Waica Reinsurance Corporation PLC V Ampalt Investments (Private) Limited AND Forcheville Investments (Private) Limited AND Timili Investments (Private) Limited AND Susan Mutangadura N.O

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WAICA REINSURANCE CORPORATION PLC
versus
AMPALT INVESTMENTS (PRIVATE) LIMITED
and
FORCHEVILLE INVESTMENTS (PRIVATE) LIMITED
and
TIMILI INVESTMENTS (PRIVATE) LIMITED
and
SUSAN MUTANGADURA N.O


HIGH COURT OF ZIMBABWE
CHIRAWU-MUGOMBA J
HARARE, 9, 12, 26, 27, 28 April and 5 May 2021

T. Mpofu with T.L Mapuranga, for the applicant
N.M Phiri with L. Charangwa, for the 1 st to 3rd respondents
No appearance for the 4th respondent


OPPOSED MATTER


       CHIRAWU-MUGOMBA J: Arbitration falls in the realm of alternative dispute
resolution. In a jurisdiction like Zimbabwe in which the adversarial approach is used, it is
often touted as a better alternative than the winner-take-all approach. However, as this matter
will show, there is a long line of litigants who as they are entitled to, seek setting aside of
awards in terms of Article 34 of the schedule to the Arbitration Act [Chapter 7:15]
        In casu, there is no dispute between the parties regarding the referral of the matter to
arbitration. The claim submitted by the respondents to the 4 th respondent before whom the
matter was referred for arbitration as captured in a statement of agreed facts can be
summarised as follows. On 24 January 2018, the applicant and the 1 st to 3rd respondents
entered into an agreement in terms of which the latter sold their shareholding in a company
called Colonnade Reinsurance (Pvt) Ltd as a going concern to the applicant. The total
purchase price was the sum of United States Dollars nine hundred and fourteen thousand six
hundred and seventy–four dollars ($914 674). This figure was made up as follows, payment
of US$100 000 as the initial amount and the balance of US$814 764 would be settled through
the payment of a value of 50% of all uncollected premiums as per the management account
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of Colonnade Reinsurance (Pvt) Ltd. As at 31 December 2017, this amount was US$1 629
348. Half of that amount is US$814 764. This value would be paid upon collection of
uncollected premiums without undue delay. The respondents performed their end of the
contract by transferring shares including the share registration certificate. On the other hand,
despite follow up, the applicant had partly fulfilled its end of the bargain by paying only
US$100 000 (One hundred thousand). As from early July 2018, the 1 st – 3rd respondents made
several enquiries of the outstanding balance from the applicant. The applicant acknowledged
its indebtedness to the respondents. As at 31 October 2018, an amount of US$339 455.90
was due for collection. Half of that amount in the sum of US$169 775.45 became due and
payable to the 1st – 3rd respondents. The applicant made two payments to local bank accounts
in the sums of RTGS$59 306.66 and $110 468.79 which totalled RTGS $169 775.45. The 1 st
to 3rd respondents were advised that this figure represented 50% of the collected premiums
(from the uncollected sums). They rejected this amount as in their view, it did not represent
the terms of the agreement between the parties.
       The parties requested the 4th respondent to adjudicate on the following matters: -

   1. Whether or not the respondent (now applicant in casu) has breached the purchase
       agreement dated 24 January 2018 warranting the relief of specific performance
       claimed by (sic) as follows: -
       a. That the respondent is ordered to render to the claimants (now 1st to the 3 rd
           respondents in casu) the true and proper management accounts of WAICA
           Reinsurance Corporation PLC from October 2018 to May 2019 within two weeks
           of the order being granted.
       b. Payment by the respondent to the claimants of whatever amounts appear to be due
           to the claimant upon delivery of the said accounts denominated in United States
           Dollars.

       c. Whether or not the total payments by respondent of RTGS 169 775.45 to the
           claimants’ amounts to performance in terms of the agreement.
         According to a document filed by the 1 st to 3rd respondents titled ‘claimants’
supplementary heads of argument’, the 4 th respondent after hearing oral evidence requested
that the parties address two issues as follows. (1) Whether or not this arbitration is a domestic
or ‘international’ arbitration and (2) clarity regarding the position of the claimant on the
interpretation of S.I 33 of 2019?
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After the filing of submissions and hearing oral evidence, the 4 th respondent determined the
issues that remained to be addressed as follows: -

   1. Whether or not the purchase price of US$914 674 remains a United States dollar
       obligation, and if the balance of that purchase price in the sum of US$814 674 is now
       payable in R.T.G.S dollars by operation of SI 33 of 2019;

   2. Whether or not the amount due to claimants based on 31 October 2018 management
       account of Colonnade Re, which is expressed in most parts as US$169 775.45 is
       payable in USD or in local currency, and

   3. If the amount due and payable to claimant is US$169 775.45. whether the respondent
       is entitled to be reimbursed the RTGS$ 169 775.45 that the claimant has paid; and

   4. Whether or not the claimant is entitled to receive the management accounts of
       Colonnade Re from which to verify the premiums paid and thereby compute the
       amount due to it in any given period.
       The 4th respondent subsequently made the following findings: -
   a. Claimant has successfully established before the Tribunal that there is a binding
       agreement between the claimants and respondents in terms of which an amount of
       US$914 674 was due and payable to claimants as the full purchase price. The amount
       is payable in United States Dollars. The claimant has further established that an
       amount of US$100 000 having been paid, the balance outstanding is USD$814 674.
   b. Claimant has successfully established before the Tribunal that there is a binding
       agreement between the claimants and respondents in terms of which an amount of
       USD$169775.45 was due and payable to claimants as at 30 October 2018.
   c. Claimant has successfully established before the Tribunal that Respondent being a
       foreign company, the arbitration falls under the realm of international arbitration as
       envisaged by the Arbitration Act of Zimbabwe [Chapter 7:15].
   d. Claimant has successfully established before the Tribunal that the agreement being an
       international commercial transaction, more specifically an agreement for an
       investment into Zimbabwe by a foreign national, its provisions are protected by
       exchange control regulations and the conditions for the investment set by the
       exchange control authorities.
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   e. Claimant has successfully established before the Tribunal that the respondent having
       paid an amount of RTGS$169 775.45 to claimants, the respondent is in breach of the
       provisions of the agreement between the parties.
   f. Claimant has successfully established before the Tribunal that the basis upon which
       the amount due and payable to it being computed from the management accounts of
       Colonnade Re, it is therefore entitled to receive, from respondent, copies of the said
       management account in order to verify its entitlement.
   g. The claimant has not made any claim for an award of costs or interest on the mount
       claimed.
       The award made by the 4th respondent is as follows: -
   1. Respondent shall pay the balance outstanding in terms of the agreement between the
       parties in the sum of US$814 674.00 to the claimant in Unites States dollars as
       provided for in the agreement.
   2. Respondent shall pay to claimant the sum of US$169 775.45 being 50% of the
       premiums already collected according to the management account of 30 October
       2018.
   3. Claimant shall return to respondent the amount of RTGS $169 775.45 that was paid to
       it within 7 days of this award by way of a transfer into respondent’s nominated bank
       account.
   4. The respondent shall furnish to the claimant monthly management accounts of
       Colonnade Reinsurance (Pvt) Limited, being the subject matter of the agreement
       between the parties, for the period 1 November 2018 to 31 March 2019 and thereafter
       for the last day of each succeeding month to enable claimants to claim the outstanding
       balance of the purchase price in terms of the agreement between the parties, until the
       balance of the purchase price has been paid to Claimant in full.
   5. This award shall be registrable as an order of the High Court of Zimbabwe and any
       other court of competent jurisdiction and shall be executable as permitted by law.
       Aggrieved by the award, the applicant seeks its setting aside. The main basis is that it
is contrary to public policy. In support the applicant pointed to the following as being
‘misdirections’ on the part of the 4 th respondent. The arbitrator went on a frolic of her own.
There was no basis for finding that the agreement was an international commercial
transaction. Payment of the balance was supposed to be in local currency since the agreement
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was concluded in Zimbabwe and the currency regime had changed. The 50% payment was
supposed to be based on premiums actually collected and since it was collected in Zimbabwe,
payment was to be in the Zimbabwe currency. The arbitrator had placed too much reliance on
the fact that the applicant had obtained exchange control approval to transact. The award
constitutes a breach of statute law. The 4 th respondent created an entitlement that the 1 st to 3rd
respondents were supposed to receive monthly management accounts. At the hearing Mr
Mpofu for the applicant made the following submissions. That the award was based on a
creation by the 4th respondent of a material issue not raised by the parties. That the award is
contrary to the clear terms of the agreement between the parties; that the award constitutes a
subversion of statute law and that the arbitrator awarded relief against a party who was not
before her.
             The 1st to the 3rd respondents strenuously opposed the application. They stated that
the findings by the 4th respondent were based on the fact that the applicant is a foreign entity
which received foreign exchange approval to transact in purchasing the shares.                It is
important to appreciate that the applicant is a foreign entity who purchased shares in a local
entity. The parties never contemplated the transaction as being a local one due to the nature
of reinsurance business. The import of the Finance Act No. 2 of 2019 is that all foreign
obligations are to be settled in foreign currency and the applicant as a foreign investor
undertook to invest in Zimbabwe. They denied therefore that the award is contrary to public
policy.
          The applicant does not deny that it owes the 1st to the 3rd respondents’ money but what
it essentially challenging is the currency of payment having paid the first one hundred
thousand in United States Dollars. There is always danger in cases of setting aside arbitral
awards in that a court may be tempted or may err by – re-litigating’ the matter. As has been
stated in a plethora of cases, the court does not sit as an appeals court. The sole question is
this – is the award contrary to public policy as claimed by the applicant?
          The law on setting aside of arbitral awards has been set out in a plethora of cases – see
Peruke Investments (Pvt) Ltd v Willousghby’s Investments (Pvt) Ltd and anor, 2015 (1) ZLR
491 and also Article 34 of the Model Law (First Schedule to the Arbitration Award) on the
procedure and substantive grounds for setting aside an award. The case is also one of the
authorities for the set legal position that courts are reluctant to invoke the limited ground of
public policy ‘except in the most glaring instances of illogicality, injustice or moral
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turpitude’. In Decimel Investments (Pvt) Ltd v Arundel Village (Pvt) Ltd and anor, 2012 (1)
ZLR 581(H), MATHONSI J (as he then was) stated as follows: -
       “It should be appreciated that the limited grounds of attacking an arbitral award are meant to
       ensure international uniformity in the application of the model law contained in the
       Arbitration Act. That law is of international origin and is intended to govern both domestic
       and international arbitrations. Pamire & Ors v Dumbutshena N.O. & Anor 2001(1) ZLR
       123(H) at 125 E.”
       I would add also the fact that arbitration as I have already observed is part of
alternative dispute resolution and it would cause confusion if awards are set aside willy-nilly.
Litigants might as well reach the conclusion that arbitration is a waste of time. Therefore,
rule number one in such matters is the fact that arbitral awards are not set aside on the mere
asking but courts have to employ a strict standard and threshold. It is akin to searching for a
needle in a haystack.
       As rightly observed by GOWORA J (as she then was) in Pioneer Transport (pvt) Ltd
vs. Delta Corporation and another, 2012 (1) ZLR 58, the UNCITRAL model does not define
the concept of public policy. In our law however, the standard was set in ZESA v Maposa,
1999(2) ZLR 452(S) where at 466 E-G GUBBAY CJ said:
       “Under articles 34 or 36, the court does not exercise an appeal power and either uphold or set
       aside or decline to recognise and enforce an award by having regard to what it considers
       should have been the correct decision. Where, however, the reasoning or conclusion in an
       award goes beyond mere faultiness or incorrectness and constitutes a palpable inequity that is
       so far reaching and outrageous in its defiance of logic or accepted moral standards that a
       sensible and fair minded person would consider that the conception of justice in Zimbabwe
       would be intolerably hurt by the award, then it would be contrary to public policy to uphold it.
       The same consequence applies where the arbitrator has not applied his mind to the question or
       has totally misunderstood the issue and the resultant injustice reaches the point mentioned
       above”.

       Resolving this matter will involve scrutinising in my view, the issues put before the
4th respondent and the award she made. The issue of payments by the applicant to the 1-3 rd
respondents being denominated in United States Dollars was one put by the parties before the
4th respondent. The record shows that she requested the parties to address her on the question
of whether or not the arbitration was domestic or international and the position of the 1 st to
the 3rd respondents on its interpretation of S.I. 33 of 2019. None of the parties protested this
request. The 1st to the 3rd respondents filed what it termed ‘claimants’ supplementary heads of
arguments’ in answering the questions. The applicant addressed these issues in what it
termed ‘respondents closing submissions’. The conclusion that the agreement was an
international commercial contract with the contract price expressed in United States Dollars
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was in the context of the relationship between the parties as being that of the applicant as a
foreign entity and the 1st-3rd respondents being Zimbabwean entities. The applicant had
requested the 4th respondent to treat the US$100,000 it had initially paid for the shares
differently from the balance of US$814 674 in that the latter was supposed to be paid in
Zimbabwean currency. The arbitrator stated as follows in her findings- ‘Respondent has
argued that the effect of the new regulations is that its obligations to the claimants are now
payable in RTGS$ on the basis that claimants and Colonnade Re are local entities. S44C (2)
(b) of the Reserve Bank of Zimbabwe Act [Chapter 22:1]5 as amended by S.1 33 of 2019
provides that ‘the issuance of any electronic currency shall not affect or apply in respect of
foreign loans and obligations denominated in any foreign currency which shall continue to
be payable in such foreign currency”. To the extent that WAICA is a foreign entity and the
agreement between the parties falls within the definition of an international contract by
virtue of the fact that it involves parties of different nationalities, i.e. Zimbabwean parties and
an entity domiciled out of Zimbabwe, the Tribunal finds that the amount payable falls under
the classification of an obligation denominated in foreign currency by a foreign entity”.
Having made that finding and conclusion, it follows that the 4 th respondent also reached the
conclusion that payment of the remainder of US$814 674.00 was to be made in United States
Dollars. The sum of US$169 775.45 is part of that payment. If regard is had to issues (b)
and (c) placed before the 4th respondent, these were answered. In my view, the 4th respondent
cannot be said to have frolicked on her own and can also not be faulted for reaching the
conclusion that the currency of payment was the United States Dollars – see Breastplate
Service (Pvt) Ltd v Cambria Africa PLC, SC - 66-20.
          The applicant placed emphasis on the fact that the 50% of the amount collected was
supposed to be paid in Zimbabwean currency because it was collected in local currency.
What was put before the 4th respondent was a balance of collections report ‘for the period to
30 September 2018’. The statement shows a total of $339 544.90 as the total being available
for distribution, i.e. 50% of that total. That amount is made up of $220 925.60 as ‘offsets’,
and $118 619.30 as ‘cash’. The statement does not state in which currency it is denominated.
Mr Phiri pointed out to the fact that some of the debtors that appear on the statement are
foreign entities. Further that the whole agreement between the parties required foreign
exchange approval. As pointed out in the Breastplate matter (supra) what is important is to
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look at the situation prevailing before the institution of legal proceedings and the conduct of
the parties. PATEL JA had this to say: -
       “Having regard to the factual circumstances preceding the institution of proceedings a quo
       coupled with the conduct of the parties, it is abundantly clear that it was the intention of both
       parties from the onset of their transaction that the appellant’s contractual obligation to pay the
       respondent would be discharged in United States dollars. Indeed, Mr Mutandwa, in his
       replying submissions, quite properly conceded that until the promulgation of S.I. 33 of 2019
       the parties were fully agreed that payment would be made in foreign currency”.
       In casu, the pre-arbitration points out to the fact that the understanding of the parties
was that payment would be made in United States Dollars. This is buoyed by the requirement
of exchange control authority and the fact that the applicant is a foreign entity which entered
into an agreement with Zimbabwean entities for the purchase of shares. As stated by the 4 th
respondent it would be absurd as suggested by the applicant to pay US$100 000 and then the
rest in local currency. The applicant’s statement that it used as a basis of paying $169 775.45
is silent on the form of currency and as rightly pointed by Mr Phiri even the currency for the
cash indicated on the statement is not revealed. It is pertinent to note that the collection of
part of the 50% premiums including the cash was done before the promulgation of SI 33/19.
The collections report is up to the 30 th of September 2018 and therefore the money ‘when
collected’ was done so in United States Dollars including the cash.
       The applicant further argues that the issue of management accounts is a creation of the
4th respondent. This however flies in the face of one of the issues put before her that needed
adjudication. This was by way of a statement of agreed facts. The parties agreed that the
issue of whether or not the applicants should be ordered to render to the 1 st to 3rd respondents
the true and proper management accounts of WAICA Reinsurance Corporation PLC from
October 2018 to May 2019 should be part of those for adjudication. It was therefore in the
contemplation of the parties that there must be a way or method to ascertain how much was
collected. There needed to be a basis for the collection of the 50% due from unpaid
premiums. The 4th respondent’s finding was therefore based squarely on an issue put before
her. It cannot be said to be an alteration of the agreement between the parties.
       Has the applicant managed to meet this high threshold of setting aside an arbitral
award on the basis that it is contrary to public policy or is it a sore loser? In that regard I can
do no better that cite the words of MATHONSI J (as he then was) in Botha v Gwanda Rural
District Council, 2018 (1) ZLR 630 at 634 H and 635 A-B,
       “That this is a very high threshold is pretty obvious. It means that even where a decision is
       faulty or incorrect the court still will not interfere. The court will only interfere where the
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       decision is outrageous in its defiance of logic and so offends against the public’s sense of
       justice. It is only then that the court will set it aside or decline to recognize or enforce it.
       That remedy is certainly not available to sore losers who simply are unhappy with the arbitral
       award because it has been made against them. Such a result happens all the time that a
       dispute is adjudicated upon because adjudication, by its very nature, means that one of the
       parties has to live with disappointment. Even where the court does not agree with the
       decision of the arbitrator it has no power to substitute its own decision. Clearly the complaints
       raised by the respondent against the arbitral award do not come anywhere near the threshold
       for setting aside or refusal to recognize and enforce an arbitral award. The respondent’s
       concerns are the usual fulminations of a disappointed litigant.”

       Although Mr Mpofu implored the court to treat this matter as one of those exceptional
ones in which an arbitral award is set aside, for reasons stated, the applicant has simply failed
to convince the court. The inescapable conclusion is that the applicant has failed to cross the
hurdle of convincing this court that the arbitral award ought to be set aside on the grounds of
public policy.    I can perceive of no reason why the 1 st – 3rd respondents should not be
awarded costs.
DISPOSITION
       It is accordingly ordered as follows: -
       1. The application be and is hereby dismissed.
       2. The applicant shall pay the costs.


AB & David, applicants’ legal practitioners
Muvingi and Mugadza, 1st – 3rd respondents’ legal practitioners