Metalco Industries Company Ltd and Ors v First National Bank Zambia Ltd and Anor (Appeal 222 of 2021) [2022] ZMCA 16 (15 March 2022)

IN THE COURT OF APPEAL OF ZAMBIA APPEAL NO. 222/2021 HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: ———$$$_—_—___, 15 MAR 2022 \ AT. = METALCO INDUSTRIES COMPANY LIMITED 18 APPELLANT ZALCO LIMITED 2° APPELLANT CENTRAL RECYCLING COMPANY LIMITED 3°? APPELLANT AND FIRST NATIONAL BANK ZAMBIA LIMITED 18T RESPONDENT FIRSTRAND BANK LIMITED 2°” RESPONDENT CORAM: Chashi, Majula and Sharpe-Phiri, JJA ON: 15‘ February and 15‘ March 2022 For the 1st, 2nd and 34 Appellants: —S. Chikuba and C. Nkhata, Messrs Paul Norah Advocates For the 1st and 2-4 Respondents: Y. Yosa, Messrs Musa Dudhia & Company JUDGMENT CHASHI JA, delivered the Judgment of the Court. Cases referred to: 1. Zambia National Holdings Limited and Another v The Attorney General - SCZ Judgment No. 3 of 1994 Leonard Ridge Safaris Limited v Zambia Wildlife Authority (2008) ZR, 97 Pouwels Construction Zambia Limited and Another v Inyatsi Construction Limited (2016) ZR, Vol 2, 1 (Zambia) Limited Mandlethu Cooperative Society Limited and The Attorney General CAZ Appeal No. 93 of 2021 Chavuma Mining - and Chikuta v Chipata Rural Council (1974) ZR, 303 Ody’s Oil Company Limited v The Attorney General and Another (2012) ZR, 164 Booz Allen & Hamilton Inc. v SBL Home Finance Limited and Others (2011) 5 SCC 532 Legislation referred to: The Arbitration Act, No. 19 of 2000 The High Court Act, Chapter 27 of the Laws of Zambia Rules referred to: The High Court Rules, Chapter 27 of The Laws of Zambia The Supreme Court Practice (White Book) 1999 The Court of Appeal Rules, Statutory Instrument No. 65 of Other works referred to: Practical Law, 2022- Thomson Reuters A to Approach Tweeddale, Blackstone Press Practical Arbitration Law - Andrew ~J2- 1.0 INTRODUCTION 1.1 This is an appeal against the Ruling of Honourable Mrs. Justice K. E. Mwenda-Zimba, High Court Judge (Commercial Division) delivered on 234 June 2021. Liz In the said Ruling, the learned Judge declined an application by the Appellants to stay proceedings and refer the parties to arbitration. 2.0 BACKGROUND 2.1 On 224 March 2021, the Respondents which were the plaintiffs in the court below, commenced foreclosure proceedings against the Appellants, in respect to two legal mortgages, under the provisions pursuant to the mortgage deeds. Dawe On 9th April 2021, the Appellants applied to the court to stay proceedings pursuant to Section of The Arbitration Act’, (the Act) as well as clause 47 of the facility agreement dated 16* March 2018. According to the Appellants, the facility agreement provided that all disputes arising out of, or in connection with the agreement be referred to arbitration. It was averred that -J3- clause of the agreement divested the court of jurisdiction to adjudicate upon the matter. Zuo The Respondents opposed the application on the ground that they had employed the right mode of commencement of the action under Order 30/14 of The High Court Rules! (HCR) and Order 88/1 of The Rules of the Supreme Court? (RSC). Further that, there was no dispute which had arisen as the Appellants had admitted the debt. 2.4 It was the Respondents’ averment that the facility agreement, the mortgage deeds and the deed of guarantee were in no way expressed to read as one. That the Respondents had invoked the remedy under the mortgage deeds, which had no arbitration clause and therefore the arbitration clause under the facility agreement cannot come into play. In reply, the Appellants attempted to argue that there was a dispute over interest and further that, the 1% Respondent as agents should not be party to the proceedings. -J4- 3.0 DECISION OF THE COURT BELOW Sak After considering the affidavit evidence, the arguments and the authorities cited by the parties, the learned Judge formulated the issue for consideration as follows: “Whether a mortgage action is arbitrable in our jurisdiction.” In determining the issue, the learned Judge referred to Section 10 of the Act. Further reference was made to Section 6 of the Act, which stipulates what matters are subject of arbitration and those which are not. 3.2 From a review of the provisions, the learned Judge opined that Zambian law on arbitration is pro-arbitration. That where there is a valid arbitration agreement and one party requests the court to refer the parties to arbitration, the court has no choice but to do so, with the exception of where the agreement is null and void, inoperative, incapable of being performed or incapable of arbitration as outlined under section 6 (2) of the Act. -J5- 3.3 The learned Judge opined that, a mortgage is a contract and therefore governed by the principles of contract. She concluded that, whether a mortgage action is subject to arbitration depends on the agreement between the parties to the mortgage deed. The learned Judge stated as follows; “From the above, I hold the view that a mortgage action is arbitrable if there is agreement to refer parties to arbitration in the mortgage deed and the arbitration is not null and void, inoperative, incapable of being performed or incapable of arbitration.” 3:4 Arising from that statement, the learned Judge then went on to consider whether the action which was before her should be stayed and parties referred to arbitration. In interpreting clause 47 and 16 of the facility agreement, the learned Judge found that the arbitration clause was only in the facility agreement. She observed that the deed of guarantee which was executed after the facility agreement did not have an arbitration clause and it reposed jurisdiction in the commercial division of the High Court. -J6- The learned Judge further observed as regards the legal mortgage, that it was silent on dispute resolution, whilst the third party mortgage reposed jurisdiction in the High Court, commercial division. 3.5 The learned Judge was of the view that the deed of guarantee, the mortgage deeds and other security documents provide guidance on what agreements governed dispute resolution as they were entered into post the facility agreement and they did not contain arbitration clauses. Furthermore, that the securities sought to be enforced in the action are the deed of guarantee and mortgages and not the facility agreement. 4.0 THE APPEAL 4.1 Dissatisfied with the Ruling, the Appellants have appealed to this Court advancing four grounds couched as follows: (i) That the learned trial Judge misdirected herself in law and in principle when she denied the Applicants leave to appeal despite acknowledging in her Ruling that she was dealing with a novel area of law; a decision which is contrary to the -J7- rules of natural justice and negative to the development of jurisprudence in the subject matter. (ii) That the learned trial Judge misdirected herself in law and fact when she acknowledged an arbitration clause, being clause 47 in the facility Agreement of 16“ March 2018 but failed to refer the parties in that particular agreement to arbitration. (iii) That the honourable court misdirected itself in law and fact when it ruled that the deed of guarantee, mortgages and other’ securities entered into post the facility agreement of 16" March 2018, and the provisions in the said guarantees, mortgages and securities provide guidance as to mode of enforcement. The learned trial Judge failed to recognize that the said guarantees, mortgages and _ securities were specifically linked to, subjected to and subordinate to clause 34 of the facility agreement -J8- of March 2018, which provided that should there be any inconsistency with the provisions of the facility agreement and any other transaction document, the facility agreement provisions shall prevail, and as such the learned trial Judge was wrong to rule that the facility agreement and guarantee, mortgages ought to be separately read from the facility agreement of March 2018. (iv) That the honourable court misdirected itself in law and fact when it ruied that the deed of guarantee and the mortgage deeds are not defined as “Transaction documents” but that they are defined as transaction Security documents” under clause 1.1.109, when in fact a strict review of the meaning of the two documents indicates that “Transactions documents” and transaction Security Documents” mean the same thing. Clause 1.1.107 defines “Transaction document” to also mean inter alia finance document and clause 1.1.38 of the same agreement defined -J9- “finance document” as_ inter-alia meaning “Transaction Security documents”. The honourable trial Judge hence failed to appreciate in her ruling that the meaning of transaction documents includes’ transaction security documents, and as such mortgage deeds and deeds of guarantee contrary to the ruling, fall under the category of transaction documents and hence are subordinated to clause 34 of the facility “agreement which favours arbitration. 5.1 ARGUMENTS IN SUPPORT OF THE APPEAL 5.1 In arguing the first ground, Mr. Chikuba and Mr Nkhata Counsel for the Appellant submitted that, the lower court having established or acknowledged that she was dealing with a novel area of law, ought to have granted leave to appeal to the Court of Appeal as the test for granting leave was already met in the Ruling. Reference was made to Section 13 of The High Court Act? and submitted that the court below, ought to have allowed leave to appeal in order to properly satisfy the parties over the consideration of the -J10- novel issue. That by the court refusing to use its discretion to grant leave to appeal on a matter it acknowledged as novel, regardless of whether it is novel or not, ought to have equitably been subjected to an appeal in case parties were not satisfied with her Ruling on the matter. 5.2 Grounds two, three and four were argued as one, as according to Counsel, they anchored on the same or similar issue. Counsel contended that the facility agreement and the mortgage deeds as well as the deeds of guarantee under which the 2"4 and 34 Appellants’ liability arises are expressed to be read as one as per clause 34 of the facility agreement. a3 It was submitted that, having established that the arbitration clause is of effect and does come into play, it follows therefore that Section 10 of the Act is applicable to this case, as the Respondents commenced the action by invoking the facility agreement. Our attention was drawn to clause 47 of the facility agreement of 16 March 2018 and submitted that the parties had limited the disputes to -J11- be referred to arbitration during continuance or subsistence of the agreement. 5.4 In contending that parties are bound by the arbitration agreement, our attention was drawn to the cases of Zambia National Holdings Limited, and Another v The Attorney General! and Leonard Ridge Safaris Limited v Zambia Wildlife Authority’. 3.0 Counsel submitted that, it must be pointed out from the onset that the 2"4 Respondent loan has an arbitration clause. That the arbitration clause in the facility agreement applies to all mortgages executed by the Respondents, as it was evident from clause 34 of the agreement, that should there be any inconsistency between the facility agreement and any other document signed by the Respondents, the facility agreement shall prevail. 9.6 Our attention was drawn to clause 34 of the facility agreement at pages 212 of the Record of Appeal which states as follows; -J12- “Should any conflict exist between the provisions of the agreement and the provisions of any other transaction document, the provisions of this agreement shall prevail.” o.7 Our attention was also drawn to clause 1.1.107 of the facility agreement at page of the record, where transaction documents is defined as follows: “Means each finance document, each FNB finance document, the IFC Agreements and every other document designated as such, in writing by the borrower and the agent.” 5.8 Counsel submitted that, from that definition, it can be said that transaction documents in this matter includes the deed of guarantee dated 21st May 2018, third party mortgage dated 29th May 2018 and the first legal mortgage dated 5 June 2018. It was contended that this is a proper case for referring the matter to arbitration. 5.9 It was further submitted that the properties intended to be foreclosed by the Respondents were covered in the facility -J13- agreement which has an arbitration clause. We were referred to the case of Pouwels Construction Zambia Limited and Pouwels Hotels and Resorts Limited v Inyatsi Construction Limited® where the Supreme Court had this to say: “Regarding the contention by Counsel for the Respondent that some issues are not arbitral, we must emphasize that this is a question to be determined by the arbitral tribunal once it is constituted and not the court.... An arbitration clause is inserted in the contract at the time of its conclusion because the parties contemplate as a matter of commercial convenience that it is desirable to adopt this as a mechanism for resolving the disputes that may arise in the course of their business relationship. Its construction should therefore be influenced by the consideration of the underlying commercial purpose of including such a clause in the agreement.” -J14- 6.0 ARGUMENTS IN OPPOSITION TO THE APPEAL 6.1 In opposing the appeal, Mr Yosa, Counsel for the Respondent, relied on the Respondents’ arguments, which started with an introduction followed by the background to the matter. Counsel then requested us to dismiss the appeal for failure to compile the record of appeal in the prescribed manner. We note from the onset that there has been non compliance with Order 13/5 (1) of The Court of Appeal Rules (CAR) by the Respondent which states as follows: “A Respondent who intends to make any preliminary objection in relation to an appeal shall give notice of such preliminary objection to the court and to the other parties within fourteen days from the date of receipt of the record of appeal.” G2 We note that the issues relating to preparation of the record of appeal are being raised through arguments and not in accordance with Order 13/5 (1) CAR. In the case of Mandlethu (Zambia) Limited and Chavuma Mining -J15- Cooperative Society Limited and The Attorney General*, we made it very clear that heads of argument in an appeal play a specific role. The purpose of heads of argument is to speak to the grounds of appeal succinctly. Therefore, in view of the manner in which the objection is being raised, we refuse to be enticed into consideration of the same as it is incompetently before us. The court will have no jurisdiction to grant reliefs sought, where the manner of moving the court is irregular. 6.3 In response to the first ground, Counsel submitted that the learned single Judge of this Court granted the Appellant leave to appeal on 14t July 2021. That this ground of appeal has been overtaken by events. However, Counsel went on to submit on this ground in the event that we are inclined to entertain it. We will not recapitulate the submissions, as we are not inclined to entertain this ground as will be explained later in our analysis and consideration of the ground. 6.4 In response to grounds two, three and four, Counsel submitted that an agreement under the facility agreement -J16- means “this facility agreement together with the annexures, thereto as it may be amended, supplemented, varied or novated from time to time.” According to Counsel, the agreement is not defined to include the Transaction Security Documents or the mortgage deeds. That therefore, the arbitration clause is limited to a dispute on the facility agreement and not the enforcement of the mortgage. 6.5 On the Appellants’ reliance on clause 34, it was submitted that the learned Judge conducted a review of the mortgages and determined that the first legal mortgage was silent on dispute resolution. That the third party mortgage submits the deed to the jurisdiction of the High Court. 6.6 Counsel argued that, clause 34 cannot be relied on as there is no conflict arising between the provisions of the facility agreement and the mortgage deeds. That this is because the manner of enforcement of a mortgage is provided under statute and is not a matter of contract. We were in that respect referred to Order 30/14 HCR and -J17- Order 88/1 RSC and submitted that the rules do not provide for enforcement of the mortgage through arbitration. 6.7 It was further submitted that had the parties sought to have a dispute under the mortgage arbitrated, an arbitration clause would have been specifically included in the mortgage deeds. It was argued that in the matter at hand the Respondents invoked the action via the mortgage deeds, through the originating summons, that as such, the arbitration clause in the facility agreement, which is not contained in any of the mortgage deeds does not come into play. 6.8 Counsel also submitted that, a review of the originating summons and the affidavit in support shows that also in issue is a temporary facility issued by the 1st Respondent to the 3™ Appellant which appears at pages 41 and 48 of the record. That this facility is not incorporated in the agreement which contains an arbitration clause. That it is however secured by the same mortgage sought to be enforced by the Appellants. It was Counsel’s submission -J18- in the alternative that the Respondents can still proceed to enforce the mortgages on the strength of the facility. 6.9 On the issue of whether mortgage actions are arbitrable, our attention was once again drawn to Order 30/14 HCR and the case of Chikuta v Chipata Rural Council® and submitted that there is a mandatory obligation on parties to adhere to modes of commencement of proceedings and there are no exceptions to the rules. 6.10 Counsel submitted that, where a party seeks to enforce its rights pursuant to a mortgage, that party must pursue its claim through the courts and not through alternate fora like arbitration, because such a matter is not arbitable and as a result the arbitration clause is inoperative. 6.11 Our attention was also drawn to Section 6 of the Act which states as follows; “(2) Disputes in respect of the following matters shall not be capable of determination by arbitration (a) (b) An agreement that is contrary to public policy A dispute which in terms of any law, may not be -J19- determined by arbitration (c) (d) (e) (f) (g) (3) The fact that a law confers jurisdiction on a court or other tribunal to determine any matter shall not on that ground alone, be construed as preventing the matter from being determined by arbitration.” 6.12 The case of Ody’s Oil Company Limited v The Attorney General and Another® was cited where the Supreme Court in orbiter had this to say: “We have considered the provisions of Section 10. It is our firm view that the Section is clear and requires no special interpretation. There can be no doubt that Section gives the court discretion to determine whether a matter which has arbitration as a mode of settlement of -J20- disputes, should be referred to arbitration. In such an application the court must be satisfied that there is firstly an achitetion agreement, that the arbitration agreement is not null and void, inoperative or incapable of being performed. 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. Some of these issues, such as the issue of illegality, public policy and the 1*t Respondent not being a party to the arbitration clause were central to the determination of the questions before him and ‘whether in the circumstances it would be proper to refer the dispute to arbitration for settlement. This also applies to the issues raised in Section 6 (2) of the Act which stipulates matters that cannot be subjected to arbitration. These include public policy and matters of a criminal nature.” -J21- 6.13 On the strength of that authority, it was contended that where the matter is not arbitrable, the court is on firm ground to pronounce itself on the matter and not refer it to arbitration. That it is also clear that enforcement of rights flowing from default of a mortgage cannot be done through arbitration because the mechanisms for resolving such a dispute is provided at law in the High court Rules. 6.14 Counsel urged us to adopt the Indian case of Booz Allen & Hamilton Inc. v SBL Home Finance Limited and others’, which he contended had great persuasive effect and invaluable assistance and guidance. In the said case the Supreme Court of India at pages 10-11 had this to say: “... it may be noticed that the cases referred to above relate to actions in rem. A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an _ interest protected solely against specific individuals. Actions in personam refer to actions determining the rights and interest of the parties themselves, whereas actions in rem refer to actions determining the title -J22- to property and the rights of parties, not merely among themselves but also against all persons at any time claiming interest in that property.... Correspondingly, Judgment in personam refers to a Judgment against a person as distinguished from a Judgment against a thing, right or status and Judgment in rem refers to a Judgment that determines the status or condition of property which operates directly on the property itself (Vide Black’s Law Dictionary). General, and traditionally all disputes relating to rights in personam are considered to be amenable to arbitration; and all disputes relating to rights in rem are required to be adjudicated by courts and public tribunals, being unsuitable for private arbitration. This is however not a rigid or inflexible rule. Disputes relating to sub- ordinate rights in personam arising from rights in rem have always been considered to be arbitable...” 6.15 According to Counsel, it is settled law that enforcement of mortgages relates to rights in rem and mortgages actions can only be commenced in the High Court and not the -J23- arbital tribunal because the Arbitration Act expressly excludes matters that are said to be commenced as stipulated in another written law. That as such the arbitration clause was inoperative. 7.0 OUR ANALYSIS AND DECISION 7.1 We have considered the arguments and the Ruling being impugned. As regards the first ground, we opine that it does not qualify as a ground of appeal to this Court. Order 10/9 (2) CAR provides as follows: “A memorandum of appeal shall set forth concisely and under distinct heads, without argument or narrative, the grounds of objections to the Judgment appealed against, and shall specify the points of law or fact which are alleged to have been wrongly decided, such grounds to be numbered consecutively.” 7.2 Although leave to appeal was denied in the Ruling, it does not qualify to be a ground of appeal to this Court, as Order 10/4 (5) and (6) provides for the mechanism of how to -J24- approach the issue where a trial Judge declines leave to appeal to this Court as follows; “(5) Where leave to appeal is refused, an application for leave to appeal to the court shall be made to the single Judge. (6) Where a single Judge refuses leave to appeal, the application for leave may be renewed before the court.” 7.3 We note as rightly observed by Counsel for the Appellants that leave to appeal to this Court was granted by the single Judge and therefore this ground is incompetently before us and we accordingly dismiss it. TA The second ground of appeal attacks the failure by the learned Judge to refer the parties to arbitration, despite acknowledging that clause 47 in the facility agreement had an arbitration clause. The third ground attacks the finding by the learned Judge that the facility agreement, the deed of ararenee and mortgage deeds should be read separately in view of clause 34 of the facility agreement. -J25- We shall consider the two grounds together as they are related. 7.9 The facility agreement subject of determination appears at page 97 of the record. In the definitions and interpretation provisions and in particular clause 1.1.3 the agreement is defined as follows; “1.1.3 “Agreement” means this facility agreement together with annexures thereto as it may be amended supplemented varied or novated from time to time.” 7.6 The said facility agreement provides for arbitration under clause 47 as follows: “47.7 Arbitration- any dispute arising out of or in connection with this agreement (including a dispute regarding the existence, validity or termination of this agreement or _ the consequences of its nullity shall be referred to and finally resolved by arbitration under the Arbitration Rules of the London Court of International Arbitration.” -J26- 7.7 It is evident that clause 47.1 is restricted to the facility agreement as defined under clause 1.1.3 and does not extend to any other document, apart from the facility agreement itself and its annexures. 7.8 The facility agreement is defined by the learned authors of Practical Law, 2022? as follows: “Also known as a loan or credit facility agreement or facility letter. An agreement or letter in which the lender (usually a bank or other financial | institution) sets out the terms and conditions precedent) on which it is prepared to make a loan facility available to a borrower” 7.9 The facility agreement confirms the loan facility offer and describes the principles and terms on which the loan is granted including the loan amount interest rate, duration of the loan, payment conditions provisions regarding early repayment, financial covenants and other obligations and the conditions precedent which include collateral offered as security to be charged to the loan. -J27- 7.10 The facility agreement as can be deduced is distinct from any security document in terms of its provisions. In the view that we have taken, the arbitration clause is restricted to the facility agreement and its annexures. The mortgage deeds in issue are not subject to the arbitration clause. In the view that we have taken, we find no basis to fault the learned Judge in the court below for refusing to adhere to clause 47 and refer the parties to arbitration. 7.11 We note that the proceedings in the court below were judicial foreclosure proceedings, the action having been commenced as such under Order 30/14 HCR and Order 88/1 RSC. The reliefs which were being sought by the Respondents are as follows: 1, Payment of all monies which as at 30'° March 2020 stood at US6,888,975. 53 under the FNB Zambia facility plus interest continuing to accrue and other charges due and owing to the 1*t Respondent from the 1%* Appellant and secured by a first legal mortgage over lot 19871/M Kabwe Central Province for the sum of US$30,600.000 dated 5 June 2018 -J28- owned by the 1* Appellant and a third party mortgage over lot 19979/M Central Province for the sum of US$30,600,000 dated 29** May 2018 owned by the 2" Appellant. . Payment of all monies which as at 30'* December 2019 stood at US$7,886,545.51 under the FirstRand Bank loan plus interest continuing to accrue and other charges due and owing to the 2"! Respondent from the 1*t Appellant and secured by a first legal mortgage over lot No. 19871/M Kabwe, Central Province for the sum of US$30,600,000 dated 5 June 2018 owned by the 1*t Appellant and a third party mortgage over lot 199'75/M Central Province for the sum of US$30,600,000 dated 29 May 2018 owned by the 2" Appellant. . Payment of all monies which as at 30" March 2020 stood at US$1,010,304.72 under the temporary facility granted to the 3 Appellant plus interest continuing to accrue and other charges due and owing to the 1*t Respondent from the 3° Appellant -J29- and secured by a first legal mortgage over lot no. 19871/M Kabwe Central Province for the sum of US$30,600,000 dated 5** June 2018 owed by the 1* Appellant and a third party mortgage over lot No. 19979/M Central Province for the sum of US$30,600,000 dated 29 May 2018 owned by the 2"! Appellant. 4. Foreclosure, possession and sale of lot 19871/M Kabwe 5. Foreclosure, possession and sale of lot 19979/M Central Province | 6. An Order for the enforcement of the corporate guarantee issued by the 2™ and 3" Appellants. 7. An Order that the 2"? and 3 Appellants be held liable for the debt accrued by the 1* Appellant as guarantors of the said 1*t Appellants indebtedness. 7.12 In the court below, the Respondents were seeking reliefs on enforcement of the legal mortgage dated 5'» June 2018, third party mortgage dated 29t* May 2018 and corporate guarantees. The reliefs being sought do not make any -J30- reference to enforcement of the facility agreement. These were the underlying security documents subject of enforcement by way of foreclosure proceedings in the court below. 7.13 There is no dispute that none of the aforestated security documents have an _ arbitration agreement. The jurisdiction of the arbitral tribunal derives solely from the arbitration agreement which may be found in the underlying contract between the parties or in a separate ad hoc agreement. 7.14 Having opined that the facility agreement is separate from the mortgage deeds and the corporate guarantees, clause of the facility agreement which speaks to conflict between transaction documents is inapplicable in the circumstances. 7.15 The fourth ground attacks the learned Judge’s failure to find that transaction documents and transaction security documents have the same meaning. According to the Appellants, the learned Judge failed to appreciate that the meaning of transaction documents includes transactions -J31- security documents and as such mortgages deeds and deeds of guarantee fall under the category of transaction documents under clause 34 of the facility agreement 7.16 We have already opined that clause 34 is inapplicable in the circumstances. We have also opined that the facility agreement is separate from the security documents being enforced. Therefore, in our view, this ground of appeal is not relevant to the determination of the matter before us. 7.17 We note that, Counsel for the Respondent made reference to the Indian jurisdiction and in particular the case of Booz Allen, where the Supreme Court of India held that the enforcement of a mortgage by sale can only be tried by court and not arbitral tribunal. In our case, we are guided by the Act in particular Sections 6(2) and 10 on what matters are arbitrable. Under the said _ provisions, mortgage actions are not proscribed. 7.18 A mortgage is a consensual security which may be enforced by foreclosure or sale, by taking possession or appointment ofa receiver. In our jurisdiction, like in many others such as the United States of America, the parties -J32- are at liberty to resort to arbitration as long as the mortgage deed contains an arbitration agreement, which however was not the case in the matter before us. 7.19 We agree with the learned Judge in the court below that the underlying contract between the parties for purposes of the foreclosure and sale proceedings in ihe court below were the mortgage deeds and the corporate guarantees which did not have an arbitration agreement nor separate ad hoc arbitration agreements. 7.20 We hasten to add that, Section 10 of the Act grants power to the court to exercise jurisdiction to refuse a stay and refer parties to arbitration. The learned authors of A Practical Approach to Arbitration Law’ at page 21 states as follows: “For there to be a reference to arbitration there needs to be a dispute. Where there was no dispute that was capable of compromise by accord or satisfaction there could be no reference to arbitration... ifa party admits a claim then there is something which is incapable of being -J33- compromised by accord and therefore there is no dispute to found the jurisdiction of the arbitral tribunal.” 7.21 In the matter before us, as rightly observed by the learned Judge in the court below in her Ruling, the claim was admitted except for the issue of interest and the 2nd Respondent as an agent. There was therefore no dispute to found the jurisdiction of the arbitral tribunal. 7.22 In the view that we have taken, the matter is remitted back to the High Court before the same learned Judge for issuance of orders for direction as all the four grounds of appeal have failed for lack of merit. 7.23 Costs to the Respondents, to be-paid forthwith. Same are to be taxed in default of /J. CHASHI COURT OF APPEAL JUDGE pep rutye B. M. MAJULA COURT OF APPEAL JUDGE —— Ye. A. SHARPE-PHIRI COURT OF APPEAL JUDGE -J34-