Ultra Resources (Pvt) Ltd t/a Ultra Construction & Civil Engineering v Premier Services Medical Investments (Pvt) Ltd t/a PSMI

Both parties are corporate entities registered under Zimbabwean law. Plaintiff (Ultra Resources) operates in building construction and maintenance services, while defendant (PSMI) operates in the medical sector. Plaintiff issued summons claiming US$1,517,933.09 plus interest and costs for alleged non-payment by defendant for construction and maintenance services rendered under a "Service Level Contract" (SLA). The SLA contained clause 8, an arbitration agreement, which provided for dispute resolution by arbitration through the Harare Commercial Arbitration Centre. Defendant admitted indebtedness but contested quantum and currency. Defendant raised a special plea of jurisdiction, contending that plaintiff had evaded the arbitral dispute resolution procedure prescribed in clause 8 of the SLA.

• Whether the plaintiff was obliged to refer the dispute to arbitration in terms of clause 8 of the Service Level Contract before approaching the court
• Whether the arbitration clause in clause 8.1 was mandatory or merely optional
• Whether the arbitration agreement was null and void, inoperative or incapable of being performed as contemplated in Article 8(1) of the Arbitration Act
• Whether clause 8 of the SLA, when read in its totality, reflected the parties' intention to resolve disputes through arbitration
• Whether the court should exercise its discretion to stay proceedings and refer the matter to arbitration

1. The special plea for stay of proceedings in terms of Article 8(1) of the Arbitration Act [Chapter 7:16] was granted. 2. The proceedings were stayed and the dispute referred for resolution in terms of the parties' arbitration agreement. 3. Each party to bear its own costs.

An arbitration clause in a contract must be interpreted in its totality to determine the parties' intention, not by severing individual subclauses. Where parties have contractually agreed to resolve disputes through arbitration, courts must stay proceedings and refer parties to arbitration unless the arbitration agreement is proven to be null and void, inoperative or incapable of being performed as required by Article 8(1) of the Arbitration Act. The onus rests on the party challenging referral to arbitration to prove that the arbitration agreement falls within one of these exceptions. Courts must respect contractual autonomy and show a predilection toward upholding arbitral agreements. The mere fact that language in an arbitration clause could have been better framed does not negate the clear intent of the parties when the clause is read as a whole.

The court observed that whilst parties are enjoined by law to respect arbitral agreements, if there is truly no contest or dispute, a plaintiff may be at liberty to approach the courts for relief. The court noted that had plaintiff been furnished with earlier communication from defendant about its contestations on quantum and currency, summons may not have been issued. However, the court emphasized that insufficient facts were provided to establish the precise nature and timing of defendant's concession of liability. The court commented that the need to encourage parties to respect arbitral pacts justified the costs order that each party bear its own costs. The court also referenced the impact of Presidential Powers regulations SI 33/19 and SI 60-24 on the parties' contract regarding currency issues, though this was not determinative of the special plea.

This case is significant in Zimbabwean jurisprudence as it reinforces the principle of contractual autonomy and the courts' duty to uphold arbitration agreements. It provides guidance on the interpretation of arbitration clauses, emphasizing that such clauses must be read in their totality rather than in isolation. The judgment underscores the strong pro-arbitration policy reflected in Article 8(1) of the Arbitration Act and the requirement that courts show a predilection toward upholding arbitral agreements. It clarifies that parties who contractually agree to arbitration must exhaust that process before resorting to litigation, unless the arbitration agreement is null and void, inoperative or incapable of being performed. The case also demonstrates the application of the five requirements for successful special pleas based on arbitration agreements established in Conplant Technology (Pvt) Ltd v Wentspring Investments (Pvt) Ltd.