[2005] UGCommC 40

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M. STEEL LIMITED RESPONDENT \par }{\insrsid8206633 \par }{\b\ul\insrsid8206633\charrsid7217123 BEFORE}{\b\ul\insrsid2375196 :}{\b\ul\insrsid8206633\charrsid7217123 THE HONOURABLE MR. JUSTICE FMS EGONDA-NTENDE \par \par RULING \par }{\insrsid8206633 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid13041864 \hich\af0\dbch\af0\loch\f0 1.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid15740213 { \insrsid13041864 Kilembe Mines Limited, hereinafter called the }{\insrsid12791599 applicant}{\insrsid13041864 are seeking to set aside an arbitral award }{\insrsid15563135 dated 13}{\super\insrsid15563135\charrsid15563135 th}{\insrsid15563135 December 2004, issued against the applicant, in favour}{\insrsid3607822 of}{\insrsid15563135 B. M. Steel Limited, hereinafte}{\insrsid12791599 r referred to as the respondent, in which the applicant}{\insrsid15563135 were o}{\insrsid12791599 rdered to pay to the respondent}{\insrsid15563135 a sum of shs.}{\insrsid941313 3,488,427,789.00 }{\insrsid3607822 being special and general damages, }{\insrsid941313 with }{\insrsid6515932 interest at 25% per annum on }{\insrsid16276343 the }{ \insrsid3356669 special damages in the }{\insrsid16276343 sum of shs.3,233,427,789.00}{\insrsid10164543 from 13}{\super\insrsid10164543\charrsid10164543 th}{\insrsid10164543 November 2001 to 30}{\super\insrsid10164543\charrsid10164543 th}{ \insrsid10164543 June 2004, and interest on the whole sum at the rate of 6% per annum from the date of}{\insrsid6560247 the award till payment in full, and the costs of the respondent before the arbitrator.}{\insrsid3356669 The respondent opposes this application}{\insrsid7933917 .}{\insrsid8206633 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid544269 \hich\af0\dbch\af0\loch\f0 2.\tab}}{\insrsid544269 The brief background is that the parties entered into a lease and provision of services }{\insrsid92535 agreement under which the applicant let out certain areas on its premises, equipment, and supply of electricity at 33KV to the respondent on the terms and conditions set out therein. The agreement was signed on the 13}{\super\insrsid92535\charrsid92535 th }{\insrsid92535 November 2001 for a term of five years. }{\insrsid1263000 Within the first year of the agreement parties developed i ntermittent disputes, that resulted in the termination of the agreement, apparently by the respondent, and relocation to Mbarara. }{\insrsid15998486 Following the relocation arbitral proceedings were commenced and an award made. It is that award that is the subject of these proceedings.}{\insrsid544269 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid7933917 \hich\af0\dbch\af0\loch\f0 3.\tab}}{\insrsid7933917 The application }{\insrsid15998486 put}{\insrsid3083854 s}{\insrsid15998486 forth}{\insrsid2563694 4 grounds. Firstly}{ \insrsid6648724 , that the arbitral procedure violated the agreement of parties who had agreed on conciliation which was in progress at the}{\insrsid1530357 time}{\insrsid6648724 the arbitration procedure was unilaterally }{\insrsid13312318 initiated. Secondly that the learned Arbitrator expressed evident partiality in the conduct of proceedings. Thirdly}{\insrsid1004682 that the applicant was disabled from properly presenting all its evidence to support its case by the arbitrator}{ \insrsid13779954 . And fourthly that the arbitrator misconducted himself when he failed to distinguish between the general and special damages or to properly apply the law governing assessment of damages and hence his award in relation to damages was an obvious error.}{\insrsid16654784 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid16654784 \hich\af0\dbch\af0\loch\f0 4.\tab}The }{\insrsid12791599 respondent}{\insrsid16654784 opposed this application, and firstly at the hearing raised three points of law which, it was submitted by Mr. Oine, lea}{\insrsid12791599 rned counsel for the respondent}{\insrsid16654784 , would dispose of the whole application. I shall deal with those points first. }{\insrsid4671974 Firstly Mr. Oine submitted that this application does not arise }{\insrsid15564095 under }{\insrsid12791599 reference nu}{\insrsid5774516 mber AC No. 11 of 2}{\insrsid12791599 004, under which the respondent}{\insrsid5774516 filed the award in this court. }{\insrsid6954269 The award therefore that this pre}{\insrsid12791599 sent application intends to set}{\insrsid6954269 aside is not the award that is registered as AC No. 11 of 2004, if I understood, Mr. Oine correctly}{ \insrsid5195806 . }{\insrsid1530357 A}{\insrsid5195806 s this application does not arise from the cause registered as AC No}{\insrsid12791599 . 11 of 2004, it infringes Rule}{\insrsid5195806 3 of the }{\insrsid13774554 Arbitration Rules}{\insrsid5195806 in the First Schedule }{\insrsid6648724 }{\insrsid13774554 to the Arbitration and Conciliation Act}{\insrsid8607510 , hereinafter referred to as the ACA}{\insrsid13774554 .}{\insrsid7933917 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid13774554 \hich\af0\dbch\af0\loch\f0 5.\tab}}{\insrsid13774554 Secondly Mr. Oine submitted that }{\insrsid5512200 the }{\insrsid12791599 notice notifying the applicant}{\insrsid13184591 of the filing of the }{\insrsid5512200 award issued by the arbitrator was served on the }{\insrsid12791599 applicant}{\insrsid6689510 on 15}{\super\insrsid6689510\charrsid6689510 th}{\insrsid6689510 December 2004}{\insrsid13184591 . The respodents inquired from the Registrar Commercial Court if any application to set aside the award had been filed. The Registrar responded by letter on the 17}{\super\insrsid13184591\charrsid13184591 th}{\insrsid13184591 March 2005, and notified the respodents that no application had been filed to set aside the award. He submitted therefore that this application was out of time, as it had not been filed within 90 days as required by Rule }{\insrsid12264559 7(1) of the Arbitration Rules.}{\insrsid13774554 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid7361341 \hich\af0\dbch\af0\loch\f0 6.\tab}}{\insrsid7361341 Thirdly, Mr. Oine submitted that this application had been overtaken by events as the Government of Uganda which is the majority shareholder in }{\insrsid11940673 the applicant had accepted the award, and instructed the }{\insrsid12791599 applicant}{ \insrsid11940673 to cease any further legal proceedings in respect of the same.}{\insrsid2390295 Mr. Oine therefore prayed that this application should be struck out.}{\insrsid7361341 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid4654084 \hich\af0\dbch\af0\loch\f0 7.\tab}}{\insrsid4654084 Mr. Nangawala, learned counsel for the }{\insrsid12791599 applicant}{\insrsid8461210 , in answer to the above submissions, replied that}{\insrsid13705440 this application was made under Section 34(3) of the ACA which provides for the filing of an application within 30 days of receipt of the award}{\insrsid14566405 , rather }{ \insrsid1530357 than }{\insrsid14566405 Rule 7 of the Rules which provides for o}{\insrsid10948798 bjections to}{\insrsid12791599 be}{\insrsid10948798 made within 90 days.}{\insrsid1004201 The Registrar\rquote s letter must have been i nadvertent as he signed the chamber summons on 19}{\super\insrsid1004201\charrsid1004201 th}{\insrsid1004201 January 2005.}{\insrsid10948798 As regards the question of whether this application was filed under AC No. 11 of 2004 or not, this was a technicality and not a substantive matter}{\insrsid1004201 . }{\insrsid4654084 }{\insrsid6305151 With regard to the instructions of the Mi nister to the board of the applicant to}{\insrsid12791599 }{\insrsid6305151 withdraw}{\insrsid11608855 these proceedings, Mr. Nangwala stated that the PERD Statute recognises the role }{\insrsid1530357 of }{\insrsid7173597 the board of directors of an enterprise }{\insrsid11608855 in corporate governan}{\insrsid7173597 ce.}{\insrsid4654084 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid15093441 \hich\af0\dbch\af0\loch\f0 8.\tab}}{\insrsid15093441 Starting with the first of the points raised by Mr. Oine, }{\insrsid12648701 it is true that this application is listed under Miscellanous Causes and not Arbitral Causes and in particular not Arbitral Cause No. 11 of 2004, under which the award of the arbitrator was filed. }{\insrsid10098256 Rule 3}{\insrsid3429355 of the Arbitral Rules states, }{\insrsid11759561 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid7566449 {\fs20\insrsid3429355\charrsid7566449 \'93}{\fs20\insrsid15103863\charrsid7566449 An award on being f iled or registered shall be given its serial number in the civil list, and all subsquent proceedings in connection with it shall be similarly numbered.\'94}{\fs20\insrsid7173597\charrsid7566449 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid13311139 \hich\af0\dbch\af0\loch\f0 9.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid15740213 { \insrsid13311139 Arbitral Causes and Miscallanous Causes are all part of the civil list of this court. And in any case a re issued by the court, and not the parties. If this was a substantial mistake, which I do not think it is, the fault would lie at the feet of this court, and not the party who brought forth documents for filing.}{\insrsid6902013 This is a technicality which cannot defeat substantive justice, given Article }{\insrsid3290148 126 (2) (e) of the Constitution of Uganda. }{\insrsid15103863 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid2315723 \hich\af0\dbch\af0\loch\f0 10.\tab}}{\insrsid2315723 Turning to the second of }{\insrsid5794135 the respondent\rquote s }{\insrsid2315723 objections, Section 34 (3) provides, }{ \insrsid11759561 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid11759561 {\fs20\insrsid2315723\charrsid11759561 \'93}{\fs20\insrsid9776983\charrsid11759561 An application for setting aside the arbitral award may not be made after one month has elapsed from the date on which the party making that application had received the arbitral award, or if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral award.\'94}{ \fs20\insrsid2315723\charrsid11759561 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid1990236 \hich\af0\dbch\af0\loch\f0 11.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid15740213 { \insrsid1990236 Rule 7 of the Arbitration Rules states, }{\insrsid3219930 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid10752423 {\fs20\insrsid1990236\charrsid3219930 \'93 (1) Any party who objects to an award filed or registered in the court may, within ninety days after the notice of the filing of the award has been served upon that party, apply for the award to be set aside and lodge his or her objections}{ \fs20\insrsid5794135\charrsid3219930 to it, together with necessary copies and fees for serving them upon the other parties interested.\'94}{\fs20\insrsid1990236\charrsid3219930 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid2626449 \hich\af0\dbch\af0\loch\f0 12.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid15740213 { \insrsid2626449 It would appear to me that here we have a situation where the rules and the principal legislation are at variance over the same subject}{\insrsid8655109 . However it is not necessary to consider this conflict or even to resolve }{ \insrsid1530357 it in order }{\insrsid8655109 to decide the point raised by Mr. Oine. The }{\insrsid12791599 applicant}{\insrsid8655109 lodged this application on 1}{\insrsid13584160 2}{\super\insrsid13584160\charrsid13584160 th}{\insrsid13584160 January 2005, less than 30 days from the announcement of the award or serving of the same upon the }{\insrsid12791599 applicant}{\insrsid13584160 . The letter of the Registrar of 19}{\super\insrsid13584160\charrsid13584160 th}{\insrsid13584160 March 2005 purpoting to say that no application had been filed, was obviously written in error, and cannot be dispostive of }{\insrsid13572322 this issue.}{\insrsid2626449 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid13572322 \hich\af0\dbch\af0\loch\f0 13.\tab}}{\insrsid13572322 Turning to the last of the preliminary points of law raised by the respondent, }{\insrsid1128122 if I unde rstood Mr. Oine correctly, }{\insrsid6488959 it is the contention of the respondent, that }{\insrsid1128122 this application had been overtaken by events and must be struck out, because the Minister in charge of Privatisation}{\insrsid7692222 , Hon. Professor Kasenene,}{\insrsid1128122 had directed the }{\insrsid12791599 applicant}{\insrsid1128122 to cease legal proceedings in respect of this matter}{\insrsid6488959 . No authority, statutory or otherwise, is cited to support this proposition raised as a point of law. }{\insrsid1530357 Neither did Mr. Oine seek in aid of his position the regulations of the company, in the form of articles of association. }{ \insrsid14292 I am therefore wondering how it can be taken as a point of law. Was the Minister\rquote s directive }{\insrsid2475 lawful? }{\insrsid1530357 May be f}{\insrsid2475 ar from it. Though shareholders have an interest in the company in which they hold shares, }{\insrsid1530357 such interest is exercised in properly appointed organs of the company, including general meetings, in the case of shareholders, or any other means, authorised by law or the articles of association of the company}{\insrsid15801788 .}{\insrsid7813502 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid7813502 \hich\af0\dbch\af0\loch\f0 14.\tab}Section 9 of the Public Enterprises Reform and Divestiture Act, provides, }{\insrsid13762939 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid13762939 {\fs20\insrsid7813502\charrsid13762939 \'93(1) In the mana gement of public enterprises, Government Policy shall recognise the need for the following fundamental conditions---- }{\fs20\insrsid3219930 }{\fs20\insrsid7813502\charrsid13762939 (a) autonomy in public enterprise management, which shall be deemed to be freedom of the enterprise to manage its operational and financial affairs efficiently without interference or hindrance;\'94 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid16213522 \hich\af0\dbch\af0\loch\f0 15.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid15740213 {\insrsid16213522 It would appear to me that the Minister\rquote s actions amounted to interference }{\insrsid6035967 in the}{\insrsid16213522 }{\insrsid1530357 autonomy of }{\insrsid16213522 the public enterprise}{\insrsid7692222 to manage its operational and financial affairs.}{\insrsid11550426 To institute suits or legal actions and defend the same is the comp}{\insrsid6035967 e}{\insrsid11550426 tence of those }{\insrsid2558293 in }{\insrsid11550426 charge of }{ \insrsid2558293 the management of an enterprise}{\insrsid11550426 , and that is the board of directors, with its management, and not for the shareholders}{\insrsid5646586 , whether the shareholder be government or private individuals}{\insrsid6035967 , unless the regulations of the company provide otherwise}{\insrsid11550426 .}{\insrsid2558293 For companies owned by government, Section 9 aforesaid reinforces the independence of management to do this.}{\insrsid6955977 It is axiomatic that the Minister\rquote s position was }{\insrsid5531155 inimical to}{\insrsid6251384 the interests of the public enterprise.}{\insrsid16213522 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid11751544 \hich\af0\dbch\af0\loch\f0 16.\tab}}{\insrsid11751544 I am satisfied that the preliminary points of law raised by Mr. Oine have no merit, and they are rejected accordingly. }{ \insrsid6035967 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid11751544 \hich\af0\dbch\af0\loch\f0 17.\tab}}{\insrsid11751544 I shall now turn to}{\insrsid5318883 the grounds of}{\insrsid11751544 the }{\insrsid5318883 main application.}{ \insrsid15231579 The first ground }{\insrsid3306766 was that arbitral proceedings violated a prior agreement of the parties to go to conciliation, which was in progress at the time the arbitral proceedings were instituted.}{\insrsid3878822 This ground was not argued by Mr. Nangwala. }{\insrsid1196800 Under Section 62 of the ACA, if conciliation proceedings continue between the parties, no arbitral or judicial proceedings may be initiated in respect of the same dispute}{\insrsid13965860 .} {\insrsid11751544 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid13965860 \hich\af0\dbch\af0\loch\f0 18.\tab}}{\insrsid13965860 In the instant case}{\insrsid16405008 ,}{\insrsid13965860 on the evidence of Bob Makoma, in his affidavit in support of the application, I am unable to find that conciliation proceedings had effectively commenced}{\insrsid8988435 , as no conciliatior or conciliators had been appointed by the parties. The Minister of State for Fina}{\insrsid12791599 n}{\insrsid8988435 ce, in charge of privatisation, had }{\insrsid9840073 taken steps in investigating the matter with independent experts, but there is no evidence that the parties had appointed a conciliator. And before such an appointment could be made, I am unable to find that there were conciliation proceedings in progress, which barred the institution of arbitral proceedings.}{\insrsid13185801 This ground therefore fails.}{ \insrsid13965860 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid7160325 \hich\af0\dbch\af0\loch\f0 19.\tab}}{\insrsid7160325 I now turn to the second gr ound, and that is that the learned arbitrator expressed evident partiality in the conduct of the arbitration proceedings.}{\insrsid6961200 Mr. Nangwala for the }{\insrsid12791599 applicant}{\insrsid6961200 submitted that the arbitrator refused to accept the request of the }{\insrsid12791599 applicant}{\insrsid6961200 for appointment of an additional arbitrator. Secondly he rejected a}{\insrsid6385188 report that had been agreed would be tendered into evidence, in spite of the parties having agreed }{\insrsid12791599 that}{\insrsid6385188 the Civil Procedures Rules will be applied with flexibility. Thirdly he refused the applicant to call two witn esses, an auditor and an electrical engineer, whose testimony was necessary for the case for the applicant.}{\insrsid10246013 Fourthly that the arbitrator selectively relied on parts of the Electrical Engineer\rquote s report that supported the case for the respondent and ignored those parts that supported the case for the applicant.}{\insrsid15205896 For instance the engineer examined the protection systems of either part}{\insrsid12723748 y}{\insrsid15205896 on their installations. He found and stated in his report}{\insrsid12723748 that the system for the respondent was not offered adequate protection against incoming disturbances.}{\insrsid12665842 He also found that the two sy}{\insrsid12791599 s}{ \insrsid12665842 tems were basically incompatible, and that neither party appreciated this. Had the Arbitrator paid due regard to this evidence he may have found that }{\insrsid9634667 the agreement between the parties was vitia ted by a fundamental mistake of fact.}{\insrsid13185801 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid13593511 \hich\af0\dbch\af0\loch\f0 20.\tab}}{\insrsid13593511 The electrical consultant in his report apportioned blame 70/30 as against the applicant something the arbitrator did not even consider at face value.}{\insrsid13529684 The arbitrator failed to consider evidence which showed that respon dent had accepted blame for the }{\insrsid4879324 occurrence of the damage to the respondent\rquote s transformer}{\insrsid16285271 as contained in the letter of respondent to the applicant dated 13}{\super\insrsid16285271\charrsid16285271 th}{ \insrsid16285271 Februar}{\insrsid9449985 y 2002 annexed to the applicant\rquote s affidavit in support of this application as Annexture K}{\insrsid5713403 5}{\insrsid9449985 (See affidavit of Mr. Makoma}{\insrsid10494327 dated 12}{ \super\insrsid10494327\charrsid10494327 th}{\insrsid10494327 January 2005}{\insrsid4879324 .}{\insrsid16728070 ) \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid16728070 \hich\af0\dbch\af0\loch\f0 21.\tab}Mr. Nangwala further attacked the arbitrator\rquote s award of special damages as evidence of partiality}{\insrsid5929383 without evidential evaluation, relying on a report}{\insrsid397813 that did not disclose its source materials. The arbitrator did not address himself to the standard of proof. On the contrary when he came to the applicant\rquote s counter claim}{ \insrsid9266108 he engaged into deep anaylsis resulting in the rejection of the claim.}{\insrsid9788811 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid9788811 \hich\af0\dbch\af0\loch\f0 22.\tab}Mr. Oine, for the }{\insrsid12791599 respondent}{\insrsid9788811 , submitted that }{\insrsid12066998 this court in entert aining this application does not act as an appellate court, and cannot re-examine and re-appraise the evidence in the case.}{\insrsid8477882 The arbitrator did not refuse the engineer to testify and as such this cannot be used as proof of }{ \insrsid815226 partiality}{\insrsid10706435 . The arbitrator\rquote s assessment of evidence before him and attachment of weight does not display evident partiality.}{\insrsid417030 }{\insrsid12791599 There}{\insrsid8877252 is no evidence that the arbitrator was induced or acted fraudulently or acted in bad faith.}{\insrsid417030 The allegation of bias is a very grave one for which the burden of proof is quite high. Bias must be actual or imputed. There is no evidence before the court to support this charge.}{\insrsid4201037 W}{\insrsid4336985 hat is before the court are mere suspicions.}{\insrsid6965794 He referred to the }{\insrsid2063983 London Martime Arbitration by Clare Amborse and Karen Maxwell 1996, Yugasta Construction Ltd v Coffee Marketing Board, AC No. 1 of 1884, Total Uganda Ltd v v Buramba General Agencies, AC No. 3 of 1998}{\insrsid9572736 in support of his submissions under this head.}{\insrsid13593511 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid10689360 \hich\af0\dbch\af0\loch\f0 23.\tab}}{\insrsid10689360 Section 18 of the ACA states, \'93The parties shall be treated with equality, and each party shall be given reasonable opportunity for presenting his or her case.\'94 The aribitrator is obliged to treat the parties before }{\insrsid4409266 him or her }{\insrsid10689360 equally}{\insrsid12791599 .}{\insrsid8873320 Evident partiality does not have to be actuated by dishonesty}{\insrsid15031773 , fraud or corrruption}{\insrsid4409266 .}{\insrsid15031773 The motivation for the partiality is not brought into issue here. What is importa}{\insrsid12353015 nt is being even with all the parties before him or her in }{\insrsid12329751 permitting }{\insrsid12353015 the presentation}{\insrsid8412059 of}{\insrsid12329751 their cases}{\insrsid12353015 , consideration}{\insrsid12329751 of the same}{ \insrsid12353015 , and decision}{\insrsid12329751 making}{\insrsid11014424 by the arbitrator.}{\insrsid7634298 What is required to be established is that there was evident partiality by the arbitrator}{\insrsid6035967 (}{\insrsid7634298 s}{ \insrsid6035967 )}{\insrsid7634298 . If it is demonstrated that the scales were not even}{\insrsid5262200 , and this is evident on the record, or in the award, or by some other evidence}{\insrsid10908203 , partiality will have been established.}{ \insrsid10689360 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid5979725 \hich\af0\dbch\af0\loch\f0 24.\tab}}{\insrsid5979725 Mr. Nangwala submitted th}{\insrsid7873488 at the arbitrator scrutinised proof of the applicant}{\insrsid6035967 \rquote }{ \insrsid7873488 s counter-claim without subjecting the respondent}{\insrsid6035967 \rquote }{\insrsid7873488 s claim of special damages to the same level of scrutiny. }{\insrsid4209284 To verify this allegation we need to turn to the award and examine how the arbitrator dealt with the said matters.}{\insrsid11339179 I shall set out first how the arbitrator dealt with the respondent}{\insrsid6035967 \rquote }{\insrsid11339179 s special damages. }{\insrsid6898957 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid5321309 {\fs20\insrsid11339179\charrsid6898957 \'93 (b) The Claimant claimed special damages. The principle to follow in the circumstances is that special damages must be specifically pleaded and proved. We shall be guided by the same principle. }{\fs20\insrsid3487168\charrsid6898957 The claimant pleaded and proved special damages mainly through evidence of CW1, Francis Mwebesa, and CW5 Acholio Evert William, a certified Public Accountant. Reliance was also made }{\fs20\insrsid1794118\charrsid6898957 on the report (cont ained in pages 1 to 6 of claimants bundle No.1). It should be noted that this oral and documentary evidence was never challenged. It was specifically pleaded and proved. Therefore, BMS is entitled to special damages,which it pleaded and proved as follows: }{\fs20\insrsid13336498 }{\fs20\insrsid1794118\charrsid6898957 (i) Ug. Shs.}{\fs20\insrsid9517832\charrsid6898957 821,957,546/= as lost income for 7 \'bd hours per day due to unavailability of power from 1/6/2001-18/6/2003.}{\fs20\insrsid13336498 }{\fs20\insrsid9517832\charrsid6898957 (ii) Ug. Shs.503,059,846/= being loss income as a result of the Respondent\rquote s failure to supply scrap as agreed. }{\fs20\insrsid13336498 }{\fs20\insrsid9517832\charrsid6898957 (iii) Ug. Shs.292,}{\fs20\insrsid6121156\charrsid6898957 803,396/= as lost income as a result of the claimant procuring }{\fs20\insrsid14445876\charrsid6898957 scrap from other sources after the respodent had failed tosupply scrap as agreed. }{\fs20\insrsid13336498 }{\fs20\insrsid14445876\charrsid6898957 (iv) Ug. Shs.888,413,939/=}{\fs20\insrsid16140067\charrsid6898957 lost income as a result of insufficient}{ \fs20\insrsid2059832\charrsid6898957 fluctuating and surging power from 1/6/2001 to 18/6/2003. }{\fs20\insrsid13336498 }{\fs20\insrsid2059832\charrsid6898957 (v) Ug. Shs.}{\fs20\insrsid5577293\charrsid6898957 48,192,170/= being costs for the replacement and repairs of the damaged transformer of the furnace of the Claimant. }{\fs20\insrsid13336498 }{\fs20\insrsid5577293\charrsid6898957 (vi) Ug. Shs.671,769,231/= being costs for the relocation}{\fs20\insrsid12525982\charrsid6898957 of the furnace from Kilembe to Mbarara and its associated expenses. }{\fs20\insrsid13336498 }{ \fs20\insrsid12525982\charrsid6898957 (vii)}{\fs20\insrsid12807444\charrsid6898957 Shs.32,341,961 being costs to the consultant to evaluate and prepare actual loss suffered by the Claimant as a result of breach of contract by the Respondent. (For ease of reference and how or why and when the figures were arrived at, refer to the Report in Claimant\rquote s bundle from page 2 to page 6 and evidence of CW5}{\fs20\insrsid15228326\charrsid6898957 ).\'94}{\fs20\insrsid10689360\charrsid6898957 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid15228326 \hich\af0\dbch\af0\loch\f0 25.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid15740213 {\insrsid15228326 The arbitrator }{\insrsid1583295 examined in great detail the evidence in support of the applicant\rquote s counter-claim}{\insrsid15737374 . In part, the award reads, }{\insrsid11237833 }{\insrsid1407817 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid5321309 {\fs20\insrsid15737374\charrsid152486 \'93 A number of questions arise at the stage. Apart from Shs175,134,502/= which was sufficiently explained, where did the rest of the figures on document \'93XX\'94 come from? When did they arise}{\fs20\insrsid12679495\charrsid152486 (period)? How did they arise given the payment arrangments in the Agreement that required advance payment for particular items? }{\fs20\insrsid11237833\charrsid152486 }{ \fs20\insrsid12679495\charrsid152486 Regarding }{\fs20\insrsid9509719\charrsid152486 the arrears account, (Shs.175,135,502/=) i t would appear clearly that it was balances on obligations owing by BMS to KML arising from previous Agreements. This is derived fro}{\fs20\insrsid16321841\charrsid152486 m the fact that balances were closed in an arrears account as at 30/4/2000, even though reconciliation was done only in May 2002. The retrospective effect meant that the parties were acknowledging their obligations as before 13}{ \fs20\super\insrsid16321841\charrsid152486 th}{\fs20\insrsid16321841\charrsid152486 November 2001 when the new agreement was signed. That being the case, the }{\fs20\insrsid2753167\charrsid152486 obligations under previous Agreements cannot be within the competence of the Tribunal to entertain, even if the parties may acknowledge them. This is the case with Letter Annexture \'93O\'94 to the Response to the claim, in which BMS acknowledge the indebtness}{\fs20\insrsid5917900\charrsid152486 . }{\fs20\insrsid11237833\charrsid152486 }{\fs20\insrsid5917900\charrsid152486 It must be stated here clearly that jurisdiction of the Tribunal is limited to the mandate derived from the Agreement of the 13}{\fs20\super\insrsid5917900\charrsid152486 th}{\fs20\insrsid5917900\charrsid152486 November 2001,}{\fs20\insrsid7082639\charrsid152486 which had an arbitration clause in it. It does not refer to any pr evious engagements of parties even if the parties themselves may wish to recognise those obligations. Therefore, the Tribunal is unable to pronounce itself on matter of Shs175,135,502/= that clearly arose out of previous arrangments over which it has no j urisdiction. }{\fs20\insrsid11237833\charrsid152486 }{\fs20\insrsid7082639\charrsid152486 Regarding rent, electricity power, scrap and other services, reliance has to be made document \'93XX\'94 attached to the Respondent\rquote s response to the claim. The essence of document \'93XX\'94 has already been explained. These are what the Respondent claimed as special damages}{\fs20\insrsid12346275\charrsid152486 (see and relate this document to paragraph 25 of the Response to the claim). }{\fs20\insrsid11237833\charrsid152486 }{\fs20\insrsid152486\charrsid152486 }{\fs20\insrsid12346275\charrsid152486 However, the earlier questions still remain answered. It is not clear how were those figures}{ \fs20\insrsid1140495\charrsid152486 were arrived at . For example, for what period is the power account of Shs.196,864,320/=? For how much power consumed? How does the figure accrue? Rent for space of Shs}{\fs20\insrsid9182709\charrsid152486 27,027,000/= for how many months and what period? How much was the rent in for Ch. 12, and how many months-rent totaled up to Shs.900,000/=? Scrap Account of Shs.5,282,695/=, how many tones supplied? When? Under what circumstances did this arise and gvien the arrangement of advance payment before supply as per Agreeement? How did it arise? (See Article 5.3) Other than summaries}{\fs20\insrsid7036396\charrsid152486 in document \'93XX\'94 whose source is apparently unclear, where are the supporting documents, receipts, invoinces, vouchers and demand notes? The principle is that special damages must not only be spefically pleaded but also proved. It would have been expected for RW3}{ \fs20\insrsid7799468\charrsid152486 Ntungwa Louis to avail this information which he did not. In the circumstances, no other evidence rem ained to prove the claim of Shs.414,033,297/-. Therefore, the claim cannot stand even without the denial by the Claimant that it owes nothing.\'94}{\fs20\insrsid4594904 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid11951459 \hich\af0\dbch\af0\loch\f0 26.\tab}}\pard \ql \fi-360\li720\ri1440\sl360\slmult1\widctlpar \jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin1440\lin720\itap0\pararsid15740213 {\insrsid11951459 The arbitrator went to great length to examine the claim for }{\insrsid2387456 special damages of the applicant, asking the proper the questions to determine if it had been proved or not. This assessment is in sharp contrast with his treatment of the respondent\rquote s claim for special damages. No questions were asked}{\insrsid13764917 . It was just accepted, line, hook and sinker!}{\insrsid9708145 Had the arbitrator }{\insrsid1062811 applied the same level of scrutiny to }{\insrsid9708145 the respondent}{\insrsid6035967 \rquote }{\insrsid9708145 s claim for special damages, }{ \insrsid1062811 as he applied to the applicant}{\insrsid6035967 \rquote }{\insrsid1062811 s claim, }{\insrsid12611561 it should have been apparent to the arbitrator}{\insrsid6385809 the respondent}{\insrsid6035967 \rquote }{\insrsid6385809 s claim }{ \insrsid416234 for }{\insrsid6385809 special damages }{\insrsid416234 had }{\insrsid6385809 several troubling aspects.}{\insrsid16588601 For this to be clear on}{\insrsid6035967 e}{\insrsid16588601 needs to look at Report of CW5 which was relied upon. I set it out in full. }{\fs20\insrsid2645540 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b\f1\fs16\insrsid12063973 \'93}{\b\f1\fs16\insrsid725140\charrsid13790097 B. M. STEEL LTD.}{\fs20\insrsid725140\charrsid1714169 \par }{\b\f1\fs16\insrsid725140\charrsid13790097 \par Item 1 loss of income due to unavailability of electric power. \par \par }\pard\plain \s15\qj \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 \f1\fs24\lang2057\langfe1033\cgrid\langnp2057\langfenp1033 {\fs16\insrsid725140\charrsid13790097 Under Article 4 of the Agreement between the Kilembe Mines Ltd and B. M. Steel Ltd. Kilembe Mines Ltd. had to supply at 33KV all Electric Power required by B. M. Steel Ltd. and consumed by their furnace and its auxiliaries. \par \par All the required power was not supplied. The period in which Kilembe Mines Ltd. had to supply power is from 1}{\fs16\super\insrsid725140\charrsid13790097 st}{\fs16\insrsid725140\charrsid13790097 June 2001 to 18 June 2003. \par \par {\pntext\pard\plain\s15 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 i)\tab}}\pard \s15\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx1440{\*\pn \pnlvlbody\ilvl0\ls3\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls3\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 The number of days from 1}{\fs16\super\insrsid725140\charrsid13790097 st}{ \fs16\insrsid725140\charrsid13790097 June 2001 to 18}{\fs16\super\insrsid725140\charrsid13790097 th}{\fs16\insrsid725140\charrsid13790097 June 2003 are:- \par }\pard \s15\qj \li1440\ri1440\widctlpar{\*\pn \pnlvlcont\ilvl0\ls0\pnrnot0\pndec }\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 2001 1}{\fs16\super\insrsid725140\charrsid13790097 st}{ \fs16\insrsid725140\charrsid13790097 June 31 December \tab =\tab 214 days \par 2002 1}{\fs16\super\insrsid725140\charrsid13790097 st}{\fs16\insrsid725140\charrsid13790097 January to 31}{\fs16\super\insrsid725140\charrsid13790097 st}{\fs16\insrsid725140\charrsid13790097 December =\tab 366 days \par 2003 1}{\fs16\super\insrsid725140\charrsid13790097 st}{\fs16\insrsid725140\charrsid13790097 January to 18}{\fs16\super\insrsid725140\charrsid13790097 th}{\fs16\insrsid725140\charrsid13790097 June = }{ \fs16\ul\insrsid725140\charrsid13790097 169 days \par }{\b\fs16\insrsid725140\charrsid13790097 Total\tab \tab \tab \tab \tab =\tab 749 days \par \par }{\fs16\insrsid725140\charrsid13790097 The days available for production from 1}{\fs16\super\insrsid725140\charrsid13790097 st}{\fs16\insrsid725140\charrsid13790097 June 2001 to 18}{\fs16\super\insrsid725140\charrsid13790097 th}{ \fs16\insrsid725140\charrsid13790097 June 2003 are 749 days less one day per week for maintenance. \par The number of days for maintenance are: }{\fs16\ul\insrsid725140\charrsid13790097 749 days}{\fs16\insrsid725140\charrsid13790097 = 107 days \par \tab \tab \tab \tab \tab \tab 7 days \par The number of production days are (749-107)days = 642 days. \par {\pntext\pard\plain\s15 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 ii)\tab}}\pard \s15\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx1440{\*\pn \pnlvlbody\ilvl0\ls3\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls3\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 (a) Electric was not available on six days a week from 10:30p.m. to 06:00a.m.

\par }\pard \s15\qj \li1440\ri1440\widctlpar{\*\pn \pnlvlcont\ilvl0\ls0\pnrnot0\pndec }\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 (b) Electric Power was not also available on weekly scheduled maintenance days for twelve (12) hours. \par {\pntext\pard\plain\s15 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 iii)\tab}}\pard \s15\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx1440{\*\pn \pnlvlbody\ilvl0\ls3\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls3\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 (a) The number of production hours lost per day on normal working days were therefore 7.5 hours. \par }\pard \s15\qj \li1440\ri1440\widctlpar{\*\pn \pnlvlcont\ilvl0\ls0\pnrnot0\pndec }\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 (b) The number of production hours lost on scheduled maintenance days on production days were 7.5 hours. \par {\pntext\pard\plain\s15 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 iv)\tab}}\pard \s15\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx1440{\*\pn \pnlvlbody\ilvl0\ls3\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls3\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 (a) The total number of production hours lost on normal working days were (749 days \endash 107) = 642 x 7.5 hours per day = 4,815 hours. \par }\pard \s15\qj \li1440\ri1440\widctlpar{\*\pn \pnlvlcont\ilvl0\ls0\pnrnot0\pndec }\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 (b) The total number of hours lost on scheduled maintenance days were production days \endash 107 days x 12 hours = 1,284 hours. \par {\pntext\pard\plain\s15 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 v)\tab}}\pard \s15\qj \fi-720\li1440\ri1440\widctlpar{\*\pn \pnlvlbody\ilvl0\ls3\pnrnot0\pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls3\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 The number of tons lost a s a result of unavailability of electric power supply is calculated as follows: \par }\pard \s15\qj \li1440\ri1440\widctlpar{\*\pn \pnlvlcont\ilvl0\ls0\pnrnot0\pndec }\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 Number of heats of 2 hours are 4,815 hrs + 1,284 hrs \par = }{\fs16\ul\insrsid725140\charrsid13790097 6,099}{\fs16\insrsid725140\charrsid13790097 heats i.e. 3,049.5 heats. Each heat is a production of \par 2 \par 3.2 tons. \par \par }{\b\fs16\insrsid725140\charrsid13790097 The production lost was 3,049.5 x 3.2 tons = 9,758.4 tons. \par \par {\pntext\pard\plain\s15 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 vi)\tab}}\pard \s15\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx1440{\*\pn \pnlvlbody\ilvl0\ls3\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls3\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 B. M. Steel Ltd was selling ingots produced to B. M. Technical Services Ltd. at Ushs.365,000 per ton. The selling price of Ushs.365,000 per ton was inclusive of a margin of 30%. The margin per ton was therefore Ushs.84,230.77. The total income lost due to unavailability of electric supply from 1}{ \fs16\super\insrsid725140\charrsid13790097 st}{\fs16\insrsid725140\charrsid13790097 June 2001 to 18}{\fs16\super\insrsid725140\charrsid13790097 th}{\fs16\insrsid725140\charrsid13790097 June 2003 is 9,750.4 tons x Ushs.84,230.77 = }{ \b\fs16\insrsid725140\charrsid13790097 Ushs}{\fs16\insrsid725140\charrsid13790097 }{\b\fs16\insrsid725140\charrsid13790097 821,957,546}{\fs16\insrsid725140\charrsid13790097 (Eight hundred twenty one million nine hundred fifty seven thousand five hundred forty six only). \par }\pard \s15\qj \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 \par }{\b\fs16\insrsid725140\charrsid13790097 Item 2 Income lost as a result of failure by Kilembe Mines Ltd. to deliver 100 tons of scrap per week, from 1}{\b\fs16\super\insrsid725140\charrsid13790097 st}{\b\fs16\insrsid725140\charrsid13790097 June 2001 to 18}{\b\fs16\super\insrsid725140\charrsid13790097 th}{\b\fs16\insrsid725140\charrsid13790097 June 2004. \par \par {\pntext\pard\plain\s15 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 i)\tab}}\pard \s15\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx2160{\*\pn \pnlvlbody\ilvl0\ls4\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls4\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 Number of production days as calculated in item 1 are 642. \par {\pntext\pard\plain\s15 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 ii)\tab}}\pard \s15\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx2160{\*\pn \pnlvlbody\ilvl0\ls4\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls4\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 Number of weeks = }{\fs16\ul\insrsid725140\charrsid13790097 642 }{ \fs16\insrsid725140\charrsid13790097 = 91.70 weeks \par }\pard \s15\qj \li1440\ri1440\widctlpar{\*\pn \pnlvlcont\ilvl0\ls0\pnrnot0\pndec }\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 7 \par {\pntext\pard\plain\s15 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 iii)\tab}}\pard \s15\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx2160{\*\pn \pnlvlbody\ilvl0\ls4\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls4\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 The required tonnage of scrap = \par }\pard \s15\qj \fi720\li1440\ri1440\widctlpar{\*\pn \pnlvlcont\ilvl0\ls0\pnrnot0\pndec }\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 weeks x 100 tons \tab \tab \tab = 9,200 tons.

\par {\pntext\pard\plain\s15 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 iv)\tab}}\pard \s15\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx2160{\*\pn \pnlvlbody\ilvl0\ls4\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls4\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 The actual tonnage of scrap supplied \par }\pard \s15\qj \fi720\li1440\ri1440\widctlpar{\*\pn \pnlvlcont\ilvl0\ls0\pnrnot0\pndec }\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 by KLM \tab \tab \tab \tab = 668 tons

\par {\pntext\pard\plain\s15 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 v)\tab}}\pard \s15\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx2160{\*\pn \pnlvlbody\ilvl0\ls4\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls4\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 Quantity of scrap not delivered is \par }\pard \s15\qj \fi720\li1440\ri1440\widctlpar{\*\pn \pnlvlcont\ilvl0\ls0\pnrnot0\pndec }\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 (9,200 \endash 668) tons\tab \tab \tab = 8,532 tons \par {\pntext\pard\plain\s15 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 vi)\tab}}\pard \s15\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx2160{\*\pn \pnlvlbody\ilvl0\ls4\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls4\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 Number of tons that would have been \par }\pard \s15\qj \fi720\li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 Produced are 8,532 at a recovery \par }{\fs16\insrsid160408 rate of 70%\tab \tab }{\fs16\insrsid725140\charrsid13790097 = 5,972.40 \par }\pard \s15\qj \li0\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin0\itap0\pararsid160408 {\fs16\insrsid6584433 }{\fs16\insrsid725140\charrsid13790097 vii)\tab Revenue lost (5,972.40 x 365,000) =2,179,926,000 \par }\pard \s15\qj \li1080\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1080\itap0\pararsid6584433 {\fs16\insrsid725140\charrsid13790097 viii) Profit margin was 30% of revenue \par ix)\tab Income lost is Ushs.}{\fs16\ul\insrsid725140\charrsid13790097 2,179,926,000 x 30 }{\fs16\insrsid725140\charrsid13790097 =}{\b\fs16\insrsid725140\charrsid13790097 503,059,846}{\fs16\insrsid725140\charrsid13790097 \par }\pard \s15\qj \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\fs16\insrsid725140\charrsid13790097 130 \par }\pard\plain \s16\qj \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 \f1\fs24\lang2057\langfe1033\cgrid\langnp2057\langfenp1033 {\fs16\insrsid725140\charrsid13790097 (Ushs. Five hundred three million fifty nine thousand eight hundred forty six only) \par }\pard\plain \s17\qj \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 \b\f1\fs24\lang2057\langfe1033\cgrid\langnp2057\langfenp1033 {\fs16\insrsid725140\charrsid13790097 Item 3 Income lost as a resul t of insufficient power, fluctuating power and surging \par \par }{\b0\fs16\insrsid725140\charrsid13790097 Through out the period from 1}{\b0\fs16\super\insrsid725140\charrsid13790097 st}{\b0\fs16\insrsid725140\charrsid13790097 June 2001 to 18}{\b0\fs16\super\insrsid725140\charrsid13790097 th}{ \b0\fs16\insrsid725140\charrsid13790097 June 2003 Kilembe Mines Ltd. never supplied adequate power continuously. On a daily basis power was either too low to the extent that machines could not be operated or the power would surge causing interruption of production process. As a result of this, the company never produced at the required capacity of 600 tons per month. This production level takes into account maintenance time and minor bra ke downs. If the power had been available as required the company would have produced 600 tons x 24.5 months i.e. 14,700 tons. \par \par But the company produced 4152.62 tons due to irregular supply of power. The shortfall in production was (14,152.62) tons = 10,547.38 tons. \par \par The margin per ton as already stated in 1 above is Ushs.84,230.77, therefore the Income lost is Ushs.(10,547.38 tons x Ushs84,230.77 = Ushs.888,413,939. (Ushs. Eight hundred eighty eight million four hundred thirteen thousand nine hundred thi rty nine only). \par \par }{\fs16\insrsid725140\charrsid13790097 Item 4 Revenue lost due to procurement of scrap by B. M. Steel Ltd. from other sources instead of from Kilembe Mines Ltd. \par \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 a)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx1440{\*\pn \pnlvlbody\ilvl0\ls6\pnrnot0 \pnlcltr\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls6\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 The total tonnage of scrap procured and delivered by B. M. Steel Ltd from other sources instead of from Kilembe Mines Ltd. from 1}{\b0\fs16\super\insrsid725140\charrsid13790097 st}{\b0\fs16\insrsid725140\charrsid13790097 June 2001 to 18}{ \b0\fs16\super\insrsid725140\charrsid13790097 th}{\b0\fs16\insrsid725140\charrsid13790097 June 2003 was 5,264,311 tons. \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 b)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx1440{\*\pn \pnlvlbody\ilvl0\ls6\pnrnot0 \pnlcltr\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls6\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Kilembe Mines Ltd delivered during the period mentioned above 668.000 tons. The shortfall was therefore 4,596.311 tons \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 c)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx1440{\*\pn \pnlvlbody\ilvl0\ls6\pnrnot0 \pnlcltr\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls6\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Kilembe Mines Ltd was to deliver the scrap at Ushs. 86,296 per ton as per agreement. However, B. M. Steel Ltd. procured the scrap at an average price of Ushs.150,000 per ton. \par }\pard \s17\qj \li1440\ri1440\widctlpar{\*\pn \pnlvlcont\ilvl0\ls0\pnrnot0\pndec }\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 \par There was therefore loss of revenue of Ushs.63,704 per ton due to Kilembe Mines Ltd. failure to supply the scrap. \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 d)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx1440{\*\pn \pnlvlbody\ilvl0\ls6\pnrnot0 \pnlcltr\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls6\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 The total revenue lost was 4,596,311 to ns (see b above) x Ushs.63,704 per ton = Ushs.292,803,396. \par }\pard \s17\qj \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 \par }{\fs16\insrsid725140\charrsid13790097 Item 5 Costs of repairs and replacement of damaged equipment \par \par }{\b0\fs16\insrsid725140\charrsid13790097 Under the Agreement KLM under took to supplly 33KV electric power to B. M. Steel Ltd. On 23}{\b0\fs16\super\insrsid725140\charrsid13790097 rd}{\b0\fs16\insrsid725140\charrsid13790097 December 2001 KLM powere supplly surged far beyond 33KV voltage which resulted into the destruction of B. M. Steel\rquote s Induction Furnace and equipment. The cost of replacement and repairs to the Induction Furnace amount to Ushs.48,192,170(Forty eight million thousand one hundred ninety two thousand one hundred seventy only). \par \par The details are as follows:- \par \par \par }{\fs16\insrsid725140\charrsid13790097 Date\tab \tab Description\tab US$ Amount\tab \tab Ushs. \par \par }{\b0\fs16\insrsid725140\charrsid13790097 02.11.01\tab Spare parts\tab \tab 830\tab \tab \tab 1,460,000 \par 08.11.01\tab Spare parts\tab \tab 362\tab \tab \tab 637,120 \par 27.11.01\tab Spare parts\tab \tab 609\tab \tab \tab 1,059,660 \par 12.12.01\tab Spare parts\tab }{\b0\fs16\insrsid6584433 }{\b0\fs16\insrsid725140\charrsid13790097 1,310\tab \tab \tab 2,296,800 \par 12.12.01\tab Air Tickets\tab }{\b0\fs16\insrsid6584433 }{\b0\fs16\insrsid725140\charrsid13790097 5,004\tab \tab \tab 8,808,746 \par 25.12.01\tab Air Tickets }{\b0\fs16\insrsid6584433 }{\b0\fs16\insrsid725140\charrsid13790097 1,379\tab \tab \tab 2,427,744 \par 25.12.01\tab Air Tickets }{\b0\fs16\insrsid6584433 }{\b0\fs16\insrsid725140\charrsid13790097 2,125\tab \tab \tab 3,739,700 \par 11.02.02\tab Air Tickets\tab }{\b0\fs16\insrsid10301147 }{\b0\fs16\insrsid725140\charrsid13790097 815\tab \tab \tab 1,434,400 \par 11.02.02\tab Air Tickets\tab }{\b0\fs16\insrsid10301147 }{\b0\fs16\insrsid725140\charrsid13790097 1,600\tab \tab \tab 2,816,000 \par 11.02.02\tab Spare parts\tab }{\b0\fs16\insrsid10301147 }{\b0\fs16\insrsid725140\charrsid13790097 4,425\tab \tab \tab 7,788,000 \par 11.02.02.\tab Spare parts }{\b0\fs16\insrsid10301147 }{\b0\fs16\insrsid725140\charrsid13790097 3,180\tab \tab \tab }{\b0\fs16\ul\insrsid725140\charrsid13790097 5,724,000}{\b0\fs16\insrsid725140\charrsid13790097 \par }{\fs16\insrsid725140\charrsid13790097 \tab \tab Total \tab \tab \tab \tab \tab 38,192,170 \par }{\b0\fs16\insrsid725140\charrsid13790097 Local incidental expenditure.\tab \tab \tab }{\b0\fs16\insrsid10301147 }{\b0\fs16\ul\insrsid725140\charrsid13790097 10,000,000 \par }{\b0\fs16\insrsid725140\charrsid13790097 \tab \tab \tab \tab \tab \tab \tab }{\fs16\ul\insrsid725140\charrsid13790097 Ushs.48,192,170 \par }{\b0\fs16\insrsid725140\charrsid13790097 \par }{\fs16\insrsid725140\charrsid13790097 Item 6 Costs of Relocation from Kilembe Mines Ltd Kasese to Mbarara town. \par }{\b0\fs16\insrsid725140\charrsid13790097 \par Following the termination of the Agreement for lease of Areas of Operation and Provision of Service for an Induction Furnace at Kilembe Mines Ltd on 18}{\b0\fs16\super\insrsid725140\charrsid13790097 th}{\b0\fs16\insrsid725140\charrsid13790097 June 2003, B. M. Steel had to relocate the Induction Furnace, Plaint and Equipment to Mbarara. The company did not produce for seven months as a result of relocating to Mbarara. The costs of relocation are:- \par \par \tab \tab \tab \tab \tab \tab \tab }{\fs16\insrsid725140\charrsid13790097 Ushs.}{\b0\fs16\insrsid725140\charrsid13790097 \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 i)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx720{\*\pn \pnlvlbody\ilvl0\ls7\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls7\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Construction of structure\tab \tab }{\b0\fs16\insrsid9590047 }{\b0\fs16\insrsid725140\charrsid13790097 107,000,000 \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 ii)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx720{\*\pn \pnlvlbody\ilvl0\ls7\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls7\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Furnace installation costs\tab \tab }{\b0\fs16\insrsid9590047 }{\b0\fs16\insrsid725140\charrsid13790097 137,000,000\tab \tab \tab \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 iii)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx720{\*\pn \pnlvlbody\ilvl0\ls7\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls7\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Crane installation costs\tab \tab }{\b0\fs16\insrsid9590047 }{\b0\fs16\insrsid725140\charrsid13790097 15,000,000 \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 iv)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx720{\*\pn \pnlvlbody\ilvl0\ls7\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls7\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Power connection\tab \tab \tab }{\b0\fs16\insrsid9590047 }{\b0\fs16\insrsid725140\charrsid13790097 25,000,000 \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 v)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx720{\*\pn \pnlvlbody\ilvl0\ls7\pnrnot0 \pnlcrm\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls7\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Loss of income due to stoppage for 7 months: \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 a)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx720{\*\pn \pnlvlbody\ilvl0\ls8\pnrnot0 \pnlcltr\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls8\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Loss of income \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 b)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx720{\*\pn \pnlvlbody\ilvl0\ls8\pnrnot0 \pnlcltr\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls8\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Production lost \endash 600 tons x 7 months = 4,200 tons \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 c)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx720{\*\pn \pnlvlbody\ilvl0\ls8\pnrnot0 \pnlcltr\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls8\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Selling price per ton was Ushs.365,000 \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 d)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx720{\*\pn \pnlvlbody\ilvl0\ls8\pnrnot0 \pnlcltr\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls8\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Profit margin was 30% of revenue \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 e)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx720{\*\pn \pnlvlbody\ilvl0\ls8\pnrnot0 \pnlcltr\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls8\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Income lost was 4200 tons x Ushs.}{\b0\fs16\ul\insrsid725140\charrsid13790097 365,000 x 30}{\b0\fs16\insrsid725140\charrsid13790097 \par }\pard \s17\qj \li1440\ri1440\widctlpar{\*\pn \pnlvlcont\ilvl0\ls0\pnrnot0\pndec }\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 130 \par {\pntext\pard\plain\s17 \f1\fs16\lang2057\langfe1033\langnp2057\insrsid725140\charrsid13790097 \hich\af1\dbch\af0\loch\f1 f)\tab}}\pard \s17\qj \fi-720\li1440\ri1440\widctlpar\jclisttab\tx720{\*\pn \pnlvlbody\ilvl0\ls8\pnrnot0 \pnlcltr\pnstart1\pnindent360\pnsp120\pnhang {\pntxta )}}\aspalpha\aspnum\faauto\ls8\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 Administrative overhead for 7 months \par }\pard \s17\qj \fi720\li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid15740213 {\b0\fs16\insrsid725140\charrsid13790097 @ Ushs.6,000,000 per month\tab \tab }{\b0\fs16\insrsid9590047 }{ \b0\fs16\insrsid725140\charrsid13790097 42,000,000 \par }\pard \s17\qj \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid10301147 {\fs16\insrsid725140\charrsid13790097 Total\tab \tab \tab \tab \tab }{\fs16\insrsid9590047 }{\fs16\insrsid8920430 }{ \fs16\insrsid9590047 }{\fs16\insrsid725140\charrsid13790097 Ushs.}{\fs16\ul\insrsid725140\charrsid13790097 679,769,231}{\fs16\ul\insrsid8920430 }{\b0\fs16\insrsid725140\charrsid13790097 (Six hundred}{\fs16\insrsid725140\charrsid13790097 }{ \b0\fs16\insrsid725140\charrsid13790097 seventy nine million seven hundred sixty nine thousand two hundred thirty one only).\'94 \par }\pard \s17\qj \fi720\li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15740213 {\b0\insrsid725140 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid8537251 \hich\af0\dbch\af0\loch\f0 27.\tab}}\pard\plain \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar \jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid15740213 \fs24\lang1024\langfe1024\cgrid\noproof\langnp2057\langfenp1033 {\insrsid8537251 If one started }{\insrsid6035967 by}{\insrsid8537251 looking at item 3}{ \insrsid6035967 ,}{\insrsid8537251 loss }{\insrsid15754370 of income for insufficient, flu}{\insrsid8537251 ctuating and surging power, it is calculated based on a monthly production figure of 600 tons of steel per month. This would represent a 24 hour production}{\insrsid7039885 given th e unsupported claim of CW1 that the capacity of the furnace was 650 tons per month. }{\insrsid14771257 The report calculated the lost production for the period between 1/6/2001 to 18/6/2003}{\insrsid10250530 by obtaining the difference between }{ \insrsid6035967 the alleged }{\insrsid10250530 actual production in that period, and the anticipated pr}{\insrsid15151638 oduction of 600}{\insrsid2902608 tons per month.}{\insrsid10624822 }{\insrsid2902608 This was multiplied with the net profit on each ton the company earned, and a figure of Shs}{\insrsid6035967 .}{\insrsid2902608 888,413,939/= was }{\insrsid7699654 claimed as loss of Income.}{\insrsid10098202\charrsid10098202 }{\insrsid10098202 (No proof was offered to support this claim of a monthly production of 600 tons per month, rendering unproven any claim based thereupon.)}{\insrsid7699654 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid7699654 \hich\af0\dbch\af0\loch\f0 28.\tab}In spite of this claim, there are }{\insrsid3493561 separate }{\insrsid7699654 claims for loss of income or loss of profits for the same period }{\insrsid3493561 1/6/2001 to 18/6/2003}{\insrsid8537251 }{\insrsid3493561 on the same production line}{\insrsid1851524 and same product. In item 1 there is a claim for loss of income for 7.5 hours per day during the period power was allegedly not available for the same dates. This is so, in spite of the fact that there is a claim for the short fall in the production for each}{\insrsid5581022 day, during the same period, }{\insrsid6035967 rendering}{\insrsid5581022 this claim in item 1 a repeat of the claim in item 3}{\insrsid2449626 , a duplictous claim}{\insrsid1326609 of Shs}{\insrsid6035967 .}{\insrsid1326609 821,957,546/=}{ \insrsid5581022 .}{\insrsid11339179 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid5581022 \hich\af0\dbch\af0\loch\f0 29.\tab}}{\insrsid5581022 The respondent in item 2 claims for }{\insrsid13789216 loss of income on scrap not supplied}{\insrsid132975 for the same period for which item 3 claims loss of income on the steel not produced, }{\insrsid6035967 between }{\insrsid132975 1/6/2001 to 18/6/2003.}{\insrsid14099519 The report calculates the shortfall on scrap supplied, and works out the loss of income derived therefrom. This ignores the fact}{\insrsid6035967 that}{\insrsid14099519 }{\insrsid11812070 loss of income on the final product had been calculated in item 3, which made the claim for loss of income under item}{\insrsid14425602 2}{\insrsid11812070 , a claim over the same product, from the the same production line, for the same period, as the claim in item 3.}{\insrsid12083751 This claim in item 2 is a claim already included in the claim under item 3}{\insrsid2449626 , rendering it a duplictous claim}{\insrsid1326609 of Shs}{\insrsid6035967 .}{\insrsid1326609 503,059,846/=}{\insrsid12083751 . \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid416234 \hich\af0\dbch\af0\loch\f0 30.\tab}}{\insrsid416234 The arbitrator did not consider whether or not the claim for relocation of the furnace to Mbarara, including all the itemised components therein, was a specie of damages reasonably forseeable or not too remote, as a consequenc e of the alleged breach, and therefore, liability for the same, should be borne by the applicant. Construction of a new production facility for instance for which over Shs.100 million is claimed, may well be too remote, considering that in any case the ag reement between the parties was only for five years, and the respondent would have had to relocate in time, or otherwise remove itself from the applicant\rquote s premi}{\insrsid9189451 ses in Kasese. The arbitrator ought to have made specific findings on whether these different heads of claims were justified in law, and if so, then assess the evidence to determine if they had been proved.}{\insrsid416234 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid13057391 \hich\af0\dbch\af0\loch\f0 31.\tab}}{\insrsid13057391 It is clear to me that the arbitrator never attempted to assess the evidence in support of the claim for the special damages by the respondent}{\insrsid8940107 . }{\insrsid1978065 Instead he offered himself as conduit for unjust enrichment}{ \insrsid1276692 of the respondent through clearly duplictous claims of colossal sums of money. He failed to consider the claim for special damages}{\insrsid2710662 of the respondent}{\insrsid1276692 with the care }{\insrsid2710662 he exhibited when dealing with the applicant\rquote s claim. In so doing }{\insrsid2716348 the arbitrator}{\insrsid2710662 exhibited eviden}{\insrsid2121141 t}{\insrsid2710662 partiality}{\insrsid1065456 to the respondent}{\insrsid13960444 \rquote }{ \insrsid1065456 s case}{\insrsid13960444 }{\insrsid15883450 leading to a peverse award}{\insrsid1065456 .}{\insrsid5581022 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid14041841 \hich\af0\dbch\af0\loch\f0 32.\tab}}{\insrsid14041841 I agree with Mr. Nangwala that the arbitrator ignored, in his assessment of the evidence before him, evidence favourable to the applicant\rquote s case}{\insrsid7085853 , especially with regard to the issue of the damage to the respondent\rquote s transformer}{\insrsid2235501 . This includes the Report of the Electrical Engineer}{\insrsid1647025 , Samuel S Sentongo. The arbitrator ignored}{\insrsid15754370 Annexture}{\insrsid1647025 K}{\insrsid15754370 5, in which the }{\insrsid12791599 respondent}{\insrsid15754370 managing director had accepted responsibility for the damage to the transformer.}{\insrsid2235501 }{\insrsid7085853 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid8147347 \hich\af0\dbch\af0\loch\f0 33.\tab}}{\insrsid8147347 Mr. Nangwala argued that had the arbitrator properly considered the report of the electrical engineer, he ought to have reached the conclusion that }{\insrsid3634967 there was a fundamental mistake of fact on the side of both parties, which made this contract void.}{\insrsid2105788 This point was not taken before the arbitrator, though looking at}{\insrsid5857249 the Report of Engineer Sentongo and actually the testimony of CW}{\insrsid13916657 7, Tobias Kamu Karehako, it is possible to conclude that this contract was incapable of being performed}{\insrsid2381400 , at the location of its intended performance, due to}{\insrsid8978485 a}{\insrsid2381400 misaprehension}{\insrsid2121141 or mistake}{\insrsid2381400 of certain facts}{\insrsid1005361 , connected }{\insrsid8978485 to }{\insrsid1005361 supply of electricity and load characteristics of the furnace.}{\insrsid8978485 However}{\insrsid4930549 ,}{\insrsid8978485 as the point was not taken by the parties before the arbitrator,}{\insrsid4930549 it cannot be used at this stage to support partiality against the arbitrator.}{\insrsid6385809 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid15414249 \hich\af0\dbch\af0\loch\f0 34.\tab}}{\insrsid15414249 I now turn to the third ground. That the applicant was disabled from properly presenting all its evidence to support its case by the arbitrator which caused it undue prejudice.}{\insrsid6848386 From the record of proceedings, on the 2}{ \super\insrsid6848386\charrsid6848386 nd}{\insrsid6848386 November 2004, the applicant notifed the arbitral proceeding that he intended to call three witnesses, including an auditor and an electrical engineer.}{\insrsid343991 }{\insrsid4013309 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid343991 \hich\af0\dbch\af0\loch\f0 35.\tab}}{\insrsid343991 The respondent objected to }{\insrsid4013309 calling as witnesses }{\insrsid2706588 an }{\insrsid343991 auditor and electrical engineer}{\insrsid2706588 who had been hired by the Privatization Unit of the Ministry of Finance}{\insrsid343991 . In his ruling, the arbitrator rejected the calling of the auditor, because he was the author of a report that he had refused to accept in evidence because it had been authored after the start of the arbitral proceedings}{\insrsid12345493 and that it contravened the law relating to annextures because the applicant sought to put it in after the claimant had closed his case}{\insrsid343991 .}{\insrsid4935018 }{\insrsid5318883 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid547937 \hich\af0\dbch\af0\loch\f0 36.\tab}}{\insrsid547937 As far as I am aware there is no law that pr}{\insrsid2846553 o}{\insrsid547937 vides}{\insrsid2846553 that documents authored after the start of a proceeding are inadmissible}{\insrsid6372045 on that account.}{\insrsid2706588 The arbitrator does }{\insrsid2647841 not }{\insrsid2706588 cite the exact provisions of the law he reli}{\insrsid6186197 ed upon to reject both the Report of the Auditor, and for the auditor to testify as a witness. The arbitrator just mentions rules or law without citing the particular}{\insrsid2121141 provisions}{\insrsid6186197 he relied upon. }{\insrsid745551 Obviously both those decisions, }{\insrsid2647841 without convincing reasons, }{\insrsid745551 had the effect of preventing the applicant to put its cas}{\insrsid4198039 e before the arbitrator.}{\insrsid2706588 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid4210031 \hich\af0\dbch\af0\loch\f0 37.\tab}}{\insrsid4210031 The arbitrator rejected calling of the electrical engineer in a round about way. This is what he said. }{\insrsid6038277

\par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid5979394 {\fs20\insrsid4210031\charrsid5979394 \'93On the Engineer\rquote s Report, there is need to study the final copies before it is determined whether or not to call him as a witness\emdash tomorrow. Obviously, his being called or got will largely depend on the contents of the final Report vis a vis what }{ \fs20\insrsid10118863\charrsid5979394 was tendered in and whether actually he is a necessary witness in light of the fact that the Report would be treated as neutral evidence to be relied upon by either parties.\'94}{\fs20\insrsid4945837\charrsid5979394 }{\fs20\insrsid5979394\charrsid5979394 \par }\pard \ql \li360\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin360\itap0\pararsid5979394 {\insrsid5979394 }{\insrsid4945837 He directed the proceedings to continue with other witnesses.}{\insrsid4210031 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid4945837 \hich\af0\dbch\af0\loch\f0 38.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid15740213 { \insrsid4945837 There is no decision as was promised }{\insrsid2121141 the following day or thereafter. I}{\insrsid4945837 n effect the arbitrator refused the }{\insrsid1078827 applicant to call this witness to testify in the arbitral proceedings. In }{ \insrsid8347638 s}{\insrsid1078827 o doing I am satisfied that the arbitrator prevented the applicant from }{\insrsid16212995 calling the electrical engineer as a witness before him }{\insrsid1913310 without justification}{\insrsid16212995 .}{ \insrsid4945837 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid13443242 \hich\af0\dbch\af0\loch\f0 39.\tab}}{\insrsid13443242 Under Section 34 (2) (iii) of the ACA one of the grounds for setting aside an award is if the applicant was un}{ \insrsid14893471 able to present his or her case. }{\insrsid8716858 In my view, where an applicant is prevented from fully presenting his or h}{\insrsid11602415 er case, he or she is }{\insrsid8716858 unable to present his or her case.}{\insrsid148618 This could be achieved by denying }{\insrsid9916175 or }{\insrsid148618 refusing witnesses relevant to his or her case from testifying or affording them reasonable possibility }{\insrsid9916175 to}{\insrsid148618 testify.}{\insrsid9916175 In the instant case }{\insrsid11602415 the arbitrator refused two of the witnesses called by the applicant from testifying for less than clear reasons.}{\insrsid3421569 I find that the arbitrator thus prevented the ap plicant from fully presenting its case to }{\insrsid2121141 the}{\insrsid3421569 obvious prejudice}{\insrsid2121141 of the applicant}{\insrsid3421569 . }{\insrsid13443242 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid3569014 \hich\af0\dbch\af0\loch\f0 40.\tab}}{\insrsid3569014 In light of my discussion of the issue of special damages as handled by the arbitrator hereinabove, it is no longer necessary to consider ground 4}{\insrsid1781598 .}{\insrsid3569014 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid1781598 \hich\af0\dbch\af0\loch\f0 41.\tab}}{\insrsid1781598 The applic}{\insrsid3557511 ant has establi shed two grounds. Firstly that the arbitrator acted with evident partiality to the respondent and against the applicant. Secondly that the arbitrator prevented the applicant from presenting its case fully before the arbitrator. }{\insrsid14156990 Any of these grounds is sufficient to order setting aside this award, and I so order}{\insrsid14308790 ,with costs here}{\insrsid6967916 and before the arbitral tribunal}{\insrsid14308790 , to the applicant}{\insrsid6967916 .}{\insrsid1781598 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid8654563 \hich\af0\dbch\af0\loch\f0 42.\tab}}{\insrsid8654563 Mr. Oine invited me, to remit to the Arbitrator, were I to find that there are areas of non-compliance}{\insrsid4024681 in the award, }{\insrsid936380 such spe}{\insrsid2121141 ci}{\insrsid936380 fic areas, for the arbitrator to deal with.}{\insrsid13832712 As far as I can trace, this would only be possible under Section 34 (4) of the ACA, where proceedings for setting aside could be suspended, and the matter remited back }{\insrsid15554551 to the arbitral tribunal to take such action as may be necessary to eliminate the grounds for setting aside}{\insrsid3040966 the arbitral award. Those circumstances do not obtain here as hearing of the setting aside proceedings is complete, just as much as arbitral proceedings were duly completed and an award made.}{\insrsid8654563 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid5128110 \hich\af0\dbch\af0\loch\f0 43.\tab}}{\insrsid5128110 This}{\insrsid6685075 ,}{\insrsid5128110 though}{\insrsid6685075 ,}{\insrsid5128110 does raise a dilema for the parties. Do they commence new arbitral proceedings before another arbitrator? Or do they commence an action in a court of law?}{\insrsid6619583 The ACA is silent on consequenti}{\insrsid6685075 al}{\insrsid6619583 orders to be made by the court after setting aside an award.}{\insrsid215889 I leave it to the parties to determine their next course of action.}{\insrsid5128110 \par }\pard \ql \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15740213 {\insrsid16083261 Dated at Kampala this 14}{\super\insrsid16083261\charrsid16083261 th}{\insrsid16083261 day of July 2005 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16083261 {\insrsid16083261 \par \par \par \par \par FMS Egonda-Ntende \par Judge \par }}