THE High Court has dismissed a lawsuit by Australian firm Mining Engineering Consulting Services that was claiming AU$5,5 million from Blanket Mine after the latter terminated its contract and services.
The firm had cited Blanket Mine and George Gapu, the arbitrator, respectively, as respondents in the case.
Mining Engineering is a private company registered in Australia and it provides specialised shaft sinking and equipping services at mining locations.
Mining Engineering and Blanket Mine were in a contractual relationship and a dispute arose between them.
The referral was in accordance with an arbitration agreement in the contract and they settled on Gapu as the arbitrator.
In terms of the contract, Mining Engineering would provide specialised shaft sinking and equipping services for Blanket Mine, which terminated the legal relationship.
Mining Engineering demanded AU$279 425,21 for the outstanding final invoice, but Blanket Mine withheld payment on the basis of its own concerns against the Australian firm regarding some previous invoices it considered overstated.
The dispute was referred to arbitration and Mining Engineering made three claims, the first relating to the outstanding invoice of AU$279 425,21, AU$5 235 316,32 in damages for unlawful termination of the agreement and a claim of AU$5 765,02 for the value of the equipment retained at the mine.
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However, Blanket Mine raised a plea that the unlawful termination of the agreement and compensation for the undelivered equipment fell outside the scope of the arbitrator’s authority and had no jurisdiction to determine them on the current referral.
The arbitrator decided to deal with the question of the plea as a preliminary point and he upheld it and declined to deal with the two claims relating to the damages and the value for the undelivered equipment.
Aggrieved, Mining Engineering approached the High Court in terms of Art 16[3] of the Model Law to set aside the arbitrator’s decision seeking an order directing the arbitrator to exercise his jurisdiction over its claim for damages.
It argued that the arbitrator misconstrued the position of the law in believing that arbitration should always be preceded by a declaration of claims, he conflated the issue of jurisdiction and that of scope of authority and that the issue before him was of jurisdiction rather than scope of authority.
The firm further argued that the arbitrator had the jurisdiction to determine the contractual dispute that was referred to him and that his approach violates the “once and for all rule”, which dictates that one must include in a single process all one’s claims arising from the same cause of action.
Mining Engineering further argued that parties to an arbitration are not required to agree on the identity or number of claims before the arbitrator can exercise jurisdiction.
Blanket Mine, however, argued that the sole dispute raised by Mining Engineering was in relation to the outstanding invoice.
It further argued that the claim for damages for unlawful termination of the contract and for the return of equipment were not referred to arbitration.
High Court judge Justice Joseph Mafusire said it was clear the dispute in question was a legal dispute and, accordingly, propose that it be submitted before an arbitrator
“The application cannot succeed. The arbitrator’s decision cannot be faulted. The dispute before the arbitrator was on the whole question of jurisdiction, in both the narrower and wider senses.
“Scope of authority is a species of jurisdiction. In any given case, it is up to the parties to identify the species of jurisdiction relied upon in any challenge as to the arbitrator’s capacity. In casu, the challenge was on the scope of authority given what had been placed before the arbitrator,” he ruled.
Justice Mafusire said there is no justification to award them on the higher scale, as Blanket Mine prayed.
