Wakilii

Weldetinsae v Bekunda & Another (Miscellaneous Cause 9 of 2024)

High Court · [2024] UGCOMMC 134 · 2024 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for interim measure of protection pending arbitration proceedings under the Arbitration and Conciliation Act
Decision
Interim injunction granted pending arbitration

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court Commercial Division granted an interim injunction restraining the respondents from evicting the applicant pending arbitration proceedings. The court found that the application disclosed a serious question to be arbitrated concerning a 10-year lease agreement, that the applicant faced imminent risk of irreparable loss to his established restaurant and bar business and commercial reputation that could not be adequately compensated in damages, and that the balance of convenience favoured the applicant who stood to lose his lifetime investment. The application was granted under section 6(1) of the Arbitration and Conciliation Act.

Outcome

Interim injunction granted pending arbitration

Facts

On 29 January 2021, the first respondent leased property in Kyadondo Block 245 Plots 74 and 79 to the applicant for a fixed 10-year term from 1 February 2021 to 31 January 2031 for operating a lounge, bar and restaurant styled 'Mash-Up Lounge'. The lease agreement provided that it could only be terminated prematurely upon mutual agreement to compensate the applicant for capital investment, lost profits and incidental costs. The agreement also contained an arbitration clause. In July 2023, the first respondent began contemplating sale of the property. In October 2023, she sold and transferred the property to the second respondent for UGX 2.2 billion without formal communication to the applicant. The applicant discovered the transfer on 5 January 2024. Negotiations on compensation failed. The applicant commenced arbitration proceedings by serving a Notice of Commencement of Arbitration on the respondents pursuant to clause 13 of the agreement. Facing imminent threat of eviction, the applicant sought an interim injunction. The respondents did not file an affidavit in reply despite being served and given time by the court.

Issues

  1. Whether the application discloses sufficient grounds for the grant of an interim measure of protection pending arbitration?

Orders

  • An interim measure of protection by way of an injunction order is granted restraining the Respondents or any of their agents or successors in title from evicting, attempting to evict or otherwise interfering with the Applicant's quiet enjoyment and possession of the property comprised in Kyadondo Block 245 Plots 74 and 79, land at Kiuliriza until the final determination of the arbitration proceedings.
  • Costs of the application shall abide the outcome of the arbitration proceedings.

Rules and key headnotes

Arbitration & ADR — Interim Measures of Protection — Jurisdiction of Court Under Arbitration and Conciliation Act
Section 6(1) of the Arbitration and Conciliation Act empowers the court to grant interim measures of protection before or during arbitral proceedings, as one of the limited instances where the court may intervene in matters governed by the Act notwithstanding the general prohibition under section 9.
Arbitration & ADR — Interim Measures — Test for Grant of Interim Protection
In determining an application for interim measure of protection under the Arbitration and Conciliation Act, the court must consider: (1) whether there is a serious question to be arbitrated in respect of which the applicant demonstrates a sufficient likelihood of success; (2) whether there is an imminent risk of irreparable loss by considering whether damages are an adequate remedy; and (3) the course of action favoured on a balance of convenience, being the course that results in a lower risk of injustice if the decision to grant the restraining order is incorrect.
Arbitration & ADR — Interim Measures — Purpose and Scope
An interim measure is any temporary measure by which, before issuance of the final award, the court or arbitral tribunal orders a party to maintain or restore the status quo pending determination of the dispute, take action or refrain from action to prevent imminent harm to the arbitration process, provide means of preserving assets out of which a subsequent award may be satisfied, or preserve relevant evidence. Such orders aim to preserve parties' legal rights pending arbitration but are not aimed at determining those rights.
Contract Law — Lease Agreements — Fixed-Term Leases and Premature Termination
Where a lease agreement provides for a fixed term and expressly stipulates that premature termination can only occur upon mutual agreement to pay compensation for capital investment, lost profits and incidental costs, a dispute concerning the landlord's sale of the property to a third party during the subsistence of the lease without agreement on compensation raises a serious question for arbitration justifying interim protection.
Civil Procedure — Affidavit Evidence — Effect of Failure to File Reply
Where a respondent fails to file an affidavit in reply despite being served and given time by the court, this constitutes a clear indication that they do not intend to challenge the application, and facts deposed in the affidavit in support that are neither denied nor rebutted are presumed to be admitted. However, the applicant retains the burden under sections 101, 102 and 103 of the Evidence Act to prove the necessary considerations for the grant of the application.

Legislation cited (7)

Cases cited (8)

  • Energo Projekt Joint Stock Company v Kasirye Gwanga and Another (HCMA No. 558 of 2009)
  • Oloka Onyango and Others v Attorney General (Constitutional Petition No. 6 of 2014)
  • Akankwasa v Registrar of Titles (HCMA No. 33 of 2008)
  • Massa v Achan [1978] HCB 297
  • AC Yafeng Construction Limited v Registered Trustees of Living Word Assembly Church and Another (HCMA No. 1 of 2021)
  • Polat Yol Yapi Sanvetic SA v UNRA (Miscellaneous Cause No. 3 of 2022)
  • Great Lakes Energy Company NV v MSS Xsabo Power Limited & 4 Others (HCMA No. 1041 of 2023)
  • Proline Soccer Academy v Commissioner Land Registration (HCMA No. 494 of 2018)

Full judgment

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

Weldetinsae v Bekunda & Another (Miscellaneous Cause 9 of 2024) [2024] UGCommC 134 (15 May 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.