Serengeti Breweries vs Monaban Trading & Farming Co. Limited (Civil Appeal No. 52 of 2023) [2025] TZCA 1149 (17 October 2025)

IN THE COURT OF APPEAL OF TANZANIA AT ARUSHA (CORAM: LILA, J.A., FIKIRINI 3.A. And RUMANYIKA. J.A.T CIVIL APPEAL NO. 52 OF 2023 SERENGETI BREWERIES .......................................................... APPELLANT VERSUS MONABAN TRADING & FARMING CO. LIMITED ................... RESPONDENT (Appeal from the decision of the High Court of Tanzania Arusha Sub-Registry at Arusha) (Gwae. J.~ ) Dated the 22n d day of March, 2022 in Civil Case No. 1 of 2020 JUDGMENT OF THE COURT lffh & l / h October, 2025 LILA, J.A: The appellant, Serengeti Breweries Limited, instituted a suit before the High Court Arusha District Registry against the Cereal and Other Produce Board of Tanzania (then 1s t defendant) and the respondent, Monaban Trading and Farming Co. Limited (then 2n d defendant). The claim against both defendants was for release and handing over to the appellant of 1,383 metric tons of white sorghum valued at TZs 936,975,585.00 then stored at the warehouse located at Plot No. 1,3,5,7,11 and 11A, Unga i Limited Area, Arusha, damages and costs of the suit. The warehouse belonged to then 1s t defendant. Initially, the respondent, by an agreement for grain management services executed on 9/9/2017, between the appellant and the respondent, the later agreed to store a variety of the appellant's cereals in the said warehouse. As it were, for reasons not relevant in this appeal hence no need to tell them, the then 1s t defendant, wrote a letter to the respondent informing her that they have taken ownership and possession of the premises including all property and assets in the premises and required the respondent to vacate therefrom. In another development, whereas the respondent filed a written statement of defence against the suit denying all the appellant's claims as raised in the plaint, then then 1s t defendant, instead of filing a written statement of defence, emerged on 20/3/2020, through Mr. Clement Mathias, learned advocate, and expressed her intention in court that she had no interest in the white sorghum, the subject of the suit. Following that, Mr. Lubango, learned advocate and acting for the appellant, discharged the then 1s t defendant from the suit. The dispute therefore remained between the parties herein regarding the amount of sorghum the appellant was entitled to recover from the respondent. To accord with the situation, the appellant had to amend the plaint a prayer she sought and was granted on 28/7/2020. The amended plaint was accordingly lodged reflecting only the parties herein. For the sake of it, the suit was heard and determined and at its conclusion, the respondent emerged the winner and was granted various reliefs which, again, we see no need to show they being not relevant in this judgement. Aggrieved, the appellant has accessed the Court to challenge the High Court decision. At the hearing of the appeal, Mr. Renatus Lubango Shiduki. Learned advocate, appeared to represent the appellant. The Respondent enjoyed the services of Mr. Francis Stolla and Mr. Kapimpiti Mgalula, learned Advocates. Mr. Nathaniel Mollel, Principal Officer of the Respondent Company, was also present in Court. We heard both parties' submissions for and against the appeal. However, in the course of Mr. Shiduki's submission before the Court, he made reference to the agreement entered between the appellant and the respondent executed on 9/9/2020 (exhibit PEI) where the respondent agreed to store a variety of the plaintiff's cereals as found on page 521 to page 545 of the record of appeal. In the course of examining it, it came to our attention that the parties had chosen their own modality of resolving disputes arising from the agreement under clause 10 of it. Doubting if the 3 parties had pursued the course stipulated therein, we invited the counsel of the parties to address us on it to which both were in agreement that the dispute did not comply with it before the suit was instituted in court which was contravention of the settled law that the parties' choice of the procedure to resolve their dispute arising from a contract should be exhausted before recourse to court. They were of a concurrent view that the proceedings before the High Court, the judgement and the decree are, for that anomaly, a nullity. Mr. Stolla moved the Court to invoke the provisions of section 6(2) of the Appellate Jurisdiction Act, Cap 141 R. E. 2023 (the AJA) to nullify the proceedings, judgement and decree of the High Court with no order for costs as the matter was raised by the Court suo motuto which Mr. Shiduki readily agreed. We shall preface our resolution by examining the modality of dispute settlement the parties, by their own choice, agreed to have resort to. Clause 10 of the "Agreement for Grain Management Services" (exhibit PEI) found on page 125 of the record of appeal is relevant here. In it, whereas the appellant was referred to in its name or "SBL", the respondent was referred to as the "Supplier". It stipulates that: "10. DISPUTE RESOLUTION 10.1 SBL and the Supplier will endavour to resolve any dispute which arises between the parties through good faith negotiationsas follows: 10.11 The SBL Procurement Director/Manager and the Supplier's manager will attempt to resolve the matter within fourteen (14) days o f the matter being referred to them, or any other period agreed upon by the parties; 10.12 I f the matter is not resolved by those persons within fourteen (14) days o f the matter being referred to them' or any other period agreed upon by the parties, the matter will be referred to the respective Chief Executive Officers (or comparable officer) of SBL and the Supplier; 10.13 I f those persons are unable to resolve the matter within fourteen (14) days o f the matter being referred to them, or any other period agreed upon, such matter will be resolved exclusively by arbitration as provided in this clause. 10.2 Any controversy or claim, whether based on contract, tort or other legal theory (including, but not limited to, any claim o f fraud or misrepresentation), arising out or relating to this Agreement, including its interpretation performance, breach o f or termination that is not resolved by good faith negotiations, shall be resolved exclusively by arbitration in accordance with the following provisions: 10.21 The arbitration shall be conducted under the provisions o f the Rules o f Arbitration Act, Cap. 15 o f Laws o f Tanzania. 10. 22 The arbitration shall be conducted in English by a single arbitrator ("Arbitrator") to be appointed by agreement between the parties or, filing agreement within (14) days o f the notification by either party to the other o f the existence o f the dispute or claim, to be appointed by the Chairman for the time being o f The Chartered Institute o f Arbitrators, Tanzania Branch Dar es Salaam, Tanzania on the Application o f the either party. 10.23 The Arbitrator will be bound by the provisions of this Agreement. P.O. to his appointment, the selected Arbitrator shall be made aware o f the terms o f this Agreement. Following his appointment, the Arbitrator shall set forth the schedule and timing of the arbitration proceedings. 10.24 The Arbitrator shall have the right to assess the cost o f the arbitration and cost incurred by either party against the losing party or in such manner has he deems just The award rendered by Arbitrator shall be final and binding. 6 10.25 Upon rendering an award or a decision, the Arbitrator shall set forth in writing the basis o f such award or decision. 10.26 Judgment on the award or any other final or interim decision rendered by the Arbitrator may be entered, registered, or filed for enforcement" (Emphasis added) Under the clause, parties had opted their dispute be resolved by arbitration and the award thereof is final and is enforceable. In these circumstances, the parties had no right of recourse to court of law but for enforcement of the award by the Arbitrator. What then is the nature and function of an arbitration clause in a contract? This excerpt from Lord Macmillan in the case of Heyman v. Darwin Ltd (1941) AC 356 at page 375 quoted with approval in its completeness in the case of Tanzania Motor Services Ltd and Another vs Mehar Singh t/a Thaker Singh, Civil Appeal no. 115 of 2005, saves the purpose: 7 venture to think that not enough attention has been directed to the true nature and function o f an arbitration clause in a contract. It is quite distinct from the other clauses. The other clauses set out the obligations which the parties undertake towards each other but the arbitration clause does not impose on one o f the i parties an obligation in favour o f the other. It embodies the agreement o f both parties that, if any dispute arises with regard to the obligations which the one party has undertaken to the other, such dispute shall be settled by a tribunal o f their own constitution. And there is this very material difference, that whereas in an ordinary contract the obligation o f the parties to each other cannot in general be specifically enforced and breach o f them results only in damages, the arbitration clause can be specifically enforced by the machinery o f the Arbitration Acts. The appropriate remedy for breach o f the agreement to arbitrate is not damages, but is enforcement. Moreover, there is the further significant difference that the courts in England have a discretionary power o f dispensation as regards arbitration clauses which they do not possess as regards the other clauses o f contract."(Emphasis added) It is obvious that the parties had chosen to submit to the Arbitrator their disputes or differences arising from the contract. Expounding on the effect of such submission to the Arbitrator, the Court in Construction and Builders vs Sugar Development Corporation [1983] TLR 13, held that if parties agree to refer the matter to arbitration, then the case should start with arbitration. In its own words, it stated, in part, that: "...If it is dear ...that the parties have agreed to submit all their "disputes or differences arising "under" the contract to an arbitrator, then the dispute must go to arbitration unless there is some good reason to justify the court to override the agreement o f the parties. In the present case we can find no good reason to do so and we are accordingly o f the opinion that the learned High Court Judge properly exercised his discretion in ordering a stay o f proceedings in this case." It is evident and the learned counsel of the parties are concurrent, that the parties entered into a binding contract of cereal management and dispute as to the quantity taken to the respondent for storage and that taken away by the appellant. The dispute, therefore arose under the contract. They are in agreement, too, that the appellant instituted a suit (Civil Case No. 1 of 2020) against the respondent before the High Court of Arusha instead of invoking the arbitration clause. That amounted to circumvention of the modality of dispute settlement the parties, on their own, had chosen. Consistent with our holding in our earlier decision in Construction and Builders vs Sugar Development Corporation (supra), failure by the appellant to bring into play the arbitration clause stipulated in the contract was a serious error rendering the proceedings and judgment of the High Court a nullity. Accordingly, we hold that the suit before the High Court was incompetent and ought to have been struck out. No valid appeal may arise from an incompetent action/suit or decree. The present appeal is equally incompetent and we, invoking our powers of revision in terms of the 9 provisions of section 6(2) of the AJA, nullify the proceedings, judgment and the decree thereof. As this sufficiently disposes the appeal, consideration of the grounds of appeal is rendered a futile exercise. The anomaly having been sourced by the Court, and as the counsel of the parties agreed to each other, no costs should be awarded. Each party shall bear its own costs. DATED at ARUSHA this 16th day of October, 2025. Judgment delivered this 17thday of October, 2025 in the presence of Mr. Dennis Mworia, learned counsel for the Appellant, Mr. Kapimpiti Mgalula, learned counsel for the respondent and Ms. Jasmin Kazi, Court Clerk; is hereby certified as a true copy of the original. S. A. LILA JUSTICE OF APPEAL P. S. FIKIRINI JUSTICE OF APPEAL S. M. RUMANYIKA JUSTICE OF APPEAL 10