Cambria Africa PLC v Breastplate Services (Private) Limited t/a Nemchem International

On 25 February 2016, the plaintiff (Cambria Africa PLC, a British-registered foreign company) and defendant (Breastplate Services (Pvt) Ltd, a Zimbabwean company) entered into a term sheet agreement whereby the plaintiff sold its entire issued share capital in Milchem Zambia Limited to the defendant for US$46,347.00, payable in US dollars to a Zimbabwean US dollar bank account by 31 March 2016. The defendant paid US$6,347.00 initially and US$8,600.00 on 19 January 2018, leaving a balance of US$31,400.00. The defendant admitted owing this balance but argued it should be payable in RTGS dollars (local currency) rather than US dollars, relying on Statutory Instruments 33 and 142 of 2019 which introduced the RTGS dollar and established the Zimbabwe dollar as sole legal tender. The parties filed a statement of agreed facts admitting the debt and narrowing the issues to whether payment should be in US dollars or RTGS dollars, and matters of interest and costs.

• Whether the outstanding balance of US$31,400.00 is payable in United States dollars or RTGS dollars (Zimbabwean domestic currency)
• Whether Statutory Instrument 33 of 2019 and Statutory Instrument 142 of 2019 affect obligations denominated in foreign currency under pre-existing contracts
• Whether it is competent for a Zimbabwean court to give judgment in foreign currency
• Whether the defendant's obligation constitutes a 'foreign obligation denominated in foreign currency' exempt from the provisions of SI 33/2019

The court ordered: (a) Defendant to pay plaintiff the sum of US$31,400.00; (b) Interest thereon at the prescribed rate of interest per annum from 19 January 2018 to the date of payment in full and final settlement; (c) Costs of suit at ordinary scale.

The binding legal principles established are: (1) Obligations denominated in foreign currency under contracts entered into before the enactment of SI 33/2019 and SI 142/2019 fall within the exemption in paragraph 2(b) of SI 33/2019 and remain payable in the foreign currency stipulated; (2) Paragraph 4(1)(d) of SI 33/2019 (deeming US dollar assets and liabilities to be RTGS dollars at 1:1) does not apply to 'foreign obligations denominated in foreign currency' which are expressly exempt under paragraph 2(b); (3) Zimbabwean courts have jurisdiction to give judgments in foreign currency where the justice of the case requires it, particularly where the obligation was originally denominated in foreign currency; (4) The proper conversion date for enforcement purposes is the date when leave is given to enforce the judgment, not the breach date or judgment date; (5) A plaintiff should not suffer by reason of devaluation in local currency between the due date and the date of actual payment or enforcement.

The court made several non-binding observations: (1) The court noted that it does not write agreements for parties, emphasizing that the parties' own conduct and express terms govern their obligations; (2) The court observed that the defendant appeared desirous of meeting its obligation in US dollars but was concerned about legal compliance, interpreting the defendant's conduct charitably; (3) The court endorsed the 'revolutionary' approach taken by the House of Lords in Miliangos, emphasizing that 'the law is a living system that adapts to the necessities of present time'; (4) The court noted that fluctuations in world currencies justify acceptance of the rule that court orders may be expressed in foreign currency; (5) The court observed that since execution cannot be levied in foreign currency, conversion to local currency must occur for the limited purpose of enforcement at the rate obtaining at the date of enforcement; (6) The court rejected the 'floodgates' argument that granting foreign currency judgments would open the door to numerous similar claims, finding this not a valid reason to deny justice in an appropriate case.

This case is significant in Zimbabwean commercial law as it clarifies the interaction between domestic monetary policy changes (introduction of RTGS dollar and Zimbabwe dollar as sole legal tender) and pre-existing contractual obligations denominated in foreign currency. The judgment affirms that SI 33/2019 and SI 142/2019 do not extinguish foreign currency obligations that existed before their enactment, particularly where such obligations fall within the express exemptions provided in the statutory instruments. The case reaffirms the power of Zimbabwean courts to grant judgments in foreign currency where justice requires, following established Supreme Court precedent. It provides important guidance on interpreting paragraph 2(b) of SI 33/2019 regarding 'foreign obligations denominated in foreign currency' and confirms that such obligations continue to be payable in the foreign currency despite the introduction of domestic currency reforms. The judgment represents judicial recognition that contractual obligations and the sanctity of agreements should not be arbitrarily altered by subsequent monetary policy changes, particularly where the legislature has provided exemptions for foreign currency obligations.