mic tanzania limited vs crystal mobile tanzania limited 2021 tzhccomd 3300 14 july 2021

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION)

AT PAR ES SALAAM MISC. COMMERCIAL CAUSE NO, 17 OF 2021 (Arising from Misc. Commercial Cause No. 15 of 2020)

IN THE MATTER OF THE ARBITRATION

BETWEEN MIC TANZANIA LIMITED.......................................... PETITIONER AND CRYSTAL MOBILE TANZANIA LIMITED.................... RESPONDENT AND IN THE MATTER OF THE ARBITRATION ACT, 2020

RULING B.K. PHILLIP, J The petitioner herein lodged this petition under the provisions of section 70(1), (2) (d) (i), (3)(a) and (b) of the Arbitration Act,2020 and Regulation 63 of the Arbitration (Rules of Procedure) Regulations GN No. 146 of 2021. He alleged that the Arbitral award is tainted with serious irregularities. The petitioner prays for the following orders; (a) Setting aside irreconcilable findings in issue number two (2) (b) Setting aside irreconcilable findings on TZS 70,000,000/= as nominal damages as against the findings in issue number four (4). (c) Setting aside the holding shifting the burden of proof to the petitioner/respondent on the issue on proof of loss of business. i (d) Setting aside the award on general damages and the award on costs. (e) Remit the final award for reconsideration and /or consideration and determination as follows; i. Reconsider the claim of special damages of TZS 28,721,950/= according to the law and principles governing proof of special damages. ii. In the alternative consider, address herself on and determine the claim of TZS. 28,721,950/= in line with the fact that all outstanding invoices including the earnings obtained during the life cycle/post termination period were duly paid on 14th June 2017. iii. Consider, address herself on and determine the claim of TZS. 28,721,950/= in line with the provisions of clause 4.1 and 14 of

the agreement on billing, traffic report and invoicing of the amount earned. iv. Reconsider, address herself on and determine the special damages contradicting claims of TZS 591,152,940.00/= TZS 571,012,500.00 according to the law and principles governing proof and award of special damages. v. Reconsider, address herself on and determine relevance and admissibility of Annexture C-3 and C-7 to the statement of defence according to the law of evidence. vi. Reconsider the principle of burden of proof according to the law. 2 vii. Reconsider, address herself on and determine the conditions relating to the life cycle period in the Agreement according to the law. viii. Reconsider the issue of general damages and costs according to the law and principles governing their respective assessment. ix. Costs of this Petition be provided for and any other relief as this court may deem appropriate. This petition is contested. In his reply to the petition, the respondent refuted all of the petitioner's allegations. He contended that the arbitral award is not tainted with any irregularity and the Arbitrator determined all issues which were raised by the parties. He invited this court to dismiss the petition with costs. A brief background to this petition is that on 3rd April 2020, the sole Arbitrator in the dispute between the parties herein wrote a letter to the registrar of this court, through which he requested this court to register the award he issued as the decree of this court pursuant to section 12(2) of the then, Arbitration Act, Cap 15 R.E.

2002. Upon being notified that, the award had been transmitted to this court, the advocates for the petitioner lodged this petition to challenge the award. Before the sole Arbitrator, the respondent's (claimant in the arbitration proceedings) claims were couched as follows; 1. "The Claimant claims the money due by reason of use of the respondent of the claimant's content and services to its subscribers, amounting to TZS 28,721,950/= plus interest from the date of the default. 3 2. Damages for loss of bargain or loss of future income as a result of early termination of contract being 30% of estimated gross revenues for a period of 2 years estimated of TZS 20,140,440plus interest.

3. An Award ordering the respondent to pay the claimant damages for loss of business arising from substantial and material breach of its post contractual rights and obligations amounting to TZS 571,012,500.00.

4. The claimant claims for general damages and compensation amounting to US$ 200,000 for harm suffered as a result of non­ payment of undisputed invoices and monies due and the respondent's refusal to engage in negotiations in good faith.

5. An Award ordering the respondent to pay the costs of this arbitration, claimant's legal representative's costs, experts fees and disbursements.

6. The Claimant claims 19% annual interest on the final decretal amount to be due to it from the date of the Award.

7. Such further or other relief as would properly reflect its loss and the tribunal deems appropriate". In his award the sole Arbitrator issued the following orders; i. "Payment of Tanzania Shillings Twenty Eight Million, Seven Hundred and Twenty One Thousand, Nine Hundred and Fifty Only (TZS. 28,721,950/=) being payment of amount due for the use of Claimant's content and services. 4 ii. Payment of Tanzania Shillings Seventy Million Only (TZS 70,000,000/=) as nominal damages for loss of business arising from respondent's breach of its post contractual obligations. Hi. Payment of general damages in the amount of Tanzanian Shillings Ten Million Only (TZS 10,000,000/=) as compensation for business disruption for delay in payment of undisputed invoices. Compensation amounting to US$ 200,000 is therefore denied. iv. Interest at a commercial rate per annum as determined in published Bank of Tanzania rates on the amount of TZS 28,721,950/= from the date of default, that is 5h February, 2017 to the date of Statement of Claim, i.e 25h September, 2018. v. Further interest of 12% annual interest on the decretal amount from the date of the Award to the payment in full. vi. Arbitrator's fees, being United States Dollars Nine Thousand (US$ 9,000 VAT exclusive); and administrative expenses as invoiced. Each party shall bear its own legal fees and expenses. vii. Prayer for damages for loss of

bargain or loss of future income as a result of early termination of contract is denied". I ordered the petition to be disposed of by way of written submissions. The learned advocate Rosan Mbwambo filed the submissions for the petitioner whereas the written submission for the respondent was filed by learned advocate Romana Gervas. I have carefully read the petition, the reply to petition and the submissions filed by both learned advocates as well as the Arbitral Award. In this ruling I will not be able to reproduce the submissions made by the learned 5 advocates verbatim, but I will consider all major and important points raised , as Igo along making the deliberations of the issue raised. Submitting for the petition, Mr. Rosan Mbwambo submitted that the Arbitrator awarded the respondent a sum of Tshs 28,721,950 allegedly earnings obtained during the life cycle/post termination period while the respondent did not prove that claim and did not provide explanations/evidence on how he arrived at that figure. Mr. Mbwambo insisted that the law requires special damages to be specifically pleaded and proved. To cement his arguments he cited a number of cases including the case of Zuberi Augustino Vs. Anicet Mugabe, [1993] TLR 228 and Rugarabamu Mwombeki Vs Charles Kisigha (1984) TLR 350. Mr. Mbwambo went on to submit as follows; that the Arbitrator failed to take into consideration that

the respondent could only be paid upon issuing invoice, instead he entertained the respondent's claims in the absence of any invoice. The Arbitrator overlooked the principles governing the law of contract and the conditions relating to the life cycle period in clause 4.1.3 of the agreement between the parties, as a result failed to determine properly the petitioner's post termination costs. The Arbitrator awarded the respondent TZS 70,000,000/= as nominal damages at the same time he made findings that the respondent failed to prove his claims for special damages. Under the explained circumstances the award of the aforesaid nominal damages was contrary to the basic principles of governing proof of special damages and nominal damages, contended Mr. Mbwambo. 6 Moreover, Mr. Mbwambo raised the following arguments; that the Arbitrator's award in respect of special damages was in contradiction with his findings that the RBTs had been supplied to other telephone operators. The award of special damages did not take into consideration the amount claimed as the respondent indicated two different figures that is, Tshs. 591,152,940/= and 571,012,500/=. The Arbitrator failed to apply the basic principles of the law of evidence on admission and assessment of credibility of electronic evidence when granting the award for damages as he wrongly relied on an email sent by Mubanga Malama and a

photocopy of the contract alleged that it was signed by the parties. The Arbitrator shifted the burden of proof to the petitioner on the existence of the 361xty media company and existence of exclusive agreement contrary to sections 110,111,112 and 123 of the evidence Act. The Arbitrator's findings are contradictory as having held that termination of the agreement was lawful, then wrongly held in the subsequent issues that the petitioner waved her right to terminate the contract. The failure to reconcile his findings stated herein above, compromised the Arbitrator's findings on the reliefs the parties entitled to contended Mr Mbwambo. Furthermore, he was of the view that the Arbitrator's award of general damages to tune of TZS. 10,000,000/= was unreasonable as the same arises from the respondent's claim that the petitioner delayed payment of a sum of TZS 2,400,961.55/= only. The Arbitrator's award of costs was done in contravention of the principles of the law governing assessment and apportionment of costs as only 11% of the total claim lodged by the respondent was awarded, but the petitioner was condemned to pay all costs except the fees for the respondent's lawyer which was not yet assessed. Mr Mwambo insisted 7 that costs have to be apportioned according to the nature of the claim and the extent of success. In rebuttal the learned advocate Romana Gervas submitted that there

are no any serious irregularities committed in the arbitral proceedings. She contended that according to section 70(2)(a) of the Arbitration Act, 2020, for serious irregularity to be established in an award, the applicant must show that the Arbitrator failed to comply with the provisions of section 35 of the Arbitration Act, 2020. Moreover, Ms. Gervas submitted that according to section 70(2)(b) of the Arbitration Act 2020, this court may set aside final award where the Arbitral Tribunal exceeded its powers otherwise than exceeding its substantive jurisdiction. She was of a strong view that in the instant matter, the Arbitrator acted within his powers. He conducted the proceedings in accordance with the procedures agreed by the parties. All five issues which were raised in the proceedings were determined accordance with the law and no fraud had been committed by the Arbitrator. She insisted that the petitioner has not established any of the conditions stated in section 70(2) (a)(b)(c)(d)(e) and (f) (g) (h) and (i) of the Arbitration Act 2020 to move this court to set aside the award. She maintained that mistake of law or fact by the Arbitrator is never a ground to challenge the award. To cement her arguments she cited a number of cases which I cannot reproduce them all in this ruling but included the case of Mahawi Enterprises Limited Vs Serengeti Breweries Ltd. Misc Commercial

cause No. 09/2018 (unreported) and Salu & Company Limited Vs Cool Care Service Ltd, Misc. Commercial Cause No. 56 of 2017 (unreported). 8 Furthermore, Ms. Gervas submitted that the petitioner's concern that Arbitrator should be ordered to reconsider the respondent's claim for damages as he indicated two different figures that is Tshs. 591,152,940/= and Tshs. 571,021,500/= is baseless because the Arbitrator did not grant the award for damages. As regards the petitioner's concern on the exhibits that were admitted by the Arbitrator, Ms Gervas contended that the petitioner did not object to the admission of those exhibits during the hearing. Each party was accorded opportunity to bring evidence and at no time during the proceedings the Arbitrator shifted the burden of proof to the respondent contrary to the law. In conclusion of her submission, Ms. Gervas was of a strong view that the Arbitral proceedings in its entirety do not contain any' technical misconduct such as mishandling or procedural irregularity, ambiguity or excess of jurisdiction. Also, she insisted that there is no any element suggesting that there was improper procurement of the award. Thus, she invited this court to dismiss the petition with costs. In his rejoinder Mr. Mbwambo reiterated his submission in chief and insisted that this petition is specifically made under the provisions of section 70(1), 2(d) and (i)

of the Arbitration Act 2020. He contended that Ms Gerva's submission is misconceived as she has failed to interpret properly the import of the provisions of the law under which this petition is made. Expounding on the interpretation and application of section 70(1) (2) (d) and (i) of the Arbitration Act, 2020, she submitted that, it is not enough to show that the issues which were framed by the Arbitral Tribunal were determined as the issues which are envisaged in the above 9 mentioned provisions of the law involves all concerns/arguments raised by the parties, not only the issues framed by the Arbitral Tribunal which are normally very general. To cement his arguments she referred this court to case of the Secretary of State for Home Department (the Home Office) Vs Raythen Systme Limited [(TCC)] and 2014 EWHC 4375 (TCC)] in which the court made interpretation and application of section 68 of the English Arbitration Act 1996 which is in pari materia to section 70 of our Arbitration Act, 2020 to the effect that the provisions of section 68 of the English Arbitration Act empowers the court to correct serious failure to comply with the due process of the Arbitral proceedings. That the serious irregularity requirement was a "high threshold" and to meet the requirements for substantial injustice under section 68(2)(d) the applicant/ petition needs to show that his position on that

issue was "reasonably arguable" and had the tribunal found in his favour, the Tribunal might well have reached a different outcome in the award Mr. Mbwambo insisted that the irregularities pointed at in the petition are fatal. Ms Gervas has failed to address them adequately. He also contended that the cases cited by Ms Gervas are no longer good laws as they are not in line with the new Arbitration Act, 2020. Before embarking on the discussion on the merits of this petition, I wish to point out that the advent of the Arbitration Act 2020 and its regulations (the Arbitration Rules of Procedure) Regulations 2021, has not changed the general rule as far as petitions for challenging registration of Arbitral Award are concerned that is, a petition challenging the registration of an Award as a Court decree is not an appeal and should not be an appeal in disguise. I am of a settled legal opinion that the position of the law pronounced in io the previous court decisions prior to the enactment of the new Arbitration Act, 2020 is still applicable to date as it carries one of the important rule on the finality of an Arbitral Award, that is, it is not appealable. There are plethora of decisions on the position of the law I have stated herein above. For instance, in the case of D.B Shapriya and Co Ltd Vs Bish International Bv (2) 2003 E.A 2002 the court said the following; 'Courts cannot

interfere with the findings of the fact by the arbitrator. A mistake of fact or law is not a ground for setting aside or remitting an award for further consideration on the ground of misconduct. The court's intervention is limited to errors of law which are apparent on the face of the award. It is only when an erroneous proposition of law is stated in an award and forms the basis of that award that a court can set aside the award or remit it' (Emphasis added) The complaints raised by the petitioner are based on the provisions of section 70(1), (2)(d) and (i) of the Arbitration Act, 2020. For ease of understanding let me reproduce them here under S.70(l)(2)(d)(i) (1) A party to arbitral proceedings may, upon notice to the other parties and to the arbitral tribunal, apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the arbitral tribunal, the proceedings or the award. (2)For the purpose of this section, "serious irregularity" means an irregularity of one or more of the following kinds which the court ii considers has caused or is likely to cause substantial injustice to the applicant. (d) Failure by the arbitral tribunal to deal with all the issues that were raised before it. (i) Any irregularity in the conduct of the proceedings or 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". Upon perusing the Arbitral Award, I have noted that the sole Arbitrator dealt with all concerns/arguments that were raised by the parties including the issues that were framed by Arbitral Tribunal. The Arbitrator dealt with each issue at length. However, he misapplied the law as I will elaborate hereunder. In his analysis of the evidence adduced the Arbitrator made the following findings; "In any event, while it is true that, the Claimant has not addressed the Arbitral Tribunal on how it arrived at the figure of TZS 28,721,950/= I must also say that, I have failed to get sufficient explanation and/or grasp the necessary information required from the download report produced by the respondent as attached to Annexure C-12 to enable me have an understanding on the amount payable and eventually make an informed decision........ On the basis of the above analysis, coupled with the authorities cited. I am inclined to hold that, despite failure by the claimant to specifically prove his claim by particularizing 12 the amount of TZS 28,721,950/= I am satisfied of the relief pleaded as there is no shadow of doubt that the service was utilized. In that respect, the claimant is hereby awarded a sum of TZS 28,721,950/= with interest at a commercial rate per annum

as determined in published bank of Tanzania rates from the date of default, that is $h February, 2017 to the date of Statement of Claim, i.e 2$h September, 2018". (Emphasis is added) Relying on the decision of the Court of Appeal in the case of Zuberi Augustino (supra), the Arbitrator granted the said claim for TZS 28,721,950/=. As regards the claim for general damages the Arbitrator made the following findings; "In any event, much as the Claimant has succeeded to prove its case, again as in (1) above, lam inclined to agree with the respondent's submission that the relief sought is in the nature of special damages, and indeed it is trite law that special damages must be specifically pleaded and strictly proved. 45 In the instant case, I do not think that the claimant's claim was sufficiently proved by specifically particularizing the damage. It would appear that this has been left to the Arbitral Tribunal to speculate, as rightly submitted by the respondent that, even the claimant appears not to be sure of the amount claimed given the inconsistence on the figures of TZS. 591,152,940.00 and TZS 571,012,500.00. 46 .............. The above notwithstanding, the fact still remains that the claimant has suffered loss of business as a result of respondent's conduct post 13 termination, and as of right, should be entitled to some relief. The claimant refers the Arbitral Tribunal to

section 73-75 of the Law of Contract Act 47 where in essence, provides that, the party who suffers from a contract that has been broken is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him. On the same vein, the aggrieved party can claim damages as a matter of right but the court has the discretion in determining the quantum of damages; In exercising its discretion, in Zuberi Augustino vs Anicet Mugabe (supra) the court made a decision to award damages to the respondent despite failure to specifically prove his claims. Also, in Dixon V Deveridhe 49 if the loss was not sufficiently proved the only damages that can be awarded would have been nominal ............ Considering the above authorities, and in all fairness, I consider the award of Tanzanian Shillings Seventy Million only (TZS 70,000,000/=) as nominal damages for loss of business arising from the respondent's breach of its post contractual obligations" (emphasis is added) At the end the Arbitrator granted an award of nominal damages to a tune of Tshs 70,000,000/=. From the findings of the Arbitrator quoted herein above, it is obvious that the Arbitrator granted the Award of Tshs 70,000,000/= and Tshs 28,721,950/= basing on the reasoning and holding of the Court of Appeal in the case of Zuberi Augustino ( Supra).With due respect to the Arbitrator, in my

considered view, he misapplied the aforesaid case, since the facts and scenario in that case are quite different from the facts that were before him. In the case of Zuberi Augustino, 14 there were facts which were obvious and no disputed, that is why the Court of Appeal upheld the decision of the High Court. For easy of understanding let me reproduce the relevant part of the decision of the Court of Appeal hereunder; "It is trite law and we need not to cite any authority, that special damages must be specifically pleaded and proved. Cost of repair was pleaded but not proved. The respondent merely stated it to be Shs 500,000/=. However, the learned trial Judge was satisfied that the engine of the bus was completely blown off and is in fact beyond repair. It is notorious fact that prices are rising in astronomic proportions and that the amount pleaded cannot even buy a reconditioned engine. So though repair costs have not been specifically proved we allow the amount pleaded" (Emphasis is added) Without prejudice to my findings herein above, it has to be noted that the petitioner's complaints on some of the exhibits admitted in evidence as well as the application on the general principles of the law on burden of proof and assessment of costs are matters pertaining to the analysis of the evidence and the Arbitrator's assessment of the weight of evidence presented before him. These

are matters which cannot be termed as "irregularities" as envisaged in the provisions of S. 70(2)(i) of the Arbitration Act 2020 as they have nothing to do with the conduct of the proceeding. These complaints are directly leveled against the Arbitrator's reasoning and analysis of the evidence which this court cannot interfere as doing so will be turning this petition into an appeal which is not correct. 15 From the forgoing and on the strength of the decision of the Court in the case of D.B Shapriya and Co Ltd, (Supra),since the error of the law I have pointed out herein above is apparent on the face of the record and it forms the basis of granting the award for nominal damages (Tshs 70,000,000/=) and specific damages (Tshs 28,721,950/=), I hereby grant this application to the extent explained herein above and remit the final Award for the Arbitrator to do the following; i. To reconsider the claim of special damages of Tshs. 28,721,950/= according to the law and principles governing proof of special damages. ii. To reconsider the award for nominal damages to a tune of Tshs 70,000,000/= according to the law 16