Konkola Copper Mines Plc v U&M Mining Zambia Ltd

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMr Justice Eder
Judgment Date02 July 2014
Neutral Citation[2014] EWHC 2146 (Comm)
Docket NumberCase No: 2014 Folio 105

[2014] EWHC 2146 (Comm)




Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL


Mr Justice Eder

Case No: 2014 Folio 105

Konkola Copper Mines Plc
U&M Mining Zambia Ltd

Mr Graham Dunning QC, Ms Rebecca StripeandMr Louis Flannery (Solicitor Advocate) (instructed by Stephenson Harwood) on behalf of the Claimant

Mr Derrick Dale QC and Mr Ravi Aswani (instructed by Clyde & Co) on behalf of the Defendant



Approved Judgment


I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Eder Mr Justice Eder



1. On 20 June 2014, I heard two related applications on behalf of the defendant ("U&M") for (i) security for costs pursuant to s70(6) of the Arbitration Act 1996 (the "1996 Act") in relation to challenges made by the claimant ("KCM") to an arbitration award dated 6 January 2014; and (ii) security for certain sums due under such award pursuant to s70(7) of the 1996 Act. At the conclusion of that hearing, I informed the parties that I would order security for costs in the sum of £300,000; but that I refused to make any order for security under s70(7) of the 1996 Act. This judgment sets out my reasons for those decisions.




2. KCM and U&M are both companies incorporated under the laws of the Republic of Zambia. KCM is a subsidiary of Vedanta Resources Plc ("Vedanta") which is listed on the London Stock Exchange. KCM operates a number of copper mines on the Zambian copperbelt. U&M is a subsidiary of a substantial Brazilian mining conglomerate and carries on business as a mining contractor in Zambia. Between April 2007 and December 2011, KCM and U&M entered into a number of contracts which were, in essence, for the provision by U&M of open pit mining and related services at one of KCM's mines in the Nchanga area of Zambia's copperbelt.


3. A number of disputes subsequently arose between the parties in relation to their contractual arrangements. Those disputes culminated in a Settlement Agreement and a Memorandum of Understanding both dated 26 October 2012. Subsequently, KCM purported to terminate one of the mining contracts between the parties and also to rescind the said Settlement Agreement, KCM claiming that it had been induced to enter the Settlement Agreement by a fraudulent misrepresentation made by U&M. This was followed by applications for interim relief by KCM in Zambia and by U&M in the English Courts; and the commencement by U&M of four arbitration references pursuant to the Rules of the London Court of International Arbitration ("LCIA") which were subsequently consolidated. The tribunal — consisting of Mr Edwin Glasgow QC, Mr Stuart Isaacs QC and Mr Michael Lee (Chairman) — also granted further interim relief in favour of U&M.


First Award


4. Following the service of submissions in the arbitration by U&M, a hearing took place in London during the week commencing 30 September 2013 to determine a preliminary issue with regard to the validity of the Settlement Agreement. Pursuant to an award dated 7 November 2013 (the "First Award"), the tribunal found that the Settlement Agreement was binding and ordered KCM to pay U&M US$14,619,900.12 and £15,155.23. However, nothing has been paid. The First Award was not challenged in England although KCM is now resisting its enforcement in Zambia based on a number of allegations – including (i) an allegation that the tribunal was not properly constituted as the Settlement Agreement provided for the arbitral reference to be determined by a sole arbitrator; and (ii) an allegation that enforcement in Zambia would be "contrary to public policy" on the basis that the underlying arbitration agreement was not properly authenticated for use in Zambia. U&M say that such allegations are without merit and a blatant abuse of process. In any event, whatever the outcome of such challenges may be in Zambia, given the terms of the First Award and absent any challenge before this Court, it seems to me that the First Award is plainly to be regarded as valid and binding as a matter of English law.


Second Award


5. Following publication of the First Award, U&M made a number of applications to the tribunal in the course of November and early December which culminated in a further hearing before the tribunal on 9 December 2013. The correspondence passing between the parties and the tribunal during this period is set out in considerable detail in the first witness statement of Peter Hirst who is a solicitor and partner in Clyde & Co, U&M's solicitors. In summary, U&M say that KCM in effect refused or failed to respond properly to such applications and directions. Rather, late in the evening before the scheduled hearing, Debevoise & Plimpton (KCM's then lawyers) wrote saying they were coming off the record. An e-mail was then sent by KCM on the morning of the hearing seeking a three month adjournment whilst it could consider at a senior management level the various points arising and actively consider changing its legal representation. An application was made at the hearing by Debevoise & Plimpton for the adjournment. The application was refused by the tribunal and the representative from Debevoise & Plimpton then left. The hearing then continued in the absence of any representative of KCM; and Mr Dale QC on behalf of U&M then went through the various claims advanced on behalf of U&M and the orders sought including in relation to what U&M said were sums due under a series of outstanding invoices totalling US$40,205,995.31. As appears from p8 of the transcript of that hearing, Mr Dale submitted that U&M were entitled to an "interim payment" in respect of such outstanding sums pursuant to Article 25.1(c) of the LCIA Rules which provides as follows:

" The Arbitral Tribunal shall have the power, unless otherwise agreed by the parties in writing, on the application of any party:


(c) to order on a provisional basis, subject to final determination in an award, any relief which the Arbitral Tribunal would have power to grant in an award, including a provisional order for the payment of money or the disposition of property between the parties…"


Thereafter, Mr Dale reverted to this topic at p42 lines 17–21 of the transcript suggesting:

" … a procedure going forward that the determination of that being, turning that interim order into a final order, along the lines of giving [KCM] a certain time period in which to respond and ask to respond and for then that to be determined by the tribunal …"


The transcript then continues as follows:

" The CHAIRMAN: Can — would it be possible to do this by way of effectively a conditional award? An interim award plus directions for responding by the respondent. If [KCM] does not respond in whatever time we direct, that is converted into a final award.

MR DALE: That –

THE CHAIRMAN: And if they do respond, then –

MR DALE: Then we have a right of reply. That sets a very fair mechanism for both sides to deal with any points that arise …"


A full transcript of the hearing which took place on 9 December 2013 was immediately sent to KCM on that very day.


6. Thereafter, the tribunal issued its Second Award dated 6 January 2014 (the "Second Award") containing in paragraph 75 a series of various declarations and orders. For present purposes, I would note, in particular, that in paragraph 75(i), the tribunal ordered that: " KCM shall make an interim payment of £1,096,876.01 on account of U&M's legal costs"; that in paragraph 75(iv), the tribunal ordered KCM to pay to U&M £15,000 in respect of the deposit paid (to the LCIA) by U&M on KCM's behalf; and that with regard to the claims in respect of alleged outstanding invoices the tribunal ordered at paragraph 47 and repeated at paragraph 75(viii):

" Unless KCM shows cause, supported by evidence within 14 days, why the invoices … should not be immediately payable, KCM is ordered to pay those invoices totalling US$40,205,995.31 forthwith. If KCM does file a submission within the time directed U&M shall reply thereto within 14 days after receipt of KCM's submissions."


The "show cause" formula was also adopted by the tribunal in respect of certain of the other claims advanced by U&M.


7. A copy of the Second Award was apparently received by KCM on 10 January 2014.


8. Meanwhile, KCM instructed new solicitors, Stephenson Harwood, towards the end of December 2013. However, there was apparently some delay in those solicitors receiving the relevant documents and coming up to speed; and they eventually came on the record on 14 January 2014. In the event, KCM did not respond to the tribunal's invitation to "show cause" within the fourteen day period specified in paragraph 75(viii) of the Second Award. Thereafter, further correspondence ensued between Clyde & Co, Stephenson Harwood and the tribunal as summarised in Mr Hirst's first witness statement which it is unnecessary to set out in detail save to note that by email dated 29 January 2014, the tribunal gave certain confirmations sought by Stephenson Harwood including that the matters set out in inter alia paragraphs 47 and 75(viii) were "final".


Third Award


9. A further hearing took place before the tribunal on 11 February 2014 attended by both parties' representatives. This was followed by an email from the tribunal on 13 February 2014 confirming that certain of the declarations and orders made in the Second Award were "final" and giving further directions with regard to other outstanding matters; and the tribunal's further award (the "Third Award") dated 24 March 2014 whereby KCM were ordered to pay U&M's costs relating to the First Award on...

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