UCHENA J: The applicant is
a company duly registered in terms of the laws of Zimbabwe. The
second respondent is its employee with whom it has had labour
disputes leading to this application.
The second respondent was suspended from employment pending the
resolution of the dispute between her and her employer.
The first respondent is an arbitrator who was duly appointed to
arbitrate in the labour dispute between the applicant and the second
defendant.
The applicant and the second respondent filed written submissions
with the first respondent. The first respondent thereafter called
them for a hearing which was not finalised. He called them again to
clarify the issue of whether or not the second respondent had secured
employment during the period of her suspension.
On 26 June 2007, while Mr Biti
for the second respondent was making submissions at the hearing, the
first respondent said the second respondent had “told him about how
she suffered during the years”. The applicant's counsel asked him
to clarify where this conversation took place, but the first
respondent did not respond to that inquiry.
That hearing was adjourned without a clarification of the first
respondent's comments.
The applicant's counsel followed it up by letter to the second
respondent's counsel dated 27 June 2007. The letter was copied to
the first respondent. It reads as follows:
“We refer to the arbitration
hearing before Mr Gabilo
on 26 June 2007.
As you will no doubt be aware, the arbitrator made some remarks
indicating that he had granted audience to the claimant and heard
certain evidence from the claimant outside the framework of a
hearing. The writer sought an explanation as to how this had occurred
and the arbitrator gave no response.
Our client is concerned that the arbitrator may have acted improperly
as a result of which his impartiality may be in doubt. In this
regard, the respondent is entitled to impeach the arbitrator and have
the matter referred to another arbitrator.
Please can we have your client's explanation in this regard not
later than 29 June 2007.”
The second respondent's counsel did not respond within the
stipulated period. The first respondent did not respond even though
the letter was copied to him.
The applicant's counsel then wrote to the first respondent on 4
July 2007. The letter reads as follows:
“We refer to our letter of 27
June 2007 addressed to the claimant's legal practitioners and
copied to you. We have not heard from the claimant's legal
practitioners.
Our client has instructed us in the circumstances to address its
request for your recusal as arbitrator in this matter on the grounds
that the respondent entertains serious doubts as to your impartiality
or independence as arbitrator. As indicated in our letter of 27 June
2007, the respondent believes that you have entertained
representations from the claimant outside the framework of the
arbitration hearing. When we requested that you explain the
circumstances in which the claimant had made representations to you,
you did not answer that question.
In the circumstances, the
respondent seeks your recusal as arbitrator immediately.
Accordingly you are to refer the matter to the Labour Officer who
referred the matter to you for a fresh appointment of an arbitrator.
Regrettably, should you not recuse yourself the respondent shall seek
the intervention of the High Court.”(emphasis added)
The first respondent did not respond to the challenge, but proceeded
to make an award without first rejecting the challenge.
The applicant thereafter applied to this court for an order
terminating the first respondent's mandate to arbitrate, and
ordering that, fresh arbitration proceedings, be held, within a
fortnight.
The applicant is being represented by Mr Shoko the Group Chief
Executive of Trust Holdings Limited. The applicant is a subsidiary of
Trust Holdings.
The first respondent did not oppose the application.
The second respondent opposed the
application, and raised two points in limine.
She claimed that Mr Shoko does
not have the applicant's authority to institute these proceedings
as the applicant's Board of Directors was dissolved in 2005, and
could not have authorised him to institute this application. She also
claimed that the applicant's application does not comply with the
provisions of article 13 of the Arbitration Act [Cap
7:15]
herein- after called “the Act”..
Locus Standi
Mr Biti
for the second respondent submitted that the applicant did not pass a
resolution authorizing Mr Shoko to file this application on its
behalf. He argued that the resolution Mr Shoko relied on was passed
by Trust Holdings Limited, which described itself in the resolution
as a holder of 60% equity in the applicant. He submitted that the
resolution was issued by the applicant's majority shareholder
instead of the applicant's directors.
This argument is supported by the resolution which clearly states
that the applicant's board was dissolved in 2005 pending the
applicant's voluntary liquidation. This means the applicant does
not have a Board of Directors with authority to resolve that Mr Shoko
can represent it. When a company goes into voluntary liquidation and
its Board of Directors is dissolved, its management and authority to
act rests in its Liquidator. Its shareholders have no authority to
perform the functions of the dissolved Board of Directors.
Mr Mundia
for the applicant conceded that Trust Holdings cannot pass
resolutions on behalf of the applicant, but argued that Mr Shoko has
always acted for the applicant, and can depose an affidavit on the
basis of the knowledge he has about the labour dispute between the
parties.
My understanding of the second
respondent's objection is not that the affidavit was deposed by an
unqualified person, but that the proceedings were instituted by a
person without locus
standi.
In paragraph 2.1 of her opposing affidavit the second respondent
said:
“I am aware that Gift Shoko has
not been authorised by the applicant's board to bring these
proceedings against myself. In fact I am aware that there is no valid
board of the applicant that exists. Shoko thus acted without
authority and therefore there is absolutely no basis and foundation
of the present application.”
It is therefore clear that the issue is on Shoko's authority to
institute these proceedings and not his authority to depose to an
affidavit supporting the application. In other words the second
respondent is saying there is no valid application before the court.
Mr Mundia,
submitted that Mr Shoko represented the applicant in previous
proceedings between the applicant and the second respondent.
That does not, cloathe Mr Shoko with authority to institute
proceedings on behalf of the applicant without a valid resolution of
the applicant authorizing him to do so.
I am therefore satisfied that Shoko does not have authority to
institute these proceedings.
Compliance with Article 13 of the Act
Mr Biti
also raised the issue of procedure arguing that the applicant's
application does not comply with article 13 of the Arbitration Act.
He submitted that in terms of article 13(1), the parties should have
agreed on the procedure to be used in challenging the arbitrator. He
also submitted that the notice of challenge was defective because no
evidence was attached to it. He therefore argued that the application
does not comply with the procedure through which a challenge to the
arbitrator's appointment can be brought to this court.
He further submitted that the arbitrator has already made his award,
and in the circumstances the applicant should have proceeded in terms
of article 34 of the Act.
He submitted that the applicant could not apply to this court in
terms of article 13, because the parties had not agreed on the
procedure for challenging the arbitrator.
Mr Mundia
for the applicant argued that the application was properly made in
terms of article 13, as failure to agree on the challenging procedure
is not a bar to any challenge arising from what happens during the
arbitral proceedings. He further submitted that the letter to the
first respondent contains all the information which should be in a
statement of challenge and should therefore be accepted as a valid
challenge to the arbitrator.
Article 13 of the Act provides as follows:
“(1) The parties are free to
agree on a procedure for challenging an arbitrator, subject to the
provisions of para (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 para
(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.”
The wording of paragraph (1) of
article 13 favours Mr Mundia's
interpretation.
It states that the parties are free to agree on a procedure for
challenging the arbitrator. It does not say that they have to.
It further states that the provision is subject to para (3) of this
article. Article 13(3), mentions two procedures, which can be used
for challenging the arbitrator. They can use the agreed procedure or
the procedure prescribed by para (2). Article 13(2) provides for a
procedure to be followed if the parties do not agree on a procedure
to be followed. It specifically states that “failing such
agreement, a party who intends to challenge an arbitrator shall …”.
This means that para (2) procedure is an alternative procedure to be
used if the parties do not agree on the procedure to be used.
I would therefore agree with Mr
Mundia
for the applicant that the application does not depend on whether or
not the parties agreed on the challenging procedure. It is in my view
depends on whether or not the applicant, correctly followed the
procedure prescribed by para (2) of article 13.
An analysis of article 13(2) reveals the requirements which should be
complied with before a party can request this court to decide on a
challenge. They are as follows:
1. The party who seeks to
challenge the arbitrator must within fifteen days of becoming aware
of the reason for the challenge;
2. Send to the tribunal or
arbitrator a written statement;
3. Stating the reasons for the
challenge;
4. The challenged arbitrator can
withdraw from his office, or the other party can agree to the
challenge; and
5. If the arbitrator does not
withdraw, and the other party does not agree with the challenge, then
the arbitrator must decide on the challenge.
In terms of article 13(3) the rejection of the challenge by the
arbitrator, leads to the following:
1. The challenging party may if
he is not satisfied by the rejection;
2. Within thirty days of the
rejection request the High Court;
3. To decide on the challenge.
While the challenge is pending in the High Court the challenged
arbitrator or tribunal can continue with the arbitral proceedings and
make an award.
In this case the arbitrator did not respond to the challenge, but
proceeded to make an award without dealing with the challenge.
In terms of article 13(2), he was bound to decide on the challenge.
Mr Mundia
for the applicant argued that, that entitles this court to hear the
applicant's application.
Mr Biti
for the second
respondent argued that once the award is made it can only be set
aside by the High Court in terms of article 34(2)(b)(ii) of the Act.
As already indicated the procedure under article 13(2) does not
require the parties to first agree on the challenging procedure. The
words “failing such agreement” in article 13(2) means in the
absence of an agreement. The applicant's application cannot
therefore be dismissed just because the parties had not agreed on the
challenging procedure.
The application must however comply with the alternative procedure
under article 13(2) and (3), which requires the applicant to within
fifteen days of becoming aware of the circumstances on which the
challenge is premised, to send a written statement to the tribunal in
which the reasons for the challenge will be stated.
Mr Biti
for the second
respondent submitted that the applicant's statement was not
accompanied by reasons for the challenge. Mr Mundia
submitted that the letter the applicant wrote to the arbitrator
satisfies the requirements of article 13.
I agree with Mr Mundia
as a reading of the article gives the impression that what is
required is a simple statement which informs the tribunal or
arbitrator of the reasons why its or his recusal is being sought.
If the intention was for the challenging party to submit an
application accompanied by an affidavit in which the reasons for
recusal would be stated the legislature would have required the
challenging party to apply for recusal instead of sending a
statement.
The letter to the first respondent clearly states why his recusal was
being sought. It therefore satisfies the requirements of article 13.
I am therefore satisfied that the applicant's application cannot be
dismissed for failure to give separate reasons for the arbitrator's
recusal.
On receipt of a challenge the arbitrator can either withdraw from his
office or decide on the challenge.
The other party can agree to the challenge in which case the
arbitrator cannot proceed with the arbitration proceedings.
The tribunal or arbitrator cannot ignore the challenge and proceed
with the arbitral proceedings as if its or his appointment has not
been challenged.
If the challenge is not successful the challenging party must within
thirty days of receiving the arbitrator's determination on the
challenge request the High Court to decide the challenge.
In this case, the applicant, send a statement of his challenge to
both the arbitrator and the other party within the stipulated period.
The other party did not agree, and the arbitrator did not respond.
Article 13(3) does not provide for an application to this court until
after the arbitrator has given the challenging party notice of his
decision rejecting the request to recuse himself.
This therefore means the applicant's application does not comply
with the provisions of article 13(3).
The Arbitrator has already made an award which the applicant wants to
be declared null and void because of the alleged impartiality.
Article 13(2) and (3) permits the arbitrator to continue with the
proceedings in spite of the challenge which he will have rejected and
the challenging party's request that the High Court determines the
challenge.
In this case he proceeded without first rejecting the applicant's
challenge.
This was an irregularity on his party as article 13(3) allows an
arbitrator to continue with the proceedings after notifying the
challenger of the rejection of the challenge.
Mr Mundia
submitted that the award should be set aside on the basis that it
does not even deal with the challenge.
I agree with him that the arbitrator was required to deal with the
challenge before proceeding with the proceedings before him, but the
issue in this case is whether or not the applicant is properly before
this court.
This court can in terms of article 13(3) only decide on a challenge
after its rejection by the arbitrator.
In this case the failure by the arbitrator to reject the challenge
before making the award makes the article 13 procedure inapplicable,
as this court can only be requested to intervene when the challenge
has been rejected.
I am therefore satisfied that Mr
Biti's
submission that the applicant is not properly before this court is
correct.
The applicant is however not without a remedy.
Mr Biti
correctly pointed out that in the circumstances of this case the
applicant should have applied for the setting aside of the award in
terms of article 34(2)(b)(ii) of the Act.
The applicant could ordinarily have taken the arbitrator's failure
to decide on the challenge on review, but article 5 of the Act
provides that “no court shall intervene except where so provided in
this Model Law”.
This means this court's intervention in terms of article 13 must be
strictly in compliance with the provisions of that article.
The Act does not provide for review and article 34(1) provides that
an application to set aside is the only available remedy.
Article 34(1) provides as follows:
“Recourse to a court against an
arbitral award may be made only by an application for setting aside
in accordance with paras (2) and (3) of this article.”
This means in the circumstances of this case an application in terms
of article 34(1) is the only procedure through which the applicant
can seek a remedy from this court.
Article 34(2)(b)(ii) provides for the setting aside of the award on
the ground that it is contrary to the public policy of Zimbabwe.
Article 34(5) defines the circumstances under which an award can be
said to be contrary to the public policy of Zimbabwe. It provides as
follows;
“For the avoidance of doubt,
and without limiting the generality of para (2)(b)(ii) of this
article, it is declared that an award is in conflict with 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 in connection with the making of the award.”
The applicant's grounds, for applying, for the recusal of the first
respondent, and the setting aside of his award is that he heard
submissions from the second respondent outside the arbitral
proceedings.
That if proved would be contrary to the rules of natural justice and
entitle the applicant to the setting aside of the award in terms of
article 34.
I am therefore satisfied that the applicant should in the
circumstances of this case have applied for the setting aside of the
award in terms of article 34(2)(b)(ii) of the Act. Its application in
terms of article 13 of the Act must therefore be dismissed.
In the result the applicant's application is dismissed with costs.
Gill Godlonton & Gerrans, applicant's legal
practitioners
Honey & Blanckenberg, second respondent's legal
practitioners