THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

[COMMERCIAL DIVISION]

MISCELLANEOUS APPLICATION No. 669 OF 2014

[ARISING OUT OF CIVIL SUIT No. 494 OF 2014]

EAST AFRICAN MINING LTD ::::::::::::::::::::::::::::::::::::::: APPLICANT

VERSUS

 MINERAL SERVICES INDUSTRY ::::::::::::::::::::::::::::::::: RESPONDENT

BEFORE:   HON MR. JUSTICE B.KAINAMURA

RULING

The applicants brought this application under the provisions of 0rder 36 rule 3 (1), 4, 8 & 10 and Order 42 rule 1 & 3 of the CPR. The applicant seeks orders for unconditional leave to appear and defend Civil Suit No.494 of 2014 now pending in this court and that costs of the application be in the cause.

The application is supported by the affidavit of Mr. Thomas Sawyer.

The respondent filed an affidavit to oppose the application deponed to by Keith Scott.

In the summary suit the respondent claims recovery of US $ 103,480.27 with interest at the rate of 1.5% per month from 8^th April to 8^th May 2013 and interest at the rate of 5% per month from 8^th May 2013 until payment in full and costs of the suit.  

In the affidavit in support of the application Thomas Sawyer averred that:-

The outstanding amount is less than what the respondent has claimed in the plaint.

The respondent has not handed over to the applicant all the proprietary and intellectual data acquired during the exploration work and for this reason, the applicant has been constrained to withhold any further payments to the respondent.

The parties agreed that disputes arising from or in connection with, and any enforcement of the letter of acknowledgment and the debt upon which the suit is predicated shall be resolved through arbitration.

The respondent never agreed to pay interest at 5% on top of the outstanding amount payable after handing over all proprietary and intellectual data acquired during the exploration work.

The applicant has a valid defence to the suit.

The respondent filed an affidavit in reply in which Mr. Keith Scott deposed that;

The applicant contracted the respondent to undertake mineral exploration consultancy services in Karamoja-Uganda.

The respondent carried out the services to completion and demands the sum of US $ 103,480.27 which the applicant has never settled.

The applicant acknowledged being indebted and further proposed to settle in instalments.

Pursuant to clause 15.3 of the contract the parties are at liberty to institute an action in the High Court, therefore this Court has jurisdiction over the respondent’s claim.

Paragraph 3 of the unconditional letter of acknowledgment permits the respondent to charge interest at the rate of 5%.

Applicant’s Submissions

Counsel for the applicant submitted that court cannot grant a summary judgment in a case where a suit is founded on a contract that contains an arbitration agreement.  Counsel relied on Section 5 of the Arbitration and Conciliation Act, Cap 4 submitting that court can only permit the defendant to file a defence, stay proceedings, and then refer the matter to arbitration. He also referred to Sections 9 and 40 of the same Act and the High Court decision of Power and City Contractors Ltd Vs LTL Project (PVT) Ltd Misc. Appl. No. 0062 arising from H.C.S.C No. 29 of 2011.

Counsel further submitted that there is a disparity in the amounts claimed and what the applicant is alleged to have acknowledged. In conclusion, Counsel prayed that the applicant be granted leave to appear and defend the suit, and thereafter, the matter be referred for arbitration and costs be granted.

Respondent’s Submissions

Regarding the issue of jurisdiction, Counsel for the respondent submitted that there is no dispute to be referred for arbitration as the applicant acknowledged being indebted to the respondent in the sum of US $ 103,480.27 which the applicant does not dispute. He cited the case of Halki Shipping Vs Sopex Oils Limited (1998) 2 ALL at pg 23 where the court with approval cited the case of Ellarine Bros. (Pty) Ltd and Anor Vs Klinger(1982) ALL ER 737 where court held that;

“The proposition must be that if a claim is indisputable then it cannot form the subject of a “dispute” or “difference” within the meaning of an arbitration clause.................................................................There is a dispute until the defendant admits that the sum is due and payable.”

Counsel quoted an extract from the book “Law relating to Arbitration and Conciliation, 2^nd Edition by M. A Sujan and argued that from the extract, it is clear that none payment of an admitted claim cannot amount to a dispute referable to arbitration. Counsel submitted that the argument that the dispute ought to be referred to arbitration is devoid of merit and in any event does not raise a triable issue.

Counsel added that for arbitration to be the exclusive dispute resolution mechanism there ought not be a conflicting clause in the agreement. Counsel cited Clause 15.3 of the agreement which is to the effect that;

“The parties are however not precluded from instituting action in the High Court if required and /or deemed necessary.”

Counsel submitted that the respondent was at liberty to institute its claim in the High Court as it did, therefore the High Court has jurisdiction over the dispute.

Regarding the issue of non-handing over of proprietary information, Counsel submitted that the contract permits the respondent to withhold reports on account of non payment of fees due to it, and until it does, it has no cause of action against the respondent based on those reports. Counsel submitted that this does not by any measure amount to a triable issue.

In conclusion, Counsel submitted that the respondent seeks an award of USD 103,480.27 which the applicant acknowledged to be indebted in clause 2 of the deed of acknowledgement. Therefore there is no discrepancy in the figures as alleged.

Decision of court

I have read through the pleadings of both parties and submissions by both Counsel. The respondent’s claim as set out in the plaint is for USD 103,480.27 arising from contracted work that it did for the defendant/applicant who has defaulted to make payments. The defendant/applicant now seeks leave to appear and defend that suit.

The principles to be applied by court under Order 36 rule 4 in considering any application for leave to appear and defend are well settled as emphasized in a number of decisions(see Maluku Interglobal Trade Agency Vs Bank of Uganda [1985] HCB 63).

 Counsel for the applicant raised three triable issues which include; there is an arbitration clause in the agreement, the respondent has not given the applicant the proprietary information generated during the exploratory drilling and there is a discrepancy in the amount claimed and the acknowledged debt.

Counsel for the respondent in his submission urged that the applicant on the 08^th April 2013 signed an unconditional acknowledgment of debt which should bind the parties.

Clause 8 of the agreement addresses the issue of jurisdiction and is to the effect that;

“Any dispute arising from or in connection with this acknowledgement shall be finally resolved in accordance with… ……………the commercial rules of Arbitration of the Foundation of South Africa……………………….”

Counsel for the applicant argued that this court has no jurisdiction over the matter. However Counsel for the respondent urged that the court has jurisdiction since there is no dispute in regard to the acknowledgment.

It is my considered opinion that the suit arose as a result of failure by the applicant to meet its financial obligation. There is no dispute with regard to the unconditional acknowledgment of the debt. Clause 2 is to the effect that;

“EAML is, and acknowledges itself to be, irrevocably liable and indebted to and in favor of MSA for the payment of an amount of USD R103, 480.27…………”

This was clear acknowledgment of the debt and since there is no denial of liability then in my view there is no dispute to be referred to arbitration. In addition I fail to see the disparity in the sums claimed. The applicant does not point to any in the affidavit in support.

Accordingly for the reasons above this application fails and is dismissed with costs.

Judgment is entered for the plaintiff for:-

1. The sum of US $ 103,480.27 (United States Dollars one hundred three thousand, four hundred eighty and twenty seven pence).
2. Interest at the rate of 1.5% per month from 8^th April to 8^th May 2013 and interest at the rate of 5% per month from 8^th May 2013 till payment in full.
3. Costs of the suit and the application.  

B. Kainamura

Judge

18.08.2015