Supply Connection Limited v Ndilila Associates (2017/HPC/ARB/0187) [2022] ZMHC 32 (3 June 2022)

IN THE H IGH COURT FOR ZAMBIA AT THE COMMERCIAL REGISTRY HOLDEN AT LUSAKA (Civil Jurisdiction) 2017/HPC/ARB/0187 IN THE MATTER OF: Rule 23 of the Arbitration (Court Proceedings) Rules, Statutory Instrument No. 75 of 2001 Regulation 3 of Part 1 of Arbitration (Court Proceedings) Rules, Statutory Ins trument No. 75 of 200. Regulations 5 (1) (a) and {c) of part 1 of Arbitration (Count Proceedings) Rules, Statutory Instrume nt No. 75 of 2001 Regulation 12 of part 1 of Arbitration (court proceedings) Rules, statutory Instrument No. 75 of 2001 Regulation 13 (1) of part 1 of Arbitration (CoW't proceedings) Rules, s tatutory Instrume nt No. 75 of 2001 ( AND IN THE MATTER OF: Section 17(2) (ii) (iii) and IV of the Arbitration Act, No.19 OF 2001 AND IN THE MATTER OF: An Arb itration Award dated 20th March, 2017 BETWEEN: SUPPLY CONNECTION LIMITED APPLICANT AND NDILILA ASSOC IA TES RESPONDENT TJefore Lady Jus tice £3. G. Shonga this 3nt day of June 2022 For the Plaintiff, Ms. D. Nundwe and Mr. E. Saka/a Messrs. Ranchhod & chungu For the Defendant, Mr. E. Zimba and Ms. B. Nachimba Mess rs . Fraser Associates JUDGMENT J2 LEGISLATION AND OTHER MATERIALS REFERRED TO: 1. Arbitration Act, 2000: s. 17 (2) 2. The Arbitration (Code of Conduct and Standards) Regulations, Statutory Instrument No. 12 of 2007: R. 15. 1.0 NATURE OF ACTION By originating sum1nons filed on 13th April, 201 7, the C Applicant claims, against the Respondent, for an order that the Arbitration Awa rd delivered by Prof. Muya Mundia on 20th fviarch, 2 01 7, be set aside on the grounds that the composition of the arbitral tribunal was not in accordance with the agrccn1cnt of the parties; the procedure employed by Lhc arbitrator was not in conformity with the Arbitration Act, 2000; a nd the a ward contained decisions on matters beyond C th e scope of arbitra tion. 2.0 THE EVIDENCE 2.1 Evidence in supporl The summons is supported by an affidavit d e posed by Sundeep Kantilal Ranchhod, a director in the Applicant company. J3 Mr. Ranchhod attests that the Applicant, Respondent and three other parties entered into an agreement of association sometime in 2012. In furtherance of the agreement, the parties collaborated and submitted a bid in response to the tender for the design, delivery and installation of the Warehouse Racking System and installation for Fire Detectors at Churches Association of Zambia (CHAZ) Warehouse. The affiant identified Civilstruts Consulting Engineering, North Atlantic Engineering Consultants, and JON Associates as the other three parties to the agreement. According to Mr. Ranchhod, the agreement contained an a rbilra lion agreement in relation to the resolution of disputes . In support of his deposition, he adduced exhibit marked "SKR1" a copy of the agreement. Mr. Ra.11.chhod attested that a dispute arose and the parties requested the Chartered Institute of Arbitrators to appoint an arbitrator. On 8 th December, 2015, the Chartered Institute of Arbitrators appointed Prof. Muya as the arbitrator. Exhibit marked J4 "SKR2" to the affidavit is th e letter of a ppoint m ent of t he arbitrator. Mr. Ranchhod also deposed that the arbitration commenced on 4 th February, 2016, at a preliminary meeting where the arbitrator informed the parties that he had engaged Dr. Lungowe Matakala as his assistant arbitrator. According to Mr. Ranchhod, the assistant arbitrator actively participated a nd re ndered decisions in the arbitration proceedings, with ou t the consent of the parties. It was Mr. Ra n chhold's testament that sometime in 2016 , after the arbi tral proceedings commenced, the Applicant perceived th at t he arbitrator demonstrated bias and impartia lity in th e conduct of the arbitral proceedings. He poin ted out, for example, that on 7 t h September, 2016, the a rbit ra tor, his assistant and the Respondent conducted a site visi t to CHAZ in the abse nce of the Applicant and without due notice to the Applicant. The Applicant took issue with the site visit and on the same d a te, through electronic communication, registered its disquiet regarding the manner the dispute resolution process wa s being conducted. C ( JS It was Mr. Ranchhold's d eposition tha t the Applicant's opinion of bias wa s initially communicated to the arbitrator by dint of the Applicant's letter of 5 th September, 2016. Subsequently, on 9th November, 2016, the Applicant requested the arbitrator to · recuse himself on the ground of bias, impartiality and prejudice. The deponent referred me to exhibit m arked "SKR9", the letter of demand of recusal. The ( d e mand wa s met with Interim Award No. l of 31 st January, 20 1 7 , exhibit m a rked "SKR6", the arbitrator's decision d is m issing th e a pplication for recusal. M r. Ranchhod a lso a ttested that on 12th February, 2017, the a rbitra tor m a de an interim award in which he directed that th e a dvoca tes for the Applicant (Respondent in the arbitral proceed ings), Messr s . Ra nchhod I Chungu, should cease to ( act as co unsel in the a rbitra l proceedings because a conflict of inte re s t. It wa s d e posed that notwithstanding that interim award, the a rbit r a tor continued to correspond with Messrs. Ranchhod I Chungu as the Re spondent's advocates in the arbitra l procee dings. A copy of Interim Awa rd No. 2 is exhibited , marked "SKR6". J6 Ultimately, the affiant avowed that the arbitration process was supposed to be concluded within four (4) months from 18th May, 2016, being no later than 18 t h September, 2016. However that a final award was made on 20 th March, 2017. ) The Applicant drew my attention to exhibit marked "SKR3", the Arbitrator's Final Award. 2.2 Evide nce in opposition In opposing the summons, the Respondent filed an affidavit in op position deposed by Francis Mwape Ndilila, a principal at the Responde nt firm . Mr. Ndilila a dmits th at the arbitrator appointed an assistant arbitrator at the pre liminary meeting, but denies that the said assistant arbitrator actively participated and deliberated over the a rbitra tion proceedings. He avows that all awards were s igned by a single arbitrator. As regards the site visit of 7 th September, 2016, Mr. Ndilila avers that the Applican t was aware of the scheduled visit because their lawyers were aware. To evidence their C ( \ J7 knowledge, the affiant adduced correspondence in which the parties set the dates and communicated with coun sel for the Applicant during the period 1s t to 6 th September, 2016, relating to the site visit in contention. Finally, the affiant rejected that the arbitration process was time bound to a defined period. He counters that the process or mandate was to conclude upon the making of a final award. 3.0 LEGAL ARGUMENTS 3. 1 Argume nts presented by the Applicant The /\pp li cation 1s a nchored on section 17(2) of the Arbitration Act, of 2000 (the "Act") which lays down the grounds on which an award passed by the arbitral tribunal can be set aside. In particular, the Applicant cited section 17 (2) (a ) (ii), (iii) and (iv) which read as follows: "An arbitral award muy be set aside by the court only if (a) the party making the application furnishes proof that- (ii) lhe parly making the application was not given proper notice of the appointment of an arbitral tribunal or of the arbitral proceedings or was otherwise unable to present his case; (iii) . the a_w°:rd deals with a dispute not contemplated by, or not falling within the terms of, the submission to arbitration, or contains decisions on matters beyond the scope of the submis sion C ( J8 to arbitration, provided that, if the decision on matters ~ubmitted to arbitration can be separated from those not so submitted, only that part of the award which contains decision on matters not submitted to arbitration may be set aside; (iv) the composition of the arbitral tribunal or the arbit~al proce~i:-re was not in accordance with the agreement of the parties or, fazlzng such agreement, was not in accordance with this Act or the law of the country where the arbitration too le place; or ... " 3.2 Arguments presented by the Respondent In responding to the Applicant's arguments, the Respondent advances that Rule 15 of the Arbitration (Code of Conduct and Standards) Regulations, SI No. 12 of 2007 (the "Standards") permits an arbitrator to use assistants. 4.0 DETERMINATION I accept that an arbitration award may be set aside, in accordance with section 17 (2) (a) (ii) if the applicant furnishes proof that it was not given proper notice of the appointment of an arbitral tribunal. If not this, the award can be set aside under that same section, if the eviden ce adduced by the applicant de1nonstrates that the applicant was given inadequate notice of the arbitral proceedings. The third door which opens to an award being set aside under s . 1 7 (2) (a) ( ( J9 (ii) is proof that the applicant was otherwise unable to present his case . In this case, the Applicant alleges that improper notice of the site visit was given to it. My scrutiny of the affidavit evidence before m e reveals that counsel for the Applicant were in the know about the d ate of the site visits beca use they were in copy in th e email correspondence which communicated the dates. This evidence is presented through exhibit marked "FMNl" to the affidavit in opposition. As a result, I find as a matter of fact that counsel for the Applicant, and in tum, the Applicant, were given proper notice of the site visit. Consequently, I find that the circumstances of this case do not fall within the scope of section 17 (2) (a) (ii) of the Act. The second arm of the Applicant's disquiet is that the arbitrator made decisions on matters beyond the scope of the submission to arbitration . However, the Applicant neglected to illuminate the actual scop e that was submitted to arbitration. In this regard, a part from the Award itse lf, n either party adduced a c opy of the claim or other document wh ich set out the scop e or parain eter s of th e dispute. The ( ( JlO affidavit evidence merely reveals that a dispute between the Applicant and Respondent arose and it was submitted to arbitration. Without a definitive scope before me, it is difficult assess what can be regarded as transcending the indeterminate scope. Nonetheless, I have examined the Award itself, which outlines the claim. From the Final Award, I discern that the Respondent (Claimant in the arbitral proceedings) claimed K372, 205.00 being a s h are of the sum of K2, 808, 550.29 plus K3 ,722 .050.00 which was allegedly paid to the Applicant h e rein by CHAZ and which was due to it from the Applicant for the.: s h a re of work the Respondent did for CHAZ as part of th e Con sortium . The Applicant illuminate s a portion of the Final Award, on p . 24 of the said Award, in which the arbitrator uttered the following finding: "From the p:eceding discussion and reasons given, J find the respondent liable for breach of contract as w ell as trust ves ted in them v~a the power of attorney assigned to the m by the other consortium partners." Jll Below the above finding, the a rbitrator proceeded to make his Final Award, in which the Applicant was directed to pay the Respondent the sum of Kl 96, 598.52 being a percentage of the amount that the arbitrator found to have been paid by CHAZ to the Applicant, together with interest and costs. I observe that the arbitrator did not make any award in favour of the other consortium members. Similarly, there was no award in respect of damages for breach of contract or breach of trust. In my view, the absence of the grant of reliefs relating to damages for breach of contract or trust strongly suggests that the utterance made by the arbitrator constituted babble as he meandered his way to determining the actual issues be for<:; him_. Consequently, I am not persuaded that the arbitra tor went outside the scope of the submission to arbitration. Relief under s ection 17 (2) (a ) (iii) is, therefore, not te n a ble. I now turn to the a llegation that the appointment of the assistant arbitrator compromised the composition of the arbitral tribunal. I have ruminated upon Regulation 15 of the Standards . It reads as follows: J12 ((A n arbitrator s hall not delegate any decision -making functions to another person without the consent of the parties." My interpretation of Regulation 15 is that the arbitrator is prohi_bited from assigning decision-making functions to another person without the parties' consent. Simply put, the subject of the prohibition is the delegation of d ecision making functions . As I see it, th e question that falls for determination is whether a d ecision making function was delegated to the a ppointed a ssistant arbitra tor. I h ave traversed the affidavit eviden ce before Court in search of an indication of the d ecis ion -m a king fun ction which m ay have been delegated. I see none. The Applicant elected not to assist the Court by pinpointing the decision-tnaldng function that was delegated without the consent of the parties. That being the case, I find that this a llegation a lso lacks m erit. As such, I d etermine that the Applicant h as not demonstra ted that the composition of the arbitral tribuna l or procedure was not in accordance with the agreemen t of the parties or th e Act. Resultantly, relief under s . 17 (2 ) (a ) (iv) is not available. J13 In light of the above, I hold that the Applicant has fail ed to furnish proof that it was not given proper notice of the arbitral proceedings; or that the Award deals with a dispute not contemplated by, or not falling within the terms of, the submission to arbitration; or that the composition of the arbitral tribunal fell afoul of the agreement between the parties. In light of the foregoing, I do not consider this to be an a ppropriate case in which to set aside the Final Arbitral Awa rd. The refore, the application is unsuccessful and is d ismissed, with costs. Costs are awarded in favour of the Responde nt , to be taxed in default of agreement. Dated this 3 rd day of June, 2022. / J I ( ,JI (\~/ -·,( JUSTICE B. G~ ·-sHONGA HIGH COURT JUDGE . "I ' .•