Gold Driven Investments v Telone (Pvt) Ltd and A. R. Gubbay N.O

The applicant and first respondent entered into two tobacco agreements in 2005 and 2006 whereby the first respondent advanced funds to the applicant. A dispute arose between the parties regarding the applicant's obligation to account for all monies advanced to it under these agreements. The matter was referred to arbitration before the second respondent, who handed down an award on 16 August 2010 in favor of the first respondent. The arbitrator ordered the applicant to pay all proceeds generated from the scheme and awarded costs largely against the applicant. The applicant brought this application seeking to set aside the arbitral award on the grounds that it conflicted with the public policy of Zimbabwe.

• Whether the arbitrator made a determination on issues not placed before him for adjudication
• Whether there was a breach of the rules of natural justice in connection with the making of the award
• Whether the award conflicts with the substantive law of Zimbabwe
• Whether the arbitrator acted outside his terms of reference by making an award on costs different from that agreed in the procedure document
• What is the threshold for setting aside an arbitral award on grounds of public policy

The application was dismissed in its entirety. The applicant was ordered to pay costs.

An arbitral award will only be set aside on public policy grounds where the reasoning or conclusion goes beyond mere faultiness or incorrectness and 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. The same consequence applies where the arbitrator has not applied his mind to the question or has totally misunderstood the issue and the resultant injustice reached the point of constituting a palpable inequity. Courts will uphold arbitral awards that are in accordance with substantive and procedural laws and where parties were afforded a fair hearing in accordance with the rules of natural justice.

The court observed that the arbitrator's decision regarding costs, even if it departed from the initial agreement in the procedure document, did not warrant setting aside the award where the parties had given the arbitrator leave to decide their fate regarding costs at the close of the hearing. The court also noted that issues raised belatedly (such as the Reserve Bank authorization issue raised only in heads of argument) could properly be excluded by the arbitrator as being introduced "through the back door". The court implicitly endorsed the principle that amendments to claims during arbitration proceedings, when made under the stewardship of the arbitrator and with the agreement or participation of the parties, do not constitute a breach of natural justice.

This case is significant in Zimbabwean jurisprudence as it reinforces the high threshold required for setting aside arbitral awards on public policy grounds. The judgment emphasizes the courts' deference to arbitral awards and the limited grounds upon which they will intervene. It confirms that mere disagreement with the arbitrator's findings, or allegations of procedural irregularities without substantiation, are insufficient to meet the threshold of a palpable inequity that would shock the conscience of justice. The case demonstrates the principle of finality in arbitration and the courts' reluctance to substitute their own judgment for that of the arbitrator unless there is a fundamental defect that reaches the level of outraging accepted standards of justice.