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Court dismisses injunction granted to KCM over CEC power supply

KITWE High Court judge Evaristo Pengele has dismissed with costs an ex-parte interim injunction he granted to Konkola Copper Mines which sought to stop Copperbelt Energy Corporation from restricting power supply to the mining firm over the US $132 million owed to the utility.

On 13th May, 2020, the court granted KCM an ex-parte order pending arbitration.

But CEC through its lawyers William Nyirenda and Musa Mwenye applied to have the order dismissed on grounds that it had been overtaken by events.

Nyirenda submitted that KCM’s claim that the restriction of power supply would cause damage to its facilities was untrue because there was a prescribed procedure agreed by the parties on how such a restriction would be undertaken.

He further argued that the relationship between CEC and KCM had disengaged and that there was no implied or express contractual relationship between the parties in relation to any power supply agreement.

“If the court is to grant a continuation of the injunction, it will essentially be extending or creating a new power supply agreement and the court has no authority to impose a contract on the parties,” Nyirenda submitted.

And Mwenye submitted that by seeking reliefs, KCM had breached the law of equity by seeking remedies while being in breach.

“The law of equity states that ‘he who comes to equity must come with clean hands’. There are many facts that are indisputable, principally that: KCM owes CEC well over US$132 million, which amount has been admitted by KCM. KCM has entered into arrangements for a new PSA [Power Supply Agreement] with Zesco. KCM has not shown how or when it intends to settle the debt it owes to CEC. The above are all breaches. KCM is seeking remedies while being in breach.  An applicant cannot come to court with tainted hands and seek to be availed remedies in equity,” Mwenye argued.

Ruling on the matter on Friday, judge Pengele said the plaintiff (KCM) has not established that there is a serious dispute to be determined at arbitration to warrant its entitlement to interim relief from court.

“On the material so far placed before me, the plaintiff has not satisfied me that it has any real prospect of succeeding in its contentions at arbitration. It is clear from what I have stated above that the plaintiff acknowledges and accepts that it owes the defendant the US $131,811,794.00 in relation to which the defendant issued the contested demand notice. I have found it difficult to appreciate how the plaintiff would properly be aggrieved with the defendant for claiming payment of a debt which the plaintiff acknowledges is properly due and payable to the defendant,” judge Pengele said.

The judge said it was clear from the affidavit in support that the last payment KCM made towards electricity consumed from CEC was made between October and December 2019 which meant that from December 2019 to 13th March, 2020 when KCM filed the application, KCM did not make any payment towards the bills for electricity supplied to it by CEC.

Judge Pengele said clause 13 (d) of the PSA which the plaintiff exhibited in its affidavit provides that if any payment due to the defendant remains unpaid for a period in excess of 45 days, the defendant shall have the right to suspend the plaintiff’s power supply by giving 14 days written notice of its intention to suspend the power supply.

He said it was evident from the affidavit in support that the acknowledged amount of US$131,811,794. 00 remained due and unpaid for a period in excess of 45 days as envisaged in clause 13 (d) of the PSA.
“From the foregoing, I have no hesitation in holding that the plaintiff has not convinced this court that there is a serious question to be heard and determined at arbitration. On the basis of the above, I find no merit in the plaintiff’s application for an order of interim relief pending arbitration. I dismiss the plaintiff’s application forthwith. I discharge the ex-parte order of interim relief pending arbitration which I granted in favour of the plaintiff on 13th May, 2020. I award the costs for this application to the defendant to be taxed in default of agreement,” ruled Judge Pengele.

This means CEC will continue restricting power to push KCM to settle the outstanding debts.

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