Musonzoa (Private) Limited v Standard Fire and General Insurance Company (Private) Limited and Dr Brian Campbell

The applicant, a producer of agricultural products including paprika, insured approximately 60 hectares of paprika crop with the first respondent against hail, wind and fire damage. In early November 1998, a hailstorm struck and damaged about 55 hectares. A dispute arose as to the extent of damage and compensation payable. The first respondent appointed Paul Falkenberg to assess the loss, who first determined it at 23 tonnes, then revised to 46.6 tonnes. The applicant obtained independent assessments ranging from 70-99 tonnes. The parties agreed to arbitration and appointed the second respondent (Dr Campbell) as arbitrator. On the last day of hearings (18 September 2000), the applicant's legal practitioner raised concerns about Dr Campbell's prior association with the first respondent, its general manager Guy Adams, and the loss assessor Falkenberg, alleging this compromised his impartiality. Dr Campbell proceeded with the arbitration and handed down an award. The applicant subsequently discovered that Dr Campbell had been involved in at least three prior insurance claims with Falkenberg, Adams and the first respondent, including work on the Zimtobac Insurance Scheme where Dr Campbell had been hired as a consultant by Falkenberg.

• Whether the arbitrator had a duty to disclose his prior association with parties to the arbitration under Article 12 of the Model Law (First Schedule to the Arbitration Act [Chapter 7:15])
• Whether the prior association between the arbitrator, the first respondent, and its representatives gave rise to justifiable doubts as to the arbitrator's impartiality under Article 12(2) of the Model Law
• Whether the arbitrator was obliged to decide on the challenge to his impartiality under Article 13(2) of the Model Law
• What test applies to determine whether there is a real danger of bias on the part of an arbitrator
• Whether the arbitral award should be set aside under Articles 13 and/or 34 of the Model Law
• Whether the application was brought within the prescribed time limits under the Model Law
• Whether the High Court Rules or the Model Law provisions govern challenges to arbitrators and applications to set aside arbitral awards

1. The second respondent's (Dr Campbell's) mandate was terminated in terms of Article 13 of the Model Law. 2. The award made by Dr Campbell was set aside as being a nullity. 3. A fresh arbitration was ordered to be held within a fortnight, presided over by an arbitrator to be appointed in terms of Article 15(1) of the Model Law, or failing agreement, by an arbitrator appointed by the President or Chairman of the Commercial Arbitration Centre. 4. A copy of the order was to be served upon the President or Chairman of the Commercial Arbitration Centre. 5. The first and second respondents were ordered to pay the costs of the application jointly and severally, the one paying the other to be absolved.

An arbitrator is under a mandatory duty under Article 12 of the Model Law to disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. The test for determining whether such circumstances exist is objective: whether a reasonable man, with knowledge of the relevant circumstances, would conclude that there was a real danger (possibility, not probability) that the arbitrator might unfairly regard with favour or disfavour the case of a party. The court does not inquire into the actual state of mind of the arbitrator or whether actual bias existed. A close prior business relationship between an arbitrator and one party or its representatives, particularly where the arbitrator has received fees through that party, constitutes circumstances giving rise to justifiable doubts as to impartiality which must be disclosed. An arbitrator who is challenged under Article 13(2) must decide on the challenge; failure to do so constitutes a breach of the Model Law. Where an arbitrator fails to disclose material circumstances and fails to decide on a challenge, the arbitral proceedings are a nullity and any award made must be set aside. The Model Law provisions (Articles 12, 13, and 34), not the general High Court Rules, exclusively govern challenges to arbitrators and applications to set aside arbitral awards.

The court observed that the practice of combining applications for condonation with substantive applications is not favoured, as costs may be unnecessarily incurred if condonation is not granted. The court noted that while it did not need to decide whether Dr Campbell was actually biased, his failure to disclose the association and to decide on the challenge would have been sufficient grounds for setting aside the award under Article 34(5)(b) as being in conflict with Zimbabwe's public policy by breaching natural justice rules - though this was not the appropriate procedural route in the circumstances. The court commented that bias operates in an insidious manner and a person may be unconscious of it. The court also noted that if grounds for challenge emerge only after an award has been delivered (when the challenging party could not have known of them earlier), the party may proceed under Article 34 and would need to establish actual bias or other grounds specified in that Article. The court suggested that an arbitrator who fails to comply with disclosure requirements and whose proceedings are found to be a nullity may not be entitled to fees for those proceedings.

This case provides important guidance on the duties of arbitrators in Zimbabwe under the Model Law (First Schedule to the Arbitration Act). It establishes that: (1) arbitrators have a mandatory duty to disclose any circumstances likely to give rise to justifiable doubts as to their impartiality or independence; (2) the objective 'reasonable man' test applies to determine whether such circumstances exist; (3) prior business relationships and associations, even if professional, may constitute such circumstances; (4) an arbitrator must decide on any challenge to their impartiality under Article 13(2); (5) failure to comply with these requirements renders the proceedings and any resulting award a nullity; (6) the Model Law provisions, not the general High Court Rules, govern challenges to arbitrators and applications to set aside awards; and (7) arbitrators who actively oppose applications challenging their impartiality may be ordered to pay costs. The judgment clarifies the distinction between challenges under Articles 12-13 (made before or during proceedings) and applications under Article 34 (to set aside awards after delivery). It reinforces the principle that justice must not only be done but must be seen to be done, and that arbitrators must be above any reasonable suspicion of bias.