Vedanta Resources Holdings Limited v ZCCM Investments Holdings Plc and Anor (CAZ/08/249/2019) [2020] ZMCA 154 (20 November 2020)

f IN THE COURT OF APPEAL IN THE COURT OF APPEAL HOLDEN AT NDOLA HOLDEN AT NDOLA (Civil Jurisdiction) (Civil Jurisdiction) BETWEEN: BETWEEN: t~l.lijLIC OF Z1,~18 ~ ~G_~-~~-2~~~/08/249/2019 /08/249/2019 ,---P~r-~~;;-,--'/i :AZ/08/181/2019 AZ/08/181/2019 " - (~ y . Box 50067, l\)S PEAL NO. 181/2019 50067. PEAL NO. 181/2019 RrC STRY 1 VEDANTA RESOURCES HOLDINGS LIMITED VEDANTA RESOURCES HOLDINGS LIMITED APPELLANT APPELLANT AND AND ZCCM INVESTMENT HOLDINGS PLC ZCCM INVESTMENT HOLDINGS PLC KONKOLA COPPER MINES PLC KONKOLA COPPER MINES PLC 1st RESPONDENT 1 ST RESPONDENT 2nd RESPONDENT 2ND RESPONDENT CORAM: CHISANGA JP, SICHINGA and NGULUBE, JJA CORAM: CHISANGA JP, SICHINGA and NGULUBE, JJA ON: 10th March, 2020 and ON: 10th March, 2020 and For the Appellant: For the Appellant: For the 1st Respondent: For the 1st Respondent: For the 2nd Respondent: For the 2 nd Respondent: Mr. M. M Mundashi SC, Mr. D. M Chakoleka, Messrs Mulenga Mr. M. M Mundashi SC, Mr. D. M Chakoleka, Messrs Mulenga Mundashi Legal Practitioners, Mr. S Chisenga, Corpus Legal Mundashi Legal Practitioners, Mr. S Chisenga, Corpus Legal Practitioners, Practitioners, Mr. A. J Shonga Jnr SC, Mr. N. Ng'andu Messrs Shamwana and Mr. A. J Shonga Jnr SC, Mr. N. Ng’andu Messrs Shamwana and Company & Mr. M. Musukwa of Musukwa & Company Company & Mr. M. Musukiva ofMusukwa & Company Mr. B. C Mutale, SC, M. Sitali Messrs Ellis and Company, Mr. C. Mr. B. C Mutate, SC, M. Sitali Messrs Ellis and Company, Mr. C. Bwalya of D. H Kemp and Company, Mr. J Zimba, of Makebi Bwalya of D. H Kemp and Company, Mr. J. Zimba, of Makebi Zulu Advocates Zulu Advocates JUDGMENT JUDGMENT CHISANGA JP, delivered the Judgment of the Court. CHISANGA JP, delivered the Judgment of the Court. Cases referred to: Cases referred to: 1. Etri Fanns Ltd vs N. M. B UK Ltd (1987) 3 ALL ER 765 1. Etri Farms Ltd vs N. M. B UK Ltd (1987) 3 ALL ER 765 2. Avalon Motors Ltd (In Receivership) vs Bernard Leigh Gadsden and 2. Avalon Motors Ltd (In Receivership} vs Bernard Leigh Gadsden and Motor City Limited (1998) ZR 41 Motor City Limited (1998) ZR 41 3. Backloads (Zambia) Limited vs Freight and Liners (Zambia) Limited 3. Backloads (Zambia} Limited vs Freight and Liners (Zambia} Limited (2008/HP/0588 (2008/HP/0588 4. In re Union Accident Insurance Co. Ltd (1972} 1 WLR 640 4. In re Union Accident Insurance Co. Ltd (1972) 1 WLR 640 Iii 5. Closegate Hotel Development (Durhan) Ltd and Another vs Mclean and 5. Closegate Hotel Development (Durhan) Ltd and Another vs Mclean and Others (2013) EWHC 3237 Ch. Others (2013) EWHC 3237 Ch. 6. Turnkey Properties vs Lusaka West Development Company Limited, 6. Turnkey Properties vs Lusaka West Development Company Limited, B. S. K Cluto (Sued as Receiver) SCZ Judgment No. 3 of 1984 B. S. K Cluto (Sued as Receiver) SCZ Judgment No. 3 of 1984 7. Shamwana vs Mwanawasa (1993-94) ZR 149 7. Shamwana vs Mwanawasa (1993-94) ZR 149 8. Beza Consulting Inc Limited and Vari Zamia Ltd and another, Appeal 8. Beza Consulting Inc Limited and Vari Zamia Ltd and another, Appeal No 171 of 2018, CA Judgment dated 3CJthAugust 2019 No 171 of 2018, CA Judgment dated 30th August 2019 9. Hadkinson vs Hadkinson (1952) ALL ER 5678 9. Hadkinson vs Hadkinson (1952) ALL ER 5678 10. Hangandu and Co. vs Mulubisha (2005) 2 ZR 829 10. Hangandu and Co. vs Mulubisha (2005) 2 ZR 829 11. Salford Estates (No. 2) Limited vs Altonert (2014) EWCA1575 11. Salford Estates (No. 2) Limited vs Altonert (2014) EWCA1575 12. Ody's Oil Company vs The Attorney General and Papoutis (2012) 1 12. Ody's Oil Company vs The Attorney General and Papoutis (2012) 1 ZR163 ZR163 13. Larsen Oil and Gas Pic Limited vs Pepropod Limited (2011) 13. Larsen Oil and Gas Plc Limited vs Pepropod Limited (2011) SGCA 21 SGCA 21 14. Fulham Club (1987) Limited vs Richards and Another (2011) EWCA 14. Fulham Club ( 1987) Limited vs Richards and Another (2011) EWCA Civ 855 Civ 855 15. In re Pantemaenong Timber Co. Ltd (2004) 1 AC 158. 15. In re Pantemaenong Timber Co. Ltd (2004t 1 AC 158. 16. Townap Textiles Zambia Limited and Another vs Tata Zambia 16. Townap Textiles Zambia Limited and Another vs Tata Zambia Limited (SCZ) Judgment No.17nof 1988 Limited (SCZ) Judgment No. 17nof 1988 17. Konkola Copper Mines Pic vs NFC Africa Mining Pic SCZ Appeal 1 7. Konkola Copper Mines Plc vs NFC Africa Mining Plc SCZ Appeal No.118 of 2016 No.118 of 2016 18. Mulenga and Others vs Investment Merchant Bank limited (1999) 18. Mulenga and Others vs Investment Merchant Bank limited (1999) ZR 101 ZR 101 19. Zambia Revenue Authority vs Post Newspaper Ltd SCZ Judgment 19. Zambia Revenue Authority vs Post Newspaper Ltd SCZ Judgment No. 16 of 2016 No. 16 of 2016 20. Royal & Son Alliance Insurance Pic vsT&N limited (In administration 20. Royal & Son Alliance Insurance Plc vs T & N limited (In administration (2002) EWCA GV 1964 (2002) EWCA GV 1964 21. Hammond Suddard Solutions vs Agriculture International Holdings 21. Hammond Suddard Solutions vs Agriculture International Holdings Ltd (2001) EWCA Civ 2065 Ltd (2001) EWCA Civ 2065 22. Bowa (suing as Administrator of the estate of the late Ruth Bowa vs 22. Bowa (suing as Administrator of the estate of the late Ruth Bowa vs Mubiana and Zesco Ltd SCZ Appeal No. 121 of 2011 Mubiana and Zesco Ltd SCZ Appeal No. 121 of 2011 23. Chibwe vs Chibwe SCZ Judgment No. 38 of 2000 23. Chibwe vs Chibwe SCZ Judgment No. 38 of 2000 24. Audrey Nyambe & Total Zambia Limited SCZ Judgment No. 24. Audrey Nyambe & Total Zambia Limited SCZ Judgment No. 1 of 2015 1 of 2015 25. Tomolugen Holdings Ltd and Another vs Silica Investors Ltd and 25. Tomolugen Holdings Ltd and Another vs Silica Investors Ltd and Other Appeals (2015) SGCA 57 Other Appeals (2015) SGCA 57 26. Four Pillers Enterprises Co Ltd vs Beiersdorf Aktiengesellschaft (1999) 26. Four Pillers Enterprises Co Ltd vs Beiersdorf Aktiengesellschaft (1999) SLR (R) 382. SLR (R) 382. 27. Re Bradford Navigation Company (1870) LR 5 Ch App 60 27. Re Bradford Navigation Company (1870) LR 5 Ch App 60 28. Re SBA Properties Ltd (1967) 1 WLR799 at 802 28. Re SBA Properties Ltd (1967) 1 WLR799 at 802 29. Fred M’membe & Post Newespapers vs Moozi & Others 29. Fred M'membe & Post Newespapers vs Moozi & Others 30. Petropod Limited (in official liquidation in the Cayman Islands and in 30. Petropod Limited (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore) [2011] SGCA 21 compulsory liquidation in Singapore) [2011] SGCA 21 31. O’neals and another vs Philips and Others (1999) 1 WLR 1092 at 1098- 31. O'neals and another vs Philips and Others (1999) 1 WLR 1092 at 1098- 1099 32. Re-Bleriot Manufacturing aircraft Company (1916) 32 Times of L R 253, 32. Re-Bleriot Manufacturing aircraft Company (1916) 32 Ttmes of LR 253, 255 33. Re Brinsmead (Thomas Edward) and son (1897) I Ch. 406 33. Re Brinsmead (Thomas Edward) and son (1897) I Ch. 406 J2 J2 34. Lock vs John Blackwood Limited (1924) A 783 34. Lock vs John Blackwood Limited (1924) A 783 35. Yenidje Tobacco Co. Limited (1916) 2 Ch. 426 35. Yenidje Tobacco Co. Limited (1916) 2 Ch. 426 36. Ebrahim vs Estboume Gallerve Ltd (1973) AC 360 36. Ebrahim vs Estbourne Galleroe Ltd (1973) AC 360 37. Baird vs Lees 1924 S. C. 83, 92 37. Baird vs Lees 1924 S. C. 83, 92 38. Davis & Company Ltd vs Bruiswicke (Australia) Ltd Bruiswicke-Balke- 38. Davis & Company Ltd vs Bn.tiswicke (Australia) Ltd Bn.tiswicke-Balke Collender Co. And Bn.tinswick Radio Corporation 1936 1 All ER P299 Collender Co. And Bruinswick Radio Corporation 1936 1 All ER P299 39. Sonny Paul Mulenga and Another vs Chainama Hotels Limited and 39. Sonny Paul Mulenga and Another vs Chainama Hotels Limited and Others (SCZ Judgment No. 15 of 1999). Others (SCZ Judgment No. 15 of 1999). Other Works referred to: Other Works referred to: 1. Section 10(1~ of The Zambian Arbitration Act. 1. Section 10(1) of The Zambian Arbitration Act. 2. Halsbury's Law of England 4 th Edition Vol. 37 2. Halsbury's Law of England 4th Edition Vol. 37 3. Corporate Insolvency Act No. 9 of 2017 3. Corporate Insolvency Act No. 9 of 2017 4. Arbitration Act 1975 Chapter 3 United Kingdom 4. Arbitration Act 1975 Chapter 3 United Kingdom INTRODUCTION INTRODUCTION There are four appeals before the Court. There are four appeals before the Court. It questions 1. The first is by Vedanta Resources Holdings Plc (Vedanta). 1. The first is by Vedanta Resources Holdings Pic (Vedanta). It questions the refusal of Bobo J, to stay winding up proceedings and refer the the refusal of Bobo J, to stay winding up proceedings and refer the parties to arbitration, pursuant to a Shareholder Agreement executed by parties to arbitration, pursuant to a Shareholder Agreement executed by the parties. The second, a cross appeal by ZCCM Investment Holdings the parties. The second, a cross appeal by ZCCM Investment Holdings Plc (ZCCM IH), is against Bobo J's finding that there was a dispute Pic (ZCCM IH), is against Bobo J's finding that there was a dispute contemplated by the SHA between the parties. The Third appeal is contemplated by the SHA between the parties. The Third appeal is against the Order that stayed the winding up proceedings pending the against the Order that stayed the winding up proceedings pending the hearing and determination of the appeal. It was brought by ZCCM IH. hearing and determination of the appeal. It was brought by ZCCM IH. The fourth is a cross appeal, on the leaned judge's view that the proposed The fourth is a cross appeal, on the leaned judge’s view that the proposed appeal had no prospects of success. This Judgment deals with all four appeal had no prospects of success. This Judgment deals with all four appeals. appeals. J3 J3 l BACKGROUND BACKGROUND 2. Vedanta Resources Holdings Limited (Vedanta) owns the majority of the 2. Vedanta Resources Holdings Limited (Vedanta) owns the majority of the shares in Konkola Copper Mines (KCM). ZCCM Investments Holdings shares in Konkola Copper Mines (KCM). ZCCM Investments Holdings the minority Shareholder. A Shareholder's Limited Limited (ZCCM IH), is the minority Shareholder. A Shareholder's (ZCCM IHL is Agreement was executed at the acquisition of the majority stake in Agreement was executed at the acquisition of the majority stake in Konkola Copper Mines (KCM) by Vedanta. The parties to this agreement Konkola Copper Mines (KCM) by Vedanta. The parties to this agreement included the Government of the Republic of Zambia through the Minister included the Government of the Republic of Zambia through the Minister of Finance, Zambia Copper Investments Limited (ZCI Bermuda) ZCI of Finance, Zambia Copper Investments Limited (ZCI Bermuda) ZCI Holdings SA, (ZCI Holdings) ZCCM Investments Plc, (ZCCM IH), Vedanta Holdings SA, (ZCI Holdings) ZCCM Investments Pic, (ZCCM IH), Vedanta the Resources Holdings Limited ("VRHL"). The agreement outlined Resources Holdings Limited (“VRHL”). The agreement outlined the obligations of the Company (KCM), the Board of Directors and Vedanta. It obligations of the Company (KCM), the Board of Directors and Vedanta. It also conferred power on Vedanta to appoint the majority of the Directors. also conferred power on Vedanta to appoint the majority of the Directors. PETITION PETITION 3. ZCCM IH became disillutioned with the manner in which KCM was 3. ZCCM IH became disillutioned with the manner in which KCM was being managed and administered which it felt was detrimental to its being managed and administered which it felt was detrimental to its interests. This impelled it to petition that KCM be wound up on the interests. This impelled it to petition that KCM be wound up on the just and equitable ground. just and equitable ground. 4. More particularly, the petition asserts that KCM has operated at USO 4. More particularly, the petition asserts that KCM has operated at USD It has reported negative 1.2623 billion, loss for the past 7 years. 1.2623 billion, loss for the past 7 years. It has reported negative cash flow balances in the last 2 years, and only declared dividends cash flow balances in the last 2 years, and only declared dividends for 4 years, viz 2007, 2008, 2012 and 2013 in the total sum of USO for 4 years, viz 2007, 2008, 2012 and 2013 in the total sum of USD 6 7 .105 million. KCM has failed to pay ZCCM IH a portion of the 67.105 million. KCM has failed to pay ZCCM IH a portion of the dividend declared in 2013, in the sum of USO 10,305,000. Moreover, dividend declared in 2013, in the sum of USD 10,305,000. Moreover, J4 J4 ' . the income generated on a yearly basis is unable to meet KCM's the income generated on a yearly basis is unable to meet KCM’s operating costs. operating costs. 5. KCM has failed to develop the mining areas m Chingola and 5. KCM has failed to develop the mining areas in Chingola and Chililabombwe, contrary to the mining plan formulated pursuant to. Chililabombwe, contrary to the mining plan formulated pursuant to Section 35(1)(6) of the Mines and Minerals Development Act 201 l. In Section 35(f)(6) of the Mines and Minerals Development Act 2011. In addition, it has failed to carry out mining operations with due addition, it has failed to carry out mining operations with due diligence. As a result, it continues to operate below capacity, The diligence. As a result, it continues to operate below capacity. The failure to adhere to the operational requirements in the Mines and failure to adhere to the operational requirements in the Mines and Minerals Development Act has prompted the issuance of a default Minerals Development Act has prompted the issuance of a default notice against KCM. notice against KCM. 6. KCM has failed to pay its debts when they fall due. It has failed to 6. KCM has failed to pay its debts when they fall due. It has failed to pay Copperbelt Energy Corporation PLC (CEC) for the electricity the pay Copperbelt Energy Corporation PLC (CEC) for the electricity the latter supplies to the mine. As a result, CEC issued a restriction latter supplies to the mine. As a result, CEC issued a restriction notice on 14th May 2019, on account of outstanding arrears in the notice on 14th May 2019, on account of outstanding arrears in the sum of USD 24,064,722. sum of USD 24,064,722. 7. As well, KCM has failed to pay Ndola Lime Plc, a sum of USD 468, 7. As well, KCM has failed to pay Ndola Lime Pic, a sum of USD 468, 036.25 for the quicklime it supplied, as well as the sum of ZMW 036.25 for the quicklime it supplied, as well as the sum of ZMW 199,941 for limestone supplied for the period March 2019 to May 199,941 for limestone supplied for the period March 2019 to May 2019. Moreover, KCM has failed to pay some of its suppliers and 2019. Moreover, KCM has failed to pay some of its suppliers and contractors. contractors. 8. KCM has been operating m a manner that is not environmentally 8. KCM has been operating in a manner that is not environmentally friendly or sustainable. It has polluted or continues to pollute water friendly or sustainable. It has polluted or continues to pollute water sources in and around its mining licence areas. sources in and around its mining licence areas. 9. These grievances have led to a loss of confidence in Vedanta's ability 9. These grievances have led to a loss of confidence in Vedanta’s ability to manage and administer KCM's affairs in good faith and in a to manage and administer KCM's affairs in good faith and in a JS J5 t manner that ensures ZCCM IH's return on its investment and manner that ensures ZCCM IH’s return on its investment and dividends. dividends, 10. Thus, according to ZCCM IH, "it is justifiable that KCM be wound up 10. Thus, according to ZCCM IH, "it is justifiable that KCM be wound up for failing to pay its debts as and when they fall due, and that for the for failing to pay its debts as and when they fall due, and that for the foregoing reasons, it is just and equitable that KCM be wound up. " foregoing reasons, it is just and equitable that KCM be wound up." A number of creditors filed in notices of intention to be heard at the A number of creditors filed in notices of intention to be heard at the hearing of the petition pursuant to Rule 10 of the Companies hearing of the petition pursuant to Rule 10 of the Companies (Winding-up) Rules 2004. These rules were promulgated pursuant to (Winding-up) Rules 2004. These rules were promulgated pursuant to the Companies Act, when the Corporate Insolvency Regime was in the Companies Act, when the Corporate Insolvency Regime was in that Act. The Corporate Insolvency Act No. 9 of 2017 now provides for that Act. The Corporate Insolvency Act No. 9 of 2017 now provides for winding up of companies. winding up of companies. ANSWER TO THE PETITION ANSWER TO THE PETITION 11. KCM applied, exparte, for leave to file its Answer and Affidavit in reply 11. KCM applied, exparte, for leave to file its Answer and Affidavit in reply out of time. The Court allowed it to do so, and accordingly, one out of time. The Court allowed it to do so, and accordingly, one Maxwell Mainsa, the legal Counsel and secretary of KCM, swore an Maxwell Mainsa, the legal Counsel and secretary of KCM, swore an Affidavit in Opposition to the petition. It was filed into Court on 4th Affidavit in Opposition to the petition. It was filed into Court on 4 th July, 2019. He deposed as follows: July, 2019. He deposed as follows: 12. KCM had not paid the Shareholders the dividends declared in the 12. KCM had not paid the Shareholders the dividends declared in the 2013 financial year, on account of cash flow and liquidity liquidity financial year, on account of cash flow and constraints, as well as the conditions that had to be met. constraints, as well as the conditions that had to be met. 13. The Company had operated at a loss of USD 1, 2623 million in the 13. The Company had operated at a loss of USO 1, 2623 million in the last seven years. For 2018, this was because of the drop in the last seven years. For 2018, this was because of the drop in the planned production of 100,610 CU MT mainly due to lower primary planned production of 100,610 CU MT mainly due to lower primary development against (sic) planned as per KCM Business Plans for the development against (sic) planned as per KCM Business Plans for the financial year by 701 meters. Secondly, there was loss in secondary financial year by 701 meters. Secondly, there was loss in secondary J6 J6 ' in development of 2,231 meters due development of 2,231 meters due to no capital injection in to no capital injection development. This accounted for the drop in revenue for 2017, 2016, development. This accounted for the drop in revenue for 2017, 2016, 2015, 2014 and 2013, with varying drops in production, and loss in 2015, 2014 and 2013, with varying drops in production, and loss in secondary development. For 2012, an additional factor was lower secondary development. For 2012, an additional factor was lower sales realization than planned. sales realization than planned. 14. The negative cash flow balances for 2017 were brought about by 14. The negative cash flow balances for 2017 were brought about by payments of interest and loan principle to Standard Bank. Reduced payments of interest and loan principle to Standard Bank. Reduced production also accounted for reduced cash flow. The increase in production also accounted for reduced cash flow. The increase in inventory and receivables also led to reduced cash flows. inventory and receivables also led to reduced cash flows. to 15. The apparent failure to meet operating costs for the years 2013 15. The apparent failure to meet operating costs for the years 2013 to part of 2019 was due to failure to achieve targeted primary and part of 2019 was due to failure to achieve targeted primary and m secondary developments as per KCM business plan secondary developments as per KCM business plan resulting in resulting lower actual revenue than planned. lower actual revenue than planned. 16. The Company had unpaid debts, and this was due to the technically 16. The Company had unpaid debts, and this was due to the technically unsound business operations model adopted by Vedanta Resources unsound business operations model adopted by Vedanta Resources Limited, the management employed by Vedanta Resources Holdings Limited, the management employed by Vedanta Resources Holdings Limited to provide management services at Konkola Copper Mines Limited to provide management services at Konkola Copper Mines the management Agreement which are not PLC pursuant PLC pursuant to the management Agreement which are not to generating sufficient funds to meet all payment obligations as they generating sufficient funds to meet all payment obligations as they fall due. fall due. 17. The failure to comply with the Mining Plans was due to lack of capital 17. The failure to comply with the Mining Plans was due to lack of capital injection in primary and secondary development, lack of equipment injection in primary and secondary development, lack of equipment required for mining, failure to allocate finances to necessary aspects of required for mining, failure to allocate finances to necessary aspects of the plans and purchase of spares for machinery, non payment of the plans and purchase of spares for machinery, non payment of thereby. suppliers contractual contractual liabilities to suppliers and contractors thereby contractors liabilities and to J7 J7 T r .. comprom1smg implementation of mine plans, and abandonment of compromising implementation of mine plans, and abandonment of mine plans due to constrained resources. mine plans due to constrained resources, 18. There had been cases of pollution of the aquatic environment and 18. There had been cases of pollution of the aquatic environment and KCM had been held liable. KCM had been held liable. VEDANTA'S OPPOSITION TO THE PETITION VEDANTA'S OPPOSITION TO THE PETITION 19. Vedanta also filed an affidavit, which was sworn by one Srinivasen 19. Vedanta also filed an affidavit, which was sworn by one Srinivasen the Venkatakrishnan, a Director of Vedanta Resources Limited, Venkatakrishnan, a Director of Vedanta Resources Limited, the parent Company and Vedanta the contributor. The opposition was parent Company and Vedanta the contributor. The opposition was that the allegations in the petition were a smoke screen for the that the allegations in the petition were a smoke screen for the attempted expropriation of KCM by the Government of the Republic attempted expropriation of KCM by the Government of the Republic of Zambia, going by the sentiments expressed by Government officials of Zambia, going by the sentiments expressed by Government officials and Ministers on the matter. He charged that the petition has and Ministers on the matter. He charged that the petition has nothing to do with the interests of KCM or its creditors, shareholders nothing to do with the interests of KCM or its creditors, shareholders or employees. Rather it is an abuse of the winding up legislation. or employees. Rather it is an abuse of the winding up legislation. 20. The matters relied on in support of the petition concern the conduct The matters relied on in support of the petition concern the conduct 20. of Vedanta in the management of KCM. They are in the nature of a of Vedanta in the management of KCM. They are in the nature of a shareholder dispute which must be determined by the dispute shareholder dispute which must be determined by the dispute resolution mechanism agreed upon in the SHA. The agreement resolution mechanism agreed upon in the SHA. The agreement provides for amicable dispute resolution negotiations for 30 business provides for amicable dispute resolution negotiations for 30 business days followed by arbitration in accordance with the UNCITRAL days followed by arbitration in accordance with the UNCITRAL Arbitration Rules. ZCCM IH is required to follow the contractually Arbitration Rules. ZCCM IH is required to follow the contractually agreed dispute resolution process in the SHA. agreed dispute resolution process in the SHA. 21. The response to the allegation that KCM was being managed and 21. The response to the allegation that KCM was being managed and administered in a manner that was detrimental to the interests of administered in a manner that was detrimental to the interests of ZCCM IH was that there was no requirement that KCM be managed ZCCM IH was that there was no requirement that KCM be managed JS J8 solely in the interest of ZCCM IH. The Directors of KCM are obligated solely in the interest of ZCCM IH. The Directors of KCM are obligated to act in the best interests of KCM, and not one shareholder. to act in the best interests of KCM, and not one shareholder. 22. 22. In addition to this, the executive management team in charge of In addition to this, the executive management team in charge of KCM was highly competent and experienced. Even if there was an KCM was highly competent and experienced. Even if there was an infringement of ZCCM IH's rights, which was denied, that was not a infringement of ZCCM I H's rights, which was denied, that was not a basis on which ZCCM IH could petition for winding up. basis on which ZCCM IH could petition for winding up. 23. During the period from 2004 to 2018, KCM has declared dividends 23. During the period from 2004 to 2018, KCM has declared dividends totaling USD 122.94 million, out of which USD 72.94 million have totaling USO 122.94 million, out of which USO 72.94 million have been paid to the Shareholders, including ZCCM IH. In years where been paid to the Shareholders, including ZCCM IH. In years where profits are unavailable, it would be unlawful to declare dividends profits are unavailable, it would be unlawful to declare dividends which, in any event, the Directors are not obligated to declare, doing which, in any event, the Directors are not obligated to declare, doing so only in their discretion. so only in their discretion. 24. 24. Initially, an interim dividend had been declared for the first half of Initially, an interim dividend had been declared for the first half of the year 2013. Despite the loss made in the second half, the the year 2013. Despite the loss made in the second half, the Directors decided to convert the interim dividend into a final to convert the interim dividend into a final Directors decided dividend, with a condition that it would be paid upon free cash flow dividend, with a condition that it would be paid upon free cash flow being available. ZCCM IH in fact served a Notice of Arbitration with being available. ZCCM IH in fact served a Notice of Arbitration with regard to the unpaid dividends. regard to the unpaid dividends. 25. 25. In answer to the allegation that KCM has been operating at a loss, it In answer to the allegation that KCM has been operating at a loss, it was explained that once depreciation and other non-cash that once depreciation and other non-cash was explained adjustments are taken into account, KCM's aggregate earnings adjustments are taken into account, KCM's aggregate earnings before interest, taxes, depreciation and amortization (EBITDA) for before interest, taxes, depreciation and amortization (EBITDA) for the past seven years has been a positive USO 386.6 once exchange the past seven years has been a positive USD 386.6 once exchange losses on value added tax (VAT) receivables and the one time losses on value added tax (VAT) receivables and the one time J9 J9 y reversal of power tariffs are removed, KCM's aggregate EBIT DA for reversal of power tariffs are removed, KCM’s aggregate EBIT DA for the past seven years was US $488.1 million. the past seven years was US $488.1 million. 26. 26. For the financial year ended March 31 st 2018, net cash generated For the financial year ended March 31st 2018, net cash generated from operating activities was US $ 120.7 million. For 2019, a from operating activities was US $ 120.7 million. For 2019, a negative cash flow was recorded. However, the deficit for that year negative cash flow was recorded. However, the deficit for that year was supported by Vedanta Resources (VRL} and its subsidiaries and was supported by Vedanta Resources (VRL) and its subsidiaries and therefore the negative cash flow did not reflect an inability on KCM's therefore the negative cash flow did not reflect an inability on KCM's part to pay its debts. part to pay its debts. 27. 27. In response to the assertion that KCM has failed to develop the mines In response to the assertion that KCM has failed to develop the mines or carry out the mining operations appropriately, it was stated that or carry out the mining operations appropriately, it was stated that KCM has spent over US$ 3 billion on capital expenditure since 2004, KCM has spent over US$ 3 billion on capital expenditure since 2004, with the assistance of funding from Companies within VRL's group. with the assistance of funding from Companies within VRL's group. 28. This included US$ 925 million on the Konkola Deep Mining Project 28. This included US$ 925 million on the Konkola Deep Mining Project and US$ 467 million on the smelter. KCM was also, at the time the and US$ 467 million on the smelter. KCM was also, at the time the petition was presented, in the process of discussing a turnaround petition was presented, in the process of discussing a turnaround plan involving further capital expenditure from 2020 to 2024. plan involving further capital expenditure from 2020 to 2024. 29. The strategic priorities under the plan included creation of a highly 29. The strategic priorities under the plan included creation of a highly productive underground mine at Konkola with an additional productive underground mine at Konkola with an additional horizontal development, involving aggregate capital expenditure of horizontal development, involving aggregate capital expenditure of US$ 750-760 million using new mining methods. US$ 750-760 million using new mining methods. 30. The stabilization and completion of the elevated temperature leach 30. The stabilization and completion of the elevated temperature leach refinery at Nchanga using project, creation of a modernized project, creation of a modernized refinery at Nchanga using permanent cathode technology at the tank house, to increase its permanent cathode technology at the tank house, to increase its capacity by approximately 30 tonnes was one of the priorities. capacity by approximately 30 tonnes was one of the priorities. JlO J1O 1 31. KCM has engaged the Ministry of Mines and Mineral Development 1 31. KCM has engaged the Ministry of Mines and Mineral Development concerning mining operations generally. A detailed technical report was concerning mining operations generally. A detailed technical report was submitted to the Ministry in June 2018. KCM has taken responsible responsible submitted to the Ministry in June 2018. KCM has taken steps to address the concerns of the Ministry. steps to address the concerns of the Ministry. 32. Responding to the claim that KCM was insolvent, it was explained that 32. Responding to the claim that KCM was insolvent, it was explained that Vedanta Resources Holdings and its subsidiaries were providing financial Vedanta Resources Holdings and its subsidiaries were providing financial support to KCM and no creditor of KCM had petitioned for winding up of support to KCM and no creditor of KCM had petitioned for winding up of the Company for failure to settle debts owed to it. Prior to presentation of the Company for failure to settle debts owed to it. Prior to presentation of the petition, KCM met its day to day working capital requirements the petition, KCM met its day to day working capital requirements through operating revenues, overdraft facilities, other bank borrowings through operating revenues, overdraft facilities, other bank borrowings and related party loans. Vedanta Resources Holdings (VRL) had always and related party loans. Vedanta Resources Holdings (VRL) had always provided KCM with the financial support it needed to carry out its provided KCM with the financial support it needed to carry out its operations and there was no reason for the Board of KCM to believe that operations and there was no reason for the Board of KCM to believe that VRL was not going to continue to do so for the foreseeable future. As at VRL was not going to continue to do so for the foreseeable future. As at 31 st March, 2019, KCM was owed approximately US$ 164 million by the 31st March, 2019, KCM was owed approximately US$ 164 million by the Zambia Revenue Authority (ZRA) in respect of VAT rebates. This has Zambia Revenue Authority (ZRA) in respect of VAT rebates. This has affected payments to its creditors. affected payments to its creditors. 33. Regarding the CEC debt, KCM, became current with all payments m 33. Regarding the CEC debt, KCM, became current with all payments in January, 2019. As for Ndola Lime, KCM would have liquidated its January, 2019. As for Ndola Lime, KCM would have liquidated its indebtedness had it not been for the liquidation proceedings. Moreover, indebtedness had it not been for the liquidation proceedings. Moreover, the letter of financial support issued by Vedanta Resources Holdings· the letter of financial support issued by Vedanta Resources Holdings Limited will enable KCM to pay existing current liabilities if the petition is Limited will enable KCM to pay existing current liabilities if the petition is dismissed. dismissed. Jll Jll • APPLICATION TO STAY PROCEEDINGS AND REFER THE MATTER APPLICATION TO STAY PROCEEDINGS AND REFER THE MATTER TO arbitration TO ARBITRATION 34. 34. Vedanta Resources Holdings Limited had on 21st June 2019, filed a Vedanta Resources Holdings Limited had on 2 I st June 20 I 9, filed a Notice of Intention to appear at the hearing of the petition pursuant to Notice of Intention to appear at the hearing of the petition pursuant to Rule 10 of the Companies (Winding - up) Rules Statutory Instrument Rule 10 of the Companies {Winding - up) Rules Statutory Instrument No.86 of 2004 and Section 60(3) of the Corporate Insolvency Act No. 9 of No.86 of 2004 and Section 60(3) of the Corporate Insolvency Act No. 9 of 201 7 of the Laws of Zambia. And on 28th June, 2019, it filed· Summons 2017 of the Laws of Zambia. And on 28th June, 2019, it filed Summons for an Order to stay proceedings and refer parties to arbitration. The for an Order to stay proceedings and refer parties to arbitration. The premise of the proposed referral was that the issues raised by ZCCM IH premise of the proposed referral was that the issues raised by ZCCM IH amounted to a dispute between the shareholders in terms of the SHA. amounted to a dispute between the shareholders in terms of the SHA. That ZCCM IH had, by filing the Winding up petition contravened the That ZCCM IH had, by filing the Winding up petition contravened the dispute resolution mechanism agreed to in the SHA. The contributor had dispute resolution mechanism agreed to in the SHA. The contributor had in reaction issued a Notice of Dispute relating to in reaction issued a Notice of Dispute relating to ZCCM IH's breach IH's breach ZCCM and continuing breach of the SHA in commencing and presenting the and continuing breach of the SHA in commencing and presenting the winding up petition. winding up petition. 35. At the hearing of the application, two preliminary issues were raised by 35. At the hearing of the application, two preliminary issues were raised by Vedanta's advocates. Vedanta's advocates. 36. These were whether the petitioner could rely on the affidavit of Maxwell 36. These were whether the petitioner could rely on the affidavit of Maxwell Mainsa on the application to stay proceedings and refer the matter to Mainsa on the application to stay proceedings and refer the matter to arbitration, when an application challenging the exparte Order that had arbitration, when an application challenging the exparte Order that had allowed the filing of the affidavit in opposition to the petition was being allowed the filing of the affidavit in opposition to the petition was being challenged. challenged. 37. And secondly, whether the affidavit in question could be relied upon 3 7. And secondly, whether the affidavit in question could be relied upon when an application to determine whether the 2 nd Respondents could when an application to determine whether the 2nd Respondents could J12 J12 .. represent KCM generally was pending determination of the issue filed represent KCM generally was pending determination of the issue filed into Court by Messrs Nchito and Nchito. into Court by Messrs Nchito and Nchito. 38. 38. Bobo J, in dealing with the two issues stated that as the exparte Order Bobo J, in dealing with the two issues stated that as the exparte Order pursuant to which the Mainsa affidavit was filed still subsisted on the pursuant to which the Mainsa affidavit was filed still subsisted on the record at the hearing, she had difficulty appreciating the argument record at the hearing, she had difficulty appreciating the argument that it should not be relied upon on the application to stay proceedings that it should not be relied upon on the application to stay proceedings It was her considered view that and refer the parties to arbitration. and refer the parties to arbitration. It was her considered view that nothing stopped a party to the proceedings, or one who had duly filed a nothing stopped a party to the proceedings, or one who had duly filed a Notice of Intention to be heard on the petition, from relying on a Notice of Intention to be heard on the petition, from relying on a document filed pursuant to the exparte Order. document filed pursuant to the exparte Order. 39. 39. On the question whether the matter should be stayed and referred to On the question whether the matter should be stayed and ref erred to arbitration, Bobo J, on examining Clause 26. 1 of the SHA, and "the arbitration, Bobo J, on examining Clause 26. 1 of the SHA, and the definition of a 'dispute' in that agreement, concluded that the definition definition of a 'dispute' in that agreement, concluded that the definition of dispute was very broad, capturing any issue in contention between of dispute was very broad, capturing any issue in contention between the parties relating to the interpretation or performance of the SHA. the parties relating to the interpretation or performance of the SHA. She also formed the view that there was an underlying dispute between She also formed the view that there was an underlying dispute between to the petitioner, the Respondent and the contributor, as parties the petitioner, the Respondent and the contributor, as parties to the SHA, and that Section 10 of the arbitration Act was applicable. She the SHA, and that Section 10 of the arbitration Act was applicable. She however opined that, that Section enjoined her to refuse to stay however opined that, that Section enjoined her to refuse to stay proceedings on finding that the Arbitration Agreement is null and void, proceedings on finding that the Arbitration Agreement is null and void, inoperative or incapable of being performed. inoperative or incapable of being performed. 40. The learned Judge stated that she was alive to the fact that liquidation The learned Judge stated that she was alive to the fact that liquidation 40. proceedings are governed by statute, and that the Court has exclusive proceedings are governed by statute, and that the Court has exclusive jurisdiction to oversee this process, the ultimate of which is founded in jurisdiction to oversee this process, the ultimate of which is founded in public policy considerations such as the protection of interests of third public policy considerations such as the protection of interests of third J13 J13 parties, who include creditors of a Company which sought to be wound parties, who include creditors of a Company which sought to be wound up. up. 41. 41. She noted the Notices of Intention that had been filed by creditors She noted the Notices of Intention that had been filed by creditors wishing to be heard on the winding up petition, and expressed the view wishing to be heard on the winding up petition, and expressed the view that she was duty bound to consider the third party interests in deciding that she was duty bound to consider the third party interests in deciding the application before her. Referring to Fulham Football Club (1987), the the application before her. Referring to Fulham Football Club ( 1987), the learned judge resolved that where third party rights are involved in learned judge resolved that where third party rights are involved in liquidation proceedings, the private agreement between the shareholders liquidation proceedings, the private agreement between the shareholders and a company to submit their dispute to arbitration is displaced and and a company to submit their dispute to arbitration is displaced and rendered inoperative. The competing interests of third parties can only be rendered inoperative. The competing interests of third parties can only be taken care of through the court process. taken care of through the court process. 42. Drawing guidance from the Ody’s case, Bobo J, opined that an the Ody's case, Bobo J, opined that an 42. Drawing guidance from arbitration clause is wholly inoperative against creditors and other third arbitration clause is wholly inoperative against creditors and other third parties whose claims are subject of winding up proceedings. She thus parties whose claims are subject of winding up proceedings. She thus found clause 26.1 of the SHA inoperative and incapable of performance. found clause 26.1 of the SHA inoperative and incapable of performance. 43. 43. In addition to this, the learned Judge opined that the contributor was In addition to this, the learned Judge opined that the contributor was procedurally ill placed to request for a stay and reference to arbitration, procedurally ill placed to request for a stay and reference to arbitration, when the parties to the proceedings were not averse to the winding up. when the parties to the proceedings were not averse to the winding up. To accede to that request would be contrary to the express wishes of the To accede to that request would be contrary to the express wishes of the parties themselves. In arriving at this decision, she took into account the parties themselves. In arriving at this decision, she took into account the separate legal personality of KCM from its shareholders. She also referred separate legal personality of KCM from its shareholders. She also referred to Etri Farms Limited vs NMS (UK) Limited1 which interrogated Section to Etri Farms Limited vs NMS (UK) Limited1 which interrogated Section 1(1) of the Arbitration Act 1975. 1(1) of the Arbitration Act 1975. 44. The application having fallen on hard ground, Vedanta launched this 44. The application having fallen on hard ground, Vedanta launched this appeal on the following grounds: appeal on the following grounds: J14 J14 ' 1. The learned Judge erred in law and fact by holding that for the 1. The learned Judge erred in law and fact by holding that for the purpose of the hearing of the application to stay proceedings purpose of the hearing of the application to stay proceedings to refer the matter to arbitration (the "Stay Application") under to refer the matter to arbitration (the "Stay Application") under Section 10 of the Arbitration Act No. 19 of 2000 (the Section 10 of the Arbitration Act No. 19 of 2000 (the "Arbitration Act") that: "Arbitration Act") that: (a) The Respondent could rely on the contested affidavit of (a) The Respondent could rely on the contested affidavit of Maxwell Mainsa ("Mainsa Affidavit") that was filed pursuant Maxwell Mainsa ("Mainsa Affidavit") that was filed pursuant ("Exparte to an ex parte order of 4 th July, 2019 to an ex parte order of 4th July, 2019 ("Exparte Order")should be subjected to an inter partes bearing and Order")should be subjected to an inter partes hearing and (b) The Mainsa Affidavit could be relied on durin·g the Stay (b) The Mainsa Affidavit could be relied on during the Stay Application pending the determination of the Appellant's Application pending the determination of the Appellant's application challenging the Affidavit and without allowing application challenging the Affidavit and without allowing the Appellant to be heard on the challenge of the Ex parte the Appellant to be heard on the challenge of the Ex parte Order that allowed the filing of the affidavit. Order that allowed the filing of the affidavit. 2. The learned Judge erred in law and fact when, after finding 2. The learned Judge erred in law and fact when, after finding that there was in fact an arbitrable dispute between the that there was in fact an arbitrable dispute between the Appellant and the Respondent which is the subject of an Appellant and the Respondent which is the subject of an Arbitration Agreement: Arbitration Agreement: (a) She did not refer the matter to arbitration which she is (a) She did not refer the matter to arbitration which she is mandated to do in terms of Section 10(1) of the Arbitration mandated to do in terms of Section 10(1) of the Arbitration Act. Act. (b) She erred in finding that there were an Arbitration (b) She erred in finding that there were an Arbitration Agreement was inoperable on account of the fact that there Agreement was inoperable on account of the fact that there were alleged creditors who had filed notices of intention to were alleged creditors who had filed notices of intention to be heard subsequent to the filing of the Stay Application be heard subsequent to the filing of the Stay Application JlS J15 and who were not parties to the Arbitration Agreement; and and who were not parties to the Arbitration Agreement; and she wrongly interpreted Section 6(2) of the Arbitration Act she wrongly interpreted Section 6(2) of the Arbitration Act when she concluded that though there was an arbitrable when she concluded that though there was an arbitrable dispute, the dispute was not capable of being referred to dispute, the dispute was not capable of being referred to Arbitration. Arbitration. (c) She erred in finding that were third parties are involved in (c) She erred in finding that were third parties are involved in the private and liquidation proceedings, liquidation proceedings, and therefore, the private therefore, agreement between shareholders and a company to submit agreement between shareholders and a company to submit their dispute to arbitration is displaced and rendered their dispute to arbitration is displaced and rendered inoperative. inoperative. (d) The Court erred in law in finding that if the winding up (d) The Court erred in law in finding that if the winding up proceedings were stayed; the third-party creditors would be proceedings were stayed; the third-party creditors would be left without any remedy at all; and left without any remedy at all; and (e) The learned Judge erred when she did not interrogate and (e) The learned Judge erred when she did not interrogate and undertake a determination of whether the third party's undertake a determination of whether the third party's claims as allegedly set out in the notices of intention to be claims as allegedly set out in the notices of intention to be heard were so relevant or connected to the determination of heard were so relevant or connected to the determination of the dispute between the Appellant and the Respondents so the dispute between the Appellant and the Respondents so as to make the Arbitration Agreement inoperable as per the as to make the Arbitration Agreement inoperable as per the proviso to Section 10 (1) of the Arbitration Act. proviso to Section 10 (1) of the Arbitration Act. 3. The learned Judge erred in law and in fact when she concluded 3. The learned Judge erred in law and in fact when she concluded that as the 2 nd Respondent was a separate entity from the that as the 2nd Respondent was a separate entity from the Appellant, only the 2 nd Respondent could defend itself in the Appellant, only the 2nd Respondent could defend itself in the winding up proceedings without due regard to the following: winding up proceedings without due regard to the following: J16 J16 (a) the position of the law that Companies make decisions (a) the position of the law that Companies make decisions through their Board of Directors and that on account of the through their Board of Directors and that on account of the fact that the ex parte order procured by the 1st Respondent fact that the ex parte order procured by the 1st Respondent "Provisional appointing appointing a provisional liquidator (the “Provisional provisional liquidator (the a Liquidator") for the 2 ndRespondent, the Board of Directors of Liquidator") for the 2ndRespondent, the Board of Directors of the 2 nd Respondent had been prevented by the Provisional the 2nd Respondent had been prevented by the Provisional Liquidator from exercising those residual powers vested in Liquidator from exercising those residual powers vested in for purposes of defending the the Board of Directors the Board of Directors for purposes of defending the Company in the winding proceedings. Company in the winding proceedings. (b) the decision in regard to defending the 2 nd Respondent were (b) the decision in regard to defending the 2nd Respondent were being made by the Provisional Liquidator appointed by the being made by the Provisional Liquidator appointed by the 1 stRespondent; and lstRespondent; and (c) the majority of the Directors of the 2 ndRespondent, through (c) the majority of the Directors of the 2ndRespondent, through its Chairman had made an application for determination that its Chairman had made an application for determination that the Board of Directors of the Respondent had the residual the Board of Directors of the Respondent had the residual powers to defend the company in winding up proceedings and powers to defend the company in winding up proceedings and at the time of hearing of the Stay Application. at the time of hearing of the Stay Application. 4. The learned trial Judge erred in law and fact: 4. The learned trial Judge erred in law and fact: (a, By holding that the 2 nd Respondent was a party to the (a) By holding that the 2nd Respondent was a party to the proceedings and thereby able to defend itself, which holding proceedings and thereby able to defend itself, which holding as a consequence had the effect of predetermining the as a consequence had the effect of predetermining the application brought by the Directors of the 2 nd Respondent; application brought by the Directors of the 2nd Respondent; their through through their appointed counsel, in regard to their their appointed counsel, regard to in application that the Directors had residual powers to application that the Directors had residual powers to represent the 2 nd Respondent in the winding up proceedings. represent the 2nd Respondent in the winding up proceedings. J17 J17 ti (b) By determining that the 2nd Respondent, which was being (b) By determining that the 2nd Respondent, which was being controlled by the Provisional Liquidator, was a party to the controlled by the Provisional Liquidator, was a party to the winding up proceedings and by this determination, the winding up proceedings and by this determination, the learned trial Judge denied the Directors not affording the learned trial Judge denied the Directors not affording the Directors of the 2 nd Respondent an opportunity to be heard Directors of the 2nd Respondent an opportunity to be heard on the application that had been filed by counsel for the on the application that had been filed by counsel for the Directors of the 2 nd Respondent. Directors of the 2nd Respondent. 5. The learned trial Judge erred in law and fact when she held 5. The learned trial Judge erred in law and fact when she held that the 2 nd Respondent had mounted no objection to the that the 2nd Respondent had mounted no objection to the winding up proceedings and had substantially admitted the winding up proceedings and had substantially admitted the allegations in the petition when the Directors of the 2 nd allegations in the petition when the Directors of the 2nd Respondent have not had the opportunity to raise their Respondent have not had the opportunity to raise their objection to the petition. objection to the petition. 6. The learned Judge erred in law and fact when she held that the 6. The learned Judge erred in law and fact when she held that the Appellants as contributor could not make the application to Appellants as contributor could not make the application to stay and refer the parties to arbitration as it was not a party to stay and refer the parties to arbitration as it was not a party to the proceedings. the proceedings. 1. APPELLANT'S (VEDANTA) ARGUMENTS 1. APPELLANT’S (VEDANTA) ARGUMENTS 45. At the hearing of the appeal by Vedanta against Bobo J's refusal to stay 45. At the hearing of the appeal by Vedanta against Bobo J’s refusal to stay the petition ad refer the matter to arbitration, Mr. Mundashi SC informed the petition ad refer the matter to arbitration, Mr. Mundashi SC informed the court that reliance would be placed on the heads of argument filed on the court that reliance would be placed on the heads of argument filed on 16th July 2020. He drew particular attention to page 797 in relation to 16th July 2020. He drew particular attention to page 797 in relation to fraud. fraud. J18 J18 •46. On the first ground, it was grumbled that the 'Mainsa' affidavit remained '46. On the first ground, it was grumbled that the 'Mainsa' affidavit remained the on the record only because the Appellant's application to set aside on the record only because the Appellant's application to set aside the Exparte Order had not yet been heard by the learned Judge who should Exparte Order had not yet been heard by the learned Judge who should have subjected the Exparte Order to an inter partes hearing before it have subjected the Exparte Order to an inter partes hearing before it could be relied upon. The Judge's conclusion, based on the contents of could be relied upon. The Judge's conclusion, based on the contents of the affidavit, was that the parties to the petition were not averse to the the affidavit, was that the parties to the petition were not averse to the proposed winding up. proposed winding up. 4 7. 47. In finding the arbitration agreement inoperative, the learned Judge In finding the arbitration agreement inoperative, the learned Judge ignored the fact that the petition was filed by a member on the basis of ignored the fact that the petition was filed by a member on the basis of shareholder disputes, and not by a creditor, and that the parties had shareholder disputes, and not by a creditor, and that the parties had contractually agreed to resolve their disputes by arbitration. contractually agreed to resolve their disputes by arbitration. 48. Whilst the creditors are entitled to file notices to be heard in the winding 48. Whilst the creditors are entitled to file notices to be heard in the winding up proceedings, they have to take the proceedings as they find them. The up proceedings, they have to take the proceedings as they find them. The right to be heard cannot alter the proceedings, cure a defect or overreach right to be heard cannot alter the proceedings, cure a defect or overreach the legitimate rights and interests of the parties to the proceedings. the legitimate rights and interests of the parties to the proceedings. Allowing this would render arbitration agreements meaningless, as they Allowing this would render arbitration agreements meaningless, as they would then be easily sidestepped. would then be easily sidestepped. 49. The creditors elected to avail credit to an entity whose shareholders were 49. The creditors elected to avail credit to an entity whose shareholders were the Court has bound by a bound by a shareholder's agreement. Moreover, the Court has shareholder's agreement. Moreover, jurisdiction to protect creditors in various ways. Therefore protecting the jurisdiction to protect creditors in various ways. Therefore protecting the inoperable was creditors by creditors by rendering the arbitration agreement inoperable was the arbitration agreement rendering misdirection. misdirection. 50. This case is distinguishable from the Ody's case because in that case, 50. This case is distinguishable from the Ody's case because in that case, reference to arbitration was refused because the agreement was tainted reference to arbitration was refused because the agreement was tainted with illegality. The fact that the third party was not a party to the with illegality. The fact that the third party was not a party to the J19 J19 arbitration agreement was a secondary consideration. In addition to this, arbitration agreement was a secondary consideration. In addition to this, the standing of the third party was given cursory treatment, no the standing of the third party was given cursory treatment, no authorities were cited, nor were reasons given. The decision 1s authorities were cited, nor were reasons given. The decision is inapplicable to the instant case as there is no illegality or any other basis inapplicable to the instant case as there is no illegality or any other basis on which the arbitration agreement can be rendered inoperative or on which the arbitration agreement can be rendered inoperative or incapable of performance. incapable of performance. 51. 51. Furthermore, the rights and claims of the creditors would not come Furthermore, the rights and claims of the creditors would not come within the arbitration or fall to be decided by the arbitrator if the winding within the arbitration or fall to be decided by the arbitrator if the winding up proceedings were to be stayed in favour of arbitration. The creditors of up proceedings were to be stayed in favour of arbitration. The creditors of KCM would not be drawn in to an arbitration they had not agreed to. KCM would not be drawn into an arbitration they had not agreed to. 52. The Exparte Order appointing the Provisional Liquidator though widely 52. The Exparte Order appointing the Provisional Liquidator though widely drawn does not prevent the Board of Directors from exercising its drawn does not prevent the Board of Directors from exercising its residual power to conduct the defence of the company in winding up residual power to conduct the defence of the company in winding up proceedings. Even were that the case, the Board of Directors and proceedings. Even were that the case, the Board of Directors and shareholders have a responsibility to defend the action before the Court: shareholders have a responsibility to defend the action before the Court: Avalon Motors Ltd (In Receivership) vs Bernard Leigh Gadsden and Avalon Motors Ltd (In Receivership) vs Bernard Leigh Gadsden and Motor City Limited2 , and paragraph 1489 of Halsbury's Laws of Motor City Limited2, and paragraph 1489 of Halsbury's Laws of England 4 th Edition volume 7(2), where authors make this statement: England 4th Edition volume 7(2), where authors make this statement: "The winding up order also has the effect of discharging all the "The winding up order also has the effect of discharging all the company's employees, and terminating agencies, and discharging its company’s employees, and terminating agencies, and discharging its Directors. It puts an end to the Director's powers of management, thus, Directors. It puts an end to the Director’s powers of management, thus, the they cannot make calls. They may however, appeal they cannot make calls. They may however, appeal in the in company's name from the winding up Order, and they do not cease to company’s name from the winding up Order, and they do not cease to be officers of the company for purposes of being ordered to answer, be officers of the company for purposes of being ordered to answer, interrogations". interrogations". J20 J20 • 53. Reference was also made to the High Court decision in Backloads ’53, Reference was also made to the High Court decision in Backloads (Zambia} Limited vs Freight and Loners (Zambia) Limited3 , as well as (Zambia) Limited vs Freight and Loners (Zambia) Limited3, as well as in Re Union Accident Insurance Co. 4 , and Closegate Hotel in Re Union Accident Insurance Co.4, and Closegate Hotel Development (Durhan) Ltd and Another vs. Mclean and Others5 . Development (Durhan) Ltd and Another vs. Mclean and Others5. 54. 54. In the premises, the learned trial Judge erred in holding that only In the premises, the learned trial Judge erred in holding that only KCM could defend the winding up proceedings, ignoring the fact that KCM could defend the winding up proceedings, ignoring the fact that KCM's defence was advanced by the Provisional Liquidator appointed KCM's defence was advanced by the Provisional Liquidator appointed by the Petitioner/1 st Respondent and not the Directors of the by the Petitioner/1st Respondent and not the Directors of the Company. This, when an application for determination of the residual Company. This, when an application for determination of the residual powers of the Board of Directors to defend KCM in the winding up powers of the Board of Directors to defend KCM in the winding up proceedings, was pending. proceedings, was pending. 55. The holding that KCM was able to defend itself predetermined the 55. The holding that KCM was able to defend itself predetermined the application brought by the Directors of KCM through their appointed application brought by the Directors of KCM through their appointed Counsel. Moreover, the holding that the Appellant was not a party to Counsel. Moreover, the holding that the Appellant was not a party to the proceedings rendered the said application, which was pending the proceedings rendered the said application, which was pending before the Court, nugatory. The Directors of KCM, were denied a before the Court, nugatory. The Directors of KCM, were denied a hearing: Turnkey Properties vs Lusaka West Development Company hearing: Turnkey Properties vs Lusaka West Development Company Limited, and Others)and ZSIC and Shamwana vs Mwanawasa7, Limited, and Others) and. ZSIC and Shamwana vs Mwanawasa7, 56. The alleged admission of insolvency was made in an affidavit sworn by 56. The alleged admission of insolvency was made in an affidavit sworn by an employee of KCM, Mr. Mainsa, who it would appear, was under the an employee of KCM, Mr. Mainsa, who it would appear, was under the control and direction of the Provisional Liquidator appointed by the control and direction of the Provisional Liquidator appointed by the Petitioner/ 1 stRespondent. To discount the existence of a dispute Petitioner/ lstRespondent. To discount the existence of a dispute capable of reference to arbitration was erroneous as a result. capable of reference to arbitration was erroneous as a result. J21 J21 57. Section 60(3) of the Corporate Insolvency Act allowed the AppeUant to 57. Section 60(3) of the Corporate Insolvency Act allowed the Appellant to make the stay application. It was the only party that could put up an make the stay application. It was the only party that could put up an independent objection to the winding up proceedings and seek to independent objection to the winding up proceedings and seek to enforce the Arbitration Agreement. The learned Judge should not have enforce the Arbitration Agreement. The learned Judge should not have entertained the notion that KCM is not averse to the winding up entertained the notion that KCM is not averse to the winding up proceedings: Re Union Accident Insurance Co. Ltd4 , Close gate proceedings: Re Union Accident Insurance Co. Ltd4, Close gate Hotel vs Mclean and Others5 Hotel vs Mclean and Others5 the 58. Moreover, the finding is inconsistent with the true interpretation of 58. Moreover, the finding is inconsistent with the true interpretation of the Arbitration Act and the definition of 'party' in that Act. The definition Arbitration Act and the definition of 'party' in that Act. The definition includes a party to an arbitration agreement, which in this case was the includes a party to an arbitration agreement, which in this case was the the court below, after SHA. It was SHA. It was therefore a misdirection for the court below, after therefore a misdirection for acknowledging the existence of a dispute between the Appellant and acknowledging the existence of a dispute between the Appellant and Respondent, to hold that the Appellant was not entitled to make a stay Respondent, to hold that the Appellant was not entitled to make a stay application. application. 59. Mr. Chakoleka also addressed the court. Drawing our attention to 59. Mr. Chakoleka also addressed the court. Drawing our attention to Beza Consulting Inc Limited and Vari Zamia Ltd and another, Appeal Beza Consulting Inc Limited and Vari Zamia Ltd and another, Appeal No 171 of 2018, CA Judgment dated 30th August 2019, as well as The No 171 of 2018, CA Judgment dated 30th August 2019, as well as The Post Newspapers Ltd in Liquidation and Abel Mbozi & Five Others, Post Newspapers Ltd in Liquidation and Abel Mbozi & Five Others, Appeal No. 175 of 2019 in which Judgment was dated 10th Ju]y Appeal No. 175 of 2019 in which Judgment was dated 10th July 2020, Mr. Chakoleka on locus standi. He contended that the two 2020, Mr. Chakoleka on locus standi. He contended that the two decisions are distinguishable in a material particular from the facts of decisions are distinguishable in a material particular from the facts of the case. He argued that none of those decisions dealt with section the case. He argued that none of those decisions dealt with section 60(3) of the Corporate Insolvency Act which empowers a party who 60(3) of the Corporate Insolvency Act which empowers a party who has filed a notice of intention to appear to make an application at any has filed a notice of intention to appear to make an application at any J22 J22 .. time in the proceedings. Mr. Chisenga sought to distinguish the Ody's time in the proceedings. Mr. Chisenga sought to distinguish the Ody’s case from the present one. He also argued that the creditors had case from the present one. He also argued that the creditors had alternative remedies, as they could sue for debts I a civil action or alternative remedies, as they could sue for debts I a civil action or alternatively, they could file a creditor's winding up. alternatively, they could file a creditor’s winding up. 1st RESPONDENT'S (ZCCM IH) ARGUMENTS 1st RESPONDENT’S (ZCCM IH) ARGUMENTS 60. Mr. Shonga SC, on behalf of ZCCM informed the court that reliance 60. Mr. Shonga SC, on behalf of ZCCM informed the court that reliance would be placed on the head of argument filed on 24th July 2020. With would be placed on the head of argument filed on 24th July 2020. With reference to the Mainsa affidavit, learned state counsel argued that if that reference to the Mainsa affidavit, learned state counsel argued that if that affidavit were removed, the petition would be undefended, and the judge affidavit were removed, the petition would be undefended, and the judge would have come to the very conclusion she arrived at. Mr. Shonga SC would have come to the very conclusion she arrived at. Mr. Shonga SC argued that the cases referred to by Mr. Chakoleka were applicable, and argued that the cases referred to by Mr. Chakoleka were applicable, and against the appeal. He urged the court to dismiss the appeal. against the appeal. He urged the court to dismiss the appeal. 61. The court allowed the Mainsa affidavit to be relied upon because it 61. The court allowed the Mainsa affidavit to be relied upon because it formed part of the record, and had not been set aside. There was no formed part of the record, and had not been set aside. There was no appeal against that portion of the Ruling in issue. The Appellant raised appeal against that portion of the Ruling in issue. The Appellant raised preliminary issues on the affidavit, when those same arguments were to preliminary issues on the affidavit, when those same arguments were to be raised on the pending application relating to the affidavit. That is why be raised on the pending application relating to the affidavit. That is why the Court did not delve into the Appellant's arguments on the alleged the Court did not delve into the Appellant's arguments on the alleged impropriety of the ’Mainsa' affidavit. The Court of Appeal, it was argued, impropriety of the 'Mainsa' affidavit. The Court of Appeal, it was argued, should desist from delving into matters that await determination by the should desist from delving into matters that await determination by the court below. court below. 62. An application for leave to file an affidavit verifying petition out of time 62. An application for leave to file an affidavit verifying petition out of time does not contemplate an interim Order. The matter is concluded, subject does not contemplate an interim Order. The matter is concluded, subject only to appeal or review. In any event, the Practice Direction, No. 1 of In any event, the Practice Direction, No. 1 of only to appeal or review. 1993, gives an opportunity when the leave is granted to the opposing 1993, gives an opportunity when the leave is granted to the opposing J23 J23 party to issue inter parte summons for the application. Failure to hear t party to issue inter parte summons for the application. Failure to hear the application inter partes does not lead to nullification or invalidation the application inter partes does not lead to nullification or invalidation of the exparte Order. of the exparte Order. 63. 63. Furthermore, as the Practice Direction refers to the 'other side' this Furthermore, as the Practice Direction refers to the 'other side' this envisages a party to the application. The Appellant would have no locus envisages a party to the application. The Appellant would have no locus standi to make the application as it is not the other side with respect to, standi to make the application as it is not the other side with respect to the dispute between the 1st and 2nd Respondents in this appeal. the dispute between the 1st and 2nd Respondents in this appeal. Hadkinson vs Hadkinson11 • Hadkinson vs Hadkinson11. 64. The Court was right in finding that the presence of third parties rendered The Court was right in finding that the presence of third parties rendered 64. the arbitration agreement inoperable. the arbitration agreement inoperable. 65. The Court's conclusion that KCM was a separate legal entity from The Court's conclusion that KCM was a separate legal entity from 65. Vedanta and could defend itself was properly made. The context was that Vedanta and could defend itself was properly made. The context was that the Appellant, which was not a party to the winding up proceedings, had the Appellant, which was not a party to the winding up proceedings, had not applied to stay proceedings and refer the I st Respondent and 2nd not applied to stay proceedings and refer the 1st Respondent and 2nd Respondent to arbitration. The learned Judge was averse to the Vedanta Respondent to arbitration. The learned Judge was averse to the Vedanta interposing itself in the dispute between the ZCCM IH. Even though interposing itself in the dispute between the ZCCM IH. Even though Vedanta was majority shareholder of KCM, this was of no consequence as Vedanta was majority shareholder of KCM, this was of no consequence as the two were separate and distinct legal entities. Vedanta could not speak the two were separate and distinct legal entities. Vedanta could not speak It could not apply for a stay of proceedings nor act on behalf of KCM. nor act on behalf of KCM. It could not apply for a stay of proceedings and reference of a matter to which it was not a party, to arbitration. and reference of a matter to which it was not a party, to arbitration. 66. Vedanta has no legal interest in the application by the Chairman of the 66. Vedanta has no legal interest in the application by the Chairman of the KCM's Board. It could not launch grounds of appeal that in essence seek KCM's Board. It could not launch grounds of appeal that in essence seek to champion applications made by a totally different party that awaited to champion applications made by a totally different party that awaited determination. determination. J24 J24 ,;. 67. The Appellant was the architect of its own misfortune. Had it not applied '67. The Appellant was the architect of its own misfortune. Had it not applied for stay proceedings and reference to arbitration, and had its counsel for stay proceedings and reference to arbitration, and had its counsel objected to the hearing of that application before all pending applications, objected to the hearing of that application before all pending applications, then, perhaps the application by the Chairman of the 2 nd Respondent's then, perhaps the application by the Chairman of the 2nd Respondent's Board of Directors would have been heard earlier in time. Board of Directors would have been heard earlier in time. 68. The trial Judge did not pre-determine the application by the Chairman of 68. The trial Judge did not pre-determine the application by the Chairman of the 2 nd Respondent's Board of Directors. She did not make a finding the 2nd Respondent's Board of Directors. She did not make a finding the 2 nd that only that only the Provisional Liquidator could represent the 2nd the Provisional Liquidator could represent the Chairman of the Respondent Respondent in the proceedings or that the Chairman of the the proceedings or that in 2 ndRespondent's Board of Directors had power to appoint lawyers to 2ndRespondent’s Board of Directors had power to appoint lawyers to represent the 2 nd Respondent. She cannot in the premises be said to represent the 2nd Respondent. She cannot in the premises be said to have predetermined the application. The application was heard, and a have predetermined the application. The application was heard, and a Ruling is pending on the same. Ruling is pending on the same. 69. 69. A challenge as to whether the Chairman could lawfully be heard A challenge as to whether the Chairman could lawfully be heard outside the Board, remains underdetermined by the learned Jµdge. outside the Board, remains underdetermined by the learned Judge. She aptly captured the gravamen of the petition before her. No She aptly captured the gravamen of the petition before her. No defence had been mounted to the petition by ZCCM IH. The learned defence had been mounted to the petition by ZCCM IH. The learned Judge merely observed what the papers before her revealed. Judge merely observed what the papers before her revealed. 70. 70. The Appellant was not in a position to apply for stay of the The Appellant was not in a position to apply for stay of the proceedings so that the matter could be ref erred to arbitration. proceedings so that the matter could be referred to arbitration. Reliance was placed on Etri Farms Ltd vs N. M. B UK Ltd1 Reliance was placed on Etri Farms Ltd vs N. M. B UK Ltd1 71. 71. Although the wording of Section 1( 1) of the English Arbitration Act Although the wording of Section 1(1) of the English Arbitration Act 1975 differs from Section 10( 1) of the Zambian Arbitration Act, the 1975 differs from Section 10(1) of the Zambian Arbitration Act, the reasoning of Woolf W applied to this case. The learned Judge could reasoning of Woolf LJ applied to this case. The learned Judge could not therefore be faulted in construing Section 10(1) of the Arbitration not therefore be faulted in construing Section 10(1) of the Arbitration J25 J25 Act as he did. The only parties to the Proceedings were the 1st and 2 nd Act as he did. The only parties to the Proceedings were the 1st and 2nd Respondents. Respondents. 72. 72. The learned Judge refused to join the Appellant to the proceedings, The learned Judge refused to join the Appellant to the proceedings, as the winding up rules of 2004 did not provide for joinder. No as the winding up rules of 2004 did not provide for joinder. No appeal was made against that Ruling. As a result, the Appellant appeal was made against that Ruling. As a result, the Appellant lacked the locus standi to apply to stay proceedings and ref er the 1st lacked the locus standi to apply to stay proceedings and refer the 1st and 2ndRespondents to arbitration. It was also argued that Section and 2 nd Respondents to arbitration. It was also argued that Section 60(3) of the Corporate Insolvency Act confers no right to make 60(3) of the Corporate Insolvency Act confers no right to make blanche applications in winding up proceedings, dictating to the blanche applications in winding up proceedings, dictating to the parties how the dispute should be resolved. parties how the dispute should be resolved. 73. 73. The notion that the Court is clothed with inherent jurisdiction to stay The notion that the Court is clothed with inherent jurisdiction to stay proceedings in favour of arbitration on the Vedanta's application is proceedings in favour of arbitration on the Vedanta's application is unfounded. This is because, that jurisdiction is displaced by the unfounded. This is because, that jurisdiction is displaced by the statutory regime of Section 10(1) of The Zambian Arbitration Act. statutory regime of Section 10(1) of The Zambian Arbitration Act. 74. 74. Vedanta had in its arguments raised an issue that had not been Vedanta had in its arguments raised an issue that had not been It had impliedly amended ground six canvassed in ground six. canvassed in ground six. It had impliedly amended ground six without the leave of the Court. Thus, the Court should disregard the without the leave of the Court. Thus, the Court should disregard the arguments on the issue. Moreover, the motion of the Chairman of the arguments on the issue. Moreover, the motion of the Chairman of the 2nd Respondent's Board of Directors was heard on 13th August, 2019. 2nd Respondent's Board of Directors was heard on 13th August, 2019. The decision of the Court was awaited. The decision of the Court was awaited. 75. 75. Mr. Shonga SC augmented the arguments as follows: Mr. Shonga SC augmented the arguments as follows: learned state counsel With With reference to the Mainsa affidavit, learned state counsel the Mainsa affidavit, reference to augmented that if that affidavit were removed, the petition would be augmented that if that affidavit were removed, the petition would be undefended, and the judge would have come to the very conclusion undefended, and the judge would have come to the very conclusion she arrived at. Mr. Shonga Sc argued that the cases referred to by Mr. she arrived at. Mr. Shonga Sc argued that the cases referred to by Mr. J26 J26 Chakoleka were at applicable and against the appeal. He urged the Chakoleka were at applicable and against the appeal. He urged the court to dismiss the appeal. court to dismiss the appeal. 2 nd RESPONDENT,$ (KCM) ARGUMENTS 2nd RESPONDENT’S (KCM) ARGUMENTS 76. Mr. Mutale SC, informed the Court that reliance would be placed on the 76. Mr. Mutale SC, informed the Court that reliance would be placed on the amended heads of argument that were held on 31 st July 2020. amended heads of argument that were held on 31st July 2020. 77. The 2 nd Respondent's opposition on ground one of the appeal 1s as 77. The 2nd Respondent's opposition on ground one of the appeal is as follows: The learned Judge allowed the Respondent to file an Answer and follows: The learned Judge allowed the Respondent to file an Answer and opposing affidavit out of time. This was duly done. The Order given by opposing affidavit out of time. This was duly done. The Order given by the Court had to be obeyed, unless and until it was set aside or the Court had to be obeyed, unless and until it was set aside or discharged by further Order of the Court, or on appeal. It was as a result discharged by further Order of the Court, or on appeal. It was as a result open to the parties to refer to it. Thus, the Court of appeal had no open to the parties to refer to it. Thus, the Court of appeal had no jurisdiction to delve into the · Mainsa' affidavit as that issue was before jurisdiction to delve into the 'Mainsa' affidavit as that issue was before the High Court, and had yet to be heard and determined. Reference was the High Court, and had yet to be heard and determined. Reference was made to Hangandu & Co. vs Mulubisha12, Turnkey Properties vs made to Hangandu & Co. vs Mulubisha12, Turnkey Properties vs Lusaka West Development Company Limited Bsk Chiti6 authority for Lusaka West Development Company Limited Bsk Chiti6 authority for this argument. this argument. to determine Liquidation 78. Only 78. Only the High Court has competence to determine Liquidation the High Court has competence proceedings. This holding has not been appealed against. Therefore, the proceedings. This holding has not been appealed against. Therefore, the appeal relating to the dismissal of the Section 10 application to refer the appeal relating to the dismissal of the Section 10 application to refer the parties to arbitration is otiose. parties to arbitration is otiose. 79. Reliance was placed on Salford Estates (No. 2) Limited vs Altonert13, 79. Reliance was placed on Salford Estates (No. 2) Limited vs Altonert13, where the Court held that the mandatory stay provisions under Section where the Court held that the mandatory stay provisions under Section 9(1) of the Arbitration Act did not apply to winding up petitions brought 9(1) of the Arbitration Act did not apply to winding up petitions brought on the ground that a Company is unable to pay its debts, where what on the ground that a Company is unable to pay its debts, where what J27 J27 was in dispute was whether the Company was, in fact, unable to pay its was in dispute was whether the Company was, in fact, unable to pay its debts. debts. 80. Winding up proceedings are non-contractual but statutory. Jurisdiction 80. Winding up proceedings are non-contractual but statutory. Jurisdiction is vested in the Courts, and not co extensive with arbitration. This is vested in the Courts, and not co extensive with arbitration. This jurisdiction extends to consideration of third party' interests, as provided jurisdiction extends to consideration of third party' interests, as provided for under the Corporate Insolvency Act 2017 and the Companies for under the Corporate Insolvency Act 2017 and the Companies (Winding up) Rules 2004. (Winding up) Rules 2004. 81. 81. Forty-two entities had filed notices of intention to be heard at the hearing Forty-two entities had filed notices of intention to be heard at the hearing of the petition, the High Court being enjoined by statute and subsidiary of the petition, the High Court being enjoined by statute and subsidiary legislation to give audience to parties who had accordingly filed notices of legislation to give audience to parties who had accordingly filed notices of intention to be heard when the petition is heard. The majority of these intention to be heard when the petition is heard. The majority of these entities are creditors. The Court cannot refer a dispute to arbitration if it entities are creditors. The Court cannot refer a dispute to arbitration if it involves 3 rd parties who are strangers to the arbitration agreement. involves 3rd parties who are strangers to the arbitration agreement. 82. 82. It is not in the interest of justice to sever a dispute so that one segment is It is not in the interest of justice to sever a dispute so that one segment is referred to arbitration, while the other is determined by the Court. Once a referred to arbitration, while the other is determined by the Court. Once a situation would lead to this outcome, the Court has a duty to find a valid situation would lead to this outcome, the Court has a duty to find a valid arbitration agreement inoperative or incapable of being performed. Ody's arbitration agreement inoperative or incapable of being performed. Ody 's oil company vs the attorney general and papoutis14 refers. oil company vs the attorney general and papoutis14 refers. 83. The applicable statute and subsidiary legislation enjoin the High Court to 83. The applicable statute and subsidiaiy legislation enjoin the High Court to hear a person that has filed an appropriate notice in support of or in hear a person that has filed an appropriate notice in support of or in opposition to the petition. It would be a travesty of justice, and contrary opposition to the petition. It would be a travesty of justice, and contrary to justice for the High Court not to hear the grounds in support of or in to justice for the High Court not to hear the grounds in support of or in opposition to the petition. This right is conferred by statute, and has opposition to the petition. This right is conferred by statute, and has nothing to do with an agreement of the parties. nothing to do with an agreement of the parties. J28 J28 '84. Only a party to proceedings can apply for a stay of proceedings and *84. Only a party to proceedings can apply for a stay of proceedings and reference to arbitration. Section 10 of the Arbitration Act 2000, does not reference to arbitration. Section 10 of the Arbitration Act 2000, does not apply to a non-party to legal proceedings. The Appellant is not a party to apply to a non-party to legal proceedings. The Appellant is not a party to legal proceedings for purposes of Section 10 of the Arbitration Act. Thus legal proceedings for purposes of Section 10 of the Arbitration Act. Thus it has no standing. it has no standing. Furthermore, an entitlement to be heard on an application does not 85. 85. Furthermore, an entitlement to be heard on an application does not necessarily lead to it being granted nor does it constitute a waiver by the necessarily lead to it being granted nor does it constitute a waiver by the Court from considering whether or not the applicant has the standing to Court from considering whether or not the applicant has the standing to the bring the application. Even assuming Vedanta was joined bring the application. Even assuming Vedanta was joined to the to proceedings as second Respondent, it was highly doubtful that it could proceedings as second Respondent, it was highly doubtful that it could invoke Section 10 of the Arbitration Act as the petition was not brought invoke Section 10 of the Arbitration Act as the petition was not brought against it. against it. 86. Grounds 3 and 5 cannot be entertained by this Court, as the application 86. Grounds 3 and 5 cannot be entertained by this Court, as the application by the Chairman of the Respondent is pending determination before the by the Chairman of the Respondent is pending determination before the High Court. It is doubtful that the Appellant has competence to address High Court. It is doubtful that the Appellant has competence to address the matters raised. This is because the decision of the High Court is the matters raised. This is because the decision of the High Court is pending on the same. pending on the same. 87. The Court of Appeal's jurisdiction being appellate, it can only adjudicate 87. The Court of Appeal's jurisdiction being appellate, it can only adjudicate an appeal and not proceedings that are yet to be determined by the lower an appeal and not proceedings that are yet to be determined by the lower court. court. 88. Learned state counsel Mr. Mutale in augmenting his arguments urged Learned state counsel Mr. Mutale in augmenting his arguments urged 88. the court to interrogate the rights derived by a party by filing a notice of the court to interrogate the rights derived by a party by filing a notice of intention to appear at the hearing of the petition to oppose it. It was intention to appear at the hearing of the petition to oppose it. It was learned state counsel's argument that the notice only entitled the party learned state counsel’s argument that the notice only entitled the party J29 J29 .. filing the notice to participate m the petition proceedings m the High filing the notice to participate in the petition proceedings in the High Court. Court. VEDANTA'S RESPONSE VEDANTA’S RESPONSE 89. 89. In response Mr. Mundashi, SC, argued that the Mmembe case was In response Mr. Mundashi, SC, argued that the Mmembe case was decided under the repealed Companies Act, which did not contain section decided under the repealed Companies Act, which did not contain section 60(3) of the Corporate Insolvency Act. 60(3) of the Corporate Insolvency Act. CROSS APPEAL AND ARGUMENTS CROSS APPEAL AND ARGUMENTS 90. ZCCM IH had filed a cross appeal to the appeal under case number ZCCM IH had filed a cross appeal to the appeal under case number 90. CAZ/08/249/2019. The grounds of appeal are that: CAZ/08/249/2019. The grounds of appeal are that: i. The learned Judge in the court below erred in law and fact in i. The learned Judge in the court below erred in law and fact in finding that there existed a dispute between the parties which finding that there existed a dispute between the parties which was subject of an arbitration agreement in terms of Section 10 was subject of an arbitration agreement in terms of Section 10 of the Arbitration Act No.19 of 2000. of the Arbitration Act No. 19 of 2000. ii. The learned Judge in the court below erred in law and fact by ii. The learned Judge in the court below erred in law and fact by failing to consider and find that the public policy implications failing to consider and find that the public policy implications the dispute insolvency proceedings brought underlying underlying insolvency proceedings brought the dispute outside the realm of arbitral proceedings. outside the realm of arbitral proceedings. 91. The parties to the petition were ZCCM IH and KCM. No claims were The parties to the petition were ZCCM IH and KCM. No claims were 91. directed at Vedanta Resources Holdings Limited. It was therefore wrong directed at Vedanta Resources Holdings Limited. It was therefore wrong for the Court to base its reasoning on perceived disputes between ZCCM for the Court to base its reasoning on perceived disputes between ZCCM IH, KCM and Vedanta. The Court should have confined its enquiry to the IH, KCM and Vedanta. The Court should have confined its enquiry to the question whether there was a dispute between ZCCM IH and KCM as question whether there was a dispute between ZCCM IH and KCM as parties before the Court. parties before the Court. 92. The finding that there was a dispute between the parties was baseless. The finding that there was a dispute between the parties was baseless. 92. The definition of a dispute, and Clause 26.1 defined the matters which The definition of a dispute, and Clause 26.1 defined the matters which J30 J30 I' would be subject to arbitration. They would stem from the Shareholder's ' would be subject to arbitration. They would stem from the Shareholder's Agreement. Any disagreement of whatever nature, arising out of the Agreement. Any disagreement of whatever nature, arising out of the interpretation or performance or breach of the shareholder's agreement interpretation or performance or breach of the shareholder's agreement would be referred to arbitration. The dispute had to be traceable to a would be referred to arbitration. The dispute had to be traceable to a benefit or obligation conferred by the agreement. It had to be clearly benefit or obligation conferred by the agreement. It had to be clearly grounded within one or more clauses in the agreement. If it did not, the grounded within one or more clauses in the agreement. If it did not, the arbitration agreement had no reach or relevance to the quarrel between arbitration agreement had no reach or relevance to the quarrel between the parties. the parties. 93. The petition cites loss of confidence in the Appellant's ability to manage 93. The petition cites loss of confidence in the Appellant's ability to manage and administer the affairs of the 2nd Respondent, as well as the failure of and administer the affairs of the 2nd Respondent, as well as the failure of the 2nd Respondent to pay its debt as and when they fall due. The 2nd the 2 nd Respondent to pay its debt as and when they fall due. The 2 nd Respondent acknowledged that it had been operating at a loss for the Respondent acknowledged that it had been operating at a loss for the past 7 years, and had not abided by its mining plan. It did not deny its past 7 years, and had not abided by its mining plan. It did not deny its failure to pay a number of debts. There was no dispute as to these failure to pay a number of debts. There was no dispute as to these matters between the parties. matters between the parties. 94. 94. In addition to this, initially a dispute had existed, and the 1st Respondent In addition to this, initially a dispute had existed, and the 1st Respondent served a Notice of Dispute upon the 2nd Respondent. A Notice of served a Notice of Dispute upon the 2nd Respondent. A Notice of Arbitration was issued, in relation to alleged breach of the shareholder's Arbitration was issued, in relation to alleged breach of the shareholder's Agreement. The remedies sought from the arbitral process were specific Agreement. The remedies sought from the arbitral process were specific performance and damages for breach of contract. The winding up performance and damages for breach of contract. The winding up proceedings seek no affirmation as to which party was in the wrong, nor proceedings seek no affirmation as to which party was in the wrong, nor . compensation for the failings of KCM. Further, issues of management compensation for the failings of KCM. Further, issues of management and administration of KCM fell within the shareholder's Agreement, but and administration of KCM fell within the shareholder's Agreement, but even if this were to be the case, neither ZCCM IH nor KCM were parties even if this were to be the case, neither ZCCM IH nor KCM were parties to the Management Agreement, which would be the basis of the dispute. to the Management Agreement, which would be the basis of the dispute. J31 J31 *95. The learned Judge failed to show how the claims before the Court could • 95. The learned Judge failed to show how the claims before the Court could be equated to the definition of the dispute as stated in the Shareholder's be equated to the definition of the dispute as stated in the Shareholder's Agreement. It was necessary for the learned Judge to state the basis of Agreement. It was necessary for the learned Judge to state the basis of her conclusion that the matters constituted a dispute within the meaning her conclusion that the matters constituted a dispute within the meaning of the arbitration clause before her. According to learned Counsel, the of the arbitration clause before her. According to learned Counsel, the learned Judge failed to consider whether matters of KCM were governed learned Judge failed to consider whether matters of KCM were governed by the SHA. by the SHA. 96. The SHA merely provides a skeleton of the composition and rights of the 96. The SHA merely provides a skeleton of the composition and rights of the Board and Management of the 2 nd Respondent. The agreement refers to a Board and Management of the 2nd Respondent. The agreement refers to a Management Agreement, defined as follows: Management Agreement, defined as follows: "Management Agreement means that agreement of even date herewith "Management Agreement means that agreement of even date herewith entered into between the Company and Vedanta, regarding the entered into between the Company and Vedanta, regarding the provision by Vedanta or one of its Affiliates of management marketing provision by Vedanta or one of its Affiliates of management marketing or technical services to the company or any of its subsidiaries". or technical services to the company or any of its subsidiaries". 97. The Management Agreement at pages 1233 -1249 of Vol. 3 of the Amended 97. The Management Agreement at pages 1233 -1249 of Vol. 3 of the Amended Record of Appeal is between KCM and Vedanta Resources Pic. Record of Appeal is between KCM and Vedanta Resources Plc. 98. 98. In view of the agreement, the ZCCM IH could not be taken to have a In view of the agreement, the ZCCM IH could not be taken to have a dispute with the Vedanta as it was KCM which had retained their dispute with the Vedanta as it was KCM which had retained their in management services. Also, KCM did not deny management services. Also, KCM did not deny the failures in failures the management but simply sought to explain the reasons for these failures. management but simply sought to explain the reasons for these failures. The dispute, if existent at all, could not be said to be wholly within the The dispute, if existent at all, could not be said to be wholly within the ambit of the SHA. ambit of the SHA. 99. Moreover, the term 'dispute' as defined in the SHA, could not extend to 99. Moreover, the term 'dispute' as defined in the SHA, could not extend to insolvency proceedings and usurp the Court's jurisdiction under Section insolvency proceedings and usurp the Court's jurisdiction under Section 57 of the Corporate Insolvency Act. The mere fact that some of the 57 of the Corporate Insolvency Act. The mere fact that some of the a grounds of the petition partly fell under what could be grounds of the petition partly fell under what could be termed as a termed as J32 J32 dispute in the SHA could not, warrant a finding that the matter was • dispute in the SHA could not, warrant a finding that the matter was subject of the Arbitration Agreement. There was thus no dispute in terms subject of the Arbitration Agreement. There was thus no dispute in terms of the SHA. of the SHA. 100. 100. The court below did not fully take public policy consideration into The court below did not fully take public policy consideration into account in her decision. Arbitration is essentially a private dispute account in her decision. Arbitration is essentially a private dispute settlement mechanism. Public policy considerations however limit party settlement mechanism. Public policy considerations however limit party autonomy, and impede resort to arbitration. As a result, Courts would in autonomy, and impede resort to arbitration. As a result, Courts would in some instances refuse to refer the matter to arbitration. Reference was some instances refuse to refer the matter to arbitration. Reference was made to Larsen Oil and Gas Plc Ltd vs Pepropod Ltd15, as well as made to Larsen Oil and Gas Pic Ltd vs Pepropod Ltd15, as well as Fulham Club (1987) Ltd vs Richards and Another16. Fulham Club (1987) Ltd vs Richards and Another15. 101. Whenever the question of insolvency arises, in winding up proceedings, 101. Whenever the question of insolvency arises, in winding up proceedings, the dispute cannot simply be considered as concerned with private the dispute cannot simply be considered as concerned with private interests and rights: Re Pantmaenog Timber Co. Ltd17 (2004) I AC 158 interests and rights: Re Pantmaenog Timber Co. Ltd17 (2004) I AC 158 and Salford Estates No. 2 Ltd vs Altomart1 3, and Salford Estates No. 2 Ltd vs Altomart13. 102. The protection of public expectation that debts will be incurred and The protection of public expectation that debts will be incurred and 102. honoured in good faith undergirds Commercial Life, and this translates honoured in good faith undergirds Commercial Life, and this translates into a public interest that these norms will be observed and enforced. For into a public interest that these norms will be observed and enforced. For this reason, when a Company fails to pay its debts as and when they fall this reason, when a Company fails to pay its debts as and when they fall due, the correct and proper fora for addressing the issue of insolvency is due, the correct and proper fora for addressing the issue of insolvency is not in arbitration, as the public is not privy to the same. It is public not in arbitration, as the public is not privy to the same. It is public policy that issues of insolvency are heard and determined by the Court. policy that issues of insolvency are heard and determined by the Court. 103. 103. In the present case, proceeds, the issue of insolvency arises in paragraph In the present case, proceeds, the issue of insolvency arises in paragraph 12 of the amended petition as well as paragraphs 15 and 16 of the 12 of the amended petition as well as paragraphs 15 and 16 of the amended affidavit verifying petition. This takes the matter out of the amended affidavit verifying petition. This takes the matter out of the realm of the dispute between the parties to the SHA. Those who filed realm of the dispute between the parties to the SHA. Those who filed J33 J33 notices of intention to appear and be heard, as well as the public at large ’ notices of intention to appear and be heard, as well as the public at large are affected. Any arbitral award made on the issue of insolvency would be are affected. Any arbitral award made on the issue of insolvency would be contrary to public policy. The question of insolvency prevents the Court contrary to public policy. The question of insolvency prevents the Court from staying the proceedings and referring the parties to arbitration. The from staying the proceedings and referring the parties to arbitration. The Court was urged to allow the cross appeal. Court was urged to allow the cross appeal. 104. Mr. Mutale SC informed the court that KCM had not filed any heads of 104. Mr. Mutale SC informed the court that KCM had not filed any heads of argument, but placed on record KCM's support for the appeal. argument, but placed on record KCM’s support for the appeal. 105. Mr. Mundashi SC also informed the court that Vedanta was its amended 105. Mr. Mundashi SC also informed the court that Vedanta was its amended heads of argument filed on 21st August 2020. heads of argument filed on 21 st August 2020. VEDANTA'S OPPOSITION TO THE CROSS APPEAL VEDANTA'S OPPOSITION TO THE CROSS APPEAL 106. Learned counsel placed reliance on written arguments which were as 106. Learned counsel placed reliance on written arguments which were as follows: follows: I 07. Clauses 24 to 26.4 of the SHA reveal that the issues raised in the 107. Clauses 24 to 26.4 of the SHA reveal that the issues raised in the winding up Petition are shareholder disputes. The grounds on which winding up Petition are shareholder disputes. The grounds on which ZCCM-IH seeks the Winding up of KCM on the just and equable basis ZCCM-IH seeks the Winding up of KCM on the just and equable basis are disputes within the meaning ascribed to that term in the SHA. are disputes within the meaning ascribed to that term in the SHA. ZCCM-IH therefore, attempted to circumvent the dispute resolution ZCCM-IH therefore, attempted to circumvent the dispute resolution mechanism in Clause 26 of the SHA. mechanism in Clause 26 of the SHA. 108. 108. ZCCM-IH, emphasized Vedanta's responsibility for the Management and ZCCM-IH, emphasized Vedanta’s responsibility for the Management and Administration of KCM under the SHA, and listed grounds for alleging Administration of KCM under the SHA, and listed grounds for alleging that KCM has been managed and administered in a manner that is that KCM has been managed and administered in a manner that is detrimental to ZCCM IH's interests. The grounds relate to non-payment detrimental to ZCCM IH’s interests. The grounds relate to non-payment of dividends, alleged failures by KCM in developing mining areas, the of dividends, alleged failures by KCM in developing mining areas, the carrying on of mining operations and the alleged non -payments of carrying on of mining operations and the alleged non -payments of suppliers and contractors. These disputes ought to have been resolved suppliers and contractors. These disputes ought to have been resolved J34 J34 under the dispute resolution process set out in the SHA. The existence of under the dispute resolution process set out in the SHA. The existence of a dispute between the parties under the SHA was properly found by the a dispute between the parties under the SHA was properly found by the court below. Section 60{3) of the Corporate Insolvency Act was referred court below. Section 60(3) of the Corporate Insolvency Act was referred to. to. 109. 109. In holding that the contributor, a non-party to the petition, could not In holding that the contributor, a non-party to the petition, could not apply to refer the matter to arbitration, the learned Judge overturned her apply to refer the matter to arbitration, the learned Judge overturned her ruling of 20th June, 2019. This was incompetent and inconsistent with ruling of 20th June, 2019. This was incompetent and inconsistent with Section 60(3) of the Corporate Insolvency Act. Section 60(3) of the Corporate Insolvency Act. 110. 110. The petition contains allegations against Vedanta, which are founded on The petition contains allegations against Vedanta, which are founded on the SHA. Furthermore, even assuming this Court finds that some issues the SHA. Furthermore, even assuming this Court finds that some issues relate to the management of the KCM, which stem from the management relate to the management of the KCM, which stem from the management agreement which the ZCCM IH is not party to, nothing stops the Court agreement which the ZCCM IH is not party to, nothing stops the Court from staying the proceedings and referring the parties to arbitration, to from staying the proceedings and referring the parties to arbitration, to arbitrate the issues centered around the SHA which are clearly in arbitrate the issues centered around the SHA which are clearly in contention in the petition. contention in the petition. 111. 111. It would be just and fair to refer the parties to arbitration so as to afford It would be just and fair to refer the parties to arbitration so as to afford Vedanta an opportunity to respond to the allegations leveled against it. Vedanta an opportunity to respond to the allegations leveled against it. This is because in Townap Textiles Zambia Limited and Another vs This is because in Townap Textiles Zambia Limited and Another vs Tata Zambia Ltmtted18 , the Court was suggesting that nothing stops Tata Zambia Limited18, the Court was suggesting that nothing stops the Court from referring parties to arbitration in a winding up petition on the Court from referring parties to arbitration in a winding up petition on the just end equitable ground. This will be considered on a case by case the just end equitable ground. This will be considered on a case by case basis. In the cited case, a referral to arbitration was not done because basis. In the cited case, a referral to arbitration was not done because that would have been an academic exercise, and the reference would that would have been an academic exercise, and the reference would have served no useful purpose. Here, the petition is yet to be determined. have served no useful purpose. Here, the petition is yet to be determined. J35 J35 It is mandatory to refer a matter which is subject of an arbitration 1'12. 1’12. It is mandatory to refer a matter which is subject of an arbitration agreement to arbitration, because of the word 'shall' in Section 10 (1) of agreement to arbitration, because of the word ‘shall’ in Section 10 (1) of the Arbitration Act. That Section, creates no exceptions as to the nature the Arbitration Act. That Section, creates no exceptions as to the nature of proceedings before the Court. Reference was made to Fulham ( 1987) of proceedings before the Court. Reference was made to Fulham (1987) Football Club supra. Football Club supra. 113. 113. Learned Counsel expressed the understanding that in the Salford Estates Learned Counsel expressed the understanding that in the Salford Estates case supra, the Court described the jurisdiction to wind up a Company case supra, the Court described the jurisdiction to wind up a Company as discretionary and that discretion was to be exercised consistently with as discretionary and that discretion was to be exercised consistently with the legislative purpose of arbitration. A Court could thus dismiss or stay the legislative purpose of arbitration. A Court could thus dismiss or stay the petition, so as to compel the parties to resolve their disputes as the petition, so as to compel the parties to resolve their disputes as contractually agreed. contractually agreed. 114. Konkola Copper Mines Plc vs NFC Africa Mining Plc19 unreported, as 114. Konkola Copper Mines Pic vs NFC Africa Mining Pic19 unreported, as compels a Court to refer a matter to arbitration whenever Section 10 of compels a Court to refer a matter to arbitration whenever Section 10 of the arbitration Act was invoked. Winding up proceedings on a just and the arbitration Act was invoked. Winding up proceedings on a just and equitable ground were contemplated in Clause 26.1 of the SHA. Larsen equitable ground were contemplated in Clause 26.1 of the SHA. Larsen Oil and Gas PLC was no assistance to the Appellant, because Section 6, Oil and Gas PLC was no assistance to the Appellant, because Section 6, which lists exceptions to arbitration would have included winding up which lists exceptions to arbitration would have included winding up proceedings. proceedings. 115. Despite Pantemaenog Timber Co. Ltd17, the third party creditors are 115. Despite Pantemaenog Timber Co. Ltd17, the third party creditors are not precluded from employing other legal means available to them for not precluded from employing other legal means available to them for purposes of enforcing their rights or claims. Therefore, consideration of purposes of enforcing their rights or claims. Therefore, consideration of the third party's rights should not override the arbitration agreement. the third party’s rights should not override the arbitration agreement. The petition was not commenced by creditors. The dispute in issue is a The petition was not commenced by creditors. The dispute in issue is a shareholder dispute which the creditors are not party to. shareholder dispute which the creditors are not party to. J36 J36 STAY OF PETITION PROCEEDINGS PENDING APPEAL STAY OF PETITION PROCEEDINGS PENDING APPEAL 116. After Bobo J, had rendered her Ruling in the application to stay the 116. After Bobo J, had rendered her Ruling in the application to stay the matter and refer it to arbitration, Vedanta applied that the proceedings matter and refer it to arbitration, Vedanta applied that the proceedings be stayed pending appeal. The basis for the proposed stay was that the be stayed pending appeal. The basis for the proposed stay was that the appeal against the Ruling was meritorious with reasonable prospects of appeal against the Ruling was meritorious with reasonable prospects of appeal. That if the proceedings were not stayed, the outcome of the appeal. That if the proceedings were not stayed, the outcome of the appeal would be rendered academic. KCM would be wound up and appeal would be rendered academic. KCM would be wound up and Vedanta seriously prejudiced. Vedanta seriously prejudiced. 117. 117. It was explained that the Vedanta group had since 2004, provided over It was explained that the Vedanta group had since 2004, provided over US$100 billion in form of shareholder loans to KCM. It had also provided US$100 billion in form of shareholder loans to KCM. It had also provided guarantees for certain loans and credit facilities from third party banks, guarantees for certain loans and credit facilities from third party banks, and had also guaranteed a US$ million advance payment by one of and had also guaranteed a US$ million advance payment by one of KCM's customers. KCM's customers. 118. 118. The Vedanta group, of which Vedanta is a member by far the largest The Vedanta group, of which Vedanta is a member by far the largest creditor of KCM, and therefore, likely to suffer the greatest financial harm creditor of KCM, and therefore, likely to suffer the greatest financial harm if the stay application is not granted. ZCCM IH would not suffer any if the stay application is not granted. ZCCM IH would not suffer any harm as it had not invested any amounts in the Respondent. harm as it had not invested any amounts in the Respondent. 119. That if the appeal succeeds, the proceedings before the Court would be That if the appeal succeeds, the proceedings before the Court would be 119. stayed and the matter referred to arbitration. stayed and the matter referred to arbitration. 120. 120. The application was opposed, the basis of opposition being that the The application was opposed, the basis of opposition being that the appeal against the Ruling in the stay application had no prospects of appeal against the Ruling in the stay application had no prospects of success. In addition to this, Vedanta would not be prejudiced if if success. In addition to this, Vedanta would not be prejudiced proceedings were not stayed. Moreover, Vedanta was a separate and proceedings were not stayed. Moreover, Vedanta was a separate and distinct entity from other Companies within the purported Vedanta distinct entity from other Companies within the purported Vedanta Group and was in any event not a party to the winding up proceedings. Group and was in any event not a party to the winding up proceedings. J37 J37 That the winding up proceedings are of public interest, and other ’ That the winding up proceedings are of public interest, and other creditors had filed notices of intention to appear at the hearing of the creditors had filed notices of intention to appear at the hearing of the petition. In the event Vedanta's appeal is unsuccessful, the proceedings petition. In the event Vedanta's appeal is unsuccessful, the proceedings would be unduly delayed. would be unduly delayed. 121. Upon hearing the parties, the learned Judge rendered an extempore 121. Upon hearing the parties, the learned Judge rendered an extempore Ruling. She disclosed that she had previewed the grounds on which her Ruling. She disclosed that she had previewed the grounds on which her Ruling would be questioned, and remained unconvinced that the Ruling would be questioned, and remained unconvinced that the proposed appeal had prospects of success. She would however, in the proposed appeal had prospects of success. She would however, in the interest of justice exercise her discretion to stay the proceedings so that interest of justice exercise her discretion to stay the proceedings so that the so called novel issues are interrogated by the Court of Appeal. They the so called novel issues are interrogated by the Court of Appeal. They would prevent the appeal from being rendered nugatory in the unlikely would prevent the appeal from being rendered nugatory in the unlikely event the appeal succeeds. event the appeal succeeds. 122. 122. ZCCM-IH was aggrieved with this Ruling and appealed against it on two ZCCM-IH was aggrieved with this Ruling and appealed against it on two grounds. These are that: grounds. These are that: i. The Court erred in fact and in law when it granted a stay of the i. The Court erred in fact and in law when it granted a stay of the winding up proceedings pending the determination of the winding up proceedings pending the determination of the appeal despite making a finding that the contributor's appeal appeal despite making a finding that the contributor's appeal lacked any chance of success. lacked any chance of success. ii. The Court erred in fact and in law in the manner in which it ii. The Court erred in fact and in law in the manner in which it exercised its discretion to grant the stay of proceedings exercised its discretion to grant the stay of proceedings pending appeal on the ground of novelty. pending appeal on the ground of novelty. 123. Mr. Shonga SC placed reliance on the heads of arguments filed on 25th 123. Mr. Shonga SC placed reliance on the heads of arguments filed on 25th September, 2019. September, 2019. 124. Mr. Mutale SC informed the court that KCM had not filed any heads of 124. Mr. Mutale SC informed the court that KCM had not filed any heads of argument but wished to place itself on record as supporting the appeal. argument but wished to place itself on record as supporting the appeal. J38 J38 The two grounds were argued together. Our attention was drawn to f25. 1’25. The two grounds were argued together. Our attention was drawn to Order X Rule 5 CAR, as well as Order 59 Rule 13 RSC. Learned Order X Rule 5 CAR, as well as Order 59 Rule 13 RSC. Learned Counsel recoursed paragraph 422 of Halsbury's Law of England 4 th Counsel recoursed paragraph 422 of Halsbury's Law of England 4th Edition Vol. 37, where the power to stay proceedings is discussed. It Edition Vol. 37, where the power to stay proceedings is discussed. It was argued that as disclosed by the rules, and the cited work, the power was argued that as disclosed by the rules, and the cited work, the power to stay proceedings should be ... exercised. This position, it was argued to stay proceedings should be ... exercised. This position, it was argued in Mulenga and Others vs was echoed by the Supreme Court was echoed by the Supreme Court in Mulenga and Others vs Investment Merchant Bank Limited20 although the Court was there Investment Merchant Bank Limited20 although the Court was there dealing with an application for stay of execution. dealing with an application for stay of execution. 126. 126. Learned Counsel argued that the learned Judge, granting a stay of the Learned Counsel argued that the learned Judge, granting a stay of the proceedings had a duty to act judiciously. She did not do so. She had proceedings had a duty to act judiciously. She did not do so. She had considered the prospects of success of the 2nd Respondent's appeal, and considered the prospects of success of the 2nd Respondent's appeal, and in staying the found found that non-existed. That being so, she erred in staying the that non-existed. That being so, she erred proceedings. This militated against the interest of justice. Upon finding proceedings. This militated against the interest of justice. Upon finding prospects of the success of the proposed appeal dim, the learned Judge's prospects of the success of the proposed appeal dim, the learned Judge's hands were tied. The judicious exercise of her discretion demanded that hands were tied. The judicious exercise of her discretion demanded that she refuse the stay, in accordance with the guidance of the Supreme she refuse the stay, in accordance with the guidance of the Supreme Court in Zambia Revenue Authority vs Post Newspaper Limited21 . Court in Zambia Revenue Authority vs Post Newspaper Limited21. VEDANTA'S CROSS APPEAL VEDANTA’S CROSS APPEAL 127. 127. Vedanta's cross appealed against this appeal on one ground: Vedanta’s cross appealed against this appeal on one ground: The learned High Court Judge erred in law and in fact when she The learned High Court Judge erred in law and in fact when she found that the 2 nd Respondent 1s grounds of appeal did not have found that the 2nd Respondent's grounds of appeal did not have prospects of success without giving any reasons for the said prospects of success without giving any reasons for the said findings: findings: J39 J39 1·28. Mr. Chakoleka indicated that the appeal was opposed by combined heads 1*28. Mr. Chakoleka indicated that the appeal was opposed by combined heads of argument filed on behalf of Vedanta on 23rd October, 2019, which he of argument filed on behalf of Vedanta on 23rd October, 2019, which he relied on. relied on. 129. Mr. Shonga SC informed the court that ZCCM-IH placed reliance on 129. Mr. Shonga SC informed the court that ZCCM-IH placed reliance on heads of argument filed into court on 11 th June, 2020. heads of argument filed into court on 11th June, 2020. 130. Mr. Mutale SC informed the Court that KCM had not filed arguments in 130. Mr. Mutale SC informed the Court that KCM had not filed arguments in the appeal and would leave the decision to the Court. the appeal and would leave the decision to the Court. 131. In response to ZCCM IH's appeal, it was argued, on behalf of Vedanta, In response to ZCCM IH's appeal, it was argued, on behalf of Vedanta, 131. after referring to Order 59 Rule 13 Sub rule 2 RSC, that the High Court after referring to Order 59 Rule 13 Sub rule 2 RSC, that the High Court has a discretion to order a stay pending appeal, which the learned Judge has a discretion to order a stay pending appeal, which the learned Judge exercised. According to learned counsel, her decision was a case exercised. According to learned counsel, her decision was a case management one, which per Chadwick W in Royal & Son Alliance management one, which per Chadwick LJ in Royal & Son Alliance Insurance Plc vs T & N Ltd (In administration}22 , should not be Insurance Pic vs T & N Ltd (In administration)22, should not be interfered with. It is contended that the decision to stay proceedings is interfered with. It is contended that the decision to stay proceedings is not so plainly wrong and outside the ambit of the Judge's discretion. not so plainly wrong and outside the ambit of the Judge's discretion. Hammond Suddard Solutions vs Agriculture International Holdings Hammond Suddard Solutions vs Agriculture International Holdings Ltd23 was referred to as laying down the question a Court considering a Ltd23 was referred to as laying down the question a Court considering a stay and execution is to ask itself. stay and execution is to ask itself. 132. Reliance was also placed in Bowa (suing as Administrator of the 132. Reliance was also placed in Bowa (suing as Administrator of the estate of the late Ruth Bowa) vs Mubiana and Zesco Ltd24 as stating estate of the late Ruth Bowa) vs Mubiana and Zesco Ltd24 as stating the test for the grant of a stay. the test for the grant of a stay. 133. 133. It was contended that if the stay pending appeal is not maintained It was contended that if the stay pending appeal is not maintained (pending appeal), a real act of injustice to the Respondent and other (pending appeal), a real act of injustice to the Respondent and other parties with an interest in the 1st Respondent exists. The injustice is that parties with an interest in the 1st Respondent exists. The injustice is that if KCM is wound up, any successful appeal will be rendered nugatory. if KCM is wound up, any successful appeal will be rendered nugatory. J40 J40 Secondly, the Provisional Liquidator will proceed to depose of KCM's ' Secondly, the Provisional Liquidator will proceed to depose of KCM’s assets. This will cause irreparable harm. The case of Zambia Revenue assets. This will cause irreparable harm. The case of Zambia Revenue Authority vs Post Newspaper Ltd21 was said to be distinguishable from Authority vs Post Newspaper Ltd21 was said to be distinguishable from the present one, as the there were no special circumstances which the present one, as the there were no special circumstances which warranted a stay. warranted a stay. 134. 134. 'Novel' issues had ansen, and these warranted interrogations by the ‘Novel’ issues had arisen, and these warranted interrogations by the Court of Appeal. These were said to have arisen m that a Provisional Court of Appeal. These were said to have arisen in that a Provisional Liquidator was appointed when the petition was filed. This in turn raised Liquidator was appointed when the petition was filed. This in turn raised questions as to who could defend the interests of the company, whether questions as to who could defend the interests of the company, whether it was the Provisional Liquidator, or the company's director exercising it was the Provisional Liquidator, or the company's director exercising residual powers. residual powers. 135. 135. The arguments in support of the 2 nd Respondent's cross appeal are the The arguments in support of the 2nd Respondent's cross appeal are the learned Judge should have given reasons for the view that the grounds of learned Judge should have given reasons for the view that the grounds of appeal had no prospects of success. Referring to Chibwe & Chibwe2 s, it appeal had no prospects of success. Referring to Chibwe & Chibwe25, it was contended that the learned Judge misdirected herself in finding that was contended that the learned Judge misdirected herself in finding that the appeal lacked prospects of success without any reasons for the said the appeal lacked prospects of success without any reasons for the said Ruling. We were urged to overturn the Ruling. Ruling. We were urged to overturn the Ruling. 136. 136. In response, learned counsel for ZCCM IH referred to the definition of In response, learned counsel for ZCCM IH referred to the definition of "decision" in Black's Law Dictionary 9 th Edition at page 467. Premised on “decision” in Black's Law Dictionary 9th Edition at page 467. Premised on the definition, they argued that the finding complained about is not a the definition, they argued that the finding complained about is not a decision. The Chibwe case decision is therefore inapplicable. They argued decision. The Chibwe case decision is therefore inapplicable. They argued that it would have been improper for the learned Judge to assign reasons that it would have been improper for the learned Judge to assign reasons as to why the 2 nd Respondents appeal had no prospects of success. She as to why the 2nd Respondents appeal had no prospects of success. She would have delved into the merits of the appeal, when she had no would have delved into the merits of the appeal, when she had no jurisdiction to do so. They urged the court to dismiss the appeal jurisdiction to do so. They urged the court to dismiss the appeal J41 J41 ISSUES FOR DETERMINATION ISSUES FOR DETERMINATION 137. 137. The issues that arise for the Court's determination in the appeals before The issues that arise for the Court's determination in the appeals before it are: it are: i. Whether a dispute as defined in the SHA has arisen. 1. Whether a dispute as defined in the SHA has arisen. ii. 11. If so, whether Vedanta has locus standi to apply for stay of the If so, whether Vedanta has locus standi to apply for stay of the Petition and reference of the matter to arbitration. Petition and reference of the matter to arbitration. iii. If so, whether the disputes are arbitrable, and whether the disputes If so, whether the disputes are arbitrable, and whether the disputes 111. can be so referred in light of the notices of the intention to appear at can be so referred in light of the notices of the intention to appear at the hearing of the Petition filed by third party creditors. the hearing of the Petition filed by third party creditors. iv. Whether the Mainsa affidavit should have been considered by the 1v. Whether the Mainsa affidavit should have been considered by the court, and whether the application concerning the right of the court, and whether the application concerning the right of the KCM’s board to represent KCM has been pre-determined. KCM's board to represent KCM has been pre-determined. v. Whether Bobo J should have assigned reasons for the view that the v. Whether Bobo J should have assigned reasons for the view that the appeal lacked merit, appeal lacked merit, CONSIDERATION CONSIDERATION 138. 138. The cross appeal by ZCCM-IH raises issues that have a bearing on the The cross appeal by ZCCM-IH raises issues that have a bearing on the matter now in controversy between the parties to the appeal by Vedanta. matter now in controversy between the parties to the appeal by Vedanta. We propose to deal with them together. We will begin with the question We propose to deal with them together. We will begin with the question whether or not a dispute has arisen between the parties. The term whether or not a dispute has arisen between the parties. The term ‘dispute’ is defined in the SHA, as follows: 'dispute' is defined in the SHA, as follows: "Dispute" means any dispute, disagreement, controversy, claim or “Dispute” means any dispute, disagreement, controversy, claim or difference of whatsoever nature arising under, out of, in connection difference of whatsoever nature arising under, out of, in connection with or relating (in any manner whatsoever) to this Agreement or the with or relating (in any manner whatsoever) to this Agreement or the interpretation or performance of this Agreement or the breach, interpretation or performance of this Agreement or the breach, termination or validity thereof.” termination or validity thereof." J42 J42 Clause 26.1 of the SHA is in the following terms: 1-39. r39. Clause 26.1 of the SHA is in the following terms: Subject to the provisions of clauses 24 and 25 above, the parties Subject to the provisions of clauses 24 and 25 above, the parties hereby consent to submit any dispute to be resolved by arbitration hereby consent to submit any dispute to be resolved by arbitration in accordance with the UNCITRAL Arbitration Rules (the "Rules") as in accordance with the UNCITRAL Arbitration Rules (the “Rules”) as in force and effect on the date of service of Notice of Dispute under 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 clause 23 above, save as modified by the provisions of this clause 26. The tribunal shall consist of a sole arbitrator (The "Tribunal"} 26. The tribunal shall consist of a sole arbitrator (The “Tribunal”) and the appointing authority shall be the Secretary General of the and the appointing authority shall be the Secretary General of the Permanent Court of Arbitration at The Hague. The place of Permanent Court of Arbitration at The Hague. The place of language of the Arbitration shall be Johannesburg and the Arbitration shall be Johannesburg and the language of the arbitration shall be English. arbitration shall be English. 140. 140. This clause reveals that the parties to the SHA agreed to submit any This clause reveals that the parties to the SHA agreed to submit any dispute that would arise as defined, to arbitration. The first thing to dispute that would anse as defined, to arbitration. The first thing to determine, as stated as above, is whether a dispute as defined, exists. determine, as stated as above, 1s whether a dispute as defined, exists. This entails scrutiny of the words employed in the SHA to decipher This entails scrutiny of the words employed in the SHA to decipher whether ZCCM IH's grievances fall within the ambit of the matters whether ZCCM IH’s grievances fall within the ambit of the matters addressed in the SHA. Kaoma JS, delivering the judgment of the addressed in the SHA. Kaoma JS, delivering the judgment of the Supreme Court in Audrey Nyambe & Total Zambia Limited26 gave Supreme Court in Audrey Nyambe & Total Zambia Limited26 gave expression to this approach when she said at J9: expression to this approach when she said at J9: to "However, “However, in determining whether a matter is amenable to in determining whether a matter is amenable arbitration or not, it is imperative that the wording used in the arbitration or not, it is imperative that the wording used in the arbitration clause itself are closely studied." arbitration clause itself are closely studied.” 141. 141. Section 10 of the Zambian Arbitration Act enacts the following: Section 10 of the Zambian Arbitration Act enacts the following: (1) "A court before which legal proceedings are brought in a matter (1) “A court before which legal proceedings are brought in a matter which is subject to an arbitration agreement shall, if a party so which is subject to an arbitration agreement shall, if a party so requests at any stage of the proceedings and notwithstanding any requests at any stage of the proceedings and notwithstanding any J43 J43 written law, stay those proceedings and refer the parties to written law, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed. inoperative or incapable of being performed. (2) Where proceedings, referred to in subsection (1) have been brought, (2) Where proceedings, referred to in subsection (1) have been brought, arbitral proceedings may nevertheless be commenced or continued, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before and an award may be made, while the issue is pending before court." court.” 142. Our considered view is that the words "in a matter which is subject to an Our considered view is that the words “in a matter which is subject to an 142. arbitration agreement" clearly indicate that the parties would have agreed arbitration agreement0 clearly indicate that the parties would have agreed to arbitrate a dispute arising on that matter. to arbitrate a dispute arising on that matter. 143. 143. In determining whether a matter is caught by an arbitration clause, we In determining whether a matter is caught by an arbitration clause, we find the approach of the Court of Appeal of Singapore in Tomolugen find the approach of the Court of Appeal of Singapore in Tomolugen Holdings Ltd and Another vs Silica Investors Ltd and Other Holdings Ltd and Another vs Silica Investors Ltd and Other Appeals27 persuasive. Sundaresh Menon CJ, delivering the Judgment of Appeals27 persuasive. Sundaresh Menon CJ, delivering the Judgment of the court, said the following at J62: the court, said the following at J62: "In our Judgment, when the court considers whether any 'matter' is “In our Judgment, when the court considers whether any ‘matter’ is covered by an arbitration clause, it should undertake a practical and covered by an arbitration clause, it should undertake a practical and common sense enquiry in relation to any reasonably substantial issue common sense enquiry in relation to any reasonably substantial issue that is not merely peripherally or tangentially connected to the that is not merely peripherally or tangentially connected to the dispute in the court proceedings. The court should not characterize dispute in the court proceedings. The court should not characterize the matter(s) in either an overly broad or unduly narrow and pedantic the matter(s) in either an overly broad or unduly narrow and pedantic manner." manner.” 144. Our understanding of this decision is that the proposed enquiry requires Our understanding of this decision is that the proposed enquiry requires 144. the court to address its mind to the question whether realistically the court to address its mind to the question whether realistically speaking, the matter belongs to arbitration as agreed. Too narrow a speaking, the matter belongs to arbitration as agreed. Too narrow a review might deprive the parties an opportunity to employ their agreed review might deprive the parties an opportunity to employ their agreed mode of dispute resolution while an unduly broad assessment might well mode of dispute resolution while an unduly broad assessment might well J44 J44 consign matters to arbitration which do not belong there, as would be ” consign matters to arbitration which do not belong there, as would be discovered by the arbitrator. This would lead to avoidable time wasting. discovered by the arbitrator. This would lead to avoidable time wasting. 145. We turn then to the grievances in the petition as compared to the 145. We turn then to the grievances in the petition as compared to the relevant clauses in the SHA. relevant clauses in the SHA. 146. The first is that KCM has operated at a loss for 7 years, and declared 146. The first is that KCM has operated at a loss for 7 years, and declared dividends only for 4 years. It has failed to pay US$10,305,000. A dispute dividends only for 4 years. It has failed to pay US$10,305,000. A dispute was declared for the failure to pay this dividend. The petition does not was declared for the failure to pay this dividend. The petition does not seek winding up on account of this debt, concerning which a dispute was seek winding up on account of this debt, concerning which a dispute was declared by ZCCM IH. declared by ZCCM IH. 14 7. 147. The second complaint is that KCM has failed to develop the mining areas The second complaint is that KCM has failed to develop the mining areas in Chingola and Chililabombwe, contrary to the mining plan. It has failed in Chingola and Chililabombwe, contrary to the mining plan. It has failed to carry out mining operations with due diligence, and continues to to carry out mining operations with due diligence, and continues to operate below capacity. This has led to the issuance of a default notice operate below capacity. This has led to the issuance of a default notice against it. against it. 148. Clause 3 of the SHA states that the primary object of the company shall 148. Clause 3 of the SHA states that the primary object of the company shall be to carry out the Business. The Business shall, where relevant, be be to carry out the Business, The Business shall, where relevant, be carried out in accordance with scheduled programs. carried out in accordance with scheduled programs. 149. 149. It is plain beyond controversy that a dispute as defined, has ansen. It is plain beyond controversy that a dispute as defined, has arisen. ZCCM IH has taken issue with the manner in which the mining, which is ZCCM IH has taken issue with the manner in which the mining, which is the business of the company (KCM) has been performed. This matter is the business of the company (KCM) has been performed. This matter is clearly within the ambit of arbitration as agreed. clearly within the ambit of arbitration as agreed. 150. Another grievance ZCCM IH has with Vedanta is that it has failed to pay 150. Another grievance ZCCM IH has with Vedanta is that it has failed to pay its debts when they have fallen due. CEC and Ndola Lime are listed as its debts when they have fallen due. CEC and Ndola Lime are listed as creditors who have not been paid. creditors who have not been paid. Clause 12 .1. 1 reads: Clause 12.1.1 reads: J45 J45 Subject to clause 12.1.2, the Board shall be responsible for the raising Subject to clause 12.1.2, the Board shall be responsible for the raising of all finance necessary to implement: of all finance necessary to implement: (a) The scheduled programmes (and any refinancing thereof) (a) The scheduled programmes (and any refinancing thereof) and and (b) To the extent such operations do not form part of the (b) To the extent such operations do not form part of the (and any scheduled programmes, the carrying out of the Business scheduled programmes, the carrying out of the Business (and any refinancing thereof) refinancing thereof) 12. 1.2 Vedanta shall provide or procure the provision of all and any 12.1.2 Vedanta shall provide or procure the provision of all and any finance required in order to discharge the shortfall funding finance required in order to discharge the shortfall funding commitment and for any Konkola Ore Body Extension Project in commitment and for any Konkola Ore Body Extension Project in accordance with Clauses 12.3 and 12.4 respectively. accordance with Clauses 12.3 and 12.4 respectively. 151. 151. It seems to us that ZCCM IH's complaint on this ground implicates the It seems to us that ZCCM IH’s complaint on this ground implicates the obligation of KCM's board to raise finances required to implement the obligation of KCM’s board to raise finances required to implement the scheduled programmes, as well as Vedanta's obligation to meet the cash scheduled programmes, as well as Vedanta’s obligation to meet the cash flow shortfall as per its commitment to do so under clause 12.3 of the flow shortfall as per its commitment to do so under clause 12.3 of the SHA. In our opinion, these finances would facilitate procurement of goods SHA. In our opinion, these finances would facilitate procurement of goods and services. and services. 152. 152. The fourth complaint is that KCM has been operating in a manner that is The fourth complaint is that KCM has been operating in a manner that is not environmentally friendly or sustainable. It has polluted or continues not environmentally friendly or sustainable. It has polluted or continues to pollute water sources in and around its mining area. It seems that to pollute water sources in and around its mining area. It seems that KCM is obligated to ensure that environmental matters are handled as KCM is obligated to ensure that environmental matters are handled as planned. This appears to be within the contemplation of Clause 6.2 planned. This appears to be within the contemplation of Clause 6.2 which states as follows: which states as follows: 6.2 Without prejudice to clause 6.1, the company, at its own cost, 6.2 Without prejudice to clause 6.1, the company, at its own cost, shall prepare and send (in the case of clauses 6.2.1 to 6.2.3) or give shall prepare and send (in the case of clauses 6.2.1 to 6.2.3) or give notice (in the case of clauses 6.2.4 and 6.2.5) to the Directors and, notice (in the case of clauses 6.2.4 and 6.2.5) to the Directors and, in the case of Clause 6.2.3, to such persons who may be entitled by in the case of Clause 6.2.3, to such persons who may be entitled by law or regulation to the same: law or regulation to the same: J46 J46 6.2.2 Not later than three (3) months following the end of each 6.2.2 Not later than three (3) months following the end of each financial year, a report on environmental, social and labour financial year, a report on environmental, social and labour matters with comparisons to the Final Environmental and Social matters with comparisons to the Final Environmental and Social Management Plan and the Employment and Training Plans. Management Plan and the Employment and Training Plans. 153. 153. There appears to be Final Environmental Management Plan to which There appears to be Final Environmental Management Plan to which suggests the report on environmental matters will be compared. This the report on environmental matters will be compared. This suggests an obligation to manage environmental matters as planned. an obligation to manage environmental matters as planned. 154. 154. It is indisputable that the grievances deployed by ZCCM-IH are matters It is indisputable that the grievances deployed by ZCCM-IH are matters that substantially touch on some clauses in the SHA. We agree that a that substantially touch on some clauses in the SHA. We agree that a dispute as defined by the SHA had to originate from the agreement. It dispute as defined by the SHA had to originate from the agreement. It would arise out of the interpretation, performance or breach of the would arise out of the interpretation, performance or breach of the SHA, thus grounded in that agreement. Our examination of the SHA, thus grounded in that agreement. Our examination of the relevant clauses and the grievances in the Petition confirms that the relevant clauses and the grievances in the Petition confirms that the complaints arise from the SHA. The obligations imposed on KCM as complaints arise from the SHA. The obligations imposed on KCM as well as on Vedanta in one instance by the SHA are at the crux of the well as on Vedanta in one instance by the SHA are at the crux of the Petition. Bobo J, was in our view not off the mark in holding that a Petition. Bobo J, was in our view not off the mark in holding that a dispute had arisen between the parties. dispute had arisen between the parties. 155. 155. The next question that arises is whether Vedanta has locus to apply for The next question that arises is whether Vedanta has locus to apply for a stay of the petition and reference of the matter to arbitration. It will a stay of the petition and reference of the matter to arbitration. It will be noticed that the Mainsa affidavit attempts to offer an explanation for be noticed that the Mainsa affidavit attempts to offer an explanation for the woes of KCM while admitting ZCCM IH's accusation. Vedanta on the woes of KCM while admitting ZCCM IH’s accusation. Vedanta on the other hand has taken a stance that indicates that KCM's financial the other hand has taken a stance that indicates that KCM’s financial position is not as bleak as has been painted by ZCCM IH. It claims that position is not as bleak as has been painted by ZCCM IH. It claims that once adjustments are taken into account, KCM's aggregate EBITDA once adjustments are taken into account, KCM’s aggregate EBITDA has been a positive USO 386.6 for the past seven years. It asserts that has been a positive USD 386.6 for the past seven years. It. asserts that although a negative cash flow was recorded in 2019, the deficit for that although a negative cash flow was recorded in 2019, the deficit for that J47 J47 year was supported by Vedanta Resources and its subsidiaries and year was supported by Vedanta Resources and its subsidiaries and therefore the negative cash flow did not reflect an inability on KCM’s therefore the negative cash flow did not reflect an inability on KCM's part to pay its debts. part to pay its debts. 156. 156. On the alleged failure to develop the mines, it is explained that KCM On the alleged failure to develop the mines, it is explained that KCM has spent over US$3 billion on capital expenditure with assistance has spent over US$3 billion on capital expenditure with assistance from the companies in the VRL group. It has also spent US$925 from the companies in the VRL group. It has also spent US$925 million on the Konkola Deep Mining project and US$467 million on the million on the Konkola Deep Mining project and US$467 million on the Smelter. In a nutshell, Vedanta has attempted to portray a picture of Smelter. In a nutshell, Vedanta has attempted to portray a picture of substantial expenditure on development of the Mine. The posture substantial expenditure on development of the Mine. The posture taken by Vedanta is that it disputes the accusations leveled at KCM by taken by Vedanta is that it disputes the accusations leveled at KCM by ZCCM-IH. ZCCM-IH. 157. 157. In terms of Section 56 of the said Corporate Insolvency Act, a company In terms of Section 56 of the said Corporate Insolvency Act, a company may be wound-up by the court on the petition of a member. According may be wound-up by the court on the petition of a member. According to section 57(1) of the Act, the court may order the winding up of a to section 57(1) of the Act, the court may order the winding up of a company on the petition of a person other than the official receiver "if company on the petition of a person other than the official receiver "if in the opinion of the court it is just and equitable that the company in the opinion of the court it is just and equitable that the company should be wound-up.” should be wound-up." 158. 158. Section 60(3) of the Act is in these terms: Section 60(3) of the Act is in these terms: (3) (3) The court may, on hearing of a petition or at any time on the The court may, on hearing of a petition or at any time on the application of the petitioner, a company or person who has application of the petitioner, a company or person who has given notice of the intention to appear on the hearing of the given notice of the intention to appear on the hearing of the petition - petition - (a) (a) direct that any notice be given or steps taken before or direct that any notice be given or steps taken before or after the hearing of the petition; after the hearing of the petition; (b) (bl dispense with any notice being given or steps being taken dispense with any notice being given or steps being taken which are required by any prior order of the Court; which are required by any prior order of the Court; (c) (c) direct that oral evidence be taken on the petition or any direct that oral evidence be taken on the petition or any matter relating to it: matter relating to it: J48 J48 direct a speedy hearing or trial of the petition or any issue (d| direct a speedy hearing or trial of the petition or any issue (d) or matter; or matter; allow the petition to be amended or withdrawn; and (e| allow the petition to be amended or withdrawn; and (e) (f) (f) give such directions as to the proceedings as the Court give such directions as to the proceedings as the Court considers appropriate in the case. considers appropriate in the case. 159. As argued on behalf of Vedanta, this section reveals that even a person As argued on behalf of Vedanta, this section reveals that even a person 159. that has given notice that they will appear on the hearing of the petition that has given notice that they will appear on the hearing of the petition can make an application to the Court. This would be a person that did can make an application to the Court. This would be a person that did not file the petition, but merely signified the intention to be heard on not file the petition, but merely signified the intention to be heard on the petition. They are nonetheless allowed to apply that the petition be the petition. They are nonetheless allowed to apply that the petition be withdrawn, and the court may so order. They may in addition apply withdrawn, and the court may so order. They may in addition apply that directions as to the proceedings be given, which in the court's view that directions as to the proceedings be given, which in the court’s view in our are appropriate are appropriate in the circumstances. These provisions, in our the circumstances. These provisions, in consideration demolish the argument that a party that has given the consideration demolish the argument that a party that has given the notice of intention to be heard cannot lodge an application for the notice of intention to be heard cannot lodge an application for the consideration of the court in its own right. consideration of the court in its own right. 160. We are fortified in this view by the persuasive decision in Four Pillars 160. We are fortified in this view by the persuasive decision in Four Pillars Enterprises Co. Ltd vs Beiersdorf Aktiengesellschaft28. In that case, Enterprises Co. Ltd vs Beiersdorf Aktiengesellschaft28. In that case, the Court of Appeal in Singapore discussed the rule on the giving of the the Court of Appeal in Singapore discussed the rule on the giving of the intention to be heard on the petition m the Applicable Act. It held at intention to be heard on the petition in the Applicable Act. It held at ( 13) that the purpose of the rule is to give the person, "nomially a (13) that the purpose of the rule is to give the person, “normally a creditor or contributor," a right to be heard before the Court decides creditor or contributor,” a right to be heard before the Court decides whether to make a winding up Order. whether to make a winding up Order. 161. 161. It was further explained that by serving the notice, the person becomes It was further explained that by serving the notice, the person becomes a party to the proceedings and acquires the rights to; appear before the a party to the proceedings and acquires the rights to; appear before the court and be heard, file an affidavit in opposition to the winding-up court and be heard, file an affidavit in opposition to the winding-up application, receive affidavits in reply to his affidavit, apply to the court application, receive affidavits in reply to his affidavit, apply to the court J49 J49 .. for orders and directions enumerated in section 257(2) of the CA, and for orders and directions enumerated in section 257(2) of the CA, and appeal against the winding-up order. appeal against the winding-up order. 162. 162. Learned state counsel for the respondent referred to Etri Farms Ltd vs Learned state counsel for the respondent referred to Etri Farms Ltd vs NMS Ltd1, where it was held that for the purposes of section 1 of the NMS Ltd1, where it was held that for the purposes of section 1 of the 1975 Act 'any party to the proceedings' referred not merely to a person 1975 Act ‘arty party to the proceedings’ referred not merely to a person who had been joined as a party but to a party against whom legal who had been joined as a party but to a party against whom legal proceedings had been brought by the other party to the arbitration proceedings had been brought by the other party to the arbitration agreement in respect of any matter agreed to be referred to arbitration, agreement in respect of any matter agreed to be referred to arbitration, since the purpose and interest of Section 1 was that only parties to an since the purpose and interest of Section 1 was that only parties to an arbitration agreement and those claiming through or under them who arbitration agreement and those claiming through or under them who were sued in relation to a matter which it had been agreed should be were sued in relation to a matter which it had been agreed should be referred to arbitration should be entitled to seek a stay. Since the referred to arbitration should be entitled to seek a stay. Since the appellants had not been sued by E Ltd they would not be entitled to a appellants had not been sued by E Ltd they would not be entitled to a stay under Section I (I) even if they were joined in the action. stay under Section 1(1) even if they were joined in the action. 163. The facts in the case were that Miriebea Company Ltd and Kondo The facts in the case were that Miriebea Company Ltd and Kondo 163. Company Ltd appealed against the judgment of Sjr Nichols Browne Company Ltd appealed against the judgment of Sir Nichols Browne- Wilkson V C given on 22 nd October 1985 whereby he refused the Wilkson V C given on 22nd October 1985 whereby he refused the to be joined as def end an ts in an action appellant's application ( 1) appellant’s application (1) to be joined as defendants in an action brought by the plaintiffs Etrt Farms Ltd1 against the defendant, NMB brought by the plaintiffs Etri Farms Ltd1 against the defendant, NMB (UK) Ltd for infringement of copyright and for a stay of proceedings. (UK) Ltd for infringement of copyright and for a stay of proceedings. The section in issue, read as follows: The section in issue, read as follows: If any party to an arbitration agreement... or any person "1. “1. If any party to an arbitration agreement... or any person legal claiming claiming through or under him, commences any legal through or under him, commences any proceedings in any court against any other party to the proceedings in any court against any other party to the agreement or any person claiming though or under him, in agreement or any person claiming though or under him, in respect of any matter agreed to be referred, any party to the respect of any matter agreed to be referred, any party to the JSO J50 proceedings may ... apply to the court to stay the proceedings proceedings may...apply to the court to stay the proceedings and the court ... shall make an order staying the proceedings .... " and the court... shall make an order staying the proceedings....” 164. Woolf L J observed that the purpose and intent of that section was 164. Woolf L J observed that the purpose and intent of that section was that parties to an arbitration agreement and those claiming through that parties to an arbitration agreement and those claiming through or under those who are sued in relation to a matter which it has been or under those who are sued in relation to a matter which it has been agreed to refer to arbitration, should be entitled to seek a stay. It is agreed to refer to arbitration, should be entitled to seek a stay. It is not the intention of the sub section that those who have not been not the intention of the sub section that those who have not been sued should be able to take advantage of the provisions of section 1(1) sued should be able to take advantage of the provisions of section 1(1) by applying to become parties to the proceedings against the wishes of by applying to become parties to the proceedings against the wishes of a plaintiff purely for the purposes of obtaining a stay of an action a plaintiff purely for the purposes of obtaining a stay of an action which has been commenced, not against them, but another party who which has been commenced, not against them, but another party who either did not have or did not wish to avail himself of the right to seek either did not have or did not wish to avail himself of the right to seek a stay. a stay. 165. 165. It will be noticed that the Etri case was about breach of copyright. It It will be noticed that the Etri case was about breach of copyright. It was not concerned with the winding up of a company. Thus, the was not concerned with the winding up of a company. Thus, the decision did not address the standing of a contributor. The English decision did not address the standing of a contributor. The English Court of Appeal had almost a century before the Etri case confirmed in Court of Appeal had almost a century before the Etri case confirmed in Re Bradford Navigation Company29 , that no person has a right to Re Bradford Navigation Company29, that no person has a right to be heard on a petition for winding up of a company except for be heard on a petition for winding up of a company except for creditors and contributors. This was reiterated in Ke SBA Properties creditors and contributors. This was reiterated in Re SBA Properties Ltd30. Ltd30. 166. 166. Similarly, in this jurisdiction, the Corporate Insolvency regime, this jurisdiction, the Corporate Insolvency regime, Similarly, m enables creditors and contributors to give notice that they intend to enables creditors and contributors to give notice that they intend to appear on the hearing of a petition. They would either oppose or appear on the hearing of a petition. They would either oppose or support the petition to wind up the company. Statute has conferred a support the petition to wind up the company. Statute has conferred a J51 J51 right on them to address the court and to make applications for right on them to address the court and to make applications for certain orders. We are persuaded by the decision in Four Pillars26 certain orders. We are persuaded by the decision in Four Pillars26 that they become a "party" to the winding up petition. The court will that they become a “party” to the winding up petition. The court will take their support of, or opposition to the petition into account in take their support of, or opposition to the petition into account in deciding whether to wind a company up or not. In our opinion, this deciding whether to wind a company up or not. In our opinion, this scheme of things fits into the characterization of a contributor who scheme of things fits into the characterization of a contributor who gives notice of the intention to appear as a 'party' to a winding up gives notice of the intention to appear as a ‘party1 to a winding up petition as elucidated in the Four Pi1lars case. We use the word "party" petition as elucidated in the Four Pillars case. We use the word “party” loosely. loosely. 167. Moreover, a contributor or member does not contrive to become a 167. Moreover, a contributor or member does not contrive to become a party to a petition so that they are heard as in the Etri case. Statute party to a petition so that they are heard as in the Etri case. Statute allows them to be heard by enabling them to file the requisite notice. If allows them to be heard by enabling them to file the requisite notice. If they can oppose a winding up petition, we cannot think why they they can oppose a winding up petition, we cannot think why they should not apply that the petition be stayed and that the parties be should not apply that the petition be stayed and that the parties be referred to arbitration as agreed, on a minority shareholder's petition referred to arbitration as agreed, on a minority shareholder’s petition to wind up the company on the just and equitable ground. This is to wind up the company on the just and equitable ground. This is more so that dissolution of the company on this ground directly more so that dissolution of the company on this ground directly affects them, the petition being an indictment regarding the manner in affects them, the petition being an indictment regarding the manner in which they have managed the company. which they have managed the company. 168. We have considered the arguments relating to the case of Fred 168. We have considered the arguments relating to the case of Fred M’membe & Post Newespapers vs Moozi & Others29. M'membe & Post Newespapers vs Moozi & Others29• 169. We agree that the court is bound by the principle of stare decisis, to 169. We agree that the court is bound by the principle of stare decisis, to abide by its decisions. As pointed out by Mr. Mundashi SC, Post abide by its decisions. As pointed out by Mr. Mundashi SC, Post Newspaper Liquidation was commenced under the Companies Act Newspaper Liquidation was commenced under the Companies Act J52 J52 • CAP 388 of the Laws of Zambia. The applicable rules were The CAP 388 of the Laws of Zambia. The applicable rules were The Companies (Winding-up) Rules of 2004. Neither the Companies Act Companies (Winding-up) Rules of 2004. Neither the Companies Act nor the Rules conferred power on a member to make an application nor the Rules conferred power on a member to make an application for an order that a petition be withdrawn, or for such directions as the for an order that a petition be withdrawn, or for such directions as the is thus court would consider appropriate. The M'membe case court would consider appropriate. The M’membe case is thus distinguishable as grounded on the law as it then stood. distinguishable as grounded on the law as it then stood. 170. Turning to Beza Consulting Inc Limited and Bari Zambia Limited 170. Turning to Beza Consulting Inc Limited and Bari Zambia Limited & Another8. That case reiterated the position that an arbitration & Another6. That case reiterated the position that an arbitration agreement between two parties is rendered inoperable where a third agreement between two parties is rendered inoperable where a third party is involved in a dispute. The reasoning in that case does not party is involved in a dispute. The reasoning in that case does not apply to the instant case because even though third party creditors apply to the instant case because even though third party creditors have signified their intention to be heard on the hearing of the have signified their intention to be heard on the hearing of the petition, the dispute is between a minority shareholder and the petition, the dispute is between a minority shareholder and the majority shareholder concerning how the company is being managed. majority shareholder concerning how the company is being managed. 171. Our considered opinion is that Vedanta, which has exercised its right 171. Our considered opinion is that Vedanta, which has exercised its right to be heard on the petition which seeks dissolution of the company on to be heard on the petition which seeks dissolution of the company on the just and equitable ground, can competently apply that the Petition the just and equitable ground, can competently apply that the Petition be stayed and the matter be referred to arbitration. This standing is be stayed and the matter be referred to arbitration. This standing is derived from the avenue availed to a person who has not petitioned derived from the avenue availed to a person who has not petitioned the court for a winding up Order, to move the court for Orders the court for a winding up Order, to move the court for Orders including one for termination of a winding up proceeding by its including one for termination of a winding up proceeding by its withdrawal, and for directions as to how the proceedings would withdrawal, and for directions as to how the proceedings would proceed. In the present case, Vedanta seeks a stay of the proceedings, proceed. In the present case, Vedanta seeks a stay of the proceedings, and not termination. This it can do, as the court is empowered to give and not termination. This it can do, as the court is empowered to give J53 J53 the court considers 'such directions as ‘such directions as to the proceedings as the court considers the proceedings as to appropriate in the case.' Vedanta assumes the standing of a party by appropriate in the case. ’ Vedanta assumes the standing of a party by the notice to appear, and may make the application for a stay of the the notice to appear, and may make the application for a stay of the petition and reference of the matter to arbitration. The argument to petition and reference of the matter to arbitration. The argument to the contrary is unsustainable. the contrary is unsustainable. 172. We next approach the question whether the matter is capable of 172. We next approach the question whether the matter is capable of reference to arbitration. It is argued that an arbitrator has no power to reference to arbitration. It is argued that an arbitrator has no power to wind up a Company. We agree with this proposition. Larsen Oil and wind up a Company. We agree with this proposition. Larsen Oil and Gas Plc Limited15, Petropod Limited (in official liquidation in the Gas Pic Limited15, Petropod Limited (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore)30 Cayman Islands and in compulsory liquidation in Singapore)30 was referred to by learned counsel VK Rajah JA (delivering the was referred to by learned counsel VK Rajah JA (delivering the grounds of decision of the Court), articulated the widely accepted grounds of decision of the Court), articulated the widely accepted ambit of arbitration in these words, at paragraph 44. ambit of arbitration in these words, at paragraph 44. "The concept of non-arbitrability is a cornerstone of the process of “The concept of non-arbitrability is a cornerstone of the process of arbitration. It allows the Courts to refuse to enforce an otherwise valid arbitration. It allows the Courts to refuse to enforce an otherwise valid arbitration agreement on policy grounds. That said, we accept that arbitration agreement on policy grounds. That said, we accept that there is ordinarily a presumption of arbitrability where the words of there is ordinarily a presumption of arbitrability where the words of an arbitration Clause are wide enough to embrace a dispute, unless it an arbitration Clause are wide enough to embrace a dispute, unless it is shown that parliament intended to preclude the use of arbitration is shown that parliament intended to preclude the use of arbitration for the particular type of dispute in question (as evidenced by the for the particular type of dispute in question (as evidenced by the statute test or legislative history) or that there is an inherent conflict statute test or legislative history) or that there is an inherent conflict between arbitration and the public policy considerations involved in between arbitration and the public policy considerations involved in that particular type of dispute ” that particular type of dispute." 173. In that case, Petropod was placed in official liquidation in the Cayman 173. In that case, Petropod was placed in official liquidation in the Cayman Islands by an Order of the Grand Court of the Cayman Islands. It was Islands by an Order of the Grand Court of the Cayman Islands. It was subsequently placed in compulsory Liquidation in Singapore by an subsequently placed in compulsory Liquidation in Singapore by an Order of the High Court on 3rdAugust, 2009. A month later, Petropod’s Order of the High Court on 3 rdAugust, 2009. A month later, Petropod's J54 J54 Liquidators launched proceedings against Larsen to avoid a number of Liquidators launched proceedings against Larsen to avoid a number of payments made by Petropod to Larsen on the ground that the payments made by Petropod to Larsen on the ground that the payments amounted to unfair preferences or transactions at an payments amounted to unfair preferences or transactions at an the undervalue within undervalue within the meaning of certain provisions of the the meaning of certain provisions of Bankruptcy Act (Cap 61, 1994 Rev Ed") read with Section 329 (1) of Bankruptcy Act (Cap 61, 1994 Rev Ed”) read with Section 329 (1) of the Companies Act"} and to avoid a number of payments made by the the Companies Act”) and to avoid a number of payments made by the four subsidiaries to Larsen pursuant to 73 B of the Conveyancing and four subsidiaries to Larsen pursuant to 73 B of the Conveyancing and Law of Property Act(Cap 61, 1994 Rev Ed.) ("CLPA") on the ground Law of Property Act(Cap 61, 1994 Rev Ed.) (“CLPA”) on the ground that they were made with the intent to defraud it as a creditor of the that they were made with the intent to defraud it as a creditor of the subsidiaries. subsidiaries. 174. Larsen applied for a stay of all further proceedings brought by 174. Larsen applied for a stay of all further proceedings brought by Petropod pursuant to Section 6 {2) of the Arbitration Act. The basis of Petropod pursuant to Section 6 (2) of the Arbitration Act. The basis of the application was the arbitration Clause in an agreement between the application was the arbitration Clause in an agreement between the parties. The Judge dismissed the application on the basis that the the parties. The Judge dismissed the application on the basis that the issues were none arbitrable. Upholding the Judges' decision, VK Rajah issues were none arbitrable. Upholding the Judges' decision, VK Rajah JA said the following: JA said the following: "In our opinion, Petropod's claims against Larsen were founded "In our opinion, Petropod’s claims against Larsen were founded entirely on the avoidance provisions of the BA and Companies Act. The entirely on the avoidance provisions of the BA and Companies Act. The focus of these avoidance provisions is to address situations where focus of these avoidance provisions is to address situations where the value has been subtracted from value has been subtracted from the Insolvent Company to the the Insolvent Company to detriment of the general creditors, independent of the nature of the detriment of the general creditors, independent of the nature of the provisions allowing for the adjustment of concluded transactions upon provisions allowing for the adjustment of concluded transactions upon the onset of insolvency....” the onset of insolvency .... '' Accordingly, we rejected Larsen's claim that Petropod's claims were Accordingly, we rejected Larsen's claim that Petropod’s claims were pure contractual claims merely because of the MA. Rather, we found pure contractual claims merely because of the MA. Rather, we found that Petropod's claims against Larsen were avoidance claims that that Petropod's claims against Larsen were avoidance claims that sprung from the special regime created by the BA and companies Act." sprung from the special regime created by the BA and companies Act." JSS J55 175. It is apparent that public policy considerations informed the Court's 175. It is apparent that public policy considerations informed the Court's refusal to refer an avoidance claim under the insolvency regime to refusal to refer an avoidance claim under the insolvency regime to arbitration. arbitration. 176. In the Fulham case, the English Court of Appeal was confronted with a 176. In the Fulham case, the English Court of Appeal was confronted with a similar question whether to stay a petition presented by Fulham on similar question whether to stay a petition presented by Fulham on the basis that it had been unfairly prejudiced by the conduct of Sir the basis that it had been unfairly prejudiced by the conduct of Sir David Richards, who it was alleged had acted as an unauthorized David Richards, who it was alleged had acted as an unauthorized agent in breach of the FA football Agents Regulations when he was agent in breach of the FA football Agents Regulations when he was asked by the Chief Executive of Portsmouth City Football Club Limited asked by the Chief Executive of Portsmouth City Football Club Limited to approach the chairman of Totteham Hotsport Football and Athletic to approach the chairman of Totteham Hotsport Football and Athletic Company Limited in order to facilitate the transfer to Tottenham of Company Limited in order to facilitate the transfer to Tottenham of one of Portsmouth's players, Peter Crouch. Fulham had as well been one of Portsmouth's players, Peter Crouch. Fulham had as well been interested in the transfer of the same player to itself. The Judge at interested in the transfer of the same player to itself. The Judge at first instance stayed the petition on an application by Sir Richards, first instance stayed the petition on an application by Sir Richards, that the matter be referred to arbitration pursuant to the agreement that the matter be referred to arbitration pursuant to the agreement between the parties. between the parties. 177. The decision of the Judge was upheld. Patten LJ (with whom 177. The decision of the Judge was upheld. Patten LJ (with whom Longmore and Rox WJ agreed) said this at paragraph 77. Longmore and Rox LJJ agreed) said this at paragraph 77. "77. The determination of whether there has been unfair “77. The determination of whether there has been unfair prejudice consisting of the breach of an agreement or some prejudice consisting of the breach of an agreement or some other unconscionable behavior is plainly capable of being other unconscionable behavior is plainly capable of being decided by an arbitrator and it is common ground that an decided by an arbitrator and it is common ground that an arbitral tribunal constituted under the FAPL and FA rules would arbitral tribunal constituted under the FAPL and FA rules would have the power to grant the specific relief sought by Fulham in have the power to grant the specific relief sought by Fulham in its section 994 petition. We are not therefore concerned its section 994 petition. We are not therefore concerned with a case in which the arbitrator is being asked to grant relief with a case in which the arbitrator is being asked to grant relief of a kind which lies outside his powers or forms part of the of a kind which lies outside his powers or forms part of the exclusive jurisdiction of the Court. Nor does the determination of exclusive Jurisdiction of the Court. Nor does the determination of J56 J56 • issues of this kind call for some kind of state intervention in the issues of this kind call for some kind of state intervention in the affairs of the company which only a Court can sanction. A affairs of the company which only a Court can sanction. A dispute between members of a company or between shareholders dispute between members of a company or between shareholders and the board about alleged breaches of the articles of and__the board about alleged breaches of the articles of association or a shareholders' agreement is an essentially association or a shareholders' agreement is an essentially contractual dispute which does not necessarily engage the contractual dispute which does not necessarily engage the rights of creditors or impinge on any statutory safeguards rights of creditors or impinge on any statutory safeguards imposed for the benefit of third parties. The present case is a imposed for the benefit of third parties. The present case is a particularly good example of this where the only issue between particularly good example of this where the only issue between the parties is whether Sir David has acted in breach of the FA the parties is whether Sir David has acted in breach of the FA and FAPL rules in relating to the transfer of a premier league and FAPL rules in relating to the transfer of a premier league player". (underlined for emphasis) player”, (underlined for emphasis) 178. Nowadays, it is common for members of a company to embody their 178. Nowadays, it is common for members of a company to embody their obligations in a shareholder agreement and elect arbitration as their obligations in a shareholder agreement and elect arbitration as their preferred mode of settling disputes, should they arise. When the preferred mode of settling disputes, should they arise. When the interpretation or performance of the parties' contractual obligations, if interpretation or performance of the parties’ contractual obligations, if such a dispute were to arise, it would have arisen from a contractual such a dispute were to arise, it would have arisen from a contractual agreement. It is in those circumstances difficult to conceive how third agreement. It is in those circumstances difficult to conceive how third party interests would have a bearing on such a dispute. party interests would have a bearing on such a dispute. in 179. Moreover, decisions 179. Moreover, decisions from other jurisdictions indicate that in jurisdictions from other indicate that arbitration a distinction lies between want of jurisdiction by the arbitration a distinction lies between want of jurisdiction by the arbitrator to make certain orders, and the arbitrability of the subject arbitrator to make certain orders, and the arbitrability of the subject matter. Patten LJ explained the distinction in Fulham at paragraph matter. Patten W explained the distinction in Fulham at paragraph 84. 84. "84. But as explained earlier in this Judgment, these jurisdictional “84. But as explained earlier in this Judgment, these Jurisdictional limitations on what an arbitration can achieve are not decisive of the limitations on what an arbitration can achieve are not decisive of the question (o.fl whether the subject matter of the dispute is arbitrable. question (of) whether the subject matter of the dispute is arbitrable. They are no more than the practical consequences of choosing that They are no more than the practical consequences of choosing that method of dispute resolution." method of dispute resolution." J57 J57 180. Patten LJ had earlier observed at paragraph 83 that the underlying 180. Patten LJ had earlier observed at paragraph 83 that the underlying 'just and dispute on granting a winding up application on the 'just and dispute on granting a winding up application on the equitable' ground in the UK Insolvency Act 1986 would be arbitrable equitable' ground in the UK Insolvency Act 1986 would be arbitrable even if it might be beyond the power of the arbitral tribunal to grant even if it might be beyond the power of the arbitral tribunal to grant some of the remedies sought. He stated to that effect as follows: some of the remedies sought. He stated to that effect as follows: " ... the agreement could not arrogate to the arbitrator the question of “...the agreement could not arrogate to the arbitrator the question of whether a winding up order should be made. That would remain a whether a winding up order should be made. That would remain a matter for the Court in any subsequent proceedings. But the arbitrator matter for the Court in any subsequent proceedings. But the arbitrator could, I think legitimately, decide whether the complaint of unfair could, I think legitimately, decide whether the complaint of unfair prejudice was made out and whether it would be appropriate for prejudice was made out and whether it would be appropriate for winding up proceedings to take place or whether the complainant winding up proceedings to take place or whether the complainant should be limited to some lesser remedy.•• should be limited to some lesser remedy.” 189. 189. This view was endorsed in Tomulugen supra, at para 100 when This view was endorsed in Tomulugen supra, at para 100 when Mennon CJ said this: Mennon CJ said this: there ts nothing to preclude the underlying "100 ... Conceptually, “100... Conceptually, there is nothing to preclude the underlying dispute from being resolved by an arbitral tribunal with the pa,-ties dispute from being resolved by an arbitral tribunal with the parties remaining free to apply to the court for the grant of any specific relief remaining free to apply to the court for the grant of any specific relief which might be beyond the power of the arbitral tribunal to award. which might be beyond the power of the arbitral tribunal to award. In so Jar as any findings have been made in the arbitration in such a In so far as any findings have been made in the arbitration in such a case, the parties would be bound by such findings and would, at least case, the parties would be bound by such findings and would, at least as a general rule, be prevented from re-litigating those matters before as a general rule, be prevented from re-litigating those matters before court.,, the the court.” 190. 190. Earlier in the Judgment, Mennon CJ had drawn at para 84, a Earlier in the Judgment, Mennon CJ had drawn at para 84, a distinction between a petition for relief under section 216 and the distinction between a petition for relief under section 216 and the Companies Act for unfairly prejudicial conduct towards it as a Companies Act for unfairly prejudicial conduct towards it as a minority shareholder, and one for the liquidation of an insolvent minority shareholder, and one for the liquidation of an insolvent company or avoidance claims that arise upon insolvency. The court company or avoidance claims that arise upon insolvency. The court was of the view that the former claims do not generally engage the was of the view that the former claims do not generally engage the public policy considerations involved in the latter two situations. public policy considerations involved in the latter two situations. According to the court, nothing in the text of section 216 suggested an According to the court, nothing in the text of section 216 suggested an JSS J58 • express or implied preclusion from arbitration. Nor did the legislative express or implied preclusion from arbitration. Nor did the legislative history and statutory purpose of the provision suggest that a dispute history and statutory purpose of the provision suggest that a dispute over minority oppression or unfair prejudice was of a nature which over minority oppression or unfair prejudice was of a nature which made it contrary to public policy for the dispute to be adjudicated by made it contrary to public policy for the dispute to be adjudicated by an arbitral tribunal. an arbitral tribunal. 191. 191. In arriving at this decision, the court reviewed the legislative history In arriving at this decision, the court reviewed the legislative history and statutory purpose of the provision. It noted that section 216 of the and statutory purpose of the provision. It noted that section 216 of the Corn panies Act was modeled on section 210 of the Act 1948 of the UK, Companies Act was modeled on section 210 of the Act 1948 of the UK, which was enacted pursuant to a recommendation of a UK Committee which was enacted pursuant to a recommendation of a UK Committee on company Law Amendment ("the Cohen committee') L 1945. The on company Law Amendment (“the Cohen committee”) LI945. The Cohen committee's recommendation was its response to a perceived Cohen committee’s recommendation was its response to a perceived need to "strengthen the minority shareholders of a private company in need to “strengthen the minority shareholders of a private company in resisting oppression by the majority" Report of the committee on resisting oppression by the majority” Report of the committee on Company Law Amendment (CMD 6659, 1945) (Chairman Mr. Justice Company Law Amendment (CMD 6659, 1945) (Chairman Mr. Justice Cohen) (“Report of the Cohen Committee) at paragraph 60. Cohen) ("Report of the Cohen Committee) at paragraph 60. 170. The Court went on to observe that the Cohen Committee proposed 170. The Court went on to observe that the Cohen Committee proposed that the Court be given “unfettered” discretion to impose on the that the Court be given "unfettered" discretion to impose on the just and disputing parties whatever settlement disputing parties whatever settlement it considered just and it considered reasonable in such circumstances. reasonable in such circumstances. 171. The Court referred to a passage in Lord Hoffmann's Judgment m 171. The Court referred to a passage in Lord Hoffmann’s Judgment in O'Neills and Another vs Philips and Others3 1 where he said: O’Neills and Another vs Philips and Others31 where he said: "In the case of Section 459, the background has the following two features. “In the case of Section 459, the background has the following two features. First, a company is an association of persons for an economic purpose, First, a company is an association of persons for an economic purpose, usually entered into with legal advice and some degree of formality. The usually entered into with legal advice and some degree of formality. The terms of the association are contained in the articles of association and terms of the association are contained in the articles of association and sometimes in collateral agreement between the shareholders. Thus the sometimes in collateral agreement between the shareholders. Thus the J59 J59 • manner in which the affairs of the Company may be conducted is closely manner in which the affairs of the Company may be conducted is closely regulated by rules to which the shareholders have agreed. Secondly company regulated by rules to which the shareholders have agreed. Secondly company law has developed seamlessly from the law of partnership, which was treated law has developed seamlessly from the law of partnership, which was treated by equity, like the Roman Societas, as a contract of good faith. One of the by equity, like the Roman Societas, as a contract of good faith. One of the traditional roles of equity, as a separate jurisdiction, was to restrain the traditional roles of equity, as a separate Jurisdiction, was to restrain the exercise of strict legal rights in certain relationships in which it considered exercise of strict legal rights in certain relationships in which it considered that this would be contrary to good faith. These principles have with that this would be contrary to good faith. These principles have with appropriate modification, been carried over into company law. appropriate modification, been carried over into company law. The first of these two features leads to the conclusion that a member of a The first of these two features leads to the conclusion that a member of a company will not ordinarily be entitled to complain of unfairness unless company will not ordinarily be entitled to complain of unfairness unless there has been some breach of the terms on which he agreed that the affairs there has been some breach of the terms on which he agreed that the affairs of the company should be conducted. But the second leads to the conclusion of the company should be conducted. But the second leads to the conclusion that there will be cases in which equitable considerations make it unfair for that there will be cases in which equitable considerations make it unfair for those conducting the affairs of the company to rely upon their strict legal those conducting the affairs of the company to rely upon their strict legal powers. Thus unfairness may consist in a breach of the rules or in using the powers. Thus unfairness may consist in a breach of the rules or in using the rules in a manner which equity would regard as contrary to good faith." rules in a manner which equity would regard as contrary to good faith.” 172. Mennon CJ recalled that his Court had endorsed this exposition in an 172. Mennon CJ recalled that his Court had endorsed this exposition in an earlier case, and applied it. He went on to observe earlier case, and applied it. He went on to observe that Lord that Lord Hoffmann's Judgment made it plain that the essence of a claim for Hoffmann’s Judgment made it plain that the essence of a claim for relief on the ground of oppressive or unfairly prejudicial conduct lay in relief on the ground of oppressive or unfairly prejudicial conduct lay in upholding the commercial agreement between the shareholders of a upholding the commercial agreement between the shareholders of a company. This is irrespective of whether the agreement is found in the company. This is irrespective of whether the agreement is found in the formal constitutional documents of the company, in less formal formal constitutional documents of the company, in less formal shareholder's agreements, or in the case of quasi - partnership, in the shareholder’s agreements, or in the case of quasi - partnership, in the legitimate expectations of the shareholders Section 216 of the legitimate expectations of the shareholders Section 216 of the Companies Act was not introduced to protect or further any public Companies Act was not introduced to protect or further any public interest. interest. 173. Mennon CJ expressed the view that Section 216 was concerned with 173. Mennon CJ expressed the view that Section 216 was concerned with protecting the Commercial expectations of the parties to such an protecting the Commercial expectations of the parties to such an association. 1f those persons had chosen to have their differences association. If those persons had chosen to have their differences J60 J60 .. resolved by an arbitral tribunal, they should be entitled to do so. resolved by an arbitral tribunal, they should be entitled to do so. There is in general no public element in disputes of this nature which There is in general no public element in disputes of this nature which mandate the conclusion that it would be contrary to public policy for mandate the conclusion that it would be contrary to public policy for the dispute to be determined by an arbitral tribunal rather than a the dispute to be determined by an arbitral tribunal rather than a Court. Court. 174. We reproduce Section 210 of the UK 1948 companies Act to to 174. We reproduce Section 210 of the UK 1948 companies Act contextualize the Court’s discussion. contextualize the Court's discussion. "210 (1) Any member of a company who complains that the affairs of the “210 (1) Any member of a company who complains that the affairs of the company are being conducted in a manner oppressive to some part of the company are being conducted in a manner oppressive to some part of the members (including himself} or, in a case falling within subsection (3) of members (including himself) or, in a case falling within subsection (3) of Section 169 of this Act, the Board of Trade, may make an application to the Section 169 of this Act, the Board of Trade, may make an application to the Court by application to the Court by petition for an Order under this Section. Court by application to the Court by petition for an Order under this Section. (2) If on any such petition the Court is of opinion- (2) If on any such petition the Court is of opinion- fa) that the company’s affaires are being conducted as aforesaid; and (a) that the company's affaires are being conducted as aforesaid; and (b) that to wind up the company would unfairly prejudice that part of the that to wind up the company would unfairly prejudice that part of the (b) members, but otherwise the facts would justify the making of a winding up members, but otherwise the facts would justify the making of a winding up order on the ground that it was Just and equitable that the company should order on the ground that it was just and equitable that the company should be wound up; be wound up; the Court may, with a view to bringing to an end the matters complained of, the Court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the make such order as it thinks fit, whether for regulating the conduct of the companies affairs in future, or for the purchase of the shares of any members companies affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and in of the company by other members of the company or by the company and in the case of a purchase by the company, for the reduction accordingly of the the case of a purchase by the company, for the reduction accordingly of the company’s capital or otherwise,” company's capital or otherwise," 175. In Zambia, Section 134 of the companies Act No. 10 of 2017 addresses 175. In Zambia, Section 134 of the companies Act No. 10 of 2017 addresses oppressive conduct, and outlines the orders that may be made by the oppressive conduct, and outlines the orders that may be made by the Court on a member's application. The word 'oppressive' is defined in Court on a member’s application. The word ‘oppressive’ is defined in subsection 9 as: subsection 9 as: J61 J61 (a) Unfairly prejudicial to or unfairly discriminatory against a member or (a) Unfairly prejudicial to or unfairly discriminatory against a member or members of a company; or members of a company; or (b) Contrary to the interest of the members as a whole (b) Contrary to the interest of the members as a whole 176. Given the similarities in Section 134 of the Zambian Companies Act 176. Given the similarities in Section 134 of the Zambian Companies Act and Section 210 of the 1948 UK Companies Act although repealed, and Section 210 of the 1948 UK Companies Act although repealed, Lord Hoffmann's exposition still rings sound, and we in passing, Lord Hoffmann’s exposition still rings sound, and we in passing, endorse it as applicable to applications premised on Section 134. Our endorse it as applicable to applications premised on Section 134. Our the that further considered view further considered view is that it aptly encapsulates the it aptly encapsulates is considerations that are applicable to petitions for dissolution of a considerations that are applicable to petitions for dissolution of a Company on the just and equitable ground. Company on the just and equitable ground. 177. Section 57 of the Zambia Corporate Insolvency Act states the 177. Section 57 of the Zambia Corporate Insolvency Act states the circumstances in which a winding up Order can be made by the circumstances in which a winding up Order can be made by the Court. It provides inter alia as follows: Court. It provides inter alia as follows: "57 (1) The Court may Order the winding up of a company on the "57 (1) The Court may Order the winding up of a company on the petition other than the official receiver if- petition other than the official receiver if- (a) (a) (b) (b) (c) (c) (d) (d) (e) (e) .......... .......... .......... .......... ........ (f} If) ........ (g) (g) In the opinion of the Court, it is just and equitable that In the opinion of the Court, it is just and equitable that the Company should be wound up." the Company should be wound up.” And in Section 60(4) as follows: And in Section 60(4) as follows: "(4) Where a petition is presented by members on the ground “(4) Where a petition is presented by members on the ground that it is just and equitable that a company should be wound that it is Just and equitable that a company should be wound up and the Court determines that the petitioners are entitled to up and the Court determines that the petitioners are entitled to relief by winding up the company or by some other means, it relief by winding up the company or by some other means, it J62 J62 • shall make a winding up order unless some other remedy is shall make a winding up order unless some other remedy is available to the petitioners who are acting irresponsibly in available to the petitioners who are acting irresponsibly in seeking to have the company wound up instead of pursuing the seeking to have the company wound up instead of pursuing the other remedy." other remedy. ” 178. Case law in England indicates that successful petitions for a winding 178. Case law in England indicates that successful petitions for a winding up order on the just and equitable ground have been made where: up order on the just and equitable ground have been made where: 1. A loss of substratum of the company has occurred 1. A loss of substratum of the company has occurred 2. The company was formed for a fraudulent purpose 2. The company was formed for a fraudulent purpose 3. Justifiable loss of confidence in company management has occurred 3. Justifiable loss of confidence in company management has occurred 4. There is a deadlock in the company's management 4. There is a deadlock in the company's management 5. In a quasi- partnership type of company, a shareholder has been 5. In a quasi- partnership type of company, a shareholder has been excluded from management. excluded from management. 179. In re Bleriot Manufacturing Aircraft Company32 , the Company's 179. In re Bleriot Manufacturing Aircraft Company32, the Company's main objects were to acquire a German patent to manufacture main objects were to acquire a German patent to manufacture substitute coffee made from dates. The company failed to obtain the substitute coffee made from dates. The company failed to obtain the patent and this prompted the minority shareholders to petition for a patent and this prompted the minority shareholders to petition for a winding up order on the just and equitable ground as the company winding up order on the just and equitable ground as the company was now unable to pursue its principle object. The court granted a was now unable to pursue its principle object. The court granted a winding up order, although the company had established a factory to winding up order, although the company had established a factory to manufacture the coffee, was prosperously trading, and had in fact manufacture the coffee, was prosperously trading, and had in fact acquired a similar Swedish patent. The court held that the company's acquired a similar Swedish patent. The court held that the company's objects clause only permitted the company to manufacture the coffee objects clause only permitted the company to manufacture the coffee substituted by working a particular German patent which could not substituted by working a particular German patent which could not be obtained. be obtained. J63 J63 180. In re Brinsmead (Thomas Edward) and son33 , three former 180. In re Brinsmead (Thomas Edward) and son33, three former employees of John Brinsmead and Sons who were well known piano employees of John Brinsmead and Sons who were well known piano manufacturers formed a company. The object was to manufacture manufacturers formed a company. The object was to manufacture pianos and then fraudulently pass them off as having been made by pianos and then fraudulently pass them off as having been made by John Brinsmead and Sons. The court held that the circumstances John Brinsmead and Sons. The court held that the circumstances just entitled a shareholder to petition for a winding up order on entitled a shareholder to petition for a winding up order on the just the and equitable ground. and equitable ground. 181. Lock vs John Blackwood Limited34 affords another instance in 181. Lock vs John Blackwood Limited34 affords another instance in which the company was wound up. The managing director of the which the company was wound up. The managing director of the company refused to hold general meetings. He neither submitted company refused to hold general meetings. He neither submitted accounts nor recommend dividends. He ran the company in a accounts nor recommend dividends. He ran the company in a profitable but oppressive manner towards the shareholders with the profitable but oppressive manner towards the shareholders with the exception of his wife. It was held that running the company in this exception of his wife. It was held that running the company in this way led to justifiable lack of confidence in the management of the way led to justifiable lack of confidence in the management of the company's affairs. A winding up order was granted on the just and company's affairs. A winding up order was granted on the just and equitable ground. equitable ground. 182. Yet another example of a case in which a company was wound up is 182. Yet another example of a case in which a company was wound up is Yenidje Tobacco Co. Limited35 . two Tobacco Yenidje Tobacco Co. Limited35. In that case, two Tobacco that case, In Manufacturers, Rothman and Weinberg combined their businesses to Manufacturers, Rothman and Weinberg combined their businesses to form the company. They were the only shareholders and directors but form the company. They were the only shareholders and directors but could not work together. Rothman sued Weinberg for fraud and they could not work together. Rothman sued Weinberg for fraud and they could only communicate with each other through the company could only communicate with each other through the company secretary. Weinberg petitioned for a winding up order. The Court secretary. Weinberg petitioned for a winding up order. The Court found it just and equitable to wind up the company, stating that the found it just and equitable to wind up the company, stating that the J64 J64 company was in effect a partnership and the circumstances would company was in effect a partnership and the circumstances would justify the dissolution of a partnership. An order for winding-up was justify the dissolution of a partnership. An order for winding-up was granted as a result. granted as a result. 183. Ebrahimi vs Westbourne Galleries Ltd36 affords a detailed 183. Ebrahimi vs Westbourne Galleries Ltd36 affords a detailed exposition as to when a company could be wound up on the just and exposition as to when a company could be wound up on the just and equitable ground. In that case the two parties had been running a equitable ground. In that case the two parties had been running a in oriental rugs. They partnership for 10 years which dealt partnership for 10 years which dealt in oriental rugs. They incorporated the company to take over the Oriental rug business. One incorporated the company to take over the Oriental rug business. One of the shareholder's sons joined the company as director and of the shareholder’s sons joined the company as director and shareholder. shareholder. 184. As a result, the other shareholder became a minority on the board, 184. As a result, the other shareholder became a minority on the board, and at general meetings. He could be out-voted by the combined and at general meetings. He could be out-voted by the combined shareholding of the other shareholder and his son. Relations between shareholding of the other shareholder and his son. Relations between the two camps deteriorated. The minority shareholder was voted off the two camps deteriorated. The minority shareholder was voted off the board pursuant to a provision in the Companies Act. the board pursuant to a provision in the Companies Act. 185. On a petition for a winding up order, it was held that even though he 185. On a petition for a winding up order, it was held that even though he had been removed from the board in accordance with the Companies had been removed from the board in accordance with the Companies Act and the articles of association, the just and equitable ground Act and the articles of association, the just and equitable ground conferred on the court the jurisdiction to subject the exercise of legal conferred on the court the jurisdiction to subject the exercise of legal rights to equitable considerations. Since the minority shareholder had rights to equitable considerations. Since the minority shareholder had agreed to the formation of the company on the basis that the essence agreed to the formation of the company on the basis that the essence of their business relationship would remain the same as in their prior of their business relationship would remain the same as in their prior partnership, his exclusion from the company's management was partnership, his exclusion from the company’s management was clearly in breach of that understanding. It was therefore just and clearly in breach of that understanding. It was therefore just and J65 J65 equitable to wind-up the company. Lord Wilberforce listed the typical equitable to wind-up the company. Lord Wilberforce listed the typical elements in petitions brought under this ground: elements in petitions brought under this ground: • A business association based on a personal relationship and mutual • A business association based on a personal relationship and mutual confidence. This will be found where a pre-existing partnership has confidence. This will be found where a pre-existing partnership has converted into a limited company. converted into a limited company. • An understanding that all or certain shareholders (excluding 'sleeping' • An understanding that all or certain shareholders (excluding ‘sleeping’ partners) will participate in management. partners) will participate in management. • Restriction on the transfer of members' interests preventing the • Restriction on the transfer of members’ interests preventing the petitioner leaving. petitioner leaving. 186. Lord Wilberforce stressed that the court was entitled to superimpose 186. Lord Wilberforce stressed that the court was entitled to superimpose equitable constraints upon the exercise of right set out in the articles equitable constraints upon the exercise of right set out in the articles of association or the Act. He stated that the words "just and of association or the Act. He stated that the words “just and equitable”, equitable", "are a recognition of the fact that a limited company is more than a “are a recognition of the fact that a limited company is more than a mere legal entity, with a personality in law of its own; that there is mere legal entity, with a personality in law of its own; that there is room in company law for recognition of the fact that behind it, or room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the obligations inter se which are not necessarily submerged in the company structure.” company structure." 187. It should be borne in mind however that the cited instances do not 187. It should be borne in mind however that the cited instances do not exhaustively indicate the circumstances when a company will be exhaustively indicate the circumstances when a company will be wound up on the just and equitable ground. wound up on the just and equitable ground. 188. In re Bleriot Manufacturing aircraft Company32 the words 'ftist and 188. In re Bleriot Manufacturing aircraft Company32 the words ‘just and equitable' are words of the widest significance ad do not limit the equitable’ are words of the widest significance ad do not limit the J66 J66 jurisdiction of the court to any case. It is a question of fact and each jurisdiction of the court to any case. It is a question of fact and each case must depend on its own circumstances. case must depend on its own circumstances. 189. In Baird vs Lees3 7 , Lord Clyde. He said: 189. In Baird vs Lees37, Lord Clyde. He said: ".... I have no intention of attempting a definition of the circumstances "... I have no intention of attempting a definition of the circumstances which amount to a 'just and equitable' cause. But I think I may say this. S which amount to a ‘just and equitable* cause. But I think I may say this. S Shareholder puts his money into a company on certain conditions. The Shareholder puts his money into a company on certain conditions. The first of them is that the business in which he invests shall be limited to first of them is that the business in which he invests shall be limited to certain definite objects. The second is that it shall be carried on by certain certain definite objects. The second is that it shall be carried on by certain persons elected in a specified way. And the third is that the business persons elected in a specified way. And the third is that the business shall be conducted in accordance with certain principles of commercial shall be conducted in accordance with certain principles of commercial administration defined in the statute which provide some guarantee of administration defined in the statute which provide some guarantee of commercial probity and efficiency. If shareholders find that these conditions commercial probity and efficiency. If shareholders find that these conditions or some of them are deliberately and consistently violated and set aside by or some of them are deliberately and consistently violated and set aside by the action of a member and official of the company who wields an the action of a member and official of the company who wields an overwhelming voting power, and if the result of that is that, for the overwhelming voting power, and if the result of that is that, for the extrications of their rights as shareholders, they are deprived of the ordinary extrications of their rights as shareholders, they are deprived of the ordinary facilities which compliance with the companies Acts would provide them facilities which compliance with the companies Acts would provide them with, then there does arise, in my opinion, a situation in which it may be with, then there does arise, in my opinion, a situation in which it may be just and equitable for the court to wind up the company." Just and equitable for the court to wind up the company.** 190, Davis & Company Ltd vs Bniiswicke (Australia) Ltd Bnliswicke 190. Davis & Company Ltd vs Bruiswicke (Australia) Ltd Bruiswicke- Balke-Collender Co. And Bniinswick Radio Corporation 38 Lord Balke-Collender Co. And Bruinswick Radio Corporation38 Lord Muagham delivering the judgment of the court said, at P 308 Muagham delivering the judgment of the court said, at P 308 “... The position of the court in determining whether it is Just and " ... The position of the court in determining whether it is just and equitable to wind up the company require a fair consideration of all equitable to wind up the company require a fair consideration of all carrying the circumstances connected with the formation and the the circumstances connected with the formation and the carrying since on of the company durl.ng the short perl.od which had elapsed on of the company during the short period which had elapsed since May 12, 1930.** May 12, 1930." 191. 191. It may be safely concluded that the cited cases indicate that a petition It may be safely concluded that the cited cases indicate that a petition for winding up of a company on the just and equitable ground seeks for winding up of a company on the just and equitable ground seeks dissolution of a company where the good faith footing on which it was dissolution of a company where the good faith footing on which it was formed has been eroded by certain occurrences or the conduct of formed has been eroded by certain occurrences or the conduct of J67 J67 other shareholders. Whether or not the petition as drawn up by the other shareholders. Whether or not the petition as drawn up by the Petitioner in the case before us meets the articulated criteria is a Petitioner in the case before us meets the articulated criteria is a question for another day. Suffice to state that the Petitioner is question for another day. Suffice to state that the Petitioner is appealing to the court’s conscience to free it from its associates by a appealing to the court's conscience to free it from its associates by a winding up Order. winding up Order. 192. As was stated in Loch & Another and John Blackwood Limited34• 192. As was stated in Loch & Another and John Blackwood Limited34. At the foundation of applications for winding up on the 'just and At the foundation of applications for winding up on the ‘just and equitable' rule, there must lie as justifiable lack of confidence in the equitable’ rule, there must lie as justifiable lack of confidence in the conduct and management of the company's affairs. But this lack of conduct and management of the company’s affairs. But this lack of confidence must be grounded on conduct of the directors, not in confidence must be grounded on conduct of the directors, not in regard to their private life or affairs, but in regard to the company's regard to their private life or affairs, but in regard to the company’s business. Furthermore, the lack of confidence must spring not from business. Furthermore, the lack of confidence must spring not from dissatisfaction at being out-voted on the business affairs or on what is dissatisfaction at being out-voted on the business affairs or on what is called the domestic policy of the company. On the other hand, called the domestic policy of the company. On the other hand, wherever the lack of confidence is rested on a lack of probity I the wherever the lack of confidence is rested on a lack of probity I the conduct of the company's affairs, the former is justified by the latter, conduct of the company’s affairs, the former is justified by the latter, and it is under the statute just and equitable that the company be and it is under the statute just and equitable that the company be wound up. wound up. 193. It will be recalled that the decisions we have referred to above reveal It will be recalled that the decisions we have referred to above reveal 193. that a petition to wind up a company on the just and equitable ground that a petition to wind up a company on the just and equitable ground to applicable arbitration 1s is referable to arbitration pursuant to applicable arbitration to arbitration pursuant referable agreements. We accept that an arbitrator does not possess jurisdiction agreements. We accept that an arbitrator does not possess jurisdiction to make a winding-up Order. It is undeniable however from the It is undeniable however from the to make a winding-up Order. persuasive decisions cited above that they have jurisdiction to persuasive decisions cited above that they have jurisdiction to determine the underlying dispute between the parties. In the everH determine the underlying dispute between the parties. In the event J68 J68 they make an award in favour of the petitioning minority contributor, they make an award in favour of the petitioning minority contributor, nothing stops the contributor from petitioning the court for a winding- nothing stops the contributor from petitioning the court for a winding up Order. In the case under consideration, it will be remembered that up Order. In the case under consideration, it will be remembered that the disputes between the parties stem from the performance of the the disputes between the parties stem from the performance of the obligations imposed on KCM and Vedanta by the SHA, which is in the obligations imposed on KCM and Vedanta by the SHA, which is in the nature of a contractual agreement among the shareholders. nature of a contractual agreement among the shareholders. 194. Our considered view is that the decision in the Ody's Oil Company12 194. Our considered view is that the decision in the Ody’s Oil Company12 case is distinguishable. In that case the court refused to refer the case is distinguishable. In that case the court refused to refer the matter to arbitration because the contractual agreement was tainted matter to arbitration because the contractual agreement was tainted with illegality. In addition to this, another party which as a stranger to with illegality. In addition to this, another party which as a stranger to the arbitration agreement was involved. The court was of the view that the arbitration agreement was involved. The court was of the view that referring part of the case to arbitration would lead to multiplicity of referring part of the case to arbitration would lead to multiplicity of actions, which could result in conflicting decisions. That is not the actions, which could result in conflicting decisions. That is not the scenario in the present case. As stated above, the grievances of the 1st scenario in the present case. As stated above, the grievances of the 1st respondent have arisen from the SHA. None of them lie outside the respondent have arisen from the SHA. None of them lie outside the SHA. Secondly, the dispute is among the shareholders. ZCCM-IH SHA. Secondly, the dispute is among the shareholders. ZCCM-IH seeks a remedy available to a minority shareholder. seeks a remedy available to a minority shareholder. 195. We thus fail to conceive how the interests of third party creditors can 195. We thus fail to conceive how the interests of third party creditors can be brought to bear on the dispute between the parties to the SHA. It is be brought to bear on the dispute between the parties to the SHA. It is our view that the proposed public interest considerations on the stay our view that the proposed public interest considerations on the stay application are far-fetched. The third party creditors are in fact not application are far-fetched. The third party creditors are in fact not stopped from approaching the court in their own right. We in this stopped from approaching the court in their own right. We in this regard adopt the persuasive reasoning by the Singapore Court of regard adopt the persuasive reasoning by the Singapore Court of Appeal in Tomolugen supra. It resonates our view that the dispute Appeal in Tomolugen supra. It resonates our view that the dispute between the parties is contractual. The third party interests the· between the parties is contractual. The third party interests the J69 J69 petition is said to implicate are not visible to us. Contrary to Bobo J's petition is said to implicate are not visible to us. Contrary to Bobo J’s views, we find the arbitration agreement operative and capable of views, we find the arbitration agreement operative and capable of performance between the parties to the SHA. performance between the parties to the SHA. This discussion disposes of ZCCM IH's appeal and addresses part of This discussion disposes of ZCCM IH's appeal and addresses part of vedanta’s appeal. vedanta's appeal. 196. We turn to consider the grounds in the Vedanta appeal which remain 196. We turn to consider the grounds in the Vedanta appeal which remain unresolved after discussing the issues raised by ZCCM-IH in its cross unresolved after discussing the issues raised by ZCCM-IH in its cross appeal. we have addressed some of issues raised by Vedanta in its appeal, we have addressed some of issues raised by Vedanta in its appeal and will now address the outstanding issues. appeal and will now address the outstanding issues. 197. The Mainsa affidavit is said to have influenced Bobo J's decision. The 197. The Mainsa affidavit is said to have influenced Bobo J's decision. The Corporate Insolvency Act, which is applicable to this appeal, does not Corporate Insolvency Act, which is applicable to this appeal, does not prescribe the procedure to be followed when presenting a winding up prescribe the procedure to be followed when presenting a winding up petition. This brings in Order XLIV of the HCR Cap 27 of the Laws of petition. This brings in Order XLIV of the HCR Cap 27 of the Laws of Zambia which enacts the following: Zambia which enacts the following: 1. The rules of the Supreme Court of England tn force immediately prior 1. The rules of the Supreme Court of England in force immediately prior to the coming into effect of the Companies Act 1948, of the United to the coming into effect of the Companies Act 1948, of the United Kingdom, and the general practice therein as regards, the procedure Kingdom, and the general practice therein as regards, the procedure on applications under the Companies Act 1929 of the United Kingdom, on applications under the Companies Act 1929 of the United Kingdom, shall apply as far as circumstances may permit to all applications shall apply as far as circumstances may permit to all applications made under the Companies Act or any Act in amendment or made under the Companies Act or any Act in amendment or substitution thereof, except if and so for as any Act otherwise substitution thereof, except if and so for as any Act otherwise provides. provides. 198. The Corporate Insolvency Act of 2017 has replaced those portions of 198, The Corporate Insolvency Act of 2017 has replaced those portions of the Companies Act that addressed the Insolvency of a company. the Companies Act that addressed the Insolvency of a company. Winding up rules have not yet been promulgated. That being the case, Winding up rules have not yet been promulgated. That being the case, the applicable rules are those referred to in Order forty four of the the applicable rules are those referred to in Order forty four of the High Court Act. High Court Act. J70 J70 • 199. According to rule 35 of the Companies (Winding up) Rules, 1929 of 199. According to rule 35 of the Companies (Winding up) Rules, 1929 of England affidavits in opposition to a petition must be filed within England affidavits in opposition to a petition must be filed within seven days of the date on which the affidavit verifying the petition is seven days of the date on which the affidavit verifying the petition is filed: filed: 35.1 Affidavits in opposition to a petition that a Company may be 35.1 Affidavits in opposition to a petition that a Company may be wound up by or subject to the supervision of the Court shall be filed wound up by or subject to the supervision of the Court shall be filed within seven days of the date on which the affidavit verifying the within seven days of the date on which the affidavit verifying the petition is filed and notice of the filing of the affidavit in opposition to petition is filed and notice of the filing of the affidavit in opposition to such a petition shall be given to the petitioner or the solicitor or such a petition shall be given to the petitioner or the solicitor or London agent of the petitioner, on the day on which the affidavit is London agent of the petitioner, on the day on which the affidavit is filed. filed. (2) An affidavit in reply to an affidavit filed in opposition to a (2) An affidavit in reply to an affidavit filed in opposition to a petition shall be filed within three days of the date on which notice of petition shall be filed within three days of the date on which notice of such affidavit is received by the petitioner or the solicitor or London such affidavit is received by the petitioner or the solicitor or London agent of the petitioner. agent of the petitioner. 200. This rule does not convey the notion that the contemplated affidavit 200. This rule does not convey the notion that the contemplated affidavit will be an interim one, subject to an interpartes hearing, as proposed will be an interim one, subject to an interpartes hearing, as proposed by learned counsel for Vedanta. The practice direction referred to by by learned counsel for Vedanta. The practice direction referred to by learned counsel is clearly inapplicable. learned counsel is clearly inapplicable. 201. Learned counsel for ZCCM IH are right in arguing that had learned 201. Learned counsel for ZCCM IH are right in arguing that had learned counsel objected to hearing the stay application before the other counsel objected to hearing the stay application before the other applications which they considered necessary, then the learned Judge applications which they considered necessary, then the learned Judge would have considered the pending applications and determined would have considered the pending applications and determined them. The pending applications do not appear to have been decided, them. The pending applications do not appear to have been decided, as the learned Judge did not address those outstanding issues. There as the learned Judge did not address those outstanding issues. There was also an application whether the Chairman of the Board could be was also an application whether the Chairman of the Board could be heard outside the Board. heard outside the Board. J71 J71 • 202. As regards Bobo J's comments on the ability of KCM to defend the 202. As regards Bobo J's comments on the ability of KCM to defend the petition, her comments must be contextualized. They reiterate the petition, her comments must be contextualized. They reiterate the legal position that a company is a legal entity. The question of legal entity. The question of legal position that a company is a residual powers that reside in the directors on a winding up is another residual powers that reside in the directors on a winding up is another issue that fell to be addressed at another time. issue that fell to be addressed at another time. 203. In any case, it is our view that the determination of those applications 203. In any case, it is our view that the determination of those applications would have had no bearing on the stay application, whose mover was would have had no bearing on the stay application, whose mover was a contributor, with a right to be heard, as discussed above. We would a contributor, with a right to be heard, as discussed above. We would further point to the statement in Halsbury's Laws of England Fourth further point to the statement in Halsbury's Laws of England Fourth Edition Vol. 7 at Para 1026 as supporting our view, to this effect. Edition Vol. 7 at Para 1026 as supporting our view, to this effect. 204. We are informed the application by the Chairman for the KCM Board 204. We are informed the application by the Chairman for the KCM Board of Directors awaits delivery of ruling. It would be pre-emptive to of Directors awaits delivery of ruling. It would be pre-emptive to comment on the same. comment on the same. 205. We move to the appeal against the stay of the winding up proceedings. 205. We move to the appeal against the stay of the winding up proceedings. We agree that the law on stay of proceedings is as quoted by learned We agree that the law on stay of proceedings is as quoted by learned counsel for ZCCM IH. However, it turns out that the proceedings were counsel for ZCCM IH. However, it turns out that the proceedings were properly stayed in that although the learned Judge thought that the properly stayed in that although the learned Judge thought that the appeal was doomed to fail, it has not failed. The stay has curtailed the appeal was doomed to fail, it has not failed. The stay has curtailed the winding up process, preventing the appeal from being rendered an winding up process, preventing the appeal from being rendered an academic exercise. Although caution exercised by the learned Judge academic exercise. Although caution exercised by the learned Judge was well founded in our view. was well founded in our view. 206. The complaint in the cross appeal by Vedanta is that the learned 206. The complaint in the cross appeal by Vedanta is that the learned Judge did not give reasons for the view that the appeal had no Judge did not give reasons for the view that the appeal had no prospects of success. Our short response to this grievance is that an prospects of success. Our short response to this grievance is that an J72 J72 f • evaluation of prospects of success of an appeal is not a decision evaluation of prospects of success of an appeal is not a decision contemplated in the Chibwe vs Chibwe case. However, as articulated contemplated in the Chibwe vs Chibwe case. However, as articulated in the case of Sonny Paul Mulenga vs Chainama Hotels Limited in the case of Sonny Paul Mulenga vs Chainama Hotels Limited and Others39, the judge should have previewed the prospects of and Others39, the judge should have previewed the prospects of success as was demonstrated by the Supreme Court in that case. success as was demonstrated by the Supreme Court in that case. 207. On the foregoing discussion, we conclude as follows: 207. On the foregoing discussion, we conclude as follows: 1. A dispute as defined in the SHA exists between the parties 1. A dispute as defined in the SHA exists between the parties 2. Vedanta has locu.s standi to apply for stay of the winding up 2. Vedanta has locus standi to apply for stay of the winding up petition and reference of the matter to arbitration. petition and reference of the matter to arbitration. 3. The disputes between the parties are arbitrable and referable 3. The disputes between the parties are arbitrable and referable to arbitration. Thus, the arbitration agreement is operative. to arbitration. Thus, the arbitration agreement is operative. 4. The learned Judge rightly stayed the winding up proceedings. 4. The learned Judge rightly stayed the winding up proceedings. 5. It was necessary to preview the prospects of success of the 5. It was necessary to preview the prospects of success of the proposed appeal. proposed appeal. 208. The upshot of our decision is that Vedanta has substantially succeeded 208. The upshot of our decision is that Vedanta has substantially succeeded in the appeal against the refusal to stay proceedings and refer the in the appeal against the refusal to stay proceedings and refer the matter to Arbitration while ZCCM-IH has failed in its cross appeal to matter to Arbitration while ZCCM-IH has failed in its cross appeal to Vedanta’s appeal. In addition to this, ZCCM-IH has failed in its appeal Vedanta's appeal. In addition to this, ZCCM-IH has failed in its appeal on the stay of the winding up proceedings pending appeal, while on the stay of the winding up proceedings pending appeal, while Vedanta has nominally succeeded in the cross appeal to ZCCM-IH’s Vedanta has nominally succeeded in the cross appeal to ZCCM-IH's appeal. appeal. 209. In the premises, we set aside the decision of the learned Judge, 209. In the premises, we set aside the decision of the learned Judge, order a stay of the winding up proceedings pursuant to Section 10 of order a stay of the winding up proceedings pursuant to Section 10 of J73 J73 I -. the Arbitration Act No. 19 of 2000 and refer the matter to arbitration the Arbitration Act No. 19 of 2000 and refer the matter to arbitration as requested by Vedanta. The arbitration will be between the parties as requested by Vedanta. The arbitration will be between the parties to the SHA, to the exclusion of the third parties, the dispute between to the SHA, to the exclusion of the third parties, the dispute between the parties being a shareholder dispute. We award costs to Vedanta . the parties being a shareholder dispute. We award costs to Vedanta both here and in the court below, to be agreed and in default truced. both here and in the court below, to be agreed and in default taxed. F. M. CHISANGA JUDGE PRESIDENT JUDGE PRESIDENT . COURTO ~ P. C. M. NGULUBE P. C. M. NGULUBE COUR OF APPEAL JUDGE COUR OF APPEAL JUDGE J74 J74