Zimbabwe’s state-owned power utility, ZESA Holdings, is facing a lawsuit from a security company that claims it breached a contract and caused damages worth US$36,660.
Manifest Security (Private) Limited filed the suit at the High Court, alleging that ZESA failed to honor the terms of a written agreement signed in December 2020.
According to the court papers, the agreement required Manifest Security to provide security guard services at 11 sites assigned by ZESA. The monthly charge for all the sites was ZWL $439,696.21, which was equivalent to US$5,405.00.
However, Manifest Security claims that ZESA breached the agreement by assigning only five sites instead of 11. The plaintiff says the remaining six sites had a contract price of US$36,660, which would have been paid for 12 months.
The security company argues that it suffered damages as a result of ZESA’s breach and is seeking interest and costs of the suit.
ZESA, on the other hand, has opposed the application and raised a preliminary point that the claim is incompetent.
The power utility contends that the transaction between the parties was a domestic one and the contract was denominated in local currency. As per the Exchange Control Regulations of 2019, the claimant should settle the claim in Zimbabwean dollars, not US dollars.
The defendant accuses the plaintiff of rushing to court before exhausting the available domestic remedies.
The Ruling
High Court judge Justice Siyabona Musithu ruled in favor of ZESA and struck off the claim from the roll.
The judge agreed that the claim was not properly before the court and that the plaintiff should have followed the arbitration clause in the contract.
The judge said that there was no need to delve into the merits of the matter, as the preliminary point was decisive.
The Implications
The ruling is a blow for Manifest Security, which will have to pursue its claim through arbitration or drop it altogether.
It is also a relief for ZESA, which is already struggling with financial and operational challenges, including power shortages, debt, vandalism, and corruption.
The case also highlights the legal complexities and uncertainties that arise from the use of multiple currencies in Zimbabwe, which has experienced hyperinflation and currency crises in the past.
The Outlook
Despite the setback, Manifest Security may still have a chance to recover its losses if it can prove its case through arbitration. ZESA, meanwhile, will have to focus on improving its service delivery and addressing the power woes that affect millions of Zimbabweans.
The power utility has announced plans to increase tariffs, invest in renewable energy, and clear its debts to regional suppliers. The hope is that these measures will help ZESA to provide reliable and affordable electricity to the nation.
Source: New Zimbabwe
