In private international law, parties are at liberty to choose the law governing their underlying contracts and at the same time choose the forum for dispute resolution. This principle is also recognized under the laws of Tanzania.
Before embarking on the subject of this write-up, we crave to point out that there is a distinction between enforcement of foreign judgements and enforcement of foreign arbitral awards. The latter is addressed in a similar write-up.
In cross border financing transactions (where in this case the borrower is from Tanzania and the lender is from outside Tanzania), the governing law and dispute resolution forum are matters in financing documentation that lawyers in Tanzania are normally asked to provide expert advice. Typically, foreign lenders, in order to hedge potential risks, prefer the governing law of loan documentation (other than security documents), to be laws of their foreign jurisdictions (frequently English law). At the same time select courts in their home jurisdiction (frequently English courts) as appropriate dispute resolution forums, unless legal circumstances as shall be explained below, would not allow.
A question arises in a scenario where there is a dispute in respect of the financing documentation and a lender takes the dispute to a foreign court - will the judgement of that foreign court be enforceable in Tanzania as against the local borrower?
The answer to this question is found squarely in the Reciprocal Enforcement of Foreign Judgements Act, Chapter 8, Revised Edition 2019 of the laws of Tanzania, (hereinafter called the “Act”).
The Act makes provisions for the reciprocal enforcement of foreign judgements as between Mainland Tanzania and foreign countries and for other related matters. This means that only a judgement of the court of a country which has a reciprocal arrangement with Tanzania can be enforced in Tanzania in line with the terms of the Act. The process of recognition of a foreign judgement occurs when the court of one country or jurisdiction accepts a judicial decision made by the courts of another foreign country or jurisdiction without rehearing the substance of the original lawsuit. In the circumstance, once a foreign judgement is recognized, the party who was successful in the original case can then seek its enforcement in the recognizing country.
Countries that enjoy reciprocity treatment under the Act are limited to eleven (11), namely; Botswana, Lesotho, Mauritius, New South Wales, Zambia, Seychelles, Somalia, Zimbabwe, Swaziland, United Kingdom, and Sri Lanka. As a result, it should be well noted that not every judgement of a court from a foreign country will be enforceable in Tanzania.
Looking at the list of these countries, apart from the United Kingdom, there is an insignificant trade flow between them and Tanzania to warrant their inclusion in this era. Tanzania’s biggest trading partners include China, Germany, Japan, India, the European Union, United Arab Emirates, Kenya, Japan, India, and South Africa, to mention but a few, which, on the basis of trade and investment factors, warrant direct inclusion into this list. That said, it is high time this list is updated with the realities dictated by economic diplomacy needs, and not by historical patronage.
Registration of a judgement from a foreign court from the listed countries gives a foreign judgement, for the purposes of execution, the same force and effect (reciprocity) as if it had been originally given and delivered by the High Court of Tanzania.
To enforce a foreign judgement from a court in the listed countries, a judgement holder has to make an application to the High Court of Tanzania to have the judgement registered at any time within six (6) years after the date of the judgement or, where there have been proceedings by way of appeal against the judgement, within six (6) years after the date of the last judgement given in those proceedings.
Process of Registration
A foreign judgement will be registered with the High Court of Tanzania if: -
(a) it is final and conclusive as between the parties thereto; (b) there is payable thereunder a sum of money, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty; (c) it does not offend public policy; (d) the judgement is given after the coming into operation of the order directing the Act to extend to that foreign country; (e) is not time-barred (time limit is six years from the date the judgement is passed); and (f) it has not been wholly satisfied, such that it could be executed in the country of origin.
For one to initiate the process of registration, he has to do so by way of an application at the High Court of Tanzania for the order for filing the foreign judgement, which is then followed by proceedings.
The respondent during the proceedings will have the right to challenge the application and may plead several defences to counter enforcement of the foreign judgement in Tanzania against it, such as; (1) there was fraud in procuring the foreign judgement from the foreign court, (2) rules of natural justice were infringed, and (3) the foreign judgement offends public policy in Tanzania.
To sum up, in order to circumvent the limitation of the Act, the available option for inhouse lawyers and foreign lenders is to select arbitration as a dispute resolution forum since Tanzania is a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 and foreign arbitral awards are enforceable in the High Court of Tanzania in accordance with the Arbitration Act, Chapter 15 of the laws of Tanzania.
Note: This is not a legal opinion and the contents hereof are not meant to be relied upon by any recipient unless our written consent is sought and explicitly obtained in writing.
