The Supervisory Role of Courts in Arbitration: Commentary on Road Development Agency & Safricas Zambia Limited: Appeal No. 3 of 2024

Introduction

The Courts in Zambia have correctly and I dare say, impressively apprehended the clear dichotomy between two closely related dispute resolution mechanisms i.e. litigation and arbitration. The role of the Zambian Court in the arbitral process is not to gazump the arbitral process but rather, to provide a supportive and supervisory function.?

In a decision published on 7th August 2024, the Supreme Court once again emphatically pronounced itself as regards one of the supervisory functions of the Courts in relation to arbitration proceedings i.e. the setting aside of arbitral awards.?

Background

The appeal arose from a commercial contract between the Road Development Agency (RDA) and Safricas Zambia Limited (Safricas). Safricas was contracted to undertake road construction works by RDA. Along the way, Safricas was disenchanted by RDA’s performance and terminated the contract, while making claims for various payments under the contract. RDA resisted and sought specific performance of the contract. The parties had agreed to arbitration as their preferred dispute resolution mechanism and thus, proceeded to arbitration. The arbitrator dutifully? undertook the arbitral proceedings and promptly rendered the arbitral award. The award was largely in favour of Safricas.?

High Court

Disaffected by the award, RDA mounted a challenge in the High Court (HC), seeking to set aside the award pursuant to section 17 of the Arbitration Act, 2000. RDA contended before the HC? that the award was offensive in that it was contrary to public policy. Safricas retorted that RDA had not provided any factual proof of this allegedly offensive character of the award. The puisne Judge of the HC recognised that her role was not to sit as an appellate tribunal in respect of the award but simply to determine whether there was violation of public policy. The learned HC Judge then proceeded to determine that the arbitrator had fundamentally assaulted public policy. She found that despite having taken cognizance of Constitutional and Statutory imperatives requiring the advice and sanction of the Attorney General for the variation of public procurement contracts, the arbitrator was indifferent towards them. The award was accordingly offensive to public policy in terms of section 17(2)(b)(ii) of the Arbitration Act, 2000 and was thus set aside.

Court of Appeal

Animated by this decision, Safricas sought refuge in the Court of Appeal (CA). On review of the appeal, the CA frowned upon the inadequacy of RDA’s documents which it found did not do enough to prove the allegation of breach of public policy. The CA reiterated the mandatory requirement to strictly abide by Court process and that failure to do so was at own peril. The CA also found that the HC Judge had exceeded her jurisdiction by delving into the merits of the award and this, without giving the parties an opportunity to be heard as per Rule 23(4) of the Arbitration (Court Proceedings) Rules, 2001. The CA accordingly reversed the HC decision and reinstated the award.?

Supreme Court

Aggrieved by this turn of events, RDA escalated the matter to the apex Court, the Supreme Court (SC) for final determination. Spirited arguments were presented to the SC by both parties. In a clear and authoritative decision, the SC made the following determinations:

1. Firstly, according to Rule 23(2)(C) of the Arbitration (Court Proceedings) Rules 2001, an application to set aside an award must be made by originating summons to the HC supported by affidavit disclosing both the ground for the challenge as well as the facts relied on for doing so.
2. Rule 23(4) of the Arbitration (Court Proceedings) Rules 2001 does not afford the court an opportunity to address matters not determined by an Arbitrator as long as the parties are given opportunity to be heard. A judge cannot, in determining an application to set aside an award, consider any issues which the arbitrator omitted to consider and enlarge the decision in an award.?
3. On an application for setting aside, the duty of the court is to determine whether the process was followed in the making of the award. It examines and determines the road map leading to the award and not the substance of the award.
4. The correct effect of Rule 23(4) is to provide for the Court to determine contentious matters between parties in a trial if need be as opposed to on affidavit evidence in chambers.
5. In response to a challenge that the arbitrator granted reliefs which were beyond the scope of his jurisdiction or reference to arbitration, the Court reiterated the principle that arbitration is party driven and that the parties must consensually determine what disputes they choose to submit to arbitration either by submission or reference.?
6. The SC also drew a distinction with the Savenda Management Services Limited v Stanbic Bank Zambia Limited case confirming that while it had the jurisdiction and liberty as an appellate court to review the merits of decisions by lower courts, it did not enjoy similar liberty with arbitrator’s awards. The court’s role was restricted to reviewing the due process or road map leading up to the award and not the merits.
7. The Court’s supervisory role is very limited and restricted to noting any errors that may have been made by the arbitrator on the road to the award. It does not extend to an examination of the merits of the award. The Court also emphasised the need to strictly adhere to the procedural rules attendant with arbitration related challenges in Court. Authorities such as Access Bank (Zambia) Limited v Group Five/Zcon Business Park Joint Venture refer.?

The appeal was accordingly dismissed with costs.?

This decision yet again confirms the well established posture of the Zambian Courts as being pro arbitration.?

Conclusion

A few take-aways for arbitrators, counsel and would be parties to arbitration:

Firstly, arbitrators must take care to ensure that they faithfully walk the road map to the award, paying heed to all the signposts along the way. The dutiful arbitrator will ensure that the award is dispositive of the dispute submitted to arbitration, but no more. Colouring within the lines is essential to the good standing of the award.?

Secondly, Counsel in arbitration must be diligent as they embark on the exercise of drafting claims. A claim may fail simply because of inadequate pleading which does not cross the prescribed threshold. The injustice that invariably would visit a client in this event would be attributable in no small part to counsels’ omission.?

Finally, parties who elect arbitration as their dispute resolution mechanism of choice may be assured of the integrity of the process. The Zambian judiciary will not be ‘slighted’ by the choice to step away from litigation in favour of arbitration. Quite on the contrary, the Judiciary has maintained a consistent message of ‘staying in its lane’. It will neither stymie nor supplant but rather, supervise and support arbitral proceedings.??

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.