US court says Zimbabwe must pay $440m in land dispute; UK courts also ruled against Harare

By Staff Reporter

Zimbabwe suffered another set-back in the United States after the D.C. Circuit affirmed the enforcement of approximately $440 million of arbitral awards against Harare in a long running land reform dispute.

Last month, the Court of Appeal in London also dismissed Zimbabwe’s bid to rely on the UK’s State Immunity Act (SIA), under which States may be immune from the jurisdiction of United Kingdom courts.

The awards were given to a Swiss-German family and two forestry and sawmill companies by the International Centre for Settlement of Investment Disputes (ICSID) arbitration tribunal. The ICSID is one of the five organizations of the World Bank Group.

Harare has over, the past few years, been fighting efforts to enforce payment of the awards in the US and the UK by the Swiss-German von Pezold family along with forestry companies Border Timbers Ltd. and Hangani Development Co. (Private) Ltd.

In last week’s ruling, the D.C. Circuit agreed with a lower court ruling that Zimbabwe waived its sovereign immunity in the dispute.

A panel of the appellate court found in their judgment that a D.C. district court correctly denied the country’s motions to dismiss the petitions when it found that the Republic of Zimbabwe had waived its sovereign immunity under both the arbitration exception and the implicit waiver exception to the Foreign Sovereign Immunities Act.

The panel asserted that the von Pezold family along with the two companies established the arbitration exception by showing they had an arbitration agreement, an arbitration award and a treaty governing award enforcement in the extensive land dispute in what is now the Republic of Zimbabwe.

“We find these undisputed elements satisfied: (1) the German bilateral agreement and the Swiss bilateral agreement are the arbitration agreements; (2) the International Centre for Settlement of Investment Disputes arbitration tribunal issued valid arbitration awards; and (3) the ICSID Convention is the treaty governing the arbitration awards,” the panel said.

The von Pezold family, Border Timbers and Hangani urged the D.C. Circuit in final appellee briefs on May 10 to enforce the approximately $440 million of arbitral awards they won against the Republic of Zimbabwe, saying the court plainly has jurisdiction under the arbitration exception contained in the Foreign Sovereign Immunities Act.

The twin lawsuits aimed to enforce two arbitral awards that hold the country liable for $440.3 million.

The awards, both issued by the ICSID, grant 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 the $164.2 million ICSID award in July 2015 after an arbitral 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 $276 million award they had won in proceedings arising from the same dispute.

Border Timbers and Hangani are seeking a $101 million judgment against Zimbabwe — a reduced potential payout that stems from a settlement between the companies and the von Pezold family pursuing the related enforcement case, according to court filings.