National Restoration Party (NAREP) President Elias Chipimo has asked the government to negotiate with Vedanta Resources and avoid the animosity towards each other in the manner both parties have been engaging with each other.
In a Press Statement, Chipimo who is a lawyer by Professional said the difficulty with the approach that the Government and ZCCM-IH settled upon is that they chose the wrong entity to lodge the winding-up application.
“As a party to the Shareholders Agreement, ZCCM-IH is bound by the provisions relating to arbitration of any dispute between the parties, meaning taking the matter to court (by lodging a winding-up petition) as opposed to commencing arbitration proceedings in Johannesburg would constitute a breach of the Shareholders Agreement, which is essentially what the Johannesburg Court ruling is stating,” Chipimo said in a statement.
“Attempting to fight the Johannesburg ruling with the argument that the Shareholders Agreement is governed by Zambian law is nothing short of folly. We are better off saving the country further loss and negotiating a managed exit of Vedanta. The sad reality though is that when all is said and done, we are back to dealing with the impact of ineptitude, greed and a lack of clarity about how to safeguard the nation’s most prized assets and indeed the somewhat deeper problem of how to competently manage the nation”.
Chipimo said there has been a lot of panic and speculation about whether the decision of the South African High Court is enforceable in Zambia. He said that the Government claims that the Johannesburg ruling amounts to an interference in our judicial system and would only be applicable if it was registered in Zambia, which was not possible because Zambia and South Africa have no reciprocal enforcement provisions in their laws.
“The judge in the South African Court was alive to this challenge and dismissed such reasoning on the grounds that the instruction to withdraw the winding-up application is addressing an order in personam, meaning it is directed at ZCCM-IH and not at the Zambian High Court and as such, it does not amount to an interference by a South African court in the Zambian judicial system. Put more simply, the Johannesburg ruling is intended to bind ZCCM-IH and not the Zambian High Court. So what does this all mean for Zambia? Practically, both ZCCM-IH and the Government can continue to ignore the Johannesburg ruling and press on with the winding-up process as they appear determined to do. However, the implications for ZCCM-IH (and therefore the nation) are that when the matter eventually goes to arbitration, the damages to be paid are likely to be much higher. The Johannesburg ruling has more or less demonstrated the oddity of the reasoning behind the decision to allow the winding-up application to have seen the light of day in a any court, when the jurisprudence on matters of international arbitration seems well settled,” the Opposition leader said.
“Once the arbitration has been finalised and assuming, as many have probably correctly concluded, that Vedanta are awarded substantial damages (which could of course be reduced by any counter-claims that ZCCM-IH may have), the award will be registered in Zambia and fully enforceable as though it was a judgement passed in Zambia. Given this position, what would be a sensible way forward? It is only fair to acknowledge that the economic and social problems in Chingola, specifically and on the Copperbelt in general, are real and that given the central role that KCM plays in the prosperity of both the city and the province, the Government had to do something to arrest the decline. The problem is the unstructured nature of the intervention. It is not, however, too late to engage in discussions on a less chaotic way forward for KCM. The continuation of Vedanta as the main investor on KCM is clearly untenable and what is needed now is an agreed exit plan – something Vedanta would probably be less unwilling to consider now than in the past. The Government can use its considerable leverage to settle reasonable compensation to Vedanta which would take into account the claims by ZCCM-IH and any non-compliance with the Mines and Minerals Act. The Shareholders Agreement actually contemplates mediation and this approach would be broadly in line with that spirit”.