The economic trajectory of Tanzania, marked by a surge in large-scale infrastructure projects, cross-border investments, and sophisticated international trade, has brought with it an increase in the complexity and volume of commercial disputes. For decades, the primary avenue for resolving these conflicts was the formal court system. However, the inherent challenges of litigation namely, court congestion, prolonged procedures, and a lack of confidentiality have spurred a strategic shift toward alternative dispute resolution (ADR) mechanisms.
I. The Legal Pillars of ADR in Tanzania
Tanzania’s commitment to modernizing its commercial dispute resolution framework is not merely theoretical; it is a deliberate legislative and judicial effort.1 The core of this modernization lies in two principal legal instruments: the Arbitration Act, 2020 and the amendments to the Civil Procedure Code.
A. The Arbitration Act, 2020: A Paradigm Shift
The Arbitration Act, 2020, which replaced the outdated Arbitration Act, Cap.2 15 R.E. 2019, is a monumental piece of legislation that has aligned Tanzania with international arbitration standards. Its provisions are designed to give parties greater autonomy and to limit undue court interference. This is crucial for attracting foreign direct investment, as international investors seek legal certainty and a predictable enforcement regime.
- Principle of Party Autonomy: The Act is founded on the principle of party autonomy, enshrined in Section 4, which states that “parties shall be free to agree on any matter in respect of which this Act provides that the parties may agree.” This empowers commercial parties to design a dispute resolution process tailored to their specific needs.
- Arbitration Agreement and Separability: The bedrock of any arbitration is a valid arbitration agreement, which must be in writing.3 The Act upholds the principle of separability, where an arbitration clause is considered a distinct agreement from the main contract in which it is contained. Section 19(2) explicitly states that “a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.” This ensures that even if the main contract is challenged, the jurisdiction of the arbitral tribunal remains intact.
- Enforceability of Arbitral Awards: The Act significantly strengthens the enforceability of both domestic and foreign arbitral awards.4 By ratifying the 1958 New York Convention, Tanzania has provided a clear legal pathway for the recognition and enforcement of foreign awards. Section 80 of the Act codifies this principle, stating that “a foreign arbitral award shall be recognised as binding and enforced in accordance with the provisions of the New York Convention.” The grounds for refusal of enforcement are narrowly prescribed, primarily limited to procedural issues or public policy concerns.5
B. Court-Annexed Mediation: Mandated Conciliation
Mediation, as a mandatory step for most civil suits, has become an integral part of the Tanzanian judicial system.6 Amendments to the First Schedule of the Civil Procedure Code (as per the Civil Procedure Code (Amendment of the First Schedule) Rules, 2021) require courts to refer certain cases to mediation before a full trial can commence.
- Purpose and Impact: This a strategic move by the judiciary to reduce the backlog of cases and to promote a culture of consensus. The process is confidential and provides a non-adversarial forum for parties to negotiate a settlement with the help of a neutral mediator.
- Legal Standing of Mediated Settlements: A settlement agreement reached through court-annexed mediation is legally binding. Upon application, it can be recorded as a consent judgment by the court, which gives it the same legal force and enforceability as a judicial order.
II. Procedural Aspects of Arbitration in Tanzania
The Arbitration Act, 2020, together with the Arbitration (Rules of Procedure) Regulations, 2021, establishes a clear and systematic procedure for conducting arbitration in Tanzania.7
- Commencement of Proceedings: Arbitration is initiated by a formal written notice from one party to the other, which is served in accordance with the agreed-upon rules. This notice should articulate the nature of the dispute and the relief sought.
- Appointment of the Arbitral Tribunal: Parties have the freedom to agree on the number of arbitrators (typically one or three) and their method of appointment.8 Section 11(1) of the Act provides that “the parties are free to agree on the procedure of appointing the arbitrator or arbitrators.” In multi-party disputes, the rules of institutions like the Tanzania Institute of Arbitrators (TIArb) or the Tanzania Arbitration Centre (TAC) offer detailed guidance on this process.9
- Conduct of Proceedings: The arbitral tribunal has broad discretion to determine the procedure. Section 26 empowers the tribunal to “conduct the arbitration in such manner as it considers appropriate, subject to the provisions of this Act.” This flexibility allows the tribunal to tailor the process to the complexity of the dispute, ensuring efficiency.
- The Arbitral Award: The award must be made in writing, be signed by the arbitrator(s), and contain the reasons for the decision, unless the parties have agreed otherwise.10 The award is final and binding on the parties and has the same legal force as a court judgment.
III. The Jurisprudence: Key Cases and Judicial Interpretations
The Tanzanian judiciary has played a crucial role in shaping the application of arbitration law through its rulings. These cases provide valuable precedent and clarity on key issues such as jurisdiction, multi-tiered clauses, and the relationship between courts and tribunals.
- Yara Tanzania v. Db Shapriya (Misc. Commercial Cause No. 3 of 2019): This case, though decided under the previous Act, provides a strong judicial signal of support for arbitration. The High Court, when faced with a petition to set aside a foreign arbitral award, underscored the principle of limited judicial review.11 It affirmed that a court’s role is not to re-litigate the merits of a case but to ensure that the award was not procured in violation of due process or fundamental public policy.12 This case demonstrates the judiciary’s commitment to upholding the finality of arbitral awards.
- M/S Hodi (Hotel Management) Co. v. The United Republic of Tanzania (2025) TZCA 138: This is a landmark ruling by the Court of Appeal concerning multi-tiered dispute resolution clauses that require mediation before arbitration.13 The Court ruled that a mediator’s report stating only that “mediation has failed” was insufficient to fulfill the contractual obligation of providing a “written opinion.”14 The Court held that this failure constituted a condition precedent to arbitration that had not been met, thereby depriving the arbitrator of jurisdiction. This case provides a critical lesson for contract drafters to ensure that all pre-arbitration conditions are unambiguous and meticulously fulfilled.
- Kundan Singh Construction Limited v. Tanzania National Roads Agency (TANROADS): While the enforcement proceedings for this high-value case took place in Kenya, it serves as a powerful illustration of a Tanzanian state-owned enterprise participating in international arbitration at the Stockholm Chamber of Commerce. The case highlighted the complex issues of enforcing foreign awards against a sovereign state and showcased the enforceability of awards against Tanzanian entities under the New York Convention.
Conclusion: A Stronger Foundation for Sustainable Growth
The transformation of Tanzania’s dispute resolution framework is a testament to the nation’s commitment to building a robust and investor-friendly economy. The modern Arbitration Act, 2020 provides a clear, reliable, and internationally-recognized legal foundation for arbitration. This, combined with the integration of mandatory mediation into the judicial process and a supportive judiciary, positions Tanzania as an attractive destination for both local and foreign investment. The roles of arbitration and mediation are no longer mere alternatives to litigation; they are central to ensuring business certainty, fostering confidence, and ultimately, building a stronger and more predictable legal environment for sustainable economic growth.
About the Author: Ellay Shukuru Sezero is an Advocate of the High Court of Tanzania.