Arbitration Law in Tanzania
Arbitration Law in Tanzania is primarily governed by the Arbitration Act, 2020, which provides a framework for both domestic and international arbitration. The Act reflects Tanzania's commitment to aligning its arbitration practices with international standards, particularly the UNCITRAL Model Law on International Commercial Arbitration, and enhances the recognition and enforcement of arbitral awards, both domestic and foreign.
Key Features of Arbitration Law in Tanzania:
1. Legal Framework
- Arbitration Act, 2020: The principal legislation governing arbitration in Tanzania is the Arbitration Act of 2020. The Act replaced the earlier Arbitration Act of 1966 and brings Tanzanian arbitration law in line with international best practices.
- UNCITRAL Model Law: The Arbitration Act adopts the UNCITRAL Model Law on International Commercial Arbitration (1985), incorporating many of its provisions to ensure that the arbitration framework in Tanzania meets internationally recognized standards.
- New York Convention: Tanzania is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), which facilitates the recognition and enforcement of foreign arbitral awards in Tanzania.
- Tanzania Arbitration Centre: The Tanzania Arbitration Centre (TAC), established to facilitate the resolution of disputes through arbitration, also administers arbitration cases and provides facilities for both institutional and ad hoc arbitrations.
2. Arbitration Agreement
- Written Agreement: Under Tanzanian law, an arbitration agreement must be in writing. It may be a separate agreement or an arbitration clause embedded in a contract.
- Enforceability: Arbitration agreements are enforceable, and Tanzanian courts will generally uphold the agreement and refer the parties to arbitration. In cases where one party refuses to arbitrate, the other party can apply to the court to compel arbitration.
- Scope: The arbitration agreement must clearly define the scope of disputes to be resolved by arbitration. Disputes that fall outside the scope of the agreement cannot be referred to arbitration.
3. Arbitral Tribunal
- Number of Arbitrators: The parties to an arbitration are free to determine the number of arbitrators. Typically, either one or three arbitrators are appointed.
- Appointment of Arbitrators: The parties are free to choose the arbitrators. If the parties fail to agree, the court or an arbitration institution may appoint the arbitrators. The Tanzania Arbitration Centre can assist in the appointment process.
- Impartiality and Independence: Arbitrators must act independently and impartially. They must disclose any potential conflicts of interest and can be disqualified if there is evidence of bias or lack of independence.
- Qualifications: Although the law does not prescribe specific qualifications for arbitrators, the arbitrators typically have expertise in the subject matter of the dispute (e.g., commercial, construction, etc.).
4. Arbitration Procedure
- Party Autonomy: Tanzanian arbitration law emphasizes party autonomy. This means that the parties have the freedom to agree on procedural matters, such as the language of arbitration, the seat of arbitration, and the governing law.
- Institutional and Ad Hoc Arbitration: Tanzania allows for both institutional and ad hoc arbitration. Institutional arbitration is typically administered by the Tanzania Arbitration Centre (TAC), while ad hoc arbitration follows the rules agreed upon by the parties.
- Language of Arbitration: The parties can choose the language of the arbitration proceedings. In practice, English is often used, particularly in international arbitration cases, although Swahili can also be used for domestic disputes.
- Interim Measures: Arbitrators in Tanzania have the power to grant interim measures to preserve assets, prevent harm, or maintain the status quo during arbitration. Courts may also assist in enforcing interim measures if necessary.
- Confidentiality: Arbitration proceedings are generally confidential, and information disclosed in the course of the proceedings is protected from being used in other legal proceedings unless agreed otherwise by the parties.
5. Arbitral Awards
- Final and Binding: Arbitral awards issued by a tribunal are final and binding on the parties. Once the award is issued, the parties are required to comply with it. If one party refuses to comply, the other party may apply for enforcement through the courts.
- Types of Remedies: The tribunal can award various remedies, such as monetary compensation, specific performance, and injunctive relief, depending on the nature of the dispute.
- Written Award: The tribunal must issue a written award, which should include a clear explanation of the reasoning behind the decision.
- Time Limit: The arbitration tribunal is generally required to issue the award within a reasonable time frame, usually six months from the closure of the proceedings. This period can be extended if both parties agree or if the tribunal finds a valid reason for delay.
6. Recognition and Enforcement of Arbitral Awards
- Domestic Awards: Domestic arbitral awards are enforceable in Tanzania. A party can seek enforcement of an award through the Tanzanian courts if the other party refuses to comply with the award.
- Foreign Awards: As a signatory to the New York Convention, Tanzania recognizes and enforces foreign arbitral awards. A foreign award can be enforced in Tanzanian courts, provided it does not violate public policy (ordre public) or other domestic laws.
- Grounds for Refusal: A foreign arbitral award may not be enforced in Tanzania if:
- The award violates Tanzanian public policy.
- The subject matter of the dispute is not arbitrable under Tanzanian law.
- The arbitration procedure was not in accordance with the agreement of the parties.
- There is lack of due process (e.g., a party was not given proper notice of the arbitration).
7. Judicial Review and Setting Aside of Awards
- Limited Judicial Review: Tanzanian courts have limited power to review arbitral awards. The court may set aside an award on the following grounds:
- The tribunal exceeded its jurisdiction.
- There was a procedural irregularity, such as lack of due process.
- The award is in contravention of public policy.
- Time Limit for Challenge: A party wishing to challenge an award must do so within 30 days after the award is issued. If no challenge is made within this period, the award becomes final and binding.
8. Role of Courts in Arbitration
- Supportive Role: The Tanzanian courts play a supportive role in arbitration. They assist in the enforcement of interim measures, the appointment of arbitrators, and the recognition and enforcement of arbitral awards.
- Stay of Court Proceedings: If there is a valid arbitration agreement, Tanzanian courts will stay court proceedings and refer the matter to arbitration, provided the agreement is not deemed invalid or unenforceable.
- Interim Relief: Courts in Tanzania have the authority to issue interim orders and injunctions to support arbitration proceedings, especially to preserve assets or prevent the frustration of the arbitration process.
- Judicial Assistance: The courts may also assist in the enforcement of an award if the losing party refuses to comply with the tribunal's decision.
9. Arbitration Institutions in Tanzania
- Tanzania Arbitration Centre (TAC): The Tanzania Arbitration Centre (TAC) is the main institution for institutional arbitration in Tanzania. It provides services for both domestic and international disputes and follows the UNCITRAL Arbitration Rules or rules set by the parties.
- East African Court of Justice: While primarily a regional body, the East African Court of Justice (EACJ) may be involved in arbitration matters relating to disputes between partner states of the East African Community (EAC), which includes Tanzania.
- Other Institutions: Tanzania also accepts international arbitration institutions, such as the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), and International Centre for Dispute Resolution (ICDR), for cross-border disputes.
10. Recent Developments and Future Outlook
- Modernization of Arbitration Laws: The enactment of the Arbitration Act, 2020 has brought Tanzania’s arbitration laws closer to international standards, particularly in terms of supporting international arbitration.
- Promotion of Tanzania as an Arbitration Hub: Tanzania is making efforts to position itself as an arbitration hub in East Africa, providing facilities for both domestic and international arbitration.
- Improvement in Enforcement: While the law provides for the enforcement of both domestic and foreign arbitral awards, challenges related to practical enforcement in the local courts still exist. Future reforms and judicial training may improve the efficiency and consistency of enforcement.
Conclusion
Tanzania’s Arbitration Act, 2020 provides a modern and robust framework for arbitration, aligning with international standards and practices. The country is committed to promoting arbitration as an alternative dispute resolution mechanism, particularly for commercial and cross-border disputes. With a growing number of international arbitration institutions operating in Tanzania and its participation in international conventions like the New York Convention, Tanzania is positioning itself as an increasingly important player in the arbitration landscape of East Africa. However, practical challenges related to enforcement and the judicial environment remain and may require further reforms.
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