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Fidelis Munyoro-Chief Court Reporter
LEADING beverage company Schweppes’ woes deepened yesterday after it lost an appeal to overturn a High Court decision that endorsed its contract with South African packaging company as legally binding and that it could not invoke the exchange control regulations to wriggle out of a contractual obligation.
The Zimbabwe Stock Exchange listed and Coca-Cola subsidiary’s argument was that it could not honour payments to the South African company, Blakey Investments, as the contract relied on had been negotiated in violation of its own procurement policies — by one of its senior executives — and the country’s exchange control regulations.
The Supreme Court yesterday refused to overturn the High Court verdict last year upholding the R250 million packaging supply deal to Blakely Investments, siding with the lower court decision to dismiss Schweppes’ application seeking nullification of a three-year-old agreement on the basis that it was riddled with several irregularities.
Dissatisfied with the lower court’s verdict, Schweppes took the matter up to Supreme Court on appeal against the entire High Court decision.
However, a three-judge bench comprising Justices Chinembiri Bhunu, George Chiweshe and Joseph Musakwa unanimously agreed on an extempore ruling that the appeal was without merit and dismissed it with costs, saying reasons for the court decision would be made available in due course.
Schweppes and the South African company Blakey Investments in May 2018 entered into a deal in terms of which Schweppes would buy packaging material in agreed quantities from Blakey at agreed prices.
The deal was varied on several occasions with the last variation being in March 2019 in which the parties agreed to review minimum quantities of the shrink wraps to be supplied as well as pricing.
Along the way, Schweppes issued summons against Blakey seeking to nullify the agreement, arguing that both parties violated the exchange control regulations in that they entered into the supply chain agreement before both of them obtained the exchange control approval prior to executing the agreement.
In this regard, Schweppes claimed the deal was invalid and unenforceable. The beverages company took the position that before any obligation to make a payment outside Zimbabwe is incurred, there should be exchange control authority obtained.
But Blakey averred that it was not required to obtain such authority.
In his judgment last year, High Court judge Justice Tawanda Chitapi found no merit in the Schweppes lawsuit and dismissed it with costs, ruling that a party to a contract should not be allowed to seek to invoke exchange control regulations as a way out of an obligation and where that party seeks to do so there must be cogent evidence to show that the law was contravened.
Schweppes wanted the court to decide an academic issue on whether or not the agreement contravened exchange control regulations based on assumptions.
But Justice Chitapi found that the relief sought would be contrary to public policy if issued because the parties were agreed that there was ongoing arbitration and court proceedings in South Africa and that the agreements were subject of those judicial processes.
Schweppes was represented by Advocate Thabani Mpofu instructed by Wintertons, while Blakey Investments was represented by Advocate Firoz Girach instructed by Atherstone & Cook.
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