Wakilii

Select Garments Limited v Old Stanley Hotel Limited (Civil Suit 674 of 2014)

High Court · [2024] UGCOMMC 457 · 2024 Preliminary Objection Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Ruling on preliminary objection raised by defendant seeking to refer the matter to arbitration based on arbitration clause in tenancy agreement
Decision
Matter to proceed to trial on the merits

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the defendant waived its right to arbitration by actively participating in court proceedings for over nine years, filing a defence and counterclaim, and never raising the arbitration clause until the hearing of the defence case on 1 December 2023. The arbitration agreement became inoperative under Section 5(1)(a) of the Arbitration and Conciliation Act. A party may abandon its right to arbitrate through delay or by commencing and participating in court proceedings. The preliminary objection was overruled and the suit ordered to proceed to conclusion.

Outcome

Matter to proceed to trial on the merits

Facts

Civil Suit No. 674 of 2014 was instituted by the plaintiff arising from alleged breach of a tenancy agreement. The matter was filed in 2014 and both parties actively participated in court proceedings including mediation, conferencing, and interlocutory applications. The defendant filed an amended defence and counterclaim on 11 May 2016. The tenancy agreement between the parties contained an arbitration clause (clause 38.3) providing that disputes unresolved after 30 days should be referred to arbitration under UNCITRAL Rules with the London Court of International Arbitration as appointing authority. On 1 December 2023, when the matter came up for hearing of the defence case, counsel for the defendant raised a preliminary objection that the suit was bad in law because it was founded on an agreement containing an arbitration clause and should be referred to arbitration.

Issues

  1. Whether Civil Suit No. 674 of 2014 should be referred to arbitration under the Arbitration and Conciliation Act?

Orders

  • Preliminary objection overruled.
  • Suit to proceed to its conclusion.
  • Suit fixed for cross examination of the defendant's witness on 27 February 2024 at 9am.

Rules and key headnotes

Arbitration & ADR — Waiver of Right to Arbitrate — Delay and Active Participation in Court Proceedings
A party may waive its right to arbitration by delay or by commencing and actively participating in court proceedings without raising the arbitration clause, even where a valid arbitration agreement exists. The right to arbitrate, being a contractual right, can be abandoned through conduct demonstrating election to proceed with litigation.
Arbitration & ADR — Inoperative Arbitration Agreement — Meaning under Section 5(1)(a) of the Arbitration and Conciliation Act
An arbitration agreement becomes 'inoperative' within the meaning of Section 5(1)(a) of the Arbitration and Conciliation Act when it has ceased to have effect, including where the parties have implicitly or explicitly revoked the agreement to arbitrate through their conduct. A court may refuse to refer parties to arbitration where the arbitration agreement is inoperative.
Civil Procedure — Preliminary Objections — Timing of Raising Arbitration Clause as Objection
Where a defendant has actively participated in court proceedings for an extended period including filing a defence and counterclaim, participated in mediation and conferencing, and raised the arbitration clause only at the hearing of the defence case, such late raising of the objection amounts to waiver and the court may refuse to refer the matter to arbitration.
Contract Law — Waiver — Voluntary Abandonment of Contractual Right
Waiver in contract refers to the process whereby one party unequivocally, but without consideration, grants a concession or forbearance to the other party by not insisting upon the precise mode of performance provided for in the contract. A party's conduct may demonstrate clear waiver of contractual rights including the right to arbitrate.

Legislation cited (5)

Cases cited (12)

  • Omugabe Mbabazi Sam v Tumwesigye Dan (Civil Misc. Application No. 10 of 2023)
  • Vantage Mezzanine Fund II Partnership v Simba Properties Investment Co. Ltd and Anor (Misc. Application No. 201 of 2020)
  • Agri-Industrial Management Agency Ltd v Kayonza Growers Tea Factory Ltd & Anor (HCCS No. 819 of 2004)
  • Morgan Vs Sundance Inc. decided on 23rd May 2022
  • Heyam and Another v Darwins Ltd [1942] 1 All ER 337
  • Premium Nafta Products Ltd and others v Fili Shipping Company Ltd and others [2007] UKHL 40
  • Fiona Trust and Holding Corporation v Privalov [2008] 1 Lloyd's Rep 254
  • Broken Hill City Council v Unique Urban Built Pty Ltd [2018] NSWSC 825
  • Lucky-Goldstar International (HK) Ltd v NG Moo Kee Engineering Ltd [1993] HKCFI 14
  • Bulkbuild Pty Ltd v Fortuna Well Pty Ltd & Ors [2019] QSC 173
  • Yan Jian Uganda Company Ltd v Siwa Builders and Engineers (H.C. Misc. Application No. 1147 of 2014)
  • National Social Security Fund v Alcon International Ltd (CA No. 2 of 2008)

Full judgment

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

Select Garments Limited v Old Stanley Hotel Limited (Civil Suit 674 of 2014) [2024] UGCommC 457 (11 January 2024)
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.