Online Reporter
Fidelis Munyoro
Chief Court Reporter
The National Oil Infrastructure Company of Zimbabwe (NOIC) has emerged victorious in its appeal, successfully overturning a High Court decision that had ordered it to pay US$164 631 to AC Controls for refurbishing the Mabvuku ethanol plant.
The Supreme Court swept aside the arbitral award that had earlier been upheld by the lower court and dismissed NOIC’s attempt to settle the debt in Zimbabwean dollars at a rate of 1:1.
For NOIC, the battle began with an arbitral award that it vehemently opposed, arguing that the decision was a stark violation of the country’s public policy.
The oil company contended that the arbitrator’s findings were flawed, arbitrary, and contrary to the dictates of Statutory Instrument 33 of 2019 (SI 33/2019).
At the centre of the dispute was the interpretation of this statutory instrument, which established that debts incurred before February 22, 2019, denominated in US dollars, were to be converted into local currency at the rate of 1:1.
The arbitrator, however, had directed NOIC to pay AC Controls in United States dollars, a decision that the High Court upheld despite NOIC’s insistence that it contravened national law.
NOIC’s arguments in the High Court found no favour.
The lower court dismissed the company’s application to set aside the arbitral award and granted AC Controls’ counter-application to register the award as an enforceable court order.
The High Court, emphasising the sanctity of arbitration decisions, held that it would only interfere in rare instances where there was evidence of a grave and fundamental error.
Frustrated but undeterred, NOIC escalated the matter to the Supreme Court, seeking salvation from what it viewed as a gross miscarriage of justice.
The Supreme Court, composed of Justices Nicholas Mathonsi, George Chiweshe, and Hlekani Mwayera, dissected the legal quagmire.
Justice Mwayera, writing for the court, delivered a judgment that not only vindicated NOIC but also reinforced the supremacy of the law.
She underscored that the parties’ contract, though initially denominated in United States dollars, was subject to the provisions of SI 33/2019.
By disregarding this statutory instrument, the arbitrator and the High Court had strayed from the law, creating a precedent that could sow chaos and uncertainty in the country’s legal and economic systems.
“The finding that the debt had to be settled in United States dollars in clear defiance of SI 33/2019 was contrary to public policy and had the effect of undermining the concept of justice in Zimbabwe,” she declared.
The court concluded that the arbitrator’s decision was a misinterpretation of the law and amounted to a departure from the statutory framework governing monetary obligations.
To uphold such an award, the Supreme Court ruled, would be to condone a violation of public policy.
The judgment restored clarity and order. The Supreme Court set aside the High Court’s ruling, quashed the arbitral award, and dismissed AC Controls’ application to register it as an enforceable court order.
Justice Mwayera emphasised that adherence to SI 33/2019 was non-negotiable, as it was the legal anchor for resolving disputes over debts denominated in foreign currency during the country’s currency transition.
NOIC’s legal counsel, Professor Lovemore Madhuku, had argued that the debt owed to AC Controls accrued prior to the effective date of SI 33/2019.
Prof Madhuku submitted that the arbitrator’s directive to pay in United States dollars not only contravened the statutory instrument but also violated public policy.
He further contended that the timing of the payment certificates issued by AC Controls was irrelevant to the date on which the debt became due.
The Supreme Court’s decision validated his arguments, upholding the principle that public policy must guide the interpretation and enforcement of contractual obligations.
