Wakilii

Roko Construction Ltd v Kobusingye (Miscellaneous Cause No. 22 of 2021)

High Court · [2022] UGCOMMC 97 · 2022 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside an arbitral award dated 5 April 2021 arising from a construction contract dispute
Decision
Award of general damages set aside and remitted to arbitrator for reconsideration; remainder of arbitral award upheld

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed the application to set aside the arbitral award on grounds of evident partiality and public policy violation. The court found no evidence that the arbitrator acted with bias or that the award contravened public policy. However, the court held that the arbitrator erred in law by awarding general damages in addition to liquidated damages for the same delay, as this constituted double recovery. The award of US$1,000,000 as general damages was set aside and remitted to the arbitrator for reconsideration. The remainder of the award was upheld.

Outcome

Award of general damages set aside and remitted to arbitrator for reconsideration; remainder of arbitral award upheld

Facts

The applicant construction company executed contracts with the respondent for construction of service apartments in Nsambya between 2014 and 2016, with a total contract value exceeding US$7 million. Upon completion, a dispute arose regarding sums due. The applicant claimed US$481,590.58 for works executed, while the respondent counterclaimed US$2,185,318.15 for breach of contract. An arbitrator was appointed in January 2020. After hearing the parties and conducting a site visit with their consent, the arbitrator on 5 April 2021 dismissed the applicant's claim and awarded the respondent US$492,264.19 as liquidated damages, US$103,103.09 as rectification costs, and US$1,000,000 as general damages, plus arbitration costs. The applicant applied to set aside the award.

Issues

  1. Whether there was evident partiality on the part of the arbitrator in making observations during a site visit and relying on them in the award.
  2. Whether the arbitral award is contrary to public policy of Uganda.
  3. Whether the arbitral award is inconsistent with the Arbitration and Conciliation Act, specifically whether the arbitrator exceeded jurisdiction by opening and revising final certificates.
  4. Whether the arbitrator made decisions not in accordance with the terms of the contract and failed to take into account usages of the trade.
  5. Whether the arbitrator erred in law by awarding both liquidated damages and general damages for the same delay.

Orders

  • Application dismissed in part.
  • Award of US$1,000,000 as general damages set aside and remitted to the arbitrator for reconsideration.
  • Applicant awarded half the costs of the application.

Rules and key headnotes

Arbitration — Setting Aside Awards — Grounds — Evident Partiality — Site Inspection by Arbitrator
An arbitrator's site inspection conducted with the consent of both parties for the purpose of understanding the context of the dispute does not constitute evident partiality where the arbitrator uses observations from the inspection to corroborate evidence already on record, rather than as the sole basis for findings. The test is whether a fair-minded and informed observer would conclude there was a real possibility of bias.
Arbitration — Judicial Review of Awards — Limited Scope — No Appeal on Merits
Courts reviewing arbitration awards do not function as appellate courts but merely decide upon the legality and validity of the award. Save for specified circumstances in the Arbitration and Conciliation Act, parties take their arbitrator for better or worse as to decisions of fact and law. The court cannot re-examine or reappraise evidence considered by the arbitrator or substitute its own evaluation of conclusions on law or fact.
Arbitration — Natural Justice — Audi Alteram Partem — Outside Evidence
When an arbitrator relies upon outside evidence not available to the public, the parties must be notified and given an opportunity to correct inaccuracies or make submissions. However, where supplemental information obtained outside the material submitted in evidence is of a public nature or readily available to the parties prior to the hearing, and the parties had opportunity to address it, there is no breach of natural justice.
Arbitration — Setting Aside Awards — Public Policy — Narrow Interpretation
An arbitral award may be set aside as contrary to public policy only if it is inconsistent with the Constitution or laws of Uganda, inimical to national interest, or contrary to justice and morality. The public policy exception must be interpreted narrowly to prevent opportunistic use by award debtors as a gateway to review the merits. An award is in conflict with public policy only when its content is not just erroneous but actually perverse.
Arbitration — Arbitrator's Powers — Interpretation of Contract — Manifest Disregard
An arbitrator's task is to interpret and enforce a contract, not to rewrite it. Where an arbitrator acts in manifest disregard of the contract, the arbitrator acts without jurisdiction. However, where the arbitrator relies on construction of relevant contract provisions and presents analysis and justifications based on the contract, evidence, and submissions, the court will not interfere even if it might have interpreted the contract differently.
Damages — Liquidated Damages and General Damages — Mutual Exclusivity
Where parties have agreed on a positive amount of liquidated damages in a contract, this evidences an intention to exclude the right to recover general damages for the same breach. A valid and mandatory liquidated damages clause fixes the parties' rights and liabilities, and it is irrelevant that actual loss is greater or less than the stipulated amount. Awarding both liquidated and general damages for the same delay constitutes an error of law apparent on the face of the award.
Arbitration — Setting Aside Awards — Partial Setting Aside and Remittal
Under section 38(2)(b) of the Arbitration and Conciliation Act, where an error of law apparent on the face of the award causes substantial injustice but affects only part of the award, the court may set aside that component and remit it to the arbitrator for reconsideration while preserving the remainder of the award.

Legislation cited (13)

Cases cited (30)

  • Coppee-Lavalin SA/NV v Ken-Ren Chemicals and Fertilizers Ltd [1994] 2 All ER 465
  • Re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700
  • Kanda v Government of the Federation of Malaya [1962] AC 322
  • R v Deputy Industrial Injuries Commissioner, Ex parte Jones [1962] 2 QB 677
  • R v Schiff, Ex parte Trustees of Ottawa Civic Hospital [1970] 1 OR 752
  • Porter v Magill [2002] 2 AC 357
  • Taylor v Lawrence [2002] 2 All ER 353
  • Egerton v Earl of Brownlow (1853) 10 ER 359
  • Cooke v Turner (1845) 60 ER 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
  • Moran v Lloyd's [1983] 2 All ER 200
  • Tersons Ltd v Stevenage Development Corporation [1963] 3 All ER 863
  • Gillespie Brothers and Co v Thompsons Brothers and Co [1928] 13 Lloyd LR 519
  • Chevron Kenya Ltd v Daqare Transporters Ltd (High Court Miscellaneous Application No. 490 of 2008)
  • Associated Engineering Co. v. Government of Andra Pradesh (1991) 4 SCC 93 (AIR 1992 Sc 232)
  • Cunliffe-Owen v Teather & Greenwood [1967] 1 WLR 1421
  • McCutcheon v David MacBrayne Ltd [1964] 1 WLR 125
  • Hutton v Warren (1836) 1 M&W 466
  • The Moorcock (1889) 14 PD 64
  • Shirlaw v Southern Foundries [1939] 2 KB 206
  • Kampala Capital City Authority v Nalongo Estates Ltd (High Court Miscellaneous Cause No. 31 of 2013)
  • DB Shapriya and Co Ltd v Bish International BV [2003] 2 EA 404
  • Robinson v Harman (1848) 1 Exch 850
  • Kibimba Rice Ltd v Umar Salim (Supreme Court Civil Appeal No. 17 of 1992)
  • East Ham BC v Bernard Sunley & Sons Ltd [1966] AC 406
  • Hadley v Baxendale (1854) 9 Ex 341
  • J-Corp Pty Ltd v Mladenis [2009] WASCA 157
  • Newcastle United Football Company Ltd v Football Association Premier League Ltd [2021] EWHC 349 (Comm)
  • The Rio Claro [1987] 2 Lloyd's Rep 173

Full judgment

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

Roko Construction Ltd v Kobusingye (Miscellaneous Cause No. 22 of 2021) [2022] UGCommC 97 (17 January 2022)
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.