YOU may have heard that the government of Zimbabwe lost a US$125 million lawsuit to Border Timbers Ltd in England on January 19, 2024.
What was the case about? Why was the case heard in England? What does it mean for Zimbabwe?
This is a summary of what happened. During Zimbabwe’s land reform programme, the government of Zimbabwe compulsorily seized farms and property owned by Border Timbers Ltd, a company owned by German shareholders. The properties that were seized were protected by a Bilateral Investment Promotion and Protection Agreement between Zimbabwe and Germany in 1995.
In terms of the agreement, farms owned by Germans were protected from seizure under Zimbabwe’s land reform programme. The farms were seized by the government of Zimbabwe in spite of the investment protection agreement. This contractual breach led to Border Timbers approaching the International Centre for Settlement of Investment Disputes (ICSID) in 2010 to seek redress.
The ICSID Tribunal is an international arbitration forum based in Paris which was established in 1966 to resolve disputes between international investors and states. ICSID is part of the World Bank Group.
Border Timbers Ltd won the ICSID case against the government of Zimbabwe in July 2015. Zimbabwe was ordered to pay Border Timbers US$125 million in compensation, damages and legal costs. The government of Zimbabwe applied to get the arbitral award annulled by ICSID through a procedure provided for by the ICSID Convention. The application was dismissed in November 2018.
Zimbabwe has since failed to pay the money owed to Border Timbers Ltd, which means that Border Timbers Ltd has to pursue a legal way to enforce payment. In October 2021, Border Timbers successfully applied to the High Court in England to register the arbitration award so that it could be recognised and enforced in the same way as a High Court order in England.
The practical effect of the registration is that assets belonging to the government of Zimbabwe can be seized and sold in execution to pay the US$125 million owed to Border Timbers Ltd. Upon being served with the registration order, Zimbabwe applied to the High Court in England in July 2022 to try and set aside the registration order on the grounds that Zimbabwe was immune from the jurisdiction of UK courts by virtue of England’s State Immunity Act.
Zimbabwe’s application was dismissed by the English High Court on January 19, 2024. This means that the government of Zimbabwe must pay Border Timbers Ltd the US$125 million. If Zimbabwe continues to refuse to settle the debt, there’s a risk that Zimbabwean government assets in the UK will be attached and sold to pay the debt.
Fadzayi Mahere is a Member of Parliament and an advocate in Zimbabwe’s superior courts
