20060428 TZHC Moshi

IN 1rHE HIGH CC-UHT OF 'ri-1.NZII.N!I't · MISC C!VIL AI'P}::ii.L NO. 1 31 OF 2001 ( CIVIL CASE N0.35 OF 1999 OF MO.SHI DIS'l'RICT COURT AT i'i0SIU ) PLANT ZQUIPMENT HII{:<..: COMPANY LTD ooa ooo o;;, rq oo oooc oo~oC> APPLICANT VERSBS. ' Jes o KAMBAI·rA O O O O O O e O C O •. 0 0 0 o O O o O O • RESPONDEiilT RULING . - , ..... ,. '~·-·"'' ..... ,,., ............... ,-..:.. This application has bee11 filed by the Applicant under Sectfon 44(1) (b) of the Magistrates' Courts,1984 for the revision of the Ruling Q and Order of the District Court of Noshi in Civil Case No.35 of 1999 dismissing the suit with costs. In the said Court, the Respondent who was the Defendant in its Amended Written Statement o·f Defence had raised a Preliminary Objection that the suit was improparly before the said c-eur--f: because the parties in their wri.-::tei agreement had a clause to refer any dispute to an arbitration and that the matter had not been refsr::.~:::d to arbitration:;1 as stipulated in the agreement. The trial magistrate upheld the Preliminary Objection and dismissed the suit with costs. Having been aggrieved by the said decision of the trial magistrak, th:: iq~plicant who was the plaintiff in the trial co.urt has filed this applica.t-ion for revision of the Ruling and Order of the trial magistrate. The application has been argued b:, (() way of. wrfften ...subn11sstcm-as--per_ the o;d~;--- or·this Court dated--29/8/?005;. Mr.Jonathan, learned counsel, is advocating for the ...Appl~ca.:~1t .while Mr.Kamara, learned counsel, is advocating for the Respondent. In his submission, Mr •Jo~:.J:.:tb~.u:i contends that, in upholding the Preliminary Objection, the trial magistrate seeri:ed to have relied on the case of Con_s_1:;uct~on Ens:~n"2_e!'~~-and_ Bui~.0~~~~-!.9~-~Y:.!>_~u_ga~~'?J?!!l.~nJ:. Corporation (1983) TLR 13 and 1:-iad accepted the Jipp).icanvs~ submiss-i◊n a m r ~ ~ ? i tra tion · Drd..inan_~_e_ applies only to the High Court • .. ---However, Mr.Jonathan contends, that the trial magistrate went on to hold further that the Arbitration O:.cdinance " Ousts the jurisdiction of subordinate Courts in matters the par~ies to which indicated an intention to submit to an arbitration II and that having so held the trial magistrate i. went on to dismiss the suit. It is the submission of Mr 0 Jonathan that the trial magistrate gr0ss7 ,.r erred in ree:::hing the said holding. ire contends that the trial ?J.l.~is-~rat.0 . hoving upheld the Applicant's admission that the Arbitration Ordinance had no .q.pplication to proceedings . ' in subordinate ·courts it ivE!s precluded from hol<f'ing at the same time that the ordinance ousts subordinate courts. from having jurisdiction in cases in which the parties had agreed to refer disputes to arbitration. Mr. Jonathan_ in_ w.,uoubnd ssion--=tends. that i\ the Ordirlance we1·e to be regarded as applying to suits. before subordinate Arbitration courts also, then the.Prelimizmry Objection raised by the Respondent in the.trial court was raised too late because Section 6 of the said Ordinance ma.ndatorily requires a. party wishing to rely on an arbitration clause as ground for rejecting a suit, must r: before filing a written statement cf defence or taking any other step apply to the courts to stay the proceedings ;j • He furthe-r-,c-onte.uda.j.n his submisaion. that.- the Respondent in the trial eourt did not apply to stay the proceedings and that he raised the objection after he had filed written statement of dcfenceo He further.Gontends that the -l0arned trial magistrate in the circumstances befqre him erred in upholding the Preliminary Objection and that he further erred in dismissing the suit instead cf ordering stay of proc.eedillgs. Mr.Jonathan contends further in his submission that were it to \ be urged that the Second Schedule to the Civil Procc:!ure Cocle, ·1~;6 I I was a applicable to the suit in the trial court~ the Appplicant's l I reply would be that the .Arbitration Rules have application only in I cases where suits have been filed and the parties in such suits have 1 l, _agreed to refer their disputes to arbitra\iono He further submits that \, ,fthe, 2~ Ruling of the lower court is. confused and confusing and is riddled ·\11th misdirections hence he has praJred to this court to set it aside _i(Jand ~upstitute it with an order overruling the objection with costs. On the other part, Mr.Kamara, learned counsel for the Respondetit has vigorously opposed this application. In his submission, he contends that the suit.was properly dismissed--fcr lack of jurisdiction by tho trial magistrate having found as a .::-act basing on th(; Agreement sued upon,· that it contained an a.rbitratiotj clause and that the provisions of the Arbitration Ordinance were applicable thereto. As regards the conte1Jtion ·.• of Mr:oJoriathan that the trial magistr.att;, should have stayed the proceedings, Mr.Kamar.a submits that the said contention is crrenous for two reasons, .'-first?be6ause the .subordinate ·court had· no jurisdiction .rouu--th-e, matter and secondly that once the trial ':'"lg:i.Bt.r_ate_hclct._.that--the trial court l,ad no jurisdiction., ~~n th0 some court should not proceed to make an order for stay of ·the proceedingso He strongly contends in his submission 'that once the trial courts had held that it had no jurisdiction then the only order it could have made was Jo dismiss the suit as it did. 3/- /At:, regards the-oo.ntention-of _Mr'.-Tonathan that th~ :Respondent ' in the t-'iiiil court .h.ad :raised its _obj'cction too late, Mr.Kamara in his '-. submissidil --contends. -tl,iat hc.d it been that the Respondent was A.pplying for ).eave :to i-e:fer the,111atter fo-r arbitration as sti.,pulated under ~-t~n- 6 o.t: the Arbitration -Ordi.Panc.e..__~then-the-proper---cause for it would have been to apply so before filing it~ Writb:m Statement of li,.fenc-e-. But Mr~.a cont.=nds in his submission that such a cause would have been appropriate only if the matter was before-the 1:ligh_Court which is the court seized with jurisdiction in matters relating to arbitration. In this case, the case was before the subordinate court which lacked jurisdiction hence Mr.Kamara argued that the Respondent was denied the proper forum to apply ~or stay of.proceed.in.gs, the appropriate cause was to file a di}fe.D.ca along with '.Preliminary Objections. Mr.Kamara contends further in his submission that the circumstances of the case in th0 trial court were such that the Agreement \ ) upon which the Applicant had sued the Respondent had a clause binding the parties to refer disputes arising therefore to arbitration but the Applicant flouted that procedure ' and -· . - instead :-ir0c1uaed. ":'" .~ - .. · to file. the case in court even befure.attempting a.nyarbitraticn •. There was no room left tq apply for stay of proceedings since the matter was before the court having no. jurisdiqt.ion hence the parties could,not hav':" agreed to apply for stay or reference ,~o arbitration since their agreement _could not have conferred jurisdiction to the subordinate court. Finally, Mr.Kamara has prayed to this Court to dismiss th•.J application with c;st~~, In his rejoinder submission Mr.Jon~than~ stili maintains that the trial Court having Upheld the Applicant's admission that the Arbitration OI'di.nance had no application to _proceedin1is in subcirdin~te courts it was ( Jreciuded .. fr~m hoj_ding at the. sar.ie time that the Arbditration Ordinance ouS;t$ ,eubord~tc courts from having· jurisdiction in cases in which the par-U~ had agreed t◊ refer disputes tci .:irbitraticn. Ee further contends that n,~m-applicabili ty of the. flrbi tration Ordinanc"' an.d its ouster of juri~.:iction are two totally different concepts. YiI'.Jonathan further ·. '·!--· . . . . . ' . maint4tp_s. ·.· tIU1t . the,' trial . ' magistrate . . having held . .. that . Se.ction 2 of :,the . . - ,. . . . ·. : Arbitpatiqn Ordinan~e had no.applicatiqn ,to procee<;lings.in subordinate co~,4', _the trial magistrate. :ought to have overruled the objt:ction and holg that. t,he ~oce-edings were _propez;ly before the ~·co~t:.. 0 , ' . •• ' ' He contends that this i~ m~ch more so taking into .:t&.ount that ilJ the Agreement there i~ Fa.22 -whi.ch_provides that: .. -~ " . . . .i 11 Thi-~ Agreement ·shall bd governed by the laws in ·force in the United Republic of Tanzania as · · ammended· f'rem· time to time. 11 ., . In his view, the :Civil Procedure Codc,1966 under which -the suit was \; filed is one of such laws and that the lower court should have resorted to the said law. .M.I'-.,Jdriathan in his rejoinder submission contends that Mr-,Karnara seems to be arguing in circles~ in one breath he conceedes the .Arbitration Or<ii.nauce is· not....ap;p] j cab.le to proceedings in subordinate courts but in another breath he insists ~ e Applicant ought--tg have referred the matter to arbitration but does no~c:te:r-- which {_;,--the·-· -· Applicant coul.d have resorted to aJ.~bitration. He contends that as the. Preliminary Objection was rais-3d by the Respondent, the latter had the ---· onus of sustaining the objection by stating the law under which the Applicant could have pursued th•2 claim by 1;,ay of arbitration. I have carefully considered th2 subl'!lissions of both parties in respect of the application. I have also rend the p:t:o.Qe.adi.Jlgs....an.d.the RulL-rJg of the lower court., In my considered view, the issues to be c.onsid.e.r'0d arid determined in this application a.re first whether the trial magistrate having upheld the fi.pplicant 1 s admission that the Arbitration Ordina.n.c~ had no application to proceedings in subordinate.courts was precluded from holding at the same time that the said ordinance ousts subordinate courts from having jurisdiction in cases in which the parties had agreed to refer disputes to D..rbitration. The second issue is whether having held .tha.t Section 2 cf the Arbitration Ordinance, had no application to proceedings in subordinate courts, the trial magistrate ought to have overruled the objection and held that the proceedings were prc;perly before the lower court. The first issue, whether the lower court having upheld, the Applicant rs admission that th<..'"---Ar.bitration Ord.in?.:?ce Cap. 15 had no application to proc~edinf_;s in subordinate courts it was precluded from ( ' .\ h~lding ~,t t~e ~om~ t~me thnt the said Ordinance ousts subordinate courts _) from having Jur1sd1ct1on in cases in which the parties.had agreed to refer '.'~t;putes to arbitration. The ruling of the learned magistrate clearly shqws the reasons for dismissing the suit. First it wa.2 that the lower Court had no jurisdiction because the agreement upon which -the .Applicant had sued the Respondent· cantaini:::d a cla.usc thc,t any dispute arising under the said agreement should be referred to arbitration under the Arbitration Or<Unance. The Applicant did not refer the dispute to arbitration as $t~tf:J in the said agr,=ement. Secondly, it was ostabli.:hed that under Sectio ~~Q.tion?. of the .Arbitration -....... Ordinance "CourF means the High CourtQ In .. ·~ otpe:r words, the sµit was improperly before the lower court. Thirdly, qaeed / . ·.:.on ·••; the authqri _/ ty of •.Constrvcboij Engineers ,,,.__.,,..,...~~~:r·~r ...,,...-.~·~:,·.. ~.-..,,,,_, & BuildmI!t:! _____,,...,. ..,_...._~~.,..._- Ltd Vrs •· ,,-~--~«•-e.,-..u .,_..,._,..,._...__.....__-1:'9'"".~~ S1J~!_pev~lo_pmm1~~~ q-0!P?_rah5-n P~?3) TLR.13 which is a Ccurt -of Appeal d_;¢i~i~n, the l~arned magistra:te held that the court must hnve proof to ,' i~?- satisfacj;ion that t,p.ere are reasons to override the parties intention r.,~ to s~bmit their dj;spute'i-6· an arbitrrrticn-,--the onus being o'.n the plaintiff to pt-qve so. I qui·t'e agree with the snhmi F;.~; ....,., r,f' M .... Tr.-.-~-~ .t.1'-~ l 5/- lowe~ -court based cin the sai:d footing had no jurisdiction to entertain the dispute as held by the learned ma.gistrate. It may be that the learned magistrate went out of propotion when he further held that the Arbitration Ordinance ousts subordinate courts from having jurisdiction in cases in which the parties had agreed to refer to arbitration. In my considered view, there is no provision in the Arbitration Ordinance Cap.15 which expressly is to the effect that the jurisdiction ·of the subordinate courts is ousted~ However, since section 2 of the said ordinance the word ,·, C0 urt :: means the High Court the direct and natural interpretation that arises is that proper jurisdiction is the High Court. Invariably, a suit before the lower court in the circumstances or the present.case was improperly before the said courto Further, in my considered view, the holding of the trial magistrate .... _____ _ ( ) that the Arbitration Ordinance -ousts_jurisdiction of subordinate courts in matter the parties to which indicated an intention to submit to an arbitrator does not override his basic finding that the Arbitration Ordinanca had no application to proceedings in the subordinate courts. This is further much more fortifed by the decision of the eourt of Appeal of Tanzania in the case of Ha: ..Constructions _,,_. Engineers. & --·-••-··--·-- .--,,,,-_,,. ______ _,.,,,_._.,. ...... Builders !!!,d Vr!,• .§..~ Develo.2ment C9rp5iE~ioE,_ (1983) TLR.13 that the court must have proof to its satisfaction that there are reasons to ever.ride the . .· . . parties intention to submit their disputes to an arbitrator. It is further a trite law that jurisdiction is a matter of statute creation, it cannot be conferred ot taken away by agreement of the partieso ' No can an order of a court confer jurisdiction where the same is not -),provided for by law. (,_/ The second issue, :.whether having held that section 2 of the Arbitration Ordinance had no application to proceedings in subordinate courts, the learned Resident magistrate ought to have overruled the objection ~d held that the proceedings were properly before.the lower court • . ·In my considered view, once it was held that word "Court·· under section 2 of the Arbitration Ordinance means the High Court,, it followed tha.t was the court having propae jurisdict.ion hence the learned magistrate could not overruled· ·the Preliminary Objecti-orr-be.cause-S1:.1ch approach would go contrary to the. definition of the word ' 1Court". To overrule Preliminary Ohjection would have meant the word "C 0 urt" under Section 2 of the said ordinance extex.ids to the subordinate courts ,~hich is not the case judging from what is stated in the said provision of law .. Another reason is that . . if the learned rriagistr~te had overruled the Preliminary Ob'jection, he would have partly gone· c~;mtrary to t'he de9ision. 'bf the eourt of Appeal of Tanzania in Re: 9._cm~truction • ·~iine,el'~· ·..•, :,. _&J3.t:1ild_2r.s Ltd. Vrs .. Sugar Development. . . .,. ---~ ......-.,..,,._............. .,,••_ .... .., __,,.. _ _.._ •..,,,., "-......-=-- •-· ...... £:1.:Y~'?E~-?-~. (Supra)• In my considered viJ~•.··it was vi vidl v char from - ' .. J a clause in the agreement tl:i.at the Applicant and the Re~pondent had agreed to .~f.er to arbi~t.ion. any . ~put:e a.rising un~r their ~men{ tmrler:,I,~_bit_-r,a:t~on •. ·.. . - ,· Ordinan.ce GaP-415 of the laws of the United Republic of Tanzania. •, As to the stay. of proceedings 9 I· quitJ agr~~ i;i th' the subm.ission of Mr.Kamara that once the lower court had held that it had no jur;l.$cifct~on,,.• it followed that the same court could not proceed to make an order of stay of the proceedings. Furtl:wr, I quite agree with the submission of Mr.Kamara that had it been th;Jt the Respondent was applying; .for ieave to refer the .matter, to, ;arbliltration ·und€r Section , 6'"of the'· Arbit~ation- . •:•.: ••· ' .. • , ! , ••1 . . . . ·, ; ' ~ -·~ ' '.· '. . ; . i; ·, . .. J ' - • - Or<iinance, thep. th~. ,proper,:proc·edute would have been to so apply before filing its Written Statement of Defence but such a eourse would have been appropriate ..onl,y -i.f...the ma.tte~ :·1!la-S· ..oofor-0- the High Court., the court seized with jur:i.sdiction on the matter., '_:~11 the ,!)re,s~1:1t C-a$e 1 tHe rn.abter was before the court having no jurisdiction hence the Respondent had no proper forum to apply for stay of pro~eediogs hence the approP.riate course open to it was to file the Wri~ten Stat~ent of Defence along with Preliminary Objections as done bl the·R~spondent .. However, in my c-0nsidered view the learned magi!Strate having found that the 1 ·wer court had no jurisdiction, wpich meaner that the suit was not properly before the said court, the proper order to e:riter would .be to struck out the suit with costs instead of dismissing it with costs as he dido The suit had not been heard on merits. In the upshot, the application is hereb~ dismissed with costs s2ve that I substitute the order of dismissal of the suit mr:,de. by the learned magistrate in the lower court to an order strucking ·out the suit with costs f.or the rea....c.cns I ha-ire ·,:· herein statedo It is so ordered·., ~~ ' ' FoA.R. JUNDU · JUDGE 28/1+/2006 Right o,f Appeal Explained. ~l \1j '1 .~~ .._i, ·c·.: . F .A.R.JUNDU\ JUDG~ 28/4/2006