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THE REPUBLIC OF UGANDA
THE CENTRE FOR ARBITRATION AND DISPUTE RESOLUTION
CAD/ARB/09/06
DR. CLEMENS FEHR …………………………………… APPLICANT
VERSUS
PROF. GEORGE KANYEIHAMBA ………………… RESPONDENT
RULING
The Applicant Dr. Clemens Fehr lodged this Chamber Summons
Application, under
Sections 11 and 68 of the Arbitration and Conciliation
Act
, Chapter 4 Laws of Uganda (hereinafter referred to as the ACA), for the
compulsory appointment of an arbitrator, with the Center for Arbitration and
Dispute Resolution (hereinafter referred to as
CADER) on 14th November
2006.
The Application was listed for hearing for 29
th November 2006 at 10.00a.m.
The Affidavit of Service, sworn by one Alli Loka shows that the Chamber
Summons were served upon the Respondent’s Advocate Mr. Masembe
Kanyerezi on 15
th November 2006.
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On 29
th November 2006, at 9.58a.m., the Respondent’s Affidavit in Reply
sworn by Mr. Alex Buri, in opposition to the Application for the
appointment of an arbitrator was filed at CADER.
The Applicant’s Advocate, Mr. Okecha Michael, in order to file a
comprehensive reply, requested for extension of time, to read the
Respondent’s Affidavit in Reply, which had been filed and served at the last
minute on 29
th November 2006,. The Applicant’s prayer for extension of
time was granted. The next hearing was set for 12
th December 2006 at
10.00a.m, with the joint consent of both Counsel.
On 12
th December 2006 the hearing commenced at 10.00a.m. but was
rescheduled to 11.00a.m., because Mr. Alex Buri holding brief for Mr.
Masembe Kanyerezi stated that Mr. Masembe Kanyerezi was held up in
another court session. There was no explanation regarding the absence of
the Respondent.
Owing to the fact that 12
th December 2006 had been mutually agreed upon at
the instance of both Counsel, I directed that the matter would be stood over
until 11.00a.m. and that it would be advisable for the Respondent to also be
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present in the session. The hearing commenced at 11.10a.m. and Mr.
Masembe Kanyerezi joined the session at 11.26a.m., when the Applicant’s
Advocate had already started presenting his client’s case.
The Respondent’s Counsel insisted at this juncture that he had a preliminary
objection to the application which in his view ought to have been heard
immediately, given that it would dispose of the entire matter. Having
listened to this argument, I directed that the preliminary points of objection
would be raised in answer to the submissions made by the Applicant’s
Counsel. The delayed appearance was attributed by Mr. Masembe
Kanyerezi to the High Court which had issued short notice to attend to a
case which was not cited, but most importantly, that the High Court
Summons as a rule of thumb override all other business in Uganda. I
informed the Respondent’s Counsel that the view, whilst most patronizing,
would not be in my opinion be upheld by the High Court, for the judiciary
cannot bear the responsibility for promoting inefficient performance of other
institutions in the country, by advocating for intermittent interruptions,
rather I believe that it is the inability of advocates to diligently appropriate
and manage their time, which would be the cause of the problem. I believe
if the Respondent’s Counsel had notified all parties concerned in the said
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High Court case that 12
th December 2006, had already been reserved by the
parties thirteen days earlier, when there was no conflict on the timetable of
the Respondent’s Counsel, then other convenient arrangements would have
been made. This might explain why this rule of thumb cannot be traced in
any legislation.
We then took a ten minute break to allow Mr. Masembe Kanyerezi to
acquaint himself with the submissions which had already been made by the
Applicant’s Advocate.
This application is lodged pursuant to an arbitration clause arising from the
Lease Agreement executed by the parties on 1
st August 2006.
Clause 6
of the Lease Agreement reads as follows,
“In case any dispute or difference shall arise between the
Parties hereto as to the constructions of this contract or
as to any matter or thing of whatsoever nature arising
thereunder or in connection therewith then such dispute
or difference shall be and is hereby referred to
arbitration and final decision of a person to be agreed
between the parties, or, failing agreement within 14 days
after either party has given to the other a written request
to concur in the appointment of an Arbitrator, a person
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to be appointed on the request of either party by the
President for the time being of the Uganda Law Society.”
In the Affidavit sworn in support of the Application, the Applicant stated as
follows: -
1. That in a letter dated 5
th November 2005, attached as Annex B, the
Respondent was requested to nominate an arbitrator and as it were
there was no response.
2. That the Applicant’s lawyers wrote to the President Uganda Law
Society (U.L.S) to appoint an arbitrator as evidenced by
Annex C, to
the Applicant’s Affidavit.
Annex C
, which is a letter dated 18th September 2006 from Mwesigye,
Mugisha & Co. Advocates addressed to the President U.L.S, reads in part as
follows:-
“Wherefore we pray that you by virtue of the authority
vested in you both by the said lease agreement and
recognized by Section 11(4), (c) of the Arbitration and
Conciliation Act appoint an impartial arbitrator, one
who is less likely to be intimidated by the title of the
defendant within 4 days from the date of this notice.”
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3. That the response of the President U.L.S, was to pending the
appointment of an arbitrator, more so in light of the objection by the
Respondent’s lawyers to the appointment of the arbitrator, as set out
in
Annex D, attached to the Applicant’s Affidavit.
4. The letter from the President U.L.S, written on 10
th October 2006, in
part, reads as follows:-
“I have however received a letter from M/S
MMAKS Advocates dated 4
th October, advising
that the matter is subject of a court case (see copy
of the letter attached).
In the circumstances and without prejudice, I
would like to urge counsel to agree on how you
intend to resolve the matter and advise me further.
In the meantime, I will pend the appointment of an
arbitrator until when I get a clear indication on
the matter.”
5. The MMAKS letter dated 4
th October attached to the response by the
President U.L.S, which is part of
Annex D, to the Applicant’s
Affidavit reads as follows:-
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“We advise that the Applicant has filed a suit in respect
of this matter being H.C.C.S No.76 of 2006 DR.
CLEMENS FEHR –VS- PROF. GEORGE KANYEIMBA,
which is before His Lordship Justice Mukiibi in the Land
Division of the High Court at Kampala. (Copies of
pleadings are enclosed).
It is clear from the Plaint that Dr. Clemens Fehr has put
before the Court all the matters in dispute between the
Parties which were referable to arbitration. We filed our
defence and did not object to the Court jurisdiction. In
so doing Dr. Clemens Fehr waived the arbitration
provision and we accepted his waiver. It is no longer
open to him to seek to apply the arbitration provision.
The purpose of this letter is to bring to your attention and
to point out that no arbitrator in the dispute can now be
appointed by you.”
The Respondent’s reply to the Application is set out in the Affidavit in
Reply sworn by the Advocate Mr. Alexander Buri, who deponed in reply
to the Affidavit sworn by the Applicant as follows: -
“5. THAT instead of persisting in the appointment of an
arbitrator the Applicant on the 9
th March 2006 instead
filed a suit in the
High Court, Civil Suit No. 76 of 2006,
Clemens Fehr Vs. George Kanyeihamba
in relation to
the matters in dispute which were put before the High
Court, Land Division for determination and the said suit
is still pending (Copies of the Plaint and Defence in the
suit are annexed as “A” and “B” hereto);
6. THAT in filing the suit the Applicant waived his right
to arbitration which waiver was acceded to by the
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Respondent filing a defence in the suit and not seeking a
stay of the proceeding and it is now too late in law for
arbitration to be resorted to;
7. THAT further and in any event, this is not a case in
which the parties have failed to agree on the arbitrator
and even if it were, the arbitration clause provides for the
President of the Law Society to be appointing authority
in that circumstance to the exclusion of this “appointing
authority” and this application is misplaced.”
Dr. Clemens Fehr in his Affidavit in reply deponed as follows,
“2. That in response to paragraphs 5 and 6 thereto, I am
advised by my lawyers Mwesigye, Mugisha & Co.
Advocates; which advise I verily believe to be true that I
did not waive my right to arbitration by filing HCCS
No.76 of 2006 because the law is very clear in Section 5
of the Arbitration Act, Cap 4 Laws of Uganda which in
effect provides that proceedings in the high court or in a
magistrates court cannot bar arbitral proceedings.
4. That copies of various letters dated 21
st July 2005, 1st
September2005 (sic) & 5
th December 2005 dating way
back to the days when the respondent was still
represented by J B Byamugisha & Co. Advocates and
even to the current lawyers for the respondent for the
aforementioned in paragraph 3 above but all of which
were to no avail are hereto attached and marked "
A”,
“B”,
& “C” respectively. Annextures “A” & “B” were
responded to by copies of letters annexed hereto as
“D”
&
“E”; but no mention was ever made concerning the
issue of arbitrators.
The
Annexes A, B and C respectively read in part as follows,
“
Annex A – dated 21st July 2005
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From Mwesigye, Mugisha & Co. addressed to
J.B. Byamugisha Advocates.
7. That this letter serves as notice in accordance to
clause 4(b) of the agreement and we propose that
your client names and arbitrator for our client’s
consideration in accordance with clause 6.”
“Annex B – dated 1
st September 2005
From Mwesigye, Mugisha & Co. addressed to
J.B. Byamugisha Advocates.
We are still awaiting the nomination of an
arbitrator by your client for our consideration and
if we do not hear from you within fourteen (14)
days from the date hereof, we request the
President Uganda Law Society to appoint one by
copy of this letter as provided for in the
agreement.”
“Annex C – dated 5
th December 2005
From Mwesigye, Mugisha & Co. addressed to
MMAKS Advocates.
Our client also has issues over boundary and
registration of the lease which has never been
addressed by your client.
Accordingly we invoke clause 6 of the lease
agreement for arbitration of the same and here to
(sic) forward the following Arbitrators for your
consideration and approval.
i) Chief Government Surveyor
ii) Chairperson of the Association of Surveyors
iii) Chairperson Judicator Services
Commission.
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Kindly confirm and revert to us so that we can put
this matter to rest”.
Annexes D
and E are replies written the Respondent’s Advocates, J.B.
Byamugisha Advocates.
Annex D dated 25th July 2005 is in reply to Annex
A
dated 21st July 2005, whilst Annex E dated 2nd September 2005 is in reply
to
Annex B dated 1st September 2005. Neither Annex D nor Annex E
addresses the issue of appointment of an arbitrator.
The Applicant’s Advocate in his submissions stated that the basis of the
application was
Clause 6 of the Lease Agreement. In brief, that the
Application was triggered by the Respondent’s inaction on the issue of
appointment of an arbitrator, evidenced through various communication
which had been exhibited in this Application.
In response to the claim that the Applicant had waived the right to resort to
arbitration, Mr. Okecha Michael relied upon
Section 5 ACA, which he
submitted allowed any party to an arbitration agreement to apply for stay of
proceedings.
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Mr. Michael Okecha then stated that the Application to stay proceedings had
already been filed in the High Court and referred me to the Affidavit in
Support of the Application, only to realize that the Stay Application had not
been annexed to this Application. Mr. Okecha Michael then prayed that
judicial notice of the Stay Application be taken by the Tribunal. Applicant’s
Counsel wound up the submissions by praying that CADER exercises its
statutory power and appoints an arbitrator.
The Respondent’s Counsel Mr. Masembe Kanyerezi in his brusque opening
remarks, submitted that the entire application was without merit and should
be disallowed on two grounds.
The first ground, was that CADER lacked jurisdiction because the
application was based on
Section 11(3) ACA, which was wholly
inapplicable in this case. He further submitted that
Clause 6 of the Lease
Agreement was within the four squares of
Section 11(2) ACA. Further that
both
Sections 11(2) and 11(3) ACA only applied when there was no existing
procedure on the appointment of an arbitrator, agreed between the parties.
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The remedy, in the opinion of the Respondent’s Counsel, lay in reference of
the matter to the President U.L.S.
Thus when the President U.L.S observed that,
“In the circumstances and without prejudice, I
would like to urge counsel to agree on how you
intend to resolve the matter and advise me further.
In the meantime, I will pend the appointment of an
arbitrator until when I get a clear indication on
the matter.”
it was incumbent on the Applicant to act as advised, otherwise the
Applicant’s folly would create two “tribunals” handling the same dispute
contemporaneously, with the added risk of inconsistent findings.
To support this, Respondent’s Counsel then referred to the distinguished
work by
Mustill & Boyd, The Law and Practice of Commercial
Arbitration in England
, Second Edition, Butterworths, 1989, page 156-
157, which reads as follows,
“
2 Practical applications of the residual
jurisdiction
The rules set out above are of practical importance
in four situations.
(a) Proceedings brought in spite of arbitration
agreement.
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First, the claimant institutes an action in the
courts. Here, unless and until an application is
made to stay the action, the jurisdiction of the
courts takes effect in full; the action proceeds in
precisely the same way as if there had been no
arbitration agreement; and, equally, the judgment
of the Court is unconditionally binding on the
parties. The situation is precisely the same if an
arbitration is subsequently started by one or other
of the parties. Until the Court decides to grant a
stay, it is the action which is the medium for
determining the dispute, since there cannot be two
tribunals with co-existent powers to make binding
decisions as to the rights of the parties.”
Given that
Clause 6 of the Lease Agreement, gave the procedure available
in the unfortunate event that the parties failed to appoint an arbitrator then,
the Applicant was precluded from applying to CADER and worse still there
existed no prerequisite grounds which founded CADER’s jurisdiction to
entertain the application, Respondent’s Counsel further argued.
Turning to
Section 11(4)(c) ACA, Respondent’s Counsel submitted that
Applicant’s Counsel was right not to refer to it because it was inapplicable
and in any event the third party, that is the President U.L.S, had not failed to
perform its duty, but merely suspended performance of its duty. For this
reason the application to CADER was misconceived.
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Secondly, Respondent’s Counsel submitted that instead of the Applicant
persisting in the appointment of an arbitrator, he filed a case in the Land
Division, High Court –
H.C.C.S No.76 of 2006 (Civil Suit). That this Civil
Suit has raised all matters related to the dispute. Further that the Civil Suit
amounted to a waiver of the right to resort to arbitration on the part of the
Applicant. The waiver occurred again when the Respondent filed the
Written Statement of Defence, and, forfeited the right to apply for stay of
proceedings under
Section 5 ACA. The right to apply for stay of
proceedings could only accrue to the Defendant in the Civil Suit. For this
reason, the Respondent’s Counsel submitted that it was now too late for the
Applicant to resort to arbitration. Mr. Masembe Kanyerezi then submitted
that a High Court authority to this effect existed, which he would submit
later to the CADER and Applicant’s Counsel the next day – this never
occurred.
Respondent’s Counsel concluded by praying that the Application should be
dismissed with costs.
Applicant’s Counsel in reply stated that Section
5 ACA vested rights in any
party interested in invoking the arbitration clause. He found the opinion of
the distinguished authors Mustill & Boyd inconsistent with the substance of
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Section 5 ACA
, which accommodates the concept of waiver. He reasoned
that if the filing of a Written Statement of Defence constituted a waiver then
Section 5 ACA
would not exist at all. He also observed that the Section 11
ACA
is not to be read in entirety as had been submitted by Respondent’s
Counsel, because all subsections were mutually independent. He was of the
opinion that the President U.L.S had failed in his duty to appoint an
arbitrator as had been requested by the Applicant, and cited the provisions of
Section 11(4) ACA
in aid of his interpretation. At this point Respondent’s
Counsel interjected and stated that since the Chamber Summons application
did not cite
Section 11(4) ACA then the Applicant’s Counsel could not rely
upon it. Lastly, he submitted that
Clause 6 procedure had been exhausted
by the Applicant in seeking it’s enforcement, hence this Application.
The
ACA is derived in part from the United Nations Commission on
International Trade Law (UNCITRAL) Model Law on International
Commercial Arbitration
(hereinafter referred to as the MAL).
The
MAL is contained in the United Nations document A/40/17, Annex I,
which was adopted by the United Nations General Assembly on 11th
December 1985; this can be downloaded from the website link
,
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http://daccessdds.un.org/doc/RESOLUTION/GEN/NR0/477/79/IMG/NR04
7779.pdf?OpenElement.
Uganda, like many other nations adapted the
MAL with some modifications.
In passing it should be noted that this has enabled created a bigger body of
precedent law from adapting countries which can be referred to other than
case law from United Kingdom as was previously the case in past legislation
which was derived from United Kingdom.
Thus
Section 11 ACA is derived from Article 11 M.A.L, which reads as
follows,
“Article 11. Appointment of arbitrators
(1) No person shall be precluded by reason of his
nationality from acting as an arbitrator, unless
otherwise agreed by the parties.
(2) The parties are free to agree on a procedure of
appointing the arbitrator or arbitrators, subject to
the provisions of paragraphs (4) and (5) of this
article.
(3) Failing such agreement,
(a) in an arbitration with three arbitrators, each
party shall appoint one arbitrator, and the two
arbitrators thus appointed shall appoint the third
arbitrator; if a party fails to appoint the arbitrator
within thirty days of receipt of a request to do so
from the other party, or if the two arbitrators fail
to agree on the third arbitrator within thirty days
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of their appointment, the appointment shall be
made, upon request of a party, by the court or
other authority specified in article 6;
(b) in an arbitration with a sole arbitrator, if the
parties are unable to agree on the arbitrator, he
shall be appointed, upon request of a party, by the
court or other authority specified in article 6.
(4) Where, under an appointment procedure
agreed upon by the parties,
(a) a party fails to act as required under such
procedure, or
(b) the parties, or two arbitrators, are unable to
reach an agreement expected of them under such
procedure, or
(c) a third party, including an institution, fails to
perform any function entrusted to it under such
procedure,
any party may request the court or other authority
specified in article 6 to take the necessary
measure, unless the agreement on the appointment
procedure provides other means for securing the
appointment.
(5) A decision on a matter entrusted by paragraph
(3) or (4) of this article to the court or other
authority specified in article 6 shall be subject to
no appeal. The court or other authority, in
appointing an arbitrator, shall have due regard to
any qualifications required of the arbitrator by the
agreement of the parties and to such
considerations as are likely to secure the
appointment of an independent and impartial
arbitrator and, in the case of a sole or third
arbitrator, shall take into account as well the
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advisability of appointing an arbitrator of a
nationality other than those of the parties.”
Section 5 ACA
, which has been cited by both Counsel, is derived in part
from
Article 8 M.A.L, which reads as follows,
“
Article 8. Arbitration agreement and substantive
claim before court
(1) A court before which an action is brought in a
matter which is the subject of an arbitration
agreement shall, if a party so requests not later
than when submitting his first statement on the
substance of the dispute, refer the parties to
arbitration unless it finds that the agreement is
null and void, inoperative or incapable of being
performed.
(2) Where an action referred to in paragraph (1)
of this article has been brought, arbitral
proceedings may nevertheless be commenced or
continued, and an award may be made, while the
issue is pending before the court.”
I now turn to consider the case as presented by both parties. To begin with I
am find am unable to take judicial notice of the Applicant’s application to
stay the High Court proceeding because this was not tendered in evidence by
the Applicant.
The
Mustill & Boyd text book cited cannot also be taken into account, in
this instant case. It is a 1989 Edition. The United Kingdom law which the
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authors comment upon is set out in Appendix 1 and these include the
Arbitration Act 1950, Arbitration Act 1975 and Arbitration Act 1979. Since
17
th June 1996, the effective law on arbitration in the United Kingdom has
been the Arbitration Act, Chapter 23, which was enacted pursuant to the
MAL
. In any event the passage cited from the text by the learned authors
Mustill & Boyd relates to court proceedings brought in spite of the
arbitration agreement, whilst this Application is one regarding the
compulsory statutory powers CADER may exercise in light of default to
procure the appointment of an arbitrator by one of the parties to the
arbitration agreement, it is not about the competing jurisdiction between
courts and arbitral tribunals.
In any event, the issue of competing jurisdiction between arbitral tribunals
and courts, is now addressed by
Sections 5(2), 9 and 16(8) ACA, which are
pari materia
to Articles 8(2), 5 and 16(3) MAL respectively. In brief
Sections
5(2) and 16(8) ACA confirm that the arbitral tribunals can proceed
to handle matters placed before them notwithstanding that there are pending
court applications, more because
Section 9 ACA stipulates that the powers
of the courts in matters governed by the arbitral legislation are limited to the
prescribed instances set out in the
ACA - thus there is no conflation. The
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totality of the above is that in an application such as this it matters not that
there is a court case. This is because the matters which the courts are
empowered to resolve pursuant to
Section 9 ACA are not related to merits
of the case, but issues which support the arbitral process either affirming the
validity of the concluded arbitral process or by checking the excesses or
failures of either the parties or the arbitral tribunal.
It is important to note that the arbitration clause unlike other provisions in an
agreement is one which bestows a mutual obligation upon both parties. This
is what a third party or institution or an appointing authority ought to address
it’s mind to, when requested by a party to perform the function of appointing
an arbitrator.
Lord Macmillan in
Heyman v Darwins, [1942] All ER 337, 346(D-E),
expressed the complimentary nature of an arbitration clause as follows,
“I venture to think that not enough attention has
been directed to
the true nature and function of
an arbitration clause in a contract
. It is quite
distinct from the other clause. The other clauses
set out the obligations which the parties undertake
towards each other
hinc inde; but the arbitration
clause
does not impose on one of the parties an
obligation in favour of the other
. It embodies the
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agreement of both parties that, if any dispute
arises with regard to the obligations which the one
party has undertaken to the other, such dispute
shall be settled by a tribunal
of their own
constitution
. Moreover, there is this very material
difference that, whereas in an ordinary contract
the obligations of the parties to each other cannot
in general be specifically enforced and breach of
them results only in damages, the arbitration
clause can be specifically enforced by the
machinery of the Arbitration Acts. The
appropriate remedy for breach of the agreement to
arbitrate is not damages but its
enforcement.”
(bold emphasis mine).
Thus Mr. Alex Buri’s averment in the Affidavit in Reply that Applicant
failed in “persisting in the appointment of an arbitrator” indicates that the
Respondent was not advised or informed, by his Counsel, that the obligation
to secure the appointment of an arbitrator is an obligation which is mutually
binding upon the parties. If anything in failing to ensure the performance of
the mutual obligation, the Respondent denied himself from exercising the
“party autonomy” right guaranteed by
Section 11 ACA, that is, to
participate in the setting up of an arbitral tribunal of their “own”
constitution.
This mutuality is restated in the ruling of Catherine Muganga in
B.M. Steels
Ltd v. Kilembe Mines
, CAD/ARB/10/04, 15th July 2004 (unreported) in the
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form of prudential normative response expected of a respondent party in
receipt of a request to concur in the appointment of an arbitrator.
The prudential normative response was set out as follows,
“
It is prudent to point out at this stage three possible courses of
action which could have been taken by the Respondent:
a) First the Respondent would have consented to the
Arbitrator suggested by Applicant with a view of
having a one-person arbitral panel.
b) Secondly the Respondent would oppose the
Applicant’s nomination by indicating another
nominee Arbitrator whilst inviting the Applicant to
consent to the Respondent’s nomination with a view
to having a one-person arbitral panel.
c)
Thirdly the Respondent would oppose or consent to
the Applicant’s nomination. Nevertheless the
Respondent would then proceed to indicate another
Nominee chosen by the Respondent and invite the
Applicant to consent to the second nomination
person with a view of having a two person
tribunal.”
From the evidence tendered, I find that with regard to the appointment of an
arbitrator pursuant to
Clause 6 of the Lease Agreement, the following events
took occurred.
1. One thousand four hundred and fifty days later after execution of the
Lease Agreement, the Applicant on 21
st July 2005 (Annex A -
Applicant’s Affidavit in Rejoinder) proposed that the Respondent
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should name an arbitrator, which nomination the Applicant would
take into account.
2. Forty two days later, after the first proposal dated 21
st July 2005
(
Annex A - Applicant’s Affidavit in Rejoinder), the Respondent on
1
st September 2005 (Annex B - Applicant’s Affidavit in Rejoinder),
the Applicant reminded the Respondent that he was still awaiting the
Respondent’s nomination of an arbitrator. There was a further
notification that the Respondent’s nomination was to take place
within fourteen days, after which the Applicant would apply to the
President U.L.S to appoint an arbitrator.
3. Ninety five days after the second notice dated 1
st September 2005
(
Annex B - Applicant’s Affidavit in Rejoinder), the Applicant on 5th
December 2005 (
Annex C - Applicant’s Affidavit in Support of the
Chamber Summons) nominated the Chief Government Surveyor, the
Chairperson of the Association of Surveyors and the Chairperson
Judicator Services Commission, and required the Respondent to
confirm his approval of the nominations.
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4. Two hundred eighty seven days after the issuing the third notice
dated 5
th December 2005 (Annex B – Applicant’s Affidavit in
Support of the Chamber Summons), the Applicant on 18
th September
2006 (
Annex C - Applicant’s Affidavit in Support of the Chamber
Summons) wrote to the President Uganda Law Society requesting
him to appoint an arbitrator.
5. Fifty seven days after issuing the fourth notice dated 18
th September
2006 (
Annex C - Applicant’s Affidavit in Support of the
Chamber Summons
), the Applicant filed the Chamber Summons
Application, on 14
th November 2006, for the compulsory
appointment of an arbitrator by CADER pursuant to under
Section
11 ACA
.
Whilst the Applicant sought to have one arbitrator appointed pursuant to
Clause 6
of the Lease Agreement for a total of four hundred and twenty four
days and again sought the same appointment pursuant to
Section 11 ACA
for another fifty seven days, the Respondent paid a blind eye to this request
and Application.
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Whilst the prudential norms listed in
B.M. Steels Ltd v. Kilembe Mines,
CAD/ARB/10/04, on the one hand point out the proactive measures which
parties can undertake to perform their part of the mutual obligation, they on
the other hand illuminate the fact that non-performance of the mutual
obligation imposed by
Clause 6 of the Lease Agreement, can only be
interpreted as an act or omission aimed at frustrating performance of the
mutual obligation.
I find that all of the Applicant’s actions spread over four hundred and eighty
one days, were within the intent of
Clause 6 of the Lease Agreement,
whereas the Respondent’s silence over the same period only served to
grossly and unjustly delay the Applicant’s right to invoke the right to
arbitration and needless to say the Respondent’s right to participate in
constitution of a tribunal of their own choice, as was originally intended.
The Applicant’s requirement on 1
st September 2005, that the Respondent
ought to reply in the affirmative within fourteen days, failing which the
Applicant would lodge a request with the President U.L.S was well within
Section 11 ACA
, given that the time limit for appointment of an arbitrator
only applies when three arbitrators are required by the parties -
Section
Page 26 of 35
11(3)(a) ACA
. In this instant case Clause 6 of the Lease Agreement
stipulates that only one arbitrator shall be appointed.
The Respondent’s Counsel submitted that CADER had no jurisdiction to
entertain this Application because
Clause 6 only empowered the President
U.L.S. to give relief to the parties.
Section 11 ACA
sets out the chain-reaction-process, which dictates the
relief the Applicant would resort to when the Respondent refused to comply
with the request to appoint an arbitrator.
In the case of one-arbitrator appointments, the chain-reaction-process set out
in the
ACA is follows.
First chain-reaction-process -
Section 11(2) ACA permits the parties to
agree to on the procedure for appointing an arbitrator.
Second chain-reaction-process -
Section 11(3)(b) ACA permits a party to
lodge an application with the appointing authority, for the appointment an
arbitrator, when the parties fail to agree upon one.
Page 27 of 35
Third chain-reaction-process -
Section 11(4)(c) ACA permits a party to
lodge an application with the appointing authority, for the appointment an
arbitrator, when the third party entrusted with powers to appoint an
arbitrator, under the terms of a party agreed procedure fails to perform the
function.
Given that
Clause 6 of the Lease Agreement envisaged an arbitrator either
appointed directly by the parties or by the President U.L.S, in the event that
the parties are unable to appoint one, it is beyond doubt that
Clause 6 of the
Lease Agreement is well within the provisions of
Section 11(3) & (4) ACA.
It should be noted that whilst
Section 11(3)(a) A.C.A., imposes a 30 day
time limit for the appointment of three arbitrators, in the case of the
appointment of one arbitrator,
Section 11(3)(b) A.C.A provides no time
limit. This therefore leaves it open to the either party to impose a time limit
within which they require the appointment of the single arbitrator.
Therefore an applicant, in the case of a three-person arbitrator panel, would
have to prove to the appointing authority two things. First, that the 30 days
had passed. Secondly, that no arbitrator had been appointed. In the case of a
Page 28 of 35
one-person arbitrator panel the applicant need only prove non-adherence to
the self-imposed time limit set by the party requesting the appointment.
The notice dated 18
th September 2006, written by the Applicant to the
President U.L.S imposed a 4 day time limit, within which an appointment
was to be made. The Respondent’s replied on 4
th October 2006 opposing the
Application. The President U.L.S replied on 10
th October 2006. It is evident
that neither the President U.L.S nor the Respondent’s Counsel took note of
the 4 day time limit which was imposed by the Applicant. Upon expiration
of the 4 day limit the Applicant was at liberty to lodge an application for the
compulsory appointment of an arbitrator, on any date he so chose.
Turning to the response the Applicant received from the President U.L.S., I
am of the opinion that once the Applicant had lodged the Request the
President U.L.S had only two options available, to either appoint an
arbitrator or decline to appoint an arbitrator, but not to keep the parties in
limbo, by urging “counsel to agree” on how they intended to resolve the
matter and advise him further.
Page 29 of 35
From the second paragraph of the response by the President U.L.S., it can be
gathered that “the matter” referred to is that which is the “subject matter of a
court case….”. There is a sense of weariness when the President U.L.S
observes that he would in the meantime “pend” the appointment of an
arbitrator until such a time he got “a clear indication of the matter”.
The duty of a third party or the appointing authority to appoint an arbitrator
is similar to the extent the same consideration is taken into account.
First, account must be taken of the fact of existence of the arbitration
agreement, which must be evidenced in writing (
S.3(2) A.C.A) whether
agreed within the contract giving rise to the claim or after the claim has
arisen. Secondly there must be cogent evidence that the other party has
failed to consider the nomination or appointment request made by the
complainant. Thirdly, where applicable that a third party has failed to
exercise powers vested in them by virtue of an agreement between the
parties.
In this case I find that CADER has jurisdiction to consider this application
given that the President U.L.S in pending the appointment, did actually fail
Page 30 of 35
to exercise or decline to the powers entrusted to him by
Clause 6 Lease
Agreement,
which are recognized by Section 11(4)(c) ACA. The dilemma
of the court case (HCCS No.76 of 2006, Dr. Clemens Fehr v. Prof George
Kanyeihamba) which was presented to the President ULS and then to
CADER is irrelevant, because it is essentially about the jurisdiction of the
arbitral tribunal. The issue of the jurisdiction of the arbitral tribunal is not
one to be considered by the “third party, including an institution” or the
“appointing authority” or the Courts.
Section 16 ACA empowers the
arbitral tribunal to consider jurisdictional competence to handle a case
lodged before it. As a result
Section 11(6) ACA stipulates that the chief
consideration to be raised by the parties, in applications such as this, is the
qualifications and other considerations as are likely to secure the
appointment of an independent or impartial arbitrator.
In any event upon reading of the Plaint and Written Statement of Defence in
HCCS, No.76 of 2006 (Land Division), there is no indication that the
appointment of an arbitrator or specific performance of
Clause 6 Lease
Agreement is sought by the parties before the High Court.
Respondent’s counsel then referred to the sub-title of the Chamber
Summons Application which read
“[Under Ss 11(3) & 68 of the Arbitration
Page 31 of 35
and Conciliation Act Cap 4 & Rule 13 of the Arbitration Rules.]
” and
submitted that the omission to refer to
Section 11(4)(c) ACA, barred the
Applicant from referring to the failure by the President ULS to appoint an
arbitrator. This is a disingenuous argument, given that there is no provision
in the
ACA which stipulates that the form of the Application must indicate
with precision the Section relied upon, otherwise the right of the Applicant
to lodge this Application is extinguished. Moreover, whilst on the one hand
the failure by the Respondent and the President U.L.S to appoint an
arbitrator is well articulated in the Applicant’s Affidavits, on the other hand
Mr. Alex Buri in the Affidavit in Reply depones that the arbitration clause
provides that the President of the Law Society is the appointing authority.
This is blowing hot and cold, that the Applicant is precluded from referring
to the actions of the President U.L.S, but the Respondent can make reference
to the powers of the President U.L.S. The acts of the President U.L.S having
been sufficiently evidenced in the affidavit cannot be ignored by CADER
when handling a compulsory motion for appointment of an arbitrator such as
this one. This is the nature of evil
Article 126(2)(e) Constitution of the
Republic of Uganda, 1995
seeks to cure in stipulating that substantive
justice shall be administered without undue regard to technicalities.
Page 32 of 35
Mr. Alex Buri further depones as follows,
“7. THAT further and in any event, this is not a case in
which the parties have failed to agree on the arbitrator
and even if it were, the arbitration clause provides for the
President of the Law Society to be the appointing
authority in that circumstance
to the exclusion of this
“appointing authority”
and this application is
misplaced.”
(emphasis added).
From the above averment there is the startling proposition, which though it
cannot be deciphered from
Clause 6 Lease Agreement, that parties can write
an exclusion clause barring CADER from performing it’s statutory powers
under
Section 11 ACA.
This construction is doubtful given that the
Section 11 ACA, clearly
distinguishes “appointing authority” from “a third party including an
institution” by stipulating that the appointing authority is only vested with
jurisdiction when either a party fails to agree on the appointment of an
arbitrator or a “third party including an institution” fails to perform a
function entrusted to it under that procedure. The legislature went a further
step in
Section 68(a) ACA to also vest the performance of Section 11
functions in CADER, presumably because there was a significant absence of
Alternative Dispute Resolution service providers during the lifetime of the
repealed legislation. The legislature in the same breath in Section 2(1)(a)
Page 33 of 35
ACA defined an “appointing authority” to mean an institution, body or
person appointed by the Minister to perform the functions of appointing
arbitrators and conciliators. So an “appointing authority” in the context of
Section 11 ACA
, can only be CADER as designated by the legislature
including persons appointed by the ministerial appointment, and not persons
deriving the power from contractual clauses; the latter would within the
language of
Section 11(4)(c) ACA, be the “third parties” or “institutions”.
Thus the President U.L.S would in the context of
Section 11 ACA be ‘the
third party including an institution”. The nature of exclusion which is
permitted by
Section 11 ACA is one which is directory on the procedure to
be followed by the third party including an institution, say if both parties
agreed that the President U.L.S was to be given 30 days before he would
deliver his decision, this would be the kind of issue “
the agreement
otherwise provides, for securing the compliance with the procedure agreed
upon by the parties
” which CADER would have to take into account.
In the circumstances, I find the application has merit.
Neither of the parties suggested any qualifications or other considerations
CADER should take into account prior to appointment of an arbitrator.
Page 34 of 35
In view of the above, I appoint the Mr. Samuel Wako Wambuzi (retired
Chief Justice Emeritus) as the Sole Arbitrator in the above mentioned
matter.
Taking into account
Section 12(1) ACA I am mindful of the fact that Mr.
Samuel Wako Wambuzi (retired Chief Justice Emeritus) may on his own
motion disclose circumstances which are likely to give raise to justifiable
doubts as to his impartiality or independence.
In such a case the Applicant may be left at loss and compelled to lodge
another application for consideration. This would mean more costs and
delay to the Applicant.
To forestall such a situation I believe it is prudent in a case like this to list
other arbitrators whose services may be called upon to resolve the dispute.
With this in mind I therefore name two other arbitrators. Either nomination
shall only take effect if Mr. Samuel Wako Wambuzi (retired Chief Justice
Emeritus) declines my appointment. Further the two nominated arbitrators
Page 35 of 35
shall only be approached by the order of order precedence in which I have
listed them.
1. Mr. Herbert J. Ntagoba (retired Principal Judge Emeritus).
2. Mr. Seth Manyindo (retired Deputy Chief Justice Emeritus).
I hasten to add that Mr. Samuel Wako Wambuzi or any of the
aforementioned arbitrators should notify the CADER when accepting or
turning down the nomination made in this Ruling. Costs of this Application
shall be borne by the Respondent.
Delivered on 4
th January 2007
by JIMMY MUYANJA,
EXECUTIVE DIRECTOR,
CADER.