KUDYA
JA:
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 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 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 art 33. 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.
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.
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 art 34(2)(b)(ii) of the Model Law.
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 art
34.
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 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.
THE
CONTENTIONS BEFORE THIS COURT
Mr
Phiri
for the appellant submitted that the impugned interim award was
contrary to public policy.
He
contended that the repeated assertions in the interim award by the
arbitrator that he was “re-opening” his earlier award confirmed
that he had revived his jurisdiction. He argued that, having issued a
final and definitive award on specific performance, which had been
registered for enforcement by the High Court, the arbitrator became
functus
officio
as he had completed his mandate. In the circumstances, he could not
re-open the completed proceedings and revive the jurisdiction that
the parties had previously conferred on him. He therefore contended
that the twin principles of functus
officio
and finality to litigation militated against the resumption of his
earlier jurisdiction, which by operation of law, had been exhausted.
He
strongly argued that the resumption of jurisdiction in these
circumstances was repugnant to the public policy of Zimbabwe.
He
also submitted that it was erroneous for the court a
quo
to split the unitary interim award into two. He, however, failed to
demonstrate how the split affronted the public policy of Zimbabwe.
While he conceded that clause 10 of the contract allowed the first
respondent to commence fresh arbitral proceedings premised on the
unenforceable arbitral order for specific performance, he was adamant
that it could not seek the revival of the arbitrator's exhausted
jurisdiction.
He
further argued that the arbitrator could not also mero
motu
revive the jurisdiction he had fully exercised.
He
also contended that, while the withdrawal of the completed specific
performance award was a nullity, it constituted a belated realization
by the arbitrator that he could not revive jurisdiction in completed
proceedings.
He
finally submitted that the court a
quo
ought to have confirmed and not discharged the provisional order.
He
moved for the success of the appeal with costs on the ordinary scale.
Per
contra,
Mr Hashiti,
for the first respondent submitted that the interim award was not in
conflict with the public policy of Zimbabwe.
He
contended that as the arbitral award for specific performance was
derailed by the wrongful conduct of the appellant, the arbitrator's
jurisdiction to further determine the quantification of the first
respondent's damages arising from such conduct was not only extant
but was automatically reactivated by such conduct.
He
further contended that the continuing power of the arbitrator in
these circumstances was also prescribed by section 24(1) and (2) of
the Interpretation Act [Chapter
1:01],
as applied in Zesa
v Utah
SC32/18 and Mhlanga
v Mtenengari & Anor
1992 (2) ZLR 431 (S) and obliquely recognized by this Court in OK
Zimbabwe Ltd v ArdMbare Properties (Pvt) Ltd
SC55/17.
He
also argued that the above cited case authorities held that an
arbitrator who determined a previous matter between the same parties
ought to decide any other aspects of the same matter that may arise
in future.
He
vehemently disputed that the quantification matter constituted an
amendment or correction of the award for specific performance.
He,
therefore, maintained that the arbitrator was not functus
officio
and that his jurisdiction had not been exhausted. He moved for the
dismissal of the appeal with costs on the higher scale.
ANALYSIS
The
law on the setting aside of arbitral awards is settled in this
jurisdiction. An arbitral award, whether interim or final may be set
aside if it is contrary to the public policy of Zimbabwe. See Wallen
Holdings (Pvt) Ltd v Lloyd & Anor 1996
(2) ZLR 383 (H) at 398F-G where CHINHEGO J correctly stated that:
“A
party is in a proper case entitled to bring to this court an
application in which an arbitrator's interim
award
is challenged and the court has the jurisdiction to entertain and
determine the application. An interim award is final and binding in
respect of those matters referred to the arbitrator and which are
agreed shall be the subject of such an award (see Butler & Finsen
[Arbitration
in South Africa: Law and Practice] op cit
p262). This position may however be altered by the parties if they
agree that neither of them may institute review proceedings before
the arbitration proceedings were completed.” (My underlining for
emphasis)
The
passage in Butler
and Finsen
that CHINHENGO J relied upon states that:
“The
award must be final; in the sense that it must deal with all the
matters submitted to the arbitrator and leave no matter unsettled. It
must therefore be complete. There is a partial exception in the case
of an interim award. While an interim award does not deal with all
the matters referred to the arbitrator, it must deal with all the
matters which the parties have agreed shall be the subject of the
interim award, and
is final and binding in respect of those matters.”
(my underlining for emphasis)
The
above view accords with that of Redfern and Butler in
The
Law and Practice of International Commercial Arbitration
2nd
ed at p273 that:
“In
a sense all awards may be said to be 'final' in that (subject to
the possibility of challenge in the courts) they dispose of one or
more of the issues in dispute between the parties. For instance, an
interim (or preliminary) award by an arbitral tribunal in an
arbitration under the UNCITRAL Rules, to the effect that it does have
jurisdiction to determine the dispute before it, is a final
decision
on the issue of jurisdiction, subject to any appeal to the competent
court.”
The
concept of public policy in this regard is restrictively construed in
order to uphold the sanctity of contracts of the parties and bring a
dispute to finality in an inexpensive and expeditious manner.
In
Zimbabwe
Electricity Supply Authority v Maposa
1999 (2) 452 (S) at 466E-G GUBBAY CJ said:
“An
arbitral award will not be contrary to public policy merely because
the reasoning or conclusions of the arbitrator are wrong in fact or
in law. In such a situation the court would not be justified in
setting the award aside. Under article 34 or 36, the court does not
exercise an appeal power and either uphold or set aside or decline to
recognise and enforce an award by having regard to what it considers
should have been the correct decision…Where, however, the reasoning
or conclusion in an award goes beyond mere faultiness or correctness
and constitutes a palpable inequity that is so far reaching and
outrageous in its defiance of logic or acceptable 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 applies 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 above.”
The
import of the above remarks was clarified by MALABA DCJ, as he then
was, in Alliance
Insurance v Imperial Plastics (Pvt) Ltd & Anor
SC30/17
at p11 thus:
“The
question that should be in the mind of a Judge who is faced with this
ground for setting aside an arbitral award is that, in light of all
the submissions and evidence adduced before the arbitrator, is it
fathomable that he would have come up with such a conclusion. If the
answer is in the affirmative, there is no basis upon which to set
aside the award. The appellant's submissions should be considered
in the light of these remarks.”
In
OK
Zimbabwe Ltd v ArdMbare Properties (Pvt) Ltd
SC55/17 at pp12-13 PATEL JA, as he then was, further explained the
meaning in the Maposa
case supra
in the following way:
“The
reviewing court does not exercise an appeal power by having regard to
what it considers should have been the correct decision. It will only
intervene to set aside an award on the ground of public policy where
the reasoning or conclusion in the award…..constitutes a palpable
inequity, gross irrationality, moral turpitude or resultant grave
injustice, either in the procedure adopted by the arbitrator or in
his substantive findings on the merits of the matter, so as to
warrant the setting aside of the impugned award. In the absence of
any perverse conduct or outlandish aberration on the part of the
arbitrator or in the affirmation of his award by the High Court, the
appellant is not entitled to the relief that it craves.”
See
also Ropa
v Rosemart Investments (Pvt) Ltd & Anor
2006 (2) ZLR 283 (S) 286B-D;
Delta
Operations (Pvt) Ltd v Origen Corporation (Pvt) Ltd
2007 (2) ZLR
81 (S) at 85B-E and Peruke
Investments (Pvt) Ltd v Willoughby's Investments (Pvt) Ltd &
Anor
2015 (1) ZLR 491 (S).
The
real question for determination in this appeal is whether the
arbitrator's reasoning or conclusion on jurisdiction goes beyond
mere faultiness or incorrectness and constitutes a palpable inequity
that is so far reaching and outrageous in 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 impugned interim award.
In
our law, jurisdiction denotes the power or competence of a court to
hear and determine an issue brought before it. Herbstein
and van Winsen: The Civil Practice of the High Courts of South Africa
5th
ed at p3 opine that:
“A
court of law will not entertain legal proceedings unless it is
satisfied that it is competent (in other words, has jurisdiction) to
do so, that the proceedings have been instituted in the proper form,
and that they are being conducted in the proper manner.”
While
it is settled that an arbitral tribunal is not a court of law, the
above principle applies with equal force to it.
An
arbitrator cannot act without jurisdiction. If he does so, the
arbitral proceedings that ensue will be a nullity.
The
exercise of jurisdiction where none exists would intolerably and
mortally hurt the very concept of justice in Zimbabwe and thus be
contrary to the public policy of Zimbabwe. Similarly, the revival or
resumption of jurisdiction on a finalized matter in which the
judicial officer or arbitrator has fully and finally exhausted his
jurisdiction would injure the public policy concept of finality to
litigation. See Stambolie
v Commissioner of Police
1989 (3) ZLR 287 (S) at 289; Bheka
v Disability Benefits Board
1994 (1) ZLR 353 (S) at 35 and Ndebele
v Ncube
1992 (1) ZLR 288 (S) at 290C. In the latter case this Court held
that:
“It
is the policy of the law that there should be finality in
litigation.”
To
similar effect is Herbstein
& Van Winsen, supra
at
p926:
“The
general principle, now well established in our law, is that once a
court has duly pronounced a final judgment or order, it has itself no
authority to correct, alter or supplement it. The reason is that the
court thereupon becomes functus
officio:
its jurisdiction in the case having been fully and finally exercised,
its authority over the subject matter ceases. The other equally
important consideration is the public interest in bringing litigation
to finality. The parties must be assured that once an order of court
has been made, it is final and they can arrange their affairs in
accordance with that order.”
The
importance for an arbitrator to act with jurisdiction is indeed
underscored by the nature and scope of articles 16 and 17 of the
Model Law, which inter
alia
imbue an arbitral tribunal with the power to dispose of the question
of whether or not it has jurisdiction as a preliminary point before
considering the merits of the arbitration.
An
arbitrator is consequently permitted to make an interim award on the
question of jurisdiction, which, in any event, constitutes a final
and definitive award.
The
functus
officio
concept
is an aspect of jurisdiction.
It
is a concept which expresses the termination of the jurisdiction of
any person or body charged with the duty and responsibility of
exercising a statutory or common law power or authority. The
jurisdiction conferred on an arbitrator by the parties in their
arbitration agreement terminates when the arbitrator has completed
his or her mandate. The academic writers posit that such termination
takes place after the happening of either of the following events:
The
first is at the stage when the arbitrator publishes his award to the
parties. The second is when he or she corrects any errors in
computation, syntax or errors of a similar nature or makes an
additional award in the manner and within the timeframe envisaged in
art 33 of the Model Law. The third concerns a determination
subsequent to a remittal by a superior court of competent
jurisdiction under art 34(4) of the Model Law.
In
Arbitration
in South Africa: Law and Practice: Butler & Finsen
(Juta 1993) at p103, the learned authors underscore the point that
the completion of the mandate terminates the jurisdiction of an
arbitrator. The learned authors write that:
“An
arbitrator derives his powers from his acceptance of a reference from
the parties to an arbitration agreement. He thereby undertakes to
hear their dispute and to make an award. When he has completely
discharged his duty to them and made an award which is complete in
all respects and disposes of all the matters in dispute, his powers
automatically desert him and he is said to be functus
officio.
This termination of his powers is so complete that, if he finds he
has made a mistake in his award, he has no power to correct it. Voet
4.8.23
and Table
Bay Harbour Board v Metropolitan and Suburban Railway Company
(1892)
9 SC 437 at 438.”
They
further observe at p295 that:
“The
effect of setting aside of the award is that everything that has
happened since the arbitrator entered into the reference is
nullified. His jurisdiction ceased on the publication of his award
and is not revived by its setting aside. But the arbitration
agreement itself is not affected and its provisions remain binding on
the parties, unless by mutual agreement or by order of court it is
terminated or set aside. The dispute must on the application of
either party, be submitted to a new arbitration tribunal constituted
in the manner directed by the court. But where the pleadings and
discovery for the first arbitration have not been tainted by the
circumstances that led to the setting aside of the award, the parties
could agree, or in the absence of agreement, the new arbitrator could
direct that the pleadings should be reused in the new reference and
that discovery need not be repeated.”
The
revival of jurisdiction in casu
is almost analogous to that of the arbitrator in Re:
Stringer and Riley Bros
[1901] 1 QB 105 who omitted to deal with certain issues and delivered
an award on others. He was thereafter alerted of his error and
proceeded to mero
motu
vacate the award before issuing a fresh one. The court therein held
that having made the first award, he became functus
officio
and his second award was invalid. The court, however, acted in terms
of section 30 of the English Arbitration Act 42 of 1965 to set aside
the second award and remit the matter to him to consider the omitted
issues.
In
Russell
on Arbitration,
20th
ed (1982), Walton
& Victoria
observe that:
“The
arbitrator is not functus
officio
until he has made an award. Until then either party can make any
application to him, and the arbitrator still having jurisdiction,
must deal with such application. Though the case has been formally
closed, it is in the discretion of the arbitrator whether he will
re-open it and receive further evidence.”
To
the same effect is Jacobs, The
Law of Arbitration in South Africa
Juta 1977 at p115:
“Once
an award has been made, the arbitrator is functus
officio.
However, prior to making an award the arbitrator has the power to
entertain an application for leave to reopen and receive further
evidence. It is submitted that the same principles that would apply
to a reopening before judgment in a court of law are applicable to an
arbitration.”
In
The
Law of Arbitration South African and International Arbitration
Juta 2009 at p168, Ramsden cautions that:
“An
award requires finality to be achieved. A situation where the
arbitrator's award directs that further works are to be executed
under the supervision of a third party, cannot constitute an award in
the sense required. It is not final in any sense of the word. The
arbitrator's status is one of functus
officio
(has discharged his office) after his delivery of the award, yet the
determination of the issues is not complete.”
Lastly,
Redfern and Hunter, supra
at p273 confirm the above position in the following manner:
“However,
the term 'final award' is customarily reserved for an award which
completes the mission of the arbitral tribunal. Subject to certain
exceptions, the issue of a final award renders the arbitrators
functus
officio.
They cease to have any further jurisdiction over the dispute; and the
special relationship that exists between the arbitral tribunal and
the parties during the currency of the arbitration ceases.”
In
our law, art 32(1) and (3) clearly state that “the arbitral
proceedings are terminated by the final award” and “the mandate
of the arbitral tribunal terminates with the termination of the
arbitral proceedings, subject to the provisions of articles 33 and
34(4).”
Art.
33 prescribes the arbitral tribunal's power to correct its award
mero
motu
or on request on 30 days notice or any agreed period of
extension after the delivery or publication of the award but within
the prescribed period of 60 days or any extended period set by such a
tribunal. And, art. 34(4) vests in the High Court the power to stay
an application for the vacation of an arbitral award at the request
of a party to the arbitration for a specified time determined by the
High Court “to give the arbitral tribunal an opportunity to resume
the arbitral proceedings or take such other action as in the
tribunal's opinion will eliminate the grounds for setting aside.”
In
casu,
the factors envisaged by articles 33 and 34(4) are absent.
The
arbitrator granted a final award for specific performance on 25 July
2017. The appellant sought the vacation of that award while the
respondent, conversely, prayed for its registration.
In
a consolidated judgment dated 10 June 2020, the High Court dismissed
the application by the appellant and registered that arbitral award.
The
attempted appeal by the appellant against that order was not pursued;
hence the registered arbitral order constituted the final award
granted by the arbitrator.
The
academic writers, such as Walton & Victoria, supra,
at p311 of their above cited work rely on the old English case of
Simmons
v Swaine
(1809) 1 Taunt 549 to posit, correctly in our view, that:
“An
award in the alternative may be sufficiently certain and final. If an
award directs one of two things to be done and one of them is
uncertain or impossible, the award is nevertheless sufficiently
certain and final if the second alternative is certain and possible;
and it will be incumbent on the party to perform the second
alternative.”
On
the same page the learned authors make the further point that:
“An
arbitrator cannot in his award reserve either to himself or delegate
to another the power of performing in future any act of a judicial
nature respecting the submitted matters. His duty is to make a final
and complete determination respecting them by his award, and it is in
breach of that duty to leave anything to be determined hereafter.”
An
exception to this rule is enunciated in Cogstad
v Newsum
[1921] AC 528 where it was held that an arbitrator is permitted to
make an interim award on liability leaving the reference of the
question of quantum
open
to him, if the parties fail to agree thereon.
This
is what happened in the ArdMbare
Properties case, supra,
with the exception that the parties vested the arbitrator, after
determining the question of liability, with the power to determine
quantum
if the parties subsequently failed to agree on the measure thereof.
Again,
in Mathews
v Craster International (Pvt) Ltd
HH497/17 at p3 (per CHATUKUTA J, as she then was) and Muchenje
& Ors v Stuttaffords Removals
(Pvt) Ltd HH374/13 at p4 (per TSANGA J), the High Court held that
quantification was not the same as an amendment or a correction. The
High Court further upheld the quantification subsequent to an earlier
award on the discernible ratio
that the earlier award was merely a partial award which the same
arbitrator could reopen.
In
the present matter the arbitrator reasoned that he was not functus
officio
because:
“The
award I made cannot be effected and therefore the award has to be
amended
in order to enable the claimant to quantify the damages it has
sustained. Because the award cannot be complied with, it
must be amended.
I have to deal with that issue so I am not functus
officio.
No one else can make the award effective.” (my emphasis)
The
considerations that are spelt out in the ArdMbare
and Cogstad
cases, supra,
contrary to Mr Hashiti's
submissions, do not apply to the award of 25 July 2017 for two
reasons.
Firstly,
while the respondent sought specific performance of the contract from
the appellant and the alternative relief of damages, the arbitrator
only granted the main relief sought.
It
was competent of him to do so.
According
to Visser et
al
in Gibson's South
African Mercantile and Company Law,
8th
ed (Juta) at p88, it would have been competent, however, for the
arbitrator to award both the main relief of specific performance
together with the alternative relief of damages. The learned authors
state that:
“A
party to a contract who is in breach may be compelled to perform the
obligation in the manner required by the terms of the contract. The
necessary court order may be enforced by contempt of court
proceedings if specific performance has been decreed absolutely. But
very often the court orders specific performance with an alternative
in damages, if this relief is claimed. (The magistrates court has no
jurisdiction to order specific performance unless it is coupled with
an alternative order for damages, except in respect of the rendering
of an account or the delivery of property (s46 of the Magistrates
Courts Act 32 of 1944)).”
Secondly,
the specific performance award was neither an interim award nor a
partial award. It was a final one.
It
is common cause, notwithstanding the prevarication of the first
respondent on the point, that the present award on jurisdiction was
an interim award.
The
issue of jurisdiction cannot be revisited by the same arbitrator when
he eventually determines the merits of the substantive issue of
damages.
The
interim award was therefore properly challenged a quo.
The
most important legal consequence of a valid award that is underscored
by Butler and Finsen, supra
at
p271, was approved by this Court in Ropa
v Rosemart Investments (Pvt) Ltd & Anor, supra.
The learned authors state that:
“The
most important legal consequence 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. The
effect of a valid award by an arbitrator will usually be to create
new rights and obligations between the parties and it will dissolve
existing rights or bring an end to a dispute as to whether certain
rights existed or not.”
It
seems to us that the arbitral award on specific performance granted
on 25 July 2017 was a final award. It brought the
arbitrator's jurisdiction to an end.
However,
it created new rights and obligations between the parties under which
the first respondent could invoke the arbitration clause in the
contract between the parties. See The
Cold Chain (Pvt) Ltd t/a Sea Harvest v Makoni
CCZ
8/17 at p7.
The
respondent could not, without the appellant's consent, properly
seek to revive the arbitrator's jurisdiction nor could the
arbitrator revive his own jurisdiction, which had been exhausted at
the time the arbitrator published the award for specific performance.
The
provisions of section 24(1) and (2) of the Interpretation Act, which
vests a person or authority with the continuing power, jurisdiction,
right or duty to exercise such power, jurisdiction, right or duty
from time to time as the occasion requires applies during the
pendency of such a person or authority's mandate.
It
does not apply to a person or authority who is functus
officio.
In
the circumstances, the first five grounds of appeal are meritorious
and ought to succeed. The arbitrator did not have jurisdiction to
reopen the case. He could only do so either with the appellant's
consent or after the first respondent had invoked the arbitral
process prescribed in clause 10 of the contract between the parties.
The
exercise of jurisdiction by the arbitrator in the circumstances of
this case was therefore contrary to the public policy of Zimbabwe.
The
contrary finding by the court a
quo
was incorrect. We, accordingly, agree with Mr
Phiri's
submissions that it should be set aside.
In
view of this finding, it is not necessary to relate to the second
issue raised in the sixth ground of appeal.
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 art 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.
COSTS
In
view of the conduct of the appellant, which necessitated the
erroneous reopening of the earlier arbitral award, it is appropriate
that each party bears its own costs.
DISPOSITION
The
arbitrator could not revive his jurisdiction nor amend his earlier
order as he purported to do as he had fully and finally exhausted his
jurisdiction. He could only do so with the appellant's consent,
which as is apparent from the proceedings, was never given.
The
arbitrator should have upheld the appellant's preliminary point on
jurisdiction. The court a
quo,
in
turn, should have found the finding of the arbitrator to have been in
breach of the public policy of Zimbabwe.
In
the circumstances, the following order will ensue.
1.
The appeal succeeds in part.
2.
Para (i) of the order of the court a
quo
is set aside and substituted with the following:
“(i)
The application in HC722/21 be and is hereby granted.”
3.
Each party shall bear its own costs.
MATHONSI
JA: I
agree
MWAYERA
JA: I
agree
Muvingi
and Mugadza,
appellant's legal practitioners
Chivore
Dzingirai Group of Lawyers, 1st
respondent's legal practitioners
