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.

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

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

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

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

~

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.

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 ~

(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. "

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,

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

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

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

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

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