The appellant appeals against the whole judgment of the High Court (the court a quo) dated 17 November 2021. The court a quo found, that, the arbitral award by the second respondent (the arbitrator), dated 2 December 2020, was not in conflict with the public policy of Zimbabwe.
On 2 December 2020, the arbitrator held, that, he had the jurisdiction to determine the quantification of damages in lieu of his earlier arbitral award against the appellant for specific performance that had been registered by the High Court on 10 June 2020.
Consequent upon assuming jurisdiction, the arbitrator further directed the appellant to file further affidavits and submissions in response to the respondent's replication on the quantification of damages.
THE BACKGROUND
The salient facts relevant to the dispute between the parties are as follows:
The parties concluded a contract on 30 September 2013. The first respondent undertook to supply, fix, and maintain four (4) elevators by 14 August 2015, at the appellant's Electricity Centre in Harare. It only managed to supply and fix a single elevator by the due date. The appellant, consequently cancelled the contract on 25 October 2015 and re-tendered the outstanding works a year later.
Irked by the cancellation, the first respondent referred the dispute to arbitration in terms of clause 10 of the contract.
The clause mandated the parties to refer to arbitration any disputes arising from or in connection with the contract. The provisions of the Arbitration Act [Chapter 7:15] would apply. The arbitrator, whose decision would be final, would be appointed by the Commercial Arbitration Centre in Harare at the request of the aggrieved party.
The arbitrator was appointed in terms of clause 10.
On 25 July 2017, the arbitrator issued an award in which he found the cancellation to be unlawful, reversed it, and reinstated the contract. Even though the first respondent had, in the alternative to specific performance, claimed for damages, the arbitrator did not relate to the alternative claim. Firstly, because the first respondent did not motivate the alternative claim. Secondly, because specific performance could be performed.
Dissatisfied, the appellant sought the setting aside of the award by the High Court. The first respondent also applied to the same court for the registration of the award. The two applications were consolidated.
On 10 June 2020, the High Court dismissed the appellant's application and granted the first respondent's application.
When the first respondent sought compliance from the appellant, it was advised, by letter dated 20 June 2020, that, the outstanding works had been completed by a third party. Thereafter, the parties failed to agree on the extent of the appellant's liability and the consequential damages for breaching the award for specific performance.
The failure to agree prompted the first respondent 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 the maintenance business in the aggregate sum of US$1,910,318=12, arbitration fees, and legal costs on the higher scale.
The appellant opposed the application.
It raised four preliminary points relating to jurisdiction, functus officio, finality in litigation, and incompetence of the relief sought.
After hearing argument on these points, the arbitrator issued a written award on 2 December 2020. He dismissed all the preliminary points and directed the appellant to make a rejoinder to the replication within a prescribed period, failing which he would proceed to determine the application on the merits.
The appellant was aggrieved by the award and direction.
On 17 March 2021, the appellant applied to the court a quo for the setting aside of the interim award on the sole ground, that, it was contrary to the public policy of Zimbabwe. It premised its application on Article 34(1)(b)(ii) of the Model Law to the Arbitration Act.
During the pendency of the hearing a quo, the appellant also sought and obtained, in a separate urgent chamber application, an interim interdict against the continuation of the quantification pending the determination of its application for the vacation of the interim award.
The interim interdict prompted the arbitrator, on 20 April 2021, to file a quo a “Withdrawal of Award” which he copied to the two protagonists.
It was common cause between them that, the tenor of the document strongly suggested that it related to the registered arbitral award for specific performance. In the document, the arbitrator pertinently remarked that:
“It is the responsibility of the arbitrator to make an award that can be implemented. Accordingly, I have made an interim award, that, the second respondent could make a claim for damages. A final award will be made when the applicant responds to the request I made. Accordingly, I withdraw the arbitral award that I handed down.”
THE CONTENTIONS IN THE COURT A QUO
The appellant argued, that, as the arbitral award on specific performance was final and definitive, the arbitrator, having exhausted his jurisdiction, became functus officio.
It contended, that, the admission recorded in the interim award, by the arbitrator, that he had re-opened what the appellant termed a “completed process” further confirmed that the arbitrator had fully and finally exercised his jurisdiction over the earlier arbitral award.
It further argued, that, the application for quantification of damages constituted an amendment or correction of the earlier arbitral award, which could only have been invoked within the period prescribed in Article 33 of the Model Law.
The appellant also argued it was improper for the arbitrator to direct it to file a rejoinder refuting the evidence on quantum that was belatedly attached to the first respondent's replication.
The first respondent made the contrary submissions, that, the interim award was an interim procedural order that was incapable of impeachment before the conclusion of the quantification proceedings.
It contended, that, such an award was not dispositive of the quantification proceedings and could not, therefore, be set aside under the provisions of Article 34(1)(b)(ii) of the Model Law.
It further argued, that, the arbitrator had the jurisdiction to entertain and complete the quantification process under clause 10 of the arbitral agreement.
The first respondent also contended, that, the failure to claim, and prove, an alternative in damages during the earlier arbitral proceedings constituted an error of law which would not make it contrary to public policy.
It also contended, that, quantification was an independent process that did not fall within the ambit of an amendment or correction envisaged by Article 33 of the Model Law. This was, so the argument went, because damages could be awarded in tandem with an order for specific performance, but could, in terms of Mandiringa & Ors v NSSA 2005 (2) ZLR 239 (S), be quantified subsequent to the order for specific performance.
It also contended, that, the appellant could not be permitted to benefit from its perverse conduct of deliberately subverting the specific performance award by turning it into a brutum fulmen.
The first respondent strongly argued, that, the revival of jurisdiction by the arbitrator was the only avenue by which an injustice occasioned by the appellant could be effectively corrected.
It also contended, that, the interests of justice pertaining to the expeditious and inexpensive resolution of the quantification dispute could best be served by an arbitrator who was familiar with the dispute.
Regarding the direction, the first respondent contended that it was not in conflict with the public policy of Zimbabwe as it affirmed the appellant's fundamental right to be heard, in compliance with the rules of natural justice.
THE FINDINGS OF THE COURT A QUO
The court a quo basically made three findings:
(i) The first was that clause 10.1 of the arbitration agreement conferred jurisdiction on the arbitrator to complete the specific performance award by quantifying it. It however regarded quantification proceedings to be “another arbitration” incurred by the appellant's failure to comply with the first arbitral award.
(ii) The second was that the arbitrator's finding, that he had jurisdiction and was therefore not functus officio to determine the quantification application, was an interim award with final effect on the question of jurisdiction, which could be and was properly challenged under Article 34(2)(b)(ii) of the Model Law.
(iii) The third was that the direction constituted a mere procedural order that was interlocutory in nature and not be dispositive of the quantification dispute, and which did not constitute either an interim or a final order. It could not thus be impeached under Article 34 of the Model Law.
The court a quo, therefore, held that the requisite public policy threshold for impugning the interim award, which has been pronounced in a plethora of cases by our superior courts, had not been breached. It accordingly dismissed the appellant's application and discharged the provisional order.
THE GROUNDS OF APPEAL
The appellant was aggrieved by these findings. It appealed to this Court on the following grounds:
1. The court a quo erred at law in dismissing the application for setting aside the arbitral award on the basis that it was not contrary to public policy.
2. The court a quo erred in finding, that, the appellant had failed to satisfy the requirements for setting aside an arbitral award on the basis of public policy.
3. The court a quo erred at law in not finding, that, the second respondent had no jurisdiction to hear the matter and that he was functus officio.
4. The court a quo erred at law in finding that the withdrawal of the arbitral award by the second respondent was of no consequence.
5. The court a quo erred at law in failing to find, that, the arbitral award by the second respondent had the effect of re-opening the hearing.
6. The court a quo erred in law in splitting the arbitral award into two, and, erroneously finding, that, as an interim award, it is susceptible to challenge at this stage, but, on the other hand, it is a procedural award and not susceptible to challenge; when, in actual fact, it was dealing with one arbitral award issued on 2 December 2020.
7. The court a quo erred at law in discharging the provisional order and not finding that public policy had been affronted to the appellant's prejudice.
The relief sought is:
“1. The appeal succeeds with costs.
2. The judgment a quo is set aside, and, in its place, substituted with the following:
“(a) The arbitral award issued by the second respondent on the 2nd of December 2020, in the arbitration proceedings between the applicant and the first respondent, be and is hereby set aside as being against public policy.
(b) The arbitral proceedings before the 2nd respondent, between the applicant and 1st respondent, be and is (sic) hereby set aside.
(c) The 1st respondent pays costs of this application on a legal practitioner and client scale.”
THE ISSUES
The first five (5) grounds of appeal speak to one issue: it is whether the court a quo was correct in holding that the reopening, by the arbitrator, of completed arbitral proceedings, was not contrary to the public policy of Zimbabwe.
The second issue raised by the sixth ground of appeal is whether the court a quo was correct in splitting the interim award into, firstly, an interim award on jurisdiction that could properly be challenged, and, secondly, an interlocutory procedural direction that was not open to challenge before the completion of the impugned arbitral proceedings.
The third and last issue, emanating from the seventh ground of appeal, is whether the court a quo ought to have confirmed rather than discharged the provisional order....,.
Regarding the third issue, which relates to the seventh ground of appeal, the determination of the application for vacating the interim order, whether in favour of the appellant or against it would result in the discharge of the provisional order.
This is because the fate of the interim award could only be determined under Article 34(4) the Model Law and not under the common law.
The interim interdict, having served its purpose, cannot, at the behest of the court a quo nor in the substitutionary order of this court, be confirmed. It falls to be discharged.
The court a quo therefore correctly discharged the provisional order in question.
