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ZCCM-IH opposes vedanta’s application to dismiss winding up petition, fire Milingo Lungu

ZCCM-IH has opposed the application by Vedanta Resources Holdings Limited to dismiss the winding up petition of Konkola Copper Mines and relieve provisional liquidator Milingo Lungu of his duties.

It argues that the contributor’s application was wrongly before court, and any decision to be passed by the Lusaka High Court would be a nullity for want of jurisdiction as the same was made within the 90-day period in which to effect the partial final arbitral award.

This is in a matter where ZCCM-IH has petitioned KCM for liquidation, seeking an order that it be wound up for engaging in tax evasion and being managed in a manner detrimental to the interests of government, among other reasons.

In an affidavit in support of summons for an order to strike out and or dismiss the petition pursuant to section 60(3)(f) of the corporate insolvency Act no. 9 of 2017 and Section 13 of the High Court Act, Deepak Kumar, a director and company secretary of the contributor, said on July 26, 2021 Vedanta filed an application for registration and enforcement of the final award in the commercial division of the High Court under cause number 2021/HPC/ARB/no.432.

He stated that on July 30, 2021, the deputy registrar granted the contributor leave to register the partial arbitral award in Zambia.

Kumar said the partial final arbitral award having been registered in Zambia was binding on the petitioner and had full force and effect of a judgement of the court.

He stated that following the ruling of the Arbitral tribunal, the grounds relied upon by the petitioner and the accompanying verifying affidavits before court should be struck out and that the petition should be dismissed and the provisional liquidator be discharged.

“The partial final arbitral award having been made in Johannesburg South Africa is capable of enforcement and execution in South Africa and has neither been set aside nor suspended in Zambia or Johannesburg South Africa,” Kumar said.

In his skeleton arguments, Kumar stated that the sole Arbitrator had become functus officio with regards to issues that have been addressed in the partial final arbitral award.

“The petitioner cannot either before this court or the before the ongoing arbitration proceedings re-open the individual issues of law or fact which have been decided upon by the partial final arbitral award. The award is conclusive on the petitioner’s breach of the arbitration clause in the shareholders agreement and continues to breach the said provision as long as the winding up proceedings on the current grounds are still before court,” Kumar said.

“We urge this court to give effect to the Partial Final Arbitral Award as the proceedings before this court have undoubtedly become inescapably doomed to failure and should be dismissed as being an abuse of the process of the court. It is now settled that the right forum for the petitioner is not before this court but Arbitral tribunal as per provision of the Shareholders Agreement.”

Kumar indicated that the proceedings before court have now become frivolous and vexatious to the extent that the same cannot be sustained by the court.

“Sustaining the petition creates serious confusion and a risk to have conflicting decisions. We urge the court to dismiss and or strike out the petition as it cannot be seen to aid the petitioner in breaching the SHA by allowing these proceedings to remain alive,” said Kumar.

“The provisional liquidator cannot continue to act as such following the dismissal of the petition. Section 65(1) of the Insolvency Act empowers this court to provisionally appoint the official receiver or any other person to be the liquidator after the presentation of the winding up petition before making a winding up order. The dismissal of the winding up petition inevitably discharges the provisional liquidator of his duties.”

According to a partial final award dated July 7, 2021, the Arbitral Tribunal in South Africa ruled that it had the jurisdiction to determine Vedanta’s claim that ZCCM-IH breached and was in continuing breach of the dispute resolution provisions at clause 24 and clause 26 of the shareholders agreement.

The tribunal ruled that the petition and amended petition on the grounds relied upon was in breach of the dispute resolution provisions of the shareholders agreement.

It further ruled that KCM was not required to carry on business to meet all the objectives contained in the preamble to the approved programme and the KCM board was responsible for the management of the company.

However, in a notice to raise preliminary objection to the contributor’s application dated September 20, 2021, ZCCM-IH said it would at the hearing of the contributor’s summons to stay or dismiss petition, raise a preliminary objection to the said application on grounds that the same was irregular and an abuse of court process and the court had no authority to entertain it.

The petitioner seeks the court’s direction on whether the High Court had jurisdiction to hear and determine summons for an order to strike out or dismiss the petition when winding up proceedings had been stayed and dispute referred to arbitration by the Court of Appeal.

“Whether the contributor’s summons for an order to strike out or dismiss the petition filed within the prescribed period prohibiting enforcement of an arbitral award is competently before court,” asked the petitioner.

“Whether the contributor’s affidavit in support of summons for an order to set aside and or dismiss the petition dated September 20, 2021 offends section 27 of the Arbitration Act and order 5 Rule 15 of the High Court rules.”

The petitioner urged the court to consider the status of the stay of proceedings ordered by the Court of Appeal following the handing down of a partial final award on July 7, 2021 by the Arbitral Tribunal.

It stated that the stay of proceedings had not been lifted as the partial final arbitral award had not brought the arbitration to an end.

“The arbitration has neither been concluded nor has it attended to any issues raised in the winding up petition as referred by the Court of Appeal,” ZCCM-IH said.

“As the stay of proceedings has not been lifted, the door has not been opened for the contributor to apply for an order to strike out and or dismiss the petition. This court cannot entertain the contributor’s application for want of jurisdiction.”

It said Vedanta was precluded from taking any steps towards the enforcement of the partial final arbitral award until the expiration of the 90 days effective July 7, 2021.

The petitioner said the partial final arbitral award was supposed to be effected on October 4, 2021 but Vedanta’s summons to set aside the petition were filed within the 90 day period and was in breach of Rule 17(2) of the Arbitration Rules 2001.

“As the contributor’s application was filed before the expiry of the 90 days, we submit that its application is irregular before court and the court has no jurisdiction to determine the application. The contributor’s application is wrongly before court, any decision to be passed by the court would be a nullity for want of jurisdiction,” said ZCCM-IH.

“At the heart of arbitration is confidentiality which is one of the key reasons the parties chose to go for arbitration for settlement of their disputes as they do not want their differences to be a topic of discussion. When a matter is being litigated, proceedings and documents are generally open to the public and this would be unappealing to parties who desire to keep certain information away from public scrutiny.”

It prayed that the motion be resolved in its favour with costs payable forthwith.

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