Wakilii

Taiba Manpower Agency Limited v Progressive Workers World Wide FZ LLC (Miscellaneous Application 2966 of 2023)

High Court · [2024] UGCOMMC 184 · 2024 Application Granted — Matter Referred to Arbitration AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application under Sections 5 and 9 of the Arbitration and Conciliation Act seeking dismissal of civil suit and referral to arbitration
Decision
Civil suit dismissed and matter referred to arbitration

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that where parties to a Memorandum of Understanding included an arbitration clause requiring amicable settlement followed by arbitration, and the amicable settlement failed, the dispute must be referred to arbitration under Section 5(1) of the Arbitration and Conciliation Act. The court has no jurisdiction to hear a suit that falls within a valid arbitration agreement, and the termination of the underlying contract does not render the arbitration clause inoperative where the dispute arises from that contract.

Outcome

Civil suit dismissed and matter referred to arbitration

Facts

The applicant and respondent entered into a Memorandum of Understanding dated 27 January 2022. The respondent subsequently filed Civil Suit No.1466 of 2023 alleging breach of the Memorandum and seeking recovery of USD 7,000 in rent arrears, USD 220,320 and UGX 12,785,000 in lost commission and operational costs, plus damages. Clause 11 of the Memorandum provided that disputes shall first be resolved amicably, and failing that, be referred to arbitration. The respondent claimed to have attempted amicable settlement through WhatsApp messages and demand notices, which the applicant allegedly ignored. The applicant filed this application seeking dismissal of the suit for want of jurisdiction and referral to arbitration. The Memorandum had a duration of 11 months under clause 9 and was not renewed.

Issues

  1. Whether Civil Suit No.1466 of 2023 is competent before this Court?
  2. What remedies are available to the parties?

Orders

  • The dispute between the parties herein is referred to arbitration.
  • The parties should jointly appoint an arbitrator within thirty (30) days from the date of this Ruling.
  • In the event of failure to jointly appoint, either party shall refer to an appointing authority under the Arbitration and Conciliation Act to appoint an arbitrator.
  • High Court Civil Suit No.1466 of 2023 is hereby dismissed.
  • Each party shall bear their own costs of this application.
  • Each party shall bear their own costs of the main suit.

Rules and key headnotes

Arbitration Agreement — Validity and Enforceability — Effect of Termination of Underlying Contract
An arbitration clause in a contract remains valid and enforceable even after the termination or non-renewal of the underlying contract where the dispute arises from that contract, as the arbitration clause is separable from the substantive contract terms.
Arbitration Agreement — Preconditions to Arbitration — Failure of Amicable Settlement
Where an arbitration clause requires parties to first attempt amicable settlement before proceeding to arbitration, the failure of one party to engage in amicable settlement discussions does not render the arbitration clause inoperative, but rather confirms that the amicable settlement method has failed, triggering the obligation to proceed to arbitration.
Court Jurisdiction — Stay of Proceedings — Section 5(1) Arbitration and Conciliation Act
Where a valid and enforceable arbitration agreement exists between parties and a suit is filed in court concerning matters subject to that agreement, the court must refer the matter to arbitration under Section 5(1) of the Arbitration and Conciliation Act unless the arbitration agreement is null and void, inoperative, or incapable of being performed.
Waiver of Right to Arbitrate — Standard of Proof
Courts are slow to find that a party has waived its right to arbitrate without very clear evidence of an intention to abandon the right to arbitrate together with reliance by the other party to its detriment. Mere non-participation in preliminary amicable settlement discussions does not constitute waiver of the right to arbitrate.
High Court Jurisdiction — Constitutional Limits — Arbitration
While the High Court has unlimited original jurisdiction under Article 139(1) of the Constitution and Section 14 of the Judicature Act, this jurisdiction must conform with other written laws and procedures, including the mandatory provisions of the Arbitration and Conciliation Act which restrict court intervention in matters governed by valid arbitration agreements.
Construction of Arbitration Clauses — Presumption in Favour of Arbitration
The construction of an arbitration clause should start from the assumption that parties as rational businessmen are likely to have intended any dispute arising out of their relationship to be decided by the same tribunal, and the clause should be construed under this presumption unless the language makes clear that certain questions were intended to be excluded from the arbitrator's jurisdiction.
Inoperative or Incapable of Performance — Meaning
An arbitration agreement is 'inoperative' when it has ceased to have effect due to revocation, res judicata, settlement, or similar circumstances. It is 'incapable of being performed' when there is an obstacle which cannot be overcome even if the parties are ready, able and willing to perform, such as where a specifically named arbitrator is deceased or unavailable, or the clause is too vague to implement.

Legislation cited (16)

Cases cited (19)

  • Vantage Mezzanine Fund II Partnership v Simba Properties Investment Co. Limited and Another (High Court Miscellaneous Application No. 201 of 2020)
  • British American Tobacco Uganda Limited v Lira Tobacco Stores (High Court Miscellaneous Application No. 924 of 2013)
  • Golf View Inn (U) Ltd v Barclays Bank (U) Ltd (High Court Civil Suit No. 358 of 2009)
  • Babcon Uganda Ltd v Mbale Resort Hotel Ltd (Court of Appeal Civil Appeal No. 87 of 2011)
  • Male H. Mabirizi K Kiwanuka v Attorney General (Miscellaneous Application No. 7 of 2018)
  • AC Yafeng Construction Co. Ltd v The Living World Assembly Ltd and Others (Civil Suit No. 739 of 2021)
  • Male Mabirizi Kiwanuka v Attorney General (Constitutional Petition No. 2 of 2018)
  • 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
  • Omugabe Mbabazi Sam v Tumwesigye Dan (High Court Miscellaneous Application No. 10 of 2023)
  • Baku Raphael Obudra & Another v Attorney General (Supreme Court Civil Appeal No. 1 of 2005)
  • Uganda Revenue Authority v Rabbo Enterprises (U) Ltd & Another (Supreme Court Civil Appeal No. 12 of 2004)
  • Lakeside Dairy Limited v International Centre for Arbitration and Mediation Kampala and Midland Emporium Limited (Miscellaneous Cause No. 21 of 2021)
  • Coppee-Lavalin SA/NV v Ken-Ren Chemicals and Fertilizers Ltd [1994] 2 All ER 465
  • 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 & Others [2019] QSC 173
  • National Social Security Fund v Alcon International Ltd (Court of Appeal Civil Appeal No. 2 of 2008)

Full judgment

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Taiba Manpower Agency Limited v Progressive Workers World Wide FZ LLC (Miscellaneous Application 2966 of 2023) [2024] UGCommC 184 (27 June 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.