U&M Mining Zambia Ltd v Konkola Copper Mines Plc [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Blair J |
| Judgment Date | 15 February 2013 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 15 February 2013 |
Queen's Bench Division (Commercial Court).
Blair J.
Andrew Mitchell QC and Marianne Butler (instructed by Clyde & Co) for the claimant.
Justin Mort (instructed by Latham & Watkins) for the defendant.
The following cases were referred to in the judgment:
A v B [2007] 2 CLC 157.
Ace Capital Ltd v CMS Energy CorpUNK [2008] EWHC 1843 (Comm); [2008] 2 CLC 318.
Braes of Doune Wind Farm (Scotland) Ltd v Alfred McAlpine Business Services LtdUNK [2008] EWHC 426 (TCC); [2008] 1 CLC 487.
C v D [2007] 2 CLC 930.
Econet Wireless Ltd v Vee Networks LtdUNK [2006] EWHC 1568 (Comm).
Joint Stock Asset Management Co Ingosstrakh-Investments v BNP Paribas SA [2012] 2 CLC 312.
Nomihold Securities Inc v Mobile Telesystems Finance SA [2012] 1 CLC 339.
Shashoua v Sharma [2009] 1 CLC 716.
Starlight Shipping Co v Tai Ping Insurance Co Ltd [2007] 2 CLC 440.
Sulamérica Cia Nacional de Seguros SA v Enesa Engenharia SAUNK [2012] EWHC 42 (Comm); [2012] 2 CLC 216; [2013] 1 WLR 102 (CA).
Arbitration — Interim and protective measures — Seat of arbitration — Anti-suit injunction — Defendant owned copper mine in Zambia operated by claimant — Parties' contracts subject to Zambian law and jurisdiction and providing for LCIA arbitration in London — Defendant terminated contract — Whether claimant required to leave site immediately — Defendant obtained order from Zambian court pending arbitration compelling claimant to vacate mine and hand over equipment — Claimant commenced London arbitration and sought anti-suit injunction — Provision for place of arbitration to be England meant that seat of arbitration was England — Parties contractually entitled under LCIA rules to apply to Zambian courts for interim protective measures — Zambian proceedings not in breach of arbitration agreement — Anti-suit injunction discharged.
This was an application by the claimant (U&M) for a final anti-suit injunction restraining the defendant (KCM) from pursuing proceedings in Zambia seeking interim measures in support of arbitration proceedings.
KCM was a Zambian company which owned copper mines in Zambia. U&M was a Zambian subsidiary of a major Brazilian mining and construction contractor. U&M operated an open pit copper mine for KCM under a number of contracts governed by Zambian law and jurisdiction and providing for LCIA arbitration in London. The value of U&M's equipment on site was around US$95m.
In January 2013, KCM terminated or purported to terminate one of the mining contracts on the ground that U&M had failed to meet production targets. The contract provided that on termination U&M should leave the site. KCM applied to the Zambian court under the Zambian Arbitration Act and obtained an ex parte interim mandatory injunction compelling U&M to vacate the mine immediately and to hand over certain identified equipment that had been pledged by U&M to KCM as security.
KCM asserted that its intention in bringing those proceedings was to protect its contractual rights and interests pending LCIA arbitration in London. U&M sought to comply with the order and most, if not all, of the equipment identified in the order had been handed over.
U&M commenced an LCIA arbitration in London and then obtained an interim anti-suit injunction restraining KCM from taking steps in the Zambian proceedings on the ground that those proceedings were in breach of the arbitration provisions in the contracts which required LCIA arbitration.
U&M argued that if KCM genuinely required interim relief from a court for reasons of urgency it was obliged to seek it from the English court, as the seat of the arbitration, not the Zambian court. It was common ground that resolution of that issue depended on the terms of the arbitration agreement between the parties. KCM submitted that whether or not the seat of the arbitration was in Zambia, KCM was still entitled to use the Zambian court as the local court to obtain interim remedies.
Held, discharging the interim anti-suit injunction:
1. Despite the reference to the High Court of Zambia having exclusive jurisdiction, the parties had agreed that disputes relating to and/or arising out of the contract should be referred to arbitration. Although the contract referred to LCIA arbitration “in London” and provided that the “place” of the arbitration should be England, it was plain that the parties thereby agreed that the seat of the arbitration should be England. The seat was in most cases sufficiently indicated by the country chosen as the place of the arbitration. For such a choice of place not to be given effect as a choice of seat, there would need to be clear evidence to the contrary and there was none in the present case. (Shashoua v Sharma[2009] 1 CLC 716 followed.)
2. The natural court for the granting of interim injunctive relief had to be the court of the country of the seat of arbitration, especially where the curial law of the arbitration was that of the same country. A party might exceptionally be entitled to seek interim relief in some court other than that of the seat, if for practical reasons the application could only sensibly be made there, provided that the proceedings were not a disguised attempt to outflank the arbitration agreement. The courts of the seat would have the sole supervisory and primary supportive function in relation to the conduct of the arbitration. In the present case the parties' agreement provided for LCIA arbitration. Article 25.3 of the LCIA Rules, by expressly stipulating that the power of the arbitral tribunal to order interim and conservatory measures was not to prejudice a party's right to apply to a state court before the formation of the arbitral tribunal, implicitly recognised the party's right to do so. That meant that the parties were contractually entitled to apply to the Zambian courts for interim protective measures. In the circumstances, so far as judicial assistance by way of interim measures pending the appointment of the arbitrators was required, the natural forum for such proceedings was in Zambia, not in England. The Zambian proceedings were not in breach of the arbitration agreement between the parties, and on that basis the injunction was discharged.
Blair J:
1. This case concerns an anti-suit injunction obtained by the claimant, U&M Mining Zambia Ltd (“U&M”), against the defendant, Konkola Copper Mines plc (“KCM”). The injunction obtained by U&M restrains KCM from pursuing proceedings in Zambia contrary (U&M submits) to various London arbitration clauses. Though the general principles applicable in such a situation are well settled, counsel agree that there is no direct authority on the particular issue that is raised in this case. That is because the suit in Zambia which U&M seeks to restrain is, or is in the form of, an application made for interim measures in support of, rather than in opposition to, the arbitration. The issue is essentially whether these proceedings amount to a breach of the arbitration clauses in question so as to justify the grant of an injunction by this court.
2. U&M is a Zambian company which is a subsidiary of a major Brazilian mining and construction contractor. KCM is also a Zambian company (according to U&M it is a subsidiary of Vedanta Resources plc, a company headquartered in London, England, but KCM did not confirm this at the hearing).
3. KCM owns copper mines in Zambia. This case concerns an open pit copper mine called COP F&D which is in the Nchanga area of Zambia's copperbelt. Some idea of the scale of the operation comes from the fact that the mine is at least 4km long by about 3km wide. Many people (local and expatriate) work there, and I was told that it accounts for a substantial percentage of the entire country's GDP.
4. U&M has operated the COP F&D mine for KCM since 2007. KCM says that U&M was incorporated for this purpose, and no contrary suggestion has been made. In simple terms, the evidence is that mining takes place as follows. Rock is blasted with explosives, excavated by hydraulic shovels and loaded into very large trucks. Waste is deposited in nearby dumps, while the ore is hauled to KCM's plant for extraction of the copper. All this requires heavy duty machinery of various kinds which is provided by U&M. I am told by U&M that, leaving aside certain equipment that has been treated as security for advances made by KCM to U&M, the value of U&M's equipment on site is around US$95m.
5. Since the first mining contract between the parties dated 25 April 2007, there have been numerous further contracts by way of amendment, or self-standing agreements of various kinds. For present purposes, this application is primarily concerned (it is stated in U&M's evidence) with a contract entered into by the parties on 15 December 2011 for mining waste from what is called the Footwall and Hanging Wall (“the FW/ HW contract”). However various other contracts feature in the evidence, including a settlement agreement dated 26 October 2012 (one of two settlement agreements entered into in 2012). A common feature of the parties” various contracts is that they are governed by Zambian law, and provide for LCIA arbitration in London.
6. The fact that there were two settlement agreements between the parties in 2012 indicates, as is the case, that relations between them have not been good in recent times. Among other things, disputes have arisen as to what sums are due to be paid to U&M.
7. Matters came to a head at the beginning of 2013. On 28 January 2013, KCM terminated (or purported to terminate) the FW/HW contract on the grounds that U&M had failed to meet production targets over five consecutive months from August 2012 to December 2012. U&M denies any such breach, and says that (even if established) it was subsumed in the settlement agreement of 26 October 2012.
8. Clause 35.1.8 of the FW/HW contract provides that upon...
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