The National Oil Infrastructure Company has been ordered to pay US$164 631 to a firm that fixed its Mabvuku ethanol plant after the High Court refused to quash the arbitral award against NOIC and threw out its attempt to pay in Zimbabwe dollars at the rate of 1:1.
The ruling comes after NOIC approached the court challenging the arbitral award forcing the oil company to pay its outstanding debt to AC Controls (Pvt) Limited in United States dollars, in terms of the parties' written contract.
In February 2018, NOIC and AC Controls entered into an agreement for the supply, delivery and installation of instrumentation, control and electrical equipment for the Mabvuku ethanol storage tanks.
Following a dispute concerning the payment of US$164 631.34, the matter was referred to arbitration.
The arbitrator made an award in favour of AC Controls which AC sought to register at the High Court for enforcement.
NOIC had refused to pay on the strength of Statutory Instrument 33 of 2019, arguing the award was in conflict with public policy because it was premised on an incorrect interpretation of the law, and that the arbitrator's findings were made arbitrarily. So, NOIC wanted to pay in local currency at the rate of 1:1 despite unambiguously signing a US dollar contract.
Further, NOIC argued that the contract price was originally denominated in United States dollars, but owing to the advent of Statutory Instrument 33 of 2019, the debt was converted to local currency at the rate of 1:1. Consequently, the sum payable became Z$164 631.34.
It was also argued that the award was wrong at law in that it directed NOIC to pay at the prevailing interbank rate when the debt arose prior to 22 February 2019.
AC Controls opposed that application to have reading of the law by the arbitrator, the late retired Justice November Mtshiya, declared as a wrongful decision. It did not translate to a decision that was in conflict with public policy as contemplated in the Arbitration Act.
In addition, AC Controls contended that the allegation of arbitrariness was not a requirement for the setting aside of an arbitral award.
Accompanying the opposing papers was AC Controls' counter application for the registration of the arbitral award in terms of s 35 (1) of the Arbitration Act.
Justice Webster Chinamora ruled that NOIC failed to establish any basis within the scope of the law to warrant the setting aside of the award and rejected the application with costs.
In this case, the agreement between the parties was that foreign debts be paid in United States dollars, therefore, the court could not rule that the amount in question was in Zimbabwean dollars at the rate of 1:1.
Justice Chinamora noted in his judgement that the parties freely entered the contract between themselves and freely amended it to cater for foreign debts or procurements.
It was on that basis the judge found no merit in the application to set aside the arbitral award.
"Thus, I am satisfied that the arbitral award is registrable," he ruled in a judgment delivered last week.
"In the result, the application to set aside the arbitral award be and is hereby dismissed with costs."
The judge, however, allowed the counter-application by AC Controls to have the award registered as an order of the Court, to enable the company to recover its debt.
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NOIC had opposed the counter-application arguing that the award was incapable of registration and is unenforceable as it is contrary to public policy.
In his judgment, Justice Chinamora said that even if the arbitrator had not dealt with the particular issues complained of by NOIC, there was no serious error justifying the setting aside of the award, whether on the grounds of arbitral procedure or public policy.
The judgment underpins the court's pro-arbitration stance and makes it clear that any error in an award made by an arbitrator cannot by itself counterbalance the public policy bias towards enforcement of arbitration agreements and awards.
Further, the court will rarely interfere with arbitration's decision unless there is proof that the arbitral court had made a serious or egregious error which would cause substantial injustice to the parties.
