By UK Bureau
THE US-based International Centre for Settlement of Investment Disputes (ICSID) has rejected Zimbabwe’s application to annul an US$195 million award to a German family whose property was expropriated under the controversial land reform programme.
The development comes after the cash-strapped Harare government again reiterated its commitment to compensate farmers whose properties were seized under the chaotic and often violent programme.
Finance minister set aside just US$53 million in his 2019 budget proposals, but the more than 4,000 ex-farmers say they are owed up to US$9 billion.
Part of the World Bank group, ICSID last week dismissed Harare’s annulment application in the long-running with the family of Bernhard von Pezold which had invested in forestry and agriculture businesses in the country.
According to his lawyers, von Pezold said Zimbabwe should “immediately honour the award per its obligations and promises”.
“After eight years of arbitration proceedings, the von Pezold family is relieved that the proceedings have been successfully concluded,” he added.
“There is a stark contrast on the one hand between the manner in which Zimbabwe has treated foreign investors whose property it has expropriated and on the other hand the often-0repeated promise of President Mnangagwa that ‘Zimbabwe is open for business’.
“Foreign investors will not return to Zimbabwe if it does not honour its international obligations.”
The Zimbabwean government has not yet commenting on the development.
An ICSID tribunal granted the von Pezold family the award in July 2015 after determining that Zimbabwe breached its bilateral investment treaties with Germany and Switzerland when it expropriated the von Pezolds’ property in 2005 under the land reform programme.
The most significant finding of the award was that Zimbabwe expropriated the von Pezolds’ property because of the colour of their skin.”
Harare was ordered to return the seized properties and pay damages within ninety days of the award; failing that the country must pay damages of US$195 million plus interest and costs.
The properties were not returned “and, therefore, US$195 million plus costs and interest is due.”
In October 2015, the Harare government subsequently applied to have the award rescinded, but this was dismissed by ICSID’s annulment committee last week.
The von Pezold family said Zimbabwe was already in breach of its obligations under international law.
“It is of great concern that, as a matter of international law, Zimbabwe is already in breach of its obligation to pay the full compensation due under the award, and that this breach has continued even after President Mnangagwa became president in November 2017,” said Bernhard von Pezold.
“During the annulment phase of the arbitration proceedings, Zimbabwe has stated that it would honour the award if its application to annul the award failed. That application has now failed.
“In order for Zimbabwe to show its commitment to the rule of law, and willingness to engage with the international community, the von Pezolds call upon Zimbabwe to immediately honour the award per its obligations and promises.”