The High Court sitting in Blantyre has dismissed with costs Mulli Brothers’ application to stop court proceedings which the Reserve Bank of Malawi (RBM) instituted to recover over K1.4 billion from the company.
Mulli Brothers wanted the court to stop proceedings until the matter goes for arbitration.
But, in his judgement dated June 15 2022, Judge Jabbar Alide says while arbitration was one of the dispute resolution mechanisms in the agreement, Mulli Brothers did not show a willingness to take the necessary steps for the arbitration to take place.
“There is no indication of any evidence to suggest that the defendants took any steps then, or thereafter, to refer the matter for arbitration. Further, the sworn statement filed by the defendant in support of the application has not indicated or demonstrated any readiness and willingness on the part of the defendant to do all the necessary things for the proper conduct of the arbitration.
“In my view, the current application has failed to demonstrate that the defendant was— at the time the proceedings were commenced, and still remains— ready and willing to do the necessary things for the proper conduct of the arbitration. On this basis the application is dismissed in its entirety,” he said.
In the arrangement, local private and public companies were contracted to import white petroleum products, fertiliser and other strategic products using letters of credit sourced from the Trade and Development Bank, formerly PTA Bank, guaranteed by the government through the Reserve Bank of Malawi.
The government, the guarantor, undertook to settle such letters of credit and was expected to receive the money from the company in Kwacha.
In 2019, Mulli Brothers, as one of the nominated companies, agreed with the Malawi Government, through the Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM), to supply fertiliser for Farm Inputs Subsidy Programme valued at K2.1 billion.
In line with the facility, Mulli Brothers applied for various letters of credit from TDB in favour of ETG Agri Inputs FZE of the United Arab Emirates, suppliers of the products.
The total bill, including other costs, came to K2,111,609,000, of which the company only paid K700 million, such that it remained at K1.4 billion.
On top of calling for arbitration, Mulli Brothers also claim that it agreed with SFFRFM, and not RBM, and that, if anything, RBM should deal with SFFRFM and not the company.
After dismissing the application to stay the proceedings, Alide has given the defence seven days to enter defence before the matter goes to mediation.