This was an application for the setting aside of an arbitration award.The arbitrator, the second responded herein, was a retired Judge of this court.The basis of the application was that the arbitrator had misconstrued the factual basis of the applicant's claim before him. It was also said, that, the arbitrator's ...
This was an application for the setting aside of an arbitration award.
The arbitrator, the second responded herein, was a retired Judge of this court.
The basis of the application was that the arbitrator had misconstrued the factual basis of the applicant's claim before him. It was also said, that, the arbitrator's second and final award had contradicted the findings in his first award. This misdirection was said to have led the arbitrator to make an award that was so palpably iniquitous as to be in conflict with the public policy of Zimbabwe, as envisaged by Article 34(2)(b)(ii) of the Model Law, which is incorporated in the Arbitration Act [Chapter 7:15].
The applicant also challenged the arbitrator's order of costs against it on the punitive scale of attorney and client and said, or implied, that, it was irrational, especially in circumstances where not only the arbitrator had given no justification or explanation for it, but also where the first respondent had not asked for such a scale.
Finally, the applicant also challenged the arbitrator's order that his costs be met by the applicant alone. The award of costs in such a manner was cited as another example of the lack of logic in, and the iniquitous nature of the award....,.
[c] Issues
In order for me to arrive at the conclusion whether or not the arbitration award was impeachable by reason of a violation of the public policy of Zimbabwe, as envisaged by Article 34[2][b][ii] of the Model Law, which is incorporated in the Arbitration Act [Chapter 7:15], the issues, as I see them, were these:
[i]...,.
[ii]...,.
[iii]...,.
[iv] Did the arbitrator misdirect himself by awarding the first respondent costs on a higher scale and ordering the applicant to meet the costs of the arbitrator on its own?...,.
[iv] Did the arbitrator misdirect himself by awarding the first respondent costs on the higher scale and ordering the applicant to meet the costs of the arbitrator alone?
The applicant's claim before the arbitrator was dismissed with costs on the higher scale of attorney and client. Further, the applicant was ordered to meet the costs of the arbitrator on its own.
It has not been clear to me the basis upon which such scale of costs was ordered, or why the applicant was made to meet the costs of the arbitrator all by itself.
The first respondent did not ask for such a scale.
The arbitration clause in the Agreement of Sale of Shares made no provision for the costs of the arbitration. The only provision relating to costs was clause 15. But, this confined itself to the costs of, or incidental to, the negotiation, preparation and execution of the Agreement of Sale of Shares.
In his award, the arbitrator did not explain why he granted such a scale of costs, or why he ordered that his costs be paid by the applicant alone.
In casu, the applicant has made a frontal challenge on the arbitral award on this point. The first respondent's response has been rather muted or equivocal.
The award of costs is wholly a matter in the discretion of the judicial officer: see Graham v Odendaal 1971 [2] SA 611 [AD]; Kruger Brothers & Wassermen v Ruskin 1918 AD 63 and Rautenbach v Symington 1995 SA 583 [O].
Unless a party is guilty of some misconduct, costs are normally awarded on the ordinary scale. That is my understanding of the general principle in the civil courts. But, I see no reason why, in the absence of an agreement to the contrary, or of some other factors affecting it, the principle should not be extended to other fora or bodies exercising judicial or quasi-judicial functions.
In my view, the arbitrator misdirected himself when he awarded costs on the higher scale.
The applicant's claim may have been misconceived, but, the misconception was not so out of the ordinary as to warrant the applicant being mulcted in costs.
Although, even in these proceedings, the applicant may still be kicking against the legal pricks [see Corderoy v Union Government [Minister of Finance] 1918 AD 512…,.], in my view, it has not so gone out of bounds as to attract an adverse order of costs beyond the ordinary scale.
Regarding the order that the costs of the arbitrator should be borne by the applicant alone; again, I have found no explanation anywhere for this.
In my experience, the costs of the arbitrator are generally met by the parties in equal shares.
In the absence of an explanation for a departure from this practice, the arbitrator's costs have to be shared by the parties equally.
In the circumstances, the order of costs by the arbitrator, against the applicant, is set aside and substituted with one of costs on the ordinary scale, with the costs of the arbitrator being shared equally between the parties....,.
1....,.
2. Paragraph 2 of the arbitration award by the Honourable Justice L. G. Smith [Retired], on 2 December 2014, relating to costs, is hereby set aside and substituted by the following:
2.1 The Claimant shall pay the Respondent's costs.
2.2 The costs of the arbitrator shall be borne by the parties in equal shares.
