This is an appeal against the whole judgment of the High Court dismissing the appellants application for the setting aside of an arbitral award in terms of Article 34 of the First Schedule to the Arbitration Act [Chapter 7:15] hereinafter referred to as the Act.
FACTUAL BACKGROUND
The detailed facts of the case can be summarised as follows:
The two appellants and the first respondent are Zimbabwean companies registered in terms of the law. The second respondent is an Arbitrator who is presiding over a dispute between the appellants and the first respondent.
RM Enterprises (Private) Limited (the second appellant) is a wholly owned subsidiary of Riozim Limited (the first appellant).
On 19 January 2010, the first appellant and Maranatha Ferrochrome (Private) Limited (the first respondent) entered into a memorandum of Shareholders Agreement. In terms of the agreement, the first appellant was to ensure that 40 per cent of issued shares in the second appellant would be transferred, without cost, to the first respondent so that the shareholding between the parties in the second appellant would be as follows; Riozim 60 per cent and Maranatha Ferrochrome 40 per cent.
On 29 January 2017, the first respondent wrote to the first appellant informing it of its breach of the terms of the Shareholder Agreement. It informed the first appellant that it had breached clause 1.1 of the agreement as it failed to transfer chrome claims as agreed between the parties.
The first respondent gave the first appellant notice that it would, in terms of clause 30 of the agreement, refer the dispute to an arbitrator if the first appellant failed to fulfil its obligations within 30 days.
The parties agreed to refer the dispute to arbitration before the second respondent.
At the commencement of arbitral proceedings, the first appellant raised preliminary points, objecting to the second respondent's jurisdiction, the validity of the agreement, and that the first respondent's claim had prescribed.
The first appellant averred, that, there was no arbitration agreement between the first appellant and the first respondent (the parties to the agreement) and the second appellant, who was the subject of the agreement.
The first appellant averred that clause 30 of the agreement sued upon by the first respondent was between it and the first appellant and did not extend to the second appellant.
The first appellant argued, that, the second respondent had no jurisdiction to preside over the dispute.
The first appellant averred, that, by the joinder of the second appellant to the dispute, the first respondent accepted that the dispute could not be resolved through arbitration as the arbitrator could not exercise jurisdiction over the second appellant.
The last point raised by the first appellant was to the effect, that, the first respondent's claim had prescribed as the cause on which the first respondent sued had arisen in 2010, and, as such, three (3) years had lapsed.
The first respondent opposed the preliminary points.
In determining the preliminary points, the second respondent ruled, that, he had jurisdiction to preside over the matter as there was a valid Shareholder's Agreement which the first appellant accepted to be valid. He further found, that, an interpretation of the Shareholders Agreement proved that clause 27 was placed in the agreement so as to bind the second appellant impliedly and expressly to the provisions of the agreement. The second respondent also ruled, that, the second appellant being a wholly owned subsidiary of the first appellant, and the subject of the agreement, was bound by the provisions of the agreement.
For these reasons, the second respondent dismissed the preliminary objections on jurisdiction and the validity of the Shareholder's Agreement.
On the issue of prescription, the second respondent held, that, the dispute between the parties was on whether or not there were stipulated time limits for performance in the Shareholder's Agreement to indicate when the cause of action would arise and make the debt due.
The second respondent held, that, as the Shareholder's Agreement was silent on the date of performance, the appellants could not be in mora until a reasonable time for performance had lapsed after the first respondent had made demand for performance.
He further found, that, demand for performance was made by the first respondent on 30 January 2018, and, as such, the debt had not prescribed.
In the result, the second respondent made an order dismissing the points in limine raised by the appellants in proceedings before him. He ruled that he had jurisdiction to preside over the dispute between the parties and held that the first respondent's cause of action had not prescribed.
Aggrieved by the second respondent's decisions, the appellants applied to the High Court (the court a quo) in terms of Article 34(2)(b)(ii) of the Model Law for an order setting aside the second respondent's interim award.
The first respondent opposed the application and raised two preliminary points to the effect, that, the appellants could not seek the setting aside of an interim award after a period of thirty (30) days.
It was argued on its behalf, that, in terms of Article 16(3) of the Model Law, a party requesting the High Court to determine a matter of jurisdiction had thirty (30) days within which to apply for a determination on the Arbitrator's ruling.
It was further submitted, that, in this case, the appellants applied to the court a quo out of time, as the interim award was granted on 10 June 2019. Therefore, the appellants had up to 23 July 2019 to approach the High Court to determine the matter in terms of Article 16(3) of the Model Law.
The court a quo upheld the preliminary points and dismissed the appellants application on that basis.
It held that Article 34 of the Model Law was a procedure for the setting aside of a final award and not an interim award.
It further held, that, the award made by the second respondent was an interim award dismissing the first appellant's special pleas and that such an award could not be set aside as it had not terminated the arbitral proceedings.
It reasoned, that, the appellants, having failed to make their application in terms of Article 16(3) of the Model Law, realized that they were out of time and sought to resurrect their right to approach the court by relying on Article 34(3) of the Model Law.
The court held, that, the appellants conduct was dishonest and an abuse of court process as they sought to approach the court out of time under the guise of a wrong procedure.
In the result, the court a quo upheld the first respondent's preliminary points and dismissed the appellant's application.
On the issue of costs, it ordered that the appellants (who were the applicants in the court a quo) to jointly and severally, the one paying the other to be absolved, pay the first respondent's costs of suit.
Aggrieved by the decision of the court a quo, the appellants noted an appeal to this Court on the following grounds:
“GROUNDS OF APPEAL
1. The learned Judge erred in law and fact in finding that the Appellants application, under case number HC8150/19, should have been brought in accordance with the provisions of Article 16 to the First Schedule to the Arbitration Act [Chapter 7:15].
2. The learned Judge erred and misdirected himself in failing to find, that, the objections by the Appellants before the Second Respondent went beyond a preliminary enquiry into the arbitrator's jurisdiction. Consequently, the Appellant could approach the High Court in terms of Article 34 to the Arbitration Act [Chapter 7:15].
3. The learned Judge erred in law and fact in failing to find, as he should have, that an arbitration award, once handed down, becomes final on all issues canvased therein, and, consequently, such issues are rendered res judicata in future proceedings.
4. The learned Judge consequently erred in law and fact in finding, as he did, that, he had no jurisdiction over the Appellant's application in case number HC8150/19.
5. As regards the Second Appellant, the learned Judge erred in failing to find, as he should have, that, Second Appellant, as a third party who was not privy to the arbitration agreement between First Respondent and First Appellant, was improperly joined before the Second Respondent.”
SUBMISSIONS MADE BY THE PARTIES
In urging the court to exercise its discretion in the appellants favour, counsel for the appellants submitted, that, the court a quo erred in dismissing the appellants application.
He argued, that, the interim award made by the arbitrator could be challenged on the basis of Article 34 of the Model Law as the award was final on the determination of the preliminary points raised by the appellants.
Counsel for the appellants further argued, that, international case law, cited in the appellants heads of argument, establishes that an interim award can be challenged under Article 34 of the Model Law.
Counsel also argued, that, the appellants could not challenge the interim award in two applications, one under Article 16 of the Model Law, on the point of jurisdiction, and, another under Article 34 of the Model Law, on the point of prescription.
He contended, that, the correct procedure was to bring one application under Article 34 of the Model Law to challenge both points and question whether or not the award was contrary to public policy.
Per contra, counsel for the first respondent argued that the judgment of the court a quo was correct.
He argued, that, the international authorities cited by the appellants cannot be applied to the present matter as the Arbitration Acts of India and Indonesia provide a definition for an award to include interim awards.
Counsel for the first respondent also argued, that, the wording of Article 34 of the Zimbabwean Arbitration Act does not extend to interim awards.
Counsel further argued, that, the appellant ought to have challenged the preliminary points under the procedure provided for in Article 16(3) of the Arbitration Act within thirty (30) days and that when the appellants failed to do so, they sought to have a second bite of the cherry by employing the wrong procedure under Article 34 of the Arbitration Act.
ISSUE FOR DETERMINATION
The only issue to be determined in this appeal is whether or not the court a quo erred in dismissing the appellants application to set aside an arbitral award in terms of Article 34 of the Model Law of the First Schedule of the Arbitration Act on the basis that the application had not been properly placed before it.
THE LAW
Section 2(3), Schedule (section 2) Model Law, Articles 16, 31(7), 32(1), 33 and 34 of the Arbitration Act are relevant to the determination of this appeal.
Section 2(3) of the Arbitration Act provides for the interpretation of the Act as follows:
“2 Interpretation
(3) The material to which an arbitral tribunal or a court may refer in interpreting this Act includes the documents relating to the Model Law and originating from the United Nations Commission on International Trade Law, or its working group for the preparation of the Model Law, that is to say, the travaux preparatoires to the Model Law, and, in interpreting the Model Law, regard shall be had to its international origin and to the desirability of achieving international uniformity in its interpretation and application.”...,.
Courts should therefore always be conscious of the need to achieve international uniformity when interpreting provisions of the Model Law. This means the Model Law's interpretation by other jurisdictions should be taken into consideration subject to the exclusion of irrelevant interpretation of modifications by those jurisdictions.
It must be stated, that, relevant interpretations of modifications by other jurisdictions which bring out the correct interpretation of the Model Law can be taken into consideration.
In the case of Courtesy Connection (Pvt) Ltd and Another v Mupamhadzi 2006 (1) ZLR 479 (H)…, MAKARAU J, commenting on the international pedigree of the Model Law, said:
“I am further persuaded to hold as I do by the fact that the Act is of international pedigree, and, certainty and finality of legal proceedings were paramount in its formulation. It would destroy both features if courts of the different countries adopting the Model Law were to be allowed to extend the period within which an award is to be set aside. Section 2 of the Act specifically provides, that, in interpreting the Model Law, regard shall be had to its international origin and to the desirability of achieving international uniformity in its interpretation and application.
On the basis of the application of the above two principles, I would hold that the right to have set aside an arbitral award under Article 34 is irrevocably lost if it is not brought within 3 months of the date of receipt by the party intending to have it set aside.”…,.
See also Mtetwa and Anor v Mupamhadzi 2007 (1) ZLR 253 (S).
Schedule (section 2) of the Model Law provides for the identification of modifications of the Model Law by our Legislature. It provides as follows:
[This Schedule contains the United Nations Commission on International Trade Law (UNCITRAL) Model Law with modifications. The modifications appear in italics.]”…,.
Modifications to the Model Law by our Legislature are italicised. Their interpretation is guided by local precedents as they are not internationally applicable.
In interpreting the Model Law, courts should therefore bear in mind the distinction between provisions which are of international application and local modifications which are only applicable within our jurisdiction.
