Judgment record
Starafricacorporation Limited Versus Sivnet Investments (Private) Limited AND Porthill Investments (Private) Limited
HH 178-2011HH 178-20112011
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HH 178-2011
HC 7123/10
STARAFRICACORPORATION LIMITED
versus
SIVNET INVESTMENTS (PRIVATE) LIMITED
and
PORTHILL INVESTMENTS (PRIVATE) LIMITED
HIGH COURT OF ZIMBABWE
PATEL J
Opposed Application
HARARE, 9 June 2011 and 13 September 2011
A.P. de Bourbon and D. Ochieng, for the applicant
E. Morris, for the respondents
PATEL J: In Case No. HC 4174/10, the applicant in this matter
filed for the review and setting aside of an arbitral award rendered in
arbitration proceedings between the parties. The award was made on 26
May 2010 and the application for review was filed on 21 June 2010. There
were delays in confirming and preparing the record of those proceedings
for various reasons. The applicant now seeks condonation for the late
filing of the arbitral record to enable the review proceedings to continue.
The respondents oppose this application. They contend that there
was no need for the arbitral record to have been confirmed by the
parties. The applicant should have simply attached the bundle of
documents constituting the record to its founding affidavit in Case No.
HC 4174/10. Because of the consequent absence of any arbitral record
before this Court, the application for review must fail. Moreover, the
Court cannot condone the late filing of the record as it should have been
attached to the applicant’s founding affidavit and identified ab initio.
In response, the applicant avers that the arbitrator (Muchadeyi
Masunda) was initially asked to prepare and lodge the arbitral record, in
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terms of Rule 260(1) of the High Court Rules 1971. He declined to do so
and it therefore became necessary to have the record agreed for
practical purposes, because of its sheer volume of over 400 pages. The
respondents initially gave the impression of their willingness to confirm
the record but subsequently declined to do so. The record was eventually
filed on 29 September 2010 and the present application was made on 8
October 2010. The belated lodging of the record should be condoned by
way of interlocutory relief so that the review application can be heard on
its merits.
The Submissions
Adv. de Bourbon submits that an application for review under
Article 34 of the Model Law requires a record of the arbitral proceedings
under scrutiny. Such record would consist of a transcript of the evidence
lead and the documents filed before the arbitral tribunal. Only the
arbitrator can produce a full record of the arbitration proceedings. He
further submits that the respondents’ opposition to the present
application is an exercise in sterile formalism. They would not suffer any
prejudice if the record filed by the applicant is accepted for the main
review application.
Adv. Morris concedes that there would be no prejudice to the
respondents if the record were to be admitted. However, he takes the
point that the main application in Case No. HC 4174/10 is a nullity by
virtue of the decision in Mtetwa & Another v Mupamhadzi 2007 (1) ZLR 253
(S) at 254F-255C and 256B-C. It was held by the Supreme Court in that
case that any challenge to an arbitral award must be made in terms of
Article 34 of the Model Law exclusively. It cannot be made by way of
review under Order 33 of the High Court Rules 1971. The main
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application and its founding affidavit refer simply to an application for
review, without making any mention of Article 34. The main application
therefore constitutes a nullity and, as was affirmed in Mtetwa’s case at
255G-256B, it cannot be extended or amended beyond the 3 months
period stipulated in the Model Law. Consequently, the present
application for condonation is futile and must fail.
In reply, Adv. de Bourbon accepts that an arbitration award can no
longer be challenged or set aside using common law review proceedings.
He also accepts that the main application refers to an application for the
review of the arbitral award in casu. However, he points out that both in
the main application and in its founding affidavit it is specifically stated
that the award is in conflict with public policy as well as being grossly
irregular. Therefore, he submits that the main application was in fact
made under Article 34 of the Model Law and not Order 33 of the Rules.
Setting Aside of Arbitral Awards and Proceedings for Review
Article 34 of the Model Law (Schedule to the Arbitration Act
[Chapter 7:15]), in its relevant portions, provides as follows:
“(1) Recourse to a court against an arbitral award may be
made only by an application for setting aside in accordance with
paragraphs (2) and (3) of this article.
(2) An arbitral award may be set aside by the High Court only
if–
(a) the party making the application furnishes proof that–
(i) a party to the arbitration agreement referred to in article
7 was under some incapacity; or the said agreement is not valid
under the law to which the parties have subjected it or, failing any
indication on that question, under the law of Zimbabwe; or
(ii) the party making the application was not given proper
notice of the appointment of an arbitrator or of the arbitral
proceedings or was otherwise unable to present his case; or
(iii) the award deals with a dispute not contemplated by or
not falling within the terms of the submission to arbitration, or
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contains decisions on matters beyond the scope of the submission
to arbitration …; or
(iv) the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of the
parties, … or, failing such agreement, was not in accordance with
this Model Law; or
(b) the High Court finds, that—
(i) the subject-matter of the dispute is not capable of
settlement by arbitration under the law of Zimbabwe; or
(ii) the award is in conflict with the public policy of
Zimbabwe.
(3) An application for setting aside may not be made after
three months have elapsed from the date on which the party
making that application had received the award or, if a request had
been made under article 33, from the date on which that request
had been disposed of by the arbitral tribunal.
(4) ………….
(5) For the avoidance of doubt, and without limiting the
generality of paragraph (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.”
As was recognised by the Supreme Court in Mtetwa’s case (supra) at
254F-255C, the use of the words “exclusive” and “only” in Article 34 make
it clear that recourse to a court against an arbitral award may be made
only by an application for setting aside in accordance with paragraphs (2)
and (3) of Article 34. Gwaunza JA proceeded to hold that this provision
“quite simply and effectively precludes” any application for the setting
aside of an arbitral award “otherwise than in terms of paras (2) and (3) of
Article 34”. She fortified that position by noting, at 256B-C, that “Article 34
is part and parcel of a statute, the Arbitration Act, and should therefore
hold dominance over Order 33 of the High Court Rules, which is
subsidiary legislation”.
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While I am in general agreement with the views expressed by her
Ladyship, it seems to me, with the greatest respect, that the Court might
have overlooked certain aspects of the relationship between Article 34 of
the Model Law and the High Court Rules. The principal object of
paragraph (1) of Article 34 is to ensure the finality of arbitration
proceedings by defining and restricting the scope of challenges to
arbitral awards. This is achieved by stipulating that any such challenge
may be made only by an application for setting aside in accordance with
paragraphs (2) and (3). Paragraph (2), as amplified by paragraph (5), sets
out the substantive grounds upon which an arbitral award may be set
aside. Paragraph (3) prescribes the time limit within which such an
application must be made. Apart from this, Article 34 says nothing more
about the procedure governing an application for setting aside.
Part V of the High Court Act [Chapter 7:06] deals with the review
powers of this Court. Section 26 of the Act restates the inherent common
law power of review as follows:
“Subject to this Act and any other law, the High Court shall
have power, jurisdiction and authority to review all proceedings
and decisions of all inferior courts of justice, tribunals and
administrative authorities within Zimbabwe.”
Section 27 elaborates the traditional grounds for review in the
following terms:
“(1) Subject to this Act and any other law, the grounds on
which any proceedings or decision may be brought on review
before the High Court shall be–
(a) absence of jurisdiction on the part of the court, tribunal
or authority concerned;
(b) interest in the cause, bias, malice or corruption on the
part of the person presiding over the court or tribunal concerned
or on the part of the authority concerned, as the case may be;
(c) gross irregularity in the proceedings or the decision.
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(2) Nothing in subsection (1) shall affect any other law
relating to the review of proceedings or decisions of inferior
courts, tribunals or authorities.”
Also relevant for present purposes is section 28 which sets out the
Court’s powers on review of civil proceedings and decisions:
“On a review of any proceedings or decision other than
criminal proceedings, the High Court may, subject to any other
law, set aside or correct the proceedings or decision.”
The procedure governing reviews under the Act is provided for in
Order 33 of the High Court Rules 1971. Rule 256 states that proceedings
for review shall be by way of court application directed and delivered to
all the affected parties. Rule 257 requires that the court application must
state shortly and clearly the grounds upon which the applicant seeks to
have the proceedings set aside or corrected and the exact relief prayed
for. Apart from this, in terms of Rule 258, the application procedure set
out in Order 32 shall apply to any application for review. Lastly, by virtue
of Rule 259, any proceedings by way of review must be instituted within 8
weeks, subject to the possibility of that time being extended for good
cause shown.
Reverting to Article 34 of the Model Law, the challenge envisaged
under that provision is not one on the merits of the arbitral award in
question. It is essentially a species of review of the arbitration
proceedings and resultant award. The differences between an application
under Article 34 and review proceedings generally are fairly obvious.
Firstly, the interventionary powers of the High Court are confined to
setting aside the impugned award and do not extend to any other
corrective measure. Secondly, the time limit for a review application is 8
weeks, subject to extension for good cause, while the period stipulated
under Article 34(3) is 3 months, without the possibility of extension. See
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Mtetwa’s case (supra) at 255G-256B. Apart from these procedural
distinctions, the substantive grounds for setting aside an award, in terms
of Article 34(2) as read with Article 34(5), are virtually the same as the
grounds for review under common law and the High Court Act.
Moreover, as I have stated earlier, Article 34 does not contain any
procedural detail regulating an application for setting aside. The requisite
provisions are set out in Order 32 of the Rules relating to applications
generally, which provisions also apply to the conduct of review
proceedings under Order 33. I would also add that although Order 33 is
unquestionably subsidiary legislation, as was noted in Mtetwa’s case
(supra) at 256B-C, its fundamental objective is to prescribe the procedure
to be applied in the exercise of review powers embodied in its parent
statute, the High Court Act.
The thrust of all of the foregoing is that the procedural exigencies
of the Model Law should not be seen as being in conflict with the High
Court Rules. Rather, Article 34 should be construed and applied in
conjunction and conformity with the Rules, including Order 33, which
should be treated as a complementary adjunct to the application
contemplated by Article 34. If this is correct, Article 34(1) does not
exclude or preclude an application for the setting aside of an arbitral
award by way of review proceedings under Order 33, provided such
application is in accordance with Articles 34(2) and (3), viz. premised on
one or more of the grounds enumerated in Article 34(2) and (5), and
made within the 3 months time limit stipulated by Article 34(3).
Disposition
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Inasmuch as I am bound by the decision in Mtetwa’s case (supra),
the above dicta can be no more than obiter, for future consideration
should that decision be revisited by the Supreme Court. In the instant
case, the unavoidable proposition of law that must apply is that an
arbitration award cannot be challenged or set aside by way of review
proceedings. Nevertheless, I do not perceive this to be an impediment to
the relief sought by the applicant for the following reasons.
It is common cause that the main application was lodged within 4
weeks after the arbitral award in casu was made. This is a feature that
distinguishes the present matter from the untimely application in
Mtetwa’s case (supra). It is also not in dispute that the main application
sought the setting aside of the arbitral award by way of review. In fact, it
makes three references to the review of the award. However, in
paragraph 1 of the application, it is specifically stated that the award is in
conflict with the public policy of Zimbabwe. This averment is repeated in
paragraph 11 of the founding affidavit, where it is also alleged that the
award was grossly irregular. Conflict with public policy is not a traditional
ground of review but a specific ground for recourse under Article 34(2)(b)
(ii). Again, gross irregularity constitutes a breach of the rules of natural
justice, which is also recognised as a ground for recourse under Article
34(5)(b). Having regard to all of these indicia, I am satisfied that, both in
intention and effect, the main application was made under Article 34 of
the Model Law and not Order 33 of the High Court Rules. I am further
satisfied that it was made in substantial compliance with the
requirements of Article 34(1) inasmuch as it was instituted for the setting
aside of the arbitral award in accordance with Article 34(2) and (3). It
should therefore proceed to be heard on the merits on the basis of the
record prepared by the applicant and not objected to by the respondents.
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In arriving at these conclusions, I take heed of the point that is
often made that procedural rules are fashioned so as to be flexible tools,
adaptable to meet particular needs and circumstances. See Nxasana v
Minister of Justice & Another 1976 (3) SA 745 (D&CLD) at 751G-H. In this
regard, the courts should eschew resort to formalism and apply
procedural rules so as to secure the inexpensive and expeditious
completion of litigation before them. See Federated Trust Ltd v Botha 1978
(3) SA 645 (A) at 654C-D. In short, I am inclined to agree with Adv. De
Bourbon that the respondents’ opposition to the interlocutory relief
sought herein propounds no more than sterile formalism (see Jockey Club
of South Africa v Forbes 1993 (1) SA 649 (A) at 663D) and should be
rejected on that account.
In the result, the applicant is entitled to the relief that it seeks,
including the costs of instructing two counsel. It is accordingly ordered
that:
1. The late filing of the record in Case No. HC 4174/2010 be and is
hereby condoned.
2. The respondents pay the costs of this application, including the
costs of two counsel.
Coghlan Welsh & Guest, applicant’s legal practitioners
Atherstone & Cook, respondents’ legal practitioners