Tanzania: Top Hotel Executive's Arrest Sought As Part of Legal Battle

UBUNGO Plaza Limited has applied for the arrest and detention as civil prisoner, the Managing Director of Blue Pearl Hotel and Apartments Limited, Mr Rustamali Merani, for allegedly failing to comply + with a court decree for payments of over 4bn/- rental charges.

The company, which is the owner of Ubungo Plaza Complex, where Blue Pear Hotel was based, has filed the application to the High Court in Dar es Salaam. The Deputy Registrar, Ms Ruth Massam is set to hear the application on April 18, 2018. In the application, advocates Elisa Msuya and Oscar Msechu are appearing for Ubungo Plaza Limited, while Counsel Henry Massaba is representing the Blue Pearl boss in the execution proceedings.

The court's decree is dated November 3, 2017. The total sum claimed as per the decree extracted from the judgment given by High Court Judge Rehema Samaji is 1,919,042.81 US dollars plus 100m/-.

The judgment originates from a suit lodged by Ubungo Plaza Limited against Blue Pearl Hotel and Apartments Limited in 2016. Facts show that on October 19, 2006, the parties entered into a lease agreement where Blue Pearl Hotel and Apartments Limited rented and took occupation of one of the two-tower complex of Ubungo Plaza for use as a hotel and for conference facilities together with allied amenities and essential equipment. The leased premises are located along Morogoro Road in Dar es Salaam, belonging to Ubungo Plaza Limited.

The lease agreement was for a period of 15 years effective from October 19, 2006 to 2021. The payable monthly rate was 45,000 US dollars for the first two years. About 50,000 US dollars was to be paid for the third to fifth years and thereafter the total monthly rent was to be increased by eight per cent compounded, annually.

However, on December 10, 2013, Blue Pearl Hotel and Apartments Limited commenced arbitration proceedings against Ubungo plaza Limited. In the arbitration proceedings, Blue Pearl Hotel and Apartments Limited, the defendant, alleged material breach of the lease agreement on the part of Ubungo Plaza Limited, the plaintiff. After a full determination, the arbitral panel ordered the plaintiff to pay the defendant 3,171,854 US dollars.

The figure constituted the costs of the arbitral proceedings amounting to 46,614,614.13 US dollars and legal charges of 86,804.08 US Dollars. Thereafter, the defendant sought to offset the awarded sum from all the rental dues. However, the plaintiff filed a commercial case before the High Court to challenge the same.

The plaintiff was successful, whereby the High Court's Commercial Division nullified the award, ruling that the arbitrator had failed to observe the principles of impartiality and for misconduct. Since the defendant was not paying rent, the plaintiff issued notice of breach of the lease agreement. Several demand notices for payments were thereafter issued, but the defendant did not comply with any.

As a result, the plaintiff instituted the suit, which is the outcome of the decree now being sought to be executed by seeking orders to arrest and detain the defendant's boss as a civil prisoner.

In the judgment, the trial judge declared the defendant as being party to the lease agreement was bound by the terms and conditions entailed therein. The judge, therefore, declared the defendant to have breached terms and conditions of the lease agreement.

By: Faustine Kapama


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