By Michael Chishala
Having read the entire 25 page South African Arbitration Court judgment in the case of the Zambian government versus Vedanta, I am of the view that the SA court is on firm ground in granting an interim injunction halting the liquidation of KCM until the substantive dispute is heard. The salient points are:
1. The original KCM Shareholder’s Agreement explicitly provided for a court to arbitrate all disputes, to sit in Johannesburg, to deliberate in English and for the sole Arbitrator to be appointed by the Secretary General of the Court of Arbitration at The Hague in Netherlands. This clause is normal for international agreements like the KCM one, so as to preserve neutrality and guard against potential bias and an unfair arbitration procedure within Zambia if a court action was commenced after a breach.
2. Any disputes arising from any breaches of the agreement are to be settled by the same Arbitrator. Arbitration through the SA court is therefore not optional but mandatory. The case filed by Vedanta was therefore properly before the Arbitration Court in SA. GRZ has not disputed the jurisdiction of the SA court. Moreover, GRZ was adequately represented in the case in SA.
3. The definition of a “dispute” is very broad within the agreement and adequately covers the current situation whereby Vedanta is disputing the action by GRZ to attempt to liquidate the company through an ex-part order wherein Vedanta had no opportunity to be heard.
4. The Arbitrator has exclusive authority to hear and rule on any disputes and this authority and jurisdiction cannot be superceded or nullified by any other court action in Zambia initiated by GRZ. The refusal to register the SA judgment in Zambia by GRZ does not nullify it, nor does it prevent Vedanta from getting relief via the Arbitration Court in SA.
5. As a consequence of point 4, the Zambian government initiated the liquidation procedure in Zambia in an irregular manner because if indeed they had any reasonable dispute with Vedanta, they were supposed to file a case before the aforementioned Arbitration Court in SA. The current action by GRZ in the Zambian courts to wind up the company is an attempt to circumvent the Shareholder’s Agreement as noted in the judgment and Vedanta therefore is on firm ground in declaring a dispute, which dispute the SA Arbitration Court has sole, exclusive and final jurisdiction, to the exclusion of any decisions made by Zambian courts to the contrary.
6. The Arbitration Court in SA in this particular case was not dealing with the merits of the complaints of GRZ, but only whether a dispute has arisen which therefore falls under the legal authority of the SA Arbitration Court.
7. Under the Arbitration clause in the agreement and general legal principles, Vedanta has a legal right to seek any kind of relief or compensation, including, but not limited to, interim injunctions restraining GRZ from proceeding with the liquidation of KCM.
8. The Arbitration clause in the Shareholder’s Agreement necessarily implies that the parties agreed not to commence any legal actions (arising from any disputes) in any other court other than the Arbitration Court as provided for in the agreement. Acting contrary to this clause implies an attempt to circumvent the agreement. The action by GRZ to liquidate KCM is thus irregular and improper and the SA court therefore has the legal mandate and jurisdiction to halt the liquidation process currently going on in Zambia after a dispute was declared by Vedanta and brought to the only court allowed to arbitrate such disputes as per agreement.
9. As a consequence of points 4, 5 and 8, Zambia has already suffered great reputational damage in international business and investment circles.
10. The interim injunction suspends the liquidation action, pending the substantive matter to be heard, also by the same SA Arbitration Court.
11. If GRZ ignores the decisions made in the SA Court, matters shall be escalated that may potentially result in Zambia being forced to pay compensation to Vedanta by seizing its assets abroad, especially if the substantive case is won by Vedanta. All Vedanta has to do is register the judgment in any country where assets are held by Zambia (eg reserves sitting in foreign banks in Europe or USA).
12. Regardless of the merits of the grounds for the “divorce” between Vedanta and GRZ, compensation must be paid because you cannot just grab a property, sell it off to someone else and pocket the money. There will eventually be a day of reckoning.
Bottom line: Zambia is in deep brown stuff.
Last night was very hot. I can’t wait for today. There is just something about walking hand in hand with my white swiss blonde wife. My black skin on her lovely smooth white skin. It just looks amazing. My wife is a a show stopper due to her hour glass figure and beauty. Alot of jealousy from fellow blacks is what is shocking
@ N.E.E.Z WGIAF, if you know what I mean, stop this nonsense.
Good article by Chishala.
Problem is that PF do not listen. They think they know everything now that they have fake PhDs.
No one wants vedanta in Zambia. But that does not mean you can simply tear up contracts and seize assets. Even you citizens where cheering on.
@N.E.E.Z this is not Facebook or Instagram, it’s political and governing news, concerning a good population. Wisdom is a Grace and not curriculum. Please grow up and be wise. Thank you Chishala for the update.
This is a very good analysis. A contract is a legally binding agreement between two or more parties that involves an offer, acceptance and consideration. All parties to a contract must also have mental capacity or the ability to understand the nature and consequences of entering into the contract. It is not in dispute that ZCCM-IH and GRZ offered Vedanta KCM. It is not also in dispute that Vedanta accepted and paid a consideration. What is in dispute is the mental capacity or ability of ZCCM-IH and GRZ to understand the nature and consequences of the Shareholders Agreement which they entered into in 2004. This is where the problem lies, and is clearly manifest from waffling of the Minister and the AG. Trouble lies ahead!
In any case, GRZ has not taken ANY action at all, whether in Zambia, or South Africa. What needs to be made clear is that there are three parties to the KCM Shareholders Agreement: GRZ, Vedanta and ZCCM-IH. The three are separate legal entities. If ZCCM-IH takes any action or makes a claim against Vedanta, that does not mean that GRZ has taken action against Vedanta and vice versa. The matters in Lusaka High Court and Johannesburg High Court are between ZCCM-IH and Vedanta. GRZ is not cited as a party. So this noise from government official that government has taken action against Vedanta is all nonsense. It is quite embarrassing in the eyes of the international community that this government does not know the simple difference, despite having learned persons such as AG and SG.
re N.E.E.Z:
is there no way to stop that crazy guy from repeatedly advertising his “white swiss blonde wife”?
What does that have to do with the topic of this debate, i.e. the Vedanta issue?
@ Michael Chishala stop misleading the people of Zambia, the Zambian judiciary system is the final adjudicator of all local cases no until the case is disposed of here in Zambia any case outside Zambia regarding the same case is null and void and is ultra-variance with the laws of Zambia. meaning the Shareholder’s Agreement explicitly and arbitration of disputes which sit in Johannesburg is sub judicial to the laws of Zambia also. Micheal get you facts right
Neez congrats.. make each other happy.. happiness is the key.. greet your wife
If GRZ ignores the decisions made in the SA Court, matters shall be escalated that may potentially result in Zambia being forced to pay compensation to Vedanta by seizing its assets abroad, especially if the substantive case is won by Vedanta. All Vedanta has to do is register the judgment in any country where assets are held by Zambia (eg reserves sitting in foreign banks in Europe or USA).
White skins is not smooth and it’s only lovely with makeup.
Who were the first to breach the contract???? Vedanta were!! Does South Africa have jurisdiction over Zambia??? Hell NO!!
Bottom line is ZCCM-IH does not have to abide by a court with no jurisdiction’s ruling and number 2, ZCCM-IH has the same right to characterize a loosely termed “dispute” as Vedanta is attempting.
The only sad thing for me is having unpatriotic egomaniacs like Chishala here ejaculating over a supposed loss to their country while pretending to be well read and smart.
These kind don’t want anything good to happen to the smart people of the Zambian Enterprise. For the record … Zambia is doing just fine and ain’t in no trouble.
Contracts are broken every day and Vedanta did and we are following suit.
Heaven help us all … epo mpelele,
BRM
The response coming from the Attorney General’ s chambers and the minister of mines is at variance with what is contained in the Shareholder’s agreement between ZCCM-IH and Vedanta.Now if the Chambers of the Attornry General,who is the Chief Legal Advisor of govt can fail to do a due diligence as regards the KCM saga,then its a worry.
I will take this for my amusement.
Are we a nation that is able to defend itself? If yes, then that time has come. The end justifies the means. Vendate must go. In fact they should have left yesterday. Long live Zambia.
Talking from point of ignorance. Ignorance is bliss. Typical PF mentality.
This is an inditement on Lungu who should have known better as a lawyer. He is the initiator of this liquidation against all advice. What type of lawyer is this Lungu. Only a failed state can tolerate such a fool who is a clear liability to continue leading.
Dull cadre. Do you even understand the article? You !d!ot PF first put us in trouble with Lap Green who we are now paying millions of dollars and now because of failure to follow procedure, we already owe Vedanta lawyers $5 million in legal fees and may have to pay billions in compensation because of your never-ending stup!d!ty. Mulifipuba with your dull president and grade five primary school teacher Mines Minister who does not know sh!t.
There are two ways on how to proceed with the divorce of Vedanta from KCM. One is to follow through with the agreement terms. The other is the rogue way GRZ has undertaken.
In the former, litigation by arbitration will take considerable amount of time to thrash out a deal satisfactory to both parties. In the latter case, Vedanta can be history within a couple of months as we have been told by the minister.
The length of time and uncertainty of the outcome from the arbitration process will place the mine in limbo. Business partners will hold back supplies and this will inevitably affect the operation and consequently the standing of the mine as a business entity.
I am hoping and praying GRZ has evaluated all possibilities.
Take note, FQM and DRC were at daggers drawn from 1999 to…
…2012 when they got paid off $1.25bn for three facilities- the Kolwezi Tailings, Lonshi and Frontier Mines! And this was to become FQM’s flagship bearer to replace Kansanshi Mine.
Vedanta got KCM for a paltry $25m. The only investment of note is the ($600m) new smelter at Nchanga, zero primary development in the open pits and underground and snail’s pace development of the world class Konkola Deep Mine resource. What billions would this Indian demand considering the money he paid us and the fact that he is on record saying that he hardly makes a profit on the facility? Surely, we can afford to pay him off and pass on the cost to the prospective buyer!
Zambia had a good case against Vedanta, but handled it very carelessly by showing off that it had power to do anything without flowing the laid laws in accordance with the rules and regulation of the game. I am wondering the professional integrity of the lawyers and ZCCM-IH for taking “down” Vedanta. As a Christian Nation we can do better than the way we have handled Vedanta. We could have handled Vedanta case professionally, with integrity, without favor or fear, not biased and not showing off. I wish the authorities dealing with Vedanta had listened to citizen professionals who have the knowledge. It seems the government has not learned any lesson from Lap Green concerning ZAMTEL. I hope the government will take care of all workers of KCM.
This Article is Spot on. My only problem with GRZ is how they failed to see this coming and why GRZ didn’t approach this Court first when they realized that Vedanta had breached the Agreement? Why..why didn’t GRZ get rid off Vedanta first? The Provisional Liquidation was a bad idea. GRZ didn’t have to breach the KCM Shareholders Agreement. They should have taken their complaints and Disputes to the International Arbitration Court in JHB, South Africa as provided in the Agreement. If GRZ disregards this Judgement they will make matters worse.
GRZ needs to damage control the situation by negotiating a Settlement Deal under the Chairmanship of the International Arbitrator. GRZ should quietly buy out Vedanta out of KCM on Agreed Terms. The sooner this is done the better for Zambia. In…
Dude, has PF ever displayed any intelligence in anything they do?
Let them distribute land fairly to blacks and show justice before they preside over Zambian affairs.
And let them sort out zuma before they talk about Zambian case.
Can American case be heard in Indian court.
We dont want colleges class assignments here.
I think the author is one of the part time lecturers from thses mushrooming universities
@ Its politiical.. We are sick and tired of this PF foolishness.
Reading is fundamental. The reason why this is being heard in a South African court is above in black and white. It’s ironic that you talk about “colleges class assignments” when you either can’t or won’t read the article. Or maybe it’s a lack of comprehension or maybe you just don’t care about the terms of the agreement regardless of what it will ultimately cost us.
Whatever the case may be Vedanta is out of Zambia. This case will now be heard with the urgency that it deserves. I doubt a company can walk in any country and mess up and leave just like that. This is a lesson to all companies doing business in Zambia, they must begin to do business honestly. This is the time to support our own Govt. Tomorrow we will be the same people blaming them. We have seen how other countries make decisions when national interest is at stake.
What lesson naimwe they may still end up winners if the the case is decided in their favour coz we will have to pay them billions. This dull government just needed to understand the agreement in place and follow that procedure and not doing things to please stup!d cadres at the airport. Other countries take such decisions after doing due diligence and understanding the consequences of a chosen course of action. These chimbwis went in blindly and now they have sent their dull AG to go and appeal a decision they say they do not recognise. !d!ocy of the highest order.
IT REMINDS ME OF A CIVIL SERVANT GETTING A LOAN AND LETTER COMPLAINING THAT THE BANK HAS INCREASED THE LOAN RECOVERY PERIOD. PLEASE LETS READ AND UNDERSTAND THE AGREEMENTS.
It appears now that every one is a Law Practitioner. Do not force gov to use executive powers.
And people writing these articles you know nothing about this country I guess.
I don’t know what point 9 business was in the hearing for an arbitrator to preside over the ‘dispute’ …..
So what.
New partner will pay for existing value which is much much lower than Vedanta inflates since they never stockpiled any ores, stripped the mine and have huge liabilities. Vedanta gets its negative cut after creditors get there dues. The people of Zambia get a better partner who will clearly know the consequences of lying and stealing from the seeming laid back partner.
This is the ultimate fine print. Not these things you read from small courts beneath the people of Zambia.
We will see whose balls will be in whose mouth.
GRZ may have mishandled it but will they do better?
Or maybe it was the plan by GRZ all along.
Chishala is talking nonsense. Insolvency of a company when it fails to meet its obligations is not a “dispute”. Insolvency Act / law deals with insolvency matters. The matter before the Zambian High court regarding KCM’s insolvency is ZCCM-IH vs KCM… The one in SA where disputes are handled is GRZ vs Vedanta… Keep your trash to yourself. You are even happy. This KCM matter is a matter that needs to be dealt with now.
@DIGGA You are the one talking nonsense.
ZCCM IH which has a 20% stake in KCM signed the shareholder agreement with VEDANTA. But it is the same ZCCM IH which filed for liquidation in the High Court against its own signed agreement.
The legal liquidation route would stand if creditors like ZRA , lending institutions such as banks or the mining suppliers initiated the legal action.
But in this case,the PF government is acting in desperation because of “nkongole” and handling the whole issue wrongly.VEDANTA have now been given a way out.
The PF government only have one thing in mind.
GIVE KCM TO THE CHINESE IN EXCHANGE FOR DEBT AND KICKBACKS BEFORE 2021 ELECTIONS.
They are using the corrupt Zambian PF judges and lawyers to achieve this end.The PF have no money to pay off the EUROBONDS which are due within the next 3 years.This is an act of desperation.
A DROWNING MAN WILL CLUTCH AT A STRAW.
“Independent”, first and foremost have respect for an elected government even if you many not like it. Your shouting (Capital letter writing ) has no supporting evidence. You may be worse than the guys in Government now, the way i see it. You are accusing anyone who is PF to be corrupt. Learn to be patriotic like other countries do. You have no country to. Foreigners can say those thinsg about us but they have their own country which you will rarely find them insulting it. . They may doing things wrong but there are ways of airing your views in a noble manner than just rantling. You are vomiting all your vernom here for all to see insteady of helping the situation. SHAME.
Another shallow analysis. Please read and understand what the the UNCTRAL arbitration process, seat of Jurisdiction and ruled are, and what they are not. Also what the term Governing Law implies. Too many blind prophets who seem to attract just as many blind followers in their myopic analysis and conclusions. Social media has made everyone a qualified analyst, even those are were only good to do so over beers in a bar.
Ubufi bubi just some of you guys are not patriotic that is why you speak ill of this nation. Let us be honest and frank, and by the way this is business and business is loose or win.We loose fine,we win fine. So the fact is Vedanta is gone and no more retreating.And even before the Arbitration issue,there is a process which is suppose to be taken which Vedanta is suppose to take, read the agreement again and again.
let’s wait and see how this unfolds. I hope the ruling is in Zambian’s favor, but they mishandled this issue recklessly bad
the problem with the current government is that they seem to think that they are above the law. they do that to Zambians and issues pertaining to them all the time
to me it seems like they chose to ignore a lot of clauses in the contract, probably because the pressure from the top
and that brief news conference by mines minister was just to save face and try and calm people’s concerns. they know all too well that they can’t dismiss this issue on the basis that Zambia is it’s own nation. be it as it may be, this contract is with a multinational firm and the terms were stipulated in the contact
My take is that, we have enough copper underground to pay off whatever compesation there may be in case vedanta wins the case. Lets put this rogue company out of the way and start afresh. Its just money. We have enough Gold, Diamonds, cobalt…name it it. We can do it.
Nobody disputes the fact that Vedanta is a bad investor but the PF chipantepante government should have analysed the agreement the MMD government signed with those thieves masquerading as investors before rushing the disengagement (liquidation) process. Did the government think that those crooks would just pack their bags and bid farewell to Zambians and not put up a fight? Was this liquidation process began haphazardly in order to win political mileage by our visionless president and his unpopular PF? Well you just can’t get rid of an international company as if you are evicting a truant tenant from a corner shop. Finally the government must make a true and detailed statement concerning the process Vedanta has started at the arbitration court in South Africa and its consequences on…
The government must make a true and detailed statement concerning the process Vedanta has started at the arbitration court in South Africa and its consequences on Zambia if Vedanta wins the case. Lungu and his government must stop lying and tell us the truth. If the result of the legal process in South Africa doesn’t matter, why did the government hire expensive defence lawyers?
This government is chronically dull in everything they do. They firstly do then think later. It is very shameful how they run the affairs of the country and very embarrassing to the outside world. The government reject sound advise and pay no attention to contructive criticism they act like a man who has taken viagra without firstly thinking of equipping oneself with a condom since he doesn’t really know who he is about to sleep with. The viagra just makes them want to do do
There is no such entity as South African Court of Arbitration. Vedanta took the case to the South African HIGH COURT. This shows you the depth of ignorance of the writer and yet he wants to interpret the KCM agreement for us! Absolute crap!
Despite claiming that this is a dispute fit for arbitration Vedanta have not initiated any arbitration anywhere in the world. If the South African High Court decision is enforceable anywhere in the world then the Zambian High Court decision will also be enforceable to counter the South african court. It is a zero sum game as they say, so the initial case will remain: LIQUIDATION in Zambia. Vedanta know this very well that’s why they are running like scared rats all over the show, including inconsequential south african court interdicts or injunctions.