When commercial transactions involve a web of related contracts, each often carries its own mechanism for handling disputes. A situation may arise where the loan agreement stipulates arbitration in Zambia, while the security documents grant exclusive jurisdiction to Zambian courts, leaving the parties unsure which forum should hear the conflict. The growing use of multi-contract structures in financing, infrastructure projects, and M&A transactions raises the likelihood that the arbitration provision in the main agreement will not automatically apply to the ancillary documents.
Recent court rulings clarify jurisdictional conflicts
In Grandview International Limited & Others v Barak Fund Limited (Appeal No. 289 of 2023), the Zambian Court of Appeal examined a clash between two competing jurisdiction clauses. The judges outlined two possible interpretative methods for dealing with unclear contractual language. One method is the contra proferentem rule, which dictates that any ambiguity be interpreted against the party that drafted the problematic provision. The court observed that, absent an explicit waiver, the drafter assumes the risk of any uncertainty.
The principle was further developed in Barak Fund SPC Limited v Attorney General & Grandview International Limited (CAZ Appeal No. 79 of 2025). Relying on the English precedent Trust Group SpA v AmTrust Europe Limited, the Zambian court accepted the notion that a tribunal may identify the “centre of gravity” of a dispute to decide which jurisdiction clause is “closer to the claim.” Applying that reasoning, the court concluded that the second proceeding was more closely connected to the matters covered by clause 15.1 of the Deed of Assignment than to the arbitration clause contained in the Facility Agreements.
According to the centre of gravity test, the adjudicating body must determine the genuine origin of the disagreement by looking at the substantive content rather than the formal label of the claims. Once the primary contract that gave rise to the dispute is pinpointed, the dispute-resolution clause within that contract generally governs the case.
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Although the centre of gravity test offers a systematic way to settle jurisdictional clashes, it demands a wide-ranging and purposive reading of dispute-resolution provisions. Courts should consider whether a clause is sufficiently expansive to cover disputes that arise out of, relate to, or are connected with the instrument in question. Such an interpretation advances commercial efficiency and ensures that matters bearing a strong link to a particular agreement are resolved in the venue the parties envisaged, thereby reducing the danger of split proceedings and parallel litigation.
Legal counsel and their clients should strive to align the dispute-resolution terms across every document that forms part of a single transaction. Harmonised clauses support predictability and minimize the risk of jurisdictional disputes.
Practical considerations for drafting agreements
Applying the centre of gravity test in practice calls for a generous, purpose-driven construction of dispute-resolution clauses. Rather than limiting interpretation to a narrow, technical reading, tribunals may evaluate whether the provision is broad enough to capture disputes that arise out of, relate to, or are linked with the relevant contract. This approach supports commercial efficacy and ensures that disputes possessing a substantial nexus to a particular agreement are determined in the forum contemplated by the parties.