Court name
Center for Arbitration and Dispute Resolution of Uganda
Judgment date
4 January 2007

Clemens Ferhr v Kanyeihamba (CAD/ARB/-2006/9) [2007] UGCADER 2 (04 January 2007);

Cite this case
[2007] UGCADER 2

Page 1 of 35

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.

Page 2 of 35

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

Page 3 of 35

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

Page 4 of 35

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

Page 5 of 35

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.”

Page 6 of 35

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:-

Page 7 of 35

“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

Page 8 of 35

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

Page 9 of 35

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.

Page 10 of 35

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.

Page 11 of 35

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.

Page 12 of 35

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.

Page 13 of 35

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.

Page 14 of 35

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

Page 15 of 35

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

 

,

Page 16 of 35

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

Page 17 of 35

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

Page 18 of 35

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

Page 19 of 35

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

Page 20 of 35

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

Page 21 of 35

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

Page 22 of 35

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

Page 23 of 35

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.

Page 24 of 35

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.

Page 25 of 35

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.