Pula’s 195m US dollar suit against ARC rages on Dar es Salaam

DAR ES SALAAM: THE on-going Pula 195m US dollars suit against Patrice Motsepe’s of African Rainbow Capital has entered the final stage as Pula’s final witness testified this week in its cross examination of Pula’s witnesses.

In the suit at the High Court of Tanzania’s  Commercial Division under Judge  Frank Mirindo, ARC pushed on two points that the firm is not party to the agreement signed between Pula and its sister company African Rainbow Minerals.

ARC maintains the two are separate companies that operate independently of each other, and another line of argument is that the suit should be tried in South Africa and not Tanzania.

 The logic being that the Agreement between Pula and ARM is subject to South Africa law.

The hurdles that ARC has to overcome are high. ARC’s argument is the parties named as defendants in the suit are separate companies that operate independently.    Pula’s claim is that even though they are separate companies, legally; in this case they did not operate independently of each other.

 ARC invested in Evolution. Evolution owns the competing graphite project.

This investment constituted the breach of the non-compete clause. The evidence that supports Pula’s argument is a filing to the Australian Stock Exchange by ARC’s subsidiary Evolution.

Evolution owns the competing project in Ruangwa. In the filing to the Australian Stock Exchange Evolution indicated that not only does ARC and Motsepe hold a relevant interest in the project competing with Pula’s project in Ruangwa, they also stated that Patrice Motsepe has a controlling interest in all of the entities named in the suit.

The second hurdle that ARC has to overcome is the argument that the suit should be tried in a South African court.

The mining project protected by the non-compete clause is Pula’s graphite project in Ruangwa. The company holding the license is Pula Graphite Partners, a Tanzanian company.

The project in which the investment was made that constituted the breach of the non-compete is in Ruangwa.

The company that held the license for the competing project is based in Tanzania. The 2017 Mining Act is clear.

Any dispute involving Tanzanian minerals must be litigated in Tanzania.

In a last-ditch effort to avoid having the judge rule on the merit of Pula’s case, after testimony by Pula’s final witness, the attorneys for ARC prayed to the Court that ARC has no locus to answer and the Court should throw out Pula’s suit because they had not provided sufficient evidence that ARC should be party to the suit.

The judge deliberated over the motion and ruled that if ARC wants the Court to evaluate ARC’s prayer, it will do so with the evidence before the Court, which means ARC would not be able to present its witnesses.

 ARC’s counsel then decided not to pursue the prayer. The trial will continue on May 25th and ARC’s witnesses are set to begin their testimony on that date.

ARC’s attorneys are going to have a high bar to hurdle in light of the testimony and evidence from Pula’s witnesses.

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This mining dispute is one of its kind as it draws attention to the independent Judiciary system in Africa in which Pula Group and its Tanzanian partner are pursuing damages in Tanzania , accusing companies linked to Motsepe of using confidential mining data to gain and enjoy advantages in graphite- related projects.

Earlier, ARC succeeded in obtaining a Gauteng High Court, Johannesburg order declaring that Pula Group and its Tanzanian subsidiary Pula Graphite Partners are prevented from filing the lawsuit against ARC.

Judge Leicester Adams ordered that to the extent that Pula Group is able to prove a breach of the agreement and damages arising from that breach, its contractual remedies are only against African Rainbow Minerals (ARM), one of Motsepe’s companies.