Zambian court process on KCM liquidation illegal, says Sinkamba

Green Party leader Peter Sinkamba says the court process between ZCCM-IH and Vedanta Resources over the liquidation of Konkola Copper Mines (KCM) in Zambian courts is illegal.

And Sinkamba has said ZCCM-IH should immediately withdraw the court proceedings in Zambia and present their case in South Africa for arbitration to recover their US $10 million from Vedanta as directed by the South African High Court.

In an interview, Sinkamba said the two parties had a binding agreement, which compelled them to subject themselves to foreign jurisdiction in Johannesburg, South Africa.

“International law, you don’t play games with it. You can play the aspect of sovereignty to say ‘no we are a sovereign nation, we have laws and rules,’ but when you bind yourself in an agreement, a voluntary agreement as it were where the Government of the Republic of Zambia and ZCCM and Vedanta, in their own wisdom and agreement that they shall subject themselves to foreign jurisdiction in Johannesburg, South Africa, that becomes a binding agreement. Unless there was no exclusive statement that was stated in the agreement citing South Africa as the jurisdiction for arbitration, but this particular shareholders’ agreement clearly stipulates that the jurisdiction for arbitration on any issues is Johannesburg, South Africa. That makes Zambia as a wrong place for jurisdiction to determine a matter between shareholders,” Sinkamba said.

He has insisted that it would be important for ZCCM-IH to with immediate effect withdraw the court proceedings in Zambia and seek arbitration in South Africa as guided by the agreement signed with Vedanta.

“We should not be funny about it. The most important thing is that as the Court has directed in South Africa, is for ZCCM-IH to withdraw those proceedings here in Zambia with immediate effect and go and present their case in South Africa for arbitration to recover their US $10 million from Vedanta. And if the arbitration process will be in favour of ZCCM-IH, the arbitrator will determine how the monies shall be recovered and if it will be established that there is need to wind-up KCM to pay ZCCM-IH whatever is owed, the arbitrator will determine that side. And that is when now the process of liquidation shall commence. At this point, it’s premature to proceed in that manner. And we should follow the process because even if ZCCM-IH had a good case, it can be lost if you use the wrong process,” Sinkamba advised.

“So, it is this process here, which is illegal [and] not the process in South Africa. South Africa is the right forum for hearing such cases and there is no need to register the judgment here. All they can do if they want to enforce it is to use the international systems to deal with recovery (of) their damages from ZCCM and they will do it. And people should not be funny about this. Like what happened with First Quantum in Congo on the Luanshya Mine seizure by the Congolese Government; they were able to seen international systems to enforce the judgment, which brought the Congolese government to their knees. And they are paying billion plus dollars compensation to First Quantum! I am not sure if they have finished, but the Congolese government has been paying.”

He said it was wrong for government to front ZCCM-IH in the KCM winding up process.

“The liquidation is out. Government, if it had any issues with Vedanta, and government was desirous to take over those operations and find some other investors, government did not need to front ZCCM-IH. It was wrong to front ZCCM-IH! Without even involving ZCCM-IH, government would have even evoked the Mines and Minerals Development Act in relation to the licensing of the mining operations. It is a requirement under the Mines Act to provide conditions under which a license is issued. And if anyone of those key conditions is breached, government has a right to withdraw the mining license, and once the mining license is withdrawn, then the Director of Mines Safety takes over the operations,” said Sinkamba.

“And once that happens, if the mine is insolvent, then the Director of Mine Safety will trigger in the decommissioning and closure provisions of the mining law. Under those provisions, then there can be the winding-up process whether to demolish, sell and stuff like that or government can say ‘we are not decommissioning and not closing, but we will find another operator.’ And the operator shall be appointed to start running the operations, where now they will have to start looking for an equity partner who comes and takes over. But the mine also has to pay for compensation to a person who was running it.”




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Alfred Lungu
Alfred Lungu

In Congo DRC First Quantum lost the case in an International court. This is because they did not follow the development agreement. Zambia should have studied this case before making any moves on KCM.

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