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Respect arbitration decisions

It’s not wise for the Zambian government and ZCCM-IH to try and run away from arbitration obligations to Vedanta.

This is not only damaging the country’s international reputation but also threatens the stability of its mining interests.

The Minister of Mines and Mineral Resources, Richard Musukwa, says the ruling handed by the South Gauteng High Court in South Africa granting Vedanta Resources an urgent interim interdict against Konkola Copper Mines (KCM) minority shareholder, ZCCM Investment Holdings Plc, has no bearing on the current position of the Zambian government on the liquidation process of KCM.

Musukwa says foreign judgments are not enforceable in Zambia until they have undergone a rigorous process and that the judgment has no effect on the processes going on in Zambia about the liquidation of KCM.

Musukwa’s sentiments were further echoed by the Minister of Justice, Given Lubinda, who said that Zambia had a working and effective judiciary and before matters from outside can take effect they have to be brought before the judicial system in Zambia.

This is a reaction to South Africa’s High Court granting Vedanta Resources an urgent interdict halting the liquidation of its Konkola Copper Mines unit in Zambia until a final decision is made through arbitration.

Vedanta has been locked in a dispute with the Zambian government since May when it appointed a liquidator to run KCM, which is 21 per cent owned by Zambia’s state mining company ZCCM-IH and the rest by Vedanta. Zambia accused KCM of breaching the terms of its licence.

Mumbai-listed Vedanta denies that KCM has broken the terms of its licence.

South African High Court Judge Leicester Adams said on Tuesday in a ruling seen as a big win for Vedanta that wind-up proceedings must be immediately withdrawn until a final decision is made following arbitration.

“Pending the final determination of the arbitration, the first respondent is interdicted and restrained from taking any further steps in the furtherance and prosecution of the winding up proceedings,” he said.

Vedanta welcomed the decision and said it was committed to resolving the dispute.

It’s easy for the Zambian government to ignore the South African High Court decision and go ahead with liquidation and sale of KCM but there will be consequences.

While Vedanta can’t do much to enforce this judgment in Zambia, there’s a lot it can do to enforce it in South Africa and worldwide.

Any assets connected to ZCCM-IH and KCM can easily be seized in South Africa and elsewhere, including on the high seas.

It’s better to honour the arbitration obligations than play truant.

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