KCM in liquidation: will the claimants in Vedanta v Lungowe have to seek permission of Zambian courts to proceed against KCM?

The Zambian government has formally filed an application to place KCM, Vedanta’s Zambian subsidiary in liquidation.

This latest development in the Vedanta v Lungowe saga may potentially complicate matters as the claimants seek to obtain justice. As highlighted in previous posts, it is necessary for KCM to be a party to the proceedings in order to establish the alleged breaches by Vedanta and also owing to the practical difficulties of obtaining justice in Zambia against KCM.

However, the impact of the liquidation could be that the claimants would face restrictions in respect of the claims they can bring against KCM. Under English law, actions against a company in liquidation are subject to a statutory stay under section 130 Insolvency Act 1986. Section 130 provides that:

“no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the court and subject to such terms as the court may impose.”

Under Zambian law, the Corporate Insolvency Act No.9 2017 makes a similar provision . Section 66 provides that:

Where a winding-up order is made or a provisional liquidator
is appointed, an action or proceeding shall not be proceeded with,
or commenced against, a company except by leave of the Court
and subject to such terms and conditions as the Court may impose.

Accordingly, applying either English or Zambian law, a consequence of successful liquidation of KCM will be that the claimants would need to seek the permission of the courts to proceed with the claim against KCM. It is likely going to be the Zambian courts’ permission that would need to be sought given that the liquidation has been commenced pursuant to the Zambian Corporate Insolvency Act.

All these thoughts are of course very preliminary and subject to subsequent developments in the Zambian courts. It is ironic that developments in Zambia may hold the key to whether the claimants can obtain justice against KCM despite the Supreme Court finding that England is the proper place to bring the claim.

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