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A $195 million lawsuit against Patrice Motsepe and three of his affiliated companies has opened a new front, with the US firm that filed the case now arguing a South African court has no power to weigh in on the matter at all.
The dispute pits Motsepe's investment firm, African Rainbow Capital, against Pula Group, a US-based company led by Mary Stith, the daughter of former US ambassador to Tanzania Charles Stith. Pula Group filed the damages claim in Tanzania in 2023, alleging that Motsepe, ARC, African Rainbow Minerals and Arch Resources breached a confidential 2019 agreement covering a mining investment proposal in that country.
ARC responded by going to the Johannesburg high court last year, seeking a declaratory order that it cannot be held liable for the alleged breach. The Johannesburg court granted ARC leave to serve papers on Pula Group and Pula Graphite by edictal citation, a mechanism used when the defendants are outside the country.
Now Pula is pushing back on the very foundation of that move. Les Morison, Pula Group's legal representative, filed papers arguing that the Johannesburg high court simply has no jurisdiction over the foreign companies because they do not operate in South Africa.
"The defendants do not have a presence in South Africa; the cause of action against them did not arise here, nor have their assets been attached here," Morison argued in the filings.
He went further, saying ARC had not pleaded a case that meets any recognised grounds for jurisdiction. "The lack of jurisdiction point defeats the ex parte application for edictal citation and the application for a declarator," he wrote, adding that ARC cannot manufacture jurisdiction where none exists. "There is no common law ground of jurisdiction in this matter."
ARC's position is that South African courts do have jurisdiction. The confidentiality agreement at the centre of the dispute was signed in South Africa by African Rainbow Minerals and Pula Group, which ARC argues is relevant to where the matter should be heard.
Morison rejected that reasoning. The fact that the agreement was concluded in South Africa with another member of the African Rainbow group, he contended, does not mean the cause of action arose within the court's jurisdiction.
The litigation has its roots in a graphite mining project in Chilalo, Tanzania. The 2019 agreement between ARM and Pula Group covered a mining investment proposal in that area. The conflict erupted after Arch Resources invested in Australia's Evolution Energy Minerals in 2021, which is involved in a graphite project in the same Chilalo area where Pula Graphite's proposed project sits. Pula argues that investment was made using information obtained under the confidential agreement.
The declaratory relief ARC is seeking from the Johannesburg court includes a finding that Pula Graphite has no contractual rights derived from the 2019 agreement, that it cannot suffer damages from it because the agreement was signed by Pula Group and not Pula Graphite, and that ARC itself has no obligations arising from it.
The Tanzania damages case continues regardless. ARC is the only party actively contesting the claim there. Motsepe personally, along with ARM and Arch Resources, did not initially defend the case and are now trying to set aside a pending default judgment against them.
The broader question the case is putting before South African courts is how far local jurisdiction can extend over multinational companies and disputes that originated, and are being litigated, in another country.
