MAKONI J: The applicant applied under case numbers HC
1010/12, HC 4009/12 and HC 4008/12 for the registration of arbitral awards in
terms of Article 35 of the United Nations Commission of International Trade Law
(UNIC TRAL) Model Law (Schedule to Arbitration Act [Cap 7:15])
against the respondents.
The respondents, in turn, and in case numbers HC 5351/12, 5418/12, 5549/12 and
5350/12, applied for the setting aside of the awards, in terms of Article 34
(2) (b) (ii) of the Act.
At the hearing of the matters, and by consent of all the parties, the
matters were consolidated with the applications by Old Mutual being the main
applications and the applications by the respondents being
counter-applications. At the conclusion of the hearing, I gave an order in
favour of the applicant with reasons to follow later. These are they.
The brief background to the matter is that the
applicant is the landlord and the respondents are tenants, in terms of a
written lease agreement, at applicant's premises at Metro Centre. In terms of
clause 42 of the lease agreement, the applicant gave 6 months notice to the
respondents to vacate the premises to pave way for demolitions of the premises
and redevelopment of the site. The respondents did not comply with the notice.
Consequently, the applicant commenced arbitration proceedings in terms of
clause 41 of the lease agreement. The matter was determined by the Honourable
Justice C.G SMITH (retired), who made an award in favour of the applicant. It
is these awards that is at the centre of the dispute between the parties. The
applicant applies in terms of Article 35 of the Model Law that the award be
registered. The respondents counter-apply for the setting aside of the awards.
It is applicant's contention that once a party has made an application in terms
of Article 35, he or she is entitled, as a matter of right to have the award
registered unless the respondent shows sufficient cause for the court to
decline same. In order to discharge the onus upon him, the respondent,
resisting registration of an arbitral award, should establish one or more of
the defences prescribed in the Article 36. It is applicant's submission that
the respondents in casu, have failed to sufficiently set out grounds
warranting refusal of recognition of the award.
The respondents resist the registration of the award on the basis that the
award is against public policy for two main reasons viz;
(i)
Bias on the part of the Arbitrator
(ii)
That the Arbitrator did not make a finding on a fundamental issue whether the
notice to terminate the lease agreement was valid.
Article 35 provides that:-
“ (1) An arbitral award,
irrespective of the country in which it is made, shall be recognised as binding
and upon application to the High Court, shall be enforced subject to the
provisions of this Article and of Article 36.”
Article 36 provides grounds for refusal of recognition or
enforcement of an award. In s 1(b) it provides:-
“(b) if the court finds that:-
(i) --------------------
(ii) The recognition or
enforcement of the award would be contrary to the public policy of
Zimbabwe.”
Article 34(2) provides the basis upon which and arbitral award can be set
aside. It provides:-
“2 (a) An
arbitral award may be set aside by the High Court only
if-
(i)
-----------------------------
(ii)
-----------------------------
(iii)
-------------------------------
(iv)
-------------------------------
Or
b) the High Court finds, that-
(i) -----------
(ii) the award is in
conflict with the public policy of Zimbabwe.”
From the above it is clear that the High Court can refuse to recognise an award
or can set aside an award on the basis that it is contrary to public policy.
The doctrine of public policy was defined in the following terms by GUBBAY CJ
(as he then was) in ZESA v Maposa 1999(2) ZLR 4522 at 453
C-E.
“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 recognise the basic
objective of finality in all arbitration, and to hold such defence applicable
only if some fundamental principle of law or morality or justice is violated.
An award will not be contrary to public policy merely because the reasoning or
conclusions of the arbitrator are wrong in fact or in law. Where, however, the
reasoning or conclusion in an award goes beyond mere faultiness or
incorrectness and constitute a palpable inequity that is so far reaching
and outrageous in its defiance of logic or accepted 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, then it would be contrary
to public policy to uphold it. The same consequences apply where the
arbitrator has not applied his mind to the question or has totally
misunderstood the issue, and the resultant injustice reaches the point
mentioned”.
Bias
The respondents content that the Arbitrator was biased when
he determined their matters as he had issued arbitral awards in default, for
the eviction of other tenants from Metro Centre. This factor was not brought to
their attention by either the Arbitrator or the applicant. The Arbitrator
determined their matters with existing negative awards he had made on the same
facts. There was need for the Arbitrator to be consistent as the respondents
were in the same category with the other tenants for which awards in default
had been issued.
It was submitted on their behalf that in terms of Article 18 of the Model Law,
there should be equal treatment of parties and each party should be given a
full opportunity to present its case before an Arbitrator. By not advising the
respondents that he had issued default judgements, the Arbitrator did not treat
the parties equally and fairly. It was further submitted that there where bias
is alleged, one does not need to prove actual existence of malice. The court is
simply concerned with the honest view of the bystander.
The applicant's position is that it is not correct that the Arbitrator had
already taken a position before hearing this matter. At the commencement of the
hearing it was established that two of the tenants were in default. This was in
the presence of the respondents. The Arbitrator did not make any substantive
awards against those in default, prior to the hearing of this matter. This
matter was heard on 2 March 2012 and the awards in default were only made on 13
March 2012.
The test as to when a person performing a judicial function should be
disqualified to act on the grounds of interest or bias was discussed in Leopard
Rock Hotel Co (Pvt) Ltd and Anor v Walenn Construction (Pvt) Ltd 1994
(1) ZLR 255(S) at 273G-H and 274 A-C where KOSAH J reviewed a number of cases
on this issue. At p 273 G-H he quotes LORD GOFF in R v Gough (1993)
2 ALL ER 724 (HL) at 130 e-g where he said.
“I turn next to the broader
question of bias on the part of a member of the relevant tribunal. Here it is
necessary to put on one side the very rare case where actual bias is shown to
exist. Of course, if factual bias is proved, that is an end of the case: the
person concerned must be disqualified. But it is not necessary that
actual bias be proved; and in practice the enquiry is directed to the question
whether there was such a degree of possibility of bias on the part of the
tribunal that the court will not allow the decision to stand. Such a question
may arise in a wide variety of circumstances. These include, but are by no
means limited to, cases in which a member of the tribunal has an interest in
the outcome of the proceedings which falls short of direct pecuniary interest.
Such interests may vary widely in their nature, in their effect and in their
relevance to the subject matter of the proceedings; and there is no rule, as
there is in the case of a pecuniary interest, that the possession of such an
interest automatically disqualifies the member of the tribunal from sitting.
Each case falls to be considered on its own facts”.
KOSAH JA then continued at p 274 C and stated
“As the court always adopts the
standard of the reasonable man in resolving factual issues, I understand the
words: “the court will not allow the decision to stand” to imply that: “nothing
is to be done which will create a suspicion in the mind of the
reasonable man that there has been an improper interference with the
course of justice”.
He then concluded at p 275 A by stating:
“A common theme which runs
through the authorities is, therefore, that the test to be applied is an
objective one. One does not enquire into the mind of the person challenged to
determine whether or not he was or would be actually biased. Thus the
character, professionalism, experience or ability as to make it unlikely,
despite the existence of circumstances suggesting a possibility of bias arising
out of some conflict of interest, that he would yield to infamy, do not fall
for consideration”.
Applying that test to this matter, the question would be are there any
circumstances which may engender a belief in the mind of reasonable litigant
that in the arbitral proceedings he would be at a disadvantage.
My view is that the answer to the above should be in the negative. To suggest
that the Arbitrator's mind would have been influenced by awards he made in
default is to slight the Arbitrator's intelligence and experience. Regard to
the award itself will show that the Arbitrator applied his mind and considered
the submissions made before him by the parties before arriving at a decision. I
do not understand why the Arbitrator could not have arrived at a different
conclusion, to the awards in default, if the circumstances warranted. No
“precepts of natural justice” were offended as claimed by the respondents.
Notice to vacate
It is the respondents' contention that the Arbitrator did
not make a finding on the issue of whether the notice to terminate the lease
agreement was valid. It was submitted on behalf of the respondents that award
envisages stay of the respondents on the premises as being unlawful for the
reason that the applicant had redevelopment plans. The view is erroneous as the
lease agreement between the parties was binding at the material time. The
applicant gave as its reasons for terminating the lease, as non compliance with
municipal by-laws as well as failure to meet minimum health standards. The
notice is therefore invalid and respondents had no obligation to comply with
same.
I do not understand the basis of the respondents' position. The notice given by
the applicant and which is on p 41 of the record, has given in terms of clause
42 of the Lease Agreement. The clause among other things, authorizes the
premature termination of the agreement if the landlord wishes to demolish the
premises and redevelop the site. The Arbitrator applied his mind to this issue
on p15 of the award, which is p154 of the record whereby he makes a finding
that the requisite six calendar months notice was given to the respondents. He
further went on to give the meaning of clauses 41 and 42 of the Lease Agreement
and concluded by saying that the respondents had failed to establish their
allegations that the applicant was acting in bad faith.
The Arbitrator might have been wrong in arriving at that decision in the
respondent's view. The position is settled in our law regarding wrong
decision by Arbitrators. See Catering Employers Association of
Zimbabwe v Deputy Chairman, Labour Relations Tribunal & Anor
HH206/00 where it was stated
“Even where the Arbitrator made a finding that was
erroneous or unreasonable the court should not interfere but it could only
interfere if the decision was attended by a gross irregularity or it resulted
in a failure of justice.”
See also ZESA v Maphosa
supra where GUBBAY CJ stated
“An award will not be contrary to public policy merely
because the reasoning or conclusions of the Arbitrator are wrong in fact or in
law.”
Incasu, I am satisfied that the Arbitrator
exercised his powers judiciously in arriving at the award in question. He
did apply his mind to the question, before him. I will make a finding that the
award is not contrary to public policy.
The applicant in its papers also raised a point regarding
the Arbitration Clause in the lease agreement which the respondents did not
respond to. I take it that they agree with the applicant's position.
The Arbitration Clause provides:-
“41.6 The decision of the
Arbitrator shall be final and binding on the parties to the dispute and may be
made an order of court at the instance of the parties to the dispute.”
The effect of such a clause was dealt with in Ropa v Reosmart
Investments (Pvt) Ltd and Anor 2006 (2) ZLR 283 at 286 B-C where GWAUNZA
JA quoted the following passage by Butler and Trisen in Arbitration in
South Africa (Law and Practice, 1993) at p 271 where the authors explain
the legal consequences of an arbitral award thus
“The most important legal
consequences of a valid final award is that it brings the dispute between the
parties to an irrevocable end: the arbitrator's decision is final and there is
no appeal to the courts. For better or worse, the parties must live with the
award, unless their arbitration agreement provides for a right of appeal to
another arbitral tribunal. The issues determined by the arbitrator become res
judicata and neither party may reopen those issues in a fresh arbitration
or court action”.
GWAUNZA
JA then went on to state that the above position applied with equal force in
Zimbabwe.
This court should always be reluctant to interfere with an
award where the parties have agreed on an arbitration clause and this court
will not do so.
The applicant prayed for costs on a legal practitioner and
client scale de bonis propriis. Its basis is that the respondents'
case, not only lacked merit but is a classical abuse of court process which the
court should frown upon. Whilst I agree with the applicant's position that the
respondents' opposition to the application amounts to an abuse of court process
with the aim of delaying the finalisation of this matter whilst they continued
to enjoy the use of applicant's premises, I do not agree with the proposition
for costs de bonis propriis. I will therefore award costs on
a higher scale. In the result, I will make the following order
1) The counter applications
are dismissed.
2) The Arbitral Awards made
in favour of the applicants as against the respondents by Honourable Justice
L.G SMITH be and are hereby registered as an order of this court in terms of
Article 35 of the Arbitral Law (Schedule to the Arbitration Act) [Cap
7:15).
3) The respondents to pay
costs on a higher scale to the applicant.
Wintertons Legal Practitioners, applicant's legal practitioners
Venturas
& Samukange, respondents' legal practitioners
