Kapsch Trafficcom AG v Intelligent Mobility Solutions Limited (APPLICATION 28/2023) [2023] ZMCA 373 (20 November 2023)

I IN THE COURT OF APPEAL OF ZAMBIA APPLICATION 28/2023 HOLDEN AT . NDOLA AND INTELLIGENT MOBILITY SOULUTIONS LIMITED RESPONDENT CORAM: SIAVWAPA JP, NGULUBE AND CHEMBE, JJA. On 13th and 20th November, 2023 For the Appellant: Mr. K. Phiri - Messrs. Corpus Legal Practitioners For the Respondent: Mr. J. Chileshe -Messrs. Eric Silwamba, Jalasi & Linyama Legal Practitioners RULING NGULUBE JA, delivered the Ruling of the Court. Cases referred to: 1. Colgate Palmolive Zambia vs Abel Shemu Chuka & 10 Others - SCZ Judgment No. 11 of 2005 2. Gateway Service Station vs Engen Petroleum (Z) Limited - Appeal No. 31 of2003 3. 4. P. Anand Gajapathi Raju & Others vs P. V. G Raju & Others - 2000 (4) sec 539 Leopard Ridge Safaris vs Zambia Wildlife Authority (2008) Z. R. 97 5. 6. 7. 8. 9. Konkola Copper Mines vs NFC Africa Mining Pie-Appeal No. 118 of2006 Vedanta Resources Holdings Limited vs ZCCM & Konkola Copper Mines -Appeal No. 181/2019 Audrey Nyambe vs Total Zambia Limited - SCZ Judgment No. 1 of 2015 Wilheim Roman Buchman vs The Attorney General (1994) S. J 76 (SC) Moses Milambo (Administrator of the estate of Alfred Siandavu) & Col. Joseph Keith Kamanga vs Florence Mweemba - CAZ Appeal No. 009/2020 10. Newplast Industries vs The Attorney General SCZ Judgment No. 8 of 11. Water Resources Management Authority vs Chimsoro Farms Limited & Others - Appeal No. 24 of 2021 12. Mukumbuta Mukumbuta & 4 Others vs Nkwilimba Choobana & Others - SCZ Judgment No. 8 of 2003 13. Muyawa Liuwa vs Judicial Complaints Authority & The Attorney General - SCZ Judgment No. 6 of 2011 14. Astro Holdings Limited vs Lusaka City Council & 3 Others - CAZ/ 08/ 110/ 2020 15. Gateway Services Station Limited vs Engen Petroleum (Z) Limited - Appeal No. 31 of 2003. 16. Mutantika & Another vs Chipungu - SCZ Judgment No. 13 of 2014 1 7. Seebo International Trading Agencies Limited & Others vs Inda Zambia Bank Limited - CAZ/ 8/ 11 6/2016 18. Naik vs Burgess & Others - Appeal No. 45 of 2020 Legislation referred to: 1. 2. 3. 4. The Court of Appeal Rules, Statutory Instrument No. 65 of 2016 The Court of Appeal Act No. 7 of 2016 The Arbitration Act No. 19 of 2000 The Rules of the Supreme Court of England, 1999 Edition (White Book) -R2- 1.0 INTRODUCTION 1.1 This is a ruling on the appellant's notice of motion for an order to stay proceedings and refer the matter to arbitration. It is made pursuant to Section 10 (1) of the Arbitration Act No. 19 of 20001 read together with Order VII Rule 1 of the Court of Appeal Rules. 2 2.0 BACKGROUND 2.1 The application 1s accompanied by an affidavit in support deposed to by Hendrix Tembo, a Donee of a Power of Attorney from the appellant, dated 5 th April, 2023. He deposed that the respondent commenced proceedings in the lower Court for the alleged breach of the appellant's duties under the shareholder's agreement signed between the parties and Lamise Trading Limited. 2.2 He deposed further that the lower Court entered a default judgment against the appellant which was set aside by ruling dated 31st August, 2022, on condition that the appellant pays into Court 30% of the damages after they are assessed. 2.3 The deponent stated that the shareholder's agreement which was subject of the suit in the lower Court has an arbitration -R3- clause as a mechanism for dispute resolution hence this application. It was stated further that a similar application made in the lower Court was not heard owing to this Court granting the stay of proceedings of the lower Court. 2.4 Counsel for the appellant filed List of Authorities and Skeleton Arguments in support of the application. Counsel submitted that this Court needs to determine whether this Court has the power to stay proceedings and refer the parties to arbitration. 2.5 It was submitted that this Court has the power to refer the parties to arbitration in accordance with Section 10 of the Arbitration Act No. 19 of 2000 which provision is in accordance with the principle of freedom of contract which cannot be ousted by the Court as enunciated in the case of Colgate Palmolive Zambia vs Ab,el Shemu Chuka & 10 Others. 1 Section 10 of the Arbitration Act provides as follows- "A cou rt before which legal proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so requests at any stage of the proceedings and not withstanding any written law, stay those proceedings and refer the parties to a rbitration unless it finds that the -R4- agreement is null and void, inoperative or incapable of being performed." 2 .6 We were referred to a plethora of authorities which include the following: Gateway Service Station vs Engen Petroleum (Z) Limited2 and P. Anand Gajapathi Raju & Others vs P. V. G Raju and Others3 Leopard Ridge Safaris vs Zambia Wildlife Authority, 4 Konkola Copper Mines vs NFC Africa Mining Plc5 and Vedanta Resources Holdings Limited vs ZCCM Investment Holdings Plc and Konkola Copper Mines6 and Audrey Nyambe vs Total Zambia Limited. 7 2 .7 It was submitted that where an agreement has an arbitration clause, a Court has no choice but to refer the parties to arbitration. 2 . 13 Lastly, it was submitted that this Court should refer the parties to arbitration because there is a valid arbitration clause. 3.0 RESPONDENT'S ARGUMENTS 3 . 1 The respondent filed an affidavit in opposition deposed to by Walid El Nahas, a minority shareholder in the respondent company. He deposed that on 30th December, 2022 the -RS- appellant made an application to stay proceedings and refer the parties to arbitration before the lower Court. He also deposed that the appellant made an application for an order to stay proceedings in this Court which was denied by ruling dated 9 1h March, 2023. 3.2 It was deposed that the application before us amounted to forum shopping because the appellant made a similar application in the lower Court which is yet to be determined. That the appellant's advocates had even notified the respondent's advocates of the hearing of the application scheduled for 6 th September, 2022 and notified them of the hearing scheduled before this Court on 5 th October, 2022 3.5 Counsel for the respondents filed Skeleton Arguments m support of the affidavit in opposition. Counsel submitted that the appellant has not come to this Court with clean hands because it did not disclose that a similar application is pending before the lower Court. 3 .6 We were referred to Order 59 Rule 10(43) of the Rules of the Supreme Court, .1965 (White Book) .1999 Edition, Volume 1 which confers jurisdiction on a single Judge and Registrar to hear incidental applications in connection with -R6- pending appeals. Counsel accordingly submitted that there is no correlation between the relief being sought in the motion and the substantive appeal and so the application ought to have been brought before a single judge. In relying on the cases of Newplast Industries vs The Attorney General8 and Water Resources . Management Authority vs Ch·imsoro Farms Limited & Others , 9 Counsel submitted that this Court was incorrectly moved because there is a matter pending before the Court below and the appellant has not moved a single Judge of this Court to determine the application first. .3.7 In relying on Section 9 of the Court of Appeal Act and Order . X Rule 2 of the Court of . Appeal Rules, it was submitted that this Court has no jurisdiction to entertain this application because the appellant has missed crucial steps in bringing this application to this Court before it can be determined by the lower Court. That the proper procedure if the lower Court refused the application would be for the appellant to appeal that decision. 3.8 It was argued that this Court has no jurisdiction to entertain an application which was not first raised in the Court below. -R7- To support this argument, we were referred to the cases of "Wilheim Roman Buchman vs The Attorne,y Gene .ral10 and Moses Milambo (Adminsitrator of the estate of Alf~ed Siandavu) & Col. Joseph Keith Kam,anga vs . Fl,o~ence Mweemba. 11 It was held in the former case that a matter which was not raised in the Court below cannot be raised in a higher court as a ground of appeal. 3.9 It was submitted further that the appellant's application amounts to forum shopping and abuse of the Cou rt process because it has brought the same application before two different Courts. We were referred to the following plethora of authorities to support this argument: . Mukumbuta Mukumbuta & 4 Others vs Nkwil'imba C.hoo.bana & Others, 12 Muyawa Liuwa vs Judicial Comp!aints Authority & The Attorney General1 3 and Astro llo ,ldi.n,gs Limited vs Lusaka City Council & 3 Othe~s. 14 3.10 Counsel for the respondent also argued in the alternative that the dispute in the lower Court was not a shareholder's dispute but a derivative action and therefore the arbitration clause does not apply. -RS- 4.0 APPELLANT'S ARGUMENT S IN REPLY 4.1 The appellant filed into Court an affidavit in reply deposed to by Hendrix Tembo. He deposed that the ruling dated 9 th March 2023, alluded to in paragraph 8 of the respondent's affidavit in opposition was in respect of the application to stay proceedings regarding the assessn1ent of damages that are pending before the Registrar of the High Court and not to stay the matter and refer the parties to arbitration. That this Court has effectively stayed all proceedings pending in the High Court pending the appeal against the default judgment and should be the Court to refer the parties to arbitration. 4.2 It was deposed that the appellant's application to stay proceedings was properly instituted because the lower Court rejected the application to stay the proceedings for assessment and there is therefore no forum shopping or abuse of court process. 4 .3 The appellant's counsel filed into Court Skeleton Arguments in support of the affidavit in reply. The arguments in reply were substantially the same as the arguments in support of the affidavit in support of the application. For the avoidance of repetition, we will not reiterate the same, save to add that -R9- the appellant believes that this matter warrants to be heard by the full Court because it has the potential to determine the whole appeal. To support this position, we were referred to the cases of Seebo International Trading Agencies Limited & Others vs lndo Zambia Ban.k Limited15 and Nai.k vs Burgess & Others. 16 4.4 We were also referred to various cases relating to the jurisdiction of the Courts in arbitration agreements to argue that once parties decide that their dispute should be adjudicated upon by way of arbitration, the parties are in fact saying they do not wish to avail themselves of the Court's save for limited circumstances provided for by law. 4 .5 Lastly, it was submitted that even if the parties cannot be referred to arbitration in terms of the shareholder's agreement, they can still be referred to arbitration in terms of the articles of association of the respondent. 6 .0 DECISION 6.1 We have considered the affidavits and Skeleton Arguments filed by both parties. The application before us raises the following two issues: -RlO- 1. Whether this is an appropriate case for this Court to refer the parties to arbitration; and 11. Whether the application should firstly have been heard by a single Judge of this Court. 6.2 It is obvious that the appellant made a similar application in the lower Court to stay proceedings and refer the parties to arbitration. The respondent argues that this amounts to Forum shopping and is an abuse of court process which is frowned upon. The Court must indeed ensure prevention of improper use of its machinery. 6.3 In our considered view, the question 1s whether we can proceed to hear th is application despite a similar application pending in the Court below. We opine that the lodging of the notice of appeal in this Court and the subsequent order of this Court staying proceedings in the lower Court, takes the matter out of the realm of the lower Court. It is only proper that interlocutory applications intended to be made by the parties on appeal should be made to the appellate Court that has conduct of the matter. The situation would have been different if the application in the lower Court had already -Rll- been determined because then the appellant would have had to appeal against that decision. 6.4 Counsel for the respondent argued that if this Court proceeds to determine this application, it will result in two conflicting decisions. Suffice it to mention that this Court already granted an order of stay of proceedings of the lower Court pending the appeal. Therefore, it will not result in conflicting decisions because this matter is now in the jurisdiction of this Court which is superior to the lower Court. Whatever decision this court will make will take precedence and the application pending in the lower Court will become otiose. We cannot have a situation where a lower Court hears an application for a matter which is before a superior Court. 6.5 We will now address the issue whether this is an appropriate case to refer the parties to arbitration. We note that the appeal challenges the judge's decision to attach a condition to the setting aside of the default judgment. The result of the condition attached to setting a side the default judgment is that the default judgment remains forceful unless the condition of the lower Court is met by the appellant or is set aside by this Court. This is because the default judgment -R12- remruns the determination of the lower Court. For this reason, we cannot stay the proceedings and refer the parties to arbitration without determining the appeal. 6.6 Coming to the second issue, we opine that in terms of Sect ion 9 of the Court of Appeal . Act , a single judge of this Court may exercise a power vested in the Court not involving the decision of the appeal. The subject matter of the application before us has nothing to do with the decision of the appeal. Therefore, this application should have been made to a single Judge of this Court. 6. 7 In view of the foregoing, the application lacks merit and is accordingly dismissed. Costs to the respondent. j M. J. SIAVWAPA JUDGE PRESIDENT ~ P. C. M. NGULUBE COURT OF APPEAL J UDGE Y. CHEMBE COURT OF APPEAL JUDGE -R13-