Court upholds Shs 329.6m arbitration award against Roko

The Commercial Division of the High Court has dismissed an application by Roko Construction Limited seeking to set aside an arbitration award requiring it to pay Senaca (U) Limited more than Shs 329 million.

Justice Thomas Ocaya ruled that the final arbitration award issued on November 20, 2024, is binding on the parties and enforceable in the same manner as a decree of the High Court.

The dispute arose from a security services agreement signed by Roko and Senaca on March 18, 2015, under which Senaca provided unarmed security guards at Roko’s sites and locations.

The agreement required Roko to pay for the services provided and contained an arbitration clause providing that any dispute between the parties would be referred to arbitration in accordance with the Arbitration and Conciliation Act.

A dispute later arose after Senaca claimed that Roko had failed to settle some invoices for security services. Roko, however, maintained that it had paid for all services rendered.

Although the contract provided for an arbitrator to be appointed by the chairman of the Chartered Institute of Arbitrators if the parties failed to agree, the parties subsequently agreed to have former Chief Justice Bart Katureebe handle the dispute.

In a joint letter dated December 8, 2023, signed by lawyers representing both parties, they consented to the appointment of Justice (Rtd) Bart M. Katureebe, Chief Justice Emeritus, as the sole arbitrator.

The arbitration was administered by Praxis Conflict Centre Limited. On January 18, 2024, the parties attended a pre-arbitration meeting, where Katureebe’s appointment was confirmed and the terms of reference were signed by the parties and the arbitrator.

Senaca subsequently filed its statement of claim, while Roko filed a defence and counterclaim seeking a refund of alleged overpayments, declarations that Senaca had breached and illegally terminated the contract, Shs 200 million in general damages, interest and costs.

After hearing the parties, Katureebe delivered his final award on November 20, 2024.

He ordered Roko to pay Senaca Shs 199.6 million being outstanding fees for security services provided, together with Shs 120 million in general damages.

The arbitrator also awarded Roko Shs 10 million in general damages on its counterclaim, together with interest at 12 per cent per annum on the general damages.

Dissatisfied with the decision, Roko returned to the Commercial Division seeking to have the arbitral award set aside or varied, as well as an order for costs.

Roko also sought a stay of the proceedings, arguing that the company was under liquidation.

However, Justice Ocaya rejected the argument, noting that Roko had not produced any authority, resolution or election by a statutory office holder to support its position.

The judge said the company could not rely on liquidation to halt proceedings while simultaneously participating in and controlling the same proceedings.

“A party cannot be in liquidation for the purpose of arresting proceedings and out of liquidation for the purpose of controlling them,” Justice Ocaya observed.

The court further held that the grounds upon which an arbitral award can be set aside are limited and must fall within those prescribed by law.

Justice Ocaya found that the reliefs awarded by the arbitrator, including special and general damages, interest and costs, had been pleaded by Senaca and were therefore within the scope of the reference.

The judge also rejected Roko’s allegation that the arbitrator had been biased.

“Roko’s prayer for a stay of these proceedings on account of the alleged liquidation is refused and the application to set aside and or vary the Final Award in Arbitration is dismissed,” Justice Ocaya ruled.

He further declared: “The Final Award in Arbitration dated 20th November 2024 is recognised as binding on the parties and is enforceable in the same manner as if it were a decree of this court.”

The ruling effectively leaves the arbitration award in force, requiring Roko to meet the obligations set out by the arbitrator.

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