Wakilii

Mungereza v Price Water House Coopers Africa Central (Civil Appeal No.34 of 2001)

Court of Appeal · [2002] UGCA 24 · 2002 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from High Court order staying proceedings and referring the matter to arbitration
Decision
Appeal dismissed; High Court order staying proceedings and referring the matter to arbitration upheld

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Court of Appeal dismissed the appeal, holding that the phrase 'incapable of being performed' in section 41 of the Arbitration and Conciliation Act refers to legal incapability, not a party's impecuniosity. Poverty per se, even if allegedly induced by the respondent, is not a sufficient ground for refusing a mandatory stay where a valid non-domestic arbitration agreement exists. The appellant's claimed inability to afford travel to London for arbitration did not bring the agreement within the statutory exceptions. Since the parties had freely and voluntarily entered into the arbitration agreement, and no good reason to depart from it was shown, the trial judge was justified in staying the proceedings and referring the dispute to arbitration.

Outcome

Appeal dismissed; High Court order staying proceedings and referring the matter to arbitration upheld

Facts

The appellant, a Certified Public Accountant, had been a partner in Coopers and Lybrand since 1986. In 1997, regional firms merged to form PricewaterhouseCoopers, and a Framework Agreement was signed for the conduct of business across seven Central African countries, forming an association known as PricewaterhouseCoopers Africa Central. Clause 29 of the Framework Agreement provided for mediation followed by binding arbitration in London of disputes. In April 2000, the appellant was told the partners had lost confidence in him. After negotiations, he left the firm and filed a suit in the High Court claiming leave passage, a refund on his tax account, and general damages for breach of contract. The respondent applied under sections 40 and 41 of the Arbitration and Conciliation Act to stay the proceedings and refer the matter to arbitration. The appellant resisted, arguing his impecuniosity, allegedly caused by the respondent's conduct, rendered the arbitration agreement incapable of being performed. The trial judge ordered a stay and referral to arbitration.

Issues

  1. Whether the appellant's impecuniosity fell within the exceptions to a mandatory stay under section 41 of the Arbitration and Conciliation Act, rendering the arbitration agreement incapable of being performed.
  2. Whether the respondent's alleged breach of contract and failure to follow the prescribed mediation procedure entitled the appellant to disregard the arbitration clause.
  3. Whether the trial judge erred in staying the proceedings and referring the matter to arbitration.

Orders

  • Appeal dismissed.
  • Costs of the appeal awarded to the respondent, here and in the High Court.

Rules and key headnotes

Arbitration — Stay of Proceedings — 'Incapable of Being Performed' — Meaning
The expression 'incapable of being performed' in section 41 of the Arbitration and Conciliation Act refers to legal incapability, not a party's impecuniosity; an agreement is incapable of performance only where circumstances are such that it could no longer be performed even if both parties were ready, willing and able to perform it.
Arbitration — Stay of Proceedings — Impecuniosity of a Party
The poverty or impecuniosity of a party, even where alleged to have been induced by the other party's breach of contract, is not per se a sufficient ground to refuse a mandatory stay of proceedings under a valid non-domestic arbitration agreement, absent sufficient evidence that the poverty was caused by that party.
Arbitration — Mandatory Stay — Non-Domestic Arbitration Agreements
Where parties freely and voluntarily enter into a non-domestic arbitration agreement, the court must grant a mandatory stay unless satisfied that the agreement is null and void, inoperative or incapable of being performed; a party seeking to depart from such an agreement must show good reason.
Arbitration — Mediation as Precondition — Effect on Arbitration Clause
Whether one party failed to submit a dispute first to the agreed mediation procedure is itself a dispute arising within the framework agreement and thus a matter to be resolved by arbitration; such failure does not render the arbitration agreement incapable of being performed.

Legislation cited (2)

  • Arbitration and Conciliation Act No. 7 of 2000 s.40
  • Arbitration and Conciliation Act No. 7 of 2000 s.41

Cases cited (7)

  • Fakes v Taylor Woodrow Construction Ltd [1973] 1 All ER 670
  • Paczy v Haendler and Natermann GmbH [1981] 1 Lloyd's Rep 302 (CA)
  • Smith v Pearl Assurance Co Ltd [1939] 1 All ER 95
  • Shell (U) Ltd v Agip (U) Ltd (Civil Appeal No. 49 of 1995)
  • Eagle Star Insurance Co Ltd. vs Lloyd's Rep 357 at 363
  • Construction Engineers Builders Ltd. v Sugar Corporation Dev. 1985 L.R.C. (Const) 596
  • Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] All ER 664

Full judgment

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Mungereza v Price Water House Coopers Africa Central (Civil Appeal No.34 of 2001) [2002] UGCA 24 (26 August 2002)
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.