TN Harlequin Luxaire Limited & Lifestyle Holdings Luxaire Limited v Quest Motors Manufacturing (Private) Limited

In November 2010, the first appellant (tenant) entered into a written lease agreement with the respondent (landlord), with the second appellant binding itself as guarantor and co-principal debtor. The lease was to subsist from 7 November 2010 to 30 November 2015. On 29 January 2013, the respondent wrote to the appellants expressing concern about the second appellant disposing of its assets, which diminished the security value, and demanded fresh security proposals. The appellants viewed this demand as repudiation of the lease agreement and accepted the perceived repudiation on 7 February 2013. On 28 February 2013, the first appellant vacated the leased premises, effectively terminating the lease. The respondent referred the dispute to arbitration in accordance with the lease agreement's arbitration clause. The arbitrator found the appellants in breach of the lease agreement and awarded the respondent damages equivalent to rentals and other charges payable over the remaining lease period. The respondent applied to the High Court for registration of the award, which the appellants opposed.

• Whether the application for registration of the arbitral award was fatally defective for failure to attach the original copy of the award to the founding affidavit
• Whether the arbitral award was contrary to the public policy of Zimbabwe
• Whether the arbitrator erred in finding that it was not the respondent's repudiation that terminated the contract
• Whether the arbitrator erred in failing to find that the respondent had not mitigated its loss
• Whether the arbitrator had jurisdiction to arbitrate over the dispute (raised for the first time on appeal)
• Whether an amendment to grounds of appeal should be allowed to introduce a new jurisdictional issue not previously raised

The appeal was dismissed with costs.

An arbitral award is not contrary to public policy merely because the arbitrator's reasoning may be wrong in fact or law. To set aside an award on public policy grounds, the proven error must go beyond mere faultiness or incorrectness to constitute a palpable departure from justice that would make a sensible and fair-minded person consider it intolerably hurts the conception of justice in the jurisdiction. Courts reviewing applications for registration of arbitral awards do not sit as appellate courts to correct arbitrators' decisions. Article 35 of the Model Law does not require the original or authenticated copy of an arbitral award to be attached specifically to the founding affidavit in a registration application; substantial compliance is achieved if the authenticated copy is supplied to the court through any filing, including the answering affidavit. A point of law raised for the first time on appeal will only be permitted if it is covered by the pleadings in the court below, involves no unfairness to the opposing party, and has merit (is fatal to one or more contentions of the other party).

MAKARAU JA observed that the appellants' grounds of appeal were "no more than a thinly disguised appeal against the arbitral award, which at law is incompetent as arbitral awards are non-appealable." The court also noted that even if the jurisdictional issue had been properly raised, it would have been inclined to consider it despite not being covered in the papers filed in the court a quo, because want of jurisdiction strikes at the very root of an award and would create an "intolerable situation" to uphold such an award. However, this inclination was ultimately outweighed by considerations of fairness when the point raised is without merit. The court emphasized that pursuing justice lies more in arriving at a legally correct solution than in strictly adhering to procedural timelines, suggesting a flexible approach to procedural matters when substantive justice is at stake, provided there is no unfairness to the opposing party.

This case is significant in Zimbabwean arbitration law as it clarifies and reinforces several important principles: (1) It confirms the narrow scope of judicial review of arbitral awards under the public policy exception, emphasizing that mere errors of fact or law are insufficient to set aside an award; (2) It establishes that the public policy test requires a "palpable departure from justice" that would make "justice spin on its head" and "intolerably hurt the conception of justice" in the jurisdiction; (3) It clarifies procedural requirements for registration of arbitral awards under Article 35 of the Model Law, holding that substantial compliance is sufficient when providing authenticated copies of awards; (4) It demonstrates the strict limitations on introducing new grounds of appeal, particularly jurisdictional issues not raised before the arbitrator or court a quo; and (5) It reinforces the finality of arbitral awards and the limited role of courts in reviewing them, consistent with the pro-arbitration policy underlying the Arbitration Act.