This
is an application for the registration of an award issued in favour of the
applicants under the Labour Act [Chapter 28:01] on 30 March 2010. The
registration is sought in terms of section 98(14) of the Labour Act [Chapter
28:01].
The respondent opposes the granting of the
relief being sought.
The
background to this dispute is as follows. The applicants were employed by the
respondent on the basis of written contracts which determined the terms and
conditions of their employment. The contracts were then terminated by the
respondent and the dispute was referred to N.A. Mutongoreni, an arbitrator, who
made an award in favour of the applicants on 31 August 2007. The terms of his
award were as follows -
“1.
First issue in dispute is answered as follows:
The
contracts of employment between the respondent and complainants were not
terminated in accordance with the provisions of the contracts of employment
between the parties.
2.
Second issue in dispute is answered as follows:
Complainants
had a legitimate expectation for the automatic renewal of their respective
contracts of employment.
3.
Third issue in dispute is answered as follows:
Complainants
were unfairly dismissed.
4.
Fourth issue in dispute is answered as follows:
Contracts
of employment should be deemed automatically renewed on the same conditions
with effect from 1 July 2007.
5.
Fifth issue in dispute is answered as follows:
Contracts
of employment were unlawfully terminated.
6.
Sixth issue in dispute is answered as follows:
Complainants
must be deemed to be under respondent's employment from the date of the
purported termination to the date of this arbitration i.e. 31 August 2007
(being a period of two months).”
Aggrieved
by the award the respondent noted an appeal to the Labour Court which, again,
found in favour of the applicants and dismissed the appeal. The dispute was
then referred to another arbitrator for the determination of salaries and
benefits payable to the applicants. The arbitrator, Mr. Matsikidze, then made
an award on 31 March 2010 which is the subject matter of the dispute before me.
The
second issue raised in the opposing affidavit was that the respondent had
applied to the Labour Court for an order staying execution of the arbitral
award. The applicants have attached to the answering affidavit filed on their
behalf an order issued by the Labour Court on 17 May 2010 refusing the application
for an order for a stay of execution.
The
opposing affidavit did not touch on any other ground for opposing the grant of
the order sought before me.
In
the heads of argument filed before this court, counsel for the respondent
submitted that if the award were enforced the respondent would be practically
deprived of a right to challenge the content of the award despite the fact that
the respondent is entitled to such challenge. He submitted, further, that this
court is entitled to look into the content of the award itself and in this
regard he adverted to the appeals pending in the Labour Court. He cited Pamire
& Ors v Dumbutshena NO & Anor 2001 (1) 123 (H). It is a judgment by
MAKARAU J…,. The passage referred to me…., reads as follows -
“…,.To
therefore grant the full reward in the absence of complete performance by the
second respondent does make justice turn on its own head in my opinion. It is a
violation of Zimbabwe's notion of elementary justice and constitutes a palpable
inequity that would hurt the conceptions of justice in Zimbabwe. Justice in
Zimbabwe ought to be conceived as fair, even-handed and non-discriminatory
between the rich and poor. To recognize the award would have the effect of
dispelling this notion.”
Counsel
for the respondent, in pursuing his argument, further submitted that in terms
of Article 36(1)(b)(ii) this court should refuse to register the award on the
basis that it is contrary to public policy. He contended, further, that once
there were unfair provisions in the award that would be contrary to public
policy and the award could not stand that test. He argued that the arbitrator
had wrongly read the judgments and had ruled that the applicants would be
deemed as the respondent's employees until their contracts were lawfully
terminated.
When
Mr. Matsikidze determined the level of salaries and benefits due to the
applicants he stated as follows -
“The
question I used to ask myself is; what did the Labour Court rule in this
particular case? Clearly, from the paragraph quoted above, the Labour Court
made it clear that these employees remain employees of the respondent 'until
their contracts were lawfully terminated.' The question which naturally follows
is: “Are the contracts in question lawfully terminated? The answer is no. In that
regard, my hands are tied. I cannot alter the judgment of the Labour Court.
What I can simply do is to interpret or effect its meaning. In that view, my
task will be to determine salaries and benefits up to the date of lawful
termination.”
Clearly,
the status of the employees, vis-à-vis their employer, was not determined by
the arbitrator whose award is before me, but by N.A. Mutongereni on 31 August
2007 and confirmed by the Labour Court on 12 March 2009. The pertinent
paragraph in the judgment reads thus -
“What
are the terms and conditions referred to herein? Obviously, the arbitrator is
referring to the same terms and conditions of the contracts of employment
previously signed by the respondents. In those contracts the appellant is
obliged to give 90 days' notice should appellant intend to terminate contracts
due to lack of funding. Therefore, paragraph 6 of the award cannot be
interpreted to mean what the appellant submitted, that the respondents were
only reinstated for two months. The arbitrator was only emphasizing that
respondents are deemed to have been in appellant's employment for the past two
months. The contracts were renewed for 12 months. I am not satisfied, therefore,
that appellant has complied with the arbitrator's ruling. Appellant has not
complied with the arbitrator's ruling as appellant has not re-instated
respondents neither has appellant been paying respondents' salaries.”
The
respondent herein was not happy with the judgment of the Labour Court and
sought leave to appeal which leave was denied on the basis that it was
approaching the court with dirty hands due to non- payment of the award by the
arbitrator and refusal to re-instate the applicants….,.
Counsel
for the respondent contended that the arbitrator had wrongly read judgments and
had consequently, ruled that the applicants would be deemed as the respondent's
employees until their contracts were lawfully terminated. He further complained
that the arbitrator had then awarded what he deemed to be arrear salaries and
future salaries instead of assessing damages that would result from a finding
that a contract had been unlawfully terminated. He submitted that that finding
on its own was patently wrong in two respects – firstly that it had never been
in dispute that the contracts were fixed term contracts and that when the
Labour Court ruled that they were deemed renewed it could not have been for a
period exceeding twelve months. He further submitted that the arbitrator has
not indicated on the award that he reminded himself, or took into account, that
the applicants had an obligation to mitigate damages. He contended that if an
arbitrator ignores or disregards a provision of law such award may not be
enforced. For this proposition he referred me to Delta Operations (Pvt) Ltd v
Origen Corporation (Pvt) Ltd SC86-07.
In
opening his submissions counsel for the respondent made reference to Article
36(1)(b) which enforces a court to refuse to register an arbitral award if the
court finds that –
“(i)
…,.
(ii)
The recognition or enforcement of the award would be contrary to the public
policy of Zimbabwe.”
This
sub-clause should be read with Article 36(3) which provides -
“For
the avoidance of doubt and without limiting the generality of para (1)(b)(ii)
of this article, it is declared that the recognition or enforcement of an award
would be contrary to the public policy of Zimbabwe if –
(a)
The making of the award was induced or effected by fraud or corruption; or
(b)
A breach of the rules of natural justice occurred with the making of the
award.”
As
stated earlier, this defence of public policy was not pleaded by the respondent,
but, even in his submissions, counsel for the respondent did not mention fraud,
corruption or the violation of the rules of natural justice.
Article
36(3) does not, however, limit the court to these grounds in determining the
issue of the defence of public policy. The manner in which I understood counsel
for the respondent's argument is that he was alluding to error on the part of
the arbitrator.
The
question then is whether the alleged error alluded to by counsel for the
respondent can be such as to cast the
award as one contrary to the public policy of Zimbabwe.
The
meaning of the phrase “contrary to public” was extensively discussed by GUBBAY
CJ in Zimbabwe Electricity Supply Authority v Maposa 1999 (2) ZLR 452 (S). This is what the learned CHIEF JUSTICE
stated…,-
“What
has to be focused on is whether the award, be it foreign or domestic, is
contrary to the public policy of Zimbabwe. If it is, then it cannot be
sustained no matter that any foreign form would be prepared to recognize and
enforce it.”
In
my opinion, the approach to be adopted is to construe the public policy defence,
as being applicable to either a foreign or domestic award, restrictively in
order to preserve and recognize the basic objectivity of finality in all
arbitrations; and to hold such defence applicable only if some fundamental
principle of the law or morality or justice is violated. This is illustrated by
dicta in many cases, of which the following are impressive:
In
Paktila Investment Ltd v Klockner East
Asia Ltd reported in (1994) 19 Yearbook of Commercial Arbitration 664, the Supreme Court of Hong
Kong remarked…,-
“The
public policy defence is construed narrowly and I deprecate any the attempt to
wheel it out on all occasions. As the US Court of Appeals for the Second Circuit
said in Parsons & Whittemore v RAKTA 508 F 24 969 (2d Cir 1974):
'…,
the convention's public defence should be construed narrowly. Enforcement of
foreign arbitral awards may be denied on this basis only where enforcement
would violate the forum State's most basic notions of morality and public
justice.'…,.
Similarly,
in Leopold Lazarus Ltd (UK) v Chrome Resources SA (Switz), reported in (1979) 4
Yearbook of Commercial Arbitration 311, the Court de Justice, Canton of Geneva,
at 312 underscored that before the defence of public policy can be upheld:
'There
must be a violation on fundamental principles of the Swiss legal order, hurting
intolerably the feeling of justice…,. This exception of public order should not
be twisted in order to avoid application of international conventions which are
signed by Switzerland and which form part of Swiss law…,.'”
Finally,
in Remisager Power Co Ltd (India) v General Electric Co (US) reported in (1995)
20 Yearbook of Commercial Arbitration 681, the Supreme Court of India…,
concluded that enforcement of an award-
“….,.would
be refused on the grounds that it is contrary to public policy if such
enforcement would be contrary to (i) fundamental policy of Indian law; or (ii)
the interests of India; or (iii) justice or morality.”
The
difficulty then, is not with the formulation of an appropriate and acceptable
test. It is with the application of that test in an endeavour to determine
whether the arbitral award should be set aside or the enforcement of it denied,
on the ground of a conflict with the public policy of Zimbabwe.
I
am conscious, as emphasized by SIR MICHAEL KERR in his article entitled
“Concord and Conflict in International Arbitration” published in (1997) 13
Arbitration International 121…, that -
“In
most countries, the spirit of the New York convention has rightly been upheld
to require what a US Circuit Court of Appeals has referred to as 'etc general
pro-enforcement bias.'”
In
casu, the effect of an enforcement of the arbitral award will be to allow
Maposa to take advantage of a position that he deliberately engineered. Counsel
for Zesa submitted that this “turns justice on its head”; the error of the
arbitrator being so fundamental as to make a refusal to set aside the award,
or, to permit the enforcement of it, a violation of Zimbabwe's elementary
notions of justice.”
Counsel
for the respondent argued that the arbitrator had awarded arrear salaries and
future salaries instead of damages.
This
court is not, in this instance, sitting as a court of appeal to adjudicate the
correctness or erroneous nature of the reasoning of the arbitrator. Its task is to consider whether the award by the arbitrator is one that
should not be registerable having regard to the requirements of Articles 34 and
36 of the Arbitral Act. I am persuaded that an award by an arbitrator is not
contrary to public policy merely because the arbitrator was wrong in law or in
fact in reaching the conclusion that he arrived at. It is also clear from an
examination of the papers that the respondent has not placed before the court
the basis upon which it seeks to rely on the defence of public policy under the
Arbitration Act. This court would only intervene and uphold the defence of
public policy where it is established that “the reasoning or conclusion in the
award goes beyond mere faultiness or incorrectness and constitutes a palpable
inequity that is so far-reaching and outrageous in its defiance of logic or
acceptable moral standards that a sensible and fair-minded person would
consider that the conception of justice in Zimbabwe would be intolerably hurt
by the award;” per GUBBAY CJ in Zimbabwe Electricity Supply Authority v Maposa 1999 (2) ZLR 452 (S).
The
courts in this country have construed the defence of public policy very
restrictively so that the objective of finality to arbitration is achieved. It
follows, therefore, that the grounds upon which an award may be set aside or
those on which a court may refuse to register the award are very narrow.
Whether or not the arbitrator erred is not an issue that should concern this court
in deciding whether or not the award should be registered in terms of the
statutory provisions providing for registration. The issue to be decided is
whether or not the respondent has shown that its registration would be contrary
to the public policy of Zimbabwe, and, in my view, the respondent, apart from a
mere bald statement, has not shown that it would be. The respondent referred me
to Delta Operations (Pvt) Ltd v Origen Corporation (Pvt) Ltd SC86-07…, which
re-affirmed the principles that had been set out by GUBBAY CJ in the case of Zimbabwe
Electricity Supply Authority v Maposa 1999
(2) ZLR 452 (S)…,. He did not advance any cogent argument as to how the
authority he cited supported the defence that was proffered on behalf of the
respondent. There had been no facts placed before the court on which legal
argument supporting the defence could then be premised.
In
my view, the point raised by counsel for the applicants that the defence had
not been pleaded had merit as the defence lacked foundation and could not be
advanced further than to argue error on the part of the arbitrator.
I
find, therefore, that the respondent has not established that the reasoning by
the arbitrator was so outrageous in its defiance of logic and acceptable moral
standards as to lead me to conclude that an injustice was done to the
respondent. I find, consequently, that registration of the award is not
contrary to public policy.
In the premises, an order in favour of the
applicants as well as costs will issue in terms of the draft.
