The High Court’s Commercial Division has ruled against an additional award issued by the Tanzania Institute of Arbitrators (TIArb) to the joint venture of Arab Contractors and Elsewedy Electric (Joint Venture AC‑EE). The award required Bharya Engineering and Contracting Company Ltd (BECCO) to pay TSh 849.76 million in liquidated damages for breaching its subcontract agreement. The joint venture had subcontracted BECCO to construct a 77‑kilometre road from Kibiti to the Julius Nyerere Hydropower Project (JNHP) site.
In his recent judgment, High Court Judge Ubena Agatho held that the application for the additional award was time‑barred and that the arbitrator acted without jurisdiction. He noted that the first award was issued on 11 October 2022, while the additional award was rendered on 9 January 2023—90 days later. Legally, an additional award must be issued within 56 days of the first award. Moreover, the statutory period for applying for a correction or an additional award is 28 days. The joint venture’s application for the additional award, dated 9 November 2022, was a day late; it should have been filed by 8 November 2022. The application was only sent to the arbitral tribunal on 14 November 2022, 34 days after the first award. Judge Agatho emphasized that failure to respect the statutory limitation defeats the purpose of the procedural rules.
Advocate Benedict Ishabakaki of Victory Attorneys and Consultants, who represented BECCO, welcomed the decision, describing it as delivering justice. In late January, BECCO had applied to the court to set aside the additional arbitral award made by sole arbitrator Eng. Dr. Kumbwaeli Salewi of TIArb. The dispute between BECCO and Joint Venture AC‑EE originated over two years ago concerning the subcontract for upgrading and rehabilitating a 64‑kilometre road from Kibiti to the JNHP at a cost of TSh 8.19 billion. By November 2020, the parties were in a payment dispute after the joint venture claimed underperformance by BECCO. Attempts to resolve the matter involved district and regional authorities, the courts, and finally arbitration.
On 11 October, TIArb ruled that the joint venture should pay BECCO TSh 587.9 million (US$255,638) for work performed. However, on 9 November, Joint Venture AC‑EE submitted a letter to TIArb demanding liquidated damages of TSh 849.76 million from BECCO. In response, sole arbitrator Dr. Salewi issued an additional award, stating that the initial award had not considered the liquidated damages claim raised by the joint venture in its defence and counter‑claim.
BECCO, through Victory Attorneys and Consultants, petitioned the High Court’s Commercial Division to declare the additional award ineffective on the grounds that the arbitral tribunal no longer possessed substantive jurisdiction. The petition also sought to set aside the award due to serious procedural irregularities and bias in its issuance.
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