The South Gauteng High Court in Johannesburg has granted Vedanta Resources Holdings Limited an urgent interim injunction against ZCCM Investment Holdings and Konkola Copper Mines (KCM) Provisional Liquidator, Milingo Lungu.
But Mines Minister Richard Musukwa says the South African court’s ruling has no bearing on the Zambian court process at the moment because it has not been registered although government will appeal.
On Tuesday, Gauteng High Court judge, L R Adams granted Vedanta leave to move the application as one of urgency and further declared that ZCCM-IH had breached and continued to breach the Shareholders’ Agreement through the institution of the winding-up proceedings against KCM in the Lusaka High Court.
He further directed ZCCM-IH to immediately withdraw the winding-up proceedings such that the provisional liquidator was discharged from office, pending the final determination of the arbitration.
Justice Adams, among other orders, also ordered ZCCM-IH to restrain from taking any further steps in the furtherance and prosecution of the Winding-Up proceedings and to further restrain from instituting any winding up application against KCM pending final determination of the arbitration.
Vedanta had contended that ZCCM’s application for KCM liquidation was a dispute between shareholders as defined in the shareholders agreement and should have been referred to arbitration as provided for in the said agreement.
In his judgement, Justice Adams noted that the disputes which were the subject of the legal action before him were truly of an international nature.
He added that South Africa’s only interest and involvement in the matters at hand was that Johannesburg was named as the place where the arbitration should be held.
Justice Adams stated that the differences between Vedanta and ZCCM-IH were indeed disputes subject to arbitration as contemplated in the shareholders’ agreement.
He agreed with the submission by Vedanta that whilst the parties to the application were foreign peregrini of his court, the arbitration clause of the shareholders’ agreement was sufficient connection with the court to give it jurisdiction.
“These matters are indeed arbitrable disputes. It follows that this court will have jurisdiction over ZCCM-IH and this suit since Johannesburg is the seat of the arbitration in terms of the shareholders’ agreement,” Judge Adams said.
He added that ZCCM-IH’s principle that ‘one sovereign state should not attempt to regulate the proceedings before the court of a different sovereign state’ was outdated, and that in its place was a principle which was based on a modern sophisticated appreciation of the true nature of anti-suit injunctions.
Justice Adams further noted that Vedanta’s efforts to intervene and protect its interests in Zambia had proven futile.
“The applicant has reasonable apprehension of harm. Their efforts in Zambia to intervene to protect its interests have proven futile. The Zambian court has either refused to assist when approached or swiftly reversed whatever miniscule gains the applicant had achieved. There is no prospect of the applicant’s circumstance improving before the Zambian courts,” he stated.
Justice Adams therefore granted Vedanta leave to move its application as one of urgency and made other orders.
“Pending the final determination of the arbitration proceedings to be instituted by Vedanta against ZCCM-IH in Johannesburg within 10 days of the expiry of the 30 business day period for the amicable settlement of disputes under clause 24.2 of the shareholders agreement, it is declared that ZCCM-IH has breached the shareholders agreement and continues to breach the shareholders agreement through the institution by ZCCM-IH of winding-up proceedings in the Lusaka High Court against KCM and its perseverance with the winding-up proceedings,” said justice Adams.
The South African court further ordered that ZCCM-IH shall pay Vedanta’s costs of the urgent application, including cost consequent upon the employment of three counsel and the cost of the edictal citation.
But addressing journalists at State House yesterday, Musukwa, who was flanked by Justice Minister Given Lubinda and Attorney General Likando Kalaluka, said the ruling had no bearing on Zambian courts.
Musukwa said state lawyers had been advised to appeal the judgment.
“We are aware of the court ruling in South Africa as regards the issues pertaining to KCM. The ruling and orders generated by the South African court has no jurisdiction or enforceable mechanism or indeed applicable in the Zambian system without being registered. And to that effect, I want to state clearly that the foreign judgments are not enforceable in Zambia until a legarous process is undertaken when it is registered. To that effect, it has no effect on the processes that are going on in Zambia. As government we continue to respect jurisdictions of the courts and to that effect, we have advised our Attorneys in South Africa to appeal against the judgment,” said Musukwa.
“You would also be interested to know that we have a history of foreign judgments in the case of FTJ Chiluba, the London court restrition is a matter that you have experience about and so we want to take this opportunity to urge the people out there to remain calm as the process is under control… further I would like to indicate and give comfort to our people that the liquidator was actually given a mandate by the Zambian court, he’s still in charge of the liquidation process at KCM.”
And Lubinda disclosed that Kalaluka would travel to SA to join the appeal in order to “protect the integrity of Zambian courts”.
“Just to clarify further that the learned Attorney General has also been requested to go and join that appeal matter because he has to go and express to the court in South Africa the fact that Zambia has a viable and functioning judicial system and the matters that are heard and determined outside Zambia before they take any effect, they ought to be brought under the jurisdiction of the local judiciary system and the Attorney General’s responsibility is to ensure that the judiciary of Zambia is protected by everyone, including foreign jurisdictions. They cannot in any way undermine decisions made by local courts on local matters. This is the reason why you cannot appeal a matter of one country into a court of another country, if you have any appeal on any issue, you go to an institution that is accredited by all member states and the South African High Court is not such a court. It is a High Court which operates at equal footing with our local jurisdictions,” said Lubinda.
“So learned Attorney General will actually be going into South Africa for the purpose of protecting the integrity of the judiciary of Zambia. This is a matter also that Ministry of Foreign Affairs will be taking up with his counterpart Minister of Foreign Affairs in South Africa so that this matter is also handled administratively beyond being handled through the judiciary.”