csi electrical ltd vs capcon ltd 2023 tzhccomd 256 14 july 2023

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION)

AT PAR ES SALAAM MISCELLANEOUS COMMERCIAL CAUSE NO. 59 OF 2022

AND

IN THE MATTER OF ARBITRATION AND IN THE MATTER OF ARBITRATION ACT [CAP.15 R.E 2020]

BETWEEN CSI ELECTRICAL LIMITED........................................... PETITIONER Versus CAPCON LIMITED...................................................... RESPONDENT Date of last order: 05th May, 2023 Date of Ruling: 14th July, 2023

RULING MKEHA, J. The petitioner is moving the court to be pleased declaring that the award delivered by Mr. Adonis Mwijage Kamala, sole arbitrator, is of no effect in whole for serious irregularities in issuing the same. The petition is made under section 75 (1), (2) (a) (c) (i) of the Arbitration Act as well as Rule 63 Page 1 of 7 of the Arbitration Rules (Rules of Procedure) Regulations (GN No. 146 of 2021). The petition is resisted through an answer to the petition filed on behalf of the Respondent. The petition was argued by way of written submissions. Whereas Mr. Juvenalis Ngowi learned advocate represented the petitioner, Mr. Hassan Mussa learned advocate represented the respondent. It was alleged in the petition that, the Respondent was aware of the Award before the parties had been notified to collect the same by relevant Authorities. Then it was submitted on behalf of the petitioner that, to prove truth of the said allegation, the Respondent issued invoice No. HVAC for the sum of USD 110,446.55 to the petitioner, two days before the NCC informed the parties that the award was ready for collection. Coincidentally, the amount of money claimed by the Respondent via invoice No. HVAC dated 6th December 2022 happened to be exactly the same amount which was awarded by the Arbitrator in his award. According to the learned advocate for the petitioner, whereas the invoice was

issued on 6th December 2022, on 7th December 2022 the Arbitrator corresponded to the parties informing them that the award was ready for collection. This Page 2 of 7 notification dated 7th December 2022 was channeled to the parties on 8th December 2022 in which the NCC informed the parties that fees had been paid and the Award was to be collected at the National Construction Council offices located at RFB Building, Ground floor, Block D, Mjedengwa Dodoma. In view of the learned advocate for the petitioner, the only logical conclusion which could be derived from the flow of facts was that, there was unilateral communication between the Tribunal and the Respondent which enabled the latter to know the amount awarded before the parties were informed of the date for collection of the Award. Mr. Juvenalis Ngowi learned advocate submitted further that, unilateral communication in arbitration proceedings is a serious irregularity as it creates room for bias. The learned advocate insisted that section 37 (1) (a) of the Arbitration Act, 2020 provides that, the arbitral tribunal has a general duty to act fairly and impartially. The learned advocate for the petitioner submitted that, in circumstances whereby the respondent had a privilege to know the outcome of the case before the time for knowing the same, one could raise a valid suspicion whether the Arbitral Tribunal acted fairly if the

two parties were treated differently. The learned advocate cited Page 3 of 7 the decision in SYMBION POWER LCC AND VENCO IMTIAZ CONSTRUCTION COMPANY, CASE No. HT-2016-0000211, the High Court of Justice, Queens Bench Division in which it was held that unilateral communication between the Arbitrator and one part to the case is against principles of fairness and impartiality for creating the impression of a close relationship between the arbitrator and the party and raises the spectre of other communications. In his further submissions Mr. Juvenalis Ngowi learned advocate submitted that, unilateral communication in the Arbitration proceedings is expressly prohibited by the Code of Conduct for Reconciliators, Negotiators, Mediators and Arbitrators, Regulations, 2021, GN No. 148 of 2021. The learned advocate cited the relevant Item, that is, Item 15 (3) of the first Schedule to the Regulations which provides that, throughout the Arbitral proceedings, an arbitrator should avoid any unilateral communications regarding the case with any party, or its representatives. After the learned advocate had observed that the irregularity committed was a serious one, he invited the court to declare the Award to be of no legal effect in whole. Page 4 of 7 In the answer to the petition and the submissions in reply filed on behalf of the Respondent, it was not disputed that the parties were notified

via a letter dated 7th December, 2022 channeled to them on 8th December, 2022, that the Award was ready for collection. There was a concession to the effect that the Respondent was made aware of the Award before receiving formal notification from NCC that was channeled to the parties on 8th December, 2022, inviting them to go for collection of the Award. The learned advocate for the respondent submitted that, after the respondent had paid the relevant fees and costs on 5th December 2022, she proceeded to collect the award on 6th December 2022 and that, on the same date, an invoice was issued to the petitioner claiming the same amount contained in the award which was expected to be known by the parties from the 8th day of December 2022 when they were officially invited by the NCC officials to go for collection of the Award. The only issue for determination is whether there was serious irregularity on part of the Arbitral tribunal which can affect legality of the award. It is not disputed in this case that the contents of the award including the actual award were made known to the Respondent Page 5 of 7 before the 8th December, 2022, the date on which a letter inviting the parties for collection of the award, was sent to them (the parties) via email. At that time, it is presumed that, only the Arbitrator knew the Award. Therefore, as correctly submitted by Mr. Juvenalis Ngowi

learned advocate, the only logical conclusion is that, there was unilateral communication between the Arbitrator and the Respondent which enabled the latter to know that was the award in his favour, before the requisite time as per the arbitration agreement and the obtaining procedures and practice. Item 15(3) of the first schedule to GN No. 148 of 2021 prohibits unilateral communications between the arbitrator and any party or its representative regarding the case under arbitration. Presence of unilateral communication between the arbitrator and a party to the arbitration proceedings touching confidential matters like the prospective award as it happened in this case, raises doubts regarding fairness and impartiality of the arbitrator. I hold the same to be a serious irregularity within the meaning of the of section 75 (2) (a) of the Arbitration Act, Chapter 15, RE, 2020. Page 6 of 7 For the foregoing reasoning, pursuant to section 75 (3) (c) of the Arbitration Act, I declare the award to be of no effect in whole. DATED at DAR ES SALAAM this 14th day of JULY, 2023. C. P. MKEHA

JUDGE 14/07/2023 Court: Ruling is delivered in the presence of Mr. Peter Clavery learned advocate holding brief of Mr. Juvenalis Ngowi learned advocate for the petitioner and Mr. Jumanne Kilewa learned advocate for the respondent. C. P. MKEHA

JUDGE 14/07/2023 Page 7 of 7