UK Supreme Court Rules: Mozambique Can Sue Shipbuilder Privinvest Over $2bn Scandal

UK Supreme Court Rules: Mozambique Can Sue Shipbuilder Privinvest Over $2bn Scandal

Mozambique vs. Privinvest: A High-Stakes Lawsuit

The United Kingdom’s Supreme Court has recently ruled that the Southeast African nation, Mozambique, can proceed with its lawsuit against shipbuilder Privinvest in Britain. Mozambique’s legal action against Privinvest and its owner, Iskandar Safa, as well as Credit Suisse and others, stems from government-backed loans raised in 2013 and 2014. A significant portion of these funds, amounting to hundreds of millions of dollars, has reportedly gone missing, leading to what is now widely referred to as the “$2 billion tuna bond scandal.”

Privinvest had previously argued that, according to its contracts with Mozambique, any disputes between the two parties should be resolved through arbitration. This argument was accepted by the Court of Appeal in 2021, which dealt a significant blow to Mozambique’s efforts to recover the lost funds. However, the recent ruling by the Supreme Court unanimously approved Mozambique’s appeal against this decision, setting the stage for a high-stakes trial.

The Tuna Bond Scandal: A Brief Overview

The so-called “tuna bond” or “hidden debt” scandal has led to criminal investigations in both Mozambique and New York, along with several related lawsuits. The case revolves around agreements between Mozambican state-owned entities and Privinvest, partly financed by loans and bonds from Credit Suisse and purportedly backed by undisclosed Mozambican government guarantees.

These loans were ostensibly for the development of the fishing industry and maritime security. However, Mozambique, one of the world’s poorest nations, seeks to annul a sovereign guarantee on a loan it alleges was obtained through corruption and obtain compensation for other alleged wrongdoings.

Legal Challenges and Implications

While this ruling marks a crucial step in Mozambique’s journey to recover the funds it claims to have lost in the scandal, the upcoming trial is not without its challenges. Legal proceedings in London have faced obstacles due to Mozambique’s repeated failure to disclose crucial documents, posing a risk to the litigation.

Privinvest and Safa had also attempted to involve Mozambican President Filipe Nyusi in the case, but were unsuccessful, with the High Court ruling that he enjoys state immunity. This decision adds another layer of complexity to an already intricate case that has wide-ranging implications for Mozambique and its economy.

Looking Ahead: A Landmark Trial

Mozambique’s claims against Privinvest will now proceed to a lengthy trial, scheduled to commence on October 3. This trial, expected to last several months, represents a pivotal moment in Mozambique’s pursuit of justice and financial recovery. It also underscores the broader implications of the case, impacting international legal precedent, the global financial landscape, and the economic future of Mozambique.