Portnex International (Proprietary) Limited v Zimasco (Private) Limited and C.H. Lucas N.O.

The applicant, a South African company under business rescue, was engaged in arbitration proceedings with the first respondent (a Zimbabwean company) before the second respondent (arbitrator). The first respondent was the claimant in the arbitration, while the applicant was respondent and also filed a counterclaim. The applicant raised a preliminary objection challenging the arbitrator's jurisdiction on the basis that the first respondent's claim was incompetent due to the applicant's business rescue status and required special dispensation to institute proceedings. On 4 October 2021, the second respondent dismissed this preliminary objection with costs. The applicant then instituted proceedings under HC5959/21 to set aside that award. On 8 November 2021, the applicant's legal practitioners wrote to the second respondent advising they intended to seek a stay of arbitration proceedings pending determination of HC5959/21. The second respondent interpreted this as an application and decided to proceed with the hearing on 17 November 2021. The applicant then filed this urgent chamber application seeking to stay the arbitral proceedings pending determination of HC5959/21.

• Whether the matter was urgent and should be heard as an urgent chamber application
• Whether the High Court should interfere in uncompleted arbitration proceedings
• Whether the arbitrator acted improperly by not hearing submissions on the stay application before deciding to proceed with the hearing
• The proper interpretation and application of Article 16(3) of the Arbitration Act [Chapter 7:15]
• Whether the alleged irregularities could be redressed through other means, particularly Article 34 of the Arbitration Act

The application was not urgent and was removed from the roll of urgent matters.

The High Court will not interfere in uncompleted arbitration proceedings unless there are exceptional circumstances of proven gross irregularity causing miscarriage of justice that cannot be redressed by other means, or where the interlocutory decision is clearly wrong and seriously prejudices the rights of the litigant. Article 16(3) of the Arbitration Act [Chapter 7:15] grants arbitral tribunals discretion to continue arbitral proceedings pending High Court determination of challenges to preliminary rulings on jurisdiction. Where alleged irregularities in arbitration proceedings can be effectively addressed through Article 34 of the Arbitration Act (application to set aside final award), a matter is not urgent and the court will not stay the arbitration. A party seeking urgent intervention to stay arbitration proceedings must demonstrate actual, serious prejudice that cannot be remedied through alternative legal remedies.

The court observed that the proceedings which the applicant sought to have stayed were already underway when the parties appeared before the court. The court noted that the applicant had also made a counterclaim to the first respondent's claim and both claims were ready to be determined by the tribunal, suggesting it would be inefficient to halt the process. The court also noted the dispute between the parties regarding whether the applicant had properly made an application for stay of proceedings before the arbitrator, with the arbitrator apparently not having heard such an application because none was formally made.

This case reinforces important principles regarding the High Court's reluctance to interfere in uncompleted arbitration proceedings and clarifies the test for urgency in applications seeking to stay arbitral proceedings. It demonstrates the proper application of Article 16(3) of the Arbitration Act [Chapter 7:15] and confirms that arbitrators have discretion to continue proceedings pending High Court challenges to preliminary rulings. The case emphasizes that parties must demonstrate actual prejudice that cannot be remedied through other means (such as Article 34 challenges to final awards) before the court will intervene in ongoing arbitration proceedings. It illustrates the court's pro-arbitration stance and reinforces the policy of allowing arbitral processes to run their course before judicial intervention.