Industrial Development Corporation of South Africa Limited and Another v Kalagadi Manganese (Pty) Ltd (661/2024) [2025] ZASCA 70 (30 May 2025)



THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA


JUDGMENT

 


Reportable

Case
No: 661/2024

 


In
the matter between:

 

INDUSTRIAL
DEVELOPMENT CORPORATION

OF
SOUTH AFRICA LIMITED                                

FIRST APPLICANT


AFRICAN
DEVELOPMENT BANK                        

SECOND APPLICANT


and


KALAGADI
MANGANESE (PTY) LTD                  

FIRST RESPONDENT


KALAHARI
RESOURCES (PTY) LTD                   

SECOND RESPONDENT


KGALAGADI
ALLOYS (PTY) LTD                        

THIRD RESPONDENT

 

Neutral
citation:  
Industrial
Development Corporation of South Africa Limited and Another v
Kalagadi Manganese (Pty) Ltd
(661/2024)
[2025] ZASCA 70 (30 May 2025)

Coram:      
MEYER, MATOJANE, KATHREE-SETILOANE and
UNTERHALTER JJA and VALLY AJA

Heard:       
3 March 2025

Delivered:  
30 May 2025

Summary: 
Law of Contract
– international arbitration agreement -
disputes arising out of or in connection with the agreement –
must be resolved
through arbitration in the United Kingdom -
International Arbitration Act 15 of 2017 applies – high court -
no jurisdiction
to determine disputes.

Diplomatic
Privileges and Immunities Act 37 of 2001 – African Development
Bank – immune from court’s jurisdiction –
immunity recognised
and enforced through the Diplomatic Privileges and Immunities Act 37
of 2001.

 


ORDER

 

On
appeal from:
Gauteng Division of the
High Court, Johannesburg (Spilg J, sitting as a court of first
instance):

 


1
The application for leave to appeal is granted with costs including
those of two counsel where so employed.


2
The appeal is upheld with costs including those of two counsel where
so employed.


3
The order of the high court is set aside and replaced with the
following order:


1.
The application is stayed as against Kalagadi Manganese (Pty) Ltd
(Kalagadi Manganese), pending the final determination of the

arbitration proceedings in terms of clause 40.2.1 of the Common Terms
Agreement.


2.
Kalagadi Manganese is ordered to pay the costs of the application
including those of two counsel.’


 


JUDGMENT


 


Kathree-Setiloane
JA (Meyer, Matojane and Unterhalter JJA and Vally AJA concurring):


 

[1] 
This is an application for leave to appeal in terms of s 17(2)(b)
of the Superior Courts Act 10 of 2013 (the Superior Courts Act)
against paragraph 3 of the order of the Gauteng Division of the High
Court, Johannesburg, Spilg J sitting as the court of first instance

(the high court), dated 6 September 2023. The application was
referred for oral argument in terms of s 17(2)(d) of the
Superior Courts Act.

 


[2


On 29 April 2020, the first applicant, the Industrial Development
Corporation (the IDC) brought an application to place
the first
respondent, Kalagadi Manganese (Pty) Ltd (Kalagadi) under business
rescue in terms of s 131(1) of the Companies Act 71 of 2008, under
case number 10228/2020 (the business rescue application). In
response, Kalagadi, together with the second and third respondents

respectively, Kalahari Resources (Pty) Ltd (Kalahari Resources) and
Kalagadi Alloys (Pty) Ltd (Kalagadi Alloys),[1]
brought an application in the high court to, inter
alia
,
compel the IDC and the second applicant, the African Development Bank
(the AfDB),[2] to accept a
restructuring arrangement of the debt between Kalagadi and the
applicants (the Kalagadi application). The relationship
between
Kalagadi and the applicants is governed by various contracts; the
principal one being the Common Terms Agreement which
was concluded on
4 September 2017.

 

[3] 
In their answering affidavit, in the Kalagadi application, the
applicants raised the following preliminary objections:


(a)
The court is required to stay the exercise of its jurisdiction to
determine the merits of the Kalagadi application. Clause 40.2.1
of
the Common Terms Agreement provides that any disputes arising out of
or in connection with the agreement must be resolved through

arbitration in London, United Kingdom, under the International
Chamber of Commerce rules [(the ICC Rules)]. The substantive law
of
the Common Terms Agreement is also English law. Kalagadi’s
attempt to bypass this arbitration clause and bring the matter
before
a domestic court contravenes the agreed-upon dispute resolution
process.


(b)
Kalagadi has failed to follow further formal dispute resolution
processes prescribed in the Common Terms Agreement. Clause 15
of the
Common Terms Agreement requires that disputes regarding revisions to
the Financial Model or Technical and Economic Assumptions
must first
be negotiated in good faith and, if unresolved, referred to an expert
for determination in terms of clause 38 of the
Common Terms
Agreement. Kalagadi’s failure to engage in this expert
determination process, opting instead to initiate court
proceedings,
is a direct violation of the contractually prescribed mechanisms for
resolving such disputes.


(c)
AfDB, a respondent (and a necessary party) in the Kalagadi
application, is immune from the Court’s jurisdiction. Under

article 52(1) of the AfDB Parent Agreement (given effect to, and
recognised, inter alia, by article 4 of the AfDB Host Country
Agreement), the AfDB is immune from every form of legal process
except in cases arising
out of its borrowing powers. This immunity
has been recognised and enforced through South African law,
specifically the Diplomatic
Privileges and Immunities Act 37 of 2001
[(the Immunities Act)], pursuant to the Host Country Agreement
concluded with the Minister
of International Relations and
Cooperation of the Government of the Republic of South Africa [(the
Minister)].


(d)
Since the AfDB is a necessary party to the application and cannot be
subject to the jurisdiction of the South African courts,
the Court is
divested of jurisdiction and the entire application is rendered
defective as relief cannot be granted against the
AfDB and it cannot
otherwise be joined to the proceedings.’

The
preliminary objections will be referred to as the arbitral, expert
determination and immunity challenges, respectively.

 

[4] 
Kalagadi operates a manganese mine in the Northern Cape. It obtained
various loan facilities from the applicants for its
operation. These
facilities were made available to Kalagadi pursuant to the Common
Terms Agreement. The total amount owing by Kalagadi
is currently in
excess of R6 billion.

 

[5] 
The IDC is not only a major creditor of Kalagadi, but is also a
minority shareholder in Kalagadi, with a 20% shareholding.
The major
shareholders of Kalagadi are Kalahari Resources and Kgalagadi Alloys.
They are not parties to the Common Terms Agreement,
but are parties
to two separate Guarantee, Pledge and Cession Agreements which were
concluded on 14 September 2017 with,
inter
alia
,
IDC and AfDB, respectively. Pursuant to these agreements, Kalahari
Resources and Kgalagadi Alloys provided security to the applicants,

which they could call up in the event of Kalagadi breaching its debt
repayment obligations to them, under clause 5 of the Common
Terms
Agreement. Clause 5[3] regulates
Kalagadi’s repayment obligations to the applicants. 

 

[6] 
Kalagadi did not satisfy its obligations under clause 5 of the Common
Terms Agreement. The applicants, acting in terms
of their powers
under clause 24.30,
[4]
issued separate notices of default to Kalagadi accelerating the
entirety of the debt. Kalagadi was obliged to repay the whole debt

immediately.

 

[7] 
On 29 April 2020, the IDC instituted the business rescue application.
At the time, Kalagadi was indebted to the IDC in
an aggregate amount
of R3,010,341,967.01. This application was struck from the roll on 29
May 2020, for want of urgency. The respondents
subsequently brought
the Kalagadi application. In addition to an order directing the
applicants to restructure their loans to Kalagadi,
the respondents
also sought an order directing the applicants to consent to the
termination of a mining contract concluded with
Murray & Roberts
Cementation (Pty) Ltd, which Kalagadi blamed for the business rescue
application. They also sought to interdict
the applicants from
exercising their security rights in terms of clause 1.1.248 of the
Common Terms Agreement, consequent upon
their default.

 

[8] 
On 30 October 2020, Kalagadi launched a further application in which
it, inter alia, sought a joint hearing of the business rescue
and the Kalagadi applications. The high court heard that application
on 30 January
2021. On 22 July 2021, it ordered a joint hearing of
the two applications on the basis that ‘the substantive
adjudication
of the one [application] involves a consideration of the
factors raised in the other, and it may be more convenient not to
require
their regurgitation simply for the sake of form’. The
high court did not order a consolidation of the two applications.

 

[9] 
However, on 3 December 2021,
the
high court heard only the preliminary o
bjections
raised in the Kalagadi application and the business rescue
application.[5] It did not deal
with the merits of these applications. On 6 September 2023, it
dismissed the preliminary objections in the Kalagadi
application in
paragraph 3 of its order. The applicants applied to the high court
for leave to appeal this order. It was refused.
They subsequently
applied to this Court for leave to appeal. The respondents oppose the
application.  

 

The
Arbitral Challenge

[10] 
The applicants contend that the high court erred in dismissing this
preliminary objection, as the peremptory dispute
resolution mechanism
in clause 40.2.1 of the Common Terms Agreement is peremptory. Clause
40.2.1 reads:


Subject
to Clause 40.2.10, any dispute arising out of or in connection with
[the Common Terms Agreement], including any question
regarding its
existence, validity or termination, shall be referred to and finally
resolved by arbitration under the Rules of Arbitration
of the
International Chamber of Commerce (the ICC) in force at that time
(the ICC Rules), which ICC Rules are deemed by reference
into this
clause 40.2 . . .’

 

[11] 
The test for interpreting documents is well established. It is a
unitary exercise that involves considering the text,
context and
purpose of the provision in question.[6]
Clause 40.2.1 is unambiguous. It expressly provides that ‘any
dispute arising out of or in connection with [the Common Terms

Agreement]’ shall be referred to arbitration and finally
resolved by arbitration. The use of the word ‘shall’

signifies that clause 40.2.1 is peremptory. It provides no scope for
the exercise of a discretion. It also imposes no internal
substantive
limitation on the class of disputes that must be referred to
arbitration. This is consistent with the purpose of the
clause which
is to establish a neutral, efficient, and enforceable dispute
resolution mechanism for the resolution of disputes
arising from the
agreement. Thus, any disputes arising out of or in connection with
the Common Terms Agreement must be referred
to arbitration for
resolution. 

 

[12] 
The only exception to this rule is in clause 40.2.10 of the Common
Terms Agreement.[7] This term of
the agreement gives the finance parties (in this case the IDC and
AfDB) an election, regardless of whether the borrower
has commenced
arbitration, to elect by notice in writing to the borrower (Kalagadi)
that the dispute shall be resolved by litigation
rather than
arbitration. Neither of the applicants has made this election. The
Kalagadi application concerns alleged breaches,
by the applicants, of
the Common Terms Agreement. These are, manifestly, ‘disputes
arising out of or in connection with the
[Common Terms Agreement]’.
Courts of law, therefore, have no jurisdiction to determine these
disputes.

 

[13] 
In spite of the peremptory dispute mechanism in clause 40.2.1 of the
Common Terms Agreement, the high court found that:


(a)
the Kalagadi application is responsive to the business rescue
application, and, given that the dispute resolution clause is
not
applicable to the business rescue application, the court has sole
jurisdiction in both applications;


(b)
the AfDB actively supported the business rescue application and thus
cannot now cavil at the respondents raising defences to
the business
rescue (in the form of the Kalagadi application), even if such issues
would otherwise fall to be arbitrated in terms
of the Common Terms
Agreement;


(c)
the respondent parties have a right of access to court under the
Constitution, which right may only be limited where it is reasonable

to do so; and


(d)
the issues, which are the subject matter of the court proceedings,
overlap with what may be referred to arbitration and thus
the former
subsumes the latter, and it does not make sense to refer the issues
to arbitration.

 

[14] 
The high court erred in arriving at this conclusion, as it failed to
consider the parties’ clear intention to include
an extensive
dispute resolution mechanism in the Common Terms Agreement. It,
furthermore, simply overlooked that the agreement
is an
‘international arbitration agreement’ which is governed
by the International Arbitration Act 15 of 2017 (the
IAA). Prior to
20 December 2017, all arbitrations and arbitration agreements,
whether domestic or international in character, were
governed by the
Arbitration Act 42 of 1965 (the Arbitration Act). Since that date,
however, international arbitrations are governed by the IAA. Article
1(3) of Schedule 1 to the IAA, states that an arbitration
is
international if, inter alia, the parties to an arbitration
agreement have at the time of the conclusion of that agreement, their
places of business in different
States; or the place of arbitration
is different to the State where the parties have their places of
business.

 

[15] 
The Common Terms Agreement is an international arbitration agreement
as the AfDB has its offices in Abidjan and Côte
d’Ivoire,
whereas Kalagadi, ABSA[8] and
the IDC have their places of business in South Africa. Additionally,
the agreed place of arbitration in the agreement is London.
The IAA
clearly applies in this matter.  Counsel for the respondents
conceded as much during oral argument in this Court.

 

[16] 
In terms of article 8(1) of Schedule 1 to the IAA, ‘[a] court
before which an action is brought in a matter which
is the subject of
an arbitration agreement shall, if a party so requests not later than
when submitting his or her first statement
on the substance of the
dispute, stay those proceedings and refer the parties to arbitration
unless it finds that the agreement
is null and void, inoperative or
incapable of being performed’. The IAA heightens the stringent
standard that a party wishing
to escape an arbitration agreement must
meet, before a court would entertain the matter. This is in step with
the modern approach
to arbitration clauses which is ‘to respect
the parties’ autonomy in concluding the arbitration agreement,
and to minimise
the extent of judicial interference in the
process’.[9]

 

[17] 
The high court, however, failed to apply the test prescribed in the
IAA. Mistakenly, it referenced the Arbitration Act in its judgment
and applied an ‘interests of justice’ test to conclude
that it has a wide discretion in this matter. Yet
even under that
Act, the test is stringent.[10]

 

[18] 
There was some debate on whether the applicants relied on article
8(1) of Schedule 1 to the IAA in argument before the
high court. The
respondents were adamant that the applicants had not, hence we should
not assail the high court for failing to
apply this provision.  This
submission is misplaced. The high court was confronted with a
preliminary objection to its jurisdiction
to determine the dispute
between the parties. In terms of clause 40.2.1 of the Common Terms
Agreement, the high court was required
to determine whether the
arbitration clause was of appreciation. The applicants’
omission to deal with the IAA pertinently,
during argument in the
high court, did not absolve the court from doing so. A court has a
duty to determine its own jurisdiction,
quite apart from the parties’
submissions to the Court.

 

[19] 
The high court erred for the further reason that it considered the
Kalagadi and the business rescue applications as having
overlapping
issues. The Kalagadi application is distinct from the business rescue
application. It is brought under a separate case
number from the
business rescue application and is not a counter application to the
latter. This is, perhaps, why the high court
did not make an order
consolidating the two applications. Besides the relief sought in the
Kalagadi application is not dependent
on the outcome of the business
rescue application. The relief sought, and issues raised, in the
Kalagadi application are founded
on purported breaches of the Common
Terms Agreement.    

 

[20] 
Even if there are overlaps between the two applications, this does
not render the dispute resolution mechanisms in the
Common Terms
Agreement inapplicable to disputes arising therefrom. The relief
sought in the business rescue application and the
Kalagadi
application are dissimilar. Each of these proceedings may take its
own course without requiring the high court to assume
jurisdiction
over the arbitration proceedings. The business rescue proceedings are
clearly not a basis for disregarding or bypassing
the arbitration
agreement.

 

[21] 
The business rescue application would bring about an entirely
different statutory regime in respect of Kalagadi. Importantly,
in
this regard, it will place Kalagadi under independent oversight and
temporarily halt certain enforcement action against it,
without
absolving it from any breach. By comparison, the relief which
Kalagadi seeks in the Kalagadi application is effectively
an
injunction against the exercise of the applicants’ contractual
rights. This relief must be sought in the correct forum
– the
contractually agreed arbitration process.

 

[22] 
The high court also erred in placing emphasis on Kalagadi’s
lack of legal remedies.  It has remedies in terms
of the
contractually agreed dispute resolution clause in the Common Terms
Agreement. Kalagadi expressly agreed, in that agreement,
not to
exercise its right to access to court in terms of s 34 of the
Constitution. As held by the Constitutional Court in
Mphaphuli[11]
‘the decision to refer a dispute to arbitration, as long as it
is voluntarily made, should be respected by the courts.[12]

 

[23] 
The high court found that AfDB supported the business rescue
application and is therefore precluded through its conduct
from
invoking its immunity or the arbitration agreement under the Common
Terms Agreement. The high court erred in this respect,
as there is no
factual basis for this finding on the papers. Equally, it erred in
concluding that the IDC cannot simultaneously
invoke the business
rescue application and raise the preliminary objections. Nothing
stopped the IDC from doing so. It raised the
preliminary objections
as a defence in the Kalagadi application, whereas it seeks a
different remedy in the business rescue application.
 

 

[24] 
The Kalagadi parties seek to escape the peremptory dispute resolution
clause by contending that the Guarantee, Pledge
and Cession
Agreements are implicated in this matter. They argue that these
agreements would expose Kalahari Resources and Kalagadi
Alloys (the
Kalagadi majority shareholders) to liability, should the applicants
not be interdicted from enforcing their security
rights in the high
court. As mentioned, these shareholders are not party to the Common
Terms Agreement but rather to two different
Guarantee, Pledge and
Cession Agreements. Although they do not allege that the applicants
have breached these agreements, they,
nonetheless, believed, rightly
or wrongly, that as Kalagadi was not in a position to pay the debt to
the applicants, they would
likely call up their guarantees.

 

[25] 
In my view, Kalahari Resources and Kgalagadi Alloys were not required
to wait for the applicants to call up the guarantees
before seeking
interdictory relief, which they could only seek from the high court,
under the Guarantee, Pledge and Cession Agreements.
A referral to
arbitration of the interdictory relief they seek in the Kalagadi
application will, therefore, deny them the right
to seek relief, in
the high court, to interdict the applicants from enforcing their
security rights in terms of those agreements.
It must be emphasised,
however, that the security arrangement under these agreements have no
bearing on the enforceability of the
peremptory arbitration clause as
between Kalagadi and the applicants.

 

[26] 
Kalagadi contends that the IDC’s constitutional and statutory
obligations preclude it from entering into an arbitration
agreement.
This contention is unsustainable. The IDC’s primary mission is
to promote economic growth and industrial development
in South
Africa. Lending money is a key tool for achieving this
objective.[13]  There are
no legal barriers that preclude the IDC from agreeing to the
arbitration process to resolve disputes, when concluding
loan
agreements. Public bodies, routinely, enter into such agreements and
participate in arbitrations in South Africa. Section
5 of the IAA
expressly recognises the binding nature of arbitration agreements on
public bodies, such as the IDC, in international
commercial
arbitrations.[14]

 

The
Immunity Challenge

[27] 
In relation to this ground of appeal, the applicants contend that
AfDB enjoys immunity from legal process and the high
court erred in
concluding that it has jurisdiction over it.[15]
The applicants found this challenge on the AfDB Parent Agreement and
the AfDB Host Country Agreement. The AfDB was established
in terms of
the AfDB Parent Agreement that was signed in Khartoum on 4 August
1963. South Africa became a member of the AfDB on
13 December 1995.

 

[28] 
In terms of article 52(1) of the AfDB Parent Agreement,
the
AfDB is immune ‘from every form of legal process except in
cases arising out of the exercise of its borrowing powers’.
The
AfDB Host Country Agreement was agreed to by the Republic of South
Africa and published in Government Notice 916,
Government
Gazette
32579
of 18 September 2009. It conferred the relevant immunities on the
AfDB.[16] Article 4 of the
Host Country Agreement provides that ‘the [AfDB] shall be
immune from every form of legal process and may
only be sued in
accordance with paragraph 1 of article 52 of [the AfDB Parent
Agreement]’.

 

[29] 
The AfDB’s privileges and immunities are recognised by the
Minister under s 5(3) and 7(1) of the Immunities Act.
The high court
held, to the contrary, that the AfDB was not immune in the Kalagadi
application, as such immunity had not been incorporated
into South
African law as required under s 231(2) of the Constitution. This
section provides that ‘[a]n international agreement
binds the
Republic only after it has been approved by resolution in both the
National Assembly and the National Council of Provinces,
unless it is
an agreement referred to in section 3’. This section is not
applicable, as immunity from legal process is sourced
not from s 231
of the Constitution, but rather in the Immunities Act, and its
consequent recognition by the Minister. Sections
5(3) and 7(1) of the
Immunities Act provide:


5(3)   
any organisation recognised by the Minister for the purposes of this
section and any official of such organisation
enjoy such privileges
and immunities as may be provided for in any agreement entered into
with such organisation or as may be conferred
on them by virtue of
section 7(2).


.
. . .


7(1)
Any agreement whereby immunities and privileges are conferred to any
person or organisation in terms of this Act must be published
by
notice in the Gazette.’

 

[30] 
These
provisions give the Minister the power to recognise organisations for
the purposes of conferring immunities. The Minister
may then enter
into an agreement with the recognised organisations which confer
those immunities or, in the absence of agreement,
simply confer them
unilaterally in terms of s 7(2) of the Immunities Act.[17]
Parliament has specifically assigned these powers and duties to the
Minister.

 

[31] 
Since the immunities and privileges are incorporated into domestic
law through the Immunities Act, there is no need for
additional
ratification by Parliament. In addition, the Immunities Act has been
invoked on several occasions and remains on our
statute books. Its
constitutionality has not been successfully challenged. Nor has the
Minister’s power to confer immunity
in terms of s 7(2) of the
Immunities Act. The Immunities Act is, therefore, enforceable in its
terms.[18] Consequently, s
231(2) of the Constitution is inapplicable.

 


[32] 
As indicated above, in terms of article 52 of the AfDB Parent
Agreement, the AfDB is immune from every form of legal
process,
except in cases arising out of the exercise of its borrowing powers.
Since, this case involves the exercise AfDB’s
lending powers
and not its borrowing powers, legal immunity applies to AfDB. The
applicants, however, argue that under the Common
Terms Agreement, the
AfDB only consented to being sued by way of the arbitral procedure in
clause 40.2.1 or the expert procedure
in clause 38. These clauses, so
they contend, are significant because although the AfDB has immunity,
they still provide Kalagadi
with legal recourse should they breach
the Common Terms Agreement.

 


[33] 
However, as correctly pointed out by the respondents, what the
applicants fail to address is clause 40.2.9 of the Common
Terms
Agreement which nullifies clauses 40.2.1 and clause 38, to the extent
that they apply to the AfDB. Clause 40.2.9 precludes
the respondents
from ever proceeding against AfDB. It reads:


The
parties hereby acknowledge and agree that nothing contained in this
Agreement, or any other Finance Document shall be construed
as
a waiver, renunciation or other modification of any privileges,
immunities and exemptions accorded to AfDB under the AfDB Charter,

international law or any other law applicable or applicable
international treaties or customs, including without limitation . .
.
the immunity of AfDB from all forms of legal processes . . . .’
(My emphasis.)

 

[34] 
Although this issue was raised by the respondents in their answering
affidavit, the applicants failed to deal with it
in reply or in their
heads of argument. However, at the hearing in this Court, counsel for
the applicants waived reliance on clause
40.2.9 in so far as it
applies to its immunity in the arbitral process in terms of clause
40.2.1 of the Common Terms Agreement.
The effect of this waiver is
that Kalagadi may proceed against AfDB in arbitration proceedings
envisaged in clause 40.2.1 of the
agreement but may not do so in a
court of law. In other words, AfDB will not raise immunity in the
arbitration proceedings. Consequently,
the issue of non-joinder will
not arise.[19]

 


[35] 
In the circumstances, there is no obstacle to staying the Kalagadi
application for purposes of referral of the dispute
to arbitration in
terms of clause 40.2.1 of the Common Terms Agreement. The stay of the
Kalagadi application will not non-suit
Kalahari Resources and
Kgalagadi Alloys. They have their remedies in terms of the Guarantee,
Pledge and Cession Agreements which
they may enforce in the high
court. In view of the conclusion that I have arrived at; I will not
consider the remaining preliminary
objection concerning clause 38
of the Common Terms Agreement.

 


[36] 
For all these reasons, the high court has no jurisdiction to
determine the Kalagadi application. In the circumstances,
the
application for leave to appeal must be granted and the appeal
upheld.

 


[37] 
In the result, it is ordered that:


1
The application for leave to appeal is granted with costs, including
those of two counsel where so employed.


2
The appeal is upheld with costs including those of two counsel where
so employed.


3
The order of the high court is set aside and replaced with the
following order:


1.
The application is stayed as against  Kalagadi Manganese (Pty)
Ltd (Kalagadi Manganese), pending the final determination
of the
arbitration proceedings in terms of clause 40.2.1 of the Common Terms
Agreement.


2.
Kalagadi Manganese is ordered to pay the costs of the application,
including those of two counsel.’

 


F KATHREE-SETILOANE


JUDGE OF APPEAL 

Appearances

 

For
the appellants:                   

A E Franklin SC and M Mbikiwa

Instructed
by:                            

Webber Wentzel, Johannesburg

                                                 

Honey Attorneys,
Bloemfontein

 

For
the respondents:                
A Gautschi
SC, N Luthuli, O Motlhasedi and

                                                 

M Salukazana

Instructed
by:                           

Harris Nupen Molebatsi Inc, Johannesburg

                                                 

Mayet & Associates,
Bloemfontein.


[1]
Kalagadi,
Kalahari Resources and Kalagadi Alloys are collectively referred to
as ‘the respondents’ in the judgment.

[2]
IDC
and AfDB

are collectively referred as ‘the applicants’ in the
judgment.

[3]
Clause
5 of the Common Terms Agreement reads:

[Kalagadi]
shall repay all Utilisations made to it under a Facility Agreement
in full, in the amounts and on the dates specified
in that Facility
Agreement, in accordance with the Priority of Payments and otherwise
in accordance with the terms of the Facility
Agreement, this
Agreement and the Account Bank Agreement.’

[4]
Clause 24.30.1 provides (in relevant part) that the Lenders are
entitled to take the following action as a result of an event
of
default:

.
. . .

(c)
demand repayment of all or part of its share of the Total
Outstandings regardless of whether or not the individual amounts of

the Total Outstandings are due, all of which amounts shall
immediately become due and payable upon such claim; and/or

(d)
declare that all or part of any Loans is repayable, and any other
amounts accrued or outstanding under the Finance Documents
are
immediately due and payable, whereupon they shall become immediately
due and payable; and/or

.
. . .

(g)
take any steps to exercise enforce any rights, remedies, powers or
discretions of the Finance Parties under the Security Documents,

subject to the Intercreditor Deed; and/or

(h)
instruct the Borrower to, or enforce, all or any of the Borrower’s
rights under the Project Documents for which purpose
the Borrower
irrevocably appoints the Facility Agent as its agents to perform all
acts and to sign all documents and all Project
Authorisations on its
behalf necessary to enforce such rights.’

[5]
The
business rescue application has been postponed
sine
die

(without a date).

[6]
University
of Johannesburg v Auckland Park Theological Seminary and Another

[2021]
ZACC 13; 2021 (6) SA 1 (CC).

[7]
Clause 40.2.10 of the Common Terms Agreement reads:

The
Borrower agrees for the benefit of the Finance Parties that, at the
sole option of the Finance Parties and regardless of whether
the
Borrower has commenced arbitration proceedings under Clause 40.2.1,
the Finance Parties may elect by notice in writing to
the Borrower .
. . that the Dispute shall be resolved by litigation rather than
arbitration. . .’

 

[8]
ABSA
is a lender under the Common Terms Agreement but is not cited as a
respondent in the Kalagadi application.

[10]
In
terms of s 3 of the
Arbitration
Act, a Court could overlook an arbitration agreement on ‘good
cause’ being established. This open-ended standard was
interpreted
restrictively in
De
Lange v Presiding Bishop of the Methodist Church of Southern Africa
for the time being and Another

[2015] ZACC 35; 2016 (1) BCLR 1 (CC); 2016 (2) SA 1 (CC) paras 36-7,
where the Constitutional Court held that ‘the onus to
demonstrate good cause is not easily met. A court’s
discretion
to set aside an existing arbitration agreement must be exercised
only where a persuasive case has been made out .
. . [a]bsent
infringement of constitutional norms, courts will hesitate to set
aside an arbitration agreement untainted by misconduct
or
irregularity unless a truly compelling reason exists’.

[11]
Ibid
at paras 216-217.

[13]
Sections
4(
b)
and
(c)
of the Industrial Development Corporation Act 22 of 1940
specifically give the IDC the authority to lend money to companies
and acquire shares in those companies.

[14]
Section 5 of the IAA provides: ‘[the IAA] binds public bodies
and applies to any international commercial arbitration in
terms of
an arbitration agreement to which a public body is a party’. A
‘public body’ is defined in the IAA
to include
provincial and national departments, municipalities and ‘any
other functionary or institution when exercising
a public power or
performing a public function in terms of . . . any legislation’.

[15]
Should
the applicants succeed in this challenge,

AfDB’s immunity would not only preclude it from being party to
the Kalagadi application. Since it is a necessary party
to the
proceedings, not only can no relief be granted against it, but the
entire application would be stillborn. In
Absa
Bank Limited v Naude NO and Others
[15],
this
Court held that ‘if an order
or
judgment cannot be sustained without necessarily prejudicing the
interests of third parties that had not been joined, then
those
third parties have a legal interest in the matter and must be joined
before the court can proceed to adjudicate the dispute’.
If
the court has no jurisdiction over a necessary party, then it cannot
adjudicate the matter.

[16]
This
was recognised by the republication of the Host Country Agreement
(with a protocol) by the Minister in the Government Gazette
on 10
November 2017 (GN 1233; GG 41237). The official Department of
International Relations and Co-operation’s treaty register

confirms the amended Host Country Agreement, which amended and
reincorporated the original Host Country Agreement of 2009, subject

to amendments that are not relevant to this matter. It came into
force in South Africa on 18 August 2017.

[17]
Section
7(2) of the Immunities Act provides:

The
Minister may in any particular case if it is not expedient to enter
into an agreement as contemplated in subsection (1) and
if the
conferment of immunities and privileges is in the interest of the
Republic, confer such immunities and privileges on a
person or
organisation as may be specified by notice in the
Gazette.’




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