PATEL
J: In
May 2004 the applicant and the 1st
respondent entered into a software licensing agreement. Following a
dispute that arose between the parties in January 2006, the matter
was referred to an arbitrator (the 2nd
respondent) for arbitration.
On
the 23rd
of June 2008, the applicant challenged the impartiality of the
arbitrator in terms of Article 13(2) of the First Schedule to the
Arbitration Act [Chapter
7:15]
(the Model Law).
On
the 28th
of June 2008, the arbitrator rejected this challenge and his decision
was communicated to the applicant on the 3rd
of July 2008.
The
challenge was then referred to this Court for determination on the
1st
of August 2008 in terms of Article 13(3) of the Model Law.
The
Issues
The
issues for determination in this matter are as follows:
(1)
The nature of the challenge before this Court.
(2)
Was the challenge before the arbitrator prescribed in terms of
Article 13(2)?
(3)
Did the arbitrator fail to act impartially in
casu
and, if so, is his conduct such as to warrant his removal as
arbitrator?
Challenge
to Continuation of Arbitrator
Article
12 of the Model Law provides as follows:
“(1)
When a person is approached in connection with his possible
appointment as an arbitrator, he shall disclose any circumstances
likely to give rise to justifiable doubts as to his impartiality or
independence. An arbitrator, from the time of his appointment and
throughout the arbitral proceedings, shall without delay disclose any
such circumstances to the parties unless they have already been
informed of them by him.
(2)
An arbitrator may be challenged only if circumstances exist that give
rise to justifiable doubts as to his impartiality or independence, or
if he does not possess qualifications agreed to by the parties. A
party may challenge an arbitrator appointed by him, or in whose
appointment he has participated, only for reasons of which he becomes
aware after the appointment has been made.”
Article
13 sets out the procedure for challenging an arbitrator in the
following terms:
“(1)
The parties are free to agree on a procedure for challenging an
arbitrator, subject to the provisions of paragraph (3) of this
article.
(2)
Failing such agreement, a party who intends to challenge an
arbitrator shall, within fifteen days after becoming aware of the
constitution of the arbitral tribunal or after becoming aware of any
circumstance referred to in article 12(2), send a written statement
of the reasons for the challenge to the arbitral tribunal. Unless the
challenged arbitrator withdraws from his office or the other party
agrees to the challenge, the arbitral tribunal shall decide on the
challenge.
(3)
If a challenge under any procedure agreed upon by the parties or
under the procedure of paragraph (2) of this article is not
successful, the challenging party may request, within thirty days
after having received notice of the decision rejecting the challenge,
the High
Court to
decide on the challenge, which decision shall be subject to no
appeal; while such a request is pending, the arbitral tribunal,
including the challenged arbitrator, may continue the arbitral
proceedings and make an award.”
Nature
of Challenge before the Court
Adv.
Zhou
for the applicant submits that the arbitrator in
casu
decided the challenge before him without any substantive submissions
having been made by the 1st
respondent. He therefore contends that the latter is now estopped
from making fresh submissions though its opposing papers before this
Court. In other words, this Court must determine the challenge in the
same form as was presented to the arbitrator, viz. without the
benefit of any submissions from the 1st
respondent.
Article
13(3) enjoins the Court “to decide on the challenge” referred to
it by the challenging party, without elaborating the procedure to be
followed.
Be
that as it may, I have no doubt that the Court is confined to
determining the challenge on the grounds
of challenge
presented to the arbitrator and cannot entertain any fresh ground of
challenge. However, I am not persuaded that Article 13(3) narrows the
scrutiny of the Court, when examining and ventilating the issues
before it, to the same submissions that were presented to the
arbitrator.
I
am not so persuaded for several reasons.
(i)
Firstly, although the challenge before this Court may be likened to
an appeal, it is not described as such and cannot therefore be
regarded as an appeal stricto
sensu.
Even if it were to be so treated, it does not invariably follow that
a party to an appeal cannot make fresh submissions on the grounds of
appeal or the issues that constitute the subject-matter of the
appeal.
(ii)
Secondly, Article 13(3) does not define or fetter the powers of the
Court as to the procedure to be followed.
In
practice, the procedure that is adopted in the referral of arbitral
matters to the Court is by way of ordinary application and there is
nothing in the Rules of Court to preclude the filing of submissions
by any party to the arbitration proceedings in question.
(iii)
Last but not least, to construe Article 13(3) in a restrictive manner
would operate to constrict and offend the common law right to be
heard which vests in every interested party – as embodied in the
audi
alteram partem
rule – as well as the constitutional right to a fair hearing
guaranteed by section 18(2) of the Constitution.
For
all of these reasons, I am satisfied that the procedure
for challenge
before this Court cannot be curtailed in the manner propounded by
Adv.
Zhou.
Prescription
of Challenge before the Arbitrator
The
applicant in
casu
challenged the arbitrator on the 23rd
of June 2008. In this respect,
Adv. Fitches
for the 1st
respondent submits that the applicant was precluded from challenging
any conduct of the arbitrator that occurred at any stage before the
15 days preceding the date of challenge. He contends that Article
13(2) does not contemplate continuing conduct and that unless the
challenge is raised within 15 days of the specific act complained of
it must be treated as having prescribed and become technically
otiose.
As
against this, Adv.
Zhou
submits that the conduct giving rise to the challenge in the present
case began on the 30th
of May 2008 and continued until the 9th
of June 2008. This continuing conduct displayed the arbitrator's
partiality and the challenge thereto was filed timeously on the 23rd
of June 2008, within the stipulated 15 day period.
I
fully concur with the stance taken by Adv.
Zhou.
In
terms of Article 13(2) as read with Article 12(2), the challenging
party must raise his challenge
within 15 days after becoming aware of any circumstance that gives
rise to justifiable doubts as to the arbitrator's impartiality or
independence.
In
my view, the partiality of an arbitrator may not always manifest
itself immediately as a single act committed on one specific
occasion. More often than not, it will be evinced by a series of acts
at different times or continuing conduct which when pieced together
demonstrates his lack of impartiality.
In
this context, the aggrieved party may only be in a position to form
justifiable doubts as to the arbitrator's impartiality towards the
end of such continuing conduct rather than at its inception.
The
specific acts complained of in
casu
fall precisely into to the category of continuing conduct that I have
described above. I accordingly take the view that the challenge
before the arbitrator in this case was timeously lodged and has not
prescribed as contended by Adv.
Fitches.
Impartiality
of the Arbitrator
It
is generally accepted that in evaluating bias or partiality on the
part of an arbitrator the test to be applied is an objective one. See
The
Elissar
[1984] 2 Lloyd's Rep 84 at 89, where ACKNER LJ enunciated the test
as follows:
“Do
there exist grounds from which a reasonable person would think that
there was a real likelihood that the arbitrator could not or would
not fairly determine the relevant issue on the basis of the evidence
and arguments to be adduced before him.”
In
Leopard
Rock Hotel Co (Pvt) Ltd & Anor v Walenn Construction (Pvt) Ltd
1994 (1) ZLR 255 (S) at 275, KORSAH JA stated that:
“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.”
In
Standard
Chartered Finance Zimbabwe Ltd v Georgias & Anor
1998 (2) ZLR 547 (H) at 549-550, SMITH J adopted the same objective
approach:
“In
an application for recusal, the test to be applied is not easily
defined since decided cases are not entirely consistent, with some
judges favouring the view that the test is whether, as a matter of
fact, there is a real likelihood of bias, whilst others accepted a
reasonable belief that a real likelihood of bias existed as being
sufficient. To my mind, however, there is no real difference between
the two approaches since, unless there were a real likelihood of
bias, a reasonable or right-thinking man would not believe that there
was such likelihood.”
The
twofold nature of the test to be applied was elaborated by MUKHARJI J
in a decision of the Supreme Court of India in International
Airport Authority of India v Bali & Anor
[1988] LRC (Comm) 583 at 587-588:
“It
is well said that once the arbitrator enters into an arbitration, the
arbitrator must not be guilty of any act which can possibly be
construed as indicative of partiality or unfairness. It is not a
question of the effect which misconduct on his part had in fact upon
the result of the proceeding, but of what effect it might possibly
have produced. It is not enough to show that, even if there was
misconduct on his part, the award was unaffected by it, and was in
reality just; the arbitrator must not do anything which is not in
itself fair and impartial. ………………………
It
is well settled that there must be a real likelihood of bias and not
mere suspicion of bias before the proceedings can be quashed on the
ground that the person conducting the proceedings is disqualified by
interest.……………………
There
must be reasonableness in the apprehension of bias in the mind of the
party. The purity of administration requires that the party to the
proceedings should not have apprehension that the authority is biased
and is likely to decide against the party. But we agree with the
learned judge of the High Court that it is equally true that it is
not every suspicion felt by a party which must lead to the conclusion
that the authority hearing the proceedings is biased. The
apprehension must be judged from a healthy, reasonable and average
point of view and not on the mere apprehension of any whimsical
person.”
Similarly,
in a decision of the High Court of Singapore in Koh
Bros Building and Civil Engineering Pte Ltd v Scotts Development
(Saraca) Pte Ltd
[2003] 3 LRC 111 at 119-120, PRAKASH J observed as follows:
“No
actual bias or partiality need be shown as long as the court is
satisfied from the conduct of the arbitrator, either by his words,
his action or inaction or his handling of the proceedings, that he
displayed a real likelihood that he might not be able to act
judicially.”
The
Present Challenge
Turning
to the instant case, the conduct that the applicant complains of
herein – and which falls within the time limit stipulated by
Article 13(2) of the Model Law – began towards the end of May 2008
and appears from various e-mail messages communicated by the
arbitrator. More specifically, it is averred that:
(i)
On the 30th
of May, without first having heard the parties, he took the decision
not to recuse himself.
(ii)
On the 3rd
of June, he admitted to having communicated directly with the
applicant rather than its legal representative in the arbitration.
(iii)
On the same date, his response to the applicant's legal
representative's earlier query regarding the application of the
so-called Old Mutual Implied Rate was somewhat sarcastic and made in
bad taste.
(iv)
On the 3rd
of June and again on the 9th
of June, he unilaterally decided that if the additional costs fixed
by him were not paid, he would dismiss the applicant's defence and
counter-claim.
(v)
From the 3rd
to the 9th
of June, even though he had been advised that the applicant's legal
representative would be out of the country until the 9th
of June, he insisted on hearing argument on the question of
additional costs on the 11th
of June.
The
respondents dispute these allegations of impropriety and it is
submitted on behalf of the arbitrator that:
(i)
He declined to recuse himself, after having received written
representations by e-mail from both parties, because this Court had
already dismissed the applicant's previous challenge and in order
to reach finality without further delays.
(ii)
In the context of the case, it was not partial or unfair for him to
have communicated directly with the applicant in order to expedite
the matter.
(iii)
There was nothing malicious or biased in his response concerning the
Old Mutual Implied Rate inasmuch as that rate had become part of
daily commercial dealings in this country.
(iv)
He recalculated the security for costs which the applicant had been
ordered to pay by this Court in Case No. HC2597/07. He then invited
the applicant, if it objected to the recalculation, to show cause why
the security for costs should not be recalculated in the manner
indicated and why the recalculated amount should not be paid by the
11th
of June, and failing which why the applicant's defence and
counterclaim should not be dismissed.
(v)
Having regard to the fact that the applicant's legal representative
was away, he rescheduled the dates of arbitration to the 16th
to the 19th
of June and fixed the 11th
of June as the date for hearing the question of costs. These dates
were flexibly fixed in order to accommodate the applicant and its
legal representative.
On
balance, taking a broad view of all the allegations of misconduct and
the explanations proffered by the respondents, I am inclined to agree
with the respondents' submissions.
It
seems to me that the arbitrator did not act in any manner indicative
of partiality or bias in favour of the 1st
respondent and as against the applicant. On the contrary, his robust
approach in certain respects appears to have been necessitated by the
dilatoriness of the applicant and its legal representative in
bringing the matter to finality.
I
am of the view that his actions were not improper but generally
designed to expedite the arbitral proceedings in accordance with his
arbitral brief and, in particular, with the provisions of Article
25(d) of the Model Law, which empowers him to “give directions,
with or without conditions, for the speedy determination of the
claim”.
In
short, the applicant has failed to establish the existence of grounds
from which a reasonable person would think that there was a real
likelihood of bias and that the arbitrator could not or would not
fairly determine the issues before him. The applicant's challenge
is flimsy and without any real substance. It cannot be sustained on
the evidence before me.
This
application is accordingly dismissed with costs.
Mawere
& Sibanda,
applicant's legal practitioners
Scanlen
& Holderness,
1st
respondent's legal practitioners
