Wednesday, June 12, 2024

Diamond exploration licence under threat of judicial seizure

The battle between a Cyprus-based company called GML Ltd and the Russian government could well spill over across a dozen borders onto the diamond fields of Orapa.

GML is a holding company for Yukos Oil Co.’s main owners who won a US$50 billion award against the Russian government from The Permanent Court of Arbitration in The Hague this past week.

Claiming that award will be an uphill battle, one of the options open to GML is to seize assets of the Russian government in 150 countries if it refuses to pay up.

One of the companies that are prospecting for diamonds in the Orapa area is called Sunland Minerals.
The latter is an equal-partnership joint venture between Botswana Diamonds (previously known as Africa Diamonds) and Alrosa, the world’s largest rough diamond producer by volume which is owned by the Russian government.

When announced, the agreement between the two parties was worth an initial US$1 million (P8.5m) and had the two companies going splits on investment.

A senior government lawyer with thorough grounding in international commercial law says that GML can, through a High Court order, attach Sunland Minerals’ assets in the form of exploration licence, diamond-bearing rock samples from the ground and payment from debtors.

Matters of this nature take years to conclude and should GML make such application to the High Court, Sunland Minerals would probably be operating a diamond mine by that time.

However, the complication in this particular case would be that this is a partnership in which one party has absolutely nothing to do with the case at The Hague.

The lawyer says that in order to get back its property, Botswana Diamonds would have to file what in law is called a “third party notice” and produce evidence to prove its claim to lawful ownership of the attached property.

If satisfied with the case it presents, the court would order that Botswana Diamonds should get its share of the attached property back.

While international law protects embassies, the lawyer says that there are precedents of such diplomatic immunity being lifted. He cites a 2010 case in which a South African High Court attached property of the Zimbabwe diplomatic mission in Cape Town.

This was to satisfy an order by the Southern African Development Community Tribunal for punitive costs to pay for the legal costs of white farmers whose land was seized by Robert Mugabe’s government.

The farmers had taken the matter to the Tribunal which ruled that the seizure was unlawful.
Subsequent to this, a white farmer called Mike Campbell made an application to the South African Supreme Court to take possession of a Zimbabwe government property in Cape Town to compensate for the seizure of his farm.

The Russian government dismantled Yukos between 2004 to 2007 over US$27 billion in tax charges after imprisoning its Chief Executive Officer, Mikhail Khodorkovsky. The latter was critical of Vladimir Putin’s rule, bankrolled the opposition and said to have his own presidential ambitions.

In its ruling, the court at The Hague found that charges against Khodorkovsky were politically motivated.

The claims were brought in 2005 by Hulley Enterprises Limited and Veteran Petroleum Limited, two Cyprus-based subsidiaries of former majority shareholder GML Limited, and Veteran Petroleum Ltd., a pension fund for former Yukos employees.


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