The High court passed judgement in a case brought before the court by Cambria Africa PLC which sought an order to compel Breastplate Services trading as Nemchem to pay outstanding amounts on a sale of shares to them in US Dollars. This judgement will raise eyebrows as the first that has imposed the US dollar sale conditions since the end of the multi-currency era.
Facts of the Case
Cambria Africa PLC, which is listed on the London Stock Exchange, entered an agreement with Nemchem to sell its shares in Zambian Milchem for US$46347 with the entire amount to be settled by 31st March 2016. This was to be paid into a Nostro account held by Cambria in Zimbabwe. Nemchem made two payments in respect of the deal between 2016 and 2018 of US$6347 and US$8600 respectively. It is the outstanding amount of US$31400 which had now accrued interest according to the terms of the agreement that made the total outstanding amount US$40000.
Nemchem wanted to pay the outstanding amounts in RTGS/Zimbabwean dollars citing Statutory instrument 33 of 2019 which converted all outstanding contracts and agreements to RTGS at the rate of 1:1 with the US dollar. Effectively Nemchem sought to pay ZWL$40000, approximately US$4440 at current interbank rates. According to Business Times, there was a further dispute in another matter involving the two that complicated dealings and lead Cambria to take the matter to the courts.
High court justice Isaac Mudenda ruled that Nemchem was to pay the full outstanding amount including interest and legal costs. He noted that the amount should’ve been settled in 2016 and as such would’ve been in US dollars.
This case may give the opportunity for many to challenge similar instances where contracts were converted to RTGS dollars. In this particular case those Cambrias foreign listing, hence foreign domicile, may be the key issue that swayed the judgement as SI 33 of 2019 did explicitly exclude agreements with foreign domiciled entities from the 1:1 conversion. It is not the first challenge to the conversion but will be noted as the first success.