Galaxy Engineering Design Consultants (Private) Limited v Great Zimbabwe University and Prostruct Engineering (Private) Limited

In January 2013, the applicant and second respondent entered into an agreement with the first respondent (Great Zimbabwe University) to carry out civil engineering work for drawing and design of construction of various buildings at the first respondent's main campus in Masvingo. The applicant and second respondent were to jointly provide services with work and fees shared equally between them. After completion of works, the applicant and second respondent submitted invoices totaling US$9,239,059.45. The applicant sought to recover its half share of US$4,660,117.49. Despite demand, the first respondent failed to pay. The first respondent filed a special plea contending that the applicant was obliged to refer the matter to arbitration in terms of clause 15(2) of the agreement, and that the court therefore lacked jurisdiction.

• Whether the court had jurisdiction to hear the claim or whether the matter should be referred to arbitration in terms of clause 15(2) of the parties' agreement
• Whether non-payment for services rendered constitutes a 'dispute' that must be referred to mediation and arbitration under the contract
• Whether the special plea was taken in bad faith and constituted an abuse of court process

1. The special plea was dismissed. 2. The first respondent was ordered to pay costs on a legal practitioner and client scale.

A failure to pay for services rendered does not constitute a 'dispute' that must be referred to arbitration under a standard arbitration clause in a commercial contract. For a matter to fall within an arbitration clause requiring referral of disputes 'arising out of the agreement or concerning its interpretation, validity or enforcement of rights/obligations', there must be a genuine dispute that goes to the root or substance of the contract. Mere non-payment of an admitted debt, where services have been provided at an agreed price and liability has been accepted (as evidenced by negotiations for a payment plan), does not constitute such a dispute and does not oust the court's jurisdiction.

The court observed that the first respondent's conduct in seeking further and better particulars repeatedly and then raising the special plea constituted an abuse of court process designed to delay the inevitable payment. The court noted that at some stage the first respondent had sought to negotiate a payment plan, which was a clear indication that it had accepted liability for the sums claimed, and that the litigation proceedings were a continuation of a ploy to buy time. The court expressed that the special plea deserved to be dismissed 'with the contempt it deserves' given the first respondent had absolutely no defence to the claim.

This case establishes important principles regarding the scope of arbitration clauses in commercial contracts in Zimbabwe. It clarifies that not every disagreement between contracting parties constitutes a 'dispute' requiring arbitration. Specifically, mere non-payment for services already rendered and accepted does not fall within the ambit of disputes that must be referred to arbitration under standard arbitration clauses. The case also serves as authority against the abuse of arbitration clauses as a delaying tactic where there is no genuine dispute about liability. The judgment reinforces that arbitration clauses should be interpreted purposively and are intended for substantive disputes concerning interpretation, validity or enforcement of contractual rights, not as a mechanism to avoid payment of undisputed debts.