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Attachment of assets in execution—26

2019-02-15 15:04:36

By Paul Kibuuka @tzpaulkibuuka

At the conclusion of the trial of a banking and finance case, the court renders its judgment—enforcement of which allows the judgment creditor to enjoy the fruits of his judgment. But can you imagine what would happen if people don’t obey and comply with judgments?

Today, the enforcement of money judgements is a very weighty issue within the business community in Tanzania due to, in part, the tight liquidity conditions in the economy. In this twenty-sixth part of our 30-part article series, we present a high-level overview of the enforcement of judgments through execution by way of attachment of debtors’ assets.

In normal court proceedings, judgment and decree must have been issued before an order of attachment can be granted. Additionally, the execution process upon the assets of the debtor must not have been stayed.

However, in preliminary court proceedings (i.e. before judgment), certain requirements must be met for the court to grant an attachment.

For example, the plaintiff bank must satisfy the court that the defendant business bank customer is about to remove his assets from the local limits of the jurisdiction of the court with intent to obstruct or delay the execution of any decree that may be passed against him. Sketchy allegations that the defendant is about to remove the asset will not suffice.

But what if attachment of assets is sought on the basis of a foreign judgment and decree? Here, the foreign judgment creditor must first show that there is in place a treaty for the enforcement of foreign judgements between Tanzania and the country in which the foreign judgment was rendered.

Then, he must apply to register the foreign judgment with the High Court of Tanzania. The registration must be done within six years from the date the judgment was pronounced by the foreign court.

With regard to judgments and decrees for payment of money pronounced by the courts of Tanzania, the judgment creditor/decree holder has to file a written, signed and verified application for attachment in the court which passed the decree.

Nevertheless, oral applications are admissible under the Civil Procedure Code, Cap 33 (CPC) for execution of a decree by way of arrest of the judgment debtor.

The property of a debtor that may be attached is defined by the CPC to include all saleable property, movable or immovable, belonging to the judgment debtor. Given the broad definition of the term “property” and the CPC provisions on attachment of debts and shares, it is possible to attach the debts of third parties to the debtor.

There are numerous assets listed under the CPC that are immune from attachment or sale; these include: books of accounts, salary, agricultural land, residential houses, etc. In the case of non-immune assets, the likelihood of challenging an order of attachment is very limited.  

Even in local arbitration proceedings, enforcement of the arbitral award, deemed to be a decree upon registration in a competent court, can be by means of attachment.

It’s important to note that whilst attachments don’t have extraterritorial effect, they are not subject to time limits to remain in effect. Moreover, the courts may dispense with issuance of prior notice of attachment to the debtor if doing so would lead to undue and unjustified delays or would “defeat the ends of justice”.

The CPC provides no special rules to deal with the situation where other plaintiff banks seek judgments against the same assets of the debtor upon which there is already an order of attachment. Although the CPC provides no rules for such scenario, those banks can apply for attachment of the remaining assets.

The right of the victorious party to enforce a judgment through attachment in execution of a decree is an integral part of the right to a fair trial within a reasonable time.

The judiciary branch of the government of Tanzania is called upon to ensure that challenges do not stand in the way of that process otherwise the authority of the courts may be diminished and the faith of litigant banks and business bank customers in the efficacy of the judiciary may be seriously undermined.  

Paul Kibuuka is the managing partner of Isidora & Company Advocates, a corporate, commercial and financial law firm. This article was published in The Citizen on Saturday, 16 February 2019

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