Shs5 trillion locked up in disputes at commercial court

Wednesday November 18 2020
finance03pix

The failure to dispose of a substantial number of cases continues to tie up a lot of capital at the Commercial Division of the High Court. PHOTO | file

By Paul Murungi

At least more than Shs5 trillion is locked up in commercial disputes with some cases taking as much as 10 years to get resolved. 

This, according to Mr Patrick Gimara, the former Uganda Law Society president and board member of the International Centre for Arbitration and Mediation in Kampala, result from a large case backlog sitting at the Commercial Division of the High Court. 

Speaking at the launch of the Centre’s 2020-23 strategic plan, Mr Gimara said there was need to promote use of arbitration and mediation as non-litigation measures to reduce case backlog in the commercial sector. 

“We needed to support the private sector to enable businesses resolve disputes quicker. We are saddened by the fact that close to Shs5 trillion is caught in the justice system as a result of the ongoing disputes,” he said. 

On average, the Commercial Court receives a total of 2,000 cases annually with only half of these going up to disposal per annum. 

For instance, according to the 2013 annual report, the Commercial Court Division, received 2,417 of which 1,747 were disposed of. 

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However, the backlog, during the period grew to 4,165, which represented an average annual growth of 22.6 per cent. 

It is not clear how the current case backlog looks like, however, the average annual growth of at least 22.6 per cent is on a high end for a court that lacks in both financial and human resource. 

The Commercial Court has a mediation and arbitration division, however, Daily Monitor could not immediately ascertain how it has been performing.     

Mr Gimara said, a matter being locked up to four years, is quite a challenge not only to the business but also the country at large. 

Therefore, he said, in next the three years, the International Centre for Arbitration and Mediation in Kampala will seek to help businesses incorporate alternative measures of dispute resolution into their contracts such that in the event of a dispute there is way in which it can be resolved to save time and costs. 

During the launch, Mr Gideon Badagawa, the Private Sector Foundation Uganda executive director, said arbitration and mediation will drive down the cost of doing business in the private sector, especially for small and medium enterprises, which lose time and resources while pursuing cases. 

“One of the cost drivers of doing business is delayed justice. There are many contracts that we rush to sign in banking and insurance, but it is at the point of implementation of the agreement that many face challenges and are referred to the judicial system, which takes a long time,” he said.

Established in 2018, the International Centre for Arbitration and Mediation in Kampala was triggered by the overwhelming and growing number of commercial disputes, which provides ground for alternative and effective dispute settlement mechanism. 

Ms Norah Kaggwa, the International Centre for Arbitration and Mediation in Kampala registrar, said mediation and arbitration has a low cost attached which usually depends on the business costs attached to the case.  

So far, she said, the Centre has been active awarding four cases, out of the 22 that were registered, noting that they have also been building human resource capacity through partneships within and beyond Uganda.

The law and arbitration  
In Uganda, arbitration and mediation is governed by The Arbitration and Conciliation Act, which recognises the right of parties to agree to submit their disputes to an arbiter. 

The Act provides and recognises, party autonomy, in agreeing on how arbitrators may be appointed, the law governing the arbitral proceedings, the procedure of the arbitration and the duration of the same. 

Consequently, upon agreement of parties under their arbitration agreement, adhoc arbitration and institutional arbitration can legally be conducted in Uganda. 

editorial@ug.nationmedia.com

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