Chris Bester v Tian Ze Tobacco Company (Pvt) Ltd

The respondent, a tobacco financing company, contracted with the applicant, a farmer, to grow tobacco for the 2013/14 season. The respondent supplied inputs and the applicant delivered tobacco to the respondent's auction floors. After selling the tobacco, the applicant remained owing $82,089.33. The respondent referred the matter to arbitration to recover the outstanding amount. The arbitrator (P Kwenda) found in favour of the respondent on 22 February 2016 and ordered the applicant to pay the sum of $82,089.33 plus 5% interest from 30 September 2014 and costs on an attorney/client scale. The applicant then applied to the High Court to set aside the arbitral award, arguing that the arbitrator had no jurisdiction as the parties' contract contained no arbitration clause, and that he had only submitted to arbitration based on the respondent's misrepresentation that such a clause existed.

• Whether an arbitrator has jurisdiction to determine a dispute in the absence of a valid arbitration agreement between the parties
• Whether a party can challenge an arbitrator's jurisdiction for the first time in the High Court after having submitted to the arbitration process
• Whether submission to arbitration obtained through misrepresentation can confer jurisdiction on an arbitrator
• Whether paragraph 12(v) of the contract, which allowed the contractor to recover outstanding amounts through lawyers or debt collectors, constituted an arbitration clause

1. The arbitral award by Honourable P Kwenda dated 25th October 2016 be and is hereby set aside. 2. The respondent shall pay costs of arbitration.

An arbitrator has no jurisdiction to determine a dispute where there is no valid arbitration agreement in writing between the parties. A contractual clause that merely gives one party the right to recover outstanding amounts through lawyers or debt collectors does not constitute an arbitration clause requiring disputes to be resolved through arbitration. Where submission to arbitration is obtained through misrepresentation about the existence of an arbitration agreement, the submission is irregular and the resulting arbitral award is a nullity. In such circumstances, a party is not precluded from challenging the arbitrator's jurisdiction for the first time in the High Court, notwithstanding the general principle that jurisdiction issues should be raised before the arbitral tribunal. An arbitrator's authority is strictly derived from a valid and enforceable arbitration agreement, and arbitration cannot be imposed on parties without their mutual agreement.

The court observed that jurisdiction is a threshold matter and a question of law, and the general position is that issues of law can be raised at any time, whether during initial proceedings or on appeal. The court noted that once it is found that the arbitrator should not have heard the matter due to lack of jurisdiction, there is no need to deal with other issues raised, such as allegations of bias or public policy violations. The court distinguished the case from NNPC v Clifio Nig Ltd (2011) CLR 4 (SC) where it was held that a party who did not raise jurisdiction before the arbitral panel is foreclosed from raising it in the High Court, noting that the foundation of jurisdiction in arbitration is submission - but that distinction applies where there is an actual arbitration agreement and genuine submission, not where submission is obtained through misrepresentation.

This case is significant in Zimbabwean arbitration law as it reinforces the fundamental principle that an arbitrator's jurisdiction is strictly derived from a valid and enforceable arbitration agreement in writing. The case clarifies that not every contractual provision relating to dispute resolution or debt recovery constitutes an arbitration clause. It also establishes that where submission to arbitration is obtained through misrepresentation about the existence of an arbitration clause, a party is not precluded from challenging jurisdiction for the first time in the High Court, even if the issue was not raised before the arbitral tribunal. The judgment emphasizes that arbitration cannot be imposed on parties and that the foundation of arbitration jurisdiction is genuine mutual agreement to submit to the process.