Ndamu Sandu
16 August 2008
IN a landmark ruling, the Zambian Supreme Court has said Zimbabwe's Reconstruction laws used to take over companies owned by Mutumwa Mawere cannot be applied across the Zambezi, deflating government's efforts to seize assets belonging to the acquisitive businessman.
The judgment was delivered in favour of Africa Resources Limited (ARL), a company wholly owned by Mawere, and others in an appeal against an order granted by the High Court of Zambia.
The court had ruled that by virtue of the expropriation decrees promulgated by President Robert Mugabe in September 2004, TAP Building Products Limited (TAP) a company wholly owned by ARL, be deemed to be a company under the control and management of an administrator, Arafas Gwaradzimba.
Gwaradzimba had been appointed an administrator by Justice Minister Patrick Chinamasa pursuant to the operation of the controversial legislation that permitted the Government of Zimbabwe to take over the control and management of Mawere's companies without the involvement of the judiciary.
ARL had also appealed against an order granted by the High Court setting aside the appointment of new directors to the TAP board.
But the Supreme Court ruled that if TAP was insolvent, necessary action could be taken within the ambit and spirit of the Zambian law. It ruled that the Zambian laws do not provide for what is described as "Associate Company" under the Zimbabwean laws. It said Zambia was a sovereign state with its own laws and as such Zimbabwean laws do not apply in Zambia.
"This being the case we find no justification in the importation of the Zimbabwean laws into this country when we have our own laws under which the third defendant company was incorporated," it said.
It ruled that TAP, being a body corporate had its own rights under Zambian laws like an individual natural person and cannot be subjected to the laws of its foreign based shareholders.
"The reference to the Zimbabwean laws was uncalled for and there was no need for their application beyond Zimbabwe's borders in a foreign sovereign state," it said.
On the legality of the board meeting that was held to have new board members, the Supreme Court said this was supposed to be challenged using Zambia's provision of the law. It said that while there was reference to Section 211 of the Companies Act Cap. 388 regarding the removal of directors, the issue was brought in for the purpose of justifying the main claim seeking TAP to be deemed an Associate Company of SMM which was subject to reconstruction pursuant to the Reconstruction laws of Zimbabwe.
"The issue was therefore, not properly brought before the court. It ought to have been challenged on its own merits and not with an extraneous motive to give effect or legitimacy to a foreign statute.
ARL were the first defendant, Mawere the second defendant; TAP Building Products Limited the third defendant; and Meanwood Holdings Limited as fourth defendant.
Gwaradzimba suing in his capacity as Administrator of SMM Holdings Private Company was the first respondent while SMM Holdings Private Limited the second respondent.
In its argument the respondents said SMM Holdings had become indebted to the Government of Zimbabwe and was having difficulties in repaying back.
As such the affairs of SMM were placed under an administrator. TAP being an associate company of SMM was supposed to be put under Gwaradzimba because only then would SMM through Gwaradzimba be able to dispose or deal with the assets in TAP in accordance with Zimbabwean laws.
In opposing the application Mawere informed TAP board chairman of the acquisition of 60% shareholding by Meanwood Holdings Limited in TAP. The defendants argued that TAP was a company registered under Zambian law which requires that its shareholders and equity holder be registered with the Registrar of Companies.
Asked to comment on the judgment, Mawere said the ruling goes a long way to show "that even in Africa, there are courts that can resist thuggish laws designed to circumvent the constitution and undermine the rule of law".
"The mere fact that Gwaradzimba armed with powers derived from draconian laws could seek to enforce such laws in a foreign state shows the extent of the Zimbabwean crisis. What you have here is a classic example of why things have gone fundamentally wrong in Zimbabwe," he said.
"If President Mwanawasa (Levy) knew about this case, one can understand why he has a problem with the proposition that the kind of thinking that would lead a government to manufacture laws that offend the very foundation of the constitutional order must prevail and endorsed by SADC."
Gwaradzimba was away and would be back in office tomorrow (Monday), his office told Standardbusiness on Thursday.
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