Court name
Court of Appeal of Uganda
Judgment date
10 April 2013

Attorney General v Dtt Services & 3 Ors (CAD/AMA/-2013/1) [2013] UGCA 1 (10 April 2013);

Cite this case
[2013] UGCA 1

 

 

THE REPUBLIC OF UGANDA

 

IN THE CENTRE FOR ARBITRATION & DISPUTE RESOLUTION

 

CAD/AMA/01/2013

(FROM CAD/ARB/25/2013)

 

ATTORNEY GENERAL …………………………………….……… APPLICANT

 

versus

 

  1. DOTT SERVICES LTD
  2. JUSTICE (EMERITUS) ALFRED KAROKORA
  3. JACKIE NAKALEMBE NDEGEYA
  4. FRED BUSINGE KIIZA ………………………………. RESPONDENTS

 

RULING

 

The application before me seeks orders from CADER to revoke the tenure of the arbitrators (second, third and fourth respondents).

 

I shall first dispose of the preliminary issues arising from the Application and Affidavit deposed by Mr. Cheborion Barishaki, the Director Civil Litigation, Ministry of Justice and Constitutional Affairs.

 

The Application and Affidavit neither shows that circumstances exist which have given rise to justifiable doubt regarding the impartiality or independence of the arbitrators nor proves that the tribunal members do not have qualifications agreed to by the parties.

 

The Application and Affidavit does not indicate when the Applicant became of circumstances, which have given rise to this Application to set aside or revoke the appointment of the arbitrators.

 

It has also not been proved that the Application was made within fifteen days of the circumstances having been noticed by the Applicant; the application is therefore lacking in form and substance.

 

The second preliminary issue is whether CADER can invoke powers under the Civil Procedure Act. 

I had previously held in Aya Investments (U) Ltd v. Mugoya Construction & Engineering U Ltd, M.A. No.3/2008 (arising from No.12/2007) that CADER cannot assume the powers of the courts set out in the Civil Procedure Act.

 

The Arbitration and Conciliation Act gives very distinct roles to CADER and the courts.

 

Each institution has its defined powers, which I elaborated in Aya Investments (U) Ltd v. Mugoya Construction and Engineering (U) Ltd, M.A. No.1/2008 (arising from Misc. Cause No.12/2007) in the tabular form set out below.

 

UNCITRAL Model Law on International Commercial Arbitration 1985

Art.11(3)

Compulsory Appointment of Arbitrators upon Party Failure to Appoint

Art.11(4)

Compulsory Appointment of Arbitrators upon Procedural Failure to Appoint

Art.13(3)

Challenge of Arbitrator upon Appointment

Art.14

Challenge of Arbitrator for Failure or Impossibility to perform functions

Art.16(3)

Challenge of Arbitral Tribunal on preliminary assumption of Jurisdiction

Art.34(2)

Setting Aside

Uganda

Chapter 4 Laws of Uganda

S.11(2)

CADER – S.68(a)

&

Appointing Authority

S.11(4)

CADER – S.68(a)

&

Appointing Authority

S.13(2)

CADER – S.68(a)

&

Appointing Authority

S.14

CADER

S.16

High Court

S.34(2)

High Court

 

 

The table shows how Uganda consciously varied Article 6 of the UNCITRAL Model Law on International Commercial Arbitration in allocating S.13 roles to CADER and any other appointing authority.  

 

I therefore cannot invoke S.98 Civil Procedure Act, when attending to this Application.

 

The third preliminary point is whether arbitrators should be joined as actual parties to applications lodged under S.13 ACA seeking to revoke their tenure. 

 

I held in Roko Construction Ltd v. Aya Bakery (U) Ltd, M.A. No.12 of 2008 (Arising out of CAD/ARB/No.10 of 2007), that arbitrators have not right of audience under the Arbitration and Conciliation Act regarding any challenge on their lack of impartiality, independence or qualifications.

 

 

I held then that,

Section 14(1)(a) ACA vests the parties with the power to jointly terminate the mandate of the arbitrator where both parties are in agreement that the arbitrator has failed to perform functions of the office or to act without undue delay.

 

In this instance, a right of audience is not extended to the arbitrator.

 

In the event that the parties are unable to agree that the arbitrator has failed to perform the functions of the office or to act without undue delay, then the aggrieved party has a right to apply to CADER to determine the issue under Section 14(2) ACA

 

The right of the aggrieved party, to resort to CADER under S.14(2) ACA, flows from S.14(1)(a) ACA, which I have already observed does not grant the  arbitrator any right of audience.

 

Another example is where the arbitrator issues a declaration of impartiality to the parties pursuant to S.12(1) ACA; this was done in this case.  The arbitrator’s declaration would not estop any party from filing, with CADER, a challenge regarding the arbitrator’s impartiality under S.13(2) ACA.  In this instance the arbitrator is also not granted any right of audience.

 

The Sections 13ACA and 14 ACA instances, which I have referred to above, do not require the arbitrator to give any reasons.

 

It becomes more difficult when the arbitrator who withdraws from office, gives reasons which are connected with the application, such as the one I have before me.

 

In this case, Applicant’s counsel, also responded to matters raised by the arbitrator.  The legislature did not intend that parties and arbitrators should be engaged in any way apart from what is envisaged by the ACA.

 

Arbitrators are vested with judicial immunity which protects their person from claims by the parties regarding any judicial intervention professed by them.  This is why there can be no claim for general or special damages under Sections 13-14 ACA

 

The reason for this is because the arbitral process and tribunal is a process established by the parties to serve their needs.  The right of recourse under the ACA is reserved only to the parties, because the entire arbitral process is aimed at serving the parties interests.  Take these two cases for example.

 

On 3rd March 2008, the Superior Court of New Jersey in Rick Malik v. A Fred Ruttenberg, Docket No. A- 6615-06T3, refused to recognize any liability on the part of the arbitrator or the American Arbitration Association for the grievous bodily harm which had been inflicted upon the claimant, by another party, whilst on recess break.

 

On 30th April 2008, the Pennsylvania District Court in The Honarable Edwin E. Naython v. Stradley, Ronon, Stevens & Young, LLP & Andrew L. Dennis, Civil No. 07-4489 (RMB), refused to allow prosecution of the civil claim by the arbitrator that one party had defamed him by challenging his refusal to recuse himself thereby resulting in damage to reputation, emotional harm and loss of earnings on the part of the arbitrator.

 

Therefore the relief mechanism invoked in arbitrations is not for the redemption of the arbitrator but the arbitral process.”

 

I will therefore disregard the Affidavit filed by Mr. Fred Busingye Kiiza and the fact that the arbitrators were not present today.

 

I will go further and elaborate today the reason why the arbitrator is excluded.  The arbitrators duty is to exhibit exemplary impartiality and independence at all times.  Arbitrators unlike court judges are pre-warned that lack of impartiality or independence can be determined either by the parties or the appointing authority [S.13(2) ACA].  Court judges have themselves only to determine if they are possibly impartial or lack independence. 

 

It is for this reason that CADER arbitrators first issue a declaration of impartiality before proceeding with a case.  However they take on the case knowing that the potential impartiality or independence can be determined by the parties or by the appointing authority under S.13(2) ACA.  The arbitrator cannot task the parties to prove their agreement to terminate the tribunal’s mandate. 

 

The arbitrator similarly cannot task CADER or the appointing authority to prove the grounds for termination of the tribunal’s tenure – S.13(2) ACA. 

 

This scheme is in place simply because the relief mechanism invoked in arbitrations is not for the redemption of the arbitrator but the arbitral process.

The first basis of this application is that the there exist three court applications which allege that the arbitrators have misconducted themselves and “are thus in adversarial proceedings against the Applicant”.

 

The three Applications are Miscellaneous Applications Nos.87/2013, 88/2013 and 89/2013. The Applicant did not attach a record of these proceedings.  These were provided in the first respondent’s affidavit (Annex C and D).

 

The citation for the cases, from the record before me is as follows:-

 

  • Annex C: Misc. Application No.88/2013, Attorney General v. Dott Services Ltd, (arising from M.A. No.87/2013).
  • Annex D: Misc. Application No.89/2013, Attorney General v. Dott Services Ltd, (arising from M.A. No.87/2013 & 88/2013).

 

The simplicity with which the Applicant has approached this matter is set out in grounds 2, 3 and 4, which read as follows,

 

“2.  The three Arbitrators are parties in Misc. Applications 88 & 87/2013 in which, inter alia, they are accused of Arbitrator Misconduct and are thus in adversarial proceedings against the Applicant herein - [Affidavit Para.4].

 

3.  That all three Arbitrators are therefore in conflict of interests, in as far as they cannot at the same time be Arbitrators in a matter involving the Applicant herein as well as litigants in adversarial proceedings against the very Applicant - [Affidavit Para.5].

 

4.  That the impartiality of all three Arbitrators is put in question by virtue of being in adversarial proceedings with the Applicant which may, inter alia, result in adverse declarations and payment of costs in respect of either party. -  [Affidavit Para.6]”

 

I do not agree that the court applications placed before me amount to proof of grounds pointing to lack of impartiality, independence or qualifications under S.12(2) ACA by the arbitrators.

 

If this were the case, then every court application, would operate as an injunction against an arbitration tribunal from carrying on its functions.

 

What the respondent has sought to do is to create a novel ground which injuncts arbitral tribunals from proceeding.  This is the argument put forth – because the Attorney General is the applicant and the arbitrators are the respondents, then the arbitrators appointment must be revoked.  It then boils down to this - whenever the Attorney General seeks to injunct an arbitral tribunal all they have to prove is that a court application had been lodged against the arbitrators.

 

I have perused the applications and have noticed that they are filed by the Attorney General and raise no grounds regarding the case between the parties, which is before the arbitrators.

 

The Attorney General, is in Uganda, the nominal representative in all judicial proceedings against Government entities, hence the appearance in lawsuits as a defendant or complainant [Art.250(2) Constitution].

 

I am aware from my Ruling in Dott Services Ltd v A.G., CAD/ARB/25/2012, delivered on 4th September 2012, that the Attorney General’s nominal representation is with regard to the contract executed between Dott Services Ltd and the National Authorizing Officer of the European Development Fund in Uganda, Ministry of Finance, Planning and Economic Development for Backlog road Maintenance Programme (BRMP) in Uganda: Package No.2 roads.

 

The Applicant has not shown any connection between the arbitrators and the National Authorizing Officer of the European Development Fund in Uganda, which gives rise to the alleged lack of impartiality or independence on the part of the arbitrators.

 

Applicant counsel did not prove any amendment to S.13(2) ACA, and I am therefore compelled to observe that any application challenging the arbitrators lack of impartiality, independence or qualifications, is certainly before the wrong forum if at all it has been lodged before the court and not before the appointing authority.

 

The other ground is in Para.10 that “in a separate matter the Applicant had challenged the appointment of the Hon. Justice Alfred Karokora, also on grounds of conflict of interest relating to his being a Petitioner in Constitutional Petition No.45/2012, vide Written Statement (Letter) Ref: CAD/ARB/25/2012 – Para.13 Affidavit.

 

How did the Applicant waive their right to raise this objection.  I pointed out in the Para.11, page 7, of the Ruling in Dott Services Ltd v. A.G., CAD/ARB/25/2012 that the Applicant had forfeited its right to set up an arbitration tribunal.  I will illustrate this.  The Attorney General would have notified Dott Services of it’s proposed procedure for setting up the arbitral tribunal.  The Attorney General would also have written out a skills sought and exclusion list.  One exclusion criteria would have indicated anyone with a case against the Government of Uganda would be excluded from serving as an arbitrator.  Both the Attorney General and Dott Services would then have either sourced names independently or from CADER.  Even if the decision were delegated to CADER the Attorney General’s exclusion criteria would have been taken into account.  This was never done.  I must hasten to add that I have noticed the Attorney General’s Chambers is lately very slack in exercising its party autonomy rights.

 

I therefore find that the Attorney General waived the right to set up litigation history as a barrier to tenure as an arbitrator in this matter, when it failed to participate in the formulation of the arbitral tribunal.

 

Reflecting on the issue, I still note that no connection or element of conflict has been proved to exist between the second respondent arbitrator and the first respondent or the applicant.  The grounds alleging impartiality or lack of independence must be cogent.  For example that the arbitrator is a shareholder in Dott Services Ltd and will therefore be a direct beneficiary of the outcome of the award.

 

The next ground is set out in Para.5-9, which read as follows,

 

“5.  That in spite of the pendency of Misc. Applications 88 & 87/2013 the Arbitrators have proceeded to disregard the said suit and set the date for delivery of the award on 10th April 2013 – [Affidavit Para.7].

 

6. That delivery of the award despite the pendency of Misc. Applications 88 & 89/2013 would render the said Applications nugatory ­– [Affidavit Para.8].

 

7.  That CAD/ARB/25/2012 is sub judice in view of the pendency of Misc. Applications 88 & 87/2013 in view of the insistence of the Arbitrators to conduct the said proceedings and even proceed to set the date for delivery of the award the Arbitrators are in violation of the Subjudice Rule.

 

8. Failure to disqualify onself when in conflict of interests, violation of the Subjudice Rules and actions of the Arbitrators constitute Arbitrator Misconduct and impugn the impartiality of the Arbitrators.

 

9.  That pursuant to the paragraph above, all three Arbitrators have demonstrated bias against the Applicant and partiality in favor of the Respondent herein, which constitute Arbitrators misconduct.”

 

The question is do the arbitrators have a right to proceed with the case – yes they do!

 

Counsel for the First Respondent evidenced the court Ruling in the matter of A.G v. Dott Services Ltd, M.A. No.89/2013[from M.A. No.87/2013 and 88/2013], which held that CADER’s decision to appoint the tribunal was final and not subject to appeal. 

 

The decision in effect did not grant the prayer to injunct the arbitral tribunal from proceeding with the case before it.

 

The role of the court with regard to issuing interim orders is set out in S.6 ACA.  The scope of this section is limited to the interim relief regarding the parties to arbitration proceedings – not the arbitral tribunal.

 

Paras.5-9 only point out that the tribunal has exercised its powers to proceed with the hearing of the case. 

 

It should be noted that grounds 5-9 all relate to procedure adopted by the tribunal and not lack of impartiality or independence by the arbitrators.

 

It was not shown to me that the Attorney General and Dott Services Ltd had set up rules which prohibited the arbitral tribunal from proceeding, in the event of any court applications – S.19(1) ACA.

 

I therefore find that in the absence of agreed rules of procedure between the parties that the arbitral tribunal is right to proceed under S.19(2) ACA, as they deem fit.

 

Further S.14(1)(a) ACA obligates the tribunal to proceed without undue delay, whilst S.31(1) ACA guides the tribunal to finalize the case within two months.  Therefore the tribunal unlike the courts is obligated to act expeditiously.

 

The next ground [Affidavit Para.14] raised is that “to date CADER has not pronounced itself on the matter in spite of the expiration of thirty days in which such decision must be made”.

 

The background to this is as follows.

 

The Attorney General issued a letter dated 19th November 2012 objecting to the appointment of Justice (Emeritus) Karokora as the arbitrator.  This letter was delivered by State Attorney Kasibayo Kosia who was notified by me that it ought to have been a Chamber Summons application pursuant to Regulation 13, First Schedule ACA.  Justice Karokora then wrote communication to the parties to the effect that he did not believe he was either impartial or lacked independence in this matter.

 

The Director Civil Litigation then wrote another letter dated 14th February 2013 restating the objection.  This letter notes that Justice (Emeritus) Karokora did serve the Attorney General with notice that he had declined to recuse himself.  CADER then filed a reply dated 19th February 2013 pointing out that the 19th November 2012 letter had to comply with Regulation 13, First Schedule ACA.

 

This Application was filed on 19th March 2013.  CADER set it down for hearing on 10th April 2013 at 10.30a.m.

 

The 19th November 2012 letter does not bring to the attention of the parties that there is indeed an application at hand.  How was CADER to indicate to the other parties that a hearing date had been set for consideration of the letter from the Attorney General.   This could only be done through the Chamber Summons which cater for this process.  That is notice to the parties that there is an application before CADER. Secondly notice of the hearing date and time.  Thirdly that the Summons had indeed been issued with CADER’s sanction.

 

It is my considered opinion that S.13 ACA must be read together with Regulation 13, First Schedule ACA. 

 

It must be recalled that the ACA as it exists was passed by the legislature.  The first edition was Act No.7 of 2000 published under Gazette No.32 Vol.XCIII dated 19th May 2000.  This first edition had the First Schedule of Rules.  In effect therefore the First schedule is what was passed by the legislature. 

 

The rule of interpretation must be one, which gives effect to the intention of the legislature.  What was this intention?  That “all applications for the appointment of or challenge to arbitrators, and all other applications under the Act, other than those directed by these Rules to be otherwise made, shall be made by way of chamber summons supported by affidavit”.

 

This is what the Attorney General has finally done.  This therefore negates the Applicant’s counsel submission that the question whether the proper procedure is a Chamber Summons Application or a letter is appropriate under S.13(2) ACA is sub judice.  If that was the case then the Attorney General would not have filed this instant application!

 

Section 13 is not one falling under the oversight of the courts.  My reading is that S.9 ACA means what it says and therefore excludes any use of inherent, common law or equity powers when determining applications under the ACA, which have been determined by the legislature to fall under the courts mandate.  See Runman Faruqi v. Commonwealth Secretariat, [2002] EWHC 681.

 

Applicant counsel also made a blanket submission that the arbitral tribunal and CADER itself was caught by the sub judice rule.  I noted that the only evidence before me was Annex C and D to Affidavit of Mr. Eddy Maheswara. 

 

I restate the case citations:-

  • Annex C: Misc. Application No.88/2013, Attorney General v. Dott Services Ltd, (arising from M.A. No.87/2013).
  • Annex D: Misc. Application No.89/2013, Attorney General v. Dott Services Ltd, (arising from M.A. No.87/2013 & 88/2013).

 

I therefore find that the Applicant’s counsel was most unprofessional when he accused the First Respondent’s counsel of misrepresenting the facts that these Applications did apply to the arbitrators and CADER.  In the circumstances I find that the Applications tabled before me did not apply to CADER or the arbitrators.

 

It was not proved to me that the matter before the arbitrators or CADER are the same as the issues and facts before the court.  I therefore find that this blanket sub judice has not been proved by the Applicant’s counsel.  I have found no merit in all grounds raised by the Applicant.

 

It was held in Laker Airways Inc v. FLS Aerospace Ltd, [1999] EWHC B3, that, 

“Arbitration is a consensual process and therefore it is perhaps particularly unfortunate that one party should feel any apprehension about the impartiality of an arbitrator. Nevertheless, arbitration would become impossible if one party could require an arbitrator to retire by making unjustified allegations about impartiality or bias. The circumstances in which an arbitrator can be removed are therefore defined in section 24 of the Act. The test is an objective one - whether circumstances exist that give rise to justifiable doubts as to an arbitrator's impartiality. The test is thus objective in at least two respects: the court must find that circumstances exist, and are not merely believed to exist (although I suppose that a belief may itself be a circumstance); and secondly, those circumstances must justify doubts as to impartiality. An unjustifiable or perhaps unreasonable doubt is not sufficient: it is not enough honestly to say that one has lost confidence in the arbitrator's impartiality. On the other hand, doubts, if justifiable, are sufficient: it is not necessary to prove actual bias.”

 

I adapt holding.  I find that the Applicant engaged in an academic adventure and speculation rather than adduce cogent grounds to prove the Application.

 

I dismiss the entire Application with costs being awarded to all the Respondents.

 

Before taking leave of the proceedings, I have to state that I noted Applicant’s counsel submission that the Attorney General chose not to attend the arbitration proceedings.  I find this approach if true most reckless because S.25 ACA empowers arbitral tribunals to proceed in the absence of parties.  The cost of reckless abandonment can be seen by all lawyers in the case following Ugandan cases - Katamba Philip v Magala Ronald, [2011] UGCommc 65, Uganda Telecom Limited v Hi-Tech Telecom Pty Ltd [2011] FCA 131 before the New South Wales District, Federal Court of Australia and Bayeti Farm Enterprises Ltd v. Cooperative TGS U.A, Hatch Tech BV, Case Number 221871/KV RK 11-999, from the Netherlands Court Arnhem.

 

Delivered at Kampala on the 10th day of April 2013.

 

…………………………………..

Jimmy Muyanja

EXECUTIVE DIRECTOR

CADER