The Supreme Court of Zimbabwe has granted a British Virgin Islands-registered oil company, Trans African Oil Limited, permission to pursue an appeal over a US$1.47 million fuel debt dispute. The company had missed the deadline to challenge a High Court ruling that declared its fuel supply agreement with Willred Minerals and Energy void. The Supreme Court, in Judgement No. SC 53/26 delivered by Justice George Chiweshe, granted the company condonation for the late noting of its appeal.
The dispute arose from a fuel supply agreement between Trans African Oil and Willred Minerals and Energy, with Halgor Estate providing security for Willred's obligations. Trans African Oil supplied fuel worth US$1,471,423.54 to Willred between July 2021 and November 2022. The fuel was released by the National Oil Infrastructure Company of Zimbabwe on Trans African Oil's instructions. However, Willred failed to pay for the fuel, prompting Trans African Oil to approach the High Court seeking payment of the outstanding amount.
The High Court upheld a special plea and dismissed Trans African Oil's claim, finding that the agreement contravened section 11 of the Exchange Control Regulations, 1996. The court ruled that the Fuel Supply Agreement, Guarantee and Indemnity Agreement, and Surety Mortgage Bond were illegal and void from the outset because the parties had entered into and partly performed the agreement before obtaining the required Exchange Control approval.
Trans African Oil subsequently sought to appeal but missed the prescribed deadline and filed several applications for condonation that were struck off the roll for non-compliance with court rules. The Supreme Court acknowledged that the delay was substantial and that the company's explanation was unsatisfactory. However, the court found that the intended appeal raised arguable legal questions concerning the interpretation of the Exchange Control Regulations.
Among the issues the company is intending to raise on appeal is whether the Exchange Control approval obtained on July 22, 2022, could regularise the agreement or make it enforceable from that point onwards. The company also argued that individual fuel transactions were separate and that some transactions occurred after Exchange Control approval had been obtained. It further contended that the respondents should not be allowed to rely on illegality after receiving and using fuel worth more than US$1.4 million.
The Supreme Court considered a recent High Court decision, Levi v Magaya HH 153/26, which dealt with similar questions concerning Exchange Control approval and contractual obligations involving a foreign party. The Supreme Court said the decision raised substantially similar legal questions and supported the view that Trans African Oil's proposed appeal was arguable. The court stressed, however, that it was not determining the merits of the intended appeal at this stage.
The Supreme Court granted the application for condonation and extended the time for Trans African Oil to file and serve its notice of appeal. The company was ordered to file and serve the notice within seven days, with no order as to costs. The court's decision allows Trans African Oil to pursue its appeal and potentially challenge the High Court's ruling that declared its fuel supply agreement void.
Key points
- The Supreme Court of Zimbabwe has granted Trans African Oil Limited permission to pursue an appeal over a US$1.47 million fuel debt dispute.
- The company's fuel supply agreement with Willred Minerals and Energy was declared void due to lack of prior Exchange Control approval.
- The Supreme Court's decision allows Trans African Oil to potentially challenge the High Court's ruling and seek payment of the outstanding amount.
