THE High Court's Commercial Division has ruled against an additional award given by the Tanzania Institute of Arbitrators (TIArb) to the Joint Venture of the Arab Contractors and Elsewedy Electric (Joint
Venture AC-EE).
The additional award was ordering the Bharya Engineering and Contracting Company Ltd (BECCO) to pay 849.76m/- to the JV AC-EE as liquidated damages upon breaching the subcontract agreement.
The JVACEE had subcontracted the BECCO to construct a 77-kilometre road from Kibiti to the construction site of the Julius Nyerere Hydropower Project (JNHP).
In his judgment issued recently, High Court Judge Ubena Agatho stated: "the application for additional award was time barred, the additional award itself was given out of time, and hence the Arbitrator acted without jurisdiction."
In the judgment, Judge Agatho argued that the first award was issued on 11/10/2022; the additional award was issued on 09/01/2023. That was 90 days from the date the first award was issued.
"Legally speaking, the additional award ought to have been issued within fifty six (56) days from the date of issuing the first arbitral award," he argued.
Again, the time limit for a party applying for correction of an award or applying for additional award is 28 days.
"It should be noted that the first award was issued on 11/10/2022, while the respondents (JVACEE)'s application for additional award is dated 09/11/2022. The application was a day late. The application ought to have been filed on 08/11/2022," he pointed out.
The said application was sent to the Arbitral Tribunal on 14/11/2022, that is 34 days from the date the first award was issued.
"...If the statutory period of limitation is not respected then there is no point of having such rules prescribing when certain legal action is to be taken," he argued.
Commenting on the judgment, advocate Benedict Ishabakaki of the Victory Attorneys and Consultants which represented the BECCO at the High Court, said he was happy with the ruling which has made justice.
Late January, this year, BECCO submitted an application to the court seeking the setting aside of an additional arbitral award issued by Sole Arbitrator Eng Dr Kumbwaeli Salewi of the TIAarb.
The two parties, BECCO and Joint Venture AC-EE, were being mediated at the TIAarb following contractual dispute arose over two years ago regarding the subcontract they entered for upgrading and
rehabilitation of the 64-kilometre road from Kibiti to Julius Nyerere Hydropower Project (JNHPP) at a cost of 8.19bn/-.
However, the two parties have since November 2020 entered into a pay dispute after the JVACEE claimed that the work was underperformed.
The attempts to resolve the dispute were made at several levels including the district and regional authorities, court and lately the arbitration.
On October 11, the TIAarb ruled that the JVACEE should pay the subcontractor, BECCO, a total of 587.9m/- (255,638 US dollars) for the work it performed.
But, the JV AC-EE, later on November 9 submitted a letter to the TIAarb demanding liquidated damages from the BECCO amounting to 849.76m/-.
Following its application, Sole Arbitrator Dr Salewi made an additional award, arguing that it was true that previously the arbitrator in its initial award did not consider the issue of liquidated damages as submitted by the respondent (JV AC-EE) in its statement of defense and counterclaim.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
"The claimant in this matter (BECCO Ltd) breached the subcontract agreement, and accordingly has to pay for the liquidated damages amounting to 849.76m/-.
However, the BECCO, through the Victory Attorneys and Consultants, submitted the petition to the High Court's Commercial Division to challenge the decision.
The application sought the High Court to issue an order to the effect that the additional award was made on the merits to be of no effect in whole on the grounds that the Arbitral Tribunal no longer had the substantive jurisdiction over the matter.
The plea further seeks court order to set aside the additional award made by the Arbitral Tribunal on the ground of serious procedural irregularity and bias in the issuance of the additional award.
