International Arbitration 2023 Comparisons

In recent years, efforts have been made in Tanzania to enhance alternative means of dispute resolution such as arbitration, mediation and negotiation. Many commercial contracts in Tanzania contain dispute resolution clauses which require some form of alternative dispute resolution before parties resort to litigating disputes in courts.

The enactment of the Arbitration Act (CAP 15 RE 2020) (the “Arbitration Act”) repealed the Arbitration Act of 1931, which was inherited from the British colonial rule.

For a long time, the National Construction Council (NCC) and the Tanzania Institute of Arbitrators (TIArb) have been the principal arbitral bodies in Tanzania. However, in 2021, the Tanzania International Arbitration Centre (TIAC) was established to provide a forum to facilitate international commercial arbitration.

Additionally, the Arbitration Act provides for the establishment of the Tanzania Arbitration Centre (the “Centre”) as the statutory regulatory body for domestic and international arbitration. The Centre is yet to become operational, but recent developments indicate that it will commence operations soon.

The most common arbitration in Tanzania is domestic arbitration; it is very rare to have international arbitration proceedings seated in Tanzania.

Key industries which have historically seen significant activity in international arbitration in Tanzania include construction, telecommunications, finance and mining. Government/investor contracts have also been the subject of international arbitration.

Given the lack of published statistics in Tanzania, it is difficult to ascertain arbitral trends and the impact of COVID-19 on arbitration activities.

Tanzania currently has three arbitral institutions, namely, the National Construction Council (NCC), the Tanzania Institute of Arbitrators (TIArb) and the recently established Tanzania International Arbitration Centre (TIAC).

Additionally, the Arbitration Act provides for the establishment of the Tanzania Arbitration Centre (the “Centre”), which is likely to commence operations soon.

Tanzanian courts are, at present, only vested with supervisory authority over arbitration proceedings and the ability to enforce arbitral awards.

In Tanzania, arbitration proceedings are governed by the Arbitration Act, and the Arbitration (Rules of Procedure) Regulations, 2021 (the “Rules of Procedure Regulations”).

The Arbitration Act is based on the UK Arbitration Act, 1996 and not on the UNCITRAL Model Law.

There were no changes to Tanzanian arbitration laws in 2022/2023. There does not appear to be any pending legislation designed to change laws governing arbitration in Tanzania.

According to the Arbitration Act, for an arbitration agreement to be enforceable, it must be in writing. An agreement is deemed to be in writing where:

• the agreement is in writing, whether or not it is signed by the parties;
• the agreement is made by exchange of communications in writing; or
• the agreement is evidenced in writing.

Arbitration stems from what has been agreed by parties under an arbitration agreement. Under the Arbitration Act, an arbitration agreement is defined as an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

Recent case law in Tanzania has been explicit that only the High Court has the authority to hear winding-up proceedings, regardless of whether the winding-up petition arises from a contract that provided for an arbitration clause. Therefore, any matter in which the relief sought requires an order that only a court can make, will not be arbitrable.

The Arbitration Act provides explicitly that an arbitral award is final and binding upon the parties claiming through it. As such, the national courts have been reluctant to interfere with the enforcement of an arbitral award provided it is in accordance with the Arbitration Act.

The grounds on which enforcement of an arbitral award may be rejected are as follows.

• If the party against which it is invoked furnishes proof to the court that:
1. parties to the arbitration agreement, pursuant to the applicable law, lacked the capacity to enter into the agreement or were not properly represented;
2. 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;
3. the party against which the arbitral award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitration proceedings or was otherwise unable to present its case;
4. the arbitral award deals with a dispute not contemplated by or not falling within the terms of reference of 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;
5. 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
6. 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.
• The court finds that:
1. the subject matter of the dispute cannot be settled by arbitration under any written laws; or
2. the recognition or enforcement of the arbitral award would be contrary to any written laws or norms.

An arbitration agreement is treated as a distinct agreement separate from the main agreement. Unless otherwise agreed by the parties, an arbitration agreement which forms or was intended to form part of another agreement, regardless of whether it is in writing or not, shall not be regarded as invalid or non-existent because the rest of the agreement is invalid or has become ineffective.

The parties to an arbitration agreement are at liberty to agree on the number of arbitrators to form the arbitral tribunal and on the necessity of having a chairperson or umpire.

Additionally, the parties must agree on the procedure for appointing the arbitrator or arbitrators and the procedure for appointing any chairperson or umpire.

The Arbitration Act provides for a default procedure in the event that the parties fail to appoint an arbitrator. In an instance where the parties have agreed that the matter will be presided over by two arbitrators, and one of the parties has appointed an arbitrator of its choice while the second party has defaulted, the first party may give notice in writing to the other party for the appointed arbitrator to act as a sole arbitrator whose award will be binding on the parties.

Where the parties fail to appoint an arbitrator, either party may apply to the Centre, which will direct on the appointment procedure or make an appointment on behalf of the parties.

With regard to the designation of an arbitrator in a multi-party arbitration, the parties acting as claimants will be considered as a single-party claimant and the parties claimed against will be considered as a single-party respondent. Both the parties acting as a single-party claimant and the parties acting as a single-party respondent are at liberty to select an arbitrator or arbitrators. If the multiple parties cannot agree on the selection of an arbitrator, the Centre will select the arbitrator on behalf of the multiple parties.

The courts have no authority in the appointment of arbitrators. Only the parties vested with the mandate have this authority or, in the event they are unable to appoint an arbitrator, the Centre will have the mandate to appoint an arbitrator.

According to the Arbitration Act and the Rules of Procedure Regulations, an arbitrator may be challenged where there are justifiable doubts as to the impartiality or independence of the arbitrator. A party that intends to challenge an arbitrator is required to notify the Centre within 14 days from the time of being advised of the identity of the arbitrator, attaching documentation establishing the basis for such challenge. An arbitrator may be removed due to any of the following grounds:

• there are circumstances which give rise to justifiable doubts as to the arbitrator’s impartiality;
• the arbitrator does not possess the qualifications required by the arbitration agreement;
• the arbitrator is physically or mentally incapable of conducting the proceedings or there are justifiable doubts as to their capacity to do so; or
• the arbitrator has failed or refused to:
1. properly conduct proceedings;
2. use all reasonable dispatch in conducting the proceedings; or
3. make an award, and substantial injustice has been or will be caused to the applicant.

It should be noted that the arbitrator will only be removed after being heard by the Centre.

An arbitrator appointed to preside over an arbitration proceeding is required:

• to be an arbitrator who is accredited or registered in terms of the Reconciliation, Negotiation, Mediation and Arbitration (Practitioners Accreditation) Regulations, 2021 (the “Practitioners Accreditation Regulations”);
• to have no family relationship based on descent and/or marriage down to the third generation, with any of the parties involved in the dispute;
• to have no financial interest or any other interest whatsoever in the result of the arbitration;
• to be named in the arbitration agreement by the parties; and
• to be a person of high moral character and recognised competence in the field of law, commerce, industry or finance, who may be relied upon to exercise independent judgement.

As per the Arbitration Act and its Regulations, an arbitrator is obliged to disclose all facts and circumstances which may raise concerns as to their impartiality and independence.

See 3.2 Arbitrability.

An arbitral tribunal is vested with the power to rule on its own substantive jurisdiction; on whether a valid arbitration agreement exists; on whether the arbitral tribunal is properly constituted; and on matters that may be submitted to arbitration in accordance with the arbitration agreement.

This is further reiterated by Regulation 28 of the Rules of Procedure Regulations, which provides that an arbitral tribunal has the power to hear and determine objections to its own jurisdiction, including any objections with respect to the form, existence, validity or scope of the arbitration agreement.

The Arbitration Act vests a party to the proceedings with the power to challenge any award made by the tribunal ruling on its substantive jurisdiction, provided that the party challenging said award provides notice to the other parties and to the arbitral tribunal.

The Arbitration Act further provides that a party subject to arbitration proceedings may apply to the court to rule on any question as to the substantive jurisdiction of the arbitral tribunal. Such an application to the court will not be considered unless the following requirements are met:

• the application is made with the agreement in writing of all the other parties to the proceedings; or
• the application is made with the permission of the arbitral tribunal and the court is satisfied that:
1. the determination of the question is likely to produce substantial savings in costs;
2. the application was made without delay; and
3. there is good reason why the matter should be decided by the court.

Unless the parties agree otherwise, the tribunal may proceed with conducting the proceedings and make an award pending determination of an application.

A party may raise an objection on the ground that the arbitral tribunal lacks substantive jurisdiction no later than the point at which the party takes the first step in the proceedings to contest the merits of any matter in relation to which the party is challenging the arbitral tribunal’s jurisdiction. As per Section 36 of the Arbitration Act, a party may make an application to the court, as soon as possible, to determine any questions as to the substantive jurisdiction of the arbitral tribunal.

A party may challenge an award of the tribunal ruling on its substantive jurisdiction within 28 days of the award being made.

The standard of judicial review for questions of admissibility and jurisdiction is not stipulated in Tanzania’s arbitration laws, nor has it been tested in case law. However, borrowing from decisions in the UK, any party challenging an award based on substantial jurisdiction is entitled to a complete rehearing of the jurisdictional matters, rather than just a review of the tribunal’s decision on the issue.

The courts have emphasised in various decisions that the parties are bound by their agreements; therefore, where parties have agreed to determine their disputes by way of arbitration, any legal proceedings brought before the court will be stayed on application to pave the way for arbitration.

The Arbitration Act defines the term “party” to mean a party to an arbitration agreement. The tribunals will only assume jurisdiction over individuals or entities that are party to an arbitration agreement or signatories to the contract containing the arbitration agreement. The Arbitration Act does not give the arbitral tribunal room to assume jurisdiction over third parties.

The parties may agree on the powers to be conferred to the arbitral tribunal in respect of granting interim reliefs. In the absence of such agreement, the Arbitration Act grants the tribunal default powers to grant interim reliefs related to security for costs, preservation of evidence and preservation of property.

An interim relief awarded by the tribunal is binding on the parties; however, it would require enforcement to make it effective. Given the expected delays in enforcing such an award and the urgency surrounding the granting of an interim order, parties may seek to apply to the courts directly for some interim orders.

Unless otherwise agreed by the parties, the Arbitration Act bestows wide powers upon the court in relation to the preservation of evidence and property for arbitration. The court’s authority under this section is the same as that exercisable in legal proceedings.

The court may make an order based on the following orders:

• the taking of the evidence of witnesses;
• the preservation of evidence;
• making orders relating to property which is the subject of the proceedings or as to which any question may arise in the proceedings: (a) for the inspection, photographing, preservation, custody or detention of the property; or (b) ordering that samples be taken from, or any observation be made regarding, or experiment conducted upon, the property; and for that purpose, the court may authorise any person to enter any premises in the possession or control of a party to the arbitration;
• the sale of any goods which are the subject of the proceedings; or
• the granting of an interim injunction or the appointment of a receiver.

The Rules of Procedure Regulations also make provision for the appointment of emergency arbitrators in an instance where urgent interim relief is required prior to the formation of the tribunal. The party seeking such interim relief may apply to the Centre, which will subsequently appoint an arbitrator to preside over the hearing seeking relief. Any order by the emergency arbitrator will be binding on the parties. 

The law does not cater for court intervention after an emergency arbitrator has been appointed. Given the strict set of circumstances under which a court may intervene in arbitration proceedings, it is unlikely that a court will be able to intervene once an emergency arbitrator has been appointed.

The Arbitration Act vests the court and the tribunal with the power to order security for costs unless the parties agree otherwise.

Arbitration proceedings are governed by the Arbitration Act and the Rules of Procedure Regulations and the Civil Procedure Code (CAP 33 RE 2019).

The procedure for registration and accreditation of arbitrators is governed by the Practitioners Accreditation Regulations.

The conduct of arbitrators is governed by the Code of Conduct and Practice for Reconciliators, Negotiators, Mediators and Arbitrators Regulations, 2021 (the “Code of Conduct”).

Arbitration proceedings in respect of a particular dispute will commence on the date on which the request for the dispute to be referred to arbitration is received by the other party. The procedural rules will be as agreed by the parties or directed by the arbitrator or arbitral tribunal.

A tribunal is given a wide array of powers under the law; however, the use of such power is contingent on the parties’ agreement. Arbitrators are obliged to act fairly and impartially, giving each party a reasonable opportunity to put its case, and to adopt procedures suitable to the circumstances of that particular case, while avoiding unnecessary delay or expense in order to provide a fair means to resolve the dispute.

The parties may be represented by an advocate, or any other person chosen by them. The law does not regulate the qualification of the legal representative as such. Given the general application, legal representatives appearing before a tribunal can have qualifications other than domestic qualifications.

The arbitral tribunal has the discretion to decide on all procedural and evidential matters, subject to the agreement of the parties. No specific rules have been set out guiding such procedure; it is entirely at the discretion of the tribunal.

Evidential matters in arbitration proceedings are decided by the arbitral tribunal. Such matters include:

• when and where the proceedings will be held;
• the language or languages to be used in proceedings and whether translations of any relevant documents are to be supplied;
• whether, and if so, what form of written statements of claim and defence are to be used, when they are to be supplied, and the extent to which they can be amended;
• which documents will be produced by the parties and at what stage;
• what questions are to be asked and answered by the respective parties and when and in what form this will be done;
• whether to apply strict rules of evidence or any other rules as to the admissibility, relevance or weight of any material, be it oral, written or other evidence sought to be tendered on any matter of fact or opinion, and the time, manner and form in which such material will be exchanged and presented;
• whether and to what extent the arbitral tribunal will take the initiative in ascertaining the facts and the law; and
• whether and to what extent there will be oral evidence, written evidence or submissions.

A witness within Tanzania who is unwilling to attend arbitration proceedings in order to provide oral testimony or to produce documents or other material evidence may be compelled to attend the proceedings via an application to the court. A party to the proceedings, with the permission of the arbitral tribunal or by agreement with the other party, may apply to the court for the issuance of a witness summons.

With regard to the production of documents, the law sets a limitation by providing that a witness is not compelled to produce any document or material evidence in arbitration that the witness would not be compelled to produce in proceedings in court. This provision is intended to protect the witness’s right not to produce evidence that is privileged and to prevent disclosure of documents by way of a “fishing expedition”.

Arbitration proceedings are usually conducted privately and in camera. Both the parties and the arbitral tribunal are under an obligation to keep the entirety of the arbitration proceedings confidential. The law permits very limited circumstances where disclosure of confidential information may be permitted, which include attaching the award if the court is being moved to exercise its supervisory powers or if the award is being executed.

An arbitral award is required to be made in writing stating the reasons upon which the award is based, unless the parties have agreed that no reasons are to be given. An award granted by an arbitral tribunal will be passed based on the legal stipulations or based on justice and propriety.

Unless the parties agree otherwise, arbitration proceedings will be completed within a period of no longer than 180 days from the date of composition of the arbitral tribunal. Where the dispute is complex, the tribunal may extend the deadline upon notice to the parties. An award is to be delivered within 30 days of conclusion of the hearing.

In addition to having the mandate to make final awards, an arbitral tribunal has the power to grant interim, interlocutory or partial awards depending on the circumstances of the case.

The Arbitration Act provides that costs shall follow the event, as is the norm in court proceedings in Tanzania, which is built upon the adversarial system. By contrast, the Rules of Procedure Regulations provide that each party will bear its own costs for legal representation and will not be assessed against the other party. However, Section 36(1) of the Interpretation of Laws Act (CAP 1 RE 2019) provides that subsidiary legislation may not be inconsistent with the provisions of the written law under which it is made. Therefore, in this case, costs will follow suit.

An arbitral award is deemed to be final, and not open to appeal, unless the parties agree otherwise. However, an arbitral award may be challenged on the following grounds:

• the arbitral tribunal exceeded its substantive jurisdiction;
• the tribunal failed to deal with all the issues before it;
• the award was obtained by fraud or procured in a manner that is contrary to public policy; or
• there were irregularities in the conduct of the proceeding or in the award.

Where the court determines that there is a serious irregularity affecting the tribunal, it may:

• remit the award to the arbitral tribunal, in whole or in part, for reconsideration;
• set aside the award in whole or in part; or
• declare the award to be of no effect, in whole or in part.

The court may not exercise its powers to set aside or nullify an arbitral award, unless it is satisfied that it would be inappropriate to remit the matters in question to the arbitral tribunal for reconsideration.

The parties cannot exclude the scope of a challenge on substantive jurisdiction or serious irregularity; however, it may be excluded from the scope of the parties to approach the court on a question of law.

The merits of a case cannot be reviewed or determined by a court; however, a party may challenge an award on substantive jurisdiction, serious irregularity or a question of law. A party challenging an award on the above grounds will be entitled to a complete re-hearing as opposed to a review of the tribunal’s decision. In the event that the re-hearing is successful, the court may confirm the award, vary the award, remit the award back to the tribunal, set aside the award in whole or in part, or declare the award to be of no effect.

Tanzania has signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). However, the treaty has not been domesticated into law in Tanzania.

Tanzania is also a party to the Geneva Convention on the Execution of Foreign Arbitral Awards 1927 (the “Geneva Convention”), the Geneva Protocol on Arbitration Clauses (the “Geneva Protocol”), the ICSID Convention 1965, the Multilateral Investment Treaties Guaranteed Agency Convention 1958 (the “MIGA Convention”) and several bilateral investment treaties with other countries.

Foreign arbitral awards are recognised and can be enforced by the High Court, subject to compliance with the Arbitration Act. According to the provisions of Section 78(1) of the Arbitration Act, upon application in writing to the High Court, a domestic arbitral award or foreign arbitral award will be recognised as binding and enforceable.

Standards

In order for an award to be enforceable, it must:

• have been made in pursuance of an agreement for arbitration which was valid under the law by which it was governed;
• have been made by the arbitral tribunal provided for in the agreement or constituted in a manner agreed upon by the parties;
• have been made in conformity with the law governing the arbitration procedure;
• have become final in the country in which it was made;
• have been in respect of a matter which may lawfully be referred to arbitration under the laws of Tanzania, and its enforcement may not be contrary to the public policy or the laws of Tanzania; and
• not contradict conditions for the enforcement of foreign awards, as provided under Section 83(2) and (4) of the Arbitration Act.

Procedures

Regulation 63 of the Rules of Procedure Regulations provides for the format in which the application for enforcement of the arbitral award must be made to the court, namely that it must:

• be made by way of petition and be titled “In the matter of the arbitration and in the matter of the Act”, and reference must be made in the application to the relevant section of the Arbitration Act;
• contain a brief statement, in summary form, of the material facts; be divided into paragraphs numbered consecutively; and state the nature of the relief sought or the questions of law for the determination of the court, as the case may be;
• have attached to it the submission, the minutes or proceedings of the arbitral tribunal award or the ruling to which the petition relates; or have a copy of the arbitral award, certified by the petitioner or their advocate to be a true copy; and
• specify the persons affected by it and upon whom notice is required to be given as provided in those Regulations and it  must state the address, in detail, of each of them.

Not less than seven days before the date for the hearing of a petition or such lesser time as a magistrate or, as the case may be, a judge may allow, written notice must be given by the court to all persons specified in the petition and to such other persons as appear likely to be affected by the proceedings, requiring them to show cause, within the time specified in the notice, why the relief sought should not be granted, and if no sufficient cause be shown, a judge may make such order as the circumstances of the case may appear to them to require.

Status of an Award That has Been Set Aside by the Courts in the Seat of Arbitration or is Subject to an Ongoing Set-Aside Proceeding

As per the above, an award that has been set aside or is subject to an ongoing set-aside proceeding in the seat of arbitration will not be enforceable in Tanzania.

Defence of Sovereign Immunity

Tanzania currently has no law in place regulating state immunity, nor is there a judicial precedent discussing the inclination of the judiciary in Tanzania either towards absolute or restrictive immunity. The defence of sovereign immunity will not be available where the state has consented to arbitration contained in a bilateral investment treaty or where it has been expressly waived in the agreement between the parties.

Moreover, a party will not be able to attach the properties of the Tanzanian government during the enforcement of an award against Tanzania through the Tanzanian courts. The Government Proceeding Act (CAP 5 RE 2019) explicitly prohibits attachment of government assets; instead, the decree holder may approach the Permanent Secretary of the Treasury, who will then pay the amount lawfully due.

Tanzanian courts generally recognise and enforce arbitral awards. This is reflected in the Arbitration Act, which sets strict parameters on the grounds on which the court can reject enforcement of an arbitral award.

Among the grounds preventing enforcement of an arbitral award is whether the award is contrary to the public policy of Mainland Tanzania. It is therefore clear that Tanzania interprets public policy grounds to mean domestic public policy.

In the case of Catic International Engineering (T) Limited v University of Dar es Salaam, Miscellaneous Commercial Cause No 1 of 2020, the High Court of Tanzania (Commercial Division), at Dar es Salaam (unreported), the arbitral tribunal ruled in favour of the petitioner against the respondent, a public institution, on the grounds of public policy.

The court cited with approval the Kenyan case of Tanzania National Roads Agency v Kundan Singh, Miscellaneous Civil Application No 171 of 2012 (unreported), where it was held that an award could be set aside on the grounds of public policy if it was shown that the award was:

• inconsistent with the constitution or other laws of the country;
• inimical to national interests; or
• contrary to justice or morality.

The law does not cater for class-action or group arbitration, especially since arbitration is typically a bilateral affair binding only upon the parties to the arbitration agreement.

Arbitrators are governed by the Code of Conduct, which lays out principles to which arbitrators are required to adhere when handling disputes. These principles include acting impartially, fairly, confidentially, acting in the interest of justice and fairness, and avoiding any conflict of interest.

A general code of conduct for counsels representing the parties in arbitration proceedings has not yet been enacted. While each profession at present is guided by its respective code of conduct, questions can be asked regarding the applicability of the said codes of conduct in arbitration proceedings and the disciplinary mechanisms that follow suit. For example, would the Medical Council of Tanganyika be able to exercise its disciplinary authority when a doctor has acted against the interests of a party while representing them as counsel? Can a doctor be held liable for acts conducted outside the medical field? It may be argued that perhaps the only profession which would provide adequate redress for a party is where the counsel representing the party is an advocate. Advocates are governed by the Advocates Act (CAP 341 RE 2019), which provides that advocates have a duty to act confidentially, competently, honestly and in the best interest of their client. Disciplinary redress can be sought through the Advocates Committee.

Given that the law does not limit the parties from selecting a counsel of their choice, it may be prudent to enact a law governing the counsel’s code of conduct, especially given that there is a possibility that the counsel selected may not necessarily be a professional.

There are no rules or restrictions on third-party funders.

Arbitration proceedings may be consolidated, or concurrent hearings may be held, only where the parties agree to do so based on terms agreed upon by the parties.

Unless the parties agree to this, an arbitral tribunal does not have the power to order consolidation of proceedings or concurrent hearings.

Generally, an arbitration agreement only binds the parties that signed the agreement. It will not be binding upon a third party. The exception to this general principle is when an agent signs on behalf of a principal, in which instance, the arbitration agreement will be binding upon the principal too.