Forum for National Development (FND) said yesterday it will file an application to vacate a stay order the Malawi Supreme Court of Appeal granted to the Attorney General (AG) on Monday.

The Supreme Court granted AG Thabo Chakaka Nyirenda the stay order on an injunction FND obtained in the High Court of Malawi Commercial Division that stopped National Bank of Malawi (NBM) plc and NBS Bank plc from disbursing K105 billion loans to government for the construction of Salima-Lilongwe Water Project by Khato Civils, as was approved by the last sitting of Parliament.

The stay order, issued by Justice of Appeal Dingiswayo Madise, meant that the two banks may proceed to disburse the loans as the blockade that was stayed.

But the Supreme Court granted the stay order on conditions that the AG files fresh application with notice within seven days, FND to respond within 14 days and hearing of summons to be heard within 21 days from Monday.

Kachere: The matter is purely commercial

In an interview yesterday, private practice lawyer Edgar Kachere, representing FND, said he was making the application to vacate what he called “unprocedural order obtained through misrepresentation of facts”.

He said: “The Attorney General misrepresented facts to the Supreme Court. The High Court [Commercial Division in Blantyre] did not dismiss his application for stay. Rather the court told him to file a formal application in writing. When he did so exparte, the court told him to bring it interpartes. Then he rushed to the Supreme Court and misrepresented facts.

“Our position is that the matter is purely commercial in nature in that the Commercial Court is being asked to determine whether a party that breaches the contract is given different terms and assistance instead of the government terminating the contract and re-tendering the whole contract.”

The lawyer said Khato Civils won the contract on the basis that it would source financing, arguing that once it failed, it meant that the contract became void, as such government needed to retender the contract.

But the AG argued in an interview that the lower court did not entertain his application for a stay and he had no choice but to turn to the Supreme Court to protect interests of government.

In applying for the stay, Nyirenda argued that the judge in the lower court, Ken Manda, erred in law and in fact in holding that the presentation as to whether the matter before the court below was a commercial or not had been overtaken by events.

He said the lower court also erred in assuming jurisdiction over the matter when there was no commercial relationship between the parties and that the matter was not commercial in nature.

The Salima-Lilongwe Water Project was initiated in 2015 and was supposed to be completed in 2018/19, but it has faced a number of challenges, including funding.

FND, led by its national coordinator Fryson Chodzi, obtained the injunction on May 4 2023 stopping the banks from issuing the loans to government, arguing the nation needed an explanation to what happened to a financier that the contractor Khato Civils identified, Quay Energy Corp.

On the other hand, Khato Civils, through lawyer Chancy Gondwe, were arguing in the lower court that the Government of Malawi through the National Assembly passed the NBS Bank plc and National Bank of Malawi plc (Lake Malawi Water Supply Project) Loan Authorisation Bill, 2023.

They contend the Bill was passed into law on April 6 2023, effectively authorising the government to borrow from the two banks to finance the abstraction and treatment of water from Lake Malawi at Lifuwu in Salima and transportation of the treated water to Lilongwe City.

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