LEGAL INSIGHTS ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN TANZANIA
- How an international award can be recognized in Tanzania
- Power of the Tanzanian High Court in remitting or setting aside foreign awards, or otherwise, enforcing them as decrees.
- Role of the Dowans vs. TANESCO case, [Miscellaneous Civil Case No. 8 of 2011] in defining the applicable procedure in enforcing arbitral awards in Tanzania.
This Article aims at solving the quite frequently asked question that “How can an international arbitration award be enforced in Tanzania?” It also intends to highlight the etiquette of going about causing the award to being recognized and being enforceable in Tanzania.
We at Breakthrough Attorneys, following popular maxim, inutilis labor, et sine fructu, non est effectus legis which means that useless labor and without fruits is not the effect of the law; understand that more so often, the prevailing party in an international commercial arbitration, expects the award to be realized without delay. Further, it is trite that the purpose of arbitration, unlike mediation, is to arrive at a binding decision on the dispute swiftly.
Arbitration is governed by the Arbitration Act together with the Civil Procedure Code and the Arbitration Rules. The Civil Procedure (Arbitration) Rules are contained in the Second Schedule to the Civil Procedure Code.
What makes an award a “foreign arbitral award?”
In Tanzania, for an award to be regarded as a foreign arbitral award, it must deal with differences arising between parties in a commercial dispute where the arbitral tribunal sat in another nation. Enforcement of the award will depend on the country in which the award was issued. This is because it will depend on whether the country has a bilateral or multilateral agreement with Tanzania on enforcement of foreign arbitral awards.
Conditions for an award to be recognized and deemed enforceable
According to section 17 of the Arbitration Act, foreign awards may only be enforced in the High Court of Tanzania. The awards can be enforced as decrees of the Court and shall be binding to the parties involved in the said awards. In order for the foreign award to be enforceable, it must;
i. have been made in pursuance of an agreement for arbitration which was valid under the law by which it was governed;
ii. have been made by the tribunal provided for in the agreement or constituted in manner agreed upon by the parties;
iii. have been made in conformity with the law governing the arbitration procedure;
iv. have become final in the country in which it was made; and
v. have been in respect of a matter which may lawfully be referred to arbitration under the law of Tanzania, and its enforcement must not be contrary to the public policy or the law of Tanzania.
Challenging of Foreign Arbitral Awards
However, a foreign award can be opposed. This draws away the notion of finality of awards. It is universal that one cannot appeal against an award however the validity of the award can be challenged. The Tanzanian Arbitration Act offers avenues in which the validity of the award can be challenged on the following grounds [See Section 30 of the Arbitration Act];
i. the award has been annulled in the country in which it was made;
ii. the party against whom it is sought to enforce the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case or was under some legal incapacity and was not properly represented;
iii. The award does not deal with all the questions referred or contains decisions on matters beyond the scope of the agreement for arbitration.
The effect of a party successfully objecting the enforcement of the award on grounds (ii) and (iii) is for the Court either to refuse to enforce the award or adjourn the hearing until after the expiration of reasonably sufficient period to enable that party to take the necessary steps to have the award annulled by the competent tribunal. If a party succeeds to prove ground (i) this will mean that the Court will refuse to enforce the award entirely.
Moreover, the decision of the Court with regards to petition seeking to object an international award can be appealed to the Court of Appeal of Tanzania. A good example being the landmark case of Dowans vs. TANESCO Misc. Civil Case No. 8 of 2011, where the High Court dismissed the petition filed by TANESCO. TANESCO appealed to the Court of appeal, where the Court of Appeal upheld the High Court’s decision to enforce the foreign award in Tanzania which was issued by ICC in England.
Enforceability of Multilateral Instruments on Recognition and Enforcement
Tanzania has signed a few multilateral and bilateral treaties. The multilateral treaties entered into by Tanzania include;
i. The New York Convention on Recognition and Enforcement of Foreign Arbitral Awards of 1958,
ii. The Geneva Protocol On Arbitration Clauses of 1923,
iii. The Geneva Convention Of Execution Of Foreign Arbitral Award of 1927,
iv. Convention on the Settlement of Investment Dispute between Status and Nationals of Other States (ICSID) and;
v. The multilateral investment guarantee agency.
Tanzania has also entered into bilateral agreements with countries such as Denmark, Finland, Germany, Italy and Netherlands.
Breakthrough Attorneys’ arbitration team teams up with a handful of other scholars and arbitration law practitioners in Tanzania in drawing a conclusion that one of the biggest challenges with enforcement of arbitral awards is that despite entering in a number of conventions, Tanzanian has only domesticated two conventions namely: The Geneva Protocol on Arbitration Clause of 1923(GPAC) and The Geneva Convention of Execution of Foreign Arbitral Award of 1927 (GCFAA) to date. These two conventions are binding in Tanzania to date. Of course, the bigger inference here is that, the law itself (Arbitration Act, Cap 15 R.E. 2002) is outdated.
The New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (NYC) has superseded the GPAC and GCFAA. However, the NYC has not been domesticated into the Tanzanian law to date despite the fact that it was ratified over fifty years ago. Our arbitration experts at Breakthrough Attorneys are of the view that the Tanzanian Arbitration Act and its rules are overly outdated; and thus a new piece of legislature is needed. Furthermore, despite entering into number of bilateral and multilateral treaties Tanzania has not domesticated any of them save for the GPAC and GCFAA which are also as of date, non-existent. On that note; it is difficult to settle the question whether Courts in Tanzania can enforce the provisions of the NYC despite not being legislated. However, the fact that the ICC award was ruled enforceable by the Court of Appeal of Tanzania, indicates that by virtue of Section 17 of the Arbitration Act, any award that is filed in Court, if not remitted or set aside is enforceable as a decree.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Breakthrough Attorneys, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.