Wakilii

Rocktrust Contractors (U) Limited v DFCU Bank Limited (Miscellaneous Application 1033 of 2023)

High Court · [2023] UGCOMMC 195 · 2023 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for stay of consolidated civil suits and referral to arbitration, with interim measures of protection
Decision
Civil suits stayed pending arbitration; temporary injunction issued restraining respondent from enforcing security arrangements until conclusion of arbitration

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Where parties have already commenced arbitration proceedings pursuant to an arbitration clause in a Deed of Assignment, the court will sanction the arbitration to proceed and stay related civil proceedings. The doctrine of kompetenz-kompetenz requires that questions about the scope of the arbitration agreement be determined by the arbitrator at first instance, not by the court. The court may grant interim measures of protection under s.6 of the Arbitration and Conciliation Act to preserve the status quo pending arbitration where irreparable harm would otherwise result.

Outcome

Civil suits stayed pending arbitration; temporary injunction issued restraining respondent from enforcing security arrangements until conclusion of arbitration

Facts

Rocktrust Contractors (U) Limited had long-term contracts with UNRA and REA. In 2019, it approached DFCU Bank for financing, resulting in facility agreements secured by a Deed of Assignment of contract proceeds, charges over moveable and immoveable property, and personal guarantees. DFCU Bank later unilaterally withdrew from the relationship and declared Rocktrust in default. Rocktrust filed Civil Suit No. 0878 of 2022 to stop DFCU's recovery efforts. DFCU responded with a counterclaim and a separate Civil Suit No. 1012 of 2022 seeking declarations of default. Both suits were consolidated. DFCU also obtained an ex parte order in Miscellaneous Cause No. 0043 of 2023 freezing Rocktrust's bank accounts and payments from UNRA. The Deed of Assignment contained an arbitration clause. DFCU initiated arbitration proceedings; the Uganda Law Society appointed an arbitrator (initially Hon. Justice Wangututsi, who recused himself, then Hon. Chief Justice Bart Katureebe).

Issues

  1. Whether the consolidated Civil Suits Nos. 0878 of 2022 and 1012 of 2022 should be referred to arbitration.
  2. Whether this Court should issue interim measures of protection pending the determination of the arbitration.
  3. Whether the applicant is entitled to interest on its frozen receivables and accounts.
  4. Whether the applicant is entitled to a judgment on admission.

Orders

  • The ongoing arbitration proceedings between the parties are hereby sanctioned to proceed to their logical conclusion.
  • Proceedings in consolidated Civil Suits No. 0878 of 2022 and 1012 of 2022 are hereby stayed pending the outcome of the arbitration.
  • A temporary injunction is hereby issued restraining the respondent, her servants, agents and/or persons claiming under her from enforcing and/or exercising any purported right under the various deeds executed between the parties in pursuance to the contract financing arrangement which is the subject of the consolidated suits until the conclusion of the arbitration.
  • The costs of this application shall abide by the outcome of the consolidated Civil Suits No. 0878 of 2022 and 1012 of 2022.

Rules and key headnotes

Arbitration & ADR — Referral to Arbitration — Court Intervention Where Arbitration Already Commenced
Where parties have already commenced arbitration proceedings pursuant to an arbitration agreement, it is unnecessary for the court to formally refer the matter to arbitration; the court can only sanction the arbitration to proceed to its logical conclusion.
Arbitration & ADR — Kompetenz-Kompetenz — Determination of Arbitrator's Jurisdiction
The doctrine of kompetenz-kompetenz provides that an arbitral tribunal has jurisdiction to consider and decide any disputes regarding its own jurisdiction, including questions about the scope of the arbitration agreement, at least at first instance. Courts should avoid anticipating a decision that the tribunal is empowered to make on its own jurisdiction.
Arbitration & ADR — Court Intervention — Prohibition Under Section 9
Section 9 of the Arbitration and Conciliation Act Cap 4 prohibits any interventions by the court in disputes that are subject to an arbitration agreement except as expressly authorized by that Act. Questions on the scope of an arbitration agreement can only be considered by the court under s.34(2)(iv) when dealing with an application to set aside an award after the conclusion of arbitration.
Arbitration & ADR — Interim Measures of Protection — Section 6 Arbitration and Conciliation Act
Section 6(1) of the Arbitration and Conciliation Act Cap 4 accords courts the discretion to issue interim measures preserving the status quo of a dispute before or during arbitration. In exercising this discretion, the court will have regard to the nature and strength of the applicant's case, the existence of an imminent risk of irreparable loss, and the balance of convenience.
Civil Procedure — Interim Measures — Irreparable Injury
An interim measure of protection is only available where compensatory damages would be inadequate and where an imminent damage would be irreparable. Irreparable damage means loss that cannot be compensated with money. Where a party's moveable and immoveable property would be sold off creating third party rights before the determination of the merits of the dispute by an arbitrator, the resultant injury cannot be adequately compensated with money.
Contract Law — Privity of Contract — Contractual Obligations
The general rule on privity of contract precludes the charging of contractual obligations on persons who were not part of the contract. A party cannot be ordered to pay contractual interest agreed in a contract to which it was not privy.

Legislation cited (10)

Cases cited (4)

  • TMA Architects & Anor v Prome Consultants Limited (Miscellaneous Cause No. 0080 of 2021)
  • AC Yafeng Construction Limited v The Registered Trustees of Living Word Assembly Church & Anor (Miscellaneous Application No. 0001 of 2021)
  • Kiyimba Kaggwa E.L.T. v Haji Abdu Nasser Katende [1985] HCB 43
  • Digital Displays Limited v Tim Construction Company Ltd & 2 Ors (Civil Suit No. 21 of 2015)

Full judgment

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

Rocktrust Contractors (U) Limited v DFCU Bank Limited (Miscellaneous Application 1033 of 2023) [2023] UGCommC 195 (30 October 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.