Introduction  

This is a short commentary on the judgment of the Supreme Court of Zimbabwe in Jimbata (Pvt) Ltd v Zimbabwe Mining Development & Kamativi Tin Mines (Pvt) Ltd SC 2-23  after it held that where an agreement has been found to be null and void, the whole agreement, including the arbitration clause, is a nullity.

Factual Matrix

The parties entered into a joint venture agreement (the agreement) for the purpose of processing the Kamativi tailings dump to extract lithium and other minerals. They agreed to incorporate a joint venture company (JVC) to implement the project. The agreement suffered a stillbirth as the parties failed to fulfil some conditions precedent to its performance. Chief among them was s13(1) of the Joint Ventures Act [Chapter 22:22]1 (the Act) which provides as follows: “Subject to subsection (2) and section 8(4), no contracting authority shall award a project or sign a joint venture agreement relating to a project unless the joint venture agreement has been approved by the Cabinet in accordance with this Act and any agreement required to be so approved that is purported to be concluded without such approval shall be a nullity.” The respondents sought and obtained in the High Court an order declaring the joint venture agreement (JV Agreement) between the parties a nullity. The appellant appealed to the Supreme Court against the order.

APPELLANT’S CASE

The Appellant contended that since the parties JV agreement had an arbitration clause, the court a quo should have deferred to the arbitration process and stayed the proceedings pending arbitration.2 Furthermore, the arbitration agreement within the JV agreement which the parties concluded was severable from the main agreement and was enforceable regardless of the fate of the main agreement.

RESPONDENT'S CASE

It was the Respondent's contention that firstly, the arbitration clause does not make it mandatory that the parties proceed to arbitration for purposes of dispute resolution. Secondly, the JV agreement was null and void for want of compliance with section 13(1) of the Act and therefore the question of referral to arbitration falls away.

THE JUDGMENT

The parties failed to seek and obtain the necessary Cabinet Approval as required by s 13(1) of the Act thus rendering the JV a nullity3. Article 8(1) of the Arbitration Act provides: “A court before which proceedings are brought in the matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.” The agreement has been found to be null and void ab initio. In other words, it never existed. The whole agreement, including the arbitration clause, is a nullity. There is nothing to sever or save.4

AN ANALYSIS OF THE SUPREME COURT JUDGMENT

What agreement is referred to in Article 8(1)?

Is it the primary or main contract concerning the commercial obligations of the parties or the secondary contract containing the parties obligation to resolve any disputes arising from their commercial relationship by arbitration? Commenting on Article 8(1) of the Arbitration Act, the court remarked that, the court a quo found that the agreement was null and void and therefore the question of referral to arbitration falls away.5 The words “unless it finds the agreement is null and void, inoperative or incapable of being performed” were interpreted by the Supreme Court as referring to the main contract which the court held to be null and void. By so doing, the Supreme Court erred. Article 8(1) of the Arbitration Act has nothing to do with the main contract. It relates to the arbitration agreement. What should be null and void, inoperative or incapable of being performed is the arbitration agreement and not the main contract. Thus, the agreement referred to in Article 8(1) of the Arbitration Act is not the main contract but the arbitration agreement. For instance, an arbitration agreement will be null and void if the parties never entered into it6or in cases in which the arbitration agreement is found to be void ab initio.7 One of the cornerstone principles of arbitration, is the severability8 of an arbitration agreement.9 The principles of separability10 and Kompetenz-Kompetenz are widely celebrated principles of arbitration as they render ‘arbitration efficacious and independent of the state.’11

Leading commentators have noted that:

The doctrine of separability requires that the arbitration agreement be treated as a separate contractual undertaking, that is, the agreement to arbitrate disputes arising out of a contract is distinct from the main contract, such that disputes as to the scope or even the existence of the main contract can be arbitrated.12

Does an arbitration agreement contained in a main contract which is null and void also become null and void?

Whilst accepting that an arbitration agreement is a separate and independent agreement from the terms of the underlying contract in which it may be included,13 the Supreme Court held that because the agreement (main contract) had been found to be null and void for want of compliance with s 13 (1) of the Act, the whole agreement, including the arbitration clause is a nullity.

By so doing, the court erred. Article 16(1) of the Model Law provides that:

“The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.”

It is clear from article 16(1) of the Arbitration Act that, in instances in which the main contract between the parties is considered to be null and void, an arbitration agreement is not affected because it is regarded as a stand-alone agreement between the parties regarding the resolution of any disputes between the parties.14 How the Arbitration Act should be interpreted is set out in s 2(3) of the Act which provides that:

“The material to which an arbitral tribunal or a court may refer in interpreting this Act includes the documents relating to the Model Law and originating from the United Nations Commission on International Trade Law ,or its working group for the preparation of the Model Law, that is to say the travaux préparatoires to the Model Law, and, in interpreting the Model Law, regard shall be had to its international origin and the desirability of achieving international uniformity in its interpretation and application.”

The illegality or invalidity of the underlying contract has no bearing on the arbitration clause itself.15 Where the main contract is not concluded (null) or does not come into effect after conclusion (void), it will not influence the effect of the arbitration clause agreed by the parties, as the arbitration clause is completely separate from the main contract.16

As one commentator put it:

An arbitration agreement between the parties is separable from the main contract. The arbitration agreement, as a rule is a procedural law contract. In contrast, the main contract is a substantive law contract. These two contracts are different from each other. Therefore, the fate of an arbitration agreement is not tied to the fate of main contract. At the same time, the fate of main contract does not depend on the fate of the arbitration agreement.17

CONCLUSION

The Supreme Court of Zimbabwe wrongly interpreted Article 8(1) of the Arbitration Act by construing the words, unless it finds that the agreement is null and void, inoperative or incapable of being performed, as referring to the main contract when they in fact refer to the arbitration agreement. The court’s understanding and interpretation of the doctrine of separability is inconsistent with its international interpretation and application, so is its understanding and interpretation of Article 8(1) of the Arbitration Act. Such errors in interpretation by the Supreme Court bring confusion in the practice of arbitration and undermine the development of Zimbabwe’s arbitration jurisprudence.

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1 The Zimbabwe Investment and Development Agency Act [Chapter 14:37] on the 07th February 2020 repealed the Joint Ventures Act [Chapter 22:22], the Zimbabwe Investment Authority Act [Chapter 14:30] and the Special Economic Zones Act [Chapter 14:34].

2 K Böckstiegel, ‘The Role of Arbitration within Today’s Challenges to the World Community and to International Law’ (2006) 22 (1) Arbitration International 165 – 178.

3 SC 2-23 at p8.

4 SC 2-23 at p8.

5 SC 2/23 at p7.

6 D St John Sutton, J Gill & M Gearing, Russell on Arbitration (23 ed, Sweet & Maxwell, 2007) 7-46.

7 Sun Life Assurance Co of Canada v CX Reinsurance Co Ltd [2003] EWCA Civ 283.

8 Heyman & Another v Darwins Ltd [1942] 1 All ER 337 (HL).

9 SM Schwebel, L Sobota & R Manton, International Arbitration: Three Salient Problems (Cambridge University Press, 2020) 1 – 64.

10 JA Rosen, 'Arbitration Under Private International Law: The Doctrines of Separability and Competence de la Competence' (1993) 17 (3) Fordham International Law Journal 559 -666; A Mustafayeva, 'Doctrine of separability in International Commercial Arbitration' (2015) 1 Baku State University Law Review 93 – 98; S Camilleri, 'Sense and Separability' (2023) 72 (2) International & Comparative Law Quarterly 509 – 525.

11 P Landolt, 'The Inconvenience of Principle: Separability and Kompetenz-Kompetenz' (2013) 30 (5) Journal of International Arbitration 511, 512.

12 J Delaney & K Lewis, 'The Presumptive Approach to the Construction of Arbitration Agreements and the Principle of Separability - English Law Post Fiona Trust and Australia Law Contrasted' (2008) 31 (1) UNSWL Law Journal 341, 347.

13 ZETDC v Tendai Masawi t/a Masawi & Partners & Another HH 404-20.

14 Davison Kanokanga & Prince Kanokanga, UNCITRAL Model Law on International Commercial Arbitration: A Commentary on the Zimbabwean Arbitration Act [Chapter 7:15] (Juta &Co, 2022) p67.

15 National Agricultural Coop Mktg Federation India v Gains Trading Ltd 2007 (5) SCC 692.

16 Interpretation on Certain Issues Relating to the Application of the PRC Arbitration Law, Supreme People’s Court,23 August 2006: Jiangsu Materials Group Light Industry and Weaving Co v Hong Kong Top-Capital Holdings Ltd (Canada) Prince Development Ltd (the Yuyicase) Supreme People’s Court, 1998.

17 S Özmumcu, 'The Principle of Separability and Competence - Competence in Turkish Civil Procedure Code No. 6100' (2013) 45 (62) Annales 263, 266.