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Parliament passes a bill for the new Arbitration Act, 2020

Legal Alert

By Gasper Nyika and Faiza Salah

Introduction
A bill enacting a new Arbitration Act 2020 was passed by the parliament of the United Republic of Tanzania. The bill is now awaiting to be assented by the President of the United Republic of Tanzania. The proposed Act will repeal and replace the current Arbitration Act, Chapter 15 R.E 2002 (the “Arbitration Act”). This news alert gives a glimpse at the new proposed Act which, if assented by the President of the United Republic of Tanzania, will become a law binding on mainland Tanzania.

The new proposed Act is significantly different from the Arbitration Act as it has addressed extensively the challenges which were being faced by courts and litigants in the application of the Arbitration Act. The bill proposes to create clarity and efficiency in arbitration as one of the preferable means of settling commercial and investment disputes. The bill provides for all steps from the arbitration agreement, appointment of arbitrators, evidential hearing, enforcement, challenges and formation of an arbitration cen-tre and registry to regulate arbitration practice in Tanzania.

Salient features of the Bill

  • The bill introduces guiding principles in the application and interpretation of the Act, which is fairness, impartiality of the arbitral tribunal, speedy and less costly arbitral process.
  • The bill introduces, for the first time, the distinction between domestic commercial arbitration and international commercial arbitration. This distinction was missing in the Arbitration Act and that was a cause for a lot of confusion especially on the power of the High Court to entertain challenges in the recognition and enforcement of foreign awards.
  • The bill makes it clear that the propose Act will only apply if the seat of arbitration is Tanzania save for stay of proceedings and matters related to recognition and enforcement of awards. This position was missing in the Arbitration Act.
  • The proposed bill provides for definition of an arbitration agreement and the requirement for it to be in writing and the meaning of being in writing.
  • The bill provides for clear construction of arbitration agreements, what happens when a party to arbitration agreement dies and clear procedures on how to stay legal proceedings pending reference to arbitration. The proposed Act intends to cure the confusion which was in the Arbitration Act on whether the right to arbitration survives when a party to arbitration dies.
  • The bill also makes clear provisions for the composition of the arbitral tribunal, appointment of arbitrators and procedures for removal and or replacement of arbitrators. The bill provides for immunity of arbitrators from legal action arising from the discharge of their functions as arbitrators.
  • The bill maintains the right of the parties to challenge the jurisdiction of the arbitral tribunal and the power of the arbitral tribunal to determine its jurisdiction. However, the bill introduces the jurisdiction of the court to deal with a jurisdictional challenge of the arbitral tribunal by consent of the par-ties or the tribunal.
  • The bill provides for the general procedures to be followed in the arbitral tribunal from the duties of the arbitral tribunal, procedures in dealing with procedural and evidential matters in accordance with the agreement of the parties, consolidation of proceedings, representation of parties in arbitration to the power of the arbitral tribunal upon a party who fails to comply with the tribunal’s orders as well as how to enforce peremptory orders issued by the tribunal against a party to the arbitration before the court.
  • The proposed Act will also address arbitration costs and how parties can recover fees and expenses of arbitrators. The proposed Act also proposes procedures on how to recover fees and expenses of arbitration. These are all new provisions which never existed in the Arbitration Act.
  • Power and involvement of the courts of law in every stage of the arbitral proceeding from the power to extend time for commencement of arbitral proceedings, determination of jurisdictional matters to the power of the Court in the enforcement and recognition of domestic and foreign awards. The court’s involvement in the arbitration proceedings under the Arbitration Act was very limited com-pared to the proposed Act. However, in giving the courts power to intervene in almost every step of the arbitration, the bill emphasises the right of all parties or the arbitral tribunal to consent to the Courts’ intervention. In that case, the principle of arbitration process being parties driven is maintained.
  • The bill has also imported the grounds for refusal to enforce the arbitral award under the New York Convention and clearly indicates the tests to be satisfied before a court can recognise a domestic or foreign arbitral award for enforcement purposes.
  • In a step which would likely jeopardise the need to have finality of arbitral award, the bill introduces the right of appeal to the High Court on a question of law arising out of an award made in the proceedings. This will likely erode the principle of speedy and cost-effective process embodied in the proposed bill.
  • The bill provides for establishment of Tanzania Arbitration Centre with the functions of acting as a regulator of arbitration practice in Tanzania including maintaining a register of approved arbitrators in Tanzania. The bill provides for appointment of a Registrar within the office of the Ministry of Justice and Constitutional Affairs to deal with the approval and registration of practicing arbitrators in Tanzania.

Consequential Amendments

  • The bill further propose to amend Section 11 (2) and (3) of the Natural Wealth and Resources (Permanent Sovereignty) Act [Chapter 449 R.E 2002] on the requirement of disputes involving natu-ral resources to be dealt with by dispute settlement bodies established in Tanzania. The bill proposes to delete the word “established” in the cited section. This amendment is a significant change in the cited law in a sense that, once the proposed Act come into force, it will be sufficient for the hearing of disputes involving natural resources to be held in Tanzania and not necessarily before bodies es-tablished in Tanzania. The seating in Tanzania will be sufficient.

 Conclusion

  • All in all, the proposed Act brings in a new dawn in arbitration practice in Tanzania and takes care of a long overdue change which was required in arbitration practice in Tanzania.

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