Wakilii

Welhai International Economy and Technical Cooperative Company Limited v Hansa Engineering Services Limited (Miscellaneous Cause No. 3 of 2020)

High Court · [2020] UGHC 144 · 2020 Application Granted — Award Set Aside AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside an arbitral award under sections 34(2) and 71(2) of The Arbitration and Conciliation Act
Decision
Arbitral award set aside and declared unenforceable

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the appointment of an arbitrator unilaterally by one party, without mutual agreement or appointment by the statutory appointing authority, was inconsistent with the arbitration clause in the contract and sections 11(2)(b) and 11(3)(b) of The Arbitration and Conciliation Act. The arbitrator acted without jurisdiction. The applicant was denied natural justice as it was not properly notified of the proceedings. The arbitral award was set aside as unenforceable.

Outcome

Arbitral award set aside and declared unenforceable

Facts

By agreement dated 15 October 2018, the applicant sub-contracted the respondent at a sum of UGX 118,066,000 to undertake construction works at a waste water plant in Gulu. The respondent received a 20% advance and completed the works within the agreed 20 days, then demanded payment of the balance. When payment was not forthcoming, the respondent filed a suit which was referred to arbitration under clause 5 of the sub-contract. The respondent unilaterally appointed a single arbitrator, Mr Nuwagaba Collins. The applicant was not involved in the appointment and asserts it was never properly notified of the proceedings. The arbitrator proceeded ex-parte and awarded the respondent UGX 212,518,800. The respondent sought to enforce by attaching the applicant's trucks. The applicant secured a stay and applied to set aside the award.

Issues

  1. Whether the arbitral tribunal was properly constituted in accordance with the arbitration agreement and The Arbitration and Conciliation Act.
  2. Whether the applicant was given proper notice of the appointment of the arbitrator and the arbitral proceedings.
  3. Whether the arbitral award should be set aside on grounds of improper constitution and breach of natural justice.

Orders

  • The arbitral award is set aside.
  • Costs of the application awarded to the applicant.

Rules and key headnotes

Arbitration — Constitution of Arbitral Tribunal — Appointment by Agreement or Statutory Authority
Where an arbitration agreement provides for a single arbitrator and the parties fail to agree on the person to be appointed, the appointment must be made by the statutory appointing authority under section 11(3)(b) of The Arbitration and Conciliation Act. A single arbitrator appointed unilaterally by one party without the other party's agreement or without appointment by the appointing authority is improperly constituted and acts without jurisdiction.
Arbitration — Setting Aside Award — Grounds — Improper Notice and Breach of Natural Justice
An arbitral award may be set aside under section 34(2) of The Arbitration and Conciliation Act where the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was unable to present his or her case. Breach of natural justice that denies the arbitrator the benefit of a party's case entirely is sufficient ground for setting aside an award.
Arbitration — Nature of Arbitration — Consensual Basis
Arbitration as an alternative forum to courts for the determination of disputes can only take place if agreed to by the disputants, either in advance by way of an arbitration agreement (normally an arbitration clause in a contract), or by way of a submission to arbitration of a specified existing dispute. Courts will safeguard against awards made against persons who did not agree to arbitrate.
Arbitration — Commencement of Proceedings — Defective Arbitration Notice
An arbitration notice may be ineffective and accordingly defective or invalid for flouting the procedure for the commencement of an arbitration. A unilateral appointment of an arbitrator contrary to the dispute resolution clause in the parties' agreement renders subsequent notices of appointment and hearing ineffective.

Legislation cited (9)

Cases cited (2)

  • A v B [2017] EWHC 3417 (Comm)
  • Easybiz Investments v Sinograin (The Biz) [2011] 1 Lloyd's Rep 688

Full judgment

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

Welhai International Economy and Technical Cooperative Company Limited v Hansa Engineering Services Limited (Miscellaneous Cause No. 3 of 2020) [2020] UGHC 144 (23 July 2020)
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.