19920112 TZHC Dar es Salaam

IH TI-IE HIGr~: CbU~:.T QF '?AiT~AITiA ~~~------ A7 DJ1H 28 SAL/.AE CVL ds; Ho. 105 C? 1992 IHGRA EiTGilT~ED.II-JG & COiTS?:1 •CO. LTj ~ ~ • ~APcLICANT vei-sus 1 • H:iiTIOl'JAL DEVELOPN::1:IJT CO:J.F • 2 • ITATIOHJl.L 3Ji.HIC OF CCiti1'1EIWZ •• •. • • • 4 ~ •• R::CS?OHDEHTS RU,L]HG Thin is an ap1')lidation :f6:t oi"'der:::; -bl1.at the defendants be given leave to.ap:Jear and defend. the suit; that the prdceedings be stayed pending arbitration proceedings a;:1d conts he provided for ·_;he application is supported by 2 affidavits sworn by troico ancl Hunt~obe- respectively. The argument put :fo!"1-·rard by Nr. Eihayo, learned counsel to the applicants/de:fendants in that the eoven1.ment of Tanzania should iJe made a party to theOe proceedings because it ~rit¢cl ~- th.r,ep~ynient of the loan. I4r, riihayo went on to argue that /. \ according to l~rticle ·. 6. of the agreement any dispute O'.~ conz.:broyersy should be finally and exclusively settled by 3 arbitratorn. He submitted that tho present suit was bef'ore the court prematurely and that a stay o:t tho suit should be granted pending arbitration. Mr. Hihayo 1-1e11.t on to submit on the. ,,- nature o:t the dis:;_)ute as being non payr::ent of' the promissory / notes on ti1:1e and concluded that the issues were of' mixed f'aots and law and, therefore sqt1ar0.l:y f'ollil.1.g Ui-"1.der the Arbitration Ordinance Cap 15, He

:ro:t~C-. to Civil Appeal Ho 2.3 of 19831/CEB ,h.,t.sl.•-Y-•.JiUDi2CO(ijl3£0POrted) in support of his argument• .·- Finally, 11.e sub1:1i tted that even if this o 8 se which was filed under Order 35 wore to J>;oooo6C.. since the summons served on th.e defendants was not a sul:.r.1ons under Orcl0r 3.5 rule 2 ( 1), but- one under Order .5 Rule I and 2., the matter oould not ~ d , . He prayed for tho orders sought :ln. the Chaobe.t" app;l.ioat:lon. 2 .tn reply, Mr. Ngalo, l0arn0d oounsel :for the respondent/plaintif'f said with regard to the sunr.1ons ,issued that 1filis was a J?l"ococrura.l rotter anc1. tlmt in o.:ny co.so the a.p1,licant ho.d alrd?,dy o.o'fted c,s if the sur.1nons was unc.or 01"c:.0!' 35 o.nc1. no r>rojuc1.ico oodstcd on l.he 'Part of the llJ?J?licant tltrO\l,Gh tl:.o issuo of tho wronc SUI.IDons. Ile wont on to subnit tl:..at tLo o.!)plica.tion ha.cl iiwo linbs. The first linb, ho saic.l, was the O..l)vlioation for leave to c1.ofonclo Ile sn.ic1 that in arclor to sucococ. in t1.is tho a])plicr,nt !:.o..cl to show lc,ck of consiclerntion. Ile subnittoc:. th2.t in this co.so tl:.o O:.Q?licnnt was not sa,yil'l[,' that tl::.ero wns no consic:..ora.tion. Mr. Nco.lo scic.l tha.t ifu.o O.J.)pliccnt wo.s roqu:i.rcC. in tho o.l term tivo to show fn.ots which tho covi"t woulc1. c.oon su;CTiciont to c;ra.nt leave to dcfonc.1, which woulcl l:.0,vo to 1:io trio.1Jlo issues.

Ilo roforrccl i;o J3cnk v City of Lori'. on,.f197j W L R 149 o.ncl '[f9Tf/ 1 }Jit·If-541 Which he so.ic.l hole. thot even where fi"ml('l. is ::i.lloc,-od, tlmt woulcl not stop o. court t!t'oo civil"'-C juc\snont o.s 1011c as tho J.)l'onisso:ey notes wore c;:i.von in ,eoocl faith n.nci_ for vnlv.c. Tio o.lso :rofori~oc1 to tho ca.so of Elizr,both Y~nilo. v 11.oir Molumcd. Mora.li {:r96ef[ E.1~. 411, whicl:. doo,ls with r. coot clofonco on nori'j:s• Ile suboittod tho.t tho a.:pvli02,rrt wo..s not puttiric cmythinc a.s a. trinblo issuo for 'WhioE there wc.s n coocl clofenco o..nt tl:o,t 100-vo to c1.efom1 sJ::oulcl thc.rcforo not bo c;rn.ntocl. 1Tith roco..rci_ to the question of ClI'bitrntion, ]tL·• Ucnlo suboiti;ed tl:a.t nn-nIJJ?licntion for sia.y Done.inc c.rbitra.tion m1de~ section 6 of tho iu'bitrc:.tion Orclinrmco, h...1.d. to bo nD..<.lo by wo.,y of 11 potition end tho,t since this wns not c:.0110, tl:.o a.:i;iplicction before tl::c court wo,s clofootivo, Uith rocnr'1 to tho c..rcunont tl1c.t tl:.o covorru:.1ont wo,s n. c,iJD.rnntor, Mr. Ne,nlo s1.ibr..uttoc. tl:.nt tho covornnont wn.s not tho e,-u..'\.i.~cmto.:r of i;hc pronissory notes. Ilo nls.o su1.mittoc1. tl:c.t tl:o o.o;-conont wns not r,p11l.icnblc any loneor nnc.l thc.t thP"fC .ms no clisl)V.to oy~ t2·10 0voonont or over c,nythine but ;!;hat there wn.s eir1J?lY n. fa.il'l.l.ro to l)O.Y c.uo to lo.ck of func.113 on

>tho pa.rt of tl:.o o.prlicc.rtt whiol:. cou.lc1. not 110 tornocl n c:is:,--utc since it 1'/'C.6 r.10:r.o irobility-1 Ile snicl, tlmt in order fo:c tl:.c court to C5:Cc1..cr n. str,y of tl:.o 1>rocooc.inc:,'St ,it IJU$t be sct!sfiocl tl:.nt there is c, os:;_mto unc.er tho cont:rn.c~. Ile distincuishod tho facts of tl~s ca.so fron those in t~:o SIJD:;JCO cc.so citoi:1 p.bovo on tho ;i.ssuo of a. clis:IJlltO unc1..or tho oontro.ct. IIo scic.1.. tl::o.t in tho su:or,co caoo ~t.i.0ro '\-70.S o. c:.isj)Uto unc.1or tho oont..i:'u.ot but ·not ho:i.,o, cmc1. th..--,t own the $31).it wcs p.ot broucht tU'l.C..Ol' tl.:.o c-"tr;roonont tut unc:.ci~ e, r>rooissort not.est•• ·rrc pJ:C,yod far c:..i.srJ.isen.1 of "il::o c11plicntion r-:.nc. £or ju.C.o.1ont f.ol' tJ.:.o riJ.c.int.iff, ~,..,.,,..... "'.~"'VJ.. ·.,'11"" ,'<('~':f-'· . ~--- " . ; " 3 In roJ.)ly to t:.10 a.bovo, Mre1 Mi.l:c,yo fo.-r t1-,_o cpplicrurb subm.ttod th6.t tho nJ_):;)lioo,tion wc,s for s-uny of the c,~so c,ncl not nn aJ_)plicntion fo'I! arbit:;:-ation. IIo wont on to EJtv,to that lon,vo to dcfoncl which wc.s 1Joinc l)l'c,yoc1 for wr,s 102,vo to 1:,o 2,1:,lc to s,.-:.y soooth:!..11£; in 001.u-t such ns non-joinc:.m:', stcy of l)l'ocooc1..incs. IIo o,lso subm:ttoc1.. tl:a.t there wns ccrto.inly a. c:.isl,uto boco..wo tho tine i;c,;Jlo for J;)l1yncnt heel not boon honoured whicl~ onn l:)o se,ic7.. to to wLc,t is

o:rrvisccoc1. in rule 3 of Ore.or 35 which tclks of "such fo..cts c,s tl::o oom•t would cloon sufficient to SUj_)pco,t· tho al)plico,tion. 11 Tio sc,ic1.. tLc..t it wns not nocossc.ry tha;tt thoro ore tri...iblo issues on.Iyo Fimlly with roo::·,1•cl to oxbit:ra.tion, Mi."• Mihnyo subIJittod tho,t sinoo tho }.)urtios ho..c1 stibnittca. thoosolvos to a.rbitrntion they o.ro bounc1 1Jy their o.ei:-oornnt. I will 1)oc;in wi tL tho q,:;_,lioa.tion for leave to clofoncl. Suonons to tl:o clofoncu::.nts/C:.Ql)lico.nts wc,o not iosuoc1. unc7-or Cl'c.01.• 35 of tho Civil Prococlm•o Coclo ln.1t tho n}l,_;licc,nts L:wo o,ctoc1. oo if t:'::.oro wns such n sunqo~ 1)y sookinc..,' J..oe,vo to clofoncl. I c,c;c-oo with l:11':r o ncclo t1J;;-,,t no J_lt'ojuclico on tho lXJ,:i.--t of tho q·}:::1io0,nts exists 1Jooa,uso of tl:.o issv.o of tho w:rone surJD.ons ';:occ.1..wo tl:o o,:p~liodriis unc1orstoocl tho surJr.1011.S to 1~oquiro then to sock loc,vo to c1ofonci... l'i.S for tl:o nOJ:'i ts of tho o..:;;rrlico..tion for locvo to dofoncl, I a{;o,in o,c;coo with Mr. Hcnlo thc.t thoro iG nbsolutoly no trw'blo rule 3, uo...~o tho coort cot l)y civine locvo to clofoncl, Ho fo,ciis l~cw boon c.isolosoc1 in tLis c.p:)licntion whieh woulcl □c.ko it i11o't,1J.'J1Jont on tho rosl)onclont to ]_)rovd consic.orc.tion, ror cloos tho V..J?}.)lion,tion clisclosc such fa.ots c,s tho court woulc1 c7.oon s-uffioiont

to st.11?}.)~ii tho a.11:Dlic..--rbion. Tho question of no-.joinc.7.or of tho (:,'017'01"11rJOnt cloos not :foll within t1ic ~ of rule 3 of Crc1..or 35., Ls pointoc1 out 1)y Mro Ngclo, whet is in issue in this ca.co io fdluro on tho }?::::.rt of tho a.p1Jliocnt-s to l)ey" tho l)l'Oo.isa~ notes e,s t!. .oy bodr,i]O C.uo boocuso of lc,ck of func".B. 1 Tho1"0 is no dispu:t.o wor tho cont:,:,o,ct or c..c;roor.1ont. TLoi-o is in fo..ot no dis:;,.m:to ~t ru.l. The DODC!C'0,11.el1..1D of unc:.oroto,nc1inc (c.nnoxtm"o C1) oloo..rly sl:mm that tho ~ / cp:pli.cc.:rrts c.J.1c7. tho roo1)onc1or,;.ts WOl'O tryinc; to finc1.. wcys of how bosil. tto a.111)licc.,nts coulc. ~Y t2.c rocj_)onc.'.cnto in orC:.Ol~ to liq1,uJ:,....,_,tn tho debt. Tho applicGtion uoos not c1sclooo sucr-~ects o.s voul~ nrJ(o t:~o court civc lonva to t1.ofonc1.. °:)occuso tbm.·o is notLinc to c1..ofonc'l.• Tho next point is tho c.'.l)})lioo,tion of tho c,:;:;})lico,nt.. to tho ~.JtiQ. ooko tl-,_o covornnont of tl:.o Uni tod J.opublic of Tonzc.nin. n ~ t.o tho J)I'Ooooc'j.11(;1:l 1:,ooa.uso it e,ucr2-n-toocl tl::o :-.:-o:.'IDiYUont of t::.o 100,110 Mr. Ncalo xc.11liocl tllC1i i:l10 {;OVOI"nnont wn.s J'.l.ot r:-. ~nn:f:;w -0:f tl:,o 1~~ :oo1t.os. - r 4 A lock at the guarantee by the goverrment shows that the goverr..::1ent is actually a guarantor eve1: of' the promissory notes as paragraph ( 1) (b} o:f t::e gu2.rantee by

the governr:ient sho,·rs o But tho r0si.)011de:nt ha",: no obligation to sue the goverm:iento Ee hos chooen to sw~ the applicants and he cannot be forced or ~,:,equired to r,1x. tj:.e government as ·uell. Indeed, i t is coi:~1:1O11 10.1owl0dgc th:-.tt the government can only be sued after the requiai-bo cbn"lo:Itt ~·.as been given by the Hi..."1.ister responsible for legal ,:fi"airo, Finally, with reg&rd to th·) prayer i'o:;. stay of proceedings 1 pending reference of' the 1:1atte~.'."' to ar1)itr,;,tors,. againiagree with l1tt Hga.lo that thoro is no diop-~te on the r·;ui t based on the agreem0nto There is si::;iply in-"'.bility to :,)ay in satisfaction of the promissory notoo duo :for p.--y:1e:;:1t. Thr. 1:iemorandum of' Understanding (am1.0xture CI) a~.: eady show::: that there is no 1 dispute c,oncern.ing the agraez:1311-l:; or anyti:::.i·.1.g else but that there is oi.oply a.failure to pay o:n the part of' th0 first de:fendant because of lack of f'utds o The ::1x•o1:1issory :10t0s were endorsed by th0 second defendant the Hation~l Ba.r...:.c of Uom."Tierceo Indeed Mr Hihayo did not indica tc no:r havo t:1.e affid, vi ts indicated any dispute in the agreer.1ent which ought to be ref'0rr0d to arbitration. I ar,1 sa:tisfied in this cnso in -:·:ori:1s of s.ec /;ion 6 of' the Arbitration Ordin~mce that there is suf':ficinnt reason why th0 matter should not be r0forred to

arbitrationo Indeed it would. be a wast0 of money and time to refer thi::. r.1atter tc nr0itrc:i.tion which would have to be held in Zurich Switzerland by a panel o:f three arbitrators when th0re is really nothing to arbitrate upon. For the above reasono t2e apylication is disraissed in toto with oosts. Judgr:1ent i::. hereby cnte:.."GCL in :favour o:~· the plaintiff' as Or C.OJ:' pruyed. in th0 plaint under /·35 rule 2(2)(a.). J·unGE 12.1 .. 92 Hr 1-'iihayo for applicant Hr. Hihayo/Hgalo for responclent.