On 1 February 2013, the plaintiff insured his Volvo S60 motor vehicle with the defendant under a comprehensive insurance policy. In April 2013, the plaintiff was involved in a motor vehicle accident at a roundabout at Warren Park along the Harare and Bulawayo Road, resulting in his vehicle being damaged beyond repair. The police investigated the accident and the plaintiff paid a US$200 deposit fine for driving without due care and attention. The plaintiff lodged a claim with the defendant for US$11,000. On 3 May 2013, the defendant accepted the claim and generated a loss acceptance form to compensate the plaintiff for US$9,000. However, payment was not made. Upon inquiry, the defendant informed the plaintiff that it had no intention of settling the claim, citing that its own investigation suggested the claim may be fraudulent as the plaintiff had failed to make known the place where the accident occurred. The plaintiff instituted legal proceedings in the High Court. The defendant filed a special plea based on Clause 14 of the insurance policy, which required disputes regarding 'the amount of any claim' to be referred to arbitration as a condition precedent to any right of action against the company.
The current proceedings were stayed and the matter was referred to arbitration for determination in terms of Clause 14 of the arbitration clause in the policy document. Costs were ordered to be costs in the cause.
An arbitration clause in an insurance contract is binding on the parties who have contractually agreed to submit disputes to arbitration. Where parties have elected arbitration as their dispute resolution mechanism in circumstances involving disputes regarding 'the amount of any claim', the court must stay proceedings and refer the matter to arbitration in accordance with Article 8(1) of the Model Law, First Schedule to the Arbitration Act [Chapter 7:15], unless the arbitration agreement is null and void, inoperative or incapable of being performed, or unless a reference to arbitration would be contrary to the justice of the matter. A party cannot invoke the court's inherent jurisdiction to override a valid arbitration clause simply by choosing to file suit in court. The filing of a special plea is sufficient to bring the issue of arbitration before the court under Order 21 Rule 138, and no separate application for stay of proceedings is required.
The court observed that the plaintiff had incorrectly quoted Clause 14 of the insurance policy in the pre-trial conference minute, substituting the word 'the' for 'any' when referring to 'the amount of any claim', although this error did not affect the outcome as the dispute still pertained to the amount of the claim. The court noted that in staying proceedings rather than dismissing the action, it avoided the risk of creating res judicata on the merits, making clear that it had only determined the proper forum and not the substantive issues. The court indicated that the arbitrator would be seized with determination of whether either party breached the insurance policy and what quantum, if any, is payable to the plaintiff. The court also noted instances where courts have exercised discretion to override arbitration clauses where the justice of the matter required it, citing the example of Yorigaami Maritime Construction v Nissho-Iwal where practical considerations (all evidence and witnesses being in Cape Town rather than Japan where the arbitration clause specified) justified overriding the arbitration agreement.
This case affirms the binding nature of arbitration clauses in insurance contracts in Zimbabwean law and clarifies the relationship between the High Court's inherent jurisdiction and contractual arbitration agreements. It establishes that parties cannot unilaterally resile from arbitration clauses they have agreed to, and that courts must give effect to such clauses unless the agreement is null and void, inoperative, or incapable of being performed, or unless arbitration would be contrary to the justice of the matter. The case also provides guidance on procedural aspects of raising special pleas based on arbitration clauses, confirming that no separate application for stay is required beyond filing the special plea itself under Order 21 Rule 138. The judgment reinforces the principle of sanctity of contract and the enforceability of alternative dispute resolution mechanisms agreed upon by parties.