Comply with SA order in KCM case, lawyer Chanda advises counsel


LUSAKA lawyer Nicholas Chanda has urged government to comply with the order of the South Gauteng High Court in Johanesburg, which barred ZCCM-IH from winding up the mining firm by halting proceedings before the Lusaka High Court.

Chanda said the government should not focus on the issue of jurisdiction as it was bound to heed to the order of the South African High Court and cannot claim immunity to jurisdiction as regards the International Arbitration Act, to which it was a party under the shareholders agreement.

He sad the government should instead apply to have the injunction granted to Vedanta set aside.

Government argues that the ruling of the South African High Court cannot be enforced in Zambia as it had not undergone the reciprocal registration process.

Minister of mines Richard Musukwa said foreign judgments were not enforceable in Zambia until a rigorous process was undertaken.

He said to that effect, he SA order had no impact on the winding up proceedings of KCM in Zambia and that the Attorney General Likando Kalaluka will appeal the ruling of the South African Court.

In this matter, Vedanta Resources Holding Limited sued ZCCM-IH and its provisional liquidator Milingo Lungu in the South African High Court and sought an interim order that the minority shareholder, ZCCM, breached the shareholders’ agreement by pursuing winding up proceedings against KCM in Zambia and directing it to withdraw the proceedings and removing Milingo Lungu.

Vedanta was on July 4, 2019 granted an ex-parte order by the South African High Court for leave to institute an urgent interim interdict (injunction) against ZCCM and Lungu.

Vedanta had claimed that the winding up of KCM has nothing to do with its insolvency but a dispute between shareholders’ agreement.

However, ZCCM said that the South African court was interfering with proceedings before court in a different sovereign state.

On July 23, 2019 the South Gauteng High Court granted Vedanta Resources an urgent interim injunction restraining ZCCM-IH from taking further steps in the furtherance and the prosecution of the winding up proceedings of Konkola Copper Mines [KCM] pending determination of the arbitration proceedings.

Judge Leicester Adams found that ZCCM-IH breached the shareholder’s agreement and continued to breach it through the institution of winding up proceedings in the Lusaka High Court against KCM.

The court said efforts by Vedanta to protect its interest in the winding up proceedings have proved futile as the Zambian court has either refused to assist the applicant when approached or swiftly reversed whatever miniscule gains the applicant had achieved.

“There is no prospect of the applicant’s circumstances improving before the Zambian courts. The applicant has a well-grounded apprehension of harm. There is no remedy and the balance of convenience favours the applicant [Vedanta], the applicant’s application for interim relief therefore should be granted,” judge Adams ordered.

On the issue of jurisdiction, judge Adam said that South Africa’s only interest and involvement in the matter at hand was that Johannesburg was named as the place where the arbitration should be held as the parties chose Johannesburg as the seat of the arbitration and they chose the court with supervisory powers to ensure compliance with the shareholders.

“The respondent relies on the principal that one sovereign state should not attempt to regulate the proceeding before the court of a different sovereign state, the principal is out dated and out of step with the modern enlightened understanding about the basis for and the nature and effect of the type of anti-suit interdict the applicant seeks in casu,”said judge Adams.

Judge Adam also noted that the disputes which were the subject of the litigation before him were of an international nature, adding that the philosophy underlying the arbitration agreement was clear.

“Pending the final determination of the arbitration, the first respondent is directed to immediately withdraw the winding up proceedings such that the provisional liquidator is discharged from office.

(i)The first respondent is interdicted and restrained from taking any further steps in the furtherance and the prosecution of the winding up proceedings.

(ii) The first respondent is interdicted and restrained from instituting any further winding up application against KCM on the basis of the same or similar grounds relied upon in the winding up proceedings.

(iii) The first respondent shall pay the applicant’s costs if this urgent application, including the cost consequent upon the employment of three counsel, one of which is a senior counsel, and the cost of the edictal citation,” ordered Judge Adams.

Chanda advised that the High Court of Zambia to stop the winding up proceedings of KCM pending the outcome of arbitration process in South Africa.

“We are a party to that international law. We have to respect that tribunal. There is no conflict on jurisdiction, there is only one way out – to stop the proceedings here in Zambia as we wait for arbitration. It sounds like a difficult thing but we have no choice. There must be some remedies in the international reciprocal arbitration agreement and some penal clauses that could be imposed on government if it fails to comply with the order,” he said.

Chanda said the international statute needed to be adhered to as government had legal advisors who should have known that such situations would arise and Vedanta would be adamant to complain.

“These are international standards [rules], they [Zambian government] have to comply with them simple, they will liquidate it at the end of the day but not now when there is an arbitration going on and there is an injunction in South Africa,” said.

“The best thing they can do, the other alternative which is easier for the Zambian government is to fight to discharge the injunction in South Africa so that the KCM case is open so that they can proceed.”

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