Chartpril Enterprises (Pvt) Ltd and Leadward Investments (Pvt) Ltd and Sino Electrical Systems (Pvt) Ltd v Elnour United Engineering Group (Pvt) Ltd and Hon Arbitrator George Leslie Smith N.O

This case arose from a landlord-tenant dispute involving lease agreements for premises in the Gulf Complex, Harare. The first respondent (landlord) entered into lease agreements in 2016 with Zilking Investments and the first and second applicants, which expired in 2018. These 2016 leases contained an arbitration clause (Clause 18) providing for arbitration by an arbitrator appointed by the Secretary or President of the Harare Commercial Arbitration Centre. In 2019, new lease agreements were entered into with the first and second applicants. Zilking Investments did not renew its lease. The third applicant, Sino Electrical Systems (Pvt) Ltd, entered into a lease for premises previously occupied by Zilking. The 2019 leases did not contain an express arbitration clause but included Clause 4 which incorporated all prior written terms and conditions from the 2016 leases. Upon expiry of the 2019 leases, the applicants were served with notices of termination. Retired Justice Smith was appointed as arbitrator and rendered an award ordering the applicants to vacate the premises. The first respondent applied to register the award, while the applicants applied to set it aside under Article 34(2)(b)(ii) of the Arbitration Act, alleging the award was contrary to public policy.

• Whether the arbitrator was properly appointed in accordance with the arbitration agreement
• Whether there was a valid arbitration agreement between the first respondent and the third applicant
• Whether the arbitrator had jurisdiction to determine the disputes, particularly in relation to statutory tenants
• Whether the arbitrator's failure to rule on preliminary challenges to his jurisdiction constituted a breach of natural justice
• Whether the arbitrator's failure to determine jurisdictional challenges rendered the award contrary to public policy
• Whether the court should suspend the setting aside proceedings and remit the matter to the arbitrator under Article 34(4) of the Arbitration Act

1. The application for setting aside of the award of Rtd Leslie George Smith J is suspended in terms of Article 34(4) of the Model Law. 2. The second respondent (arbitrator) shall rule on the challenges raised in the arbitration proceedings and render an additional award within 90 days of service of this order. 3. The first respondent shall apply for set down of the applications under HC 4419/20 and HC 4450/20 to enable the court to further consider the said applications within 30 days of the additional award. 4. Costs shall be in the cause.

An arbitrator who is faced with preliminary challenges to his jurisdiction must actively determine and rule on those challenges, providing reasons for his decision, before proceeding to determine the merits of the dispute. The competence-competence principle under Article 16(1) of the Arbitration Act imposes both a power and a duty on arbitrators to determine their own jurisdiction. Failure to rule on jurisdictional challenges constitutes a breach of the rules of natural justice and renders arbitral proceedings unfair. Such failure amounts to a procedural irregularity that is contrary to public policy under Article 34(2)(b)(ii) of the Arbitration Act where it prejudices a party and results in a failure of justice. However, where the defect is capable of being cured, the court may exercise its discretion under Article 34(4) to suspend setting aside proceedings and remit the matter to the arbitrator to cure the omission, rather than immediately setting aside the award.

The court observed that the purpose of Article 34(4) is to provide curative powers to avoid the need to set aside awards where defects or omissions are capable of being remedied. The court noted that remission is only appropriate before an award is set aside and where the issues relate to procedural matters rather than substantive merits. The court deliberately avoided resolving the disputes regarding interpretation or application of the arbitration agreement itself, recognizing that these were matters the parties agreed should be determined by the arbitrator. The court commented on the narrow construction of public policy in arbitration, noting that it should be reserved for exceptional cases where awards 'shock the conscience' or 'violate the forum's most basic notions of morality'. The court also noted that while arbitration proceedings are informal by nature, they must still follow due process and be guided by basic principles of procedural law to ensure fairness and justice between parties. The court emphasized that it should not approach the matter as an appeal court but rather test the arbitrator's approach and conduct of the arbitration proceedings.

This case is significant in Zimbabwean arbitration law for several reasons: (1) It reinforces the principle that arbitrators must actively and expressly determine jurisdictional challenges rather than tacitly proceeding to the merits, following the competence-competence principle under Article 16(1) of the Arbitration Act; (2) It clarifies that failure to rule on jurisdictional challenges constitutes a breach of natural justice and can render an award contrary to public policy under Article 34(2)(b)(ii); (3) It demonstrates the court's curative approach under Article 34(4), preferring remission to the arbitrator to cure defects rather than immediately setting aside awards, thereby promoting the finality of arbitration; (4) It defines the narrow scope of 'public policy' in arbitration, confirming that procedural irregularities that shock the conscience or violate basic notions of fairness can constitute grounds for setting aside; (5) It emphasizes that arbitration, while informal, must still comply with due process and basic principles of procedural law to ensure fair hearings.