Wakilii

Mss Xsabo Power Limited & 4 Others v Great Lakes Energy Company NV (Arbitration Cause 14 of 2024; Arbitration Cause 75 of 2023)

High Court · [2024] UGCOMMC 75 · 2024 Application Granted; Objection Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Cross-applications concerning recognition and enforcement of final arbitral award from London Court of International Arbitration
Decision
Final arbitral award recognised and enforceable as a judgment of the High Court; applicants' objection to enforcement dismissed.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court allowed the application for recognition and enforcement of the final LCIA arbitral award and dismissed the applicants' objections. The Court held that although disputes about available funds for repayment fell outside the arbitration clause, they were inextricably intertwined with arbitrable issues. The Court rejected public policy objections, finding that the Tribunal's set-off computation (though not expressly detailed on record) did not violate equal treatment principles, that LIBOR's transition to a synthetic methodology did not render the award uncertain, and that the objections did not constitute violations of fundamental public policy warranting refusal of enforcement.

Outcome

Final arbitral award recognised and enforceable as a judgment of the High Court; applicants' objection to enforcement dismissed.

Facts

The applicants and respondent entered investment and ancillary agreements for a solar power project in Uganda. The respondent became a shareholder upon expending monies into the project. A dispute arose when applicants accused the respondent of inflating EPC costs by around US$6 million without knowledge of fellow shareholders. Applicants rescinded the investment agreement and revoked share allotment. The respondent commenced LCIA arbitration in London. Three arbitral awards were rendered: two partial awards (11 March 2022 and 10 January 2023) and a final award (11 September 2023). The first partial award found the respondent liable for secret commission. The final award ordered the 1st–3rd applicants to pay US$1,188,730 damages plus interest, and all applicants to pay legal and arbitration costs. The respondent sought enforcement in Uganda; the applicants objected on grounds of public policy violation and that issues fell outside the arbitration agreement.

Issues

  1. Whether the Final Arbitral Award dealt with issues falling outside the scope of the submission to arbitration.
  2. Whether the Final Arbitral Award is in conflict with the law and public policy of Uganda.
  3. Whether the Arbitral Tribunal's failure to determine a rate of interest on the secret commission to be refunded by the respondent constitutes a violation of public policy.
  4. Whether the Arbitral Tribunal's failure to determine the rate, period and quantification of interest payable constitutes a failure to treat the parties with equality and discrimination.
  5. Whether the award of interest to the respondent at the rate of US$ 3-month LIBOR plus 8%, which was phased out, offends public policy and renders the award unenforceable.
  6. Whether interim measures of protection should be extended beyond the date of enforcement of the final award.

Orders

  • Arbitration Cause No. 0014 of 2024 dismissed with costs to the respondent.
  • Arbitration Cause No. 0075 of 2023 allowed with costs to the respondent.
  • Leave granted to Great Lakes Energy Company NV to enforce the Final Award in the same manner as a judgment or order of this court.
  • Costs of the application to be recovered as part of the costs or execution of the award.
  • Interim protective measures order dated 16th August, 2021 (as varied on 14th October, 2022) deemed to have lapsed upon granting of enforcement leave.

Rules and key headnotes

Recognition and Enforcement of Foreign Arbitral Awards — New York Convention — Grounds for Refusal — Exhaustive List
Article V of the New York Convention prescribes an exhaustive list of grounds for refusing recognition and enforcement of foreign arbitral awards, and these grounds preclude review of the merits of the award. In order to discourage erroneous domestic conditions for enforcement, the grounds specified in Article V are to be construed narrowly and exhaustively.
Arbitration Agreements — Construction — In Favorem Rule
The in favorem rule of construction provides that a valid arbitration clause should generally be interpreted expansively and, in cases of doubt, extended to encompass disputed claims. Any doubts concerning the scope of arbitrable issues should be resolved in favour of arbitration. Arbitrability is the norm and non-arbitrability the exception.
Incorporation of Arbitration Clauses — Express Reference Required
To incorporate an arbitration clause from one contract to another, express reference is required. The reference in an agreement to a document containing an arbitration clause constitutes an arbitration agreement only if the reference is such as to make that clause part of the agreement.
Arbitrable and Non-Arbitrable Issues — Inextricably Intertwined Doctrine
A non-arbitrable issue can be decided in arbitration when it is inextricably intertwined with an arbitrable issue, particularly where the determination of the arbitrable claim may dispose of the non-arbitrable claim. This serves the interests of judicial economy and avoids the risk of inconsistent results.
Public Policy Exception — Narrow Interpretation — International Public Policy vs Domestic Public Policy
The public policy exception under Article V(2)(b) of the New York Convention must be interpreted narrowly and is limited to violations of the most basic notions of morality and justice. Not all contravention of domestic public policy falls within the scope of the public policy exception. Public policy relates to fundamental economic, legal, moral, political and social values considered essential by a national jurisdiction, and an award warrants refusal of enforcement only where it shocks the conscience of the court or is patently illegal.
Equal Treatment — Procedural Fairness — Review on Merits Not Permitted
The principle of equal treatment in arbitration imposes a duty upon the tribunal to be neutral, independent, impartial and fair, and to provide parties reasonable opportunity to present their case. However, courts will not review the merits of an award or substitute their opinion for that of the tribunal on matters of fact, evidence appraisal, or quantum. A party challenging an award based on unequal treatment must demonstrate a fundamental flaw in the process denying a fair hearing, not merely an error in outcome.
Ambiguity or Uncertainty in Awards — Construction in Favour of Validity
Inconsistency or ambiguity in the operative parts of an award might require remission to the arbitrator to resolve, since it would not be right to enforce an award in an ambiguous or inconsistent form. However, in cases of uncertainty, the court will so far as possible construe the award in such a way as to make it valid rather than invalid, adopting an interpretation that can reasonably give effect to the true intention of the tribunal.

Legislation cited (24)

Cases cited (33)

  • Premium Nafta Products Ltd v Fili Shipping Co Ltd [2008] 1 Lloyd's Rep 619
  • Fiona Trust & Holding Corp v Privalov [2007] UKHL 40
  • Franek Jan Sodzawiczny v Simon John Mcnally [2021] EWHC 3384 (Comm)
  • Walter Llewellyn & Sons Ltd v Excel Brickwork Ltd [2010] EWHC 3415 (TCC)
  • Barrier Ltd v Redhall Marine Ltd [2016] EWHC 381 (QB)
  • Sea Trade Maritime Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd [2006] EWHC 2530 (Comm)
  • Sea Trade Maritime Corp v Hellenic Mutual War Risk Association (Bermuda) Ltd (The Athena) (No 2) [2007] 1 Lloyd's Rep 280
  • Cohen v. Ark Asset Holdings, 268 A.D.2d 285, 286 (1st Dept. 2000)
  • Lake Harbor Advisors, LLC v. Settlement Servs. Arbitration and Mediation, Inc., 175 A.D.3d 479 (2d Dept. 2019)
  • Monotube Pile Corp. v. Pile Foundation Constr. Corp., 269 A.D.2d 531 (2d Dept. 2000)
  • Protostorm, Inc. v. Foley & Lardner LLP, 193 AD3d 486 (1st Dept 2021)
  • Maurer, A.G., The Public Policy Exception under the New York Convention, 2013, pp. 64-66
  • Born, G., International Arbitration: Law and Practice, 2nd ed., 2015, p. 409
  • Richardson v. Mellish, 130 Eng. Rep. 294, 303 (Ex. 1824)
  • Janson v Driefontein Consolidated Mines [1902] AC 484
  • Fender v St John-Mildmay [1938] AC 1
  • Libyan American Oil Company (LIAMCO) v. Socialist People's Libyan Arab Republic Jamahirya, (formerly Libyan Arab Republic), (1981) 20 ILM 1
  • Oliver Wendell Holmes, Jr., The Common Law (1881) at p. 1
  • Egerton v Earl of Brownlow (1853) 10 ER 359
  • Cooke v Turner (1845) 60 Eng Rep 449
  • Christ for All Nationals v Apollo Insurance Co Ltd [2002] 2 EA 366
  • Sinocore International Co Ltd v RBRG Trading (UK) Ltd [2018] 2 Lloyd's Rep 133
  • Parsons and Whittemore Overseas Co., Inc. v. Société générale de l'industrie du papier (RAKTA). 508 F. 2d 969 (2d Cir. 1974)
  • Regazzoni v Sethia [1958] AC 301
  • Ducat Maritime Ltd v Lavender Shipmanagement Inc [2022] EWHC 766 (Comm)
  • Gol Linhas Aereas SA v Matlin Patterson Global Opportunities Partners (Cayman) [2022] UKPC 21
  • Moran v Lloyd's [1983] QB 542
  • Xstrata Coal Queensland P Ltd v Benxi Iron & Steel (Group) International Economic & Trading Co Ltd [2020] EWHC 324 (Comm)
  • Alegrow SA v Yayla Argo Gida San ve Nak AS [2020] EWHC 1845 (Comm)
  • MRI Trading AG v Erdenet Mining Corporation LLC [2013] 1 Lloyd's Rep 638
  • Saahib Enterprises Ltd v Olam Uganda Ltd (Civil Suit No. 180 of 2009)
  • CIZ v CJA [2021] SGHC 178
  • TMM Division Maritama SA de CV v Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972

Full judgment

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Mss Xsabo Power Limited & 4 Others v Great Lakes Energy Company NV (Arbitration Cause 14 of 2024; Arbitration Cause 75 of 2023) [2024] UGCommC 75 (18 April 2024)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.