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Tanzania decisions
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The trial court erred in lifting the corporate veil without sufficient evidence of fraud, sham, or misuse of corporate structure; respondent failed to discharge the burden of proof regarding the 1st appellant's lack of assets; improper design alone is not a valid ground for veil lifting; liability cannot be imposed solely on one director without proper justification.
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The applicant failed to establish legal grounds for lifting the corporate veil; there was no evidence of fraud, concealment within the company, or alter ego sufficient to disregard the company's separate legal personality. Directors/shareholders cannot be made personally liable for company debts solely due to lack of assets or failure to pay the decree.
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The 2nd Respondent is using the corporate structure to defeat execution of a lawful award; justice requires lifting the corporate veil to hold the 2nd Respondent personally liable for the judgment debt.
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Court of Appeal granted a stay of execution pending appeal, and ordered an irrevocable bank guarantee of TZS 90 million as security for due performance.
The High Court Labour Division lifted the veil of incorporation of the judgment debtor and ordered arrest and detention of the 2nd respondent for non-payment.
The application to lift the corporate veil was dismissed because the applicant failed to establish any fraud, improper conduct, concealment, or other recognized grounds for disregarding the separate legal personality of the 1st Respondent. The mere fact that the 2nd and 3rd Respondents are sole shareholders/directors and executed agreements on behalf of the company, or that the company has no assets, does not justify lifting the veil. The applicant's evidence did not meet the legal threshold for piercing the corporate veil under Tanzanian law and established principles.
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The African Court awarded reparations to Mgosi Mwita Makungu for Tanzania’s failure to provide court records needed to appeal his conviction.
Exceptional circumstances exist as the 2nd respondent, director of the 1st respondent, signed the deed of settlement and failed to satisfy the decree without plausible explanation. Lifting the corporate veil is necessary to prevent frustration of the court's decree and to uphold public convenience and confidence in the judicial process.
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The High Court held that a decree may be executed against property administered by a liquidator, so enforcement was allowed.
The Court of Appeal refused a stay of execution pending appeal, holding that the applicant failed to show special circumstances justifying suspension of the High Court decree.
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