The principles of arbitration used in the case of Dowans vs. Tanesco.

Preliminary

In alternative dispute resolution (ADR), arbitration is among the alternatives to disputes resolution out the ordinary court proceedings. Arbitrations domestic and international are formed by either parties who entered into a contract which clearly state that if there is mis-understanding between parties their matter must be taken to the arbitration and not court. Arbitration can be formed before or after the rise of a dispute between parties depending to a contract entered by them, within a contract of business or anything between parties there must be a term which clearly direct the parties to arbitration when there is a dispute. A term arbitration has been given a lot of meanings by different people and institutions worldwide, but in most of the definitions provided by people there is some elements which must exist to complement a correct meaning as shown by the following meanings of a term arbitration;

Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes outside the courts. The dispute will be decided by one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), which renders the "arbitration award". An arbitration award is legally binding on both sides and enforceable in the courts. Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. In certain countries, arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts and may include a waiver of the right to bring a class action claim. Mandatory consumer and employment arbitration should be distinguished from consensual arbitration, particularly commercial arbitration.

Arbitration can be either voluntary or mandatory (although mandatory arbitration can only come from a statute or from a contract that one party imposes on the other, in which the parties agree to hold all existing or future disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur) and can be either binding or non-binding. Non-binding arbitration is similar to mediation in that a decision cannot be imposed on the parties. However, the principal distinction is that where as a mediator will try to help the parties find a middle ground on which to compromise, the (non-binding) arbiter remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable. By one definition arbitration is binding and non-binding arbitration is therefore technically not arbitration.

Arbitration is a proceeding in which a dispute is resolved by an impartial adjudicator whose decision the parties to the dispute have agreed, or legislation has decreed, will be final and binding. There are limited rights of review and appeal of arbitration awards. Arbitration is not as judicial proceedings (although in some jurisdictions, court proceedings are sometimes referred as arbitrations), alternative dispute resolution (ADR), expert determination, mediation (a form of settlement negotiation facilitated by a neutral third party).

In Tanzania, Arbitration is typically an out of court method for resolving a dispute in which a party submits a disputed matter to impartial person (the arbitrator) for decision. The arbitrator controls the process; listen to both sides and make a decision. Like a court trial only one side will prevail, but unlike court litigation appeal on the merit of the case is limited. In a more formal setting the arbitrator will conduct hearing where all of the parities present evidence through documents, exhibits and testimony. The parties may agree, in some instances, to establish their own procedure or administrating organization may provide procedures.

All the definition above connote that arbitration presupposes binding decision from the arbitrators. Whereas some writers use the word arbitration irrespective of the decision that appointed arbitrators would give: whether it is binding decision or non binding decision. In binding arbitration, the arbitrator has the power to render a decision that decides (concludes) the dispute in a legally binding way by issuing an award. The award can be enforced against a party in the same way that a court judgment can be enforced, such as by seizer and sale of property. If arbitration is not binding, then it is advisory. In advisory arbitration, the parties can choose whether or not to abide by the arbitrator(s) decision. Some proponents on arbitration, apart two kinds of arbitrations: as binding and nonbinding, refuse the applicability of the word arbitration for non- binding decision of arbitrator(s). As to these people, the word arbitration is used only to show a process in which an arbitrator would give an award which is binding upon the conflicting parties. Agreement of the disputing parties to submit their dispute to third party and the latter to give his opinion (non- binding decision) upon dispute could not be called as arbitration as to the above opinion. 

The principles of arbitration used in the case of Dowans vs. Tanesco.

Arbitration as other systems of justice, it has a number of rules and principles which enable an arbitral body to dispense justice. Arbitral systems vary from one country to another but it may vary within a one country due to a type of agreement entered between parties. There is many principles which regulate arbitration but the following are the common and mostly known by many people and various institutions worldwide;

Arbitration clause in a contract, for a person or company to take a matter to arbitration there must be a clause in their agreement which state that, where there is a dispute between parties a matter will be settled by a particular arbitral tribunal. In a case of DOWANS vs TANESCO, There was an arbitration clause established under clause 14 of the agreement which was called POA, clause 14 of POA clearly directed the parties to take their disputes to arbitration which was International Chamber of Commerce (I.C.C), and as the dispute arose between Tanesco and Dowans, dowans wrote a letter to Tanesco that they request to take a matter to ICC and the matter was taken to ICC for decision. That all happened and Tanesco accepted a request from dowans because it was among terms of agreement. 

An arbitration clause is a section of a contract that deals with the parties’ rights and options in the event of a legal dispute over the contract. In most arbitration clauses, the parties agree not to sue each other, and instead will resolve their disputes through arbitration. Arbitration is a process that allows a third-party arbitrator to help with discussions between the parties. Rather than sue each other, the parties will need to work out their differences during these arbitration sessions and reach a mutual agreement about how the problem is to be resolved. This might result in remedies similar to what a court might issues, such as a settlement payment. The difference is that arbitration is much more flexible and informal, and allows the parties to discuss the remedies on their own terms.

An arbitration clause can be either binding or nonbinding. A binding arbitration clause means that the arbitrator’s decision on a specific dispute will be final and the courts will enforce it and neither party can appeal or not follow the decision. A non-binding arbitration clause allows parties to be free to reject the arbitrator’s decision and take the dispute to court to make a final determination. Usually parties use binding arbitration clauses since it is more decisive and makes things go faster.

An arbitral award is final if it is obtained out of fraud and mis-conduct, in a case of TANESCO vs DOWANS a petition instituted at High Court of Tanzania by Tanesco who were the petitioners and Dowans as respondents was to challenge the validity of arbitral award given by ICC’s tribunal by the ground that the decision was made under fraud and mis-conduct so it open doors to the affected party to request judicial review and to request a court to set aside arbitral award. It is a principle that, “an arbitral award is final”, an arbitral award is final if obtained without fraud and mis-conduct, and if proved that there was no fraud and mis-conduct no party is allowed to sue another party in a court of law or he may challenge a decision of a tribunal unsuccessful. But if there are elements of fraud and mis-conduct, an affected party may open a suit to sue a party or to challenge a decision made by arbitration.

In this case an affected party was Tanesco who were required to pay more than 66,000,000 million USD. They were not ready to pay because they believed a decision was obtained under fraud and mis-conduct and they claimed that an arbitral body formed illegally. Due to all the grounds revealed by petitioner, Tanesco instituted a civil suit to challenge the validity of an award given by arbitral tribunal, they were unsuccessful.

A foreign arbitral award must be registered by the high court of Tanzania so as to take effect, section 12 of The Arbitration Act, require that, all foreign arbitral awards must be registered to the high court of Tanzania so as to take effect. This principles of arbitration is a statutory principle which require registration of all foreign arbitral award to high court of Tanzania so as to take effect, in a case of TANESCO vs DOWANS, Tanesco requested a final award and addendum to be filed at High Court of Tanzania and a communication was made between ICC and High Court of Tanzania and lastly the documents received by a registrar of high court for registration. After registration, a petitioner (TANESCO) open a civil suit no 8 of 2011 to challenge the validity of arbitral award made by ICC.

An arbitral tribunal must be composed in accordance to the law or as agreed by parties, Failure to follow the procedure agreed by the parties on the composition of the arbitral tribunal or on the resolution of the dispute is another reason for refusing the recognition and the enforcement of the foreign arbitral award. Thus, the arbitral award delivered in such circumstances violates a fundamental principle, namely, the understanding of the parties regarding the constitution of the arbitral tribunal, respectively of the arbitral proceedings, regulated both by the international conventions and by the national legislation. Stipulating that within the arbitration agreement, the parties may establish rules of procedure governing the arbitration or the arbitrators can be empower by the parties in this regard.

A dispute between Dowans and Tanesco reveal this principle clearly, after a letter to terminate contract from Tanesco to Dowans, dowans took their step ahead to refer a matter to arbitral tribunal ICC and before hearing they were given an opportunity to choose arbitrators to hear their matter. Dowans nominated as arbitrator Sir Swithin Munyantwali and Tanesco nominated as arbitrator Sir Jonathan Parker as it was agreed by them every party given a chance to choose an arbitrator. It is a principle that all procedures in composition of an arbitral award must be followed so as to prevent rejection of foreign arbitral award in other countries where one of the parties in a suit reside.

Conclusion

The principles discussed above is only principles which existed or which was visibly applicable in a case between DOWANS vs TANESCO but there are many other principles of arbitration like “non-disclosure of information” because an arbitration is not like open court, arbitration is a chamber case where only parties attend to hear a matter. In my understanding I think there is a need to put into account a number of factors before one decide to enter into a contract which refer it’s matters or disputes to arbitration so as to avoid loss of time and money to conduct suits in arbitration because arbitration is informal in operating it’s activities.

BIBLIOGRAPHY

INTERNATIONAL INSTRUMENTS

European Convention on International Commercial Arbitration 1961

International Chamber of Commerce Rules of Arbitration 1998

UNCITRAL Model Law on International Commercial Arbitration 1985

STATUTES

Tanzania Government of the Arbitration Act, [Cap. 15 R.E 2002], the Government Printers, Dar es Salaam.

Tanzania Government of, the Basic Rights and Duties Enforcement Act No 33 of 1994, the Government Printers, Dar es Salaam.

Tanzania Government of, the Civil Procedure Code Act, 1966, the Government Printers, Dar es Salaam.

BOOKS.

Bansal A.K (2005) Arbitration & ADR, Universal Law Publishing Co. Pvt. Ltd,  Delhi.

Court of Appeal of Tanzania (2004) the History of Administration of Justice in Tanzania, 1st edition, Mathews books & Stationeries, Dar-es-salaam.

CASES.

DOWANS vs TANESCO, Civil Application no 8 of 2011