Wakilii

Smile Communications Uganda Limited v ATC Uganda Limited and Another (Arbitration Cause 4 of 2022)

High Court · [2023] UGCOMMC 30 · 2023 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside an arbitral award arising from disputes over telecommunications infrastructure services agreements
Decision
Arbitral award set aside; matter may return to fresh arbitration before a different arbitrator

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court set aside an arbitral award on two grounds: the arbitrator exceeded the contractually agreed 90-day timeline for delivery of the award by unilaterally extending time without the parties' mutual consent, rendering the award invalid; and the arbitrator created a reasonable apprehension of bias by dedicating a book published during the arbitration to the law firm representing the respondents, despite having worked there over 20 years earlier, which would lead a fair-minded observer to conclude there was a real possibility of partiality.

Outcome

Arbitral award set aside; matter may return to fresh arbitration before a different arbitrator

Facts

Smile Communications Uganda Limited (applicant) entered into telecommunications infrastructure agreements with ATC Uganda Limited and Eaton Towers Uganda Limited (respondents) in 2012 and 2013. Disputes arose in 2018 concerning contract amendments and electricity billing practices. The parties agreed to arbitrate their disputes under The Arbitration and Conciliation Act with a 90-day timeline for completion. The arbitrator delivered an award on 28th January 2022, over 10 months after commencement, dismissing the applicant's claims and awarding the respondents unpaid amounts plus damages. The applicant applied to set aside the award, alleging procedural irregularities, partiality, and errors of law.

Issues

  1. Whether the dispute between the applicant and the 2nd respondent was arbitrable or should have been determined by the Electricity Disputes Tribunal.
  2. Whether there were errors apparent on the face of the arbitral award justifying setting aside.
  3. Whether the arbitral award was contrary to public policy.
  4. Whether the arbitral award was made in a manner contrary to the provisions of The Arbitration and Conciliation Act.
  5. Whether the arbitral award was delivered beyond the statutory timelines and those set out in the arbitration agreement.
  6. Whether the arbitrator failed in his duty to accord equal treatment to the parties at the point of delivery of the award.
  7. Whether the arbitral award was procured by evident partiality or reasonable apprehension of bias on the part of the arbitrator.

Orders

  • The arbitral award dated 28th January 2022 is set aside.
  • Costs of the application awarded to the applicant.

Rules and key headnotes

Arbitration — Time Limits for Delivery of Award — Contractual Timeline — Effect of Unilateral Extension
Where parties to an arbitration agreement have fixed a time limit for rendering an award, that time limit is extendable only by mutual consent of the parties. If consent for extension is denied by one party and the award is not rendered within the time fixed, the mandate of the arbitrator terminates. An extension declared by the arbitrator without mutual agreement of the parties is ineffective. An award passed after effluxion of the agreed period without mutual consent to extension is bad in law and contrary to the agreed terms binding the parties and the arbitrator.
Arbitration — Evident Partiality — Reasonable Apprehension of Bias — Book Dedication to Opposing Counsel's Law Firm
An arbitrator bears a continuing duty to remain impartial and independent and to avoid even the appearance of inability to be impartial. Where an arbitrator dedicates a book published during the course of arbitration proceedings to the law firm representing one of the parties, even though the arbitrator worked there over twenty years earlier, this conduct creates a reasonable apprehension of partiality. A fair-minded and informed observer would conclude there was a real possibility of bias, vitiating the award. Appearance and perception often triumph over substance, and confidence in the propriety of an arbitral award is eroded by conduct creating the appearance of inability to be impartial.
Arbitration — Arbitrability — Disputes Involving Regulated Utilities — Electricity Billing Practices
A dispute is arbitrable where the remedy sought affects only the parties to the arbitration and involves subordinate rights in personam arising from contractual relations, even where the dispute touches on issues regulated by statute. A challenge to electricity billing practices under a private telecommunications infrastructure contract is arbitrable even though electricity is a regulated sector, where the respondent is not a licensed public utility, the facts are unique to the parties, the resolution is not important to the regulatory responsibilities of the Electricity Regulatory Authority, and the arbitrator does not infringe the Authority's jurisdiction over licensed utilities.
Arbitration — Non-Arbitrability — Exception in Arbitration Agreement — Waiver by Participation
Under section 109(2) of The Electricity Act, all matters relating to electricity may be referred to the Electricity Disputes Tribunal provided the parties have not agreed to settle the dispute by arbitration. The Act favours respect for parties' decisions to arbitrate. A party who fully participates in arbitral proceedings without raising an objection to arbitrability of the issues or jurisdiction of the arbitrator is deemed under section 4 of The Arbitration and Conciliation Act to have waived the right to object and is precluded from raising such objections when challenging the award.
Arbitration — Setting Aside Award — Grounds — Errors of Law or Fact Distinguished from Procedural Irregularities
An arbitral award cannot be set aside for errors of law or fact, as the arbitrator is the final judge of facts and law. The setting aside process under section 34 of The Arbitration and Conciliation Act is designed to deal with true jurisdictional errors and procedural irregularities, not to provide an appellate review of the merits. Mere error in evaluation of evidence or misinterpretation of law is never a ground for setting aside an award. Only manifest disregard of the law so gross as to substantially amount to failure to apply the proper law, combined with substantial injustice, may warrant setting aside.
Arbitration — Public Policy — Scope of Exception — Enforcement of Awards Involving Regulated Sectors
An arbitral award may be set aside under section 34(2)(b)(ii) of The Arbitration and Conciliation Act only if it is in conflict with public policy, which covers only fundamental principles widely recognised in the Ugandan legal tradition. Public policy considerations include awards inconsistent with the Constitution or laws of Uganda, awards inimical to national interest, and awards contrary to justice and morality. The public policy exception must be interpreted narrowly. Where a dispute involves private contractual matters between entities not engaged as public utilities serving the general public, enforcement of an award upholding contractual terms does not violate public policy merely because the contract involves activities regulated by statute for public utilities.
Arbitration — Kompetenz-Kompetenz Principle — Arbitrator's Power to Determine Own Jurisdiction
Under the principle of kompetenz-kompetenz, an arbitral tribunal has jurisdiction to consider and decide disputes regarding its own jurisdiction in the first instance, subject to subsequent judicial review. A plea that the arbitral tribunal lacks jurisdiction or that issues are non-arbitrable must be raised as soon as the matter is raised during arbitral proceedings under section 16(3) of The Arbitration and Conciliation Act. The court has no jurisdiction to determine the arbitrator's jurisdictional reach until the arbitrator has ruled as a preliminary question that it has jurisdiction and a party applies to the court to decide the matter.

Legislation cited (40)

Cases cited (36)

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  • Fiona Trust & Holding Corp v Privalov [2007] UKHL 40
  • Booz-Allen & Hamilton Inc v. Sbi Home Finance Ltd. and others, (2011) 5 SCC 532
  • 85 A.D.3d 502
  • Vimal Kishor Shah and others v. Jayesh Dinesh Shah and others (2016) 8 SCC
  • Tomolugen Holdings Ltd v Silica Investors Ltd [2015] SGCA 57
  • Christ For All Nationals v Apollo Insurance Co Ltd [2002] 2 EA 366
  • Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbertriebe Registrierte Genossenschaft mit Beschrankter Haftung [1953] 2 All ER 1039; [1953] 1 Lloyd's Rep. 495
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  • Ting Kang Chung John v Teo Hee Lai Building Constructions Pte Ltd [2010] SGHC 20
  • Suryadev Alloys and Power Pvt. Ltd. v. Shri Govindaraja Textiles Pvt. Ltd, AIR (2010) SC 640
  • Sunway Creative Stones Sdn Bhd v Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd [2020] MLJU 658
  • Ken Grouting Sdn Bhd v RKT Nusantara Sdn Bhd [2020] MLJU 1901
  • NBCC Limited v. JG Engineering Pvt. Limited (2010) 2, SCC 385
  • Jayesh H. Pandya and another v. Subhtex India Ltd. and Others, (2020) 17 SCC 383
  • M/s Lion Engineering Consultants v. State of State of Madhya Pradesh and others (2018) 16 SCC 758
  • Quippo Construction Equipment Limited v. Janardan Nirman Pvt. Limited 2020 SCC OnLine SC 419
  • Salar jung Museum and another v. Design Team Consultant Pvt. Ltd, 2010 (1) ALT 435
  • Michael Waibel, "Investment Arbitration: Jurisdiction and Admissibility," (2014) 5 (4) Legal Studies Research Paper Series, 67-68
  • AT&T Corporation v Saudi Cable Co [2000] 2 All ER (Comm) 625
  • Sinocore International Co Ltd v RBRG Trading (UK) Ltd [2018] 2 Lloyd's Rep 133
  • Cohen v. Ark Asset Holdings, 268 A.D.2d 285, 286 (1st Dept. 2000)
  • Lake Harbor Advisors, LLC v. Settlement Servs. Arbitration and Mediation, Inc., 175 A.D.3d 479 (2d Dept. 2019)
  • Monotube Pile Corp. v. Pile Foundation Constr. Corp., 269 A.D.2d 531 (2d Dept. 2000)
  • Protostorm, Inc. v. Foley & Lardner LLP, 193 AD3d 486 (1st Dept 2021)
  • Re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700
  • Porter v Magill [2002] 2 AC 357
  • Taylor v Lawrence [2002] 2 All ER 353
  • R v Gough [1993] AC 646
  • Laker Airways Inc v FLS Aerospace Limited [1999] 2 Lloyd's Rep 45
  • R v Sussex Justices, ex parte McCarthy [1924] 1 KB 256
  • Egerton v Earl of Brownlow (1853) 10 ER 359
  • Cooke v Turner (1845) 60 ER 449
  • Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48
  • Halliburton Company v Chubb Bermuda Insurance Ltd [2021] AC 1083

Full judgment

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Smile Communications Uganda Limited v ATC Uganda Limited and Another (Arbitration Cause 4 of 2022) [2023] UGCommC 30 (11 April 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.