Wakilii

Nakabago Growers Co-operative Society Ltd and Another v Fairland High School (Miscellaneous Application No. 581 of 2025)

High Court · [2026] UGHC 445 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside dismissal order and reinstate underlying civil suit that was dismissed in favour of arbitration
Decision
Dismissal order set aside and underlying civil suit reinstated for hearing on merits

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that under section 5(1)(a) of the Arbitration and Conciliation Act, a court must stay rather than dismiss proceedings when referring parties to arbitration, to preserve the possibility of resuming litigation if the arbitration fails. A counterclaim defendant has locus standi to apply for reinstatement of a dismissed suit. Where a party refuses to appoint an arbitrator rendering the arbitration clause incapable of being performed, the court may reinstate a stayed suit. Application allowed and suit reinstated.

Outcome

Dismissal order set aside and underlying civil suit reinstated for hearing on merits

Facts

The applicants and respondent entered an agreement of sale of land in 1997 containing an arbitration clause. The applicants initiated arbitration proceedings twice, both of which failed or were frustrated. In November 2020, the respondent filed a civil suit (No. 212 of 2020) in the High Court. At the commencement of the hearing, the Court noted the arbitration clause and dismissed the suit, referring the parties to arbitration. The applicants attempted to initiate further arbitration but the respondent refused to appoint an arbitrator. The applicants, who were defendants and counterclaim plaintiffs in the dismissed suit, filed this application to set aside the dismissal order and reinstate the suit.

Issues

  1. Whether the applicants as counterclaim defendants have locus standi to apply for reinstatement of a suit dismissed in favour of arbitration.
  2. Whether a court should dismiss or stay proceedings when referring parties to arbitration under section 5(1)(a) of the Arbitration and Conciliation Act.
  3. Whether the arbitration agreement has become incapable of being performed due to the respondent's refusal to appoint an arbitrator.
  4. Whether the dismissal of the suit instead of staying it constitutes an error apparent on the face of the record justifying review.

Orders

  • Application allowed.
  • Order of dismissal of Civil Suit No. 212 of 2020 set aside.
  • Civil Suit No. 212 of 2020 reinstated.
  • Costs of this application to abide the outcome of the suit.

Rules and key headnotes

Arbitration & ADR — Stay of Proceedings — Distinction from Dismissal
Once a court is satisfied that the parties' arbitration agreement is valid and their dispute falls within its scope, the court must stay rather than dismiss the proceedings pending the outcome of arbitration. A stay suspends proceedings allowing the court to resume the suit if the arbitration breaks down, fails, or cannot be completed, whereas dismissal terminates the proceedings and may require filing a new suit.
Arbitration & ADR — Section 5(1)(a) Arbitration and Conciliation Act — Mandatory Stay
Section 5(1)(a) of the Arbitration and Conciliation Act empowers a court to 'stay' rather than 'dismiss' a suit when referring parties to arbitration. The court lacks discretion to dismiss the suit under that provision solely because the parties have agreed to arbitration. The provision does not expressly permit judges to dismiss a suit pending arbitration when all claims are subject to arbitration.
Arbitration & ADR — Incapable of Being Performed — Refusal to Appoint Arbitrator
An arbitration agreement becomes incapable of being performed where there is an insurmountable obstacle to the arbitration process, such as where one party clearly and unequivocally refuses to perform its obligation to appoint an arbitrator. Such a breach goes to the root of the arbitration agreement and deprives the other party of their right to arbitrate. The court may then lift the stay and allow the suit to resume.
Civil Procedure — Counterclaims — Locus Standi to Apply for Reinstatement
A party with a counterclaim has the procedural right to apply for reinstatement of a dismissed suit. A counterclaim is a separate and independent cross-action that survives dismissal of the main suit. The defendant/counter-claimant retains the right to ask the court to reinstate the dismissed main suit to ensure efficiency and resolve all connected issues together.
Civil Procedure — Review — Error Apparent on Face of Record
Dismissal of a suit when it should have been stayed pursuant to section 5 of the Arbitration and Conciliation Act constitutes an error apparent on the face of the record which the court is empowered to correct by way of review under Order 46 rule 1 of the Civil Procedure Rules.
Civil Procedure — Reinstatement of Suits — Discretion of Court
Courts have a wide discretion to reinstate suits where doing so serves the interests of justice and avoids multiplicity of suits. If the arbitration process fails, is voided, or is unable to resolve the dispute, reinstatement allows parties to return to the existing suit rather than initiating a costly new action.

Legislation cited (5)

Cases cited (7)

  • Bremer Vulcan v South India Shipping Corporation Limited [1981] AC 909
  • Jesus Yanez v DISH Network, No. 24-50580 (5th Cir. 2025)
  • Smith v Spizzirri, 601 U.S. 472 (2024)
  • Oryx Energies Tanzania Limited v Mo Assurance Company Limited and Another (Civil Appeal No. 705 of 2023) [2025] TZCA 945
  • BDMS Ltd v Rafael Advanced Defence Systems [2014] EWHC 451 (Comm)
  • Downing v Al Tameer Establishment & Anor [2002] EWCA Civ 721
  • Costain Ltd v Tarmac Holdings Ltd [2017] EWHC 319 (TCC)

Full judgment

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

Nakabago Growers Co-operative Society Ltd and Another v Fairland High School (Miscellaneous Application No. 581 of 2025) [2026] UGHC 445 (11 March 202
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.