Shoprite Holdings Limited and Anor v Africa Opportunity Fund L.P and Anor (2019/HPC/501) [2022] ZMHC 115 (21 October 2022)

IN THE HIGH COURT OF ZAMBIA AT THE COMMERCIAL REGISTRY HOLDEN AT LUSAKA (Civil Jurisdiction) 2019/HPC/501 IN THE MATTER OF: AND IN THE MATTER OF: AN APPLICATION FOR AN ORDER FOR RECOGNITION AND REGISTRATION OF AN ARBITRATION AWARD IN TERMS OF SECTION 18 OF THE ARBITRATION ACT, No. 19 OF 2000 , READ TOGETHER WITH RULE 15 OF PART VII OF THE ARBITRATION (COURT PROCEEDINGS) RULES, 2001. AN ARBITRATION AWARD ON APPEAL DATED THE 12TH DECEMBER, 2018, IN THE MATTER BETWEEN SHOPRITE HOLDINGS LIMITED AND AFRICA OPPORTUNITY FUND LP AND AFRICA OPPORTUNITY FUND CAYMAN LIMITED (CASE No. 16486/2014) HELD IN CAPE TOWN . I BETWEEN: SHOPRITE HOLDINGS LIMI SHOPRITE CHECKERS (PTY) AND • ~ \\ C u Or Z.-; l"1 'l'i.t. IUO!c:tAny ' I . . _. -7~ 1ST APPLICANT 2ND APPLICANT lfr~PKC'.~s __ , l2 /) () · 80x soo61, ~_......... AFRICA OPPORTUNITY FUND LP AFRICA OPPORTUNITY CAYMAN LIMITED 1ST RESPONDENT 2ND RESPONDENT For the Applicants : Mr. William Boli Nyirenda, SC, of William Nyirenda & Company with Mr. Buta Gondwe of Buta Gondwe & Associates . For the Respondents: Mr. Mulopa Ndalameta, of Musa Dudhia & Company. ( On an Application to Set Aside Originating Process and Ex-Parte Orders) RULING RI 1.0 INTRODUCTION 1.1 By Ex-parte Originating Summons, filed on 8 th November, 2019, Shoprite Holdings Limited (1 st Applicant) and Shoprite Checkers (PTY) Limited (2 nd Applicant), applied to have registered, against Africa Opportunity Fund L. P (1st respondent) and Africa Opportunity Cayman Limited (2 nd respondent), an Arbitral Award (the Award) rendered on appeal dated 12th December, 2018. The Award affected the respondents' shares in Shoprite Holdings Limited registered at the Share Register of the Lusaka Stock Exchange (LuSE). 1.2 The application to register the Award was made pursuant to section 18 of the Arbitration Act, No. 19 of 2000, read together with Rule 15, Part VII of the Arbitration (Court Proceedings) Rules, 2001. 1. 3 On 13th November, 2019, I heard the application for registration of the Award and granted it as prayed and the Order was signed on 14th November, 2019. 1.4 By Ex-parte application, the Order of Recognition and Registration of Award was amended, dated 2 nd June, 2020, with the effect that the respondents and their nominees do cause to be amended the Share Register of Shoprite Holdings Limited at LuSE's Central Securities Depository and the Holders of Record to show that valid title did not pass to the respondents in 796,622 out of a total of 807,861 ordinary shares held by the respondents at LuSE's Central Securities Depository. That the shares in which title did not pass be reversed and vested in Shoprite Checkers (Pty) Limited ab initio and that the LuSE Registers do show that the respondents are valid holders of 11,059 ordinary shares in Shoprite Holdings Limited. R2 1.5 By another Ex-parte Summons, the applicants applied for substituted service on the respondents out of jurisdiction. On 20th November, 2020, the order to serve by substituted service was granted and the applicants were ordered to publish the Order of Registration of Award in a prominent national daily newspaper in the Cayman Islands where the respondents were domiciled. 1. 6 By yet another Ex-parte application, an order was entered on 26th August, 2021 with the effect that the 796,622 ordinary shares be deemed to have reverted to the pt applicant from date of Award, which was confirmed on appeal on 12th December, 2018. On 21 st September, 2021, amendments to the Order of Recognition and Registration of Award were once more allowed to give effect to the Award. 1.7 On 21 st October, 2021, Messrs Musa Dudhia & Co. filed Notice of Appointment of Advocates for the Respondents and launched an application to set aside Originating Process and Ex-parte Orders of this Court and to Stay Execution/Enforcement pending determination of Set Aside Application. 1.8 On 5th November, 2021, enforcement of the Award and the Orders made thus far, were stayed, pending determination of the matter. The Order of Registration of Award was however, not stayed, pending determination of the respondents' applications. 2.0 THE RESPONDENT'S APPLICATION TO SET ASIDE ORIGINATING PROCESS AND EX-PARTE ORDERS 2.1 The respondents' application is supported by "the Affidavit in support of summons to set aside originating process and ex-parte orders of the court and to stay execution/ enforcement pending determination of set aside R3 application," filed on 2nd November, 2021; "the list of authorities and skeleton arguments," filed on 2nd November, 2021, "the affidavit in reply and skeleton arguments", both filed on 10th December, 2021 and "oral arguments." 2.2 The Affidavit in support was deposed to by Francis Daniels, a director of the investment manager of the respondents and director in the 2 nd respondent company. He averred that the respondents that they are both neither incorporated nor domiciled in Zambia. He deposed that the originating process that commenced the action was issued without leave of the Court to issue process for service outside jurisdiction. He itemised the Ex-parte Orders and stated that the respondents have been prejudiced as they have not had any opportunity to be heard at all in this action, despite the applicants being aware of the respondents' address in the Cayman Islands as stated at paragraph 4 of the applicants' affidavit in support of originating summons filed on 8 th November, 2019. Further, that the applicants and their South African lawyers were always able to reach the respondents and hence cannot claim not to be able to know where to serve the documents on the respondents as opposed to resorting to substituted service, which advertisements either in Zambia or in the Cayman Islands have not been seen by the respondents. It was further stated that the applicants have not brought any of the Ex-parte Orders obtained to the respondents' attention much to the respondents' prejudice. 2.3 It was averred that the respondents have not been served with a notice of registration. Further, that the registration and enforcement process is administrative in the sense that the High Court does not add to or vary the award as the award is registered and enforced in the manner it was published. Furthermore, that the applicants have involved the High Court in re-writing the award to, inter alia, require the Lusaka Securities Exchange (LuSE) to amend the share register; deem shares as having R4 reverted to the 1st applicant from the date of the first award and have third parties make changes to the share registers and the Central Securities Depository (CSD). It was averred that the arbitral tribunal neither made such determination nor did the applicants seek such an order but this Court has heard the applicants in the absence of the respondents and granted such orders. The respondents disputed the assertion that the Standard Chartered Securities Nominees are representatives of the respondents but merely hold the shares in issue. It was also averred that the order applied for and obtained by the applicants was for substituted service which is distinct from an order for leave to issue process for service out of the jurisdiction despite Pieter Gerrit Du Preez having the contact details of Francis Daniels. 2.4 In the skeleton arguments, the respondents contend that the originating process and all ex-parte Orders be set aside for lack of jurisdiction and irregularity, in that the despite the respondents been domiciled outside jurisdiction, no leave to serve the application for registration and enforcement of arbitral award out of jurisdiction was obtained nor was proof of service shown. On this proposition, counsel for the respondents called in aid Order 10 rules 1, 15 and 16, HCRs, CAP 27; Order 6/7, RSC, 1999 Edition, Leopold Walford (Zambia) Limited v Unifreight ( 1985) ZR, 203; Chishala Karabasis Nivel v Laston Geoffrey Mwale (SCZ Selected Judgment No. 40 of 2018). It was contended that an application for substituted service, unlike an application to issue for service out of jurisdiction, in made pursuant to Order 10 rule 17, HCRs. It was further argued that substituted service did not happen each time the applicants made an application to this Court, other than the one for registration of the award which was published in a newspaper. The respondents argued that no reason has been given why the applicants did not serve the orders made on 27th May, 2020, 26th August, 2021, 9 th September, 2021 and 21 st September, 2021. RS 2.5 It was further argued that the applicants did not make a full and frank disclosure of the whereabouts of the respondents as their company secretary was in communication with the respondents' South African representatives, including Francis Daniels. The case of Tommy Mwendalema v Zambia Railways Board (1978) ZR 65 was cited in support of this argument. It was further contended, on the strength of the decision in Winnie Zaloumis (Suing in her capacity as acting National Secretary for the Movement/or Multi-party Democracy} v Felix Mutati and 3 Others (2016) 2 ZR 183 and Shamwana v Mwanawasa (1993- 1994) ZR 149 that the applications necessitating the ex-parte orders ought to have been made inter-partes as there was no urgency in granting them. It was argued therefore, that by virtue of the ex-parte Orders, the respondents have been prejudiced as they had had no opportunity to be heard at all in this action. 2.6 The respondents further argued that the various ex-parte orders that have been granted, effectively change and add to the arbitral award and not utilising the court's complimentary role. The case of Savenda Management Services Limited v Stanbic Bank Zambia Limited (Selected Judgment No. 39 of 2017) was cited on the complimentary role of the court. The respondents maintained that Rule 17 of the Arbitration Rules was not complied with as no notice of registration was filed in accordance with the Rules. Further, that the process was served by the applicants on the nominees of the respondents under the mistaken belief that the same were respondents' representatives. 2. 7 In his oral arguments, Mr. Ndalameta reiterated that the respondents' main contention is that since they are all foreign entities with addresses outside the (Zambian) jurisdiction, leave to issue process to serve outside jurisdiction was necessary before commencing these proceedings. He R6 argued that since this was not done, the law was settled that there is no jurisdiction to entertain the proceedings. Secondly, that various ex- parte orders were issued in the absence of proof of service of the attendant applications which was bad at law. He contended that certain of the ex parte orders had the effect of adding to or altering to the arbitral award which is not permissible. Therefore, that the originating process and ex parte orders should be set aside. 2.8 Mr. Ndalameta further argued that non-disclosure of material facts only applies to the equitable relief of an injunction which is not the case here. Further, that even if that information comes to the Court's attention, the Mwendalema case is very clear that the court is simply put in a position to decide based on the totality of the information. He also argued that losing at arbitration has never been a bar to utilising court processes to set things right and that is why there is an avenue of applying to set aside the registration of an arbitral award. He contended, on the strength of the Savenda case that jurisdiction in registration and enforcement is merely to register the award and enforce it as it is. He argued that Order 3 Rule 2, HCRs, does not override section 20 of the Arbitration Act in terms of jurisdiction of this Court in an arbitral award. He also argued that there was a difference between leave to serve by substituted service and leave to issue process for service outside jurisdiction. Lastly, on paragraphs 5 and 10 of the Affidavit in Reply, he submitted that the two do not offend the High Court Rules as it was practice for a deponent to refer to the advice of his lawyers. 3.0 THE APPLICANT'S OBJECTION THE RESPONDENTS' APPLICATION TO SET ASIDE ORIGINATING PROCESS AND EX-PARTE ORDERS TO 3.1 The applicants' response was contained in the "Affidavit in opposition to summons to set aside originating process and ex-parte orders of the court R7 and to stay execution/ enforcement pending determination of setting aside application," filed on 25 th November, 2021; "the List of Authorities and Skeleton Arguments," filed on 25th November, 2021 and "oral arguments." 3.2 the Affidavit in opposition was deposed to by Pieter Gerrit Du Preez, the Company Secretary in the applicant companies. He deposed that as far as registration of the arbitration award on appeal is concerned, the process was duly complied with as provided by the Arbitration Rules. Further, that the registration process was served on the Nominees of the respondents, Standard Chartered Securities Nominees Limited who hold the affected shares in the Central Share Depository at the Lusaka Securities Exchange (LuSE) on behalf of the respondents and were duly served through their advocates. That registration was also served on the respondents out of jurisdiction by way of advertising in the Times of Zambia and in the Compass Media in the Cayman Islands. Pieter Gerrit Du Preez disputed being aware of the respondents' physical addresses for service as they were served through their lawyers in South Africa during the arbitration proceedings. Further, that the parties agreed to do all things necessary to rectify the relevant share register to reflect Shoprite Checkers (Pty) Ltd as the registered and beneficial shareholder. He added that the outcome of the arbitration has since been published by the respondents in their Company Announcements of February, 2017 and January, 2019. 3.3 In the skeleton arguments, the applicants relied on the Arbitration Act, 2000, the Arbitration (Court Proceedings) Rules, 2001, the High Court Rules, CAP 27 and the case of Cash Crusaders Franchising (Pty) v Shakers and Movers Zambia Limited. The gist of the applicants' submission was that they had complied with the Arbitration Rules on registration of an award and that the rules provide for the process to be ex-parte and that the Court had jurisdiction to make the attendant ex-parte orders as the RS registration process was served on the Nominees of the respondents, Standard Chartered Securities Nominees Limited. That the respondents do not have any registered office(s) in Zambia but are domiciled in the Cayman Islands and leave to serve them outside jurisdiction was duly obtained. 3.4 In his oral arguments, Mr. Nyirenda, SC, submitted that to the extent of the Arbitration Rules, the registration of an arbitral award is done by the party seeking registration. That Rule 16 of the Arbitration (Court Proceedings) Rules, 2001, requires that an application for registration of an arbitral award be made ex-parte. After making the application, the registering party then proceeds to serve on the parties concerned (Rule 19(1) of the Arbitration (Court Proceedings) Rules, 2001). That Rule 19(1)(b) further stipulates that where service is sought outside jurisdiction, it is done in accordance with the rules relating to service of a writ of summons. Accordingly, the applicants in this matter made an ex-parte application before this court seeking (i) leave to serve process by substituted service by advertising and (ii) leave to serve outside jurisdiction. The court proceeded to grant the leave in accordance thereof. It was submitted that substituted service and service outside jurisdiction was effected on the respondents by (i) advertising in the Times of Zambia Newspaper as exhibited in the Affidavit in opposition and (ii) service outside jurisdiction was effected by publication in a Newspaper in the Cayman Islands called "Campus Media" as equally exhibited. 3.5 It was argued by State Counsel Nyirenda that there was no requirement under the Arbitration Rules for a party seeking to register an arbitration award to seek leave of court to proceed with the registration process and that the law requires service after the process is filed and an order (of registration) obtained. It was contended that this procedure was complied with by the applicants. R9 3.6 Concerning the argument on ex-parte orders, it was argued that these orders sought to enforce the registered arbitration award with the Lusaka Stock Exchange (LuSE) so that there is actualisation of the arbitration award to which both parties submitted themselves willingly. He emphasised that Rule 16 of the Arbitration Rules, 2001, require that registration of the award be by ex-parte summons. It was contended that when all the ex-parte orders were obtained, they were equally within the strength of the leave granted by the Court to serve outside jurisdiction by substituted service and all the Court's orders were published in Cayman Island. It was added that the arbitration in contention was conducted in Cape Town, South Africa and not in Zambia. That they were commenced by the respondents and all parties were represented during the arbitration proceedings and all parties willingly and freely subjected themselves to the process. It was further argued that the respondents had agreed to do everything within their power to ensure effectual registration of the arbitration award and do all things necessary to rectify the relevant share register (refer to page 62 of exhibit PGDP9 of the Affidavit in Opposition filed on 25th November, 2021). That this position is in contrast to the position taken by the respondents in paragraph 16 of their Affidavit in Reply filed on 10th December, 2021 wherein they rubbish the arbitral agreement which is a clear affront to the arbitral proceedings and this is being done before the wrong forum and too late in the day. 3.7 It was further submitted that the argument that the ex-parte orders are varying the arbitration award by requiring LuSE to vary the share register (paragraph 7 of Affidavit in Reply), is misconceived as the ex-parte orders relate to the enforcement of the registered award. The Cash Crusaders case was cited in which it was held that once registration has taken place, the award is brought into the realm of the existing rules and procedures (of court) for purposes of enforcement (Rule 16 of the Arbitration Rules). It was further submitted that under Order 3 Rule 2 of the High Court Rules, RlO CAP 27, this Court has unlimited powers to make reasonable orders within the realm of the law for purposes of enforcement of court processes (awards, orders, etc). That in casu, LuSE are not part of the proceedings and their application to join the proceedings for purposes of execution of award was referred to a judge for hearing but this has not taken place to date. Exhibit "PGDP8" of the Affidavit in Opposition (Register Report from LuSE) shows that the respondents' shares are not registered in their names and they are not shown but the same are held in the Central Share Depository by Standard Chartered nominees in trust for the respondents and this is confirmed in paragraph 16 of the Affidavit in Reply wherein they instructed their nominee not to comply which is in breach of the award. It was contended that in so far as enforcement of the registered award is concerned, there are four critical parties involved, namely the respondents (who have about 11,059 ordinary shares after the Award); the applicants, Shoprite Checkers (who have 807,681 ordinary shares) and the custodians, Standard Chartered Nominees and LuSE, the regulatory authority. State Counsel Nyirenda submitted that the lawyers of Standard Chartered Nominees, Messrs Ventus Legal Practitioners through a Mr. Chris Sinkala even appeared before this Court and therefore, the respondents were aware of the registration processes. 3.8 Mr. Nyirenda, SC, argued that the assertion that the arbitral award has been varied has no merit and flies in the teeth of the evidence on record. He contended that the respondents have not even disclosed that they are signatories to the document exhibited as "PGDP9" which sought to smoothen the registration and enforcement of the arbitral award and have impugned that document in their paragraph 16 of the Affidavit in Reply. Secondly, that as shown by exhibits "PGDPl0-11" of the applicants' affidavit, the respondents published to their shareholders the fact that they had lost the arbitration and shares had reverted to Shoprite Checkers but have not disclosed this material evidence that could have assisted the Rll Court to come a just decision. It was submitted that non-disclosure of material information is fatal at law and works against the non-disclosing party, as was held in the case of Mobile Zambia Limited v Msiska, SCZ Judgment No. 11 of 1983. State Counsel also referred to Order 29/1/a/33 of the Rules of the Supreme Court, 1999 on suppression of facts which should work against a party so suppressing. State Counsel Nyirenda also contended that paragraphs 5 and 10 of the respondents' affidavit contains legal arguments and should be disregarded for infringing the High Court Rules. 3.9 Mr. Gondwe supplemented by stating that in the applicants' skeleton arguments (paragraph 1.3), it has been emphasised that no breach was made by the applicants in so far as they complied with the Arbitration Act. He argued that the registration of the award can only succeed if there is a fundamental breach and if there is demonstrable prejudice but none of these two has been satisfied by the respondents. He emphasised that in "PGDP9" the respondents actually agreed to do all things necessary for registration, enforcement and rectification of register for the shares, which the respondent failed to substantiate. Therefore, pursuant to Rule 2, Rules of the Supreme Court, the respondents' application should be dismissed with costs. 3 .10 Counsel for the applicants prayed that the respondents' application be dismissed with costs and the registration of the award be upheld. 4.0 THE DECISION AND CONCLUSION 4.1 I have considered the application and the contrasting arguments. It is settled that on 8 th November, 2019, an ex-parte originating summons was filed pursuant to section 18 of the Arbitration Act, No. 19 of 2000 and on 14th November, 2019 an ex-parte order for recognition and registration of the award on appeal was entered. It is noteworthy that this matter was R12 settled by arbitration and only came to court for registration, recognition and enforcement of award. Section 20( 1) of the Arbitration Act provides that an award made by an arbitral tribunal is pursuant to an arbitration agreement is final and binding on the parties and on any persons claiming through or under them. The parties herein, subjected themselves to an arbitration process and by an Award on Appeal delivered at Cape Town dated 12th December, 2018, the following was ordered by the arbitral tribunal in paragraph 27 (b): "b. The award at first instance is set aside and replaced with the following: (i) (ii) The first claimant's claims are dismissed. the respondent is to pay the second claimant dividends in respect of 11,059 ordinary shares in respondent to be calculated as at the date of declaration or the date of confirmation of the dividends - whichever is the later - on the basis of the kwacha equivalent of the dividend declared in rand on interest calculated at the rate of 9% as from that date to date of payment. together with that date, (iii) Costs to stand over for later determination." The now applicants were respondents in the arbitration while the claimant was the now respondents. 4.2 It cannot be overemphasised that the role of the court in arbitration is complimentary and the registration of the award by the Court is for purposes of giving it an official seal for enforcement purposes and not to bring it to be subject to the dictates of a court. This was the guidance given in the Cash Crusaders case above cited. 4.3 For determination, in my view, in this application are three questions, namely: R13 (i) whether leave was required to serve originating process outside jurisdiction before filing the registration, recognition and enforcement application. (ii) whether it could be said that the respondents were served with the registration of award notice. (iii) whether the orders rendered in this matter have the effect of varying the arbitral award and ought to be set aside. 4.4 On the first issue, it is my considered view that the applicants did comply with the law, that is, Rule 16 of the Arbitration (Court Proceedings) Rules, S. I. No. 75 of 2001 in that the Rule requires the application to be made ex-parte by way of originating summons which the applicants did. Rule 17 (1) of the Arbitration (Court Proceedings) Rules, 2001, does not require that the order giving leave to register an award be served on the judgment debtor. 4.5 On whether the respondents were served with the registration of award, it is my conclusion that they were indeed served, not only on their nominees, Standard Chartered Securities Nominees but also through advertisement in the Cayman Islands where they are domiciled. I am satisfied that the requirements of Order 10, HCRs were met in the application for substituted service. I do not think that the fact that the registration was not personally effected on the respondents changes the situation as Rule 17(1) of the Arbitration (Court Proceedings) Rules, 2001 does not in fact require service on a judgment debtor. In any case, a nominee is defined in Black's Law Dictionary as a person designated to act in place of another. The respondents have not disputed that Standard Chartered Securities was its nominee and holds its shares at the Central Securities Depository. R14 4.6 On whether the orders rendered in this matter have the effect of varying the arbitral award and ought to be set aside, I reiterate that the court has no mandate to vary or alter the arbitral award but assist with enforcement (execution) of award as though it was a court judgment. The respondents did not however, pin-point to what extent the ex-parte orders, other than the one for registration and enforcement of award, varied the award which portion or specific order I ought to set aside. On the other hand, the applicants have insisted that all the ex-parte orders were meant to enforce the award. I am therefore, at pains to appreciate the respondents' position as to which orders infringed on their rights or went against the arbitral award on appeal. In the absence of evidence specifically indicating what has been varied in the orders, I cannot sustain this application. As much as I agree with the respondents' contention that they ought to have been served with the applications for amendments of the registration order and the attendant ex-parte orders, it is however, not enough to make a blanket statement that all ex-parte orders varied or added to the arbitral award on appeal. It is trite that enforcement of arbitral award can include an order to rectify the share register. I would have expected to hear an argument that the impugned ex-parte orders did in fact give the applicants shares that they were not awarded during arbitration or the orders had an effect of giving an undue financial benefit to the applicants to the detriment of the respondents. 4. 7 From the foregoing, I decline the respondents' application to set aside the orders rendered in these proceedings. 4.8 I award costs to the applicants, to be agreed and in default to be taxed. 49. Leave to appeal is granted . Delivered at Lusaka this 21 st day of October, 2022 . ...:...:.=---------, ~ tt-z~ - t -~Ul. P JBL!C OF ZAMBIA JUD ICIARY R. K. Kaoma • REGISTRAR I Ii - RlS 2 1 OCT 2022 ~ -· L - - - - - - - - - :~ T HE REG?STfi. AR OF TH E SUPR EM E COU RT P. o. BOX 500 6 7 , LUS A K A