Brewing and Distilling Employers Association v Brewing and Distilling Workers Union and Moses Chinhengo (RT Judge) N.O and Munyaradzi Gwisai N.O

### Preamble
1
HH 555-25
HCH 6665/23
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BREWING AND DISTILLING EMPLOYERS ASSOCIATION

and

BREWING AND DISTILLING WORKERS UNION

and

MOSES CHINHENGO (RT JUDGE) N.O

and

MUNYARADZI GWISAI N.O

HIGH COURT OF ZIMBABWE

TAKUVA J

HARARE; 15 November 2024 and 22 September 2025

Court Application For Setting Aside Of An Arbitral Award

K Ncube, for the applicant

A S Ndlovu, for the 1st respondent

TAKUVA J:   This is an application for setting aside of an arbitral award in terms of Article 34 of the United Nations Commission on International Trade Law (UNCTRAL) MODEL LAW that is domesticated in Zimbabwean law under the Arbitration ACT [Chapter 7:15].  The application is made on the grounds that the award dated 25 September 2023 in a matter between the applicant and the first respondent is in conflict with the public policy of Zimbabwe.  The arbitration was done on a voluntary basis between the applicant and the first respondent.

BACKGROUND FACTS

The Applicant and the first Respondent are the organisations representing the interests of employers and the employees respectively in the Brewing and Distilling Industry.  The Applicant and the first Respondent deadlocked in negotiations on whether or not there should be an increase in the wages and allowances of employees in the industry.  The parties accordingly agreed to submit to voluntary arbitration.  The second and third Respondents were appointed as the arbitration tribunal.

The first Respondent submitted its claim whose material terms were as following;

First Respondent moved for a 34.62 increase in their basic wages on the basis of factors such as the sky-rocketing of the cost of living for an average citizen, the continued tradition of the Brewing Industry being the highest paid sub-sector in the food industry, comparative wage structures and, improved productivity and revenue base.

Transport allowance was to be increased by 75% considering ferry costs per day by way of public transport and that fuel is exclusively denominated in United States Dollars.

In respect of housing allowances, the Respondent sought a 150% increment exclusively payable in United States Dollars on account of rentals across surburbs being paid expressly in hard currency.

Lastly, subsistence allowance was sought with a 30% increase to be paid expressly in the United States Dollar.

The Applicant opposed the claimant’s position on the basis that the increments sought were unjustified and had no basis whatsoever given that the economic environment in the country had started to improve such that the exchange rate of the United States Dollar to the Zimbabwean Dollar had firmed up in favour of the Zimbabwean dollar.  The rate of inflation had started to go down.  The economic environment had stabilized such that no increment was warranted.  After replication, an oral hearing was conducted to consider submissions and the evidence attached to the papers.

The second and third Respondents rendered their award on 25 September 2023.  The Award;

Granted a 20% basic wage increment to a sum of USD 312.00 with 62,5%  payable in United States Dollars and 37,5% payable in the local currency at the prevailing bank rate,

Granted a transport allowance of USD 45.00 wholly payable in United States Dollars,

Granted a Housing Allowance of US$60.00 wholly payable in US dollars;

Granted a subsistence Allowance of US$54.00 with 62.5% payable in United States Dollars and 37.5% payable in local currency at the prevailing bank rate.

GROUNDS FOR SETTING IT ASIDE

Applicant submitted that the following gross irregularities afflict and render the Award in conflict with the public policy of Zimbabwe-

It is based on the rate of inflation which was neither rational nor proven.  The parties agreed that the rate of inflation was 15.3% (Jan – June 23) Yet the award considered the rate of inflation to be 30.9% (April to June 2023).  In awarding all the increases in emoluments it worked with this figure of inflation.  This was a gross irregularity.

The award is against public policy as it puts into disarray the efforts by the government to control economic fundamentals and in particular inflation and the exchange rate.  The failure to take into account economic fundamentals that control inflation and exchange rate is against public policy.

The arbitral Tribunal did not give reasons for not considering issues that were raised by the applicant in Annexure “C”.

The Tribunal failed to regard the most important consideration in the mix of currencies by which the employees in the Industry are paid which was the currency proportion of revenue of their employers.  Employees received their wages and allowances in two currencies, namely 62,5% USD and 37,5% in Zimbabwean dollars.  The Tribunal acceded to the employees’ request to be paid housing and transport allowances entirely in United States Dollars ignoring the revenue -currency mix of the employers.

It granted relief which was not sought by the employees when it ordered the subsistence allowance to be paid in terms of currency mix prevailing.

It mischaracterized the dispute between parties formulating it as if the Applicant (employers) wanted to pay slave wages.

THE LAW AND ANALYSIS

A dispute arose between the parties on whether the employees in the industry should get an increase in their earnings for the months July to September 2023.  The applicant took the position that economic conditions had improved since the last increase in earnings, where as the first Respondent took the position that these improvements notwithstanding, the employees must get an increment.  The Arbitrators gave the employees a 20% basic wage increase a 12.5% transport allowance increase, a 23.3% housing allowance increment and a 20% subsistence allowance increase.

The Award was strongly criticized for being contrary to public policy.  In Provincial Superior Jesuit Province of Zimbabwe v Kamoto and Ors 2007(2) ZLR 8(S) the court held that;

“ZESA v Maphosa Supra is authority for the proposition that an award will not be contrary to public policy merely because the reasoning or conclusion of the arbitrator are wrong in fact or in law.  In such a situation a court would not be justified in setting aside the award.  Where, however, the reasoning or conclusion in an award goes beyond were faultiness or incorrectness and constitutes 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 reach the point mentioned above.”

It is trite that the requirements for the setting aside of an award calls upon the court to engage in a thorough interrogation of the arbitral award.  It involves an inquiry into whether the award conforms with the law.  It is only when such an examination of the award has been conducted and the award has failed the test, that the High Court may exercise its discretion to set the award aside.

In casu, the first ground for setting aside the Award is that it is based on the rate of inflation which was neither rational nor proven.  The specific criticism is that the Tribunal used the rate of inflation of 30.9% instead of 15.3%.  considering the question of inflation, the Tribunal stated;

“In the present matter the statistics and figures given by both parties showed beyond any doubt a macro-economic environment ravaged by volatility and uncertainty in particular with reference to the inflation rates, currency and prices in the period under review.  These figures were common cause and not in dispute.  The employees states that the average month-on-month inflation rate between January and June 2023 was 15.3%.  A computation of the average figure of the month on month inflation for April to June 2023 using the figures given by the employers was about 30.9%.  Whereas in April the month on month figure was 2.4%, this had sharply jumped to 74.5% in June 2023.  See Annexure DD8 to the respondent’s statement of Defence.  The same document shows a sharp depreciation of the RBZ Auction rate of the ZWL$ to the USD from 1047, 4449 in April to 5739,7961 in June.

The above picture speaks to circumstances of sharp volatility in the macro-economic environment.  Generally, rates of inflation are the main indicator on changes of the cost of living.  In this instance the average month-on-month inflation was 30.9%, whereas for January to June it was 15.3%.  There is therefore adequate demonstration of changed circumstances by reference to the inflation rates as well as the currency depreciation.  Everything else being equal, the 30.9% average month-on-month inflation figure would be the necessary figure to increase wages and benefits just to maintain the value of wages as of April 2023, when parties reached agreement.  The Tribunal accepts Claimant’s submission that the primary period of reference is that of April to June 2023.  This is the period to consider whether there have been changes that justify amendment of the CBA.  If things had gone properly before end of June 2023, the parties would have sat and reviewed their agreement before it lapsed looking at the preceeding period.

Considering the above, the reduced claim of USD 312 representing an increase of 20% is lower that the average month-on-month inflation-rate of the period of 30.9% and only marginally higher that the 15.3% of the January to June period.  At the same time, it takes into account the volatility rates that have characterized the period, and indeed as was subsequently shown in the July and August periods.” (the underlining is mine for emphasis).

I do not find any fault in the above assessment and conclusions.  The rate of inflation which definition is too many dollars chasing too few goods was not just plucked from the air.  It is based on statistics of economic fundamentals.  The figure therefore is scientific.  In my view, the first ground for setting aside the Award lacks merit in that the appropriate period covered by the Award sought was first July to 30 September 2023.  Empirical figures indicate that the rate of inflation for the period January to June 2023 is 15.3%.  note that this is a six month period.  On the other hand, the rate of inflation for the period April to June 2023 is 30.9% (4 month period).  The correct cycle to renegotiate the CBA is 4 months and not six(6) months.  It follows that the relevant period for calculating the appropriate rate of inflation is April to June 2023 and not January to June 2023.  This coincides with the CBA’s renegotiating cycles.  I do not find any irregularity or misdirection in the Tribunal’s reliance on 30.9% as the basis for adjusting the wages and other benefits.  In any event, I take the view that even if this were so it would not render the Award contrary to the public  policy of Zimbabwe.

In the result, the first reason advanced for setting aside the award is without merit and it is hereby dismissed.

The second ground is equally unmerited in that it is a mere extension of the first ground which is based on a misunderstanding of the formular used to calculate the appropriate rate of inflation.  The Tribunal’s conclusion did not imperil the Government’s efforts to establish or promote sound economic fundamentals.  The increase is not inflationary as it is way below the 30.9% rate.  I take the view that it is not contrary to the public policy of Zimbabwe to award employees periodic, fair and reasonable awards.  To the contrary this is essential for good industrial relations as it prevents industrial unrest often characterized by collective job action.    Accordingly, the second ground is baseless and it is hereby dismissed.

The whole of the third ground is anchored on Annexure C.  The court was not referred to the page where the Annexure appears.  Neither was the court briefly informed of its contents which required the Tribunals consideration.  The IECMS record does not reveal Annexure C.  In that regard I find that the ground is vague and too generalized to warrant any analysis.  The Applicant knowns what it is that was not properly considered by the Tribunal.  Unfortunately, the onus is on the applicant to express this ground concisely and precisely.  In casu, this has not been done.  In the result, the ground is dismissed for lack of merit.

As regards the alleged failure to recognize the currency mix/proportion the Tribunal observed and complied with this formular except where it considered Housing and Transport allowances.  More importantly the Tribunal gave reasons why they felt these awards should be paid solely in USD.  Granted, the Tribunal’s task was to grant a fair and reasonable award.  See section  65 of the Constitution of Zimbabwe.  The reasoning of the Tribunal was that most if not all land lords were not prepared to be paid rentals in ZWL$.  This equally extended to the transport sector.  The alternative would have to pay these allowances and expect employees to source US$ in the street at parallel market rates.  In my view this approach would severely prejudice the employees.  There is no public policy consideration that bars the payment of these allowances in USD.    Accordingly, I find that this ground has no merit and is hereby dismissed.

Ground number 5 contradicts elements of the 4th ground in that on one land, it argues that the Tribunal acceded to the employees request to be paid housing and transport allowances in USD yet on the other it argues that this relief was not sought by the employees at all.  The relief granted was arrived at after consideration of multiple issues referred to in the reasons given for the award.  It is in correct to say that the Tribunal granted relief not sought by the employees.  While assessing the evidence and summarizing the parties’ submissions, the Tribunal concluded thus;

TRANSPORT ALLOWANCES

“currently set at USD 40.00 of which 60% is paid in USD currency while 40% is paid at the ZWL equivalent.

-initial claim was to increase this to USD70.00 wholly paid in the USD currency”

-following discussions during the hearing the Union adjusted their claim to USD 45.00 representing a 12.5% increase -wholly paid in USD.”

Quite evidently, the union sought to be paid transport allowances in USD.  The record is clear on this fact.

Housing Allowance

-currently set at USD45.00 of which 70% is paid in USD currency and the remaining 30% at the ZWL equivalent.

-After considering engagements during the hearing with the Tribunal and employers, the union adjusted their claim to USD 66.09 wholly paid in USD…”

(c) SUBSISTENCE ALLOWANCE

The union claims an increase to USD 60.00.  “wholly paid in USD Currency.”

On this evidence the award is based on the parties submissions.  This ground has no merit and is here by dismissed.

The last and 6th ground is a red herring.  Surely nothing turns on the Tribunal’s choice of words.  The Tribunal had in mind the need to award a fair and reasonable wage as provided under s 65(1) of the Constitution of Zimbabwe.  This ground is therefore dismissed for lack of merit.

Article 34(5) of the Model Law sets out what must be regarded as being contrary to public policy.  It states;

“34(5)

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 public policy of Zimbabwe if:

The making of the award was induced or affected by fraud or corruption; or

A breach of the rules of natural justice occurred in connection with the making of the award.”

In casu, Applicant places reliance on the question of “irrationality” instead of the specific provisions of Article 34(5) of the Model Law.  It must also be noted that an award will not be contrary to public policy merely because the reasoning or conclusions of the arbitrator are wrong in fact or law.  In such a situation the court would not be justified in setting the award aside.  The Applicant faults the reasoning and conclusions made by the Tribunal alleging that they are wrong in fact and law.  Unfortunately, this is not a basis upon which an award can be set aside.  In my view, the reasoning of the Tribunal does not go beyond mere faultiness or incorrectness so as to constitute a palpable inequity that is so far reaching in its defiance of logic or accepted moral standards.

The Applicant has not discharged the onus of proving that the Award is contrary to public policy.

In the result, the application for setting aside the Arbitral Award is hereby dismissed with costs.

THE COUNTER CLAIM FOR THE RECOGNITION AND ENFORCEMENT OF AN ARBITRAL AWARD

The applicant is seeking to register an arbitral award rendered by the second and third respondents.  The application has been filed as a counter application to the first respondent’s application to set aside the award.  The first respondent is resisting the registration of the award on the grounds that it violates the public policy of Zimbabwe as laid out in articles 34 and 36 of the Arbitration Act [Chapter 7:15].

In its opposition, the first respondent raised the following points in limine;

The present counter application is not issued by the Registrar of this court, and it is therefore not before the court.

The counter application did not ever attach the award sought to be registered at all to the Founding papers.

There is no authenticated or certified award attached to the application.

The recognition or enforcement of the award would be contrary to the pubic policy of Zimbabwe.as regards the first point in limine, it has been submitted that since the application was not stamped by the Registrar it is not before the court.  Reliance was placed on r 78(4) and (7) of the High Court Rules 2021 which provides;

“(4) The summons or other first document, in any matter shall be numbered by the registrar before issue with a consecutive number for the year and the matter shall at the time of issue, be entered by him or her in the civil record book under that number.  Where the summons or other first document is issued by a deputy registrar the document shall be numbered by the registrar at Harare, Bulawayo, Masvingo or Mutare on receipt there of in terms of subrule (14).

(7) A registrar shall not accept and file any document or issue any summons, subpoenaes or other process or order of court unless the prescribed stamp fee has been paid and the receipt attached, except where a party has been granted leave to proceed as a pauper”

I take the view that the counter application in casu complies with the peremptory requirements of r 58(8) of rules.  The rule provides that;

“(8) where a respondent files a notice of opposition and opposing affidavit, he or she may file, together with those documents, a counter application against the applicant in the form, with necessary changes of a court application or a chamber application whichever is appropriate.”

The counter application was filed together with the Notice of Opposition and Opposing Affidavit.  Rule 58(8) upon which counter claim is premised, does not make it mandatory for the Registrar to stamp the counter application, request for payment of stamp fees or number the counter application consecutively as any other application.

In any event, a counter application is not the first document within the contemplation of R 78(4) of the High Court Rules, 2021.  The “first document” contemplated is the main application to which the counter application relates.  Put differently, a counter application has no separate existence to/from the main application.  It arises from the main application and consequently can not be regarded as a first document within the contemplation of r 78(4) of the High Court Rules 2021.

It appears the first Respondent blames the Registrar by pleading that the Registrar did not properly exercise his functions in terms of the Rules.  If I am correct, then the first Respondent should have joined the Registrar as a respondent to enable him to be heard on the matter before an adverse finding is made against any party.

The first Respondent also attacked the application on the ground that the authenticated Award is not attached to the application.  The authenticated copy of the award is central to the determination of the counter application.  In casu, the Applicant alleged in para 11 of the Founding Affidavit that it was attaching a copy of the authenticated award as an Annexure.  The existence of and reliance on an authenticated copy of the award was properly revealed.  Applicant did not make a new case in the Answering Affidavit.  Therefore, first Respondent suffered no prejudice. In the present case, the non attachment of the authentication certificate is attributable to pure human error and inadvertence.

In litigation, the search for the truth is paramount.  In Kauma and Anor v Vambe and Anor [2022] ZWHHC 883 the court stated,

“Litigants should not play hide and seek with the courts.  Lawyers should not behave like hired guns.  They are officers of the court.  Litigation is not a game of wits.  It is a serious and scientific process to resolve disputes amongst individuals and to settle problems in the society.  The search for truth is paramount.  It is a duty thrust upon everyone.  A party that conceals material information from the court must be unworthy of its protection or assistance.  If you seek relief, you must take the court into your confidence, laying bare all the relevant facts on the matter.”

In terms of r 58(1) of this court’s rules 2021 it is proper and permissible for an Answering Affidavit to contain annexures.

For the above reasons, I do not find merit in both preliminary points which I proceed to dismiss.

Merits

The first Respondent argued that the Counter-Application should not succeed.  In other words, it must not be enforced.  The first Respondent repeated, its arguments raised in the principal, application namely, that the award can not be recognized or enforced because such recognition and enforcement would be contrary to the public policy of Zimbabwe.

Reliance was placed on the following cases:

NATIONAL PHARMACEUTICAL COMPANY v DRAX CONSULT SAGL SC 66/23

ZIMBABWE MANPOWER DEVELOPMENT FUND v MCR VENGESAI AND ANOR SC 97/19

DELTA OPERATIONS (PVT) Ltd v ORIGEN CORP. (PVT) (LTD) 2007(2) ZLR 51(S).

CHAWARA SYNDICATE v PICKWERL MINING (PVT) LTD AND MOSES CHINHENGO N.O SC 93/19.

In my view, the registration of an Arbitral Award may only be refused on the basis of any of the grounds set out in Article 36 of the Model Law attached as a Schedule to the Arbitration Act.  See also Gwanda Rural District Councils v Lourens Martinus Botha (Snr) [2020] ZWSC 174 at p 5.

In Wide Free (Pvt) Ltd T/A Core Solutions v Meikles Ltd [2018] ZWHHC 250 at pp 8-9 the court stated;

“In the absence of an order which set it aside or suspended it, it remains binding.  the mere filing of an application for review does not affect the binding nature of the award and does not detract from its registration.  as was correctly submitted by Mr Hashiti the filing of an application for review is not a bar to its registration.  it does not matter that the review application might succeed.  This is why article 36(7) says if an application for setting aside or suspension of an award has been made to a court, the court where recognition or enforcement is sought may, if it considers proper, adjourn its decision.  this means that the court has discretion on whether or not to register the award taking into account various factors in the circumstances of the case.”

It is trite law that in order to benefit from Article 36(1)(b)(ii) of the model law, it must be shown that the recognition and enforcement of the award would be contrary to the public policy of Zimbabwe.  It should be noted that I have already dismissed this argument in the principal matter as meritless.  In Alliance Insurance v Imperial Plastics (Pvt) Ltd and Anor [2017] ZWSC 30 at p 5, it was held as follows;

“…voluntary arbitration is a consensual adjudication process which implies that the parties have agreed to accept the award given by the arbitration even if it is wrong as long  as the proper procedures are followed.  The courts therefore can not interfere with the arbitral award except on the ground outlined in Article 34(2).  An application brought before the court under this provision is in essence a restricted appeal and the applicant should prove the grounds set out in order to succeed in its application.”

Whether or not in casu, the award can be said to be wrong or incorrect or constitutes an error at law is neither here nor there as the courts will not interfere with that Award on that basis.  Consequently, the court can not refuse to register an award merely on account of the contention made by one party that the Award could be wrong, incorrect or constitutes an error at law.

The Arbitration agreement between the parties grants the Tribunal the liberty to determine the basis wage, housing allowances, transport allowances and subsistence allowances for the period in question.   The agreement does not restrict the Tribunal in the manner of its approach in making this determination.  The Tribunal had in mind the obligation to pay a fair and reasonable wage as required by s 65 of the Constitution of Zimbabwe.

In the result, it is ordered that:

The Arbitral Award handed down by the Hon. Arbitrators, M H Chinhengo and M Gwisai on 25 September 2023 is hereby registered as an order of this court for purposes of enforcement.

CONSEQUENTLY

A basic minimum wage of USD 312.00 of which USD 195.00 (62.5%) is payable in the USD currency and the balance of USD 117.00 (37.5) is payable in the ZWL equivalent at the prevailing RBZ Auction Rate as of 18 of every month.

A transport allowance of USD 45.00 wholly payable in USD.

A housing allowance of USD 60.00 wholly payable in USD.

A subsistence allowance of USD 54.00 of which USD 33.75 (62.5%) is payable in the USD currency and the balance of USD 20.25 (37.5%) is payable at the ZWL Auction rate equivalent as of the 18th  day of each month.

The first respondent shall bear the costs of suit on an ordinary scale.

Takuva J:………………………….

Gill, Godlonton & Gerrans, applicants’ legal practitioners