A new breed of legal support

Arbitration series part II: Is arbitration a viable option for settling business disputes?

2018-02-15 09:06:33

By Frederick Werema & Paul Kibuuka

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (also known as the “New York Arbitration Convention” or the “New York Convention”) has modified all of the Geneva Protocols that are still incorporated in Tanzania’s existing Arbitration Act, Cap 15 (Revised Edition 2002).

Tanzania ratified the New York Convention in 1965, but is yet to transpose it into national legislation and to have it domesticated. Arguably, this Convention is applied in Tanzania under international customary law. We should not rely on customary international law where we can adopt, through legislation, principles enunciated by the New York Convention and those worked out under the UNCITRAL Model Law on International Commercial Arbitration 1985, as amended in 2006.

The Law Reform Commission of Tanzania, charged with the responsibility to reform and develop the country’s laws, has long been expected to pave the way for a full-fledged legal reform of our Arbitration Act. But, as earlier noted, this Act, to-date, closely follows its 1931 predecessor that was amended in 1971.

Even so, arbitration as an alternative mechanism for resolving business, commercial and investment disputes has a lot of prospects for improvement in efficiency and wider usage.

From this perspective, important amendments in the Arbitration Act should include specific time-limits for implementing different stages of arbitration proceedings, including limits on how long an arbitrator can otherwise extend (or further extend) the time to render an arbitral award; and provisions with respect to dissenting arbitrators’ opinions.

Other important amendments should include provisions on the arbitrators’ requirement of independence; provisions on the grant of interim measures of protection; provisions regulating arbitration costs; grounds for annulment of arbitral awards by courts; and importantly, provisions to prevent parties from sabotaging arbitration proceedings through mischievous delay tactics.

Surely we can agree that there are grounds to justify the overhaul of the Tanzanian Arbitration Act. We can also agree to confer commercial actors a mandate to resolve business disputes through arbitration that is supported and structured according to the law. The Attorney General’s Office in collaboration with the Law Reform Commission of Tanzania and the Tanganyika Law Society may wish to take the lead in championing legal reforms that support arbitration.

Tanzanian lawmakers are also called to play a positive role in modernizing Tanzania’s arbitration ecosystem if we want to position the country as an arbitration hub.

Arbitration requires court’s assistance in most instances. Recognition and enforcement by courts of an arbitration agreement in a contract is of valuable assistance to arbitration. For example, maintenance or restoration of the status quo and preservation of assets that are the subject of arbitration could be necessary and the disputing parties may seek the assistance of the courts.

Thus, it is very important that the attitude of judicial officers, including judges, towards arbitration is positive where the contracting parties had agreed and incorporated an arbitration clause in their contract. Unless the parties have agreed to abandon their agreement to arbitrate, the courts should positively refer them to arbitration. In doing so, the courts will be helping to preserve the sanctity of explicit contractual obligations, which is pivotal to Tanzania’s economic development agenda.

We are mindful that courts and judicial officers alone will not make arbitration to thrive in Tanzania. Unwavering support by not only policymakers and lawmakers but also the business community and the commercial bar is crucial in, for instance, promoting awareness to arbitration advantages.

As things stand, apart from multinational enterprises and large local companies with strong legal teams, the process of arbitration and the advantages thereof remain mysterious to many Tanzanian businesses. Executives from such enterprises and companies contracting with the Tanzania Government usually prefer, for a good cause, global hubs, such as, Paris, London and New York as the seats of arbitration.

The Biwater, Konoike-Tanroads, and Stirling Civil Engineering arbitrations were conducted outside Tanzania. And just last year, some local and international media reports revealed that Symbion Power, Acacia Mining, AngloGold and EcoEnergy served the Tanzania Government with notices of arbitration filed in the International Court of Arbitration in London and Paris. This state of affairs needs to change.

Hon. Frederick Werema is a retired Judge and former Attorney General of Tanzania and currently the managing partner of FMD Legal Consultants & Advocates. Mr Paul Kibuuka is the managing partner of Isidora & Company Advocates.

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