THE High Court yesterday ruled that the contract entered between the National Pharmaceutical Company (NatPharm) and Drax Consult Sagl for the provision of medical sundries is binding.
High Court judge, Justice Webster Chinamora slapped NatPharm with the legal costs and nullified a March arbitral award that declared the agreement between the two parties illegal. Drax’s local representative Delish Nguwaya filed an opposing application on June 1 where he argued that the award was in conflict with the public policy of Zimbabwe, culminating in yesterday’s judgment in favour of his company.
“On the date of hearing, the applicant applied to amend the draft order to no longer ask for the setting aside of the entire award, but rather, only paragraph 84 (A) of the award which read ‘the agreement entered into between the parties is found to be illegal and unenforceable for want of compliance with section 15 of the Public Procurement and Disposal Act’, the respondent did not oppose the proposed amendment, and I granted it,” Justice Chinamora ruled.
In delivering the judgment, the court heard that Drax and NatPharm entered into an agreement on December 11, 2019 for the supply of medicines and medical sundries by the former. NatPharm, however, refused to take delivery of medical supplies worth US$210 000 that Drax alleged to be sitting at the Robert Gabriel Mugabe International Airport as part of a consignment worth US$2 733 480.
NatPharm had contended that Drax had contravened provisions of the Public Procurement and Disposal of Public Assets Act which state that ‘‘a procurement entity shall not initiate or conduct any procurement requirement proceedings in which the value of the procurement requirement is at or above the prescribed threshold, unless such procurement entity has been generally authorised by the authority to conduct such proceedings’’.
Drax was aggrieved by NatPharm’s refusal to pay for the medicines prompting the company to seek arbitration.
However, the arbitrators ruled in NatPharm’s favour and concluded that the contract was illegal as it was done without the authority as enshrined in the Procurement Act.
However, Drax went ahead and sought relief at the High Court seeking the court to set aside the award. The judge absolved Drax of any wrongdoing with regards to the contract and subsequent supply of the drugs.
“The letter of November 6, 2019 merits careful and intimate examination. I notice that the respondent has only made reference to the resolution by the Special Procurement Oversight Committee (Spoc) which is mentioned in that letter. In my view, such a simplistic (if not, shallow) approach does not do justice to the resolution of the dispute in this matter. Having said this, four crucial points need to be underlined in connection with the November 6, 2019 letter,” read the judgment.
Chinamora also quashed the reasoning of the arbitrators in concluding that the contract between Drax and NatPharm was illegal.
“It seems to boggle the mind that the arbitrators found that the contract between the applicant and the respondent was illegal and unenforceable for want of compliance with section 15 of the Procurement Act. It bears emphasising that Article 34 of the First Schedule to the Arbitration Act permits the setting aside of an arbitral award by this court in specified circumstances. In this case, the applicant submits that the award offends the public of Zimbabwe in that it declared as illegal and unenforceable a contract authorised by the relevant authority,” added Chinamora.
“I must clarify something about the law and the position I have taken on the November 6, 2019 letter. My observation is that on a proper examination of the letter of November 6, 2019, the arbitrators could not plausibly have made a finding of illegality of the contract. I hasten to state that my conclusion is not meant to be a review of the arbitrators’ decision. It is not my province to do so.
“On the contrary, I am merely bringing to the fore that the award is offensive to the public policy of Zimbabwe. The angle I have taken is that it offends public policy in the sense of being so outrageous in its defiance of logic or accepted moral standards that a sensible and fair-minded person’s conception of justice in Zimbabwe would be intolerably hurt.”