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GUIDING NOTES ON ARBITRATION LAW AND PRACTICE
Part Three
Evidentiary Hearing and Post-Award Proceedings
FIRST EDITION
Prepared by Dr. Julius Clement Mashamba
Editorial Board
Chairperson
Prof. Dr. Alex B. Makulilo
Chief Editor
Dr. John Ubena.
Editors
Dr. Eugine E. Mniwasa
Mr. Clement Mubanga
Mr. Innocent Kibadu
Miss. Beatrice Cherdiel
Mr. Mackphason Buberwa
Mr. Kaleb Gamaya
Published By:
Tanganyika Law Society
Plot. No. 391 | House No. 21 | Chato Street | Regent Estate
P.O.BOX 2148 | Dar es Salaam | Tanzania
Telephone: +255 22 277 5313 | Fax: +255 22 277 5314
Email: info@tls.or.tz
Website: www.tls.or.tz
Copyright: Tanganyika Law Society, November 2020
FOREWORD
Among the objects of the Tanganyika Law Society (TLS) as enshrined in the Tanganyika Law Society Act is to facilitate the acquisition of legal knowledge to the members of legal profession and others. The TLS through the Research and Publication Committee has pioneered different legal materials for the legal professional, especially its members. Through the years, the TLS has published thousands of publications that are disseminated to the advocates, stakeholders and the public for the purpose of creating and raising awareness of the legal knowledge in different areas of law. With such a longstanding and consistent background on publishing legal materials for the legal profession and public, the TLS has now decided to develop and publish Guiding notes for members of the legal profession especially young lawyers to provide guidance in specific practice areas of law. It is my strong belief that the Guiding Notes will be one of the means of ensuring continued provision of legal education to the TLS Members and the public at large.
My sincere thanks go to all contributors, the Editorial Board and the Secretariat for the job well done.
Prof. Dr. Alex B. Makulilo
Chairperson
Research and Publication committee
Chapter One: Evidentiary Hearing
1.1 Introduction
The IBA Rules on the Taking of Evidence in International Arbitration define the term “Evidentiary Hearing” as ‘any hearing, whether held on consecutive days, at which the Arbitral Tribunal, whether in person, by teleconference, videoconference or other method, receives oral or other evidence.’ As such, Evidentiary Hearing is an important procedural step where the parties are given an opportunity to present oral testimony and tender or examine documents and exhibits that support or strengthens their respective cases.
As such, this Chapter considers the underlying procedural steps and actions undertaken during the Evidentiary Hearing. Before examining such procedural steps, the Chapter begins by looking at the applicable rules of evidence in Evidentiary Hearing. It then considers procedure and the conduct of a pre-hearing conference, and the major procedural steps and actions undertaken in the Main Evidentiary Hearing. The Chapter also examines post-hearing briefs or written submissions, and the closing arbitral proceedings.
1.2 Applicable Rules of Evidence
In order to maintain the principle of party autonomy in choosing the tribunal and rules of procedure, many arbitration laws include provisions to the effect of excluding the national evidentiary laws from application to arbitrations under such laws.2 Thus, what typically takes care of the evidentiary process is “party autonomy” and the tribunal’s discretion.3 As such, arbitrations enjoy much procedural flexibility.4 In fact, almost all national laws/institutional rules allow the parties and the arbitral tribunals to determine admissibility, relevance, materiality and weight of any evidence.5
It is based on this well-accepted principle relating to applicable rules of evidence in arbitration that Section 36 (1) of the Tanzania Arbitration Act allow the arbitral tribunal to decide ‘all procedural and evidential matters, subject to the agreement of the parties thereof.’ The procedural and evidential matters relating to adducing evidence are:
(i) whether and, if so, which documents or classes of documents shall be disclosed and produced by the parties and at what stage;6
(ii) whether and, if so, what questions should be put to and answered by the respective parties and when and in what form this shall be done;7
(iii) whether to apply strict rules of evidence or any other rules as ‘to the admissibility, relevance or weight of any material, oral, written or other evidence sought to be tendered on any matter of fact or opinion, and the time, manner and form in which such material shall be exchanged and presented’ ;8
(iv) whether and, to what extent, the arbitral tribunal ‘shall itself take the initiative in ascertaining the facts and the law’;9 and
(v) whether and, to what extent, there ‘shall be oral, written evidence or submissions.’10
Therefore, the arbitral tribunal has to decide on the applicable rules of evidence to be adopted in the evidentiary hearing before such step is undertaken. This determination is normally set out in a procedural order made by the tribunal, in consultation with the parties, prior to the evidentiary hearing.11 In practice, the consultation on evidentiary issues addresses the scope, timing and manner of the taking of evidence, including:
(i) the preparation and submission of Witness Statements and Expert Reports;12
(ii) the taking of oral testimony at any Evidentiary Hearing;13
(iii) the requirements, procedure and format applicable to the production of documents;14
(iv) The level of confidentiality protection to be afforded to evidence in the arbitration;15 and
(v) the promotion of efficiency, economy and conservation of resources in connection with the taking of evidence.16
1.3 Pre-Hearing Conference
This important step in evidentiary hearing is sometimes17 referred to as “initial hearing conference”18 or “preliminary hearing conference”.19 It is held prior to the holding of the main Evidentiary Hearing, involving the parties’ counsel, arbitrators, and the case manager or tribunal secretary. Usually held by tele- or video- conference, this conference excludes the parties, in most cases.
In particular, it is at this conference that the parties and the tribunal will agree on the hearing date (s), and how document discovery/disclosure will be handled, together with the resolution on admissibility of exhibits. The conference also agrees on the location and the day-to-day starting and finishing time for the hearing, and for exchange of information regarding witness and exhibit lists. At the end, the conference results in a case management order that records all the agreed elements of the main Evidentiary Hearing.
1.4 Main Evidentiary Hearing
The main Evidentiary Hearing is the session where the parties will orally present their respective case by particularly proffering their witnesses, producing exhibits and all necessary evidence in support of their cases. For that matter, the parties must either appear in person or by advocate or agent at this session. So, non-appearance at Evidentiary hearing may have adverse effect on defaulting party. Like in civil litigation trials, in arbitration’s Evidentiary Hearing counsel for both parties should ensure that they present their clients’ cases a very effective way during the hearing in order to have a favourable outcome at the end of the arbitral proceedings.
1.4.1 Structure of the Evidentiary Hearing
Usually, the stages and sequence of the evidentiary hearing are set out during the pre-hearing conference. The most typical stages are:
(i) Opening statement, in which the claimant goes first;
(ii) Testimony witnesses (from fact witnesses and experts: with those for the claimant beginning followed by the respondents’ witnesses);
(iii) Admission of attached documents and exhibits; and
(iv) Closing arguments, where the claimant generally begins, followed by the respondent.
Although this sequence is commonly applied in many arbitral proceedings, it may be deviated from where the parties and tribunal agree to alter this flow of events, in keeping with the flexibility nature of arbitration.20 However, many tribunals maintain a strict time allocation to which parties are required to adhere during the Evidentiary Hearing.21
(a) Opening Statements
Opening Statements are made by counsel for each party at the onset of the Evidentiary Hearing. The aim of making an opening statement ‘is to highlight the party’s case to the [tribunal] and explain what the party plans to prove its case with the evidence it is going to present before the [tribunal].’22 For advocates, an opening statement provides him an opportunity to: (i) clarify what he considers being the fundamental issues in the case; (ii) summarize the evidence presented ‘in a light most favourable to the client’; (iii) establish legal concepts that support the client’s position; and (iv) rebut the opponent’s most prominent arguments.23
For the arbitrators, opening statements not only assist them to refresh the recollection of matters previously briefed and documentary evidence previously introduced, but also serve as a guide to what to expect during the hearing.24 Some experienced counsel in modern arbitral proceedings use demonstratives in order to ensure that arbitrators internalise their arguments and the “road map” on which direction the party intends to traverse through its evidence and the theory it strives to prove.
In terms of mode of presentation, during when each party finishes making its respective opening statements, members of the tribunal may ask follow-up questions to the concerned counsel. Sometimes, the parties are given the opportunity to make rebuttal statements in a second round of opening submissions, although this seems to happen less and less in most arbitration because of time. In the rebuttal statements, counsel is required to be short and to the point, and address the major points they need to rebut one by one. It is, therefore, advisable to take good notes during the other side’s presentation.
(b) Examination of Witnesses
One of the major advantages of both international and domestic arbitration is that parties and the arbitral tribunal are free to define the procedure, including on examination of witnesses, as they deem fit for the case at issue. This means that the parties and the arbitral tribunal may organise their hearing as they see fit which includes deciding whether witnesses will be heard and, if so, if direct examination will be conducted orally at the hearing or will be replaced by witness statements submitted in advance (with oral direct examination excluded or significantly limited).
Where the parties and the tribunal agree to dispense with direct examination or examination-in-chief instead of the witness statements previously filed with the tribunal, then the witnesses will only be crossexamined and re-examined. Where they agree to examine witnesses directly, then the witnesses will be examined in-chief, cross-examined and re-examined, much as we do in civil and criminal litigation.
(i) The Concept of Examination of Witnesses
Examination of witnesses during Evidentiary Hearing is basically a question-and-answer process whereby a witness, who is called to testify before the arbitral tribunal,25 is asked questions by both parties concerning his knowledge about a fact or facts forming part of the legal dispute before the tribunal. At this stage, witnesses are required to adduce evidence basing on the knowledge they possess regarding the dispute before the tribunal. This procedure is derived from the classical rule of evidence in civil and criminal litigation that posits that the burden of proof lies on a person who alleges about the existence of a particular fact.26 It should be noted, however, that, in arbitration, tribunals are flexible when applying the doctrine of burden of proof to a specific case.
(ii) Order of Examination of Fact Witnesses
As noted above, the testimony witnesses (both fact witnesses and experts) are given in such a manner that those for the claimant testify, followed by the respondent’s witnesses. Where the parties and the tribunal have agreed to examine witnesses in-chief, cross, and reexamination, every witness will be examined through these three stages. However, sometimes parties and their counsel may skip performing cross-examination or re-examination of witnesses. Although the examination of a witness in these stages is structured and conducted similarly as it is done in classical civil litigation, in arbitration there is room for relaxation in keeping with the flexible nature of arbitration.
Universally acceptable because the purpose of examination and witness statements in arbitration is to convince the arbitral tribunal that the position of the party presenting the witness is correct, the testimony (be it oral or in writing) must be clear and consistent with other means of evidence on record. It should be noted that, unlike in civil litigation, in arbitration, arbitrators may also ask questions to witnesses seeking for clarification or making the witness correct certain information or fact of significant interest to the arbitration.
(iii) Examination of Expert Witnesses on their Reports
As noted in Chapter Five above, when an expert (whether appointed by parties or the tribunal) files his report, he may be summoned by the tribunal upon the parties’ request or in consultation with the parties to appear before the tribunal during Evidentiary Hearing for questioning by the parties.27 Experts may be engaged to give testimony in relation to liability and damages/quantum.28 In many arbitral proceedings, experts testify after fact witnesses have testified. They usually give their technical opinions on any technical aspects of the disputes such as accounting, construction, engineering, aviation and damages, just to name a few aspects.
The order of examination of expert witnesses in arbitration is like the one applicable in fact witnesses; but there is a slight difference in examining experts who have already submitted their reports before the Evidentiary Hearing. Normally, the expert report is considered as part of the expert’s direct testimony, in which case many tribunals allow the expert make a brief presentation (i.e. initial presentation) on any technical aspects in the report that might need clarification or on any new technical development relating to the dispute. Thereafter, the opponent counsel will cross-examine the expert witness before he reexamined by his own counsel.29
After the examination of the expert witnesses, the arbitral tribunal may direct a witness conferencing (also called “hot-tubbing”) should be held. In many arbitral tribunals, this aspect should be determined by the tribunal in consultation with the parties prior to evidentiary hearing in order to give the parties an opportunity to prepare their experts for the conference. This is a procedure for ‘a joint presentation of expert’s testimony’30 where all experts on the subject ‘testify at the same time and answer seriatim the same questions put by counsel and then by the arbitrators.’31 This procedure, which ‘has recently become more popular in both domestic and international arbitration’, aims at allowing experts ‘to respond to each other’s testimony and, in doing so, to streamline the key issues in dispute between them.’32
It should be noted that, when examining expert witnesses, counsel should be mindful of the fact that, because they testify on technical aspects of the dispute in which they are more conversant than the examining counsel, such witnesses may are too wordy, too technical and unable to clearly express their reasoning in terms that are easily understood by laymen. This is even more so in the so-called didactic presentations by quantum experts before their cross-examination. It is then incumbent upon counsel to be prepared before examining such experts and make sure they deliver positively before the tribunal.
(c) Admission of Documents and Exhibits
Unlike in civil litigation, the formal rules of document authentication are not applied in arbitration. Instead, provided that documents have formed part of the pre-hearing pleadings submitted to the arbitral tribunal or are part of the joint list of exhibits agreed to by the parties before hearing, counsel may refer to the documents during the Evidentiary Hearing ‘without the need to establish provenance or otherwise authenticate them.’ This is mainly because the hallmarks of arbitration is to streamline the presentation of evidence by avoiding the rigorous formalities of document admissions found in conventional litigation.
This does not mean that opposing counsel should not contest the authenticity or otherwise legality of documents relied upon by the other party. In practice, counsel may raise such objection before hearing, in which case the arbitral tribunal will issue a procedural order admitting or rejecting the objection as to the authenticity and validity of a document or exhibit. The universally acceptable principle is that the tribunal has the authority to determine the admissibility, relevance, materiality and weight of evidence well before the Evidentiary Hearing takes place. This means that, during the evidentiary, hearing objections to authenticity of documents and exhibits will not be entertained by the tribunal in order to allow a smooth flow of the presentation of oral testimony.
(d) Closing Arguments
At the conclusion of the Evidentiary Hearing, parties or their advocates will be allowed to make closing statements or arguments or submissions. These statements summarize the case of each party, issues, the evidence, the strong points of the party’s case and the weak points of the other party. They also strengthen the party’s prayers before the court. The major purpose of closing arguments is ‘to draw conclusions from the witness evidence ad to sum up each party’s case.’33 Therefore, closing arguments should strive:
(i) To streamline the legal and factual issues that remain in dispute even after the Evidentiary Hearing;
(ii) To establish, from the documentary evidence and witness testimony, the party’s position and rebut the position taken by the opponent; and
(iii) To lay out the relief (s) the party should be granted by the arbitral tribunal.
In addition, closing arguments should adapt to what transpired during the hearing, with a convincing summary of witness testimony in order to refresh the arbitrators’ recollection of important testimony before deliberations start. They should consider and address questions raised by the arbitrators during the hearing (and, sometimes, arbitrators may direct the parties to address specific issues in their closing arguments, which should be addressed as well).
Because of their critical significance to concretizing a party’s case, it is incumbent upon counsel to vehemently resist any proposal (either by the opponent party or tribunal) to forego the making of closing arguments. This is principally because it is through closing arguments counsel ‘can be sure to tie up all loose strands that emerged during the hearing, including the tribunal’s concerns and questions.’34
1.5 Post-Hearing Briefs or Written Submissions
Apart from presenting their legal arguments and the relevant facts in pre-hearing submissions and during the hearing itself, parties in arbitration may also have such an opportunity after the hearing and closing arguments have been concluded. Post-hearing briefs may be used to draw the arbitral tribunal’s attention to relevant facts that have emerged at the hearing and place them in the parties' claims and defences. They are usually drafted in a manner that assists the arbitral tribunal with drafting the arbitral award. In some cases, the arbitral tribunal may identify key issues to be addressed by the parties in their post-hearing briefs.
It should be noted that post-hearing briefs are not mandatory, particularly where closing arguments were made. Where the tribunal, in consultation with the parties, direct that post-hearing briefs be submitted, it will also agree with the parties on the page limit and timing for the filing of the same, including an indication that they may be submitted simultaneously or sequentially, and there can be more than one round of posthearing briefs.
1.8 Closing Arbitral Proceedings
After the post-hearing briefs are submitted (or in case only closing arguments are submitted) by the parties, the tribunal will inform the parties that the arbitral proceedings have been closed. This marks the moment after which, unless there are interesting reasons, the arbitrators will no longer receive any evidence or argument; instead, the arbitrators will head to the deliberations before rendering their award. Only in rare cases and for interesting reasons the tribunal may request the parties to furnish it with further evidence, clarifications or additional arguments on certain issues concerning the dispute.
Chapter Two: Arbitral Awards and Their
Enforcement
2.1 Introduction
Unlike in civil cases where the final decision of the court is called a judgment, in arbitration, the final decision of the arbitral tribunal on any issue or the entire dispute is called an arbitral award. One of the major features of an arbitral award is it is final and binding upon the parties, unless the parties had agreed otherwise.35 Therefore, this Chapter considers arbitral awards by particular explaining the concept of an arbitral award, the power vested in the arbitral tribunal to render an award, and contents of an award.
In addition, the Chapter examines the procedure for challenging arbitral awards, immunity of arbitration institutions, and the procedure to enforce arbitral awards in Tanzania. The Chapter also considers the termination of arbitration and costs of arbitration.
2.2 Arbitral Awards
Unlike in conventional litigation where courts render judgments, in arbitration, the final outcome of any arbitral proceedings is contained in an instrument called an “arbitral award”. As explained below, the arbitral award is the final decision of the tribunal on any specific issue or the entire matters in dispute in arbitration. Apart from being final, an arbitral award is also binding upon the parties and capable of being enforced as a decree of the court.
2.2.1 The Concept of an Arbitral Award
Defined, an arbitral award is ‘a decision of the arbitral tribunal on the substance of a dispute, and includes any interim order (arbitral award).’36 It is analogous to a judgment in a court of law. This definition entails two categories of arbitral awards: (i) provisional or interlocutory awards, and (ii) final awards. While interim awards are defined in Chapter Five (Part 5.4) above, final awards are decisions of the tribunal rendered at the end of the arbitral proceedings.37 It is important to note that, under the law, an award made by the arbitral tribunal under an arbitration agreement is ‘final and binding to both parties and to any person claiming through or under them’, unless otherwise agreed by the parties.38 However, as considered below, a party aggrieved by an arbitral award may challenge its court.39
In addition, there are other categories of awards in arbitration practice that are also commonly rendered by arbitral tribunals: a “partial award”, which determines only part of the claims in dispute between the parties;40 and an “greed award”, which entered by agreement of the parties and the arbitral tribunal, recording the result of a settlement.41 Depending on where it was rendered, a tribunal decision may be deemed “domestic award” if it is made within the territory of a state; and as a “foreign award” it is made or deemed to be made in the territory of another state.42
Broadly stated, an arbitral award is a ‘written instrument, drafted and signed by the arbitrator(s), stating the tribunal’s final decision on particular claims or disputes.’43 This conception excludes such other decisions of the arbitral tribunal as tribunal procedural orders, directions, or communications. This means that preliminary decisions as to the selection, removal or replacement of an arbitrator, selection of the place of arbitration, and other administrative decisions by an arbitral institution are not “awards”.44 It should be noted that an arbitral award is rendered by arbitrators, not the arbitral institution, appointing authority or the secretary to the tribunal.
2.2.2 Power to Render Arbitral Award
The law allows an arbitral tribunal to render awards on different issues. In particular, Section 49 (1) vests discretionary power in the arbitral tribunal to make more than one award at different times in the course of the proceedings on different aspects of the matters to be determined, unless otherwise agreed by the parties. Specifically, the arbitral tribunal may make an award relating to: (i) an issue affecting the whole claim; or (ii) a part of the claims or cross-claims submitted to it for decision. Where the arbitral tribunal makes an award on a certain issue or a part of a claim under this section, it should specify in its award the issue, or the claim or part of a claim, which is the subject of the award.
2.2.3 Contents of Arbitral Awards
Although there is no particular form of constructing an arbitral award, the arbitrator is generally required to set the award in writing, and it must contain reasons for the award, unless the parties have agreed to dispense with reasons. The award should further state the seat of the arbitration and the date when the award is made. In particular, an arbitral award must:
(i) resolve all issues in dispute;
(ii) not contain extraneous issues which go beyond the jurisdiction of the arbitral tribunal or matters which were not referred to it;
(iii) be final and unconditional;
(iv) set out the relief(s) sought by the winning party;
(v) be certain and capable of performance by the parties; and
(vi) be capable of enforcement by the parties.
Failure to meet any of the foregoing criteria would amount to misconduct by the arbitrator or umpire. That could be grounds for challenging the arbitral award. The award must be duly signed by the arbitrator(s) or umpire, and the parties should be duly informed. Unless the parties had agreed otherwise, in Tanzania an arbitral award is final and binding upon the parties.
2.2.4 Reliefs Granted in Arbitral Awards
One of the essential contents of the arbitral award is that it must set out the relief(s) that the winning party has sought in the arbitral proceedings. Reliefs are remedies to which the wining party is entitled to be granted by arbitral tribunal upon proof of a complained breach in arbitration. The most common reliefs set out in many commercial- or investment- related arbitral awards are normally monetary. Other reliefs include perpetual injunctions (e.g., orders of specific performance), declaratory reliefs, punitive or exemplary damages, interests, and costs.
2.4 Immunity of Arbitral Institutions
It is universally established that both arbitrators and arbitral institutions enjoy a certain amount of immunity from civil liabilities. Whereas arbitrators enjoy civil immunity so they may discharge their functions without fear or favour, arbitral institutions and their officers are also insulated from the criminal or civil interference or other influences of the State in which they operate. This has confirmed in a recent U.S. decision in Landmark Ventures Inc. v. Cohen and International Chamber of Commerce, where the plaintiff sued the arbitrator and the arbitral institution for several irregularities allegedly committed in arbitral proceedings. The court dismissed the suit holding that both under the common law and Article 40 of the ICC Rules (to which the parties to arbitral proceedings had agreed to arbitrate), arbitrators and the arbitral institution are ‘immune from suit and that this contractual provision is binding.’
Domesticating this international arbitration norm, Sections 31 and 76 of the 2020 Arbitration Act provides immunity to arbitrators and arbitral institutions, respectively. In relation to immunity of arbitral institutions, an arbitral or other institution or person designated or requested by the parties to appoint or nominate an arbitrator ‘shall not be liable for anything done or omitted in the discharge or purported discharge of that function unless the act or omission is proven to have been done in bad faith.’45 In addition, an arbitral or other institution or person by whom an arbitrator is appointed or nominated ‘shall not be liable, by having appointed or nominated him, for anything done or omitted to be done by the arbitrator or his employees or agents, in the discharge or purported discharge of his functions as arbitrator.’46This immunity also applies to an employee or agent of an arbitral or other institution or person as they apply to the institution or person himself.47
2.5 Procedure to enforce Arbitral Awards in Tanzania
Like in ordinary civil proceedings, the enforcement of an arbitral award in arbitral proceedings is very crucial. In principle, the enforcement of an award seeks to ensure that the winning party realizes their entitlements as awarded by the arbitral tribunal. Ac considered below, there are procedures to enforce arbitral awards in Tanzania: (i) procedure for enforcing domestic arbitral awards, and (ii) procedure for enforcing foreign arbitral awards.
2.5.1 Enforcement of Domestic Arbitral Awards
Typically, a party against whom an arbitral award has been made should honour as soon it is made. This is so because the purpose of an arbitration agreement is that the parties should resolve their dispute amicably through arbitration. But, most times, unsuccessful parties do not do so; hence the need arises for the successful party to execute the award.48 Under Section 68 (1) of the 2020 Arbitration Act, an award made by the arbitral tribunal pursuant to an arbitration agreement ‘may, by leave of the court, be enforced in the same manner as a judgment or order of the court’ (i.e. as a decree of the court49). Where leave of the court is given, judgment may be entered in terms of an award.’50 However, leave to enforce an award ‘shall not be given where, or to the extent that, the person against whom it is sought to be enforced shows that the arbitral tribunal lacked substantive jurisdiction to make the award.’51
The mode of enforcement of arbitral award is expected to be set out in the Arbitration Regulations (or Rules) that are going to be promulgated by the Minister in terms of Section 90 (1) and (2) (f) of the Arbitration Act. Before the adoption of the envisaged Arbitration Regulations under Section 90 of the new arbitration law, the Arbitration Rules of 1957, which were made under Section 20 of the repealed Arbitration Act, remain in force in terms Section 33 of the Interpretation of Laws Act only to the extent of their consistency with the repealing law until otherwise repealed by subsequent Regulations.
Under the 1957 Arbitration Rules, there two ways of enforcing an arbitral award in the High Court. The first is the one is that an award has to be filed in the court for registration as a decree of the court.52 Accordingly, the arbitral award ‘must not necessarily be brought before a judge to make an order to have the arbitral award an enforceable decree.’53 The second way is ‘once an arbitral award has been filed in court, the process of having it transformed into a decree of the court follows’54-i.e. the arbitral award ‘is taken before a judge who summons the parties and tells them the filing of the award and if a respondent intimates not to take any step to challenge it, the same is recorded and, by order, becomes enforceable.’55
Indeed, the Court of Appeal supports the second way of enforcement of an arbitral award. For example, in Tanzania Cotton Marketing Board v. Cogecot Cotton Company SA [1997] TLR 165 in which it stated:
So far in our country the practice in matters of arbitration awards is that the court is moved by an application for an order for filing which is then followed by proceedings. On the basis of the Indian decisions we are persuaded to take the view that as a matter of law it is unnecessary to conduct proceedings before an order for filing is made, the receipt of the award by the Court Registry constitutes the filing of the award. Thereafter, the court is required to notify the parties who may wish to challenge or to enforce the award in terms of the law.
(Emphasis supplied).
So, the procedure is that after the arbitrator files the arbitral award in the High Court for registration, the court will record is as a decree and the same can be enforced as if it were a decree of this court. In terms of Section 78 (1) of the 2020 Arbitration Act, upon application in writing to the court, a domestic arbitral award ‘shall be recognised as binding and enforceable.’
However, the court may refuse to register and hence render an arbitral award as a decree of the court under any of the three circumstances set out in Section 78(2) of the Arbitration Act. Firstly, a domestic arbitral award or foreign arbitral award ‘shall be refused if at the request of the party against whom it is invoked’, that party furnishes to court proof that, pursuant to the law applicable, the parties to the arbitration agreement (i) lacked capacity to enter into the agreement;56 or (ii) were not properly represented.57 Proof to be furnished will also be in relation to the fact that the arbitration agreement ‘is not valid under the law to which the parties have subjected it or, failing any indication of that law, under the law of the state where the arbitral award was made.’58
The complaining party will also furnish proof to the court to the effect that the party against whom the arbitral award is invoked ‘was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case.’59 Another reason for refusal of registration of an award is the fact the arbitral award deals with a dispute not contemplated by or not falling within the terms of the reference to arbitration, or it contains decisions on matters beyond the reference to arbitration.60 However, if the decisions on matters referred to arbitration can be separated from those not so referred, that part of the arbitral award which contains decisions on matters referred to arbitration may be recognised and enforced.61 Furthermore, the complaining party should furnish to the court proof that the composition of the arbitral tribunal or the arbitral procedure ‘was not under the agreement of the parties or, failing any agreement by the parties, was not under the law of the state where the arbitration took place’. The complaining party will also have to furnish proof that the arbitral award has not yet become binding on the parties or has been set aside or suspended by a court of the state in which, or under the law of which, that arbitral award was made.
Secondly, a domestic arbitral award or foreign arbitral award shall be refused if the making of the arbitral award was induced or affected by fraud, bribery, corruption or undue influence. And thirdly, a domestic arbitral award or foreign arbitral award shall be refused if the court finds that: (i) the subject of the dispute is not capable of settlement by arbitration under any written laws; or (ii) the recognition or enforcement of the arbitral award ‘would be contrary to any written laws or norms.’
Otherwise, the aggrieved party may appeal to the Court of Appeal for further redress.
2.5.2 Enforcement of Foreign Arbitral Awards in Tanzania
In Tanzania, foreign arbitral awards can be enforced in the same manner as domestic arbitration awards as set out in terms of Section 78 (1) of the 2020 Arbitration Act. According to this provision, upon application in writing to the court, a foreign arbitral award shall be recognised as binding and enforceable. Enforcement of foreign arbitral awards in Tanzania is also governed by the New York Convention. Under the New York Convention, a foreign arbitral award is binding if it is no longer open to an appeal in the country where it was made; and can, thus, be enforced in any country. The execution or enforcement of a foreign arbitral award follows a similar procedure as for domestic arbitral awards in the High Court.
2.6 Termination of Arbitration
In practice, the arbitral proceedings are terminated by the final award; or by an order of the arbitral tribunal where it finds that the continuation of the proceedings has, for any other reason, become unnecessary or impossible.
2.7 Costs of Arbitration
In any judicial or quasi-judicial proceedings, there are considerable costs to be incurred by the parties and the presiding officer. These kinds of costs would have not been incurred were the proceedings not initiated. As such, it is a cardinal rule of procedure that a successful party should be entitled to be awarded costs. So, in arbitral proceedings, the award usually contains an order for costs. As in court proceedings, in arbitration, costs follow the event, unless the parties otherwise agree i.e. the successful party should be awarded costs at the end of the proceedings, unless there is an interesting reason for departing from this general rule. However, the tribunal may order otherwise where it appears to the arbitral tribunal that in the circumstances it is not appropriate in relation to the whole or part of the costs.
Under Section 61 (1) of the Arbitration Act, the costs of arbitration are divided into three categories: (i) the arbitrators’ fees and expenses;62 (ii) the fees and expenses of any arbitral institution concerned;63 and (iii) the legal or other costs of the parties.64 They also include the costs of or incidental to any proceedings to determine the amount of the recoverable costs of the arbitration.65
The arbitral tribunal may make an award allocating the costs of the arbitration as between the parties, subject to any agreement by the parties.66 However, an agreement67 which has the effect that a party is to pay the whole or part of the costs of the arbitration is only valid where the agreement is made after the dispute in question has arisen.68 To determine the recoverable costs of arbitration,69 where there is no agreement between the parties as on the recoverable costs of arbitration, the arbitral tribunal may determine by award the recoverable cost on such basis as it considers fit.70 In doing so, the tribunal should specify: (i) the basis on which it has acted;71 and (ii) the items of recoverable costs and the amount referable to each party.72 Where the arbitral tribunal does not determine the recoverable costs of the arbitration, any party to the arbitral proceedings may, upon notice to the other party apply to court, and the court may: (i) determine the recoverable costs of the arbitration on such basis as it deems fit;73 or (ii) order that the recoverable costs of the arbitration ‘shall be determined by such means and upon such terms as it may specify.’74
In principle, the recoverable costs of the arbitration shall be determined on the basis that there shall be allowed a reasonable amount regarding all costs reasonably incurred.’75 Any doubt as to whether costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the paying party.76 However, the arbitral tribunal or the court determines otherwise.
The tribunal has power under Section 67 of the Arbitration Act to limit recoverable costs, unless otherwise agreed by the parties. In that case, the arbitral tribunal may direct that the recoverable costs of the arbitration, or of any part of the arbitral proceedings, shall be limited to a specified amount. In addition, the arbitral tribunal may, at any stage, vary its directive on limitation of recoverable costs. However, such variation should be done sufficiently in advance prior to either (i) the incurring of costs to which variation of the directives relates; or (ii) the taking of any steps in the proceedings which may be affected by variation of the directives, for the limit to be taken into account.
Chapter Three: Challenging Arbitral Awards
3.1 Introduction
Like in civil proceedings, a party to arbitral proceedings may challenge an arbitral award, not as an appeal but by undertaking specified legal action based on the grounds of lack of substantive jurisdiction by the tribunal and the existence of “serious irregularity” affecting the arbitral tribunal, the proceedings or the award.
3.2 Grounds for Challenging an Arbitral Award
As considered below, such challenge is normally launched in the “court”77 on two main grounds: (i) that the arbitral tribunal lacked substantive jurisdiction; and (ii) that there was “serious irregularity” that affected the arbitral tribunal, the proceedings or the award.78
3.2.1 Tribunal’s Lack of Substantive Jurisdiction
A party to arbitral proceedings may challenge any award of the arbitral tribunal in court for lack of “substantive jurisdiction” on the part of the tribunal. Under Section 69 (1) of the Arbitration Act, “substantive jurisdiction” relates to the matters specified in Section 32 (1) of the Act, including: (i) whether there is a valid arbitration agreement; (ii) whether the arbitral tribunal is properly constituted; and (iii) what matters should be submitted to arbitration in accordance with the arbitration agreement. So, the tribunal’s decision substantive jurisdiction may be challenged by ‘any available arbitral process of appeal or review or in accordance with the provisions of this Act.’ Indeed, such a process is enacted in Section 69 of the Arbitration Act.
In such case, an aggrieved party will be seeking a court’s order declaring an award made by the arbitral tribunal on the merits to be of no effect, in whole or in part, on grounds that the arbitral tribunal did not have substantive jurisdiction.79 This application is made to the court while the arbitral proceedings are still pending, in which case the arbitral tribunal may choose to continue the arbitral proceedings and make a further award pending an application to the court in relation to an award as to jurisdiction.80
3.2.2 Serious Irregularity Affecting the Arbitral Tribunal, Proceedings or Award
A party to arbitral proceedings may challenge an award in the proceedings in court on the ground of ‘serious irregularity affecting the arbitral tribunal, the proceedings or the award.’81 The major elements constituting “serious irregularity” are set out in Section 71 (2) of the Arbitration Act:
(i) failure by the arbitral tribunal to comply with Section 35 of the Arbitration Act;82
(ii) the arbitral tribunal has exceeded its powers otherwise than by exceeding its substantive jurisdiction;83
(iii) failure by the arbitral tribunal to conduct the proceedings under the procedure agreed by the parties;84
(iv) failure by the arbitral tribunal to deal with all the issues that were raised before it;85
(v) any arbitral institution or other institution or person vested by the parties with powers in relation to the proceedings or the award exceeding its powers;86
(vi) uncertainty or ambiguity as to the effect of the award;87
(vii) the award being obtained by fraud or procured in a manner that is contrary to public policy;88
(viii) failure to comply with the requirements as to the form of the award;89 or
(ix) any irregularity in the conduct of the proceedings or in the award which is admitted by the arbitral tribunal or by any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award.90
In its court challenge to the arbitral award, the applicant may cite one or more of the foregoing elements, which the court will consider having caused or is likely to cause substantial injustice to the applicant.
3.3 Procedural Steps in Challenging Arbitral Awards
The substantive provisions setting out the procedure in challenging arbitral awards under the new Arbitration Act are Sections 69 (1) and 70 (1) upon notice to the other parties and to the arbitral tribunal. These provisions allow a party to arbitral proceedings to “apply to the court” challenging an award in the proceedings on the specified grounds upon notice to the other parties and to the arbitral tribunal. The mode of application is expected to be set out in the Arbitration Regulations (or Rules) that are going to be promulgated by the Minister in terms of Section 90 (1) and (2) (f) of the Arbitration Act.
Before the adoption of the envisaged Arbitration Regulations under Section 90 of the new arbitration law, the procedure for challenging an arbitral award set out in the 957 Arbitration Rules remains in force. The procedure under the 1957 Arbitration Rules is such that the challenge against any arbitral award must be initiated by a Petition accompanied, as an annexure, by the submission to arbitration clause or the arbitration agreement in the contract from which a dispute arose. The arbitral award also must be annexed to the petition.
3.4 Legal Effects of the Challenge to Arbitral Award
The legal consequences arising out of an action to challenge an arbitral award usually depend on whether the applicant challenged the tribunal’s lack of substantive jurisdiction, or that there was “serious irregularity” that affected the arbitral tribunal, the proceedings, or the award.
3.4.1 Consequences where the Arbitral Tribunal Lacked Substantive Jurisdiction.
Where the applicant challenges the tribunal’s lack of substantive jurisdiction, the court may, on determination of an application under this section, make any of these orders: (i) confirm the award;91 (ii) vary the award;92 or (iii) set aside the award in whole or in part.93
3.4.2 Consequences in the Case of Serious Irregularity
Where the applicant challenges the arbitral award because there was “serious irregularity” that affected the arbitral tribunal, the proceedings or the award; the court may, where it determines that there is a serious irregularity affecting the arbitral tribunal, the proceedings or the award: (i) remit the award to the arbitral tribunal, in whole or in part, for reconsideration;94
(ii) Set aside the award in whole or in part;95 or
(iii) declare the award to be of no effect, in whole or in part.
However, the court will not exercise its power to set aside or to declare an award to be of no effect, in whole or in part, ‘unless it is satisfied that it will be inappropriate to remit the matters in question to the arbitral tribunal for reconsideration.’96
3.5 Remedy against the Court’s Decision on the Challenge to Arbitral Award
A party who is aggrieved by the decision of the court to which a challenge on an arbitral award was referred may be appealed against. Before the appeal is determined by the appellate court, however, leave of the court must be required for any appeal against such decision of the court.97
2 See, for example, the Model Law on International Commercial Arbitration as amended in 2006, p 34.
3 Gunawansa, A. and D. Surasena, “Applicable Rules of Evidence in Arbitration.” Available at https://www.researchgate.net/publication/340793996_Applicable_Rules_of_Evidence_in_Arbitrati on (accessed 29 September 2020).
4 See, for example, Slanely v. International Athletic Federation, 244 F.4d 580, 591 (7th Cir. 2001); McDonald v. City of W Branch (466 U.S. 284), 292; and Forsythe International, SA v. Gibbs Oil Co, 915 F.2d 1017, 1022 (5th Cir. 1990).
5 See, for instance, Section 36 of the Tanzania Arbitration Act. See also Articles 19 and 24(1) of the UNCITRAL Model Law; Sections 33 and 34 of the 1996 English Arbitration Act; Art. 27(4) of the UNCITRAL Arbitration Rules; Article 22.2 - 22.7 of the Hong Kong International Arbitration Centre (HKIAC) Rules; Article 19.2, 19.4 of the Singapore International Arbitration Centre (SIAC) Rules.
6 Section 36(2)(d) of the Tanzania Arbitration Act.
7 Ibid, Section 36(2)(e).
8 Ibid, Section 36(2)(f).
9 Ibid, Section 36(2)(g).
10 Ibid, Section 36(2)(h).
11 Article 2(1) of the IBA Rules on the Taking of Evidence requires the arbitral tribunal to consult the parties ‘at the earliest appropriate time in the proceedings and invite them to consult each other with a view to agreeing on an efficient, economical and fair process for the taking of evidence.’
12 Ibid, Article 2(2)(a).
13 Ibid, Article 2(2)(b).
14 Ibid, Article 2(2)(c).
15 Ibid, Article 2(2)(d).
16 Ibid, Article 2(2)(e).
17 Cottone, P., “The Pre-Hearing Conference in Arbitration - A Step by Step Guide.”
Available at https://www.philcottone.com/articles/PLI%202012-%20PreHearing.pdf (accessed 29 September 2020).
18 In its securities arbitrations, the Washington, DC-based Financial Industry Regulatory Authority (FINRA) calls this step as the “Initial Pre □Hearing Conference”.
19 The American Arbitration Association (AAA) calls this procedural step as the “Preliminary Hearing Conference”.
20 Ibid, p. 12-3.
21 The most common strict time allocation applied by many tribunals is the “chess-clock” method, under which a party is ‘allocated a specified amount of time, typically a pro rata share of the total hearing time reserved, to present its case.’ Alvarez, H.C., et al., “The Hearing on the Merits,” in Gaitis, J.M., et al. (eds.), The College of Commercial Arbitrators Guide to Best Practices in Commercial Arbitration (4th edn.) (Juris Legal Information, 2017), pp. 241 and 265.
22 Mashamba, C.J., Advocacy Skills in Civil Litigation: A Practitioner’s Manual, op. cit, p. 68.
23 Gardiner, J., et al., op. cit, p. 12-4.
24 Ibid.
25 Section 45(1) of the Arbitration Act provides that:
‘A party to arbitral proceedings may, with the permission of the arbitral tribunal or by agreement with the other party, and by using the same court procedures available in relation to other legal proceedings, secure the attendance of a witness before the arbitral tribunal to give oral testimony or to produce documents or other material evidence.’
26 Section 110(2) of the Evidence Act, Cap. 6 R.E. 2002. See also Mashamba, op. cit, p. 69; Safari, A.J., Prosecution and Defence of Criminal Cases (Dar es Salaam: Huda Publishers Ltd., 1996), p. 49; and Abdallah Kondo v. R, Crim. Appeal No. 322, Court of Appeal of Tanzania at Dar Es Salaam, (Unreported).
27 Section 39(1) of the Arbitration Act. In particular, Rule 6(6) of the IBA Rules on the Taking of Evidence provides that:
‘At the request of a Party or of the Arbitral Tribunal, the Tribunal-Appointed Expert shall be present at an Evidentiary Hearing. The Arbitral Tribunal may question the Tribunal- Appointed Expert, and he or she may be questioned by the Parties or by any Party- Appointed Expert on issues raised in his or her Expert Report, the Parties’ submissions or Witness Statement or the Expert Reports made by the Party-Appointed Experts pursuant to Article 6.5.’
28 Barnes, R., et al., “Country Risk Premium,” in in Legum, B. (ed.), The Investment Treaty Arbitration Review (London: Law Business Research Ltd., 2019), pp. 298-306 at p. 298 (noting that: ‘the role of quantum experts is to determine the value of an asset or project, with the results of this valuation exercise being used as in input the assessment of compensation’ in arbitral proceedings.).
29 Gardiner, et al., op. cit, pp. 12-9-10.
30 Samberg, G., “Pros and Cons of Hot-Tubbing in International Arbitration,” 1 December 2016.
Available at https://www.mintz.com/msights-center/news-press/pros-and-cons-hot-tubbing-
international-arbitration (accessed 30 September 2020).
31 Alvarez, op. cit, p. 257.
32 Gardiner, et al., op. cit, p. 12-12.
33 Walker, S.P. and I.K. Clark, Pleading in Arbitration: A Practitioner’s Guide (Glasgow: W. Green, 2012), pp. 12, 18.
34 Gardiner, et al., op. cit, p. 12-15.
35Tanzania Electric Supply Co. Ltd. v. Dowans Holdings SA (Costa Rica) & Dowans Tanzania Limited (Tanzania), High Court of Tanzania at Dar es Salaam, Misc. Civil Application No. 8 of 2011 (Unreported).
36 Section 3 of the Tanzania Arbitration Act.
37 Mashamba, C.J., Alternative Dispute Resolution in Tanzania (Dar es Salaam: Mkuki na Nyota Publishers, 2014), p. 145.
38 Section 60(1) of the Tanzania Arbitration Act.
39 Ibid, Section 60(2).
40 Ibid, Section 49(2)(b).
41 Hope, J., “Awards: Form, Content, Effect,” in Rowley, J.W. (ed.), The Guide to Challenging and Enforcing Arbitration Awards (1st edn.) (Law Business Research, 2019). Available at https://globalarbitrationreview.com/edition/1001323/the-guide-to-challenging-and-enforcmg- arbitration-awards-first-edition (accessed 29 September 2020).
42 Ibid.
43 Born, G.B., International Arbitration: Law and Practice (2nd edn.) (The Netherlands: Kluwer Law International, 2016), pp. 286-287.
44 Ibid, p. 287.
45 Section 76(1) of the 2020 Arbitration Act.
46 Ibid, Section 76(2).
47 Ibid, Section 76(c).
48 Mashamba, Alternative Dispute Resolution in Tanzania, op. cit, p. 148.
49 See particularly Mandani v. Suchale 1971) HCD no. 10 (holding that that an arbitral award is a decree capable of being enforced in a court of law); Tanzania Electric Supply Co. Ltd. v. Dowans Holdings SA (Costa Rica) & Dowans Tanzania Limited (Tanzania), High Court of Tanzania at Dar es Salaam, Misc. Civil Application No. 8 of 2011 (Unreported); and M/S Kiundo Enterprises (T) Ltd. v. Ardhi University, High Court of Tanzania (Commercial Division) at Dar es Salaam, Miscellaneous Commercial Cause No. 272 of 2015 (Unreported).
50 Section 68(2) of the 2020 Arbitration Act.
51 Ibid, Section 68(3).
52 M/S Kiundo Enterprises (T) Ltd. v. Ardhi University, op. cit.
53 Ibid. See also M/S Lukumbulu Investment Co. Ltd. v. M/S St. Anthony Secondary School, High Court of Tanzania at Dar es Salaam, Misc. Commercial Application No.184 of 2015 (Unreported).
54 M/S Kiundo Enterprises (T) Ltd. v. Ardhi University, ibid.
55 Ibid.
56 Section 78(2)(a)(i)(aa) of the Arbitration Act.
57 Ibid, Section 78(2)(a)(i)(bb).
58 Ibid, Section 78(2)(a)(ii).
59 Ibid, Section 78(2)(a)(iii).
60 Ibid, Section 78(2)(a)(iv).
61 Ibid.
62 Ibid, Section 61(1)(a).
63 Ibid, Section 61(1)(b).
64 Ibid, Section 61(1)(b).
65 Ibid, Section 61(2).
66 Ibid, Section 63(1).
67 Ibid, Section 64 (providing that: ‘Unless the parties otherwise agree, any obligation under an agreement between the parties as to how the costs of the arbitration shall be borne, or under an award allocating the costs of the arbitration, extends only to such costs as are recoverable.’).
68 Ibid, Section 62.
69 Under Section 66(1) of the Arbitration Act, unless otherwise agreed by the parties, the recoverable costs of the arbitration in respect of the fees and expenses of the arbitrators, include such reasonable fees and expenses as are appropriate in the circumstances. Section 66(2)(a) and (b) stipulates that, for the purposes of determining the question as to what reasonable fees and expenses are appropriate in the circumstances, and where a matter is not already before the court on an application under section 65(4), the court may, on application by a party and upon notice to the other party: (i) determine the matter; or (ii) order that the matter be determined by such means and upon such terms as the court may specify.
70 Ibid, Section 65(1).
71 Ibid, Section 65(2)(a).
72 Ibid, Section 65(2)(b).
73 Ibid, Section 65(3)(a).
74 Ibid, Section 65(3)(b).
75 Ibid, Section 65(4)(a).
76 Ibid, Section 65(4)(b).
77 Section 3 of the 2020 Arbitration Act defines a “court” as ‘a court of competent jurisdiction in Mainland Tanzania, provided that, in the case of international commercial arbitration, it means the High Court in exercise of its ordinary original civil jurisdiction.’
78 Under the provisions of sections 15 and 16 of the repealed Arbitration Act the court could interfere with the conduct of the arbitral proceedings and the ensuing award if it was satisfied that (i) there had been misconduct on the part of the arbitral tribunal; or (ii) that the award had been improperly procured by the respondents.
79 Ibid, Section 69(1)(b).
80 Ibid, Section 69(2).
81 Ibid, Section 71(1).
82 Ibid, Section 71(2)(a).
83 Ibid, Section 71(2)(b).
84 Ibid, Section 71(2)(c).
85 Ibid, Section 71(2)(d).
86 Ibid, Section 71(2)(e).
87 Ibid, Section 71(2)(f).
88 Ibid, Section 71(2)(g).
89 Ibid, Section 71(2)(h).
90 Ibid, Section 71(2)(i).
91 Section 69(3)(a) of the 2020 Arbitration Act.
92 Ibid, Section 69(3)(b).
93 Ibid, Section 69(3)(c).
94 Ibid, Section 71(3)(a).
95 Ibid, Section 71(3)(b).
96 Ibid, Section 71(3)(c), proviso.
97 Ibid, Sections 69(4) and 1(4).