ZESA Holdings (Pvt) Ltd v Clovgate Elevator Company (Pvt) Ltd & Anor

ZESA Holdings (applicant), a wholly government-owned company, awarded a tender in 2013 to Clovgate Elevator Company (respondent) for the supply, installation and maintenance of four elevators at its headquarters for USD930,165.54. The contract was to run from 14 August 2013 to 28 July 2014. Delays occurred from the outset, including the applicant's 41-day delay in making the 50% down payment. By October 2015, only one elevator was installed. The respondent cited force majeure due to Metropolitan Bank's financial difficulties preventing access to the down payment funds. Despite draft amendments and promises of assistance, ZESA eventually purported to cancel the contract and re-tendered to another company. The respondent referred the dispute to arbitration. On 25 July 2017, the arbitrator found in favour of the respondent, ruling that the cancellation breached the contract and ordering specific performance. This award was registered as a court order on 10 June 2020. When the respondent attempted to resume work, ZESA advised that another company had completed the job. The respondent sought a second arbitration to quantify damages for non-compliance with the first award, claiming USD1,922,511.16. On 2 December 2020, the arbitrator ruled he had jurisdiction to proceed and directed ZESA to file submissions responding to quantum evidence. ZESA sought to set aside this ruling in two consolidated applications (HC 722/21 and HC 1355/21).

• Whether the arbitrator's ruling of 2 December 2020 constituted a final award, partial/interim award, or merely a procedural/interlocutory award
• Whether the arbitrator had jurisdiction to conduct a second arbitration on quantum of damages after rendering the initial award
• Whether the arbitrator was functus officio after making the first award
• Whether the second arbitration constituted an impermissible attempt to correct the first award outside the 30-day limitation period
• Whether the arbitrator's ruling was contrary to public policy of Zimbabwe under Article 34(2)(b)(ii) of the Arbitration Act
• Whether a procedural award by an arbitrator is susceptible to challenge before the final arbitral award

i) The application in HC 722/21 is dismissed. ii) The provisional order in HC 1355/21 is discharged. iii) Costs of suit in both cases to be borne by the applicant (ZESA Holdings).

An arbitrator is not functus officio and retains jurisdiction to quantify damages when an initial award for specific performance becomes impossible to implement due to supervening circumstances. A second arbitration to quantify such damages is not an impermissible correction of the first award (subject to the 30-day limitation) but a continuation and completion of the arbitration process. Arbitral awards may be categorized as: (a) final awards (dispositive and creating res judicata); (b) partial/interim awards (dealing with discrete issues like jurisdiction); and (c) procedural/interlocutory awards (directive in nature, facilitating the arbitration process). Partial awards that are finally dispositive of particular issues (such as jurisdiction) are susceptible to immediate challenge, while purely procedural awards are generally not challengeable until the final award. The threshold for setting aside an arbitral award on public policy grounds under Article 34(2)(b)(ii) of the Arbitration Act is very high - it must constitute palpable inequity that is outrageous in its defiance of logic or accepted moral standards and offends Zimbabwe's conception of justice; mere wrongfulness of fact or law is insufficient. Courts will respect party autonomy in arbitration and give effect to broad arbitration clauses covering disputes arising from or in connection with a contract.

The court observed that this case "makes nonsense of the notion of arbitration as an expedient and cheaper form of alternative dispute resolution mechanism," given that the dispute had been ongoing for 7-8 years with no end in sight due to appeal rights. The court noted the arbitrator's confusing "Withdrawal of Award" document filed on 20 April 2021, but declined to give it any effect, treating it as adding "more confusion and unnecessary density" without deciding the real issues. The court assumed, without deciding, that nothing would preclude ZESA from tabling its own damages claims before the arbitrator in mitigation or set-off. Mafusire J noted that the Arbitration Act does not define "award" and that no internationally accepted definition exists in major international conventions, leaving it to courts to determine on a case-by-case basis whether a particular ruling constitutes an award and whether it is susceptible to challenge.

This case provides important guidance on Zimbabwean arbitration law, particularly regarding: (1) the categorization of arbitral awards into final, partial/interim, and procedural/interlocutory awards; (2) the circumstances in which an arbitrator remains seized with jurisdiction and is not functus officio; (3) the high threshold for setting aside arbitral awards on public policy grounds under Article 34(2)(b)(ii) of the Arbitration Act; (4) the principle of party autonomy in arbitration and the courts' role in respecting arbitration agreements; (5) the completion of arbitration processes where specific performance becomes impossible and damages need quantification; and (6) the limited scope for court intervention in ongoing arbitration proceedings, particularly regarding procedural/interlocutory matters. The judgment reinforces the pro-arbitration stance of Zimbabwean courts and the principle of minimal judicial interference in arbitral processes.