Reserve Bank of Zimbabwe v Holbud Limited

The Reserve Bank of Zimbabwe (applicant) and Holbud Limited (1st respondent) had a debt dispute. The parties disagreed on when the debt arose (applicant: 2007; 1st respondent: 21 September 2017) and its cause (applicant: grain supply to Republic of Zimbabwe; 1st respondent: foreign currency loan to the applicant). The applicant claimed the debt was assumed by the Republic of Zimbabwe under the Reserve Bank of Zimbabwe (Debt Assumption) Act and was paid through Treasury Bills, leaving only US$26 million outstanding for foreign currency repatriation. A payment plan was agreed but the applicant defaulted due to foreign currency shortages. The 1st respondent obtained registration of an arbitral award under HC 3207/19 and issued a writ of execution, leading to attachment of the applicant's assets by the Sheriff. The applicant filed an application for declaratory relief to prevent execution and a concurrent urgent application for stay of execution, both heard together on 6 May 2021.

• Whether the Reserve Bank of Zimbabwe qualifies for protection under the State Liabilities Act against execution of its assets
• Whether section 63B of the Reserve Bank of Zimbabwe Act applies the State Liabilities Act to the Reserve Bank
• Whether the Reserve Bank of Zimbabwe (Debt Assumption) Act No 2 of 2015 applies to the debt in question
• Whether the Reserve Bank of Zimbabwe waived its statutory protection by entering into a payment agreement with private contractual terms
• Whether parties can contract out of statutory protections provided by the State Liabilities Act
• Whether an arbitral award registered as a court order constitutes a debt for purposes of the State Liabilities Act
• Whether the requirements for granting declaratory relief under section 14 of the High Court Act have been met

1. The preliminary point was dismissed. 2. It was declared that the assets of the Reserve Bank of Zimbabwe are subject to the State Liabilities Act and cannot be attached in execution. 3. The amount claimed under the arbitral award registered under HC 3207/19 is subject to the Reserve Bank (Debt Assumption) Act No 2 of 2015 and not subject to further execution. 4. The writ of execution and the attachment of the applicant's assets were declared unlawful and a legal nullity and set aside. 5. The 1st respondent was ordered to pay the applicant's costs on the ordinary scale.

The binding legal principles established are: (1) The assets of the Reserve Bank of Zimbabwe are protected from execution and attachment by virtue of section 5(2) of the State Liabilities Act read with section 63B of the Reserve Bank of Zimbabwe Act; (2) Parties cannot waive statutory protections through contractual arrangements, particularly where such waiver would be contrary to public policy or in breach of statutory provisions; (3) For waiver to be established, the party relying on waiver must prove that the other party, with full knowledge of its rights, consciously abandoned them either expressly or by conduct plainly inconsistent with enforcing those rights; (4) Contractual provisions relating to payment methods (such as offshore accounts or use of export proceeds) do not constitute waiver of statutory immunity from execution; (5) An arbitral award registered as a court order constitutes a judgment debt bringing the debtor within the scope of the State Liabilities Act protections; (6) Section 5(2) of the State Liabilities Act focuses on the ownership of assets subject to execution, not the nature or timing of the underlying debt.

The court made several non-binding observations: (1) The court noted the decision in Mangwiro v Minister of Justice (HH 172-17) where section 5(2) of the State Liabilities Act was declared unconstitutionally invalid, but observed that this decision was set aside by consent in the Constitutional Court (CCZ No 23/18) and no judgment has been rendered by the apex court, meaning the State Liabilities Act remains valid law; (2) The court declined to make a pronouncement on whether the issuance of Treasury Bills by the State satisfied the 1st respondent's claim, confining itself to the existence of the writ of execution; (3) The court commented on the requirements for attorney-client costs, noting they are punitive and require showing that the other party deserves punishment for its behavior, which was not established in this case where the 1st respondent merely sought to execute a validly obtained court order; (4) The court observed that each case regarding proof of authority to represent a company must be considered on its merits, and that the requirement for company resolutions has been "blown out of proportion and taken to ridiculous levels" per African Banking Corporation v PWC Motors.

This judgment is significant in Zimbabwean law as it confirms and applies the constitutional protection afforded to State entities against execution of their assets. It establishes that the Reserve Bank of Zimbabwe enjoys the same protection as the State under the State Liabilities Act by virtue of section 63B of the Reserve Bank of Zimbabwe Act. The case importantly clarifies that parties cannot contract out of statutory protections, particularly those grounded in public policy considerations. The judgment also addresses the tension between enforcement of arbitral awards and statutory immunity from execution, favoring the latter where State or quasi-State entities are concerned. The case references but distinguishes Mangwiro v Minister of Justice (HH 172-17), where section 5(2) of the State Liabilities Act was declared unconstitutional, noting that decision was set aside by consent in the Constitutional Court and the provision remains valid law. This case has implications for creditors seeking to enforce judgments against the Reserve Bank and similar State entities in Zimbabwe.