19970704 TZHC Dar es Salaam

IN TIIE filGII COURT OF TANZANIA A!J: TA.DO¥ rr/c CIVIL CASE No .. 10 CF 1996 1 PAI." liJi'llI CAH CORPORA'l1IOlJ LTD. u o • .,., ., o.,. PLAINTIFF VEP.SJS s:::.Il~ll:J:JGA REGION OO.:.OPERATIVE ) ·rn.:-ION ( i 904) LI1,.CEI.1ED ~ • •,,., •• • DEFTIND.ANT RULING In the Written Statei,ient o:f DGf ence 1 the Def'en.dant raised a f'ou..J:1- limbed prelimir,.8,j'.'y olJj ection ,;-thich their l~arned counsel, iv1r_,. lv1taki, argued 011 ~l:.e cl~y. tl1is sv_i t 1vas :fi::ed for first l1earinG• These four 1• That the sL1,i t i8 pre£i1atu_re as any di spu.t e ti hat .may have arisen between the pa.J:ties has never'-tlEi"en .: ef'erred to a.rbi t1 ation as 0 1 pro"ri ded. for unde±·:1;a.J:acraph 6 of the contract between the parties~ 21; Tha·c 110 notice by the plaintiff has ever been served on the de:f enclant as req..,tlred u.nd.er l)S..1'.'a{;raph 7 of the cont:ract between t11e parties. 3. Tha·c the plaint is not p2'0perly veri:fied ancL tlleref'ore f ataJ.ly de:fective. 4. Tb.at the relief fox t.ravel 811.G,. aCCOfa;il00..ation prayed for in para,-. graph 9(b) of: t:.1e plaint is bad in l2;i-T~ In the _~q;l;f to--the. Yrittm Statec,,ent of Defence -phe plaintiff statedg_:_ 1• That the suit is not premature as the Def enckm·i; repeatedly refused to refer the mat~ for a:rbi t:rai;ion as per a.nne:x:ture Ib and Io of the plaint. ,.__ That it is the Defendant and 110t the plaintiff' who purported to ter,Dinate the contraet. 3. That the ver:i:fication in the plaint by the plaintiff· is proper and not f'ataJ.ly def eqtive. 4. That t.o the extent that the extra travel ancl acco.wmodation expenses had to be incurred as a result of non-fulf'ilment of the· contract the defendant is liable.. • 2 In the_i:r contract wl-1erein t'b.e pLli~tif'f, Panafrican. Corporation L:Llti ted~ a[,rreed to purchaJie 15,ooci bales:.of' cotto11 lint f'rom the defend.an-£, Shi:nyanga Rec-ion Cooperative Union (1984) Li,i1it0ci, tl:.:ere is an arbitration clause contai;::ec;. i:1. para,;raph 6,. It is --to the ef'f'ect g ".ill dispL1:Jes or di1f e1·ences concernint:; or :arising out of', or L.1.Y.'.der t1::iis coDtract s~:.aJ.l be settled in the countr,y o:C the se:ller and accor~'ling to the Arbitration ai.uicablJ" OI' by arbiytsyion Ordinance Cap. 15, of' the Laws o:f S::a.tizania. n lvil'• i•.1.taki, for tlrn def'endat1t 9 sub1.d. ts tl-:.at the plaintiff' filed this l!llit , bef'ore the IHatter was ref erred to a.rlJi tratiori a.ncl therefore the suit should -- be diSill.issed as preiuature. lvll'• 1'.Lakani; for the plaintiff, apart f'ro.,;u statinc that the defendant ref'used t-wice to ref er the watte:c to an arbitrator, su.b.iili ts that this appl:ir- cation is i.ii1properly- bef'ore the coL~rt. It does not colil.ply with Rule 5 of the A.rbit_ration RD.es, 1957 and also section 6 of the krbi tratio1i" Ordinance, '• Cap.1 5 of -the Laws-. Ile subu1its that Rule 5 of the Afbitration_I&les 1957, Governw.ent Notice No.427 of 1957 sJi;ates that all applications u,1ade ww.er this orcli:..1ance shall be made by Wc!J' o-f petition, not by _a preli.u1inary obJ_ection. Section 6 of the .t!~bi tration Ordinance also provides that such an application S:haJ.1 be ..:.:iade :)ef o:rc a Written !ltate.1,ent of' Def-ence is filei;l or any otl::.er steps in tb.e r,roceecli..1-cs are ta.ken bJr the applicant. Iv.iy learned lJ::·other hl'• Ju::rcice J:-.iackan,i a 2 in Tfo.'i.DEX (UIC) Liwi ted VJ, Shi.n,7a.r.;;a Re{;io.:1 Ooopera-/;ivo Union ( 1924) Lii,ii ted:, (IIC) Civil Case No.6ci>'f · 1996 (Ta00:ra Re---is·h,-,- L b u ..... " 9 not -ye-'-I.I rp·,or'·ar,) -'l·•' t.,..._,._,w_ ' where the dEi[ ei~dant anplied 1-" I for disw.issaJ. of the st.-i t for non-coi,r_i,lia:.1-ce with the erbi tration clatise of' the contract, in oiSe~t:i.~~ ~stead of' -a: petiJ~i;~ a~ ;:ti~;~cl und.or ~cl~·aJ.rbi tration.; Eules 1~57, diS!ilissod the prelii,i.ina.ry objection as not being properly before the court. I aJ.so acree with l'il'• Justice Hackanja in the above cited case that the only rai1ec~r a party can seek tmder the 4,rbitra·i;ion Orq;inanc'i for non- compliance wi tJ.1 the arbitration clausG of the contract by the a.d:verse party 1 is sta.y of' .the l)I'OCeec-lings~ not their dia,1issalo ]br non-compliance with the arbi tratJon clause do er:\ not 1?..£!: ~ oust the ip;riscliction of -the Court. r,i. As to tho clef' endantt s ref LJ.saJ. to appoint an ar1Ji tra. tor, lill'• lvlaka.ni for the plai.i1-i;i:E'i' J .:nacle no subi;,ission on this pointa 11.pparently he - abandoned it,. t ' .3 .Asum:ing he he.s not, the annex-tu.res .rel evan.t to this point in the plaint are I(a) (b) ( c) and ( d)o I(a) States inter alias t 1You are thorefore he:ceby given 14 daJrs :fro. .n the date o±' th.is letter -within which to appoint on arbitrator as pi•ov:i.. cled :for under clau_se 6.1 of' the ag.reeHent. Our client shall let you know of' :1is choice of' an arbitrator as soon as he .receives ,:;ro L:rs." In reply tLe de:f-2:r-da.rt wrote a:11.:1extui·e I(b) which reads in tb.e relevant pa.:;:-t i - "1Te reG1°et to advice that clause 9.0 which foJ:'friec-:. an i!1tergral part of the above contract nevor H°Jatm:ialized. and thus we feel quite un- called :for to appoint an i\.r1Ji trator for an i:.1ten.decl co:ntract,. n Annexture I(c) i;,:: an e..:;,phasis to I(b), above~ that the defendant is not iri. a position ·co appoint an arbitrator as requested due to the :fact that . the Agreeuent nc,-v-c:r ••,3.:~c.rializcrJ. a.nd vr?,s invalidated as per clause 9.0 o:f ~he contract,. is to tho effect that clause 9 ii,aterializect, accordin{;· -~o -c.::o plai,:~ti:ff~ a..i:1d t:j_e·i·e is a dispute between the parties, but that the plci:Y~i~':f cannot :forc_G:"dhe cle:fenclant to appoint. an arbitrator. Paracrat>- 1 of tLo W:r.•itton Sta:~e,uent of Defence States that the suit is pre.;,aturo ac t:::1e parties have llGVOI' referred the dispute to a:r1:Jitratio1-i. This is a cont:.·acliotion to tl-::.e ciefo;:JClant 1 s letters Atu1e:x:tures 1(b) and (c) that tho :aaJutor is not :fit f'o:i: roferronce to arbitration as clause 9.0 o:f ,.,,,,_,,, The defe11C,2,J.1t 1 s letters, aimmnti.rres I(b) and l (b) and I(c), are to the effect that tl1e defo~1dant "ti-iii'iks ther~. is no valid contract between the parties as clause 9.0 of the a.gree,1e~1t was not co.,1plied with., The defendant ma,y have been helie~1g then in goorl faith that the arbitration clause is ·inapplicable for that reaso~ As I have_ stated earlier, learned counsel for the plai:nti:f:t' abandoned this g:ro~u1d in his su'bu,issio1~ an.cl so we heard no reply on this :fro1,1 tho def endantt s co:..msel~ fut in the WTitten Stateffient of defence the clof 01,d.ant raises t1:e ncn-coD1pliance with the arbitration clause as one of his 'preliJ.Jd.na:ry obj eotionn.., This cl oarl,y shows that the def end.ant at last 'by the tL,,e he filed tho Wri·cten State.,,ent of' Defence recognizes that th:i.s is a "Dispu·i;e 01· difference" req:uiri.,_v1g the co111pliance m. th the arbitra- tion claus.e. There:fo:re both parties now sceui to be rcad,y- and -willing to ref er their c:!J.sputo to arbitration., t • 4 The def endairt ::;.:;:· axt;"Ui.a,:_:; that the suit is. p~emaiu.re dtie -=t~ -horr-co.mpliance-~~~-- _ with -the arbi tr.::i:cior;. ~laU3e, and the plaintiff by sub.u1i tting that the suit should bo sta,,red. penclinc the submission to arbitration rather than be di&iii ssed., Paragraph 6 • i o:f the ilgree.-.ient, w;_Ji.cL. I have qy.oted above, only states that aJ.l dispL~tes or di:f:ferences concerninc_;- or a.risinc; in connection with o.r Lmder thi3 contfact sb.aJ.l be settled · 11 a.Iri.cablir or by arbi tra1iion.n It does not s~.;ate w:ho s:iaJ.l api:;oint the arbitrator or arbi tra.tors. So one can net tell w2ucL part,y is to ljla..z1e for t1.;.e non-appointi,Hmt of the arbitrators, . One of' ·..;.t:o ..:,1ain du:i:;ies o:C tl1e oourt in contract cases is to interpret and decide by the contxactinc: parties• intentions. Para{;raph 6.i of the parties' ar;ree.ilent shown t;_ie parties' .intention to be that 1~aJ.l disputes and cliff erenoes coi1cer.:in~; o:c arising out or in conr:.ection with or under i-1l.1ile the c1ef'endant objects to tl.:.e suit beinc heard before first being r~f'errcd to n.rbitzation, and that it shou.lrl _be di8fi1issed? the plainti.f';' subfil:i. ts that .r2/0hor than di swiss tlie suit for non-coiiipliance with the arbi tratior:.. clau.sc, it sJ.1ould be steyod penclinc; the rGf' errence to a.rbit;var- tion. This s.:~mrs neither pa-...-ty to be unwilling to ref er the 11iatter to arbitration f'irGt as per thoir a.::;reeuient. I agree wit21 the learned coL-:..nsol foz- Jc:2e ~Jlaintiff' that this suit should be stnv'et1. and not dis.,iiGGocl. I a;.i of t~10 view, t:~at this court has the discretion to sta.::;r proceec:'l.inl..,s 01:. its own o:r on application of a party to the stti t or G0,,1oone claLli1"1G Li;;der l~i11 wl1ere -c:!.le:;:.•o is a. disputed between the parties to ·i;.":e agroei.1en t to rel' er to arbi trati or: a.ncl tJ1ey a.re read,y a..'1.d willing to refex :h::.c ...;1attor to t~,.o a.:r~)i-tration as %r.reed in the parties' contract. I rorn.rciae such a discretiol1 - J under . Ru.le - 1 i of ,the Arbi traiiion Rules 1957 a,ncl Soc·~ion ~5 o-Z the Civil Procedure Code 176p;,;. The seconcl li.mb of objection,_relates to paragraph 7 of the agreewent. It rea.dsg ''In the event that a P.arty to this 3.t,""I'eeI.1e.nt beco.u1es In sol vent or b~tlcrupt or com.nits a material breach of thic agree.1ent; · thm the other party shall have the rieht to ter..:.Jinate this agreement upon ten dey-s by a wxi ten notice G=Lve."'1. to the. otJ.1er party." . . • lvJr. fotalci arg..,,es tllat Ul1der the above quoted paragrapb. the- plaintil':f should have issued -'clle de:f enclant with a ten days notice befoi•e f'iling this :5ui t. Ile cited. a._;a:i.11 the ir:_radex (UI~) Liu.1:i. ted casey cited above, and ticlieli K. Sl'o.c.'¼D.,i and. others v. The Director General g Tanzania Railwa,;vs Corpo:ration2 E/G Civil C8.se rJo .• 11 of 1995 (rrabora Rep;istr.y 7 not yet reported)• With a11 dile rospect to tl.le learned counsel _:l.:'or t.~10 de:f'enda.nt, .... Mr. l.v1tak:i, tl:e L.;.12,tlieli Ko Shau.ri case he cited is di st:j.n[;'1.,lishal::,l"e· f':miu our present 02,se,. In the f'o;:-;,ie:r· o.:we t~;e .. :e-elevant law, oection 87 (a) of the T~faa,u·t>.. fo:iil ~T§il_S Corporatim1 h.c·i; No.11 ·of 1977 sta·i;es in no uncertain teri:,1s that bef'aro one Ci:.::. sue tl1e Tanzania RailwaJ·:3 CoJ:1_Joration oae has to issue the Director Gc:1oraJ. ti:ce.reo£ m. th .at least one .rnonth 1 s notice. This is :1. st2..tc:.tc.rJ- lb1i to,-',;ion, ;10·~ a contractuaJ. l:i.iaitation.a Contractual Li;uitatioac; ne,, se •10 rict m_-:.st jlJxisdictions of' courts while statutory l:L:iiitatious cb .. 1'lro · i,.:aka;.1i ar;-:;uos tl1at pa.ra.::;raph 7 ref· ers to teri,1inatio11 of the a,greefaents no·t insti t:;.ti0n of ·i;he :::;uit. 1':1,_Y learr1ed.iJrot}.ler l•1acka11ja, .Ji in the Trad0x C8.se, oi<;cd. aiJove~ l:.olds tha·i; t:1e institution of the suit &i ves ar1 irros:::. stibl e :..1.ct' crreDcc t.:'.at t.:,e contr2,ot is dead. Bt:t t]:c is3L,n still :._,e,,12w.r:.s tllo,t eve:: if it is dead who killed or terwinated it? l.:r. i-..c;.::ani for t2:.-:) plo..intiff" subi:ri. ts the,t it is the def e- ... ndant wbo tc;.,,:J..:.1atccl . . " . .. t::.-ie con-',;.r ..wt vide their letters ai.1ncx:tures E and F. The plaii1t nowhere states tlla:~ tl:-,.e plaintiff ter,,liiu.""l.tes the contract but ~: ' •• it st::i:tes tl.z.t it 1no citGJ'.' t:.ic de:fcEd.e.nt ter,.iinatecl. the contract vid.e their l0ttcrs a,.;.u:i.e:;:t:ires E and F ··i;ha,t the plcintiff filed this suit. Words 11ot defi;1ccl ii1 t::;.0 co.nt:ro,c.~ or statlJ.tes dif'f'ere~tly ought to be given. tJ::..eir or-:1:i..:12..1\'/ iiieanini;s., '.]]1e•. words 11 ter,,iina-'.;e tb.s agreeuiont 11 ,.·• and 11 ir:sti tute r:roceec7in::_;s 11 have. very ,di:ff erent ordinary ihUa.."lings.· and parac-raph 7 o±: ·c::e con-::;ra.ct nowl::.ere talks of gi vi;ig a 10 da.y notice be:foro insti tL,~il1G proceeilinu:3, to ·cl:o o·~b.er party.- And the def' end.ant no·where in :1:i.s Writ-ten S-t;::1te.aent o:i:' Defence avers tl.iat tile plaintiff' teri.iinated the co;.1tract. Unless clcarJ.J,- .~tated so one who ~_;i,les a ·sLti. t :for 'breach o:f contract •f '. . • • does not terfiiina-ce the _contr~1-6·;;·~" IIe claims th.at he has per.formGd his pa.rt. . He ei the:::> pra,ys tl:c court to· orC:.er tl10 other pa:rty tc l)e.ri'on;1 his pa.rt o:f the contract i. e-. bj,• ordering £or spccif'ic perfor,aance, or he prays :fox •• ~a&es so that he beco111es in the position he wou.ld have l)een if the other party hacl pe:d:on.ied in.~ part of co11"c.:c;:,,c-i; 9 .. ,, . .. .' ·• 5 6 To we by i~1,:;-citutin.c.; tl:ese prooeedi:1e;s tho Illaintif·f wants the court to e.n:force tJ?.o c1e:::· o.i1C1.'U1\ to roi-{'01•i:.1 b.is p2.rt or co;~1pensate ~1L:,1 for the It does not L,ply he is teru1inatL1L;' tho contract. . ;: ~ So it is i,;,pro:,or £'or the clcle11cla;:i:c to require the pla.int:if:f to issue hi,u wi t:.1 a ten :.:la,ys notice befor;:; insti tL1_tinc- procee'cli:ngs while the plaintiff c·j_:::l r;.o-~ ter;,,iiiate tho contrc10t. I think w:1at ho mcanc L.1 :.ic obj ectici1 t.:.,2:0 hci,s 00en coEtr:.:~vonec: in Order VI Rule 15 (2} of tho Ci:Jil Procedure CodG 1966s which re.::iclsi 11111'.e po:r-su.n. verif·;jli:1c shall spGcif'y lJy rel' erence to tho nuwlblerec~ para.::;rapl1s of' the pleaclinc;, what l10 vori:fies of his own lmowle~e and what he ver:i2io:::; upon i:c.cf o.n.1ation recei vecl aJ.1cl believed to °iJ o true. 11 i•.nd the dispu·kcl vo:c:'..ficaticn clause i·eacls~ 1111:at is state cl in par2,;_~:r;3,1,hs 1, 2, 3A, 5, 6, 7,G, 9; 1 a11.cl 10 above is true to tl,.e · best of' ,i1Jr own kno..1- lec\;e ancl belief. lv.iXe l-i:3,k:a:ri oulJ.,;i·~s tl;.;J.t tl:e kncnrledge c,ul belief' on the contents of para,.;rapi~s i to 10; i.e., all tho pci.ra,crapl::_:: in tl10 Illaint are the know- lcd.,:;e a::1cl ~Jelie:f of t:rn ons verify.i.lli_; and tl:ere is no i11:fori11atio11 rece:i:-- vecl f'roi1, ot~:e:::- soLrcos.. Thore is :10 oviclenoe that soll,G oi' ·cL.o t:l1owlec\3·e 2.nd belief Ca.iilO So o:--io can no·i; hold the v0ri:ficati811 clat.1so to be clof'eotive at t.'.:is Atace. As f'or -11:,.e pr~rer :for travel a.1:..d acc,..:,rnModation, Mr. Nakani has,:. I.think satisf'aotcril.:,·, w:;:·lainec:. that these are not bills of costs for r11.'"":e case bu·c o.,-q,enses inct.il'recl. w~:j_lc t1:5··2.nc to settle the iiiatter before Therefore the prelL,iinary objGCtions a.re aJ.1 herelJy overruled. Save that tl"~e 1,roceeilings of' this sL"!i t are 1:J.Greb,y staJred under ~ 11 of' tho l.rbit:ca·~ion Rules 2 1957 and s-95 of'..,the Civ:i.;J.., Proceduxe Code 1966, pe11di.~1g the subwission o:f tJ:iis dci.spute to arbitration. The parties a.To to :report to this coart w:i tlxi.11 a month fro1,i to claJr- as to whe- ther they have a.greed on their arbitrators or whether the court should appoint one f' o:..' tha,-.1. - 7 - As the prelh,i:iia:r:y- objectioi.'18 lui:-re hem· overruled a.ad the pra.yer that this suit be cli s.:.1iss2cl rej ec-ced., but tha;i:; t:.:8 suit has i~,oe.n stayed pending subfilie-=.- sion to arbiti·atio::1, and the plo.intiff is partl;;r -i:;c b l ~ f'o1' filinc this .;.-: r • ' . :-, . · . .: ·. . ;:., befo'±·e tho ,ja;ttor ~ro.o s~iJ.. ,i·~-t;ecl -'co u.rbi tr,:itiq_1D eac> pa.,"':'ty will be;:i,r its own costs :for these prcli;;,inar:· hc:)a:ri::.ics. ~~ "Jt . . :v·. ~-..._ L • Ho .,CIL",J.E' Delivered this 4th ciaJr of July, 19S7 -Defore Mr. Maka:;tl, for the plaini;:if'f and Mr,. i•ltcld f'or the def' enc:.ant. brn,,iE, J"JIDE 4/7 /19':Jl •'