East Asian Consortium BV v MTN Group Ltd and Others
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Citation | 2023 (3) SA 77 (GJ) |
East Asian Consortium BV v MTN Group Ltd and Others
2023 (3) SA 77 (GJ)
2023 (3) SA p77
|
Citation |
2023 (3) SA 77 (GJ) |
|
Case No |
2013/44462 |
|
Court |
Gauteng Local Division, Johannesburg |
|
Judge |
Wepener J |
|
Heard |
November 30, 2022 |
|
Judgment |
November 30, 2022 |
|
Counsel |
AE Franklin SC (with JPV McNally SC, JJ Meiring and BT Moretlwe) for the plaintiff. |
Flynote : Sleutelwoorde
International law — Private international law — Choice of law — Delict — Determination of system of law governing cause of action — Lex loci delicti commissi to be applied.
International law — Jurisdiction of courts — Act-of-state doctrine — Relevant principles fully discussed.
International law — State immunity — Relevant principles fully discussed.
Jurisdiction — Foreign jurisdiction — Submission to — Clause in contract that parties subject themselves to jurisdiction of foreign court — Enforceability — Nature of court's discretion.
Headnote : Kopnota
The Johannesburg High Court was called to determine a number of separated issues in an action brought by the plaintiff, the Dutch company East Asian Consortium BV (EAC), against six defendants, the first four of which comprised MTN Group Ltd and various associated entities (collectively referred to as MTN), claiming in delict damages as a result of the defendants' having wrongfully interfered with EAC's contractual rights, alternatively, having unlawfully competed with EAC for those rights. EAC's claims as encapsulated in its particulars of claim were the following: It was the successful bidder in respect of an international tender put out by the Iranian government to be granted a private licence for the operation and maintenance of a GSM-type cellular phone system public network in Iran. Pursuant to the awarding of the tender to it, it was issued a final licence, and a binding agreement was entered into between itself and the government of Iran. Subsequently, MTN induced Iran, by means of, inter alia, bribery of its officials, to enter into a secret tender process and ultimately breach its agreement with EAC, by replacing the latter with MTN as
2023 (3) SA p78
the recipient of the licence. The issues to be determined in this application included the following:
Did Iranian law, as argued by MTN, or South African law, as argued by EAC, determine whether the allegations made in paras 36 – 60 and 66 of the particulars of claim found a claim for damages, as the plaintiff contended?
Should MTN succeed in the special pleas it raised, to the effect that the present court was deprived of jurisdiction (a) by virtue of the tender documents (art 29 of 'the regulations') granting Iran exclusive jurisdiction to determine '(a)ny dispute or litigation relative to [the tender regulations], or to the call for competitive bids to which they relate'; (b) through the application of the 'foreign-act-of-state doctrine'; and (c) through the application of the principle of 'state immunity'?
Choice of law
The court considered the various tests for guiding the choice as to which system of law should apply in the determination of whether EAC's particulars of claim founded a claim for damages, a claim which the parties were agreed was based in delict (see [9] – [10]). The court expressed its preference for the application of the lex loci delicti commissi — the law of the place where the delict was committed — for, inter alia, the following reasons: in most cases the lex loci delicti commissi would be clear, certain and appropriate; the rule reflected the reasonable expectations of most parties; the rule was in accordance with Roman-Dutch authority; the rule had been adopted in both Canada and Australia; there had been clear legislative moves in the United Kingdom and in Europe in support of the rule; and further the acceptance of the rule would ensure broad uniformity with many other influential jurisdictions across the world, including important trading partners (see [16]). The court went on to consider, on the assumption that the allegations made in the particulars of claim were correct, where the delict occurred. It was Iran, the court held: the conduct of MTN which formed the basis of the delict occurred in Iran; and the unlawful conduct of the Iranian government, in breaching the agreement with EAC, causing the latter loss, occurred in Iran. (See [11] – [15] and [17].) The court accordingly concluded that the law of Iran applied to the question in dispute (see [17]).
Exclusive jurisdiction of Iranian court
The court agreed with the applicant that the foreign-jurisdiction clause in question applied to the present litigation and was binding on the parties (see [36] – [39]). The court acknowledged, however, that in terms of the law it retained a discretion as to whether or not to enforce the clause (see [40]). In the present case, the court determined, the discretion should be exercised in favour of enforcing the clause, with the result that Iranian courts had jurisdiction to hear the matter, and not those of South Africa (see [41] and [97]). In reaching this decision, the court had regard to the fact that, inter alia, the allegations (save for the preparatory actions) were situated in Iran; that the law of Iran pertained to art 29 and any relevant matter, and an Iranian court would not require expert testimony on Iranian law; that the plaintiff was not South African and did business in Iran; and given the central involvement of the Iranian government. (See [41].)
The foreign-act-of-state doctrine
The court noted that on various occasions the doctrine had been endorsed as part of South African law (see [46] and [50]). The court considered the application of the doctrine both in South Africa and in foreign jurisdictions, the pertinent features of which included the following:
The doctrine, in general terms, demanded courts to not readily sit in judgment or adjudicate on unlawful conduct ascribed to foreign sovereign states (see [46] – [49]).
2023 (3) SA p79
The doctrine applied, even where, as here, the foreign party whose conduct was impugned was not party to proceedings. It was enough that the foreign party's conduct fell to be examined and determined. (See [49], [52], [53], [57], [72] and [74].)
The doctrine did not apply simply by reason of the fact that the subject-matter may incidentally disclose that a state had acted unlawfully; it applied only where the invalidity or unlawfulness of the state's sovereign acts was part of the subject-matter of the action, in the sense that the issue could not be resolved without determining it. (See [79].)
The doctrine applied when the proceedings related to acts done in the exercise of sovereign authority, as opposed to private acts, ie acts of a private character, such that a private citizen might have entered into (see [74]).
Applying the relevant law to the facts, the court concluded that the operation of the doctrine precluded it from exercising jurisdiction in the matter, and the special plea ought to be upheld (see [85]). In explanation, the court stressed that, on the pleadings, it was being asked to examine the lawfulness of conduct on the part of the Iranian government that involved the exercise of sovereign authority: the issuing and awarding of the tender qualified as the implementation of government policy, placing the entire transaction within the public-law sphere. (See [71], [75], [81], [84] and [92].) Further, the allegation of unlawful conduct on the part of the Iranian government was crucial to EAC's case; if it had not acted wrongfully, there could never have been a delictual cause of action. (See [31] and [84].)
State immunity
The court referred to s 2 of the Immunities Act. It provided, in ss (1), that '(a) foreign state shall be immune from the jurisdiction of the courts of the Republic except as provided in this Act'; and in ss (2), that '(a) court shall give effect to the immunity conferred by this section even though the foreign state does not appear in the proceedings in question'. (See [85].) The effect of the operation of the principle, the court held, was that a court could not rule on the lawfulness of the conduct of a state, whether or not such state was party to litigation, when its judgment would imply an evaluation of the lawfulness of the conduct of such state (see [87], [89]).
The court held that in this matter it would be required to make adverse findings regarding the unlawful acts of Iran, as a finding would affect the interests or activities of Iran. It concluded that the provisions of the Immunities Act resulted in its having no jurisdiction to entertain the matter as pleaded by EAC, and the special plea had to be upheld. (See [93].)
Cases cited
Southern Africa
Burchell v Anglin 2010 (3) SA 48 (ECG): referred to
Chirwa v Transnet Ltd and Others 2008 (4) SA 367 (CC) ((2008) 29 ILJ 73; 2008 (3) BCLR 251; [2008] 2 BLLR 97; [2007] ZACC 23): dicta in paras [155] and [169] applied
Department of Transport and Others v Tasima (Pty) Ltd 2017 (2) SA 622 (CC) (2017 (1) BCLR 1; [2016] ZACC 39): referred to
Foize Africa (Pty) Ltd v Foize Beheer BV and Others 2013 (3) SA 91 (SCA) ([2012] ZASCA 123): discussed and applied
Gallo Africa Ltd and Others v Sting Music (Pty) Ltd and Others 2010 (6) SA 329 (SCA): referred to
Gcaba v Minister for Safety and Security and Others 2010 (1) SA 238 (CC) (2010 (1) BCLR 35; [2009] 12 BLLR 1145; [2009] ZACC 26): applied
2023 (3) SA p80
Johannesburg City Council v Victteren Towers (Pty) Ltd 1975 (4) SA 334 (W): dictum at 336A applied
Leibowitz and Others v Schwartz and Others 1974 (2) SA 661 (T): referred to
Logbro Properties CC v Bedderson NO and Others 2003...
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