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Fidelis Munyoro
Chief Court Reporter
Harare City Council has failed in its bid to avoid paying in Zimbabwe dollars a US$468 855 debt it owes a private company, Furbank Trading (Private) Ltd, using the 1-1 exchange rate, although it can still at law, pay in local currency at the prevailing exchange rate.
Harare has been arguing since the award of US$468 855 was granted in December 2019 in favour of Furbank Trading by an arbitrator and eventually approached the High Court to get it reversed, but the court found that the arbitrator had applied the law correctly.
The council wanted the High Court to invalidate the award, arguing that it was contrary to the public policy and in breach of the Statutory Instrument 33 of 2019 that states that the US dollar was at par with local currency at that point.
But Retired Justice Webster Chinamora dismissed the appeal by the city council and upheld arbitrator Mr Thomas Alexander Taylor s decision. He said Mr Taylor’s finding and ruling was consistent with the law.
“The award is not contrary to public policy. A reading of the arbitrator’s award clearly shows that the established facts and applicable law are in tandem,” he said.
In his ruling, the arbitrator had found that the debt which was being claimed was incurred in May 2019 and it was in foreign currency, the rand, with the knowledge and consent of the Harare City Council.
That being the case, the arbitrator invoked section 22 (e) of the Finance Act (No.2) of 2019.
Zimbabwean courts recognise that a judgment in foreign currency may be given subject to the amount of the foreign currency being converted into local currency at the date of enforcement of the judgment. It was on that basis that Justice Chinamora did not find anything contrary to public policy of the country in the award by Mr Taylor.
“Therefore, the arbitrator not only upheld the parties’ agreement but also correctly applied the law to the established facts.”
HCC took Furbank to the High Court in a bid to invalidate the arbitral award rendered by Mr Taylor on December 22 2019 in favour of Furbank. In July 2018, Furbank was awarded a tender by HCC’s procurement management unit for the supply and delivery of bitumen products for emergency road rehabilitation. A contract was subsequently signed between the council and the company for a total contract price of US$ 1 497 500.00
HCC made orders of bitumen products and Furbank supplied the products for a grand total of US$468 855.
Following delivery of the products in May 2019, Furbank presented its invoice for payment as agreed.
HCC acknowledged its indebtedness to Furbank through a memorandum dated May 31 2019.
Despite this, the debt was not settled resulting in the matter being referred to arbitration.
HCC opposed Furbank’s claim for two reasons. First, the local authority denied that the memorandum constituted an acknowledgment of debt.
The second reason was that, in light of Statutory Instrument 33 of 2019, the amount due to Furbank was to be settled in Zimbabwe dollars at the rate of US$1:1 ZWL dollar.
That was where the arbitrator, backed by the High Court, disagreed.
Online Reporter