Vedanta Resources Holdings Limited has appealed to the Court of Appeal, against the Lusaka High Court’s refusal to stay the winding-up proceedings that ZCCM Investments Holdings has instituted against Konkola Copper Mines (KCM) and refer parties to arbitration.
Vedanta has further asked the Lusaka High Court to stay the Winding-up proceedings pending determination of it’s appeal.
In this matter, ZCCM-IH has petitioned the Lusaka High Court, seeking an order that KCM should be wound up for engaging in tax evasion and being managed in a manner detrimental to its interest, among other allegations.
Vedanta, the majority shareholder of KCM, had applied for an order to stay proceedings and refer the parties to arbitration pursuant to section 10 of the Arbitration Act.
But earlier this month, Lusaka High Court Judge Anessie Banda-Bobo dismissed Vedanta’s application saying it was not a proper case to refer the parties to arbitration.
She ruled that staying the proceedings at the instance of Vedanta would be contrary to the wishes of ZCCM-IH and KCM, who are the parties to the proceedings.
Justice Banda-Bobo observed that staying the proceedings and referring parties to arbitration would leave KCM’s creditors who had indicated their interest in the proceedings, without a remedy.
However, in a memorundum of appeal filed in the Court of Appeal, Vedanta argued in its grounds of appeal, among others, that justice Banda-Bobo erred in law and fact after finding that there was in fact an abitrable dispute between Vedanta and ZCCM-IH which is the subject of an arbitration agreement.
Vedanta further argued that justice Banda-Bobo erred in law and fact when she held that Vedanta as contributor, could not make the application to stay and refer parties to arbitration as it was not a party to the proceedings, a finding which is not consistent with the true interpretation of the Arbitration Act.
It also argued that Justice Banda-Bobo erred in law and fact when she concluded that KCM was a separate entity from Vedanta and that only KCM could defend itself in the winding-up proceedings.
And in an affidavit in support of ex parte summons for an order to stay proceedings pending the hearing of the appeal filed in the Lusaka High Court yesterday, Vedanta’s representative Hermein Uys asked the court to stay the winding-up proceedings stating that in the event that their appeal succeeds, the outcome would be rendered academic should the winding-up proceedings before the High Court proceed.
“This court has scheduled August 27 as date of hearing the petition of winding-up of KCM. That further in the event that the appeal lodged by the contributor in the Court of Appeal succeeds, the outcome of the appeal would be rendered academic should the winding-up proceedings before this court proceed and KCM be wound-up and in such a case, the contributor would be seriously prejudiced,” read the affidavit.
Uys stated that the Vedanta group had since 2004 provided over US$1 billion in the form of shareholders loans to KCM.
He added that the Vedanta group of which Vedanta was a member, was by far the largest creditor of KCM and therefore likely to suffer the greatest financial harm if the stay application was not granted.
“That the Vedanta group has since 2004 provided over US$1 billion in the form of shareholder loans to the respondent. Further it has provided guarantee for certain loans and credit facilities from third party banks and also guaranteed a US$100 million advance payment made by one of KCM’s customers,” read the affidavit further.
“The Vedanta group (of which the contributor is a member) is by far the largest creditor of the respondent and therefore likely to suffer the greatest financial harm if the stay application is not granted. In so far as I am aware and I verily believe it to be so that the petitioner will not suffer harm as it had not invested any amounts in the respondent in that period.”
Uys further stated that if the appeal that Vedanta had filed succeeds, then the proceedings before the High Court would be stayed and the matter reffered to arbitration.
“That if the petition for the winding-up of the respondent will proceed to be heard and determined despite the pending appeal by the contributor in the court of appeal, then the said appeal will be rendered academic and a nugatory. It is desirable and in the interest of justice that all further proceedings before this court be stayed pending the hearing and determination of the appeal by the court of appeal,” read the affidavit.
Meanwhile, another creditor of KCM Jersey Limited has filed a notice of intetion to appear on the petition persuant to rule 10 of the companies winding-up rules.
“Take note that Vedanta Resources Jersey II Limited, a creditor who is owed a sum of US $1,038,300,000.00 plus interest , intends to appear on the hearing of the aforementioned petition to oppose it when the said petiton is presented for hearing,” read the notice filed by Messers Mulenga Mundashi Legal Practitioners.