20140610 TZHC Dar es Salaam 1

IN THE HIGH COURT OF TANZANIA {COMMERCIAL DIVISION) AT DAR ES SALAAM IN THE MATTER OF THE ARBITRATION ACT"CFP 15(R.~. 2002) AND IN THE MATTER OF MISCELLANEOUS CIVIL APPLICATION NO ........ OF 2012 .• {FILED SOLELY FOR STAY OF COMMERCIAL CASE NO. 142 OF 2012) BETWEEN M/S TEAM AFRICA COMMOTIEIES TRADING INTERNATIONAL FZE }. ............. ,. ......... PETITIONER AND M/S KAHAMA OIL MILLS LIMITED ........... :..................... RESPONDENT "RULING A.A. Nchimbi, J. This is a ruling on a petition filed by the petitioner herein on 10th December 2012. The petition has been made under Section 6 o the Arbitration Act, Cap 15 R.E. 2002, Rules 5 and 11 of the Arbitration Rules, GN No. 427 of 1957, Section 64 of the Civil Procedure Act, Cap 33 R.E. 2002 read together with . " ,· paragraph 18 of the Second Schedule to the Civil Procedure Act and under any other enabling provision of the law. In the petition the petitioner prays that this Honourable Court be pleased to: (a) Order stay of all further proceedings instituted in this Honoruab/e Court pending a reference to arbitration pursuant to the provisions of the sale purchase contract. (b) To order the respondent to pay cost occasioned by the Petitioner including the costs of this Petition. (c) To make such other orders as may seem just. On the date of hearing of the petition, Mr. Laizer, Advocate appeared for the petitioner, Ms. Linda, Advocate appeared for the respondent. The matter was disposed of orally. Submitting in support of the petition, Mr. Laizer for the petitioner, had the following to submit: That the petition before this court is a prayer by the petitioner that this court be pleased to order stay of woceedings instituted in this court pending reference to arbitration in accordance with the provisions of the Sale Purchase Agreement signed by the parties on 5/8/2012. The learned counsel went on to submit that, it is Commercial Case No. 142 of 2012 filed in this court on 22/11/20'12 which gives rise to this petition in question. That the petition at hand was filed on 2 . 9/12/2012 and thus bringing into play the 2nd schedule to the Civil Procedure Arbitration Rules. He submitted further that when the petition was filed in this court, the petitioner was willing and is still willing to refer the matter to arbitration. The learned counsel for the petitioner averred further that, he has read carefully the respondent's answer to the petition ad that the only ground for their objection for this petition is that the arbitration clause and misunderstanding clause do not mean an arbitration clause. It is his submission that the respondent did not offer an answer as to what arbitration and misunderstanding clause mean. The learned counsel surmised further that the agreement is in headed paper of the respondent prepared by respondent themselves and given to the petitioner on take it or limited terms. As the document JvaS drawn by the respondent themselves, and that being their own document surely it would have been prudent for them to tell the court as to what those terms mean. Referring to the annexture Koml the learned counsel submitted that, the words cotton seed cake making are not defined, also that the agreement talks of payment of balance to be paid on delivery of goods. Mr. Laizer submitted further that the agreement was arbitrarily drafted, hence the same should be interpreted as contra proferentum as this is a maxim which hits the drawer or grantor. The learned counsel concluded his submissions by praying that the ambiguity referred to should be interpreted against the respondent. 3 . ··- Counsel referred this court to the writings in the Book of Chitrty on Contracts, Volume 1, 2004 at page 747. He thus humbly prayed that the proposition-in those quotations should be taken to be proper and should for the following reasons mean: 1. The agreement was drawn unilaterally 2. The agreement is on the respondent headed paper 3. The words, arbitration and misunderstanding on dispute relating to this agreement be resolved amicably are ambiguous by all standard. The learned counsel for the petitioner urged the court to construe the clause against the respondent and stay the proceedings of the pending case and order reference to arbitration with costs. Ms. Linda for the respondent lin her reply .submissions submitted the following: That the main issue is whether there is any agreement to refer the dispute to arbitration. The learned counsel submitted that a particular case has to be taken and that the basic requirement is that it is clearly specified by the parties' intention to refer dispute to arbitration. Fortifying her argument, counsel referred to the book Practical Guide to International Commercial Arbitration: Assessment Planning and Strategy which she stated is of aid as to the elements of an arbitration agreement. Reading para 2.3.1 on intention to 4 arbitrate she insisted that in order to avoid ambiguity the clause should state clearly reference to arbitration. The learned counsel for the respondent went on to submit that, looking at the agreement referred to by counsel for the petitioner, the three elements ·. mentioned are not met, therefore the petitioner cannot claim that there is an agreement to arbitrate as there is none. She insisted that whether the agreement was prepared by the respondent or not it does not mean the clause is valid, the sticking term of the agreement is that parties should attempt amicable settlement of the dispute and that the attempt was made. Furthermore, Ms. Linda averred that the petitioner cannot claim that since the agreement was drafted by the respondent they should be bound by it, because also on her part she had an option of taking or l~aving it. Responding to point on the grade of seed cake, counsel submitted that will be determined in the main suit. Also on contra proferentum rule, counsel surmised that the rule does not apply because there are specific rules in place. The learned counsel respondent further that the contention in Chitty (supra) deals with deed and not arbitration matter, further that the case referred to by the petitioner's counsel is not applicable to the facts in question as there is no clause to refer the matter to arbitration. Concluding her reply submissions, Ms. Linda submitted that there is no ambiguity in the agreement as there is no arbitration agreement to warrant the 5 suit to be stayed. She, therefore, prayed that the petition be dismissed with costs. Briefly the rejoinder by Mr. Laizer was to the effect that, he took note of the respondent counsel's not disputing that the respondent is the one who drafted the agreement, hence it was his duty to indicate the three elements of an arbitration agreement. Having not done so it can only mean the respondent wanted to take advantage of its own agreement. The learned counsel reiterated his previous submission that amplifies para 18 of the Arbitration Rules and in the final analysis he prayed that let the dispute go to arbitration so as to resolve the contentious issues. Having summarized the submissions of the parties, the issued which I find needs this court's consideration before ordering stay of proceedings pending reference to arbitration; is whether there is an agreement between the parties to refer the matter to arbitration, because the reading of Section 6 of the Arbitration Act, cap 15 referred to by the petitioner is very clear, I quote: " Where a party to a submission to which this Part applies, or a person claiming under him, commences a legal proceedings against any other party to the submission or any person claiming under him in "respect of any matter agreed to be referred, a part to the legal proceedings may, at any time after appearance and before filing· a written statement or taking any other steps in the proceedings apply to the court to stay the 6 proceedings; and the court if 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 the proceedings were commenced, and still remains, ready and willing to do all things necessary for the proper conduct of the arbitration, may make an order staying the prpceedings. " Parties to the contract are at liberty to choose the forum for determination of their dispute in case any arose as far as the contract is concerned. It is by this understanding that parties opt to include a clause in their contSract on resolving their dispute. By that the parties to the contract insert an arbitration clause in their contract which is to compulsorily submit to arbitration the disputes on either the rights or liabilities arising there from. It may be as a collateral agreement to the main agreement, or it may be a submission to arbitration, that is where there is no prior arbitration agreement, but after the dispute they wish to arbitrate. The aim of having an arbitration clause in a contract is to avoid litigation of disputes in ordinary court and also to express the consent of the parties to submit to arbitration in case of dispute. The clause operates on the principle of separability. There are two types of arbitration agreement, one is where it is provided for in the agreement or contract prior to the dispute and the other is that where parties agree after the dispute has arisen. In the present case the petitioner contends that there is an agreement to submit to arbitration 7 . and on the other hand the respondent objects to that and avers that there is no arbitration clause. The above background has made me to have a look at the sale purchase contract between the parties to this matter, referred to as annexture Koml herein, particularly the reading of the last item which is titled "arbitration and misunderstanding; all disputes relating to this sale contract to be resolved amicably." The learned counsel for the petitioner in the course of submitting in support of the petition stated that since the clause was arbitrary drafted it should be construed against the respondent. J on the other hand counsel for the respondent insists that there was no intention of the parties tcr . refer the dispute to arbitration because if that was the case the clause would have to state so clearly. Now can it be said that the clause the petitioner wants to rely on to refer the matter.to arbitration is an arbitration clause in the sense of referring the matter to arbitration? The clause clearly depicts a meaning that in case of any dispute the same will be resolved amicably. My understanding is that an arbitration clause acting as a clause should confer jurisdiction on an arbitrator or tribunal in that matter because without an agreement there can be no valid arbitration, hence the need of arbitration clause being clear witnout any ambiguity. In the case of Cott (UK) Ltd v. F.E. Berber Ltd (1997) All ER there was an aroitration clause which was construed not to amount to a proper arbitration agreement though titled arbitration. The court viewed it not an 8 . • arbitration clause. It was held, inter alia, that; "when construing a clause in an agreement the heading of the clause which was a catch word or form of identification inserted for convenience of reference could not prevail over the express wording of the clause or create an ambiguity where none was present------". In the present matter the clause which the respondent seeks to rely on states clearly that in case of misunderstanding the dispute be resolved amicably. There is no express word of referring the matter to arbitration because amicably settlement is far from arbitration in the real sense of the word. As rightly submitted by Ms. Linda for the respondent the clause in the agreement should specify the parties' intention to refer disputes to arbitration. That an agreement to arbitrate should be expressed in mandatory terms to avoid ambiguity and also it should also ensure the agreement to arbitrate complies with any requirements for formal validity. She further submitted that the clause should not be ambiguous. On the other hand counsel for the petition insists that in case it is found that the clause is ambiguous it should be interpreted against the . respondents because they are the ones who drafted the contract. I would re-echo that this court's business before staying the proceedings is to satisfy itself if the parties by the clause in the agreement agreed expressly to •. refer the matter to arbitration. In establishing that the wording of the clause is important. In this petition given the wording of the clause, I hesitate to hold 9 . ------------- that the parties' intention was to refer the matter to arbitration because the plain meaning of the clause iA question does not in any way confer the jurisdiction on a tribunal so to speak. It simply says in case of dispute the same be resolved amicably. By any imagination amicable settlement cannot be construed to mean arbitration. It could have meant other mechanisms of amicable settlement such as negotiations of settlement betvveen the parties themselves independent of any tribunal or an arbitrator. I also cannot condemn the respondents ori this because the petitioner had a duty to also ensure that the clause is express and not ambiguous to avoid future misunderstanding and interpretation like this. By signing the contract it necessarily means each party understood the terms and the conditions involved. I, therefore, find that the petition lacks merits because this court cannot stay a · proceeding pending reference to arbitration while the intention of the parties in the agreement does not expressly provide for advice to resolve the matter by way of an arbitration. I dismiss the petition with costs. ~ A.A. Nchimbi JUDGE 10/06/2014 10