Monaban Trading & Farming Company Limited vs Cereal & Other Produce Board of Tanzania (Civil Appeal No. 539 of 2022) [2025] TZCA 1194 (14 November 2025)

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM fCORAM: MKUYE. J.A.. MAIGE. 3.A. And KHAMIS. J.A.^ CIVIL APPEAL NO. 539 OF 2022 MONABAN TRADING & FARMING COMPANY LIMITED ........... APPELLANT VERSUS CEREALS & OTHER PRODUCE BOARD OF TANZANIA.............RESPONDENT (Appeal from the Judgement and Decree of the High Court of Tanzania, Commercial Division) (Nanaela. 3.) dated the 2n dday of September, 2022 in Misc. Commercial Cause No. 9 of 2022 JUDGMENT OF THE COURT 7th & 14th November, 2025 MAIGE. J.A.: The dispute leading to the current appeal can be traced way back on 23rd day of August, 2007 when the appellant and the National Milling Corporation (the NMC), a specified public corporation in terms of the Public Corporation (Amendment) Act, 1993 (the Act), entered into a five years renewable Maize and Wheat Milling Agreement for milling and storage services at the Arusha maize and wheat plant located at Unga Limited Industrial Area, in Arusha (the storage facility). It would appear that, on 10th April, 2008, the above two entities executed an addendum with the effect of allegedly allowing the appellant to expand the storage i facility by carrying out major investment amounting to USD 2.684 million. In August, 2013, the Treasury Registrar as the statutory successor of the NMC executed an instrument of transfer under which several assets which belonged to the NMC, including the storage facility, were conveyed to the respondent. On 27th June, 2014, the appellant and the respondent executed a deed of variation under which the storage facility was conveyed to the respondent. While the agreement was still intact, the appellant alleged, the respondent took over the storage facility with intent to run the same on her own regardless of the investments made by the appellant hence the erruption of the dispute in the process of the address of which, the High Court of Tanzania at Arusha appointed Ms. Christina Ilumba, as a sole arbitrator. Eventually, the appellant submitted the dispute to arbitration. When the parties appeared before the arbitrator, the respondent raised an objection on account that, the arbitrator had no jurisdiction to entertain the matter. Having heard the matter in totality, the arbitrator, in the first place, overruled the objection and maintained that she had jurisdiction to arbitrate the dispute. She, thereafter, determined the dispute on its merit wherein she, among others, held the respondent to be in breach of the contract, awarded her a substantial amount of money as specific and general damages. Aggrieved, the respondent petitioned to the High Court, Commercial Division (the Commercial Court) for setting aside the arbitral award on material irregularities and misconduct on the part of the arbitrator. The Commercial Court found that, as the respondent was not privy to the contract constituting the arbitration clause, the arbitral tribunal had no jurisdiction to entertain the dispute. It, therefore, set aside the arbitral award. That, notwithstanding, it nullified the entire agreement on account that it was entered into between the NMC and the appellant in violation of the provisions of section 48 of Act as the NMC was a specified public corporation. Aggrieved, the appellant has instituted the current appeal on the following grounds: 1. The learned trial Judge erred in law and fact to set aside the arbitral award on the ground that, the arbitrator had no jurisdiction to hear and determine the arbitration while the said arbitrator was appointed by the High Court having the concurrentjurisdiction. 2. The learned trial Judge erred in law and fact to nullify the contract entered by the appellant and respondent while the said contract was the instrument ; with an arbitral clause, that governed the legal relation o f the said appellant and respondent ; and that the said parties had already honoured their rights and obligations under the said contract 3 3. The learned trial Judge erred in law and fact to set aside the arbitral award on the ground that the arbitrator had no jurisdiction to hear and determine the arbitration white the order to appoint the arbitrator was and is still in force, that is to say, the order is and was never reversed by review, appeal or revision. At the hearing, the appellant enjoyed the services of Mr. Francis Stolla, learned advocate, whereas the respondent enjoyed the services of Mr. Deogratius Nyoni, learned Principal State Attorney assisted by Ms. Pauline Mdendemi, the learned Senior State Attorney and Mr. Mkama Msalama, learned State Attorney. Notably, each party had, before the hearing, filed the relevant written submissions in support of its position in the appeal. While Mr. Stolla fully adopted the written submissions in support of the appeal without more, Ms. Mdendemi adopted it with some minor clarifications. We commend the counsel for their well-researched and focused submissions which have been of much assistance in the composition of this judgment. We shall start our deliberation with the first and third issues which in essence fault the Commercial Court judge in holding that the arbitral tribunal lacked the necessary jurisdiction to entertain the appeal. Mr. Stolla's submission in substantiation of this contention was based on two propositions. The first one being that, because the arbitrator was 4 appointed by an order of the High Court at Arusha, she possessed the jurisdiction to arbitrate the matter. It was submitted that by appointing her as such, the High Court at Arusha was satisfied that she had jurisdiction to entertain the dispute. Otherwise, Mr. Stolla insisted, the High Court at Arusha would have not given an order which was incapable of being acted upon. In response, it was submitted for the respondent that, as the order did not touch into the contract and establish that jurisdiction could arise therefrom, it cannot be said to have conclusively or at all, determined whether the respondent was privy to the contract so that the arbitral tribunal could have jurisdiction to arbitrate the dispute. Without much ado, we think Ms. Mdendemi is, in this respect, quite right because, as a matter of principle, jurisdiction to arbitrate a dispute in terms of the Arbitration Act is a creature of a contract between the parties. That being private contractual issues between the parties, ordinary courts cannot have jurisdiction to confer powers to an arbitrator that which is not founded on a contract between them. In here, what the High Court at Arusha was called upon to do, was to appoint an arbitrator. In such a motion, whether the parties were entitled under the contrary to refer the dispute to arbitration or not was not raised as an issue as to 5 render the order appointing the arbitrator as a factual finding to such a proposition. In the same vein, it was submitted for the appellant that because the appointment order was made by the High Court, it was not for another judge of the High Court to issue an order with the effect of rendering the appointment invalid as both judges have concurrent jurisdiction. In holding that the arbitrator had no jurisdiction, it was submitted, the Commercial Court invalidated the appointment order of the High Court at Arusha an act which is barred by the doctrine of functus officio. With respect, we see no merit in this submission because as we said in respect to the first contention, the previous order of the High Court apart from appointing the arbitrator, had nothing to say on her jurisdiction. Indeed, the proposition upon which the Commercial Court held the arbitrator to have no jurisdiction, namely, the respondent being not privy to the submission clause, was not in any way dealt with in the appointment order. The above said, we find the first and third grounds of appeal devoid of any merit and dismiss them. In the second ground, it was Mr. Stola's submission that the Commercial Court was not entitled to nullify the entire contract for being 6 violative of section 40A(1) (M) of Act based on the negligence of the respondent and her predecessors in title namely, the NMC and the Treasury Registrar. He submitted further that under the doctrine of promissory estopel set out under section 123 of the Evidence Act, the NMC and her successors in title were estopped from denying the legality and validity of the contract. In line with that, we requested the parties to address us whether the Commercial Court having established that the respondent was not privy to the contract, could have jurisdiction, in the same proceeding and between the same parties, to determine the legality and validity of the contract. Our major concern was, if, which we have established to be correct, the arbitrator had no jurisdiction to arbitrate because the respondent was not privy to the contract, where did the Commercial Court derive its jurisdiction to determine the validity of the contract? For the respondent, it was submitted, since the jurisdiction to entertain the dispute arose from the contract, determination of the validity of the contract was necessary. There was no comment from the counsel for the appellant apart from what he had submitted in his written submissions. We have considered the concern and examined the record. We understand it to be an elementary principle of law that, for a person to 7 sue or be sued in a civil action, he or she must have a suable interest. This is to say, he or she must have interest on the subject of the dispute. A stranger to a contract like the respondent, therefore, cannot move the court to have the same contract which she is not privy to, invalidated. In this case, the petition on the basis of which the arbitral award was set aside and the contract invalidated, was at the instance of the respondent who is irrefutably not privy to the contract. Be it valid or not, the contract, as per the record, was entered into between the appellant and the NMC. The latter has, however, never been a party to the arbitral proceedings. Neither in the petition resulting into this appeal. Equally so, for her successors in title. It follows, therefore that, a decision determining the validity of the contract could not be made in the absence of one of the signatories or her successor in title. More importantly, such a decree cannot be made at the instance of a stranger to the contract. These are elementary principles of law which need not citation of an authority. In view of the foregoing, therefore, the appeal partly fails to the extent of the first and third grounds of appeal which are dismissed, and, succeeds to the extent of the second ground of appeal but for other reasons, namely; the Commercial Court misdirected itself in determining the validity and legality of the contract at the instance of a stranger and 8 without affording one of the parties to the contract a right to be heard. On that account, therefore, the decision of the Commercial Court insofar as it nullified the contract is quashed and set aside. However, its decision that the arbitral tribunal had no jurisdiction to arbitrate the dispute is upheld. In the nature of the decision we have rendered, we will not make an order as to costs. DATED at DAR ES SALAAM this 13th day of November, 2025. R. K. MKUYE JUSTICE OF APPEAL I. J. MAIGE JUSTICE OF APPEAL A. S. KHAMIS JUSTICE OF APPEAL The Judgment delivered this 14th day of November, 2025 in the presence of Mr. Francis Stolla, learned counsel for the Appellant and Mr. Sharifu Abdallah, learned State Attorney for the Respondent, Mr. Ladislaus 9