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Fidelis Munyoro Harare Bureau
THE High Court has barred Mbada Diamonds from carrying out any mining operations in Chiadzwa without a licence, saying allowing the firm to resume extraction of the gems will be tantamount to sanctioning an illegality.
Justice Joseph Martin Mafusire, however, condemned the eviction on February 22 of Mbada from Chiadzwa.
He allowed Mbada to remain at the mining site for purposes of securing its assets until “such time that the validity of such Special Grants has been regularised in accordance with the law”.
“In casu, to allow Mbada to resume mining operations as before, when the right to do so expired, is to sanction an illegality,” ruled Justice Mafusire. “That, in my view, is contrary to public policy.”
The ruling follows an urgent application by Mauritius-registered Grandwell Holdings, with a 50 percent controlling stake in Mbada Diamonds (Private) Limited, contesting the eviction.
It sought a spoliation order (status quo).
Mbada is an offspring of the marriage between Grandwell Holdings and Marange Resources. Marange Resources is wholly owned by Zimbabwe Mining Development Corporation on behalf of the government.
Mbada has been extracting diamonds at Chiadzwa over the past seven years, but the government was brooding.
While Grandwell entered into a number of joint ventures with several foreign investors, the government was getting little or no remittances.
To rectify this, the government crafted a policy to merge all the diamond mining companies at Chiadzwa into a single entity.
This resulted in the creation of the Zimbabwe Consolidated Diamond Company (ZCDC), a special purpose vehicle for the new venture.
All the diamond companies would take up 50 percent of the equity in it while the government takes the remaining 50 percent.
But the diamond companies rejected the government proposal and went to court in a bid to block the move.
Advocates Lewis Uriri and Sylvetser Hashiti, who appeared for Mines and Mining Development Minister Walter Chidhakwa, Marange Resources, ZMDC and ZCDC strenuously argued that it had become illegal for Mbada and Grandwell to remain at the mining site without mining authority.
They said the Special Grants had expired by reason of the firms’ own failure to renew their licence.
They also argued that the JVA and shareholder agreements might have provided for certain rights in perpetuity could not override the provisions of an Act of Parliament, which are superior to any provisions of a private agreement.
The Minister, they said, was the regulator of all mining rights and the action he took was to restore the law.
But Sternford Moyo and Advocate Thabani Mpofu, who argued the matter for Grandwell and Mbada, respectively slammed the respondents’ attempt to place reliance on the expired Special Grants.
They argued that, among other things, in terms of the agreements, the obligation to renew those Special Grants, had been thrust on Marange Resources, the state company.
They also argued that the fact that the Special Grants had not been renewed on expiry was the government’s own fault.
As such, they requested the court to preclude the respondents from trying to profit from their wrong.
But their main argument was that the issue before the court was about the rights and wrongs of the respective parties. They said it was not about the validity or otherwise of Mbada’s title to mine.
Justice Mafusire agreed with the two.
“In my view, the respondents’ actions were classically an act of spoliation,” said Justice Mafusire. “The purpose of spoliatory relief is to restore at once the possession to the possessor where he has been unlawfully deprived of it. This is so, in order to prevent people, governments included, from taking law into their own hands.”
The judge also ruled that Grandwell had a substantial interest in the matter hence it was entitled to bring a derivative action against the respondents.
Online Reporter