Dr. Jane Mutasa v Telecel International and Telecel Zimbabwe (Private) Limited

The applicant claimed to be chairperson, director and shareholder of the second respondent, Telecel Zimbabwe (Pvt) Ltd. She was part of Empowerment Corporation (Pvt) Ltd which entered into a joint venture with the first respondent, Telecel International, to operate a telecommunications business in Zimbabwe through the second respondent. The applicant claimed she was appointed acting chairperson when James Makamba was incarcerated, and automatically became substantive chairperson when he fled the country. At a board of directors meeting held in London on 19 March 2010, a resolution was passed suspending the applicant from the position of chairperson and director. The applicant sought to have this resolution declared a nullity, claiming the meeting lacked a quorum as it was not chaired by a representative of Empowerment Corporation (Pvt) Ltd. The second respondent disputed that the applicant was ever substantive chairperson, maintaining she was only acting chairperson, and that Makamba remained the chairperson. The second respondent contended the meeting was properly constituted in terms of the Shareholders Agreement between the first respondent and Empowerment Corporation (Pvt) Ltd.

• Whether the applicant could introduce new evidence in Heads of Argument that was not contained in the founding affidavit
• Whether the board meeting of 19 March 2010 was properly constituted under the Shareholders Agreement
• Whether the dispute should have been referred to arbitration in terms of the arbitration clause (Article 17) in the Shareholders Agreement
• Whether the court had jurisdiction to hear the matter given the existence of an arbitration clause

The application was dismissed with costs.

Where parties have entered into a shareholders agreement containing an arbitration clause requiring disputes relating to the agreement to be submitted to arbitration, a party seeking to enforce provisions of that agreement must submit to all provisions of the agreement, including the arbitration clause. A party cannot selectively enforce favorable provisions while ignoring procedural requirements such as mandatory arbitration. The principle of sanctity of contract requires that contracts freely and voluntarily entered into be held sacred and enforced by the courts. Additionally, evidence or allegations contained only in Heads of Argument and not in affidavits must be ignored by the court, as the opposing party is entitled to an opportunity to rebut such allegations in their opposing papers.

The court made obiter observations that: (1) the conduct of purposely avoiding presenting evidence in affidavits in order to ambush the other party by placing such evidence in arguments is not only improper but "utterly absurd and completely unacceptable"; (2) there is a question whether the matter, if viewed as an employment dispute between a director (as an employee) and the company, would fall outside the jurisdiction of the High Court and be a labor matter; and (3) the applicant's argument that the arbitration clause applied only to disputes among shareholders and not directors was "a classic case of a distinction without a difference."

This case reinforces important principles in Zimbabwean law regarding: (1) the impropriety of introducing evidence in Heads of Argument that was not contained in affidavits in motion proceedings; (2) the sanctity of contract and the enforcement of arbitration clauses in shareholders agreements; (3) the principle that parties cannot selectively enforce provisions of agreements while ignoring others that are inconvenient to them; and (4) the court's willingness to uphold procedural requirements in arbitration clauses and decline jurisdiction where parties have contractually agreed to resolve disputes through arbitration.