METL

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES SALAAM MISCELLANEOUS COMMERCIAL APPLICATION NO. 022358 OF 2024 METL MOTORS LIMITED................................................................. APPLICANT VERSUS CHINA DONGFENG MOTOR INDUSTRY IMPORT AND EXPORT CO. LIMITED........................................... RESPONDENT RULING Date of Last Order: 19/09/2024 Date of Ruling: 19/09/2024 GONZI, J. Under section 2(3) of the Judicature and Application of Laws Act, CAP 358 (RE 2019) read together with Section 95 of the Civil Procedure Code, CAP 33 (RE 2022), the Applicant prayed for Orders that: Exparte: 1. This Honourable Court be pleased to grant an order that, pending the determination of the application interpartes, the respondent, its agents, contractors, assignees, workmen, employees or whomsoever purporting to act for/on behalf of the Respondent, or any individual or company within the territory of Tanzania other than the Applicant, be 1 restrained from importing trucks, trailers, spare parts, oil, lubricants any other product manufactured by the Respondent and in the brand name of Dongfeng and from persisting in any such breach, pursuant to the Applicant’s legal notice of intention to initiate arbitral proceedings dated 2nd September 2024. Inter Partes: 1. This Honourable Court be pleased to grant an order that the respondent, its agents, contractors, assignees, workmen,employees or whomsoever purporting to act for/on behalf of the Respondent, or any individual or company within the territory of Tanzania other than the Applicant, be restrained from importing trucks, trailers, spare parts, oil, lubricants any other product manufactured by the Respondent and in the brand name of Dongfeng and from persisting in any such breach, pursuant to Final determination of Arbitral proceedings by CIETEC- Beijing pursuant to legal notice dated 2nd September 2024. 2. Any other reliefs which this Honourable Court may deem fit to grant. 3. Costs of this application to be provided for. 2 The Application was supported by an affidavit of Mohamed Anwar Rashid, Principal Officer of the Applicant Company. In the affidavit, it was stated that under the Distributorship Agreement signed on 15th July 2022 between the Respondent and Glenrich Transportation Co. Limited, the said Glenrich Transportation Co. Limited was given sole distributorship rights to distribute Dongfeng Trucks and provide after sale services and spare parts for Dongfeng trucks in Tanzania. It was stated that on 6th January 2023, the Applicant entered into an addendum No.2 with the Respondent and Glenrich Transportation Co. Limited with a tripartite binding nature upon which it was agreed that the Applicant had effectively replaced the said Glenrich Transportation Co. Limited in the exclusive Distribution Agreement and addendum No.1. The Respondent agreed to give exclusivity distributorship to the Applicant as a successor to Glenrich Transportation Co. Limited and agreed not to appoint any other company, entity, individual, firm etc in Tanzania to sell, distribute and provide spares and maintenance services. It was stated that in violation of the Distributorship Agreement and its addenda thereto, the Respondent made direct sale to a third party namely Sunshine Transportation Limited without informing the Applicant or routing the customer through the Applicant. Also, it was stated that the Respondent has 3 incorporated a subsidiary company in Tanzania known as Dongfeng (Tanzania) Zhaohong Automobile Sales and Service Center Limited, in breach of the Exclusivity and Distributorship Agreement. It was alleged that the breaches prevented the Applicant from reaching the agreed annual targets of distribution of the Respondent’s products and that, on the basis whereof, the Respondent went ahead to issue a Notice of Terminating the Distributorship Agreement on 3rd September 2024. The reasons and grounds for the intended termination of the Agreement by the Respondent are the alleged failures by the Applicant to reach the agreed annual targets under the distribution agreement. Meanwhile, the Applicant, on 2nd September 2024 wrote a legal notice of intention to initiate arbitral proceedings at the China International Economic and Trade Arbitration Commission (CIETAC) in Beijing, China. The Applicant intimated to institute the said arbitral proceedings against the Respondent to claim damages for breach of contract. Pending the institution of the intended arbitral proceedings in CIETAC, the Applicant filed the present application under certificate of extreme urgency. On 9th September 2024, the Court directed the Applicant to effect service of the Application immediately upon the Respondent hence serve the 4 respondent with the Initial Order, Chamber Summons and Affidavit supporting the Application. In the Initial Order, the Respondent was given 7 days to file a counter affidavit. The case was fixed for necessary orders on 17th September 2024. On 17th September 2024, Mr. Dismas Raphael, Learned Advocate, appeared for the Applicant. The Respondent had not filed a counter affidavit and did not appear. Mr. Raphael, Learned Advocate, addressed the Court that the Applicant had complied with the court’s initial orders and had already effected service by sending the Respondent the Initial Order of the Court, the Chamber Summons and Affidavit. He submitted that they had served the Respondent vide the Respondent’s known E-mail addresses which were ordinarily used in their correspondences with the Applicant in the ordinary course of their business transactions with the Applicant. He submitted that the Applicant had filed in Court an affidavit of service upon the Respondent to that effect. Mr. Raphael, Learned Advocate, proceeded to make submissions in respect of the application at hand. He submitted that they have brought an exparte application for injunctive orders praying that pending the determination of the application interpartes, the Respondent, its agents, contractors, assignees, workmen, employees, or whomsoever is purporting to act for or 5 on behalf of the Respondent being any individual or company within the territory of Tanzania, be restrained from importing trucks, trailers, spare arts, oil, lubricants or any other product manufactured by the Respondent in the brand name of DongFeng and from persisting with any such breach pursuant to the Applicant's Legal Notice of intention to initiate arbitral proceedings dated the 2nd September 2024. He submitted that as the Respondent has not filed a counter affidavit, this application be granted exparte pending hearing and determination of the same application interpartes. In the course of preparing the Ruling the court entertained doubts as to the jurisdiction of the court and the propriety of this court taking cognizance of the present application. Whereas according to annexture D-8 to the affidavit the intended arbitration is envisaged to be instituted in CIETAC, Beijing, China under the Rules of Procedure of CIETAC and the national courts with supervisory jurisdiction, therefore, being those of China, this application has been filed in this court in Tanzania. Does this Court have the requisite Jurisdiction? Is it proper for the court to take cognizance of the matter? On 19th September 2024, the date the matter was set for Ruling, the Court reserved its Ruling and called upon the learned Counsel for the Applicant to address the Court on the issues raised by the Court suo motu as to whether 6 or not the court has jurisdiction to entertain the application. When that question was put to Mr. Dismas Raphael, Learned Advocate, he responded that this court has unlimited jurisdiction and that there is an exclusivity agreement (Annextures DA1 and DA 3 to the affidavit) signed by parties herein where the Applicant has exclusive right to distribute the products produced under the Dongfeng brand of the Respondent. He submitted that in the exclusivity contract, there is a clause where the parties have agreed that they may seek the assistance of ordinary courts in either country in respect of interim measures and issues. He submitted that the business and activities under the agreement are conducted in Tanzania, therefore, it is presumable that all interim issues in dispute will be dealt with by the Courts of Tanzania. Mr.Raphael, Learned Counsel, also invited the Court to look at Annexture DA 2 to the affidavit that also constitutes an exclusivity agreement. He argued that under the agreements, the jurisdiction of Tanzanian Courts in interim matters like injunction is recognized. He submitted that this court has jurisdiction and it is the only court that can issue the interim orders so long as the breach is being committed in Tanzania. 7 I must say that the jurisdictional doubt expressed by the Court was reasonable and necessary. To borrow the words of Hon. Mwambegele, J. (as he then was), in Symbion Power LLC vs Salem Construction Ltd , in (Misc. Commercial Cause No. 26 of 2016) [2016] TZHCComD 2146 (30 June 2016): To me, the question of jurisdiction is the biggest of all deals at this stage. I cannot virtually proceed to legally do or say anything before I am assured of my powers so to do. As was held by the Court of Appeal in Nicomedes Kajungu & 1374 Others Vs Bulyankulu Gold Mine (T) LTD Civil Appeal No. 110 of 2008 (unreported), it is the duty of the Court to satisfy itself that it is properly seized or vested with the requisite jurisdiction to hear and determine a matter. It is a well settled principle that a question of jurisdiction goes to the root of determination, stressed the court of Appeal. I fully subscribe to the above words. I raised the question of jurisdiction of the Court suo motu in order to satisfy myself on the jurisdiction of this court. The Distribution Agreement, Annexture DA-2 to the Affidavit, provides under Clause 27 titled “Governing Law and Dispute,” that: 8 The Agreement shall be governed by and construed in accordance with China substantive law regardless of the conflict of law rules. Any dispute, controversy or claim arising out of or in connection with this Agreement, or the breach, termination or invalidity thereof, shall be finally settled by arbitration in accordance with the Arbitration Rules of the China International Trade and Economy Arbitration Committee. The parties agree to exclude any right of application or appeal to the courts with respect to an award by said arbitral tribunal. The language of the arbitral proceeding shall be English Language. The place of arbitration shall be Beijing, P.R.China. Notwithstanding the above, may at the discretion of each, institute proceedings before any court of general or special jurisdiction or before any other judicial body of competent jurisdiction in matters relating to the protection and enforcement of ownership rights in compliance with the Agreement and of intellectual property rights, including but not limited to trademarks, company names, trade names and domain names, and may also seek preliminary injunctive relief to secure their such rights. (Underlining supplied for emphasis) 9 Despite the above clause, it is clear that the parties reserved their right to approach the competent courts for interim reliefs for the purpose of or pending the arbitration process. That is a normal legal framework under arbitration law for the courts to facilitate the arbitral tribunals. The Arbitration Act, CAP 15 of the Laws of Tanzania (R.E 2020) also provides: Section 51.-(1) Unless otherwise agreed by the parties, the court shall, for the purposes of and in relation to arbitral proceedings, have the same power to make orders on matters provided for under subsection (2). (2) The matters referred to under subsection (1) shall include- (e) the granting of an interim injunction or the appointment of a receiver. (3) Where the case is one of urgency, the court may, on the application of a party or proposed party to the arbitral proceedings, make such orders as it thinks necessary for the purpose of preserving evidence or assets. Therefore, there is no doubt that the ordinary Courts have jurisdiction and mandate to determine applications in respect of interim reliefs “for the purposes of and in relation to” arbitral proceedings. The words “for the purposes of” arbitral proceedings mean that the interim reliefs may be 10 sought by parties to an arbitration agreement before the ordinary courts even prior to the institution of the arbitration proceedings. In the persuasive case of Siskina (Owners’ of Cargo lately laden on board M V. Distos Compania Naviera S.A. [1979] AC 210, it was held at page 407 that: “It follows in my view, that the Court has power to grant a mareva injunction for the purpose of and in relation to an Arbitration which has not yet been commenced, and to do so subject to a term proving for arbitration to be commenced within a specified time, together with such other terms, as it thinks fit”. In the present case, there is no arbitration which has commenced yet. There is a Notice issued by the Applicant to the Respondent but not copied to the Arbitral Tribunal showing the Applicant’s intention to commence arbitration proceedings under the CIETAC in Beijing, China. Equally, there is no suit filed in any court as regards the subject matters in dispute since the filing of a suit would violate the arbitration agreement between the parties. Hence, the injunction sought in this application is in the nature of a mareva injunction in absence of a suit. This is allowed in Tanzania under proper circumstances. In the Registered Trustees of Calvary Assemblies of God (CAG) vs 11 Tanzania Steel Pipes Ltd and Others (Misc. Land Application 677 of 2019) [2020] TZHCLandD 26 (2 March 2020), it was held that: “It is apparent from the above quote and in all the cases cited that the provision moving the court in cases where there is no pending suit was section 2(2) of the Judicature and Application of Laws Ordinance and 2(3) of JALA. The rationale is that the Mareva Injunctions apply in the Common Law and its application in our courts is by virtue of section 2(2) of the Judicature and Application of Laws Ordinance and now section 2(3) JALA.” The Applicant has brought the present Application under section 2(3) of JALA as well as the provisions of section 95 of the Civil Procedure Court on inherent jurisdiction of the Court. He has not brought the application under section 51 or any other provision of the Arbitration Act. However, that does not prevent the Court from taking into consideration the relevant provisions of law in reaching its decision. The provisions of section 51 of the Arbitration Act, CAP 15 (RE 2020), are relevant as they provide for this Court’s facilitative roles to arbitration process whether or not it is actually the supervisory national court in respect of arbitration that has commenced or yet to commence. The supervisory powers of the courts over the arbitration 12 process and the resulting award, are exercisable by the national courts of the seat of arbitration. According to Lexis Nexis (https://www.lexisnexis.co.uk/legal/glossary/seat-of-arbitration): a seat of arbitration is the jurisdiction in which an arbitration is deemed legally to take place and the award issued, regardless of the geographical location of the tribunal and/or any hearings. The seat also determines the legal system that, generally, provides the arbitration’s procedure and which courts have supervisory jurisdiction over the arbitration. Whereas the supervisory powers of the Court are exercised by the national courts of the seat, the facilitative role of the court, however, may be exercised by the national courts or the forum courts in another jurisdiction that are better placed to facilitate the arbitral process taking into account the local limits within which the properties or persons connected with and subject to the arbitration, are situated. Normally, an arbitration process is tied to a particular place which supplies the procedural laws of arbitration and nationality of the Award. In this case, it is likely that the envisaged arbitration will be seated at the Peoples’ 13 Republic of China. In the case of Minister of Finance (Incorporated) and 1 Malaysia Development Berhad v International Petroleum Investment Company and Aabar Investments PJS [2019] EWCA Civ 2080, the Court of Appeal of England held that: “The principle of party autonomy in arbitration meant that, where the parties agreed on London as the seat of arbitration, they also agreed to the application of the [Arbitration] Act and the supervisory role of the courts over their arbitration.” Now, in the case at hand it may be the national courts of China or another country to which the parties will attach the nationality of their arbitration that will have supervisory jurisdiction over the arbitration process the moment the same is initiated pursuant to the agreement of the parties. However, in my view, that would not prevent this court from playing its facilitative roles in the arbitration. The Arbitration Act CAP 15 of the Laws of Tanzania provides under section 7(3) and (4) that: (3) The powers conferred under sections 51 shall apply even where the seat of the arbitration is outside Mainland Tanzania or no seat has been designated or determined, 14 Provided that, the court may refuse to exercise any such power if, in the opinion of the court, the fact that the seat of the arbitration is outside Mainland Tanzania or that when designated or determined the seat is likely to be outside the United Republic makes it inappropriate to do so. (4) The court may exercise a power conferred by any provision of this Act not mentioned in subsection (2) or (3) for the purpose of supporting the arbitral process where- (a) no seat of the arbitration has been designated or determined; and (b) by reason of a connection with Mainland Tanzania the court is satisfied that it is appropriate to do so. Section 7(3) and (4) of the Arbitration Act, CAP 15 (RE 2020) therefore would still allow this court to take cognizance of the application at hand for interim reliefs in terms of section 51 of the Arbitration Act, even if the intended arbitration would, eventually, have a seat of arbitration outside Mainland Tanzania or outside the United Republic. The court has jurisdiction and mandate but it has discretion to decide whether or not in the given case it is inappropriate to do so. The Arbitration Agreement between the parties herein contained under Clause 27 of the Distribution Agreement, has not 15 specified the seat of arbitration, expressly. I have taken into account the facts that at the time of institution of the present application the parties had not instituted arbitration proceedings in any arbitral tribunal under supervisory powers of any national courts as to make it inappropriate for this court to take cognizance of the matter at hand. Also, it is a fact that the arbitration agreement allows parties thereto to resort to the ordinary courts for interim reliefs in connection with the matters covered by their distributorship agreement. Further, the present application is in respect of an alleged breach of a commercial agreement that has occurred in Tanzania and the application has been brought under the provisions of Section 2(3) of the Judicature and Application of Laws Act. For all practical purposes, I find that this Court can conveniently and competently take cognizance of the matter at hand and play the facilitative role under section 51 of the Arbitration Act with regard to issuance of interim reliefs. This court has the requisite jurisdiction. I must hasten to say that, the CIETAC itself as the arbitral institution will have powers to make interim orders as well. In addition, the national courts having supervisory powers over the intended CIETAC arbitration will also have jurisdiction as well to grant the interim reliefs. 16 The China International Economic and Trade Arbitration Commission (CIETAC) Arbitration Rules (Revised and adopted by the China Council for the Promotion of International Trade/China Chamber of International Commerce on November 4, 2014, effective as of January 1, 2015) provide that: Article 23 Conservatory and Interim Measures 1. Where a party applies for conservatory measures pursuant to the laws of the People’s Republic of China, CIETAC shall forward the party’s application to the competent court designated by that party in accordance with the law. 2. In accordance with the applicable law or the agreement of the parties, a party may apply to the Arbitration Court for emergency relief pursuant to the CIETAC Emergency Arbitrator Procedures (Appendix III). The emergency arbitrator may decide to order or award necessary or appropriate emergency measures. The decision of the emergency arbitrator shall be binding upon both parties. 3. At the request of a party, the arbitral tribunal may decide to order or award any interim measure it deems necessary or proper in accordance with the 17 applicable law or the agreement of the parties and may require the requesting party to provide appropriate security in connection with the measure. It is well established in international commercial arbitration that the courts at the seat of arbitration will have supervisory jurisdiction over the arbitral proceedings, including hearing any challenges to the validity of the arbitral award. The national courts of the seat of arbitration will also be empowered to determine interim applications. In the meantime the application has been brought to this court. This Court will proceed to entertain the application at hand since there is nothing to preclude it from exercising its jurisdiction or making it inappropriate for the court to do so. It must be borne in mind, just for avoidance of doubt, that an arbitration Agreement does not oust jurisdiction of the Court. Whereas the court as well as the arbitral Tribunal would both be vested with jurisdiction over the same matter, the rule of party autonomy would require that the parties’ own-chosen forum should be respected by referring the parties to their preferred forum of dispute resolution. I will now consider the Application on merit. It is an application for interim injunction. If the application passes the trinity of tests in Atilio versus 18 Mbowe, then it deserves to be granted. In the case of Attilio v Mbowe (1969) H.C.D. 284, the following three principles have to be considered prior to the grant of injunctions. Those principles are: 1. That there must be a serious question to be tried on the facts alleged and a probability that the plaintiff will be entitled to the relief prayed. 2. That the court's interference is necessary to protect the plaintiff from the kind of injuries which may be irreparable before his legal right is established, and 3. That on the balance there will be greater hardship and mischief suffered by the plaintiff from withholding of the injunction than will be suffered by the defendant from granting it. As regards the prima fascie case or serious questions to be tried, I find that according to Annexture D-8 which is a letter dated 2nd September 2024 from dirm attorneys for and on behalf of the Applicant, directed to the Respondent’s Managing Director, China Dongfeng Motor Industry Imp.& Exp.Co. Ltd, Hubei Province, Peoples Republic of China, there is a serious question to be determined on the claims leveled against the Respondent for the alleged breach of dealership agreement for distribution of products, 19 spare parts and provision of services of Dongfeng Trucks in Tanzania for a term of three years from July 2022 to 14th July 2025. Annexture D 8 to the affidavit is a “Legal Notice for intention to initiate arbitral proceedings at CIETAC-Beijing against China Dongfeng Motor Industry Imp.&Exp. Co. Ltd for breach of contract and damages.” The dealership agreement was also annexed to the affidavit. The allegations in the affidavit have not been refuted despite the Respondent being served with the application. On irreparable loss, I have taken notice of the fact that the Applicant is trying to enforce an exclusivity agreement with the Respondent. Under the exclusivity agreement, the Applicant was assured of the exclusive monopoly and business reputation attached to the distribution of all Dongfeng products in Tanzania. If the Respondent is left to continue with the ongoing breaches, the Applicant will lose the business reputation and client base. That may not be easy to regain afterwards. The affidavit in support of the application has itemized the resultant business losses suffered by the Applicant allegedly due to the breaches by the Respondent. There is a need to stop the irreparable losses likely to be further incurred by the Applicant. On balance of convenience, as the Respondent has not filed a counter affidavit despite being served, the court has details of one side only. There 20 are no details of inconvenience that might be occasioned to the Respondent for the court to weigh in the balances of convenience. Perhaps during the hearing of the application interpartes, the Respondent may bring loss and inconveniences details relating to the Respondent’s side. The Applicant in the affidavit in support of the Application has shown that the breaches and violations of the exclusivity agreement have been preventing the Applicant to reach their agreed annual target as the market base of the applicant is eroded by the Respondent directly or indirectly competing against the Applicant in the same business for which the Applicant was guaranteed of exclusive monopoly in the Tanzanian market. That underscores the great inconvenience the Applicant is likely to suffer unless the Respondent is estopped by way of an injunction. The balance of convenience therefore tilts in favour of the Applicant. In fine, I grant the application and this Court does hereby order that: 1. This Honourable Court does hereby grant an interim exparte order that the respondent, its agents, contractors, assignees, workmen, employees or whomsoever purporting to act for and or on behalf of the Respondent, or any individual or company within the territory of Tanzania other than the Applicant, is hereby restrained from importing trucks, trailers, spare parts, 21 oil, lubricants and any other product manufactured by the Respondent and in the brand name of “Dongfeng”; and from persisting in any such breach, pending the determination of the application interpartes. 2. I make no order as to costs. It is so ordered. A. H. GONZI JUDGE 19/09/2024 Ruling is delivered in Court this 19th day of September 2024 in the presence of Mr. Dismas Raphael, Learned Advocate for the Applicant. A. H. GONZI JUDGE 19/09/2024 22