Ramani

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA

MOROGORO DISTRICT REGISTRY

AT MOROGORO MISCELLANEOUS CIVIL CAUSE No 47 OF 2023 IN THE MATTER OF ARBITRATION ACT [Cap 15 of 2020]

AND

IN THE MATTER OF ARBITRATION UNDER THE NATIONAL CONSTRUCTION COUNCIL ARBITRATION RULES 2001 EDITION

BETWEEN

SOKOINE UNIVERSITY OF AGRICULTURE PETITIONER

VERSUS

RAMANI CONSULTANTSV LIMITED RESPONDENT

RULING MRUMA,J This Petition was brought under Section 74 and 75 of the Arbitration Act, [Cap 15 R.E. 2019], read together with Reguiation 63(1) of the Arbitration (Ruies of Procedure) Reguiations GN No 146 Of 2021 seeking orders that: 1. The award dated 16^^ October 2022 deiivered by Hyacintha Benedict Makiieo, soie arbitrator as a whoie be set aside, on the basis of serious irreguiarity and iack of substantive jurisdiction; 2. The award be declared of no effect; 3. Costs of the Petitioner be granted and; 4. Any other reliefs as this court may deem fit and just to grant. The grounds for this petition are listed and amplified in the petition which was presented for filing on August 2023. Briefly the grounds are:- i. That the arbitrator committed serious irregularities by procuring an award contrary to public policy by awarding the Respondent payments in conflict with the public procurement laws which require prior approval; ii. That the uncertainty or ambiguity as to the effect of the award in regard to the reliefs awarded visa vis the findings of the issues as entitlement of the Respondent; ill. That the Arbitrator misconducted herself and committed serious irregularities for failure to deal with all issues to with; mode of computation and proof of payments to the consultancy servcise rendered by the Respondent that were raised by the Petitioner before the tribunal as per both

original contract and the addendum; iv. That the arbitrator misconducted herself and committed serious irregularities by failure to comply with the requirements as to the form of the award as provided for under Regulation 47 (1)- (3) of the (Arbitration Rules of Procedure) Regulations 2021. V. That there Irregularities In the conduct of the proceedings and In the award and; vl. That the arbitrator lacked substantive jurisdiction to Issue an award beyond The petition was strongly opposed by way of Respondent's Answer to the Petition and a Notice of Preliminary Objection sworn by Its Managing Director. The preliminary objection was dealt with at early stages of this matter. Points opposing the petition are contained In the Respondent's answer to the petition and can be summarized as follows:- I. That the award was procured after hearing both parties on all Issue agreed for determination; II. That the Issues on public policy and/or public procurement law were not and could pot be a subject of determination by arbitrator and that the grounds are not sufficient for challenging an arbitral award; III. That the award Is very clear and certain on the finding of the agreed Issues and the evidence tendered; iv. That the arbitrator dealt with and determined all the framed issues as agreed by the parties and as per original contract snd the addendum therefore there was no irregularities

capable of constituting a ground for setting aside the award; V. That the arbitration was conducted under the National Construction Council Arbitration Rules and not under the Arbitration (Rules of Procedure), Regulations 2021 and that failure to comply with the form of award is not a ground for setting aside an award; vi. That the arbitration was conducted in accordance with the agreed rules of procedure and agreement of the ;arties; vii. That the arbitrator had substantive jurisdiction to determine the dispute contrary to what is stated and the time for making an award was accordingly extended by the arbitrator and that in any event an award made beyond the extended time does not take away substantive jurisdiction of the arbitrator. In these proceedings the Petitioner was represented by Mr Baraka Nyambita and Ms Rehema Mtulya learned State Attorneys while the Respondent was represented by Mr Brighton Shayo, learned advocate. Both parties' written submissions are on file. I have carefully gone through the impugned arbitral award and the submissions of the parties and I find that three issues have been raised for determination. The issues can be summarized as follows:- 1) Whether there are any grounds to justify setting aside the award?

2) Whether the honourable court can in the circumstances make orders as sought for in the Petition?

3) What remedies are available to the parties? Starting with issue No 1 whether there are any grounds to justify setting aside the award. The learned State Attorney has submitted for the Petitioner that the advent of the Arbitration Act (Cap 15 R.E. 2020), and its Regulations (Rules of Procedure) Regulations GN No 146 of 2021 has not changed the general rule as far as petitions for challenging arbitral awards are concerned that is; a petition challenging an arbitral award is not an appeal and should not be an appeal in disguise. The learned State Attorney cited decision of the Court of Appeal in Civil Appeal No 14 of 2016 between Vodacom Tanzania Ltd Versus FTS Services Ltd where the Court held that: ''Any application to the High courtfor review ofan arbitralaward is notan arbitral award is notan appealand therefore cannot be disposed in the form ofrehearing" The learned state Attorney did not explain relevancy of this authority to the case at hand and on my part, I think this case was cited out of context. The case was cited out of context because the issue before me is not whether or not petition to set aside an arbitral award is an appeal. The issue before this court is whether there are circumstances that may warrant setting side arbitral awards. In challenging the arbitral award, a party intending to challenge the award may petition to the High court by way of petition as

provided for under Rule 66 of the Rules. There are various grounds under which a party may petition to the court to set aside an award on substantive jurisdiction of the tribunal or proceedings of the Arbitration Tribunal or on the final award on the grounds of serious irregularities as stated under section 75 of the Act. The Present petition is begged under sections 74 and 75 of the Act. It is the learned State Attorney's submissions that the arbitrator committed serious irregularities by procuring an award contrary to public policy by awarding the Respondents payments in conflict with the Public Procurement laws and Public Private Partnership laws that require prior approval. That the costs claimed by the Respondents were too high to necessitate the alteration of the contract price. That once the issue of alteration of the contract price arises it requires the Petitioner to seek approval of her tender board that issued the contract. It was the learned State Attorney's contention that in terms of the provisions of sections 74 and 75 of the Arbitration Act [Cap 15 R.E. 2020], Court may set aside an arbitral award on grounds of:- i. Misconduct and; ii. Serious irregularities affecting the arbitral award. Further to that it was the submissions of the learned State Attorney that since contract involving the Government are governed by the Procurement Act, the arbitrator's failure

to consider costs raised by the Respondent would alter the contract price and hence requiring approval of the Petitioner and the tender board and is contrary to the provisions of Section 2 and 69 of the Public Procurement Act of 2004 which restricts increase of prices without approvals from the relevant authorities involved in the tender process. The learned State Attorney cited the provisions of section 94 of the Public Procurement (Selection and Employment of Consultants) Regulations 2005 that according to him are applicable during execution of a contract and Regulation 61(1) of GN No 446 of 2013 which according to him is the current law which requires that if a contract based on procurement process is amended and altered then there must be approvals. The learned State Attorney also cited the provision of section 69 (2) of the Public Procurement Act which is to the effect that any additions to the value of a procurement contract shall be reviewed and greed by the approving authority. He said that the aim of the Public Procurement Regulations is to prohibit or discourage those involved in contract financed through public funds from secretly by way of variations or otherwise, vary the agreed contractual values or change the economic balance of the parties outside the oversights organs of procuring entities that is to say the tender board. To support his argument the learned

State Attorney cited the case of CATIC International Engineering (T) Ltd Versus University of Dar Es Salaam Civil Appeal No 162 of 2020 where the Court of Appeal held that: ''Now as regards to the applicable law, while section 33(1)(b)of the Act requires the board to approve all variations, regulation 110(4)(5)and(5)ofthe Regulations qualifies thatrequirement ItIs clearly provided that the variation which are notIncidental to or arising out ofthe contract, and which alter the scope, extent or Intention ofthe contract require approval ofthe board'' The learned State Attorney contended that annexure Ramani 3, attached to the Respondent's reply to the petition was not approved by the authority. He stated that those cost estimates must be approved by the tender board and the budget approving authority so that consultant can have a fee claim because her contract was charged on percentage therefore awarding that full amount of Shillings 2,325,601,143.90 which included Shillings 458, 536, 375 which the petitioner disputed and amount of variations and added activities that required approval of the board before execution by the Consultant. The learned State Attorney concluded that the arbitrator committed serious irregularities by procuring an award contrary to public policy by awarding the Respondent costs associated with variations whose quotations were not finally approved

additional work. Further to that it is the submission of the learned State Attorney that the arbitrator committed serious irregularities for failure to deal with all issues to wit mode of computation and proof of payment to the consultancy services rendered by the Respondent that were raised by the petitioner before the tribunal as per both original contract and addendum. To support his argument the learned State Attorney cited the case NIC & Another Versus Sekulu Construction Co Ltd (1986) TLR 157. Finally, the learned State Attorney contended that the arbitrator did not deal with issue No 5 fairly as he did not consider the issue of overpayment raised by the Respondent as a result of which the petitioner suffered substantial injustice from unfair decision. On the shillings 54,384,106.35 allegedly paid by the Petitioner to the Respondent in two instalments as agreed by the parties between the year 2000 and 2002 to cover for works prior to postponement of the project in the year 1990 and shillings 800,984,533.76 that were paid for the period between 2006 and 2010 the learned state attorney contended that the arbitrator misconducted herself by failing to recognize that the said payments were made under the same original contract and addendum. In reply, counsel for the Respondent majorly disagreed with the contentions of the learned State Attorney submitting that the Petitioner's

contention particularly in respect of grounds which were referred in the petition as grounds (a)(b)(c)(d) and (e) are mere allegations that the Arbitrator has committed serious irregularities in reaching the conclusion she did. The counsel contended that by so alleging the counsel for the Petitioner has fundamentally misunderstood what should be proved to establish serious irregularity 10 under the Act. The learned counsel argued this court to find that in law an error in law or fact no matter how obvious may be can never be a ground for proving serious irregularity envisaged by law. He referred this court to the author Mukanda's in Law relating to Arbitration and Conciliation 4^^^ Edition 2001 at page 643 where it is stated thus:- "Itis not open to the court to substitute its own reasons for that ofthe arbitrator. Furthermore the learned author states at page 621 that: "The mere fact that the arbitrators have erred in iaw or in fact can be no ground forinterference by the courtand the award wiii be binding on the parties" On the basis of the foregoing submissions, counsel for Respondent contends that for the Petitioner to succeed under the ground of serious irregularities she must specifically explain on the face of the award the errors alleged to have been committed. I have carefully considered the above arguments by parties and the authorities they reiied upon. I would start

with the question of lack of substantive jurisdiction which is raised as the last ground of this petition. 11 The Petition to challenge the Arbitral Award on substantive jurisdiction issue can be made during the pendency of the Arbitration proceedings or after the final award is issued as provided under section 74 (1) of the Arbitration Act. Thus, the Arbitrator may at its discretion decide the question either as a preliminary question or may determine the issue on the award as jurisdiction under Rule 28(4) and 37 of the Rules. In our case the issue was not raised during the pendency of the arbitration proceedings. It has been raised by way of petition to this court. As stated by P.C. Makanda in his book, the Law Relating to Arbitration & Conciliation at page 525, when a court is called upon to decide objections raised by a party against an arbitral award, the Jurisdiction of the Court is limited, as expressly indicated in the Act, and it has no jurisdiction to sit in appeal and examine the award on merits. Having that principle in mind, I shall determine this cause. I find it expedient to review the impact of sections 74 and 75 of the Arbitration Act under which this petition is brought. While section 74 deals with challenging an arbitral award on substantive jurisdiction section 75 prescribes grounds for challenging an arbitral award on serious irregularity grounds. 12 The

learned author M.A. Sujan, in his book Law Relating to Arbitration and Conciliation Second Edition at page 517, while commenting on the Indian Section 34 which is a replica of our S. 74 (1) of the Arbitration Act stated that: ''Section 34 refers to setting aside of the award... it may be noticed thatS. 34restricts the groundsforsetting aside the award as iisted therein Other grounds for setting aside an arbitral award can be established from case law, I have noted that India's provisions on arbitration are similar to ours and it has established a wide jurisprudence from case law on matters regarding arbitration proceedings. The Supreme Court of India while discussing setting aside of an award, in the case of Associated Engineering Co. Vs Government of Andhra Pradesh (1991)4 SCC 93(AIR 1992 SC 232)observed that:- "y4/7 arbitrator cannot act arbitrariiy, irrationaiiy, capriciousiy or independentiy ofthe contractand his soie function is to arbitrate in terms of contract as his authority is derived from the contract...If he remained inside the parameters of the contract and has construed the provisions of the contract, his award cannot be interfered with uniess he has given reason for the 13 award disclosing an error on the face ofit..the courtcan iook into the question ofas to whether the arbitrator has travelled bevond the scope of the contract as he derives his jurisdiction from

the contract and ifthe arbitrator exceeds his jurisdiction the award can be set aside. An award can aiso be set aside in cases ofmisconductapparenton the face ofthe ward. Itcan aiso be interfered with ifthe arbitrator hasgiven reasonsfor the award disclosing an error apparent on the face ofit (emphasis is mine) The above authorities are very clear on what court will consider to set aside the arbitral award. Briefly in this case, the Petitioner and the Respondent on March 1989 entered into an agreement for designing and supervision of construction of students' hostel at Sokoine University of Agriculture. The terms of payments with respect to the original contract were stipulated under clause 2 of the agreement. Fees were based on the accepted tender price as stipulated in clause 2 of the signed agreement. agreement. By a letter dated 4^*^ July 2013 the Respondent submitted to the Petitioner a professional fee amounting to shillings 2,345,426,854.62 as outstanding consultancy fee due. 14 The Respondent took the matter for arbitration. The Arbitral proceedings were initiated under the auspices of the National Construction Council (NCC), The tribunal was constituted on 22"^ July 2020. On October 2020 the Respondent submitted statement of claim among others claiming Tanzania Shillings 2,325,601,143.90 as fees held by the Petitioner. The Petitioner counsel argued that the arbitrator

committed misconduct and serious irregularities on the part of the Arbitrator by procuring an award contrary to public policy awarding the Respondent payments in conflict with the public procurement laws that requires prior approval. In the first place I would agree with the learned counsel for the Respondent that as per amendment of the Arbitration Act Cap 15 R. E. 2020 the word misconduct is no longer applicable in arbitration proceedings. In the new law the word misconduct has been replaced by the words serious irregularity. Serious irreguiarities have been raised in grounds 1, 3, 4 and 5 of the Petitioner's petition. Generally it is trite law that he who alleges must prove. In arbitration proceedings, like any other proceedings of civil nature, the burden of substantiating the averment of commission of serious irregularity by the arbitrator is on the petitioner. Counsei for the petitioner argues that the arbitrator committed serious 15 irregularities by procuring an award contrary to the public policy by awarding the Respondent payment in conflict with the public procurement laws and public private partnership laws which requires prior approval. The learned State Attorney cited Sections 2 and 69 of the Public Procurement Act of 2004, Regulation 94 of the Public Procurement (Selection and Employment of Consultants) Regulations 2005 and Regulation 61 (1)(2)(3) and (4) of the

Public Regulations GN No 446 of 2013 as the law applicable in the instant proceedings. The term irregularity is not defined in the Act, however Black's law Dictionary by Bryan A. Garner, lO^'^ edition at page 957 defines it as something irregular especially an act or practice that varies from the normal conduct of an action. That being the meaning of the term irregularity, in my view claims of commission of serious irregularity would Be proved if there was failure by the Arbitrator to comply with the provisions of section 37 (1) and (2) of the Arbitration Act which requires the arbitrator to act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent; and adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expenses so as to provide a fair means for the resolution of the matter to be determined. 16 Under the provision of sub-section (2), the arbitrator is required to comply with the general duty referred under subsection (1) in conducting the arbitration proceedings on matters of procedure and evidence, and in the exercise of all other powers conferred on her/him. In the case at hand serious irregularity would have been established if there was evidence that the Petitioner was not permitted or given opportunity to present her case before

the arbitrator or if her submissions were not permitted before the arbitrator but the Respondent's were. In the Indian case of Krishan Lai Vs Union of India, AIR 1999 Punjab & Haryana 60, it held that: ">4/7 arbitrator who performs a quasi-judicialfunction issupposed to adhere to the principles ofnaturaljustice andshould not make a farce ofthe inquiry before him. He mustgive fuii opportunity to the parties to die their daims/repiies, ifany, and aHow them to adduce evidence in support oftheir respective pieas". In the present case the Petitioner does not contend that she was never accorded a chance to be heard. In fact, though I have had no opportunity to peruse the record before the arbitrator, as they were not availed to me, but from impugned final award, it is apparent that both parties were equally and fairly heard. 17 As it can be discerned from the petition the arbitral proceedings were initiated under the auspice of the National Construction Council (NCC). The tribunal was constituted on 22"^ July 2020 upon appointment of QS Hyacintha Benedict Makileo as a Sole Arbitrator. On 17^ October 2020 the Respondent submitted her Statement of Claim among others claiming for Tsh 2,325,601,143.90 as unpaid fees. Thereafter parties agreed on the modality of handling the matter and they did so by way of witness statements which were duly filed as agreed. On IG^'^ October 2022

being three months after the completion of the parties pleadings and submissions the Arbitrator pronounced his award. At that, I have failed to find any partiality or prejudicial act by the arbitrator in the course of the hearing which would constitute serious irregularity. On Public Policy; M.A. Sujan in his book Arbitration and Conciliation (supra)cites Pullock & Mulla's Contract & Specific Relief ActsCll^*" Edition) Vol. 1 at Page 348, where it is stated that:- ... Lord Brougham defines public policy as the principle which declares that no one can iawfuiiy do that which has a tendency to be injurious to public welfare. Public Policy comprehends only the protection and promotion ofpublic welfare". 18 The Author went on to illustrate that: "anywhere in the world action of interested parties seeking to corrupt ministers wouid be againstpublic policy or publicgood" It follows therefore that an act is thought to be contrary to public policy if it results in a breach of law, harms citizens and/or causes injuries to the state. Broadly speaking public policy means that courts will occasionally find an act invalid if it is against public good. I have carefully gone through the submissions of the learned State Attorney but I have failed to find merit in Petitioner's assertion that the arbitral award was procured In contravention of public policy simply on ground that amount awarded

required an approval by the tender board. In my view, an arbitral award being a final written decision or determination made by an arbitrator that settles a dispute between parties on merits cannot be subjected to approval by a tender board of either party. Section 69 of the Procurement Act of 2004 which was cited by the learned State Attorney deals with alterations and amendments of a procurement contract. The said section reads "(1)A procurement contract shaii not be altered or amended in any way after it has been signed by both parties unless such alteration or amendmentis- 19 (a) To the benefit of the Government or is not disadvantageous to the government and; (b) Is endorsed by the approving authority; (2)Any additions to the vaiue ofa procurement contractshaii be reviewed and agreed by the approving authority". Giving an overview review of the State Attorney's argument, I am inclined to believe the counsel for Respondent's contention to the effect that the Petitioner is attempting to persuade this court to carry out a fresh hearing, or revisit and re-evaluate the evidence which it is not mandated to since a petition to challenge an arbitral award is not an appeal in the ordinary sense from an award of an Arbitrator. I must state that the arbitrator was alive to the fact that he had to decide the matter in accordance with the contract between the parties.The applicant

herein seeks orders that were never before the arbitrator for consideration. This court cannot entertain new causes of action at this stage. The issue of approval of alteration and/or amendment of the contract of procurement was not raised before the arbitrator despite the fact that her claims were presented to the arbitrator and the Respondent had an opportunity to challenge amount claimed on among other grounds that it ought to have been approved by a tender board 20 or any other authority. This was not done therefore this court cannot exercise its discretion on the issue. Discretion by court is exercised subject to the law. This court cannot determine or grant orders that were never subject to the arbitration process, this would be an injustice to the Respondent. I therefore find no merit in this issue. Thus, after a careful consideration of the case before me, I have found that the arbitral award contains the honest decision of the arbitrator after a full, impartial and fair hearing of the parties. This Court therefore has no authority to interfere with it. In the circumstances therefore, this petition is void of any merit and it is dismissed with costs to the Respondent. Order accordingly. A.R'. MRUMA 0^

JUDGE -7 t-u v-J X LA > 5. 11. 2024 21