The Supreme Court has upheld an appeal by the Zimbabwe Manpower Development Fund (ZIMDEF) in which it was seeking the setting aside of an arbitral award in a construction deal worth millions of dollars.
The High Court had dismissed its application and granted an application for the registration of the same award in favour of Zimbabwe Jiangsu International Company which won the tender to do the work in 2000.
The company was cited as the first respondent in the appeal.
Classic Project Management Pvt Ltd, cited as the second respondent was appointed the manager of the botched project.
The deal relates to the construction of a nine-storey building, at ZIMDEF Headquarters in Harare.
According to court papers, ZIMDEF engaged Zimbabwe Jiangsu International Company through a tender process, to construct a nine-storey building.
The tender was awarded on 1 November 2000 by the State Procurement Board in the sum of ZW$497,318,100.00.
The project was scheduled to be completed on 31 August 2002 but was suspended on 29 April 2005.
This was due to the country experiencing hyperinflation which incapacitated it from continuing with the project to its completion.
Between 2005 and 2009, the country went through four re-denominations of its currency.
The depreciation of the Zimbabwe Dollar eventually led to the introduction of the multi-currency system in 2009.
After the introduction of the multi-currency system, ZIMDEF sought to re-price the outstanding works in United States Dollars.
Approval for the repricing of the works was obtained and the approved amount was US $19,550,560.14.
On or about 2 July 2012, Zimbabwe Jiangsu International entered into an "Agreement and Schedule of Conditions of Building Contract" (the Building Contract") in terms of which it agreed to complete the outstanding work.
The company was obliged to complete the work within 36 weeks.
The building contract provided that ZIMDEF would pay US$19,550.560.14 for the completion of the outstanding works.
The company was further entitled to obtain payment for re-measurement of work done, increased cost, variations and any other legitimate claim by it.
A firm of architects was appointed in terms of the Building Contract.
The bills of quantities were also agreed to be prepared by a specified firm of Quantity Surveyors.
Classic Project Management was appointed to be the project manager.
Zimbabwe Jiangsu was entitled to request a payment certificate in terms of the valuation.
"The parties also agreed that there would be a Retention Fund which would be equivalent to 10 percent of the total amount due to the company," the court heard.
The funds were to be deposited into a joint bank account.
Zimbabwe Jiangsu International Company was entitled to receive a payment of one-half of the retention fund including the interest accumulated upon completion of the works.
The other half of the Retention Fund and accrued interest was to be paid upon issuance of the Architect's final certificate.
Allegedly, ZIMDEF delayed opening the Retention Fund.
Clause 25 of the Building Contract provided that in the event of a dispute between the first respondent and the appellant, such dispute would be determined by the architect.
If either of the parties was not happy with the architect's decision, they were entitled to refer the dispute to arbitration.
In August 2014, a dispute arose between the appellant and the architect.
Thereafter, the second respondent took over the role of the architect with regard to the issue of payment certificates, while the quantity surveyors continued to issue the valuations.
Disputes concerning the payment of certain sums of money arose between the parties.
Between January 2016 and January 2022, the parties were engaged in discussions and mediation in an attempt to resolve the dispute.
The mediation process was presided over by Classique Project Management.
ZIMDEF insisted that it was entitled to pay the amount due in Zimbabwe dollars converted from the United States dollar at a rate of 1 to 1.
Zimbabwe Jiangsu International argued that payment was unaffected by the provisions of Statutory Instrument 33 of 2019.
The mediation not having yielded a resolution, the dispute was placed before an arbitrator
Among other things, it argued that Zimbabwe Dollar was the sole legal tender for all transactions in Zimbabwe.
However, the arbitrator made an award in favour of Zimbabwe Jiangsu International for the payment of most but not all of the money claimed by it.
The arbitrator's award stated that the awarded amount was to be paid in US Dollars or ZWL Dollars at the prevailing interbank rate, without interest.
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Zimbabwe Jiangsu International then applied to the High Court for the registration of the arbitral award.
ZIMDEF raised four grounds to justify why the award had to be set aside.
The High Court dismissed the application for the setting aside of the arbitral award and granted the application for the registration of the award.
Aggrieved, the appellant filed this appeal before the Supreme Court ruled in ZIMDEF's favour.
The court said proceedings before the court a quo were instituted by way of application procedure as such it was incumbent upon the court to address all issues raised in the papers filed before it.
"It has already been observed earlier, that in casu, the court a quo did not determine the issues that were live before it, these having been pleaded or raised by the appellant and ventilated by the parties. In failing to do so, the court erred.
"The judgment of the court a quo cannot stand. The matter must be remitted to the lower court for the determination of the issues that remain unresolved.
"The appeal be and is hereby allowed with costs," ruled the court.
