Eyre Malik Agar v Gen. Moru Jijiyo and 3 Others (Miscellaneous Application No. 53 of 2023) [2023] UGCommC 18 (25 April 2023)

Key Facts

Transaction Type

Issues

• Whether the arbitration process involved fraudulent documentation, including inconsistent witness testimony about timelines, and whether the award was a scheme to defraud the Applicant of funds from his KCB Bank account.
• Whether the Applicant was validly served with arbitration documents via Fatuma Night, who was later revealed to be deceased and not a competent process server, and whether this invalidated the award.
• Whether the arbitral award (dated 11th July 2019) and associated garnishee orders were properly executed, given claims of invalid service of process, lack of arbitrator accreditation, and fraudulent proceedings.

Holdings

• The court rejected supplementary affidavits submitted after the hearing, as they deprived other parties of the opportunity to respond. It also dismissed allegations of witness misdirection by counsel, citing the credibility of sworn testimony during cross-examination. The ruling emphasized that courts cannot condone fraud or allow garnishee proceedings based on fraudulent awards.
• The court invalidated the garnishee orders (nisi and absolute) issued to enforce the fraudulent arbitral award. It ruled that the transfer of US$ 454,976 from the Applicant's KCB Bank account to the 3rd Respondent's Bank of Africa account must be reversed within two days, with interest accruing if not complied. The court also dismissed the 3rd Respondent's claim for instruction fees, citing failure to exercise due diligence.
• The court determined that the alleged arbitration proceedings and subsequent arbitral award (dated 11th July 2019) were fraudulent. Key findings included inconsistencies in the respondents' accounts of their presence in Uganda during the arbitration, invalid service of process by Fatuma Night (who was not a competent process server and had since deceased), and the arbitrator's false claims about conducting hearings in Uganda. The court concluded that no valid arbitration occurred, rendering the award a nullity.

Remedies

• The court ruled that the 1st and 2nd Respondents (Gen. Paulino Moru Jijiyo and Moses Abyeyi Marial Magol) must cover the Applicant's costs for Miscellaneous Application No. 053 of 2023, as they were found to have knowingly participated in the fraudulent arbitration proceedings leading to the award.
• The court allowed Miscellaneous Application No. 053 of 2023 and set aside the arbitral award dated 11th July 2019 (Arbitration Cause No. 003 of 2023) and the garnishee proceedings from Miscellaneous Application No. 013 of 2023. This was due to findings that the arbitration and its award were fraudulent, with no proper service of process and fabricated evidence.
• The court directed the 3rd Respondent (Anthony Ahimbisibwe & Co.) to return US$ 454,976, transferred from the Applicant's KCB Bank Account No. 2201976066 to the 3rd Respondent's Bank of Africa Equatorial Branch Account No. 07173840010, back to the Applicant within two days. Failure to comply would incur commercial interest from the ruling date until full repayment.

Contract Value

Monetary Damages

Legal Principles

• The court rejected supplementary affidavits filed after the hearing, citing improper procedure and lack of opportunity for cross-examination. It emphasized that affidavits must be properly sworn and evidence must be tested in court.
• The court set aside the arbitral award and garnishee proceedings as fraudulent, finding inconsistencies in witness testimonies (e.g., Moses Abyeyi Marial Magol's timeline) and invalid service of process by Fatuma Night. It ruled that the arbitration lacked legitimacy and the award was a tool for financial theft.
• The court acknowledged the 3rd Respondent's argument that the Applicant's application was an abuse of court process due to prior withdrawal of a similar application (Miscellaneous Application No. 32 of 2023). However, it did not adopt this principle as a basis for its decision.

Precedent Name

• Owani vs. Bukenya Salongo
• Surgipharm (U) Limited Versus Uganda Investment Authority and Graphics System (U) Limited
• MB Automobiles vs. Kampala Bus Service
• Makula International Versus His Eminence Cardinal Nsubuga

Key Disputed Contract Clauses

• The Applicant disputed the formation of the 2008 contract, asserting he was not in Uganda at the time and the signature on the agreement was forged. The Respondents maintained the contract was validly formed. The court found discrepancies in the parties' locations and concluded the contract's execution violated Section 10(1) of the Contracts Act 2010.
• The court analyzed the arbitration clause in the 2008 contract, which designated Peter Chuol Gatluak as the arbitrator. The Applicant argued the clause was invalid due to the arbitrator's lack of accreditation under the Arbitration and Conciliation Act, while the Respondents claimed it was lawfully appointed via the contract. The court found the arbitrator unaccredited and his appointment non-compliant with legal requirements.

Cited Statute

• Arbitration and Conciliation Act
• Civil Procedure Rules
• Contracts Act 2010

Judge Name

Passage Text

• Peter Chuol Gatluak informed this Court on oath [...] and this also goes to prove that no arbitration proceedings took place at Mukono [...] and the resultant arbitral award [...] is a nullity and is hereby set aside.
• I therefore allow Miscellaneous Application No. 053 of 2023 and hereby set aside all garnishee proceedings arising from Mukono High Court Miscellaneous Application No. 013 of2023 and Mukono High Court Arbitration Cause No. 003 of 2023.
• Court finds that all documents in support of this alleged arbitration [...] were all fraudulent and were all designed to steal money from the Applicant's Account Number [...] with KCB Bank.

Damages / Relief Type

• Ordered transfer of US$ 454,976 back to Applicant's KCB Bank account within 2 days.
• Costs of the application awarded against 1st and 2nd Respondents for orchestrating fraudulent proceedings.
• Court set aside arbitral award and garnishee proceedings as fraudulent.