Zimbabwe challenges US$441m land seizure awards in US court

Zimbabwe is challenging efforts by European investors to secure a swift enforcement of US$441 million in international arbitration awards linked to land seized during the country's controversial land reform programme.

In a brief filed on Monday with the US Court of Appeals for the District of Columbia Circuit, the Government argued that the dispute raises complex legal questions that require full consideration, including the applicable interest rate and whether the awards should be reduced to account for benefits the investors received from continuing to operate some of the properties.

Zimbabwe is appealing a July ruling by US District Judge Amit P. Mehta, who upheld the awards in favour of the von Pezold family and their companies after their land was expropriated.

The Government maintains that it is entitled to an equitable set-off, arguing that the value derived from continued operations of the properties should be considered when determining the amounts payable.

"There are decades of decisions supporting Zimbabwe's entitlement to equitable setoff, standing against an unpublished district court opinion offered by appellees," the Government argued, adding that full legal arguments were necessary before the appeal could be decided.

However, Judge Mehta rejected Zimbabwe's position, noting that the arbitration tribunal had already considered and dismissed the set-off argument. He also said the US court could not revisit the tribunal's findings or determine an appropriate deduction based on benefits the investors may have received.

The von Pezold family has urged the appeals court to reject Zimbabwe's challenge without further proceedings, arguing that the lower court correctly applied established principles governing the enforcement of international arbitration awards.

The family also highlighted that the dispute has been ongoing for more than 15 years and that Zimbabwe previously pursued an unsuccessful interlocutory appeal involving sovereign immunity.

The awards were issued by tribunals of the International Centre for Settlement of Investment Disputes (ICSID).

The von Pezold family, whose members hold Swiss and German nationalities, secured an award of US$276.7 million after an international tribunal concluded that Zimbabwe had unlawfully expropriated their land without compensation.

Forestry and sawmill company Border Timbers Ltd, which is controlled by the family, received a separate award of US$164 million.

The company operated forestry plantations across 28 properties in eastern Zimbabwe, covering nearly 48,000 hectares, with pine and eucalyptus plantations, three sawmills, a pole-treatment plant and two factories.

Much of the property was seized in 2005, while the remaining assets were allegedly rendered worthless, according to court records. The arbitration tribunal found that the transfer of legal title was sufficient to establish expropriation, even though the investors retained control or possession of parts of some properties.

The von Pezold award requires Zimbabwe to pay US$263.2 million, £10.14 million, 745,500 South African rand and €1,163, in addition to interest.

The dispute stems from Zimbabwe's land reform programme, which sought to address the legacy of colonial-era land ownership patterns that concentrated large areas of agricultural land in the hands of white commercial farmers.

The outcome of the appeal will determine whether the US court's enforcement ruling stands and how Zimbabwe's arguments over interest and set-off are treated in the proceedings.