A South African court has the power to overturn any decision taken by a Tanzanian court against billionaire Patrice Motsepe’s investment firm African Rainbow Capital (ARC) in a multibillion-rand lawsuit initiated by a US-based company, Pula Group, the investment company’s lawyer, Anthony Mundell, argues. Pula Group, headed by former US ambassador to Tanzania Charles Stith’s daughter Mary, took Motsepe’s ARC, African Rainbow Minerals (ARM) and Arch Sustainable Resources to court in 2023, accusing Motsepe and the companies of breaching a 2019 confidential agreement. The agreement was between ARM and Pula Group for a mining investment proposal in Tanzania.
The litigation ensued after Arch invested in Australia’s Evolution Energy Minerals in 2021, which is involved in a graphite mine project in Chilalo — the same area as Pula Graphite’s proposed project. The $195m (more than R3.2bn) damages litigation has been under way in Tanzania, but ARC wants a South African court to declare the company cannot be held liable for the alleged breach of contract. The featuring of the case in South Africa has transversed into a jurisdiction dispute between the parties on which country has the legal power to decide on the matter.
Mundell, representing ARC filed heads of arguments for the company this week, contends the confidential agreement was signed in Johannesburg and the SA high court has the power to overturn any unjust outcome of the litigation taking place in Tanzania in relation to ARC. “ARC is advised by advocate Gaspar Nyika– one of ARC’s Tanzanian legal team – that any possible inequitable or improper outcome in that process will be removed should this honourable court [Gauteng high court] issue the requested declaratory orders as those which will then be binding on the Tanzanian Court as a legitimate acceptance by that court of this court’s findings,” Mundell argues. The litigation, which has been delayed by interlocutory applications, is still ongoing in Tanzania.
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The declaratory orders sought by ARC in SA include, Pula Graphite has no contractual rights derived from the agreement, Pula Graphite cannot suffer contractual damages flowing from a breach of the agreement because the agreement was signed Pula Group and ARC has no obligations arising from the agreement. Mundell describes the case as harmful to South African law and pleads for the high court to take a decision on the matter that affects two foreign jurisdictions: South Africa and Tanzania. “That case is so inimical to the South African law that fairness and justice dictate that this court exercise its discretion to grant the appropriate declaratory orders. In the absence of the required declaratory relief, ARC will, potentially, be significantly prejudiced in the adjudication of the Tanzania proceedings.”
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