Konkola Copper Mines v U&M Mining Zambia Ltd

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMr Justice Cooke
Judgment Date15 July 2014
Neutral Citation[2014] EWHC 2374 (Comm)
Docket NumberCase No: 2014 Folio 105

[2014] EWHC 2374 (Comm)




Royal Courts of Justice

Strand, London, WC2A 2LL


Mr Justice Cooke

Case No: 2014 Folio 105

Konkola Copper Mines
U&M Mining Zambia Ltd

Graham Dunning QC, Rebecca StripeandLouis Flannery(Solicitor Advocate) (instructed by Stephenson Harwood) for the claimant

Derrick Dale QC and Ravi Aswani (instructed by Clyde & Co LLP) for the respondent

Hearing dates: 8th and 9th July 2013

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 Cooke Mr Justice Cooke



This is an application by the respondent in an arbitration, Konkola Copper Mines Plc (KCM) under section 67 and section 68 of the Arbitration Act 1996. It is not untypical of applications of this kind made to the Commercial Court. The defendant, which is the claimant in the arbitration, is U&M Mining Zambia Ltd (U&M).


In the Arbitration Claim Form KCM asks the court to declare that the Second Partial Final Award dated 6th January 2014 (the Second Award) in four consolidated LCIA arbitrations is of no effect and should be set aside and/or remitted to the Tribunal for reconsideration. In oral argument the relief sought under section 67 was setting aside and the relief sought under section 68 was remission.


The grounds as set out in the Claim Form centre on a hearing which took place on 9th December 2013 in the absence of KCM. It is said that the tribunal ought to have granted an adjournment and should not have proceeded on that date. Having failed to give any clear indication of the issues and of what, if any, substantive matters would be raised at the hearing, and having failed to give KCM proper opportunity to lodge pleadings, submissions or evidence following the First Award made one month earlier, it should not have proceeded to make the Second Award which determined a number of substantive issues. It is said that a number of the issues determined were beyond the tribunal's substantive jurisdiction and that the conduct of the proceedings leading to the Second Award was vitiated by serious irregularity which has caused KCM substantial injustice. It was not given a reasonable opportunity to put its case, the procedure was unfair and the tribunal did not comply with section 33 of the 1996 Act. The tribunal is also said to have acted in breach of Article 19.1 of the LCIA Rules. It is said that none of the procedural defects were ameliorated by the provision in paragraphs 47, 53 and 62(2) of the Second Award which allowed a 14 day period of time following the Award in which KCM could seek to "show cause" against certain heads of relief granted and orally it was submitted that this was an invalid form of Award to make.


The factual background can be stated shortly and I take the following summary essentially from KCM's skeleton argument.


KCM and U&M are both companies incorporated under the laws of the Republic of Zambia. KCM is a subsidiary of Vedanta Resources Plc, a substantial company which is listed on the London Stock Exchange. It is the largest copper mining company in Africa. KCM operates a number of copper mines on the Zambian copper belt. U&M, which is a subsidiary of a Brazilian mining conglomerate, 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 KCM's mines in the Nchanga area of Zambia's copper belt. A number of disputes subsequently arose between the parties in relation to their various contractual arrangements which led to a Settlement Agreement in April 2012 which led to an Adjudication followed by the conclusion of a Settlement Agreement dated 26th October 2012 (the Settlement Agreement).


In January 2013 however, KCM terminated one of the mining contracts between the parties and purported to rescind the Settlement Agreement. Notwithstanding the arbitration clause in each of the relevant four contracts, KCM applied to the Zambian courts seeking to compel U&M to vacate KCM's mining site at the COP F&D mine immediately and to deliver certain equipment in its possession to KCM which had been pledged by U&M as security for an Advance Payment Guarantee and Performance Guarantee given by U&M in KCM's favour. U&M successfully applied to this court for an anti-suit injunction in respect of the Zambian proceedings, which was subsequently discharged on the basis of an entitlement, on the part of KCM to obtain interim protective measures from the Zambian courts but not substantive relief, but on terms of an undertaking by KCM not to enforce that security until substantive issues were resolved in arbitration.


On 13th February 2013, KCM sought to call upon a bank guarantee (the BES Guarantee) which U&M had procured in favour of KCM in respect of all loss and damage which KCM might suffer by reason of a payment on account of sums that might become due following the reference of earlier claims to an adjudicator. The maximum sum covered by guarantee was US$10 million. On 18th February U&M's parent company applied to the Brazilian court of First Instance for an ex parte injunction restraining BES from paying KCM's demand under the BES Guarantee. The application was refused but on appeal the Brazilian Court of Appeal overturned that decision on 22nd February 2013.


The parties' disputes were referred to LCIA arbitration (at the end of January/beginning of February 2013) under four contracts. The first reference was arbitration 132307 under the Settlement Agreement where U&M claimed sums due under that Agreement totalling US$22,648,465.56. The second arbitration was numbered 132309 which arose under a "Contract for Mining Enhancement from Open Pits" which was referred to as the Main Contract which had come to an end in mid January 2013. U&M claimed under this contract for payment of invoices totalling US$20,345,213.38 (with interest) together with a claim for "other necessary or alternative relief under or in respect of the Main Contract, in particular with regard to payment of further invoices which have not yet fallen due for payment". This was the contract that KCM terminated on 28th January 2013. The third arbitration was numbered 132310 in respect of a "Contract for Mining of Waste at Foot Wall/Hanging Wall at COP F&D Open Pit", which is referred to as the FW/HW contract. KCM sought payment of invoices under that agreement totalling $7,486,607.77 "together with interest and any other necessary or alternative relief under or in respect of that contract, in particular with regard to the payment of further invoices which have not yet fallen due for payment". The last arbitration was that numbered 132311 in respect of a "Contract for Maintenance of Haul Road Connecting COP F&D and East Mill NIBU Concentrator", known as the Road Maintenance Contract. U&M sought payment of invoices totalling $319,786.48 "together with interest and any other necessary or alternative relief under or in connection with the road maintenance contract, in particular with the regard to the payment of further invoices which have not yet fallen due for payment". The statements of claim in relation to each of the four separate arbitrations sought relief in similarly wide terms. In particular, relief was sought in relation to the BES Guarantee, the Advance Payment Guarantee and the Performance Guarantee, each of which related to underlying obligations in the contracts. In the FW/HW Contract arbitration, U&M sought, in addition to its monetary claims, a declaration that KCM was not contractually entitled to the relief claimed in the Zambian court.


The four arbitrations were consolidated by a consent order of the Tribunal dated 11th June 2013 and on U&M's application, the Tribunal ordered a preliminary issue relating to the validity of the Settlement Agreement because many of KCM's defences and cross claims stood or fell in limine on this question. The hearing of this took place between 30th September and 4th October 2013 where oral evidence was adduced. U&M were represented by Clyde & Co and KCM by Debevoise & Plimpton LLP (hereinafter Debevoise). It was KCM's case that the Settlement Agreement had been procured by reason of a material misrepresentation on the part of U&M. On 7th November 2013, the 3 man tribunal made a Partial Final Award (the First Award), running to 56 pages in which they declared the Settlement Agreement to be valid, disbelieved the evidence of U&M's main witness Mr Pratap and found there had been no misrepresentation at all. Paragraph 4 of the dispositive part of the First Award reserved "all claims and counterclaims, including all questions of costs, for one or more future awards" and paragraph 5 stated that "directions will be given for the determination of the remaining claims in these proceedings".

Sections 67 and 68 of the Arbitration Act 1996


The terms of section 67 of the Arbitration Act provide that a party to arbitral proceedings may, upon notice to other parties and to the tribunal, apply to the court challenging any award of the tribunal as to its substantive jurisdiction or seeking a declaration that an award on the merits be of no effect, in whole or in part, because of the lack of such jurisdiction. Section 67(1) expressly states that a party may lose the right to object, by reference to section 73.


Section 73 provides that if a party to arbitral proceedings takes part or continues to take part in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of the Act, any...

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