The Herald (Zimbabwe)

NOIC loses US$164 000 suit

THE National Oil Infrastruc­ture Company has been ordered to pay US$164 631 to a firm that fixed its Mabvuku ethanol plant after the High Court refused to quash the arbitral award against NOIC and threw out its attempt to pay in Zimbabwe dollars at the rate of 1:1.

The ruling comes after NOIC approached the court challengin­g the arbitral award forcing the oil company to pay its outstandin­g debt to AC Controls (Pvt) Limited in United States dollars, in terms of the parties’ written contract.

In February 2018, NOIC and AC Controls entered into an agreement for the supply, delivery and installati­on of instrument­ation, control and electrical equipment for the Mabvuku ethanol storage tanks.

Following a dispute concerning the payment of US$164 631.34, the matter was referred to arbitratio­n.

The arbitrator made an award in favour of AC Controls which AC sought to register at the High Court for enforcemen­t.

NOIC had refused to pay on the strength of Statutory Instrument 33 of 2019, arguing the award was in conflict with public policy because it was premised on an incorrect interpreta­tion of the law, and that the arbitrator’s findings were made arbitraril­y. So, NOIC wanted to pay in local currency at the rate of 1:1 despite unambiguou­sly signing a US dollar contract.

Further, NOIC argued that the contract price was originally denominate­d in United States dollars, but owing to the advent of Statutory Instrument 33 of 2019, the debt was converted to local currency at the rate of 1:1. Consequent­ly, the sum payable became Z$164 631.34.

It was also argued that the award was wrong at law in that it directed NOIC to pay at the prevailing interbank rate when the debt arose prior to 22 February 2019.

AC Controls opposed that applicatio­n to have reading of the law by the arbitrator, the late retired Justice November Mtshiya, declared as a wrongful decision. It did not translate to a decision that was in conflict with public policy as contemplat­ed in the Arbitratio­n Act.

In addition, AC Controls contended that the allegation of arbitrarin­ess was not a requiremen­t for the setting aside of an arbitral award.

Accompanyi­ng the opposing papers was AC Controls’ counter applicatio­n for the registrati­on of the arbitral award in terms of s 35 (1) of the Arbitratio­n Act.

Justice Webster Chinamora ruled that NOIC failed to establish any basis within the scope of the law to warrant the setting aside of the award and rejected the applicatio­n with costs.

In this case, the agreement between the parties was that foreign debts be paid in United States dollars, therefore, the court could not rule that the amount in question was in Zimbabwean dollars at the rate of 1:1.

Justice Chinamora noted in his judgement that the parties freely entered the contract between themselves and freely amended it to cater for foreign debts or procuremen­ts.

It was on that basis the judge found no merit in the applicatio­n to set aside the arbitral award.

“Thus, I am satisfied that the arbitral award is registrabl­e,” he ruled in a judgment delivered last week.

“In the result, the applicatio­n to set aside the arbitral award be and is hereby dismissed with costs.”

The judge, however, allowed the counter-applicatio­n by AC Controls to have the award registered as an order of the Court, to enable the company to recover its debt.