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SA court thrown out ZCCM-IH’s application to appeal judgment

THE South Gauteng High Court in Johannesburg has thrown out an application by Zambia Consolidated Copper Mines Investments Holding (ZCCM-IH) to appeal against its judgment ordering it to withdraw the winding up proceedings of Konkola Copper Mines before the Lusaka High Court pending determination of the arbitration proceedings.

This is in a matter Vedanta Resources Holding Limited, an Indian company, sued ZCCM-IH and its provisional liquidator Milingo Lungu in the South African High Court seeking an interim order that the minority shareholder (ZCCM-IH) breached the shareholders’ agreement by pursuing winding up proceedings against KCM in Zambia and directing it to withdraw the proceedings and removing Lungu as provisional liquidator.

Judge Leicester Adams dismissed with costs the appeal by ZCCM-IH as it had no reasonable prospects of succeeding because the minority shareholder of KCM did not raise anything new in its application for leave to appeal.

The court removed from the roll ZCCM-IH’s conditional interlocutory application to declare unconstitutional Article 17J (3) of schedule 1 of the international Arbitration Act No. 15 of 2017.

“In my judgment, the leave to appeal should be refused for the simple reason that my order is not appealable. In any event, I am of the view that the appeal does not have a reasonable prospect of success. Therefore, even if article 17J (3) is invalid and set aside, I would still refuse the application for leave to appeal. I therefore do not believe that it is necessary for me to deal in any way with the interlocutory application other than to remove the same from the role,” judge Adams said.

On July 23, judge Adams found that ZCCM-IH had breached the shareholder’s agreement and continued to breach it through the institution of winding up proceedings in the Lusaka High Court against KCM and ordered it to halt the winding up proceedings before the Lusaka High Court.

However, ZCCM-IH had applied for leave to appeal against the whole judgment and the order of July 23 in which it was directed to discharge the provisional liquidator from office and secure the suspension of his powers.

ZCCM-IH submitted that the court erred in finding that there was a genuine and palpable dispute between Vedanta Resources limited and ZCCM-IH in the winding up of Konkola Copper Mines, which should be referred to arbitration pursuant to the shareholders’ agreement.

ZCCM-IH submitted that the winding up of the mining company was based on the fact that it was commercially insolvent.

It submitted that judge Adams erred by not finding that Vedanta’s urgent application should fail on the basis of the principal of lis pendens (a pending legal action).

Judge Adams said his judgment and order were not definitive rights of the parties, as it was the arbitrator to decide disputes between Vedanta and ZCCM-IH and whether the disputes once decided warrant an application of winding up KCM.

He said his order was an interim injunction pending the final determination of the arbitration, which he did not or intends to decide because the final word on the issues has not been spoken and it would happen during arbitration.

Judge Adams said the relief granted to Vedanta on July 23, 2019 was not final because the envisaged arbitration would finally determine either in favour of Vedanta or ZCCM-IH.

He said the court had jurisdiction to compel ZCCM-IH to abide by its orders based on the Arbitration clause in the shareholders’ agreement.

The court indicated that the parties opted for a dispute mechanism in terms of which commercial disputes between them would be resolved by the international arbitration on neutral grounds and ZCCM-IH should be held bound by the covenant contained in the arbitration clause.

Judge Adams said he was not persuaded that the issues raised by ZCCM-IH in its application for leave to appeal as they are issues in respect of which another court was likely to reach different conclusion to those reached by him.

“I am therefore of the view that there are no reasonable prospects of another court coming to different conclusions, be they on aspects of fact or law, to the ones reached by me. The appeal does not in my judgment, have a reasonable prospect of success,” he ruled.

Judge Adams further ordered ZCCM-IH to pay Vedanta costs of the application for leave to appeal, including the cost consequent upon the employment of three counsel, one of whom is a senior counsel.

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