Zimbabwe Ferro Alloys Employers Association v Zimbabwe Ferro Alloys Workers Union

IN THE LABOUR COURT OF ZIMBABWE                     JUDGMENT NO. LC/MD/34/2013
HELD AT GWERU ON 28 NOVEMBER, 2012                   CASE NO. LC/REV/ MD/08/2011
In the matter between



ZIMBABWE FERRO ALLOYS
EMPLOYERS ASSOCIATION                                              –      Applicant
And

ZIMBABWE FERRO ALLOYS WORKERS UNION                                –      Respondent




Before The Honourable L. Matanda-Moyo, President
For Applicant        - P. Takaendesa (Legal Practitioner)
For Respondent       - T. Pamacheche Legal Practitioner)


MATANDA-MOYO, L.

      This an application for review of an arbitral award in terms of Article34(2)

of the 1st schedule to the Arbitration Act. The Arbitrators ordered as follows;


             “1. From 1January 2011 to 30June 2011 – the current wage position will prevail for
             that period.
             2.From 1July 2011 to 31December 2011 – an increase on the present minimum wage
             of grade one of the Ferro –Alloy NEC of 20%.”


   The Arbitrators found that there would be an element of backpay for the

period 1 July 2011 to 31 December 2011 and that any employer who was unable

to meet the backpay immediately should be allowed to apply for an exemption

to allow the backpay to be paid over a period of time.
                                                     JUDGMENT NO. LC/MD/34/2013


The Applicants sought review of the arbitral award on the following grounds;

   1) That the arbitral award is in conflict with public policy in terms of Article

      34 of the Schedule and in particular sub-article 2(b)(ii) of the Arbitration

      Act.

   2) That the implementation of the award would lead to the closure or

      liquidation of companies affiliated to the Applicant. This would result in

      los of about 2000 jobs.



      Applicant prayed that the decision of the Arbitrators be set aside and that

a marginal increase of about 4% which is consistent with the rate of inflation be

awarded.



      The Respondent on the other hand opposed the application on the

following grounds;

      1) That this court has no jurisdiction to hear this matter

      2) That the Applicant is trying to sneak in an appeal in an application for

           review.

      3) Article34 of the Arbitration Act allows the setting aside of an award by

           way of an appeal. It allows an attack on the merits of the matter on

           the ground that the award is in conflict with public policy.

      4) There has been no evidence placed before the Arbitrators nor this

           court in the form of financials proving Applicant’s incapacity to pay.

      5) That the award is reasonable in the circumstances and should be

           allowed to stand.



Respondent prayed for the dismissal of the application with costs.


                                                                                    2
                                                               JUDGMENT NO. LC/MD/34/2013




      Let me start by dealing with the points in limmine. On the date of hearing. I

ruled that this court has jurisdiction to hear an application for review in terms of

Artcle34 of the Arbitration Act. The Labour Amendment Act No.7 of 2005 came

into force on 30 December 2005. Section29 of that Amendment Act amended

subsection (1) of section89 of the Labour Act to read;
      “d1. exercise the same powers of review as would be exercisable by the High Court in respect
      of labour matters”


      Such section gave the labour Court powers to review labour matters

where the High Court had powers to do so. It meant that in labour cases where

the High Court had review powers before 30 December 2005, the Labour Court

could hear such matters. Article 34(2)(b) provides;


      “(2) an arbitral award may be set aside by the High Court only if ------------
      (b) the High Court finds, that
        (i)--------------------
        (ii) the award is in conflict with the public policy of Zimbabwe.”


      The purpose of Labour Amendment Act In particular section 89(d1)

quoted above amongst others was to ease pressure on the High Court on

labour matters. The intention of the legislature was to extend the Labour Court

powers to include having review powers in such labour matters where such

power lied with the High Court. I cannot find any better example than the

present application.



      That brings me to the issue of the effect of the Arbitration Agreement

entered into by the parties on 1 August 2011. It is common cause that Applicant

                                                                                                3
                                                                 JUDGMENT NO. LC/MD/34/2013


and Respondent agreed to go for voluntary arbitration. Paragraph 3.5 of such

agreement provided that;


       “3.5. in the extent that any party is aggrieved with the arbitral award the aggrieved party
       shall have the right to appeal to the High Court in terms of the Labour Act Chapter28:01 and
       the Arbitration Act Chapter7:15.”


       What is clear is that the parties inserted the above paragraph under the

erroneous belief that it was only the High Court which can set aside such award.

The parties were oblivious to the powers of this Court.                           In any case any

agreement which is in conflict with the law cannot be enforced. I am of the view

that such agreement cannot, have the effect of taking away powers bestowed

on this Court by a statute. Accordingly this Court still has jurisdiction to set

aside the award. However in so doing this Court is guided by the powers given

to the High Court by the Arbitration Act.



Article34(5) provides;
       “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 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”(my own underlining)



       From the above it is clear that paragraph (5) does not intend to limit the

application of paragraph (2) (b) (ii). I therefore do not agree with Respondent’s

submission that “an award would be contrary to public policy if it was induced by fraud or

corruption and or is a breach of natural justice.” The interpretation of paragraph (2)(b)(ii)

can be extended to any such circumstances of public policy.

                                                                                                     4
                                                             JUDGMENT NO. LC/MD/34/2013




      I am thus satisfied that Article34 of the Arbitration Act confers the High

Court with review powers of matters emanating from voluntary arbitration. I

am also satisfied that in terms of Section89 (1d) of the Labour Act, I have powers

to hear this application for review.



      Let me now proceed to deal with the merits of this case, namely whether

Applicant managed to prove that the award is in conflict with the public policy of

Zimbabwe. Respondent referred me to the words of Gubbay CJ in his judgment

in the matter between Zimbabwe Electricity Supply Authority vs Maposa

1999(2) ZLR 452(5) at page 459 where he said;


      “the original text of UNICTRAL Model Law did not amplify the meaning of “public policy”
      although the United Nations Commission recorded in relation to Article34 that the term,
      which was also used in the New York Convention and in many other treaties, was understood
      to cover fundamental principle of law and justice in substantive as well as procedural
      respects.   See Holtzmann and Neuhaus A Guide to the UNCITRAL Model LAW ON
      International Commercial Arbitration: Legislative History and commentary 914.           The
      Zimbabwean modification to the Model law, however, puts this matter beyond doubt.
      Article34(5) spells out what is to be regarded as in conflict with the public policy of
      Zimbabwe, namely if;
      (a)the making of the award was induced or effected by fraud or corruption; or
      (a)a breach of the rules of natural justice occurred in connection with the making of the
      award.”



At page 466 he continued to say;


      “where , however, the reasoning or conclusion in an award goes beyond mere faultiness or
      incorrectness and constitutes a palpable inequity that is for reaching and outrageous in its
      defiance of logic or accepted moral standards that a sensible and fair minded person would

                                                                                                5
                                                               JUDGMENT NO. LC/MD/34/2013


      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 consequence 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.”



      Applicants submitted that an award which would cause the closure or

liquidation of companies falls within the definition of an award which is in

conflict with the public policy of Zimbabwe. I agree. However there ought to be

proof that the award in question would have such resultant effect. See Astra

Industries Limited vs Peter Chamburuka SC258/11 at page2 of the

cyclostyled judgment where Ormejee AJA said;


      “the position is now settled in our law that in civil proceedings a party who makes a positive
      allegation bears the burden to prove such allegation.-------. In Book vs Davidson 1988(1)
      ZLR365(5)at 384B-F, Dumbutshema CJ quoted with approval the words of Potgieter AJA
      (Pvt) Ltd vs Mechin 1965(2)SA 706 AD at 711 E-G;
      “the general principle governing the determination of the incidence of the onus is the one
      stated in the Corpus Luris simper necessiatas probandi incumbit illi qui agit. In other words
      he who seeks a remedy must prove the grounds therefore.”



      The Arbitrators in their ruling admitted that they acted as representatives

of the employer and employee organizations. Under paragraph 3 of the award

on page 31 of the record they said;


      “in this circumstance the Arbitrators are expected to become the negotiating parties to come
      up with award that the parties at NEC really made little effort to come to -----“


      From the above it is true that the two arbitrators fell into error into

believing that they were sitting to conciliate the matter.                      Conciliation had


                                                                                                   6
                                                   JUDGMENT NO. LC/MD/34/2013


already failed and the two were sitting to hear and determine the matter on the

basis of evidence led before them. To allow such a decision to stand would be

contrary to the public policy of Zimbabwe. Any person reading the arbitral

award would believe that the two arbitrators did not determine the matter but

sat, one representing the employers and the other representing the employees.

The two then compromised to reach a verdict. This was clear breach of the

Arbitration agreement as read with the Labour Act. The arbitrators were to sit

and determine the matter.



      The Zimbabwean economy is going through various challenges. There is

need for an Arbitrator dealing with wage issues to demonstrate that he has

evidence justifying whatever conclusion being reached. In matters as this the

paramount consideration if affordability. The arbitrator must be sure that the

companies involved have capacity to pay those salaries before making a

determination. Unfortunately I cannot say the same for the present award. The

present award was preoccupied with reaching a compromise without

considering the important factors.



      It is only fair that the award be set aside and that 3 Arbitrators be

appointed to call for and hear evidence from both parties. A determination can

only be made after assessment of evidence especially company financials. That

the workers deserve a decent living is common cause. The crucial evidence

required is the company financials. It is not in the interest of public policy to

simply rush and pluck figures from the air in determining salary issues.




                                                                                7
                                                     JUDGMENT NO. LC/MD/34/2013


      However the Applicant shall pay for the ordered arbitration as it would be

unfair to order Respondents to contribute towards such expenses.



In the result the application succeeds and it is ordered as follows;



   1) That the arbitral award be and is hereby set aside.

   2) That the matter is to be reheard before three new Arbitrators one to be

      appointed by Applicant the other by the employees and the third by the

      Ministry of Labour.

   3) Such arbitration costs to be borne by Applicants.            In the interim

      Applicants are to increase Respondents salaries by the 4% they offered.

   4) That there be no order as to costs.




Danzinger and Partners– Applicant’s Legal Practitioners

Gundu and Dube- Respondent’s Legal Practitioners




                                                                                8