In order to avoid the risk that Vedanta Resources- owned mining firm Konkola Copper Mines might use its liquid assets to frustrate U& M Zambia’s efforts to enforce an arbitration award a London Court has maintained that the freeze on the firms global assets be sustained.

This matter came up for hearing before Justice Teare in the Commercial Court of the High Court of Justice Queen’s Bench Division in London on October 10, where U& M Mining Zambia was the claimant and Konkola Copper Mines ( KCM) the defendant. U& M took the dispute that arose over mining contracts before the London Court of International Arbitration (LCIA) and was granted a Worldwide Freezing Order ( WFO).

U& M wants the order to be continued following Konkola Copper Mines ( KCM)’ s alleged failure to pay the ordered sums despite KCM oppostion.

Justice Teare decided that the worldwide freezing order (“WFO”) granted to U& M Mining Zambia on June 17 by Justice Eder also at the Royal Courts of Justice in London should continue despite U& M Mining failing in its duty of full and frank disclosure.

“The failures to comply with the duty of full and frank disclosure were innocent in the sense that they were not deliberate,” he stated.

“An order to perpetuate the freezing order against KCM would give U& M legitimate protective relief.”

The court, however, noted that the respects in which U& M failed in its duty of full and frank disclosure related to the finances of KCM as opposed to its conduct in the arbitration or in its challenge to the second arbitration.

“That is the conduct from which can be inferred the risk that KCM, unless restrained, will seek to deal with its assets other than in the ordinary course of business with a view to making enforcement of the arbitration awards more difficult,” the judgment reads in part.

According to U& M’s submissions in the matter KCM was a sort of company that would stop at nothing, including dissipation of its assets, to prevent U& M from making any substantial recovery.

Nevertheless, Justice Teare described these assertions as not being solid evidence although he observed that an entity like KCM, which had employees willing to give untrue evidence before a tribunal in order to delay an enforcement of an arbitration award, might as well seek to deal with its assets other than in the ordinary course of business.

“There is, therefore, a real risk that KCM will deal with its liquid assets in such a way as to frustrate the efforts of U& M to enforce the arbitration awards,” he said.

And as KCM’s assets were not in England, Justice Teare said the English court was within its jurisdiction to grant the WFO in favour of U& M, especially in this situation where there was a perceived real risk.

“This is a case where it is appropriate for two courts to grant a freezing order against KCM,” the judgment read.

“It is just and convenient to grant a WFO in the circumstances of this case.”

A freezing order is an interlocutory injunction which restrains a respondent from disposing of, or dealing with, his own assets. The purpose of a freezing order is to prevent a defendant from moving, hiding or otherwise unjustifiably dissipating his assets so as to render himself judgment proof.

It is an interim remedy granted to ensure that the court process is effective.



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