11 August 2014

Tanzania: Local IT Firm Wins Hefty Arbitration Award in Dar

AN Arbitration Tribunal has ordered Vodacom Tanzania Limited to pay a local IT Consulting Company, FTS Service Limited, over 1bn/- being bonus compensation and damage payments, among others, for breach of an Agreement for provision of converged services and products.

FTS Service Limited had sued Vodacom Tanzania Limited for violating terms of their agreement and terminated their contractual business relationship with the local partner unlawfully.

The Tribunal comprising Court of Appeal Justice John Mrosso (rtd), High Court Judge Thomas Mihayo (rtd) and President of Tanganyika Law Society, seasoned advocate Charles Rwechungula, concluded that Vodacom Tanzania Limited wrongly and prematurely terminated the agreement with the FTS Company.

According to an award issued recently by the Arbitrators, FTS Services had entered into an agreement with Vodacom Tanzania Limited as Vodacom Business Partner, for promoting and selling what is known as converged services and Vodacom Business Solutions since June 6, 2012.

The claimant was to sell, market and obtain sales orders for a complete range of Vodacom Enterprise solutions, which included but not limited to provision of front line after sales technical assistance, share general market information about Vodacom products to customers and manage customer relationship.

Records show that the contract was to continue for an initial period of two years and, thereafter, would be automatically renewed for an indefinite period.

It is alleged that on December 14, 2012, barely six months and eight days after start of the agreement, the respondent had written a letter of termination notice, which by then time barred, was emailed to the claimant on January 7, 2013.

The termination was made without any written notice being served to the local IT firm prior to the due date of termination. Efforts by the Claimant tried to have the Respondent reconsider its decision on termination of the contract were all in vain.

As a result, the IT local firm resorted to a clause under the agreement which allows taking the matter in dispute for arbitration. In their award, the arbitrators ruled, among others, that the respondent acted in breach of the agreement.

"The Claimant, therefore, was wrongfully terminated and was entitled for compensation on damages suffered as the result of the above illegal act.

The purported notice was not valid and it could not have the effect of terminating the agreement between the parties," they ruled.


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