Zimbabwe's High Court Orders NOIC to Pay Contractor $164,631 for Ethanol Project

The High Court of Zimbabwe has ruled in favor of AC Controls Company, a contractor, in a dispute with the National Oil Infrastructure Company of Zimbabwe (NOIC) over payment for supplying and installing equipment for the Mabvuku Ethanol Storage Tanks Project.

The court ordered NOIC to pay $164,631 to AC Controls following NOIC's initial refusal to honor the arbitration award. The dispute arose when NOIC insisted on settling the debt using a 1:1 exchange rate between US dollars and the Zimbabwean dollar.

AC Controls had fulfilled its obligations under the contract, which stipulated payment for materials upon submission of invoices, valuation reports, and interim certificates. Despite amendments to the contract reflecting changes in Zimbabwe's monetary policy, AC Controls had procured materials worth $164,631.34 before the amendments took effect.

The dispute was referred to arbitration, where retired High Court judge Justice November Mtshiya ruled in favor of AC Controls, upholding their claim for payment. NOIC applied to set aside the arbitral award, but Justice Webster Chinamora, presiding over the case, dismissed the application.

Why this matters: This ruling sets a precedent for contractual disputes in Zimbabwe, particularly in cases involving foreign currency exchange rates. It may lead to a shift in how businesses approach contract negotiations and dispute resolution in the country.

Justice Chinamora noted that the parties had willingly entered into and amended the contract to account for foreign debts, concluding that the award was valid and should be enforced. He stated, "The parties had willingly entered into and amended the contract to account for foreign debts... the award was valid and should be enforced."

In another key finding, Justice Chinamora remarked, "I must hasten to state that it was the applicant who gave a voluntary concession that it owed the first respondent. In my view, such a finding could not have been made if the arbitrator had not considered the applicant's submissions."

The court's decision highlights the importance of adhering to contractual agreements, especially in light of changes in monetary policy. The ruling ensures that AC Controls receives the payment they are owed for their work on the Mabvuku Ethanol Storage Tanks Project.

This case highlights the complexities that can arise in contractual disputes, particularly when monetary policies shift. The High Court's ruling provides clarity and reinforces the principle that parties must honor their commitments, regardless of external changes.

The High Court of Zimbabwe's decision to enforce the arbitration award marks a significant development in the legal environment, ensuring that contractors like AC Controls are compensated fairly for their services.

Key Takeaways

• Zimbabwe's High Court rules in favor of AC Controls in payment dispute with NOIC.
• Court orders NOIC to pay $164,631 to AC Controls for Mabvuku Ethanol Storage Tanks Project.
• Dispute arose over 1:1 exchange rate between US dollars and Zimbabwean dollars.
• Ruling sets precedent for contractual disputes involving foreign currency exchange rates.
• Court emphasizes importance of honoring contractual agreements despite monetary policy changes.