Legal UpdateNewsTanzania To Enact A New Arbitration Act

The Government has submitted to the parliament a bill to enact a new Arbitration Act, 2020. The new act seeks to replace the existing law which was enacted in 1931.

The draft Bill, which has about 102 sections, will have consequential amendments to the Criminal Procedure Act Cap. 20, the Civil Procedure Code Cap. 33, the Natural Wealth and Resources (Permanent Sovereignty) Act, Cap. 449 and the Public Private Partnership Act, Cap. 103. With regard to PPP, the amendment proposes changes that would allow dispute resolution save that, the law and siting of the arbitration to be in Tanzania. This follows earlier amendments in September 2018 to the PPP Act that required, the law, siting and institutions administering Arbitrations to be from Tanzania

In response to positive reforms by the Government of Tanzania to embrace both domestic and international arbitration, the proposed long citation (name) of the bill is titled, an Act to provide for conduct relating to domestic commercial arbitration, international commercial arbitration and enforcement of foreign arbitral awards, repeal of the Arbitration Act and to provide for matters relating to or incidental thereto.

Further, among others, the Act defines the terms “domestic commercial arbitration” and “International Commercial Arbitration”. The term Domestic Commercial Arbitration is defined as an arbitration agreement which provides expressly or by implication for arbitration in Mainland Tanzania, and at the time when proceedings are commenced, or the arbitration is entered into. Likewise, the term “International Commercial Arbitration” has been defined as an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in Mainland Tanzania and where at least one of the parties is nonresident or company incorporated outside Tanzania or foreign Government or Company whose central management and control is exercised in any country other than Mainland Tanzania.

The notable feature of the Bill is the introduction and creation of the Tanzania Arbitration Centre which will foster the conduct and management of arbitrations as well as accreditation of arbitrators in Tanzania, among others.

Equally important is the introduction of Schedule 1 which itemize mandatory provisions that must be adhered to by the parties notwithstanding any agreement to the contrary. Those include:-

• sections13 (relating to stay of legal proceedings);
• section14 (relating to power of court to extend agreed time limits);
• section15 (relating to application of the Law of Limitation Acts);
• section26 (relating to power of court to remove arbitrator);
• section 28(1) relating to (effect of death of arbitrator);
• section 30 (relating to liability of parties for fees and expenses of arbitrators);
• section 31 (relating to immunity of arbitrator);
• section 32 (relating to objection to substantive jurisdiction of tribunal);
• section 34 (relating to determination of preliminary point of jurisdiction);
• section 35 (relating to general duty of tribunal);
• section 39(2) (relating to items to be treated as expenses of arbitrators);
• section 42 (relating to general duty of parties);
• section 45 (relating to securing the attendance of witnesses);
• section 58 (relating to power to withhold award in case of nonpayment);
• section 64(relating to effectiveness of agreement for payment of costs in any event);
• section 68 (relating to enforcement of award);
• sections 69 and 70 ( relating to challenging the award: substantive jurisdiction and serious irregularity);
• sections 72 and 73(relating to supplementary provisions and effect of order of court)
• section 74 (relating to saving for rights of person who takes no part in proceedings);
• section 75 (relating to loss of right to object); and
• section 76 (relating to immunity of arbitral institutions)

All other matters are classified as non-mandatory thus shall allow the parties to make their own arrangements by agreement but provide rules which shall apply in the absence of such agreement. It is relevant to note that, the bill provides that, choice of law other than the law of Mainland Tanzania as the applicable law in respect of a matter provided for by a non-mandatory provision of this Part is equivalent to an agreement making provision about that matter.

Finally and worth of attention is the proposed section 78 with provides the enforcement of the arbitral award. Section 78 provides in length grounds upon which courts may refuse to enforce an arbitral award. These include:-

• Proof that the parties lacked the capacity to enter into the agreement;
• The proof that the Party was not properly represented;
• the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication of that law, under the law of the state where the arbitral award was made;
• the party against whom the arbitral award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;
• the arbitral award deals with a dispute not contemplated by or not falling within the terms of the reference to arbitration, or it contains decisions on matters beyond the scope of the reference to arbitration, provided that if the decisions on matters referred to arbitration can be separated from those not so referred, that part of the arbitral award which contains decisions on matters referred to arbitration may be recognised and enforced;
• the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing any agreement by the parties, was not in accordance with the law of the state where the arbitration took place; or
• the arbitral award has not yet become binding on the parties or has been set aside or suspended by a court of the state in which, or under the law of which, that arbitral award was made;
• the making of the arbitral award was induced or affected by fraud, bribery, corruption or undue influence;

With regards to recognition and enforcement of Foreign Arbitral award the Bill provides that, Enforcement of a foreign award may be refused, only if that party furnishes to the court proof that:-

• the parties to the agreement, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made;
• the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
• the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, except that where the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced;
• the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
• the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
• the subject-matter of the difference is not capable of settlement by arbitration under the laws of Mainland Tanzania; or
• the enforcement of the award would be contrary to the public policy of Mainland Tanzania

The Bill was tabled before the parliament for the first reading on 28^th January 2020 and is expected to go through stakeholders’ public hearing to collect comments and reviews before finally be passed by the Parliament.

FIN & LAW -Client Updates January 2020 -Dispute Resolution -Tanzania to Enact New Arbitration Act

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