This article was featured in Jus Mundi‘s 2025 Arbitration Year in Review, an annual publication analyzing arbitration developments across 40+ jurisdictions on 6 continents. This edition brings together young practitioners and senior experts to capture the year’s most significant legislative reforms, enforcement trends, and institutional innovations.
THE AUTHORS:
Emmy Msomba, Legal Consultant, iResolveTM
The key developments in arbitration in Tanzania in 2025 emanate from judicial decisions giving interpretation to the provisions of the Arbitration Act. This discussion examines the Courts approach towards arbitration agreements with specific consideration on instances when questions arise regarding their scope, validity or enforceability. It explores the extent of the Court’s intervention when presented with an ambiguous arbitration agreement and the parties’ intention to resolve disputes through arbitration.
Arbitration Act [CAP 15 R.E 2023]
The Arbitration Act CAP 15 Revised Edition 2023 (“the Act”) came into force on 1st July 2025 as stipulated by the Government Notice No. 262 of 2025. The Act has not introduced any significant amendments to the Arbitration Act of 2020 (“former Act’), apart from correcting minor clerical errors. However, a notable change, which is discussed in detail below, is evident from the Act.
Powers of the Arbitral Tribunal on Default by the Claimant
The powers of the arbitral tribunal upon a party’s default in compliance and/or failure to take essential steps for conduct of arbitral proceedings in an expeditious manner are governed by Section 48 of the Act. While the former Act did not establish the power of the arbitral tribunal where default is occasioned by the Claimant and there is a risk or potential risk of failing to fairly resolve the claim, but only established the powers where the default would lead to prejudice to the Respondent, the same has been rectified by the Act. The arbitral tribunal now has the power to make an award dismissing the claim by the Claimant if the default may lead to a risk of not having a fair resolution of the claim.
Further to the amendment, the year 2025 has seen several significant judicial decisions addressing legal questions and establishing precedents in arbitration through the interpretation of the Act. This comes as a result of the increase in reliance on arbitration as a mechanism for the settlement of disputes between parties. A search on TanZLII shows that until November 2025 there has been a total of 189 judgments on arbitration from both the Court of Appeal (127 decisions) and the High Court Commercial Division (62 decisions) reported for 2025. From these reported decisions, this article presents decisions worth noting with a remarkable impact on the interpretation of crucial provisions of the Act.
Tanzania As a Pro-Arbitration Jurisdiction
On 25 April 2025, the High Court of the United Republic of Tanzania (Commercial Division) pronounced two Rulings of significance in the interpretation of arbitration agreements and the Arbitration Act. These are Oasis Brand Tanzania Limited v. Nancy Senyoni (Commercial Application No. 028130 of 2024) [2025] TZHCComD 74 (25 April 2025) and Lipton Teas Infusions Tanzania Limited v. C. H. B. S LTD (Commercial Case No. 11123 of 2024) [2025] TZHCComD 79 (25 April 2025), all decided by Hon. Gonzi, J.
From the outset, it should be noted that both cases were decided in 2025 but before the coming into force of the Arbitration Act of 2023, hence, the decisions refer to the Arbitration Act of 2020, whose provisions, as highlighted above, are para materia to the current Act.
In Oasis Brand Tanzania Limited, the Applicant lodged an application under Section 95 of the Civil Procedure Code and Rule 5 of the Civil Procedure (Arbitration) Rules for the court to invoke its inherent powers and proceed to grant an order appointing a sole arbitrator over a dispute between the parties. The application resulted from the parties’ failure to agree on the selection of an arbitrator. In determining the questions posed before it, the court determined that:
- Pathological clauses in arbitration agreements are poorly drafted or ambiguous provisions that hinder the execution of arbitration proceedings. The court found that there are two judicial approaches to tackling this hurdle. The first approach is to be taken by a court that is not in a pro-arbitration jurisdiction, where the jurisdiction of an arbitrator explicitly emanates from the arbitration agreement. The interpretation of the arbitration clause (agreement) by the court in such a jurisdiction is narrow to the extent that an ambiguous arbitration clause is interpretated against both parties’ intention to refer their dispute to arbitration. This, in turn, has the effect of giving mandate to the court’s interference in arbitration proceedings.
The second approach is taken by courts in a pro-arbitration jurisdiction. It is centred around the parties’ intention to resolve the claim through arbitration, which is to be upheld despite the presence of an ambiguous and poorly drafted arbitration clause. The court ruled that courts in Tanzania are in a jurisdiction which is pro-arbitration, as evidenced by the provisions of Section 14 (1) and (3) of the Act, which calls upon the court to refer parties to arbitration where an arbitration agreement exists. The Court cemented its holding that Tanzania takes a pro-arbitration approach by making reference to Article 107 A (2)(d) and the Civil Procedure Code, which emphasizes the settlement of disputes by alternative mechanisms. - What comes after the court determines an arbitration clause as being pathological? The court found that the result of a pathological clause, such as the one leading to the dispute laid before it, was to put parties in a deadlock insofar as the choice of arbitrators is concerned. It is at this point that the court has now been called upon to first cure the deficiency in the pathological clause by “augmenting or supplementing” the pathological agreement in a manner that makes it effective and does not interfere with parties’ autonomy in arbitration. This can be done by subjecting the pathological agreement to institutional arbitration and rules of the institution which take into consideration the principle of party autonomy.
Similarly, in Lipton Teas Infusions Tanzania Limited, the suit emanated from a construction agreement between the Plaintiff and the Defendant. where the Plaintiff claimed for payment of 167, 397.511.70 Tanzanian Shillings and interest both at commercial rate of 18% and interest on decretal sum at the court rate of 7% per annum. While filing its Written Statement of Defense, The Defendant lodged a preliminary objection against the claim on the basis that it was instituted prematurely because of the presence of an arbitration clause. In determining the case the Court found that the arbitration clauses between the parties were pathological clauses which were poorly drafted. The same two approaches of dealing with pathological clauses were also discussed in this case. The first approach is for Courts in a pro-arbitration jurisdiction when faced with pathological clauses, the Court will give effect to the parties’ intention to arbitrate by upholding the arbitration clauses despite the anomaly.. The second approach is practiced by Courts not in a jurisdiction that is pro-arbitration where the Courts interpret an arbitration clause narrowly and any ambiguity is to be resolved against the parties.
These two cases have established that the court’s role in relation to pathological arbitration clauses does not end in identifying and pinpointing the clauses. It further extends to giving effect to the arbitration agreement by amplifying the pathological agreement to make it effective while upholding the principle of party’s autonomy. This position is exemplified by the Court in Lipton Teas Infusions Tanzania Limited where the parties’ initial agreement provided for settlement of disputes through arbitration by a non- existing institution that is the Tanzania Arbitration Association. The Court found that although this clause was salvageable, the best approach to uphold the party’s intention to arbitrate is to subject/direct the parties to an ideal existing arbitration institution with prevailing institutional rules.
These include institutions such as the Tanzania Institute of Arbitrators (“TIArb”), the National Construction Council(“NCC Tanzania”), and the Tanzania International Arbitration Centre.
Parallel Proceedings before the Court of Law and an Arbitral Tribunal
In Arab Contractors (Osmond Ahmed Osman & Co Limited) and Another v. Tanzania Electric Supply Corporation (TANESCO) and Another (Miscellaneous Commercial Application No. 000009573 of 2025) [2025] TZHCComD 247 (29 August 2025), the applicant instituted an application for the court to grant an order for stay of proceedings of a commercial case pending the conclusion of ongoing arbitration between the applicant and the 1st respondent. In determining the application before it the Court established that there is no law mandating it to order stay of proceedings pending determination of a related issue through arbitration where there is no arbitration agreement providing for reference of the matter to arbitration. The Court established that the test to be used when determining an application for stay is the existence of a valid and enforceable arbitration agreement.
The Court found that pursuant to the provisions of Section 14 (3) and 15 (5) of the Act, the conduct of what it termed as “parallel proceedings” is allowed if the dispute is the same before both the court of law and an arbitral tribunal, even in instances where there is an arbitration agreement. That, the court may permit such a situation where the court: (a) does not find it fit to refer the dispute to arbitration; (b) where the court refuses to refer the dispute to arbitration; or (c) where the court refuses to stay a suit pending referral to arbitration. Despite the arbitration agreement, proceedings before the court are to be regarded as valid since arbitration is regarded as a condition precedent to institute legal proceedings in respect of the same dispute.
The Principle of Separability in Softpawa Limited vs Nanovas Tanzania Limited and 2 Others (Misc. Commercial Cause No. 19565 of 2024) [2025] TZHCComD 192 (25 July 2025) the applicant prayed for, inter alia, the recognition as final and binding the award of the sole arbitrator in Tanzania, in an arbitration where the seat of arbitration was England and Wales. In determining the various matters laid before it in relation to the arbitration proceedings, the Court found that:
- The respondent is precluded from challenging the validity of the arbitration agreement before the domestic court. This is because a claim of validity of an arbitral agreement is part of the elements of substantive jurisdiction of the arbitral tribunal, which were already determined by the tribunal, and the respondent had not raised the challenge under the laws of England and Wales before the arbitrator. This restriction is also presented under Section 80 (1) and (2) of the Act.
- A challenge of an agreement between the parties does not translate to a challenge of the arbitration agreement. The court found that the two agreements are regarded as separate agreements by the doctrine of separability pursuant to Section 12 of the Act. As such, the Court went further to regard the conduct of the parties upon occurrence of the dispute as significant in supplementing the application of the separability principle. The Court found that the act of exchanging written correspondences between parties after occurrence of the dispute as well as taking part in the arbitration without objecting to the existence or validity of the arbitration agreement are all impliedly regarded as waiver to a claim of lack of substantive jurisdiction.
This decision has further expanded the applicability of the principle of separability in Tanzania. A party to an arbitration agreement cannot escape obligations arising out of the agreement in instances where upon occurrence of a dispute they took part in the arbitration process.
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ABOUT THE AUTHOR
Emmy Msomba is a practicing Advocate and a member of the Tanganyika Law Society. She holds a Bachelor of Laws (LL.B.) from Mzumbe University and a Post Graduate Diploma in Legal Practice from the Law School of Tanzania. She also holds a Master’s Degree in Oil and Gas from the University of Dar es Salaam (UDSM), equipping her with specialized expertise in the energy sector. She currently serves as a Legal Consultant (IC) at iResolveTM providing legal services centered around corporate governance, risk management, policy development and regulatory compliance including telecommunication companies as well as litigation support.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
