Authored by: Jovinson Kagirwa – Head of Litigation and Recovery, June 2022
An Arbitral award is defined as the decision of the arbitral tribunal on the substance of disputes, and it includes any interim or interlocutory decision. It is therefore clear that an interim decision of the Arbitral Tribunal such as Ruling on a point of preliminary Objection or Preliminary findings under Section 52(1) of the Arbitration Act [CAP 15 R:E 2020] (The Act) and Rule 44 of the Arbitration (Rules of Procedure) Regulation, 2021 G.N No. 146 of 2021 (The Rules) or on its findings of Substantive jurisdiction under Section 74(1) of the Act and Rule 37 (1) of the Rules fall within the meaning of the Arbitral Award under the Act.
a.) Filing, Recognition and Registration of Award.
The process of presenting an arbitral award at the court registry, the relevant file opened, and a number given to it, constitutes filing of the arbitral award. The process of filing is covered under Rule 49 of the Rules. The Rules provides that the award that has been signed by the Arbitrator(s) shall be transmitted and registered by the Arbitral Tribunal with the Court within 14 days from the date of signing. Reading Rule 49 of the Rules, the interpretation of filing of the award expounded by the Court of Appeal in Tanzania Cotton Marketing Board Vs Cogecot Cotton Company SA [1997J TLR 165 remain relevant within the meaning of the Act and the Rules.
Recognition on the other hand, it is provided under Section 83(1) of the Act. Once the award is filed under Rule 49 of the Rules, the party intending to enforce an award to be recognized, and the Court having issued the Notice to show cause why the Award should not be registered and enforced, is required to make an Application in Writing to Court to enforce an Award. The Application must be made by way of Petition as provided under Rule 63(1) (a) of the Rules. The Petition must contain a brief statement in summary form divided into paragraphs, annexed with submission, minutes or proceedings and specify the persons affected by the Award.
In case the Application will be granted by the Court, the Award will be recognized and enforceable. The Court may refuse to enforce an Award on number of reasons stated under Section 83 (2) (a), Section 83(3), 83(4) and 83(5) of the Act.
Further, an Award may be enforced as the Judgment and Decree of the Court under the enforcement of the Award made under Section 73(1) of the Act. The Application under Section 73(10 of the Act seeks leave of the Court. The Application for leave under this section is required to be made by Petition. In case of the foreign Award, the Petitioner must satisfy the Court in his Petition all conditions stated under Rule 66(3) of the Rules.
b.) Challenging an Award
In challenging the Award, the seat of Arbitration is the key factor to take into consideration in determining the mode and extent of challenging an Award and the Applicable laws.
The Arbitration Act came into force on 18th January 2021 with retrospective application under Section 91(4) of the Act to include all pending proceedings initiated under the repealed Act and pending in Court, that they shall be determined using in the light of the Act.
The Act provides the procedures under which an Award can be challenged. The mode of challenging an Award depends totally on nature of the Arbitration proceedings from which the Award was issued.
A party intending to challenge the Award may then petition to the High Court (‘the Court’) by way of Petition as provided under Rule 66 of the Rules, to challenge an award on various grounds. The first available remedy is by challenging an award on substantive jurisdiction of the Tribunal, or proceedings of the Arbitration Tribunal (before the Tribunal has delivered its Final Award) or on the final award on the grounds of serious irregularities as stated under Section 75 of the Act. This position was confirmed by the High Court of Tanzania (Commercial Division) in Misc. Commercial Cause No. 7 of 2020 Voltalia Portugal S.A versus NextGen Solawazi Limited. In its Ruling the Court noted that “According to sections 69 (1) and 70 (1) of Act No.2/2020 an award can be challenged on substantive jurisdiction or on serious irregularities by making an application before the court”. It must be noted that the decision of the Court was made before the Arbitration Act was Revised. The former Section 69 is now Section 74 and the former Section 70 is now Section 75.
c.) Challenge an Award on substantive jurisdiction.
The Petition to challenge the Arbitral Award on substantive Jurisdiction issues can be made either during the pendency of the Arbitration proceedings or after the Final Award is issued by the Arbitrator as provided under Section 74(1). The rational behind Section 74(1) is due to the reasons that the Arbitrator may at its discretion decide the and determine the question of jurisdiction either as preliminary question or may determine the issue on the award as to jurisdiction under Rule 28(4) and Rule 37 of the Rules.
To exercise that right, the Petitioner will be required to file a Petition and serve notice to that effect to the other party and the Arbitral Tribunal. In case the Petition is made during the pendency of the Arbitration proceedings, the Arbitral Tribunal may at its discretion proceed with determination of the Arbitration proceedings regardless of the pendency of the Application challenging the Arbitral proceedings (Section 74(2).
The party against whom the Award is made may also challenge enforcement of the Award under Section 72(3) and Section 73 of the Act by showing the Court that the Arbitral tribunal had no substantive jurisdiction at the time of making an Award.
The Court in determining the petition under Section 74(1) may confirm the award, vary the award or set aside the award in whole or in part per. Section 74(3).
d.) Challenge an Award for serious irregularities.
A party to the proceedings may challenge the Arbitral Award on the grounds of serious irregularities under Section 75(1) of the Act. The procedure is quite similar with that covered above save that the grounds under which the Petition should be made differs. Section 75(2) of the Act defines the scope under which the Petition challenging an Arbitral Award under the serious irregularities.
In determining whether or not a decision is an award for the purposes of invoking section 75(1) of the Act (serious irregularity), the court is required to consider numbers of factors including the substance of the decision; the nature of the issues with which the decision emanated from, whether the decision is final in the sense that it disposes of the matters submitted to arbitration so as to render the tribunal functus officio, either entirely or in relation to that specific issue or claim; the tribunal’s description of the decision, which is relevant but not determinative, and how a ‘reasonable recipient’ would consider the objective attributes of the decision.
Once the Court has satisfied itself that the decision is an award, the Court will entertain the Petition as presented by the Petitioner. The Court will have to satisfy itself if the Petition discloses any grounds stated under Section 75(2) of the Act which includes, failure of the Arbitral tribunal to comply with the principals of natural justice ( per Section 37) and to adopt procedures suitable to the circumstances of the particular case.
Where the Court is satisfied that there are serious irregularities, the Court may under Section 75(3) remit the Award back to the Arbitral Tribunal either in whole or in part for reconsideration and the Arbitral Tribunal shall be required to make a fresh award in respect of the matters remitted within three months from the date of the Order of the Court remitting an Award or such other period as the Court may direct (Section 78(3); the Court may also set aside the award in whole or in part or declare the award to be of no effect
The Court may in exercise of its jurisdiction under Section 78 of the Act, order that any provision which an award is a condition precedent to the bringing of legal proceedings in respect of the matter to which the arbitration agreement applies, is of no legal effect or set it aside in whole or in part as regards to the subject matter of the award or, as the case may be, the relevant part of the award. Section 78(4).
The Court’s decision under Section 74(1) and 75(1) of the Act can only be challenged by appeal with the leave of the Court. The Application for leave to appeal must be filed within Fifteen days from the date of Order/ decision of the Court (Rule 65(1) of the Arbitration Rules.
For foreign arbitral proceedings or award, the Act does not apply save for the Petition for stay of proceedings for reference to foreign Arbitral Tribunal under Section 15 and the Petition to challenge the enforcement of the award under Section 73 of the Act. Under Section 73 of the Act, the enforcement of the Award (both domestic and foreign) can be made by the party subject to the leave of the Court. The enforcement is not automatic even in the absence of the Petition to challenge the Award. See Voltalia Portugal S.A vs NextGen Solawazi. The Court must be satisfied that the Arbitral Award sought to be enforced aligns with Rule 66 of the Arbitration Rules; which provides that for a foreign award to be enforceable in Tanzania it must be made pursuant to the Agreement for Arbitration, made by the arbitral tribunal provided for in the Agreement, conformity with the laws governing Arbitration, is final in the country in which it was made, is made in respect of a matter which is arbitrable in Tanzania and does not contradict conditions for enforcement of Award. These conditions under Rule 66 must be met cumulatively.
The party against whom the enforcement is sought by may also challenge the enforcement of the foreign Award by satisfying the Court that the Arbitral Tribunal lacked substantive jurisdiction.
Reading the wording of Section 7 of the Act, Section 73 is the only exception under the Act where the party can challenge the foreign award under the Act.
e.) Challenging an Award by third party.
Section 79(1) of the Act gives power to the third party to the proceedings (a party who took no part in the proceedings but holding an interest in the subject of the Arbitration proceedings to make an Application to Court challenging the validity of the Agreement, jurisdiction of the Arbitral Tribunal and legality of the proceedings. The Application made under Section 79(1) entitle the Petitioner to enjoy all rights available to the aggrieved party in the Arbitration proceedings as provided under Section 79(2) to challenge, an Award on substantive jurisdiction and serious irregularities.
