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IN THE HIGH COURT OF TANZANIACOMMERCIAL DIVISION
AT DAR ES SALAAM
COMMERCIAL CASE NO.159 OF 2013
ISLAM ALLY SALEH BALHABOU PLAINTIFF
VERSUS
LATIF NASHER NUMAN DEFENDANT
Date of last Order: 11.02.2014
Date of ruling.' 02.05.2014
This is a ruling on a preliminary objection that this Court does
not
have territorial jurisdiction to entertain this suit. The facts
briefly are that,
the Plaintiff, ISLAM ALLY SALEH BALHABOU, who is a natural
person
and businessman resident in Msasani, Dar es Salaam lodged a suit
in this
Court on the 11th November, 2013 against the Defendant,
LATIF
NASHER NUMAN, a Kenyan citizen, resident in Dubai and carrying
on
businessin Dubai and Luanda,Angola.
The Defendant raised through his Written Statement of Defence
a
point of preliminary objection that this Court lacks
jurisdiction to entertain
the suit and sought this Court to strike it out. The preliminary
point of
objection by consent of the learned Counselsfor the parties was
disposed
of by way of written submissions,Mr. Kilindu, Advocate for the
Defendant
in support and Mr. Mwakajinga, Advocate for the Plaintiff in
rival.
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In the suit, the subject of the preliminary objection, the
Plaintiff
claims from the Defendant for the payment of USD600,000.00
among
other things, being a refund for the sum the Defendant was
supposed to
pay the Plaintiff's Company but did not pay. The Plaintiff is
also claiming
for the payment of USD 1,500,000.00 being for building a
wheat
processingfactory in Luanda,Angola, the Defendant was supposed
to build
but which has not.
Mr. Kilindu for the Defendant premised his submissionson section
18
of the Civil ProcedureCode, Cap.33 R.E.2002, which he argues
that it is in
pari materia to section 20(a), (b) and (c) of the Indian Civil
Procedure
Code. In this regard Mr. Kilindu resorted to the commentary by
the learned
author of Mulla the Indian Civil Procedure Code, 15th Ed, on
the
principle underlying section section 20(a) and Section (b) as
being, "that
the suit is to be instituted at the place where the defendant
can defend the
suit without undue trouble." In light of section 18 of our Civil
Procedure
Code, Mr. Kilindu further submitted, the suit against the
Defendant should
have been filed in Dubai where the Defendant not only
voluntarily resides
but carries on business. Mr. Kilindu emphasized that as the
learned author
of Mulla the Indian Civil Procedure Code, 15th Ed noted, the
suit
should have been filed in Dubai, which is "the place where the
defendant
can defend the suit without undue trouble." The demand notice,
Mr.
Kilindu further submitted, was sent to the Defendant in Dubai
where the
Defendant's contacts are undoubtedly known to the Plaintiff and
his lawyer
as well. Mr. Kilindu submitted further that in terms of section
18 (c) of the
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Civil ProcedureCode, the Plaintiff has a right to file a suit
where the cause
of action arose wholly or in part.
It is quite evident from paragraphs 3, 4, 5 and 6 of the Plaint,
Mr.
Kilindu further submitted, that, the parties to the contract,
which is the
foundation of this suit, formed a company in Luanda, Angola
for
investing in a project which had to be implemented in Angola.
The
parties have even rented an office in Luanda,Angola in
furtherance of their
investment objective, Mr. Kilindu pointed out. Even the
documents
attached to the Plaint relating to the incorporation of the
company,
including the investment contract and other documents were made
in
Angola and are in Portuguese language, Mr. Kilindu further
elaborated.
This shows that parties had in mind of subjecting themselves to
the
jurisdiction of Courts of Angola in interpreting those
documents, should the
need to do so arise, Mr. Kilindu suggested. Mr. Kilindu sought
refuge in
Black's Law Dictionary, 8th Ed. at page 930 wherein to the
effect that
"the law of the place where a contract is executed or to be
performed or
the lex loci contractus (in LatinJ is often the proper law by
which to
decide contractual disputes."
Mr. Kilindu buttressed his argument on the validity of the law
of the
place where the contract was entered into by referring to the
decision of
the Court of Appeal in the case of GHARIB ABDALLAH JUMA
VERSUS
KAYMLINGA [2004] T.L.R. 74 where the Court had this to say:
"...the validity of a contract depends on the law of the place
where
the contract was entered into - ''lex loci contractus" and there
was no
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evidence that the marriage settlement was illegal under Danish
law,
the High Court in Zanzibar had no option but to accept it in
evidence
for what it was, a marriage settlement. "
Mr. Kilindu emphasized that, the validity or otherwise of
the
contract in issue must depend on the law of the placewhere it
was entered
into and in this case, Luanda, Angola. Mr. Kilindu added that
even the
cause of action arose in Angola and the law applicable to
determine the
validity or otherwise of the contract must therefore be Angolan
Law. In
such instance, Mr. Kilindu was of the view that, this Court does
not have
jurisdiction to determine a suit founded on an investment
contract, which is
in the Portuguese language, and which was entered into in
Luanda,
Angola.
Making reference to Order VII Rule l(e) and (f) of the Civil
Procedure
Code, which is to the effect that "the plaint shall contain the
facts
constituting the cause of action and when it arose and the facts
showing
that the Court has jurisdiction', Mr. Kilindu, submitted that,
in the present
suit, it is simply stated in paragraph 10 of the Plaint that the
parties held
meetings in Dar es Salaam with a view of investing in Luanda.
Those
meetings cannot constitute grounds to confer jurisdiction to
this Court to
adjudicate this suit, Mr. Kilindu observed and referred this
Court to the
learned author of Mogha's Law of Pleadings in India with
Precedents,15th Ed, commenting on the necessity of showing that
the
Court has jurisdiction. According to Mr. Kilindu, the Plaintiff
has miserably
failed to provide the required facts showing that this Court has
jurisdiction
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to try a suit which is founded on a contract which was signed in
Angola,
Luanda. Mr. Kilindu further argued that, the meetings the
parties held in
Dar es Salaam with a view of investing in Luanda did not
constitute
formation of contract in law. In the first place, Mr. Kilindu
further observed,
even the minutes of the said meetings, if any took place, were
not
attached to the Plaint to confirm having been held and to
convince the
Court that they could constitute facts showing that the Court
had
jurisdiction to try the suit. According to Mr. Kilindu, in the
absence of the
minutes there is nothing before the Court to satisfy itself that
the meetings
were held in Dare s salaam.
Mr. Kilindu concluded his submissions by referring this Court to
the
commentary by the learned author of Nulla Code of Civil
Procedure, at
page 253 thus:
''In a suit for damages for breach of contract, the cause of
action
consists of the making of the contract, and of its breach, so
that the
suit may be filed either at the place where the contract was
made or at the place where it should have been performedand the
breach occurred. ..But making of an offer on a particularplace does
not from cause of action in a suit for damages for breach
of contract. "
Mr. Mwakajinga replied by submitting that, the provisions of
section
20(a) and 20(b) of the Indian Civil Procedure Code are not
applicable in
Tanzania. Mr. Mwakajinga proposed that, this Court has to look
at the
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provisions of section 98 (1) of the Civil ProcedureCode, Cap.33
R.E. 2002
instead.
Mr. Mwakajinga submitted further that, the preliminaries of
forming a
company in Luanda by the parties was done by the shareholders in
Dar es
Salaam, Tanzania. According to Mr. Mwakajinga, the present
dispute is all
about the preliminaries of forming a company in Luanda and
therefore it
constitutes jurisdiction of this Court under section 18(c) of
the Civil
Procedure Code. According to Mr. Mwakajinga, the present dispute
is not
between the companies but between the shareholders. Mr.
Mwakajinga
referred this Court to a copy of Police Clearance Certificate
for the
Defendant from the Ministry of Home Affairs of the United
Republic of
Tanzania in Dar es Salaam to emphasis his point that the cause
of action
arose in Dar es Salaam,Tanzania. Mr. Mwakajinga submitted
further that,
all the agreements, including the allotment and payment of
shares was
done in Dar es Salaam and therefore any breach of the agreements
made
in Dar es Salaamconstitute a causeof action in Dar es
Salaam.
Mr. Kilindu maintained in rejoinder that, the Plaintiff can file
a suit
where the Defendant resides. In this case the Defendant neither
resides in
nor works for gain in Dar es Salaam.According to Mr. Kilindu,
the question
whether the cause of action arose in Dar es Salaam is
discernible from the
Plaint itself. Mr. Kilindu added that, shareholders and
allotment of shares
are not mentioned in the Plaint. Mr. Kilindu therefore invited
this Court to
ignore the comments of Mr. Mwakajinga in that regard and also to
ignore
annexture "A" to the submissionsof Mr. Mwakajinga.
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Mr Kilindu noted that, the learned Counsel for the Plaintiff has
not
commented on the doctrine of "lex loci contractus." Mr. Kilindu
reiterated
that this suit is not maintainable in this Court and it should
therefore be
struck out with costs.
In the present matter, the learned Counsels for the parties
have
flexed their muscles on the reach and import of section 18 of
the Civil
ProcedureCode, Cap.33 R.E.2002, which provides as follows:
"Subject to the limitations aforesaid, every suit shall be
instituted in a
court within the local limits of whosejurisdiction-
(a) the defendant or each of the defendants where there are
more than one, at the time of the commencement of the
suit, actuallv and voluntarily resides, or carries on
business, or personally works for gain;
(b) any of the defendants, where there are more than one, at
the
time of the commencement of the suit, actually and
voluntarily
resides, or carries on business, or personally works for
gain,
prOVidedthat in such case either the leave of the court is
given
or the defendants who do not reside or carry on business, or
personally work for gain, as aforesaid, acquiesce in such
institution; or ~
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(c) the cause of action, wholly or part, arises. (the
emphasis
is of this Court).
The general principle enshrined under section 18 of the
Civil
Procedure Code is that "every suit shall be instituted in a
court
within the local limits of whose jurisdiction'; in either the
situationsadumbrated in section 18(a) to (c) of the Civil
ProcedureCodeare present.
This particular legal position has been emphasized in the case
of AHMED
MOHAMED SIWlI VERSUS NBC LIMITED AND AMIN AHMED
SIWlI, Commercial Case No.96 of 2010, (High Court of
Tanzania)
(Commercial Division), (unreported) in the ruling of Makaramba
J., dated
5th August, 2011 at page 6. If either one or all of the
situations stipulated
under section 18 of the Civil ProcedureCode are present, the
requirement
for filing of a suit within the local limits of the court is
therefore mandatory.
As per the ruling of Dr. Bwana, J. as he then was, in IPP
LIMITED
VERSUSERNESTCOOVI ADlOVI AND KORAENTERTAINMENTS.A
{PTY) LTD, Commercial Case No. 66 of 2002, (High Court of
Tanzania) (Commercial Division), (unreported) at page 3,
jurisdiction
means:
"...the authority, competence and powers of the Court of law
to
conduct given proceedings. Competence entails territorial
coverage
and/or pecuniary limits plus kind of casesa given court may
handle. "
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The provIsions of section 18(a), (b) and (c) are couched in
the
alternative by the use of the word "or." This means that either
one or all of
the situations stated under that section may be present in
determining
were a suit should be instituted. I should point out here that
jurisdictional
limitation can be either by subject matter of the suit, the
nature of the
dispute, the value of the subject matter of the suit
(pecuniary), territorial
(spatial), or personal.
The provisions of section 18(a) and (b) of the Civil Procedure
Code
concern the personal jurisdiction in the senseof where the
defendant, oreach of the defendants (if more than one), at the time
of the
commencement of the suit, actually and voluntarily resides,
or
carries on business, or personallY works for gain. In order for
the
provisions of section 18(a) and (b) to come into play it must be
established
that at the at the time of the commencement of the suit, the
defendant actually and voluntarily resides, or carries on
business,
or personallY works for gain within the local limits of the
Court and in
this regard we mean the Commercial Division of the High Court
of
Tanzania.
A closer look at paragraph 2 of the Plaint reveals that, the
Defendant
actually and voluntarily resides in Dubai and his address for
purposes of
summons is that of Dubai, which means that that is where the
Defendant
carries on business or personally works for gain. This is
buttressed further
by the paragraph 8 of the Plaint which shows that, the
Plaintiff's lawyer
travelled from Luanda, Angola to Dubai to see and claim the
necessary
money from the Defendant, which money, the subject of the
pending suit,
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was supposed to be paid by the Defendant but the Defendant did
not
respond. This fact much as it emphasizesthe residency of the
Defendant
also shows that the cause of action arose in Luanda, Angola and
in Dubai,
United Arab Emirates.
This brings us to the other alternative for filing a suit, which
is found
under section 18Cc) of the Civil ProcedureCode, that is, where"
the cause
of action, wholly or part, arose." In his reply submissions
Mr.
Mwakajinga suggested that, the decision by the parties to invest
in Luanda
and the majority of their meetings were held in Dar es Salaam,
Tanzania,
thus clothing this Court with jurisdiction to entertain the
suit. I am of the
considered view and as Mulla Code of Civil Procedure observes at
page
253, the "making of an offer on a particular place does not
fromcause of action in a suit for damages for breach of contract" I
amof the firm view that the decision by the parties to invest in
Luanda and by
holding the majority of their meetings in Dar es Salaam
Tanzania, this
constituted an offer and does not therefore constitute a cause
of action in
a suit for damages for breach of contract becauseat that stage
the parties
had not created an intention to have a binding legal
relationship capable of
being enforced by court action.
The present suit is in the nature of claiming damages arising
out of an
alleged breach of a contract. As I intimated to above no such
contract ever
came to fruition and thus giving rise to a cause of action for
its breach. I
am of the considered view, and as Mr. Kilindu rightly submitted,
merely by
the parties deciding to invest in Luanda, Angola, and by holding
their
meetings in Dar es Salaam this alone did not constitute an
intention to
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create binding legal relationship enforceable by action for
damages of
breach of contract and thus confer this Court with any
jurisdiction. It is
pertinent to note here that jurisdiction is a statutory creature
and section
18 of the Civil Procedure Code emphasizes this legal position by
stating
clearly under what circumstances a court may assume
jurisdiction. As Mr.
Kilindu rightly submitted and as could be gathered from the
Plaint, there is
no where it is established that, the parties met and/or convened
any
meetings in Dare s Salaam. As such no minutes of any of the
alleged
meeting is annexed to the Plaint to prove the allegation.
In any event even if we were to argue for the sake of argument
that
there the meeting of the parties constituted a contract, which
is not, still
the suit was to have filed either at the place where the
contract was
made or at the place where it should have been performed and the
breach
occurred. However, section 18 of the Civil Procedure which
clothes this
court with jurisdiction stipulates very clearly that, the suit
shall be
instituted in a Court within the local limits of whose
jurisdiction the
Defendant actually and voluntarily resides or carries on
business or
personally works for gain or where the cause of action wholly or
part
arises.The word "actually' has received judicial interpretation
by Katiti,
J., as he then was in the case of K.N. MAFOLEAND OTHERS
VERSUS
TANZANIA PYRETHRUM BOARD, Civil Cause No.62 of 1998,
(unreported), which was quoted with approval by Dr. Bwana J. as
he
then was, in his ruling in the case of IPP LIMITED VERSUS
ERNEST
COOVI ADlOVI AND KORA ENTERTAINMENT S.A (PTY) LTD
(above). In K.N. Nafole And Others Versus Tanzania Pyrethrum
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Board, Katiti, J, defined the term "actually" as meaning that,
"the
Defendant shall not be put to trouble and probably expenses
travelling long
distances in order to defend himself. .. " This fact is
emphasized by Mr.
Kilindu when insisting that the suit should have been filed in
Dubai or
Luanda Angola and cited the learned author of Mulla the Indian
Civil
Procedure Code, 15th Ed, for the reason that that is "the place
where
the defendant can defend the suit without undue trouble. "
The undisputed facts in this case are that the Defendant, who is
a
Kenyan citizen, has his place of residence in Dubai and actually
works for
gain in Dubai and Luanda, Angola. The parties formed a company
in
Luanda, Angola for investing in a project which had to be
implemented in Angola. The parties have even rented an office
in
Luanda, Angola in furtherance of their investment objective.
Even the
documents attached to the Plaint relating to the incorporation
of the
company, including the investment contract and other documents
were
made in Angola and are in Portuguese language. On these facts
clearly the
parties did not intend that any dispute arising from this
contract should be
subject to the jurisdiction of a foreign country and in this
regard the United
Republic of Tanzania, where clearly there is connection with the
contract
which gave rise to the present suit.
I should point out here that in terms of section 3 of the
Civil
ProcedureCode, a "Court" is defined except where the expression
"foreign
court" is made, to mean the High Court of the United Republic, a
court
of a resident magistrate or a district court presided over by a
civil
magistrate and references to a district court are references to
a district
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court presided over by a civil magistrate. Article 108.-(1) of
the
Constitution of the United Republicof Tanzania, 1977 also
provides for the
existence of of "a High Court of the United Republic to be
referred toin short as "the High Court", the jurisdiction of which
shall be as
specified in this Constitution or in any other law. It is only
safe to conclude
therefore that the Civil ProcedureCode [Cap.33 R.E. 2002] which
governs
the conduct of civil proceedings in the High Court of Tanzania
and the
subordinate courts of District and Resident Magistrates' Courts
is therefore
the other law apart from the Constitution which confers
jurisdiction on
court in this country over civil suits. This being the case
therefore,
Tanzania not being neither the place where the contract was
made
(Iexi loci contractus) nor at the place where it should have
been
performed and the breach occurred, and the Defendant who
actually
resides and works for gain in Dubai and Luanda, Angola, clearly
this Court
has no jurisdiction in the suit.
In the whole and for the foregoing reasons the preliminary
objection
raised by the Defendant that this Court lacks jurisdiction to
entertain the
suit is hereby upheld. Accordingly the suit is hereby struck out
with costs.
R.V. MAKARA A
JUDGE
02/05/2014
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Ruling delivered this 02nd day of May 2014 in the presence
of:
For the Plaintiff: lv.: ~.~:..~:~j.~q"f A:.~.~ .For the
Defendant: fu.r..~ ~.0:~'f""~"" .
......... ~R.V. MAKARAMBA
JUDGE
02/05/2014