THE Zimbabwe Manpower Development Fund (ZIMDEF) has successfully appealed for the reversal of an arbitral award against it, in a multi-million dollar construction deal signed in 2000.
The Supreme Court has ruled that the High Court, with a different judge, must reconsider the application by ZIMDEF to block the registration of an arbitral award because the initial High Court hearing did not follow procedures required in considering such applications.
ZIMDEF had approached the Supreme Court in the latest round of its dispute with Zimbabwe Jiangsu International Company, which won the tender to build its nine-storey headquarters building in 2000.
In setting aside the High Court decision to reject the ZIMDEF application and confirm the arbitral award as a court order, Justice Susan Mavangira, sitting with Justice Lavender Makoni and Justice George Chiweshe, found that the High Court did not determine the issues that had been pleaded by Zimdef and ventilated by the parties.
In failing to do so, the court erred, and so its final judgment could not stand. That meant that the whole matter had to be remitted back to the High Court for determination of the issues that remained unresolved.
Having made a finding that the High Court committed an irregularity, it became unnecessary for the Supreme Court to consider other grounds raised.
“The appeal has merit,” she said. “The judgment of the court a quo stands to be set aside. The matter will be remitted to the court for a fresh hearing before a different Judge.”
The botched project that was being managed by Classic Project Management Pvt Ltd, listed as the second respondent, involved the construction of a nine-storey building at Zimdef headquarters in Harare.
Zimdef contracted the Chinese company through a tender process for the construction project.
The tender was awarded in November 2000 by the State Procurement Board for Z$497 318 100 and the construction was scheduled to be completed in August 2002. Work was delayed and eventually suspended in April 2005.
Zimbabwe Jiangsu International Company argued that the hyperinflation experienced in the country during that time prevented it from continuing with the project to its completion.
Following the introduction of the multi-currency system in 2009, Zimdef sought to reprice the remaining works in United States dollars. The repricing was approved to the tune of US$19 550 560,14.
And in 2012, a fresh agreement was signed in terms of which Zimbabwe Jiangsu International agreed to complete the outstanding work within 36 weeks, provided that ZIMDEF would pay US$19 550 560,14 for the completion of the outstanding works.
Clause 25 of the building contract provided that in the event of a dispute between the parties, such dispute would be referred for arbitration.
Again the work was taking longer and later on a dispute arose between the parties over payment with Zimdef insisting on payment in local currency converted from the United States dollar at a rate of 1 to 1.
Zimbabwe Jiangsu International argued that payment was not affected by the provisions of Statutory Instrument 33 of 2019.
The matter ended up before an arbitrator who ruled in favour of Zimbabwe Jiangsu International, which again successfully applied to the High Court for the registration of the arbitral award, prompting Zimdef to appeal to the Supreme Court.