INTRODUCTION
Arbitration is a form of alternative dispute resolution where a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. Under the Arbitration Act [Chapter 7:15], there are limited circumstances in which an arbitral award can be set aside. These include if the award is contrary to public policy, if it deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or if the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, among others. This write-up provides an overview of cases decided by the Supreme Court of Zimbabwe regarding the setting aside of arbitral awards.
CASE SUMMARIES
- Zimbabwe Electricity Supply Authority v Maposa 1999 (2) ZLR 452 (SC)
Background Facts:
Maposa, an employee of ZESA, was initially suspended from duty with pay pending investigations into charges of misconduct. After the investigations, ZESA’s Board offered the Maposa an opportunity to resign and avoid a suspension without pay pending disciplinary proceedings. Maposa refused to do so, whereupon, ZESA suspended him without pay pending a disciplinary hearing in terms of the code of conduct
However, before ZESA could proceed in terms of the code. Maposa instituted proceedings in the High Court seeking an order, inter alia, that the dispute be referred to an independent arbitrator. He argued that the Board’s disciplinary committee was not competent to conduct a hearing, as the Board had prejudged his guilt. The order was granted by consent and in due course the matter was heard by another arbitrator
Arbitration:
The issue for determination by the arbitrator was the lawfulness or otherwise of Maposa’s suspension and whether or not the same was guilty. The arbitrator held that the suspension was a nullity, as ZESA had failed to determine the dispute in terms of the code of conduct. He ordered ZESA to pay Maposa his salary and benefits.
High Court:
Maposa applied to the High Court for an order, pursuant to Article 35 of the Model law contained in the Schedule to the Arbitration Act [Chapter 7:15] for the recognition of the award. ZESA on the other hand sought to set aside the award, pursuant to Article 34 of the Model Law contained in the Schedule to the Arbitration Act [Chapter 7:15]. Both applications were dismissed by the High Court and both parties were aggrieved by the outcome of the High Court proceedings. As a result, ZESA appealed to the Supreme Court and the employee cross- appealed.
Supreme Court:
The Supreme Court held that Maposa’s actions of applying to the High Court to have the matter referred to another arbitrator made it impossible for ZESA to follow its code of conduct. By enforcing the arbitral award, it would have allowed Maposa to benefit from a situation that he had deliberately engineered. It was Maposa who had initiated the process to halt ZESA’s proceedings under the code of conduct, yet the award declared his suspension as unlawful due to the lack of compliance with the code.
In the result, the award was set aside on the basis that it was contrary to public policy.
Position of the Supreme Court:
The Supreme Court held that an arbitral award will not be set aside or not recognized merely because the reasoning or conclusions of the arbitrator are wrong in fact or in law. It was held that courts will only intervene if the award goes beyond mere faultiness or incorrectness and constitutes a palpable inequity that is so outrageous in its defiance of logic or accepted moral standards. The award must reach a level of injustice that is so intolerable that it would offend the public’s sense of justice for it to be set aside.
The court emphasized that the threshold for setting aside an arbitral award on public policy grounds is very high. It is not enough for a party to be simply unhappy with the award because it was made against them; there must be a clear violation of public policy for the court to intervene.
Therefore, the court in this case established a strict standard for setting aside arbitral awards on public policy grounds, emphasizing that the court’s role is not to act as an appellate body that can second-guess the arbitrator’s decision.
- Beazley NO v Kabell And Hippo Valley Estates (Pvt) Limited SC 22/2003
Background Facts:
The Supreme Court of Zimbabwe heard an appeal against a judgment of the High Court which had dismissed the appellant’s application to set aside the determination by the arbitrator. There was a contract between Hippo Valley Estates Limited and Main Contracting (Private) Limited for construction of a dam in Chiredzi District. The consulting engineer responsible for the project was Hart Frost. The engineer, in June 1995, advised Hippo Valley that Main Contracting had failed to proceed with the dam construction according to the terms of the contract and would not be able to complete the work on time. This led to the termination of the contract by Hippo Valley based on Main Contracting’s slow progress.
Arbitration:
A dispute arose over the termination of the contract and the dispute was referred to arbitration. The Arbitrator made a finding that the termination of a construction contract of the dam was valid.
High Court
Main Contracting approached the High Court to set aside the determination by the arbitrator. The High Court dismissed Main Contracting’s application to set aside the determination
Supreme Court:
Main Contracting, challenged the termination of the contract, arguing that proper notice should have been given before termination as per the contract terms. Main Contracting also sought to introduce additional evidence related to the unavailability of core material for the dam construction.
The court held that compliance with the notice provision was not a prerequisite for contract termination under the relevant clauses and that the arbitrator’s decision to exclude certain documents and refusal to allow additional evidence did not result in a failure to promote justice. The court also found that the arbitrator’s decision to uphold the contract termination was not in conflict with the public policy of Zimbabwe.
Ultimately, the Supreme Court dismissed the appeal, ruling that the arbitrator’s decision was reasonable and valid based on the evidence presented.
- Catering Employers Association of Zimbabwe V Zimbabwe Hotel and Catering Workers Union & Anor 2001 (2) ZLR 388 (S)
Background Facts:
In this case, Catering Employers Association of Zimbabwe appealed against a judgment of the High Court that confirmed part of an order issued by the Labour Relations Tribunal against the Association. The dispute arose from negotiations between the Zimbabwe Hotel And Catering Workers Union and the Association regarding wage increases and improvements in various conditions of service for industry employees.
Arbitration:
The parties failed to reach agreement, leading to the matter being referred to an arbitrator who made a determination on wage increases but referred other unresolved issues back to the parties. The dispute was later referred to the Labour Relations Tribunal for compulsory arbitration, which issued an order regarding minimum housing and transport allowances for employees, as well as split shifts in working hours.
High Court:
The Association sought a review of the Tribunal’s order, resulting in the High Court confirming parts of the order while setting aside aspects not submitted for arbitration. The Association then appealed the decision, arguing that the Tribunal’s order should be set aside. However, the Supreme Court held that the grounds for setting aside an arbitral award are limited and set out in the Model Law contained in the Arbitration Act.
Supreme Court:
The court discussed the importance and advantages of arbitration as a method of dispute resolution, especially in the labour field. The court emphasized that when parties agree to arbitration, they are bound by the decision of the arbitrator and generally abandon the right to litigate in court. The court also notes that it is crucial for parties to implement the arbitrator’s decision promptly and in good faith.
The court further addresses the grounds on which an arbitral award may be set aside by the High Court. It highlights that the sole grounds for setting aside an arbitral award are specified in Article 34 of the Model Law contained in the Arbitration Act. The court disagreed with the suggestion that the High Court may also review arbitral awards based on the grounds set out in the High Court Act.
In the result, the appeal by the Catering Employers Association of Zimbabwe was dismissed, as the grounds for setting aside the Tribunal’s order were not established in terms of the Arbitration Act.
- Zimbabwe Educational, Scientific, Social And Cultural Workers’ Union v Welfare Educational Institutions’ Employers’ Association 2013 (1) ZLR 187 (S),
Background Fact:
In the case of Zimbabwe Educational, Scientific, Social and Cultural Workers Union v Welfare Educational Institutions Employers Association, the Union and the Association were unable to reach an agreement in collective bargaining over minimum wages and allowances for employees, so they submitted the dispute to arbitration.
Arbitration:
An arbitration agreement was signed by the parties, which included a clause stating that the award issued by the arbitrators would be final and binding on the parties. The arbitrators were chosen by the parties and handed down their award on 19 June 2009 in favour of the Union.
Labour Court:
The Association, however, was dissatisfied with the award and noted an appeal on 30 June 2009, and also applied for a review of the award on 10 July 2009 at the Labour Court. The Labour Court granted the appeal on the grounds that the arbitrators had seriously misdirected themselves.
Supreme Court:
The Union noted an appeal to the Supreme Court, and argued that voluntary arbitration proceedings are not appealable and that the Labour Court does not have jurisdiction to hear the appeals and reviews of the arbitration disputes.
In the result, the Supreme Court held that voluntary arbitration proceedings cannot be subjected to either an appeal or review under the Labour Act, as they are governed by the Arbitration Act, which provides that an appeal against an arbitral award lies with High Court. The appeal was granted, and the judgment of the court a quo was set aside.
Position of the Supreme Court on Setting Aside an Arbitral Award:
The court emphasized the importance of finality in arbitration awards. The court held that when parties agree to arbitration and choose their own arbitrators, set their own terms of reference, and agree that the award will be final and binding, the court generally respects their chosen procedure and does not interfere with the results. The court is usually hesitant to intervene, even if the arbitrator is wrong, except in limited circumstances where the award goes against public policy inter alia. The standard for setting aside an arbitral award is high.
- Peruke Investments (Private) Limited v Willoughby’s Investments (Private) Limited & Another -SC 11/2015
Background Facts:
The matter revolved around a dispute regarding the sharing of rental income derived from two adjoining stands, with a building straddling both stands, purchased by Peruke Investments and Willoughby’s Investments. The parties had acquired the properties under separate deeds of transfer, with Peruke Investments paying 70% of the total purchase price and Willoughby’s Investments paying 30%.
The building, known as Lonrho House, was leased out as a single unit to a third party, with the rental income shared equally between the parties. However, Peruke Investments challenged the equal sharing arrangement and sought an arbitral ruling on the matter.
Arbitration:
The arbitrator held that the income derived from the two stands should be in proportion to the specific contributions made by each party towards the total purchase price. As a result, the claim for a 50% share of the rentals was dismissed by the arbitrator.
High Court:
Willoughby’s Investments subsequently challenged the arbitral award as being contrary to public policy. The High Court upheld the challenge, finding that the arbitrator’s decision to allocate only 30% of the net rental income to Willoughby’s Investments was inequitable and contrary to public policy. The High court set aside the arbitral award, with costs.
Supreme Court:
On appeal, the Supreme Court addressed two main issues. Firstly, it considered the procedural point of whether Willoughby’s Investments had filed its challenge within the prescribed three-month period from receiving the arbitral award in terms of the Model Law. The court examined the interpretation of when precisely the first respondent had received the award and ruled that the application was filed in time.
Secondly, the Supreme Court delved into the substantive merits of the case, focusing on the apportionment of income and expenditure between the parties. The court refuted the High Court’s finding that the arbitrator’s decision was contrary to public policy, reasoning that the proportionate sharing of rental income based on each party’s contribution to the purchase price was justified, given the differences in the value of the stands and the building on them.
The Court made a finding that there was no indication that the arbitrator had failed to understand or apply his mind to the issue at hand. The court also did not find any glaring illogicality or immorality in the arbitrator’s reasoning or conclusions regarding the apportionment of rental income and expenses between the parties. As a result, the Supreme Court concluded that the court a quo erred in holding that the arbitral award constituted a palpable inequity contrary to public policy. The court, therefore, upheld the arbitral award.
Position of the Court on Setting Aside an Arbitral Award:
The Supreme Court highlighted the cautious approach that should be taken when considering whether an arbitral award conflicts with public policy. The court emphasized that the public policy defence should be invoked only in the most glaring instances of illogicality, injustice, or moral turpitude.
The court held that an award would not be deemed contrary to public policy simply because the arbitrator’s reasoning or conclusions are wrong in fact or law. However, if the arbitrator’s decision goes beyond mere faultiness or incorrectness and results in a palpable inequity that defies logic or accepted moral standards to the extent that it would intolerably hurt the conception of justice, then it would be contrary to public policy.
- Alliance Insurance V Imperial Plastics (Private) Limited And Anor- SC 30/2017
Background Facts:
The matter revolved around a dispute between Alliance Insurance, and Imperial Plastics (Private) Limited, regarding an insurance claim made by Imperial Plastics under an assets all-risk policy held with Alliance Insurance. Imperial Plastics suffered a fire incident at its plastic processing plant which resulted in damage to its building, stock, and other movables covered under the insurance policy.
In order to assess the damage and value of the claim, auditors appointed by Alliance Insurance requested information from Imperial Plastics. After conducting an audit, the auditors appointed by Alliance Insurance determined the amount to be paid as compensation. However, Imperial Plastics contested the payment amount, claiming it was below the sum insured, and engaged its own auditors who came up with a different valuation for the stock.
Arbitration:
As per the insurance policy, any disputes regarding a claim had to be referred to arbitration. Imperial Plastics initiated arbitration proceedings and made several claims, including the replacement of a crane, valuation of stock based on the BDO audit report, evaluation of electrical connections, and reimbursement of arbitration costs. Alliance Insurance opposed these claims, arguing that the crane was not covered under the policy and challenging the valuation by BDO.
The arbitrator ruled in favour of the Imperial Plastics in relation to the crane and stock valuation, ordering Alliance Insurance to replace the crane or pay its equivalent value and to pay the balance determined by the BDO report for the damaged stock. The claim for electrical connections was dismissed, and Alliance Insurance was ordered to cover the costs on a legal practitioner/client scale.
High Court:
Unsatisfied with the arbitral award, Alliance Insurance brought an application before the High Court to set aside the award under section 34 of the Arbitration Act, alleging that the award exceeded the scope of submissions for arbitration and violated public policy. The High Court dismissed the application, leading Alliance Insurance to appeal the decision.
Supreme Court:
The Supreme Court, in its judgment, deliberated on the grounds presented by Alliance Insurance and concluded that the appellant had not demonstrated sufficient grounds to set aside the arbitral award. The Court found that the arbitrator did not exceed the terms of reference and that the award did not offend public policy. The Court emphasized the limited grounds for setting aside arbitral awards and upheld the decision of the court a quo.
Position of the Court on Setting Aside an Arbitral Award:
“…the Court should not be inclined to set aside the arbitral award merely on the basis that it considers the decision of the arbitrator wrong in fact or in law. If the courts are given the power to review the decision of the arbitrator on the ground of error of law or of fact, then it would defeat the objectives of the Act. It would make arbitration the first step in a process which would lead to a series of appeals.”
In essence, the Supreme Court emphasized that arbitral awards should not be set aside solely because the court may believe the arbitrator made an error in fact or in law. The court pointed out that if the judiciary were to have the power to review arbitral awards based on errors of law or fact, it would essentially undermine the purpose of the Arbitration Act. This is because it would potentially turn arbitration into just an initial step in a prolonged legal process involving numerous appeals.
The key idea, is to uphold the finality and efficiency of arbitration as an alternative dispute resolution mechanism. By limiting the grounds for challenging arbitral awards and discouraging courts from intervening in decisions made by arbitrators, the Act seeks to promote the resolution of disputes in a timely and cost-effective manner. The courts are generally expected to defer to the decisions of arbitrators, unless there are specific grounds, such as public policy concerns, for setting aside an award. This approach helps maintain the integrity and effectiveness of arbitration as a means of resolving disputes outside the traditional court system.
- Zimdef v Vengesai Architects SC 97/2019
Background Facts:
The case involved a dispute between the Zimbabwe Manpower Development Fund (ZIMDEF) and Vengesai Architects over fees for architectural services provided by Vengesai Architects to ZIMDEF for a construction project. The parties had entered into an agreement in 1998, and a dispute arose in 2014 regarding the calculation of fees due to Vengesai Architects upon the resumption of the project.
Arbitration:
After failing to resolve the dispute amicably, the matter was referred to arbitration as per the contract terms. The arbitrator found in favour of Vengesai Architects, stating that the charges raised upon the resumption of the project were justified and consistent with the relevant regulations. The arbitrator issued an arbitral award directing ZIMDEF to pay Vengesai Architects a specified sum with interest and also to bear the costs of the arbitration.
High Court:
The arbitral award was then brought before the High Court for registration, which was granted. ZIMDEF also made a counter-application to set aside the arbitral award. The application to set aside the award was dismissed by the High Court.
Supreme Court:
The appeal before the Supreme Court was on whether the High Court had misdirected itself in failing to find that the arbitral award was contrary to public policy, specifically in relation to fee calculations and alleged negligence by Vengesayi Architects. The court held that the arbitrator had followed the correct procedures and made decisions based on the facts presented by the parties. In the result, the court dismissed the appeal and held that the award was not contrary to public policy.
The Supreme Court held that the law governing arbitral awards allows parties to choose arbitration as the process for resolving disputes arising from their agreement. Arbitration is meant to bring finality to litigation, with the decision of the arbitrator being final and binding.
It was held that courts are generally reluctant to interfere with arbitral awards as they bring closure to disputes between the parties. However, The Arbitration Act allows for the setting aside of an award if it is in conflict with public policy, inter alia, although this provision must be applied sparingly.
The court will only set aside an award on public policy grounds if the award is outrageous in its defiance of logic or accepted moral standards that would intolerably hurt the conception of justice. The standard for setting aside an arbitral award on public policy grounds is high, and such intervention by the court is exceptional.
- Central African Building Society v Finormacg Consultancy (Private) Limited & Retired Justice L.G. Smith -SC 56/2022
Background Facts:
Central African Building Society (CABS) and Finormacg Consultancy entered into a consultancy contract in January 2013 with the goal of transforming CABS from a building society into a commercial bank. Despite the contract not being signed by the Finormacg Consultancy, both parties acknowledged its validity in regulating their relationship. In February 2013, CABS managing director informed Finormacg Consultancy that the contract would not be renewed and proceeded to terminate it, offering cash in lieu of notice. Dissatisfied with this decision, the first respondent took the matter to arbitration.
Arbitration:
During the arbitral proceedings, Finormacg Consultancy argued that CABS had unlawfully terminated the contract without just cause, violating the terms of clause 7.1 of the contract. The Finormacg Consultancy claimed that the contract should be reinstated or that damages amounting to US$1,744,451.50 should be paid.
On the other hand, CABS defended its actions, stating that it had the right to terminate the contract under clause 7. CABS alleged that Finormacg Consultancy had breached the contract by failing to complete the project as agreed, resulting in damages of US$1,648,169.91, for which a counterclaim was filed.
The arbitrator ruled in favour of CABS, finding that the contract termination was in accordance with clause 7.1 and dismissed the Finormacg Consultancy’s claim for reinstatement and damages. The arbitrator awarded Finorrmacg Consultancy, payment of US$23,517 for the month of March 2013 as per the contract. Additionally, the arbitrator rejected CABS claim for damages amounting to US$1,648,169.91.
Subsequently, the Finormacg Consultancy sought to set aside the arbitral award through an application to the High Court under Article 34(2)(b)(ii) of the UNCITRAL Model Law, alleging discrepancies in the arbitration process.
High Court:
Finormacg Consultancy brought an application before the High Court, alleging that the arbitrator had misinterpreted the contract and that his award was biased, and contravened public policy. The Finormacg Consultancy claimed that the arbitrator and the managing director of the appellant had a prior relationship, leading to reasonable apprehension of bias. Additionally, it was argued that the arbitrator’s language in his opposing affidavit was partial towards the appellant, indicating lack of neutrality.
In response, the CABS contended that the conversation between the arbitrator and the managing director was harmless and unrelated to the case, therefore not causing bias. CABS also argued that the allegations of bias were raised post-arbitration and were not substantiated during the process.
The High Court held that while the arbitrator’s contract interpretation was flawed, it did not violate public policy. The court ruled that the conversation between the arbitrator and the managing director did not create reasonable apprehension of bias and that the bias allegations were not brought up during arbitration.
However, the court held that the arbitrator’s intemperate language in the opposing affidavit, combined with other factors, did give rise to a reasonable apprehension of bias. As a result, the arbitral award was set aside, and the matter was to be handled by a different arbitrator. CABS, dissatisfied with the High Court’s decision, lodged an appeal against the ruling.
Supreme Court:
CABS appealed the decision of the High Court on grounds that the court misdirected itself regarding the arbitrator’s bias and the setting aside of the arbitral award. CABS argued that the court improperly considered the arbitrator’s opposing affidavit, which was filed post-award, and that the bias allegations were not adequately supported in the founding affidavit.
Finormacg Consultancy defended the court a quo’s decision, stating that the court had every right to consider the arbitrator’s post-award conduct related to bias.
Ultimately, the Supreme Court set aside the decision of the High Court, stating that the court had made errors in considering the post-award conduct of the arbitrator and relying on the opposing affidavit to reach a decision. The appeal was granted, and the arbitral award was upheld.
- Riozim & RM Enterprises v Maranatha Ferrochrome & Mtshiya N.O. SC-30/2022
Background Facts:
RM Enterprises (Pvt) Ltd. and Rio-Zim Ltd. were involved in a dispute with Maranatha Ferrochrome (Pvt) Ltd. regarding a Shareholders Agreement signed in 2010. The agreement stipulated the transfer of shares between the parties. Maranatha Ferrochrome accused Rio-Zim of breaching the agreement in 2017, and they threatened to take the matter to arbitration, if the breach was not rectified within thirty days.
Arbitration:
The dispute was indeed referred to arbitration, where Rio-Zim raised objections to the arbitrator’s jurisdiction, the validity of the agreement, and the prescription of the claim. The arbitrator ultimately ruled in favour of Maranatha Ferrochrome, stating that he had jurisdiction to entertain the matter and that the claim had not prescribed.
High Court:
Rio Zim and RM Enterprises sought to set aside the interim award through an application to the High Court in accordance with Article 34 of the Model Law, which allows for the setting aside of arbitral awards under specific circumstances. Maranatha Ferrochrome opposed this application, arguing that the Rio Zim and RM Enterprises had exceeded the 30-day limit for challenging the interim award under Article 16. The High Court upheld the preliminary points raised by Maranatha Ferrochrome and dismissed the application. The High Court held that Article 34 pertains to final awards and not interim awards, as the award in question was an interim one. The court ruled that since the interim award did not conclude the arbitral proceedings, it could not be set aside under Article 34.
Supreme Court:
The Supreme Court referred to the Arbitration Act and highlighted that challenges to an arbitrator’s preliminary ruling must be made within 30 days under Article 16 of the Model Law, which deals with jurisdiction matters. The court noted that the arbitrator’s ruling on jurisdiction is not considered an award and cannot be challenged under Article 34.
However, the Supreme Court ruled that challenges to interim awards, such as one on prescription, can be made under Article 34. The court held that the application to set aside the interim award on prescription should proceed to a hearing on its merits and remitted the case back to the court a quo for further consideration.
- Great Zimbabwe University v Vengesai Architects & Daniel Tivador N.O SC- 10/23
Background Facts:
Great Zimbabwe University, appealed against the judgment of the High Court (court a quo) which partially set aside an arbitral award between the University and Vengesayi Architects.
The University, had engaged the architectural partnership of Vengesayi Architects in 2008 to design and coordinate the development of its Main Campus, Administration Block and Heritage Studies Centre. The dispute arose over the fees and services rendered by the architect.
Arbitration:
The arbitrator was tasked with determining whether the architect had deviated from the agreed contract as regards to the designs for the buildings. The arbitrator dismissed most of Vengesai Architect’s claim for payment for architectural services rendered on the basis that the architect had breached the written agreement by exceeding the specified design sizes for the buildings, leading to increased costs.
High Court:
Vengesai, aggrieved by the arbitrator’s decision, sought to have part of the arbitral award set aside by the court a quo on the ground that it was contrary to public policy. The court a quo partially set aside the arbitral award in favour of the Vengesai Architects.
Supreme Court:
The University appealed to the Supreme Court of Zimbabwe for a final resolution of the matter. In the result, the court granted the appeal with costs and upheld the court the arbitrator’s decision.
Position of the Court:
The Court held that an arbitral award should not be set aside merely because the reasoning or conclusions of the arbitrator are wrong in fact or in law. An award should only be set aside if the reasoning or conclusion goes beyond mere faultiness or incorrectness and constitutes a palpable inequity that is so far-reaching and outrageous in its defiance of logic or accepted moral standards that it would be contrary to public policy to uphold it.
Further, the Court also emphasized the importance of upholding the sanctity of contracts as a venerable tenet of public policy in Zimbabwe. It was held that courts should not destroy or create a contract for the parties.
- ZESA Holdings (Pvt) Ltd v Clovgate Elevator Co (Pvt) Ltd & Justice Smith N.O. SC 69/2023
Background Facts:
ZESA Holdings (Private) Limited contracted Clovgate Elevator Company (Private) Limited] to supply, fix and maintain 4 elevators at its premises. Clovgate only supplied and fixed one elevator prompting ZESA to cancel the contract. Clovgate was aggrieved by the cancellation and referred the matter to arbitration in terms of clause 10 of the contract. The Arbitrator, found the cancellation to be unlawful, reversed it and reinstated the contract. He however did not relate to the alternative claim relating to specific performance.
ZESA made an application to the High Court for setting aside the arbitral award on the basis that it was contrary to public policy. Clovgate also applied for the registration of the award. The two applications were consolidated. The Application for setting aside the award was dismissed and that of registration was granted.
Arbitration:
Clovgate sought compliance and was advised that the work had been completed by a third party. The parties could not agree on ZESA’s liability and consequential damages and as a result Clovgate applied to the Arbitrator for Quantification of the Registered Arbitral Award. Failure to agree prompted Clovgate to file an application to the Arbitrator entitled: “Application for Quantification of Registered Arbitral Award” on 31 July 2020. It sought the payment of contractual damages and damages for loss of business.
ZESA opposed Clovgate’s claim and raised preliminary points relating to jurisdiction, functus officio, finality to litigation and that the relief sought was incompetent.
On 2 December 2020, the Arbitrator in dismissing the preliminary points held that he had the jurisdiction to determine quantification of damages in lieu of his earlier arbitral award against ZESA for specific performance that had been registered by the High Court on the 10th of June 2020. He also found that he could re-open the case. Consequently upon assuming jurisdiction, the Arbitrator further directed ZESA to file further affidavits and submissions in response to Clovgate’s replication on the quantification of damages within a prescribed period, failing which he would proceed to determine the claim on the merits.
High Court:
Aggrieved by the determination, ZESA applied to the High Court for setting aside of the interim arbitral award in terms of Article 34 of the Arbitration Act [Chapter 7:15]. It also sought and obtained an interim interdict against the continuation of the quantification proceedings pending the application for setting aside. In turn the Arbitrator filed a withdrawal of award relating to the registered award.
The High Court dismissed the application for setting aside of the interim award on the basis that the Arbitrator was not functus officio, had jurisdiction and the direction for replication was an order of an interlocutory nature.
Supreme Court:
ZESA then appealed to the Supreme Court seeking the setting aside of the High Court judgment. The Supreme Court under judgment number SC 69/23 granted the appeal and held that the Arbitrator could not revive his jurisdiction nor amend his earlier order as he purported to when he had fully and finally exhausted his jurisdiction. The Arbitrator did not have jurisdiction to reopen the case. The exercise of jurisdiction by the Arbitrator in the circumstances of this case was therefore contrary to the public policy of Zimbabwe. He could only do so with ZESA’s consent, which as is apparent from the proceedings was never given. The Court held that the Arbitrator should have upheld the ZESA’s preliminary point on jurisdiction. The High Court, in turn, should have found the Arbitrator in breach of the public policy of Zimbabwe.
CONCLUSION
The Supreme Court of Zimbabwe maintains a stringent approach towards setting aside arbitral awards. It emphasizes the finality and binding nature of arbitration, intervening only in cases of significant public policy violations. This stance promotes the integrity and efficiency of arbitration as a dispute resolution mechanism, ensuring that courts do not undermine the process by acting as appellate bodies. The Court’s consistent jurisprudence underscores the importance of a high threshold for setting aside awards, focusing on maintaining the legitimacy and finality of arbitral decisions.
For further inquiries, you may contact our Arbitration & Dispute Resolution Practice Group on info@mmmlawfirm.co.zw
The article is quite comprehensive and enlightening.