Augur Investments OU v (1) Fairclot Investments (Private) Limited t/a T & C Construction (2) D.L. Cruttenden

The appellant (Augur Investments), a Mauritian company, was contracted by the City of Harare in June 2008 to manage the upgrading and extension of Airport Road. By agreement dated 25-26 March 2013, the appellant subcontracted the first respondent (Fairclot/T&C Construction), a Zimbabwean company, to carry out civil engineering works on Airport Road. At the time of the agreement, the appellant acknowledged owing the first respondent US$3,340,500 for previous work and equipment hire. Under the agreement, payment was to be made by way of land, and if the land option fell away, payment was to be in cash within a limited time period. The first respondent performed additional works costing US$4,800,000. The land pledged as security was not registered in the appellant's name and was never sold. After almost two years of non-payment, the first respondent cancelled the agreement on 14 April 2014. The dispute was referred to arbitration as per the contract. The arbitrator found for the first respondent and ordered payment in cash. The appellant applied to the High Court to set aside the arbitral award on grounds that it was contrary to public policy, arguing the arbitrator decided on matters not placed before him. The High Court dismissed the application, leading to this appeal.

• Whether the arbitrator decided on issues that were not placed before him, thereby exceeding his terms of reference
• Whether the arbitral award was contrary to the public policy of Zimbabwe
• The proper interpretation and application of Article 34(2) of the UNCITRAL Model Law as set out in the Arbitration Act [Chapter 7:15]
• The test for setting aside an arbitral award on grounds of public policy

The appeal was dismissed with costs.

An arbitral award may only be set aside on public policy grounds under Article 34(2)(b)(ii) of the UNCITRAL Model Law where the reasoning or conclusion 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. Courts do not exercise appellate power over arbitral awards and are not concerned with mere faultiness or incorrectness. The public policy defence must be construed restrictively to preserve the basic objective of finality in arbitration, and is applicable only if some fundamental principle of law, morality or justice is violated. An arbitrator does not exceed their terms of reference where the issues determined were properly pleaded and/or introduced into evidence by the parties themselves.

The Court observed that the first respondent had performed its part of the contract and incurred expenses running into millions of dollars which had not been paid close to 5 years after the contract was entered into, suggesting that the opposite of a public policy violation could be said to be true. The Court also noted that an arbitrator, unlike a court of law, has no inherent power to decide issues or make orders beyond those referred to arbitration, with the only source of an arbitrator's power being the arbitration agreement between the parties. The Court observed that it is not uncommon at law for a single determination to be premised on more than one finding in the same dispute, even if one of those findings might be questioned.

This case is significant in Zimbabwean arbitration law as it: (1) Reaffirms the restrictive approach to setting aside arbitral awards on public policy grounds, emphasizing the principle of finality in arbitration; (2) Clarifies the test for public policy under Article 34(2)(b)(ii) of the UNCITRAL Model Law, following ZESA v Maposa - that an award must constitute a palpable inequity that is outrageous in its defiance of logic or accepted moral standards; (3) Confirms that arbitrators cannot venture outside their terms of reference, but courts will examine the pleadings and evidence to determine what was actually before the arbitrator; (4) Establishes that courts do not exercise appellate jurisdiction over arbitral awards and are not concerned with correctness of conclusions, only whether awards violate fundamental principles of law, morality or justice; (5) Demonstrates judicial support for enforcing arbitral awards where the losing party admitted the debt and the mode of payment was contemplated in the contract. The case promotes the finality and enforceability of arbitral awards in Zimbabwe.