Namcor's N$304m claim against Mulunga revived

The Labour Court has handed national oil company Namcor a significant legal victory after overturning an arbitrator's decision that blocked the state-owned oil company from pursuing more than N$304 million in damages against its former managing director, Immanuel Mulunga.

In a judgment delivered on Friday, Judge Boas de Jager ruled that the Labour Commissioner does have jurisdiction to hear Namcor's claims for contractual damages arising from an alleged breach of Mulunga's employment contract. The judge set aside the arbitration award in its entirety and ordered that the matter be heard afresh before a different arbitrator.

The ruling clears the way for Namcor to proceed with its case, in which it alleges that Mulunga's actions while at the helm of the company caused losses exceeding N$304 million.

Namcor referred the dispute to the Labour Commissioner in October 2024, claiming Mulunga breached his employment contract in several respects. The company is seeking to recover interest of about N$123 million arising from what it describes as an unauthorised outward transfer of US$6.7 million in August 2022. 

It is also claiming N$266.7 million in losses allegedly linked to failures to enforce Namcor's credit control policies involving Erongo Petroleum CC and Enercon Namibia, as well as a further N$37.99 million allegedly arising from the same transactions. 

In addition, Namcor wants the findings of an independent disciplinary chairperson, who had cleared Mulunga of misconduct, to be set aside.

Before the merits of the case could be heard, Mulunga raised several preliminary objections, arguing that the Labour Commissioner lacked jurisdiction because the matter amounted to a civil damages claim rather than a labour dispute. He also argued that the claims had prescribed and that the disciplinary outcome could not be revisited.

Arbitrator Moses Mazambo agreed with those arguments in June last year, dismissed Namcor's case without hearing evidence and ordered the company to pay Mulunga N$4 000 in legal costs. Namcor appealed the decision.

In his judgment, De Jager found that the arbitrator had erred in law by concluding that the Labour Commissioner lacked jurisdiction. The court held that disputes arising from an employee's alleged breach of an employment contract fall squarely within the Labour Act and that arbitrators have the authority to award contractual damages where appropriate.

The judge also rejected the arbitrator's finding that Namcor's claims had prescribed. He held that the Labour Act's one-year referral period should not be treated as a prescription provision and noted that Mulunga bore the burden of proving when the dispute arose. Since no evidence had been presented, the arbitrator had no factual basis to conclude that the matter had been brought out of time.

De Jager further criticised the arbitrator's decision to award costs against Namcor, finding there was no evidence that the company had acted frivolously, vexatiously or with the intention of harassing Mulunga. He also expressed concern that aspects of the arbitrator's reasoning created an appearance of bias, making it appropriate for the dispute to be heard by a different arbitrator.

The Labour Court accordingly upheld Namcor's appeal, dismissed Mulunga's preliminary objections and referred the matter back to the Labour Commissioner for a fresh arbitration before another arbitrator, where the merits of the company's multimillion-dollar claims will finally be determined.