By Linda Kwanjana
Legal and economic experts are urging the Malawi government to settle its helicopter dispute with Zambian firm AYATechnologies before it spirals into a financial disaster. They warn that international arbitration in Paris could force Malawi to pay far more than the K8 billion currently being claimed.
Malawi could end up paying billions more if it refuses to settle its dispute with AYA Technologies Ltd, the Zambian company suing over the botched Bell 412 helicopter deal, legal and economic experts have warned.
The experts say the government’s decision to cancel the procurement after already paying a $500,000 (about K867 million) deposit gives AYA strong legal grounds — and that prolonged arbitration before the International Court of Arbitration (ICC) in Paris could bleed the Treasury.
The dispute revolves around Malawi’s July 2024 move to cancel the purchase of two helicopters for the Malawi Defence Force (MDF) after a technical report found them unfit to fly. AYA Technologies has since sued for $4.6 million (around K8 billion), claiming breach of contract, while Attorney General Thabo Nyirenda insists the contract was invalid and is seeking to recover the deposit.
But experts say the government’s position, while principled, is financially risky.
“Payment means contract existed,” lawyer argues
Commercial lawyer Chifundo Soko said the government’s $500,000 advance payment legally acknowledges the existence of a binding agreement.
“By paying, the government effectively confirmed the contract. Whether or not the helicopters were suitable for service, that payment signals intent and consent to proceed,” said Soko.
“Arbitrators often look at the parties’ conduct, not just technicalities. From a legal standpoint, Malawi could easily be ruled to have breached the deal, and the damages could multiply.”
Soko urged the government to pursue mediation before the matter escalates, warning that arbitration in Paris is both costly and slow.
“If Malawi settles now, it could pay far less than it would after years of litigation. Mediation is cheaper, faster, and better for our international reputation,” he added.
Economists warn of ballooning financial risks
Economic governance expert Clifford Mwansambo said taking the case to full arbitration would drain public finances and likely cost Malawi far more than K8 billion.
“International arbitration is expensive — add interest, legal fees, and currency penalties, and you could be talking about K12 to K15 billion before the case even ends,” Mwansambo said.
“Government should cut its losses now and negotiate. We cannot afford to bleed billions defending a contract that was clearly mishandled from the start.”
He said a prolonged fight would also damage Malawi’s creditworthiness and regional relations, particularly given AYA’s Zambian origin.
Middlemen at the centre of the crisis
Procurement analyst Dr. Anthony Kamwana said the dispute exposes the government’s dependence on middlemen in defence contracts — a pattern that has historically led to inflated prices and corruption scandals.
“If a deposit was made, it means the intermediary fulfilled part of their role. These middlemen need to be sorted out legally or compensated fairly, otherwise Malawi will face more penalties,” Kamwana explained.
“Settling out of court doesn’t mean admitting guilt. It means being pragmatic and protecting public funds.”
A costly lesson from history
Malawi has lost millions of dollars in previous arbitration cases involving cancelled contracts. In 2020, the government paid $8 million in a similar procurement dispute after failing to negotiate early.
Former Solicitor General Janet Banda, now an international law consultant, warned that the helicopter case could follow the same path.
“Arbitration tribunals focus on procedure. If Malawi didn’t follow proper termination processes, it could lose regardless of the aircraft’s condition,” Banda said.
“Negotiation is the smartest move. Settle now, limit exposure, and move on.”
Settle and save
Experts agree that settling could save the country billions. A structured mediation that compensates AYA for incurred costs while formally terminating the deal would prevent mounting legal expenses.
“Even if government paid half of the K8 billion as a negotiated exit, that’s still a win compared to the potential K15 billion after arbitration,” Mwansambo said.
A source at the Ministry of Finance echoed the warning, saying the Treasury is worried about the financial implications.
“The truth is, the deposit was made, so legally we are already entangled,” the source said. “If we don’t act now, the cost will balloon beyond control.”
Malawi’s stubbornness could prove costly. Experts say the government should swallow its pride, negotiate with AYA Technologies, and settle out of court — because if it doesn’t, taxpayers will end up paying far more than the helicopters were ever worth.
