A. Adam and Company (Private) Limited & 2 Others v Good Living Real Estate (Private) Limited

On 10 January 2010, the first appellant entered into a partnership agreement with the respondent to develop immovable property. The parties subsequently concluded a lease agreement on 26 August 2010. A dispute arose regarding the interpretation of the agreements and parties' rights. By consent order dated 10 September 2013, the dispute was referred to arbitration. The third appellant (a retired Justice) was appointed as arbitrator. The respondent sought the arbitrator's recusal alleging bias due to his personal relationship with the first appellant's directors. The arbitrator proposed that the parties appoint an independent two-member tribunal to determine the recusal application. On 13 May 2016, this tribunal dismissed the recusal application. However, there was also a preliminary award dated 20 April 2015 indicating the arbitrator had already ruled on his recusal before referring the matter to the tribunal. On 23 November 2016, Chigumba J granted a default order declaring the arbitrator's directive to appoint the independent tribunal contrary to public policy and set it aside. Despite this order, the arbitrator issued his final award on 6 December 2016 in favor of the appellants. The appellants applied to register the award while the respondent applied to set it aside as contrary to public policy.

• Whether the arbitral award was contrary to public policy for being made in defiance of an extant court order
• Whether the arbitrator properly determined the application for his recusal
• Whether the arbitrator's conduct violated the rules of natural justice
• Whether the court a quo properly awarded costs on a legal practitioner-client scale without providing reasons

The appeal was allowed in part only in respect of the punitive costs order. Paragraph 2 of the court a quo's order was amended by deleting the words "on a legal practitioner client scale" so that the costs order was on the ordinary scale. The rest of the appeal was dismissed. The appellant was ordered to pay the respondent's costs of the appeal.

An arbitral award made in defiance of an extant and binding court order is contrary to public policy and may be set aside under Article 34(2)(b)(ii) of the UNCITRAL Model Law as incorporated in the Arbitration Act [Chapter 7:15]. A court order must be strictly complied with and remains valid until set aside by a competent court of law. Where a court order nullifies a previous determination in arbitration proceedings, the arbitrator must reconsider and determine the affected issue afresh before proceeding to a final award, regardless of any prior determination. An arbitrator who acknowledges being personally involved in a matter creates a likelihood of bias that makes it irregular for him to continue adjudication. An award of costs on a legal practitioner-client scale (punitive costs) must be substantiated by reasons demonstrating exceptional circumstances such as dishonest, malicious, vexatious, reckless or frivolous conduct warranting censure.

The Court noted that one need not prove actual bias but only its likelihood, citing Associated Newspapers of Zimbabwe (Private) Limited v The Minister of State for Information and Publicity & Ors SC 111/04. The Court also observed that the arbitrator's decision to appeal the judgment together with the other appellants appeared to confirm his alleged impartiality, stating "by appealing the court a quo's judgment, the arbitrator appears to have pitched his tent together with the appellants thereby confirming his alleged impartiality." The Court reiterated the principle from Zesa v Maposa 1999 (2) ZLR 452 (S) that courts have very limited grounds to refuse to give effect to an arbitral award and do not exercise appellate power over arbitral awards - an award will not be contrary to public policy merely because the reasoning or conclusions are wrong in fact or law.

This case establishes important principles regarding arbitration in Zimbabwe, particularly concerning: (1) the imperative nature of compliance with court orders even by arbitrators - a court order must be strictly obeyed until set aside by a competent court; (2) the proper procedure when a court order affects an ongoing arbitration - an arbitrator must reconsider and determine afresh any issue affected by a subsequent court order before proceeding; (3) the meaning of public policy violations in the arbitration context - defiance of a binding court order constitutes a violation of public policy justifying setting aside an arbitral award under Article 34(2) of the UNCITRAL Model Law; (4) the test for apparent bias in arbitration - an arbitrator who acknowledges being personally involved should not continue to adjudicate; and (5) the requirement that punitive costs orders must be justified with reasons demonstrating exceptional circumstances warranting censure of a party's conduct.