ETG threatens international arbitration in dispute over $60mn seizure

African commodities house ETG has warned Mozambique that it will seek international arbitration in a dispute over the seizure of up to $60mn in goods, in an escalation of a long-running fight over exports of an Indian food staple.

Lawyers for Mauritius-headquartered ETG wrote to President Filipe Nyusi’s government last week warning that ETG “will have no choice but to commence international arbitration” if Mozambique does not offer talks to resolve the dispute, according to a letter seen by the Financial Times.

Its warning marks the latest development in an increasingly bitter fight between ETG, one of Africa’s biggest and oldest agricultural traders, and Mozambican food trading company Royal Group.

The case has reignited concerns about the rule of law in Mozambique, a decade after the country’s $2bn “tuna bond” debt crisis.

Royal Group seized goods including a large consignment of pigeon peas, widely used in meals across India and a key area of trade between India and Africa.

Mozambique exports a large share of pigeon peas to India and has privileged access to its market in terms of duties. Most Mozambican production comes from poor small-scale farmers who sell to traders.

ETG is alleging that by allowing the seizure, Mozambique has breached both a domestic law on investment that sets out property and export rights, and a bilateral investment treaty with Mauritius. Both have provisions for appointing arbitrators in the event of a dispute.

“We have tried to resolve the matter using every legal avenue available to us in Mozambique, but we have been met with obstructions from the authorities and the judiciary at every turn,” ETG said, adding that it was still open to an amicable solution.

The company said it had “incurred substantial losses, both directly and indirectly”. The situation was “unsustainable”, it added.

The dispute dates back to 2022, when a row erupted between ETG and Royal Group over an agricultural shipment to India.

Royal Group accused competitors, including ETG, of incorrectly informing Indian authorities that the trading house had falsely certified a food shipment to India as free of genetically modified products. ETG denies the claims, while Royal Group denies exporting GMO products and points to rulings in India in its favour.

Royal Group launched proceedings in Mozambique, contested by ETG, which led to Royal Group’s seizure of the assets following a Mozambican court order.

In the letter to Mozambique’s attorney-general, ETG said its warehouses were being “continuously plundered, under the watch, and with the support, of Mozambican authorities”. 

The letter added that the authorities had “actively rebuffed” ETG’s legal efforts to contest the seizure, and it also received a “cursory response” from the government in March. This was despite an order by the country’s deputy attorney-general that the seizure was an abuse of process, the letter added.

Royal Group said it was not aware of arbitration proceedings and that it was “categorically false” that ETG’s warehouses were being plundered. It had so far collected $30mn in goods, “acting as a custodian of the cargo to safeguard it until the courts have ruled on the outcome of financial losses incurred” by the company, it added.

Royal Group is disputing the deputy attorney-general’s order and “the seizure remains in effect until the final decision is made,” it said. ETG said that it “strongly disputes the value of the goods that [Royal Group] is holding” and the seizure’s legality.

The Mozambican attorney-general and India’s foreign ministry did not respond to requests for comment.

This article has been amended to reflect the fact that Royal Group seized ETG’s assets under court orders, and that India ruled in Royal Group’s favour regarding its product being non-GMO.