Botswana, Norilsk square off over copper mine in a London court

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By Mpho Tebele

Gaborone- The Court of Appeal in Gaborone has ruled that the dispute between Botswana’s troubled copper mine and Russian copper nickel mine giant, Norilsk Nickel Africa be heard in the London Court of International Arbitration (LCIA).

The Botswana Government is a 100% shareholder in the liquidated copper mine.

This follows a decision by Norilsk Africa to appeal a he High Court decision in Botswana which had rejected its court papers to pursue its claims against BCL and government of Botswana to be heard in LCIA.

Overruling the High Court’s decision, the Court of Appeal and gave Norilsk Africa the go-ahead to pursue its US$271 million claims against BCL Group and Botswana government in LCIA.

The dispute between the parties emanates from a 2014 deal in which Norilsk struck two agreements with BCL Limited to sell its 85% stake in Tati nickel mine and its 50% stake in South Africa’s Nkomati Nickel to the state-run nickel producer for US$337m. 

The price was dropped to US$277million. The Botswana Government decided to place BCL under final liquidation in 2016 blaming the company’s poor cashflow position and low commodity prices.

While Norilsk Africa has since taken a decision to terminate its sale of agreement with BCL in December, the company says it remains resolute to claim an amount of over US$271 million together with accrued interest beginning 12 October 2016 from BCL.

In his judgement, Justice Jacobus Brand of the Court of Appeal also shared the same sentiments that while it has terminated the sales agreement “This of course does not change the essential nature of proceedings before the LCIA.”

According to the judge, “That forum (LCIA) will still have to decide whether or not the conditions precedent in the share sale agreement had been fulfilled,” he said. If this issue is decided in favour of BCL.”

He said if it is decided in favour of Norilsk, the LCIA can then proceed to determine the quantum of Norilsk’s damages upon termination.  

Justice Brand said the truth of the matter seems to be that in order to prove their claim against the Respondents (BCL), the Appellants, Norilsk, will have to establish that the share sale agreement became unconditional and the quantum of their damages upon termination of the agreement.

He said “It is plain to me that both these issues can only be determined by LCIA. The inevitable conclusion is therefore that to preclude the Applicants from proceeding with the arbitration in the LCIA would be to prevent them from ever proving their claims. 

“The point is that the claims are clearly not frivolous and to deny Applicants the opportunity to prove them will amount to a serious injustice which can never be endorsed by this court.”

He ordered that “The appeal is held with costs including costs of two counsel against First and Second Respondents jointly on paying the other to be absolved, such costs to be costs in the liquidation of First and Second Respondents.”

The Court of Appeal also ordered that Norilsk should commence and prosecute arbitration proceedings in the London Court of International against BCL pursuant to clause 29.3 of the share sale and purchase agreement entered into between BCL as seller and Norilsk purchaser in October 2014.

The order also states that in the event that BCL does not concede that the share sale agreement is unconditional, the court in London should determine whether or not the share sale agreement is unconditional. The court order further states that that in the event that it is determined or conceded by BCL that the share sale agreement is unconditional, the court should determine damages to which Norilsk is entitled.

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