U&M Mining Zambia Ltd v Konkola Copper Mines plc
Konkola Copper Mines plc owns one of the largest copper mines in the world, in Zambia. It engaged U&M, and in due course a Zambian U&M subsidiary incorporated for the purpose, to mine copper and waste. The parties' various agreements were subject to LCIA arbitration in London. U&M brought equipment to Zambia, said to be worth US$80 million, with which to perform its mining functions.
The parties fell into disagreement and KCM terminated U&M's agreement. It also obtained an ex parte injunction in the High Court of Zambia, backed with a penal notice, requiring U&M to leave the site and to hand over items of plant that KCM had claims to.
Zambia's Arbitration Act 2000 is based closely on the UNCITRAL model arbitration law and permits a party to seek interim assistance of the courts, notwithstanding the parties' agreement to refer disputes to arbitration outside Zambia.
U&M's concern was that if it complied with the Zambian court injunction it would have to abandon its plant. It therefore obtained an ex parte anti-suit injunction in the Commercial Court in London, preventing KCM from enforcing or proceeding with the Zambian court injunctive proceedings.
U&M argued that by agreeing to London arbitration the parties had agreed to the English courts having an exclusive supervisory jurisdiction: A v B [2007] 1 All ER (Comm) 591. If a party to such an agreement required court assistance in order to ensure the effectiveness of the arbitration process, it was required to seek such assistance in the jurisdiction associated with the arbitral seat.
KCM sought to set aside the anti-suit injunction on the basis that it was entitled as a matter of Zambian arbitration law, and under the terms of the LCIA rules (article 25.3), to obtain interim relief in "any court".
In practical terms, that necessarily meant the court local to the project. KCM's argument prevailed: article 25.3 was held to be unambiguous, though U&M had a credible argument that article 25.3 did no more than preserve any right existing independently of the LCIA rules rather than carving out a court jurisdiction additional to that of the arbitral tribunal.
The Commercial Court held that cases setting out the exclusive jurisdiction of the English courts to regulate London arbitration, such as A v B, could not overcome what the parties had expressly agreed in relation to interim relief. It is surely also relevant that the English's court interim remedies jurisdiction under section 44 of the Arbitration Act 1996 may arise even though the seat of the arbitration is elsewhere: section 2(3).
The operation of the Arbitration Act 1996 would be somewhat lopsided if it provided for an exclusive jurisdiction on interim matters arising out of arbitrations here, whilst at the same time permitting the English court even a limited interim remedies jurisdiction in relation to overseas arbitrations.
The case throws up some interesting points. Parties agree to arbitration in a commercial centre such as London because it is perceived to be a neutral and trusted venue for dispute resolution.
At least one of the parties in such cases must be taken to prefer to avoid the involvement of the local court in the resolution of its disputes.
But there will be instances where an interim injunction will finally and effectively determine the dispute (as U&M argued was the case here). Against that there will be as many instances where the absence of an interim injunction promptly obtained may finally and effectively determine the dispute or otherwise thwart the effectiveness of the arbitration agreement.
Practical problems arise if the parties are limited to obtaining such relief from the arbitral tribunal and/or the court in the jurisdiction where the seat of arbitration is.
Conceptual difficulties may arise where the interim remedy sought goes not to the subject matter of the arbitration, such as an injunction to prevent breach of a party's obligations, but relates directly to the conduct and/or validity of the arbitration itself or as to the validity of the arbitrator's appointment; in other words, matters that more obviously fall within the supervisory jurisdiction.
Justin Mort appeared for the defendant, Konkola Copper Mines plc
The articles and papers published by Keating Chambers are for the purpose of raising general awareness of issues and stimulating discussion. The contents must not be relied upon or applied in any given situation. There is no substitute for taking appropriate professional advice.
