By Wezzie Gausi:
The High Court’s Commercial Division has ruled that Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM) is the lawful owner of more than 10 million kilogrammes (kg) of tobacco at the centre of its dispute with Eastbridge Estate.
This means the State-owned institution has been given the leeway to sell the leaf.
Judge Trouble Kalua ruled that both the processed and unprocessed tobacco remains the property of SFFRFM because Eastbridge had not supplied the fertiliser that formed the basis of the agreement between the parties.
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The court has further declared that SFFRFM is free to dispose of the tobacco, including selling it elsewhere, while settling any outstanding warehouse charges.
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Attorney General Frank Mbeta described the judgement as a milestone.
“This is progress for the country. The court has affirmed SFFRFM’s ownership of the tobacco, which means the institution can now move forward and recover value from the crop in line with the law,” Mbeta said.
The dispute arose from a novation agreement under which SFFRFM procured more than 14.2 million kg of tobacco in exchange for fertiliser.
However, Eastbridge later informed the fund that it would no longer accept unprocessed tobacco and proposed that SFFRFM process the crop before delivery.
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The company also acknowledged, in writing, that ownership of the tobacco would remain with SFFRFM until the processed tobacco had been delivered and accepted.
Court records show that SFFRFM later paid K1.5 billion towards processing costs.
However, Eastbridge still did not deliver fertiliser as agreed.
Agriculture policy analyst William Chadza said although the transaction was linked to fertiliser supplied under the Affordable Inputs Programme rather than fertiliser specifically meant for tobacco production, the ruling is significant because it restores SFFRFM’s ability to operate.
“This is an important ruling because it allows SFFRFM to become liquid once it sells the tobacco. That means it will be in a position to purchase fertiliser for the coming farming season and fulfil its mandate,” Chadza said.
The court awarded costs of the application to SFFRFM while leaving the substantive contractual dispute between the parties to be determined in future proceedings if necessary.
