Alternative Dispute Resolution (ADR) has been accepted as a crucial system in numerous

legal systems in Zambia and across the world. Among its other benefits, it has been shown to
be crucial for preserving commercial and social relations. Through stakeholder participation
and buy-ins, it has been used over the years to settle disputes between employers and
employees. Additionally, it has proven to be highly successful in settling marital disputes.
The majority of ADR techniques entail a third party who is impartial and knowledgeable
about the matter at hand.

The aim of this essay is to examine the use of ADR in resolving commercial in Zambia; to
provide an analysis of a specific case where ADR was utilized, discussing the outcomes and
implications for the business community and the lessons that can be drawn from this case
about the advantages and limitations of ADR in commercial settings.

Alternative dispute resolution (ADR) refers to the different ways of resolving a dispute
without having to go to court. Put simply, ADR is an alternative to litigation1.

Some of the ADR methods include the following: Mediation, negotiation, arbitration,
reconciliation, Mini-trial among others2.

ADR has grown to be a significant component of Zambia's legal system because to its
adaptability, effectiveness, and capacity to maintain corporate ties. Article 118(2)(d) of the
Zambian Constitution3 promotes the use of alternative dispute resolution, it provides that:

“In exercising judicial authority, the courts, shall be guided by alternative forms of
dispute resolution, including traditional dispute resolution mechanisms, shall be
promoted, subject to clause (3).”

Of all the ADR methods, arbitration turns out to be the most commonly used and preferred
method of ADR in Zambia. Arbitration, is a type of dispute resolution method whereby,
parties are heard before a neutral decision maker as the “arbitrator.”

Arbitration in Zambia is governed by the Arbitration Act of 20004, read together with
international instruments such as the Convention of the Recognition and Enforcement of
Foreign Arbitral Awards and the United Nations Commission on International Trade
1
S. Patterson and G. Seabolt (2001). Essentials of Alternative Dispute Resolution
2
ibid
3
The Constitution of Zambia, Amendment N0.2 of 2016
4
Arbitration Act No.19 of 2000
Law’s Model Model Law on International Commercial Arbitration (UNCITRAL) Model
Law. The Court clarified that Zambia, in replacing the old Arbitration Act, Chapter 40 and
enhancing the Arbitration Act of 2000 current in use, chose to adopt the (UNCITRAL) Model
Law with specific modifications outlined in the Arbitration Act. In Zambia Revenue
Authority v Tiger Limited and Zambia Development Agency5, a similar affirmation was
given. In this case, the court, asserted that Zambia’s Arbitration law essentially mirrors the
UNCITRAL Model Law.

Section 2 of the Arbitration Act defines an Arbitration Agreement as an agreement, whether

in writing or not, by the parties to submit to submit to arbitration all or certain disputes which
have arisen or which may arise between them in respect of a defined legal relationship,
whether contractual or not. This was illustrated in the case of Savenda Management
Services Limited v Stanbic Bank Zambia Limited6 in which the respondent gave the
appellant banking facilities which were secured by, inter alia, legal mortgages. The parties
agreed to refer to arbitration any dispute that may arise concerning the banking facilities, as
was stipulated under Clause 14 of the Facility letters.

ADR stands out to be the best option in settling commercial disputes in that, it is faster,
cheaper, easier and maintains relationships between the disputing parties, compared to
litigation which has over the years proven to be a very costly, time consuming and lengthy
process in Zambia7.

The application of ADR was utilized in the case of Bomar Mining Company (Z) Limited v
Mopani Copper Mines Plc8. Facts of the case where, parties signed a NEC Term Service
Contract on November 30, 2015, and the defendant ended it on September 9, 2016.
Arbitration on appeal and adjudication were the dispute resolution procedures stipulated in
the contract. With a statement of claim and a writ of summons, the plaintiff filed a lawsuit
against the defendant on February 16, 2017.

In accordance with section 10 of the Arbitration Act, the defendant requested on March 9,
2017, that the court halt the proceedings and send the case to arbitration. Johan du Toit (the
"Deponent") produced an affidavit in support of this application, stating that arbitration under
the International Chamber of Commerce's International Court of Arbitration Rules was the
5
(2016) ZMSC 11

6
(2018) ZMSC
7
K.K. Mwenda (2008). Principles of Arbitration. Brown Walker Press, Parklands, F.I.
8
(2007) HKC/0002
forum offered under the contract's dispute resolution mechanism. In light of this, the
Deponent requested that the arbitration clause be followed and that an arbitrator be chosen.

The plaintiff contested this application, claiming that arbitration was the next option available
to the parties in the event that adjudication failed to resolve the dispute in accordance with the
terms of the contract.

The plaintiff additionally claimed that the parties could not rely on an adjudicating authority
that did not exist because the Zambia Centre for Dispute Resolution, which was the
adjudicators' nominating body, had ceased to exist in Zambia.

In light of this, the plaintiff claimed that the arbitration clause was unenforceable against the
parties and that it was invalid in its current form.

The court held as follows:

i. The process of adjudication and arbitration both survived the termination of

the contract.
ii. When interpreting an arbitration clause, preference is given to a viable
interpretation over one that impugns it.
iii. A stay of proceedings is granted in accordance with section 10 of the
Arbitration Act.

The courts decision in the case of Bomar Mining Company (Z) Limited v Mopani Copper
Mines Plc mentioned above, reaffirms the binding nature and indeed power of arbitration
agreements.

The implications of the aforementioned case on the business community in so far as the
application of ADR is concerned involve the following:

i. Arbitration rulings or decisions are legally binding:

The Bomar judgment reaffirmed the legality of arbitration clauses, businesses feel more
comfortable incorporating ADR clauses into contracts, which allow parties to employ ADR
as a way of settling commercial disputes. In John Sangwa v The Legal Practitioners
Committee of the Law Association Zambia9, the court stated that:
“Arbitration is an end in itself and not a first step in the dispute resolution process
because the decision of the arbitrator is final and binding on the parties in terms of
section 20 of the Arbitration Act.”
9
Appeal No.121 of 2013
Section 20 of the Arbitration Act10, states as follows:
Subject to subsection (2) and (3), an award made by an arbitral tribunal pursuant to
an arbitration agreement is final and binding both on the parties and on any persons
claiming through or under them.
This position of the law was reaffirmed in the case of John Kunda v Keren Motors11, in
which the court stated that, an arbitral award is binding according to section 20 of the
Arbitration Act and can only be set aside if it falls in the ambit if section of 17 of the said
Act.
ii. It survives contract termination:

The court is required by law to halt proceedings submitting an issue to arbitration, and the
parties are still obligated by the arbitration clause even if the entire agreement is repudiated.
This is in accordance with section 10 of the Arbitration Act, which provides that;
(1) A court before which legal proceedings are bought in a matter which is the
subject of an arbitration agreement shall, if a party so requests as any stage of the
proceedings and refer the parties to arbitration unless if finds that the agreement
is null and void, inoperative or incapable of being performed.
(2) Where proceedings referred to in section (1) have been brought, arbitral
proceedings may nevertheless be commenced or continued, and an award may be
made, while the issue is pending before court.
The provision of section 10 of the Arbitration Act was upheld in the case of Yougo Limited
v Pegasus Energy Limited12, in which, one of the parties to a contract containing an
arbitration clause commenced an action in the High Court for breach of the said contract.
The breach involved the non-payment of money in relation to some construction works done
on the defendant’s property by the plaintiff.
The courts ruling on the preliminary issue was that, the matter was wrongly before the court
and referred it to arbitration. In furtherance, the court stated that, the only situation under
which the court will not refer the matter to arbitration is where it finds, that the agreement is
null and void, inoperative or incapable of being performed.
The decision of the court in the aforementioned case, to have the matter referred to arbitration
gave effect to the intention of the parties as agreed in their contract. It demonstrates that, the

10
Arbitration Act No.19 of 2000
11
HPC 550 OF 2008 [2011] ZMHC 9
12
2004 HCP/0299
arbitration clause makes the parties bound to the contract they enter into when carrying out
their commercial transactions.

In addition, the effect of section 10 of the Arbitration Act was also illustrated in the case of
Intermarket Banking Corporation Zambia v Nonde Munkata 13. In this case, the
Respondent applied to stay proceedings pending referral to arbitration and it was held, inter
alia, that by virtue of section 10 of the Arbitration Act, where the parties have agreed to refer
their disputes to arbitration, the Court is obliged upon application, by one of the parties to
stay proceedings and refer the parties to arbitration.

The court’s decision to stay proceedings as a way of supporting or promoting arbitration as

provide for under the Arbitration Act, promotes freedom of contracts, in that it reduces court
interference, thereby, the effective use and application of ADR in commercial activities.

There are exceptions where the court can not stay the proceedings and refer the matter to
arbitration, in accordance with section 10 of the Arbitration Act. The court can not stay the
proceedings in a situation where, the wording of the arbitration clause, upon being
interpreted, is deemed not to represent the intention of the parties to the contract. This was
demonstrated in the case of Ashville Investments v Elmer Constructors Limited14, in
which it was stated that:

“In seeking to construe a clause in a contract, there is scope for adopting either, a liberal or a
narrow approach, the exercise which has to be undertaken is to determine what the word used
means.

Furthermore, in Audrey Nyambe v Total Zambia Ltd15, the Supreme Court stated that,
where the arbitration clause was worded in such a way that a dispute arising ‘during the
continuance of the agreement’ was to be referred to arbitration. However, in that case, the
dispute related to the manner in which the agreement was terminated.

This result means that all contracts that are written to prevent litigation must contain
arbitration clauses as a statement of the parties' intention in commercial disputes to settle
their differences through alternative dispute resolution (ADR). As such, it is incumbent upon
parties to a contract seeking to sort out their commercial disputes using ADR, such as
arbitration, to make sure that they do due diligence when coming up with the arbitration

13
(2012)/HPC/0268
14
[1987] EWCA Civ
15
SCZ Judgment No.1 of 2015
clause by ensuring that, the wording of the clause does not create room for the arbitration
contract is not rendered null, void or inoperative by the court.

There some notable lessons that can be drawn from the advantages and limitations of ADR in
commercial settings.

Advantages include the following:

1. ADR is a private process, whose main focus is on achieving a resolution that is

mutually satisfactory to the parties involved. Making it a very suitable option for
commercial settings, in that, the business of the parties that seek for ADR as a way of
resolving their commercial dispute is shielded from any potential biases held by the
public.
2. An arbitrator is chosen voluntarily rather than unilaterally: Section 12(1) and (2) of
the Arbitration Act, provides for the appointment of an arbitrator. It states that:
(1) No person shall be preluded by reason of that person’s nationality, gender, colour
or creed from acting as arbitrator.
(2) The parties are free to agree on a procedure of appointing the arbitrator or
arbitrators, subject to the provisions of subsections (4) and (5).
The party’s right to choose a procedure o the appointment of an arbitrator is a valuable too
indeed in that, the parties in a commercial setting get to have an opportunity to select an
arbitrator who has the technical competence in the subject matter. This epitomises and largely
natures the confidence which the parties have in the arbitrator when resolving disputes in
commercial settings.
The court in the case of Ald Plant & Fleet Management Limited v The Attorney
General16 in which the demonstrated the process of appointing a arbitrator, as provided for
under section 12(4) and (5) of the Arbitration Act.
Furthermore, in Heyman & Another v Darwin’s Limited17, it was opined that:
“The arbitration clause does not impose on one of the parties an obligation in favour
of the other. It embodies the agreement of both parties that, if any dispute arises with
regard to the obligations which the other party has undertaken to the other, such
dispute shall be settled at the tribunal with their own constitution, the arbitration
clause survives for determining the mode of their settlement.”

16
2023/HPC/0515
17
(1942) 1 All ER 337
 3. ADR is time efficient: ADR expedites the dispute resolution in a commercial setting,
enabling businesses to quickly return their primary operations without prolonged
disruption of a court battle.
4. ADR provides customised solutions: ADR provides the flexibility to allow the parties
to tailor solutions to their specific and unique needs and interests, so that both parties
can feel like they have achieved a favourable outcome. That same flexibility cannot
normally be accessed taking a claim to trial, where the judgment usually results in a
‘winner’ and ‘loser’.
5. Relationship Preservation: Litigation can strain business relationships, which can be
particularly demanding when the dispute is between two parties who had previously
enjoyed a healthy and financially-prosperous dealings. ADR aims to preserve those
relationships by encouraging amicable, mutually agreeable solutions, which can be
vital for ongoing collaborations.
6. The binding and finality nature of decisions in ADR, such as arbitration, which are
often significantly shielded from judicial review or appeals, transparency and trust in
the conduct of the arbitration proceedings ensure legitimacy of the process ad the
award rendered. This also protects the parties in a commercial setting from being
subjected to lengthy procedures that come with appealing a decision and all, with
respect to litigation.

Limitations include the following:

1. From the Bomar v Mopani mining Copper Mining case, it can be noted that,
chances of appealing a decision under ADR are slim, in that the conditions under
which a decision can be challenged under ADR are very tough . Making it very
cumbersome for partiers to challenge some of the decisions, in in a event that they are
not satisfied as such.
2. ADR for instance arbitration, demands that parties seeking to resolve their disputes
through ADR must ensure that they adhere to the requirements outlined by the
respective method of ADR to be used, such as clauses used in for instance, an
arbitration agreement. Failure to adhere to the set out requirements as established by
the law, may render the arbitration contract invalid, null and void or inoperative.
Section 9 of the Arbitration Act No.19 of 2000, provides that:
(1) an arbitration agreement must be in contract or in the form of a separate
agreement.
In the case of Konkola Copper Mines Plc V NFC Africa Mining Plc18, emphasis was
placed on the fact that a court has discretion not to stay proceedings and refer the parties to
arbitration, where the plaintiff demonstrates that the arbitration agreement is null and void,
inoperative or incapable of being performed.

In light of the above, it can be stated that, In Zambia, alternative dispute resolution plays a
crucial role in settling business conflicts. Its ability to provide affordable, enforceable
solutions with minimal court involvement is unmatched because it not only guarantees the
peaceful resolution of business disputes while respecting legal principles, but it also shields
companies from potential harm to their reputation that could result from making such
disputes public.

Notwithstanding its benefits, alternative dispute resolution (ADR) has drawbacks, such as the
inability of the court to step in, particularly when the award made does not satisfy one party,
and the potential for cost fluctuation, particularly when the contested matter calls for an
arbitrator who is an expert in the subject matter. Because this is a case-by-case issue, there
may not be uniformity in rates, even though the same may demand enormous sums for his or
her expert services.

REFERENCES

BOOKS

K.K. Mwenda (2008). Principles of Arbitration. Brown Walker Press, Parklands, F.I.

S. Patterson and G. Seabolt (2001). Essentials of Alternative Dispute Resolution

18
Appeal No. 118/2006
P.H. Tessler (2001). Collaborative Law: Achieving Effective Resolution and Divorce without
Litigation.

CASES

Ald Plant & Fleet Management Limited v The Attorney General 2023/HPC/0515

Audrey Nyambe v Total Zambia Ltd SCZ Judgment No.1 of 2015

Ashville Investments v Elmer Constructors Limited [1987] EWCA Civ

Bomar Mining Company (Z) Limited v Mopani Copper Mines Plc (2007) HKC/0002

Heyman & Another v Darwin’s Limited (1942) 1 All ER 337,

Intermarket Banking Corporation Zambia v Nonde Munkata (2012)/HPC/0268

John Kunda v Keren Motors HPC 550 OF 2008 [2011] ZMHC 9

John Sangwa v The Legal Practitioners Committee of the Law Association Zambia Appeal
No.121 of 2013

Konkola Copper Mines Plc V NFC Africa Mining Plc Appeal No. 118/2006

Savenda Management Services Limited v Stanbic Bank Zambia Limited (2018) ZMSC

Yougo Limited v Pegasus Energy Limited 2004 HCP/0299

Zambia Revenue Authority v. Tiger Limited and Zambia Development Agency (2016)
ZMSC 11

STATUTES

Arbitration Act No.19 of 2000

The Constitution of Zambia, Amendment No.2 of 2016