Hetro Mining and Ores Limited and 2 Ors v Louis Dreyfus Commodities Metals Suisse and 2 Ors [2019] ZMCA 384 (1 November 2019)

IN THE COURT OF APPEAL OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) APP. No 150 of 2018 BETWEEN: HETRO MINING AND ORES LIMITED (cid:9) SHAWKI FAWAZ (cid:9) TUNTA MINING ZAMBIA LIMITED (cid:9) 1ST APPELLANT 2ND APPELLANT 3 APPELLANT AND OF APPEAt /7 -.-- LOUIS DREYFUS COMMODITIES C (cid:9) METALS SUISSE IGNATIUS MWAPE (cid:9) (Sued as Receiver/ Manager (cid:9) of Berdale International Zambia Limited) ALLESANDRA VALENZA (cid:9) 2 1ST RESPONDENT CIVIL REGISTRY 2ND RESPONDENT -Y2x 57- 3 RESPONDENT Coram: Makungu, Sichinga and Ngu lube J. J. A. On the 201h day of February, 2019 and jst day of November, 2019 For the Appellants: (cid:9) For the 1st Respondent: Mr. E. Mwitwa and Mr. A. Mumba of Messrs. Mwenye & Mr. S. Chikuba of Messrs. Paul Norah Advocates For the 21 d & 3d Respondents: No appearance Mwitwa Advocates JUDGMENT MAKUNGU JA, delivered the Judgment of the Court. Cases referred to: 1. PT Thiess Contractors Indonesia v. PT Kaltim Prima Coal & Another (2011) EWHC 1842 2. Intermarket Banking Corporation Zambia Limited v Mukanta (2012) Vol. 1 ZR 185 3. Zambia National Holdings & Another v. Attorney General (1993 - 94) ZR 115. 4. Leonard Ridge Safaris Limited v Zambia Wildlife Authority (2008) ZR 97. (cid:9) (cid:9) 5. Dunlop Pneumatic Tyre Company Limited v. Selfridge and Company Limited (1915)A. C. 847 6. Zambia Oxygen Limited & Zambia Privatisation Agency v. Paul Chisakula & Others (2000) Z. R. 27 7. Friday Mwamba v. Sylvester Nthenge & Others SCZ Judgment No. 5 of 8. Colgate Palmolive (Z) Inc. v. Chuka and Others Appeal No. 185 of 2005 (unreported) 9. Sebastian Holding Inc. v. Deutsche Bank (2010) EWCA Civ. 99 10. Wilheim Roman Buchman v. Attorney General (1993 - 1994) ZR 131 11. Attorney General v. Seong San Company Limited SCZ Judgment No. 16 of 12. Re Cosslett (Contractors) Ltd (1997)4 All ER 115 at 125 13. Boscawen & Others v. Bajwa & Another (1995) 4 All ER 769. 14. Ody's Oil Company Limited v. The Attorney General & Constantinos James Papoutsis (2012) Vol. 1 ZR 166 Legislation Referred to 1. Section 10 of the Arbitration Act No. 19 of 2000. Other Works referred to: 1. Chitty on Contracts. General Principles Vol.1 Sweet and Maxwell. 2008 at para. 18-021. 1.0 INTRODUCTION 1.1 This appeal emanates from the ruling of Mbewe, J, delivered on 30th January, 2018 dismissing with costs an application to stay proceedings and refer the parties to arbitration. The ruling followed an application by Shawki Fawaz the second appellant and Allessandra Valenza the 3rd respondent herein who were the 4th and 2nd defendants respectively. The -J2- application was made pursuant to Section 10 of the Arbitration Act No. 19 of 2000. 2.0 BACKGROUND 2.1 The 1st respondent and Berdale International Zambia Limited executed two agreements on 24th June, 2010 known as the Prepayment Facility Agreement and the Offtake Agreement. Under the Prepayment Facility Agreement, the 1st respondent advanced Berdale International Zambia Limited the sum of US$800, 000.00. This facility was to be repaid under the Offtake Agreement. On 28th June 2010, Berdale International Zambia Limited, through the 3rd respondent a Director of the company signed a Charge in favour of the 1st respondent to secure the sum of US$800,000.00 and to discharge all obligations and liabilities under the Prepayment Facility Agreement. 2.2 Both the Prepayment Facility Agreement and the Offtake Agreement contained arbitration clauses. In the Prepayment Facility Agreement, the arbitration clause read as follows: ".... Any disputes between the Parties shall be exclusively settled under the rules of conciliation and arbitration of -J3- the International Chamber by one arbitrator appointed in accordance with the said rules. The arbitration to take place in London and the costs of the arbitral proceedings including costs for legal representation...." 2.3 The arbitration clause in the Offtake Agreement provided as follows: All disputes arising out of or in connection with this Agreement shall be exclusively settled under the rules of conciliation and arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with the said rules (cid:9) 2.4 The fixed Charge contained the following clause: The Commercial Court shall have exclusive jurisdiction to settle any disputes arising out of or in connection with the charge (including a dispute regarding the existence, validity or termination of the charge or the consequences of its nullity) this clause is for the benefit of the Lender only. As a result, the Lender shall not be prevented from taking proceedings relating to a Dispute in any of the Courts of Zambia or any other courts with jurisdiction. To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions. -J4- 2.5 The 1s1 respondent alleged in the writ and statement of claim that the 2d appellant and 3rd respondent had failed or neglected to pay back the debt as agreed, and further that, the 1st and 2nd appellants, and the 3rd respondent had misappropriated the charged assets which in turn had resulted in damage, loss and/or injury to the 1st respondent. Therefore, the 1st respondent claimed payment of the debt with interest and damages. Before the matter could be heard, the 2nd appellant and 3rd respondent filed an application to stay proceedings and refer the matter to arbitration pursuant to section 10 of the Arbitration Act No. 19 of 2000. 3.0 AFFIDAVIT EVIDENCE BEFORE THE COURT BELOW 3.1 The 2nd defendant's affidavit in support of the application to refer the matter to arbitration was sworn by his advocate Mr. Emmanuel Mwape Mwansa, SC. The essence of it was that the plaintiff commenced an action against the 1st and 2r defendants as representatives of Berdale International Limited being the company that signed two agreements with the plaintiff from which the said claim arise. That Article 14 of the Offtake Agreement provides that all disputes arising out of or -J5- in connection with the agreements should be referred to arbitration. The plaintiff acted in breach of the arbitration agreement. The substance of the affidavit in support of the application for a stay of proceedings and reference to arbitration sworn by the 4th defendant now 2nd appellant was that the matter emanates from an agreement dated 24t June, 2010 executed between the plaintiff and Berdale International Zambia Limited which contains an arbitration clause. That the arbitration clause is couched in mandatory terms. 3.2 There were two affidavits in opposition to the application for a stay of proceedings and reference to arbitration which were both sworn by Misozi Hope Masengu the 3rd respondent's advocate. The gist of both of them was that on 1st February, 2016 the plaintiff filed a writ of summons and statement of claim against the defendants claiming among other things, as against the 1st to 4th defendants, payment of the sum of US$692126.61 as against the 1st defendant damages for breach of contract, as against the 1 St , 2nd and 4th defendants damages for misrepresentation as against the 1st to 41h defendants, an order to trace the allocation and state of the charge assets and an order for the delivery of the said assets -J6- to the plaintiff or a person appointed, as receiver by the court and an account for the use of machinery and charged assets and delivery up of the profits arising out of the use of the charged assets. That the plaintiff and Berdale International executed an Offtake Agreement and a Prepayment Facility Agreement on 24th June, 2010 and the Fixed and Floating Charge on 28th June, 2010. That contrary to the assertions in the affidavits in support, the plaintiff commenced the action on the premise of charge as shown by the nature of the reliefs sought against the 2nd defendant. Clause 13.11 and 13.12 of the Charge bestows exclusive jurisdiction to settle any dispute arising out or in connection with the charge. Further that the charge, offtake agreement and pre-payment facility do not provide that the same agreement should be read as one or that one agreement takes precedence over the other. The plaintiff invoked the provisions of the charge alone and therefore the arbitration clauses in the other two agreements do not come into play. It is under the circumstances unwarranted for the court to stay the proceedings and refers the matter to arbitration. 4.0 DECISION OF THE COURT BELOW -J7- 4.1 The learned Judge heard arguments by counsel and considered the affidavits and skeleton arguments before her. She took the view that it is in the Charge that Berdale International Zambia Limited executed an agreement to secure US$8002 000.00 and to discharge all the obligations under the Prepayment Facility Agreement. She further found that the alleged misappropriation of assets on the part of the 3rd respondent, the 1st and 2nd appellants arises from the charged assets. 4.2 The learned Judge was persuaded by the case of PT Thiess Contractors Indonesia v. PT Kaltim Prima Coal & Another in which the English Commercial Court refused to stay proceedings in favour of arbitration, holding that where different but related agreements contained overlapping and inconsistent dispute resolution clauses, the court would be required to identify the contract under which the substance of the dispute arose, rather than formal nature of the proceedings, in order to determine which dispute resolution clause would apply. Guided by this decision, the learned Judge identified the Charge as the Agreement under which the substance of the dispute arose as it makes reference to the -J8- financing documents being the Prepayment facility Agreement and the Offtake Agreement. Consequently, she applied section 10 of the Arbitration Act, and found that this was not a proper case for her to stay the proceedings and refer the matter to arbitration as the Charge from which the action flows, clothed the court with exclusive jurisdiction to deal with the matter. She thus found no merit in the application and dismissed it with costs to the 1st respondent. It is this decision that the appellants now seek to overturn. 5.0 GROUNDS OF APPEAL 5.1 (cid:9) The appellants filed two grounds of appeal framed as follows: 1. The learned Judge erred in law and fact when she ruled that the proceedings do not arise from the Offtake Agreement but rather from the Floating Charge; and 2. The learned Judge erred in law and fact when she ruled that the alleged misappropriation of assets on the part of the 3rd and 4th defendants (1st and 2nd appellants herein) arises from the Charge executed on the 28th day of June, 2018 when the said parties were not privy to the said charge. -J9- 6.0 APPELLANTS' ARGUMENTS 6.1 According to the appellant's heads of argument filed herein on 241h September, 2018 in support of the first ground of appeal, it was submitted that the Writ of Summons and Statement of Claim filed by the 1st respondent show that the action is not only premised on the Charge but the Offtake Agreement and Prepayment Facility Agreement. It was further contended that claim No. (c) Damages for misrepresentation; (f) An account of the sale of the copper mine and (g) Damages for wrongful conversion of the copper ore and copper concentrates, do not refer to the Charge and have nothing to do with it, 6.2 It was argued that the arbitration clauses in the Prepayment Facility Agreement and the Off-Take Agreement being Articles 7.7 and 14 respectively, do come into play and are of effect. Thus, section 10 of the Arbitration Act is applicable to the case to' invoke the arbitration clauses as the 1st respondent commenced an action relating to the Charge, Facility and Off- Take Agreement. For this, reliance was placed on the case of Intermarket Banking Corporation Zambia Limited v. Mukanta, (2) a High Court decision, whose import is that a -J10- plaintiff faced with two or more agreements, has an option to pursue either one or both of the remedies available under any or both agreements, and that when he chooses to pursue a remedy other than arbitration, the arbitration clause is rendered of no effect. 6.3 It was submitted that in determining whether a matter should be referred to arbitration or not, the words used in the arbitration clause itself must be closely studied. Thus, it was contended that applying the literal rule of interpretation of the arbitration clause in Article 7.7 of the Prepayment Facility Agreement, the parties had limited the disputes arising between them to be referred to arbitration during the continuance or subsistence of the agreement. Therefore, this matter is subject to an arbitration clause as the 1st respondent is invoking the Facility and Off-Take Agreements. Consequently, we were urged to give effect to the arbitration clause as the jurisdiction of the court had been ousted, unless the agreements are null and void. Reliance was placed on the case of Zambia National Holdings & Another v. Attorney General (3) and Leonard Ridge Safaris Limited v. Zambia Wildlife Authority. (4) We were urged to enforce the Facility -Jil- and Off-Take Agreements by staying the proceedings and referring the matter to arbitration. 6.4 With regard to the second ground of appeal, it was submitted that the 1st and 2d appellants were not parties to the Charge, Facility and Off-Take Agreements, and thus are not privy to all the said agreements sought to be enforced by the 1st respondent. We were referred to the case of Dunlop Pneumatic Tyre Company Limited v. Selfridge and Company Limited (5) cited with approval in the case of Zambia Oxygen Limited & Zambia Privatisation Agency v. Paul Chisakula & Others (6) where the rule on privity of contract was restated as follows: "In the law of England certain principles are fundamental. One is that only a person who is a partq to a contract can sue on it. Our law knows nothing of jus quaesitum tertio arising by way of contract. Such a right may be conferred by way of property, as, for example, under a trust, but it cannot be conferred on a stranger to a contract as a right to enforce the contract in person." (underlining for emphasis) -J12- 6.5 Reference was also made to the learned authors of Chitty on Contracts General Principles Vol.1 Sweet and Maxwell. 2008 at para. 18-021 on privity of contract. 6.6 We were urged to find that the appellants herein are not parties to the contracts the 1st respondent seeks to enforce, and therefore should be allowed to proceed against them. 7.0 18TRESPONDENTS ARGUMENTS 7.1 According to the 1st respondents' heads of argument file herein on 8th November, 2018 in response to the appellants' submissions under the first ground of appeal, it was contended that the court below was on firm ground in holding that the proceedings do not arise from the Off-Take Agreement but rather from the Charge. The respondent submitted that the mere mention in the Writ of Summons and Statement of Claim of the Prepayment Facility and Off-Take Agreements, does not mean that the two agreements were the basis of the claim. They were merely mentioned to lay a foundation to the Charge. Although the 1st respondent intended to enforce the Charge, the relevance of the Facility Agreement has been -J13- evidenced by the Charge itself hence the mention of the two agreements in the Statement of Claim. 7.2 It was further contended that a perusal of the Writ of Summons and Statement of Claim show that the proceedings arose from the Charge and not the two agreements, based on the claims stated on the Writ. It was submitted that reliefs (c), (f) and (g) have everything to do with the Charge as they arose from the agreements referred to and are connected to the Charge. In this regard, it was argued that the arbitration clauses in the Prepayment Facility Agreement and Off-Take Agreement do not come into play as the two documents were only referred to in the Statement of Claim for purposes of clarity, and not that they are the basis of the claim and proceedings. It was further submitted that the three Agreements are separate, each having legal force and binding on the parties thereto. Thus, a party to any of the Agreements can decide which of the three to base its claim on. Thus, the 1st respondent based its claim on the Charge pursuant to which the money it paid to Berdale International Zambia Limited was secured. Under the Charge, Clause 13.12 gives -J14- the court exclusive jurisdiction to settle any disputes that arise out of or in connection with the Charge. 7.3 The cases of Friday Mwamba v. Sylvester Nthenge & Others (7) and Colgate Palmolive (Z) Inc. v. Chuka and Others (8) were relied upon as authorities for the principle of law that parties are bound by contracts that they enter into freely and voluntarily. 7.4 Reliance was also placed on the Intermarket Banking Corporation Zambia Limited Case (2) cited by the appellants and the English case of Sebastian Holding Inc. v. Deutsche Bank (9) for the proposition that, based on its claims in the Statement of Claim, the 1st respondent rightly invoked its rights under the Charge and not either of the other two agreements because the claims relate to the Charge. 7.5 On ground two, it was submitted that nowhere in the ruling of the court below is it stated that the alleged misappropriation of assets on the part of the 1st and 2nd appellants arises from the charge. Reference was made to pages R19 to R20 of the ruling of the court below where the court stated as follows: -J15- Ifurther find that the alleged misappropriation of assets on the pan of the 2nd, 3rd and 4th defendants arises from the charged assets. 7.6 Thus it was contended that there is a difference between a charge and charged assets. It was submitted further that the appellants did not raise the issue of the 3rd and 4th defendants (1st and 2nd appellants herein) not being parties to the charge before the trial court. As such, it cannot be raised before us. The case of Wilhelm Roman Buchman v. Attorney General (10) was called in aid where it was held that: "A matter that is not raised In the court below cannot be raised before a higher court as a ground of appeal." 7.7 It was further submitted that the facts herein render the matter an exception to the doctrine of privity; the exception being the equitable doctrine of constructive trust and the tort of conversion. On the concept of constructive trust, it was submitted that the 1st and 2nd appellants were aware and/or fully involved in the transaction between the 1st respondent and Berdale International Zambia Limited, vide the three agreements, although they were not parties thereto. Therefore, they were put on notice of all the agreements, especially under the Charge which was registered at the Patents and Companies Registration Agency (PACRA). 7.8 We were referred to the unreported case of Attorney General v. Seong San Company Limited c") where the Supreme Court stated as follows: "We agree with counsel that the common law doctrine of privity of contract, in general, does not confer rights nor impose obligations on persons who are not parties to it. However, equity tends to take a less rigid view of the boundaries of the contract It provides exceptions to the doctrine in equity where there may have been intentions to create a trust either expressly or imp liedly or where there may not have been intentions at all, giving rise to constructive trusts such as the one in the present case." 7.9 Thus, it was submitted that the 1st respondent had an interest in the charged assets, and for all intents and purposes, was a beneficial owner with the effect that Berdale International Zambia Limited was a trustee, while the 1st and 2nd appellants were constructive trustees having been put on notice due to the fact that they were intrinsically involved in the transaction, and that the Charge was registered at PACRA. Thus, the Pt -J17- respondent is entitled to trace the charged assets in which it had a beneficial interest as per the cases of Re Cosslett (Contractors) Ltd (12) and Boscawen & Others v. Bajwa & Another. (13) 7.10 With regard to the doctrine of conversion, it was contended that the misappropriation of the charged assets which were legally charged to the 1st respondent amounts to wrongful conversion entitling the 1st respondent to a claim for damages against the 1st and 2nd appellants notwithstanding that they are not parties to the Charge. We were therefore urged to dismiss the appeal in its entirety with costs to the 1st respondent. 7.11 During the hearing of the appeal, Mr. Chikuba, learned counsel for the appellants augmented the written heads of arguments orally by highlighting two points; 1. That if the 1st respondent sought to rely on the Charge as the legal agreement they sought enforce the charge, then they ought to have commenced the action by way of originating summons supported by affidavits, and not by writ of summons and 418- 2. The 1st respondent is seeking relief that is contained in the Prepayment Facility Agreement and Off-Take Agreement containing the arbitration clauses. He argued that these two agreements pertain to copper ore, which is part of the relief being sought by the 1st respondent and which is not the subject of the Charge. 7.12 When asked by the court if a party who is not privy to an agreement containing an arbitration clause can enforce the said clause, Mr. Chikuba responded in the negative. He added that the issue was raised in the court below, and that in their second ground of appeal, the appellants should have been mis-joined as they were not parties to any of the agreements. 7.13 In response, Counsel for the 1st respondent, Mr. Mwitwa orally argued that the assertion by the appellants that the matter ought to have been commenced by way of originating summons has no legal basis and hence the failure of counsel for the appellants to refer to any authority. He added that in any case, it is an issue that ought to have been raised in the court below as it goes to the jurisdiction of the court below. Mr. Mwitwa conceded that the three agreements are related as -J19- there is reference to all of them in the Statement of Claim. He but reiterated that reference to the agreements in the pleadings was merely to give a comprehensive background to the genesis and enforcement of the Charge. He stated that the Charge is very categorical in relation to the jurisdiction of the Commercial Court in so far as the resolution of any disputes arising out of the Charge or connected thereto. He stated that if a dispute arose out of the other two agreements, then it ought to be resolved by way of arbitration as provided by the agreements. 7.14 As regards the argument of the appellants that they are not privy to the agreements, Mr. Mwitwa responded that this argument works in favour of the 1st respondent because if the appellants were not parties to the agreements that have arbitration clauses, then they cannot be heard to ask the court to refer the disputes to arbitration. He submitted that his understanding of section 10 of the Arbitration Act is that the reference to a party to the proceedings moving a court before which an action has been brought to stay those proceedings and refer them to arbitration, is that only a party to that particular arbitration clause or agreement can move the court -J20- to stay proceedings and refer them to arbitration. Thus, if a party to proceedings who is not a party to the arbitration agreement were to move the court to stay the proceedings and refer the matter to arbitration, then that court would be well within its province to invoke the last part of section 10 of the Arbitration Act and dismiss the application. 7.15 In reply, Mr. Chikuba referred us to Order 30 of the High Court Rules Cap 27 which provides that claims based on mortgages and charges ought to be commenced by way of originating summons. Counsel submitted that his undertaking of Section 10 of the Arbitration Act is that 'any party' can raise an objection if party to the proceedings. 8.0 DECISION OF THE COURT 8.1 We have carefully considered the record of appeal, heads of argument and oral submissions rendered by both counsel. We shall deal with the two grounds of appeal together because they are related. We take the view that the Pre-Payment Facility Agreement, the Offtake Agreement and the Charge although made separately, are interrelated as there was a chain of transactions leading to their execution. Therefore, the -J21- 1st respondent had a choice to pursue remedies under any of the said documents but as stated in the affidavit in opposition to the application to stay proceedings and refer the matter to arbitration, the 1st respondent chose to enforce the fixed charge (herein after referred to merely as the charge). Apart from enforcing the charge, it is clear from the Writ and Statement of claim that the 1st respondent wishes to enforce its rights under common law by claiming in paragraph 4 for an order to trace and locate the state of the charged assets and order for delivery up of the said assets to the plaintiff or a person appointed as receiver by the court. The same applies to claim No. 5 as against the 1st to 41h defendants for an account for the use of machinery and charged assets and delivery up of profits arising out of the use of the said charged assets. 8.2 The 2nd to 5th defendants were not privy to the three agreements. Therefore, the 1st respondent has the right to enforce the charge as against the party to it Berdale International Zambia Limited and to pursue any third party who got involved in the matter. It is clear that the 1st respondent is not necessarily seeking to enforce the charge against the persons who are not privy to it. As rightly pointed -J22- out by the lower court, the alleged misappropriation of assets on the part of the 2nd, 3rd and 4th defendants arose from the charged assets. The lower court was also on firm ground when it applied the case of PT Theiss Contractors Indonesia v. PT Kaltim Prima Coal and another (1) and identify the charge as the Agreement under which the substance of the dispute arose and pointed out that it makes reference to the financing documents which are the Offtake Agreement and Pre-paying Agreements. 8.3 The appellants have argued that the mode of commencement of the main action was in breach of Order 30 of the High Court Rules Cap 27 which provides that claims arising from mortgages and charges should be commenced by originating summons. This issue was not at all raised in the court below and was sneaked in orally by the appellant's advocates without leave of the court. Order X Rule 9 (3) of the Court of Appeal Rules provides as follows: "(3) The appellant shall not without leave of the court forward any grounds of objection other than those set out in the memorandum of appeal, but the court -J23- I in dealing with the appeal shall not be confined to the grounds put forward by the appellant." "(4) The court shall not allow an appeal on any ground not stated in the memorandum of appeal unless the respondent including any person who in relation to such ground should have been made, a respondent has had sufficient opportunity of contesting the appeal on that ground." 8.4 In light of the foregoing provisions of the law, it is our considered view that under the circumstances, the respondent did not have sufficient opportunity of contesting the appeal on the ground of mode of commencement of the action. We note that it is a question of law which can be brought up at any stage of the proceedings but in the case of Wilhelm Roman Buchman v. Attorney General (10) it was held that a matter not raised in the lower court cannot be raised in a higher court as a ground of appeal. We are accordingly constrained to consider the issue of mode of commencement. 8.5 Coming to the main issue, which is whether or not the lower court erred when it rejected the application to stay proceedings and refer the parties to arbitration, we are guided by the Supreme Court's decision of Ody's Oil Company -J24- Limited v. The Attorney General & Constantinos James Papoutsis, (14) where it was held as follows: 1. Section 10 of the Arbitration Act No 19 of 2000, gives the Court discretion to determine whether a matter which has arbitration as a mode of settlement of disputes should be referred to arbitration. 2. In such an application, the Court must be satisfied that there is first an agreement, that the arbitration agreement is valid, and or that it is not null and void, inoperative or incapable of being performed. 3. If the Court finds that the arbitration agreement is null and void, inoperative or that it is not capable of being performed, then the Court will not refer the dispute to arbitration for settlement. 8.6 As already stated in this judgment, none of the appellants were parties to the Pre-Payments Facility, Offtake Agreement and the Charge. In the Ody's Oil case supra on page 182, the court alluded to the fact that the 1st respondent was not party to the arbitration agreement and therefore, not bound by the arbitration clause or its outcome. Following the cases of Ody's Oil, (15) Zambia Oxygen Limited and Zambia Privatization Agency v. Paul Chisakula and others (6) and the Attorney General v. Seong Company Limited, (11) we find and hold -J25- .4 that non-parties to the arbitration agreements are not eligible to apply to enforce such agreements pursuant to Section 10 of the Arbitration Act No. 19 of 2000. As for the exceptions to the common law doctrine of privity of contract mentioned in the case of Attorney General v. Seong San Company Limited (11) for example where there• may have been intentions to create a trust either expressly or impliedly or where there may not have been such intentions at all, giving rise to constructive trusts, our position is that the 1st respondent did not bring up the issue of Berdak International Limited being a trustee and the 1st and 2nd appellants constructive trustees in the lower court. We shall therefore not consider it, the case of Buchman v. Attorney General (10) refers. 8.7 (cid:9) Section 10 (1) of the Arbitration Act provides as follows: "A court before which legal proceedings are brought in a matter which is the subject of 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." -J26- I 8.8 Seeing as the persons who applied to refer the matter to arbitration were not privy to the arbitration agreements, the arbitration agreements are inoperative as far as they are concerned. It follows that the applications by the 2nd appellant and the 3rd respondent were misconceived and could not be granted. 9.0 CONCLUSION 9.1 In closing, the appeal fails and we accordingly dismiss it. The appellants shall bear the costs of this appeal. The 1st and 3rd appellants were not the ones who applied to refer the parties to arbitration in the court below and therefore only the 2nd appellant will bear the costs in the court below. The same should be agreed upon between the parties or taxed. C. K. MAKUNGU COURT OF APPEAL JUDGE D. L. Y. S HIN A COURT OF APPE JUDGE P. C. M. NGULUBE COURT OF APPEAL JUDGE -J27-