Wedzera Petroleum (Private) Limited v Infrastructure Development Bank of Zimbabwe and Another

### Preamble
1
HH 313-13
HC 6979/12
WEDZERA PETROLEUM (PRIVATE) LIMITED
versus
INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE
and
T. MAGWALIBA
HIGH COURT OF ZIMBABWE
MATHONSI J
HARARE, 17 September 2013 and 25 September 2013
M. Kamdefwere, for the applicant
A. Moyo, for the 1st respondent
No appearance for 2nd respondent
MATHONSI J: This application is made in terms of Article 34 of the Model Law in the Arbitration Act [Cap 7:15]. That Article provides:
“1) Recourse to a court against an arbitral award may be made only by an application
for setting aside in accordance with paragraphs (2) and (3) of this article.
2) An arbitral award may be set aside by the High Court only if-
the High Court finds, that
The subject – matter of the dispute is not capable of settlement by arbitration under the laws of Zimbabwe, or
The award is in conflict with the public policy of Zimbabwe.
3) -----------------------
4) -----------------------
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5) For the avoidance of doubt, and without limiting the generality of paragraph (2) (b)

(ii) of this article, it is declared that an award is in conflict with the public policy of

Zimbabwe if -

the making of the award was induced or effected by fraud or corruption, or

a breach of the rules of natural justice occurred in connection with the making of the award.”

The applicant is an incorporation engaged in the petroleum business while the first respondent is a banking institution registered as such in this country.   The second respondent is a legal practitioner who has been cited in this application because he arbitrated a dispute between the parties and made an arbitral award against the applicant.

On 20 July 2010, the applicant, the first respondent and an entity known as Colforth Petroleum (Pvt) Ltd signed an agreement, which they christened a “Fuel Purchase Agreement” to regulate their dealings.  That agreement contained an arbitration clause in the event of a dispute arising between them, being clause 25, which reads:

“Any dispute that may arise in relation to or in connection with this contract shall be

resolved by arbitration in terms of the Arbitration Laws in force at the time in

Zimbabwe and such arbitral proceedings shall be held in Harare.  Parties shall ensure

that any such arbitral proceedings are completed within 30 days of referral of the

dispute thereto.”

As it was wont to happen, a dispute arose between the parties as the applicant, although quite quick to collect bulk fuel from a depot in Msasa, was exceedingly slow in paying the sum of US$343 000-00 due to the first respondent for that fuel in terms of the agreement of the parties. Of necessity the matter was referred to arbitration via the Commercial Arbitration Centre of Harare and the second respondent had the honour of being appointed to handle the matter.

Although the parties, going into the agreement with all their eyes wide open, specifically agreed in the clause I have cited above, that they would strive to complete arbitration proceedings within 30 days of referral and the first respondent’s statement of claim was received by the Commercial Arbitration Centre at 3.45pm on 11 July 2011, the parties appear to have trudged on and on with the dispute for several months.

Arbitrating from Harare, the second respondent made the telling point in his interim award issued on 23 November 2011, more than 4 months after the referral of the matter, that:

“Despite numerous attempts to set the matter down and an agreement reached during the pre-arbitration hearing held on 17 August 2011, it took several abortive hearings to finally achieve the hearing of 21 November 2011.”

It was not until 22 March 2012 that the second respondent finally issued a final arbitral award, the applicant having only succeeded in filing closing submissions on 12 March 2012.  To his credit the arbitrator only took 10 days to make an award.  Whatever was the cause of the delay in the arbitration process it can scarcely be blamed on the arbitrator.

In that award, the applicant was directed to pay to the first respondent US$343 000-00 together with interest from the date it took delivery of the bulk fuel but did not pay for it, to deliver to the first respondent 105 000 litres of diesel or their open market value and to pay costs of suit and collection commission.  That became the source of the pain in the shoe which prompted the applicant, notwithstanding the commitment of the parties to resolve any dispute between them speedily and by arbitration, to make an approach to this court in terms of article 34 of the model law aforesaid seeking to set aside the arbitral award.

In its founding affidavit sworn to by its Managing Director Tobias Mupinga, the applicant loudly protested in paragraph 6 that:

“The basis of this application is that the award is contrary to public policy of Zimbabwe in that, first, it came up as a result of flouting principles of natural justice and secondly, the applicant contends that the award was induced by fraud and/or corruption.”

Mupinga goes on to confidently make a lot of gratuitous allegations against the second respondent, accusing him of bias, corruption and fraud.  He doubts the second respondent’s independence and impartiality and maintains that the applicant was denied a right to be heard in breach of the audi alteram partem rule.

Having made all these allegations against the arbitrator, one naturally expects the applicant to back them up with proof.  Disappointment however awaits one reading through the papers as the applicant does not come anywhere near substantiating those accusations.  Instead Mupinga argues that bias, corruption, fraud and the breach of the rules of natural justice are found in the second respondent’s dismissal of an application made for him to recuse himself made by the applicant, his dismissal of an application for a postponement and the arbitrator’s decision to disregard a High Court action, namely HC 105/11 in which the applicant is suing NOCZIM (Pvt) Ltd and the first respondent is not even a party to that action.

Mr Kamdefwere who appeared for the applicant could not add anything to that.  In his view there was a breach of the rules of natural justice, in particular the audi alteram partem rule because the arbitrator turned down the application for a postponement to allow the applicant’s counsel to attend and make the application for recusal.  The record shows that the applicant was represented by counsel of its choice at the hearing.  Its counsel found it unconscionable to move the application for recusal and pointed that fact to the arbitrator.  I have already stated that the parties had earlier on agreed on a road map for the conduct of the arbitration which the applicant was attempting to scuttle even as it did not advert to a single ground for recusal.  The award made deals extensively with those issues.

The audi alteram partem rule provides that both parties must be heard before a decision is taken, no more no less.  Where a party is allowed to make submissions and a decision is taken thereafter which is not favourable to that party, there is no violation of the rule:  Decimal Investments (Pvt) Ltd v Arundel Village (Pvt) Ltd Ltd & Anor HH 262/12; Truworths Limited v Charter Properties (Pvt) Ltd & Anor HH 160/13.

In addition to that, the arbitrator ruled on the application for a postponement which affected the applicant’s submissions on recusal on 1 March 2012 and yet the challenge to that was only filed on 27 June 2012 outside the requisite 3 months period provided for in the model law.

In any event, throughout the proceedings, the applicant was represented by counsel.  Its counsel made submissions on its behalf, cross examined witnesses, opened and closed the applicant’s case and indeed filed closing submissions on behalf of the applicant.  To then say that the applicant was denied a right to be heard under those circumstances is simply disingenuous if not out rightly dishonest.  I agree with Mr Moyo for the first respondent that the right to be heard is not absolute. A tribunal does not breach the rule where a party is accorded a right to make representations and in the exercise of that right the party makes a mess of its case or elects not to make representations at all, or as is the case in casu, the party opens and closes its case without giving evidence.  What is important is for the opportunity to be given and if spurned the party who spurns it cannot be heard to cry foul.

Mr Kamdefwere took the view that the arbitrator was biased because he failed to appreciate and give precedence to the proceedings between the applicant and NOCZIM which are pending before this court.  This argument is not only illusory but downrightly mendacious.  It lends itself to what GILLESPIE J had in mind in Trinity Engineering (Pvt) Ltd v Commercial Bank of Zimbabwe Ltd 2000 (2) ZLR 385 when he said at 387 C-D that;

“No such allegation of bias can be supported.  The allegation really amounts to no more than the argument ‘because he found against me, and because he was critical of me even in pejorative terms, he must be biased’.  That sort of argument is not convincing rather than justify an inference of bias it does little more than demonstrate its own circularity.  In order for there to be any justification in the inference drawn, it would have to be shown that the decision was so outrageous that it could only be explained on the assumption of bias.  Anything else amounts to no more than saying; ‘ he is biased against me but his adverse decision is admittedly correct.’”

The matter pending before this court has nothing to do with the first respondent.  In fact the respondent is not even a party to that action.  The relationship between the applicant and the first respondent is governed by a written agreement in terms of which any dispute is to be resolved by arbitration.  As to why the arbitrator should have been swayed by that litigation, we are not told.

The in escapable conclusion is that this application falls far too short of satisfying the grounds for interference with an arbitral award set out in article 34 of the model law.  What the applicant appears to have done is to merely list the grounds for interference set out in article 34 and then set about trying to substantiate them, an exercise it dismally failed.  In fact the applicant seems to have adopted the reasoning process of Shakespeare’s characters, that of starting with the conclusion and moving backwards to try and justify it.  Sadly though this is not 16th century drama. This application was unnecessary and as a show of the court’s displeasure punitive costs will be awarded.

It remains for me to deal with the first respondent’s counter application for registration of the arbitral award for enforcement.  What the first respondent is saying is that since the award was made on 22 March 2012 it has not been satisfied.  It should therefore be registered as an order of this court for enforcement in terms of article 35 of the model law.  The grounds upon which enforcement can be resisted are set out in article 36.  The applicant has not set out any such grounds and for that reason there is no basis for refusing to register the award.

In the result it is ordered that:

The application for the setting aside of the arbitral award is hereby dismissed with costs on the scale of legal practitioner and client.

The arbitral award of T. Magwaliba is hereby registered as an order of this court.

Accordingly;

Wedzera Petroleum (Pvt) Ltd shall pay to Infrastructure Development Bank of Zimbabwe the sum of US$343 000-00 together with interest at the rate of 8.231% with effect from 16 August 2010 to date of full payment.

Wedzera Petroleum (Pvt) Ltd shall deliver to Infrastructure Development Bank of

Zimbabwe 105 000 litres of diesel within 14 days of service of this order upon it.  In the event of its failure to deliver the 105 000 litres of diesel in terms hereof it shall pay to Infrastructure Development Bank the open market value of 105 000 litres of diesel together with interest at the rate of 8.231% with effect from the date of service of the order to the date of full payment.

3.3. The respondent shall pay Infrastructure Development Bank of Zimbabwe’s costs of

suit including the costs of the tribunal and the costs of the failed application for the postponement of the matter on an attorney and client scale together with collection commission to the extent that it is permissible in terms of the Law Society of Zimbabwe by-laws for the recovery of collection commission where an order for legal costs has been awarded.

Wedzera Petroleum (Pvt) Ltd shall bear the costs of this application for registration of

the award on an ordinary scale.

Muringi Kamdefwere, applicant’s legal practitioners

Kantor & Immerman, 1st respondent’s legal practitioners

Magwaliba and Kwirira, 2nd respondent’s legal practitioners