plant equipment hire company ltd vs js kambaita 2006 tzhc 323 28 april 2006

IN THE HIGH COIJ&T OF TANZANIA • AT jliOGHI MISC CIVIL APPEAL NC.1j$1 OF 2001 ( CIVIL CASE NO .35 OF 1999 OF MOSHI DISTRICT COURT AT KOSHI ) PLANT EQUIPMENT HIRE COMPANY LTD ..,«. ... c.. c. » APPLICANT VERSBS JoSo KAMBAITA .................... .RESPONDENT K UL I N G This application has been filed by the Applicant under Sectir- M+(1) (b) of the M a g istrates1 Courts,1984 for the revision of the Ruling and Order of the District Court cf Moshi 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 of Defence bad raised a Preliminary Objection that the suit was improperly before the said e-eur't- because the parties in their wrirfcei agreement had a clause to refer any dispute to an arbitration and that the matter had not been refsrrcH to arbitrations 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 magistrate, th'j Applicant who was the plaintiff J in the trial court has filed this application for revision of the Ruling and Order of the trial magistrate. The application has been argued b, \way of written submTssi~oir-ais--per_. the order o f "this Court dated--29/8/2005. Mr.Jonathan, learned counsel, is advocating for the Applicant while Mr.Kamara, learned counsel, is advocating for the Respondent. In his submission, contends that, in upholding the Preliminary Objection, the trial magistrate seeir.ed to have relied on the case of Construction Engineers and Builders Ltd Vr s „ Sugar Development Corporation (1983) TLR 13 and had accepted the -Applicant-’ s' submission and~hel'd—kha±..,tlie_ ArbitratiorrOrdinance applies only to the High Court, ••-However, Mr.Jonathan contends, that the trial magistrate went on to hold further that the Arbitration Ordinance Ousts the jurisdiction of subordinate Courts in matters the par:ies to which indicated an intention to submit to an arbitration {i and that having so held the trial magistrate went on to dismiss the suit. It is the submission of Mr.Jonathan that the trial magistrate gros«’ 1^ erred in rerching the said holding. Ke contends that the trial magiscrate having uphold the Appli c a n t ’ s admission that the Arbitration Ordinance had no application to proceedings A in subordinate courts it was precluded from holding at the same tiir.e that the ordinance ousts subordinate c'Curts. from having jurisdiction in cases in which the parties had agreed to refer disputes to arbitration. Mr,Jonathan., in. his.-suhmission'-contends that i ^ the Arbitration Ordinance were to be regarded as applying to suits before subordinate courts also, then the Preliminary Objection raised by the Respondent in the trial court was raised too late because .Section 6 of the said Ordinance mandatorily requires a party wishing to rely on an arbitration clause as ground for rejecting a suit, must t; before filing a written statement of defence or taking any other step apply tc the courts to stay the proceedings ;i. He further-contends.in his submission that--the Respondent in the trial court did not apply to stay the proceedings and that he raised the objection after he had filed written statement of dcfence. He further contends that the learned trial magistrate in the circumstances before him erred in upholding the Preliminary Objection and that he furthej* erred in dismissing the suit instead of ordering stay of proceedings# Mr.Jonathan contends further in hie submission that were it to be urged that the Second Schedule to the Civil Procedure Cede, was a applicable to the suit in the trial court, the Appplicant's reply would be that the Arbitration Rules have application only in cases where suits have been filed and the parties in such suits have agreed to refer their disputes to arbitration. He further submits that the. Ruling of the lower court is confused and confusing and is riddled with misdirections hence he has prayed to this court to set it aside ^and substitute it with an order overruling the objection with costs. On the other part, Mr.Kamara, learned counsel for the Respondent has vigorously opposed this application. In his submission, he contends that the suit, was p r o p e r l y dismissed for lack of jurisdiction by the trial magistrate having found as a Tact basing on the Agreement sued upon, that it contained an arbitration clause and that the provisions of the Arbitration Ordinance were applicable thereto. As regards the contention of Mr.Jonathan that the trial magistrate should have stayed the proceedings, Mr.Kamara submits that the said contention is orrenous for two reasons, .'first.because the subordinate court had no jurisdiction n v p r —the msrtter and secondly that once the trial .«tmte_hclcl_ihat'' the trial court had no jurisdiction, then the same court should not proceed to make an order for stay of the proceedings. 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 to dismiss the suit as it did* ,As ^regards thfc-tJoiitention.-of .MivJonathan that the Respondent in the trial court had raised its objection too late, Mr.Kamara in his submission contends that had it been that the Respondent was applying for leave to 'refer the, matter for arbitration as stipulated under ^c'tdedn 6 of the 4rbi.trati.on Ordinancetvtben—the—proper-*cause for it would have been to apply so before' filing its Written Statement of rjofencei But Mt^Kpmara contends in his submission that such a cause would have been appropriate only if the matter was before-the High.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 Tor stay of proceedings, the appropriate cause was to file a de£euce along with preliminary Objections* Mr.Kamara contends further in his submission that the circumstances of the case in the 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 p'rodueled ■ to file the case in court even before attempting a n y arbitration. There was no room left to apply for stay of proceedings since the matter was before the court having no ’ jurisdiction hence the parties could not have agreed to apply for stay or reference to arbitration since their agreement could not have conferred jurisdiction to the subordinate court. Finally, Mr.Kamara has prayed to this Court to dismiss the application with costs. In his rejoinder submission Mr.Jonathan, still maintains that the trial Court having upheld the Applicant's admission that the Arbitration Ordinance had no application to proceedings in subordinate courts it was precluded ’from holding at the same time that the Arbitration Ordinance ousts subordinate courts from having jurisdiction in cases in which the parties had agreed to refer disputes to arbitration. ”c further contends that non-applicability of the Arbitration Ordinance and its ouster of juris4iction are two totally different concepts. Mr.Jonathan further maintains that the trial magistrate having held that Section 2 of the Arbitration Ordinance had no application to proceedings in subordinate courts, the trial magistrate- ought to have overruled the objection and hold that the proceedings were properly before the 6 b w t :#- He contends ^ ^ t this is much more so taking into account that in tho Agreement there is para»22 w hich provides that: l< This Agreement shall be governed by the laws in force in the United Republic of T&nzania as ammended froor time to time.5* 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. Mr^Jonathan in his rejoinder submission contends that Mr>Kamara seems to be arguing in circles, in one breath he conceedes the Arbitration Ordinance is- not..applicable to proceedings in subordinate courts but in another breath he insists 'ttra-t-jthe Applicant ought—to have referred the matter to arbitration but does not state un'de**- which law the Applicant could have resorted to arbitration. Ke contends that as the Preliminary Objection was raised by the Respondent, the latter had the onus of sustaining the objection by stating the law under which the Applicant could have pursued the claim by way of arbitration. I have carefully considered the submissions of both parties in respect of the application. I have also read the prnceeriings.-^r,rf the Ruling of the lower court* In my considered view, the issues to be considered and determined in this application are first whether the trial magistrate having upheld the Applicant's admission that the Arbitration Ordinauc-e 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 ca ses in which the parties had agreed to refer disputes to arbitration. The second issue is whether having held that Section 2 of 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 properly before the lower court« The first issue, whether the lower court having upheld the Applicant’ s admission that ther Arbitration Ordinance C a p . 1 5 had no application to proceedings in subordinate courts it 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 arbitration„ The ruling of the learned magistrate clearly shows the reasons for dismissing the suit. First it v/ae that the lower Court had no jurisdiction because the agreement upon which the Applicant had sued the Respondent contained a clause th-it any dispute arising under the said agreement should be referred to arbitration under the Arbitration Ordinance. The Applicant did not refer the dispute to arbitration as stated in the said agreement. Secondly, it was established that under Sectio Section 2 of the Arbitration Ordinance i:Court- means the High Court* In other words, the suit was improperly before the lower court. Thirdly, based on the authority of C^j^trrctioii Engineers & Building Ltd Vrs Sugar Develcpment ^orpora^icn^ 09&5)^ TLR„13 which is a Court ‘ of Appeal decision, the learned magistrate held that the court must have proof to its satisfaction that there are reasons to override the parties intention to submit their dispute to‘an arbitration,- the onus being on the plaintiff to prove so. I quitfc agree with the s n b n - i r\rn r -P M-«~ T/r o ~ . <-» 1--- •*- 11 low©!*-court based on the said footing bad no jurisdiction to entertain the dispute as held by the learned magistrate. 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 '• C 0urt-: 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 of the present case was i m p r o p e r l y before the said court. 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 dees not override his basic finding that the Arbitration Ordinance, had no application to proceedings in the subordinate courts. This is further much more fortifed by the decision of the Court of Appeal of Tanzania in the case of Re: Const rue t i on s Engineers 8c Builders Ltd Vrs. Sugar Development Corporation 0 9 8 3 ) TLR,13 that the court must have proof to its satisfaction that there are reasons to override 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 parties. No can an order of a court confer jurisdiction where the same is not provided for by law, * The second issue, :t 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 and 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 that was the court having propee jurisdiction hence the learned magistrate could not overruled the Preliminary Objecti-orr-because -ettcfr-approach would go contrary to the definition of the word ::C ourt:‘ . To overrule Preliminary Objection would have meant the word ‘ ^ u r t 5, under Section 2 of the said ordinance extends to the subordinate courts which is not the case judging from what is stated in the said provision of law. Another reason is that if the learned magistrate had overruled the Preliminary Objection, he would have partly gone' contrary to the decision of the Court of Appeal of Tanzania in Re: C^nstr^c^ioi^^^EhigjLneers & Builders Ltd. Vrs.Sugar Development -'.rporation (Supra). In my considered view, it was vividlv cl^ar from — a clause in the agreement that the Applicant and the Respondent had agreed to refer to arbitration -any dispute arising under their Agreement under Arbitration Ordinance Cap*15 of the laws of the United Republic of Tanzania, As to the stay of proceedings , I quite agree with the submission of Mr*Kamara that once the lower court had held that it had nc jurisdiction, it followed that the same court could not proceed to make an order of stay of the proceedings. Further, I quite agree with the submission of Mr.Kamara that had it been thct the Respondent was applying for leave to refer the matter to arbitration under Section 6 of the Arbitration Ordinance, then the proper procedure would have been to so apply before filing its Written Statement of Dofence but such a course would have been appropriate only-ifL .the natter -.was the High Court, the court seized with jurisdiction on the matter, 1 In the present case, the matter was before the court having no jurisdiction hence the Respondent had no proper forum to apply for stay of proceedings hence the appropriate course open to it was to file the Written Statement of Defence along with Preliminary Objections as done by the Respondent. However, in my considered view the learned magistrate having found that the 1 v/er court had no jurisdiction, which means that the suit was not properly before the said court, the proper order to enter would be to struck out the suit with costs instead of dismissing it with costs as he did. The suit had not been heard on merits. In the upshot, the application is hereby dismissed with costs save that I substitute the order of dismissal of the suit rru’ de by the learned magistrate in the lower court to an order strucking out the suit with caste for the Teaj&cns I have herein stated„ It is so ordered. Right of Appeal Explained.