Pula Group questions Motsepe companies' move to SA courts in R3.2bn mining dispute

US-based Pula Group has questioned the real motivation for companies linked to South African billionaire Patrice Motsepe seeking a late, ex-parte judgement from the South African High Court, to hear a R3.2 billion legal dispute between them that has been on the go in Tanzania for two years.

A statement from Pula Group said Monday the $195 million dispute had escalated into a test of judicial independence, after the ex-parte move raised questions about "forum shopping", disclosure, and whether the safeguards of a fair hearing were being fully observed.

The dispute remains active in Tanzania. Pula is suing Motsepe owned companies including ARC (African Rainbow Capital), Motsepe, and ARCH Emerging Partners (ARCH), a UK-based investment fund, in November 2023, for violating a non-compete agreement signed by the companies.

The litigation started after ARCH invested in Australia's Evolution Energy Minerals in 2021, which was involved in a graphite mine project Chilalo, in the same area as Pula Graphite.

Motsepe, ARM and ARC did not defend the case in Tanzania, arguing they were not served correctly. Pula Group applied for a default judgment against the three. ARC was the only entity that opposed the application in Tanzania. The undefended parties subsequently lodged applications to have the default judgment application scrapped, but failed in 2024, and have taken the matter on appeal. ARC lodged an application with the Johannesburg court in June.

According to the statement from Pula Group, ARC and ARCH Sustainable Resources, have now sought declaratory relief in South Africa, which it said had prompted scrutiny of both the timing and the process through which South African courts were approached.

Pula Group says the move places the integrity of the judicial process under the spotlight at a moment when transparency and public confidence matter most.

In July 2024, the Tanzania High Court ruled that Motsepe, ARM, and ARCH no longer had standing in the main case, because they had failed to appear at an earlier hearing, which meant they were in default.

"For more than two years, the dispute proceeded in Tanzania. Only after a series of adverse procedural developments did Motsepe-linked parties turn to South Africa, doing so on an ex-parte basis, without notice to the opposing parties," the statement said.

In a letter on December 18, 2024, to Justice Roland Sutherland of the Gauteng Local Division of the High Court, ARC requested its application be designated a Commercial Court matter and set down for an expedited hearing. Pula has not yet to see the full allegations from the application.

A Tanzanian trial could be set down as early as March or April 2026, and South African relief was being sought urgently in advance of that hearing.

"It does not answer whether South Africa is the appropriate forum, or whether the process followed meets the standards required for a fair hearing," said Pula Group chairman Ambassador Charles Stith."A declarator will not require Pula and Pula Tanzania to do or refrain from doing anything. It will simply declare the legal position," he said.

Pula does not have assets in South Africa that can be attached to found or confirm jurisdiction. "The combination of no enforcement, no assets, and no operational consequence" raises concerns that the South African application seeks to influence the Tanzanian court proceedings in the favour of the South African companies, he said.

Pula Group said also the acting judge in the matter in Gauteng should consider recusing herself, given her professional roles outside the bench, in the South African mining industry.

"She is an acting judge and a practising attorney. In her private capacity, she serves as Chairperson and Remuneration Committee Chair, as well as an Investment Committee member, at the Mineworkers Investment Company. She is also a director of Hlapane Attorneys, a law firm that lists mining as one of its key industry sectors."

"A judge must recuse him or herself from a case if there is a real or reasonably perceived conflict of interest, It remains unclear whether any disclosure was made to the parties, the court, or the judiciary," said Dr Stith.

Pula Group said  ARC had claimed a reason for resorting to the ex-parte application was a failure to obtain an address. Pula Group said however the parties had been actively litigating for more than two years and that Patrice Motsepe had previously communicated directly with Ambassador Stith using personal contact details.

"You cannot conduct litigation for years and then claim you suddenly don't know how to find the other party," said Dr Mary Stith, President of Pula Group.

Business Report could not obtain further comment from ARC by the time of publication. According to Legalbrief, ARC wants the court to make declaratory orders that the company was not affected by the confidential agreement between ARM and Pula Group and cannot be held liable for damages. It also wants the court to declare Pula Group's mining company, Pula Graphite, was not part of the agreement, and therefore cannot claim to suffer contractual damages flowing from the alleged breach of the agreement.

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