Dubai firm, Cipla fight over Shs2b Zambia ARVs deal

A Dubai-based brokerage firm has sued drug manufacturer Cipla Quality Chemical Industries Ltd for alleged non-payment of brokerage fees worth $620,000 (about Shs2.3 billion) in a deal involving the supply of Anti-Retroviral Drugs (ARVs) to the government of Zambia.

The case before Justice Patricia Asiimwe Kahigi of the Commercial Division of the High Court arose out of a contract signed between Cipla Quality Chemical Industries Ltd and Car Commercial Brokers, a Dubai-based brokerage firm, on November 17, 2017.

Documents before the court indicate that the Car Commercial Brokers were entitled to a five percent payment that accumulated to Cipla Quality Chemicals Ltd from all payments arising out of the supply of ARVs to the government of Zambia as part of its brokerage fees.

Through its lawyers, the brokerage firm contends that Cipla Quality Chemical Industries Ltd signed a contract committing itself to pay the agent a commission of five percent on the total sale value of all business realised from Zambia as a result of the agent’s efforts.

In fulfilment of its contractual obligations, Car Commercial Brokers further alleges that it connected Cipla Quality Chemicals Ltd to sign contracts with the government of Zambia to supply ARVs worth $19m (Shs71.2b) but the payments to the brokerage company fall short by $620,000.

According to court documents, Car Commercial Brokers is accusing Cipla Quality Chemicals Ltd of breach of the agreement when it supplied drugs worth $19m to the government of Zambia between 2017 and 2019 but failed to honour the contract to pay its brokerage fees.

During the hearing of the case, Mr Chris Rugari, the chairman of Car Commercial Brokers, said his company helped Cipla Quality Chemical Industries Ltd to secure lucrative markets for ARVs in Zambia while also helping with sourcing payments for the supplied ARVs.

“Car Commercial Brokers created a market for Cipla and also processed payments for the goods that they supplied,” he said.

Mr Rugari asked the court to order Cipla Quality Chemicals Ltd to pay the $620,000 in brokerage fees and additional money in damages.

However, Mr Richard Kiggundu, the finance manager of Cipla Quality Chemicals Ltd, said: “Car Commercial did a good job of following up on payments until the termination of the contract. The payments that it followed up were not consistent with the goods that were supplied.”

Cipla Quality Chemicals Ltd contends in its defence that Car Commercial Brokers did not fulfil its obligations of sourcing markets from the government of Zambia, failed to secure the approval of the establishment of a pharmaceutical plant in Zambia and failed to help the drug manufacturer to increase its market share in Zambia.

“The plaintiff [Car Commercial Brokers] realised payment of only $6.3 million (Shs23.6b) despite the defendant [Quality Chemicals] having made supplies of over $19 million. The defendant paid five percent of the $6.3 million,” the court documents read in part.

Meanwhile, the court has directed the complaining firm and the accused party to file written submissions in October while judgment shall be delivered on notice.