US Sanctions: Zim court blocks bank account closur...

US Sanctions: Zim court blocks bank account closure

Nyashadzashe Ndoro

Chief Reporter

A Zimbabwean gold trading company, Skorus Investments (Private) Limited, has secured a temporary reprieve against the closure of its bank accounts by CBZ Bank Limited.

High Court judge Justice Christopher Dube-Banda granted an interim interdict halting the closure pending the determination of a legal challenge to the bank's actions.

The dispute arose after CBZ Bank informed Skorus Investments of its intention to close the company’s accounts, citing the company’s designation as a Specially Designated Person by the US Office of Foreign Assets Control under Executive Order 13818, related to sanctions for human rights abuse or corruption.

Skorus Investments, a registered gold trader with Fidelity Gold Refinery, argued that US sanctions have no legal application in Zimbabwe.

CBZ Bank raised preliminary objections, including a challenge to the urgency of the application and an assertion that the matter was moot as the accounts had already been closed. The bank also argued that Skorus had accepted the closure and directed the transfer of funds.

The court, however, found that the email communication from Skorus regarding fund transfer did not constitute acceptance of the closure, but rather an attempt to safeguard the funds.

Furthermore, the court noted that CBZ Bank’s own communication suggested the closure was still in process at the time of the application.

Justice Dube-Banda dismissed the bank's arguments regarding urgency, stating that the potential loss of banking services constituted a significant harm to a business, particularly one involved in gold trading. The judge emphasized the importance of access to banking facilities for such businesses.

In evaluating the merits of the case, the judge focused on whether Skorus Investments had established a prima facie right to be protected, the potential for irreparable harm, the balance of convenience, and the availability of alternative remedies. The court concluded that Skorus had met the threshold for a prima facie case, raising valid questions about the legality of a Zimbabwean bank closing accounts based on US sanctions and the arbitrary use of contractual clauses allowing account closures.

The judge also found that the closure of bank accounts would cause irreparable harm to Skorus Investments, hindering its business operations. The balance of convenience was deemed to favour granting the interdict, as the potential harm to Skorus outweighed any potential prejudice to CBZ Bank. The court also noted the lack of satisfactory alternative remedies available to Skorus.

"Regarding the balance of convenience, in exercising its discretion the courts weighs, inter alia, the prejudice to the applicant if the interdict is withheld, against the prejudice to the respondent if it is granted.

"I find that the balance of convenience favours the grating of an interim interdict as no submissions have been made of the prejudice that the interdict will cause to the respondent. In any event, if on the return date the provisional order is discharged, the respondent will close the accounts. If the interim interdict is refused, the applicant will encounter challenges in navigating its business transactions. Besides, the established facts favour granting of the interim interdict. I further find that the applicant has no other satisfactory or adequate remedy.

"In light of the above conclusions, I am of the view that the applicant established that it is entitled to the interim interdict sought, after proving that it has a prima facie right to be protected, if not, it stands to suffer irreparable harm. I further find that the balance of convenience favours the granting of the interdict.

"In the circumstances, I grant an order for interim relief in terms of the provisional order," the judge ruled.

Skorus Investments was represented by Absolom and shepherd Attorneys while Chimuka Mafunga Commercial Attorneys represented CBZ Bank Limited.