US firm sues RBZ

seeking to recover a US$35 million debt for services it rendered five years ago.
According to papers filed at the High Court, the firm – Alex Stewart International – claims that it rendered auditing services in 2006 on the production and export of minerals from Zimbabwe.
The Washington DC-based firm stated that in a separate lawsuit it intends to sue the RBZ for US$100 million for breach of contract.
However, the RBZ says the application should be dismissed with costs as the claim is bad at law because the firm failed to comply with Section 6 of the State Liabilities Act Chapter 8:14.
The RBZ also argues that the auditors did not give it 60 days notice of intention to bring the proceedings and the claim to court as required by law.
The central bank further claims that by bringing the case to court, the firm had breached the contract hence the case should be dismissed.
The RBZ denies breaching the contract saying it had no knowledge of the damages claimed. It says it will deal with it if the lawsuit is instituted.
In the application, ASI claims that on February 8, 2006, it entered into a written contract with the RBZ. The contract, it says, was signed by both parties in terms of which the firm undertook to provide auditing services of the production and export of minerals from Zimbabwe.
ASI further states that the agreement was amended twice on November 15, 2006 and April 24, 2007.
The firm averred that it then invoiced the RBZ for fees due and payable for the services rendered in terms of the contract and the last invoice was issued on July 26, 2010.
“In terms thereof, first defendant (RBZ) acknowledged and agreed that the debt due to plaintiff was US$34 995 200,” ASI stated.
Further, the firm claims that it had also notified the Minister of Finance who is also cited in the lawsuit about the debt last year. “Second defendant (Finance Minister Tendai Biti) was made aware of plaintiff’s (ASI) claim on May 17, 2010 in written correspondence from plaintiff pleading for payment of the entire debt due to it for services rendered.
“Notwithstanding numerous negotiations and discussions regarding payment of the debt, no such payment has been made forthcoming.
“This is in spite of the fact that first defendant (RBZ) does not and has never disputed its indebtedness to plaintiff,” ASI says.
The firm avers that on October 14, 2010 its lawyers, GN Mlotshwa and Company, wrote a letter of demand to the RBZ calling upon it to repay the debt plus interest accruing within seven days failure of which would result in legal action.

“Notwithstanding such demand first defendant (RBZ) has failed or neglected to pay amount due and payable to plaintiff. Indeed in a separate lawsuit, plaintiff intends to sue the first defendant for damages in an additional amount of US$100 million for breach of contract,” ASI stated.
The firm also wants the RBZ to pay interest of 10 percent per annum as well as costs of the suit.
However, the RBZ in its plea categorically states that the ASI’s claim was defective for the court to grant the relief sought.
The RBZ avers that the firm was required to give the central bank 60 days notice of intention to bring these proceedings to court.
The claim, the RBZ states, did not fall within the exemptions listed in Section 7 of the State Liabilities Act. As a result the RBZ prays for dismissal of the claim with costs.
“The honourable court should refuse to exercise its jurisdiction in the matter because the agreement being sued upon provides for an elaborate dispute settlement namely arbitration in terms of the Rules of Conciliation and Arbitration of the International Chamber of Commerce,” says the RBZ.
It also states that by instituting summons to resolve the dispute through the courts ASI had acted in breach of the agreement and should exhaust domestic remedies first.
“The US firm is peregrinus it should provide security costs in such sums as the court may determine before the matter is heard,” the RBZ says adding, “The firm should prove its allegations that it is indebted.”
The RBZ further says while it was acknowledged there had been negotiations regarding the issue of payment for services rendered, it denies ASI’s assertions that the debt has not been admitted.
“The defendant has no knowledge of the damages (US$100 million) lawsuit and will deal with it if it’s instituted,” the RBZ averred.
T. H Chitapi and Associates are representing the RBZ while the Civil Division in the Attorney General’s Office represents the Minister of Finance who is cited as second respondent.
In his response, Minster Biti who was cited in his official capacity stated that his ministry was wrongly cited.
“The plaintiff declaration falls foul of the provisions of the State Liabilities Act in as far as the pre-requisite 60 day notice as prescribed by the said Act were not given and accordingly the plaintiff’s papers are improperly before the court to the extent that they relate to the second defendant,” the minister said.
The minister said as the contract giving rise to the dispute was between the RBZ and the ASI, the ministry was never party to the contract.
“First defendant (RBZ) is capable of being sued in its own name, the second defendant (Minister of Finance) was irregularly cited and should not be party to the proceedings,” the minister stated.
Justice Susan Mavangira will preside over the case.
According to a draft pre-trial conference minute the court will determine whether Section (6) of the State Liabilities Act was breached.
The court will also determine whether there has been substantial compliance with Section (6) of the State Liabilities Act and whether or not the exemption under Section 7 (a) of the State Liabilities Act applies.