The High Court found ARC not to be a party to the NDA, limiting claims before Tanzania's proceedings over alleged privacy violations.
The Johannesburg High Court has ruled in favor of African Rainbow Capital (ARC), controlled by billionaire Patrice Motsepe, in its dispute with Tanzania's Pula Group, which is claiming $195 million (R3.2 billion) for breach of confidentiality.
The main case is scheduled to be heard in Tanzania in the coming weeks.
Pula says he will appeal the SA court's decision, which he says was brought before the SA court as a tactic to influence Tanzanian courts.
Tanzanian court bans companies linked to Motsepe
The Dar es Salaam court has already barred Motsepe-linked companies – African Rainbow Minerals (ARM), ARCH Sustainable Resources and Motsepe himself – from re-entering the proceedings after initially failing to file the petition.
This effectively puts them in default, says Pula, who has criticized the decision, saying it tarnishes the image of South African courts for attempting to shield a local company from accountability in another country.
An appeal was made by ARC to the Joburg High Court on an ex parte basis (where only one party argues) to order the production of papers by way of peremptory citation, where the whereabouts of the opponent are unknown.
Pula has no physical presence in SA, but lodged an objection as soon as he found out about the application, saying it stretches the credibility of running litigation for years and then suddenly claiming you can't locate the other side.
ARC applied for a declaratory order that the relief Pula was claiming in Tanzania was fundamentally flawed and based on a misunderstanding of SA law, which is the law governing confidentiality agreements.
Court's view
The Joburg court ruled on Tuesday that the confidentiality agreement was concluded between ARM (not ARC) and Pula Group, and that its subsidiary Pula Graphite has no contractual rights in terms of this agreement, nor can it suffer damages as a result of the alleged breach.
It further ruled that ARC had no obligations in terms of the agreement and could not be considered in breach.
If there is a breach of the agreement, Pula can only seek damages against ARM. Pula Group has no claims for damages to any assets previously owned by Pula Graphite.
Criticism
The decision was criticized by Charles Stith, chairman of the Pula Group and former US ambassador to Tanzania.
He said, “I hope for the sake of South Africa that our meeting with these judges was a mistake. If it is not, the implications are very deep.”
“This signals to the world that if you do business with a South African firm in a dispute that requires court action, the deck is stacked against you.
“For Africa, this sends a message that South African courts will 'use their discretion' to hold companies accountable for any violations committed elsewhere in the continent.”
In his court papers, Pula argued that ARC's approach towards SA courts was disrespectful to the autonomy of the Tanzanian High Court.
alleged violation
The case was brought by Pula in 2023 over an alleged breach of a 2019 non-disclosure agreement (NDA) that gave Motsepe's companies access to Pula's confidential information, which was then used to invest in a rival graphite project in Tanzania's Ruangwa region.
Pula argues that out of 52 potential graphite projects worldwide, ARC chose to invest in a neighboring mining project, for which it was provided its confidential data and project plans.
The Tanzanian mining company was shocked to learn in October 2022 that ARCH Sustainable Resources, a private equity fund in which Motsepe has a substantial interest, had invested in a neighboring graphite project owned by Australian exploration company Evolution Energy Minerals.
Graphite activity in Africa
According to Benchmark Mineral Intelligence, there are currently seven active flake graphite mines in Africa and a pipeline of about 12 additional projects expected to come online, meaning about 15 to 20 advanced or near-production projects across the continent.
In Tanzania, industry data shows that at least six to seven defined graphite projects exist within the country's graphite belt, including Nachu, Epanko, Chilalo, Bunyu, Lindi Jumbo and Mahenge, with about three projects progressing towards final investment decision or near-production status.
Motsepe has previously denied any memory of viewing Pula's confidential information and dismissed her claims as “baseless and nonsensical”.
Asked to comment on the judgment, ARC responded: “We have not received and are not aware of any application for permission to appeal the judgment. They have clearly cherry-picked parts of the judgment to suit their narrative which is not appropriate – the judgment should be read in its entirety.”
This article was republished from MoneyWeb. read the original here.