Commercial contracts increasingly contain arbitration clauses. Mining agreements, construction contracts, shareholder agreements, financing arrangements, joint ventures and international transactions frequently provide that disputes will be resolved through arbitration rather than ordinary court proceedings. There are good reasons for this.
Arbitration can provide parties with flexibility, confidentiality, specialist decision-makers and greater control over the dispute-resolution process. But once an arbitrator is appointed, an important question arises:
Can the arbitrator decide whatever they consider fair?
The Supreme Court of Zambia considered this issue in SA Airlink (Pty) Limited v Zambia Skyways Limited and Others [2025] ZMSC 30. Its answer provides an important reminder about the foundation of arbitration:
The arbitrator’s power comes from the parties’ agreement. That power therefore has boundaries.
Arbitration Begins With Consent
Unlike an ordinary court exercising the jurisdiction conferred upon it by law, an arbitrator’s authority is fundamentally rooted in the parties’ agreement to arbitrate. The parties effectively say:
“This is our dispute. These are the issues. We agree that this tribunal should decide them.”
That agreement gives the arbitrator power. But it also defines the limits of that power. This is part of the principle commonly referred to as party autonomy. The original DAC article puts the idea simply:
“The arbitrator’s power comes from that agreement.”
What Happened in SA Airlink?
The Supreme Court found that the arbitrator had gone beyond the dispute and authority given by the parties. The arbitrator also departed from the agreed procedure. Perhaps most strikingly, the award granted a benefit to a person who was not a party to the arbitration. The Supreme Court set the award aside. That result demonstrates an important principle:
An arbitrator may have considerable discretion—but cannot simply create a different dispute from the one submitted for determination.
Consider a straightforward example. Company A and Company B enter into a supply agreement. A dispute arises. They refer that dispute to arbitration. The arbitration is:
Company A v Company B. After hearing the parties, the arbitrator decides:
“Company B must pay ZMW5 million to Company C.”
But Company C was never a party to the arbitration. An obvious legal question arises:
Where did the arbitrator obtain authority to make an award in favour of Company C?
That example captures one of the practical concerns identified in SA Airlink. As the DAC source article asks:
“Where did the authority to do that come from?”
Party Autonomy Works Both Ways
Businesses choose arbitration partly because it allows them significant freedom to determine how their disputes will be resolved. Depending on the agreement and applicable law, parties may address matters such as:
- who will arbitrate;
- how the tribunal will be constituted;
- the procedure;
- the applicable rules;
- the seat or place of arbitration;
- the issues submitted;
- the governing law.
That flexibility is one of arbitration’s great strengths. But there is a corresponding obligation:
The agreed framework must be respected.
If parties have agreed upon a particular procedure, an arbitrator cannot simply disregard that procedure because another method seems preferable. The freedom to design the arbitration would mean very little if the tribunal could subsequently ignore what the parties designed.
An Arbitrator Is Powerful — But Not All-Powerful
This is perhaps the simplest way to understand the judgment.
Arbitrators may:
- interpret contracts;
- assess evidence;
- determine liability;
- award damages;
- resolve substantial commercial disputes.
But arbitral authority is not unlimited. The tribunal must remain within its jurisdiction. As the original DAC article summarises it:
“An arbitrator is powerful, but not all-powerful.”
That is a useful principle for businesses and arbitrators alike.
The Arbitration Clause Is Not Boilerplate
There is another important commercial lesson. Businesses frequently spend weeks negotiating:
- Price.
- Payment.
- Delivery.
- Performance obligations.
- Warranties.
- Termination.
Then, near the end of the contract, they encounter a clause beginning:
“Any dispute arising out of or in connection with this Agreement shall…”
And barely read it. That can be an expensive mistake. The arbitration clause may eventually determine:
- who decides the dispute;
- where it is decided;
- under what rules;
- what procedure applies;
- potentially how enforceable the eventual award will be.
Your source article specifically warns that businesses often negotiate the commercial terms carefully and then give inadequate attention to the dispute-resolution clause.
Negotiate for the Bad Day
Most contracts are negotiated while everybody is optimistic. The parties want the transaction to succeed. That is understandable. But a well-drafted contract should also contemplate the possibility that the relationship may fail. When reviewing the arbitration clause, therefore, do not ask only:
“What happens if this transaction works?”
Ask:
“What happens if this relationship completely breaks down?”
Who decides? Where? Under what law? According to what procedure? Those questions may seem remote on signing day. They can become extremely important three years later.
Define the Dispute Carefully
The lesson also extends to lawyers once arbitration has begun. Counsel should identify precisely:
What issues have actually been submitted to the tribunal?
Poorly defined terms of reference or submissions can create jurisdictional disputes later. Before the hearing begins, there should be clarity concerning:
- the parties;
- claims;
- counterclaims;
- issues;
- relief sought;
- applicable procedure.
The tribunal should know what it has been asked to decide. And equally importantly, what it has not been asked to decide.
Why Courts Can Still Matter in Arbitration
People sometimes misunderstand arbitration as meaning:
“Once we choose arbitration, the courts have absolutely nothing more to do with the dispute.”
That is too simplistic. One of arbitration’s attractions is limited judicial interference. The objective is not to turn every arbitral award into another full trial before the courts. But arbitration still exists within a legal framework. Where fundamental jurisdictional problems arise, the law may permit judicial intervention. SA Airlink demonstrates that choosing arbitration does not place the resulting process completely beyond legal scrutiny.
Finality Depends on Staying Within the Mandate
Commercial parties choose arbitration partly because they want finality. But an arbitrator who strays outside the mandate may actually undermine that objective. The irony is obvious. An arbitrator may attempt to resolve a dispute broadly in the interests of fairness. But if the award exceeds jurisdiction, the parties may end up in years of court proceedings challenging it. Respecting jurisdiction is therefore not merely legal formalism. It helps protect the eventual award.
The DAC View
At Dzekedzeke and Company, we believe SA Airlink v Zambia Skyways contains an important lesson for African commercial dispute resolution. Arbitration is valuable because it respects party autonomy. But party autonomy must mean something.
If businesses agree: “This is the dispute we want decided, and this is how we want it decided,” the tribunal must respect those boundaries.
For businesses: Take the arbitration clause seriously before signing the contract.
For lawyers: Define the dispute and relief carefully.
For arbitrators: Remain within the mandate.
And for everyone involved in commercial contracting: Do not ask only what happens if everything goes right. Ask what happens if everything goes wrong—and who will decide.
As our original DAC article concludes, that small dispute-resolution clause near the end of the contract may eventually become one of the most important clauses in the entire agreement.
For legal advice on arbitration, commercial contracts and dispute resolution, contact Dzekedzeke and Company.
Based on SA Airlink (Pty) Limited v Zambia Skyways Limited and Others (Appeal No. 10/2023) [2025] ZMSC 30 (31 December 2025).
