Zopco SA v Alex Stewart International Zambia Limited and Ors (2021/HKC/041) [2023] ZMHC 84 (29 March 2023)

IN THE HIGH COURT OF ZAMBIA 2021/HKC/041 AT THE KITWE DISTRICT COMMERCIAL DIVISION REGISTRY HOLDEN AT KITWE {Civil Jurisdiction) Between: ZOPCO SA vs ALEX STEWART INTERNATIONAL ZAMBIA LIMITED ALEX STEWART INTERNATIONAL UK CHUBB EUROPEAN GROUP SE CORPORATE SPECIAL RISKS SAS SOMPO JAPAN NIPPONKOA MARTIN & BOULART SAS CARL SCHOTER AIG EUROPE SA LIBERTY SPECIAL MARKETS BALOISE BELGIUM NV Plaintiff 1st Defendant 2nd Defendant 3rd Defendant 4th Defendant 5th Defendant 6th Defendant 7th Defendant 8th Defendant 9th Defendant Before Hon. Lady Justice Abha Patel, S. C. For the Plaintiff Mr E. C. Banda SC, Mr. N Chaleka & Mr. B Kangwa of Messrs ECB Legal Practitioners For the 1'' Defendant: Mr M. K. Mwiche of Messrs Katongo & Co For the 2nd Defendant: No Appearance For the 3rd to 9th Defendant: Ms. M. L. Mukonde Messrs Mweshi Banda & Associates RULING Cases Referred To: First Quantum Minerals Limited vs Lloyds Appeal No. 78 of 2021 Gateway Service Station vs Engen Petroleum (Z) Limited Appeal No. 31 of 2003 Leonard Ridge Safaris Limited vs Zambia Wildlife Authority (2008) ZR 97 Mwaba v Nthenga and 2 Others (SCZ Judgment No.5 of 2013) Steak Ranch Limited v Steak Ranches International BV (2012) Z. R. 564. Friday Mwamba vs Sylvester Nthenga & Others SCZ Judgment No. 5 of 2013 Printing and Numerical Registering Company vs Simpson Colgate Palmolive (Z) Inc vs Abel Shemu and others Ody's Oil Company limited vs the Attorney General and Anr (2012) 1ZR 164. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Axis (Pty) Limited vs Cloud Tech Zambia Limited and Ravikivyan Vijay Salvi, Appeeal No. 221/2020 11. Chansa Chipili and Powerflex (Z) Limited vs Wellingtone Kanshimike & Wilson Kalumba (2012) Z. R. 483 Bimal Thaker vs Access Finance Services Limited & Others African Banking Corporation Limited v Mubende Country Lodge Limited SCZ Appeal No. 116 of 2016 Concrete Pipes & Products Limited vs Kingsley Kabimba & Anr SCZ No.14 of 2015 Teklemicael Mengstab & Anr vs Ubuchinga Investments limited Appeal No. 218 of 2013 12. 13. 14. 15. Legislation Referred to: 1. The Arbitration Act No. 19 of 2000 2. 3. 4. 5. The High Court Rules Chapter 27 of the Laws of Zambia The Insurance Act No. 27 of 1997 The Insurance Act No. 38 of 2021 The Supreme Court Practice 1999 Edition Volume 1 (White Book) rage 2 I 18 1. INTRODUCTION AND BACKGROUND 1. The Plaintiffs commenced this action by way of a Writ of Summons and Statement of Claim filed in this Court on 23rd November 2021, amended by Order of Court of 23rd September 2022, the effect of which was to add the 2nd to 9th Defendants and to amend the originating process. The Plaintiff filed its amended Writ on 29 September 2022 claiming the following reliefs: i. An Order of Payment by the 1st and 2nd Defendants to the Plaintiff of an amount of USD$ 1,550,420.00 being monies spent by the Plaintiff this far for Fraud, Misrepresentation and Deceit in the Weighing, Sampling and Moisture Determination (WSMD) of the consignment done at Polytra Kitwe in relation to Certificates of Assay Numbers: Z5924, Z5552, Z6207, 219205, 220288 and Z6599 undertaken by the l't Defendant. ii. In the alternative, an Order that the 2nd Defendant as insurers and Holding Company of the 1st Defendant indemnifies the Plaintiff an amount of USD$ 1,550,420.00 being monies spent by the Plaintiff on the misrepresented Consignment; or iii. In the alternative that the 3rd to 9th Defendants indemnifies the Plaintiff an amount of USD$ 1,550,420.00 in the percentages specified under the General Conditions, particular Conditions and Specific Stipulations Marine Cargo Open Cover No. 20180320: iv. The l't Defendant pays the Plaintiff damages for fraud, Misrepresentation and Deceit in Weighing, Sampling and Moisture Determination (WSMD) of the consignment done at Polytra Kitwe in relation to Certificates of Assay r il e, r 3 I 18 Numbers: 25924, 25552, 26207, 219205, 220288 and 26599 undertaken by the 1st Defendant. v. Interest on the amounts that will be found to be due; vi. Costs for and incidental to this claim; vii. Any other reliefs that the Court may deem appropriate. 2. The l't Defendant filed its amended defence and counterclaim on 26 October 2022. 2.1 The 3rd to 9th Defendant entered appearance and filed their Defence on 5th December 2022. 2.2 On the same date, the 3rd to 9th Defendants filed an application by way of Summons to raise preliminary issues to determine questions of law and to stay court proceedings relating to the 3rd to 9th Defendants pending arbitration pursuant to Order 14A rule 1 and Order 33 rule 7 of the Rules of the Supreme Court, as read with section 10 of the Arbitration Act and rule 4 of the Arbitration (Court Proceedings) Rules 2001. ( Hereinafter referred to as The Order 14A Application.) 2.3 The record will show that the Plaintiff did file its Affidavit and skeleton arguments in opposition to the Order 14A Application on 16 January 2023. r" g c 4 I 18 2.4 At the hearing of the application, scheduled on 20 January 2023, counsel for the 3rd to 9th defendants applied for leave to file its process in reply, and thereafter proceed to argue its application. In granting leave, the Court being mindful that this being an Order 14A application, and which may have a terminal effect, did grant leave and adjourned the hearing to allow the Plaintiff and l't defendant have sight of the intended reply and arguments in reply. 2.5 On the date of the adjourned hearing, on 15th February 2023, the Parties argued the Order 14A application, placed reliance on the documents before the Court and made viva voce submissions to augment their respective positions. A full transcript of the submissions of Counsels, are on record, and will be summarized when the Court addresses its mind to the questions later in the Ruling. 2.6 This is the Ruling of the Court on the application before it, having duly considered all submissions and documents placed before the Court. acknowledge the diligence and industry of counsels retained in the matter. 3. The 3rd to 9th Defendant's Application 3.1 The 3rd to 9th Defendants have moved the Court under Summons that this action be disposed upon the determination of the following questions of law: i. Whether this Honourable Court has authority to determine this action when the General Conditions, Particular Conditions and Specific Stipulations Marine Cargo Open Cover No. 20180320 dated 27th November, 2018 (herein after referred to as the "Marine Policy" the subject of the Plaintiff's action against Po Ge 5 I 18 the 3rd to 9th Defendants, contains an arbitration agreement which requires that all disputes arising from the agreement be determined by an arbitral tribunal seated in Belgium. ii. Whether the Marine Policy is enforceable in Zambia in light of section 120 of the Insurance Act No. 27 of 1997. And that ifthe questions are answered in the negative, the proceedings relating to the 3rd to 9th Defendant be stayed and referred to arbitration. And that Costs of this application be borne by the Plaintiff. 3.2 The Supporting Affidavit is sworn by one Musenge Leah Nkonde in her capacity as Counsel with conduct of the matter on behalf of the 3rd to 9th Defendants. It is essentially her averment on behalf of her instructing clients, that Articles 22 and 24 of the Marine Policy, provide for arbitration in respect of any dispute to be held in Belgium. She has referred to the exhibit marked 'MLNl' being a copy of the Marine Policy dated 27 November 2018. 3.3 The Marine Policy having been issue in Antwerp, Belgium, she has also called into question its legality, under section 120 of the Insurance Act No. 27 of 1997. 3.4 The Skeleton Arguments filed by the 3rd to 9th Defendants in support of its Order 14A application have been noted and anxiously considered by the Court. These will not be recast save for emphasis in the determination of the issues at play. 3.5 The Plaintiff has relied largely on its opposing Affidavit sworn by one Elijah Chola Banda SC in his capacity as Counsel equally seized with conduct of the Page6l18 matter. It is State Counsel's averment that the 3rd to 9th defendants' application is misguided. He refers to an amendment to the General Conditions of the Marine Policy, which amendment has been exhibited and marked "ECB2" in support of his averment that the Policy is subject to English law and practice. He referred the Court to clause 2.1 in support of the averment above. 3.6 He also avers that clause 22 referred to by the 3rd to 9th defendants', was varied by what he refers to as "specific condition 7.3 "which gives the Plaintiff the option to choose to arbitrate or litigate and that the Plaintiff has opted for the latter. To support this, he has referred to the exhibit marked "ECB3". 3.7 It is his further averment that the act of fraud having occurred in Zambia, clothes the Court with the appropriate jurisdiction and that to split the action as suggested, would be prejudicial and a matter of possible embarrassment to adjudicators dealing with the same set of facts. Counsel Chaleka also urged the Court to consider the choice of proceedings based on the decision of the Supreme Court of Zambia in the case of Chansa Chipili and Powerflex (Z) Limited v. Wellingtone Kanshimike & Wilson Kalumba. 3.8 With reference to the second question for determination, it is State Counsel's averment that the same is premature, as the Court not having received evidence in the matter, cannot make such determination. 3.9 It is noted that the l't Defendant joined issues with the Plaintiff and did not file any process nor make any submissions. r a c 0 7 I 1s 4. The 3rd to 9th Defendants Submissions, Plaintiffs Opposing arguments and the 3 rd to 9th Defendants reply 4.1 As stated, the submissions of the Parties as referenced in paragraph 2.2 to 2.4 above, including details of their viva voce submissions, are on record and will not be recast save for where necessary in analyzing the issue in contention. 4.2 The 3rd to 9th defendant in urging the Court to note that its Order 14A application is properly before the Court, has also urged the Court to find that "the applicants application for an interim injunction is legally untenable.' I have combed the pleadings and have not found any application for an interim injunction. To that extent, the submission of the 3rd to 9th defendant is misguided, and perhaps a classic case of 'copy and paste', gone wrong, and I will leave it here. 5. Agreed Facts 5.1 Although it is early in the proceedings, the following facts are what has been noted as agreed facts by the Parties in casu. 5.2 The Plaintiff and 3rd to 9th defendants entered into an insurance policy called General Conditions, Particular Conditions and Specific Stipulations Marine Cargo Open Cover No. 20180320. This document has been exhibited by the 3rd to 9th defendants in its supporting affidavit marked 'MLN' and also by the Plaintiff in its composite application for joinder marked 'ECBl'. (The Marine Policy). r a c c 8 I 18 5.3 The various certificates of Assay (the certificates) as alleged to be issued by the 1st defendant are in fact denied in part by the 1st defendant, in its defence of 26 January 2022. To this extent, I make no finding on the issue of the certificates. 5.4 The Court will not stray into pronouncing any other agreed facts at this stage of the proceedings, as it is faced with contested affidavit evidence, each supporting the position of the Parties respectively. I must also note, and as stated above, that Counsels have chosen to aver to facts contained in Affidavits on a contentious application and each urging the Court to find on their respective averments. This practice has been frowned on by Superior Courts and I echo the sentiments accordingly. 6. The Issues for determination 6.1 Is the defendant's Order 14A application properly before the Court? 6.2 Does the inclusion of an Arbitration clause in the Marine Policy divest the Court of its jurisdiction to hear and determine the matter in the circumstances herein? 6.3 Whether the Marine Policy is enforceable in Zambia viz section 120 of the Insurance Act No. 27 of 1997? 7. The Law and Analysis by the Court 7.1 Order 14A rule 1(1) provides as follows:- P " B e 9 I 18 "The Court may upon the application of a party or of its own motion determine any question of law or construction of any document arising in any cause or matter at any stage of the proceedings where it appears to the Court that:- (a) such question is suitable for determination without a full trial of the action; (b) such determination will finally determine (subject only to any possible appeal) the entire cause or matter or any claim or issue therein; and (c) Upon such determination the Court may dismiss the cause or matter or make such order or judgment as it thinks just." 7.2 The Defendant has also called in aid the provisions of order 33 rule 7 of the White book in support of its submission that the Court is vested with the power to hear an application for determination of any question where the decision on such question will render the trial of the cause or matter unnecessary. 7.3 I am familiar with the guidance of the Supreme Court, that to properly make an Order 14 A application, a defendant ought to have entered appearance and settled its Defence respectively. In this context, I have reflected on the recent decision of the Court of Appeal in the case of Bimal Thaker vs Access Finance Services Limited & Others, which decision also speaks to the case of African Banking Corporation Limited v Mubende Country Lodge Limited. In the latter case, the Supreme Court stated as follows: race 10 I 18 "In the view that we take what constitutes a notice of intention to defend, in the context of our rules, is the filing of a memorandum of appearance which is accompanied by a defence. It, therefore, follows that the filing of a memorandum of appearance with a defence is a pre-requisite to launching an application under Order 14A, RSC." 7.4 In casu, the 3rd to 9th defendants have settled its defence in the matter and as such I am satisfied that the conditions favourable to invoking an Order 14A application, to determine the entire action on points of law, as stated above, have been met, such that, if determined in favor of the 3rd to 9th defendants, they will determine the action in its entirety. The Plaintiff raises no issue with this. The Court is thus possessed of sufficient jurisdiction to hear this application. 8. Reasoning and Analysis by the Court 8.1 In addressing my mind to the authorities canvassed in support of the issue of referral of the matter to arbitration, I am satisfied, and this Court is alive to the provisions of section 10(1) of the Arbitration Act and to the circumstances in which the same is invoked. I am all too familiar with the principles settled by the authorities, and referred to by Counsel for the 3rd to 9th Defendants. In the interest of time management and proportionality, I will not restate the arguments save to note the general position, that where there is an arbitration agreement between the Parties, the Court must refer the matter to arbitration upon application by a Party. It is the 3rd to 9th defendant's submission, that in view of Article 22 of the Marine Policy, the Court must find that there being an Page 11 I 1s arbitration clause, the dispute between the Plaintiff and the 3rd to 9th defendants ought to be settled by way of arbitration. In support of this line of submission, I have been referred to the cases of First Quantum Minerals Limited vs Lloyds and the unreported decision of the Supreme Court of Zambia in Gateway Service Station vs Engen Petroleum (Z) Limited. 8.2 The Plaintiff has countered this submission, while in no way bringing in to question the settled authorities and principles when referring matters to arbitration. It is their submission that the attempt to argue arbitration is an attempt to mislead the Court, as the said clauses were varied by the Particular conditions. It is the Plaintiff's submission that the general conditions were varied and the matter is purely of a contractual nature. 8.3 The Plaintiff has drawn the attention of the Court to clause 7.3 exhibited as 'ECB3' in support of its submission that the special conditions had modified the general conditions. The Plaintiff has placed reliance on the oft cited authority in the case of Printing and Numerical Registering Company vs Simpson which was quoted with approval in the case of Colgate Palmolive (Z) Inc vs Abel Shemu and others. A similar principle on the contractual nature was cited in the case of Friday Mwamba vs Sylvester Nthenga & Others. 8.4 The Plaintiff has also attempted to argue that there is no valid agreement to arbitrate and has referred to the decision of the Supreme Court in the case of Ody's Oil Company limited vs the Attorney General and Anr. Pace 12 I 18 8.5 It was however conceded during submissions, with reference to the exhibit marked 'ECB3' that the Marine Policy was deemed amended and the Plaintiff had the liberty to choose arbitration or litigation. In this case, the Plaintiff has opted to proceed via litigation. It was manifestly clear that Counsel for the 3rd to 9th defendants, appeared to have abandoned her submissions on the issue of the referral of the matter to arbitration and to stay proceedings. She however proceeded to argue on what was referred to as the choice of forum. 8.6 Counsels differed extensively, in their understanding, of what they referred to as the choice of forum. Counsel for the 3rd to 9th defendants urged the Court to uphold the sanctity of what had been agreed by the Parties, in writing and in so doing, urged the Court not to re-write the Agreement between the Parties. It was Counsel's submission, that the choice of Courts was the Belgian Courts and under Belgian law. She urged the court when exercising its discretion, to exercise it judiciously and with a view to upholding an agreement of the Parties. She invited the Court to not be swayed on what she termed were assumptions made by the Plaintiff or put simply, the argument of convenience. 8. 7 Counsel Mukonde submitted strongly that the Plaintiff cannot cherry pick clauses which favor its argument and expect the "Court to turn a blind eye to the contents of an agreement by giving consideration to clauses that have not taken effect as the evidence will show." (quoted verbatim from Counsel's submission). 8.8 The Doctrine of Forum Non Conveniens states as follows: "The doctrine that an appropriate forum even though competent under the law may divest itself of jurisdiction if, for the convenience of the litigants and the Pa C 0 13 I 18 witnesses, it appears that the action should proceed in another forum in which the action might also have been properly brought in the first place." 8.9 I refer to the case of Axis (PTY) Limited V Cloud Tech Zambia Limited and Ravikiran Vijay Salvi, the Court of Appeal cited the decision of Steak Ranch Limited and I refer to the following paragraph emphasized by the · Defendants as follows: "7. 12 Simply put and as expounded in the Steak Ranch Case the Respondent ought to demonstrate that there is an alternative forum in which it is more convenient for the matter to be heard. There must be consideration as to whether there is another forum which is more appropriate in which the action has the most real and substantial connection such as convenience or expense." 8.10 The Plaintiffs have submitted in their Affidavit in Opposition that the General Conditions were amended by Specific Conditions which stated that the insurance policy is subject to English law and practice and the exclusive jurisdiction of English Courts which law is applicable in this jurisdiction. Accordingly, I caution myself at this stage on this issue raised in the matter to exercise jurisdiction in the interest of justice. I refer to Black's Law Dictionary which refers to "Judicial Jurisdiction" meaning the legal power and authority of a court to make a decision that binds the parties to any matter properly brought before it." r .1 c " 14 I 18 8.11 I am guided by the following decisions when it comes to jurisdiction of the choice of law and forum: In the case of Chansa Chipili and Powerflex (Z) Limited v Wellingtone Kanshimike & Wilson Kalumba it was observed: " ..... that in business transactions, with foreign jurisdiction clauses, where business is partly conducted in foreign countries, settlement of the legal question on jurisdiction is based on circumstances supported by the evidence availoble. Thus, while parties may agree on foreign jurisdiction in an attempt to oust the jurisdiction of the state or country where they have business activities such state or country may rightly claim jurisdiction depending on the circumstances in a given case." 8.12 In addressing my mind to this line of submission, I am alive to the inherent dangers of such early challenges in contested matters and where evidence has not been heard, nor findings of fact, established. I am minded of the caution issued by the Supreme Court in the case of Concrete Pipes & Products Limited vs Kingsley Kabimba & Anr where the Supreme Court noted that the preliminary issues raised, being so integral, could properly be raised in the main cause. It was also noted by the Supreme Court in the case Teklemicael Mengstab & Anr vs Ubuchinga Investments limited, where the Court expressed misgivings at such preliminary issues being raised so early as they pose the danger of inviting the court to delve into issues which ordinarily it can only do after making findings of fact. In fact Counsel Mukonde herself in her submissions quoted at paragraph 8.7 above, refers to issues that will be proved by evidence. rag c 15 I 18 8.13 I am of the settled mind that references to the general conditions and the varied conditions, and whether clause 5.1.3 (c) of the Marine Policy has been invoked or not, will require the Court to hear the matter, the arguments and consider the evidence in totality, before I make any findings at this preliminary stage. I am not inclined to be drawn into a fact-finding exercise, based on contested affidavit evidence alone, which as has been noted, been sworn by counsels retained in the matter, and on behalf of the Parties respectively. In the exercise of my discretion, and which discretion I am bound to apply using judicious principles, I am persuaded by the argument that there being allegations and claims founded in fraud, that the evidence rests in Zambia and the events complained of occurred in Zambia, that this Court is the appropriate forum for determining matters such as the ones in casu. 8.14 I therefore opine that the issue of the choice of forum is without merit at this stage and is dismissed. I also note that this was not raised as a specific question for the determination by the Court, although the Parties made submissions on this and argued it within the first question for determination. For the avoidance of doubt the first question is also dismissed as per paragraph 8.5 above. 9. I now escalate my enquiry on the enforceability of the Marine Policy in light of section 120 of the Insurance Act No. 27 of 1997. Counsel for the 3rd to 9th defendants has submitted at length and has quoted extensively on the provisions of the cited Act. The Plaintiff has equally opposed this line of submission, which arguments have been considered though not entertained. r ,, e 0 16 I 1s 9.1 With the greatest of respect, I am not inclined to entertain either set of submissions. Counsel for the 3rd to 9th defendants in relying on this Act, has overlooked the cardinal fact that this piece of legislation has been repealed and replaced by the Insurance Act No. 38 of 2021. To this extent, any argument based on the repealed Act is otiose and does not need further mention. 9.2 It is trite that it is the duty of Counsel to direct their positions to current law and not the duty of the Court to reconcile provisions of the repealed Insurance Act with the new Act. I am guided by the decision of the Supreme Court in the case of Pule Elias Mwila & Others v. Zambia State Insurance Corporation Limited (SCZ Judgment No. 35 of 2015) ZR 3 152, in which the Court observed that litigants should not expect the Court to aid litigants by correcting their errors. I therefore dismiss the second question raised by the 3rd to 9th defendants. 9.3 For the reasons above, I am of the considered view that the 3rd to 9th defendants' application lacks merit and the same is hereby dismissed with costs to the Plaintiff. 9.4 Leave to appeal is granted. Dated at Kitwe, the 29 th day of March 2023 Lady Justice Abha Patel, S. C. P il c e 17 I 18