Judgment given in Mozambique ‘Tuna Bonds’ litigation

01/08/24

On 29 July 2024, the High Court (Mr Justice Robin Knowles) handed down judgment in 11 Commercial Court proceedings being case managed jointly. Those concern claims brought by and against the Republic of Mozambique in connection with disputes the Court records as “having attracted the shorthand name of the “Tuna Bonds” affair or the “Hidden Debts” affair”.

At the heart of those claims was the purported conclusion of three sovereign guarantees by the Republic of Mozambique with a combined value of c.US$2 billion, in connection with certain supply contracts entered into by  Privinvest(a substantial international shipping business) and certain Mozambican SPVs. The Republic alleged that the guarantees were procured by the bribery of its officials and in particular its former Finance Minister, Manuel Chang.

Prior to judgment being handed down, the Republic had settled its claims against Credit Suisse and claims brought against it by entities from the VTB group, and certain syndicated lenders including Banco Comercial Portugues S.A, United Bank for Africa and Banco Internacional de Mocambique. 

The litigation generated pre-trial 12 High Court judgments (11 of Knowles J and 1 of Waksman J) on myriad matters of civil procedure, control of private emails, the privilege against self-incrimination, state immunity and strike out for disclosure failings. The question of whether the Privinvest corporate defendants were entitled to a stay of the Republic’s claims against them pursuant to s.9 of the Arbitration Act 1996 was settled by the Supreme Court (the related news story can be found here).

Following the settlements, the issues that remained for determination by Knowles J were the Republic’s claims in inter alia bribery against the Privinvest Defendants and Privinvest’s then CEO Iskandar Safa, and the consequences of the Republic’s disclosure failures.

The Court found for the Republic in respect of its claims against Privinvest. Although the Court found other allegations of bribery unproven, Knowles J held that payments were made to or for the benefit of Mr Chang by or on behalf of the Privinvest Defendants and Mr Safa were bribes. The Court went on to hold that those payments gave rise to liability under both English and Mozambican law. The Court rejected the suggestion that the Republic should give credit for assets delivered under the supply contracts and the allegation that the claim failed for circuity because of representations made to Privinvest. 

The Court found that the Republic was entitled to damages and an indemnity for future losses, totalling c.US$2.3 billion, subject to the giving of credit for US$421 million against the loss that Privinvest is liable to make good to Mozambique (in turn subject to a possible application by the Republic for an enquiry into the amount of credit).

The judgment records that it has not (in view of his death before the hand down of the judgment) at this point determined claims against and made by Mr Safa, and it leaves open for consideration at a later date claims by Privinvest against a number of Mozambicans, including President Nyusi.

The judgment can be found here.