PORTNET HOLDINGS (PVT) LTD v MALISENI 2012 (2) ZLR 168 (H)

Flynote

Arbitration — award — setting aside of — grounds — award contrary to public policy — allowing party to be unjustly enriched from an illegal transaction — when may be contrary to public policy

Arbitration — proceedings — notice of — where notice of proceedings must be sent — notice sent to party's place of business sufficient unless parties had agreed to different method of communication

Contract — illegality — par delictum rule — departure from — relaxation of rule where party would be unjustly enriched at expense of other

Headnote

The applicant employed the respondent. Shortly before the introduction of the multi-currency system, the parties agreed to the termination of the respondent's employment. The agreement included a cash pay out in US dollars. The applicant paid a portion but left well over half outstanding. The respondent caused the dispute to be referred for conciliation. Following a stalemate, the dispute was referred to compulsory arbitration. The arbitrator gave an award in the absence of the applicant, ordering it to pay the respondent the balance. The arbitrator found that the applicant was in default. The applicant sought to have arbitration proceedings set aside on two grounds, namely, that the applicant was not given proper notice of either the appointment of the arbitrator or the arbitral proceedings and that the award was in conflict with the public policy of Zimbabwe. In respect of the first ground, the applicant alleged that notice of the proceedings had not been delivered to its legal practitioners; and in respect of the second, it argued that the agreement by the parties to have the respondent paid her terminal benefits in foreign currency at a time when that was illegal or unlawful in the country was contrary to the public policy of Zimbabwe and that the in pari delicto rule should be invoked.

Held, that in terms of art 3(1)(a) of the Schedule to the Arbitration Act [Chapter 7:15], unless otherwise agreed between the parties, any written communication is deemed to have been received if it is delivered to the addressee personally or if it is delivered at his place of business. There was no evidence that the parties had agreed that the applicant would be notified of either the appointment of the arbitrator or of the arbitral proceedings via delivery of the notice upon its legal practitioners. The applicant did not dispute that service was effected at its place of business. Accordingly, the first ground fell away. Held, further, that in seeking to set aside an arbitral award on the grounds that it is contrary to public policy, the applicant had to show that some fundamental principle of the law or morality or justice was violated. Here, apart from this particular agreement, the applicant was trading in foreign currency. It was remunerating its employees — the respondent included — in foreign currency. All these transactions by the applicant were in contravention of the Exchange Control Regulations. The applicant was therefore trading and paying salaries illegally. It now wished to resile, on grounds of public policy, from an illegal agreement in which it had discharged the bulk of its obligations. The respondent was still entitled to be paid her terminal benefits. The balance of those benefits could not be paid in local currency, which had been rendered moribund. To allow the applicant to benefit from such illegality by way of unjust enrichment would constitute a palpable inequity that was so far reaching and outrageous in its defiance of logic or accepted moral standards that a sensible and fair minded Zimbabwean would be intolerably hurt by the setting aside of the award. It would surely be contrary to public policy not to set it aside. The concept of public policy is not immutable. It must conform to changing times and suit existing circumstances. Even if the in pari delicto rule applied, given the applicant's conduct in casu, the case called for the relaxation of the rule on grounds of justice and equity.