A Q&A guide to arbitration in Zambia. This Q&A is part of the PLC multi-jurisdictional guide to arbitration. For a full list of jurisdictional Q&As visit www.practicallaw.com/arbitrationhandbook.
Arbitration has become a prominent dispute resolution mechanism in the last ten years. It has become common practice to insert an arbitration clause in commercial agreements and the parties increasingly invoke these arbitration clauses when a dispute arises.
As with most jurisdictions, the significant advantage of arbitration is the parties' ability to select a person or number of persons with knowledge in the relevant technical field to determine the matter. Many parties are also attracted by the informality and often less complicated procedure and processes of arbitration compared to court litigation. Generally, arbitration is faster than litigation, because:
It often takes a shorter time than litigation.
The finality of its decisions prevents protracted appeals, except where arbitration proceedings can be challenged in the Zambian High Court (High Court) on limited statutory grounds (see Question 4).
The principal disadvantage of arbitration is its cost. Arbitrators inevitably charge for their time and expertise and their fees can often be prohibitive to some medium-size commercial parties.
There are two arbitration organisations in Zambia, the:
Zambia Centre for Dispute Resolution Limited (Centre).
Zambia Association of Arbitrators (Association).
Both share the email address email@example.com, but are yet to set up a website. The Association is a membership organisation to which all trained arbitrators in Zambia belong. The Centre trains arbitrators in Zambia and organises various workshops and other activities related to alternative dispute resolution. The Centre is affiliated to the London Chartered Institute of Arbitrators and all arbitrators trained that the Centre trains are eligible for the membership of the London Institute.
See box, Main arbitration organisations.
The principal legislation applicable to arbitration is the Arbitration Act No. 19 of 2000 (Arbitration Act).
The First Schedule of the Arbitration Act contains the UNCITRAL Model Law. In interpreting the Arbitration Act, an arbitral tribunal or a court can refer to the documents contained in the Model Law (section 2(3), Arbitration Act). In addition:
Where the place of an arbitration is in Zambia, the First Schedule of the Act applies to the arbitration, subject to the other provisions of the Act (section 8(1), Arbitration Act).
Where the place of arbitration is not in Zambia, only Articles 8, 9, 35 and 36 of the UNCITRAL Model Law apply (section 8(2), Arbitration Act).
Unless otherwise specified, references to sections in this chapter are references to the Arbitration Act.
Challenge of awards
Under the Arbitration Act, the only way to challenge an arbitral award is to apply to the High Court to set aside the award. An award can be set aside only on the following grounds (section 17):
A party to the arbitration agreement was under some incapacity.
The arbitration agreement is not valid:
under the law to which the parties have subjected it; or
under the laws of Zambia, where there is no indication of the governing law.
The applicant was not given proper notice of the appointment of the arbitral tribunal or of the arbitral proceedings, or was otherwise unable to present his case.
deals with a dispute not contemplated by, or not falling within, the terms of the arbitration agreement; or
contains decisions on matters beyond the scope of the arbitration agreement.
If the decision on matters submitted to arbitration can be separated from those not submitted to arbitration, only that part of the award which contains decisions on matters not submitted to arbitration can be set aside.
The composition of the arbitral tribunal or the arbitral procedure was not in accordance with:
the parties' agreement; or
failing any agreement, the Arbitration Act or the law of the country where the arbitration took place.
The award has not yet become binding on the parties, or has been set aside or suspended by a court of the country in which, or under the law of which, that award was rendered.
The subject-matter of the dispute is not capable of settlement by arbitration under the law of Zambia.
The award is in conflict with public policy, or the making of the award was induced or affected by fraud, corruption or misrepresentation.
An application for setting aside cannot be made after three months from the date on which the party making the application had received the award. If a request has been made under Article 33 of the UNCITRAL Model Law for correction or interpretation of the award, or for an additional award, the time limit runs from the date on which the arbitral tribunal disposed of that request. Where the time limit has expired, or the court has refused the setting aside application, the award is enforceable in the same way as a court order.
Removal of arbitrators
The mandate of an arbitrator can be terminated for the following reasons (section 13):
The parties agree to revoke the mandate.
The arbitrator withdraws its mandate.
In addition, a party can challenge an arbitrator if:
Circumstances exist that give rise to justifiable doubts as to the arbitrator's impartiality or independence.
The arbitrator does not possess qualifications agreed to by the parties.
The parties can also request the High Court to remove an arbitrator on the basis that an arbitrator becomes legally or factually unable to perform his function or for other reasons fails to act without undue delay.
(This right of challenge and request are derived from Articles 13 and 14 of the UNCITRAL Model Law, which will apply to arbitrations that take place in Zambia (see Question 3).)
The effects of the termination are as follows, unless the parties agree otherwise:
If the sole or presiding arbitrator is replaced, any hearing previously held must be held afresh.
If an arbitrator, other than the sole or presiding arbitrator is replaced, any hearing previously held can be held afresh at a party's request.
Unless otherwise agreed by the parties, an order or ruling made before the replacement of an arbitrator is not invalid solely because of the change in the composition of the arbitral tribunal.
In relation to commercial arbitration, the following matters are not capable of determination by arbitration (sections 4 and 6(2)):
An arbitration agreement between:
Zambia and the government of a foreign country; or
Zambia and any undertaking which is wholly owned by, or is under the sole control of, the government or a foreign country unless otherwise agreed between Zambia and that undertaking.
An agreement that is contrary to public policy.
A dispute which cannot be determined by arbitration under a law. This may relate to matters that are exclusively restricted to courts for resolution by statute.
A matter affecting the interests of a minor or an individual under a legal incapacity, unless the minor or individual is represented by a competent person.
The only reference to impartiality and independence of arbitrators in the Arbitration Act is that the court or arbitral institution, in appointing an arbitrator, must have due regard to (section 12):
Any qualifications required of the arbitrator by the agreement of the parties.
Considerations that are likely to secure the appointment of an independent and impartial arbitrator.
However, the Arbitration (Code of Conduct and Standards) Regulations 2007, contained in a statutory instrument made under the Arbitration Act, provide a comprehensive guide on the requirements relating to arbitrators' impartiality, fairness and independence.
Further, Article 12 of the UNCITRAL Model Law, included in the Arbitration Act (see Question 3) imposes a duty on an arbitrator to disclose any circumstances that are likely to give rise to justifiable doubts about his impartiality or independence. Failure to do so is a ground for terminating the arbitrator's appointment (see Question 4, Removal of arbitrators). The case law from the Zambian Supreme Court shows that an award can be set aside on the basis only of an appearance of lacking independence or impartiality, irrespective of what the true situation is.
The law of limitation applies to arbitration in Zambia. The relevant statute is the Limitation Act of England 1939 (Limitation Act) which applies in Zambia under a local statute. Section 27 of the Limitation Act specifically provides that the Limitation Act applies to arbitration proceedings as it applies to actions in the High Court. The ordinary common law principles apply. The usual limitation period is six years, including for claims based on contract and most other civil law claims.
The time begins to run from the date the cause of action accrues. Once time has started to run, it continues running until proceedings are commenced or the claim is barred.
However, the defendant may not be able to rely on the statute if he has:
Entered into negotiations with the claimant for good consideration not to rely on the statute.
Represented that he desires that the claimant delay proceedings and that the claimant will not be prejudiced by the delay, and the claimant acted on this representation.
In addition, when the High Court sets aside an arbitration award or orders that the arbitration ceases to have effect on the dispute, after the start of the arbitration, the court may additionally order that the period between the start of the arbitration and the date of the court's order be excluded when calculating the time for limitation purposes.
What substantive and/or formal requirements must be satisfied?
Is a separate arbitration agreement required or is a clause in the main contract sufficient?
The Arbitration Act is flexible on the substantive and formal requirements for an arbitration agreement. From the definition of an arbitration agreement in section 2 an oral arbitration agreement may be sufficient. An arbitration agreement may take the form of an arbitration clause in a contract or a separate agreement between the parties (section 9).
In practice, however, it is vital to include a clause providing in clear terms both that:
The parties must resort to arbitration in the event of a dispute.
The arbitration is binding.
No statutory rules apply to the arbitration agreement.
The parties are free to agree on a procedure for appointing an arbitrator or arbitrators (section 12). The only requirement is that no person shall be precluded from acting as an arbitrator because of his nationality, gender, colour or creed. Such a limitation, if included in an arbitration agreement, would arguably be void.
A person can only join or be joined to arbitral proceedings if they are:
Party to the agreement that is the subject of the dispute.
Party to a submission of a dispute to arbitration.
Similarly, as in litigation, a third party who is not a "party" to the arbitral proceedings cannot be bound by or benefit from the proceedings unless they claim under or through a substantive party to the arbitral proceedings. The Arbitration Act confirms this by providing that an award made by an arbitral tribunal under an arbitration agreement is final and binding both on the parties and on any persons claiming through or under them (section 20).
The parties are free to agree on the procedure for appointing arbitrators (section 12). If the parties have not agreed on the procedure or, having agreed on a procedure, fail to settle on an arbitrator, the following default rules apply:
In an arbitration with three arbitrators, each party appoints one arbitrator, and the two arbitrators appoint the third arbitrator. The appointment will be made, on a party's request, by an arbitral institution if:
a party fails to appoint an arbitrator within 30 days of receiving the other party's request to do so; or
the two arbitrators fail to agree on the third arbitrator within 30 days of their appointment.
For arbitral institutions, see Question 2.
In an arbitration with a sole arbitrator, the parties appoint the arbitrator jointly. If the parties are unable to agree, the arbitrator will be appointed, on a party's request, by an arbitral institution.
Unless the agreed appointment procedure provides other means for securing the appointment, any party can request the High Court to take the necessary measures if:
a party fails to act as required under the appointment procedure agreed by the parties;
the parties or two arbitrators are unable to reach an agreement expected of them under the applicable procedure; or
a third party, including an arbitral institution, fails to perform functions entrusted to it under the procedure.
A court's or arbitral institution's decision relating to the appointment of arbitrators cannot be appealed.
In appointing an arbitrator, a court or arbitral institution must have due regard to:
any qualifications required of the arbitrator under the parties' agreement;
considerations that are likely to secure the appointment of an independent and impartial arbitrator; and
in the case of a sole or third arbitrator, the advisability of appointing an arbitrator of a nationality other than any of the nationalities of the parties.
In relation to default procedures for removal of arbitrators, see Question 4, Removal of arbitrators.
The Arbitration Act does not set out procedural rules. The parties to an arbitral agreement are free to agree on the procedural rules and, in the absence of agreement, the arbitral tribunal can conduct proceedings in a way that it considers appropriate (Article 19, UNCITRAL Model Law). Articles 22 to 27 and other provisions of the UNICITRAL Model Law provide helpful guidance on the procedure. In practice, procedure reflects modern international trends.
The Arbitration Act confers some procedural powers on an arbitral tribunal. Unless the parties agree otherwise, the tribunal has power to make, among other things:
An interim injunction order.
A preservation of property order.
An order for the taking of a deposit to secure the costs and expenses of arbitration.
The tribunal can also:
Make any order it considers appropriate to compel the attendance of a witness before it to give evidence or produce documents.
Order any witness to submit to examination on oath or affirmation before the arbitral tribunal, or before an officer of the tribunal or any other person, to produce information or evidence for the tribunal's use.
Order the discovery of documents and interrogatories.
Issue a commission or request for the taking of evidence outside of the jurisdiction.
The arbitral tribunal or a party with the tribunal's approval can request from the court executory assistance in the exercise of any power conferred on the tribunal. This is similar to Article 27 of the UNICITRAL Model Law. An arbitral tribunal relies on the courts to compel the parties' observance. In practice, the majority of arbitrations are conducted by legal practitioners on behalf of the parties. Compliance with the arbitrators' orders is, therefore, not problematic, as legal practitioners advise their clients against non-compliance.
The Arbitration Act does not provide a specific procedure for disclosure. However, the arbitral tribunal can order the discovery of documents and interrogatories (see Question 12). Parties can freely determine the rules on disclosure. In practice, parties tend to produce documents, relevant to the arbitral proceedings, on their own initiative. In this respect, there is not too much difference between litigation and arbitration.
Arbitral proceedings are confidential. An arbitration agreement, unless otherwise agreed between the parties, is deemed to provide that the parties must not publish, disclose, or communicate any information relating to either (section 27):
Arbitral proceedings under the agreement.
An award made in those proceedings.
Publication, disclosure or communication can be made if it is:
Required under any law.
Made to a professional or other adviser of any of the parties.
Made by an arbitral institution or a person authorised in writing by an arbitral institution. This is as long as it is made so as to:
maintain the anonymity of the parties;
reveal only those facts which may be necessary for the understanding of the subject of the arbitration and the decision of the arbitral tribunal.
The confidentiality requirement applies to information relating to the arbitration proceedings before the courts.
The Arbitration (Code of Conduct and Standards) Regulations 2007 also sets out extensive rules for confidentiality requirements for the arbitrators themselves.
Courts and arbitration
The local courts, particularly the High Court, can intervene to assist arbitration proceedings. A party can, before or during arbitral proceedings, request from a court an interim protective measure, which can take the form of (section 11):
An order for the preservation, interim custody, sale or inspection of any goods that form the subject matter of the dispute.
An order securing the amount in dispute or the costs and expenses of the arbitral proceedings.
An interim injunction or other interim order.
Any other order to ensure that an award which may be made in the arbitral proceedings is not rendered ineffectual.
The court must not grant an order or injunction under section 11 unless one of the following applies:
The arbitral tribunal has not yet been appointed and the matter is urgent.
The arbitral tribunal is not competent to grant the order or injunction.
The urgency of the matter makes it impractical to seek this order or injunction from the arbitral tribunal.
In any event, the court must not grant any order or injunction if the arbitral tribunal (assuming it is competent to grant the order or injunction), has already determined an application.
On the issue of compelling attendance of witnesses, see Question 12.
There are matters that can be referred to the courts in the course of arbitration, including an application to remove an arbitrator on the grounds of, for example, undue delay (see Question 4, Removal of arbitrators).
In theory, a party can make nuisance applications to a court to try and delay arbitral proceedings. In practice, this occurs infrequently (if at all). The courts respect arbitral proceedings and rarely cross over into the responsibilities of an arbitral tribunal.
If a party starts court proceedings in breach of an arbitration agreement, a court must, if a party requests this at any stage of the proceedings (despite any written law), stay those proceedings and refer the parties to arbitration unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed (section 10).
Arbitral proceedings commenced in breach of a valid jurisdiction clause can be challenged by an aggrieved party, through Article 16 of the UNICITRAL Model Law (see Question 19).
In an appropriate case, where it is established that a party seeking relief through an interim protection order has challenged or intends to challenge arbitral proceedings in an overseas country, a court can grant an injunction to maintain the status quo. However, it is very unlikely that a local court would issue an injunction restraining arbitral proceedings overseas. In addition to the issue relating to reciprocal enforcement of overseas judgments, intricate issues of conflict of laws arise. A party would, therefore, be better served with a court application in the country where the relevant arbitral proceedings are held.
Article 16 of the UNCITRAL Model Law provides for both kompetenz-kompetenz and separability. An arbitral tribunal can rule on its own jurisdiction, including any objections relating to the existence or validity of the arbitration agreement. An arbitral tribunal can determine a jurisdictional challenge by a party either:
As a preliminary question.
In an award on the merits.
If the issue is resolved as a preliminary question, an aggrieved party can still request a court to decide on the issue. However, Article 16 only applies to arbitrations that take place in Zambia (section 8).
An arbitration clause which forms part of a contract must be treated as an agreement independent of other terms of the contract. A decision by the arbitral tribunal that the contract is null and void does not automatically invalidate the arbitration clause.
Security for costs?
Security or other interim measures?
See Question 12.
The only method to challenge an arbitral award is an application to the High Court to set aside an arbitral award (see Question 4, Challenge of awards). The parties cannot exclude the rights of challenge.
If the parties to arbitration are represented by legal practitioners, as they often are, the fee structure under the Legal Practitioners (Costs) Order 2001 is used. This Order provides for an hourly rated graduated fee structure, which is based on the seniority of the legal practitioner. The fees chargeable by arbitrators are also regulated by statutory instrument No. 12 of 2007.
Unless otherwise agreed by the parties, the arbitral tribunal fixes and allocates the following costs in its award (section 16):
The costs and expenses of an arbitration (including the legal fees and other expenses of the parties).
The fees and expenses of the arbitral tribunal.
Other expenses related to the arbitration.
If the award does not specify otherwise, each party is responsible for:
Its own legal costs and other expenses.
An equal share of the fees and expenses of the arbitral tribunal and any other expenses related to the arbitration costs.
In practice, however, costs follow the event and the unsuccessful party pays the successful party's costs. The tribunal normally makes an unquantified award that reflects this, which is subject to taxation assessed by the court at the end of the proceedings.
An arbitration award must be enforceable in the same manner as an order of the court (section 20(3)). Therefore, the usual mechanisms of enforcement are available, including:
Writs of fieri facias (that is, a writ of execution after judgment obtained in a legal action for debt or damages).
Garnishee proceedings (requiring a third party who owes money to the judgment debtor to pay the money to the judgment creditor).
The court mechanism can be used to secure enforcement (see Question 15).
Zambia recognises arbitration awards made in jurisdictions that are signatories to the New York Convention (see Question 26). The Arbitration Act provides in its preamble for, among other things, the recognition and enforcement of foreign arbitral awards made under the New York Convention. An award made in accordance with New York Convention must be both:
Recognised as binding on the persons in relation to whom it was made.
Enforceable in accordance with Article 35 and 36 of the UNCITRAL Model Law (section 31).
However, foreign arbitration awards made in jurisdictions that are not signatories to the New York Convention will be recognised as binding in Zambia and enforced on application in writing to the High Court (section 19). The party relying on an award or applying for its enforcement must supply both the:
Duly authenticated original award or a duly certified copy of it.
Original arbitration agreement or a duly certified copy of it.
If the award or agreement is not made in the official language (presumably, English), the party must supply a duly certified translation of the document(s). The court has power to refuse recognition only on the same grounds under which an award made in Zambia can be set aside (see Question 4, Challenge of awards). Awards made in a New York Convention
country are easier to enforce than other foreign arbitration awards.
Enforcement proceedings usually only require two weeks. If certain intervening matters arise, such as the resistance of the party against whom enforcement is sought, enforcement may take up to six months.
Most commercial arbitration matters end up before the Zambian Commercial Court, which is a fast track court. Matters before this court are usually heard under an expedited procedure.
Main arbitration organisations
Zambia Centre for Dispute Resolution Limited
Main activities. Training of arbitrators, organising workshops and other activities to promote alternative dispute resolution mechanisms.
W Website not available
Zambia Association of Arbitrators
Main activities. To further the interests of its membership and promote advancement of arbitration as a viable alternative to litigation in the resolution of disputes.
W Website not available