Q&A – 28 December 2015
Insurance policy one sided
My household fire insurance policy states that I cannot make a claim 14 days after a fire or burglary. I was overseas and just came back into the country to find my house totally empty. Everything was stolen. My broker says that the 14 days have passed and I cannot now claim. What should I do?
UI, Dar
Your broker should be trying to protect your interests. At the moment he seems to be acting like an agent of the insurer. We have not read this weird houseowners policy but you can certainly challenge it. You might want to read the wording of the policy whether it is 14 days from the date you found out or the date of the burglary. This unfair term can be reported to the Commissioner of Insurance who has the powers under the Insurance Act 2009 to delete or amend, obscure or ambiguous terms in a policy. Unfortunately we do not have your policy to guide you any further but we believe you can pursue this with your broker and insurer.
Arbitrator not being appointed
We have a clause in a contract we entered into whereby each party will appoint an arbitrator, and the two arbitrators are required to appoint an umpire. Despite the other party having been informed of the arbitration they are not acting to appoint an arbitrator. What should we do?
YE, Mwanza
The Arbitration Act provides for such a scenario and states that where a submission provides that the reference shall be to three arbitrators, one to be appointed by each party and the third to be appointed by the parties, unless the submission expresses a contrary intention– (a) if one party fails to appoint an arbitrator for seven clear days after the other party, having appointed his arbitrator, has served the party making default with notice to make the appointment the party who has appointed an arbitrator may appoint that arbitrator to act as sole arbitrator in the reference and the award of the arbitrator so appointed shall be binding on both parties as if he had been appointed by consent. (b) if after each party has appointed an arbitrator the two arbitrators appointed fail to appoint a third arbitrator within seven clear days after the service by either party of a notice upon them to make the appointment, the court may, on an application by the party who gave the notice, exercise in the place of the two arbitrators the power of appointing the third arbitrator.
You can see that the law allows you to proceed with arbitration with the one duly appointed arbitrator. If the other party is not appointing an arbitrator then they might not even come to defend their case. It might be worth putting the party on notice for the last time to avoid having your arbitrator proceeding as the sole arbitrator, or to avoid the matter going exparte, which can pose a problem at a later stage.
Further lending by bank
If a bank lends money to a company in instalments based on a facility letter for the full amount, is the bank not making loans each time it disburses and should the bank not be getting consent for each disbursement? What happens if my husband has declared to a bank that he is not married?
FG, Morogoro
If the facility is for the entire loan amount, we do not see the need of the bank getting consent for each disbursement. For example, if the mortgage is registered for the full amount, the entire loan is covered.
As for the marital status, the law provides that an applicant commits an offence who by an affidavit or a written and witnessed document, knowingly gives false information to the mortgagee in relation to existence of a spouse or any other third party and, upon conviction shall be liable to a fine of not less than one half of the value of the loan money or to imprisonment for a term of not less than twelve months.
The latest trend which is evolving in the market is for spouses, most of whom know that their husbands are borrowing, to claim that they did not know of the borrowing and try to invalidate the mortgage. Banks should protect themselves by taking affidavits from such borrowers to limit exposure.
Arbitration under local rules
Is it true that the Government in Tanzania cannot enter into agreements with foreign arbitration rules of procedures? If so, is the Government not in breach of the various international dispute resolution treaties it has signed?
GO, Dar
It is not true that the Government cannot enter into agreements with foreign arbitration clauses. Most of the large oil and gas PSAs, and mining agreements provide for international arbitration under LCIA-London and ICC-Paris rules of procedure. Infact the Tanzania Investment Act provides for arbitration between investors and the Government under local law, or rules of procedure of the International Centre for the Settlement of International Disputes, or under any bilateral or multilateral agreement on investment protection.
You must differentiate between the arbitration venue, rules of procedures and the governing law as many parties end up confusing this.
The arbitration venue is the physical location of where arbitration will take place. Of recent the Government has however embarked on trying to limit arbitration out of Tanzania but that is a matter of negotiation between the parties. The rules of procedures are the rules that the parties agree to adopt to enable the arbitration to proceed in an orderly manner. Lastly, the governing law is the law that the parties agree to be bound to. When it comes to governing law, most contracts that the Government enters into are, understandably so, based on Tanzanian law.