Indemnity clauses in Mining Development Agreements in Zambia

by | Jan 25, 2021

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About Mwai Daka

Mwai is a postgraduate student at the University of Law, Bristol. He is currently a Regional Correspondent at the Oxford Human Rights Hub. He completed an MA in Politics from the University of Sheffield in 2016. His main political and legal research interests are displacement, labour law, environmental law, democracy, comparative constitutionalism, and human rights.

Citations


Mwai Daka, “Indemnity clauses in Mining Development Agreements in Zambia”, (OxHRH Blog, January 2021), <https://ohrh.law.ox.ac.uk/indemnity-clauses-in-mining-development-agreements-in-zambia/>, [Date of access].

Zambia has signed indemnity agreements with numerous multinational corporations investing in her mining sector. The agreements enable subsidiaries of international firms to be exempted from liability for environmental pollution that affects both the ecosystem and humans that inhabit it. Though Zambian courts have enjoyed some success in hold mining companies liable for environmental degradation, indemnity agreements should not be signed in future, because they allow firms to treat Zambian law with impunity.

Development Agreements (DAs) signed between Glencore, its subsidiary Mopani Copper Mines (MCM) (now owned by Zambia Consolidated Copper Mines) and the Zambian government in March 2000, contained clauses that exempted the mining companies from liability for environmental pollution. This is consequential for communities affected by air pollution, because MCM denies liability and asserts that the effects of air pollution are a result of historical causes. The DAs incorporated ‘stability clauses’ that guaranteed legal recognition of exemption from environmental liability for a prolonged period of 15 years for MCM, irrespective of new legislation enacted by the government. As a result, the organization Green and Justice observed that people affected, especially those in Kankoyo and Butando, seemingly had no recourse against MCM.

Legal analysis

Section 160(1) of the Mines and Mineral Development Act (MMDA) 2008 provides that “A development agreement which is in existence before the commencement of this Act shall, notwithstanding any provision to the contrary contained in any law or in the development agreement, cease to be binding on the Republic from the commencement of this Act”. However, over the last two decades, MCM has cited DAs exempting it from liability for environmental pollution in Mufulira, contrary to Zambian law.

Shortly after the lapse of the 15-year stability clause in 2015, within the DA with MCM, those affected by air pollution brought a legal action, reported as Mopani Copper Mines v Ndumo Miti and Victor Miti (2016). Relying on the neighbour principle set out by Lord Atkin in Donoghue v Stevenson [1932], the court found a duty of care was owed to the community in which the mine operated, even with the existence of the indemnity agreements. Additionally, upon perusal of the DA, the court “did not find any express provision highlighting exemption from statutory limits” therefore rejecting the view that the appellant was “exempt from complying with statutory limits”. Therefore, the subsidiary was estopped from denying the effects of its activities were foreseeable.

MCM, however, raises a key question. What is the effect of DAs on legislation relating to environmental protection? DAs between MCM and the Zambian government are illegal because the MMDA abolished such agreements. However, the DAs that were already subsisting from March 2000 were not immediately terminated due to stability clauses. Therefore, any subsequent law, in this case the MMDA, which tries to abolish DAs, is rendered ineffective in practice, even if the DAs legally have no teeth. This is especially consequential for environmental concerns.

In the long run, it is hoped that recent developments such as the aim to draft the international crime of “ecocide” will deter the mass damage of ecosystems by mining companies. The class action lawsuit that has been filed against mining company Anglo American over its alleged failure to prevent historic widespread toxic pollution in Kabwe will hopefully shed light on holding mining companies accountable for both historic and contemporary pollution in Zambia.

Conclusion

Moving forward, the Zambian government should avoid granting multinational companies operating in Zambia indemnity agreements which exempt them from environmental liabilities, because it is difficult to hold these companies accountable during the stability clause period. Indemnity agreements render Zambian law a dead letter. Though the Zambian court was successful in finding MCM liable in the Mopani Copper Mines case, DAs undermine the law’s ability to protect the affected local mine communities in Kankoyo and Butando, and should not be granted to mining firms in the foreseeable future.

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