SHELL ZIMBABWE (PVT) LTD v ZIMSA (PVT) LTD & ANOR 2007 (2) ZLR 366 (H)

Flynote

Arbitration ” agreement ” arbitration clause ” what is ” need for arbitration to be expressed or implied first choice of parties as method for resolving dispute ” clause requiring parties to refer matter to mediation, failing which to refer to arbitration ” not an arbitration clause ousting jurisdiction of court

Headnote

A clause in the lease agreement between the parties provided that any dispute arising between the parties in connection with the agreement should in the first instance be submitted to and decided by mediation, but if mediation did not resolve the dispute within seven days and the parties failed to agree on an extended time for mediation, then either party would be entitled to refer the matter to arbitration. A dispute arose and the plaintiff sought the eviction of the defendant from the premises. The defendant raised a special plea in limine, requesting the court to refer the matter to arbitration. The plaintiff argued that the clause was not an arbitration clause, as it did not put arbitration in the forefront but referred to it as a fall back position in the event that mediation failed. Held, that in terms of Article 8(1) of the UNCITRAL Model Law, as modified, which is set out in the Schedule to the Arbitration Act [Chapter 7:15], where one of the parties to a dispute subject to an arbitration clause requests to go to arbitration, the court has no option but to stay proceedings and refer the matter to arbitration unless the court finds that the arbitration clause is null and void or inoperative or incapable of performance. However, the jurisdiction of the court remains intact. Arbitration is an alternative to litigation and cannot take away the inherent jurisdiction of the court. For an arbitration clause in an agreement to have the effect of staying court proceedings in terms of the Act, the

A clause must be clear and unequivocal and the parties must intend arbitration to be the procedure of first instance in resolving their disputes. In all other instances, the inherent power of the court to stay its own proceedings remains intact and the discretion rests with the court to stay proceedings or not.

Held, further, that the jurisprudential bases underlying the place and role of arbitration procedures are (a) the apparent speed with which such procedures can yield results and (b) the contractual autonomy of the parties, not only to agree on their main obligations under the contract, but on how to resolve differences that may occur between them as they perform their respective obligations under the contract. The contractual autonomy to choose the method of resolving their differences has been described as paramount in the arbitration regime in this jurisdiction and explains the respect with which arbitration awards are treated by the courts. However, this contractual autonomy has to be viewed in the context of the inherent powers of the court to dispense justice to all who seek it from the court. While the court is bound to give effect to arbitration clauses in agreements, it is not bound to do so in circumstances where arbitration is not the expressed or implied first choice dispute resolution mechanism of the parties. In casu the parties did not intend arbitration to be the first procedure to be resorted to; they chose mediation in the first instance. It would be appropriate to describe this agreement as one subject to a mediation clause.