A DISPUTE between Vedanta Resources and Zambia’s ZCCM-IH regarding their respective investments in Konkola Copper Mines (KCM) ought to be settled in terms of KCM’s shareholders’ agreement, according to a Johannesburg High Court judgement today.
Judge L Adams found that the South African court was the correct jurisdiction in which to hear the dispute which relates to claims by ZCCM-IH, a government investment company, that it was due $50m in dividends, and that certain undertakings regarding new investment in copper mining in Zambia had not been undertaken.
This was because the dispute mechanism in the KCM shareholders’ agreement was the appropriate basis for arbitration.
The meaning of the judgement is that ZCCM-IH will not be able to carry through the winding up of KCM as it seeks to do through the Zambian courts. Judge L Adams consequently granted Vedanta and urgent interim interdict that discharges from office the provisional liquidator appointed by the Zambian High Court.
The matter is also being heard before the High Court in Lusaka. Vedanta said that the application to wind-up KCM was done ex-parte; in other words, without its participation or presence.
“The interim interdict was granted after two days of argument before Judge Adams last week, where Vedanta contended that ZCCM has breached and continues to breach the KCM Shareholders’ Agreement by instituting winding-up proceedings against KCM in Zambia, instead of reverting to the agreed-upon dispute resolution mechanism for shareholder disputes in the KCM shareholders agreement,” said Vedanta in a statement.
Said Judge Adams: “The applicant [Vedanta Resources] has reasonable apprehension of harm. Their efforts in Zambia to intervene to protects 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 applicants circumstance improving before the Zambian courts”.
It’s thought the Zambian government is hoping to sell the assets held in KCM, principally the Konkola Copper mine, once the liquidation is effected.
The dispute between Vedanta and ZCCM-IH is also heavily politicised. Zambia’s president, Edgar Lungu, made strong statements in June whilst on a visit to the Konkola region in Zambia in which he warned foreign investors that the government could not be deceived. His comments have been construed as electioneering in a region of the country where his Patriotic Front party suffered a by-election reverse.
“Vedanta welcomes the decision by Judge Adams and emphasises its commitment to resolve the current dispute with ZCCM through arbitration,” said Vedanta.