IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA
(COMMERCIAL DIVISION)
AT DAR ES SALAAM
COMMERCIAL CASE NO. 112 OF 2023
BETWEEN
AFRIGLOBAL COMMODITIES D.M.C.C.............................. PLAINTIFF
VERSUS
NESCH MINTECH TANZANIA LIMITED............................. DEFENDANT
RULING
Date of last Order: 29/04/2024
Date of Ruling: 03/05/2024
GONZI, J.
The brief facts of this case as collected from the plaint are that sometimes in 2018
the plaintiff concluded some transactions with the defendant by signing a number
of sales and purchase contracts in which the plaintiff supplied, and the defendant
purchased, different goods including sodium kainite and activated carbon
amounting to approximately 5.5 metric tons. The goods had a total value of United
States Dollars Nine hundred twenty nine thousand, one hundred fifty eight United
States Dollars. (USD 929,158.00 or its equivalent in UAE dirhams which was then
estimated at approximately UAE dirhams 3,419,000.)
It was alleged in the plaint that, in particular, the plaintiff and the defendant entered
into Contract No. MHTZ 20180901-MHTZ-005 dated 40th September 2018 with a
value of USD 132,250.00; Contract No.MHT - 20181101 -MHTZ-0054 dated 15th
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November 2018 with a value of USD 99,984.50; Contract No. MHTZ-20181201 -
MHTZ 0055 elated 5th December 2018 with a value of USD 299,953.50 and a
proforma invoice No. MHTZ -20180601 dated 20th June 2018 with a value of USD
396,970.00. Pursuant to the contracts between the parties, the plaintiff shipped the
consigned goods from the United Arab Emirates to Tanzania in accordance with all
the agreed quantities and specifications and the defendant duly received them.
Accordingly, the purchase price amounting to USD 929,158.00 became due and
payable to the plaintiff from the defendant against the total value of the supplied
goods in respect of which invoices were issued by the Plaintiff to the Defendant for
payment. The plaintiff alleged that despite several correspondences and repeated
demands sent to the defendant to settle the claimed amount, the defendant failed
and or neglected to pay hence a dispute arose. As per the terms and conditions of
the contracts entered by the parties herein, it was agreed that any disputes and /or
claims arising therefrom would be governed by the UAE laws and that the parties
had submitted themselves to the exclusive jurisdiction of the UAE courts. This
choice of law and choice of forum is found under Clause 7 (B and C) of the terms
and conditions of business and I reproduce it hereunder:
"Governing Law
the contract, and dispute or claim arising out of or in
connection with it or its subject matter or formation
(including non-contractua! disputes or claims), shall be
governed by and construed in accordance with the laws
of United Arab Emirates.
Jurisdiction
Each Party irrevocably agrees that the courts of United
Arab Emirates shall have exclusives jurisdiction to settle
any dispute or claim arising out of or in connection with
this contract or its subject matter or formation (including
non-contractua! disputes or claims}"
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Upon the contractual amounts becoming due and upon failure by the Defendant to
pay following the demand notice addressed to the defendant dated 09th November
2020z the plaintiff instituted a case in Dubai, which was registered as Commercial
Case No.2699 of 2021. It is alleged further in the Plaint that by email dated 15th July
2021 the defendant was summoned to appear in virtual court via the BOTIM video
calling program on 27th July 2021 at 9:00am but that the defendant defaulted
appearance.
The court conducted exparte hearing under the laws of procedure obtaining in Dubai
where an expert was appointed by the Court to review the claim and he came up
with the findings that the defendant is liable, as per the expert report, to pay an
amount of USD 929,158/= or its equivalent in UAE dirhams along with the legal
interest of 5% per annum from the judicial claim date which was on 12th July
2021. The Court in its decision dated 25th November 2021 endorsed the expert
report and entered Judgment and Decree accordingly against the Defendant who
was notified on 15th December 2022 by way of an email. After obtaining the said
judgement, the plaintiff unsuccessfully attempted to execute it as the defendant is
not a resident of Dubai and has no any known assets in Dubai. The plaintiff alleged
that so far, no reciprocal arrangement has been made between the United Republic
of Tanzania and the United Arab Emirates (Dubai) for the direct recognition and
enforcement of foreign judgements and hence this suit. The Plaintiff concluded that
the defendant submitted itself to the jurisdiction of the foreign court in Dubai and
that the foreign judgement sought to be recognized and enforced has become final
and was not obtained by fraud nor is it contrary to Tanzanian public policy and that
all rules of natural justice were observed before it was issued.
It was from the above background that the plaintiff instituted in this Court the
present suit praying for Judgment and Decree against the Defendant for the
following orders: -
a) A declaration that the plaintiff is entitled to have the
judgement issued in the name of God, the Most
Gracious, the Most Merciful in the name of His
Excellency, Shaikh Mohamed bin Rashid Al- Maktoum-
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Ruler of Dubai, Dubai Courts of instances (as per Hon.
Judge Allaudin Ibrahim Abdul-Hamid Zahran) dated
the 25th day of November 2021, in Commercial Case
No.2699 of 2021 recognized and enforced.
b) Payment of sum of United States Dollars Nine hundred
twenty-nine thousand one hundred fifty-eight (US $
929,158.00) or its equivalent in United Arabs Emirates
(UAE) dirhams pursuant to the judgment.
c) Interest at 5% per annual from 12/07/2021 till full
payment pursuant to the judgement being attorney's
fees pursuant to the judgment.
d) Payment of dirhams one thousand (USD 1,000.00) or
its equivalent in United States Dollars being the
attorney fees pursuant to the judgement.
e) Costs of suit; and
f) Any other reliefs as this honorable court deem just.
Upon being served with the plaint, the defendant duly filed their Written Statement
of Defence which also contained three points of Preliminary Objections in law that: -
a. That the honorable court lacks both subject matter
and geographical jurisdiction to entertain the suit.
b. That the suit is bad in law by mis joinder of causes of
action.
c. That the court has been improperly moved.
These preliminary objections were argued by way of written submissions and a
schedule was issued. Mr. Andrew Innocent Luhigo, learned Advocate, represented
the Defendant while Mr. John James, learned advocate represented the Plaintiff. The
Defendant's counsel duly complied with the court schedule and filed his written
submissions in support of the preliminary objections while the Plaintiff's counsel
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defaulted to file the same. Therefore, the court proceeded to determine the
preliminary objections on the basis of the written submissions filed by the
Defendants counsel only.
Mr. Andrew Innocent Luhigo, learned advocate for the Defendant, started his
submissions with the first preliminary objection which states that the honorable
court lacks both subject matter and geographical jurisdiction to entertain the suit.
On the issue of subject matter jurisdiction, he submitted that through the plaint it
is apparent that amongst the plaintiff's claims is one seeking for this court to
recognize and enforce the judgement allegedly issued by a court in the United
Arab Emirates. He submitted that that the law governing recognition of foreign
judgements in Tanzania is the Reciprocal Enforcement of Foreign Judgements Acts,
Cap 8 of the Laws of Tanzania. He argued that under section 3(1) thereof, the law
requires that for a foreign judgement to be recognized and enforced in Tanzania,
it must be coming from a country in respect of which Her Excellency the President
has given an order that its judgments by superior courts would be recognized in
Tanzania or in other terms that Tanzania has reciprocal arrangement with that
country for the recognition of its judgements in Tanzania.
Mr. Luhigo, learned advocate for the defendant, submitted that under paragraph 17
of the plaint, the plaintiff admits that Dubai/United Arab Emirates has no reciprocal
arrangements with the United Republic of Tanzania under the Reciprocal
Enforcement of Foreign Judgements Act, CAP 8 of the Laws of Tanzania for its
judgements to be recognized and enforced in Tanzania. He argued therefore that
with the foregoing position, this court lacks the subject matter jurisdiction to
entertain a suit which seeks recognition of a foreign judgment from a country whose
judgements are not legally recognizable in Tanzania.
Mr. Luhigo, learned advocate, submitted further from another angle that the court
lacks jurisdiction over the subject matter in that this is a Commercial Court which
specializes on disputes of a commercial nature as identified under Rule 2 of the
High Court Commercial Registries (amendments) Rules ,1999 and Rule 3 of the
High Court (Commercial Division) Procedure Rules, 2012 as amended in 2019. He
argued that this court cannot entertain a suit on recognition of a foreign judgement
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as that does not form part of what is recognized as a "commercial case" in the cited
provision of the law.
On geographical jurisdiction, Mr. Luhigo, learned counsel, submitted that reading
through paragraph 4 of the plaint in particular and the plaint in its entirety, one will
notice that the plaintiff, among other things, is claiming on the basis of breach of
contract. He reasoned however that looking at paragraph 9 of the same plaint, the
plaintiff is admitting that the parties to the said sale contracts had agreed that, in
case of any dispute, the courts and laws to be used would be those of the United
Arab Emirates hence excluding the jurisdiction of the courts of Tanzania to entertain
any dispute between the parties under the said contracts. He submitted, therefore,
that the present suit has been filed in this Court without the requisite jurisdiction. He
argued further, and alternatively, that in the event that this court finds that the
Tanzanian Courts have jurisdiction over the dispute, then the proper sub-registry to
admit and try the case at hand should have been the High Court Commercial
Division Mwanza sub-registry and not Dar es salaam Registry. He argued that this
would be in line with section 18(a) of the Civil Procedure Code Cap 33.
On the second preliminary objection that the suit is bad in law by Mis-Joinder of
causes of action, Mr. Andrew Mhigo, learned advocate, argued that that suit for
breach of contract and the suit for recognition of the foreign judgement have
been un-procedurally combined while they arose from two different causes of
action. He argued that reading paragraph 3 and 4 of the plaint in particular, and
the plaint in its entirety, it is obvious that the plaintiff is seeking remedies for
breach of a sale agreement and at the same time she is seeking for the
recognition of a foreign judgement. Mr. Mhigo argued that there is no any existence
of common questions of fact or law between the two causes of action in this suit as
to warrant their joinder. He argued that what the plaintiff has tried to do is a "trial
and error" practice which is unacceptable in law.
The learned counsel for the defendant argued further that the Plaintiff ought to have
separated the two processes for recognition of the foreign judgement on one hand
and the enforcement of the foreign judgement on the other hand. He submitted that
the recognition of a foreign judgement is a pre-requisite for its enforcement in
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Tanzania. He faulted the plaintiff for combining both claims of recognition and
enforcement of a foreign judgment into one claim.
On the third preliminary objection, the defendant alleged that the court is improperly
moved. He submitted that the law governing the Recognition/Registration of the
foreign judgements in Tanzanian is The Reciprocal Enforcement of Foreign
Judgement Act Cap 8 and that under section 4(1) thereof, a judgement creditor of
the foreign judgement should approach the court for its recognition in Tanzania by
way of an application, not by way of a suit as the Plaintiff has done in this case,
which is contrary to the law.
That marked the end of the submissions on the part of the defendant. As said, the
Plaintiff defaulted to file reply submissions and thus no rejoinder submissions could
come forth from the defendant.
Having read and analysed the submissions in support of the preliminary objections
from the learned counsel for the defendant, I will start to determine the first
preliminary which states that the honorable court lacks both subject matter and
geographical jurisdiction to entertain the suit. It is the law that questions of
jurisdiction of the court are critical and should be determined first. It is upon
satisfying myself that the court is vested with the requisite jurisdiction that I can be
empowered to entertain the other points of preliminary objections raised in this
case. As it was stated in the "MV Lilian S" case [1989] 1 eKLR that: -
"Jurisdiction is everything, without it, a Court has no
power to make one more step. Where the Court has no
jurisdiction, there would be no basis for a continuation of
proceedings pending other evidence. A court of law
downs tools in respect of the matter before it the moment
it holds the opinion that it is without jurisdiction."
In my considered view, without much ado, I find that the learned counsel for the
defendant has misconceived this preliminary objection. His arguments presuppose
that only foreign decisions emanating from countries with which Tanzania has
reciprocal arrangements with, in terms of section 3(1) of the Reciprocal Enforcement
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of foreign Judgments Act, Cap.8 are the ones which can be recognized and enforced
in Tanzanian courts. That is wrong. His argument would be correct only in cases
where the judgment holder of a foreign judgment seeks direct enforcement of his
foreign judgment in Tanzania. But the position of the law obtaining in Tanzania is
that foreign Judgments can be enforced in two different ways depending on whether
their countries of origin have reciprocal arrangements with Tanzania or not. Direct
enforcement approach applies where the country of origin of the foreign Judgment is
one with which Tanzania has a reciprocal arrangement for mutual recognition and
enforcement of their judgments. This is where section 3(1) of the Reciprocal
Enforcement of foreign Judgments Act, Cap 8 applies. To make use of this avenue
the country of origin and Tanzania must have entered into the reciprocal
arrangement and the President of Tanzania should, by Order, have' included that
country in the list of those countries whose judgements from superior courts would
be recognized and enforced in Tanzania. But then there is the second avenue
through which a foreign judgement can be recognized and enforced in Tanzania and
this one does not require existence of reciprocal arrangements between Tanzania
and the foreign country from which the foreign Judgment sought to be recognized
and enforced in Tanzania, emanates. For this second avenue to be available, one of
the requirements is the absence of reciprocal arrangements between Tanzania and
the foreign country from which the foreign Judgment sought to be recognized and
enforced in Tanzania, emanates. In this avenue, the foreign judgment will be
enforced by way of action, that is by the foreign judgment creditor instituting a fresh
suit in the competent court in Tanzania attaching the foreign judgment in his suit
and thereby bringing it to the attention of the Tanzanian court that there exists an
obligation by the Defendant as expressed in the attached foreign judgment which
obligation remains unfulfilled and thus the plaintiff is suing the defendant on the
basis of his failure to fulfil his obligations under the foreign judgment. This second
avenue is what the Plaintiff in the suit at hand has come in through, leaving the
Defendant waiting for him in futility lying in ambush at the wrong door ready to
smash the foreign judgment! He missed it and now the defendant is complaining
that the Plaintiff has entered through the wrong door whereas it was the defendant
who was setting a trap in the wrong avenue. The preliminary objection is
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misconceived. The Court of Appeal of Tanzania in Willow Investment Versus
Mbomba Ntumba And Two Other (1996) TLR 377 discussed in extenso the
applicability of the doctrine of obligation as the basis for which a foreign judgment
emanating from foreign states which have no reciprocal arrangement with Tanzania
for enforcement of their judgments, can be enforced in the country. The Plaintiff is
right in his approach and the Defendant is wrong in his first preliminary objection
which is hereby overruled.
On the objection that this court lacks territorial jurisdiction, the defendant's counsel
alleges that this matter was supposed to be entertained in the UAE courts and not
Tanzanian courts. I understand that the line of argument pursued by the Defendant's
learned counsel is one of party autonomy in choice of law and forum of dispute
settlement. The basis of the argument by the defendant's counsel stems from
clause 7 (B and C) of the terms and conditions of business their contract which
stipulated that:
"Governing Law
the contract, and dispute or claim arising out of or in
connection with it or its subject matter or formation
(including non-contractua! disputes or claims), shall be
governed by and construed in accordance with the laws
of United Arab Emirates.
Jurisdiction
Each Party irrevocably agrees that the courts of United
Arab Emirates shall have exclusives jurisdiction to settle
any dispute or claim arising out of or in connection with
this contract or its subject matter or formation (including
non-contractua! disputes or claims}”
The choice of law clause, also known as a governing law clause, allows the
contracting parties to choose the substantive law of the appropriate state to apply to
their contract. The choice of forum clause on the other hand allows the contracting
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parties to confer personal jurisdiction on the courts of the appropriate jurisdiction to
adjudicate disputes under their contract. Choice of the governing law and choice of
the forum clauses deal with two distinct issues: (1) the choice of law that is to
govern any dispute arising under the agreement; and (2) the choice of forum where
disputes will be heard. It is common in international trade for parties to choose the
applicable law to their contract as well as the forum to handle their dispute and that
forum can be an ordinary court or an arbitral tribunal. That is exactly what the
Plaintiff and the Defendant have done under clause 7A and B of their agreement. In
the book by Anthony Connery, titled Manual of International Dispute
Resolution, Commonwealth Secretariat (2006) at page 187 it is stated that:
Despite the increasing use of international commercial
arbitration backed up by the New York Convention,
litigation in the national courts is probably still the major
international dispute resolution process in use. In the
context of international contracts, the major problem in
relation to litigation is the prospect for one of the parties
of that litigation taking place in the courts of a foreign
country, conducted in a foreign language and under a
foreign system of law. However, litigation may be the
dispute resolution process used for a variety of reasons.
It becomes apparent, therefore, that a choice of foreign law and choice of a foreign
court by the parties to an international contract can be perfectly justified in litigation
taking place under the national courts in the same way that it can be used in
arbitration proceedings before the arbitrator or before the courts where challenge or
recognition and enforcement of the arbitral awards is ultimately sought. And the
position of the law obtaining in Tanzania is that where parties have chosen a foreign
court as the forum of dispute settlement, the Tanzanian court where proceedings are
insitituted should help the parties to keep to their bargain by staying the proceedings
and refer the parties to their chosen foreign court. This position can be seen for
example in the decision of the Court of Appeal of Tanzania in Sunshine Furniture
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versus Maersk (China) Shipping Co. Ltd and Nyota Tanzania Ltd Civil Appeal
No.98 of 2016 where the Court of appeal held that:
"we endorse the above view by the learned author that
the court in which the suit is instituted has the discretion
to stay the suit once it learns of existence of an
agreement between the parties to sue in a particular
forum, whether foreign or not. For, it neither can dismiss
the suit because it has not heard and determined it on the
merits nor can it strike it out because, except for the
choice of a different forum, it is otherwise competent to
try the matter. The high court in the instant matter, we
think, should have stayed trying the suit pending the
institution and determination of the claim in the court of
Rome. On that basis we vacate the dismissal order and
substitute for it an order staying the suit in the high
court, commercial division.
Therefore, when the learned counsel for the Defendant raised the preliminary
objection that this court lacks jurisdiction, in effect, he was arguing along the above
disclosed line of argument in law.
After giving a due consideration to the preliminary objection by the Defendant,
however, the same is bound to fail. There are two prongs of attack defeating the
arguments by the learned advocate for the Defendant. Firstly is, once again, the
misconception on the part of the learned counsel for the defendant in raising the
preliminary objection while basing on the assumption that this is a new suit for
breach of contract for supply of goods between the Plaintiff and Defendant. That is
not the case, the case at hand is based on the foreign judgment delivered by the
court in Dubai, the UAE. The basis of the Plaintiff's suit is not the international sale
of goods agreement between them but the foreign judgment delivered by the Court
in Dubai and which imposes the obligation upon the Defendant to fulfil its terms in
the same way that a binding Arbitral award would impose. The claims under their
international agreement were adjudicated to finality by the foreign court of their
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choice in Dubai, the UAE. The Defendant's preliminary objection would have been
validly raised had the Plaintiff instituted this suit first without having instituted the
same in the parties' chosen forum in Dubai, the UAE.
The second prong that also neutralizes the Defendant's preliminary objection is the
position of the law that even where parties have chosen a foreign forum for dispute
resolution under their international contract, that would nor deprive the Tanzanian
courts of jurisdiction where other factors would confer jurisdiction to the courts in
Tanzania. Choice of forum is a rule of preference between or among two or more
courts of different states which are both or all, otherwise, competent to deal with
the matter. It only means that whereas this court as well as the foreign court chosen
by the parties, both have jurisdiction over the dispute on different grounds, the
parties' own-chosen forum should be given prominence under the doctrine of party
autonomy. Party autonomy has been a common principle in contract law; thus it has
been drafted into most of the international conventions in contract law as well as
into domestic laws governing contracts. Party -autonomy entails, amongst others,
the parties' freedom of contract to decide the contractual terms and to negotiate the
terms of their contract for which they give their consents.
The defendant's learned counsel argued that under section 18(a) of the CPC, the Dar
es Salaam registry of the Commercial court has no jurisdiction as the defendant
resides in Mwanza. The Defendant is wrong. Section 18 of the Civil Procedure Code
does not confer territorial jurisdiction to the High Court. Section 18 applies to guide
the plaintiff where to institute a case where there are more than one courts within
the country, each having the requisite jurisdiction over the same matter. The logic is
simple, if one of the courts had no jurisdiction, after applying section 18 of the Civil
Procedure Code, there would be no alternative factors under it to be taken into
consideration in choosing where to file the suit. The jurisdiction of the High Court is
provided under Article 108(1) and (2) of the Constitution of the United Republic of
Tanzania which provides that:
108.-(1) There shall be a High Court of the United
Republic (to be referred to in short as "the High Court")
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the jurisdiction of which shall be as specified in this
Constitution or in any other law.
(2) Where this Constitution or any other law does not
expressly provide that any specified matter shall first be
heard by a court specified for that purpose, then the High
Court shall have jurisdiction to hear every matter of such
type. Similarly, the High Court shall have jurisdiction to
deal with any matter which, according to legal traditions
obtaining in Tanzania, is ordinarily dealt with by a High
Court provided that: the provisions of this sub-article
shall apply without prejudice to the jurisdiction of the
Court of Appeal of Tanzania as provided for in this
Constitution or in any other law.
The above stated jurisdiction of the Court could not be conferred nor be ousted by
the parties' consent or agreement. Forum choice operates only as a rule of
preference of one (foreign) court over another (local) where both courts would
otherwise be competent to determine the same dispute. Section 7 of the Civil
Procedure Code, is relevant here.
In the case at hand the dispute was entertained by the courts of United Arab
Emirates (UAE) pursuant to the parties' agreement on choice of law and choice of
forum and after the court in UAE heard the matter on merit and pronounced its final
judgement the Plaintiff discovered that the defendant has properties in Tanzania in
respect of which her decree could be effectively executed. The plaintiff has thus
brought the foreign judgment for recognition and enforcement in Tanzania. The
foreign judgment was based on a Commercial dispute. The jurisdiction of this court
is in the entire Tanzania mainland.
On the second preliminary objection the defendant's counsel alleged that the suit is
bad in law by mis joinder of causes of action. Right away, this preliminary objection
is on the wrong track. It has already been held herein above that the Plaintiff is not
suing afresh in this case for breach of the international agreement on sale of goods
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between the plaintiff and the defendant. There are no two causes of action mis
joined. This objection is grossly misconceived by the defendant who treats the suit
as one with dual causes of action for breach of contract and for recognition of the
foreign judgement. It is an action based on the foreign judgment under the doctrine
of obligation.
On the argument that the plaintiff has erroneously combined both recognition and
enforcement of a foreign judgement in one claim, again the defendant's learned
counsel has, with respect, gone astray and misconceived the nature of the case at
hand. Recognition and enforcement of a foreign judgment are two sides of the same
coin which go simultaneous.
By way of analogue, it is worth borrowing a leaf from a similar practice obtaining in
the recognition and enforcement of foreign arbitral awards under the Arbitration Act.
In Higher Education Students' Loand Board versus Tanzania Building
Works Limited, Misc. Commercial cause No.39/2022 this Court, (Hon.Nangela,J)
observed that "recognition and enforcement" go in tandem. The court held that:
"the exercise of registering an arbitral award for
recognition and enforcement of the same, was aimed only
at entering the dispositive portion of the arbitral award.
What was recognised and enforced and registered as a
judgment of the court was that part of the award
ordering the defendant to pay the sums awarded to the
plaintiff."
The argument by the defendant's learned counsel that recognition and enforcement
process in respect of a foreign judgment could not be sought in one suit, is a
misconception of the law. The objection is overruled.
On the third preliminary objection the defendant's counsel argued that the court has
been improperly moved as the defendant submitted that the plaintiff was
supposed to move this court by way of application according to section 4(1) of
the Reciprocal Enforcement of Foreign Judgements Act. Again this point of law is
misconceived and as I stated earlier herein that if Tanzania had a reciprocal
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arrangement with the UAE for reciprocal enforcement of foreign judgments, then the
avenue for enforcement of the foreign judgment in this case would have been
required to be made by way of application. That would have entailed a direct
enforcement without involving trial and reception of evidence in court. As the
Plaintiff acknowledge the absence of reciprocal arrangement for enforcement of
foreign judgments between Tanzania and UAE, the Plaintiff was correct in not filing
an application for direct enforcement rather he filed an action by way of a plaint. It
is the Defendants counsel who has misconceived the law in this aspect. The
preliminary objection therefore fails.
In fine, all the preliminary objections are misconceived. I hereby dismiss them all
with costs.
Ruling is delivered in Court this 3rd day of May 2024 in the presence of Mr. John
James learned advocate for the Plaintiff and Mr. Andrew Mhigo learned advocate for
the Defendant.
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