Groupair (Private) Limited v Cafca Limited and Muchadei Masunda

In 2012, the applicant (Groupair), a clearing agent, was engaged by the first respondent (Cafca) to clear imported galvanised wire through Forbes Border Post. Between 24 September and 3 October 2012, eleven trucks carrying the wire were detained due to a disagreement on duty rates. ZIMRA officials insisted on a duty rate of 15% (pursuant to Statutory Instrument 111 of 2012) instead of the previously applicable 10%. After ZIMRA eventually confirmed the correct rate as 10%, the trucks had accumulated demurrage charges of US$18,600 payable to DAMCO. Cafca paid these charges and sought recovery from Groupair, alleging negligence. The dispute was referred to arbitration before the second respondent (Masunda). The arbitrator found that Groupair negligently failed to: (1) familiarize itself with the correct duty rate; (2) challenge ZIMRA officials timeously; and (3) submit the required manual Bills of Entry until 4 October 2012, when they should have been submitted much earlier. The arbitrator awarded Cafca the demurrage amount plus interest and costs.

• Whether the arbitral award should be set aside on grounds that it violates public policy of Zimbabwe in terms of Article 34(2)(b)(ii) read with Article 34(5) of the Arbitration Act [Chapter 7:15]
• Whether the arbitrator's findings that Groupair's negligence was the prime cause of demurrage charges constituted a decision so unreasonable as to offend public policy
• Whether the arbitrator's failure to apportion liability based on contributory negligence rendered the award contrary to public policy
• What constitutes 'public policy' for purposes of setting aside an arbitral award under the Arbitration Act

The application to set aside the arbitral award was dismissed with costs. The arbitral award ordering Groupair to pay Cafca US$18,600 plus interest at 5% per annum from 27 November 2012, together with legal costs and arbitration costs, remained in full force and effect.

An arbitral award may only be set aside on public policy grounds under Article 34 of the Arbitration Act [Chapter 7:15] where the award goes beyond mere faultiness or incorrectness and constitutes a palpable inequity that is so far-reaching and outrageous in its defiance of logic or acceptable moral standards that a sensible and fair-minded person would consider that the conception of justice in Zimbabwe would be intolerably hurt. Courts hearing applications to set aside arbitral awards do not exercise appellate powers and cannot set aside awards merely by substituting their view of what the correct decision should have been. An error of fact or law by an arbitrator, even if established, does not in itself constitute a violation of public policy. Under Article 34, the only relief available is setting aside the award; courts have no power to vary or modify arbitral awards.

The court observed that the applicant's submission regarding contributory negligence amounted to an implicit admission of some degree of responsibility for the demurrage charges. The court noted that while ZIMRA undoubtedly contributed to the delay by initially insisting on the incorrect duty rate, this did not wholly absolve the clearing agent of its professional responsibilities to act expeditiously in submitting required documentation. The court also noted that Article 34(4) provides for suspension of setting aside proceedings to allow the arbitral tribunal to eliminate grounds for setting aside, but this was neither appropriate nor requested in the present case.

This case is significant in Zimbabwean arbitration law as it reinforces the narrow scope for judicial intervention in arbitral awards under the Arbitration Act [Chapter 7:15]. It clarifies that courts do not exercise appellate jurisdiction over arbitral awards and will only set aside awards in exceptional circumstances where public policy is violated. The judgment provides important guidance on the meaning of 'public policy' in the arbitration context, adopting a high threshold test that requires more than mere error or incorrectness - there must be a 'palpable inequity that is far reaching and outrageous' that would 'intolerably hurt' the conception of justice. The case demonstrates judicial deference to arbitral tribunals' findings of fact and emphasizes the finality of arbitration as a dispute resolution mechanism. It also confirms that even if an arbitrator's decision may be considered wrong in fact or law, this alone does not constitute a violation of public policy justifying intervention.