The state-owned Zimbabwe Mining Development Corporation (ZMDC) has been ordered to pay $14m in damages to a Dubai firm after the government forcibly took over diamond-mining operations in Marange two years ago.
Pure Diam and the state-owned company set up a joint venture, Diamond Mining Corp, in 2010. The high court ruling in favour of Pure Diam could lead to a flood of claims from at least six other firms kicked out of Marange.
Legal observers said any new lawsuits would be likely to taint the new administration of President Emmerson Mnangagwa, which is trying to attract investment under its "Zimbabwe is open for business" mantra.
In April 2016, former president Robert Mugabe's government announced its takeover of all Marange diamond-mining operations. Mugabe said the country had been "robbed" by miners that were not remitting proceeds to the treasury, and the mines ministry claimed the companies' operating licences had lapsed.
Justice Edith Mushore ordered the ZMDC to pay $13,175,000 plus interest of $880,312 into Pure Diam's Dubai account.
Because it was unable to do so, the sheriff of the high court has attached some of its property.
The second defendant, the Zimbabwe Consolidated Diamond Company (ZCDC), has not responded to Pure Diam's claim. It was nominated by ZMDC as the guarantor of its agreement with Pure Diam.
GUARANTOR
A pre-trial hearing will be held on September 25 as Pure Diam seeks to compel the ZCDC to pay up if the ZMDC fails to meet its obligations. Legal representatives on Friday declined to comment on the matter.
In its submission to the court, Pure Diam's law firm Gill, Godlonton & Gerrans said the Dubai company signed a purchase of shares and cession of loan shareholder agreement with the ZMDC.
"The ZCDC bound itself as a primary guarantor, surety and co-principal director for the due performance of ZMDC's obligations," it said.
Under the agreement, the ZMDC was supposed to pay $10.9m, the agreed net value of Pure Diam shares in the joint venture. The amount was to be paid in monthly instalments between August 2016 and July 2017.
It was also supposed to pay Pure Diam $8.6m, the value of its loan to the joint venture company, according to court papers.
"In breach of the terms and conditions of the agreement, [the ZMDC and ZCDC] have failed to pay the amounts in full in terms of the agreement. They have paid $6.3m out of the cumulated indebtedness of $19.5m, and consequently an amount of $13.1m excluding interest remains outstanding."..