Article by Fidelis Manyuchi of Zimbabwean firm, Scanlen & Holderness
Choice of Law in the face of Delta Beverages (Private) Limited v Blakey Investments (Private) Limited SC 59/22.
The issue of choice of law has come to the forefront with the advent of the African Continental Free Trade Area (AfCFTA) and the increase in international agreements.
The nuances of this area of the law are at times lost on contract drafters, which oftentimes has disastrous effects on the contracting parties. When it comes to contracting at an international level, parties are usually suspicious of the laws of the foreign jurisdiction from which the counterparty will be coming from.
Any level of suspicion can be justified as the law usually differs from jurisdiction to jurisdiction. In addition to this, navigating foreign law can also be problematic to a party’s usual legal advisors.
To alleviate these suspicions, parties to contracts with international aspect usually deal with issue by inserting a choice of laws clause in their agreements. Simply defined, a clause choice of law clause is a clause that deals with the governing law of the contract, i.e., the country’s law that would govern the contract.
Oftentimes parties choose a country which they think has less onerous laws than their respective jurisdictions. Courts generally respect choice of law provisions and this is done to preserve one of the fundamental principles of the law of contract which protects the sanctity and freedom of contract (pacta sunt servanda). However, just like with most general rules, there is always an exception.
The exception to this general rule has been recently clarified by the Supreme Court appeal in the Delta v Blakey case. According to the Supreme Court:
“…matters of public policy and mandatory laws of that other country may take precedence over governing law clauses, such as in the area of employment and exchange control regulations which are in the category of directly applicable statutes that override the choice of law.”
It is now clear that parties to international agreements which has a Zimbabwean element, have to pay particular attention and make sure that the agreements they conclude are compliant with mandatory laws as well as the public policy of Zimbabwe. Failure to do so, will have a negative effect.