Chubb European Group SE and Ors v Zopco SA and Ors (CAZ/08/337/2023) [2024] ZMCA 347 (3 May 2024)

IN THE COURT OF APPEAL OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: CHUBB EUROPEAN GROUP SE CORPORATE SPECIAL RISKS SAS SOMPO JAPAN NIPPONKOA MARTIN & BOULARTSAS CAZ/08/337/2023 AppealNo.282/2022 1 ST APPELLANT 2ND APPELLANT 3RD APPELLANT ZOPCO SA ALEX STEWART INTERNATIONAL ZAMBIA LIMITED ALEX STEWART INTERNATIONAL UK 1 sT RESPONDENT 2NnRESPONDENT 3RD RESPONDENT Coram: Chashi, Makungu and Sichinga, JJA On the 27th day of March, 2024 and the 3 rd day of May, 2024 For the Appellants: Mrs. M. B. Mutuna and Mrs. M. L. Nkonde both of Mweshi Banda and Associates / For the 1st Respondent: Mr. T. Chibeleka and Mr. N. Chaleka both of Messrs ECB Legal practitioners For the 2 nd Respondent: Mr. R. Mweche of Christopher Legal Practitioners For the 3 rd Respondent: No appearance JUDGMENT Makungu, JA delivered the Judgment of the Court. Cases referred to: 1. Costain Limited v. Tarmac Holdings Limited (2017) 7 CLC 4 91 2. Tito Manyika Tepula v. The People (1981) ZR 304 3. Shilling Bob Zinka v. The Attorney General (1991 - 1992) ZR 73 4. Finsbury Investments Limited and 7 Others v. Securities Exchange Commission and Another CAZ Appeal 193/ 2021 5. Nawa v. Standard Chartered Bank of Zambia (SCZ Judgment No. 1 of 2011) 6. Murray & Roberts Construction Limited and Kaddoura Construction Limited v. Lusaka Premium Health Limited and Industrial Development Corporation of South Africa-Appeal No. SCZ 141/2016 at page J16 7. Ringford Habwaanda v. Zambian Breweries 13 PPLC (2012) 3 ZR 75 8. Zambia Extracts Oils and Colourants Limited and Enviro Oils and Colourants Limited v. Zambia State Insurance Pension Trust Fund Board of Trustees (2016) 2 ZR 316 9. Finsbury Investment Limited v. Antonio Ventriglia and Another (2016) 3Z. R 128 10. Chazya Silwamba v. Lamba Simito (2010) ZR 475 11. Atlantic Bakery Limited v. Zesco Limited Selected Judgment No. 61 of 2021 12. Teklemicael Mengstab and Another v. Ubuchinga Investments Limited - SCZ Appeal 218 of 2013. 13. Concrete Pipes and Products Limited v. Kingsley Kabimba and Another - SCZ NO. 14 of 2015. 14. Chansa Chipili and Powerfiex (z) Limited v. Wellingtone Kashimike & Wilson Kalumba (2012) ZR 483 Legislation referred to: 1. The Arbitration Act, Number 19 of 2000 2. The Insurance Act No.38 of 2021 3. The High Court (Commercial Court Rules) Chapter 27 of the Laws of Zambia. 4. The Court of Appeal Rules, statutory Instrument No. 65 of 2016 1.0 INTRODUCTION 1.1 This appeal is against the ruling of A. Patel, J (as she then was) dated 29th March, 2023, dismissing the appellants' preliminary application for lack of merit. -J2- 2.0 BACKGROUND 2.1 The circumstances of this appeal are that the 1st Respondent commenced cause number 2021/HKC/041 in the lower court against the 2 nd and 3 rd Respondents claiming inter alia: 1. An order of payment by the 2 nd and 3rd Respondents of the sum of US$1,550,420.00 (the claimed amount) being monies spent by the 1st Respondent for fraud, misrepresentation and deceit in the weighing, sampling and moisture determination of the consignment done at Polytra, Kitwe; in relation to Certificates of Assay Numbers: Z5924, Z5552, Z6207, 219205, 220288 and Z6599 undertaken by the 2 nd respondent, and 2. Damages for fraud, misrepresentation and deceit in the weighing, sampling and moisture determination of the consignment relating to the said Assay Numbers as undertaken by the 2 nd respondent. 2.2 On 26t h September, 2022, the 1s t respondent obtained an order appearing at page 35 to 36 of the record of Appeal joining the appellants to these proceedings. Thereafter, the pleadings were amended by citing the 1st to 7 th appellants as the 3 rd to 9 th defendants respectively. The additional claims were as follows : -J3- 1. In the alternative, an order that the 3rd respondent (2nd Defendant) as insurer and the holding company of the 2 nd respondent (1 st defendant) indemnifies the 1st respondent (plaintiff) an amount of USD$1,550,420.00 being monies spent by the plaintiff on the misrepresented consignment; or 2. In the alternative, that the appellants (3rd to 9th defendant) indemnify the 1st respondent (plaintiff) the amount of USD$1 ,550,420.00 in the percentages specific stipulations of the Marine Caro open Cover No. 20180320, dated 27th November, 2018 (the Marine Policy). 2 .3 On 5 t h December, 2022 the appellants filed their defence in which they averred, inter alia that: Under the Marine policy, the parties chosen dispute resolution mechanism is arbitration in accordance with Article 22 and that any dispute arising out of the policy is to be determined by a tribunal of arbitrators in Belgium. 2. 4 Further, the Marine Policy is governed by Belgian law and practice and subject to the exclusive jurisdiction of the Belgian Courts, in the limited instance of collection of non-disputed premiums, pursuant to Article 24 thereof; and -J4- 2.5 That the 1st respondent has no cause of action against the appellants before the Zambian Courts since the Marine Policy was issued in Antwerp Belgium, contrary to section 120 ( 1) of the Insurance Act No. 27 of 1997 which requires all assets, liabilities and interests situate in Zambia to be insured by insurers registered in Zambia. 2.6 Together with the defence, the appellants filed an application to raise preliminary issues to determine questions of law and to stay court proceedings relating to the pending arbitration pursuant to Order 14A rule 1 and Order 33 rule 7 Rules of the Supreme Court (RSC) as read with section 10 of the Arbitration Act and Rule 4 of the Arbitration (Court proceedings) Rules 2001. 2.7 The preliminary issues raised were as follows: 1. Whether the High Court has authority to determine the action in view of the arbitration clause in the Marine Policy being the subject of the plaintiff's action against the 3 rd to 9 th appellants. 11. Whether the Marine Policy is enforceable in Zambia in light of Section 120 of the insurance Act, No. 21 of 1997. -JS- 2.8 The appellants had also filed on affidavit 1n support of the application and skeleton arguments. 2. 9 In brief, the basis of their application was that the Marine Policy contained an arbitration agreement under Article 22. Article 24 of the Marine Policy contained a choice of law clause which subjected all disputes to be settled exclusively in Belguim and for the insurance policy to be governed by Belgian law and practice; and the Marine Policy was not issued by a Zambian insurer and thus could not be enforced in Zambia due to the 1st respondent's failure to adhere to the mandatory provisions of Section 120 of the Insurance Act No. 27 of 1997 (the Insurance Act). 2.10 On 16th January, 2023, the 1s t respondent filed its affidavit in opposition and skeleton arguments in opposition in which it stated that: The general conditions in the Marine Policy were amended by the specific conditions appearing at page 77 to 93 thereof (appearing at pages 178 to 182 of the record of appeal) and thus, the Marine Policy was subject to the exclusive jurisdiction of English Courts. 2.11 Accepted that the Marine Policy was executed in Antwerp but disputed that the Zambian court's jurisdiction was ousted. -J6- 2.12 Asserted that the parties agreed to subject the Marine Policy to English law as they contemplated a situation where goods would move across jurisdictions from loading to delivery. 2. 13 Deposed that the alleged fraud happened in this jurisdiction and therefore, the Courts in Zambia have jurisdiction. 2.14 That the underwriters expressed difficulty in securing additional information and documents from various parties and local authorities. Therefore, it was necessary for the Zambian Courts to preside over the matter. 2.15 That the issue of the enforceability of the Marine Policy in light of Section 120 of the Insurance Act was prematurely before the court and that that, provision is not applicable to the interpretation of the Marine Policy which is purely based on English Law. 2.16 On 19th January, 2023, the appellants filed an affidavit and skeleton arguments in reply appearing at pages 201 to 222 of the record of appeal in which they stated that: No part of the Marine Policy had been amended or varied as alleged by the 1st respondent and that it was always the parties' intention that the Marine Policy should be subjected to Belgian law except in the event that it became necessary to take out insurance under the -J7- institute of London Underwriters and the Institute Cargo Clause "all Risks" pursuant to particular condition at clause 5 . 1.3 which was not the case. 2 . 17 That Articles 22 and 23 of the Marine Policy make it mandatory for disputes to be resolved through arbitration unless there are mandatory conflicting legal stipulations. 2.18 That the ordinary courts remain competent for disputes relating exclusively to the collection of non-disputed premium. 2.19 The issue of fraud or the difficulties in obtaining cooperation of other entities and local authorities had no bearing on the preliminary issues. 2.20 On 15th February, 2023, the High Court Judge Mrs. Justice A Patel, SC as she then was, heard the application and delivered the Ruling dated 29th March, 2023 (the assailed Ruling). On 22 nd June, 2023 the lower Court granted the Appellants leave to appeal out of time. 3.0 SUMMARY OF RULING APPEALED AGAINST 3.1 Upon hearing all the parties concerned and considering all the submissions and documents placed before her. The learned Judge took note that the affidavits in support and in opposition to the preliminary application were both sworn by counsel. -JS- 3.2 That the 1st defendant joined issue with the plaintiff and did not file any process or make any submissions. 3. 3 In their submissions they repeated the respective parties positions stated in their affidavits. 3.4 The 1s t respondent's counsel stated that the second preliminary issue was premature as the Court had not received evidence in the matter. 3.5 That the Marine Policy called the General Conditions, Particular Conditions and Specific Stipulations Marine Cargo open Cover No. 20180320 was exhibited by the 3 rd to 9 th appellants in the supporting affidavit. 3.6 The Judge found that the application was properly before it and held that where there is an arbitration agreement between the parties, the court must refer the matter to arbitration upon application by a party. In this case, article 22 of the marine Policy was the arbitration clause. Section 10 ( 1) of the Arbitration Act and other authorities were referred to. 3.7 The 1s t respondent argued that the application to refer the parties to arbitration was misleading because the general conditions were varied and the matter is purely of a contractual nature. -J9- 3 .8 The 1st respondent had drawn the attention of the Court to Clause 7. 3 of the modified special conditions of policy to show that the parties were at liberty to choose arbitration or litigation. 3 . 9 The Judge noted that apparently the 1st respondent's counsel had abandoned her submission on referring the parties to arbitration. Nevertheless, she proceeded to argue on the choice of forum. 3.10 The lower Court looked at the definition of the doctrine of forum non conven1ens: "The doctrine that an appropriate forum even though competent under the law may divest itself of jurisdiction if, for the convenience of the litigants and the witnesses, it appears that the action should proceed in another forum in which the action might also have been properly brought in the first place." 3. 11 Reference was made to the case of Axis PTY Limited v. Cloud Tech Zambia Limited and Ravikirah Vijay Salvi where we espoused the doctrine of choice of forum. We stated inter alia that: "Simply put and as expounded in the Steak Ranch case (2021) ZR 564, the respondent ought to demonstrate that -JlO- there is an alternative forum in which it is more convenient for the matter to be heard. There must be consideration as to whether there is another forum which is more appropriate in which the action has the most real and substantial connection such as convenience or expense." 3 . 12 The 1st respondent had argued and submitted in their affidavit in opposition that the general conditions were amended by specific conditions which stated that the insurance policy is subjected to English law and practice and the exclusive jurisdiction of English courts which law is applicable in this jurisdiction. 3.13 The case of Chansa Chipili and Powerflex (z) Limited v . Wellingtone Kashimike & Wilson Kalumba was cited, where the fallowing guidance was given: ".... In business transactions, with foreign jurisdiction clauses where business is partly conducted in foreign countries, settlement of legal questions of jurisdiction is based ~n circumstances supported by the available evidence. Thus, while parties may agree on foreign jurisdiction in an attempt to oust the jurisdiction of the -Jll- state or country where they have business activities, such state or country may rightly claim jurisdiction depending on the circumstances in a given case." 3 . 14 That the preliminary issues which are so integral could properly be raised in the main cause. 3 . 15 The case ofTeklemicael Mengstab and Another v. Ubuchinga Investments Limited was cited, where the Court expressed misgivings at such preliminary issues being raised early as they pose the danger of inviting the Court to delve into issues which ordinarily it can duly do after making findings of fact. 3 . 16 At this point, the lower court referred to the appellant's counsel's submissions on the interpretation of the agreement and that there was need for evidence as to which clauses had taken effect. 3 . 17 It was held that references to the general conditions and the varied conditions and whether clause 5.1.3 (c) of the Marine policy has been invoked or not, would require the Court to hear the matter, the arguments and consider the evidence in totality. The Court declined to be drawn into a fact-finding exercise based on contested evidence sworn by counsel on behalf of the parties. -J12- 3.18 The Court therefore exercised its discretion and held that there being allegations and claims founded in fraud, the evidence rests in Zambia and the events complained of occurred in Zambia. Therefore, the High Court of Zambia is the appropriate forum for determining the matter. That the 1st respondent had opted to litigate pursuant to clause 73 of the Marine Policy. 3.19 Further, no merit was found in the argument on choice of forum and it was dismissed. The Court noted that the issue was not specifically raised in the preliminary application before it, but merely argued within the first question. The question of referral of the parties to arbitration was also dismissed because counsel for the appellants had abandoned the issue. 3.20 The Court proceeded to look at the question whether the Marine Policy was enforceable in Zambia in light of Section 120 of the Insurance Act No. 27 of 1997. 3 .21 Counsel for the appellants had submitted at length on the provisions of the Act and her submissions were opposed. All the submissions on this issue were rejected. The court took the view that counsel for the appellants in relying on the said Act, had overlooked the cardinal fact that this piece of legislation has been repealed and replaced by the Insurance Act No. 38 of -J13- 2021. That to this extent, any arguments based on the repealed Act are otiose. 3.22 Consequently, the preliminary application was dismissed for lack of merit and leave to appeal was granted. 4.0 THE APPEAL 4.1 Dissatisfied with the above decision, the appellants have appealed to us on the basis of five grounds framed as follows: 1. The lower court erred on a point of law and fact when it held that it could only determine the preliminary issue after trial on the totality of the parties evidence on competing averments concerning the Marine Policy instead of a preliminary stage notwithstanding sufficient evidence on the record and legal authorities warranting early disposal of a matter on preliminary application. 2. The lower court erred in law and fact when it exercised its discretion in ordering that the proceedings be held in the High Court for Zambia in total disregard of evidence on the record that the Marine Policy made it mandatory for any disputes to be settled exclusively through arbitration and subject -J14- to Belgian law in Belgium except for those disputes which related to the collection of non-disputed premiums. 3. The lower court misapprehended the Appellant's submissions on the issue of referral of the matter to arbitration and stay of proceedings thereby arriving at an erroneous decision to dismiss the question of law raised in relation thereto in paragraph 8.5 of the Judgment. 4. That the lower court misdirected itself when it considered the allegations of fraud which were not made against the Appellants as being relevant to a determination of the preliminary issue raised. 5. That the lower court erred at law and fact when it held that it could not determine the allegation of contravention of section 120 of the Insurance Act No. 27 of 1997 in the placement of the Marine Policy in view of its subsequent repeal and replacement by the Insurance Act No. 38 of 2021. -J15- 5.0 APPELLANT'S HEADS OF ARGUMENT 5.1 The appellant's argued the 2 nd and 3rd grounds together first, as they relate to the first preliminary issue raised in the court below. Ground 5 was argued next because it relates to the second preliminary issue. Then grounds 1 and 4 which arise from an ancillary issue to the first issue were argued separately. Grounds 2 and 3 5 .2 Learned counsel for the appellants' submitted on the 2 nd and 3 rd grounds of appeal that the lower court did not at all address the issues raised by the appellants and the peripheral issue of forum non conveniens. Instead, the court dismissed the application without properly interrogating the Marine Policy, or at the very least, the pleadings vis- a- vis the appellants' application. While the 1st respondent was of the view that the Marine Policy had an unconditional option of either proceeding to arbitration or litigation, the appellants maintain the position that the said policy makes arbitration mandatory. Litigation, can only be held in Belgium to settle disputes relating exclusively to the collection of non-disputed premium. 5.3 In paragraphs 18 to 22 of the affidavit in opposition at pages 174 of the record of appeal (the record), it was averred that the -J16- supposed arbitration clause (Article 22) was varied by specific condition 7.3 giving the 1st respondent an option to either arbitrate or litigate, and the 1st respondent has chosen to litigate. Clause 7. 3 reads: "Arbitration will be carried out according to stipulations of POLANT ART 22 et Seq." 5.4 The appellants position remains as stated at paragraph 12 of the Affidavit in reply which appears at page 203 of the record and where the contents of paragraph 13 are admitted to the extent that judicial proceedings must be commenced at the place where the Marine Policy was issued. 5 .5 The appellants justified the above assertion in the arguments in reply appearing at pages 210 - 222 of the record. Under the heading "3. Arbitration Agreement" the appellants argued that the Marine Policy designated arbitration as the relevant forum for resolution of disputes between the parties. 5.6 Under Article 23 (paragraph 3 .2 at 211 - 213 of the record) the courts shall remain competent to resolve disputes relating exclusively to the collection of non-disputed premium. Counsel submitted that the dispute before the High Court clearly does not relate to non-disputed premuim. -J17- 5.7 Clause 3.3 reproduces Article 24 of the Marine Policy at page 212 of the record. Belgium is indicated therein as the place and seat of arbitration. 5.8 Counsel submitted further that the lower court misapprehended the submissions by the parties in finding that the appellants' counsel appeared to have abandoned her submissions on the issue of referral of the parties to arbitration and to stay proceedings and proceeded to argue on the choice of forum. 5.9 Counsel stated that the misapprehension was born out of the following submissions augmenting the parties' respective skeleton arguments. In lines 13 to 36 at page 229 of the record, counsel for the 1st respondent is recorded as having said: "On the first question which seeks to stay, it is clear from paragraph 12 of the affidavit in reply of 20th January, 2023 that they have admitted that exhibit 'ECB3' is the applicable clause which gave the plaintiff the option to litigate. The argument from them is that should the plaintiff opt for litigation, the choice of court should have been Belgium and Belgian law. The issue is now as regards law and forum and the arbitration on the arbitration clause has been dealt with. " -Jl8- 5.10 In response to the above verbal submissions, it was submitted on behalf of the appellants as appearing in lines 5 to 10 at page 232 of the record: "We rely on our documents in reply. On the issue of the arbitration clause having an option for court proceedings at the instance of the plaintiff, the same is correct." 5.11 Counsel submitted further that the 1st respondent's counsel misunderstood the import of paragraph 12 of the appellant's affidavit in reply in submitting that it was an admission that the 1st respondent has an option to litigate, thereby disposing of the issue of arbitration as the chosen dispute resolution forum. A review of paragraph 12 of the affidavit in reply referred to above will reveal that the appellants' admission of the contents of paragraph 13 of the affidavit in opposition, was not wholesome but limited to the averment that judicial proceedings must be commenced at the place where the Marine Policy was issued. To this end, and having advanced further arguments concerning the arbitration agreement between the parties in paragraph 3 of the skeleton arguments in reply, the lower court took the appellants submissions out of context. 5.12 We were referred to the case of Costain Limited v. Tarmac Holdings Limited 1 on the circumstances when a court can -J19- consider a party to have abandoned its right to arbitration. In that case, Potter W stated inter alia as follows: "So far as the Judge's first stated reason is concerned. It is of course the position that the existence of an arbitration agreement does not prevent either party from instituting court proceedings in respect of the underlying dispute. 519. That is a principle based upon the rule that the parties may not agree to oust the jurisdiction of the court: see Scott v. Avery (1956) 5 HL cas.811. However, it is inaccurate to speak of a right to commence proceedings in any more general sense. Whether or not such commencement is in breach of the arbitration agreement by the party instituting the proceedings will depend upon the circumstances. If satisfied that a breach is involved as it usually will be, then the court will grant a stay. If not satisfied, but the position is arguable, the court will grant a stay on the basis that the issue raised is not clear and that the arbitrator has the power to rule upon his ownjurisdiction (see Section 30 of the 1996 Act). However, the fact that a party is in -J20- broad terms free to commence proceedings despite the existence of a valid arbitration clause, at the risk of stay being granted, does not mean that in the circumstances of a particular case and in the light of pre-writ correspondence such commencement cannot constitute an acceptance of the defendant's previous refusal to arbitrate, so that the court is satisfied that a stay should not be granted." 5.13 The appellants counsel proceeded to submit that the lower court wrongly exercised its discretion to order the proceedings to continue in Zambia when the weight of the evidence before it pointed to an arbitration agreement which it was duty bound to enforce unless the agreement was null and void and in operative or incapable of being performed, as envisaged by Section 10 (1) of the Arbitration Act No. 19 of 2000. 5.14 It was submitted further that a failure to exercise discretion judicially results in a misdirection which can only be corrected by an appellate court reversing the decision based on the misdirection. A number of cases were cited in support of this submission including Tito Manyika Tepula v. The People2 and Mwenya v. Bemba and Another. 2 We were the ref ore urged to -J21- find that the lower court misdirected itself in finding that the appellants abandoned the submissions on the issue of referral of the parties to arbitration and to stay proceedings. 5.15 Counsel contended that the lower court ought not to have deferred determination of the question of choice of law to trial after failing to resolve the questions raised before her in the preliminary issue. The question of choice of forum was ancillary to both preliminary issues that were raised. The question was whether the proceedings before court were to be subject to English or Belgian law. On the one hand, the appellants argued that Belgian Law was applicable and on the other hand, the 1st respondent argued that English law was applicable and which, in effect meant that Zambian law was applicable. 5.16 That the lower court's failure to determine the substantive questions raised by the appellants is evident from pages 30 and 34 of the record. (Pages 13 and 1 7 of the impugned ruling). 5.17 This was tantamount to depriving the appellants of their right to be heard contrary to the principles enunciated in the case of Shilling Bob Zinka v. The Attorney General. 3 On this basis alone the appeal ought to succeed. -J22- Ground 5 5.18 The 5 th ground of appeal concerns the allegation of contravention of section 20 of the Insurance Act No. 27 of 1997 in the placement of the Marine Policy in view of the subsequent repeal and replacement by the Insurance Act No. 38 of 2001. Counsel submitted that one of the cardinal issues that the lower court ought to have addressed her mind to, was the issue whether the Marine Policy is enforceable in Zambia in light of section 120 of the Insurance Act No. 27 of 1997 (the 1997 Act). However the learned Judge was of the view that the 1997 Act was not applicable as the Insurance Act No. 38 of 2021 (the 2021 Act) had already come into force. This Counsel contended was a flawed position as the 2021 Act only came into force on 23rd December, 2022 by virtue of Statutory Instrument (SI) No. 83 of 2022. We were referred to sections 13 and 14 (3) (c) of the Interpretation and General Provisions Act, Chapter 2 of the Laws of Zambia. 5. 19 Counsel also referred us to section 2 of the 2021 Act which provides as follows: -J23- "This Act may be cited as the Insurance Act 2021, and shall come into operation on the date appointed by the Minister by Statutory Instrument ... " 5.20 He submitted that the 2021 Act therefore only came operation when SI No. 83 of 2022 was issued. 5.21 Reference was made to the case of Finsbury Investments Limited and 7 Others v. Securities Exchange Commission and Another4 where we upheld the finding by the lower court that the respondents cause of action accrued during the subsistence of the repealed Securities Act 1993 and thus, the respondents were correct to approach the High Court and not the Capital Appeal, Tribunal over the enforcement of the right accrued under the repealed legislation. 5.22 Counsel further argued that the 2021 Act did not have and was not meant to have retrospective effect and therefore could not be relied upon. To fortify this, he referred to the case of Nawa v. Standard Chartered Bank ofZambia5 where the Supreme Court held that: "It is trite law that unless expressly stated, a law does not operate retrospectively." -J24- 5.23 The 2021 Act only came into effect after the Marine Policy had been placed in 2018 and the action was commenced in 2021. Counsel further referred us to the case of Murray & Roberts Construction Limited and Kaddoura Construction Limited v. Lusaka Premium Health Limited and Industrial Development Corporation of South Africa6 where the Supreme Court disapproved of trial Judge volunteering rulings without giving the parties a chance to be heard. 5.24 In light of the above authority, Counsel for the appellants submitted that it was wrong for the lower court to volunteer a ruling on the applicability of the 1997 Act when neither party had raised the issue. The Judge should have called upon the parties to present their arguments on that point before making a ruling. 5 .25 Counsel proceeded to demonstrate to us how the Marine Policy is not enforceable in Zambia as it goes against the spirit of Section 120 of the 1997 and 2021 Act. 5.26 Section 120 of the 1997 Act has been maintained in the 2021 Act as section 166 which provides as follows: "All assets, liabilities and interests situate in Zambia to be insured by insurers registered in Zambia." -J25- 5.27 Counsel referred to some extracts of the parliamentary proceedings during the second reading of the Insurance Bill 2021 held on 12th May, 2021 which demonstrate that section 120 of the 1997 Act was meant to curb capital flight that was as a result of the Insurance Companies being wholly owned by foreigners. In other words section 120 was meant to ensure that assets in Zambia are insured by insurance companies in Zambia except where the Registrar of the Pensions Insurance Authority (PIA) deems it necessary for assets in Zambia to be insured outside the jurisdiction. Counsel submitted that an agreement is made in contravention of either Act is unenforceable in Zambia. On this point, we were referred to the case of Ringford Habwaanda v. Zambian Breweries7 where the Supreme Court discussed the seriousness of illegality which renders a contract unenforceable, which varies considerably. 5.28 We were also referred to the case of Zambia Extracts Oils and Colourants Limited and Enviro Oils and Colourants Limited v. Zambia State Insurance Pension Trust Fu~d Board of Trustees8 where the Supreme Court upheld a contract made in contravention of statute and held inter alia that: -J26- "The fundamental principle in assessing the e(fect of statute law upon contracts is whether the statute intended to affect contracts and make them void thereby depriving the contracting party the benefits under the contract." . 5.29 Counsel finally submitted that it was the intention of parliament to deter persons from taking out insurance with foreign insurers as this led to capital flight. This renders all contracts with foreign entities meant for insurance of assets and liabilities in Zambia, unenforceable (void ab inito) unless the Registrar authorizes them before they are executed. Ground 1 5.30 Ground 1 challenges the lower court's refusal to determine whether clause 5.1.3 of the Marine Policy had been invoked without a trial. The appellants' take issue with that decision because each party solely relied on the provisions of the Marine Policy which was before court in arguing for and against the application. 5.31 Counsel submitted that the learned Judge ought to have considered the Marine Policy and interpreted the agreement in order to determine whether clause 5.1.3 (c) had been invoked. -J27- 5 .32 Further that the question whether the Marine Policy was varied was not part of the questions posed by the appellants in the application. The lower court ought to have adopted the quickest way of disposing of the matter before it as guided by the case of Finsbury Investment Limited v. Antonio Ventriglia and Another. 9 5 .33 Counsel submitted at length on the requirement for case management by Judges but we do not find it necessary to summarize the submissions on this point suffice to say that counsel submitted that the lower court should have requested the parties to provide further evidence or submissions on the question to enable her make the necessary determination and not leave the question hanging until trial. Ground 4 5 .34 The 4 th ground of appeal is that the lower court misdirected itself when it considered the allegations of fraud which are not made against the appellants as being relevant to the determination of the preliminary issues. 5.35 Counsel submitted that the lower court erred by basing its decision on the need for proceedings to be held in Zambia purely -J28- on the fact that there are allegations and claims of fraud made by the 1st respondent in the statement of claim. A look at the writ and statement of claim will reveal that the allegations of fraudulent production of the Certificates of Assay were all made by the 1st respondent against the 2 nd respondent (1 st defendant in the lower court). None of the allegations were made against the appellants. The allegations of fraud had no bearing on the determination of the preliminary application. On this basis, we were urged to allow the appeal with costs both in the court below and here. 6.0 1 sT RESPONDENT'S HEADS OF ARGUMENT Grounds 2 and 3 6 .1 The respondent's counsel stated that, in the 2 nd and 3 rd grounds of appeal the appellants deny having abandoned the first preliminary question. They also claim that the court ought to have analyzed what they are calling "evidence" on record, to determine their legal questions. 6 .2 It was submitted that the appellants were economical with the facts because they did not only abandon their first question at the hearing but the court made an effort to inquire with counsel -J29- for the appellants on whether her submission indeed meant that she had abandoned the first question. This issue was put to rest at the hearing. 6.3 The record is very clear at page 232 in that the appellant's counsel conceded that the 1st respondent, under the policy had an option to litigate or arbitrate any dispute. The said phrase was as a response to counsel for the 1st respondent's argument after bringing the court's attention to exhibit 'ECB.' That gave the 1st respondent the said choice. 6.4 The 1st respondent's counsel submitted before us that when the 1st respondent opted to litigate arguments on arbitration became inconsequential or otiose. 6.5 Further, the depositions in reply to paragraphs 13 and 14 of the affidavit in opposition which introduced exhibit "ECB3" appearing at page 174 to 175 of the record, were not specifically rebutted. The appellants in reply (page 203 of the record) simply chose to partially admit paragraph 13 of the affidavit in opposition and not to comment on paragraph 14. 6.6 The appellants did not at any point deny the fact that clause 7.3 gave the 1st respondent the liberty to either arbitrate or litigate. -J30- 6.7 Citing the case ofChazya Silwamba v. Lamba Simito 10 counsel submitted that admissions save the courts time and narrow down the issues to be determined. Every allegation must be admitted frankly or denied boldly; any half admission or half denial is deemed to be evasive. 6 .8 Counsel pointed out that the above authority conforms to Order 53 rule 2 of the High Court (Commercial Court Rules) Chapter 27 of the Laws of Zambia. 6 .9 Even without the admission by counsel for the appellants, the extract under exhibit "ECB3" is clear and straight forward. The argument of choice of law only came up when the appellants were left with the question of where the court proceedings should be commenced. It was a non-issue and the appellants have not pointed to any provision of the Marine Policy on this. 6.10 That the 2 nd and 3rd grounds of appeal lack merit and should be dismissed. Ground 5 6 . 11 To counter the 5 th ground of appeal, counsel stated that even if section 120 of the Insurance Act No. 27 of 1997 applied, the law is settled that the Marine Policy will not be rendered -J31 - unenforceable by the mere fact that there was non-compliance with the statute. 6 . 12 Therefore even if the lower court had determined the 2 nd question, the end result would have been the same. 6 . 13 Counsel further submitted that the supposed parliamentary quotations and proceedings referred to by the appellants have just been sneaked in. They were not part of the proceedings in the lower Court. It is trite law that matters not brought up in the lower Court cannot be brought up for consideration on appeal. Therefore the said arguments are incompetently before this Court and should not be considered. That is why the lower Court took the view that such issues require evidence to be produced or adduced at trial. The Zambia Extracts Oils Case was relied on to state that since section 120 (4) of the said Insurance Act provides for a penalty, the Marine Policy cannot be said to be void ab inito. In fact it's the appellants who took out the policy and were duty bound to register it. 6.14 Further submissions were that since the said policy is subject to English law and not Zambian law, the argument on the Insurance Act No. 27 of 1997 is misplaced. The 5 th ground of appeal also lacks merit and should be dismissed. -J32- Ground 1 6 .15 In opposing the 1st ground of appeal, the 1st respondent's counsel stated that the lower court was on firm ground in deciding that it could determine the preliminary issue after trial. That it is not the duty of the trial Court to call parties to address it on "any issues that the Judge may have in mind" as submitted by the appellants. 6 . 16 Considering issues outside the pleadings or questions raised by the parties is a violation of a fundamental rule of civil procedure. The case of Atlantic Bakery Limited v. Zesco Limited 11 was cited in support of his submission. 6.17 Further, a strict look at the questions posed to the court in the summons to raise preliminary objections reveals that no question on interpretation of clause 5 . 1.3 (c) of the Marine Policy was raised. The arguments subsequently raised by the appellant's in relation to whether the Policy was amended, needed evidence to be adduced. Based on the authority of the case of Teklemicael Mengstab and Another v. Ubuchinga Investments Limited12 and the case of Concrete Pipes & Products Limited v. Kingsley Kabimba and Another, 13 the -J33- lower court rightly deferred the issue which was not raised in the preliminary application until trial. 6.18 The lower court at paragraph 8.13 of the Ruling refused to be drawn into a fact finding mission based on evidence from counsel who swore the affidavit. This was the correct route as guided by the Teklemicael case. 6 . 19 Counsel for the respondent further submitted that the issues raised went beyond mere construction of documents. Therefore, the lower court exercised its discretion judiciously and ground 1 lacks merit and should be dismissed. Ground 4 6.20 In ground 4, the appellants are dissatisfied with the lower court's consideration of the allegations of fraud as being relevant to the determination of the preliminary question. 6.21 Counsel for the 1st respondent submitted that ground 4 is an attack on judicial discretion. In the case of Chansa Chipili, Powerflex (Z) Limited v . Wellingtone Kanshike and Wilson Kalumba 14 the court was allowed if persuaded by the pleadings on a showing that evidence rests in Zambia, to let the matter be determined by Zambian Courts. This is notwithstanding that -J34- there exists a jurisdictional clause couched in mandatory terms in the subject agreement. 6 .22 Counsel submitted at length on the pleadings to show that the appellants had declined to pay the indemnity and chosen to wait for the determination of the court action. Further submissions relate to evidence of the duration of the risk. We do not find these submissions relevant to our decision. 6.23 Counsel submitted that there will be no evidence to settle this matter in Belgium and the Supreme Court has guided in the case of Chansa Chipili and Powerflex14 case on how the courts in this jurisdiction can curtail such injustices and wastage of resources. The prayer was that ground 4 should be dismissed for lack of merit. 7.0 2ND AND 3RD RESPONDENTS' HEADS ARGUMENT 7 . 1 The 2 nd and 3 rd respondents did not file any heads of argument and were in breach of Order X rule 9 ( 16) of the Court of Appeal Rules, 2016. Therefore, they were both precluded from being heard. -J35- 8.0 ANALYSIS AND DECISION 8.1 We have considered the record of appeal and the heads of argument filed on behalf of the Appellants and the 1st respondent which were relied on during the hearing of the appeal together with the oral submissions. Grounds 2 and 3 8.2 The 2 nd and 3 rd grounds of appeal were aptly argued together because they both relate to the first preliminary issue; whether the parties should be referred to arbitration pursuant to Article 22 of the Marine Policy. 8.3 We shall first consider the crucial question raised under ground 3 whether the appellants abandoned the issue of referral of the parties to arbitration and stay of proceedings. 8. 4 The lower Court in paragraph 8. 5 did not state categorically that the appellants' counsel had abandoned her submissions on the issue of referral of the parties to arbitration and stay of proceedings but that "it is manifestly clear that counsel for the 3rd to 9th defendants, appeared to have abandoned her submission on the issue of referral of the parties to arbitration ... she however, proceeded to argue on what was ref erred to as the choice off orum .... " -J36- 8 .5 In ou r view, t h e court skirted around this issue because the phrase 'appear to' d enotes doubt. 8.6 We accep t the a ppellants' submission that the issue of forum n on-conveniens was peripheral to the first issue. Paragraph 12 of th e affid avit in reply which was never amended, states in part tha t "The contents of p a ragraph 13 are admitted to the extent tha t j udicial proceedings must be commenced at the place where the Marine Policy was issued ... " 8 . 7 Paragraph 13 of th e affidavit in opposition talks about clause 7. 3 of the Marine Policy on the Assured to choose between arbitra tion or or dinary judicial proceedings. 8.8 The appellant's counsel accepted during the proceedings that the 1 sL respondent had the right to commence ordinary judicial p r oceedings. However , s h e did not end there because she relied on the documents filed by the appellants before court including the Marine Policy and the heads of argument. The arguments - on the mandat ory nature of the arbitration clause was not a bandoned . The ap pellant argued that there was no amendment to th e arbitration clau se as alleged by the 1st respondent. The a ppellants did not withdraw their arguments on Articles 22 to 2 4 of the Marine Policy . -J37- 8. 9 We therefore are of the firm view that the lower Court erred in finding th at the appellant had abandoned its arguments on referral of the parties to arbitration and stay of proceedings. The lower Court glossed over the written submissions by the a ppellants and the affidavits filed by the appellants especially p aragraph 12 of the affidavit in reply, which only admits p aragraph 13 of the affidavit in opposition "to the extent that judicial p roceedings must be commenced at the place where the Marine Policy was issued." 8 . 10 The lower Court ought t o have perused the relevant provisions of the Marine Policy in order to determine the first preliminary issu e. \Ne therefore set aside the finding that counsel for the appellants abandoned the first preliminary issue. 8. 11 We sha ll proceed to tackle the first preliminary issue raised in the court below. It is incontrovertible that Article 22 of the Marin e Policy is the a rbitra tion clause in the General Conditions and Specific Stipulations Marine Cargo Open Cover No. 20 18 0320 ZOPCOOSA dated 27t h November, 2018 (The Marine Policy). 8.12 The s aid clause a ppearing at page 69 of the record of appeal rea d s: "Unless provided otherwise by mandatory conflicting legal -J38- stipulations) disputes arising between insurers and Assured in relation to this policy shall be settled by a Tribunal of Arbitrators. Each p arty nominates .... )) 8.13 Article 7 .3 wh ich was heavily relied upon by the 1st respondent app ears under "CHAPTER VII: special DISPOSITIONS." 8 . 14 The clau se r ea ds as follows: "Arbitration A rbitralio, L w ill be carried out according to the stipulations of POLANT A rt. 2 2 et seq. Nevertheless, the Assured retains the right to recourse to ordinai y judicial p roceedings) instead of proceeding to arbitralio, i. )J 8 . 15 Article 23 provides: "The ordinary courts remain competent for the disputes relating exclus ively to the collection of the non-disputed premium." 8.16 Article 2 4 reads as follows: "Any d i::iputes shall be settled exclusively in Belgium at the place where the policy has been issued. This insurance policy is governed by Belgian law and Belgian practice." 8.17 It is n ot in d ispute , that the policy was issued in Belgium. It is clear from the wording of Article 7 .3 that the stipulations of -J39- I (._ Article 22 remained intact despite the prov1s1on that the Assured retains the right to recourse to ordinary judicial proceedings instead of proceeding to arbitration. 8.18 We take the view that once the Assured exercises his right to institute ordinary judicial proceedings instead of arbitration, the arbitration clause becomes inoperative. However, the proceedings must be issued in accordance with the provisions of the Marine Policy. 8 . 19 In a nutshell, the appellants' argument is that the proceedings are incompetent firstly, because the arbitration clause is couched in mandatory terms and secondly, according to article 23 of the Marine Policy, the ordinary court's jurisdiction relates exclusively to the collection of non-disputed premium, and this . is not such a case. Thirdly, article 24 provides inter alia for any disputes to be settled exclusively in Belgium at the place where the policy was issued. 8.20 The 1st respondent opted to commence ordinary judicial proceedings in Zambia. The question is whether the proceedings are competent. There is no indication that clauses 22 to 24 of the Marine Policy were ever amended. These articles must be read together with article 7.3. -J40- 8.21 We therefore apply the literal interpretation to the provisions of the policy and accept the appellants' submissions that ordinary courts are not competent to determine issues other than the ones relating to the collection of non-disputed premium (Article 23) . We hold that for any other disputes the parties must go to arbitration. 8.22 Further, where the assured decides to exercise its right to commence ordinary judicial proceedings in an appropriate case instead of arbitration, such proceedings must be commenced in Belgium pursuant to Article 24 as that is the agreed restriction under Article 24 of the policy. Under the same article, such proceedings shall be governed by Belgian law an.d Belgian practice. We note that the question of which laws would be applicable was not raised in the preliminary issue. 8.23 On the basis of the foregoing analysis, and a consideration of the pleadings in this case, we hold that the institution of the case in Zambia was in breach of Articles 23 and 24 of the Marine Policy. -J41- 8 .24 On the basis of the foregoing determination, we set aside the lower Court's findings and holding that it is convenient for this matter to be determined in this jurisdiction. Since the case was improperly commenced in the High Court of Zambia, there is no basis on which the parties can be referred to arbitration. Thus grounds 2 and 3 of the appeal succeed. Therefore , the 1st preliminary issue partially has merit. Ground 5 8.25 In the 5 th ground of appeal, the appellants are aggrieved with the Court's dismissal of the 2 nd preliminary issue on the ground that the Insurance Act No. 27 of 1997 was repealed and replaced by the Insurance Act No. 38 of 2021 and to that extent, any argument based on the repealed Act was found to be otiose. 8.26 We accept the appellant's submission that the Insurance Act No. 38 of 2021 only came into force on 23rd December 2022 by virtue of Statutory Instrument (SI) No. 83 of 2022. 8.27 Sections 13 and 14 (3) (c) (d) of the Interpretation and General Provisions Act which were referred to by the appellants, provide as follows: -J42- (13) "Where a written law repeals wholly or partially any written law and substitutes provisions for written law repealed, the written law repealed shall remain in force until the substituted provisions come into operation." Section 14 (3) (c) (d) "(3) Where a written law repeals in whole or in part any other written law, the repeal shall not (a) ...••..... (b) . .......... . (c) affect any right privilege obligation or liability acquired, accrued or incurred under any written law so repealed; or (d) affect any penalty, forfeiture, or punishment incurred in respect of any offence committed against any written law so repealed ... " 8.31 Having considered the above provisions together with section 2 of the 2021 Act which provides for the Insurance Act 2021 to only come into operation by Statutory Instrument, we accept -J43- the appellant's submission that the 2021 Act came into effect when SI 83 of 2022 was issued. 8 .32 We note that the Marine Policy was placed in 2018 and the action was commenced on 23rd November, 2021. It is trite that generally a law does not have retrospective effect except when the same expressly provides for retrospective effect (see the case of Nawa v . Standard Chartered Bank. 5 ) 8 .33 Insurance Act No. 38 of 2021 does not provide for retrospective effect, the ref ore we hold that the Insurance Act No. 38 of 2021 has no retrospective effect and therefore does not apply to this matter. 8 . 34 The lower court erred in failing to give a chance to the parties to this case to · make submissions on the issue of the repealed Insurance Act of 1997 and its effect on the Marine Policy. Therefore it was improper for the Judge to volunteer a ruling on this aspect of the matter. The Supreme Court's guidance in the case of Murray and Roberts Construction Limited and another11 should have been followed. 8 .35 The law is settled on applicability of statue law notably the case of Zambia Extracts Oil and Colorants Limited and Another -J44- v. Zambia State Insurance Pension Trust and Board8 where it was held that a contract cannot be invalidated if the statute provides for a fine in the event of breach. 8.36 Section 120 (4) of the Insurance Act No. 27 of 1997 provides for imprisonment or fine upon conviction in case of breach. Therefore, the Marine Policy in issue although settled 1n Belgium is still valid but the parties agreed to enforce it 1n Belgium. On this premise, the 5 th ground of appeal has merit. 8 .37 We accept the appellants' submission that the quotations from the parliamentary proceedings made by the 1st Respondent were not brought up in the Court below and cannot be considered. Grounds 1 and 4 8.38 Due to what we have stated herein before, grounds 1 and 4 became otiose. 9.0 CONCLUSION 9 .1 In sum, since the matter was improperly commenced in the High Court of Zambia in breach of Articles 23 and 24 of the Marine Policy, the High Court has no jurisdiction to hear and determine it. Under the circumstances, the proceedings cannot -J45- be stayed and the matter referred to arbitration as this would amount to keeping the action alive in Zambia. 9.2 As a result, the appeal succeeds, to the extent stated above and the action is dismissed for irregularity. We award costs to the appellant to be taxed in default o ent. J. CHAS COURT OF APPEAL JUDGE C. K. MAKUN U . . COURT OF APPEAL JUDGE COURT OF AP , SC JUDGE -J46-