Peter John Forsyth v The Honourable A.R. Gubbay S.C. and Gordon Crawford

The applicant and second respondent entered into an agreement in August 2004 whereby the applicant would make an interest-free loan of ZWD100 million to Alf's Auto Electric & Accessories (Pvt) Ltd in exchange for 50 ordinary shares (25% shareholding) and appointment as a non-executive director. The applicant deposited ZWD100 million (equivalent to USD15,000) into the second respondent's account on 23 August 2004, and made further payments totaling USD125,000 to various companies. The applicant later discovered that the money had allegedly been used by the second respondent to purchase immovable property in Borrowdale Brooke. Alleging fraudulent misrepresentation or alternatively unjust enrichment, the applicant instituted arbitration proceedings against the second respondent. The first respondent (arbitrator Gubbay S.C.) dismissed the applicant's claim. The applicant then approached the High Court seeking to set aside the arbitral award on grounds that it violated public policy.

• Whether the arbitral award should be set aside under Article 34(2)(b)(ii) of the Model Law on grounds that it conflicts with public policy of Zimbabwe
• Whether the award lent itself to an illegality by countenancing a scheme to avoid capital gains tax
• Whether the arbitrator failed to apply his mind to crucial issues
• Whether the arbitrator erred in not requiring rectification before admitting parol evidence
• Whether the alternative claim for unjust enrichment was properly determined
• The proper application of the public policy exception to arbitral awards

1. The application is dismissed. 2. The applicant to pay the second respondent's costs.

An arbitral award may only be set aside under Article 34(2)(b)(ii) of the Model Law where the reasoning or conclusion in 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 accepted moral standards that a sensible and fair-minded person would consider that the conception of justice in Zimbabwe would be intolerably hurt by the award. Courts do not sit as appellate courts over arbitral awards and cannot substitute their own decisions for those of arbitrators. The grounds for setting aside or refusing to register an arbitral award are very narrow, and whether the arbitrator erred is not a matter for the court's concern. The public policy exception must be construed restrictively to achieve the objective of finality in arbitration.

The court made important observations about professional conduct and the use of language in legal proceedings. MAKONI J noted with disapproval the use of intemperate language by the second respondent, including terms such as "dumb and dense" and "schizophrenic oscillation" directed at the applicant. The court endorsed the Supreme Court's statements in Moyo v Zvoma SC 28/11 emphasizing that such invective language "offends the court's sense of fairness and justice," "undermines and impairs the dignity of the judicial process," and "adds nothing to the determination of the questions before the courts." The court emphasized that legal practitioners should not settle papers containing such language and that there is a need to discourage its use in court proceedings. The court also commented that the arbitrator's personal disapproval of what he considered to be unethical and unprofessional conduct (a tax avoidance scheme) did not amount to a finding that the arrangement was illegitimate or unlawful.

This case reinforces the restrictive approach to the public policy exception in setting aside arbitral awards in Zimbabwe. It confirms that courts will not exercise appellate jurisdiction over arbitral awards and will only intervene where there is a palpable inequity that is outrageous in its defiance of logic or accepted moral standards. The case provides guidance on distinguishing between mere errors in reasoning (which are insufficient) and violations of public policy (which are extremely rare). The judgment also addresses important procedural issues including the parol evidence rule, the need for rectification, and the obligation of arbitrators to give reasons for their awards. Additionally, it contributes to jurisprudence on professional conduct by condemning the use of intemperate and insulting language in court papers.