Diamond Motors Limited v Zambia Railways Limited (2022/HPC/0458) [2023] ZMHC 68 (11 May 2023)

IN THE HIGH COURT FOR ZAMBIA AT THE COMMERCIAL REGISTRY HOLDEN AT LUSAKA (Civil Jurisdiction) IN THE MATTER OF: IN THE MATTER OF: AN APPLICATION TO DECIDE ON THE JURISDICTION OF AN ARBITRAL TRIBUNAL BETWEEN: DIAMOND MOTORS LIMITED PLAINTIFF AND ZAMBIA RAILWAYS LIMITED DEFENDANT Before: Hon. Mr. Justice L. Mwale in Chambers on the 11th day of May, 2023. For the Applicant: Mr. M. Ndalameta & Mr. Y. Yosa of Messrs Musa Du.dhia & Company For the Respondent: Mrs. Z. C. Kakunka & Ms. B. Nachamba of Messrs J & M Advocates JUDGMENT Cases referred to: 1. Agarwal Corporation Plc Ltd v. Harmony Innovation Plc Ltd (2017) EWHC 3556 (comm) 2. Audrey Nyambe v. Total Zambia Limited SCZ Judgment No. 1 of 2015 3. Stella Upton v. William Dereck Walker (1971) ZR 192 4. Twampane Mining Co~operative Society Limited v. E & M Storti Mining Limited SCZ Judgment No. 20 of 2011 5. Zambia Consolidated Copper Mines Limited v. Joseph David Chileshe (2002) ZR 86 Legislation referred to: 1. Arbitration Act No. 19 of 2000 2. Statute of Limitation Act, 1939 3. British Acts (Extent of Application} Act, Chapter 10 of the Laws of Zambia Other Publications referred to: 1. Halsbury's Laws of England 4 th Edition Volume 28 2. Chitty on Contracts 27th Edition Volume 1 1.0 INTRODUCTION 1. 1 On 5 th _ August, 2022, the Plaintiff issued out of Court an Originating Summons for an order that the arbitral tribunal does not have jurisdiction to determine arbitration proceedings commenced by the Defendant on 14th February, 2022 on the grounds that. 1. The arbitral proceedings were not commenced in accordance with the agreement of the parties, 2 . The arbitration proceedings are time barred under the agreement between the parties; and 3. The Defendant's claims in the arbitral proceedings are statute barred. 1.2 The Originating summons was supported by an Affidavit in support sworn by one Gilbert Kombe Temba together with the Skeleton Arguments and List of Authorities. 1.3 The Defendant opposed the Plaintiff's Originating Summons and on 8 th September, 2022 filed an Affidavit in Opposition sworn by one Maureen lViwaba M_umba· as well as List of Authorities and Skeleton Arguments. 1.4 The Plaintiff replied to the Defendant's arguments by filing Skeleton Arguments in Reply on 14th September, 2022. 2 .0 THE PLAINTIFF'S CASE 2.1 A perusal of the Affidavit in Support of Originating Summons shows that on 17th January, 2014 Plaintiff and the Defendant entered into a Contract for the Supply and Delivery of Mobile Flash Butt Welding Machine, Thermit Welding Equipment and Thermit Welding Portions "the Contract". The Plaintiff managed to successfully supply and deliver the thermit welding equipment as well as the thermit welding portions. 2.2 However, on 24th August, 2015, the Plaintiff delivered the first unit of the mobile flash butt welding machine at the Defendant's premises but after inspection by both parties which was conducted from 23r d to 27th November, 2015, the same was rejected on the ground that it was not n ew owing to its appearance . 2 .3 The second unit of the mobile flash unit has not been delivered because, according to the Plaintiff, the Defendant has refused and neglected to inspect it and to provide a letter of credit despite having made an advance payment of 25%. The Plaintiff asserts that the machine has been sitting at the OEM factory in India and has not been shipped owing to the Defendant's breach of the Con tract. 2.4 The parties engaged in a series of discussions which did not yield any positive results and on 14th January, 2016, the Defendant demanded a refund of the sum of US$1, 035, 058 paid towards the first machine . 2.5 On the 15th August, 2018, the Plaintiff wrote to the Defendant advising that it had decided to commence arbitration proceedings under the Contract. 2.6 On 29 th August, 2018, the Plaintiff acknowledged the Defendant's letter of 15th August 2018 and sought clarity on the identity of the arbitrator but the Defendant did not respond until 13th August, 2020 when the Defendant's advocates wrote to the Plaintiff advising it that the Defendant's intention to arbitrate would be renewed by close of business the next day. Accordingly, on 14th august, 2020, the Defendant's Advocates wrote to the Plaintiff proposing the appointment of an arbitrator to which the Plaintiffs advocates replied counter proposing the appointment of a different arbitrator. 2 . 7 After some exchange of vanous correspondence, the president of the Chartered Institute of Arbitrators Zambia Branch subsequently appointed Honourable Mr. Justice W. S. Mweemba as the arbitral tribunal and the arbitral proceedings commenced on 14th February, 2022 when the arbitral tribunal convened the preliminary hearing. 2.8 According to the Plaintiff, the arbitral proceedings have been commenced outside the statutory limitation period and are also time barred under Clause 10.2 of the Contract. 2. 9 The Plain tiff asserts that in an Affidavit in Support of Summons for an order to Vary Order for Directions No . 1 dated 23rd February, 2022 filed by the Defendant in the arbitral proceedings, the Defendant states that the arbitration commenced on 28 th October, 2021, which date would still mean that the proceedings are both statute and contractually barred. 2.10 It is the Plaintiffs position that under Clause 10.2 of the Contract, the Defendant was required to give notice on the 29 th day following failed settlement discussions or at the very least within a reasonable time thereafter. According to the Plaintiff, settlement discussions started on 17111 December, 2015 when the Defendant wrote to the Plaintiff rejecting the machine and that the Defendant ought to have given its notice of intention to commence arbitration on 15t h January, 2016 or within a reasonable lime thereafter but the letter purporting to commence arbitration was given on 15th august, 2018, over two years later. 2.11 The Plaintiff asserts that the period of over two years 1s unreasonable. Additionally, the Plaintiff avers that it has never received a notice of intention to commence arbitration as required by Clause 10.2 of the Contract but only served with a letter purporting to commence arbitration and since it did not receive the said notice by 15th January, 2016, or shortly thereafter, the Defendant did not wish to pursue its claim. 2.12 Accordingly, on 6 th April, 2022, the Plaintiff challenged the arbitral proceedings before the tribunal for want of jurisdiction but was unsuccessful by an interim award delivered on 7 th July, 2022. 2 .13 Dissatisfied with the decision of the arbitral tribunal, the Plaintiff commenced these proceedings seeking an order that the arbitral tribunal does not have jurisdiction to determine the arbitration proceedings commenced by the Defendant on 14th February, 2022 on the grounds earlier outlined in this judgment. The Plaintiff avers that the interim award ought to be set aside because: 1. The tribunal attached a purpose to the Defendant's letter of 15th august 2018 not portrayed by the authors of the letter as the true purpose and intention of the letter is clearly set out in its caption and wording; 2. The tribunal erred in its interpretation of the time frame under the general conditions of the contract and in finding that the Defendant's claims are not time barred; and 3. There is no legal basis for the interpretation that the statutory period was interrupted or halted on 20th January, 2016. 2.14 The Plaintiff asserts that it would be prejudicial for the Defendant to be allowed to prosecute its claim which is contractually and statute barred. 2 .15 In the Skeleton Arguments filed on the 5 th August, 2022, Counsel for Plaintiff submitted that this Court has the requisite jurisdiction to determine the Plaintiff's challenge of the arbitral tribunal's interim award under Article 16(3) of the First Schedule to the Arbitration Act No. 19 of 2000 which provides that: (3) The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of the ruling, the Courl specified in Arlicle 6 to decide the matter, which decision shall be subject to no appeal, while such request is pending, the arbitral tribunal may continue the arbitral proceedings and malce an award. 2 .16 As earlier mentioned, the Plaintiff challenged the jurisdiction of lhe tribunal to entertain the arbitral proceedings without success. 2.17 The arbitral tribunal held the view that the use of the word "decision" in the Defendant's letter of 15th August, 2018 showed intention on the part of the Defendant that it intended and was willing to commence arbitration proceedings and that the letter achieved the aim of informing the Plaintiff of the contemplated arbitration. 2.18 In addition, the arbitral tribunal found that the only timeline that the Contract provides for relates to the timeframe that has been allocated for the parties to attempt to settle the dispute through informal negotiation and that there was no defined timeframe within which a party could notify the other of its intention to commence arbitration. As a consequence, the Defendant had the right to bring arbitral proceedings any time after 28 days had elapsed. 2.19 Furthermore, the arbitral tribunal found that the Defendant's claims are not statute barred as the statutory period within which the Defendant could bring an action although started running or accrued on 7 th November, 2015 was interrupted or halted on 20th January, 2016 when, at. a meeting between the parties, the Plaintiff requested that it be given a chance to complete pre-delivery inspection and that the cause of action accrued afresh on 21 s t April, 2016 and that the arbitration proceedings were not statute barred. 2.20 The Plaintiffs counsel contends that the arbitral tribunal manifestly erred in its finding and called upon this Court to right the arbitral tribunal's wrong. 2.21 Counsel further argues that under Clause 10.2 of the Contract, the notice of intention to commence arbitration should be given on the 29 th day following the date on which discussions to settle a dispute amicably commenced and that no arbitration can be commenced unless a notice of intention to commence arbitration is given in the manner envisaged under the said clause. 2. 22 The Plaintiffs counsel restated the facts leading to the action as disclosed in the Affidavit in Support of Originating Summons as already outlined earlier in this judgment. 2.23 Counsel argues that the Defendant's letter of 15th august, 2018 exhibited as LM4 in the Affidavit in Support of Originating Summons merely informed the Plaintiff that it has commenced arbitration and proposed an arbitrator but did not in fact give notice of intention to commence arbitration. Counsel contends that a notice of intention to commence arbitration ought to have preceded the Defendant's letter of 15th August, 2018. Accordingly, it is Counsel's submission that the arbitral tribunal does not have jurisdiction to determine the arbitral proceedings since no notice of intention to commence arbitration was given. Further that the finding of the arbitral tribunal that the use of the word "decision" in the Defendant's letter of 15th August 2018 showed intention was flawed. That the tribunal should not have attached a purpose to the Defendant's letter which was not portrayed by the letter itself. 2.24 Furthermore, the counsel for the Plaintiff contends that under Clause 10.2 of the Contract, the parties agreed on the procedure to be followed in order to commence arbitration and that the said procedure was not. followed. The case of Aubrey Nyambe v. Total Zambia Limited SCZ Judgment No. 1 of 2015 was cited to support the position that the terms of the agreement must be followed. 2.25 On the claims that the Defendant's claims arc statute barred, the Plaintiff relied on the provisions of Sections 2 and 27 of the Statute of Limitation Act, 1939 which applies to Zambia by virtue of the British Acts (Extent of Application) Act Chapter 10 of the Laws of Zambia. 2 .26 The Plaintiff's counsel submits that the Defendant ought to have brought the action, it being founded on contract, within six (6) years from the date on which the cause of action accrued and cited Chitty on Contracts 27th Edition Volume 1 to support this submission. The Plaintiff takes the view that the general rule in contract is that the cause of action arises when the breach takes place and not when damage is suffered and that once time start moving, it does not stop. The case of Zambia Consolidated Copper Mines Limited v. Joseph David Chileshe (2002) ZR 86 was cited to support the position that once time starts moving for purposes of the Limitation Act, 1939, it does not stop unless postponed by circumstances outlined in Section 26 of the Limitation Act, 1939. 2.27 Counsel went on to submit that time for limitation purposes started to run in August, 2015 and that the arbitral proceedings were only commenced on 14th February, 2022, nearly 7 years from the date the Defendant's cause of action accrued. 2.28 Counsel for the Plaintiff further submitted that once time for purposes of the statute of limitation runs out, the Court is not concerned with the merits of the case and the Defendant cannot be deprived of its right to the defence of limitation. The Supreme Court decision of Stella Upton v. William Dereck Walker (1971) ZR 192 was cited to support this position. Counsel submitted that the arbitral tribunal's finding that the Defendant's claims are not statute barred as the statutory period within which the Defendant could bring an action, although started running or accrued on 27th November, 2015 was interrupted or halted on 20th January, 2016 when, at a meeting between the parties, the Plaintiff requested that it be given a chance to complete pre-delivery inspection, and that the cause of action accrued afresh on 21 st April, 2016 is not supported by law. The Supreme Court decision of Twampane Mining Co~operative Society Limited v. E & M Storti Mining Limited SCZ Judgment No. 20 of 2011 was cited to augment the submission that excuria settlement discussions do not, and cannot stop time from running. 2.29 It was counsel's position that even assuming that the Limitation Act, 1939 does not apply, the Defendant's claim would still be barred by !aches in the sense that the Defendant was in the habit of making its claim and then disappear for years. 2 .30 Consequently, the Plaintiff was led to believe that the Defendant was not desirous of pursuing its claim from the manner in which the Defendant conducted itself and that it would be unjust to allow the Defendant to assert its claim 7 years later. 2 .31 The Plaintiff contends that the Defendant's claims against the Plaintiff are statute barred as they arise from an alleged breach of contract that accrued more than 6 years before the arbitral proceedings were commenced. Further that the arbitral proceedings are further time barred under Clause 10.2 of the Contract. 3 .0 THE DEFENDANT'S CASE 3 .1 As earlier mentioned, the Defendant opposed the Plaintiff's Originating Summons and on 8 th September, 2022 filed an Affidavit in Opposition as well as Skeleton Arguments and List of Authorities. 3 .2 The Affidavit in Opposition confirms that indeed there was a supply contract between the Plaintiff and the Defendant and that the delivery time for the equipment was within 9 months from the date of execution of contract and payment of advance payment. 3 .3 The Defendant avers that it paid a sum of US$1, 035, 058.00 for the first defective mobile flash butt which was delivered by the Plaintiff and a further sum of US$258, 764.50 for the second mobile flash butt which the Plaintiff has not delivered. 3.4 The defective machine was rejected by the Defendant but the rejection did not sit well with the Plaintiff who requested that a joint inspection be conducted and the same was done from 23rd to 27th November, 2015 as shown by the Joint Inspection Report exhibited as MMM2 in the Affidavit in Opposition. 3 .5 The Defendant asserts that there is no basis or reason upon which the Plaintiff failed to supply the second machine as it was supposed to deliver within 9 months upon payment of the 25% advance payment which the Defendant paid. Further that there was no condition in the contract requiring the Defendant to inspect the machine before delivery. 3.6 The Defendant further states that a demand letter to the Plaintiff was issued on 14th January, 2016 following the dispute that arose as the inspection revealed that the machine that was delivered was not new and did not meet the specifications. That the Defendant agreed to the Plaintiff's proposal to stay and withdraw the letter of demand in an effort to resolve the matter amicably. 3.8 It is the Defendant's avermcnt that after unsuccessful discussions with the Plaintiff, it decided to rekindle its demand letter on 25th April, 2016. Further, that the Defendant has always been ready to commence arbitration as shown by the letter of 15th august, 2018 which constituted a notice of intention to commence arbitration but the issue to do with the appointment of the arbitrator was one among many delays occasioned by the Plaintiff. 3.9 Furthermore, that there were many back to back meetings aimed at resolving this matter hence the delay in responding to the Plaintiff letters. Additionally, that the Plaintiff was employing time wasting tactics. 3.10 The Defendant avers that it is not true that the arbitration proceedings were commenced seven (7) years after rejection of the delivery for the reason that when the stay and withdrawal of the first demand is taken into account and from the time the fresh demand letter was issued to the Respondent, the period is less than 6 years from the time of the rejection to the time the tribunal was appointed. 3.11 The Defendant further states that in any event, arbitration proceedings commenced at the time the notice was communicated to the Plaintiff and that the proceedings are still within the prescribed statutory limit. 3.12 It is the Defendant's averment that even if the date of the initial rejection in December 2015 is considered, the Defendant would still be within time, even when the date of formal commencement of the arbitration of 28th October, 2021 is taken into account. 3 . 13 The Defendant states that there was no agreement to start arbitration on the 29th day following failed settlement discussions. It is the Defendant's positions that, in fact, the discussions between the parties took longer than 28 days because the Plaintiff requested to bring its personnel from abroad to Zambia to conduct a joint inspection of the machine and that the 28 days were not sufficient to resolve the matter amicably. 3.14 It is the Defendant's position that Clause 10.2 of the Contract did not make it mandatory for arbitration to commence on the 29 th day after failed discussions. That it was discretionary for a party to commence arbitration at any time should discussions fail. 3 . 15 Further, the Defendant contends that the notice to arbitration was received on 15th August, 2018 and by clause 8 .1 of the Contract, the only requirement was that the notice must be in writing and no prescribed format was agreed upon and the Defendant was at liberty to use the format it used. 3.16 Furthermore, it is the Defendant's averment that the Plaintiff failed to deliver the second mobile flash butt despite the former paying for it as shown by exhibit marked as MMMS in the Affidavit in Opposition. In this regard, on 15th April 2016, the Defendant demanded for a refund of the monies paid for the undelivered mobile flash butt. 3.17 The Defendant further states that the arbitral tribunal was on firm ground when it dismissed the Plaintiff's application in its Interim Award dated 7 th July, 2022 by holding that the Defendant's claims are not statute barred. That the entire action does not disclose a reasonable cause of action and amounts to an abuse of court process and an attempt to appeal the arbitral award contrary to the provisions of the law. Therefore, there arc no legitimate grounds upon which the Interim Award can be set aside. 3.18 The Skeleton Arguments filed on behalf of the Defendant more or less restate the averments in the Affidavit in Opposition. That notwithstanding, the kernel of the argument by Counsel for the Defendant is that the arbitration proceedings were properly commenced in line with Clause 10 .1 and 10.2 of the Contract which provide thus: 10.1 The procuring Entity and the Supplier shall make every effort to resolve amicably by direct informal negotiation any disagreement or dispute arising between them under or zn connection with the contract. 10.2 If, after twenty-eight (28) days, the parties have failed to resolve their dispute or difference by such natural consultation, then either the procuring entity or the Supplier may give notice to the other party if its intention to commence arbitration, as herein after provided, as to the matter in dispute, or no arbitration in respect of this matter may be commenced unless such notice is given. Any dispute or difference in respect of which a notice of intention to commence arbitration has been given in accordance with this clause shall be finally settled by arbitration. Arbitration may be commenced prior to or after delivery of the Goods under the contract. Arbitration proceedings shall be conducted in accordance with the rule's procedure specified in the SCC. 3.19 It is Counsel's position that the above provision gave the parties a grace period of 28 days in which to attempt resolution of any dispute that may arise failure to which either party may commence arbitration proceedings afterwards. Counsel for the Defendant takes the view that the above provision of the Contract did not limit the time frame for commencement of arbitration to the 29th day following the lapse of the 28 days but that the same could be done at any time after the 28 days. 3.20 Further, Counsel for the Defendant submits that proper and sufficient notice to commence arbitration proceedings was given to the Plaintiff through a letter dated 15th August, 2018 contrary to the assertions by the letter that no notice was given. 3 .21 Counsel further argues that the letter of 15th August, 2018 satisfies the definition of notice as provided under Clause 8.1 of the Contract which is couched in the following terms: 8.1 Any notice given by one party to the other pursuant to the contract shall be in writing to the address specified in the SCC. The term "in writing" means communicated in written form with proof of receipt. 3.22 Further, Counsel for the Defendant takes the view that the Plaintiff through a letter dated 29 th August, 2018 authored by its General Manager did not oppose the Defendant's intention to commence arbitration proceedings and it is surprising now that they seek to challenge the notice to commence arbitration at this stage. 3.23 Counsel relied on UNCITRAL Rules, particularly Article 3 as well as Section 33(3) of the Arbitratio n Act No. 19 of 2000 to argue that the arbitration proceedings were deemed to have commenced upon the Defendant issuing the Plaintiff the notice dated 15th August, 2018 in line with Clause 8 . 1 of the Contract. 3.24 Counsel further relied on the English case of Agarwal Corporation Plc Ltd v. Harmony Innovation Pie Ltd (2017) EWHC 3556 (comm) where Section 14 (4) of the English Arbitration Act 1996 which deals with the commencement of arbitral proceedings was construed by the Court. 3 .25 Section 14 (4) of the English Arbitration Act provides: 14(4) Where the arbitration or arbitrators are to be appointed by the parties, arbitral proceedings are commenced in respect of a matter when one party serves on the other party or parties notice in writing requiring him or them to appoint an arbitrator or to agree to the appointment of an arbitrator in respect of that matter. 3.26 In interpreting the above provision, the Court took the view that the provision should be interpreted broadly and flexibly, not strictly and technically and that the focus should be on the substance, not the form of the document by which the arbitration is said to have been commenced. Therefore, the arbitration proceedings in the present case were properly commenced. 3.27 On the Plaintiff's claim that the Defendant's claim is statute barred, Counsel for the Defendant maintains that arbitral proceedings commenced in August, 2018 when the notice was served despite the fact that the first rejection as regards the first mobile butt was made in December 2015 . That the cause of action arose in 2015 but same was stayed by the Plaintiff's own proposal for the purpose of trying to resolve the matter amicably and the Defendant agreed not to enforce its rights relating to the delivered mobile flash butt which was found to be defective. Further, that the cause of action was only rekindled by the Defendant on 25th April, 2016 placing the Defendant within the statutory period of 6 years, if the notice of August 2018 is to be considered or indeed 28th October, 2021. 3 .28 Further, Counsel for the Defendant submits that even if the date of 17 th December 2015 when the Defendant rejected the mobile flash butt is to be considered, the Defendant would still be within time. 3.29 It is the Defendant's position that the claim before the arbitral tribunal is not only for the delivered mobile flash butt but also as against the second mobile flash butt which the Plaintiff failed to deliver within 9 months from the date of the contract upon payment of 25% advance payment. Further, that a demand for the reimbursement of the sum paid for the second mobile flash butt on 15th April, 2016 shows that the cause of action arose on thal date. 3 .30 Relying on Halsbury's Laws of England 4 th Edition Volume 28, Counsel for the Defendant submitted that the cause of action continually accrued to the Defendant by the Plaintiff's continued breach of the Contract. 3.31 Additionally, Counsel submits that it is not correct to assert that the arbitral proceedings commenced on 14th February, 2022. 3.32 In the alternative, Counsel for the Defendant argued that in the event that this Court finds that the statutory period applied in this matter, resort should be had to Section 26 of the Limitation Act, 1939 which allows for postponement of the limitation period in the case of fraud. According to the Defendant, the Plaintiff acted in a fraudulent manner in order to obtain pecuniary advantage, by firstly, delivering a defective flash butt, and secondly, by receiving an advance payment for the second flash butt and failing or neglecting to deliver the same. 3.33 In the final analysis, Counsel for the Defendant submits that lhe interim award rendered by the arbitral tribunal on 7 t h July, 2022 is binding on the parties and that this application by the Plaintiff is an attempt to have a second bite at the cherry and is an abuse of Court process as the arbitral tribunal has already pronounced itself on the issues that have been raised by the Plain tiff. 3.34 The Defendant submits that the arbitral tribunal was on firm ground when it found that it had jurisdiction and that the Defendant's claim are not statute barred. 3 .35 In the Skeleton Arguments in Reply filed on 14th September, 2022, Counsel for the Plaintiff submitted that the Plaintiff is within its rights to challenge the interim award on the arbitral tribunal's own jurisdiction and relied on Article 16(3) of the First Schedule of the Arbitration Act which provides: (3) The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within 30 days after having received notice of the ruling, the Court specified in article 6 to decide the matter, which decision shall be subject to no appeal, which such request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award. 3 .36 In this regard, the Plaintiff's Counsel submits that the Plaintiff's application is properly before Court. 3 .37 Further that Clause 10.2 of the Contract. expressly states that no arbitration can be commenced unless a notice of intention to commence arbitration is given. 3.38 Secondly, Counsel for the Plaintiff further submitted that the period for amicable negotiations was Limited to 28 days as per Clause 10.2 of the Contract and the same cannot be disregarded when the Defendant voluntarily agreed to the terms of the Contract. 3 .39 The Plaintiff's position is that no notice of intention to commence arbitration preceded the commencement of arbitration and as a result, the arbitral tribunal has no jurisdiction to determine the arbitral proceedings. 3.40 Further, Counsel for the Plaintiff went on to submit that the Plaintiff should not be blamed for the failure by the Defendant to start the arbitration within time as it did not conduct itself in any way that would have prevented the Defendant from commencing arbitration within time. 3.41 Counsel reiterated the arguments in the Skeleton Arguments in Support of Originating Summons to the effect that the Defendant's claims are statute barred. 3.42 In reacting to the Defendant's assertion that the Plaintiff fraudulently obtained pecuniary advantage from the Defendant, Counsel for the Plaintiff submitted that Section 26 of the Limitation Act 1939 requires that there be a clear concealment of a fraud, namely concealment of the Defendant's right to claim which the Defendant has not been satisfied. 3.43 Further that the Plaintiff has been prudent, professional and transparent in its dealings with the Defendant. That the Plaintiff has on numerous occasions invited the Defendant to attend pre-shipment inspection but the Defendant has refused or neglected to do so. However, the Plaintiff concedes that the Defendant paid a 25% advance payment towards the second unit of the mobile flash butt but has refused to conduct a pre shipment inspection and to provide a letter of credit in accordance with Clause 16.1 of the Contract. 4.0 AT THE HEARING 4.1 When the matter came up for hearing, Counsel for the parties relied on their respective relevant documents filed into Court. Suffice to state that in augmenting their respective positions, Counsel for both parties essentially restated what is already contained in their Affidavits and Skeleton Arguments filed into Court. 5.0 CONSIDERATIONS, ANALYSIS AND DECISION 5.1 I have carefully considered the Plaintiff's application together with the relevant documents filed by the parties relating to this matter. 5.2 It is common cause that on the 17th January, 2014, the Plaintiff and the Defendant signed a contract for the supply of thermit welding equipment, thermit welding portions and two units of mobile flash butt welding machines. 5.3 It is also common cause that on 24th august, 2015, the Plaintiff delivered the first unit of the mobile flash butt welding machine at the Defendant's premises. However, the Defendant rejected the machine on the basis that it was defective and not new. 5.4 It is also common cause that in respect of the second unit, the Defendant made an advance payment of 25% . According to the Plaintiff, the second unit has not been shipped because the Defendant has refused to conduct pre-shipment inspection and also to provide a letter of credit in accordance with the Contract. 5 .5 The clause relating to settlement of disputes in the Contract (Clause 10.1 and 10.2) which has been reproduced earlier in this Judgment gives the parties a period of 28 days to attempt amicable resolution of any dispute that may arise failure to which the aggrieved party may institute arbitral proceedings by giving the other party notice of intention to commence arbitration. 5.6 The evidence adduced by both parties in this matter shows that the parties could not agree on the appointment of the arbitrator. Consequently, the arbitrator was appointed by the president of the Chartered Institute of Arbitrators, Zambia Branch. 5 . 7 According to the Plaintiff, the arbitral proceedings were commenced on 14th February, 2022 when the arbitral tribunal was appointed and convened the preliminary hearing. Displeased with this development, the Plaintiff moved the arbitral tribunal challenging its jurisdiction to determine the dispute on the ground that the matter before the arbitral tribunal was contractually as well as statute barred. 5.8 In its interim award delivered on 7 th July, 2022, the arbitral tribunal found that, in fact, it had jurisdiction to entertain the matter. This is what prompted the Plaintiff to commence these proceedings seeking an order of the Court to set aside the interim award on the following grounds: 1. The arbitral proceedings were not commenced in accordance with the agreement of the parties; 2. The arbitral proceedings are time barred under the agreement of the parties; and 3. The Defendant's claims in the arbitral proceedings are statute barred. 5 .9 I propose to first deal with grounds (1) and (2) together smce they are interrelated. 5.10 Clause 8 .1 of the Contract provides that: "Any notice given by one party to the other pursuant to the contract shall be in writing to the address specified in the SCC. The term "in writing" means communicated in written form with proof of receipt." 5.11 Clause 8.2 goes on to provide that: "A notice shall be effective when delivered or on the notice's effective date, whichever is later." 5 .12 The Plaintiff's contention is that the Defendant did not give the Plaintiff its (Defendant's) notice of intention to commence arbitration in line with Clause 10.2 of the contract. The said clause provides thus: 10.2 If, after twenty-eight (28) days, the parties have failed to resolve their dispute or difference by such natural consultation, then either the procuring entity or the Supplier may give notice to the other party of its intention to commence arbitration, as hereinafter provided, as to the matter in dispute, and no arbitration in respect of this matter may be commenced unless such notice is given. Any dispute or difference in respect of which a notice of intention to commence arbitration has been given in accordance with this clause shall be finally settled by arbitration. Arbitration may be commenced prior to or after delivery of the Goods under the contract. Arbitration proceedings shall be conducted in accordance with the rules of procedure specified in the sec. 5.13 The Defendant, on the other hand, contends that the letter of 15th August, 2018 actually constituted sufficient notice of intention to commence arbitration. The said letter is reproduced hereunder: 15th August 2018 The General Manager Diamond Motors Limited Plot No. 226 Nyerere road Vingunguti Estate, P. 0. Box No. 7847 Dar es Salaam TANZANIA EmailLinfo@hansa-global.com Dear sirs Attention Mr. Laurian Martin RE: NOTICE OF DECISION TO COMMENCE ARBITRATION PROCEEDINGS: DIAMOND MOTORS AND ZAMBIA RAILWAYS LIMITED CONTRACT NO. ZRL/CONT/INFRA/0006/2013 Reference is made to the above subject matter and to previous correspondence between both parties on the above subject. We note the provisions of clause GCC 10.2 of Contract number ZRL/CONT/INFRA/ 0006/2013 between Zambia Railways Limited and yourselves, Diamond Motors Limited, which provides for resolution of any dispute between the parties by Arbitration where resolution by mutual consultation has failed. The parties have attempted, but to no avail, resolution of the dispute through mutual consultation, as evidenced by previous meetings and correspondences between the parties. Further, be advised that Zambia Railways Limited has written several letters of demand to yourselves regarding performance of your obligations under the Contract and has received no favourable responses. We now write to inform you that pursuant to Clause 10.2 of the contract, Zambia Railways Limited has decided to commence Arbitration proceedings in its efforts to recover the outstanding amounts, considering that the parties have not made any progress on the issue of mutual resolution of the dispute. Therefore, we propose Mr. Elijah Nyirenda S. C to act as the sole Arbitrator in this matter subject to your agreement. If you do not agree to the proposed Arbitrator, you are, within fourteen days hereof, required to propose a name of an Arbitrator from the list of Arbitrators practicing in Zambia. If we fail to agree, we shall refer the matter to the Chairman of the Zambia Centre for Dispute Resolution who shall decide who the Arbitrator should be. We await your response. Yours faithfully ZAMBIA RAILWAYS LIMITED Signed Mwendabai Mwalusi LEGAL COUNSEL cc: cc: cc: The Board Chairman ZRL Chief Executive Officer - ZRL Company Secretary _ ZRL 5 .14 On 29 th August 2018 , the Plaintiff replied to the Defendant's letter of 15th August, 2018 by a letter reproduced below: 29th August 2018 The Legal Counsel Zambia Railways Limited Shitima House Kafue River Avenue, P. 0. Box 80935 Kabwe Attention Mr. Mw endabayi Mwalusi Notice of decision to commence Arbitration proceedings: Diamond Motors and Zambia Railways Limited - Contract No. ZRL/CONT/INFRA/0006/2013 We refer to the above captioned matter and to your letter of 15th instant. to clause GCCl 0.2 We have perused the contents of your letter and note your intention to commence arbitration proceedings which notice has been issued pursuant No . ZRL/CONT/INFRA/0006/2013 (the "contract"). While we are still optimistic that the dispute can still be resolved amicably by the parties, we do not oppose your intention to commence arbitration proceedings and will merely seek to highlight that in terms of clause GCC 10.3 of the Contract, the parties are expected to continue performing their respective contractual obligations notwithstanding any reference of a dispute to arbitration. Contract of With respect to your choice of the proposed arbitrator, our instructions are to seek clarification over the same as we are currently not aware of any person by the names of Elijah Nyirenda SC. In this vein, kindly clarify as to whether your proposed arbitrator is Mr. Elijah Banda SC or Mr. William Nyirenda SC. We shall await your clarification in this regard before we can comment on the proposed arbitrator. We look forward to hearing from you. Yours faithfully Diamond Motors Limited Signed General Manager 5.15 The above letter from the Plaintiff to the Defendant is very clear in its acknowledgment of the fact that the Defendant's letter of 15th August, 20"18 was communicating the latter's intention to commence arbitration proceedings, and actually states that the former is not opposed to the latter's intention to commence arbitration proceedings. It is surprising that the Plaintiff has now backtracked on its earlier position and now claims that the Defendant did not give notice of intention to commence arbitration proceedings when its position is clearly expressed in the letter dated 29 th August, 2018 . 5 . 16 It is clear from an intimate examination of the Contract that there was no agreed format or template which one had to use when giving the notice of intention to commence arbitration. I, therefore, find that the Defendant did in fact give the requisite notice of intention to commence arbitration proceedings contrary to the assertion by the Plaintiff that no such notice was given. 5 . 17 On the issue relating to the time within which one has to give notice of intention to commence arbitration proceedings, it is clear to me that Clause 10.2 of the Contract does not limit the giving of the said notice to the 29th day after the lapse of the 28 days provided for for informal negotiations. I am of the fortified view that on the proper construction of Clause 10.2 of the Contract, an aggrieved party is at liberty to give the notice of intention to commence arbitration proceedings at any time after the lapse of the 28 days; even after three years provided it is done within the prescribed statutory period of limitation. 5.18 Coming to the issue of the assertion by the Plaintiff that the Defendant's claims in the arbitral proceedings are statute barred, it is clear that Section 2 of the Limitation Act, 1939, limits the period to commencing actions founded on simple contract to six years from the date on which the cause of action arose. 5 .19 In the present case, the Defendant's cause of action arose on 27th November 2015 when the parties conducted ajoint inspection of the first machine and the Defendant rejected it on the basis that it was defective and was not new. 5 .20 As I have earlier found, the notice of intention to commence arbitration proceedings was given on 15th August, 2018, almost 3 years after the cause of action arose. Therefore, it is my finding that the arbitration was commenced well within the 6 years limitation period. This fact is acknowledged by Counsel for the Plaintiff in the letter to Counsel for the Defendant dated 20th August, 2021 exhibited as MMM6 in the Affidavit in Opposition of Originating Summons which states at paragraph 3 .1 as follows: GCC 10.3 Requires parties to perform their obligations under the contract notwithstanding that a dispute between has been referred to arbitration. Despite arbitration having been commenced, your client is obligated to pay ours any sums due to the client. (underlining mine for emphasis) 5 .21 It is abundantly clear that as at 20th August 2021, the Plaintiff was fully aware that the Defendant had commenced arbitration proceedings by virtue of the notice of intention to commence arbitration proceedings that was given via a letter of 15th August, 2018 . 5.22 In the premises, I do not see how the Plaintiff can now claim that the Defendant's claims in the arbitral proceedings are statute barred. On the contrary, the claims are well within the 6 years limitation period. Additionally, It is not correct for the Plaintiff to assert that the arbitral proceedings only commenced on 14th February, 2022 when the arbitral tribunal was appointed and preliminary meeting held. The fact that the parties had back and forth communication on the appointment of the arbitrator without success does not mean that the arbitration proceedings had not commenced. 5 .23 Article 3 of the UNCTRAL Rules provides that: "Arbitral proceedings shall be deemed to commence on the date on which the notice of arbitration is received by the Respondent." 5.24 It is not in dispute that the Plaintiff received the letter of 15th August 2018 from the Defendant and actually replied to the same on 29th August, 2018. Little wonder that Counsel for the Plaintiff in the letter of 20th August 2021 referred to earlier even acknowledges that arbitration had commenced . Therefore, it is my finding that the Defendant's claims before the arbitral tribunal are not statute barred. 6.0 CONCLUSION 6.1 The upshot of my judgment is that I have not found any reason to set aside the arbitral tribunal's interim award delivered on 7 th July, 2022. Additionally, it is my finding that the arbitral tribunal indeed has the requisite jurisdiction to entertain the Defendant's claims in the arbitral proceedings as the same are neither contractually nor statute barred. Lastly, the Defendant complied with the Contract when commencing the arbitral proceedings by giving the requisite notice of intention to commence arbitration proceedings through the letter dated 15th August, 2018. 6.2 As a consequence, the Plaintiffs action is hereby dismissed for lack of merit. 6.3 Costs follow the event, to be agreed and in default taxed . Dated at Lusaka the 11th day of May, 2023 . ............. ~ .....•...... L. Mwale HIGH COURT JUDGE 25