Arbitration Agreement Clauses.

ARBITRATION CLAUSES IN
COMMERCIAL CONTRACTS
IN TANZANIA.
An arbitration agreement clause is a provision in a contract such as a commercial contract that
requires the parties to submit to arbitration all or certain disputes which have arisen or which
may arise between them in respect of their contract. It is obvious that sometimes disputes do
arise between the parties to the commercial contract either on failure to perform, poor
performance or any other form of breach, therefore parties can execute an agreement that entitles
them to resolve disputes through arbitration rather than going to court.
LAWS GOVERNING ARBITRATION
 The New York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, 1958.
 The UNCITRAL Model Law on International Commercial Arbitration, 1985.
 The ICSID Convention on the Settlement of Investment Disputes between States, 1966.
In Tanzania, these kinds of agreements are recognized by both domestic and international laws,
the arbitration agreement is defined under 3 of The Arbitration Act [CAP 15.R.E.2020] which is
the main legislation dealing with arbitration matters in Tanzania.
PRINCIPLES GOVERNING ARBITRATION AGREEMENTS
 Parties autonomy
Parties to a contract have the freedom to negotiate and agree on the terms of the contract without
interference from the government or other external forces. This principle is considered
fundamental to the functioning of a free market economy, as it allows individuals and businesses
to enter into agreements that best suit their needs and interests. It also allows for the efficient
allocation of resources by allowing market participants to make their own decisions about how to
use them.
 Separability of an arbitration agreement
An arbitration agreement is considered a separate and independent agreement from the contract
in which it is embedded. This means that if a dispute arises and one party seeks to invalidate the
contract, the arbitration agreement remains valid and enforceable. This principle is often
included in arbitration agreements to ensure that even if the underlying contract is found to be
invalid or unenforceable, the parties are still bound to resolve disputes through arbitration.
 Competence, competence principle
This principle is based on the idea that the parties to an arbitration agreement have chosen to
have disputes resolved by the arbitral tribunal, and so it is appropriate for the tribunal to have the
power to determine its own jurisdiction.
ESSENTIAL DETAILS TO BE CONTAINED IN AN ARBITRATION AGREEMENT.
An arbitration agreement as one of the legal agreements has to contain some essential details
which will make it easier for the parties to solve their disputes through arbitration in case of the
dispute must contain the following
 The rules and procedures that will govern the arbitration.
 The number and qualifications of arbitrators.
 The location of the arbitration.
 The scope of disputes that will be subject to arbitration.
 The language to be used in the arbitration.
 The process for initiating the arbitration, including any notice requirements.
 The clause should also indicate who will pay for the arbitration and how the arbitration
will be conducted.
IMPORTANCE OF AN ARBITRATION AGREEMENT CLAUSE IN THE

COMMERCIAL CONTRACT.
1. Binding: Once the arbitration clause is agreed upon, the parties are bound to follow the
arbitration process to resolve any disputes that may arise.
2. Speed and efficiency: Arbitration can often be faster and more efficient than going to
court, as the process is less formal and the parties have more control over the
proceedings.
3. Cost-effective: Arbitration can be less expensive than going to court, as the parties do not
have to pay for the costs associated with a trial.
4. Flexibility: The parties can also agree on the rules of the arbitration, such as the number
of arbitrators, the location of the arbitration, and the language to be used.
5. Limited appeal: Arbitration awards are typically final and binding, with limited grounds
for appeal.

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ARBITRATION CLAUSES IN

LAWS GOVERNING ARBITRATION

 The UNCITRAL Model Law on International Commercial Arbitration, 1985.

PRINCIPLES GOVERNING ARBITRATION AGREEMENTS

 Separability of an arbitration agreement

 Competence, competence principle

ESSENTIAL DETAILS TO BE CONTAINED IN AN ARBITRATION AGREEMENT.

 The rules and procedures that will govern the arbitration.

 The number and qualifications of arbitrators.

 The location of the arbitration.

 The scope of disputes that will be subject to arbitration.

 The language to be used in the arbitration.

IMPORTANCE OF AN ARBITRATION AGREEMENT CLAUSE IN THE

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