Zambian Court denies KCM’s request for interim relief against CEC

Kitwe High Court Judge Evaristo Pengele has dismissed the said application by KCM with costs, saying the mining company has not convinced the Court that there is a serious question to be heard and determined at arbitration.

He added that it is evident from the affidavit in support that the acknowledged amount of US $131,811,794 remains due and unpaid to CEC.

Justice Pengele has further discharged the ex-parte order of interim relief, pending arbitration, which he granted to KCM on May 13, 2020.

In this matter, KCM (in liquidation) sued CEC in the Kitwe High Court seeking an order of interim relief to prevent losses and damages that would be caused if CEC proceeded to restrict power supply to the mining company.

The mining company submitted that should CEC proceed to restrict its power supply, it would suffer irreparable damage to its mining operations, which would not be atoned for in damages.

And on May 13, 2020, the Court granted KCM an ex-parte order for interim relief, pending arbitration.

But CEC through its lawyers Musa Mwenye State Counsel and William Nyirenda argued that KCM had not established a prima facie case to entitle it to the reliefs sought.

It stated that the Power Supply Agreement (PSA) between KCM and CEC came to an end on May 31, 2020, and that KCM signed a new PSA with Zesco Limited on June 1, 2020.

“Therefore, the right which the plaintiff (KCM) is seeking to protect does not exist. Further, the plaintiff is aware of its obligations under the Power Supply Agreement and should not seek interim relief from this court, which is intended to act as a shield from responsibility,” CEC argued.

State Counsel Nyirenda submitted that restriction of KCM’s power supply would not result in irreparable damage as the restriction would maintain power supply to critical areas of the mining company’s facility.

He added that being the major consumer of CEC’s electricity supply, KCM’s default in paying for the electricity was unsustainable for CEC’s business.

Nyirenda maintained that the ex-parte order of interim injunction should be vacated and that the costs of this application must be awarded to CEC.

And Mwenye submitted that KCM’s application had been overtaken by events, adding that being a company in liquidation, KCM cannot suffer irreparable damage.

In his ruling, Friday, Judge Pengele said he was of the firm view that KCM had not established that there was a serious dispute to be determined at arbitration to warrant its entitlement to interim relief from court.

He added that on the material so far placed before him, KCM had not satisfied him that it had any real prospect of succeeding in its contentions at arbitration.

Judge Pengele said it was clear that KCM acknowledges and accepts that it owes CEC US $131,811,794.00 in relation to which CEC issued the contested demand notice.

“I have found it difficult to appreciate how KCM would properly be aggrieved with CEC for claiming payment of a debt, which KCM acknowledges is properly due and payable to CEC. From the affidavit in support, it is clear that the last payment KCM made towards electricity consumed from CEC was made between October and December, 2019. This means that from December, 2019, to at least about May 13, 2020, when KCM filed the application, KCM did not make any payment towards the bills for electricity supplied to it by CEC,” he said.

Judge Pengele said clause 13 (d) of the PSA, which KCM exhibited in its affidavit, provides that in the event that any payment due to CEC from KCM remains unpaid for a period in excess of 45 days, CEC shall have the right to suspend KCM’s power supply by giving 14 days’ written notice of its intention to suspend the power supply.

He said it was evident from the affidavit in support that the acknowledged amount of US $131,811,794.00 remained due and unpaid for a period in excess of 45 days as envisaged in clause 13 (d) of the PSA.

“From the foregoing, I have no hesitation in holding that the plaintiff has not convinced this court that there is a serious question to be heard and determined at arbitration. I see no basis for granting the plaintiff interim relief, pending arbitration,” ruled Judge Pengele.

“On the basis of the above, I find no merit in the plaintiff’s application for an order of interim relief, pending arbitration. I dismiss the plaintiff’s application forthwith. I discharge the ex-parte order of interim relief, pending arbitration, which I granted in favour of the plaintiff on May 13, 2020. I award the costs for this application to the defendant to be taxed in default of agreement.”