The High Court has ruled that the Reserve Bank of Zimbabwe (RBZ)’s assets cannot be attached in a lawsuit over more than US$26 million in unsettled debt with a London-based grain and fertiliser exporter, Holbud Limited.
RBZ assets had been attached following an order of the same court which registered an arbitral award in HC 3207/19.
The bank then approached the High Court seeking an order declaring that its assets were subject to the provisions of the State Liabilities Act and, therefore, could not be attached.
The Reserve Bank also argued that the amount claimed by Holbud under the arbitral award registered before the High Court was also the subject of the Reserve Bank (Debt Assumption) Act No 2 of 2015, and consequently was not subject to further execution.
After hearing submissions from both parties’ counsel, Justice Webster Chinamora ruled in favour of the RBZ, agreeing with its legal position that its assets were protected by law and that it had never waived these rights in its dealings with Holbud.
In terms of the State Liabilities Act as read with the Reserve Bank of Zimbabwe Act, the RBZ’s assets cannot be the subject of an order of execution, meaning that no one can attach them for sale to satisfy a debt.
Holbud sought to argue that RBZ waived its right to this protection from the State Liabilities Act, so Justice Chinamora had to determine whether such waiver had been proved.
Justice Chinamora that the commitment by Holbud to pay funds into the RBZ’s offshore accounts did not amount to either an express or assumed waiver of rights accorded to the bank by the law.
Holbud claimed to have received two Treasury Bills totalling US$40 246 217, which matured on March 25, 2017, and February 24, 2017.
The proceeds of the matured bills were to be paid to Holbud’s bankers in the United Kingdom but the RBZ had challenges repatriating the proceeds into offshore accounts of Holbud as instructed.
The RBZ and Holbud then entered into an arrangement whereby Holbud availed to the RBZ part of the proceeds of the Treasury Bills amounting to US$26 million.
The RBZ would in turn avail the funds for lending to eligible entities under a finance facility before and after exports on condition that half of the export proceeds would be credited to the RBZ’s nominated Nostro account for subsequent payment of its obligations to Holbud.
The RBZ agreed to settle the debt by paying four instalments of US$6 500 000 between January and September 2018 but failed to fulfil its contractual obligations leading to the matter being referred to an arbitrator, Retired judge Justice George Smith who ordered the RBZ to settle the debt.
More: The Herald