Riverlake Ocean Construction Sarl and Ors v China Civil Engineering Construction Corporation Zambia Limited (Appeal No. 279/2024) [2025] ZMCA 82 (6 June 2025)

t - IN THE COURT OF APPEAL OF ZAMBIA Appeal No. 279/2024 HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: RIVERLAKE OCEAN CONSTRUCTION SARL BUMU APPLIED TECHNOLOGIES COMPANY LIMITED CHINA NEW BUILDING MATERIALS ENGINEERING ZAMBIA LIMITED 1 ST APPELLANT 2ND APPELLANT 3RD APPELLANT AND CHINA CIVIL ENGINEERING CONSTRUCTION CORPORATION ZAMBIA LIMITED RESPONDENT CORAM: Siavwapa JP, Chishimba and Patel S. C, JJA On 22nd April, 2025 and 6 th June 2025 For the Appellants: Ms. R. Nyirenda of Messrs Ferd Jere and Company. For the Respondents: Mr. I. Nonde and Ms. R. Kasuba of Messrs Isaac and Partners. JUDGMENT CHISHMBA JA, delivered the judgment of the Court. CASES REFERRED TO: 1. Godfrey Miyanda v The High Court (1984) Z. R. 62 2. Hakainde Hichilema v Edgar Chagwa Lungu and 3 Others (2016/CC/0031) 3. Chishala Karabass Nivel and Sharon Mwale v Laston Geoffrey Mwale(Selected Judgment No. 40 of 2018 ,... ,,... •• • · . r,... - J2 4. Godfrey Miyanda (suing on his own behalf and on behalf of Heritage Party) v Attorney General and Ronald Banda and Nelson Nzowa SCZ No. 9 of 2005 5. Lafarge Cement Zambia Limited Pie v Sinkamba Appeal No. 169 of 6. Chansa Chipili and Powerflex (Z) Limited v Wellingtone Kanshimike and Wilson Kalumba (2012) Z. R. 483 7. Steak Ranch Limited v Steak (2011/HP/0183) Unreported ranches International BV 8. Axiz (Pty) Ltd v CloudTech Zambia Ltd and Another( Appeal 221 of 9. National Drug Company Limited and Zambia Privatisation Agency v Mary Katongo Appeal No. 79/2001 10. Dunlop Pneumatic Tyres Co. Ltd. v Selfridge Ltd (1915) A. C. 847 11. Frank Bwalya v The Attorney General, Katele Kaluba & William Nyirenda (2012) ZR 354 12. Adam v. Cape Industries Pie [1990] Ch. 433; [1990] 2 W. L. R. 657 13. Madison Investment, Property and Advisory Company Ltd. v Peter Kanyinji" Appeal No. 10 of 2016 14. Zambia National Holdings Limited and another v The Attorney General SCZ No. 3 of 1994 15. China Henan International Corporation Group Company Limited v G and G Nationwide (Z) Limited Appeal No. 199 of 2016 16. Donohue v Aemco Inc and Others (200) Illoyd's Rep. 579 1.0 INTRODUCTION 1. 1 This appeal is against the interlocutory ruling of Hon. Mr Justice L. Mwanabo delivered on 26th July 2024 emanating from the preliminary issues raised challenging the High Court's jurisdiction to hear a matter. The basis being an Arbitration clause stipulating that disputes between the parties relating to the contract will be determined by way of Arbitration at the Beijing Centre for Arbitration. Further, the issue of whether the J3 Respondent had locus standi to institute these legal proceedings in the court below. 2.0 BACKGROUND 2.1 On the 5 th of August, 2022, the respondent, through its branch in the Democratic Republic of Congo (Congo DR), entered into a sub-contract with the 1st appellant for the construction and modernisation project for the dormitory and the roofed footbridge of the General Hospital in Congo. The sub-contract was referred to as the Phase III Kinshasa Province Democratic Republic of Congo - Addendum (the variation of scope of works contract No. CCECC/COD/22/046 -Addendum 1) (hereinafter referred to as the sub-contract). 2.2 Due to operational challenges that slowed down the progress of construction, the respondent and the 1st appellant entered into a subsequent agreement on 8 th February, 2023. The terms of the agreement were that the respondent, through its branch in Congo DR, would pay for the cost of all the materials used at the site on behalf of the 1st appellant. Following this agreement, the branch incurred all the costs for the project by financing the J4 purchase of materials, personal wages, design fees, medical expenses and other expenses incidental to the construction. 2.3 It was also a term of the sub-contract that the respondent would provide 10% of the total estimated contract price as advance payment. In return, the 1st appellant would provide an advance payment guarantee for the advance payment. The 1st appellant, however, failed to provide the guarantee as agreed and instead opted to furnish a guarantor to pledge its property to guarantee the advance payment. To this effect, on 17th March, 2023, the respondent entered into an Agreement of Advance Payment Guarantee (the Agreement) for the sum of USD 880,000. 2.4 Under this agreement, the 2nd appellant pledged its property, namely, Subdivision No. 1 of Subdivision R of Subdivision No. 37 of Farm 488a, Leopards Lane Kabulonga, Lusaka, as collateral. The Agreement required the mortgaged property to be registered by the 2nd appellant with the Ministry of Lands. Pursuant to the said Agreement, the respondent had authority to execute on the property to recover the advance payment, in the event that the 1st appellant failed to perform its obligations under the sub-contract. JS 2 .5 The 1st appellant subsequently failed to perform its obligations under the sub-contract, giving the respondent the right to enforce the Advance Payment Guarantee Agreement by having recourse to the pledged property. Upon conducting a search, the respondent found that the 2 n d appellant did not register the mortgage with the Ministry of Lands. Instead, on 20th March 2023, the 2 n d appellant had registered a caveat on the property, which it failed to remove despite several reminders. 2.6 In addition to the terms of the sub-contract, the 1s t appellant was required to take out a Performance Guarantee equal to 5% of the contract amount. The 1st appellant failed to provide the Bank Performance Guarantee and in turn, entered into an Agreement of Performance Guarantee with the 3 rd appellant and the respondent. The Performance Guarantee Agreement provided that the 3 rd appellant would pledge its property, namely, No. 6728 Olympia Park, Lusaka, as collateral in the absence of an actual Bank Performance Guarantee for the sum of USD 565,876.39. The property was also to be mortgaged to the respondent and registered with the Ministry of Lands. The 1st appellant failed to perform its obligations under the contract J6 and the respondent sought recourse to the property pledged by the 3 rd appellant. 2. 7 It was later discovered that the mortgage was not registered for the second property. Consequently, it was agreed that a termination of contract agreement would be executed. 2.8 The respondent subsequently commenced an action against the 1st, 2 nd and 3 rd appellants by way of writ of summons and statement of claim. It sought the following reliefs: i) An Order for specific performance for the Agreement of Advance Payment Guarantee dated 17th March, 2023; ii) An Order for specific performance for the Agreement of Performance Guarantee dated 17th March, 2023; iii) Full and immediate payment of the sum of USD 1,899,308.96; iv) Damages for breach of contract; v) Damages for loss of use of funds; vi) Interest on the sums found due; vii) Costs for and incidental to this action; and viii) Any other relief that the Court deems fit. 2. 9 The 1st, 2 nd and 3 rd appellants, in their defence, denied the respondent's claims. 3.0 PRELIMINARY ISSUE RAISED J7 3 .1 On 30th January 2023, the appellants raised a preliminary issue for the determination of the following issues in the court below: (i) Whether this matter is competently before this Honourable Court in view of clauses 50 and 51 of the contract dated 5th August, 2022, executed between the Plaintiff and the 1st defendant which ousts the jurisdiction of this Honourable Court. (ii) Whether this matter is properly before the court, having regard to the fact that the Writ of Summons filed by the Plaintiff is defective as it does not comply with the provisions of Order X Rule 16 of the High Court Rules Chapter 27 of the laws of Zambia. (iii) Whether this matter is properly before this Court, owing to the fact that the Plaintiff has instituted proceedings against the 3 rd Defendant who ought not to have been a party to the action for the reason that the Agreement of Performance Guarantee dated 17t h March, 2023 was not properly executed. J8 (iv) Whether the aforementioned action against the 3 rd Defendant can be sustained before this Honourable Court based on the fraudulently obtained Agreement of performance Guarantee; and (v) Whether this matter is competently before the Court in light of the fact that the Main Contract which was executed by the 1st Defendant and China Civil Engineering Construction Corporation RD Congo Sarl. 4.0 DECISION OF THE COURT BELOW 4. 1 The learned Judge delivered a ruling on the preliminary issues on 26th July 2024, and held that the respondent (Plaintiff in the lower court) was not a party to the sub-contract and was therefore, not bound by the terms of the contract, particularly the foreign jurisdiction clauses. He further stated that a foreign jurisdiction clause is not an automatic ouster of jurisdiction from a domestic court and found no merit in the first issue. 4 .2 The second issue .was dismissed on the ground that the respondent had sought leave to commence and serve process outside the jurisdiction. Regarding the third and fourth issues alleging fraud on the part of the respondent in the manner the J9 guarantee agreement was executed, the court held that fraud must be specifically pleaded and proved to a higher standard than a mere balance of probability, which the appellants had failed to prove. 4.3 With respect to the fifth issue that the respondent was not a party to the sub-contract, the Court found that the pleadings before him pertained to issues relating to the guarantees. That whether these issues had the effect of substantially determining disputes arising from the sub-contract, could only be determined at the trial of the action. In sum, the learned Judge dismissed the preliminary issues raised with costs to the respondent. 5.0 GROUNDS OF APPEAL 5.1 Dissatisfied with the decision of the lower court, the appellant appealed, advancing the following grounds: i) The Honourable Judge below erred in law and in fact when he held that a foreign jurisdiction ouster is not an automatic ouster of jurisdiction from a domestic court and no evidence was produced to show that there is an alternative jurisdiction more convenient to the parties than Zambian courts when in fact evidence was produced through the main contract under JlO clauses 50 and 51, stating the dispute resolutions and applicable law and subject to the special conditions stating that the competent Courts with jurisdiction are the Courts and tribunals of Beijing of the People's Republic of China. ii) The Honourable Judge below erred in law and in fact when he failed to take into account the plaintiff's admission that it was suing on behalf of a Branch in the DRC, when in fact the Company in the DRC was a Limited Company by shares capable of suing and being sued. iii) The Honourable Judge below misdirected himself in fact and law when he failed to take into account the evidence on record showing that the main contract had special conditions with a dispute resolution clause stating that before any action, parties must refer the matter to arbitration to the Beijing International Arbitration Centre as per main contract. iv) The Honourable Judge below misdirected himself in law and fact when he held that the dispute is anchored on guarantees only, when in fact no evidence was produced by the p·laintiff to show that there was any Judgment, order or award in its favour or in favour of the Limited Company in DRC for the breach on the main contract. v) The Honourable Court below erred in law and fact when it failed to refer the matter to arbitration in accordance with the special conditions under the main contract. Jl 1 vi) The Honourable court below misdirected himself in law and fact when he held that the plaintiff is a sister company with a DRC company and is entitled to sue on behalf of the sister Company as it executed the guarantees of its favour when in fact the plaintiff is not a party to the main. vii) The Honourable Court erred in law and fact when he held that the Plaintiff is a sister company with a company in the DRC without any evidence to show that they are sister Companies. viii) The Honourable Judge erred in law and fact when he held that the Plaintiff has locus standi to sue on behalf of the company limited by shares in the DRC without taking into account evidence to show what interest or loss to be suffered or breach occasioned on itself. ix) The Court erred in law and fact when it did not properly use its discretion to award costs to the Plaintiff without looking at the evidence in favour of the Defendant. 6.0 APPELLANTS' HEADS OF ARGUMENT 6.1 The appellants filed their heads of argument on 1st October, 2024. In ground one, it was submitted that the trial Judge misdirected himself both in law and fact when he held the view that no evidence was produced at the hearing to substantiate the claim. J12 6.2 It was contended that the appellants adduced evidence on the main contract that was executed in the DRC, which contained a dispute resolution mechanism appearing at pages 273 and 278 of the record of appeal. Reference was made to the case of Godfrey Miyanda v The High Court' 11 on the meaning of the term jurisdiction. It was submitted that the Court's jurisdiction in this matter is dependent on the following: 1. 11. The document signed by the parties; The country of execution; 111. Language barrier; and 1v. The consent of the parties 6 .3 It was the appellants' contention that proceedings in the court below were n1arred with unfairness towards them and that the Court had no jurisdiction to entertain the matter. 6 .4 With respect to ground two, the appellants asserted that the court misdirected itself both in law and fact when it decided to ignore important evidence admitted to by the respondent that it was suing on behalf of the Branch. There was evidence to the effect that the company in the DRC is a limited company capable of suing and being sued. According to the appellants, J13 the appropriate procedure should have been to obtain a power of attorney and then institute legal proceedings on behalf of the company in the DRC. 6 . 5 We were urged to set aside the decision of the lower court based on the wording in the documents presented. In support of this contention, reference was made to the case of Hakainde Hichilema v Edgar Chagwa Lungu and 3 Others121, where the Constitutional Court provided guidance on the approach to be taken when the wording of a statute is clear. 6 .6 To further buttress its argument, the appellants cited the case of Chishala Karabasis Nivel and Sharon Mwale v Laston Geoffrey Mwalel31 in which the Supreme Court held that: A trial Court had no jurisdiction to deal with the action in the manner that it did because a wrong mode of commencement was employed. 6 .7 In this regard, the appellants submitted that the Court erroneously dismissed the Preliminary issues raised. 6.8 In arguing ground three, it was contended that the wording in the Arbitration Clause is clear and unambiguous on how a matter was to be referred to arbitration. The appellants argued that the agreement stipulated that the court ought to refer the J14 matter to the DRC or the People's Republic of China in Beijing, as seen on page 278 of the Record of Appeal. 6 .9 The essence of the appellants' submissions in ground four is that the court below erred in law and fact when it held that the dispute was anchored on the documents for the guarantees only. It was contended that there was no evidence that any judgment or award was given by the courts in the DRC or the People's Republic of China pertaining to the alleged breach of the main contract. That the court below should have considered evidence from the Respondent at the commencement of the court process. 6 . 10 Grounds five, six, seven, eight, and nine were argued together. In arguing these grounds, the appellants placed reliance on the case of Godfrey Miyanda (suing on his own behalf and on behalf of Heritage Party) v Attorney General and Ronald Banda and Nelson Nzowa14J. It was submitted that in determining whether a plaintiff had locus standi in a matter, a court must determine whether it suffered direct injury or harm as a result of the defendant's action, and if they have a stake in the outcome of the case. The appellants also referred to the case J15 of Lafarge Cement Zambia Limited Plc v Sinkambal51 in submitting that where a party fails to demonstrate sufficient interest in the matter, the court has the right to dismiss the matter. In light of this authority, it was contended that the trial Court had no jurisdiction to hear and determine this matter as the respondent had no locus standi to sue on behalf of another company. 6.11 According to the appellants, the Court below erred when it stated that it had jurisdiction in the matter without the express consent of the parties as contained in the main contract appearing at pages 127 and 242 to 278 of the Record of Appeal. That had the Court addressed its mind to the contract, it would have arrived at the inescapable conclusion of dismissing the matter for want of jurisdiction. We were beseeched to allow the appeal and set aside the writ of summons and statement of claim for irregularity. 7.0 RESPONDENT'S ARGUMENTS 7.1 The respondent filed its heads of argument on 18th November, 2024. Responding to ground one, it was submitted that the lower Court was on firm ground when it held that foreign J16 jurisdiction is not an automatic ouster of jurisdiction from a domestic Court. The gist of the argument on this ground is that in contracts that are partially executed in foreign countries, the determination of legal jurisdiction hinges on the circumstances supported by evidence. This proposition was anchored on the case of Chansa Chipili and Powerflex (Z) Limited v Wellingtone Kanhimike and Wilson Kalumbal61 where the Supreme Court held, inter alia, that the governing law of a contract, where it is spelt out, is a different legal issue from that of jurisdiction. 7.2 The respondent argued that the properties subject of the Guarantee Agreements are situated in this jurisdiction and the respondent, which is a Zambian company, executed the said agreements with the appellants. In this regard, the Zambian Courts have inherent jurisdiction over the matter. To exemplify this point, the respondent sought solace in the case of Steak Ranch Limited v Steak ranches International BVl71 where it was stated that: Enforcement by the Zambian courts of the choice of foreign clauses cannot be ruled as imperative; but it should depend on J17 the balance of convenience, in particular, circumstances and the exigencies of justice of the law. 7.3 It was submitted that the appellants and the respondent executed the said documents freely and voluntarily in Zambia. At the time of execution, both parties consented to the 'execution' being in English. Further, all the parties were aware that the documents involved properties that were situated in Zambia. In addition, that the action was premised on the two Agreements and not the main contract, to which the respondent was not a party. 7. 4 The Court was ref erred to the case of Axiz (Pty) Ltd v CloudTech Zambia Ltd and Another181 where we held to the effect that an appropriate forum even though competent under the law may divest itself of jurisdiction if it appears that the action should proceed in another forum in which the action might also have been properly brought in the first place. 7.5 In a nutshell, the respondent's position is that in light of the agreements and the location of the properties, this Court and the Court below had the requisite jurisdiction to hear and determine this matter. 7.6 In addressing ground two, the respondent submitted that the J18 lower Court was on firm ground when it held that the respondent has capacity and locus standi to prosecute this matter. The respondent cited a plethora of authorities on a company's distinct legal personality and referred to section 22 of the Companies Act, which provides that a company shall be capable of suing and being sued in its corporate name. Therefore, the respondent is capable of suing the appellants for failing to perform their obligations under the Advance Payment Guarantee and the Performance Guarantee Agreement entered into by the respondent on behalf of China Civil Engineering Limited - RD Congo with the appellants. 7 .7 Reliance was also placed on the case National Drug Company Limited and Zambia Privatisation Agency v Mary Katongo191 wherein the Supreme Court stated that: It is tri.te law that once the parties have voluntarily and freely entered into a legal contract, they become bound by the terms of the contract and that the role of the Court is to give efficacy to the contract when one party has breached it by respecting, upholding and enforcing the contract. 7.8 On the above premises, the appellants are said to be bound and obligated to fulfil their duties under the agreements. J19 7.9 With respect to ground three, it was submitted that the lower Court was on firm ground when it held that the respondent is not a party to the contract between the 1st appellant and China Civil Engineering Construction Corporation-RD Congo and is not bound by the arbitration dispute resolution clause. The respondent referred to the case of Dunlop Pneumatic Tyres Co. Ltd. V Selfridge Ltdl 10l on the principle that only a party to a contract can claim upon it. Therefore, the lower Court was justified in disregarding the arbitration clause in the contract between China Civil Engineering Construction Corporation-RD Congo and the 1st appellant, as the respondent is neither a party to nor bound by the terms of that contract. 7 . 10 In addressing ground four, the respondent submitted that the lower Court was on firm ground when it found that the dispute in this matter was anchored on the Advance Payment Guarantee and the Performance Guarantee Agreements. That the respondent was not privy to the earlier contract as previously stated. 7.11 In response to grounds five to nine, the respondent argued that the evidence on record showed that China Civil is the parent J20 company in China with subsidiaries in Zambia and Congo. That China Civil Engineering Corporation - RD Congo and China Civil Engineering Corporation Zambia Limited are sister companies. It was on that premise that the respondent executed the Advance Payment Guarantee and the Performance Guarantee. Therefore, the respondent had sufficient interest and standing as the actual beneficiary to the agreement. 7.12 Regarding the prayer by the appellants for costs, it was stated that an award for costs is in the discretion of a trial judge which ought to be awarded judiciously 8.0 ANALYSIS AND DECISION OF THE COURT 8.1 We have considered the appeal, the authorities cited and the arguments advanced by the learned counsel. 8.2 The facts not in dispute are that there were several contracts which were entered into between the parties as hereunder stated. The first contract is dated 5 th August, 2022 between the respondent's branch Company in Congo called China Civil Engineering Construction Corporation RD Congo Sarl and the 1st appellant. This was a sub-contract for construction works at a General Hospital. There is a subsequent agreement dated 8 th J21 February, 2023 between the respondent (branch) and the 1st appellant. The terms of the sub-contract clearly stated that in return for the respondent paying 10% of the contract price as advance payment, the 1st appellant would provide an Advance Payment Guarantee equal to 5% of the contract amount. 8.3 The 1st appellant failed to provide an Advance Payment Guarantee and a Performance Guarantee as agreed. Instead, the 1st appellant opted to give a guarantor to pledge their property as guarantee. This resulted in an Agreement of Advance Payment Guarantee dated 17th March, 2023 entered into between the respondent and the 2nd appellant for the sum of USD880,000 in which the latter pledged its property namely, Subdivision No. 1 of Subdivision R of Subdivision NO. 37 of Farm 488a, Leopards Lane Kabulonga Lusaka as collateral. 8.4 The 1st and 3 rd appellants entered into a Performance Guarantee Agreement dated 17th March, 2023 in which · the 3 rd appellant pledged its property number 6728 Olympia Park, Lusaka as collateral in lieu of a Bank Performance Guarantee in the sum of USD565,876.39. The said mortgages were not registered at J22 Ministry of Lands contrary to the agreement between the parties. 8 .5 The appellants defaulted on their obligation both under the subcontract and the Advance Payment Guarantee and Performance Guarantee. Hence, the claims by the respondent for an Order of specific performance of the two Guarantees and other reliefs. 8.6 Prior to the matter proceeding to trial, preliminary issues were raised subject of this appeal. The preliminary issues challenged the High Court's jurisdiction in a matter where the alleged contract provided that disputes will be resolved by way of submission to arbitration. To this end, the appellants raised nine grounds of appeal. 8 .7 We note that ground one offends the provisions of Order 10 Rule 9(2) of the Court of Appeal Rules (CAR) on the format of grounds of appeal. It contains arguments and is narrative. This is a clear breach of the rules of the Court. We have sounded previous warnings to legal practitioners to no avail. The ground is ambiguous. We cannot overemphasise the need for grounds of appeal to be clear and concise, setting out the points upon J23 which the appellant relies. We shall therefore not consider this ground, which is hereby expunged from the record. 8 .8 To effectively address the remaining grounds of appeal, we will address grounds two, six, seven and eight together as they all seem to challenge the respondent's capacity to bring the action in the first place. We shall then address ground four alone, while grounds three and five will be considered together, and finally ground nine. 8 .9 Grounds two, six, seven and eight all centre on the respondent's capacity to institute an action on behalf of a branch or sister company that has legal capacity to sue and be sued when the DRC branch was a company limited by shares capable of suing on its own behalf. The issue to be determined raised in the clustered grounds two, six, seven and eight is whether the respondent had locus standi to sue the 1st, 2 n d and 3rd appellants in respect of the contracts in issue. Could the respondent sue on behalf of its DRC sister branch/ company? Was the respondent part of the main contract or other contracts? The question is, has the respondent demonstrated personal and direct interest in the matter to have locus standi J24 to warrant being heard? Our affirmative view 1s that the respondent had the locus standi to be heard. This is on the ground that it entered into the Advance Payment Guarantee and Performance Guarantee Agreement of 17th March, 2023 with the 2 nd and 3 r d appellants (Guarantors) who pledged the collateral properties subject of the Order of specific performance of the contract. 8 . 10 It is trite that locus standi is defined by Black's Law Dictionary 8 th Edition, 2004 , at page 960 as: ''the right to bring an action or to be heard in a given forum." 8.11 Sufficient and direct interest must be shown. An applicant must show that he will be affected by the court's decision in a concrete sense and not an abstract one. See the case of Frank Bwalya1111 . 8.12 As regards the main contract, our view is that it was entered into between the appellant and the DRC Company. This brings in the contention raised as to the capacity of the respondent to sue on behalf of a sister company that has legal capacity to sue or be sued on its own behalf. J25 8. 13 The starting point in addressing this issue is restating the settled law on the legal persona of parent and subsidiary companies. In the English decision of Adam v. Cape Industries Plcl 12l. Slade W stated that: The court is not free to disregard the principle of Salomon v. A Salomon and Co. Ltd merely because it considers that justice so requires. Our law, for better or worse, recognises the creation of subsidiary companies which, though in one sense the creature of their parent companies, will nevertheless under the general law fall to be treated as separate legal entities with all the rights and liabilities which would normally attach to separate legal entities. There is no general principle that all companies in a group of companies are to be regarded as one. On the contrary, the fundamental principle is that each company in a group of companies is a separate legal entity possessed of separate legal rights and liabilities 8.14 Further, in Madison Investment, Property and Advisory Company Ltd. v Peter Kanyinjil13l the Supreme Court stated thus: The law takes the position that companies in a group are separate entities and are not agents of each other. At a general level, therefore, the effect of the rule in Salomon v. Salomon & Co. as it relates to individual subsidiaries within a conglomerate or group of companies is that they will be J26 treated as separate entities and the parent company cannot be made liable for their legal obligations. Where there is an express agency relationship between a parent and a subsidiary, the veil of incorporation could be pierced. In Ebbau Vale Urban District Council v. South Water Traffic Licencing Authority, the English Court of Appeal considered the relationship between the parent and a wholly owned subsidiary company. Cohen W pertinently observed that under: "the ordinary rules of law, a parent company and a subsidiary company, even a hundred per cent subsidiary company, are distinct legal entities, and in the absence of a contract of agency between the two companies, one cannot be said to be the agent of the other." 8.15 In casu, the evidence on record at page 87 of the Record of Appeal reveals the trading license of the DRC Branch. The certificate of incorporation for the respondent company is shown on page 88. The business licence or certificate for the main Branch based in Beijing is shown on page 84 of the Record of Appeal. In our view, it is apparent that the respondent and the DRC branch are distinct legal entities that are capable of suing on their own behalf, with separate legal personality. J27 8.16 In fact, the learned Judge in the lower Court, in determining the issue raised, whether the matter was competently before the Court in light of the fact that the main contract was executed between the respondent and China Civil Engineering Construction Corporation RD Congo Sarl (subcontract), did not allude to the main Subcontract. Instead, the Learned Judge found that the pleadings before him related to the guarantees and did not make a determination on the dispute arising from the subcontract. He stated that the issue could only be determined at trial. We cannot fault the lower Court for holding as such because the Advance Performance Guarantee and the Advance Payment agreements are between the respondent and the said guarantors. 8.17 We have perused the Advance Payment and Performance Guarantee Agreements at pages 90 and 95 of the Record of Appeal. The two agreements reveal that they were executed by the respondent on its own behalf and the 1st, 2 nd , and 3 rd appellants. 8.18 On the above premises, the respondent, being a party to the above agreements, has locus standi to sue for the alleged J28 breach. We find that grounds two, six, seven and eight of the appeal lack merit. 8.19 Ground four assails the holding that the dispute is anchored on the guarantee agreements only. A perusal of the statement of claim in the lower court shows that the respondent commenced an action for breach of the agreements that were entered into with the appellants. It 1s therefore, a misapprehension of facts to consider the Advance Payment and Performance Guarantee Agreements as one with the sub contract entered into between the 1st and 2 nd appellants and the DRC Branch as these are completely separate contracts with distinct parties and terms. 8 .20 In light of our earlier findings, we cannot fault the lower Court for holding as he did that the issue before him was only with respect to the alleged breach of the Advance Payment and Performance Guarantee Agreements. 8.21 Under grounds three and five, the appellants' main contention is that the lower court lacked the jurisdiction to hear a matter pertaining to a contract that had an arbitration clause .. J29 stipulating that any disputes would be resolved by way of arbitration in Beijing. 8.22 The law on arbitration agreements is settled in this jurisdiction. In the case of Zambia National Holdings Limited and another v The Attorney Genera11 141 the Supreme Court guided that in cases where parties have agreed to settle any dispute between them by arbitration, the court's jurisdiction is ousted unless the agreement is null and void, inoperative, or incapable of being performed. 8.23 Further, 1n the case of China Henan International Corporation Group Company Limited v G and D Nationwide (Z) Limitedl 15l the Supreme Court endorsed the position that: The starting point is to recognise the fact that the parties have decided to have their dispute adjudicated upon by way of arbitration, they are in fact saying that they do not wish to avail themselves of the Courts save in the limited circumstances provided for by the law. Further, once an award is rendered, it is binding and enforceable upon the parties pursuant to section 20 of the Arbitration Act ... 8 .24 That said, in our decisions in AXIZ (PTY) Limited v Cloudtech Zambia Limited Ravikiran Vijay Salvi18l , we cited an English case of Donohue v Armco Inc. and Others1 16l in which it was it was held that: ,. J30 "The foreign jurisdiction clause does not have the effect of conferring jurisdiction on the chosen court, but that the court retains a discretion to dee line to exercise that jurisdiction based on an overriding consideration of forum conveniens. 8.25 Similarly, in the case of Chansa Chipili and Powerflex (Z) Limited v Wellingtone Kanshimike and Wilson Kalumbal6 1, cited by the appellant, the Supreme Court observed that: ... in business transactions, with foreign Jurisdiction clauses, where business is partly conducted in foreign countries, settlement of the legal question on Jurisdiction is based on circumstances supported by the evidence available. Thus, while parties may agree on foreign Jurisdiction in an attempt to oust the jurisdiction of the state or country where they have business activities such state or country may rightly claim Jurisdiction depending on the circumstances in a given case. 8 .26 In agreeing with this position, the respondent in its submission contended that this matter was not subject to arbitration as the agreements in issue were independent from the main contract. It went on to argue that the properties subject to this action are situated in this jurisdiction and the agreements were equally executed in this jurisdiction. For this reason, this matter cannot subject to arbitration. 8 .27 A careful consideration of the facts in this case reveals that the respondent is not a party to the main contract but was J31 facilitating the funding of the project. Arising from the above two separate agreements were executed between the respondent and appellants to secure the advance payment guarantee and Performance Guarantee of the subcontract subject to the arbitration agreement. 8.28 We therefore do not fault the High Court Judge when he found that the action is only with respect to the Advance Payment Guarantee and Performance Guarantee Agreements. Only the main contract (Subcontract) provided for a dispute resolution mechanism by way of submission to arbitration. The said arbitral clause is inapplicable to the respondent. In that regard, the ground four of appeal fails. 8.29 Ground nine is regarding costs. It is trite that costs are in the discretion of the court. Generally, a successful party must not be deprived of costs except for some default on the part of the successful party. We find no reason to deprive the respondent of costs awarded by the lower Court. 9.0 CONCLUSION 9. 1 We hold and find that the Court below had jurisdiction to hear and determine the action by the respondent against the Ii J32 appellants as the Agreements subject of the proceedings in the lower court are not hampered by an arbitration clause as is the case with the main contract. We accordingly dismiss the appeal and uphold the holding of the lower Court. Costs are awarded to the respondent to be taxed in default of agreement. ........................................... M. J. Siavwapa ' JUDGE PRESIDENT F. M. Chishimba A. N. Patel S. C COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE