COURSE: LLB 4 SEM 2

COURSE UNIT: ALTERNATIVE DIPUTE RESOLUTION

LECTURER: MR. NUWAHEREZA NICHOLAS

TUTOR: MR. MUNANURA DONALD

GROUP 6 WORK

GROUP MEMBERS REGISTRATION NUMBER

AHIKIRIZA ANN KS20B11/626
ABBO ESTHER KS20B11/016
NANSAMABA WINNIE KS20B11/642
NASSALI JOVITAH KS20B11/036
NAMIRIMU EDITH KSB2011/028
NYAPENDI MARY DOROTHY KS20B11/004
KEKIMANZI RHONA AKS17B11/1005
OKETCH KEITH LAZARUS KS20B11/ 638
NANDITTA MEMORY JAMILLAH KS20B11/667
NASSOZI VERONICA KS20B11/ 658
AYEBARE A.K. MICHELLE EKS20B11/036

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 ARBITRATION PRACTICE & PROCEDURE, DRAFTING & DECIDING

GENERAL PRINCIPLES & ETHICS

1. Arbitration – background to a commercial process

International commercial arbitration is a method of resolving disputes through an arbitration

proceeding heard by one or more arbitrators, instead of pursuing resolution of the dispute
through an applicable court system. 1

There are many reasons why parties may prefer arbitration to litigation. One, parties may wish to
avoid the high costs of litigation, the uncertainty of proceedings in foreign (to the party) court
systems and laws, and the potential difficulties in enforcing foreign judgments. Two, arbitrations
are normally binding and usually do not allow for an extensive appeal process. Three, arbitral
awards are normally confidential, unlike most court decisions issued in litigation. Finally, the
parties to the dispute traditionally select the arbitrators to hear the dispute—this allows for the
selection of arbitrators well-versed in the subject-matter of the dispute at issue.

Some historians hold that arbitration was used as a means of resolving disputes before the
appearance of the court system. These historians point to records of the ancient Egyptians,
Greeks and Romans to support this claim. These records indicate that in ancient times, contrary
to the practice of today, the arbitrator was generally a person known and trusted by both parties –
the better known the arbitrator the more confidence the parties would have in his or her
judgment. Like Philip of Macedon, father of Alexander the Great, is recorded to have used
arbitration to settle territorial disputes arising from a peace treaty with some of the Greek states
in 337 BC .2

The Arbitration and Conciliation Act 2000 (“ACA”) supersedes the Arbitration Act Cap 55. As a
former British Protectorate, the law of Uganda draws heavily on English legal principles. The old
provisions of the Arbitration Act were complex and enforcement of international awards was by
no means straightforward. Uganda does not have a long history of formal arbitration. However,
in recent years Uganda has established itself as a willing recipient of foreign direct investment
and with that she has embraced the best international standards of arbitral practice reflected in
the ACA which closely follows the United Nations Commission on International Trade Law
model law (“UNCITRAL” Model Law) including the UNCITRAL Arbitration Rules and the
UNCITRAL Conciliation Rules. The ACA eliminates the need for complex analysis of
incoherent residual British colonial legislation.

1
https://guides.law.columbia.edu/ica accessed on 27/02/2024 at 9:30am.
2
https://www.linkedin.com/pulse/brief-history-commercial-arbitration-apurva-agarwal/ accessed on 27/02/2024
at 10:00am.s

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It should as well note that the New York Convention of 1958 has greatly influenced the
construction of Arbitration and Conciliation Act.

ARBITRATION RELATIONSHIP TO LAW

The New York Convention 1953, which was a convention on recognition and enforcement and
foreign arbitral awards. 135 states have ratified the convention and are committed to recognizing
arbitral agreements, therefore their courts will not exercise jurisdiction over the substance of a
dispute if either party insists on the arbitration clause. They have also agreed to recognize arbitral
awards as binding and enforce them in accordance with the rules of procedure in force in the
state.

UNCITRAL Model Law in 1985, which gives authority to parties and arbitral tribunal to
fashion the procedure as they wish as long as they adhere to the rule of Article 18 that “ the
parties shall be treated with equality and each party shall be given full opportunity of
presenting their case”

Article 5 provides that in matters governed by this law, no court shall intervene except where so
provided in this law.

Arbitral rules. These are in two, that is the institutional arbitration rules and the ad hoc
arbitration rules.

The institutional arbitration rules allow parties to decide on the procedure to be followed in
arbitration, so parties in most cases choose an arbitration institution in which arbitration will take
place. The rules set forth the procedure for commencement of arbitration, appointment of
arbitrators, conduct of proceedings and issuance of the awards. They may reflect the particular
needs of the type of arbitrations that will take place at the institution.

Ad hoc arbitration rules. This occurs in situations where the parties conduct arbitration without
any reference to an arbitration institution. Among the reasons as to why the parties opt for this, is
that it involves a limited amount of money and they did not or were unable to agree on the
institution. However, parties may find it different to commence arbitration, because at the time of
the dispute they might be despising one another and are unwilling to cooperate.

There are two sets of rules for ad hoc arbitration that is the ECE Arbitration rules and
UNCITRAL arbitration rules. Parties may provide in the arbitration clause in their contract
that any dispute may be settled by arbitration in accordance with the rules. Although ECE rules
are widely used in Europe, the have been shadowed by UNCITRAL arbitration rules.
UNCITRAL arbitration rules were adopted in 1976.

Ad hoc arbitration under the rules can take place in 2 different ways; one is purely as hoc, that is
to say that no institution plays any role in the arbitration and the other; arbitration institution
takes on some administrative tasks on the request of parties.

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If the parties are unable to appoint an arbitrator, the rules authorize appointing authority to do so.
If a challenge is made to an arbitrator, it will be heard by the appointing authority.

SOURCES OF ARBITRATION LAW:

- International instruments. These include the New York Convention, 1985, UNCITRAL
Model Law among others.

- Statutes. In Uganda, the main act for arbitration is the Arbitration and Conciliation Act,
cap 4. Section 1 provides that it’s for both domestic and international arbitration and
Conciliation in Uganda. It’s an offshoot of the UNCITRAL Model Law, UNCITRAL
arbitration rules and New York Convention

- The 1995 constitution of the Republic of Uganda, as amended. Article 126 makes
provisions for Alternative dispute resolution, which also encompasses arbitration

- Common law and doctrines of equity. These were introduced in Uganda by the
colonialists, and Uganda adopted many laws of the British upon getting independence.

Principles

Party autonomy. This is the freedom given to contracting parties to construct their contractual
relationship as they wish or see fit. It gives parties full rights to enter into an Arbitration
Agreement to suit their purpose.

An arbitration agreement derives its power from party autonomy, therefore arbitration can only
happen if agreed to by the parties. It lets the parties design and formulate terms of the arbitral
process, governing law, venue, composition of arbitral tribunal, language during proceedings and
other issues related to conduct of arbitral proceedings.

Section 19 of ACA is to the effect that the parties are free to agree on the procedure to be
followed by arbitral tribunal in conducting the proceedings.

Separability. An arbitration agreement in an agreement is a separate and distinct agreement to

the main agreement. The Arbitration clause is construed as an agreement which does not depend
on the terms and conditions of the contract than the will of parties.

The unenforceability of the underlying agreement does not automatically render an arbitration
agreement or clause contained within it unenforceable. Section 16(1)(a) & (b) ACA provide that
an arbitration clause which forms part of a contract shall be treated as an agreement independent
of the other terms of the contract. That the decision of the tribunal that the contract is null and
void shall not itself invalidate the arbitration clause.

Fairness and impartiality. The arbitrator has to be independent and impartial. It is therefore a
ground of objection that the nominee lacks impartiality. Section 12(2) ACA an arbitrator can be

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challenged if circumstances exist that give rise to justifiable doubts as to his or her impartiality
and independence. In Roko construction ltd v Aya Bakery (u) ltd 3 CADER held that
arbitrators have no right of audience under ACA regarding any challenge on their lack of
impartiality, independence or qualifications.

Confidentiality

Finality and enforceability. The decision of the tribunal is final and binding upon the parties.
Section 35 ACA provides that an arbitral award shall be recognized as binding and upon
application in writing to court shall be enforced. In addition, Section 36 provides that the award
shall be enforced as a decree of court. The decision is final and not subject to appeal as per
Section 16(7) ACA.

APPOINTMENT OF ARBITRATORS

The appointment of Arbitrators is provided for under Section 11 of the Arbitration and
Conciliation Act which provides possible courses of action that parties to a dispute can take to
appoint arbitrators. This section allows the parties to choose Arbitrators themselves by agreeing
upon appointment procedure. This is also provided for under the International Center for
Settlement Investment Dispute under the Article 37 rule 2 and 3. The same is .provided for under
Article 7 of the United Nations Commission on international Trade Law.

Section 11 provides that,

1. A person shall not be precluded by reason of that person's nationality from acting as one of the
an arbitrator unless otherwise agreed by the parties

11. The parties are free to agree on a procedure of appointing the arbitrator or Arbitrators and if
there is no agreement in an arbitration with three Arbitrators, each party shall appoint one
arbitrator, and the two Arbitrators so appointed shall appoint the third arbitrator and in arbitration
w8th one arbitrator, the parties shall agree on the person to be appointed.

111. in this in case of the three Arbitrators, a party fails to appoint the Arbitrator within thirty
days after receipt of the request to so from other party or if the two Arbitrators fail to agree on
the third arbitrator with in thirty days after their appointment and in the case of one arbitrator, the
parties fail to agree on the Arbitrator the appointment shall be made, upon application of a party
by the appointing authority

1V. Where under the procedure agreed upon the parties for the appointment of an Arbitrator or
Arbitrators where a party fails to act as required under that procedure, the parties or two
Arbitrators fail to reach the agreement expected of them. Under the procedure or a third party,
including an institution fails to perform any function entrusted to it under the procedure , any

3
MA no. 12 of 2008.

5
party may apply to appointing authority to take the necessary measures, unless the agreement
otherwise provides for securing compliance with the procedure agreed upon by parties

The appointing authority in appointing an arbitrator shall have due regard to any qualifications
required of an Arbitrator by the agreement of parties and to such considerations are likely to
secure the appointment of an independent and impartial arbitrator.

Section 12 provides for the grounds of a challenge where when a person is approached on
connection with appointment he or she should be able to disclosure any the circumstances likely
to give rise to doubts to his or her independence.

Section 13 of the act which provides for the challenging procedure where parties are free to
agree on the procedure 5hat is needed for the challenging of the Arbitrator where if there is no
agreement, a party who intends to challenge the Arbitrator has 15days after getting to know the
composition of the Arbitration authority or becoming aware of any circumstances in section 12 ,
send a written statement of reasons to the authority and unless the Arbitrator withdraws from his
her office or the other party agrees to challenge the appointing authority shall agree on the
within a period of thirty days after the receipt of the statement.

PRELIMINARY MEETINGS

The preliminary meeting is convened after the arbitration tribunal has been constituted.
Summons to the preliminary meeting is served to the parties with the agenda of the arbitral
proceedings inclusive. At that stage, control of arbitration proceedings shifts from the parties to
the arbitration to the tribunal which is going to resolve the dispute. The tribunal establishes the
framework for the arbitral proceedings. The meeting with the parties is useful to ensure that the
tribunal and the parties to arbitration have a common understanding on how the proceedings are
to be conducted. Each party should be represented at the preliminary meeting by persons with
authority and knowledge to take decisions, both in discussions with the party's representatives
and during the course of meeting. The tribunal may require the submissions by the parties in
form of Witness statements, written statement of defense and other necessary arbitration. The
tribunal prepares a trial timetable for arbitration proceedings.

The hearing during arbitration, this provides for section244

The arbitration tribunal may hold oral hearing for presentation of evidence or have an argument
on written submissions. Where the parties have not agreed on what procedures to follow, the oral
proceedings may be conducted at any stage of the proceedings. The tribunal shall have power to
administer oaths to the parties and appearing witnesses. The parties shall be given sufficient
notice of the meeting and any hearing. During the proceedings, the parties may appear in person
or they may be represented.

4
Arbitration and conciliation Act Cap4

6
Section255 provides what happens when the party defaults. Where the party does not enter
appearance without any sufficient reason, the tribunal may terminate arbitral proceedings. Where
the respondent fails to submit the statement of claim and defense in accordance to section 23 6 the
arbitral tribunal shall continue with the proceedings without treating the failure itself as an
admission on the claimant's allegations. This can also be referred to as exparte proceedings since
they are heard in the absence of the other party. For any party that does not present the evidence
during a hearing, the arbitral tribunal may continue the proceedings to make an award on the
evidence before it. Where the claimant fails to present his or her claim, the arbitral tribunal may
make an award dismissing the claim or give directions with or without conditions.

Section 267, the parties agree on the experts to use, the expert must attend the arbitral
proceedings of the matter. The expert gives the relevant information in regards to the documents,
good or other property.

Section 298 Provides for decision making by the panel of arbitrators. During the arbitral
proceedings, any decision of the arbitral proceedings shall be made by majority of its members.

The parties to the arbitral proceeding may decide to settle their dispute. The parties may go
ahead and terminate the proceeding, enter an arbitral award in regards to the settlement as per
section 309. The arbitral award on agreed terms shall have the same magnitude as other awards.

ARBITRATION AGREEMENT

This agreement made this 4th day of March, 2024 between Omara Alex and Namuddu Faith.

Omara Alex is a male adult of 54years of age of sound mind who resides in Mengo, Kampala
District, Kitale Sub County, for the sale of his car, and Namuddu Faith, a female adult of 45
years of age of sound mind who resides in Makindye, Kampala District wants to buy the car
from Omara.

WHEREAS certain disputes and differences have arisen and are subsisting between the aforesaid
parties relating to agreed period of installment payments.

AND WHEREAS the Parties agree to submit their dispute(s) in accordance with the Arbitration
and Conciliation Rules of 2013.

Now the parties hereby agree as follows:

1.The arbitrator to be appointed is a 3rd party with neutral interests as agreed by both parties.

5
Ibid
6
Ibid
7
Ibid
8
Arbitration and Conciliation Act Cap 4
9
Ibid

7
2.The language to be used is English language and parties require no translator.

3.The arbitration proceedings will take place in Kampala, Uganda and will sit at Sojovalo Hotel
Mengo.

4.That the buying party is to pay an amount of UGX 200,000 to the arbitrator and the selling
party is to pay the same amount.

5.The parties arbitration will take place within 5 business days.

The parties agree to submit their dispute(s) to arbitration in accordance with the Arbitration and
Conciliation Rules of 2013.

The authority to appoint the arbitrator or the arbitrators, as the case may be, shall be the
International Centre for Alternative Dispute Resolution.* The arbitration shall be administered
by the International Centre for Alternative Dispute Resolution (ICADR) in accordance with the
ICADR Arbitration Rules, 1996.

The place of arbitration shall be Kampala, Uganda.

In case the ACR is not required to appoint arbitrator(s), omit this clause.

In Witness Whereof, this Agreement has been signed this 4th day of March, 2024 at 10:30am by
Mwesigwa Samuel.

Note: The parties may:

(a) Provide for qualification(s) of the arbitrator(s) including, but not limited to, language,
technical experience, nationality and legal experience;

(b) English is the language for the conduct of arbitration.

EXAMPLE 1

Republic of Uganda

Form 1

In the Matter of the Arbitration and Conciliation Act

Whereas differences have arisen and are still subsisting between............Namuddu Faith............of
............Makindye, Kampala.....and .........Omara Alex..........of..........Mengo, Kampala District
Kitale Sub County...............concerning ............a dispute on the sale of the car upon default on
part on Namuddu Faith to pay agreed payments in installments as agreed by the
parties...................

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Now we, ................Namuddu Faith..........and ............Omara Alex................do agree to refer the
matters in difference to the award of...........a single arbitrator.......................

(Signed).......................................

Dated the ............5th day of March, 2024.................

EXAMPLE 3

Republic of Uganda

Form II

Appointment of Single Arbitrator under Agreement to Refer Future Differences to Arbitration.

Whereas, by an agreement in writing, dates the........5th day of March 2024............, and Made
between ...........Namuddu Faith............of ..................Makindye, Kampala
District .....................and ....................Omara Alex......................of.................Mengo, Kampala
District, Kitale Sub County.........................., it is provided that differences arising between the
parties to the agreement shall be referred to an arbitrator as mentioned in the agreement:

And whereas differences within the meaning of those provisions have arisen and are still
subsisting between the parties concerning ....a dispute on the sale of a car upon default to pay the
agreed payments in installments as agreed by the parties leading to termination of the Contract
by Omara Alex........................................

Now we the parties, ..........................Namuddu Faith.....................and,.................Omara

Alex..................do refer the matter in difference to the ward of.......a single
arbitrator..................................

(Signed).............................................................

Dated the............5th day of March, 2024................

EXAMPLE 4

Republic Of Uganda

Form III

Enlargement of Time by Arbitrator by Endorsement on Agreement

In the matter of Arbitration and Conciliation Act, an Arbitration between ........................Omara

Alex..................of ......Mengo Kampala District, Kitale Sub
County............and ................Namuddu Faith ..........of...........Makindye, Kampala District.............

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I enlarge the time of making my award in respect of the matters in difference referred to me by
the within (or above) agreement until the ..........15th.......day of....May, 2024..........

DRAFTING ARBITRAL AWARDS

The guidelines set out the current best practice in international commercial arbitration for
drafting Arbitral awards. It is divided into three parts dealing with

Arbitral awards in general

Awards of interest

Awards of costs

This guideline provides guidance on how to draft and communicate arbitral awards, the title that
are most commonly used, the conduct of deliberations, the form and content of awards and issues
arising after a final award has been communicated.

The arbitral awards should be prepared with the greatest care to ensure they conform to the terms
of the arbitration agreement including any arbitration rules and the law of the place of arbitration

(Lex arbitri) and enforceable under the New York convention.

Any failure to comply with the agreed process and the requirements as to form and content may
lead to challenges and create difficulty with enforcement.

THE GENERAL PRINCIPLES OF AN ARBITRAL AWARD

1. Arbitrators should make it clear that a decision is an award by including the word
“Award” in the title if its indeed an award

2. Arbitrators should structure an award in a logical sequence and express their decision in a
clear, concise and an ambiguous manner

3. Arbitrators should endeavor to make an award that is valid and enforceable

4. Arbitrators should make their award in a timely and efficient manner

5. Once the arbitrators have made their award they should communicate it to the parties and
to any arbitral institution Administering the arbitration following the method provide for
in the arbitration agreement, including any arbitration rules and /or the Lex arbitri

INTEREST & EXPENSES (COSTS)

This Topic discusses the ‘general’ items claimed in arbitration – interest and costs– with sections
on:

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Statutory interest

It should be noted that when someone has a statutory interest then they have a legal right to
charge interest on late payments.

COST DETERMINATION.

Historically, the question of costs has not attracted a great deal of academic attention; but
recently it seems to have become something of a hot topic in international arbitration, with a
number of recent articles expressing concern over what is seen as the escalating cost and
uncertainty over the application of existing rules. The ICC has issued guidance on controlling
costs and there have been a number of cases on arbitral costs decided in a variety of jurisdictions.
It is estimated that between 80% and 90% of the total costs arise from the parties’ direct
expenses, such as representation, experts and hence the rule which applies as to allocation of
these costs is one of great and arguably growing significance, particularly in smaller arbitrations
where the costs make up an appreciable proportion of the sums in issues.

I do not propose to review domestic costs rules applicable in major jurisdictions around the
world. Suffice it to say that there are two basic models, which we can denote respectively as the
American Rule and the English Rule (although the philosophy behind the English Rule can be
traced back to pre-Justinian Byzantium). Under the pure American Rule, parties pay their own
costs irrespective of the outcome and share the costs of the tribunal/institution; this is based on
the philosophy that access to justice is paramount and barriers to seeking justice should be
eliminated. Under the pure English Rule, the “winner” recovers his reasonable costs from the
“loser” who also pays for the tribunal/institution; this is based on the philosophy of indemnity, if
I was right to take this action, then I should not be out of pocket for doing so. Of course, there
are many modifications to these rules in practice in the US, bad faith litigation can result in cost
shifting and in England new rules encourage fractional costs awards to reflect partial success.
These two apparently incompatible philosophies came face to face during the negotiation of the
UNCITRAL Rules on 20 April 1976. The US delegation, backed by India, made the following
statement: The sponsors [i.e. the US and India] had found that there was a wide variety of
practice in different countries as to whether parties bore their own costs of arbitration or whether
the costs were borne by the unsuccessful party.

However, that no arbitration rules went so far as to provide that the unsuccessful party should
pay compensation for legal assistance of the successful party without exception… [The
delegation then referred to the general practice under USSR and GDR rules and continued.] In
the United States, each party bore its own costs, with rare exceptions. Most international
arbitration rules were silent on the subject of costs. The sponsors felt that a question of principle
was involved, since a poorer party might hesitate to seek justice if it feared that it might have to
bear the costs of a richer party. They considered that some provision should be made for costs,
but that it should be flexible. They then proposed an amendment to the Secretariat’s text to read:

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Each party shall bear its own expenses for legal assistance, provided, however, that the
arbitrators may include such expenses as costs of the arbitration if they determine it is
appropriate to do so under the circumstances of the case, and then only if such costs were
claimed during the arbitral proceedings and to the extent that the amount is deemed reasonable
by the arbitrators.

However, the majority on the drafting committee including the USSR representative, whose rules
had been relied on by the US delegation decided to express the principle that the successful party
should expect to recover costs. The final text that emerged reads;

Article 38;”The arbitral tribunal shall fix the costs of arbitration in its award. The term “costs”
includes... (e) The costs for legal representation and assistance of the successful party...

Article 40,” Except as provided in paragraph 2, the costs of arbitration shall in principle be borne
by the unsuccessful party. However, the arbitral tribunal may apportion each of such costs
between the parties if it determines that apportionment is reasonable, taking into account the
circumstances of the case. With respect to the costs of legal representation and assistance
referred to in article 38, paragraph (e), the arbitral tribunal, taking into account the circumstances
of the case, shall be free to determine which party shall bear such costs or may apportion such
costs between the parties if it determines that apportionment is reasonable. Since then, all key
arbitral institutions worldwide have adopted international arbitration rules which are broadly in
keeping with this text. Rules of US bodies tend not to raise a presumption that costs shall be
awarded to the successful party, but do make it clear that this option is fully open.

The decision on costs depends on a member of different factors such as the arbitral tribunal in
question, the applicable law and the procedural rules governing the proceedings, so the
successful party may not always recover the entirety of the costs incurred.

Arbitration, costs generally comprise three categories; the cost of the arbitral institution (where
there is one), the fees and expenses of the arbitrators and a party’s direct costs (which include its
costs of legal representation and costs of any experts, out of pocket expenses).

In conclusion, there are two types of cost determination that is to say; administrative fees paid to
the arbitration association and arbitrator compensation expenses paid to the arbitrator who
decides the case.

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