Theories, Principles

and Practice of
Arbitration

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Introduction

 Arbitration has become one of the principal

means of settlement of commercial disputes.

 The explosion in commercial arbitration

caused by the enormous increase in world
trade and the desire of the international
business community to have neutral and
competent tribunals to decide their
commercial disputes has already been
alluded to

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 What is Arbitration
 Arbitrationis a consensual system of
judicature directed to the resolution of
commercial disputes in private.

 It is a process by which parties submit a

dispute to the decision of a neutral person or
persons appointed by mutual consent – s 3 of
the Arbitration Act.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Types of Arbitration

 Domestic Arbitration

 It is an arbitration which takes place within Tanzania and is

governed by the domestic laws and procedures of Tanzania –
s 3A of the Arbitration Act

 International Arbitration

 It is an arbitration whose parties belong to different state

jurisdiction or countries.It is governed by the laws and
procedures not of Tanzania; it can include a government of
a foreign country – s 3 of the Arbitration Act.
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Types of Arbitration

 Institutional Arbitration

 It is an arbitration undertaken by the arbitral institution. The parties

may freely choose the institution to arbitrate the dispute submitted.
Besides, the law may require the parties to submit the dispute for
arbitration in a particular institution vested with power to do so.

 Ad hoc Arbitration

 It is an arbitration whose parties agree among themselves and

arrange for arbitration. No institution undertakes this arbitration.
 It is not conducted according to the rules of an arbitral institution.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Features of Arbitration
 It is based on an agreement between the parties – s 4(b) of the
Arbitration Act

 The parties have procedural freedom - s 4(b) of the Arbitration Act

 An arbitral award is binding upon the parties.

 The arbitrator must act in accordance with the rules of natural justice
- s 4(a)(i) of the Arbitration Act.

 The arbitrators must be independent and impartial in accordance

with codes of ethics and conduct - s 4(a)(i) of the Arbitration Act.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Benefits of Arbitration
 The parties have a free choice to select a tribunal that fits the
nature of their dispute.

 An agreement to enter into arbitration may be enforced by the

courts

 Arbitrations are held in private and they are also protected by the
laws of privacy.

 Arbitration has the quality of delivering a final and binding award.

 Ease of enforcement of arbitral awards.

Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Benefits of Arbitration
 The process is speedier and less costly compared to
normal suits.

 There is avoidance of strict adherence to procedural

aspects of law.

 It brings efficiency and effectiveness because of the

expertise of arbitrators.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Sources of Arbitration in
Tanzania
 The basic laws applicable in Commercial arbitration in
Tanzania are:

 Arbitration Act

 The Law of Limitation Act

 Arbitration Rules

 The Civil Procedure Code Act.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Sources of Arbitration in
Tanzania
 There are institutional rules governing arbitration proceedings
which are conducted by these institutions.

 For example, the Tanzania Arbitration Institute Rules, 2008. They

are rules applicable when arbitration is done by arbitrators
from Tanzania Arbitration Institute.

 The National Construction Council Arbitration Rules of 2001. The

National Construction Council Act has mandated this Council to
entertain arbitration proceedings and when you submit to this
Council, apart from arbitration Act you will be governed by
their Rules.
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Right to Arbitration
 Except where there is statutory arbitration like
under the Commission for Mediation and
Arbitration, the right to arbitration is only available
where there is arbitration agreement or arbitration
clause.

 In its absence no one case goes for arbitration.

Hence, arbitration clause or agreement is the basis
for almost all extrajudicial arbitral proceedings.
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Arbitration Clause
 Arbitration clause is the clause of the main contract or separate
written agreement by which the parties agree that the disputes
between them shall be referred to arbitration and arbitrator's
decisions shall be final and binding upon the parties.

 Section 3 of the Arbitration Act denotes that arbitration

agreement means an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which
may arise between them in respect of a defined legal
relationship, whether contractual or not

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Arbitration Clause
 Tanzania Motor Services Ltd and Others v Mehar Singh
T/A Thaker Singh, Civil Appeal No. 115 of 2005 observed
that arbitration clause is distinct from the other clauses
and that its breach can be specifically enforced by the
machinery of the Arbitration Act.

 Arbitration clause sets out the number of arbitrators to

eb appointed, the manner of appointing the arbitrators,
their qualifications, the place and language of
arbitration, the applicable law and many others.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Irrevocability of Submission to
Arbitration
 This is the doctrine which states that where the contract contains arbitration
clause or submission to arbitration , such clause cannot be revoked unless the
High Court gives leave to revoke it.

 In doing so, the provisions of the First Schedule to the Arbitration Act must be
considered. Those provisions deal with execution of submission to arbitration.

 Section 4 of the Arbitration Act provides for a doctrine of irrevocability of the

clause relating to submission to arbitration.

 In CONSTRUCTION ENGINEERS AND BUILDERS LTD v SUGAR DEVELOPMENT

CORPORATION 1983 TLR 13, the court held that where it is clear that the parties to a
contract have agreed to submit all their disputes or differences arising "under" the
contract to an arbitrator, the dispute must go to arbitration unless there is good
reason to justify the court to override the agreement of the parties
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Irrevocability of Submission to
Arbitration
 Azania Bancorp Ltd and Another v The Treasury
Registrar – Hatibu M. Co. ltd

 The high court rejected the contention of revoking the

submission to arbitration because it was procured by
fraud and misrepresentation and

 It was ordered the matter to be referred to arbitration

as per the founding contract.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Who is Arbitrator
 Arbitrator is a disinterested person, to whose judgment and
decision matters in dispute are referred.

 Arbitrator is an independent person or body officially

appointed to settle a dispute.

 Arbitrator means a person who handles arbitration

disputes – s 3 of the Arbitration Act

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Who may act as Arbitrator
 The Arbitration Act provides in section 5 that the
parties to a submission may agree about the
reference and qualification for an arbitrator or
arbitrators or appoint a person designated in their
agreement.

 As a rule of practice a sitting judge may not be

appointed as an arbitrator. There are no other
restrictions.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Appointment of Arbitrators
 General rule, the parties have power to appoint arbitrator to arbitrate
their dispute.

 Section 8 of the Arbitration Act covers the situation where parties fail to
come to an agreement regarding the appointment of the arbitrator(s).

 Any party may serve the other party or the arbitrators, as the case may
be, with a written notice to concur in appointing the missing arbitrator.

 Subsequently, by virtue of the same section, the court may, on application

by the party who gave the notice and after giving the other party an
opportunity of being heard, appoint the arbitrator

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Powers of Arbitrators
 Arbitrator has power to hear and determine the
matter that has been referred to them.

 Arbitrator is required to determine the matters

faithfully.

 This means the arbitrator has to determine the

matter fairly, impartially and without fear or favour.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Powers of Arbitrator
 To appoint an umpire

 To extend time of making an award.

 To examine witnesses under oath or affirmation.

 To order provisions for cost of arbitration.

 To make arbitral award.

Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Removal of Arbitrators

 misconduct during the proceedings;

 justifiable doubts as to his impartiality;

 lack of qualification

 physical or mental incapacity

 failure or refusal to conduct arbitration

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Relation between Parties and
Arbitrator
 The general duty of arbitrators includes fairness and
impartiality as regards the parties.

 However, an arbitrator is not liable for anything done

or omitted in the discharge or purported discharge of
his functions as arbitrator unless the act or omission is
shown to have been in bad faith.

 The remuneration of the arbitrator lies solely in the

hands of the involved parties.
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Jurisdiction of Arbitral
Tribunal
 Mvita Construction Co. v Tanzania Harbours Authority,
Civil Appeal No. 94 of 2001 held that under the law of
Tanzania, an arbitrator’s authority, powers and
jurisdiction are founded on the agreement of the parties
to a contract to submit a present or future differences
to arbitration.

 Hence, the jurisdiction of an arbitral tribunal is conferred

upon it by its appointment on the basis of the arbitration
clause or arbitration agreement or submission to
arbitration.
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Differences between Arbitration Act
and UNCITRAL Model Law
 Under the Model Law, three arbitrators are the established
requirement, whereas schedule 1 of the Arbitration Act
provides that only a single arbitrator is necessary;

 Arbitration Act requires arbitrators to proceed in an impartial

manner whereas the Model Law prescribes the additional
requirement of independence; and

 Unlike the Model Law, the tribunals’ determination of its own

jurisdiction under domestic law is not a necessary
prerequisite to a party’s desire to appeal to court.
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Commencement of Arbitral
Proceedings
 Arbitral proceedings are initiated by the notice of arbitration. In any event, the following
provisions apply:

 where the arbitrator is named or designated in the arbitration agreement, arbitral

proceedings are commenced in respect of a matter when one party serves on the other
party or parties a notice in writing requiring him or them to submit that matter to the
person so named or designated;

 where the arbitrator or arbitrators are to be appointed by the parties, arbitral

proceedings are commenced in respect of a matter when one party serves on the other
party or parties notice in writing requiring him or them to appoint an arbitrator or to
agree to the appointment of an arbitrator in respect of that matter; and

 where the arbitrator or arbitrators are to be appointed by a person other than a party
to the proceedings, arbitral proceedings are commenced in respect of a matter when
one party gives notice in writing to that person requesting him to make the
appointment in respect of that matter.
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Place and Language of
Arbitration
 Where the parties have not agreed upon the place
of arbitration and the language of the arbitral
proceedings, the tribunal will decide on the matter.

 In Tanzania the language of arbitration will usually

be English and the place will be determined having
regard to the proximity of the subject matter to the
place of arbitration or the convenience of the
parties involved

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Court’s Powers on Arbitral
Proceedings
 Unless otherwise agreed by the parties, the court
has, for the purposes of and in relation to arbitral
proceedings, the same power in relation to the
making of orders regarding matters under
consideration, as it has for the purposes of and in
relation to legal proceedings.

 Those matters include the granting of an interim

injunction or the appointment of a receiver

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Stay of Proceedings
 Pursuant to section 6 of the Arbitration Act, a party may
apply to the court to stay the legal proceedings if he
can establish the existence of a valid arbitration
agreement on a matter which under the arbitration
agreement is to be brought to arbitration.

 The court will normally grant the stay unless there is

evidence the arbitration agreement is null and void,
inoperative, incapable of being performed or the
applicant has taken a step in the court proceedings.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Arbitral Interim Measures
 Unless otherwise agreed by the parties, the court
has, for the purposes of and in relation to arbitral
proceedings, the same power in relation to the
making of orders regarding matters under
consideration, as it has for the purposes of and in
relation to legal proceedings.

 Those matters include the granting of an interim

injunction or the appointment of a receiver.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Arbitral Awards
 The award must be in writing and signed by all the
arbitrators or all those assenting to the award.

 The award must contain reasons for the award

unless it is an agreed award or the parties have
agreed to dispense with reasons.

 The award shall further state the seat of the

arbitration and the date when the award is made.
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Arbitral Awards
 The arbitral tribunal can make a declaration as to any matter to
be determined in the proceedings and order the payment of a sum
of money.

 Moreover the tribunal has the same powers as the court in respect
of ordering a party to do or to refrain from doing anything or to
force a specific performance of a contract.

 The tribunal may also make interim, partial or final awards

depending on the circumstances of the case. If the dispute is
settled during the proceedings, the parties may request that a
consent award is attached to the settlement agreement for the
purpose of recognitionEliudand enforcement.
Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Date of Arbitral Award
 Unless the parties agree differently, the date of the
award is the date on which it is signed by the
arbitrator or, where more than one arbitrator signs
the award, by the last of them.

 The date of the award is crucial for any challenge to

the award or any application for rectification,
clarification or correction.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Correction of Arbitral Award
 The parties are principally free to agree on the powers of the
tribunal to correct an award or make an additional award.

 If there is no such agreement, the tribunal may on its own initiative

or on the application of a party correct an award so as to remove
any clerical mistake or error arising from an accidental slip or
omission, or to clarify or remove any ambiguity in the award, or
make an additional award in respect of any claim (including a
claim for interest or costs) which was presented to the tribunal but
was not dealt with in the award.

 Any correction of an award forms part of the award.

Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Challenging Arbitral Award
 According to section 16 of the Arbitration Act, the court may set
aside the award where an arbitrator or umpire has misconducted
himself or an arbitration or award has been improperly procured
and serious irregularities affected the tribunal, the proceedings or
the award.

 Section 15 of Arbitration Act provide for remission of the arbitral

award to the arbitrator for reconsideration.

 Declaring the award to be of no effect either whole or part as per

the case of TANESCO v Dowans Holding SA (Costa Rica) and
Dowans Tanzania Limited (Tanzania)
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Cost of Arbitral Proceedings
 The costs of the award are at the discretion of the arbitrators
or umpire, who may direct how and by whom those costs or
any part thereof will be paid.

 In addition, he may tax or settle the amount of costs to be

paid and may award costs to be paid between advocate
and client.

 The award of costs is in the sole discretion of the arbitrator(s)

and there is no rule or practice that the loser pays the costs
of the winner or the splitting of the costs in any proportion.
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Recognition of Foreign Arbitral
Award
 The Arbitration Act governs domestic arbitral
proceedings and enforcement of foreign arbitral
awards.

 Pursuant to schedule 4 of the Act, foreign arbitral

proceedings are recognised as binding when they
are or have been conducted in the territories of any
contracting party of the Geneva Convention on the
Execution of Foreign Arbitral Awards.

Eliud Kitime, ADR: Theories, Principles and Practice of

Arbitration
 Requirements for Recognition and
Enforcement of Foreign Awards
 A foreign award is enforceable if:

 it has been made pursuant to an arbitration agreement that was valid under the law by
which it was governed;

 it has been made by the tribunal provided for in the agreement or constituted in the
manner agreed upon by the parties

 it has been made in conformity with the law governing the arbitration procedure;

 it has become final in the country in which it was made; and

 it has been made in respect of a matter which may lawfully be referred to arbitration
under the law of Tanzania and its enforcement is not contrary to the public policy of or
the law of Tanzania.
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration
 Requirements for Recognition and
Enforcement of Foreign Awards
 Foreign awards will not be enforceable if:

 the award has been annulled in the country in which it was made;

 the party against whom it is sought to enforce the award was not given
notice of the arbitration proceedings in sufficient time to enable him to
present his case or was under some legal incapacity and was not properly
represented; or

 the award does not deal with all the questions referred to or contains
decisions on matters beyond the scope of the agreement for arbitration. In
that case, the court may postpone the enforcement of the award or order
its enforcement subject to the giving of such security by the person
seeking the enforcement.
Eliud Kitime, ADR: Theories, Principles and Practice of
Arbitration