Lubambe Copper Mine Ltd & Hambani Ngwenya, Annie Musonda Kawanda Ngulube: App No. 91/2023

A hot off the press arbitration related decision was delivered by the Court of Appeal of Zambia on 27th June 2024. Before the Court was an appeal against a decision of the High Court dated 22nd December 2022. The High Court had in its judgement, refused to set aside an arbitral award made in favour of the Respondents. Disenchanted by the decision of the High Court, the Appellant launched the appeal seeking to overturn the judgement and thereby, set aside the arbitral award.

The background of the dispute is that the Respondents were both employed by the Appellant under written contracts of employment. The contracts provided for arbitration as the dispute resolution mechanism. In the by and by, the Respondents discovered that they were paid significantly less by their employer than their expatriate counterparts for comparable work. The Respondents construed this differentiation through a racial lens and discerned the unsightly hues of racial discrimination. Seeing red, the Respondents declared disputes separately, which disputes were subsequently agreed to be jointly heard by the same arbitrator. The parties were heard and the arbitrator found in favour of the Respondents.

Dissatisfied with the award, the Appellant applied to the High Court to set aside the arbitral award propping the appeal on three grounds i.e.

1. that the award deals with a matter beyond the submission to arbitration;

2. that the subject matter dealt with in the award was not capable of settlement by arbitration under the laws of Zambia; and

3. that the award conflicts with public policy.

Fundamental to the arguments on behalf of the Appellant was the contention that the Respondents had not specifically pleaded breach of section 5 of the Employment Code Act, 2019 ('the Code'). For the benefit of the reader, section 5 of the Code is the anti discriminatory clause which promotes equal opportunity and outlaws discrimination. It proscribes employer policies or practices that are discriminatory, delineates what is/not discriminatory; enjoins employers to practice equal pay for work of equal value and finally, criminalises breach and provides a penalty. The Appellant forcefully contended that the tribunal lacked jurisdiction to hear and determine a criminal matter. It was submitted that the award was in conflict with public policy as a private citizen had sat to determine a criminal matter using the civil standard of proof.

The learned High Court Judge took a contrary view, adjudging that the arbitrator decided the question of breach of section 5 of the Code from a Civil context and in furtherance of settling a Civil dispute. The arbitrator accordingly had the requisite jurisdiction. Consequently, the application to set aside the award was dismissed with costs.

It was this dismissal that animated the appeal before the Court of Appeal. Once again, the Appellant provided three pillars to hold up its appeal i.e.

1. that the Puisne Judge erred at law when he did not consider that the arbitrator exceeded the scope of his authority or jurisdiction when he considered and determined a matter that was beyond the submission of the parties to arbitration;

2. that the learned Puisne Judge erred in law when he held that the arbitrator had jurisdiction to determine breach of section 5 of the Employment Code Act despite finding that the breach of section 5 of the Employment conde was a criminal offence;

3.the learned Puisne judge erred at law when he held that the Arbitrator properly determined breach of section 5 of the Employment Code Act in furtherance of settling a civil dispute when the law requires that the leave of Court should be obtained before a criminal matter can be settled in a civil manner by way of arbitration.

At the heart of the Appellant's disputation was the contention that the arbitrator exceeded the scope of the submission to arbitration. In the arguments, a discussion around the 'form' of the terms of reference for arbitration was engaged. It was contended that the pleadings formed part of the terms of reference and that the Respondent had not specifically pleaded breach of section 5 of the Code. As such, it was argued that the arbitrator had no jurisdiction to decide the question in the final award. It was further contended that breach of section 5 of the Code is not arbitrable as breach culminates into a criminal offence. Section 16(2)(c) of the Arbitration Act, 2000 specifically excludes criminal matters from settlement by arbitration. The Appellant further argued that there was in the award, an offence of public policy to the extent that a private individual purported to settle a criminal matter. There was need for leave of Court to be sought and obtained before purporting to deal with a criminal matter. The failure to obtain it was fatal to the jurisdiction of the arbitral tribunal, so it was argued.

The Respondents countered by contending et al, that the absence of specific pleading of breach of section 5 of the Code was not prejudicial as the foundation of the case was patently a discrimination claim arising from a contract of employment. They argued that the matter was a civil one arising from an employment relationship between private individuals and therefore would not affect the well being of Zambians as a whole. The proceedings were civil and could competently be dealt with privately by the arbitration process without need for leave of court.

Well the Court of Appeal dutifully considered the competing submissions and opined thus: Firstly, the Court synthesised two questions i.e whether the matter was arbitrable or whether the arbitrator had jurisdiction to deal with the dispute. The Court addressed the matter of not specifically pleading breach of section 5 of the Code and its effect on the arbitration. The Court stated that what determines the scope of matters subject of the arbitration are 'the terms of reference, in the absence of which the scope will be deciphered from the pleadings or documents submitted to the arbitrator.' They went on to opine that there is no requirement for the law relied on to be specifically included in the pleadings. It is required of pleadings that all relevant facts upon which the claim is based are included. They found that the applicable law being Zambia, any of the laws of Zambia could be relied upon.

The Court of Appeal went further and found that while arbitration proceedings must be limited within the four corners of the contract between the parties, in this case, the arbitrator veered away from the arbitration agreement as contained in the contract between the parties and considered third party contracts. The Court opined that the question of discrimination based on the Code, other statutory provisions or the Constitution, were matters of public law and may not be resolved by arbitration.

It was accordingly held that the arbitrator went beyond the scope of the agreement of the parties and had no jurisdiction to do so. The Court thus upheld the first ground of appeal and consequently set aside the award in respect of the discrimination claim. The aspects of the award not touching on discrimination were left undisturbed.

This is an important decision which raises issues around arbitrability, terms of reference/submissions to arbitration, the powers of the arbitrator and the limits of jurisdiction vis-a-vis Courts of law and public policy considerations. We will wait and see whether the Respondents will fancy their chances in the Supreme Court!

About the author: Kaumbu Mwondela, LLB, LLM, AHCZ, FCIARB is a legal practitioner and international arbitrator. He is qualified at the Zambian bar and is a member of various professional bodies and organisations.

This article is for general information purposes and is not intended to be and should not be taken as legal advice.