Absalom Nganunu Sibanda v Na Jing Zhou Resources Africa (Private) Limited

The applicant instituted arbitration proceedings before Justice MH Chinhengo (former Judge) against the respondent claiming repayment of an outstanding loan amount, interest, and bank charges on a loan the applicant had obtained from Stanbic Bank for the respondent's benefit, as well as refund of amounts paid towards the loan and costs. The claim arose from an Agreement entered into between the parties in September 2013. Under clauses 6 and 7 of the agreement, the respondent undertook to prioritize repayment of USD 250,000 with interest over a maximum period of 12 months from the date of availability of the loan, and to open an export receipts account with Stanbic Bank to enable direct deduction of loan repayments against iron ore export proceeds. The arbitrator granted an award in favor of the applicant on 30 November 2015. The applicant then applied to the High Court for registration of the arbitral award to enable enforcement in terms of Article 35 of the Model Law, Schedule to the Arbitration Act.

• Whether the arbitral award should be registered and enforced by the High Court
• Whether the arbitral award was contrary to public policy
• Whether the arbitrator impermissibly rewrote the contract between the parties
• Whether the debt became due and payable before export proceeds were realized
• The proper interpretation of the agreement between the parties, particularly clauses 6 and 7

1. The arbitral award granted by Justice MH Chinhengo on 30 November 2015 in favour of the applicant was registered as an order of the High Court. 2. It was declared that in terms of the September 2013 Agreement, the respondent was obliged to pay the bank the loan obtained for its benefit by the applicant, together with interest and other bank charges. 3. The respondent was ordered to pay the applicant, by way of reimbursement, all amounts that the applicant has paid or shall pay to Stanbic Bank in respect of the loan. 4. The respondent was ordered to pay to Stanbic Bank the outstanding amount on the loan or may at its option pay that amount to the applicant, with discharge from double payment if paid direct to the Bank. 5. The respondent was ordered to pay three quarters of the claimant's legal costs on the scale as between legal practitioner and client and to pay the arbitrator's fees. 6. The respondent was ordered to pay the costs of the application on attorney-client scale.

An arbitral award will not be refused registration and enforcement on public policy grounds merely because the reasoning or conclusions of the arbitrator are wrong in fact or law. Recognition and enforcement will only be refused on public policy grounds 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. An arbitrator's proper interpretation and enforcement of the terms of an agreement does not constitute impermissible rewriting of the contract between the parties. The public policy defense to enforcement of arbitral awards must be construed restrictively in order to preserve and recognize the basic objectives of finality in arbitration.

The court observed that the opposition to registration and enforcement of the arbitral award was a clear abuse of the process of the court, deserving of censure through an order against the respondent for costs on attorney-client scale. The court also noted that Article 36(3) of the Model Law provides guidance on what constitutes public policy, specifically declaring that recognition and enforcement would be contrary to public policy if the making of the award was induced or effected by fraud or corruption, or if a breach of the rules of natural justice occurred in connection with the making of the award. The court further observed that under Articles 34 and 36 of the Model Law, the court does not exercise an appeal power and either uphold or set aside or decline to recognize and enforce an award by having regard to what it considers should have been the correct decision.

This case is significant in Zimbabwean arbitration law as it reinforces the restrictive approach to the public policy defense against enforcement of arbitral awards established in ZESA v Maposa. The case emphasizes that courts will not refuse to enforce arbitral awards merely because the reasoning or conclusions may be wrong in fact or law, but only where there is a palpable inequity that is so far reaching and outrageous that it would intolerably hurt the conception of justice. The case also clarifies that proper interpretation of a contract by an arbitrator does not constitute impermissible rewriting of the contract. The decision upholds the principles of finality in arbitration and limits judicial interference with arbitral awards. The imposition of attorney-client costs against a party opposing registration on spurious grounds also serves as a deterrent against abuse of process in challenging arbitral awards.