Vedanta Resources Holdings Limited v ZCCM Investment Holdings PLC and Another (2019/23462) [2019] ZAGPJHC 250 (23 June 2019)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: 2019/23462

DATE: 23rd JULY 2019

In the matter between:

VEDANTA RESOURCES HOLDINGS LIMITED Applicant

and

ZCCM INVESTMENT HOLDINGS PLC First Respondent

LUNGU, MILINGO N O

(In his official representative capacity as the

Provisional Liquidator of Konkola Copper Mines PLC) Second Respondent

JUDGMENT

Adams J:

[1]. This is an opposed urgent application by the applicant against the first respondent for interim interdictory relief and declaratory orders, pending the final determination of arbitration proceedings to be instituted by the applicant against the first respondent in Johannesburg (‘the arbitration’). In essence, the applicant in this application aims to have stayed or even withdrawn winding – up proceedings in the Lusaka High Court of Zambia against Konkola Copper Mines PLC (‘Konkola’). The arbitration proceedings which the applicant intends instituting arise from an arbitration clause in a Shareholders Agreement, which relates to the shareholding in Konkola. The applicant, the first respondent and Konkola are parties to the Shareholders Agreement, as are the Government of the Republic of Zambia and three other entities. It is the case of the applicant that the first respondent’s application for the liquidation of Konkola or rather the underlying reasons for the winding up is a ‘dispute’ between shareholders as defined in the Shareholders Agreement, and should have been referred to arbitration as provided for in the said agreement.

[2]. The disputes, which are the subject of the litigation before me, are truly of an international nature. The dramatis personae are all peregrini as far as this Court is concerned. The applicant is a company registered in England and Wales and the first respondent is registered in the Republic of Zambia, as is Konkola, the company at the centre of the fight between the applicant and the first respondent. South Africa’s only interest and involvement in the matters at hand is that Johannesburg is named as the place where the arbitration should be held. The very first question which this Court needs to adjudicate therefore is whether it has the necessary

jurisdiction to hear this matter.

[3]. The relief sought by the applicant in its notice of motion is for an order:

‘1. Granting leave to the applicant to move this application as one of urgency, dispensing with the forms and service provided for in the Uniform Rules of Court.

2. Pending the final determination of the arbitration proceedings to be instituted by the applicant against the first respondent in

Johannesburg (Arbitration), within 10 days of the expiry of the requisite 30 day business period for the amicable settlement of

disputes under clause 24.2 of the shareholders agreement concluded among the applicant, the first respondent and others (Shareholders

Agreement), declaring that the first respondent has breached the Shareholders Agreement and continues to breach the Shareholders

Agreement through the institution by the first respondent of winding – up proceedings in the High Court of Zambia, held at Lusaka, against Konkola Copper Mines PLC (KCM), (Winding-Up Proceedings), and its perseverance with the Winding – Up Proceedings.

3. Pending the final determination of the Arbitration, directing that the first respondent immediately withdraws the Winding – Up Proceedings such that the Provisional Liquidator is discharged from office, alternatively, directing that the first respondent applies to the High Court of Zambia for a stay of the Winding – Up Proceedings and to secure the immediate suspension of the powers of the provisional liquidator.

4. Pending the final determination of the arbitration, restraining the first respondent from taking any further steps in furtherance and prosecution of the Winding – Up Proceedings.

5. Pending the final determination of the arbitration, restraining the first respondent from instituting any further winding – up application against KCM on the basis of the same or similar grounds relied upon in the Winding – Up Proceedings.

6. Granting such further and / or alternative relief as this Honourable Court may deem appropriate.

7. Directing that any party opposing this application pay the applicant's costs, including the costs of two Counsel and including the costs of senior counsel.’

[4]. In addition to denying that the applicant’s application is urgent, the first respondent opposes the application on the basis that the matter is lis pendens in the Zambian High Court, in which court the applicant has applied for relief simirlar to the relief which it seeks in this application,

namely for an order staying the winding – up petition. Secondly, the first respondent contends that the application for the

winding – up of Konkola does not give rise to a dispute as contemplated in the Arbitration clause of the Shareholders Agreement.

In the absence of an arbitral dispute, it follows, so the first respondent contends further, that this court lacks the necessary

jurisdiction to hear this matter, because ‘it can only ever have jurisdiction in respect of a matter that is properly arbitrable

in terms of the Shareholders Agreement’. Lastly, it is the case of the first respondent that this court should refrain from giving orders that have extra – territorial effect and cannot be given effect to – the so called ‘effectiveness’ doctrine in the context of enquiries relating to jurisdiction. In any event, so the first respondent submits, the court of one sovereign state should not attempt to regulate the proceedings before the court of a different sovereign state.

[5]. In sum, the first respondent contends that this court does not have the necessary jurisdiction to adjudicate this matter. My reading of the first respondent’s case is that this court would have jurisdiction if I were to find that the application in the Zambian High Court for the winding – up of Konkola is underpinned by a dispute between shareholders, being the applicant and the first respondent, and that this dispute falls within the definition of an arbitrable dispute within the contemplation of the Shareholders Agreement.

[6]. Konkola is a public limited company registered in Zambia and it holds a mining licence and undertakes mining operations. It mines copper at Chingola in Zambia. The applicant holds 79.4% of the shares in Konkola and the first respondent, which is an investment vehicle for the Government of Zambia, holds 20.6%.

[7]. The Arbitration Clause 26.1 of the Shareholders Agreement concluded between inter alia the applicant and the first respondent provides that:

‘Subject to the provisions of Clauses 24 and 25 above, the Parties hereby consent to submit any Dispute to be resolved by arbitration in accordance with the UNCITRAL Arbitration Rules (the “Rules”) as in force and effect on the date of service of Notice of Dispute under Clause 23 above, save as modified by the provisions of this Clause 26. The tribunal shall consist of a sole arbitrator (the “Tribunal”) and the appointing authority shall be the Secretary General of the permanent Court of Arbitration at The Hague. The place of arbitration shall be Johannesburg and the language of the arbitration shall be English.’

[8]. The shareholders' agreement defines ‘dispute’ as ‘any dispute, disagreement, controversy, claim or difference of whatsoever nature arising under, out of, in connection with or relating (in any manner whatsoever) to this Agreement or the interpretation or performance of this Agreement or the breach, termination or validity thereof’.

[9]. On the 21st of May 2019 the first respondent applied to the Lusaka High Court of Zambia to have Konkola placed in provisional liquidation as well as for the appointment of a provisional liquidator. On the 31st of May 2019 the applicant issued a ‘notice of dispute’ as provided for in the Shareholders Agreement and set in train the arbitration process envisaged in the shareholders' agreement, it being of the view that the issues raised by the first respondent in the winding – up application are disputes falling within the contemplation of the Arbitration Clauses. The applicant therefore

seeks the enforcement of the arbitration agreement of the shareholders' agreement between the parties, in terms of which they agreed how the disputes in question would be resolved.

[10]. The parties chose Johannesburg as the seat of the arbitration. They therefore entrusted this court with supervisory powers to ensure compliance with the shareholders' agreement. As I indicated above, my reading of the first respondent’s case is that they agree with this view. The philosophy underlying the arbitration agreement is clear. The parties opted for a dispute resolution mechanism in terms of which commercial disputes would be resolved by international arbitration on neutral grounds.

[11]. In that regard, Mr Cook, Counsel for the applicant, referred me to the decision of the House of Lords in Fiona Trust & Holding Corp and Others v Privalov and Others, [2007] UKHL 40; [2007] 4 All ER 951. At par [6] Lord Hoffmann said:

‘In approaching the question of construction, it is therefore necessary to inquire into the purpose of the arbitration clause. As to this, I think there can be no doubt. The parties have entered into a relationship, an agreement or what is alleged to be an agreement or what appears on its face to be an agreement, which may give rise to disputes. They want those disputes decided by a tribunal which they have chosen, commonly on the grounds of such matters as its neutrality, expertise and privacy, the availability of legal services at the seat of the arbitration and the unobtrusive efficiency of its supervisory law. Particularly in the case of international contracts, they want a quick and efficient adjudication and do not want to take the risks of delay and, in too many cases, partiality, in proceedings before a national jurisdiction.’

[12]. I find myself in agreement with this pronunciation. As I indicated, this is the underlying philosophy behind the arbitration agreement in international contracts, and the principles are apt and find application in this matter.

[13]. Therefore, it is common cause that this court would have jurisdiction to hear this matter if it relates to a dispute as envisaged in the shareholders’ agreement. The first respondent does however take issue with the contention by the applicant that there are arbitral disputes between the parties which should be referred to arbitration.

[14]. The applicant submits that the winding – up of Konkola has nothing to do with its solvency. It relates to a dispute between shareholders regarding the management of the Company, and it falls within the purview of the arbitration clause of the shareholders' agreement. There is, so the applicant submits, a sufficient connection between the envisaged arbitration and this application, therefore this court has jurisdiction to hear this application.

[15]. The definition of ‘dispute’ is couched in very wide terms. This is clear from the language used. Four nouns are employed to describe the basic jurisdictional fact. There must be a dispute, disagreement, controversy, claim or difference between the parties. Mr Cook submitted that, simply put, where the parties do not adopt the same position or view on an issue, the jurisdictional requirement is satisfied. I find myself in agreement with this submission.

[16]. The language used in the arbitration clause suggests an intention on the part of the parties to extend rather than to limit the purview of the arbitration agreement. The dispute need not arise directly from a right or duty imposed by the shareholders' agreement. In my judgment, a disagreement in relation to any issue will qualify as a dispute even if the issue on which the parties disagree is one that is only loosely related to a right or duty emanating from the shareholders' agreement. The class of disputes that must be subjected to arbitration is so wide as to include even those disagreements that derive only indirectly from a right or duty in the shareholders' agreement.

[17]. If regard is had to the wording of the arbitration clause, it is clear that arbitration is not optional. If a jurisdictional fact is present and a dispute as contemplated by the definition exists, a party to the Shareholders’ Agreement is entitled as of right to have that dispute arbitrated. This construction placed on the arbitration clauses is consistent with international practice. Mr Cook again referred me to the approach in the United Kingdom as laid down in the Fiona Trust matter (supra), where Lord Hofmann had this to say at par [13}:

‘the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator's jurisdiction.’

[18]. I agree with the principles set out by Lord Hofmann, which have been adopted by our courts. They are firmly established in our law. In that regard see: Zhongji Development Construction Engineering Company Limited v Kamoto Copper Company SARL, 2015 (1) SA 345 (SCA) at paras [31] and [32].

[19]. In casu, the wording of the arbitration clause, in light of the aforegoing principles, takes care of the first respondent’s defence that the grievances it complains of, and which forms the basis of the liquidation application in the Zambian High Court, are not disputes as contemplated in the shareholders' agreement. In my judgment, they do. The differences between the applicant and the first respondent are indeed disputes subject to arbitration as contemplated in the shareholders' agreement. These matters are indeed arbitrable disputes.

[20]. The first respondent brought the application ex parte for the winding – up of Konkola, alleging that Konkola should be wound up on the basis that it was just and equitable to do so. On the same day the first respondent launched an application, also on an ex parte basis, for the appointment of the second respondent as the provisional liquidator. I interpose here to mention that the second

respondent, who initially delivered notice of intention to oppose this urgent application, subsequently withdrew his opposition to the application and I can only assume that he has decided to leave it up to the first respondent to fight this battle on his behalf as well.

[21]. In support of the application for the winding – up of Konkola and the appointment of a Provisional Liquidator, the first respondent alleged that the applicant was responsible under the shareholders' agreement for operating Konkola and appointing key executives and personnel. The applicant, so the first respondent says in the affidavits in support of these applications, had mismanaged Konkola to the detriment of first respondent in that Konkola had only declared a dividend of US$58 million out of which it had refused to pay the first respondent the approximate US$10 million owed to it as a dividend. There is also an allegation that Konkola has failed to develop certain mining areas in accordance with the applicable mining legislation in Zambia as well as that Konkola has failed to mine in accordance with an approved mining operation plan such that the mine's turnover is less than what it should be.

[22]. In the applications the first respondent also complained that it was due to receive an amount of US$16.8 million for 'the diminution of its shares' from the applicant, which the latter failed to pay. Furthermore, so the first respondent claims, the applicant breached 'numerous undertakings to invest in the company' by failing to provide funds for 'recapitalisation and operating capital'. The affidavit in support of the liquidation application furthermore states that the mining activities of Konkola were not environmentally friendly, and lastly that that it had failed to pay its debts as and when they fall due. All of this, so the first respondent contends, is attributable to the mismanagement of Konkola by the applicant. The first respondent has therefore lost confidence in the management and conduct of the company's affairs by the applicant. For these reasons, the first respondent said that Konkola should be wound up, because it is just and equitable to do so.

[23]. The merits of the first respondent’s various claims, grievances and frustrations are not for this court to decide. The only question that is relevant for present purposes is whether the matters traversed in support of the liquidation application are disputes as contemplated in the shareholders' agreement.

[24]. In my judgment, they clearly are.

[25]. The first respondent asserts claims for funding that it contends are due but remain unpaid by its co – shareholder, the applicant. These are all ‘claims’ contemplated by the definition of dispute, and they certainly either ‘arise out of’ or ‘relate to’ or ‘are in connection with’ the shareholders agreement. This is clear from of the shareholders' agreement (clause 12.3), which sets out when, how and under what circumstances the applicant will provide funding to Konkola.

[26]. The same principle applies to the claims by the first respondent for payment of unpaid dividends. These are 'claims' that either 'arise out of' or 'relate to' or are in 'connection with' the shareholders agreement – this is clear from a superficial reading of the shareholders agreement. The distribution of dividend is governed by the shareholders agreement. Therefore, the payment of dividends is a matter clearly arising out of the agreement.

[27]. The same is true of the several other allegations of mismanagement. The first respondent points out that the applicant is generally responsible for operating and managing Konkola. The applicant achieves this, in part, by appointing directors to the board of Konkola board in terms of the shareholders agreement. This process is governed by the ‘Management of the Company’ provisions of the shareholders' agreement. Furthermore, under the heading 'Agreement to Perform', clause 5 of the shareholders’ agreement imposes an obligation on each shareholder to perform in terms of the agreement, which is an obligation they owe to Konkola and to each other separately. In these circumstances, when the allegation is made that a shareholder has failed to perform in terms of the obligations imposed by the shareholders' agreement, it is quite clear that such a claim is a dispute that must be referred to arbitration.

[28]. Mr Cook also made the submission that whether the first respondent has sought to circumvent the provisions of shareholders’ agreement by launching the winding – up application in the Zambian High Court is itself an arbitrable dispute. I find myself in agreement with this submission. In that regard, one needs look no further than the wording of the arbitration agreement, which provides that a ‘dispute’ means any dispute relating to the interpretations of the shareholders’ agreement.

[29]. As I indicated above, in the view I take of the issue relating to whether or not the disputes in the liquidation application are arbitral disputes, the jurisdiction point follows. The first respondent accepts that if the court finds that the disputes are indeed arbitral disputes, then this court would have jurisdiction. This is however a legal concession and needs to be interrogated further.

[30]. Effectiveness may provide a rationale upon which a court assumes jurisdiction. However, I am of the view that it is not a necessary requirement. Insofar as attachment provides the means by which effectiveness is guaranteed, it is not a prerequisite and, in circumstances where it is not possible, a court may still assume jurisdiction if there is a sufficient link or adequate connection between the suit and South Africa and a South African court.

[31]. Mr Cook submitted that there is a sufficient link or adequate connection that entitles this court to assume jurisdiction over this matter. That link, he submits, can be found in the fact that the seat of this court is appointed as the seat of the arbitration. He based his submission on Bid Industrial Holdings (Pty) Ltd v Strang and Another, 2008 (3) SA 355 (SCA), which concerned the constitutionality of the common – law application for arrest to confirm or found jurisdiction. The Supreme Court of Appeal (‘the SCA’) ultimately found that the common – law jurisdictional arrest was unconstitutional.

[32]. The SCA observed that the doctrine of effectiveness was the traditional basis upon which the jurisdictional principles concerning attachment were justified. The doctrine frames the idea that a judgment should be effective in the sense that it should be executable in the jurisdiction of the applicant. To achieve effectiveness, it was, therefore, necessary to secure by attachment, the property against which execution could be levied by an applicant to satisfy his claim. Thus, if the common law principles on jurisdiction were to be developed, one of its foundational doctrines would have to be the site of that development.

[33]. The SCA observed that 'reasonable and practical' means of attaining ends must be applied in moving away, where necessary, from historical practices that cannot achieve what they were intended to. Furthermore, so the SCA held, in the absence of attachment, the responsibility for achieving effectiveness lay with the parties, and more especially the plaintiff. The consequence of these observations, so the SCA concluded, is that where an attachment is not possible, but there is a sufficient link between the suit and this country, effectiveness assumes a far lesser role, and it is for the plaintiff to grapple with the consequence that the judgment it obtains may turn out to be ineffective.

[34]. In Fleet Africa (Pty) Ltd v Cargill Cotton Ginners Ltd, 2010 JDR 1253 (GSJ), this Court held that 'it is clear that the Supreme Court of Appeal has, since at least the [Strang] case,

adopted a more relaxed view as to jurisdiction and that considerations of appropriateness and convenience must prevail.' Also, in Zhongji (supra) – a case concerning two foreign peregrini who chose South Africa as the forum for an international arbitration –

the SCA held that, whilst effectiveness remains an important consideration, ‘nowadays a generally more relaxed approach is

taken on the issue’.

[35]. Accordingly, I find myself in agreement with the submission by the applicant that, whilst the parties to this application are foreign peregrini of this Court, the arbitration clause of the shareholders' agreement is a sufficient connection with this court to give it jurisdiction.

This Court should adopt a more relaxed approach on the issue of jurisdiction and should assume jurisdiction over the suit.

[36]. I also reiterate that, in my view, there is no dispute between the parties that this court will have jurisdiction over this suit and the first respondent if it finds that the winding – up engages disputes, as envisaged in the arbitration agreement, or that the first respondent has created an arbitrable dispute itself by seeking to circumvent the shareholders' agreement.

[37]. My view, as I indicated above, is that there is an arbitrable dispute. It follows that this court will have jurisdiction over the first respondent and this suit since Johannesburg is the seat of the arbitration in terms the shareholders' agreement.

[38]. The required 'adequate connection' to establish the jurisdiction of this court is present in that this court is the supervisory court with exclusive jurisdiction to determine matters arising in relation to the international arbitration.

[39]. The adequacy of the connection is established by the provisions of South Africa's International Arbitration Act, 15 of 2017 (‘the IA Act’). The dispute between the applicant and the first respondent is an 'international arbitration' as defined in Article 1(3) the UNCITRAL Model Law on International Commercial Arbitration (‘the Model Law’), which in turn is Schedule 1 to the IA Act, and which applies in South Africa by virtue of section 6 of the IA Act. Article 1(3) of the Model Law provides that an arbitration is international if:

‘(a) the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different

States; or

(b) one of the following places situated outside the State in which the parties have their places of business;

(i) the place of arbitration if determined in, or pursuant to, the arbitration agreement;

(ii) any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject – matter of the dispute is most closely connected; or

(c) the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country.’

[40]. This court is a ‘court’ within the meaning of section 14 of the IA Act and Article 2 read with Article 6 of the Model Law and is enjoined to recognise the arbitration agreement in terms of section 16 of the IA Act.48. In terms of Article 9(1) of the Model Law, it is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure. The court's powers to grant interim measures in relation to arbitration proceedings are set out in Article 17J of the Model Law. Article 17J (1)(e) provides as follows:

'The court, at the request of a party, shall have the same powers in relation to arbitration proceedings, irrespective of whether its juridical seat is in the territory of the Republic, as it has for the purposes of proceedings before it to make an interim interdict or other interim order.'

[41]. Accordingly, even if I were to take the view that the judgment would not be effective, the position would be the same. This is so since, in the shareholders' agreement, this court is vested with exclusive jurisdiction. In that regard, I find myself in agreement with the views expressed in the English case of Angeliki Charis Compania Maritima SA v Pagnan SpA (‘the Angelic Grace case’), [1995] 1 Lloyd's Rep. The Court of Appeal (per Lord Justice Millett) stated as follows in this regard:

‘There have been many statements of great authority warning of the danger of giving an appearance of undue interference with the proceedings of a foreign Court. Such sensitivity to the feelings of a foreign Court has much to commend it where the injunction is sought on the ground of forum non conveniens or on the general ground that the foreign proceedings are vexatious or oppressive but where no breach of contract is involved. In the former case, great care may be needed to avoid casting doubt on the fairness or adequacy of the procedures of the foreign Court. In the latter case, the question whether proceedings are vexatious or oppressive is primarily a matter for the Court before which they are pending. But in my judgment there is no good reason for diffidence in granting an in junction to restrain foreign proceedings on the clear and simple ground that the defendant has promised not to bring them.’

[42]. Also, in C v D, [2007] 2 Lloyd's Rep. 367 at par [17] Lord Justice Longmore approved of the following view:

‘[A] choice of seat for the arbitration must be a choice of forum for remedies seeking to attack the award ... [A]n agreement as to the seat of an arbitration is analogous to an exclusive jurisdiction clause. Any claim for a remedy going to the existence or scope of the arbitrator's jurisdiction or as to the validity of an existing interim or final award is agreed to be made only in the courts of the place designated as the seat of the arbitration.’

[43]. Following these authorities, I am of the view that the choice of the seat of an arbitration is akin to an exclusive jurisdiction clause.

[44]. In the circumstances, this court is entitled to assume jurisdiction over the first respondent and the suit. I think that the importance of the doctrine of ‘effectiveness’ has become somewhat eroded in the context of jurisdiction. This may very well relate to the fact that the world has become a global society in which the fact that an entity, which has agreed to an international arbitration and the concomitant jurisdiction of the overseeing court, chooses not to be bound by an order of such a court, may be frowned upon by the international business community. This in itself may very have the same effect as being able to effectively execute an order.

[45]. My aforegoing conclusion is unaffected by the fact that the proceedings in the High Court of Zambia are for the winding up of Konkola. That this is so is borne out by the reasoning in both Salford Estates (No. 2) Limited v Altomart Limited, [2014] EWCA and Lasmos Limited v Southwest Pacific Pacific Bauxite (HK) Limited, [2018] 2 HKLRD 449. In both these English cases, an aggrieved party sought to have winding-up proceedings stayed or dismissed pending the resolution of disputes by arbitration.

[46]. In par [41] of the Salford Estates judgment, the following is said:

‘There is no doubt that the debt mentioned in the Petition [sc. for a winding up] falls within the very wide terms of the arbitration

clause in the Lease. The debt is not admitted. In accordance with the decision in Halki Shipping, that is sufficient to constitute a dispute within the 1996 Act, irrespective of the substantive merits of any defence, and, were

there proceedings on foot to recover the debt, to trigger the automatic stay provision in section 9(1) of the 1996 Act. For the

reasons I have given, I consider that, as a matter of the exercise of the court's discretion under IA 1986 s. 122(1)(f), it was right for the court either to dismiss or to stay the Petition so as to compel the parties to resolve their dispute over the debt by their chosen method of dispute resolution rather than require the court to investigate whether or not the debt is bona fide disputed on substantial grounds."

The First Respondent’s Plea of Lis Pendens

[47]. A plea of lis alibi pendens is based on the proposition that the dispute (lis) between the parties is being litigated elsewhere and therefore it is inappropriate for it to be litigated in the court in which the plea is raised. The policy underpinning it is that there should be a limit to the extent to which the same issue is litigated between the same parties and that it is desirable that there be finality in litigation.

[48]. It is trite that here are three requirements for a successful reliance on a plea of lis pendens. They are that the litigation is between the same parties; that the cause of action is the same; and that the same relief is sought in both. See: Nestlé (South Africa) (Pty) Ltd v Mars Incorporated, 2001 (4) SA 542 (SCA), in which the SCA (per Nugent JA) held that at par [17]:

‘There is room for the application of that principle only where the same dispute, between the same parties, is sought to be placed before the same tribunal (or two tribunals with equal competence to end the dispute authoritatively). In the absence of any of those elements there is no potential for a duplication of actions.’

[49]. The first respondent relies on the applicant’s application before the Zambian High Court to stay the winding – up, pending the determination of the arbitration. This application is scheduled to be heard on the 29th of July 2019. The first respondent contends that this matter cannot proceed as another court is already seized with the same issue. On first principles there appears to be merit in the contention by first respondent. In the Zambian High Court the applicant applies for a stay of the winding – up proceedings. This is the exact same relief the applicant applies for in casu. The first respondent is the applicant in the aforesaid application in the Zambian High Court, which in effect means that the parties, being the applicant and the first respondent in this matter, are also the parties in the stay of proceedings application in Zambia. Therefore, as I stated above, on first principles the first respondent’s plea of lis alibi pendens seemingly has merit.

[50]. However, a court retains a discretion whether to uphold a plea of lis pendens even if the requirements are satisfied. I am of the view that this case is one such matter in which I should exercise my discretion in favour of not upholding the plea. I do so for the simple reason that, in my judgment, this court, as the supervisory court, has exclusive jurisdiction in terms of the shareholders agreement to grant the applicant the relief it seeks herein.

[51]. For these reasons, the first respondent’s plea of lis pendens should fail.

Interference with the Proceedings in another Court

[52]. The last issue which I believe I should deal with relates to whether granting the applicant the relief it prays for would interfere with the proceedings of the Zambian courts. The first respondent relies on the principle that 'one sovereign state should not attempt to regulate the proceedings before the court of a different sovereign state.’

[53]. As rightly pointed out by Mr Cook, this principle is outdated and out of step with the modern enlightened understanding about the basis for, and the nature and effect of, the type of anti – suit interdict (injunction) the applicant seeks in casu. I can do no better than to repeat the quote cited above from the Angelic Grace matter. There is no good reason for diffidence in granting an interdict to restrain foreign proceedings on the clear and simple ground that the first respondent has promised not to bring them.

[54]. If a party to an arbitration agreement seeks to litigate a dispute to which the agreement relates in a court outside the country of the seat of arbitration, namely Johannesburg, his opposing party may seek an injunction to restrain him from bringing or continuing that suit. This principle emerges from the UK Supreme Court's decision in AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC, [2013] UKSC 35 (12 June 20130, [2014] 1 All ER 335, in which the court observed that an agreement to arbitrate disputes has 'positive and negative aspects'. Not only do parties to such an agreement undertake to seek relief in arbitration in whatever forum the agreement prescribes, the negative (often silent) aspect of the agreement means that the parties undertake the concomitant (negative) obligation not to seek relief in any other forum.

[55]. Importantly, a litigant seeking to enforce the negative aspect of the arbitration agreement by way of injunction may do so even if arbitration proceedings have not commenced and even if the party does not intend to institute those proceedings at all. The court in AES expressed itself as follows:

‘As a matter of interpretation of a straightforward agreement to arbitrate disputes in a particular forum (like that in this case: see [7], there is no basis for any such limitation. The negative aspect of an arbitration agreement is a feature shared with an exclusive choice of court clause. In each case, the negative aspect is as fundamental as the positive. There is no reason why a party to either should be free to engage the other party in a different forum merely because neither party wishes to bring proceedings in the agreed forum. … …

The case law also contains no support for JSC's argument that the negative aspect of an arbitration agreement is enforceable only when an arbitration is on foot or proposed. It is true that in most of the cases an arbitration was on foot, but none of the statements of principle identify this as relevant or critical.’

[56]. As noted by the court in AES, courts were initially reluctant to grant anti –suit injunctions. However, that position changed with the Court of Appeals

decision in the Angelic Grace case. The court in AES traced, with approval, the development of the law and the reasons for that development, and commented in that regard as follows:

‘[25] ... in Angeliki Charis Cia Maritime SA v Pagnan SpA, The Angelic Grace [1995] 1 Lloyd's Rep 87 ... the Court of Appeal held, citing Pena Copper and other authority, that courts ought not to feel diffident about granting an anti – suit injunction, if sought promptly. Without it the claimant would be deprived of its contractual rights in a situation where damages would be manifestly an inadequate remedy. The time had come, in Millett LJ's words (at 96), “to lay aside the ritual incantation that this is a jurisdiction which should only be exercised sparingly and with great caution”. An injunction should be granted to restrain foreign proceedings in breach of an arbitration agreement “on the simple and clear ground that the defendant has promised not to bring them”. … …

[26] Lord Hobhouse also encapsulated the principle in Turner v Grovit, [2001] UKHL 65, [2002] IRLR 358, [2002] ICR 94, when he said:

'[25] ... Under English law, a person has no right not to be sued in a particular forum, domestic or foreign, unless there is some specific factor which gives him that right. A contractual arbitration or exclusive jurisdiction clause will provide such a ground for seeking to invoke the right to enforce the clause. The applicant does not have to show that the contractual forum is more appropriate than any other; the parties' contractual agreement does that for him...

[27] The applicant for a restraining order must have a legitimate interest in making his application and the protection of that interest must make it necessary to make the order. Where the applicant is relying upon a contractual right not to be sued in the foreign country (say because of an exclusive jurisdiction clause or an arbitration clause), then, absent some special circumstance, he has by reason of his contract a legitimate interest in enforcing that right against the other party to the contract.’

[57]. I find myself in agreement with this approach by the English courts. When an injunction is granted, a Court does not direct the foreign court to do something or restrain from doing anything which it has no power to do. Rather it acts in personam, enjoining the party who seeks to litigate elsewhere from doing so, in order to enforce the contractual undertaking to arbitrate that that party has given. In acting in this way, it does not presume to tell a foreign court what it must or must not do.

[58]. I therefore agree with the submission on behalf of the applicant that the first respondent relies on a principle that has grown stale. In its place is a principle this court should apply which is based on a modern sophisticated appreciation of the true nature of anti – suit injunctions.

[59]. In the circumstance, the applicant’s relief should be granted.

The requirements for an Interim Interdict

[60]. The requirements for an interim interdict are trite. They are: (1) a clear right, which though prima facie established, is open to some doubt (prima facie right); (2) a well – grounded apprehension of irreparable harm; (3) that the balance of convenience favours the granting of the interdict; and (4) the absence of an adequate alternative remedy. See: Setlogelo v Setlogelo, 1914 AD 221 at 227; City of Tshwane Metropolitan Municipality v Afriforum and Another, 2016 (6) SA 279 (CC) par [49].

[61]. The applicant has a prima facie right. As I indicated above, the applicant is entitled under the shareholders agreement to insist that the first respondent honour its undertaking not to litigate its disputes other than by arbitration in Johannesburg. This court is the appropriate forum to enforce the first respondent’s undertaking.

[62]. The applicant has a reasonable apprehension of harm. Their efforts in Zambia to intervene to protect its interests have proven futile. The Zambian court has either refused to assist when approached or swiftly reversed whatever miniscule gains the applicant had achieved. There is no prospect of the applicant’s circumstance improving before the Zambian courts.

[63]. The applicant accordingly has a well – grounded apprehension of harm. There is no alternative remedy and the balance of convenience favours the applicant.

[64]. The applicant’s application for interim relief therefore should be granted.

Costs

[65]. The general rule in matters of costs is that the successful party should be given his costs, and this rule should not be departed from except where there are good grounds for doing so, such as misconduct on the part of the successful party or other exceptional circumstances. See: Myers v Abramson, 1951(3) SA 438 (C) at 455.

[66]. I can think of no reason why I should deviate from this general rule.

[67]. I therefore intend awarding cost against the first respondent in favour of the applicant.

Order

In the result, I make the following order:-

1. The applicant is granted leave to move this application as one of urgency.

2. Pending the final determination of the arbitration proceedings to be instituted by the applicant against the first respondent in Johannesburg (‘the Arbitration’), within 10 days of the expiry of the requisite 30 business day period for the amicable settlement of disputes under clause 24.2 of the shareholders agreement concluded among the applicant, the first respondent and others (‘the Shareholders Agreement’), it is declared that the first respondent has breached the Shareholders Agreement and continues to breach the Shareholders Agreement through the institution by the first respondent of winding – up proceedings in the High Court of Zambia, held at Lusaka, against Konkola Copper Mines PLC (‘KCM’), (‘the Winding – Up Proceedings’), and its perseverance with the Winding – Up Proceedings.

3. Pending the final determination of the Arbitration, the first respondent is directed to immediately withdraw the Winding – Up Proceedings such that the Provisional Liquidator is discharged from office.

4. Pending the final determination of the arbitration, the first respondent is interdicted and restrained from taking any further steps in the furtherance and the prosecution of the Winding – Up Proceedings.

5. Pending the final determination of the arbitration, the first respondent is interdicted and restrained from instituting any further winding – up application against KCM on the basis of the same or similar grounds relied upon in the Winding-Up Proceedings.

6. The first respondent shall pay the applicant’s costs of this urgent application, including the cost consequent upon the employment of three Counsel, one of which is a Senior Counsel, and the cost of the edictal citation.

_________________________________

L R ADAMS

Judge of the High Court

Gauteng Local Division, Johannesburg

HEARD ON: 16th July 2019 JUDGMENT DATE: 23rd July 2019 FOR THE APPLICANT: Adv A O Cook SC, together with Adv J J Meiring and Adv M Seape INSTRUCTED BY: Norton Rose Fulbright South Africa Inc FOR THE FIRST RESPONDENT: Adv I P Green SC, together with Adv G Herholdt INSTRUCTED BY: Clyde & Company