The South African high court on 23 August, refused an application made by Zambia’s mining investment vehicle ZCCM-IH to stay an earlier made ruling that blocks the Zambian government from proceeding with liquidation and selling of Vedanta assets in Konkola Copper Mines.
Judge Leicester Adams stated that the application by the 20% monitory shareholder, ZCCM-IH did not present anything new and as such he felt there was no reason to support the stay application. This is a case where Vedanta, 80% majority shareholder in KCM has been cited to breach of license requirements ranging from pollution to tax evasion. ZCCM-IH representing the government’s stake commenced liquidation proceedings in a Zambian court earlier in the year.
The South African High court is looked at as an International Arbitration advocate according to the Arbitration Act. The court stayed the application citing that only after the case should be subjected to arbitration.
This case is one which the global mining investors are closely watching in light of what the precedence will be. The cross border jurisdictional legal risk is a very critical aspect in light of potential diplomacy implications this may have on the two liberations struggle nations. Zambia is eager to get a new equity investor should the outcome be in their favor in the long run.
Most analysts are using this case and stance as a litmus test for the independence of the judicial system in both South Africa and Zambia. Whatever the outcome, the landmark case will set precedence in the mining industry for other jurisdictions grappling with license breach allegations against mining investors.
Compiled by the BT Research Team
