TWYNAM AGRICULTURAL GROUP (PVT) LTD
JOHN I. KAHLBETZER
TARISIRO MINING INVESTMENTS (PVT) LTD
HIGH COURT OF ZIMBABWE
HARARE, 13 November 2015 and 6 July 2016
S.M Hashiti, for the applicant
T. Mpofu, for the respondent
MAKONI J: The applicant approached this court seeking the registration of an arbitral award in terms of Article 35 of the Arbitration Act [Chapter 7:15] (“The Act”) handed down by arbitrator Mr Magwaliba (Magwaliba) on 5 February 2015. The background, relevant to the determination of the issue before me, is as follows:
There is a commercial dispute between the parties which they sought to be adjudicated through arbitration in terms of clause 19 an agreement of sale between them. The applicants’ legal practitioners wrote to the Commercial Arbitration Centre (CAC) seeking to be provided with names of possible arbitrators. The letter was copied to the respondents’ legal practitioners. The Commercial Arbitration Centre provided a list of five (5) arbitrators whom the parties could consider appointing to adjudicate on the dispute. This letter was forwarded to the respondents’ legal practitioners In response to this letter, the respondents offered a payment plan whereby they would pay what they owned the applicant at the rate of 50 000.00 per month. The applicants opted to pursue arbitration.
On 15 September 2014 the applicants’ legal practitioners addressed a letter to the respondents’ legal practitioners enquiring whether they had any objection to the appointment of Magwaliba as an arbitrator. There was no response. The applicants’ legal practitioners then, on 23 October 2014, wrote to Magwaliba requesting him to preside over the arbitration. The letter was copied to Mr Jori, the respondents’ legal practitioner. On 27 October 2014, Magwaliba accepted to the appointment. Again the letter was copied and delivered to Messrs Wintertones marked for Mr Jori’s attention. On 29 October 2014 the applicant’s legal practitioners wrote to Magwaliba inquiring as to when a pre-arbitration hearing could be held. The letter was copied to the respondent’s legal practitioners. On the same date, Magwaliba sent out an e-mail to both parties proposing that the pre-arbitration hearing be set for 6 November 2014 at 4.00 pm. Mrs Mtetwa, for the applicants responded indicating that she will not be available at 4.00 pm but at 4.30 pm. There was no response from Mr Jori.
On 29 October 2014, Magwaliba advised both parties, through email that 4:30pm on 6 November 2014 would be the date and time for the pre-arbitration hearing.
On 5 November 2014 Mr Jori wrote an email to Magwaliba. The email reads as follows
“1. they do not believe there is a dispute between the parties which can be referred for arbitration;
2. alternatively, any dispute between the parties is not incapable of resolution without reference to arbitration and the parties should make further attempts to resolve their differences before commencement of arbitration proceedings.
In the circumstances, I have been instructed to request a round table conference with Messrs
Mtetwa and Nyambirai, and their client, to pursue amicable resolution of the differences
between the parties.
I await to hear from Messrs Mtetwa and Nyambirai a to when the round table conference can
be held. Please take note that I will be attending summer school from tomorrow the 6th of
November 2014 so the meeting will have to be scheduled for any date next week.”
Magwaliba then wrote another email proposing 20 November 2014 at 4pm as the new date and time for the arbitration hearing. On the same date, the applicants’ legal practitioners wrote an email to Magwaliba copied to Mr Jori, pointing out that there was a dispute between the parties which requires arbitration. They also confirmed that they would attend the pre-arbitration conference on 20 November 2014.
On the morning of 20 November 2014 Messrs Wintertons addressed Magwaliba through an email stating the following.
“We regret to advise that our clients have objected to the arbitral proceedings on the grounds that they do not agree with the appointment of the Arbitrator. In the circumstances, we are under instructions not to attend the proposed Pre Arbitration Hearing.”
On 20 November 2014 Messrs Mtetwa & Nyambiri wrote to Messrs Wintertons protesting against the position adopted by the respondents. On the same day and at the stated time, Mrs Mtetwa appeared for the pre-arbitration conference. There was no appearance by the respondents or their legal practitioner. Mrs Mtetwa submitted that the matter proceeds as there had not been any objection to the appointment of Magwaliba as the arbitrator until on the morning of 20 November 2014. No reasons had been advanced for the objection. She asked that time frames within which the statements of the parties, including the statement of objection could be made be given. The following time frames were given.
“- 5 December 2014 Wintertons, The Respondents’ legal practitioners would file their
statement of objection to my appointment as an arbitrator.
- 12 December 2014, the Claimants would file the statement of claim.
- 19 December 2014 the Respondent’s legal practitioners would file their statement of defence.
- 9 January 2015, the statement of reply would be filed.”
The respondents did not file their statement of objection by the deadline. The applicants consented to an extension of time within which the respondents were to file their defence. On 31 December 2014, Magwaliba wrote an email to the parties pointing out that since he had not done minutes of the pre-arbitration hearing, the respondents might not be aware of the time limits. He then called upon the respondents to file their papers by 9 January 2015.
On 17 December 2014 the applicants filed their statement of claim. No statement of defence was filed by the respondents by 9 January 2015.
Magwaliba then went on to determine the matter on the merits in terms of Article 25 (b) of the Act. He made an award in favour of the applicants which is the subject matter of the dispute between the parties before me.
The respondent opposed the matter on the basis that the agreement being referred to by the applicant was agreed on the understanding that it was going to exist as a mere formality. It would not regulate the relationship between the parties. This position was not persistent with in argument. They further challenged the appointment of Magwaliba as an arbitrator.
Mr Hashiti for the applicants, submitted that it was clear from correspondence between the parties that there was a dispute between the parties which required a third party to adjudicate on. The respondents were asked if they objected to the appointment of Magwaliba as an arbitrator and they did not respond. The correspondence between the parties from 5 August 2014 up to 9 January 2015 indicates that the respondents knew that Magwaliba had been appointed. Their belated challenge is of no moment.
He further contended that in terms of Article 13 of the Act, the respondents were supposed to challenge the appointment of the arbitrator through the courts. They have not applied to have the award set aside. It is clear that they consented to the appointment of Magwaliba. They acquiesced to his appointment.
Further the respondents on 5 November 2014 wrote to Magwaliba seeking a postponement of the pre-arbitration hearing. They submitted themselves to the jurisdiction of Magwaliba. In the result the respondents had not set out grounds, as provided for in the Act, in their defence, against the order sought.
Mr Mpofu, on the other had argued that the arbitration of the dispute between the parties could not be dealt with by one arbitrator. All the applicants are peregrinus. Arbitration, where one of the parties is peregrinus, is dealt with in terms of Article 10. Where parties fail to agree the arbitration will be done before 3 (three) arbitrators. There could not have been one arbitrator in this matter. The award is void.
He further contented that in terms of Article 36 (1) (a) (4), recognition of an award can be refused if the tribunal was not properly constituted. Magwaliba was not appointed as an arbitrator. Clause 19 of the agreement does not include reference to the CAC. It’s a voluntary organisation which parties can approach and then comply with its rules. It did not appoint an arbitrator. On 10 February 2015, CAC wrote to the applicants’ legal practitioner enquiring whether they had made their choice. This was after the award had already been made.
He further submitted that the respondents could not make an application for the recusal of Magwaliba as he was not been appointed.
He further contended that there was no need to set aside something which is a nullity and that on that basis the award was against public policy.
The issue for determination is whether Magwaliba was validly appointed.
The respondents challenge the registration of the award on the basis that it offends Article 36 (1) (a) (iv) and 36 (1) (b) (ii).
Article 36 provides (in the relevant parts):
“(1) Recognition on enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only-
- At the request of the party whom it is involved, if that party furnishes the court where recognition or enforcement is sought proof that-
- The composition of the arbitral tribunal or the arbitral procedure was not done in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place
- If the court finds that –
- The recognition on enforcement of the award would be contrary to the public policy of Zimbabwe.”
Mr Mpofu argued that the agreement on which the applicants rely on contains an
arbitration clause in clause 19. Clause 19 does not provide for the number of arbitrators. It simply provides that the matters, to do with the arbitration, shall be dealt with in terms of the Act. All three applicants are peregrinus. In terms of Article 10, the arbitration could not have been dealt with by one arbitrator. The parties did not agree on the number of arbitrators.
Mr Hashiti contended that in terms of Art 10 parties are free to agree on the number of arbitrators. In this case the parties agreed on one. Article 10 is therefore irrelevant. Furthermore, the applicants did not resort to Art 11 as there must be a failure to agree on an arbitrator for the Art 11 to kick in. In this matter Mr Jori did not object to the appointment of Magwaliba.
These arguments raise the question whether there was an agreement between the parties regarding the appointment of Magwaliba. If there was an agreement then the argument by Mr Mpofu that the arbitration could not have been done by one arbitrator falls away. Further the provisions of Art 11 would not be relevant.
Article 10 provides:
“(1) The parties are free to determine the number of arbitrators.
(2) Failing such determination, the number of arbitrators shall be three:
Provided that where each party has any one of the following in Zimbabwe
- his place of business; or
- if he has more than one place of business, his principal place of business; or
- if he has no place of business, his place of habitual residence;
the number of arbitrators, failing such determination, shall be one”.
Article 11 provides
- No person shall be precluded by reason of his nationality from acting as an arbitrator, unless otherwise agreed by the parties.
- The parties are free to agree on a procedure of appointing the arbitrator or arbitrators, subject to the provisions of paragraphs (4) and (5) of this article.
- Failing such agreement –
- in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator, if a party fails to appoint the arbitrator within thirty days of receipt of a request to do so from the other party, or if the two arbitrators fails to agree on the third arbitrator within thirty days of their appointment, the appointment shall be made, upon request of a party, by the High Court;
- in an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, he shall be appointed, upon request of a party, by the High Court.
- Where, under an appointment procedure agreed upon by the parties-
- a party fails to act as required under such procedure; or
- the parties, or two arbitrators, are unable to reach an agreement expected of them under such procedure; or
- a third party, including an institution, fails to perform any function entrusted to it under such procedure;
any party may request the High Court to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.”
The common thread that runs through the above articles is the freedom that the parties have to determine the number of arbitrators and to agree on the procedure of appointing the arbitrator or arbitrators which inter alia, is in consonance with the spirit of arbitration unlike in court processes.
In casu, at the beginning of the judgment, I deliberately and painstakingly set out what transpired between the parties until the issuing of the arbitral award. From the time the applicant’s legal practitioners wrote to the respondent’s legal practitioners requesting referral of the dispute to arbitration, the respondents were kept abreast of all the developments. They did not raise any objections or make any indication that they were not part of what was going on. The turning point is the e-mail of 5 November 2015 whereby Mr Jori addresses Magwaliba. In it, he advises that the respondents require an opportunity to try and resolve the matter outside the arbitration proceedings. This, in my view confirms that there was a dispute between the parties. He then seeks for a postponement of the pre-arbitration hearing. The question that begs an answer is why he addressed the e-mail to Magwaliba if the respondents had not consented to the arbitration. They could still have addressed their concerns direct to the applicant’s legal practitioners. The e-mail was in response to an invitation by Magwaliba, in his capacity as arbitrator, to attend a pre-arbitration hearing on 6 November 2014. Clearly by their conduct the respondents consented to the appointment of Magwaliba as the arbitrator.
The respondents seek to argue that there was no agreement in this matter and the applicants should have approached the High Court as provided for in Art 11. For the court to accept the unilateral position of the applicant will be a breach of statute. For that proposition they relied on Mtetwa & Anor v Mupamhadzi 2007 (1) ZLR 253.
Article 11 allows the parties to agree on the procedure for the appointment of an arbitrator(s) and to agree on the appointment of the arbitrator. If the parties fail to agree either party can request the High Court to appoint the arbitrator(s). It does not say what form the agreement should take. It could be in writing or oral. If the legislature intended that the agreement be in writing and signed by the parties, it could have specifically said so. In casu the respondents by word or deed, gave out the applicants that they had accepted Magwaliba as an arbitrator. They are bound to that position.
The position of the law on this point was made clear in Lucia Munyanyi v Luminary Investments & Anor HH 38/10 at p 3 where it was stated:
“It is a trite principle of the law of contract that where by word or deed, one party to a contract gives out to the other a certain position and that position is accepted, both parties are bound. This is referred to a the quasi-mutual assent doctrine which is an intrinsic part of objectively establishing consensus ad idem between the parties to a contract.”
See also Musgrove & Watson (Rhod) (Pvt) Ltd v Rotta 1978 (2) SA 918 ® at 922 E-G.
The respondents by conduct of communicating with Magwaliba regarding the pre hearing meeting, made the applicants and Magwaliba to believe that the respondents had agreed to his jurisdiction in the arbitration proceedings.
Further, the conduct of the respondents after their objections had been refused, bolster the applicants’ position. They could have approached the High Court seeking an interdict against Magwaliba from proceeding with the arbitration. They could also have approached the court to have the arbitral award set aside after it had been granted. They did neither. To date, they have not filed a counter-application to have the award set aside.
This court, in Wenzhou Enterprises v Chen Shaoling HH 61/15 p 3, had this to say on tacit consent to jurisdiction.
“In our jurisdiction we have the procedural regime where a pela of lack of jurisdiction is adjudicated upon in limine prior to the adjudication of the merits of the matter. If the respondent did not intend to submit to the jurisdiction of the court he would have raised the issue in limine in his Notice of Opposition. His conduct, in casu, clearly points to a person who had no intention, whatsoever, to contest the jurisdiction of the court. It came as an afterthought.”
The same can be said of the respondents in this matter. It came as an afterthought for the respondents to challenge the jurisdiction of Magwaliba.
It is therefore my finding that the appointment of Magwaliba is in conformity with Act. This put paid the respondents’ argument that the award cannot be recognised as it is contrary to public policy in that it offends a fundamental principle of our law as it was made by an authority of no jurisdiction.
The applicants prayed for an order of costs on higher scale de bonis propriis mainly on two grounds. The first one is a complaint against the conduct of the respondents and that of their legal practitioner, in opposing the matter without any merit. The second one is that the language used in the papers is not expected from litigants of this honourable court especially if they are legally represented.
From the papers filed of record, it is clear that the respondents do not deny owing the amount granted in terms of the arbitral award. It is also clear that they are raising the various defences for the sole purpose of clouding the judgment of this court. Such conduct was condemned in Macro Plumbers (Pvt) Ltd v Sheriff of Zimbabwe NO & Anor HH 57/15 at p 6 where it was stated:
“It remains for me to deal with the issue o cots. Legal practitioners have been repeatedly warned against dishonourable conduct and preparing court papers dishonestly in an attempt to pull the wool over the courts eye. Legal practitioners who saddle the courts with such dishonest applications will not only be visited with costs de bonis propriis but also with an order that they should not recover any fees from their clients.”
This is a typical case of abuse of the court process for the purpose of avoiding the day of reckoning and the court should frown upon such conduct by making an appropriate order of costs.
The opposing affidavit is replete with the use of injudicious language and baseless attacks of fellow legal practitioners. The use of such words such as “nefarious”, “enthroned”, “rubber stamp”, “very bazzarre” is not expected from legal practitioners who are officers of this court. The position is made worse by the fact that the second respondent is a legal practitioner of this court himself.
It is pertinent to repeat what was said in Spring Grange Farm Pvt Ltd & Anor v The Minister of Lands, Agriculture & Rural Resettlement HB 94/03 p 4 where the following was stated:
“It is important for legal practitioners that in as much as they obtain instructions from clients it is their duty as officers of this court to strive to maintain the dignity of he court which can also be done by editing their client’s offensive language which can easily be done without deviating from the input of their necessary averments. After all it is the legal practitioner who sees to the drafting and filing of all documents in court. A legal practitioner who does not guide his client in that regard stands the risk of being associated with his client’s language and this of course qualifies for conduct which is unbecoming of a duly registered legal practitioner. Legal practitioners are therefore warned against aligning themselves with clients who hold other people in contempt. It is the duty of every lawyer worth his salt to assist his client by disabusing him of all the inherent prejudices he may have about other people. This court will in future see to it that such legal practitioners do not go unpunished.”
I must commend Mr Mpofu for the position he adopted in this matter. He apologised to the court for the use of the injudicious language. He proposed that his clients be deprived of their costs, in the event that they succeeded. In view of the apology tendered, it might not be appropriate to award costs de bonis propriis against the respondents’ legal practitioners. I will however award costs on a punitive scale as the respondents are clearly abusing the court process in order to frustrate the applicants in their claim.
As a result, I will make the following order.
- The Arbitral Award granted by Arbitrator Magwaliba on 5 February 2015 be and is hereby registered.
- The respondents shall pay the applicants’ costs on a legal practitioners client scale.
Mtetwa & Nyambirai, applicants’ legal practitioners
Wintertons, respondents’ legal practitioners