ZCCM IH loses its claim against FQM(updated)
First Quantum Minerals Ltd has reported that the legal proceedings between its subsidiary Kansanshi Mines and ZCCM Investment Holdings Plc has ended.
This was after the Arbitral Tribunal denied permission for ZCCM IH to proceed for failing to establish a prima facie case, thereby ending the arbitration.
The ruling followed the hearing of submissions from both sides over a three-day period in January 2018.
As a result of this ruling, ZCCM IH is liable for costs incurred with this proceeding.
ZCCM IH has since appealed the ruling which they allege is misconceived and meritless.
On March 7, 2018, the parties in the Statement of Claim filed in the Lusaka High Court mutually consented to a stay of proceedings.
The stay is pending resolution of an appeal by the Company and other named defendants of the Court’s decision to reserve judgment on the point that the claims were filed beyond the time.
ZCCM-IH argued First Quantum took out a loan from Kansanshi at non-commercial interest rates and used it for company operations outside Zambia, disadvantaging ZCCM-IH as a 20 percent shareholder in the mine.
The claim by ZCCM-IH includes $228 million in interest on $2.3 billion of loans that it said First Quantum wrongly borrowed from Kansanshi Mine, as well as 20 percent of the principal amount, or $570 million.
In a November 11th 2016 filing in court, First Quantum said the claims were “inflammatory, vexatious and untrue,” and that the loans were at fair market rate.
First Quantum said that the action taken by ZCCM-IH was started without the approval of the ZCCM I-H board, which was dissolved when the action commenced.
ZCCM-IH, in which the Zambian government has a 77 percent stake, said in papers filed in the Lusaka High Court on Oct. 28, 2016 that First Quantum used the money as cheap financing for its other operations.