THE TIME FACTOR IN ARBITRATION: THE IMPORTANCE OF ABIDING BY TIMELINES IN LIGHT OF THE DECISION OF THE HIGH COURT OF UGANDA IN SMILE COMMUNICATIONS LTD VS. ATC UGANDA LTD & EATON TOWERS UGANDA LTD

Introduction

In arbitration, time is of utmost importance. The swift resolution of disputes stands as one of the core advantages of arbitration. Nonetheless, it’s not uncommon for one party to attempt to hinder the arbitral process by defaulting or dragging the proceedings, or for the arbitrator to prolong the arbitral proceedings.

In the recent decision of Smile Communications Uganda Limited vs ATC Uganda Limited & Eaton Towers Uganda Limited,[1] delivered on 11th April, 2023, by the High Court of Uganda at Kampala presided over by Justice Stephen Mubiru, the issue of timelines in Arbitration was put in the spotlight.

This opinion delves into the significance of time in ensuring the efficient progression of arbitral proceedings, as well as the potential strategies available to arbitrators and parties involved in arbitration to maintain the integrity of the process and guarantee compliance with both statutory and mutually agreed-upon arbitration timelines.

  • The Case

The case involved Smile Communications Limited (hereinafter referred to as “Smile”) on one side against ATC Uganda Limited and Eaton Towers Uganda Limited on the other side.

The key facts of the case are as follows: In 2012, Smile entered into a Colocation License and Services Agreement with ATC Uganda, and in 2013, it signed a Master Space Tower Use Agreement with Eaton Towers. Nevertheless, disputes emerged between the parties in 2018 regarding these agreements.

In both the agreements and the agreement appointing the arbitrator, it was stipulated that arbitration was to be completed within 90 days from the commencement date, or any alternative period mutually agreed upon by the parties and the arbitrator.

Contrary to the terms outlined in the agreements, the arbitrator carried out and completed the arbitration process in more than 10 months. What’s more, unbeknownst to Smile, the award was issued before the previously communicated delivery date set by the arbitrator.

In the award, which was delivered on 28th January, 2022, the arbitrator dismissed the applicant’s claims and ruled in favour of the respondents. Expressing dissatisfaction with the award, Smile subsequently filed an application with the High Court seeking to have the award set aside. One of the primary reasons cited by Smile in their bid to set aside the arbitral award was that the award was issued beyond both the statutory deadlines and the timelines stipulated in the agreement.

One of the issues for consideration by the High Court pertained to whether the arbitral award was indeed delivered beyond the statutory timelines, as well as those established in the arbitration agreement and agreed upon by the parties.

In ruling in favour of Smile on this matter, Justice Stephen Mubiru held that when the arbitration agreement specifies a time frame for the delivery of the award, and that stipulated period has lapsed without an extension being mutually agreed upon by the parties, an award issued by the arbitrator after this expiration is bad in law and conflicts with the mutually established terms binding both the parties and the arbitrator.

  • The Law on Timelines in Arbitration

Under the Arbitration and Conciliation Act, parties are free to agree on the procedure to be followed by the arbitral tribunal in the conduct of the proceedings.[2]

In the absence of any agreement or enlargement of time by the arbitrator, an arbitrator is required to make an arbitral award within two months from the date a dispute is referred to him or her.[3]

The process of arbitration commences on the day the claimant requests the respondent to refer their dispute to an arbitrator.[4] From that point, it will largely depend on the wording of the dispute resolution clause on whether the claimant can singly appoint an arbitrator; whether both parties need to agree on the appointment; or whether the matter should be taken before an arbitrator appointing body such as CADER to do the appointment. Ideally, this process should not take more than a month.

Once the dispute is formally brought before the arbitrator, he or she without any delay will appoint a day for a pre-arbitration or preliminary meeting which should reasonably not be held beyond two weeks from the date the request for arbitration is received, unless there is just cause to go beyond that, but in any case, it should not go beyond 21 days from the date the request is received.

It is usually at the pre-arbitration meeting where parties will agree on the timelines to be followed throughout the arbitral proceedings. It should be noted that although the parties are free to agree on a timeline, once a timeline is adopted, the arbitrator, as well as the parties, are all bound by that timeline unless the parties agree otherwise or the arbitrator enlarges it with the consent of the parties.

It is trite law that if parties have fixed the time limit for rendering the award, the time limit is extendable only by mutual consent.[5]

  • The Importance of Time in Arbitration

One of the fundamental principles guiding the administration of justice is the principle that justice should not be delayed.[6] A dispute must therefore be concluded expeditiously.

Resolving a dispute fast allows the parties to settle their differences fast and amicably. Delays frustrate both the proceedings and the parties and may also lead a party to withdraw a matter altogether.

Time is closely linked to cost in arbitration. The longer the arbitration proceedings take, the more a party may be likely to spend on legal fees and costs.

Delay is often seen when parties ask for unnecessary adjournments or fail to file documents or take a particular step within the timelines prescribed. It can also manifest where the arbitrator fails to deliver an arbitral award on the date or within the time agreed to by the parties.

Where a time limit is imposed within which the tribunal must make its award, failure to deliver an award within the specified time limit may mean that the parties’ consent to arbitration has lapsed and any arbitration award issued after the deadline may be unenforceable.[7]

The importance of keeping time in arbitration cannot, therefore, be overemphasized.

  • How to navigate delays
    • Where the Arbitrator fails to abide by the timelines

As against the arbitrator, it is trite that an arbitrator who acts beyond the procedure the parties have agreed to acts without jurisdiction. It has been held that where an award is made by the arbitrator in breach of the agreed procedure, the applicant is entitled to have it set aside, not because there has been necessarily any breach of the rules of natural justice, but simply because the parties have not agreed to be bound by an award made by the procedure in fact adopted.[8]

The rationale is that the arbitrator’s mandate terminates on the date the parties and arbitrator have mutually agreed to have the award rendered. If the award is not made either within the statutory period or within the period agreed to by the parties, the mandate of the arbitrator stands terminated as he or she becomes functus officio.[9]

The failure of the arbitrator to act within the timelines agreed upon is a ground for setting aside an arbitral award.[10]

  • Where the Parties fail to abide by the timelines

Against the claimant, the position of the law is that a claimant is supposed to file a statement of claim within the time agreed to by the parties or set by the arbitrator.[11] Where the claimant without sufficient cause fails to communicate his or her claim within the time agreed to by the parties or set by the arbitrator and no request for an extension of time within which to file the statement of claim is made, the arbitrator has the power to terminate the arbitral proceedings.[12] This provision is mandatory, though it is subject to the agreement of the parties.

Similarly, a Respondent too has to file his or her statement of defence within the time agreed to by the parties or set by the arbitrator.[13] In the absence of any agreement to the contrary and without any sufficient cause, should the Respondent fail to communicate his or her statement of defence within the time agreed to or apply to extend the time within which to file the defence, the law allows the arbitrator to continue the proceedings without the respondent’s defence.[14] However, the refusal or failure by the Respondent to file his or her statement of defence is not to be treated as an admission by the Respondent of the Claimant’s allegations.

Should either party fail to appear at the hearing or to produce any documentary evidence, the arbitrator has the power to continue the proceedings and make an arbitral award based on the evidence available before him or her.[15]

In all the scenarios above, the Arbitration and Conciliation Act only requires a demonstration that the failure of the claimant or respondent to follow the timelines is without sufficient cause. Sufficient cause is a matter which is to be decided by the arbitrator. The arbitrator will have to determine what constitutes sufficient cause, which will generally depend on the facts of the case and the justification of the defaulting party.[16]

It should be noted that before the arbitrator takes any of the foregoing measures, he or she should issue a warning that he or she is intending to take the particular action, failure of which may result in new delays and grounds for setting aside or refusal of enforcement of the award. This is against the backdrop that an arbitrator has an overarching duty to balance respect for the parties’ right to a fair trial against delay tactics.[17]

  • Conclusion

Undoubtedly, the flexibility of the procedure is one of Arbitration’s greatest advantages. However, this flexibility is often abused by the parties and arbitrators. Parties choose to have their disputes resolved through arbitration because they want to avoid the long and cumbersome litigation process.

If arbitration too is frustrated by unnecessary delays and failure to abide by set timelines, it stands the risk of receiving backlash and resentment from the public. Therefore, a dispute should not be in arbitration forever.

This article is to raise general awareness of issues and to stimulate discussion only. It does not constitute legal advice.


[1] High Court Arbitration Cause No. 0004 of 2022.

[2] Section 19, Arbitration and Conciliation Act, Cap. 4.

[3] Section 31(1), Arbitration and Conciliation Act, Cap. 4.

[4] Section 21, Arbitration and Conciliation Act, Cap. 4.

[5] NBCC Limited vs. JG Engineering Pvt. Ltd (2010) 2, SCC 385.

[6] Articl3 126 (2)(b), Constitution of the Republic of Uganda 1995 as amended.

[7] Smile Communications Uganda Limited vs ATC Uganda Limited & Eaton Towers Uganda Limited HCAC NO. 0004 of 2022.

[8] London Export Corporation Ltd vs. Jubilee Coffee Roasting Co. Ltd [1958] 1 WLR 271.

[9] Suryadev Alloys & Power Pvt. Ltd vs. Shri Govindariya Textiles Pvt. Ltd AIR (2010) SC 640.

[10] Smile Communications Uganda Limited vs ATC Uganda Limited & Eaton Towers Uganda Limited HCAC NO. 0004 of 2022.

[11] Section 23(1), Arbitration and Conciliation Act, Cap. 4.

[12] Section 25(a), Arbitration and Conciliation Act, Cap. 4.

[13] Section 23(1), Arbitration and Conciliation Act, Cap. 4.

[14] Section 25(b), Arbitration and Conciliation Act, Cap. 4.

[15] Section 25(c), Arbitration and Conciliation Act, Cap. 4.

[16] Rajoo (n 3).

[17] ibid.

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