Grandview International Limited and Ors v Barak Fund (Suing on behalf of Barak Structured Trade Finance Segregated Portfolio) (APPEAL No. 289/2023) [2024] ZMCA 161 (25 July 2024)

IN THE COURT OF APPEAL FOR ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) APPEAL No. 289/2023 BETWEEN: i ' GRANDVIEW INTERNATIONAL LIMITED 1 S T APPELLANT GRANDVIEW PROPERTIES LIMITED 2ND APPELLANT INFINITY GROUP ZAMBIA LIMITED 3RD APPELLANT BOKANISOKO ESTHER AMA ODANI AND BARAK FUND LIMITED (Suing on behalf of Barak Structured Trade Finance Segregated Portfolio) 4TH APPELLANT 5TH APPELLANT RESPONDENT Coram: Chashi, Sichinga and Sharpe-Phiri, JJA on 19 June and 25 July 2024 For the Appellants: Mr. L. Phiri and Mr. J. Tembo of Messrs August Hill and Associates For the Respondent: Mr. K. Phiri of Messrs Corpus Legal Practitioners JUDGMENT Sichinga JA delivered the Jud gment of the Cou r t. J1 Cases referred to: 1. Stanley Mwambazi v Morester Farms Limited (1977) Z. R, 108 2 . Water Wells Limited v Jackson (1984) Z. R, 98 3. Finan ce Ban k Zambia Limited v Dimitrios Monokandilos Filandria K ouri (1997/ H P/ 136) 4. Dr. Kenneth Kaunda and Another v Central Chambers and 5 Others, SCZ Appeal No.237 of 2013 5. Attorney General v Cecil Dulu Nundwe (SCZ/ 8/2 0/ 2004) 6. Twampane Mining Co-operative Society Limited v E and M Storti Mining Limited, S. C. Z. Judgment No. 20 of 2 011 7. Gamet Industries Ltd v David Richard Everson (1987) Z. R, 104 8. Clayton v H ybrid Poultry Farms Limited S. C. Z. No. 15 of 2006 9. Dunlop Pneumatic Tyre Co. v New Garage and Motors Co. ( 1915) A. C. 7 9 10. OTK Limited v Aman it a Zambiana Limited and Others (2011) ZMHC 23 11. Turnkey Properties Limited v Lusaka West Development Company Limited and 2 Others (1984) Z. R, 85 12 . Ody 's Oil Company Limited v Attorney General and Another (2 01 2) Z. R, 13. Cash Crusaders Franchising PTY Limited v Shakers & Movers (Z) Limited (2012) Vol. 3 Z. R, 174 14. Gateway Services v Engen Petroleum (Z) Limited SCZ Appeal No. 31 of 15. Evans Milimo v Zambia Daily Mail Limited and Attorney-General CAZ Appeal No. 24 of 2021 16. Sangwa v The Legal Practitioners Committee of the Law Association of Zambia SCZ Appeal No.1 2 1 of 2013) 17. Vangelatos v Vangelatos, SCZ Appeal No. 7 of 2006 18. Leopard Ridge Safaris Limited v Zambia Wildlife Authority (2008) Z. R, 97 Vol. 2 J2 19. Pouwels Construction Zambia Limited and Pouwels Hotels and Resorts Limited v Inyatsi Construction Limited, SCZ Appeal No. 23 of 2016 Legislation referred to: 1. The High Court Rules, Chapter 2 7 of the Laws of Zambia 2. The Supreme Court Rules (1965) 1999 Edition (White Book) 3. The Arbitration Act, No. 19 of 2000 4. Arbitration (Court Proceedings) Rules, Statutory Instrument No. 75 of 2001 Other works referred t o: 1. Halsbury's Laws of England, 5th Edition, Vol. 2 (2008) 2. S. Nesbitt and H. Quinlan, The Status and Operation of Unilateral or Optional Arbitration Clauses ', 22 Arbitration International (2006), p.133, 1.0 Introduction 1. 0 This is an appeal against the ruling of the High Court Commercial Division delivered on 17 November 2022, by Lady Justice Mwenda-Zimba. In the said ruling, the learned Judge considered two applications, namely, to stay execution of the writ of possession and judgment in default, and to set aside the writ of possession and judgment in default. She found that the defendants' applications lacked merit and dismissed them with costs to the plaintiff. J3 2 .0 Background 2.1 In the introductory part of this judgment, we shall refer to the parties by their designations in the court below. 2.2 The brief background of this matter is that the plaintiff, Barak Fund Limited, respondent now, commenced an action against the defendants (now appellants), by way of writ of summons and statement of claim, amended once with leave of court on 8 April 2022, seeking the following reliefs: (i) An order that the defendants pay to the plaintiff a ll monies in the sum of USD21 , 180,472 .00 or any sum to be found due, inclusive of unpaid accrued interest b eing the outstanding sum under the Facility Agreements secured by Third-Party Mortgages and guarantees, which is due and owing to the plaintiff and having been advanced to the 1st defendant under t he Facility Agreements; (ii) Delivery by the 2nct, 4th and 5th defendants, to the plaintiff, of vacant possession of the Mortgaged Properties; (iii) An order of foreclosure and sale of the Mortgaged Properties; (iv) An order for the enforcement of the Person a l Guarantees against the 4th and 5 th defenda nts; Damages for breach of contract; Interest; (v) (vi) (vii) Legal costs; and (viii) Any other reliefs that the court may deem necessary. 2.3 The defendants having failed to enter appearance and file a defence , a judgment in default of appearance and defence was entered on 16 June 2022, in favour of the plaintiff as follows: J4 (i) An order tha t the defendants pay the plaintiff all monies m the sum of USD2 1, 180,4 72 .00 or any such sum to be found due inclusive of unpaid accrued interest being the ou tstanding sum under t h e Facility agreements secured by Third-Party Mortgages and gu a r a ntees, which is due a nd owing to the plaintiff and having been a dvan ced to the 1st d efendant under the Facility Agreem ents; (ii) Delivery up by the 2 nd , 4 th and 5 th defenda n ts, to the plaintiff of vacant possession of th e Mor tgaged Properties being, CL/8 of F /609/265 / A16; CL/6 of F /609/265 / A16; CL/7 of F / 609 /265/ A16; CL/24 of F / 609 /265 / A16; Plo t No. 724 Lusaka; a nd Subdivision 'L' of Subdivision No. 1141 of subdivision 'A' of Farm No. 378a Lusaka . (iii) An order for foreclosure and sale of the Mortgaged Properties; (iv) Orders for th e en forcement of the Personal Guarantee against the 3rd and 4 th defendants; Damages fo r b reach of contract; Interest; and (v) (vi) (vii) Costs. 2.4 Pursuant to said default judgment, the plaintiff proceeded to issue a writ of possession and writ of Fieri Facias (Fifa), both dated 23 September 2 0 22 . 2 .5 On 21 October 2022, the defendants filed twofold applications; for an order of stay of execution of the default judgment; and to set aside the writ of possession and the judgment. The application was heard on 17 November 2022 and the Judge d elivered an ex-tempore ruling dismissing the application with costs to the plaintiff. Leave to appeal to the Court of Appeal JS :: was not granted and thus , the defendants applied to the lower court for leave to appeal, which was denied. 2 .6 The defendants renewed the application before a single Judge of this Court, who granted leave to appeal. 3.0 Decision of the court below 3.1 After considering the applications, the learned Judge highlighted the principles governing the setting aside of judgment in default of defence. That a default judgment will be set aside where there is no inordinate delay on the part of a defendant applying to set such judgment aside and where there is a defence on th e merits. The learned Judge, relied on the cases of Stanley Mwambazi v Morester Farms Limited1 and Water Wells Limited v Jackson2 . She found that the defendants did not make the application to set aside judgment in good time. That, the application was made over four (4) months after the judgment and the reasons given for the delay, that the parties had engaged in ex-curia discussions, was not justifiable because ex-curia discussions do not stop time from running. Further, that if the defendants were unhappy with the judgment in d efault, they ought to have applied to set it aside promptly and the fact that the parties' negotiations collapsed, did not justify their coming to court late. The learned Judge also found that the defendants failed to demonstrate that they had a defence on the merits as their proposed defence contained bare denials of averments. J6 3.2 The learned J u dge fu rther found that, the 1st and 4 th defendants had admitted the debt in an acknowledgement of debt, exhibited as "TJS2" , in the affidavit in opposition . That, the sum of USD18 ,258, 147.00, plus interest was admitted in an agreement dated 7 March 20 19, and the sum in the judgment in default was USD21, 180 ,472.00 which included interest. Sh e stated that the defendants contended that the judgment sum was in contention, bu t did not show how and why. Sh e fou nd that there was no reason to set aside the j udgment as there was an admission. 3.3 The learned Judge ultimately found no merit 1n both applications and accordingly d ismissed them with costs to the plaintiff. 4.0 The appeal 4.1 Dissatisfied with the ruling of the lower court, the defendants a ppealed to this Court fronting fou r grounds as follows: 1. The lower court erred in law and fact when it held that the delays by the Appellants in making the application to set aside the judgment in default was inordinate and inexcusable, despite the fact that t here were ex-curia negotiations among the parties, long after the judgment in default was entered; 2 . The lower court erred in law and fact when it held that the Appellants do not have a defence on the merits and there are no triable issues worthy of a full trial, despite there being a J7 dispute as to the interest rate and penalties regarding the sum due (if any), which is clearly a triable issue; 3. The lower court erred in law and fact when it relied on an acknowledgement of debt agreement, a document, the authenticity, admissibility and provenance of which can only be tested at afull trial; and 4. The lower court erred in law and fact when it proceeded to hear the application to set aside the judgment in default before hearing the application to refer the parties to arbitration, which speaks to the jurisdiction of the court. 5.0 Appellants' arguments in support of the appeal 5 .1 At the hearing of the appeal, Mr. L. Phiri, learned counsel for t h e appellants, relied on the h eads of argument filed on 11 September 2023, t h e gist of which is that they have a defence on the merits and h ave exhibited a triable issu e, which they contend is th e primary consideration in setting aside a judgment in default. 5 .2 Further, that no prejudice will be occasioned to the respond ent should the matter be sent to trial. 5.3 In support of ground one of the appeal, coun sel invited us to take n ote of Order 20 Rule 3 and Order 12 Rule 2 of the High Court Rules1 which provide as follows: Order 20, rule 3 J8 "Any judgment by default, whether under this Order or under any of these Rules, may be set aside by the Court or a Judge, upon such terms as to costs or otherwise as the Court or Judge may think fit." Order 12, rule 2 "Where judgment is entered pursuant to the provisions of this Order, it shall be lawful for the Court or a Judge to set aside or vary such judgment upon such terms as may be just." 5.4 Counsel also referred us to the case of Stanley Mwambazi v Morester Farms Limited supra, and submitted that the Court in that case set aside a judgment in default when the defendant gave the excuse for failing to enter appearance as negotiations for a settlement. That, the Court stated that it is always the practice of courts to en courage such n egotiations . 5.5 Further, relying on the case of Water Wells Limited v Jackson supra, counsel submitted that a d efence on the m erits is the overriding consideration 1n setting aside a judgment in default and that all other factors such as the reason for the d efault or delay in setting aside the judgment in default are secondary, provided they do not prejudice the plaintiff. To further buttress this submission, counsel r eferred us to Practice Note 13/9/12 of the Rules of the Supreme Court of Eng land2 . 5.6 Citing the cases of Finance Bank Zambia Limited v Dimitrios Monokandilos Filandria Kouri3 , Dr. Kenneth Kaunda and Another v Central Chambers and 5 Others4 J9 and Attorney-General v Cecil Dulu Nundwes , counsel submitted that the determination of inordinate delay in a defendant applying to set aside a judgment in default should be decided on a case-by-case basis. That, therefore, in the present case, the delay in making the application to set aside the default judgment was not inordinate, given that the parties were en gaged in ex-curia settlement negotiations, with a view to resolving the dispute regarding the sums owed, if any. That, it was only after the respondent issued a writ of possession on 23 September 2022, in bad faith , that the appellants promptly made the requisite application on 2 1 October 2022, as it became apparent that the respondent was not inclined to settle . 5. 7 Counsel, cited the case of Twampane Mining Co-operative Society Limited v E and M Storti Mining Limited6 , and acknowledged the principle that ex-curia settlements will not stop time from running where the rules of court have prescribed a time to do a certain act. However, counsel contended that the facts in casu are distinguishable from the Twampane case as the appellants herein had not breached a prescribed time to take a step. 5 .8 Further, that the requirement under the High Court Rules and the decided cases is that a default judgment may be set aside on such terms as may be just, with the primary concern being a defence on the merits, as opposed to inordinate delay in making the application to set aside. JlO 5.9 We were urged to uphold the first ground of appeal. 5.10 In support of ground two, counsel still placed reliance on the case of Stanley Mwambazi and the case of Garnet Industries Ltd v David Richard Everson7 . He submitted that among the principles espoused in the two cases is th at there will be t riable issues where a defendant has a viable defence on the mer its of the case and there is reason to have a trial. Furth er, the case of Clayton v Hybrid Poultry Farms Limited8 was cited for its h olding to th e effect that an applicant does not have to concentrate too much on why he failed to en ter appearance and file a defence, but th at he has an arguable defence on the merits by providing prima facie evidence, such as, documentary proof that he was no longer bou nd by the contract as earlier conclu ded. It was argued that in casu, the appellants have a defence on the merits which discloses a triable issue , namely, the respondent's claim includes penal inter est which is illegal in this jurisdiction. Th at, from the documents on the record, it could be gleaned that the appellants borrowed the sum of USDll ,985,155.85 and repaid the sum ofUSDS,2 16,531.73, while the r espondent is claiming well over USD2 1, 000, 000. 00 which is inclusive of penal interest. Counsel submitted that this is a triable issue that can only be determined with a full trial, namely, that the su m owed to t h e respondent, which goes to the very root of the action, is an aggregated amount that includes penalties and interest which, even if agreed to by the parties, is illegal. Jll 5.11 Counsel for the appellants, thus submitted that it was irregular for the lower court to have awarded the respondent an amount due, inclusive of penal interest. Reliance was placed on the case of Dunlop Pneumatic Tyre Co. v New Garage and Motors Co. 9 and on this note, we were urged to uphold grou nd two of the appeal. 5. 12 In s u pport of ground three, counsel referred us to the case of OTK Limited v Amanita Zambiana Limited and Others10 and submitted that before a document can be relied on as evidence, there is need to lay a foundation and establish the validity or authenticity of such document. That, the lower court's ruling that the appellants had admitted to the amount claimed by the respondent was hinged on the Acknowledgment of Debt agreement, which was an untested document. That, the au thenticity of the said document, as well as the validity of the 4 th appellant's signature can only be proven at trial. 5.13 Further, that the Acknowledgment of Debt agreement has not been tested as to whether it meets the requ irements of a valid contract. Furthermore, that the agreement was only signed by the 1st and 4 th appellants , but the lower court's order bound all the appellants. Citing the case of Turnkey Properties Limited v Lusaka West Development Company Limited and 2 Others11 , it was contended that it is improper for a court hearing an interlocutory application to make comments, which have the effect of pre-empting the decision of the issues, which are to be decided on the merits at the trial of the matter. J12 It was advanced that the lower court ought not to have delved into the agreement and relied on the same, without according the parties a full trial, which robbed the appellants of their right to have their case heard on the merits. With this, we were urged to set aside the judgment in default and to uphold ground three of the appeal. 5.14 In support of ground four, it was submitted that the respondent and the 1st appellant entered into a Purchase and Repurchase Agreement in 2015, exhibited a pages 1148 to 1209 of the record of appeal, through which the respondent availed facilities to the 1st appellant. That, the said agreement contained an arbitration clause stipulating that arbitration shall be resorted to, in the event of a dispute between the parties. Further, the Revolving Facility Agreement also contained an arbitration clause , which allowed the respondent to opt for arbitration or litigation. A dispute arose under the Purchase and Repurchase Agreement, however the respondent commenced an action in the lower court, despite the arbitration clause. 5.15 It was stated that the statement of claim exhibited at pages 1339 to 1345 of the record of appeal, bundled all the agreements together in a bid to have the entire dispute determined by the court, when in fact, the dispute under the Purchase and Repurchase Agreement should have been settled by way of arbitration. Counsel contended that, by their application dated 2 November 2022, exhibited at pages 1166- Jl3 2092 of th e record of appeal, the appellants invoked the arbitration clause and raised the question of whether the lower court had jurisdiction to determine the matter in so far as it related to the Purchase and Repurchase Agreement. To this end, we were referred to section 10 of the Arbitration Act3 • 5. 16 Citing the cases of Ody's Oil Company Limited v Attorney General and Another12 and Cash Crusaders Franchising PTY Limited v Shakers & Movers (Z) Limited1 3 , it was submitted that where parties have a valid arbitration agreement, the court is obliged to refer the matter to arbitration. In addition, that where parties decide to have their dispute adjudicated upon through arbitration, they oust the jurisdiction of the courts, save in the limited circumstances provided by law. 5. 1 7 Furth ermore, that an application to ref er a matter to arbitration goes to the jurisdiction of the court and as such, should be given priority by the lower court. That, therefore, the lower court's refusal to hear the application to ref er the parties to arbit ration was a clear error of law. We were urged to u phold the fourth ground of appeal. 6.0 Respondent's arguments opposing the appeal 6. 1 In opposing the appeal, Mr. K. Phiri, learned coun sel for the respondent, relied on the respondent's heads of argument filed on 12 October 2023. For reasons which will soon b ecome J14 apparent, we will only summarise the respondent's argumen ts in ground four. 6 .2 In opposin g the last ground, that the lower court ought not to have h eard the application to set aside the judgment in default before hearing the application to refer the matter to arbitration , it was submitted that the appellants' argument was bereft of merit and not feasible. 6 .3 The respondent argued that, if it went under the assumption that the lower court should have referred the matter to arbitration, and by extension, ousted its jurisdiction, then there would not have been a forum to hear the application to set asid e the default judgment. The rationale for this submission is that the judgment in default is valid until set aside. 6.4 It was submitted that an arbitral t ribunal has no jurisdiction to entertain an application to set aside a judgment in default executed by a Judge of the High Court. In support of this submission, reliance was p laced on the Arbitration Act supra and the Arbitration (Court Proceedings) Rules4, which d o not have provision for an arbitral tribunal to set aside a judgment in default. 6.5 It was submitted that Order 20, rule 3 of the High Court Rules supra confers discretion only on a Court or Judge to set aside a default judgment. JlS 6.6 Cou nsel argued that the court retained jurisdiction until it m ade an order to refer t h e matter to arbitration. That arbitration clauses do not rob the court of its j urisdiction, but simply stay its powers where there are proceedings and refers them to arbitration. Reliance was placed on the case of Gateway Services v Engen Petroleum (ZJ Limited14 where the Supreme Court stated as follows: "The agreement and the authorities cited are to the effect that the Court's jurisdiction is not ousted by an arbitration clause." 6. 7 It was submitted that courts maintain their jurisdiction until an order referring the matter to arbitration is made. That in the present case, the p roceedings had come to an end. As such th ere was no dispute to refer to arbitration. 6. 8 Coun sel argued that the application to ref er the matter to arbitration was prematurely b efore this Court because there was a default judgment on the record. 6 . 9 It was also argued that the application to set aside the judgment in d efault was filed first, on 21 October 2022, and the application to refer the matter to arbitration was subsequently filed on 4 November 2022. As such, the former application ought to have been heard first. Reliance was placed on the case of Evans Milimo v Zamb ia Daily Mail Limit ed and Attorney -Ge neral15 where this Court held as follows: J16 "The applicat ion fo r ex tension of t ime was made ear lier than the one to d ismiss the action. In view of the above, the same ought to have been heard first before the application to dismiss for want of prosecut ion, as it was on record. " 6.10 Whilst the above case does not relate to judgments in default, we were urged to consider the principle that the application that has been filed earlier has to be heard first because it is earlier on record. 6.11 In conclusion, we were urged to dismiss the fourth ground as the procedure that the application to refer the matter to arbitration should have been heard first is not feasible. We were further urged to dismiss the appeal in its entirety and uphold the ruling of the lower court. 7 .0 Our decision on appeal 7. 1 We have carefully considered the assailed ruling of the court below together with the record of appeal and the arguments in support and against the appeal. The issue before us in this appeal is whether the learned Judge in the court below was on firm ground when she declined to stay execution of the writ of possession and judgment in default, and to set aside the writ of possession and judgment in default granted on 16 June 2022 . 7 .2 We shall begin by addressing the fourth ground of appeal as the appellants have raised issues on jurisdiction, which if J17 adju dged meritoriously, are bound to have a bearing on the rest of t h e grounds, as well as the proceedings in the lower court. 7 .3 The appellants argued, in ground four, that the parties herein h ad executed a valid arbitration agreement which th ey endeavor ed to invoke by an application to refer the parties to arbitration filed on 4 November 2022. Page 1 155 of the recor d of appeal, volume 3 refers. The application was titled: "Ex-parte application for stay of execution of judgment in default of appearance and defence dated 16th June 2022 pend~ng hearing of summons for an order to stay proceedings and refer the parties to arbitration (Pursuant to Order 36, rule 10 of the High Court Rules, Chapter 27 of the Laws of Zambia as read t ogether w ith Order 4 5 , rule 11 and Order 47, rule 1 of the Rules of t he Supreme Court (1999) Edition and Section 13 of the of the High Court Act, Chapter 27 of the Laws of Zambia). " 7. 4 We also note from the record that before the above application was filed on 2 1 October 2022, the appellants filed an application for an order for stay of execution of judgment in default of appearance and defence on 16 June 2022, and to set aside the said judgment, as well as the writ of possession issued on 22 September 2022 . The applications filed on 21 October 2022, were heard on 17 November 2022. On the same day, the learned Judge delivered the ex-tempore ruling, the subject of the appeal herein. The application to stay proceedings and refer the matter to arbitration was, however, not heard and determin ed. J18 7. 5 A perusal of the record of appeal reveals that in paragraph 7 of the statement of claim (page 1340 of the record) the following was averred: "7. By a Purchase and Repurchase Agreement dated 2 July 2015 as amended on 30 July 2015 and a Revolving Loan Agreement dated 1 July 2015 as amended on 2 March 2017 (collectively the "Facility Agreements"), the Plaintiff made available to the 1 st Defendant facilities which as at 9 November 2021 amounted to USD21 , 180, 472.00, inclusive of accrued, but unpaid interest (the "Debt")." 7.6 Th e collective Facility Agreements above, pursuant to which t h is matter was commenced, were both executed only by the respondent (lender) and the 1st appellant (borrower), and each had dispu te resolution clauses as follows: "Purchase and Repurchase Agreement 20. Dispute Resolution 20. 1 All disputes arising out of or i n connection with the Agreement shall be finally settled under the Rules of Arbitration of the LCIA ("the Rules") ... Such arbitration shall be held in London, England or Lusaka, Zambia or such other jurisdiction as determined by Barak at its sole and absolute discretion and shall be held i n a summary manner w ith a view to being completed as soon as possible. 20.3 This clause 20 will not preclude any Party from access to an appropriate court of law for i nterim relief in respect of urgent matters by way of, inter alia, an interdict or mandamus pending finalization of this dispute resolution process. Revolving Loan Agreement 29. Dispute Resolut ion J19 29.1 Barak, at its sole and absolute discretion, shall be entitled to refer any and all disputes arising out of or in connection with the Agreement, to arbitration or determination by the court. 29.2 Any dispute arising out of or in connection with this Agreement and referred to arbitration in terms of clause 29.1 , including any question regarding its existence, validity or termination, shall be finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this clause. 29. 7 Referring a dispute to arbitration in terms of this clause 29 will not preclude Barak from access to ~n appropriate court of law for interim relief in respect of urgent matters by way of, inter alia, an interdict or mandamus pending this dispute resolution process." finalization of 7 . 7 Our under standing of th e clau ses reproduced above is that, under t h e Purch ase and Repurchase Agreement, every dispute should be referred to arbitration , with the liberty to subject urgent interlocutory or interim applications/remedies to appropriate cou rts of law. Under th e Purch ase and Repu rchase Agreem ent, therefore, there is no option to h ave disputes resolved by th e cou rts (except th e limited interlocutory applications) and, where a m atter is commenced before the cou r t s, as in casu, eit h er party can invok e clau se 20.1 , by making an application to refer the matter to arbitration . 7 .8 Under t h e Revolvin g Loan Agreement, on the other hand, · a dispute arising th ereu nder m ay be referred to arbitration or the courts , solely at the discr etion of th e respond ent. In other J20 words, it is the resp ond en t's call to decide what type of dispute resolution t h e parties are to su bject t h em selves, in respect of dispu tes arising und er the Revolving Loan Agreem en t. 7 . 9 Wh at 1s created by t h e two arbitration clau ses 1s a contr a diction that makes enforceab ility of eit h er clau se difficult, since t h e two agreements in which they are contained are collectively the Facility Agreements, on which th e action h erein is p r emised . It is not clear, wh ich p ortion of the default alleged in t h e statemen t of claim , could be ascrib ed to t h e Purchase and Repurchase Agr eement, and wh ich could be ascribed to the Revolving Loan Agreement. 7.10 In term s of construction of arbitration agreements, th e guidance pres crib ed by t h e learned au th ors of Halsbury's Laws of England1 , at paragraph 1215 is as follows: " ... arbitration is consensual, and depends upon the intention of the parties as expressed in their agreement; only from the agreement is it possible to tell what kind of disputes they intended to submit to arbitration; and the meaning which parties intended to express by the words which they used will the commercial background. A proper be affected by approach to construction therefore requires the court to give effect, so far as the language used by the parties will permit, to the commercial purpose of the arbitration clause. The construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of their relationship to be decided by the same tribunal; and the clause should be construed this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator's jurisdiction. " in accordance with J21 7.11 The arbitration clauses in the Revolving Loan Agreem ent are generally less clear than articulated by Halsbury's Laws. 7.12 The learned authors of Nesbitt and Quinlan2 in their work ' 'The Status and Operation of Unilateral or Optional ' Arbitration Clauses', state a s follows , regarding unila teral arbitration clauses: "A unilateral option arbitration clause is a clause under which the parties bound by it are restricted to bringing proceedings in a particular jurisdiction, while at the same time providing one or more of the parties the option to elect that the dispute be referred to arbitration. In its most common form, the unilateral arbitration clause provides a party or parties to a contract with the option of unilaterally submitting a dispute to arbitration, whilst the other party (parties) are restricted to bringing proceedings in the courts of a particular jurisdiction." 7. 13 It a ppears that, in order for a unilateral arbitration clause to successfully en compass the features espoused a bove , care must be taken to en sure th a t it is drafted clearly and concisely, with specificity regarding the disputes to be referred to arbitration, if not all. It is equally important, that such a clau se is consistent with other agreements (wher e it is intended to be rea d as one with the other agreements of the same transaction), ensuring that the same arbitration agreement is applicable in all agreements. 7 . 14 In the present case, the procedure of appointing the arbitral tribunal under the Revolving Loan Agreement, is manifestly at variance with that prescribed under the Purchase and Repurchase Agreement. Clearly, these are competing positions J22 that would be difficult to enforce independently without resulting in some absurdity. This begs the question, 'which of the two dispute resolution clauses should carry the day?' In such situ ations, the p ractice is usually to resolve the issue using the contra proferentem rule. However, this rule was expressly ousted from applying to the Revolving Loan Agreement, and which ousting is well within the rights of the parties. Clause 31.12 of the agreement, to this end, provides as follows: cont ra proferentem rule shall not apply and "The accordingly, none of the provisions hereof shall be construed against or i nterpreted to t he disadvantage of the Party the draft ing or preparation of such responsible for provisions." 7. 15 There still remains, however, the contradiction between the dispute resolution clauses in the Purchase and Repurchase Agreement and the Revolving Loan Agreement. Our view is that the contra proferentem rule having been expressly excluded from application, we have to employ other methods of resolving the contradiction of the two provisions. 7.16 The next thing to consider would have been simply to question, 'which of the two agreements was executed first in time?' In so doing, the dispute resolution clause in the agreement executed last is the one that is adopted over the first. However, this 1s not tenable because, despite the agreements relating to the same transaction, they were executed independently and not with the view of the latter J23 replacing the former . The latter agreement was s igned a day after t he former and it contains no clau se to t h e effect that it was executed to r eplace the wh ole or part of the former. In any event, the record reveals that t h ere were further amendments to both agreements which essentially altered either agreem ent's position from being first execu ted to being last executed. 7.17 What remains to be done, in a bid to resolve the contradiction in the two dispute resolution clauses is to t h orough ly examine the wording of the two clauses, against practical standards. We have looked at the dispute resolution clause in the Purchase and Repurchase Agreement and it appears to be well within the acceptable standards of an arbitr ation clause. We have also looked at th e dispute resolution clause in the Revolving Loan Agreem en t and observe an issu e of concern, particularly under clause 29.1 which p r ovides that: "Barak, at its sole and absolute discretion, shall be entitled to refer any and all disputes arising out of or in connection with the Agreement, to arbitration or determination by the court." 7 .18 It is obvious that the respondent's intention in including the clause above in the agreement was so as to have an advantage over the oth er p arty to the agreement, in terms of a unilater al arbitration clause. The standard and common form of such a clause has been espoused in paragraph 7. 10 above. The standard is simply t h at, in a unilateral arbitration clau se, there has to be an established jurisdiction (usu ally the courts), J24 that the disadvantaged party will be restricted to and can utilise, in the event that they wish to legally pursue the advantaged party; and then there has to be the special option reserved only for the advantaged party to utilise arbitration in the place of the courts. This standard entails that there is a default dispute r esolution forum established and common to both parties before the advantaged party can have the privilege to be the one to solely invoke arbitration. 7. 19 In casu, however, this is not what can be seen from clause 29.1 of the Revolving Loan Agreement. The said clause 29.1 literally establishes no default dispute resolution forum, but vests all power and option to decide which mode of dispute resolution to be invoked, solely in the respondent. In other words, even if the respondent were to conduct itself in a manner that would justify the 1st appellant bringing an action against it, the 1st appellant's hands would be tied until the respondent itself decides where the 1st appellant should take its legal suit. We would imagine that the respondent would be most reluctant to refer a matter in which it is to be defendant, either to the courts or to arbitration. Therefore, by clause 29 .1 only the respondent gets to decide by what means the 1st appellant will try to enforce its rights. This , in our view, perfectly fits in what are referred to as 'pathologically or poorly drafted clauses'. In its current form, therefore , clause 29.1 cannot be invoked. J25 ., 7 .20 The effect of ou r finding above is that the only arbitration clause th at is valid as pertains to the collective Facility Agreements, 1n casu, is the one in the Purchase and Repurchase Agreement whose salient portions provide as follows: "Dispute Resolution 20. 1 All disputes arising out of or in connection with t he Agreement shall be finally settled under the Rules of Arbitrat ion of the LCIA ("the Rules") ... Such arbit ration shall be held in London, England or Lusaka, Zambia or such other jurisdiction as determined by Barak at its sole and absolute discretion and shall be held in a summary manner with a view to being completed as soon as possible. 20.3 This clause 20 w i ll not preclude any Party from access to an appropriate court of law for interim relief in respect of urgent matters by way of, i nter alia, an i nterdict or mandamus pending finalization of t his dispute resolution process. ,, 7.21 Having found that clause 20 of the Purchase and Repurchase Agreement is the only valid arbitration agreement in casu, what then is the effect of this finding on the jurisdiction of the court and the proceedings in the court below? 7.22 It has been established that there is a valid arbitration agreement in clause 20 of the Purchase and Repurchase Agreement, and it is on the record that the appellants had, on 4 November 2022, applied to the learned Judge in the lower court for a stay of proceedings and reference of the matter to arbitration. This application was made about thirteen (13) days before the learned Judge delivered the impugned ruling, J26 • 1n which she declined to stay execution of the writ of possession and judgmen t in default , and to set aside the writ of possession and j udgment in default. The learned Judge did n ot h ear and d et ermine t h e a p p lication to stay p roceedings and refer the matter t o arbitration. 7 .23 On the subj ect of arb itration agreem en ts a nd sub stantive claim s b efore courts, section 10 of the Arbitration Act supra provides that: "(1) A court 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 notwithstanding any written law, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed. (2) Where proceedings referred to in subsection (1) have been brought, be commenced or continued, and an award may be made, while the issue is pending before the court." arbitral proceedings may nevertheless 7.24 The Su preme Cou rt has pron ou nced itself on the impor t of section 1 0 a b ove in the case of Sangwa v The Legal Practitioners Committee of the Law Association of Zambia16 , wher e it h eld as follows: in "The interpretation we have given to section 10 is that it compels a court to stay proceedings before it which contravention of an arbitration commenced are agreement and refer to arbitration. The the parties stay and referral of the parties to arbitration marks the end of those proceedings before the court because the parties will have been referred their preferred choice of dispute resolution forum. The court is only the precluded proceedings staying where from to J27 • arbitration clause invoked for being pathologically or poorly drafted." is not enforceable or cannot be 7 .25 The Supreme Court equally pronounced itself in the cases of Vangelatos v Vangelatos17 and Leopard Ridge Safaris Limited v Zambia Wildlife Authority18, that a Judge has no choice, but to stay proceedings and refer the parties to arbitration where there is a valid arbitration agreement. 7.26 Further, in the case of Pouwels Construction Zambia Limited and Pouwels Hotels and Resorts Limited v Inyatsi Construction Limited19, where a High Court Judge refused to refer the matter to arbitration pursuant to section 10 of the Arbitration Act, the Supreme Court held, inter alia, that: "The court below inflicted the legal proceedings on the 1 st appellant against its will and in violation of the arbitration agreement. Since there was a valid arbitration agreement, the learned trial judge had no jurisdiction to adjudicate the matter. He had an obligation to stay proceedings and refer the parties to their choice of dispute resolution." 7 .27 The Supreme Court, in fortifying its pronouncement above, further highlighted the rationale behind arbitration clauses, as follows: "An arbitration clause is inserted in a contract at the time of its conclusion because the parties contemplate as a matter of commercial convenience that it is desirable to adopt this mechanism for resolving the disputes that may arise in the course of their business relationship. Its construction should, therefore, be the consideration of the underlying commercial purpose of including such a clause in the agreement. " influenced by J28 • 7 .28 From the foregoing, we are equally of the view that the learned Judge in the lower court, ought to have immediately addressed her mind to consideration of the appellants' pending application to stay proceedings and refer the matter to arbitration, the moment she received the application. By proceeding to h ear and determine the applications that culminated into the impugned ruling, the learned Judge erred in law because she did not have the requisite jurisdiction to hear the substance of this matter, in the face of an arbitration agreement. In this regard, we find merit in ground four of the appeal. 7.29 Having found in paragraph 7.21 above that there is a valid arbitration clause on the record, we make the following consequential orders in line with the Pouwels case: 1. We set aside the writ of possession and the j udgment in default of 16 June 2022; 2 . We s t ay the proceedi ngs in the lower court; and 3 . We refer the parties to a rbit rat ion. 7. 30 In view of our findings above, grounds one, two and three are rendered otiose. J29 • 9.0 Conclusion 9. 1 We allow the appeal on the success of ground four. 9.2 Costs awarded to the appellants to be agreed or taxed 1n default thereof. COURT OF APPEAL JUDGE . SC ~),, r- N . A. Sharpe-Phiri COURT OF APPE L JUDGE COURT OF APPEAL JUDGE BO