Automated Summary
Key Facts
Appeal No. 171/2018 in the Court of Appeal of Zambia at Ndola concerns four Joint-Venture Agreements signed between 3rd September 2012 and 8th August 2013 between BEZA CONSULTING INC LIMITED (a US company incorporated on 21st May 2012 in Maryland) and BARI ZAMBIA LIMITED for road projects in Zambia (Mbala-Nakonde, Mpika-Nabwalya-Mfuwe, Nyimba-Sinda, and Safwa-Chinsali). The Appellant claimed 40% of income from three contracts and 3% from the first, but the High Court dismissed the claims and declined jurisdiction over the three contracts with arbitration clauses. The Court of Appeal allowed the appeal on grounds 1-5 (related to the first contract) and ground 6 (jurisdiction), setting aside the judgment and ordering a retrial with the counterclaim consolidated.
Transaction Type
Joint-Venture Agreements for road project consultancy and construction in Zambia
Issues
- The learned trial Judge erred by relying on minutes of a meeting as an agreement.
- The lower Court erred by declining jurisdiction to determine claims under contracts with arbitration clauses without a party requesting arbitration.
- The lower Court erred by holding that it was not established that the Plaintiff was entitled to a 40% to 60% sharing ratio of earnings.
- The lower Court erred by holding that there was no evidence of the second Defendant working with the first Defendant on the RDA contracts.
- The lower Court erred by holding that the 40% to 60% sharing ratio applied to the Mbala-Nakonde Joint-Venture Agreement.
- The lower Court erred by failing to conclusively adjudicate on all claims raised by the Plaintiff.
- The lower Court erred by failing to differentiate between the claim under the Mbala-Nakonde Joint-Venture Agreement and the claims under the subsequent Joint-Venture Agreements.
Holdings
The Court of Appeal allowed the appeal on grounds 1 to 5, finding that the learned trial Judge misapprehended the facts regarding the Mbala-Nakonde Road Project. The Court also found that the trial Judge erred in declining jurisdiction on account of the arbitration clauses in the three Joint-Venture Agreements without a request from a party to the arbitration agreement. The Court ordered the judgment to be set aside, the record remitted back to the High Court for a re-trial before a different Judge, and the counterclaim consolidated with the main matter.
Remedies
- The Court of Appeal set aside the High Court's judgment due to errors in the lower court's findings regarding arbitration clauses and joint-venture agreements.
- The Court awarded costs to the Appellant in this appeal as the Appellant succeeded on multiple grounds of appeal.
- The counterclaim was ordered to be consolidated with the main matter and re-allocated to another judge for joint hearing.
- The Court ordered the case to be remitted to the High Court for re-trial before a different judge with the counterclaim consolidated into the main matter.
Legal Principles
The court applied the principle that a court's jurisdiction is ousted by an arbitration agreement only when a party to the agreement requests arbitration. The court further held that an arbitration agreement is inoperative when one of the parties to the proceedings is not a party to the agreement, as established in ODYS Oil Company Limited v The Attorney General.
Precedent Name
- ODYS Oil Company Limited v The Attorney General and Constatinos James Papoutsis
- Chita Chibesakunda and Abode Properties Limited v J. Z. Morrison (Export) Limited
- China Henan International Corporation Group Company Limited v G and D Nation Wide (Z) Limited
Key Disputed Contract Clauses
- The arbitration clause in the three subsequent Joint-Venture Agreements was disputed regarding the lower court's jurisdiction, as the Court of Appeal held that jurisdiction could not be declined without a party's request for arbitration under Section 10 of the Arbitration Act.
- The dispute centered on the interpretation of the earnings sharing clause in the first Joint-Venture Agreement, where the Appellant claimed a 40% to 60% ratio for three contracts despite the agreement lacking specific sharing percentages for those contracts.
Cited Statute
Arbitration Act No 19 of 2000
Judge Name
- Mchenga
- Siafvapa
- Sichinga
Passage Text
- For the above stated reasons, ground 6 succeeds. Having so found, we are inclined to make an order that the whole Judgment be, and it is hereby set aside.
- We accordingly find that grounds 1 to 5 are all centred on the learned trial Judge's misapprehension of facts in relation to the Mbala-Nakonde Road Project resulting from the 1st Joint-Venture Agreement. We would therefore allow the appeal on grounds 1 to 5.
- From the foregoing authorities, it is clear that the Court below erred when it divested itself of jurisdiction without any of the parties requesting a referral of the matter to arbitration in accordance with section 10 of the Act.
Damages / Relief Type
- Exemplary damages
- Declarations regarding agreements, deceit, and conduct
- Injunction restraining 1st Defendant from issuing further fee notes
- General damages
- Specific performance of Joint Venture Agreements
- Costs
- Damages for deceit and/or fraudulent misrepresentation
- Interest on all amounts found due