Upstream Logistics Limited v Igara Growers Tea Factory Limited (Civil Suit 464 of 2024) [2025] UGCommC 112 (7 May 2025)

5 THE REPUBLIC OF UGANDA IN THE HIGH COURT OF KAMPALA (COMMERCIAL DIVISION) CIVIL SUIT NO: 0464 OF 2024

10 UPSTREAM LOGISTICS LIMITED ======================= PLAINTIFF

VERSUS

15 IGARA GROWERS TEA FACTORY LIMITED ============ DEFENDANT

BEFORE: HON. LADY JUSTICE SUSAN ODONGO

20 RULING

Introduction:

The claim in this suit pertains breach of contract in respect to monies due and owing on charges for clearing, forwarding, transportation and interest for delayed payments.

When the suit came up for hearing, the parties and their counsels appeared in court. 25 The Plaintiff was represented by Counsel Silas Mugabi and the defendant by Counsel Dan Wegulo.

The plaintiff submitted that under the suit contract the parties had provided for disputes to be resolved by arbitration. He then prayed that the matter be referred to court appointed mediation. The defendant did not object to the prayer.


5 Issue:

The singular issue for determination is whether this Court should refer the matter to court appointed mediator.

Court's determination.

I have carefully considered the Plaintiff and the Defendant counsels' submissions.

- 10 The presence of an arbitration clause in a contract raises jurisdictional issues regarding the competence of the court to entertain the matter. It is a material issue which goes to the root of the matter, and if the clause is found operative and valid, ousts the Court's jurisdiction. Notably, current trends in jurisprudence and contemporary legal practice embrace Alternative Dispute Resolution grounded on 15 the recognition that dispute settlement by arbitral tribunals enjoy parity with courts in resolving disputes. This is grounded in the doctrine of Party Autonomy in Arbitration, a tenet that acknowledges the parties' conscious agreement to settle disputes outside of court. The Arbitration and Conciliation Act, Cap. 5, a law relating to arbitration, has adhered to the underlying intent of this principle by precluding 20 court involvement in matters governed under the Act *(see: section 9).* The courts have - just as well pronounced that the unlimited jurisdiction of the High court cannot override the Arbitration and Conciliation Act. *(see: Babcon (U) Ltd vs Mbale Resort Hotel (Civil Appeal 87 of 2011)).*

The law requires that in a matter subject of an arbitration agreement, the court before

25 whom proceedings are brought should refer the matter to arbitration unless the court finds that the arbitration agreement is null and void, inoperative or incapable of being performed. *(see; section 5 Arbitration and Conciliation Act, Cap. 5; Elizabeth Nkumbuga Vs. M/s J. General Enterprises Ltd, HCMA No. 78 of 2011).)* An arbitration agreement is deemed incapable of being performed when there are physical or legal obstacles 30 beyond the parties' control that prevent the arbitral process from being initiated. (see; *Peace River Hydro Partners and Others v. Petrowest Corporation &Others, SCC No. 41 of 2022).*

Be that as it may, the guiding principle is that the language in the dispute settlement Agreement should determine whether the dispute is to be referred to an arbitral body


5 or any other body. I have carefully studied the dispute settlement provision in the said contract. It provides at Clause 16 as follows:

*16. RESOLUTION OF DISPUTES*

*Should any dispute or difference of any kind whatsoever arise between the parties herein, the matter in question shall be settled amicably by mutual discussion as a* 10 *principle. In the event that settlement cannot be reached, the matter shall be referred to the settlement by an arbitrator to be mutually agreed upon by the parties in writing. In default of agreement, an arbitrator shall be appointed in accordance with the Arbitration Act, Cap 4, Laws of Uganda or any statutory modification or re-enactment of it for the time being in force. The decision of such* 15 *arbitrator shall be conclusive and binding on the parties herein.* (emphasis mine).

I have no doubt in my mind that the parties agreed expressly that any dispute or difference of any kind whatsoever arising between them shall initially be subjected to amicable discussions, failing which be finally resolved by arbitration conducted by an 20 arbitrator to be mutually agreed by the parties in writing. This is one of such disputes. There is no evidence that the parties have taken this step.

In the absence of evidence to show that the parties have met with obstacles that have rendered the arbitration agreement inoperative or incapable of performance, I am constrained to refer this matter to arbitration and not to a court appointed mediator.

25 Consequently, I hereby order that the suit is stayed and the parties are directed to resolve the dispute by arbitration in accordance with the dispute settlement clause under the contract.