The appellant and first respondent entered into an agreement of sale of shares on 30 September 2016, whereby the first respondent sold shares in Palatial Gold Investments (Pvt) Ltd to the appellant for US$8 million. The appellant paid US$5,693,547.00 but refused to pay the balance of US$2,306,453.00, claiming indemnity for anticipated labour claims. The appellant's indemnity claims were dismissed by arbitrator Adv. T. Magwaliba on 27 August 2019. The appellant unsuccessfully challenged this award in both the High Court and Supreme Court (SC 7/23). In July 2023, the first respondent instituted fresh arbitral proceedings before Mr Kevin Terry (second respondent) seeking payment of the balance in USD or RTGS at the prevailing interbank rate. The appellant disputed the claim, contending it had paid the outstanding balance to an Escrow Agent. On 17 October 2023, the arbitrator issued an award finding the appellant obligated to pay the balance of US$2,306,453.00 in USD or RTGS at the prevailing interbank rate. The appellant applied to the High Court to set aside this award on grounds it was contrary to public policy, which application was dismissed on 29 May 2024.
The appeal was dismissed with costs.
(1) Where a party has previously admitted the authority of a deponent to represent a corporate entity in litigation arising from the same dispute, and no new facts have emerged, that party is estopped from challenging such authority in subsequent proceedings. (2) An arbitral award may only be set aside on public policy grounds under Article 34(2)(b)(ii) of the Arbitration Act where the reasoning or conclusion goes beyond mere faultiness and constitutes a palpable inequity that is so outrageous in its defiance of logic or acceptable moral standards that it would intolerably hurt the conception of justice in Zimbabwe. (3) An arbitrator who engages with relevant statutory provisions and arrives at a conclusion based on the facts and submissions before him, even if the conclusion is arguably wrong, has not violated public policy. (4) The currency conversion provisions in section 22(1)(d) of the Finance (No. 2) Act of 2019 do not apply to debts that were uncertain or still to be assessed at the effective date of SI 33/19 because liability was denied or subject to determination. (5) An arbitrator cannot be faulted for failing to decide an issue not raised in the pleadings or submissions before him.
The Court observed that the requirement for board resolutions confirming authority to represent a legal entity has been taken to "ridiculous levels" and should not be used as an escape route by parties clutching at straws. The Court noted that an affidavit is evidence and where a deponent states he has authority to represent a company, there is no reason to disbelieve him unless contrary evidence is shown. The Court also commented that the challenge to Mr Saunders' authority appeared motivated by the appellant's loss in the first leg of the dispute rather than any genuine doubt, calling it "a desperate attempt to escape liability." The Court emphasized that each case regarding proof of authority must be considered on its own merits, and what matters is whether sufficient evidence exists to satisfy the court that it is the legal entity litigating and not an unauthorized person.
This case reinforces important principles in South African arbitration law: (1) the restrictive interpretation of the public policy ground for setting aside arbitral awards to preserve finality in arbitrations; (2) that an arbitrator has the right to be wrong on fact or law, and mere error is insufficient to set aside an award unless it violates fundamental principles of law, morality or justice; (3) the principle that courts do not exercise appellate jurisdiction over arbitral awards; (4) the application of currency conversion provisions in the Finance Act to debts that were uncertain or still to be assessed at the effective date; (5) the estoppel principle preventing parties from challenging previously admitted facts in subsequent proceedings arising from the same dispute; and (6) that arbitrators are confined to issues raised in the terms of reference and cannot be faulted for not deciding issues not placed before them. The case provides guidance on the high threshold required to establish that an award is contrary to public policy under Article 34(2)(b)(ii) of the Arbitration Act.