Zimbabwe says US$440m arbitral award can’t be enforced

Law360 – Zimbabwe is opposing a bid for summary judgment by a Swiss-German family and two forestry and sawmill companies several months after the D.C. Circuit ruled that a lower court could enforce US$440 million worth of arbitral awards against the country.

The country argued in a Tuesday brief opposing summary judgment in D.C. federal court that enforcement favoring the Swiss-German von Pezold family along with forestry companies Border Timbers Ltd. and Hangani Development Co. (Private) Ltd. must be denied under Zimbabwean law.

In November, the D.C. Circuit agreed with the lower court that the country, which brought the appeal, had waived its sovereign immunity in the land dispute and affirmed the enforcement of the awards. The Border and von Pezold petitioners asked Jan. 13 for summary judgment following the appeals court’s ruling.

Zimbabwe now argues that the appeals court’s decision along with an incorrect calculation of damages by the Border petitioners and double compensation sought by Border and the family prevents resolution by summary judgment.

Also, Zimbabwe said, the petitioners no longer have standing because the Nov. 13 appellate ruling in Elisabeth Regina Maria Gabrielle von Pezold’s case requires that the awards be enforced in accordance with Zimbabwean law.

“Pursuant to the [Zimbabwe] State Liabilities Act, Zimbabwe is immune from enforcement, leaving petitioners with no redress,” according to the brief, which argued that Zimbabwe is entitled to cash received by the petitioners since they continue to occupy and operate estates in the country.

An International Centre for Settlement of Investment Disputes tribunal sided with the von Pezold family in July 2015, finding that Zimbabwe had illegally expropriated its three estates, including the African country’s largest tobacco growing and curing operation, amid a land-reform effort a decade prior.

The same tribunal found in favor of the two Zimbabwe-based companies, Border Timbers Ltd. and Hangani Development Co., which alleged similar expropriation.

The ICSID awards granted compensation for the impact of a 1990s land reform program that Zimbabwe’s government enacted in an attempt to return the southern African nation to its Indigenous people.

Border Timbers obtained a US$164.2 million ICSID award in July 2015 after the tribunal found that Zimbabwe expropriated its forestry plantation in eastern Zimbabwe amid the country’s land reform program, according to its 2021 enforcement petition. The von Pezolds, former majority shareholders in Border Timbers, also filed their own petition seeking to realize the separate, more than US$276 million award they had won in proceedings arising from the same dispute.

The twin lawsuits in the D.C. district court aimed to enforce the two arbitral awards that held the country liable for US$440.2 million, arguing the court plainly has jurisdiction under the arbitration exception contained in the Foreign Sovereign Immunities Act.

In the trial court, Border Timbers contended in September 2023 that Zimbabwe’s appeal to the D.C. Circuit was an obvious delay tactic and doomed to fail, asking U.S. District Judge Amit P. Mehta to deem the appellate court challenge “frivolous.”

The judge declined to do so in October 2023, although he noted that “the court doubts Zimbabwe’s prospects on appeal.”

Zimbabwe argued in its February 2024 opening appellate brief that the D.C. Circuit should reverse Judge Mehta’s August 2023 ruling that it must face litigation to enforce the $440 million in awards.

According to the country, Judge Mehta incorrectly found that Zimbabwe “did not impliedly waive its sovereign immunity” when it ratified the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, also known as the ICSID Convention.

However, the D.C. Circuit’s Nov. 13 decision found that Zimbabwe had waived its sovereign immunity under both the arbitration exception and the implicit waiver exception to the Foreign Sovereign Immunities Act.

Counsel for the parties did not return a request for comment Wednesday.

Zimbabwe is represented by Rodney Quinn Smith and Katherine Sanoja of GST LLP.

Border Timbers and Hangani are represented by Jennifer Ancona Semko, Graham Cronogue and David Zaslowsky of Baker McKenzie.

The von Pezolds are represented by Chris Paparella and Michael J. Baratz of Steptoe LLP.

The cases are Border Timbers Ltd. et al. v. Republic of Zimbabwe, case number 1:21-cv-02428, and Von Pezold et al. v. Republic of Zimbabwe, case number 1:21-cv-02004, in the U.S. District Court for the District of Columbia. -finx