gaming management t ltd vs gaming board of t 2005 tzhccomd 40 19 october 2005

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION)

AT PAR ES SALAAM COMMERCIAL CASE NO. 92 OF 2005 GAMING MANAGEMENT (T) LTD............ PLAINTIFF/RESPONDENT

VERSUS GAMING BOARD OF TANZANIA............DEFEN DANT/APPLICANT Counsel: Dr. Mapunda for Respondent Mr. Kisusi for Applicant

RULING BWANA, J, 1. The Applicant herein has filed an application for stay of proceedings pending reference to arbitration. The provisions of Section 6 of The Arbitration Ordinance, Cap. 15 (read together with R.5 of the Arbitration Rules) are relied upon. This application is supported by an affidavit of one Mr. Charles Ezekiel Linhenge, a Chief Inspector of the Applicant.

2. The main suit is a product of an agreement between the two parties hereto to operate a National Lottery. Under that agreement, as stated in para 6 of the plaint filed by the Respondent:- "It was an implied term of the licence and of the Agreement and understood as such by both the plaintiff and the 1 defendant, that the plaintiff would have the right to the exclusion of any other person or company to run the national lottery throughout mainland Tanzania." Paragraph 27.2 of the Agreement makes reference to arbitration in case of dispute. It provides: "Should amicable settlement in clause 27.1 fail to be achieved within thirty days, the dispute shall be referred to arbitration in accordance with the provisions of the Arbitration Ordinance, Cap 15 of the laws of Tanzania." A dispute has arisen between the parties. While the Plaintiff has filed the main suit to that effect, the Defendant requests this court to order stay of those proceedings and refer the dispute to arbitration as provided for in para 27.2 of the Agreement (supra) and as required under Section 6 of Cap 25.

3. When this matter came before me Mr. Kisusi did raise the necessary caution that his presence in court should not be considered as taking any other steps in the proceedings as he had not filed a written statement of defence. Mr. Kisusi was correct in entering appearance on behalf of his client but raising the necessary caution.

4. It is not in dispute that this court is competent to try either the main suit or to consider this application. The issue is, however, whether the Respondent can ignore submission to arbitration and instead, file the instant suit. The Court of Appeal of Tanzania stated emphatically (in the case of Construction Engineers and Builders Ltd Vs. Sugar Development Corporation 1983 - TLR - 13) thus:- 2 " (i) Where proceedings are instituted by one of the parties to a contract containing an arbitration clause and the other party, acting pursuant to the arbitration clause, applies for stay of proceedings, the court has to decide the precise nature of the dispute and whether the dispute falls within the terms of the arbitration clause..." (ii) Where it is clear that the parties to a contract have agreed to submit all their disputes or differences arising under the contract to an arbitrator, the dispute must go to arbitration unless there is good reason to justify the court to override the agreement of the parties..." The immediate issue for determination is whether the present application falls within the perimeters of the principles stated in the Sugar Development Corp. Case (supra). This court has to decide firstly, the precise nature of the dispute and secondly, whether the said dispute falls within the terms of the arbitration clause.

5. I must thank both Counsel for eloquently expounding on both issues in their well researched submissions. According to me, section 6 of Cap. 15 provides the required guidance. That section states: "Where any party to a submission to which this part applies, or any person claiming under him, commences any legal proceedings against any other party to the submission or any person claiming under him, in respect of any matter agreed to be referred any person to such proceedings may, at any time after appearance and before filing a Written Statement of Defence, or taking any other steps in the proceedings and the 3 Court is satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission and that the Applicant was, at the time when proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings..." From the provisions of Section 6, it is clear that the following matters have to be considered by the court:- 5.1 What is the precise nature of the dispute, which has arisen (cfr. The Sugar Development Corp, case - supra) 5.2 Whether the dispute is one within the terms of the arbitration clause (cfr. Idem). 5.3 Whether the matter was one which both parties agreed to be referred to arbitration. 5.4 Whether the applicant filed his

application within the prescribed period - that is, after entering appearance but before filing a WSD or taking any other steps in the proceedings. 5.5 Whether there is sufficient reason to stay the proceedings and refer (or not refer) the matter to arbitration. 5.6 Whether at the time the proceedings commenced the applicant was and remains willing to do all things necessary to the proper conduct of arbitration. 4 It should equally be noted that the power to refer the matter to arbitration is discretionary on the part of the Court. Therefore 5.1 to 5.6 above do not automatically bind the court to refer the matter to arbitration. As Kyando J, (as he then was) did state in the case of Vocational Education Training Authority (VETA) vs Ghana Building Contractors and Another (High Court Civil Case No. 198/95, Dar es Salaam Registry, unreported): "Nor do I think that the existence of a conflict leading up to commencement of legal proceedings between parties to a contract containing an arbitration clause automatically raise the implication that there is a dispute or difference between them which must be referred to arbitration and cause those proceedings to be stayed pending arbitration...the court can only order stay of proceedings if it is satisfied inter alia that there is not sufficient reason why the matter should not be referred in accordance with a submission..." In another

case (East African Breweries Ltd Vs. G.M.M. Coy Ltd. High Court Civil Case No. 67 of 1999 Mwanza Registry, unreported) Mrosso J. (as he then was) clearly stated that inclusion into an Agreement, of a clause for reference to arbitration, does not oust the jurisdiction of the court. It only provides a step earlier before coming to court in case arbitration fails. Any ouster is against public policy. As such, such a clause is null and void ab initio.

6. Perusing through the application, I am satisfied, as stated earlier, that the Applicant has complied with no. 5.4 above. The rest need the determination of this court. My immediate response to 5.1 and 5.2 above is that the precise nature of the dispute that has arisen is the interpretation of the provisions of Section 41 and 70 of the Gaming Act, 2003. These, in turn are legal issues which can better be determined by a 5 Court of law and not "through amicable agreement" as stated in clause 27.1 of the Agreement. I do note that in the pleadings the Respondent does claim that Selcom contravenes Section 70 of the Act to the extent that it invites children to participate in gaming activities thus making it illegal and contrary to public policy. If these allegations were to be held affirmatively then it can be stated here that arbitration does not legalise what is illegal and contrary to public policy. That is the role of the Court to determine what is legal (or illegal).

7. As regards 5.3 above, it is my considered view that the provisions of the Agreement are not sufficiently clear as to whether (or not) the parties should submit to arbitration matters of legal nature. As such, I do not see the basis or sufficient reason to refer the matter to arbitration. Whether the Applicant remains willing to do all things necessary to the proper conduct of arbitration is hotly disputed. Several documents are relied upon in support of the Respondent's averment that the Applicant has always been negative when it comes to discuss settlement of their dispute by way of arbitration. Perusing through those documents, I am inclined to concur with the Respondent's averments.

8. All in all considered I am of the view that there is no sufficient reason to refer the matter to arbitration. This application for stay of proceedings pending submission to arbitration therefore, fails. It is dismissed. 6