Court name
Bulawayo High Court
Case number
HB 156 of 2020
HC 584 of 2020
HC 366 of 2020

GMB V Arenel (Pvt) Ltd; Arenel (Pvt) Ltd v GMB (HB 156 of 2020, HC 584 of 2020, HC 366 of 2020) [2020] ZWBHC 156 (23 July 2020);

Law report citations
Media neutral citation
[2020] ZWBHC 156
Coram
Dube-Banda J
  1. GRAIN MARKETING BOARD                                                   HC584/20

Versus

ARENEL (PVT) LTD

And

GORDON GEDDES N.O. 

 

  1. ARENEL (PVT) LTD                                                                      HC 366/20

Versus

GRAIN MARKETING BOARD

HIGH COURT OF ZIMBABWE

DUBE-BANDA J

BULAWAYO, 23 JUNE 2020 AND 23 JULY 2020

 

Opposed Application

T. Makuwaza, for the applicant

L. Nkomo, for the respondent

 

DUBE-BANDA J.:      This Court is seized with two applications which have been consolidated. The first application (case number HC 584/2020) sought the setting aside of an arbitral award, while the second application (case number HC 366/2020) sought the registration of the same award.

When case number HC 366/20 was set down before me, the Registrar of this court received a letter signed by the parties’ legal practitioners.  The letter was placed before me. The parties proposed that case number HC 584/20 and case number HC 366/20 be consolidated. Case number HC 584/20 is an application for setting aside an arbitral award in terms of Article 34 of the Model Law in the Schedule to the Arbitration Act [Chapter 7:15], while case number HC 366/20 is an application for registration of the same Award. The arbitrator neither filed opposing papers nor participated in these proceedings.

Consolidation of actions is sanctioned by Order 13 rule 92 of the High Court Rules, 1971 (Rules). It provides that when separate actions have been instituted and it appears to the court convenient to do so, it may upon the application of any party thereto and after notice to all interested parties, make an order consolidating such actions, whereupon—the said actions shall proceed as one action; and the court may make any order which it considers proper with regard to the further procedure, and may give one judgment disposing of all matters in dispute in the said actions.  Provided that, with the consent of the parties to the actions, a judge may make an order consolidating the actions and any order which he considers proper with regard to the further procedure.

Although the parties did not file a written application, in terms of rule 4 C of the rule of this court, I considered their consent, expressed in their letter dated 11 June 2020 sufficient for the consolidation of the two applications. Furthermore, I noted that there was a sound basis for the consolidation of the two applications, the applications deal with the same arbitral award, i.e. for the setting aside and registration of the same award. I therefore, at the commencement of the hearing made an order, in terms of rule 92 of the Rules, consolidating case number HC 584/20 and case number HC 366/20.

Factual background

For ease of reference and convenience, and where the context permits the Grain Marketing Board (GMB) shall be referred to as the applicant, and Arenel (Pvt) Ltd (Arenel) as the respondent.

On the 11 November 2016 the parties sealed an agreement, and in terms thereof, GMB was to sale and supply to Arenel 6000 metric tonnes of biscuit flour at a price of US 450. 00 per metric tonne. The purchase price was payable within 60 days of the date of monthly statement which shall be the last day of the month. The applicant supplied the biscuit flour amounting to 1 379 metric tonnes as at 16 April 2019. The parties signed an Addendum on the 16 April 2019 varying the purchase price of the flour from US$450.00 per metric tonne to RTGS 1 1335.00 per metric tonne for the outstanding balance of 4 620.10 metric tonnes of flour.

Sometime in June 2019, a dispute arose between the parties, caused by GMB’s failure to supply Arenel with flour in terms of the agreement. In terms of the dispute resolution clause in the agreement, if a dispute cannot be resolved within 14 days either party may refer the matter to arbitration by an arbitrator agreed between the parties.

The dispute was submitted for arbitration, and before the arbitrator, Arenel alleged that the failure by GMB to supply the flour was a breach of the contract between the parties. First, GMB pleaded force majeure, alleging it had been directed by the Government through the Ministry of Finance and Economic Development to stop milling wheat as it had all been committed to the Grain Millers Association. It contended that its failure to meet the conditions of the agreement was a result of the force majeure being a government directive. It further averred that it was willing to supply the outstanding balance of the biscuit flour quantities but on different terms as to quantities and pricing.

At a later stage applicant filed supplementary statement of defence, wherein it raised an alternative to the defence of force majeure. It invoked the provisions of clause 9 of the agreement, which says:

Severability

If any of the provisions of this agreement is found by a court or other competent authority to be void or unenforceable, it shall be deemed to have been deleted from this Agreement and the remaining provisions shall continue to apply. The parties shall negotiate in good faith in order to agree on a provision to be substituted for the provision found to be void or unenforceable.

The arbitrator heard the parties and upheld Arenel’s claim for an order of specific performance. It ordered GMB to supply the outstanding balance of the biscuit flour in terms of the agreement.

In paragraph 37 of the Award provides as follows:

Findings

  1. The terms of the agreement entered between the parties on 11th November 2016, were amended on 16 April 2019 whereby the respondent was to deliver 4 620. 10 metric tonnes of flour to the claimant at RTGS $1 135 per metric tonne.
  2. Payment of the said flour by the claimant was to be made within 60 days of the date of the monthly statement in terms of the principal agreement.
  3. The respondent was in breach of the agreement on its failure to resume the supply of flour on the 12 June 2019.
  4. The respondent failed to provide evidence of the nature and cause of its inability to fulfil its obligations as the consequences of its claim of force majeure.
  5. Of the amount of 4 620.10 metric tonnes was supplied leaving a balance of 4 353.10 metric tonnes.
  6. At the date of the claimant’s statement of claim (11 October 2019), the current price of flour was RTGS$9 162.00 per metric tonne. The price difference from the amended price is RTGS$8 027.00. The value of the shortfall of delivery is therefore RTGS$ 34 942.333. 70.
  7. Proof of damages for loss of export and local sales is not sustained.
  8. The respondent’s defence of force majeure is rejected. Its claim for punitive damages is dismissed.

 

Paragraph 38 Final Order:

 

  1. This is an order for specific performance is made whereby respondent be and is hereby directed to supply the balance of 4 353.10 metric tonnes at RTGS$1 135 per tonne.

Alternatively, the respondent is directed to pay the lowest or cheapest supplier of flour within its jurisdiction, the difference or shortfall from the contract price to the supplier on a monthly basis for the supply of 4 353.10 metric tonnes of flour.

  1. The respondent is to supply the claimant with not less than 430 metric tonnes of flour every calendar month commencing from 1st February 2020.
  2. The claimant is to pay the respondent within 60 days from the date of the delivery of the flour.
  3. The respondent is to pay the costs of the claimant’s suit on an attorney and client scale.
  4. Being the erring party in terms of #6.4 of the Memorandum of Agreement, the respondent is to pay the costs of the arbitration fees.
  5. It is recoded that the two parties each paid a share of a deposit of the arbitration fees on the 18th October 1919. Should the claimant, being the successful party in this dispute, wish to ensure the early release of this award, it may pay the arbitration fees and recover such costs, together with its share of the deposit, from the respondent.

Applicant’s grounds for setting-aside the arbitral award

This is an application for setting aside of an arbitral award in terms of Article 34 (2) (b) (ii) of the Schedule to the Arbitration Act [Chapter 7:15] on the basis that it is contrary to the public policy of Zimbabwe. In its written heads of argument and during the hearing, the GMB attacked the award on two grounds, namely:

  1. The arbitrator failed to decide on the pertinent issue which was placed before him. The issue being whether or not the contract price of biscuit flour of RTGS $1 135.00 was still reasonable and sustainable regard being to the market price of RTGS$ 9 162.00 at the time of the Statement of the Claim was decided. It is submitted that the failure to decide this issue lie in the face of a sensible and fair minded person and violates the conception of justice in Zimbabwe.
  2. That the alternative relief in the final award is vague and embarrassing. It is not clear as to what it must achieve. That applicant is directed to pay money to an unknown party who is not a party to the proceedings of the agreement between the parties. The unnamed supplier is not privy to the agreement. The award ought to have identified the supplier and link it to the case or the contract. An ward is that vague and embarrassing is in conflict with public policy and it must be set aside.

 

The arguments

The applicant’s argument

            GMB contends that the arbitrator failed to decide on the pertinent issue which was placed before him. The issue being whether or not the contract price of RTGS$1 135.00 of biscuit flour was still reasonable and sustainable regard being made to the market price of RTGS$9 162.00 at the time the award was made. It is submitted that the failure to decide this issue violates the conception of justice in Zimbabwe.

GMB argues that the issue of reasonability and sustainability of the contract price was the hallmark of the applicant’s defence and failure to supply flour. It submits that it expected the arbitrator to decide this issue, but it did not. It says the arbitrator only summarised the submissions of the parties in the award. It is argued that the arbitrator made a clear finding or decision on the issue of force majeure and damages, but not on the issue of reasonability and sustainability of the contract price. It is submitted that this is a palpable inequity that has far reaching consequences to GMB as a public entity.

GMB contends that the arbitrator noted that the market price of biscuit flour as at the date the statement of claim was made was RTGS$9 162.00 but he proceeded to order delivery of flour at the contract price of RTGS$1 135. It is argued that this was done without justification especially regard being made to the fact that such price was unsustainable for applicant to remain in business. It is submitted that public policy demands that contracts must advance and keep business partners in business than to push them out especially by adhering or upholding provisions or terms that drive partners out of business. It is submitted that an arbitrator must not close his eyes to the happenings in the business sector, e.g. must take into account the issue of inflation. It is said the price of RTGS$1 135.00 would push the state owned entity out of business and supply flour to respondent for a song.

It is argued that not only did the arbitrator neglect to decide on the reasonability and sustainability of the contract price. He also did not decide whether the sixty days period to pay the contract price of RTGS$1 135.00 was still reasonable in view of the notable inflation. It is said this issue was also before him and he did not decide on it. It is submitted that this goes beyond mere flautiness or correctness of his award but it defies logic and common sense.

It is submitted that the award and the order made is to the effect that applicant makes a loss of RTGS $8 027 per metric tonne of flour and a total loss of RTGS $34 942 333.70. It is argued that applicant is a public entity funded by public funds, and that the public expects applicant not to engage in loss making, fruitless and wasteful expenditure. On this basis it is submitted that the award is contrary to the public policy of Zimbabwe.

It is argued that the alternative order is vague and embarrassing. It is not clear as to what it must achieve. The applicant is directed to pay money to an unknown party who is not a party to the proceedings or the agreement between the parties. The unnamed supplier is not privy to the agreement. The award ought to have identified the supplier and link it to the case or the contract. An award that is vague and embarrassing is in conflict with public policy and it is contended that it must be set-aside.

 

The respondent’s argument

            Mr Nkomo counsel for Arenel made the submission that it is factually incorrect for GMB to argue that the arbitrator did not decide the issues he was called upon to decide. It is contended that the arbitrator dealt with these issues in his arbitral award. It is said the arbitrator applied his mind to the issue of severability, but did not uphold it. As proof of the fact that the arbitrator dealt with the issue, but did not uphold it, Mr Nkomo referred this court to the following paragraphs in the award:

  1. The second substantive leg of the defence is the doctrine of severability. This was a supplementary statement of defence by Mr Mukuwaza on 18 November 2019, as an addition to #6 of the statement of defence, after the second arbitral hearing.
  2. On the basis of doctrine of severability, the prayer is now that clause 2.1 of the amended contract of 16 April 2019 for the delivery of 4 620 metric tonnes of flour at RTGS$1 135.00 per tonne and clause 3 of the principal agreement for the payment within 60 days of monthly statement be amended on the grounds of grossly unreasonable and substituted with: the market price as at the date the claimant places the order; and the purchase price be paid within 14 days of the date of the order.
  3. Authorities cited by Mr Makuwaza relate to shortening time restriction or area in restraint clauses, labour matters or personal obligations, but he was unable to refer to a ruling on price increases. In fact, he would want to support an argument that whenever there was a price change of a commodity in a contract, the party aggrieved would be entitled to renegotiate the contract, understandable no authority could be found to support this contention.
  4. Exceptional and hyperinflation is not new in the Zimbabwe economy. As Mr Huni point out, the principle of caveat emptor applies where a contracting party assumes risk, one which should be well known in business in Zimbabwe. The risk was openly accepted by the respondent.

 

In relation to the second ground of seeking to set-aside the award, Mr Nkomo argues that the alternative relief is worded to give effect to the specific performance order. It is contended that the alternative relief emanates from the agreement signed by the parties. Clause 21 of the agreement says:

In the event that GMB anticipates failure or fails to supply the customer from its own sources in terms of the forecast in Appendix 1 for any reason than force majeure then in any such event GMB shall source the Customer’s flour requirements of no less quality from an alternative supplier at GMB’s costs and supply such flour to the Customer at the same price and at no lesser quality.

 

It is submitted that it is not open to GMB to pretend that it does not understand the meaning of the alternative relief. The parties did not at the time of signing the agreement name the alternative supplier, as it was anticipated that such issue will be dealt with when the need arose. It is submitted that this ground has no merit and must fail.

 

The issues for determination

At the arbitration proceedings, GMB submitted that there were only two issues for consideration, being; whether Arenel is entitled to the remedy of specific performance / damages; and whether the contract / agreement in its current state has provisions which must be severed for it to be enforceable and if so whether the arbitrator can proceed and sever such provisions.

From the papers filed before the arbitrator, it appears that the second issue relating to the severability of certain provisions of the contract was anchored on paragraph 1.1. of GMB’s supplementary statement of defence, which says:

  1. Addition to paragraph 6

The Respondent hereby adds the following

  1. The provisions of Clause 2.1 of the memorandum of agreement as amended and also Clause 3 are now grossly unreasonable to the extent that the tribunal must intervene and severe/struck out those provisions. The price of RTGS $1135 per tonne of flour payable within 60 days of the date of monthly statements defies logic and must be severed. The tribunal is urged to apply the doctrine of severability if it finds that Respondent must perform its obligations. The tribunal must look into the reasonability of the fixed contract price and its method of payment regard being to the fact that the price has been eroded by inflation such that it will be unreasonable, it will cause injustice or be inequitable in the circumstances of this case. To enforce the contract without severing the stated clause will unjustly enrich the Claimant and prejudice the Respondent. It will also be contrary to the public policy to enforce such a contract especially bearing in mind that the Respondent purchases or make available the flour from public funds it being a parastatal.
  1. Addition to 10

2.1 As an alternative therefore the tribunal is urged to apply the doctrine of  severability by severing Clause 2.1 and 3 such that the price for the tonne of flour be the current price as at the date Claimant places an order and that such purchase price be paid within fourteen [14] days from the date of the order

These are the issues that the arbitrator was called upon to adjudicate. I agree with Mr D Nkomo, that there were no separate issues for determination framed as whether the contract price was reasonable or sustainable, and whether the purchase price was economic. These were the anchor of the issue in respect of severability. They were submerged in the issue of severability. Therefore, the issues for determination by this court are these:

  1. Whether the arbitrator failed to decide on the pertinent issue which was placed before him. The issue being whether or not there were severable provisions of agreement, on the grounds that contract price of biscuit flour of RTGS $1 135.00 was not reasonable and sustainable regard being to the market price of RTGS$ 9 162.00 at the time of the Statement of the Claim was decided.

 

  1. Whether the alternative relief in the final award is vague and embarrassing, and is in conflict with public policy and must be set aside.

 

The law

Section 34(2) (b)(ii) of the Arbitration Act [Chapter 7:15] provides that an arbitral award may be set aside by the High Court only if— (b) the High Court finds that— the award is in conflict with the public policy of Zimbabwe.

The ambit of public policy whereof is dealt with in Zimbabwe Electricity Supply Authority v Maposa1999 (2) ZLR 452 (SC) at p 464 D-F GUBBAY CJ said -

Public policy is an expression of vague import.  Its requirements invariably pose difficult and contentious questions.  See, generally, Sasfin (Pty) Ltdv Beukes1989 (1) SA 1 (A) at 7I-9G for a useful survey of the authorities dealing with the problem.  In order to ascertain the meaning of this elusive concept, in the context of the Model Law, regard is to be had to the structure of articles 34(5) and 36(3), which deal with two aspects:

  1. Circumstances connected with the making of the award:

 

As mentioned earlier, articles 34(5)(a) and 36(3) of the Model Law put it beyond doubt that if '…the making of the award was induced or effected by fraud or corruption, the award would be in conflict with the public policy of Zimbabwe'.

This means that if, for example, the arbitrator was fraudulently misled or bribed by a party, the award, however innocuous ex facie, be contaminated in the process of making and contrary to public policy".

At p 465 B-D the learned Chief Justice went on to deal with the other aspect as follows-

"The substantive matter of the award:The substantive effect of an award may also make it contrary to public policy.  For example, an arbitral award which, after a consideration of the merits of the dispute, endorsed an agreement to break up a marriage, or the dealing in dangerous drugs or prostitution, on any view of the concept would be in conflict with the public policy of Zimbabwe.

What has to be focused upon is whether the award, be it foreign or domestic, is contrary to the public policy of Zimbabwe.  If it is, then it cannot be sustained no matter that any foreign forum would be prepared to recognise and enforce it.

In my opinion, the approach to be adopted is to construe the public policy defence, as being applicable to either a foreign or domestic award, restrictively in order to preserve and recognise the basic objective of finality in all arbitrations; and to hold such defence applicable only if some fundamental principle of the law or morality or justice is violated."

The conclusion reached in that matter by the learned Chief Justice was expressed as follows at p 466 E-G -

Under article 34 or 36, the court does not exercise an appeal power and either uphold or set aside or decline to recognise and enforce an award by having regard to what it considers should have been the correct decision.  Where, however, the reasoning or conclusion in an award goes beyond mere 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 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.

In Lovemore Hamilton Pazvakavambwa v Portcullis (Private) Limited t/a Financial Clearing Bureau HH 175/2011, the court said:

As was clearly recognised by HUNGWE J in Tel-One (Pvt) Ltd v Communications & Allied Services Workers Union of Zimbabwe HH 74-2007 at p. 4, the concept of public policy in any given society is an elusive one, depending upon transient and sometimes subjective views on what is in the public benefit or what constitutes the public good. See also my observations in Gramara (Pvt) Ltd & Another v Government of the Republic of Zimbabwe & Others HH 169-2009 at p. 14. Nevertheless, it is generally accepted that an act will be regarded as being contrary to the public policy of Zimbabwe if it violates notions of elementary justice or constitutes a palpable inequity that would hurt the conception of justice in Zimbabwe. See the remarks of Makarau J in Pamire & Others v Dumbutshena N.O. & Another 2001 (1) ZLR 123 (H) at 128.

GMB raises a public policy issue, and case law suggests that in considering such an issue, a court must bear in mind the following principles:

  1. The concept of public policy in any given society is an elusive one, however it is generally accepted that an act will be regarded as being contrary to the public policy of Zimbabwe if it violates notions of elementary justice or constitutes a palpable inequity that would hurt the conception of justice in Zimbabwe.

 

  1. A restrictive approach must be adopted to construe the public policy defence in order to preserve and recognise the basic objective of finality in all arbitrations.

 

  1. The court does not exercise an appeal power, and it cannot set aside an award because it considers the decision to be wrong.

 

  1. The public policy defence can only be upheld where some fundamental principle of the law or morality or justice is violated.

 

  1. Where the reasoning or conclusion in an award goes beyond mere 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.

 

  1. Where the arbitrator has not applied his mind to the question or has totally misunderstood the issue, and the resultant injustice creates a palpable inequity.

 

  1. Even where an arbitrator makes a finding that is erroneous or unreasonable, the court should not interfere but it could only interfere if the decision was attended by a gross irregularity or it resulted in a failure of justice.

Did the arbitrator fail to determine a pertinent issue which was placed before him? The issue being whether or not there were severable provisions of the agreement.According to Mr Makuwaza, this issue must be considered in view of the price and the time to pay.

 Arenel’s case is that the contention that the arbitrator did not consider the issue of severability is incorrect. It is argued that he did. He might not have used words preferred by GMB, but he did so in his own words and expressions. The issue before this court is not whether the arbitrator correctly decided the matter or not. The issue is whether he decided it at all, put differently, whether the award shows that he considered the issue. This is what the arbitrator says in respect of this issue:

The second substantive leg of the defence is the doctrine of severability. This was a supplementary statement of defence by Mr Mukuwaza on 18 November 2019, as an addition to #6 of the statement of defence, after the second arbitral hearing.

On the basis of doctrine of severability, the prayer is now that clause 2.1 of the amended contract of 16 April 2019 for the delivery of 4 620 metric tonnes of flour at RTGS$1 135.00 per tonne and clause 3 of the principal agreement for the payment within 60 days of monthly statement be amended on the grounds of grossly unreasonable and substituted with: the market price as at the date the claimant places the order; and the purchase price be paid within 14 days of the date of the order.

Authorities cited by Mr Makuwaza relate to shortening time restriction or area in restraint clauses, labour matters or personal obligations, but he was unable to refer to a ruling on price increases. In fact, he would want to support an argument that whenever there was a price change of a commodity in a contract, the party aggrieved would be entitled to renegotiate the contract, understandable no authority could be found to support this contention.

Exceptional and hyperinflation is not new in the Zimbabwe economy. As Mr Huni point out, the principle of caveat emptor applies where a contracting party assumes risk, one which should be well known in business in Zimbabwe. The risk was openly accepted by the respondent.

 

The defence of severability of the purchase price on the ground that it had become uneconomic was dealt with by the arbitrator. He might not have dealt with this issue to the satisfaction of GMB, he might not have used a terminology preferred by GMB, he might not have considered it to the detail preferred by GMB, he might not have given it much thought as would have been preferred by GMB, but the point is, he dealt with it. The point that the arbitrator did not deal with the issue severability has no substance. This court cannot go beyond this point. The court cannot and should not be expected to make a case for the parties. Its role is to determine the dispute put before it, on the basis only of the applicable law and procedure. This is the issue that was put before this court, and my finding is that the arbitrator considered the issue of severability of some provisions of the agreement. Whether he was correct or wrong is not an issue before this court. The issue is he considered the issue of severability. Therefore, this ground of seeking to set aside the award has no merit.

Now I consider the issue whether the alternative relief in the final award is vague and embarrassing, and is in conflict with public policy of Zimbabwe. The complaint is that the alternative order directs GMB to pay money to an unknown party, who is not party to the proceedings or the agreement between the parties. It is argued that the arbitrator ought to have identified this supplier and connect it to this case.

In relation to the second ground of seeking to set-aside the award, Mr Nkomo argues that the alternative relief is worded to give effect to the specific performance order. It is contended that the alternative relief emanates from the agreement signed by the parties. Clause 21 of the agreement says:

In the event that GMB anticipates failure or fails to supply then customer from its own sources in terms of the forecast in Appendix 1 for any reason that force majeure then in any such event GMB shall source the Customer’s flour requirements of no less quality from an alternative supplier at GMB’s costs and supply such flour to the Customer at the same price and at no lesser quality.

 

It is submitted that it is not open to GMB to pretend that it does not understand the meaning of the alternative relief. The parties did not at the time of signing the agreement name the alternative supplier, as it was anticipated that such issue will be dealt with when the need arose. It is submitted that this ground has no merit and must fail. I agree.

Whether the award is correct or wrong is not the issue before this court. The court does not exercise an appeal power, and it cannot set aside an award because it considers the decision to be wrong. The two grounds for setting aside the award have no merit.

 

 

 

Registration and enforcement of the award

 

In case number HC 366/2020 Arenel seeks the registration of the arbitral award in terms of section 35 of the Arbitration Act [Chapter 7:15],  such that it will be recognised and enforced as an order of this court.

Article 36 (1) (a) of the Model Law sets out the circumstances when recognition or enforcement of an arbitral award may be refused. In the relevant part Article 36 provides that recognition or enforcement of an arbitral award, irrespective of the country in which it was made, maybe refused only— at the request of the party against whom it is invoked, if that party furnishes to the court where recognition or enforcement is sought proof that the award should not be registered. The grounds of refusal to register are listed in Article 36.

 It is apparent from this provision that the onus is on the party resisting the application for recognition and registration of an arbitral award to prove the existence of recognised grounds for refusal of recognition or enforcement of the arbitral award.

In its opposing affidavit respondent relied on three grounds for resisting the recognition and registration of the arbitral award. These are:

  1. The award does not sound in money and cannot be registered for recognition and enforcement. It is incomplete.
  2. The award is not duly authenticated by the arbitrator as provided for by Article 35 (2) of the Arbitration Act.
  3. The award is being challenged by the respondent in this court under case number HC 179/20 for it to be set aside on the grounds of violating public policy. This court is urged to postpone this matter until the application to set aside the award is disposed of as provided in Article 36 (2) of the Arbitration Act.

 

In oral argument before this court, GMB abandoned two grounds of objection, and persisted with ground number one, that the award does not sound in money and cannot be registered for recognition and enforcement. It is incomplete. It was submitted that it is an irregular award for the purposes of registration. It was argued that the award should have ordered specific performance and in the alternative, an award sounding in money for the purposes of enforcement.

Arenel contends that the authorities cited by GBM relate to labour matters. This is not a labour case. They are distinguishable from this case before court. Article 36 provides grounds upon which a court may refuse to recognise and register an arbitral award, and the fact the award does not sound in money is not one of them. The arbitrator granted specific performance, and in the alternative granted relief that resonates with clause 2.1 of the agreement between the parties.

            GMB has not established a lawful ground upon which this court may decline to register the award. Specific performance is a remedy recognised in our law, it is enforceable in terms of the law. To argue that the remedy does not sound in money and therefore it is unenforceable cannot be correct.

 

Costs

            In case HC 584/20 GMB sought costs of this application against Arenel, on a legal practitioner and client scale.  In turn Arenel sought costs against GMB on the same scale.  Costs on an attorney and client scale are punitive. There is no basis for ordering respondent to pay such costs.

Disposition

In the result, I order as follows:

  1. The application in case number HC 584/20 for setting aside the arbitral award is dismissed with costs on a party and party scale.
  2. The arbitral award handed down by Arbitrator Mr G. Geddes dated 6 January 2020 handed is and hereby registered as an order of this court. For completeness GMB is ordered:
  1. To supply the balance of 4 350 metric tonnes of biscuit flour at RTGS $1 135.00 per tonne to Arenel (Pvt) Ltd.
  2. Alternatively, GMB is ordered to pay the lowest or cheapest supplier of biscuit flour within the jurisdiction, the difference or shortfall from the contract price to the supplier on a monthly basis for the supply of 4 353.11 metric tonnes of flour.
  3. GMB is ordered to supply Arenel with no less than 430 metric tonnes of biscuit flour every calendar month commencing from the 1 August 2020.
  4. Arenel is to pay GMB within 60 days from the date of delivery of the biscuit flour.
  5. GMB to pay the costs of arbitration fees.
  6. GMB to pay the costs of this application.

 

 

Coghlan and Welsh, Arenel legal practitioners

Makuwaza & Magogo Attorneys, Grain Marketing Board legal practitioners