The High Court of Uganda at Kampala Commercial Division in Miscellaneous Application 1830 of 2022, Attorney General V Networth Consult Limited has made a crystal clear position on the meaning and interpretation of Arbitration Clauses in agreements and their legal effect on litigation.
The decision comes to overturn the position in recent decisions such as Fulugencious Munghereza V Price Water House Coopers (1997-2000) that declared a dispute before a Court arising out of an agreement with an arbitration clause to be referred to an arbitrator rather than litigation.
Among other issues discussed by the court was the Competence of affidavits deponed by advocates, the meaning of Frivolous, Vexatious, Abuse of Court or Judicial Process Claims, and finally what amounts to a departure from pleadings.
BACKGROUND
The respondent filed Civil Suit No. 541 of 2022 {main suit} against the applicant for breach of Consultancy Contract and recovery of sums that were stated to be paid under that contract. The applicant brought this application, contending that the dispute between the parties was amenable to arbitration. Accordingly, the applicant contended that the suit was barred by law.
The respondents in this application raised three preliminary points of law. The first, that the application was fatally defective owing to the fact that the affidavit in support was deponed by a person not entitled to do so, second, that the application was frivolous, vexatious, and bad in law, that the application was brought out of time and therefore fatally defective and finally that it constituted a departure from the pleadings.
DECISION OF COURT
In regard to the first preliminary point of law, the court found that an advocate can depone an affidavit where the matters such affidavit speaks to are non-contentious. Where the affidavit merely narrates facts that the advocate knows, such an affidavit is permissible.
In determining whether the application was brought out of time and fatally defective, the court interpreted the applicability of Order 12 Rule 3(1) of the Civil Procedure Rules to interlocutory applications that provides for all interlocutory applications in a suit required to be filed within 21 days from the date of completion of the Alternative Dispute Resolutions or where there have been no Alternative Dispute Resolutions, interlocutory applications are required to be filed within 15 days after the completion of the scheduling conference. Court found that applications asserting preliminary points of law are distinct from other applications. The court further found that the former could be raised at any point before judgment.
On the preliminary point of application departing from the pleadings, the court found that the applicant hadn’t demonstrated such departure. Further, it was the reasoning of the learned judge that once a party alleges a departure from pleadings, they must show the exact area of departure, often contrasting what was asserted before from what is asserted now.
In upholding its decision on the effect of arbitration clauses providing for both litigation and Arbitration in agreements, the Court found that the discretion to elect to initiate arbitration proceedings is available only to a party initiating Arbitration proceedings.
Turning to the merits of the application, the court found that the clause in dispute in the contract between the parties provided that “Any dispute between the parties arising under or related to this contract that cannot be settled amicably may be referred to by either party to the adjudication/arbitration in accordance with the provisions specified in the SCC.”It was the applicant’s contention that the clause subjected any disputes arising there from to arbitration. The court in its wisdom in interpreting the said clause found that the use of the word adjudication was intended to refer to litigation and that it would have been the intention of the parties to have adjudication(as an alternative dispute resolution) as well as arbitration before an expert arbitrator as this would have achieved the same thing.
The court further found that the parties intended that in the event of a dispute, and where amicable dispute resolution failed, recourse could be had to either arbitration or litigation. It was also found that from the contract, the initiating party was at liberty to decide how to initiate the dispute. Once they had made their election, the other party was obligated to defend or counterclaim in the forum in which the proceedings had been began.
The court re-echoed its role in enforcing clear agreements of parties.
It is therefore not fatal for a party to an arbitration agreement to opt for litigation rather than arbitration as it is at the option of a party that intends to elect the mode of commencement of the dispute resolution as the role of the Court is to enforce a clear agreement of the parties since an arbitration clause is interpreted the same way as an ordinary contract.
CONCLUSION.
An arbitration clause that provides for both adjudication and arbitration is legally enforceable. Accordingly, where a contract has a clause providing for both adjudication and arbitration, the initiating party has the election to determine which mode to commence in, and the other party has to defend in that forum.
A draftsman has to be keen in the way they draft their clauses should it be the wish of the parties to have multiple dispute resolution mechanisms from which they intend to elect the most suitable option to their circumstances.
LUKWAGO GEORGE
Email: lukwagogeorge06@gmail.com
TUMUKUNDE & CO. ADVOCATES.
Growing up, an anguished Tony Tumukunde watched many mothers in the community become and be victims of gender-based violence, a narrative that has persisted in African society for a long time.
The zeal to help the poor and disadvantaged get justice pushed Tony to paint his name on the walls of the national legal community and those of the Uganda Christian University (UCU) Guild Tribunal’s history.
Having been mentored by the current Attorney General, Kiryowa Kiwanuka, and his legal firm, K&K Associated Advocates, Tony was determined to climb the legal ladder as his mentor and role model had done.
“I admired the way he conducted himself with us young legal associates, at his office or even in court,” he said. “He created in us an impression that we also live to mentor our peers and mentees who look up to us.”
Five years ago, Tony won an election matter in the court of appeal with just one year of practice from George Patrick Kasajja of Bulamogi West Constituency in Kaliro District in the Eastern part of the country, under Mushagara & Co. Advocates.
“I beat 3 senior lawyers with many years of experience and managed to turn down a bill of 300 million Ugandan shillings (USD 84,783.06) to zero.” He said. “From that day, I have never looked back in my career.”
According to Tony, every lawyer’s dream is to become independent and own a firm so that a legacy can be built and also help teach others. He recently opened up his own firm called Tumukunde & Co. Advocates, located in the Capital City of Kampala.
“We currently have 10 professionals in legal practice full of integrity, efficiency, and effectiveness. It’s the home of UCU practitioners,” he said.
“Over time till now, I have still offered pro bono services to domestic violence victims, and I believe with my firm it’s going to be a bit easier to help them get justice,” he added.
According to Tony, there is a high risk of negative perception in the legal profession because lawyers sometimes represent high-profile criminals or clients who people are against. This makes the public perceive that you are dealing in crime.
The 30-year-old credits all his success to UCU for shaping him into the person he is right now. “The discipline in UCU from dress code, religious background, and commitment of lecturers molded me into the person I became,” he said.
Tony, now an advocate to all courts of law in Uganda and the current UCU Alumni Association’s Speaker, was a student leader. He was the member of parliament for the constituency of law and the Guild Speaker 2013-2014. He was the president of Launch Pad 2012-2014. He was the legal officer of the Class Representative Association and even spearheaded the team that made their constitution.
Tony was born to Mr. Bashaija Amos and Mrs. Namugaya Juliet of Mitooma District in the western part of the country with three siblings, with him being the second born.
Tony is married and a father to four children. If not for legal practice, Tony would be a comedian. “I am a good actor. I was even part of the Uganda Comedian’s Association, but I got busy and gave up on that talent,” he said.
Tony worked with the Center for Constitutional Governance, Mungooma Company Advocates, in 2018 joined K&K Associated Advocates as a legal clerk, in 2019-2020 joined Uganda Registration Service as a company Registrar, in 2021 went back to K&K Associated Advocates as a legal associate, and in 2022, in January, he created his own firm.
Tony attended Victoria Nile Primary School for his elementary school, Bukoyo Secondary School, Kiira College, Butiki for his high school, Uganda Christian University for his Bachelor’s of Law and London University of East London for his Master’s in Business Administration.
Read more https://www.newvision.co.ug/articledetails/138691
Before the parliament of Uganda are draft amendments to the Income Tax Act, the Stamp Duty Act, the Value Added Tax Act, the Excise Duty Act, the Tax Procedures Act, the Tax Appeals Tribunal Act, and the Uganda Revenue Authority Act.
This article is meant to highlight the proposed amendments.
The object of the bill is;
Amend the definition of the beneficial owner to mean a natural person who ultimately owns or controls a customer or the natural person on whose behalf a transaction is conducted, including a person who exercises ultimate control over a legal person or arrangement;
a.a in relation to a legal person includes; the natural person who either directly or indirectly holds at least ten percent shares or voting rights, the natural person exercising control of the legal person through other means including personal or financial superiority; or the natural person who has the power to make or influence a decision of the legal person.
The definition of an exempt organization includes a religious, charitable, educational institution, or research institution whose object is not for profit;
The tax rate applicable to individuals for purposes of rental income is revised to 12% of the gross rental income down from 30%;
c.a deductible expenses and losses allowable to taxpayers earning rental income shall be capped to 50% of their rental income in that year of income. Any excesses shall be carried forward to the subsequent year;
Tax Exemptions; for manufacturers making new or additional investment meeting the minimum investment thresholds of USD 35 million (foreigner) and USD 5 million (citizen), sources at least 50% of their raw materials locally and employs at least 100 citizens, operating in or outside industrial parks and free zones over a minimum period of 10 years together with a tax holiday on Bujagali hydropower project for Five Years.
d.a An exemption on the income of a hospital facility developer, whose investment capital is, for over a period of at least ten years from the date of commencement of business, at least USD 5 million dollars;
Provide for the exclusion of income from transportation of cargo embarking outside Uganda;
To clarify the apportionment of income qualifying for exemption under the ten-Year Tax Holiday;
Provide the definition of a business asset for purposes of withholding tax to mean land, the whole or any part of the land, which is used or held for use in any business except land as held as trading stock. Also, an exemption from 6% WHT on the sale of business assets for compliant taxpayers;
To provide for the International Development Law Organisation as a listed Institution and for related matters;
Harmonization of the scope of qualifying sectors for incentives and related investment thresholds under the ITA Vat Act Excise Duty Act, Stamp Duty Act 2014.
Mining and petroleum revenues and other taxes charged in any assessment shall be payable on the due date of furnishing a return;
Failure by a licensee to furnish a return or provide any other document within the time prescribed by the Act is liable to a penalty of not less than USD 50,000 and not exceeding USD 500,000;
Amortization of an intangible asset at a rate of 100% if the cost of acquiring the asset is treated as a petroleum exploration expenditure.
The object of the bill is;
Agreements relating to deposit of title, deeds, pawn pledge of the total value;
Security bond or mortgage deed executed by way of security for the due execution of an office, or to account for money or other property received by virtue of security bond or mortgage deed executed by surety to secure a loan or credit facility of entry total value;
Trust concerning any property made by any writing including a transfer from a holder of letters of administration or probate orders to a beneficiary and other related matters.
The object of the bill is to;
Amendment to the definition of an exempt imported service to exclude imported services supplied as part of the provision of an exempt supply in Uganda;
The following entities have been added under the First Schedule of the act; International Development Law Organisation
The foreign common Wealth and Development Office
Repeal the exemption on cotton seed cake and menstrual cups;
To exempt assistive devices for persons with disabilities, Oxygen cylinders or oxygen for medical use, the supply of airport user services charged by the Civil Aviation Authority;
The supply of menstrual cups, sanitary towels, tampons, and inputs for their manufacture is zero-rated;
A broader definition of ‘supply of education materials” includes supplies of educational materials from the East Africa Community Partner States which shall enjoy a zero rate of tax.
The proposed amendments provide definitions for; Fruit Juice
Un-denatured spirits Vegetable juice
Revised Excise duty rates and charges on items like locally produced alcoholic and non-alcoholic beverages ranging from 12% to 100% or Ush.2500 per liter whichever is higher.
The object of the bill is to;
Provide the time frame for registration of a tax agent;
To provide for the temporary closure of business until compliance with the requirements of electronic receipting and invoicing or tax stamps;
To provide for penalties for failure to affix or activate tax stamps, printing over or defacing of tax stamps;
Failure to use an electronic receipting or invoicing, forgery of electronic receipt or invoice interfering with the electronic fiscal device or electronic dispensing control device, payment of informers, and other related matters.
The act seeks to increase the number of members of the Tribunal from five members to nine members.
Empower the minister to amend the first and second schedules by statutory instrument.
Provide for the power of the Board to appoint officers at the level of the assistant commissioner or higher and to provide for related matters.
Contact for this alert;
1.0 Introduction.
The official review of the law of succession in Uganda was the Kalema commission review of 1965
that culminated in to the 1972 Succession (Amendment) decree.
In regards to this, some of the provisions in the laws on succession have been outdated and not
reflecting the contemporary social & economic changes of the day and the changes in other laws
that is to say equality, and nondiscrimination guarantees enshrined in the Constitution of the
Republic of Uganda.
It is worth noting that this article aims at expounding on the new developments in the law of
succession in regards to the Succession (Amendment) Act, 2022 that was passed on Tuesday,
30th April, 2021 by the parliament of Uganda and assented to by the President of the Republic of
Uganda on 10th April, 2022. The Succession (Amendment) Act, 2022 tends to address the lacunas
in the law of succession in Uganda by amendments to the Succession Act in order to accord equal
rights between men and women and bring the Succession Act in conformity with the Constitution of
Uganda as highlighted below.
2.0 background of the law of Succession in Uganda.
The origin of the law of succession in Uganda can be traced as far back as the succession ordinance
of 1906 which was adopted from English law.
It as well introduced the British models of succession and inheritance in to Uganda as the law
applicable to all cases of intestate or testamentary succession however due to the short comings
in the succession ordinance of 1906, the law was amended in the 1972 by the Succession
(Amendment) decree to provide for succession to estates of Ugandan dying intestate and restricted
the disposal of property by will among other things.
3.0 Key amendments, repeals and substitutions of the Succession Act.
Notably, some of the provisions in the laws on succession have been outdated and courts have
progressively interpreted the Succession Act while taking in to account values and trends in
developments and aspirations of the Ugandan society hence declaring some of these provisions
unconstitutional and in turn creating enforcement challenges and legal uncertainty. A key illustration
is the case of Law & Advocacy for women in Uganda v Attorney General of Uganda where the
constitutional court held that section 2(n), L (ii), 23, 26, 27, 29, 43, 44, 179 of the Succession Act
are inconsistent with Articles 20, 21, 24, 26, 31, 44 of the 1995 Constitution of the Republic of
Uganda hence calling for the amendment of the succession Act. The declaration by court left a
lacuna in the law which the Succession (Amendment) Act, 2022 tends to address by amendments
to the Succession Act in order to accord equal rights between men and women and bring the
Succession Act in conformity with the Constitution of Uganda.
3.1 Replacement of discriminatory words.
The Amendment Act replaces/ repeals discriminatory words. E.g “legitimate and illegitimate child.”
“Married woman or man” with the word “a spouse.” phrases like dumb, deaf, blind or lunatic as
provided under section 36(3) of the Succession Act are replaced with suitable terms like “person
with a hearing impairment, physical impairment, speech impairment as well as visual impairment.
3.2 Age of Minority.
The Act under Section 1(I) replaces the age of minority under Section 2(o) of the principal Act which
was twenty one (21) years to eighteen (18) years bringing it in conformity with the provisions of the
Constitution of the Republic of Uganda specifically under Article 257(1) (c).
3.3 Interests and powers acquired by marriage.
Section 2 of the Amendment Act repeals Section 3 of the Succession Act and confers interest in
property of a person to he/she marries whether the property was acquired before or during the
subsistence of the marriage. This then implies that a person can by marriage acquire interest in the
property of the person whom he or she marries.
3.4 Distribution of property.
The Amendment Act, revises percentages for the distribution of an estate where an intestate is
survived by a spouse, a lineal descendant, a dependent relative and customary heir, it increases the
percentage of the spouse from 15% to 20% and reduces that of dependant relatives from 9% to
4% but maintains the percentages of the lineal descendants at 75% and the customary heir at 1%.
It is prudent to note that the Amendment Act, has taken cognizance of the contributions made by
the spouse to the estate of the deceased by entitling them with20% unlike 15% in the principal Act.
The Amendment Act goes ahead to provide that 20% of a deceased’s estate shall not be distributed
but shall be held in trust for the education, maintenance, and welfare of the minor children; children
above 18 years but below 25 years, if at the time of the death, these children were undertaking
studies and were not married; children with disabilities who are above 18 years if at the time of
the death, these children were not married and were wholly dependent on the intestate for their
livelihood.
3.5 Domicile.
Section 7 of the Succession (Amendment) Act, replaces Section 14 of the Succession Act which
originally provided that by marriage, a woman acquires the domicile of her husband, if she had not
the same domicile before. It is prudent to note that the Succession (Amendment) Act under Section
7 introduces domicile of choice where a person may upon marriage, acquire the domicile of his or
her spouse and upon dissolution of marriage, a spouse may acquire any other domicile.
Notably, this then cures the aspect of inequality and accords equal treatment in line with domicile
of a male and female after marriage.
3.6 Attestation to wills.
The Succession Amendment Act, under section 31 amends Section 50 of the principal Act and
makes it a requirement for each of the witnesses to write his or her name and address on every
page of the will in the presence of testator. In addition, the act, adds other factors that make a will
void, as to include fraud, undue influence, duress, coercion, mistake of fact, or abuse of position of
trust or vulnerability rather than just fraud or coercion under the principal Act.
3.7 Administration of an estate.
The Succession Amendment Act under Section 43 inserts Section 201A in the principal act and this
provides for surviving spouses to having preference over any other person in the administration of
the estate of the deceased meaning that surviving spouses are the first choice in search for an
administrator of the deceased.
3.8 Guardianship.
The Amendment Act, provides that either parent of a minor may, by will, appoint a guardian for the
minor. It as well introduces testamentary, customary and statutory guardians respectively, whose
provisions align the Succession Act with the Children’s Act, Cap 59 that is Section 43C thereof.
The Amendment Act as well under Section 29 gives priority to the Children’s Act in cases of conflict
with a provision in the Children’s Act regarding guardianship.
3.9 Consent.
The Amendment Act under Section 56, amends Section 270 of the principal Act and introduces a
requirement for the consent of spouses and lineal descendants prior to disposal of estate property
by administrators. This then implies that these are vital persons of whose consent must first be
sought in circumstances where administrators want to dispose of the estate of the deceased.
3.10 Maintenance.
The Amendment Act, under Section 22 replaces section 37 of the principle Act and extends
maintenance to spouses, children, lineral descendants and dependants who can apply to court for
maintenance relying on Section 38 of the Succession Act where they are left out in the will.
4.0 Conclusion.
It is right to note that the passing and assenting of the Succession (Amendment) Act, 2022
transforms the law of succession in Uganda by clearing the lacunas in the Succession Act Cap 162
to provide for gender equality and repealing provisions that were declared unconstitutional and, in
addition, they solidify principles for the distribution of the estate of deceased persons in Uganda.
Divorce in Uganda is governed by the provisions under the divorce Act, other relevant statutes
and case law. With the coming into force of the 1995 constitution of Uganda, a new debate has
arisen asto whether parties to a marriage can judicially consent to end their marriage.
The constitution under Article 31(1) provides for the rights of men and women of the age of
eighteen years and above to marry, found a family and be entitled to equal rights in marriage,
during marriage and at its dissolution.
Therefore some legal scholars have argued that if parties are free and have a right to enter
marriage, then they should have a right to end the marriage without necessarily proving fault of
the other party.
In Uganda, the law on consent Judgments has been laid down in various cases. i.e. That parties
to a Civil Suit are free to consent to a judgment. They may do so orally before a judge who then
records the consent or they may do so in writing and affix their signatures on the consent.
However in that case the Court has to sign that judgment.” 1
In instances of divorce, the divorce Act Cap 249 (as amended by case law), provides for three
major grounds i.e. adultery, cruelty, and desertion. Section 8(1) of the same Act also provides for
instances when the petition will be granted. A divorce can only be granted where the court is
satisfied that the grounds have been proved; that the petitioner has not been an accessory to the
form of marriage undergone; did not condone the adultery nor collude with either the respondent
or co- respondent. The strict interpretation of these provisions and previous court decisions is
that no judicial officer can grant a decree for dissolution of marriage except when one of these
grounds has been proved. It therefore remains debatable whether the concept of judicial
consent applies to situations of divorce.
However, Section 3(3) of the Divorce Act requires Ugandan courts to exercise their jurisdiction
under the Act “… in accordance with the law applied in matrimonial proceedings in the High Court
of Justice in England,” this has legitimated courts to take advantage of the progressive
jurisprudence in England. Cognisant that the Divorce Act is not comprehensive, courts in Uganda
have relied on English judgments to provide substance to the law, while contextualising it to the
local circumstances.
Therefore there have been instances where court has sanctioned divorce basing only on the
consent of the parties. For example in the case of Jane Basheija v Geoffrey Basheija &
Another, Kainamura J stated that ‘instead of pursuing a lengthy litigation’ the parties had
reached a ‘partial consent’ upon which basis the court had entered a decree nisi dissolving the
marriage. Under the terms of the consent, the sharing of property was to be determined by Court,
which necessitated the present proceedings.
Furthermore, in the case of Chris Bakiza v Esther Nafuna, justice Tuhaise noted that the marriage
had been dissolved in a ‘consent judgment’, in which the parties agreed to place the issue of
distribution of the matrimonial home before an arbitrator. However, the arbitrator had not
determined the substantive issue of the distribution of the matrimonial home, hence the
subsequent litigation. The marriage was dissolved in a consent judgement of 20/08/2012.
In the same consent judgement, the parties agreed to place the issue of distribution of the
matrimonial home at Plot 5 Semawata Road Ntinda before an Arbitrator.6
5 Divorce Cause 22 of 2011) [2015] UGHCFD 26 (20 August 2015)
However, in the more recent cases, judges have pushed back against such interpretation in favour
of the strict interpretation of the laws governing divorce in Uganda. For example in the case of
Ayiko Mawa Solomon v Lekuru Annet Ayiko, justice Mubiru stated that marriage continued to
‘serve valuable social, legal, economic, and institutional functions’ and that, as such, ‘the
underlying public policy’ continued to ‘promote marriage and discourage divorce’ except where
the parties strictly complied with the set statutory requirements for the grant of divorce. He further
observed that although there were attitudes expressed in modern times ‘that divorce should not
be based solely on traditional fault grounds such as adultery, cruelty, and desertion’ and that
divorce should also be permitted in circumstances such as ‘parties’ incompatibility and
irreconcilable differences’, this was not permissible in view of the prevailing statutory regime.
He added that even where the respondent did not oppose the petition for divorce that was not in
itself sufficient to justify its grant by the court. section 8 of The Divorce Act still enjoins court to
pronounce a decree nisi for the dissolution of marriage only after being satisfied that the
petitioner’s case has been proved, and does not find that the petitioner has been accessory to or
has connived at the going through of the form of marriage or the adultery, or has connived at or
condoned it, or that the petition is presented or prosecuted in collusion. That the respondent does
not oppose the petition for divorce is not sufficient of itself to justify issuance of a decree nisi for
the dissolution of marriage.7
In the 2020 case of Rebecca Nagidde v Charles Mwasa , The appellant petitioned for divorce
before the High Court in 2017, on grounds of adultery and cruelty. At the hearing, Matovu J
concluded that the marriage had irretrievably broken down and asked counsel for the parties to
prepare a decree nisi for his signature. He then proceeded to determine the issues relating to
custody and the distribution of property.
The appellant challenged the determinations relating to custody and property but, notably, not the
divorce itself. On appeal, however, Egonda-Ntende JA concluded that the decree nisi had been
wrongly entered, and emphasised that before granting such decree, the Court had to be satisfied
that the petitioner’s grounds as presented had been proven; that there was no connivance or
condonation or collusion between the parties in presenting the petition; and that the petitioner
had not themselves been guilty of adultery, or of an unreasonable delay in presenting the petition,
or cruelty to the respondent, or desertion or separation or other misconduct.
He went on to observe that while these conditions might be or appear to be archaic’ they still
represented the law on divorce as it stood, and courts were not permitted to ignore them and
establish their own grounds for divorce such as ‘irreconcilable differences’.
While this particular ground might exist in many other jurisdictions, absent an amendment to the
Divorce Act or the passing of a new law providing for it, this ground ‘however attractive it might be’
was unavailable in Uganda.
The cases cited above indicate the existing conflict in interpretation caused by a lacuna in the
current marriage and divorce laws. The coming into force of the constitution and progressive
jurisprudence in other jurisdictions have raised the need to repeal the current outdated Act and
enact a new comprehensive marriage and divorce Act that can address new concepts such as
judicial consent to divorce.
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