High Court Rules in Favor of Arbitration in Smile – ATC UGX 4.5b Billing Dispute

Court Decides Smile and ATC Must Resolve UGX 4 5b Dispute through Arbitration
PHOTO - Euro Digital Money - Court Decides Smile and ATC Must Resolve UGX 4.5b Dispute through Arbitration
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The Commercial Division of the High Court has determined that the ongoing dispute between Smile Communications and American Tower Corporation (ATC) should be settled through arbitration. This ruling, issued by Justice Thomas O R Ocaya last Friday, mandates that both Smile and ATC must appoint an arbitrator within 30 days. Failing this, either party will refer the matter to an appointing authority under the Arbitration and Conciliation Act for the selection of an arbitrator.

As a result of this decision, civil suit No 842 of 2023 has been struck out, with each party being responsible for their respective costs.

This dispute originated when Smile filed a lawsuit against ATC in 2022, alleging the illegal disconnection of its network, which caused significant distress and business losses. Smile also sought a declaration that ATC’s actions on January 31, 2022, including retaining its equipment, constituted breaches of contractual and licensing obligations. In addition, Smile requested remedies amounting to $2.12 million (UGX 7.86 billion) for lost revenue from January 31 to October 2022, as well as general damages, compensation for financial loss, economic distress, damage to goodwill and reputation, and the diminished value of its equipment. They also sought interest on pecuniary sums at a rate of 24 percent per annum, costs, and any other appropriate relief as determined by the court.

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In response, ATC objected to the lawsuit, arguing that the High Court lacked jurisdiction due to a binding arbitral clause in the agreements between the two parties. ATC contended that similar issues had been conclusively addressed by the Centre for Arbitration and Dispute Resolution (CADER). Smile, however, argued that the arbitral clause was unenforceable because the appointing authority at CADER was not constituted.

Justice Ocaya decided that while CADER arbitration could have been hindered by one party’s refusal to consent to the appointment of an arbitrator, it was appropriate to provide the parties with an opportunity to agree on an arbitrator before seeking recourse. He emphasized that arbitration and litigation cannot proceed concurrently, and consequently, he stayed and dismissed the suit to enable the parties to pursue arbitration.

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Previously, the Uganda Communications Commission (UCC) had received a complaint from Smile against ATC regarding network disconnection. The UCC’s ruling on the matter had not satisfied Smile, leading to their decision to return to court. According to Ms. Irene Kaggwa, the UCC acting executive director, Smile had contested a portion of the bill presented by ATC, prompting them to take the matter to court before it entered arbitration.

In court documents, ATC revealed that the UCC had instructed Smile to pay an “undisputed amount of $1.2 million (UGX 4.5 billion),” which was owed for services provided. Upon payment, ATC would release Smile’s equipment and commit to paying any sums determined as due by the court.

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In June, Mr. Silvernus Okoth, the acting country manager of Smile, publicly accused ATC of illegally disconnecting their network. Smile announced the termination of all contracts with ATC and initiated a request for the return of their equipment.


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