The Supreme Court has dismissed an appeal by Breastplate Services trading as Nemchem International against a High Court judgment ordering the company to pay London-listed Cambria Africa PLC outstanding share obligations in United States dollars as opposed to Real Time Gross Settlement (RTGS) equivalent.
The dispute arose from a 2016 agreement where Cambria sold its entire issued share capital of its Zambian unit, Milchem for US$46 347. The full amount was to be paid by March 31, 2016.
The nature of the agreement between the parties was exclusively to be settled in hard currency and to be deposited into a Nostro account registered in Cambria’s name in a Zimbabwean bank. But Nemchem has been refusing preferring to settle the outstanding amount in Zimbabwe dollars. The technicalities of the case point to the inclusion of IBAN/SWIFT codes in the bank details including provision of United Kingdom and South African banking details.
In a judgement handed down by Justice Elizabeth Gwaunza, Justice Bharat Patel and Justice Lavender Makoni the Supreme Court upheld the High Court’s ruling saying all the grounds of appeal on the matter were devoid of merit.
“They cannot be sustained and must therefore be dismissed. As for the cost there is no reason to depart from the norm that costs should follow the norm. “It is accordingly ordered that the appeal be and is hereby dismissed with costs,” the Supreme Court judgment said.
It is understood that the defendant, Nemchem International paid US$6 347 on unspecified date. A further US$8 600 payment was made two years later in 2018, leaving a balance of US$31 400. A misunderstanding arose pertaining to interest to be paid which accumulated to US$40 000 as per the agreement signed in September 2017.
Since then, Nemchem International, however, had been refusing to pay the balance plus compound interest in US dollars. Instead, Nemchem wanted to pay the outstanding balance in Zimbabwe dollars, prompting the plaintiff to approach the courts in order to force the defendant to pay the balance and interest in the greenback.
Cambria Africa PLC’s High Court victory was the first time such a judgment had been passed since the introduction of Statutory Instrument 142 of 2019 which banned the use of foreign currencies for transacting purposes in Zimbabwe, leaving the Zimbabwe dollar as the sole legal tender in the country.
Under the Statutory Instrument 33 of 2019, government introduced the RTGS dollars as a currency to operate side by side with the bond note and coin as a form of settlement currency in Zimbabwe, joining a basket of multi-currencies.
In June, government then banned the use of multi-currency, leaving the Zimbabwe dollar as the sole legal tender in Zimbabwe under SI 142 of 2019.
In 2020 however with the outbreak of the COVID-19 pandemic government was forced to reintroduce the US$ as a transacting currency in the country to offset dwindling foreign currency supply on the market.