Three steps back for arbitration

With the enactment of the National Arbitration and Conciliation (Amendment) Bill, whose main feature is the abolition of the Center for Arbitration and Dispute Resolution (CADR), specific changes have been introduced that have a fundamental effect on settling Disputes through Arbitration and Conciliation.

CADR was so badly mismanaged that lawyers and other stakeholders gave up on it, such that when finally it was abolished, there was little debate and discourse on the wisdom of such a decision. 

However, it should not be lost on us that Arbitration and Alternative Dispute Resolution (ADR), have become popular dispute resolution mechanisms in the last three decades, all over the world, in part because of the inefficiency of dispute resolution through Courts, characterized with expensive and winding processes, vast case backlog, as well as a desire for retaining control over dispute resolution yet arbitration in particular, offers commercial certainty of a final, binding and enforceable decision.

To foster arbitration as well as achieve uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice, The United Nation’s Commission on International Trade Law (UNCITRAL) adopted the UNCITRAL Model Law on International Commercial Arbitration in 1985, to harmonize and improve national laws, in all stages of arbitral processes from the arbitration agreement to the recognition and enforcement of the arbitral award and to achieve consensus on important issues of international arbitration practice. 

With uniformity achieved through a model law, which was then adopted by most jurisdictions, (including Uganda) it then became possible and now usual, for parties to choose jurisdictions, other than their own countries or where they are conducting business, as the jurisdiction for arbitration, as well as the laws applicable to resolution to any dispute. This possibility created business potential for countries that host arbitration processes, and with a good reputation as a credible arbitration center, investment by foreigners, as they feel they would have reliable dispute resolution mechanisms, in case of any commercial disputes.

Statistics now show that the number of cases and the total value of arbitral cases is growing significantly. construction, real estate banking and finance, logistics and parties from over 49 countries. 

Save for the older and well established centers like the London Court of International Arbitration, American Arbitration Association, Arbitration Institutes of Stockholm Chamber of Commerce, Swiss Chambers’ Arbitration Institution, many countries in the Middle East and African regions, have taken radicle steps to establish themselves as respectable Arbitration destinations to attract arbitration, including, amending the law to give it an outlook that is accommodative of international arbitration, opening new arbitration centers, including Dubai International Arbitration Center, Abu Dhabi International Arbitration Center, in the Middle East and in Africa International Arbitration Centers have been established in Johannesburg, Nairobi, Lagos, Kigali, etcetera. 

With the efforts of many jurisdictions to reform and improve arbitration, it was a welcome relief to hear that even Uganda was taking steps to improve the Center for Arbitration and Dispute Resolution, (CADR), which had gone many years without a governing council, thereby frustrating performance of the functions under Sections 11, 12, 13, 14,15, 51, and 68 generally, of the Arbitration and Conciliation Act reducing it to running in a shadowy way leading to many suits challenging decisions in appointing Arbitrators. 

However, the changes introduced in the amendment fall short of the changes desired and anticipated, in that instead of appointing a governing council, to streamline the Center’s work, the Arbitration and Conciliation (Amendment) Bill under S.4 abolished the Center altogether while creating a department to be known as the “Center for Arbitration and Dispute Resolution” in the Ministry under section 5. Section 6 repeals S. 69 which provides for a Governing body for the center while S.7 repeals S. 70 which hitherto provided for a secretariat of the center. These CADR organs play an essential role in arbitration and arbitral processes. 

Making an arbitration center a department in the ministry, when potentially government is a party to arbitral proceedings naturally compromises the principle of neutrality and the perception of a fair hearing for parties who may seek the services of the center. This raises questions whether credible arbitration center can exist in such an environment. 

Without delving deep into the efficacy of abolishing CADR, it is arguable that repealing the amendment Act and reinstating CADR would go a long way in rebuilding a credible arbitration center in Uganda, to support a court system which has been overrun by case backlog.

Julius Galisonga, MSc. CLDR, PhD (candidate) Advocate