Quarrying Enterprises (Private) Limited v Stonezim (Private) Limited and Addington Bexley Chinake (N.O)

Quarrying Enterprises (applicant) and Stonezim (first respondent) entered into a written tribute agreement on 27 April 2016, whereby the applicant would mine and extract granite blocks from seven specified claims owned by the first respondent in Mtawatawa District (Chidje Granite Claims) in exchange for monthly royalty payments in USD. Due to economic instability, inflation and exchange rate fluctuations, the parties signed an addendum on 16 December 2019 which revised royalty amounts to be paid in ZWL and included a clause for monthly reviews to maintain the economic value of the agreement having regard to inflation. A dispute arose concerning payment of royalties and was referred to arbitration before the second respondent (Chinake N.O.). The arbitrator rendered an award on 24 November 2020 in favor of Stonezim, which was subsequently corrected with the parties' consent and a final corrected arbitral award was issued on 20 December 2020. The arbitrator found that Quarrying had failed to pay base royalties timeously and in the correct adjusted amounts, constituting material breach, and that Stonezim had lawfully cancelled the agreement. Quarrying then filed HC 13/21 seeking to set aside the November 2020 award, while Stonezim filed HC 3203/21 seeking registration of the December 2020 award. The two matters were consolidated by consent.

• Whether the applicant's supplementary heads of argument should be admitted
• Whether the applicant's accountant had authority to act on behalf of the company
• Whether the applicant in HC 13/21 was challenging the wrong award (November award versus December award)
• Whether registration of the arbitral award should be granted under Article 35 of the Schedule to the Arbitration Act
• Whether the grounds for refusing enforcement under Article 36 were established, specifically whether the award violated public policy
• Whether the arbitrator properly found that there was a material breach of the tribute agreement
• Whether the cancellation of the agreement was lawful and procedurally proper

1. Case HC 13/21 is dismissed with costs. 2. Case HC 3203/21 is upheld and the arbitral award handed down by the Honourable Arbitrator ABC Chinake on 20 December 2020 in the matter of Stonezim (Private) Limited v Quarrying Enterprises (Private) Limited is hereby registered for purposes of enforcement as an order of the High Court in terms of Article 35 of the Schedule to the Arbitration Act [Chapter 7:15]. 3. The applicant (Quarrying Enterprises (Private) Limited) shall pay costs of suit on a legal practitioner and client scale.

1. An application to set aside an arbitral award that has been superseded by consent by a corrected final award is founded on a nullity and must be dismissed. When parties consent to correction of an award, they effectively abandon the original award. 2. Under Article 35 of the Schedule to the Arbitration Act, registration of an arbitral award is granted as of right upon presentation of: (a) the original or certified copy of the award; (b) the original arbitration agreement; and (c) duly certified translation if not in English, subject only to Article 36 exceptions. 3. The public policy exception under Article 36 must be construed narrowly to achieve finality in commercial arbitration. An award is not contrary to public policy merely because the arbitrator's reasoning or conclusions are wrong in fact or law. 4. A court will only refuse registration on public policy grounds where the reasoning or conclusion in the award 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 would be intolerably hurt by the award, or where the arbitrator has not applied his mind to the question or has totally misunderstood the issue and the resultant injustice reaches that point. 5. The court does not exercise appellate or review jurisdiction over arbitral awards and will not revisit findings of law and fact to assess their correctness. 6. The pacta servanda principle requires parties to honor their contractual obligations and findings that a party breached an agreement and that cancellation occurred in accordance with the agreement.

The court observed that although the issue of the automatic lapsing of the agreement on 30 April 2021 was not pleaded in the papers, refusing registration of the award would amount to the court drafting a contract for the parties and extending a lapsed contract. The court also noted that it is not always necessary to attach a company resolution confirming authority to act on behalf of a company, particularly where it is clear the deponent is employed by the company in a capacity in which they can positively attest to the facts in issue and there have been previous dealings with that person. The court commented that a point of law can be raised at any time, which informed the decision to admit supplementary heads of argument filed shortly before the hearing.

This case provides important guidance on the registration and enforcement of arbitral awards in Zimbabwe under the Arbitration Act. It clarifies that: (1) once basic requirements are met, registration of an arbitral award is granted as of right subject only to Article 36 exceptions; (2) the public policy exception must be construed narrowly and does not permit the court to act as an appellate or review court on the merits of the arbitrator's findings; (3) an award is not contrary to public policy merely because the reasoning or conclusions are arguably wrong in fact or law; (4) the court will only refuse registration where the award constitutes a palpable inequity that is outrageous in its defiance of logic or accepted moral standards causing intolerable injustice; (5) parties who consent to correction of an arbitral award abandon the original award which becomes a nullity; and (6) costs on a higher scale may be awarded where opposition to registration is found to be malafide and designed to frustrate enforcement. The judgment reinforces the principle of finality in commercial arbitration and the limited scope for judicial intervention in arbitral awards.