mogas tanzania limited vs petrofuel t limited 2022 tzhccomd 161 3 june 2022

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION)

AT DAR ES SALAAM MISCELLANEOUS COMMERCIAL CAUSE NO. 10 OF 2022 (Arising from Commercial Case No. 5 of 2022) IN THE MATTER OF ARBITRATION ACT (CAP 15 R.E 2020) AND IN THE MATTER OF STAYING COMMERCIAL CASE NO 5 OF 2022 & MISCELLANEOUS COMMERCIAL APPLICATION NO 8 OF 2022

PENDING REFERENCE TO ARBITRATION

BETWEEN MOGAS TANZANIA LIMITED.................................. PETITIONER Versus PETROFUEL (T) LIMITED....................................... RESPONDENT Date of last order: 30th May, 2022 Date of Ruling: 3rd June, 2022

RULING MKEHA, J. In this ruling, an issue of considerable legal importance arises. The issue is whether an arbitration agreement can bind non signatories to that agreement. 1 | Page On the 14th January 2022, the respondent herein, as an agent of Paramount Energy SA, basing on agency agreement, instituted Commercial Case No. 5 of 2022 together with a Chamber Application to wit, Miscellaneous Commercial Application No. 8 of 2022 and served them upon the petitioner. The named suit hereinabove is based on a claim of 72,000 litres of fuel under a hospitality agreement between the Petitioner and Paramount Energy SA, the Principal of the Respondent in this petition. According to Ms. Judith Ulomi learned advocate for the petitioner and in terms of paragraph 5 of the petition, the said hospitality agreement contains an arbitration clause therein. The position of the petitioner is that, the said Arbitration clause in the said agreement apart from being binding upon the principal, it binds its agent, the respondent herein. As indicated hereinabove, following dispute between the petitioner and the respondent as an agent of Paramount Energy SA, the respondent instituted a suit in which he claims amongst other reliefs, a declaratory order that the fuel withheld by the petitioner belongs to the plaintiff/respondent upon making payments for the localized fuel and a declaratory order for the

discharge of the whole volume of 72,000 litres of fuel to the respondent for business use. Although the respondent is not a signatory to the hospitality agreement that contains an arbitration clause binding the signatories thereto, in the 2 | Page present petition, the petitioner prays that the proceedings in Commercial Case No. 5 OF 2022 together with the Chamber Application, Miscellaneous Commercial Application No. 8 of 2022 be stayed pending the determination of the dispute pursuant to section 15 of the Arbitration Ad; in line with the agreements. That is how the issue posed hereinabove arose. Ms. Judith Ulomi learned advocate for the petitioner was insistent that, the arbitration clause contained in the arbitration agreement signed by the petitioner and the respondent's principal binds the respondent/agent as well. She prayed that the petition be granted with costs. Mr. Stanslaus Ishengoma learned advocate for the respondent submitted in reply that, the petitioner had no locus to ask for stay of proceedings basing on an arbitration agreement to which the respondent was not a party. He could not however dispute the existence of an arbitration agreement between the respondent's principal and the petitioner. It is trite law that agency is a fiduciary relationship created by express or implied contract or by law in which one party (the agent) that is subject to principal's

control may act on behalf of another party (the principal) and bind that other party by words or actions. With regard to arbitration, the general rule is that, a person is not bound by an arbitration agreement unless he has signed it. The exceptions to 3 | Page this rule are very limited. The "agency" exception allows agents to bind principals to agreements, including agreements to arbitrate, but the opposite is not true. In other words, the principal's signature does not bind its agent to an agreement to arbitrate. The holding hereinabove is based on persuasion I got from an American decision in CHARLES G. WALKER VS JENNIFER COLLYER & OTHERS, 85 MASS. APP. CT 311 (2014). Admittedly that wa<> after my failure to get assistance from our own case and statutory laws on the point. There is no denial that the respondent was not a signatory to the hospitality agreement between the petitioner and Paramount Energy SA. Therefore, on strength of the case law cited hereinabove, the dispute between the petitioner and the respondent is not arbitrable between the parties. It is for the foregoing reasons the petition is dismissed. The petitioner is condemned to pay costs of the petition to the respondent. DATED at DAR ES SALAAM this 3rd day of June, 2022. 4 | Page

JUDGE 03/06/2022 Court: Ruling is delivered in the presence of the parties7 advocates. C.P MKEHA M l*

JUDGE 03/06/2022 5 | Page