What lessons from EADB’s legal drama in Dar?

In effect, the Bank was stuck with the appointment of the sole arbitrator as the new arbitrator with the mandate to hear and adjudicate afresh the parties’ dispute.

Just before the arbitration proceedings started, the Bank requested the arbitrator to disqualify himself but he declined to do so.

This refusal prompted the Bank to file a petition in the High Court for his removal as the sole arbitrator but the petition was struck out on a technicality.

The Bank embarked on an appeal against the High Court decision and simultaneously made an application for stay of execution to prevent the commencement of the arbitration proceedings.

Again the said application was struck-out by the Court of Appeal on the ground that the order of the High Court was not capable of execution.

In the meantime, of course, that in the absence of such an order of stay the arbitrator was free to proceed with the arbitration with or without the presence of the Bank.

Protests

Faced with that stroke bad luck in the courts, the Bank elected to cut its losses and move on and so in early 2005 it abandoned its intended appeal to the Court of Appeal against the dismissal of its petition for the removal of the sole arbitrator and submitted to the arbitration albeit under protest.

The record of arbitration proceedings shows that protests by the Bank against the conduct of the arbitrator characterised the entire hearing.

The objections involved, among others, claims about the manner in which the evidence of some witnesses was recorded and the use of evidence of persons who never appeared before the arbitrator.

In the end, on August 31, 2005, the arbitrator delivered his award in which he awarded Blueline damages for losses allegedly occasioned by the Bank in the sum of $61,386,853.

No award was made in respect of the Bank’s claim for the outstanding loans and interest due from Blueline.

It is settled law that an arbitrator owes the parties three principal duties — namely to take care, to proceed diligently and to act impartially.

The duty of care requires the arbitrator to perform his duties with reasonable skill and care expected of a judicious person.

Even then, in many ways no reasonable person could make some of the awards made to Blueline such as damages to the wife of its managing director for pain and suffering occasioned by the Bank’s appointment of a receiver and manager.