Enforcing foreign arbitral awards in Tanzanian courts

Saturday November 30 2019



Lilian Kyaruzi (law@liliankyaruzi.com)

Lilian Kyaruzi (law@liliankyaruzi.com) 

It is undeniable that foreign arbitral awards can be of elephantine extent. A case in point is the recent $185 million award issued by a tribunal at the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) in favour of Standard Chartered Bank (Hong Kong) against Tanzania for breaching an energy contract.

And then there is the $36.3 million arbitral award obtained in July 2010 by Mr. Hermanus Steyn against the Tanzanian government that is still reverberating in the international arbitration community.

Evidently, obtaining an arbitral award may not be the end of the road to redress contractual or other wrongdoings of the government. Moreover, unlike court judgements, arbitral awards are not directly enforceable.

In terms of the legal framework, the Geneva Protocol on Arbitration Clauses 1923, the Geneva Convention on Execution of Foreign Awards 1927, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, the ICSID Convention 1965, and the Multilateral Investment Guarantee Agency (MIGA) Convention 1985 as well as bilateral investment treaties entered into with Denmark, Finland, Switzerland, etc. provide the basis for the recognition and enforcement of foreign arbitral awards in Tanzania.

Although Tanzania is a party to the above-mentioned Conventions and treaties, the country’s distinctly outmoded Arbitration Act, Cap 15 incorporates only the Geneva Protocol and the Geneva Convention.

The New York Convention, the ICSID Convention, the MIGA Convention and bilateral investment treaties—all of which have superseded the Geneva Protocol and the Geneva Convention—are yet to be incorporated into Tanzanian domestic law.

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In this context, can the provisions of the unincorporated Conventions and treaties be enforced in Tanzania?

The specific provisions that govern the recognition and enforcement of foreign arbitral awards are found in sections 27, 28, 29, 30 and 31 of the Arbitration Act.

The High Court of Tanzania is the only forum for the recognition and enforcement of foreign arbitral awards. Section 17 mandates that an arbitral award filed in the High Court “shall”, if not remitted or set aside, be enforceable as it were a decree of the High Court.

Indeed, in Dowans v. TANESCO Misc. Civil Case No. 8 of 2011, the Court of Appeal of Tanzania upheld the High Court’s decision that a foreign arbitral award issued under the International Chamber of Commerce (ICC) Rules of Arbitration was enforceable in Tanzania.

However, these Rules are not incorporated into Tanzanian domestic law. Thus, the question posed earlier is answered in the affirmative.

Moreover, Article 54 of the ICSID Convention, ratified by Tanzania, imposes on Tanzania the obligation to automatically ‘recognize’ and ‘enforce’ an award issued in an ICSID arbitration, even though matters are different when it comes to ‘execution’ of ICSID awards as deference is made to Tanzanian domestic procedures and rules relating to execution.

Instructively, due to major lacunae in the Arbitration Act, the legal framework for recognition and enforcement of foreign arbitral awards in Tanzania also includes the Civil Procedure Code, Cap 33 (“the CPC”).

The application for recognition and enforcement of the foreign arbitral award should be submitted as a petition; this is preceded by the filing of the award in the High Court.

This transforms the award into an enforceable decree of the High Court capable of being executed subject to domestic procedures and rules set out in the CPC (see, Tanzania Cotton Marketing Board v. Cogecot Cotton Company SA [1997] TLR 165) and the special rules limiting attachment of assets of the Government (see, Kibuuka, Paul. “Effects of Tanzania sovereign immunity on govt contracting”. The Citizen. 14 September 2019).

The automatic recognition and enforcement of ICSID awards does not derogate from Tanzanian law on State immunity from execution.

If the High Court refuses to recognise a foreign arbitral award on any of the grounds set forth under section 30 of the Arbitration Act, the aggrieved party may appeal to the Court of Appeal on the strength of the Dowans case.

Overall, charting an advance strategy for enforcing a foreign arbitral award in Tanzania and the execution of assets in satisfaction of the award, even prior to the High Court recognising the award, can improve the chances of being compensated by the government.

Lilian Kyaruzi (law@liliankyaruzi.com) is a legal director in Isidora & Company and an international development enthusiast. The views expressed do not necessarily reflect those of Isidora & Company.