Johannes Conrad Makonye v Kenae Ramodimoosi and Entredev Property Group and C. H. Lukas

The parties entered into a lease agreement on 6 September 2011 for premises at number 7 Westcott Road, Mount Pleasant, Harare. The first respondent (tenant) paid US$16,800.00 being a deposit and six months' rent in advance. The applicant (landlord) promised to complete renovations, including extending the kitchen, by the agreed occupation date of 1 November 2011. The premises were under renovation and the rental amount had been assessed based on the size of the extended kitchen according to the tenant's specifications. The applicant failed to complete the renovations by the occupation date. Further negotiations broke down when the applicant demanded more money which the first respondent refused to advance. On 1 November 2011, the premises were still under renovation. The first respondent terminated the lease agreement and claimed a refund of the US$16,800.00. The matter was referred to arbitration before the third respondent. The arbitrator requested the parties to indicate how they wished to proceed, and the parties agreed to make written submissions. The applicant specifically stated in an email dated 7 January 2012 that "written submissions only are fine, more focused and cheaper financially and time wise by me." The arbitrator granted an award on 23 February 2012 confirming the termination of the lease and ordering the applicant to refund US$16,800.00 plus interest and pay the arbitrator's costs of US$2,000.00. The applicant then sought to set aside the arbitral award.

• Whether the applicant was given an opportunity to be heard by the arbitrator
• Whether the arbitral award was made contrary to public policy in Zimbabwe
• Whether there was a breach of the rules of natural justice
• Whether the arbitrator acted fraudulently or with corruption
• Whether the second respondent (estate agent) was properly joined as a party to the proceedings
• The proper interpretation and application of Article 34 of the Model Law as set out in the second schedule to the Arbitration Act [Cap 7:15]
• The scope of judicial review of arbitral awards under the Model Law

The application to set aside the arbitral award was dismissed with costs on a legal practitioner and client scale against the applicant. The second respondent was ordered to cease to be a party to the proceedings, and the applicant was ordered to pay the second respondent's costs on a legal practitioner and client scale.

The binding legal principles established are: (1) Under Article 19 of the Model Law, parties are free to agree on arbitration procedures and cannot subsequently challenge awards on grounds that contradict their prior consent; (2) Article 24 of the Model Law gives arbitrators discretionary power to decide whether to hold oral hearings or conduct proceedings based on documents, and there is no obligation to hear oral evidence; (3) An arbitral award can only be set aside under Article 34 of the Model Law if some fundamental principle of law, morality or justice is violated, or if it is so defiant of logic or accepted moral standards that the concept of justice in Zimbabwe would be intolerably hurt; (4) Article 34 does not endow courts with appellate powers to determine the correctness of an arbitrator's decision; (5) An award is not contrary to public policy merely because it may be wrong in law or fact; (6) Allegations of fraud against an arbitrator require proof that the arbitrator was fraudulently misled or bribed by a party, or that there was misrepresentation to deceive another to his prejudice; (7) The grounds for setting aside arbitral awards are very narrow and must be construed restrictively to achieve the objective of finality in arbitration.

The court made observations about the improper joinder of parties, noting that the test for proper joinder is whether the party has any real or substantial interest in the proceedings or their outcome. The court also observed that the application appeared to have been conceived as a gimmick to frustrate the first respondent by delaying payment, and that costs on a higher scale were appropriate to discourage such conduct and mark the court's displeasure at blatant abuse of court process. The court noted that allowing the applicant to keep the money would have resulted in unjust enrichment at the expense of the first respondent who was innocent of any wrongdoing. The court emphasized that the applicant's conduct in agreeing to written submissions and then challenging the procedure was "downright dishonest and dishonorable."

This case is significant in Zimbabwean arbitration law as it affirms the restrictive approach courts take when reviewing arbitral awards under the Model Law. It establishes that: (1) parties who agree to arbitration procedures cannot later challenge awards on grounds of procedural irregularity when they consented to those procedures; (2) arbitrators have wide discretion under Articles 19 and 24 of the Model Law to determine procedural matters, including whether to conduct proceedings on written submissions alone; (3) the grounds for setting aside arbitral awards under Article 34 are very narrow and courts will not use the setting aside procedure as a disguised appeal on the merits; (4) the public policy exception to arbitral awards is construed very restrictively to achieve the objective of finality in arbitration; and (5) courts will award costs on a higher scale where applications to set aside are deemed to be abuse of process designed to frustrate enforcement of awards. The case reinforces the pro-arbitration policy and limited scope of judicial intervention in arbitration under the Model Law framework.