National Commercial Employers Association of Zimbabwe v Commercial Workers Union of Zimbabwe & Anor (HC 9490 of 2013) [2015] ZWHHC 533 (16 June 2015)

1 HH 533-15 HC 9490/13 NATIONAL COMMERCIAL EMPLOYERS ASSOCIATION OF ZIMBABWE versus THE COMMERCIAL WORKERS UNION OF ZIMBABWE and JOHNLIFE TUNGAMIRAI MAWIRE N. O. HIGH COURT OF ZIMBABWE ZHOU J HARARE, 2 October 2014 and 17 June 2015 Opposed Application F. Girach, for the applicant S. Banda, for the first respondent ZHOU J: This is an application in terms of Article 34(2) of the Schedule to the Arbitration Act [Chapter 7:15] for the setting aside of an arbitral award rendered by the second respondent in a labour dispute between the applicant and first respondent. The application is opposed by the first respondent. The applicant is an organisation of employers in the commercial sector in Zimbabwe. The first respondent is a trade union representing the employees in that same sector. Following disagreement on the minimum wage to be paid to the first respondent’s members by the applicant’s members the dispute was referred to arbitration in terms of an agreement entered into in writing by the applicant and first respondent. Two arbitrators were appointed in terms of the agreement. The two arbitrators failed to agree on the percentage by which the wages of the employees were to be increased. Consequently, a third arbitrator, the second respondent, was appointed. The second respondent rendered an arbitral award on 26 September 2013 in terms of which he awarded an increase of 10.5% on the existing wages. That is the award which the applicant seeks to impeach on the ground that it is contrary to the public policy of Zimbabwe. Article 34(2) of the Schedule to the Arbitration Act provides as follows: “An arbitral award may be set aside by the High Court only if – (a) (b) . . . the High Court finds that – (i) (ii) . . . the award is in conflict with the public policy of Zimbabwe.” HH 533-15 HC 9490/13 Article 34(5) provides the following: “For the avoidance of doubt, and without limiting the generality of paragraph (2) (b)(ii) of this article, it is declared that an award is in conflict with the public policy of Zimbabwe if – (a) the making of the award was induced or affected by fraud or corruption; or (b) a breach of the rules of natural justice occurred in connection with the making of the award.” In order to give effect to the principle of finality in arbitration proceedings the provisions relating to the public policy requirements are interpreted restrictively. In the case of Zimbabwe Electricity Supply Authority v Maposa1999 (2) ZLR 452(S) at 465C-D, the court stresses that approach in the following terms: “In my opinion, the approach to be adopted is to construe the public policy defence, as being applicable to either a foreign or domestic award, restrictively in order to preserve and recognise the basic objective of finality in all arbitrations; and to hold such defence applicable only if some fundamental principle of law, morality or justice is violated. This is illustrated by the dicta in many cases.” The above approach has been consistently embraced in this jurisdiction. See Beezley NO v Kabell & Anor2003 (2) ZLR 198(S); City of Harare v Harare Municipal Workers Union 2006 (1) ZLR 491A-C; Godfrey Tatenda Guriras & Ors v Zimbabwe Council for Higher Education & Ors HH 217 – 15 at p. 3; Richard Alwyn Matthews v The Honourable Mr Justice A. Ebrahim & Ors HH 103 – 15 at p. 4. The court is conscious of the fact that when it exercises powers in terms of arts. 34 and 36 of the Schedule to the Arbitration Act it is not sitting as an appellate court to consider the correctness or merits of the decision of the arbitrator. An applicant approaching this court for the setting aside of an arbitral award must, therefore, show more than just that the arbitrator made some mistake, be it of law or fact, or that on the same facts this or another court might or could or even should come to a different conclusion to that reached by the arbitrator. It is only when “the reasoning or conclusion in an award goes beyond mere faultiness or incorrectness and constitutes a palpable inequity that is so far reaching and outrageous in its defiance of logic or acceptable moral standards that a sensible and fair minded person would consider that the conception of justice in Zimbabwe would be intolerably hurt by the award” that this court would be justified to set aside the award on the grounds of its being in conflict with the public policy of this country. See Zimbabwe Electricity Supply Authority v Maposa (supra) at 466E-G; Delta Operations (Pvt) Ltd v HH 533-15 HC 9490/13 Origen Corp (Pvt) Ltd 2007 (2) ZLR 81(S) at 85C-D; Beezley NO v Kabell & Anor (supra) at 201D-E; Muchaka v Zhanje & Anor2009 (2) ZLR 9(H) at 11E-G. The adjectival expressions in the passage cited above graphically illuminate the threshold for interference with an arbitral award pursuant to an application made in terms of art. 34. According to the Concise Oxford English Dictionary, the word “palpable” means “plain to see or comprehend”. Put in other words, the conclusion reached in the arbitral award must amount to a plain or manifest injustice that is shockingly bad and unendurable in any civilised society for it to be set aside. In Tel-One (Pvt) Ltd v Communication & Allied Services Workers’ Union of Zimbabwe 2007 (2) ZLR 262(H) an arbitral award was held to be in conflict with the public policy of Zimbabwe on the ground that if allowed to stand it would relegate the employer into insolvency. In that case the court found that the award had the effect of obliging the employer to commit 130 percent of its income to salaries and wages. In the case of Pamire & Ors v Dumbutshena NO 2001 (1) ZLR 123(H) this court held that an arbitral award in terms of which a party was granted full damages notwithstanding its failure to perform all its contractual obligations was contrary to the public policy of Zimbabwe. Also, in Zimbabwe Posts (Pvt) Ltd v Communications and Allied Services Workers’ Union of Zimbabwe HH 60 – 14 an award was found to be in conflict with the public policy of Zimbabwe on the basis that its effect would be to drive the employer into liquidation, notwithstanding the fact that the awarded increments were not substantial. In casu the second respondent represents different employers or companies whereas in two of the judgments cited above the employer was one organisation. The industry is also different from that of the applicant in the instant case. The applicant represents businesses in such sectors as retail, dry cleaning, oil distribution, building societies, and cleaning services subsectors. Figures illustrating the performance of the economy were placed before the second respondent and were largely unchallenged. A year on year inflation rate of 1.87 percent was accepted. The second respondent acknowledged the relevant factors to be taken into account in determining a fair and reasonable increase, such as the Poverty Datum Line, the rate of inflation, the performance of the sector, and the need to reasonably compensate the employees while at the same time ensuring that the business of the employer remained viable. He also acknowledged the approach taken by the Labour Court in the Chamber of Mines case. However, his award does not appear to have been based upon or to have been guided by all or any of those factors. Rather, he merely averaged two previous awards of 10% and 11% for 2011 and 2012 respectively in order to come up with an increase of 10.5 percent. On HH 533-15 HC 9490/13 his own admission, those previous awards have no precedential value. The award, in my view, therefore constitutes an affront to the conception of justice, as it is not predicated upon the relevant considerations and ignores the impact of the increase awarded on the industry. While the increase on the minimum wage translates to an amount of $25, the overall impact of the increase on the industry was not considered. Evidence placed before the second respondent showed that the commercial sector was heavily affected by closures because of viability issues. Any increase which did not take into account the impact of the new wage bill on the industry potentially exposed the businesses to liquidation. For the above reasons, I come to the conclusion that the award is in conflict with the public policy of Zimbabwe. It is not based on precedent or any of the relevant factors. The factor considered in setting the increase is, in my view, irrelevant. In the draft order the applicant seeks in the alternative not just the setting aside of the arbitral award but also an order for the matter to be “referred to arbitration by an arbitrator to be identified and agreed by the parties failing agreement within 10 working days an arbitrator to be appointed by the President for the time being of the Law Society of Zimbabwe”. In terms of Art 34 the only relief which this court can grant if it is satisfied that the grounds have been established for it to interfere with the award is the setting aside of the award. Any other order falls outside the mandate of the court. The court will leave it to the parties to determine the future course of the matter. See Zimbabwe Electricity Supply Authority v Maposa (supra) at 467B; Origen Corporation (Pvt) Ltd v Delta Operations (Pvt) Ltd 2005 (2) ZLR 349(H) at 356E-357A; Richard Alwyn Matthews v The Honourable Mr Justice A. Ebrahim (supra) at p. 7. As regards costs, it seems to me that these should follow the result. No submissions were made to the contrary. In the result, IT IS ORDERED THAT: 1. The arbitral award rendered by the second respondent on 26 September 2013 be and is hereby set aside. 2. The first respondent shall pay the costs of this application. Gill Godlonton &Gerrans, applicant’s legal practitioners J. Mambara & Partners, first respondent’s legal practitioners