Wakilii

Najjuma Juliet v Khasakh Savings And Credit Cooperative Society Limited [2023] UGHC 542

High Court · 2023 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for stay of execution pending disposal of application to set aside default judgment, arising from civil suit for loan recovery
Decision
Application dismissed as arising from proceedings irregularly and illegally before the court, which should have been referred to arbitration

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that where parties have agreed to refer disputes to arbitration and the Cooperative Societies Amendment Act 2020 section 55AAA read with Part X of the Cooperative Societies Act requires arbitration of loan default disputes, the suit filed in court was irregular and illegal. Courts may only intervene to facilitate arbitral proceedings by prescribing arbitrator qualifications, not to adjudicate the dispute itself. The application for stay of execution was dismissed as it arose from proceedings that should not have been before the court in the first place.

Outcome

Application dismissed as arising from proceedings irregularly and illegally before the court, which should have been referred to arbitration

Facts

The applicant obtained a loan from the respondent cooperative society in 2017. After several defaults, the respondent filed Civil Suit No. 655 of 2021 seeking recovery of UGX 68,000,000. The applicant did not file an application for leave to appear and defend, and a default judgment was entered in favour of the respondent. The applicant then filed an application to set aside the judgment and this application to stay execution pending disposal of the setting aside application. The loan agreement between the parties contained clause 16 requiring disputes to be referred to arbitration. The applicant contended she was not properly served with summons. The respondent argued the Cooperative Societies Amendment Act 2020 allowed disputes to be brought directly to court.

Issues

  1. Whether this was a proper case for granting an order for stay of execution pending an application for setting aside judgment.
  2. Whether the dispute should have been referred to arbitration in accordance with the loan agreement and statutory provisions rather than filed in court.

Orders

  • Application dismissed.
  • No order as to costs.

Rules and key headnotes

Arbitration & ADR — Arbitration Clauses — Effect of Arbitration Agreement on Court Proceedings
Where parties have freely agreed to refer disputes to arbitration and proceedings are brought before a court in a matter subject to an arbitration agreement, the court shall refer the matter back to arbitration unless the arbitration agreement is null and void, inoperative or incapable of being performed, or there is no dispute to necessitate reference to arbitration.
Banking & Finance — Cooperative Societies — Loan Disputes — Dispute Resolution Mechanism
Under section 55AAA of the Cooperative Societies Amendment Act 2020 read with Part X of the Cooperative Societies Act, disputes between a cooperative savings and credit society and its members concerning loan defaults shall be referred to arbitration. The referral to courts mentioned in section 55AAA is solely for the registrar of the court to activate arbitral proceedings by prescribing qualifications of arbitrators, not for adjudication of the dispute itself.
Statutory Interpretation — Construction of Statutes — Reading Provisions in Context
Section 55AAA of the Cooperative Societies Amendment Act 2020 must be read together with Part X of the Cooperative Societies Act. When so read, any dispute including a claim by a registered society for debt or demand due from a member, whether admitted or not, shall be referred for arbitration and not adjudicated by the courts.
Civil Procedure — Illegality — Effect on Proceedings
Once an illegality is brought to the attention of the court, it overrides all pleadings and the court cannot condone it. Where an application arises from proceedings that are irregular and illegally before the court, the application must be dismissed.
Arbitration & ADR — Court Intervention — Limitations on Judicial Intervention
Except as provided in the Arbitration and Conciliation Act, no court shall intervene in matters governed by the Act. It is the duty of the court to enforce arbitration agreements freely entered into by parties.

Legislation cited (10)

Cases cited (1)

  • Makula International v His Eminence Cardinal Nsubuga and Another (1982) HCB 11

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Najjuma Juliet v Khasakh Savings And Credit Cooperative Society Limited 2023 UGHC 542 (28 September 2023)
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.