Econet’s loan dispute with Ariston takes new turn as ConCourt intervenes

The Constitutional Court has overturned a Supreme Court judgment, ordering a re-hearing of a longstanding dispute between Ariston Management Services Limited and Econet Wireless Zimbabwe Limited over a loan agreement.

The decision was handed down by Justice Rita Makarau, with Justices Anne-Marie Gowora and Justice Ben Hlatshwayo concurring.

The matter stemmed from a loan agreement between Ariston Management Services Limited and Econet Wireless Zimbabwe Limited, with the latter advancing funds to the former.

On 21 January 2019, Ariston and Econet concluded what they styled an “Export Finance Facility”.

In terms of the Agreement, Econet advanced the sum of RTGS 5 100 000,00 to Ariston who were then required to repay the loan facility in the sum of US$ 2 217 291.00.

This amount would be realised from export sales of crops grown by Ariston. These were described in the Agreement as “exportables”. The repayment period was 5 years, running from 4 January 2019 to 31 January 2024.

The Agreement provided for the deposit of export proceeds (“receivables”) into a Nostro FCA account maintained by Steward Bank, described as the “collection account”.

When a dispute arose regarding the repayment of the loan, the matter was referred to arbitration, resulting in an award in favour of Econet.

Ariston approached the High Court seeking to set aside the award, but its application was dismissed. The High Court also registered the award, which Ariston appealed against.

However, when the matter reached the Supreme Court, it was struck off the roll without a hearing, prompting Ariston to approach the Constitutional Court. The company alleged that its rights to be heard and to a fair trial had been violated.

In a detailed judgement, Justice Makarau found that the Supreme Court had indeed placed itself in a position where it could not decide on the non-constitutional issue before it.

The judge noted that the appeal against the registration of the arbitral award remained extant, despite the Supreme Court’s finding that the application for setting aside the award was defective.

Justice Makarau further held that the failure to hear the appeal against the registration of the award breached Ariston’s rights to be heard and to a fair trial.

The judge exercised the Constitutional Court’s review powers, setting aside the Supreme Court’s judgement and directing the court to set down the appeal for determination.

“It is my considered view that the circumstances of this application constitute an instance of the “unforeseen circumstances” referred to in Gonese v Minister of Finance and Economic Development (supra) necessitating the use of the review powers of this Court.

“It is my further considered opinion that where there has been a patent irregularity in the proceedings of the court a quo and such irregularity amounts to a denial of the right to be heard, as it does in casu, this Court, instead of escalating the redress of the irregularity to a constitutional matter under s 85 of the Constitution, may competently review the irregular proceedings using the powers granted to it under s 19 of the Constitutional Court Act.

“In the result, I make the following order: Using the review powers granted to this Court by s 19 of the Constitutional Court Act [Chapter 7.22], paragraph I of the order a quo is set aside,” the judge ruled.

The matter will now return to the Supreme Court for a hearing on the merits of the appeal.