IN THE HIGH COURT OF TANZANIA

(DAR ES SALAAM DISTRICT REGISTRY)

AT PAR ES SALAAM

MISCELLANEOUS CIVIL CAUSE NO. 9 3 OF 2 0 1 7

IN THE MATTER OF SECTION 6 OF ARBITRATION ACT [CAP. 15

R .E .2002]

IN THE MATTER OF A PETITION TO STAY PROCEEDINGS

PENDING ARBITRATION

BETWEEN

AGGREKO INTERNATIONAL PROJECTS LIMITED.......PETITIONER

VERSUS

M /S ELECTRICAL ENGINEERING LIMITED...............RESPONDENT

RULING

19 April & 22 May, 2018

DYANSOBERA, J.:

This is a petition for stay of proceedings filed by th e petitioner,

the Aggreko In tern atio n al Projects Limited on 12th Septem ber, 2017. It

h a s been filed u n d e r section 6 of the A rbitration Act [Cap. 15 R.E.2002]

an d is su p p o rted by a n affidavit of M unir Ladak, th e Principal Officer

of the petitioner. E ssentially, the petitioner seeks th e following orders:

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 i. T hat th e H onourable court be pleased to m ake a n order

staying th e proceedings in Civil C ase No. 55 of 2015 in the

High C ourt of T anzania, D ar es S alaam D istrict Registry

pending reference of the d ispute to the arb itratio n by the

parties.

ii. T hat th e resp o n d en t be condem ned to pay cots of the

proceedings in th is application

iii. S uch o th er order(s) be m ade as the co u rt shall deem fit an d

ju s t.

The petition h a s been resisted by the resp o n d en t M /s Electrical

Engineering Limited h a s who h a s filed a reply to th e petition.

At th e hearin g of the petition, Mr. B rian M am bosho, learned

counsel stood for th e petitioner while th e re sp o n d en t w as rep resen ted

by Mr. Paul Kalomo, learned advocate.

S upporting the petition, C ounsel for the p etitioner a t first m ade

reference to section 2 of the A rbitration Act w hich defines w hat

subm ission m ean s. He said th a t section 6 of the said Act u n d e r w hich

th is petition h a s been filed gives power to co u rt to stay proceedings. He

asserted th a t th ey have su b m itted an d agreem ent betw een the

petitioner an d resp o n d en t on w hich u n d e r close 18 of the agreem ent

the p arties agreed to th e m a tte r to be referred to arb itra tio n w henever

a d isp u te arises betw een them . He told th e co u rt th a t the

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requirem ents o utlined u n d e r section 6 are three. F irst th a t th e subject

m atter of th e su it m u s t be w ithin the arb itratio n m a tte r of the clause.

Second, th a t th e p a rty applying for stay m u st have n ot ta k e n any step

in the proceedings by filing a w ritten statem en t of defence a n d third,

th a t the p arty applying for stay h a s to show th a t he is ready an d

willing to refer th e m a tte r to arb itratio n a t the tim e w hen the su it h as

been filed. C ounsel for the petition pointed o u t th a t th ese principles

have been satisfied by the petitioner. He explained th a t the subject

m atter of th e su it is w ithin the arb itratio n m atter, No w ritten

statem en t of defence h a s been filed an d the petitioner is ready and

willing to refer the m a tte r to the arbitration. In su p p o rt of this

argum ent, counsel referred th is co u rt to the following case laws.

1. E ast Africa Breweries Ltd v. GMM Co. Ltd, Civil C ase no. 67

of 1999 reported in [1999] TLR 12 (HC).

2. The B oard of T rustees of the C ash ew n u t In d u stries

D evelopm ent F u n d v. H am m er Incorporation Co. Ltd, Misc.

C om m ercial A pplication No. 165 of 2013

3. The Hon. A ttorney G eneral, the Chief of Defence Forces,

C om m ercial C ase No. 120 of 2014 (HC).

He co ntended th a t th e su it h a s d isp u ted th e m eaning of the

agreem ent an d th e breaching pacta su n t servanda principle. It w as his

view th a t th e agreem ent being a m u tu a l u n d e rsta n d in g b o th parties

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h ad agreed th a t w henever there is a difference or any su ch a dispute

w hich will arise o u t of th e co n tract su ch d ispute sh o u ld be settled by

way of arb itratio n . T hat the sam e cardinal principal is found u n d e r

section 37 of th e Law of C ontract Act. He fu rth er contended th a t the

only way to enforce th e provisions of the co n tract c a n n o t be rem edied

by dam ages as w hen th e p arty b reaches its obligation the o th er party

can seek in co u rt for dam ages. He said th a t the rem edy in this case is

by enforcing w hat w as agreed upon. C ounsel for th e petitioner relied

on the case of Bulyankulu G oldm ine Ltd v. Durban H otels Ltd, Misc.

C om m ercial C ase No. 122 of 2016 a t p. 6 . He told th is co u rt th a t the

enforcem ent h a s b een given by th is co u rt u n d e r section 6 of the Act. It

is prayed for the petitioner th a t th is co u rt be pleased to stay the

proceedings a n d refer the m a tte r to arbitration.

Replying to th e subm ission, counsel for resp o n d en t adm itting

th a t there is a n a rb itra tio n clause in the signed agreem ent betw een the

p arties an d th a t m a tte rs pertaining to arb itratio n are covered u n d e r

section 6 of the Act, he, however, pointed o u t th a t th e m a tte r started

long ago in 2015 an d the provisions of section 6 should n o t be

m isconceived as th ey do n ot o u t th e ju risd ictio n of th e local co u rts to

h ear an d determ ine th e m atters. He said th a t section 6 of th e Act

should be read together w ith section 18 of th e Civil Procedure Code.

C ounsel for the resp o n d en t pointed o u t th a t th e petitioner h a s a

registered b u sin e ss in T anzania, an d therefore, th e essence of taking

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the m a tte r to arb itratio n as envisaged u n d e r section 6 of th e Act an d

the clause signed by th e p arties can n o t be ta k e n for g ran ted as there

m u st be sufficient ground to refer the m atter for arb itratio n in the

U nited Kingdom. He referred th is co u rt to th e case of G uest an d

C herries Ltd, a C ourt of Appeal decision reported in [1998] TLR w hich

dism issed the decision of the High C ourt holding th a t the sam e can be

en tertain ed by local co u rt em phasising th a t the co u rt m u s t be satisfied

th a t th e opting p arty for arb itratio n w as ready an d willing to do all the

n ecessary things to arb itrate. C ounsel for the resp o n d en t pointed out

th a t the d isp u te began a n u m b er of years ago before filing this case

an d law yers for th e resp o n d en t issu ed dem and notice d ated 20th day of

J a n u a ry , 2015 an d received by the petitioner on 2 1 st J a n . 2015 an d

th e resp o n d en t resp o n d ed on 10th F ebruary, 2015 b u t the q uestion of

arb itratio n w as left out. C ounsel for the resp o n d en t pointed fu rth er

su b m itted th a t the issu e of ju risd ictio n is one of law a n d n o t a w ish of

the parties an d th a t th is position w as em p h asised by th e co u rt in the

case of E ast African Brew eries and Co. Ltd in w hich th e issu e of

parties to th e co n tract ousting the ju risd ictio n of th e co u rt w as

discussed. C ounsel for the resp o n d en t is of the view th a t the petitioner

is em ploying th e delaying tactics w asting tim e of the co u rt an d trying

to strangle the rights of the respondent.

In a rejoinder, counsel for th e petitioner said th a t section 18 of

the CPC is a general law dealing w ith civil proceedings in stitu te d in

local co u rts while A rbitration Act deals w ith arb itratio n w hich h as

given pow ers of the co u rt to deal w ith m atters of arb itratio n . He said

th a t w h eth er th e petitioner h a s a registered office in T anzania, it h as

nothing to do w ith w h at the p arties agreed u p o n in th e contract. As to

the cited case of th e C ourt of Appeal, counsel argued th a t in th a t case

the defendant ad m itted the claim w hich m ean s th a t th ere w as nothing

to refer to arb itratio n . He fu rth er contended th a t th o u g h the High

C ourt h a s ju risd ictio n th e issu e is w hat forum did th e p arties chose.

I have w ith circum spection, considered the petition an d the

subm issions proferred by learned advocates.

Section 6 of the Arbitration Act (Cap 15) under which the petition is filed

provides:

6. Where a party to a submission to which this Part applies) or a person

claiming under him commences a legal proceeding against any other

party to the submission or any person claiming under him in respect o f

any matter agreed to be referred, a party to the legal proceedings may at

any time after appearance and before filing a written statement o f defence

or taking any other steps in the proceeding apply to the court to stay the

proceedings and the court i f satisfied there is no sufficient reason why the

matter should not be referred in accordance with the submission and that

the applicant was, at the time when the proceedings were commenced,

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 and still remains, ready and willing, to do all things necessary fo r the

proper conduct o f the arbitration may make an order staying the

proceedings. "

From these provisions and decided cases, the position seems to be that parties

who wish to invoke the provisions of the Arbitration Act [Cap. 15 [R.E.2002],

section 6 in particular must establish the following, to the satisfaction of the

court.

i. There must be a submission as defined under section 2 of the said Act-

that is a written agreement between the parties to submit present and

future disputes and/or differences to arbitration

ii. That the questions in dispute are covered by the agreement and that

such questions should therefore be referred to the arbitration

iii. That the petitioner is one covered by the reference to the arbitration

clause in the agreement and so is the respondent.

iv. That the petitioner has not taken steps that are in contravention of the

procedural requirements as outlined under section 6 of Cap. 15 that are

no further steps have been taken after entering appearance. Such steps

include the filing of a written statement of defence, or the taking of

other steps in the proceedings.

v. That the petitioner is willing and ready to arbitrate

vi. That there are no sufficient reasons before the court to make it refuse

granting the stay.

 Counsel for the petitioner has submitted to the effect that these conditions

have been complied with. Counsel for the respondent though does not dispute

this fact and contends that the matters pertaining to arbitration are covered under

section 6 of the Act he, however, explained that section 6 should not be

misconceived as it does not out the jurisdiction of the local courts to hear and

determine such matters asserting that the said provision should be read together

with section 18 of the Civil Procedure Code and that the reference to arbitration

in such circumstances should not be taken for granted but the court must be

satisfied that the petitioner is ready and willing to do all necessary to arbitrate.

He submitted that the conduct of the petitioner does not show the said readiness

and willingness on part of the petitioner to arbitrate. He reasoned that after the

service of notice and response from the petitioner, the question of arbitration

was left out. Besides, counsel for the respondent pointed out that although

parties to the arbitration were free to choose the law that would apply in the

event of the dispute and refer the dispute to arbitration, they were not competent

in law to agree to oust the jurisdiction of the Tanzanian courts. Counsel for the

respondent relied on the case of East African Breweries v. GMM Co. Ltd.

It is trite that where parties to a contract accept to be bound by the reference

to arbitration clause, then courts would normally give effect to that undertaking

unless there are prevailing circumstances which makes the court refuse to stay

the proceedings. The stay of proceedings in order to refer the matter to

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arbitration is in the discretion of the court and the court is not bound by the

contents of the submission. It has to take into account as well the six points

indicated above.

According to the petition, it is clear that the parties, in their agreement under

paragraph 18, undertook to refer any dispute to arbitration in London.

The burden lies on the opposing party to establish that the effects of the

arbitration clause should be departed from. This principle was well elucidated

in various cases including the following:

1. Ramada Investment Ltd v. Engen (T) Ltd; Commercial case No.

221' of 2001

2. Engineers and Builders v. Sugar Development Corporation

[19983] TLR 13

3. Norsad Fund v. Tanzania Investment Bank HC, Civil Case No. 3

of 1997

According to the submissions, the respondent has not discharged the burden.

For the re a so n s stated above, I g ran t th e petition an d stay the

proceedings in Civil C ase No. 55 of 2015 pending the p a rtie s’ reference

of th eir d isp u te to th e arb itratio n . The hearing of th e su it to resu m e on

20th Septem ber, 2018.

Owing to the n a tu re of the petition w hich in ten d s to stay the

proceedings already com m enced by the resp o n d en t an d the co n d u ct of

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the petitioner who h a s b ro u g h t the petition ra th e r belatedly, the

petitioner is condem ned cots of th is petition.

O rder accordingly. a

,/

W. P. D yansobera

JUDGE

22. 5. 2018

Delivered a t D ar es S alaam th is 22nd day of May, 2018 in th e presence

of Mr. B rian M am bosho, learned counsel for the resp o n d en t a n d in the

absence of the applicant.

r
W. P. D yansobera

JUDGE

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