FBC wins US$1m arbitration dispute

The Supreme Court has dismissed an appeal by Zimbabwe Nantong International (Pvt) Ltd, upholding a High Court ruling that set aside an arbitral award of nearly US$1 million against FBC Holdings Limited over a collapsed head office construction project.

In a unanimous decision delivered by Justice Hlekani Mwayera and concurred by Justices Antonia Guvava, Susan Mavangira, Bharat Patel, and Samuel Kudya, the Supreme Court ruled that the arbitral award was unlawful and contrary to Zimbabwe's public policy.

"This Court finds no reason to depart from the general rule that costs follow the result. It is for these reasons that this Court issued an order dismissing the appeal with costs," Justice Mwayera said while delivering the judgment.

The case stemmed from a US$24.9 million selective tender awarded by FBC Holdings to Zimbabwe Nantong in 2021 for the construction of the financial group's new headquarters.

However, the project collapsed when the Chinese contractor demanded partial payment in U.S. dollars, citing instability in the Zimbabwe dollar. FBC rejected the demand, maintaining that the contract clearly stipulated payments would be made in local currency at the Reserve Bank of Zimbabwe's auction rate.

When Nantong failed to commence work, FBC cancelled the deal - prompting the company to seek arbitration.

The arbitrator subsequently ruled in favour of Nantong, awarding US$967,000 in damages and US$8,200 for wrongful termination. But in 2024, the High Court overturned that ruling, finding the award to be in breach of the Finance Act and contrary to established principles of contract law.

The Supreme Court has now endorsed that position, holding that the arbitrator had overstepped by effectively rewriting the parties' agreement.

"The arbitrator had no power to make a new contract for the parties by introducing payment in U.S. dollars where the agreement expressly required local currency," the bench stated.

The judges added that while arbitral awards are rarely disturbed, they cannot stand if found to be unlawful or against public policy.

"An arbitral award will not be lightly set aside on the basis that a party considers it wrong. However, where the award is unlawful and contrary to public policy, as in this case, it cannot stand," the court ruled.

The decision cements FBC Holdings' victory in the long-running dispute and underscores the judiciary's insistence on upholding contractual certainty - especially regarding payment terms in Zimbabwe's volatile currency environment.