Fuss Diamonds (Private) Limited (In Liquidation) v Marange Resources (Private) Limited and Zimbabwe Consolidated Diamond Company (Private) Limited

The plaintiff, Fuss Diamonds (Private) Limited, is an Israeli company placed under liquidation by an Israeli Court at Tel Aviv, with liquidators Uri Gil and Amit Pines. The defendants are companies registered in Zimbabwe. On 4 July 2014 at Harare, prior to the plaintiff's liquidation, the first defendant and the plaintiff entered into an agreement wherein the plaintiff would purchase rough diamonds from the first defendant to the value of USD 5,000,000. The plaintiff paid USD 5,080,427, but the first defendant only fulfilled its obligation to the extent of USD 3,837,649 before stopping mining operations. The plaintiff, now in liquidation, sought to recover the outstanding amount of USD 1,242,778 from the defendants jointly and severally, plus 5% per annum interest from 1 January 2015. The defendants raised a special plea in bar, challenging the plaintiff's locus standi in judicio, arguing that a foreign company in liquidation cannot sue in its own name without the liquidators being specifically cited and without first seeking leave of the court for recognition.

• Whether a foreign company (peregrinus entity) in liquidation can sue in Zimbabwe in its own name
• Whether foreign liquidators of a company must seek leave of the court before instituting proceedings
• Whether the citation of a company in liquidation without specifically naming the liquidators is sufficient
• The correct interpretation of section 218(2)(a) and section 221(1) of the Companies Act [Chapter 24:03]
• Whether section 9(1) of the Companies (Winding Up) Rules, 1972 makes it mandatory for foreign liquidators to apply for recognition before instituting proceedings

The defendant's special plea in bar was dismissed with costs. The defendants were ordered to file their plea(s) to the plaintiff's summons and declaration within 10 days of the order.

The binding legal principles established are: (1) A foreign company in liquidation has locus standi in judicio to sue in Zimbabwe in its own name; (2) When a company in liquidation sues for debts owing to the company, it is sufficient to cite the company by its name with the subjoining expression "in liquidation" - it is not necessary to cite the names of the liquidators individually; (3) There is a clear distinction between locus standi (the legal capacity to sue) and citation (the proper naming of parties in proceedings), and these concepts should not be confused or used interchangeably; (4) Section 9(1) of the Companies (Winding Up) Rules, 1972 does not make it mandatory for foreign liquidators to first seek leave of the court for recognition before instituting proceedings in Zimbabwe; (5) Section 218(2)(a) and section 221(1) of the Companies Act [Chapter 24:03] do not preclude a company in liquidation from suing in its own name.

The court noted that the defendants had abandoned their third ground of the special plea relating to a similar action filed by Mr Fadi Khartown that was pending before the court, and therefore did not waste time addressing that ground. The court also referenced and approved the reasoning in Kingdom Bank Limited v The Right Investments (Pvt) Ltd (HH 273-16) by Charewa J and Intro Wise Catering (Pvt) Ltd v Cosira Communications Global and Others (HB 10/15) by Makonese J on related points. The court noted that the defendants had incorrectly cited section 19(1) of the Companies (Winding Up) Rules, 1972 (which relates to contempt of court in examinations) when they probably intended to refer to section 9(1) of the same Rules.

This case is significant in Zimbabwean company law and civil procedure as it clarifies important principles regarding the locus standi of foreign companies in liquidation. It establishes that foreign companies in liquidation can sue in Zimbabwe in their own name without requiring individual citation of liquidators or prior court recognition. The judgment provides guidance on the proper citation of companies in liquidation and clarifies that the requirements under section 9(1) of the Companies (Winding Up) Rules, 1972 for recognition of foreign liquidators are not mandatory prerequisites for instituting proceedings. This decision facilitates cross-border insolvency proceedings and ensures that foreign companies in liquidation are not unduly prevented from pursuing legitimate claims in Zimbabwean courts. It aligns Zimbabwean practice with international principles of recognizing foreign insolvency proceedings while maintaining procedural fairness.