The High Court of Malawi has dismissed an application by EastBridge Estate to pend hearing of a case where Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM) wants to dispose its 10.8 million kilogrammes (kg) of tobacco.
Documents filed in court show that under a novation agreement with Eastbridge, SFFRFM was set to procure, process and deliver tobacco in exchange for fertiliser.
In line with the deal, SFFRFM last year bought 14.2 million kg of tobacco, but processed and delivered to EastBridge 3.4 million kg, leaving 10.8 million kg of unprocessed tobacco, which it intends to dispose of because EastBridge does not want unprocessed leaf.
The records further show that upon being served with the application to dispose of the tobacco, Eastbridge filed an application for stay of the decision, but had not taken any other steps in the proceedings nor delivered any pleadings.
Eastbridge chief executive officer Tahir Suleman stated in a sworn statement that the agreement had an arbitration clause, pleading that the proceedings be stayed and that the matter be referred to arbitration.
In his judgement, presiding Judge Trouble Kalua said the parties agreed on what each of them was supposed to do.
He said the claimants were expected to procure and deliver tobacco to the defendant in exchange for fertiliser, but the defendant put a condition that it would only accept processed tobacco.
Said Kalua: “Only until when processed tobacco is delivered and accepted by the defendant would the defendant’s fertiliser obligations kick in. Meanwhile all the unprocessed tobacco remains the property of the claimants. It appears to be a live contract, this one.”
The judge also stated that he did not see evidence that Eastbridge Estate has always been ready and willing to submit to arbitration.
He said it was not enough to simply declare that one is willing to submit to arbitration without showing through documentary evidence their readiness and willingness to go for arbitration.
“The application fails to clear the threshold provided by statute. In the circumstances, we hold the view that the defendant’s application for a stay pending referral of this matter to arbitration has not been made out. It must, therefore, be dismissed,” ordered Kalua in the July 9 ruling.
In an interview, Attorney General Frank Mbeta said this is part of a larger controversy surrounding a fertiliser deal in the country.
“There is a multiplicity of issues. Tobacco is just one of them,” he said.
Private practice lawyer Chimwemwe Kalua, who is representing Eastbridge, did not respond to our queries.
In the deal, East Bridge was expected to supply 300 000 metric tonnes of fertiliser to State-owned SFFRFM in exchange for assorted farm produce, including soya bean, groundnuts, rice, pigeon peas, sorghum, maize, sugar and cotton.
