Ariston Management Services (Private) Limited v Ecocet Wireless Zimbabwe Limited & Peter Carnegie N.O.

### Preamble
Judgment No. SC 55/25
1
Chamber Application No. SC 592/24
---------


REPORTABLE   (55)

ARISTON     MANAGEMENT     SERVICES    (PRIVATE)     LIMITED

v

ECONET     WIRELESS     ZIMBABWE     LIMITED     (2)      PETER    CARNEGIE    N.O

SUPREME COURT OF ZIMBABWE

HARARE: 24 OCTOBER 2024 & 3 JULY 2025

D. O’chieng, for the applicant

T. R. Mafukidze, for the first respondent

IN CHAMBERS

CHIWESHE JA:	This is an opposed chamber application made in terms of r 43 (1) as read with r43 (3) of the Supreme Court Rules, 2018 (the Rules) for condonation for the late noting of an appeal and extension of time within which to note an appeal.

THE LAW

It is now trite that in applications of this nature the court exercises its discretion to grant or refuse the indulgence sought by a litigant who has infringed its rules.  In doing so, the court will consider a number of factors including the following:

The extent of the delay in complying with the infringed rule.

The reasonableness of the explanation tendered for the non – compliance or delay.

The applicant’s prospects of success in the intended appeal if condonation is granted.

The importance of the case to the parties.

The need for finality in litigation; and

The avoidance of unnecessary delays in the administration of justice.”

The above list is not exhaustive.  The court is at liberty to take into account any other factor that it considers relevant to the resolution of the application before it.  Further, these factors should be considered cumulatively and not in isolation of one or another.

See Kombayi v Berkout 1988 (1) ZLR 53 (S).

THE FACTS

The applicant and the first respondent are companies registered in terms of the laws of Zimbabwe.  The second respondent is the arbitrator who presided over the dispute between the applicant and the first respondent.  On or about 21 January 2019, the applicant, the first respondent and Steward Bank (the bank) entered into an agreement in terms of which the first respondent advanced a loan facility of RTGS $5 100 000 - 00 to the applicant.  The applicant was required to repay the loan in the sum of US$2 217 391 – 00 over a period of five years commencing from January 2019 to 31 January2024.  The loan was to be repaid out of export proceeds generated through the export of agricultural commodities.  The agreement provided that such proceeds would be deposited into the first respondent’s foreign currency account (Nostro) maintained by the bank.  The agreement was subject to fulfilment of certain conditions including approval by the Reserve Bank of Zimbabwe Exchange Control Department.  That approval was subsequently sought and granted.

On 22 February 2019, Statutory Instrument 33 of 2019 (SI 33/2019) was promulgated under the Presidential Powers (Temporary Measures) Act [Chapter 10:20].  In June 2019, Finance Act Number 2 of 2019 was enacted, putting into effect the provisions of SI 33/2019.  As at 31 May 2021, the applicant had made certain payments thereby reducing the outstanding amount to the sum of US$ 886 956 – 40.  In light of the enacted legislation cited above, the applicant took the view that it was entitled to settle its obligation under the agreement in local currency at the rate of one United States dollar to one RTGS dollar.  The first respondent disagreed with that approach and referred the matter to arbitration before the second respondent.  The first respondent sought an award for the payment of the outstanding balance in the currency of the United States Dollar and interest on that outstanding balance in the sum of US$148 666 – 00.  The applicant opposed the application.  It submitted that the agreement between the parties was a parallel market deal which offended the exchange control regulations.  It further submitted that the authority granted by the Reserve Bank did not mean that the first respondent had exchanged RTGS dollars to United States Dollars.  For these reasons, the applicant submitted that it was entitled to discharge the loan in local currency at the rate of 1:1 with the United States dollar. Further, the applicant filed a counter claim to the effect that it had over paid the first respondent in the sum of RTGS$694 633.41 and sought repayment of the same.

On 10 September 2021, the second respondent found in favour of the first respondent.  He handed down an arbitral award in favour of the first respondent in the sum of US$886 956.40 plus interest in the sum of US$148 666.01.  Further, he ordered that the applicant pays interest at the rate of 5% per annum on the sum of US$ 886 956.40 from 1 June 2021 to date of payment.  Conversely, the second respondent dismissed the applicant’s counter claim with costs on the legal practitioner and client scale and ordered that the applicant reimburses the first respondent the share of the costs of the arbitration that the first respondent had paid.

Under HC 5555/21, the applicant filed an application at the High Court (the court a quo) to set aside the arbitral award on the grounds, inter alia, that the award was contrary to the public policy of Zimbabwe because it offended the provisions of SI 33/2019.  The first respondent argued to the contrary.  Under case HC 6005/01, the first respondent filed an application for the registration of the arbitral award.  Both matters were heard together in the court a quo.  On 24 February 2024, the court a quo dismissed the applicant’s application for setting aside of the arbitral award and granted the first respondent’s application for the registration of that award.

Aggrieved by the decision of the court a quo, the applicant noted an appeal to this Court under case SC 435/23.  The appeal was however struck off the roll with costs.  This court further ordered as follows:

“2. In terms of s 25 (2) of the Supreme Court Act [Chapter 7:13], the proceedings in the application to set aside the arbitral award are hereby set aside.”

The above order was granted following an objection by the first respondent that the applicant’s founding affidavit in the court a quo in support of its application to set aside the arbitral award, was a nullity because it bore no date as to when it was commissioned.  This Court upheld that objection and proceeded to make the above order.  Delivering the unanimous judgment of the Court, Mathonsi JA remarked as follows:

“There is merit in the preliminary objection.  It ought to be upheld.  It renders the application for setting aside the award a nullity.

In view of the fact that the court a quo rendered a composite judgment in respect of the two applications, the invalid application and its outcome are capable of severance.  The application for registration, being a separate application, is not affected.  It follows that, absent a valid application a quo, there can be no valid appeal before this Court. We therefore propose to proceed in terms of s 25 of the Supreme Court Act [Chapter 7:09], which allows this Court to review and set aside irregular proceedings.”

The applicant thereafter approached the Constitutional Court on the grounds that this Court had violated its right to a fair hearing.  The Constitutional Court held that:

“If indeed this was the position that the notice of appeal was defective, still the applicant should have been heard on that allegation.”

It proceeded to issue the following order:

“In the result, I make the following order:

46.1   Using the review powers granted to this Court by s 19 of the Constitutional Court Act [Chapter 7:22], para 1 of the order a quo is set aside.

46.2   The court a quo is directed to set down the appeal for its determination.

46.3   There shall be no order as to costs.”

Consequently, the remitted matter was set down for hearing on 30 September 2024.  The applicant sought to amend its grounds of appeal.  That application was dismissed by this Court on 1 October 2024.  Consequently, the matter was struck off the roll as the notice of appeal was adjudged to be fatally defective.

The applicant has now filed the present application based on a fresh draft notice of appeal.

THE EXTENT OF THE DELAY AND THE EXPLANATION THEREFOR

The applicant submits that the delay of 14 months is not inordinate as it was involved in other litigation during that period.  In its founding affidavit, it describes the various litigation that led to the delay in noting its appeal timeously.  It states that the judgment of the court a quo was rendered on 20 July 2023.  It appealed against it within time on 31 July 2023.  The appeal was heard and determined by this Court on 19 October 2023.  It avers that the appeal was erroneously struck off the roll by this Court.  It lodged an application at the Constitutional Court to correct that error.  The Constitutional Court rendered its judgment on 18 June 2024 in favour of the applicant.

The applicant asserts that at all times it acted with due diligence in order to protect its interests and that any delay was not as a result of wilfulness on its part.  For that reason it urges this Court to condone the late noting of its appeal.

The respondent avers to the contrary, arguing that the period of delay is inordinate and that there is no reasonable explanation given for that delay.  However, the respondent has not established a firm basis for that assertion given that the applicant was indeed involved in other litigation which stalled the prosecution of its appeal.

In the circumstances the applicant’s explanation for the delay is reasonable.  It deserves the indulgence of condonation.

PROSPECTS OF SUCCESS IN THE INTENDED APPEAL

The intended notice of appeal has three grounds of appeal which essentially raise one issue for determination, namely, whether the court a quo erred in granting an order for the registration of the arbitral award.

The applicant submits that the court a quo found that the provisions of s 4 (1) (d) of SI 33/2019 were applicable in discharging applicant’s debt to the first respondent.  Consequent to that finding, the court a quo should have set aside the arbitral award which required the applicant to discharge the debt in United States Dollars, contrary to those provisions.  For that reason, the applicant submits that the award, being contrary to statutory provisions, was against the public policy of Zimbabwe.  It should have been set aside.

On the other hand, the first respondent argues that the award is not against the public policy of Zimbabwe.  What the arbitrator did was to hold the parties to their agreement.  It submits that there was nothing outrageously wrong or immoral about the award.  It concedes that the court a quo ruled that the award was contrary to SI 33/2019, but submits that the court a quo was correct when it held that the award could not be set aside.

Article 34 (3) (b) (i) and (ii) of the Arbitration Act [Chapter 7:15] provides:

“(3) An arbitral award may be set aside by the High Court only if –

---

(b) the High Court finds, that-

(i) the subject matter of the dispute is not capable of settlement by arbitration under the laws of Zimbabwe; or

(ii) the award is in conflict with the public policy of Zimbabwe.”

The above provision has been subject to judicial interpretation in various cases, including the case of ZESA v Maphosa 1992 (2) ZLR 455 (S).  It is clear from the authorities that an arbitral award cannot be set aside unless it is contrary to the public policy of Zimbabwe.  In the ZESA case supra, it was held that an award will not be contrary to public policy merely because the reasoning or conclusions of the arbitrator are wrong in fact or in law.  “Where however the reasoning or the conclusion in an award goes beyond mere faultiness and incorrectness 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 courts have consistently held that an award that offends the laws of Zimbabwe (and in this case the provisions of a statute) is contrary to the public policy of Zimbabwe.  In casu the question that arose for determination before the court a quo was whether the award was in conflict with the provisions of s 4 (1) (d) of SI 33/2019 (re-enacted as s 4 (1) of the Finance Act Amendment number 2 of 2019), which reads:

“… that for accounting and other purposes, all assets and liabilities, that were, immediately before the effective date, valued and expressed in United States Dollars (other than assets and liabilities referred to in s 44 C (2) of the Principal Act) shall on and after the effective date be deemed to be values in RTGS Dollars at the rate of one to one to the United States Dollar.”

The effective date is given as 22 February 2019.  The effects of SI 33/2019 were explained and confirmed in the case of Zambezi Gas Pvt Ltd v N.R. Barber (Pvt) Ltd & Anor SC 3/20.

It is common cause that the agreement giving rise to the financial obligations affecting the applicant was entered into before the effective date.  In other words, the applicant’s liabilities were valued before the effective date.  For that reason, the provisions of SI 33/2019 are applicable in the discharge of those liabilities.  The debt should be payable in RTGS dollars at the rate of one to one with the United States Dollar.  The court a quo recognised this position but considered that the error by the arbitrator in that regard was not the kind of error envisaged in the Zesa v Maphosa case, supra, warranting the award to be set aside.

On the other hand, s 44 (c) of the Principal Act exempts funds deposited into an FCA account (Nostro account) from the effects of the provisions of SI 33/2019.  It is common cause that the applicant was to discharge its debt by depositing funds earned through exports of agricultural commodities into the first respondent`s FCA account held at the bank.  These deposits were denominated in foreign currency.  There is thus merit in the first respondent`s submission that the applicant’s obligations should be discharged in foreign currency as per the parties’ agreement, more so because that arrangement had been approved by the Reserve Bank.

It can thus be noted that each party appears to have plausible arguments in favour of its respective case.  In my view the applicant has an edge, in that, having found that the award contravened SI 33/2019, the court a quo should have declined to register it on the grounds that the award offends the law of Zimbabwe and is therefore contrary to public policy.

In view of the large sums of money involved, I consider it in the interest of justice that the parties be allowed to argue their respective cases before the full bench.

DISPOSITION

The applicant`s explanation for the delay in complying with the rules of this Court is plausible.  Further, it has reasonable prospects of success in the intended appeal, be it that the first respondent also has an arguable case.  The case is of importance in view of what is at stake in terms of monetary value.  For these reasons the application must succeed.

Accordingly, it is ordered as follows:

The application for late noting of an appeal and extension of time within which to appeal be and is hereby granted.

Leave be and is hereby granted for the applicant to note an appeal against the judgment of the High Court in HC 5555/21 (HH 441/23) dated 20 July 2023 in terms of the draft notice of appeal filed of record within 5 days of service of this order.

There shall be no order as to costs.

Atherstone & Cook, applicant`s legal practitioners.

Mtetwa & Nyambirai., respondent’s legal practitioners.