Harare Sports Club v Zimbabwe Cricket

Harare Sports Club (applicant) leased a sporting complex to Zimbabwe Cricket (respondent) under a Notarial Agreement of Lease signed on 16 July 1999. The rental was originally fixed in Zimbabwe dollars at $40,000 per month with an annual escalation clause (clause 3(c)). If parties could not agree on escalation, the rent was to be determined by an independent arbitrator. When the Zimbabwe dollar became defunct in 2009, the parties could not agree on rent in foreign currency. After prolonged disputes, Harare Sports Club successfully obtained a court order (per Mangota J in HC 217/17) authorizing the Commercial Arbitration Centre to appoint an arbitrator. Daniel Tivadar was appointed arbitrator. The respondent objected to the arbitrator's jurisdiction, but this was dismissed on 10 April 2018. The arbitrator issued an award on 28 August 2018 directing Zimbabwe Cricket to pay US$7,500 per month from that date, arrears of US$88,119.85 with interest from 6 December 2016, and US$3,000 per month from 1 January 2018 to the award date. Two applications were consolidated: HC 9909/18 (registration of the award) and HC 10011/18 (setting aside the award).

• Whether the arbitral award should be set aside on grounds of public policy under Article 34 of the Model Law in the Arbitration Act
• Whether the arbitration clause (clause 3(c)) was void by virtue of section 29 of the Commercial Rent Regulations
• Whether the respondent timeously challenged the arbitrator's jurisdiction under Article 16 of the Model Law
• Whether the arbitrator exceeded his mandate by not escalating the agreed interim rent
• Whether the arbitrator's procedural approach in calling for expert evidence violated natural justice or demonstrated bias
• Whether res judicata applied to issues already determined in the earlier judgment (Harare Sports Club v Zimbabwe Cricket HH 471-17)
• Whether the arbitral award should be registered under Article 35 of the Model Law

1. The application for setting aside the arbitral awards (case HC 10011/18) was dismissed. 2. The application for registration of the arbitral award (case HC 9909/18) was granted. 3. The arbitral award dated 28 August 2018 was registered as an order of the High Court of Zimbabwe in terms of Article 35(1) of the First Schedule to the Arbitration Act [Chapter 7:15]. 4. Zimbabwe Cricket was ordered to pay Harare Sports Club US$112,119.85. 5. Zimbabwe Cricket was ordered to pay interest on US$88,119.85 at 5% per annum from 6 December 2016 to date of final payment. 6. Zimbabwe Cricket was ordered to pay costs of suit (but not on a punitive scale).

1. An arbitral award may only be set aside under Article 34 if it violates public policy as narrowly defined, which requires palpable inequity that is outrageous in its defiance of logic or acceptable moral standards - mere incorrectness or error of law is insufficient. 2. Arbitrators have "the right to be wrong" on matters of law, fact, contract interpretation, and admissibility of evidence without the award being set aside, as parties sacrifice the right to appeal in exchange for finality when they choose arbitration. 3. A party challenging an arbitrator's jurisdiction must do so within 30 days of the jurisdictional ruling under Article 16(2) of the Model Law, failing which the right to challenge is lost. 4. Issues already determined by a competent court (such as arbitrator jurisdiction and validity of arbitration clauses) cannot be re-litigated through challenges to arbitral awards - the doctrine of res judicata applies. 5. New grounds or defenses not raised before the arbitrator cannot be advanced for the first time in an application to set aside an award, as this would amount to seeking a re-hearing rather than challenging the decision made. 6. Courts must respect the principle of sanctity of contract and the parties' voluntary choice to submit to arbitration, and should deprecate conduct aimed at undermining arbitral awards through frivolous challenges.

The court observed that the respondent appeared to have "an unrivalled record of pressing the self-destruct button when it comes to its rent dispute with the applicant," criticizing the strategy of repeatedly raising jurisdictional objections despite a clear court order authorizing the arbitration. Mathonsi J commented that this appeared to be "a case of a tenant imbued with magical qualities beyond the ken of mortals, the power of resisting demand for payment of fair rent insisting on paying only what it wants to pay for a lengthy period of close to 10 years." The court also noted, while declining to award punitive costs, that the respondent was entitled to test the correctness of the arbitral award, suggesting that challenges to awards, even if ultimately unsuccessful, serve a legitimate purpose in the legal system. The judgment emphasized that arbitration's informality is a major strength that attracts parties to this alternative dispute resolution mechanism, and that clause 20(d) of the lease agreement (allowing the arbitrator to decide according to justice and equity without strict adherence to legal rules) liberated the arbitrator from procedural shackles.

This case is significant in Zimbabwean arbitration law as it reinforces several important principles: (1) The narrow interpretation of public policy grounds for setting aside arbitral awards under Article 34 of the Model Law; (2) The principle that arbitrators have "the right to be wrong" on merits, law, and procedure without the award being set aside; (3) The binding nature of prior court determinations on arbitrator jurisdiction and the application of res judicata in arbitration contexts; (4) The strict time limits under Article 16(2) for challenging arbitrator jurisdiction (30 days) and under Article 34 for setting aside awards (3 months); (5) The sanctity of arbitration agreements and the courts' role in supporting rather than undermining the arbitration process; (6) The flexibility afforded to arbitrators in procedure, particularly where parties have agreed to procedural informality; (7) The high threshold required for finding an award contrary to public policy - requiring palpable inequity that is "outrageous in its defiance of logic or acceptable moral standards." The case provides important guidance on the limited grounds for judicial interference with arbitral awards and the need for finality in arbitration.