Gold Driven Investments v Willemse Farming Enterprises (Pvt) Ltd and Fredrick Christian Muller

The applicant (Gold Driven Investments) entered into an agreement with the first respondent (Willemse Farming Enterprises) in March 2009 to supply crop inputs for tobacco production. The applicant agreed to supply $350,000 worth of inputs for the 2010-2011 season (70 hectares) and $320,000 for the 2011-2012 season (60 hectares). The applicant claimed it supplied inputs valued at $132,499 for 2010-2011 and $155,534 for 2011-2012, but the first respondent only repaid $9,924. The applicant also claimed $150,000 it paid to ZB Bank as surety for the first respondent's loan. When the applicant sued in the High Court, the first respondent excepted on the basis of an arbitration clause (Clause 11). The parties agreed to arbitration. The respondents counter-claimed, alleging the applicant breached the contract by failing to supply adequate and timely inputs, delaying tobacco purchases, and forcing them to take a ZB Bank loan. The arbitrator (Justice A M Ebrahim) heard evidence and dismissed both the claim and counter-claim on 4 December 2013. The applicant then sought to set aside the arbitral award under Article 34 of the Arbitral Act.

• Whether the arbitral award should be set aside under Article 34 of the Model Law on grounds it offends public policy of Zimbabwe
• Whether the arbitrator applied his mind to the evidence and issues
• Whether the principle of unjust enrichment could be raised on review when not argued before the arbitrator
• Whether non-joinder of the arbitrator is fatal to an application to set aside an arbitral award
• What constitutes an award that is contrary to public policy under Article 34(2)(b)(ii) of the Model Law

The application to set aside the arbitral award was dismissed with costs on a legal practitioner and client scale (punitive costs).

An arbitral award may only be set aside under Article 34 of the Model Law where the reasoning or conclusion constitutes a palpable inequity that is so far reaching and outrageous in its defiance of logic or acceptable moral standards that a sensible or fair-minded person would consider that the conception of justice would be intolerably hurt by the award. Courts do not exercise appellate jurisdiction over arbitral awards. A party who breaches a contract and thereby induces or makes it impossible for the other party to perform cannot found a claim based on the breach it has thus precipitated. This is a fundamental principle of contract law applicable in arbitrations. Arguments not raised before an arbitrator cannot be raised for the first time in an application to set aside the award.

The court made observations about the application of Rule 87 (dealing with joinder in action procedure) to application procedure under Order 32. While acknowledging that Rule 87 technically applies to causes and actions, the court stated it would be prepared to borrow from Rule 87 principles in application procedure where there is no similar provision, especially given Rule 4C which allows the court discretion to depart from rules in appropriate circumstances. The court observed that while it is generally desirable to cite an arbitrator in applications to set aside awards, the arbitrator would not be a participant in proceedings even if cited. The court also made strong obiter remarks criticizing parties who submit to arbitration agreeing to be bound by the arbitrator's decision but then engage in "footling litigation" when the outcome is unfavorable, noting the court is "inundated by endless such applications." The court stated "the time has come to admonish such litigants with an award of costs on a punitive scale."

This case reinforces the limited scope of judicial review of arbitral awards in Zimbabwe under Article 34 of the Model Law. It confirms that courts will not interfere with arbitral awards merely because they disagree with the outcome, but only where the award displays palpable inequity that outrageously defies logic or acceptable moral standards. The judgment emphasizes the finality and binding nature of arbitration agreements and warns against frivolous attempts to set aside unfavorable awards. It also clarifies the application of the principle that a party who causes a breach through its own breach cannot claim on the resultant breach - an important contract law principle. The case demonstrates judicial support for arbitration as an alternative dispute resolution mechanism and willingness to impose punitive costs on parties who attempt to undermine their arbitration agreements.