Grain Marketing Board v Arenel (Private) Limited & Gordon Geddes N.O.

### Preamble
Judgment No. SC 30/21
1
Civil Appeal No. SCB 341/20
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EX TEMPORE

GRAIN     MARKETING    BOARD

V

ARENEL     (PRIVATE)     LIMITED     (2)     GORDON  GEDDES     N.O

SUPREME COURT OF ZIMBABWE

GWAUNZA DCJ; MATHONSI JA & KUDYA AJA

BULAWAYO, MARCH 23, 2021 & MARCH 25, 2021

Ms P. Dube, for the appellant

Mr L. Nkomo, for the first respondent

No appearance for the second respondent

GWAUNZA DCJ

This is an appeal against part of the judgment of the High Court (“the court a quo”) which granted an application for the registration of an arbitral award.

FACTUAL BACKGROUND

On 11 November 2016 the appellant and the first respondent entered into an agreement in terms of which they agreed that the appellant would sell and supply to the first respondent 6 000 metric tonnes of biscuit making flour. The flour was to be sold at a price of USD$450 per metric tonne. The purchase price was payable within sixty days of the monthly statement for all flour delivered. In the event of a dispute arising between the parties, it was also agreed that such dispute would be resolved through arbitration and that the decision of the arbitrator would be final and binding on both parties.

Pursuant to the agreement, the appellant supplied the first respondent with 1 379 metric tonnes of flour as at 16 April 2019, leaving a balance of 4 620.10 metric tonnes. Thereafter, the parties signed an addendum to the agreement varying the price of the flour from USD$450 per metric tonne to RTGS 1 135.00 per metric tonne. Thereafter, the appellant only supplied 267 metric tonnes leaving a balance of 4353.10 metric tonnes.

On 13 June 2019 the appellant wrote to the first respondent informing it that it could no longer continue to supply the flour in terms of the agreement due to “force majeure”. It was averred that the Government of Zimbabwe, being the owner of the flour, had directed that all flour be supplied exclusively to bakers of bread.

Consequently, a dispute arose between the parties and in terms of clause 6 of the agreement it was submitted to arbitration before the second respondent. The first respondent prayed for an order of specific performance for the supply of the outstanding 4 353.10 metric tonnes at the agreed purchase price. The appellant persisted with its contention that it could not perform its obligation to supply the biscuit flour to the first respondent owing to the aforementioned government directive which allegedly amounted to “force majeure”. The appellant further averred that it was however willing to supply the outstanding flour but on different terms as regards quantities and pricing. In its “supplementary statement of defence” the appellant sought to argue the defence of severability, more particularly that the purchase price had been eroded by inflation so as to render it unreasonable and unequitable thus the specific clause relating to the purchase price had to be severed from the rest of the contract.

The second respondent granted the first respondent’s claim for specific performance. Following that arbitral award, the appellant filed an application in the court a quo to set aside the arbitral award in terms of Article 34(2)(b)(ii) of the Model Law in the Arbitration Act [Chapter 7:15] (“the Model Law”). Simultaneously, the first respondent filed an application for the registration of the award in the same court in terms of Article 36 of the Model Law. The matters were consolidated by consent of the parties.

The court a quo noted that the appellant was challenging the registration of the award on the basis that it was not sounding in money and thus could not be registered because it was incomplete. The court found that the ground was devoid of merit as Article 36 of the Model Law does not list the fact that an award is not sounding in money as one of the grounds upon which a court may refuse to recognise and register an arbitral award. In the result the court granted the application for registration of the arbitral award. It dismissed the application for the setting aside of the same award.

Dissatisfied, the appellant filed the present appeal on the following ground: -

“The court a quo erred and misdirected itself on the law by registering an Arbitral award that was incomplete and in particular it was not sounding in money and not enforceable.” (sic)

ISSUE

The crisp issue for determination is whether or not the court a quo was wrong in granting the application for the registration of the arbitral award.

THE FACTS AND THE LAW

On appeal, it is the appellant’s argument that the court a quo erred in finding that an arbitral award which does not sound in money could be registered. It is averred that such an order is unenforceable. The case of Matthews v Craster International (Pvt) Ltd SC 151/20 is pertinent in this regard. In dealing with the issue whether or not the High Court was correct in declining to register an award made under the Model Law which did not sound in money, GOWORA JA had the following to say at p 16 of the cyclostyled judgment: -

“The same is not true of the Model Law. The law does not require that an award sound in money for purposes of recognition under article 36. Sight must not be lost of the import of the Model Law and its application. Under article 35 the law provides for the recognition of awards emanating from beyond our borders in addition to our own. It provides: -

“ARTICLE 35

Recognition and enforcement

(1) An arbitral award, irrespective of the country in which it was made, shall be recognised as binding and, upon application in writing to the High Court, shall be enforced subject to the provisions of this article and of Article 36.

(2) The party relying on an award or applying for its enforcement shall supply the duly authenticated original award or a duly certified copy thereof and the original arbitration agreement referred to in article 7 or a duly certified copy thereof. If the award or agreement is not made in the English language, the party shall supply a duly certified translation into the English language.’

Suffice it to state that the matter proceeded to the High Court for the recognition of an award under article 35 of the Model Law. Refusal for the recognition of the award can only be premised on what the law permitting such recognition provides for. The court a quo was wrong to find that an arbitral award under the Model Law must sound in money for purposes of recognition. The law does not require it. In any event awards under the Model Law arise under a myriad of agreements and may take the form of orders ad percunium solvendum or ad factum praestandum. For these reasons the dismissal of the application premised on a reading of s 98 (14) is in my view a misdirection on the part of the court a quo.” (the underlining is for emphasis)

In casu, it is common cause that the arbitral award sought to be registered is not an award made under the Labour Act [Chapter 28:01], rather it is one made in terms of the Model Law. It is now settled that an award under the Model Law which does not sound in money is capable of registration and enforcement. As such, the appellant`s argument to the contrary is without merit and must be dismissed.

At the hearing of the appeal, counsel for the appellant also sought to argue that the arbitral award at the centre of this dispute was unenforceable. Counsel argued that the second respondent granted the principal relief and alternative relief which were not compatible with each other. She submitted further that both reliefs directed two different courses of action to be taken by the appellant, the first one being specific performance in terms of the contract and the second requiring it to pay monies to “diverse third parties”.

The arbitral award reads as follows in relevant part: -

“38. Final Order

38.1 This is an order for specific performance made whereby the respondent be and is hereby directed to supply the balance of 4 353.20 mt at RTGS$ 1 135 per tonne (sic)

Alternatively, the Respondent is directed to pay the lowest or cheapest supplier of flour within the jurisdiction, the difference or shortfall from the contract price to the supplier on a monthly basis for the supply of 4 353.10 mt of flour…”

A proper interpretation of the above award does not support the appellant`s contention that the relief granted by the second respondent was unenforceable. In our view the main and alternative reliefs are complementary because if the appellant is unable to supply the flour itself, it could do so in terms of the alternative relief. There is merit in the first respondent`s contention that the second respondent could not quantify the order for specific performance as the lowest or cheapest prices of flour could only be ascertained at the time of procurement of the flour and thus the main and alternative relief were complete and properly granted by the second respondent. The fact that the enforcement of the award may entail the institution of contempt of court proceedings against the appellant is not a ground for refusing its registration.

The appellant is bound by the agreement it entered into with the first respondent in terms of the caveat subscriptor rule. Simply put, parties must exercise extreme caution in entering into and signing contracts. Consequently, a party to a contract who appends his or her signature to a document does so at his or her own peril.

The rationale for this rule was captured by RH Christie in his book Business Law in Zimbabwe, 1998, Juta & Co pp 63 – 64, where the learned author says: -

“The business world has come to rely on the principle that a signature on a written contract binds the signatory to the terms of the contract and if this principle were not upheld any business enterprise would become hazardous in the extreme. The general rule, sometimes known as the caveat subscriptor rule is therefore that a party to a contract is bound by his signature whether or not he has read and understood the contract…”

It is common cause that the appellant freely entered into the agreement that it now seeks to attack at this stage. It cannot do so. In Magodora v Care International Zimbabwe SC 24/14 PATEL JA had the following to say with regards to the principle of sanctity of contract: -

“It is not open to the courts to rewrite a contract entered into between the parties or to excuse any of them from the consequences of the contract that they have freely and voluntarily accepted even if they are shown to be onerous or oppressive. This is so as a matter of public policy. Nor is it generally permissible to read into the contract some implied or tacit term that is in direct conflict with its express terms.”

The remarks in Magodora above are entirely apposite to the matter at hand. It is not open to this Court to excuse the appellant from the consequences of its actions in voluntarily and freely signing the agreement.

We find that the decision of the court a quo to recognise the second respondent`s award cannot be faulted.

In casu, the appellant did not provide a lawful basis, in terms of Article 36 of the Model Law, upon which it was resisting the registration of the arbitral award in the court a quo. The appellant rather argues that the award is “incomplete and unenforceable” as it does not have a specific sum quantified by the second respondent in granting the specific performance.

It also bears mention that at the hearing of the appeal, after full argument from both parties, counsel for the appellant sought to amend, from the bar, the sole ground of appeal in this matter. This came after the realisation that the Matthews case aforementioned, which counsel was not aware of, effectively destroyed the appellant`s argument that an arbitral award that does not sound in money is not registrable.  Counsel sought to amend the ground so as to sever that part of the ground of appeal.

Rule 44(3) of the Supreme Court Rules, 2018 allows for the amendment of grounds of appeal on application before the hearing or at the hearing by notice of amendment duly served on the respondent. In casu, it cannot be gainsaid that the appellant`s application to amend the ground of appeal was not only late in the proceedings but was also made without notice to the respondent. It clearly does not comply with the rules and seems to have been a last ditch attempt by the appellant to salvage its unmeritorious appeal.

DISPOSITION

In the result, the following order is made: -

“The appeal be and is hereby dismissed with costs”

MATHONSI JA	:	I agree

KUDYA AJA		:	I agree

Makuwaza & Magogo, appellant`s legal practitioners

Coghlan & Welsh, 1st respondent`s legal practitioners