Shahid Mahmood v Mehmboob Mulla and Honourable A. Mazarire

On 6 March 2012, the applicant (Shahid Mahmood) entered into an agreement of sale with the first respondent (Mehmboob Mulla) to purchase immovable property (Stand 1565 Salisbury Township) for US$75,000. The applicant took occupation but encountered payment difficulties. After deferrals, the applicant still owed US$20,000, which was due by 30 August 2012. Despite multiple demand letters from the first respondent's legal practitioners between September and October 2012, the applicant failed to pay the outstanding amount. The first respondent cancelled the agreement and referred the matter to the Commercial Arbitration Centre. On 11 April 2013, the second respondent (Arbitrator Honourable A. Mazarire) issued an award in favor of the first respondent, ordering cancellation of the agreement, eviction of the applicant, payment of occupational rental damages, rates and charges, legal costs, and refund of amounts paid less amounts due. The applicant sought to set aside the arbitral award on grounds that it violated public policy of Zimbabwe.

• Whether the arbitral award was in conflict with the public policy of Zimbabwe as contemplated by Article 34(2)(b)(ii) of the Arbitration Act Chapter 7:15
• Whether errors of law or fact by an arbitrator constitute grounds for setting aside an arbitral award
• What constitutes a violation of public policy sufficient to set aside an arbitral award
• Whether the arbitrator's findings regarding breach of contract, notice of termination, and remedies were so unreasonable as to offend public policy

The application to set aside the arbitral award was dismissed with costs.

An arbitral award may only be set aside on public policy grounds under Article 34(2)(b)(ii) of the Arbitration Act where: (1) the award was induced by fraud or corruption; (2) there was a breach of natural justice; or (3) the reasoning or conclusion constitutes such palpable inequity and outrageous defiance of logic or accepted moral standards that it would intolerably hurt the conception of justice in Zimbabwe. Mere errors of law or fact by an arbitrator do not constitute grounds for setting aside an award on public policy grounds. The High Court does not sit as a court of appeal to adjudicate the correctness of an arbitrator's reasoning or findings. Public policy does not condone failure by a party to honor contractual obligations.

The court observed that the correspondence in the case depicted an uncooperative applicant who wanted things done his way, and noted that "the law says no to that approach. Contracts must be honoured." The court commented that all issues placed before the arbitrator were properly addressed and that the ultimate finding of breach was correct. The court noted that in the face of admitted breach, it was difficult to interfere with the arbitrator's award.

This case reinforces the limited scope of judicial review of arbitral awards in Zimbabwe under the Arbitration Act Chapter 7:15. It confirms that courts will not set aside arbitral awards merely because of alleged errors of law or fact by the arbitrator. The judgment clarifies that the "public policy" ground for setting aside awards is narrowly construed and requires demonstration of fraud, corruption, breach of natural justice, or such palpable inequity and defiance of logic that it would intolerably hurt the conception of justice. The case emphasizes the finality of arbitral awards and the principle that courts are not appellate bodies over arbitrators' decisions. It also upholds the sanctity of contract and the principle that parties must honor their contractual obligations.