1.3.1 Domestic Arbitration

Domestic arbitration is clearly defined in Section 3A of the 2020 Arbitration Act where an arbitration agreement is deemed to provide for “domestic arbitration” if ‘it provides expressly or by implication for arbitration in Mainland Tanzania’, or at the time when proceedings are commenced or the arbitration is entered into. For that matter, arbitration is deemed to be domestic in Tanzania where: -

1. The parties are nationals or residents of Tanzania;⁷

2. The arbitration proceedings take place in Tanzania;

3. The subject matter of the contract, or its performance, is substantially in Tanzania;⁸

4. The merits of the dispute are governed by Tanzanian law; and

5. The procedure of arbitration is also governed by Tanzanian law.

1.3.2 International Arbitration

Section 3 of the 2020 Arbitration Act defines “international arbitration” as an arbitration ‘relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in Tanzania’ and where at least one of the parties is:

1. an individual who is a national of, or habitually resident in, any country other than Tanzania;

2. a body corporate, which is incorporated in any country other than Tanzania;

3. an association or a body of individuals whose central management and control is exercised in any country other than Tanzania; or

4. the Government of a foreign country.

International arbitration is divided into three main types: (i) international investment arbitration; (ii) international commercial arbitration; and (iii) inter-state arbitration. International investment treaty arbitration (or investor-state arbitration) derives its basis in bilateral investment treaties (BIT’s) and multilateral investment treaties (MIT’s). International commercial arbitration arises from a dispute between parties to an international commercial contract or international investment arrangement. Inter-state arbitration relates to disputes between states (or between one state’s agency and another state, or vice versa) over the violation of an international law obligation.

Another equally important and emerging branch of international arbitration is sport arbitration.⁹ Today, International Sports Arbitration is one of the fast-growing areas of international arbitration.¹⁰ Accounting for between 3 and 6 percent of total world trade today, the sports industry is also a major source of legal disputes.¹¹ For that matter, arbitration is now ‘firmly established as the dispute resolution method of choice throughout the sports industry.’¹² It is estimated that the Court of Arbitration for Sport (CAS)¹³ in Lausanne, Switzerland, now receives a new case almost every working day.¹⁴

Although International Sports Arbitration is more or less similar to International Commercial Arbitration and Investment Arbitration in many ways, it has several peculiar features that distinguish it from the latter. Firstly, some world’s leading sports arbitral awards are issued at the conclusion of ‘an expedited 24-hour arbitral process involving all­night deliberations by the arbitral tribunal.’ Secondly, given the nature of the sports industry, arbitral proceedings in sports arbitration are subject to public access and may be made public, unlike in other forms of arbitration. Treading on this reality, the Swiss Supreme Court has held that: ‘in view of the outstanding significance of the CAS in the field of sport, it would be desirable for a public hearing to be held on request by the athlete concerned with a view to the trust in the independence and fairness of the decision-making process.’ Furthermore, decisions and awards of the sports arbitral tribunals are made public.

Although some international sports federations have set up their own system of dispute resolution and appoint tribunals for the resolution of disputes arising in their respective sport, the CAS is the leading tribunal for the conduct of International Sports Arbitration. Although the CAS is a private institution of arbitration of disputes arising in sports at the national and international levels, it is part and parcel of the institutional mechanism that ‘governs both the national and international sports.’ It must be guarded by such lex sportiva principles as efficiency of procedure, fairness and equal treatment of similar cases, ‘so as the process to become valid.’

The role and influence of the CAS¹⁵ in the resolution of disputes in international and domestic sports have two important and peculiar features for International Sports Arbitration. Firstly, in accordance with the Code of Sports-related Arbitration (‘the Code’),¹⁶ which governs CAS arbitration proceedings, the law of the seat of all CAS Arbitration Panels is solely Lausanne, Switzerland. As such, the parties are not at liberty to choose the law of the seat, as in International Commercial Arbitration. Secondly, this requirement means that any challenge or enforcement of a CAS award will have to be determined in accordance with Swiss Law. With Swiss law being ‘pro-arbitration’, the grounds for setting aside an arbitral award ‘are subsequently narrow.’ ¹⁷ Notably, sports arbitration awards rendered by the CAS are enforceable pursuant to the New York Convention.¹⁸ In addition, according to the CAS Code, a CAS award is final and binding on the parties,¹⁹ subject only to judicial review by the Swiss Federal Tribunal (SFT).²⁰

1.6.1 International Arbitration Treaties

At the international level there are many international treaties that form the major sources of arbitration law. Many States around the world, including Tanzania, have ratified most of the international arbitration instruments. The major international arbitration treaties are:

1. The Convention for the Pacific Settlement of International Disputes (1899);

2. The Geneva Protocol on Arbitration Clauses (1923);

3. The Geneva Convention on the Execution of Foreign Arbitral Awards (1927);

4. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958);

5. The Washington Convention on the Settlement of the Investment Disputes between States and Nationals of Other States (1965);

6. The Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965);

7. The UNCITRAL Model Law on International Commercial Arbitration (1985); and

8. Bilateral investment treaties (BIT’s) and multilateral investment treaties (MIT’s).

In addition, international and domestic arbitration institutions²⁶ also have developed their own sets of rules of procedure to regulate the arbitral proceedings they conduct.²⁷ These rules of procedure also form a significant source of domestic and international arbitrational law.

Moreover, almost all international treaties contain provisions for dispute settlement when the parties to the treaties find themselves in any kind of dispute arising out of the execution of any term of such treaties. The provisions for dispute settlement form a very important source of international arbitration law.

1.6.2 Municipal Law Domesticating International Arbitration

In keeping with the international law doctrine of pacta sunt servanda (“agreements must be kept”),²⁸ many states around the world have domesticated international arbitration principles in their municipal law.²⁹ Through this domestication, all international agreements made between states or between investors and host countries are binding; and so, enforceable. So, Tanzania has adopted legislation³⁰ as well as subsidiary legislation³¹ that, to a certain extent, domesticate international arbitration norms. And, therefore, such municipal legislation is a fundamental source of international arbitration law in this country.

1.6.3 Caselaw

As a general rule, arbitration, being one of the major forms of ADR, is deemed to be informal, with parties volunteering to arbitrate in case of any dispute arising out of their contractual relationship, and determining the law applicable, venue and even the arbitrators and rules of procedure.³² That being the case, arbitral tribunals are generally not bound by rules of stare decis or precedent, as is the case with ordinary courts (at least in the common law sense). However, arbitral tribunals may (and do) apply or use case law decided by other tribunals to interpret certain principles in cases before them. Therefore, case law derived from international and domestic arbitral tribunals is a source of arbitration law and practice in this country.

As a matter of lex ludica, International Sports Arbitration provides for a more uniformed application of the formal rules and equitable principles in sport-across different sports and geographical boundaries, with sports arbitrators ‘regularly referring to past awards rendered by other arbitrators and governing bodies in similar matters.’³³ The rationale for the need for consistent legal precedents in sports matters is based on the nature of the environment in which this area of international arbitration operates, which requires great reliance to be placed by the bodies and individuals inhabiting the sporting arena. For that matter, in an environment in which the protagonists ‘are used to exercising their profession in accordance with the clearly defined rules of their respective sports, they wish to also have clearly defined rules off the field of play, and to be fully aware of the consequences of any breach of those rules.’³⁴ Since its establishment in 1984, the CAS has resulted in creating a body of case law-the lex sportiva-upon which sports arbitration users can rely.³⁵

Therefore, case law derived from international and domestic arbitral tribunals as a source of arbitration.

2.3.1 Arbitration Law is Based on Agreement between Parties

Arbitration is based on a voluntary agreement between parties to a dispute. Unlike national court systems, which are provided by the state, no arbitration panel ‘exists unless two parties contractually undertake to create one.’⁵⁴ That is to say, arbitration is consensual in that the parties must mutually and voluntarily agree to arbitrate their differences.⁵⁵ As a result, the arbitration agreement becomes the ‘primary source of the rights, powers and duties of the arbitral tribunal.’⁵⁶

2.3.2 Party Freedom and Autonomy

Generally, the parties retain considerable freedom over issues such as the place of arbitration, the applicable law, the language of the arbitration, the composition of the arbitral tribunal, and the confidentiality of proceedings.⁵⁷ There is, in short, great scope for flexibility and neutrality, which are attractive features for parties from commercial backgrounds, particularly when they come from different countries and fear being subjected to a foreign judicial system. Arbitration, thus, provides an opportunity for bridging the gap between common and civil lawyers.⁵⁸

2.3.3 Arbitration is Flexible

Flexibility is another defining characteristic of arbitration. Such flexibility ‘permits parties to agree upon the procedures that will govern the resolution of their dispute.’ As a result, the procedural conduct of arbitrations ‘varies dramatically across industrial sectors, arbitral institutions, and categories of disputes.’ In specific fields, or individual cases, parties often agree upon procedural rules tailormade for their individual needs.

2.3.4 Arbitrators are Private Decision-makers

As a general rule, arbitrations are resolved by non-governmental decision-makers-i.e. arbitrators do not act as government agents, but are private persons selected by the parties. This notion derives from the principle that arbitration, being a voluntary process chosen by the parties on consensual agreement, requires the parties to choose private arbitrators to help them in settling their dispute. In choosing arbitration, therefore, parties opt for a private dispute settlement procedure rather than going to court.

2.3.5 Arbitration Produces Binding and Enforceable Awards.

Another definitive feature of arbitration is that it produces a definitive and binding award,⁵⁹ which is capable of enforcement through national courts⁶⁰ under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (popularly known as ‘the New York Convention’) and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965 (popularly known as ‘the Washington Convention’).⁶¹ Therefore, it is a trite law in Tanzania that where the court is satisfied that the award is enforceable under, the award ‘shall be deemed to be a decree of that court.’⁶²

3.2.1 Institutional Arbitration

Both in principle and practice, institutional arbitration is administered by specialised arbitral institutions,⁶⁵ which are established to provide services to users who pursue certain commercial or other needs, and in accordance with the rules adopted by such institutions.⁶⁶ Simply stated, an institutional arbitration ‘is a proceeding where the parties designate an institution to administer the arbitral process in accordance with its arbitration rules.’⁶⁷ This means that institutional arbitration is highly regulated by the respective arbitration institution’s rules of procedure. Usually, the parties expressly stipulate in their arbitration agreements to conduct their arbitration proceedings in accordance with that arbitration institution’s procedural rules.⁶⁸

In principle, the institutional arbitration rules set out the basic procedural framework for arbitral proceedings as well as they stipulate for the institution’s capacity to assist parties in selecting arbitrators in particular disputes-i.e. they act as “appointing authorities”. The institutional rules also provide for the procedure to be followed in case a party is to challenge the appointment or conduct of an arbitrator, the arbitration places/venues, fixing arbitration fees (i.e. arbitrators’ fees and arbitration costs), as well as procedure for reviewing or annulling arbitral awards.

In terms of administration, arbitration institutions are run by independent decision-making bodies, management and staff, who also act as administrative secretaries or support staff to arbitrators. It should be noted that arbitration institutions do not conduct the arbitration proceedings by themselves, rather they provide space/venue, procedural rules and help in selecting independent arbitrators, who are not employees of the arbitration institutions. Otherwise, it is the parties who appoint arbitrators with the assistance of the relevant arbitration institution.

By its very nature, institutional arbitration has several advantages. Foremost, because it is conducted under well-laid down procedural rules and overseen by qualified staff, institutional arbitration ensure that the parties will know the procedural rules well in advance of any actual dispute. As such, there is no need for the parties ‘to negotiate the rules of engagement at a time when the dispute has already begun. ’ ⁶⁹ This may result in ‘a potentially less adversarial and speedier approach.’⁷⁰ In addition, since many institutions have rosters of arbitrators setting out their qualifications and experience, institutional arbitration gives the parties an easy way of selecting a suitable arbitrator.

Furthermore, institutional arbitration provides the parties with adequately prepared seat of arbitration, arbitration facilities, and fixing of arbitrators’ fees (with the arbitration institution-rather than the arbitrators-communicating with the parties with respect to fees, and holding the funds), in which case specialized staff provide better arbitration services ‘than ad hoc decisions by national courts with little experience in such matters.’ This entails that, arbitration institutions, by application of their rules, are given the authority ‘to appoint arbitrators at the parties’ request or in the event that the parties cannot otherwise agree-so that the parties can avoid going to court to seek an appointment.’

Moreover, arbitration institutions do issue draft arbitration clauses that ‘are up to date with recent developments in arbitration law and procedure-and are less likely to lead to interpretive disputes.’⁷¹ What the parties drawing an arbitration clause need to do is to just customise the already-prepared draft arbitration to suit their needs. Additionally, it is widely well-accepted that many institutional procedural rules contain provisions that make the arbitral more effective: provisions concerning competence-competence, separability, disclosure, arbitrator impartiality, replacement of arbitrators, provisional measures, corrections and challenges to awards, and costs.⁷²

Apart from the foregoing advantages, institutional arbitration has some disadvantages: firstly, there may be situations where the parties need to respond to the institution or pursuant to its rules within unrealistic time frames, though the parties may be able to agree to time frames more appropriate for the situation.⁷³ Secondly, some users of institutional arbitration have been complaining about an overly “bureaucratic” feeling to the process.⁷⁴ Thirdly, one needs to carefully review the institutional procedural rules before agreeing to them.⁷⁵ Fourthly, some institutional fees ‘may be expensive, in particular where they reflect a percentage of the value of a significant amount in dispute.’⁷⁶

3.2.2 Ad Hoc Arbitration

Apart from arbitration institutions, international arbitration is also conducted on an ad hoc basis, depending on the parties’ agreement on resorting to arbitration. Although this Chapter considers arbitration institutions that conduct arbitration under their aegis and in-house rules, it is trite to discuss, albeit briefly, the place and importance of ad hoc arbitration in East Africa.

Simply stated, an ad hoc arbitration is one which ‘is not administered by an [arbitration] institution and therefore, the parties are required to determine all aspects of the arbitration like the number of arbitrators, manner of their appointment, procedure for conducting the arbitration, etc.’⁷⁷ Unlike institutional arbitration, ad hoc arbitration requires the parties ‘to make their own arrangements for selection of arbitrators and for designation of rules, applicable law, procedures and administrative support.’⁷⁸

To say the least, ad hoc arbitration has several advantages⁷⁹ compared to institutional arbitration:

1. it is more flexible, potentially more confidential,⁸⁰ cheaper and faster than institutionally administered arbitration;

2. it has no administrative fees that are normally exorbitant with institutional arbitration;

3. It does not require the arbitration agreement to be couched in a complex manner; it only suffices for it to stipulate that ‘the dispute between the parties will be arbitrated’;⁸¹ and

4. where the arbitration agreement does not state how the arbitral tribunal will be appointed, how the proceedings will be conducted, or how the award will be enforced, such questions will be determined by the law designated for the arbitration - i.e. the seat of arbitration.⁸²

However, ad hoc arbitration may be affected by several factors, including whether the jurisdiction selected has an established arbitration law enabling an ad hoc arbitral tribunal to determine the foregoing questions. And, in most cases, parties to an ad hoc arbitral tribunal may need to resort to arbitration institutions or courts to get binding orders such as the appointment/removal or arbitrators, interim orders/measures,., in which case parties to an ad hoc arbitration may designate an institutional provider or court to assist in the smothering the process.

3.5.1 The Tanzania Arbitration Centre (TAC)

As noted above, the TAC is a creature of the newly enacted Tanzania Arbitration Act (2020). In particular, the TAC is established under Section 77 (1) of the 2020 Arbitration Act. When it is fully operational, the TAC will discharge a number of functions, which are enumerated in Section 77 (3) of the 2020 Arbitration Act:

1. to facilitate the conduct and management of arbitration;

2. to register and maintain a list of accredited arbitrators;

3. to enforce the code of conduct and practice for arbitrators;

4. to perform the functions as provided under Sections 19,¹¹¹ 20,¹¹² 26,¹¹³ 27¹¹⁴ and 58¹¹⁵ of the 2020 Arbitration Act;

5. to advise the government on matters related to arbitration;

6. to promote opportunities for educating the public through the various media on arbitration;

7. to publish or assist in the publication of proceedings of the Centre, of books and papers on arbitration;

8. to sponsor study and research in arbitration and provide fellowships, grants to deserving applications;

9. to provide facilities and assistance for the conduct of domestic and international arbitration;

10. to maintain adequate, accurate and timely records of proceedings made in arbitration and to keep such records in safe and secure custody;

11. management and provision of continuing education for arbitrators; and

12. to perform any other functions as the Minister responsible for legal affairs may direct.

As well as affiliating and seeking accreditation from other regional and international bodies,¹¹⁶ the TAC may establish branches as may be necessary for the proper and effective performance of its functions.¹¹⁷ In a very progressive way, Section 77 (6) of the 2020 Arbitration Act obliges the TAC, in the performance of its functions, to be guided by the provisions of this Act and any other written laws. This means that, because this law strives to domesticate international arbitration, the TAC will be obliged to uphold all international law norms entrenched in international treaties to which Tanzania is a party.

3.5.2 The National Construction Council (NCC) as an Arbitral Institution

The National Construction Council (NCC) is a Government institution established in 1979 under the National Construction Council Act with a mission of promoting and providing strategic leadership for the development of the construction industry in Tanzania. One of the functions of the NCC that is implemented in pursuit of the Council’s mission includes the “coordination” and facilitation of efficient resolution of disputes in the construction industry. In fact, the NCC has been coordinating resolution of disputes since 1982, in which case it ‘coordinates resolution of construction project disputes, by mainly appointing conciliators, adjudicators and arbitrators.’

In terms of rules of procedure to govern arbitration proceedings conducted under its auspices, in 2001, the NCC adopted the NCC Arbitration Rules (2001 Edition) in order to enable parties to settle their construction disputes. These Rules are available at the NCC offices in Dar es Salaam, Tanzania for a fee. In addition, the NCC maintains a Panel of Arbitrators ‘from whom parties can choose mediators, adjudicators and arbitrators’ to facilitate the settlement of differences and disputes arising in the construction industry in Tanzania. In terms of the arbitration services offered by the NCC, they are mainly available to persons in the construction industry, although it also offers its services to persons outside the industry.

3.5.3 The Tanzania Institute of Arbitration (TIArb)

The Tanzania Institute of Arbitrators (TIArb) is a non-governmental organization that was registered in December 1999 by the Registrar of Societies¹¹⁸ under the Societies Act of Tanzania (Cap 337).¹¹⁹ The TIArb acts as a facilitator of arbitration. It should be noted that, before the establishment of the TIArb, the NCC ‘had been undertaking such a responsibility for the construction related disputes only.’¹²⁰

By way of reminiscence, in 1995, the NCC consulted the Attorney­General’s Chambers (AGC) and the Tanganyika Law Society (TLS) regarding the establishment of a commercial arbitration institution¹²¹ with a view to consulting the latter institutions to brainstorm on the importance ‘of spearheading the establishment of an institutional framework for resolving not only construction related disputes but also commercial disputes as a whole.’¹²² Henceforth, following a consultative process that kicked off on 6 July 1995 when the NCC organized a brainstorming meeting that subsequently formed the Steering Committee to develop a framework for the settlement of all types of commercial disputes, on 15 July 1997 the TIArb was registered by the Registrar of Societies. Two years later, on 10 December 1999, the TIArb was formally launched by Honourable Francis Nyalali (the former Chief Justice of Tanzania).¹²³

The main function of TIArb is ‘to promote and facilitate the resolution of commercial disputes in Tanzania.’¹²⁴ It assists the parties (in consultation with the parties’ arbitrators) to agree ad hoc rules on the procedures which will bind them.¹²⁵ It also acts as an appointing authority, in which case it assists parties ‘with the appointment of arbitrators to arbitrations conducted at the TIArb or elsewhere.’¹²⁶ As well as providing exclusive administration of arbitrations governed by TIArb Arbitration Rules, the TIArb provides administrative facilities, including conference, meeting, and hearing rooms.¹²⁷ The TIA has its own tailored set of arbitration rules which it uses in conducting both domestic and international arbitration proceedings.¹²⁸

3.5.4 The Tanzania International Arbitration Centre

The TIAC was established in 2019 by the Tanganyika Law Society (TLS) in order to provide ADR services, which include international and domestic commercial arbitration, mediation/conciliation and negotiation.¹²⁹ It strives to maintain a panel of arbitrators and mediators, who are known for their integrity, impartiality and expertise for arbitration and mediation/ conciliation, for effective resolution of disputes outside court.

When it becomes operational, the TIAC will provide world-class hearing rooms, breakout rooms and other amenities that can accommodate arbitrations and mediations of any size, including large, multi-party arbitrations or mediations and offer full technological capabilities, including high-tech video conferencing and built-in facilities for simultaneous interpretations creating a seamless experience, freeing parties and counsels to focus on matters at hand.

In particular, the TIAC aims at, inter alia, promoting, developing, and facilitating the understanding, use and practice of arbitration, mediation, and other forms of ADR mechanisms and ensure better access to justice through the development and application of ADR services. It also strives to create public awareness and popularize the use of ADR for effective dispute resolution, management and prevention in commercial, corporate, workplace, family, community and any other types of disputes.