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# South Africa: Supreme Court of Appeal
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## Trustees for the time being of the Burmilla Trust and Another v President of the RSA and Another (64/2021)
[2022] ZASCA 22; [2022] 2 All SA 412 (SCA);
2022 (5) SA 78 (SCA) (1 March 2022)
Trustees for the time being of the Burmilla Trust and Another v President of the RSA and Another (64/2021)
[2022] ZASCA 22; [2022] 2 All SA 412 (SCA);
2022 (5) SA 78 (SCA) (1 March 2022)
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sino date 1 March 2022
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
### JUDGMENT
JUDGMENT
Reportable
Case no: 64/2021
In
the matter between:
THE
TRUSTEES FOR THE TIME BEING
OF
THE BURMILLA TRUST
FIRST APPELLANT
JOSIAS VAN
ZYL
SECOND APPELLANT
and
THE
PRESIDENT OF THE REPUBLIC OF
SOUTH
AFRICA
FIRST RESPONDENT
GOVERNMENT OF THE REPUBLIC OF
SOUTH
AFRICA
SECOND RESPONDENT
Neutral
citation:
Trustees for the time
being of the Burmilla Trust and Another v President of the RSA and
Another
(Case no 64/2021)
[2022] ZASCA
22
(1 March 2022)
Coram:
VAN DER MERWE, MBATHA, GORVEN and MABINDLA-BOQWANA
JJA and MEYER AJA
Heard
:
18 November 2021
Delivered
:
This judgment was handed down electronically by circulation
to the
parties’ legal representatives by email. It has been published on
the Supreme Court of Appeal website and released to SAFLII.
The date
and time for hand-down is deemed to be 09h45 on 1 March 2022.
Summary:
International law – appellants
claimed before Southern African Development Community Tribunal (SADC
tribunal) that Kingdom of Lesotho
(Lesotho) had violated SADC treaty
by expropriation of valid mining lease without compensation and were
liable for moral damages
– allegation that respondents violated
appellants’ rights under s 34 of Constitution by participating in
prevention of prosecution
of claims before SADC tribunal –
exception to claim for constitutional damages under s 172(1)
(b)
in respect of value of mining lease, moral damages, costs of claim
before SADC tribunal and wasted costs of subsequent legal proceedings
– whether SADC tribunal could in law have held that mining lease
was valid despite Lesotho court decisions to contrary – under
international law SADC tribunal not bound by Lesotho court decisions
– could reach different conclusion on proper ground – proper
grounds alleged – whether
Van Zyl v
Government of Republic of South Africa
2008
(3) SA 294
(SCA) precluded claim in respect of value of mining lease
– decision not
res iudicata
in respect of any issue in present action – exception should have
been dismissed in respect of claim for value of mining lease
and
costs of prosecution of that claim before SADC tribunal – exception
otherwise correctly allowed – claim for moral damages
would in law
have been denied by SADC tribunal for failure to exhaust domestic
remedies – no basis pleaded for wasted legal costs
to be awarded as
constitutional damages.
ORDER
On
appeal from:
Gauteng Division of the
High Court, Pretoria (Tuchten J sitting as court of first instance):
1 The appeal of the first
appellant is upheld with costs, including the costs of three counsel.
2 The appeal of the second
appellant is dismissed with costs, including the costs of three
counsel.
3 The order of the court a quo is
set aside and replaced with the following:
‘
(a)
The exception against the claims of the first plaintiff in respect of
the value of the Rampai mining lease and the costs of the
prosecution
of that claim before the SADC tribunal, is dismissed with costs,
including the costs of two counsel;
(b) The exception is allowed in
respect of all other claims of the first plaintiff and they are
struck out;
(c) The exception is allowed in
respect of all the claims of the second plaintiff and they are struck
out with costs, including the
costs of two counsel.’
4 The appellants may seek to
amend their particulars of claim by notice delivered within 30 days
of the date of this judgment.
JUDGMENT
Van der Merwe JA (Gorven JA
and Meyer AJA concurring)
[1]
The first appellant, the trustees for the time being of the Burmilla
Trust (the Burmilla
Trust), and the second appellant, Mr Josias van
Zyl, instituted action in the North Gauteng Division of the High
Court, Pretoria
against the first respondent, the President of the
Republic of South Africa in his official capacity as head of state
and the second
respondent, the Government of the Republic of South
Africa, for payment of damages in the total sum of approximately R800
million,
as well as interest and costs. In their particulars of claim
the appellants put forward various claims, which will be fully
discussed
below. The respondents excepted to the particulars of
claim, alleging on 14 grounds that they did not disclose a cause of
action
in respect of any of the claims. The court a quo (Tuchten J)
upheld most of the grounds of exception. Although it did not say so
explicitly, the effect of the order was to put an end to each of the
claims of the appellants. The court a quo granted leave to the
appellants to appeal to this court. In broad terms the issue on
appeal is whether the amended particulars of claim disclosed a cause
of action in respect of all or any of the claims.
Background
[2]
As I shall explain, aspects of the protracted litigation between the
parties were decided
by this court in
Van
Zyl and Others v Government of the Republic of South Africa
(
Van
Zyl SCA
)
.
[1]
Already in that judgment, handed down during September 2007, Harms
ADP said that the case had a long and convoluted history, the
salient
parts of which he proceeded to set out in the judgment. It is
unnecessary to repeat that exposition. Nor is it necessary
to fully
set out the relevant events subsequent to the judgment in
Van
Zyl
SCA
,
many of which have also been found to be facts in the arbitral award
and foreign judgments referred to below, as well as in the
judgment
of the Constitutional Court in
Law
Society v President of the RSA
[2]
.
This is so, of course, because we are dealing with an exception and
the question is whether on the facts alleged by the appellants,
they
disclosed a cause of action in law. I shall in due course embark upon
a detailed analysis of the particulars of claim. For a
proper
understanding of this judgment it is necessary that I set out, at
this juncture, the essential factual allegations upon which
the
appellants rely. These are the following.
[3]
During 1988, the Government of the Kingdom of Lesotho (Lesotho)
granted five mining
leases to Swissborough Diamond Mines (Pty) Ltd
(Swissborough), a company incorporated in Lesotho and controlled by
Mr van Zyl. The
mining leases would
inter alia
entitle
Swissborough to mine on and extract diamonds from the land to which
the mining leases related. These mining leases were registered
in the
Lesotho Deeds Registry, after having been approved by various
officials of Lesotho. Only one of the mining leases is directly
relevant to the present matter, namely the one that pertains to the
Rampai area. This mining lease and the rights that emanated therefrom
has for decades been referred to as the Rampai lease and I shall
follow suit.
[4]
It transpired, however, that the area of the Rampai lease would
largely be submerged
by the execution of the Lesotho Highlands Water
Project, a joint venture in terms of a treaty between the second
respondent and Lesotho.
In order to avoid having to pay compensation
for the expropriation of the Rampai lease, the emergent military
government of Lesotho
attempted to revoke the mining leases. These
attempts were prevented by decisions of the Lesotho courts. During
1995, however, the
Lesotho Highlands Development Authority (LHDA)
applied in the Lesotho High Court for an order declaring the Rampai
lease void
ab initio
. The application was essentially based
upon the allegation that under Lesotho law the grant of any rights to
land was subject to
the consent of the relevant Chiefs and that such
consent had not been obtained. The Lesotho high court granted the
relief sought
and during 2000 its order was upheld by the Lesotho
Court of Appeal. As I shall demonstrate, these two decisions (the
Lesotho court
decisions) play a central part in the determination of
the matter.
[5]
The Treaty of the Southern African Development Community (the SADC
treaty) came into
force on 30 September 1993. It established the
Southern African Development Community (the SADC). Lesotho was one of
the original
signatories of the SADC treaty. The Republic of South
Africa acceded to the SADC treaty and this was duly ratified by both
houses
of Parliament. In terms of Article 10 of the SADC treaty, the
Summit consists of the heads of all the member states and is ‘. .
.
responsible for the overall policy direction and control of the
functions of the SADC’. Article 4(c) of the SADC treaty provides
that the ‘SADC and its member states shall, [inter alia], act in
accordance with . . . human rights, democracy and the rule of
law’.
Article 6.1 provides:
‘
Member
States undertake to adopt adequate measures to promote the
achievement of the objectives of SADC, and shall refrain from taking
any measure likely to jeopardise the sustenance of its principles,
the achievement of its objectives and the implementation of the
provisions of this Treaty.’
[6]
The Southern African Development Community Tribunal (the SADC
tribunal) was established
in terms of Article 16 of the SADC treaty.
The SADC Tribunal Protocol approved by the Summit during 2001 (the
Protocol) provided
for the composition, jurisdiction and powers of
the SADC tribunal. Article 3.1 of the Protocol determined that the
SADC tribunal
had to consist of no less than 10 members. Importantly,
Article 15.1 provided that the SADC tribunal had jurisdiction over
disputes
between states and between natural or legal persons and
states. In terms of Article 23 the Rules of Procedure of the SADC
tribunal
annexed to the Protocol (the Rules) formed an integral part
of the Protocol.
[7]
In terms of instruments entered into during 1994, 1996 and 1997,
Swissborough
inter alia
ceded and transferred all its rights,
title and interest in and to any claim of whatever nature that it
might have against Lesotho,
to the Burmilla Trust. On the strength of
these instruments, during 2009, the Burmilla Trust launched an
application in the SADC
tribunal for relief against Lesotho (the SADC
claim). Mr van Zyl and other related parties joined the Burmilla
Trust as applicants
in the SADC claim. In essence, the Burmilla Trust
alleged in the SADC claim: that the five mining leases (including the
Rampai lease)
had been validly granted by Lesotho; that in breach of
its obligations under Articles 4(c) and 6.1 of the SADC treaty and of
customary
international law, Lesotho had expropriated the mining
leases without any compensation; and that the Lesotho court decisions
constituted
a denial of justice under international law. On this
basis, the Burmilla Trust claimed compensation from Lesotho
consisting of the
value of the mining leases at the time. It claimed
the amount of R641 109 723, as well as interest and costs
in respect
of the Rampai lease. Mr van Zyl claimed the amount of R80
million in respect of ‘moral damages’. The parties duly exchanged
pleadings
and by 15 February 2011, the SADC claim was ripe for
hearing.
[8]
Meanwhile, on 17 August 2010, the Summit
inter alia
resolved
not to renew the terms of office of five SADC tribunal judges,
rendering it
inquorate
, and to, in effect, suspend the SADC
tribunal. This prompted the appellants to institute proceedings in
the SADC tribunal against
the SADC itself, for relief designed to
enable the SADC tribunal to continue to function (the SADC saving
application). On 20 May
2011, however, the Summit decided to extend
the suspension of the SADC tribunal and not to re-appoint SADC
tribunal judges. This
rendered the SADC tribunal ‘defunct and
unable to hear and determine’ the SADC claim and the SADC saving
application.
[9]
The resolutions of 17 August 2010 and 20 May 2011 were taken in the
execution of a collusive scheme
to prevent natural or legal persons
from prosecuting claims against member states of the SADC before the
SADC tribunal. As a result,
the Summit subsequently replaced the
Protocol with one strictly limiting the jurisdiction of the SADC
tribunal to disputes between
states. The then President of South
Africa participated in all of this and thus assisted Lesotho to get
rid of the SADC claim.
[10]
The appellants proceeded to initiate arbitration proceedings against
Lesotho before an ad hoc international
tribunal under the auspices of
the Permanent Court of Arbitration (the PCA tribunal). The ultimate
aim of the proceedings before
the PCA tribunal was to obtain an award
in accordance with the relief that had been sought in the SADC claim.
Lesotho objected to
the jurisdiction of the PCA tribunal, but it
rejected the objections by majority decision (Mr Justice P M Nienaber
dissenting). In
its (majority) award dated 18 April 2016, the PCA
tribunal ruled that the parties had to establish a new tribunal to
hear the merits
of the claims for compensation. In terms of the award
the new tribunal had to be seated in Mauritius (the Mauritius
tribunal).
[11]
Lesotho approached the High Court of the Republic of Singapore for
the review and setting aside of the
award of the PCA tribunal. In the
meantime, the Mauritius tribunal was constituted and dealt with some
preliminary skirmishes, pending
the determination of the review. The
Singapore High Court in due course upheld Lesotho’s review
application and set aside the award
of the PCA tribunal, on the
ground that it had no jurisdiction to determine the claims before it.
On 27 November 2018, the Singapore
Court of Appeal dismissed the
appellants’ appeal against that order. This, of course, put an end
to the Mauritius tribunal.
[12]
In their particulars of claim as expressly limited in argument before
us, the appellants claimed payment
of the following amounts:
(a)
R641 109 723 plus interest for the value of the Rampai
lease (claim A);
(b)
R80 million for moral damages allegedly suffered by Mr van Zyl (claim
B);
(c)
R15 004 729 plus interest for legal costs incurred in
respect of the SADC claim (claim C);
(d)
R2 782 554 plus interest for legal costs incurred in
respect of the SADC saving application (claim D); and
(e)
R64 324 672 plus interest for legal costs incurred in
respect of the proceedings before the PCA tribunal, the Mauritius
tribunal, as well as in the Singapore courts (claim E).
Apart
from any other consideration, however, as far as the Burmilla Trust
was concerned, the fate of the exception in respect of claims
C, D
and E was entirely dependent on whether claim A survived this
exception. The same applied to Mr van Zyl and claim B.
[13]
The court a quo upheld grounds 2, 3, 4, 6, 8, 9, 10 and 11 of the
respondents’ exception. It made no
order on ground 12 and dismissed
the remainder of the 14 grounds of exception. It directed the
appellants to pay the costs of the
exception, including the costs
consequent upon the employment of two counsel.
[14]
The court a quo erroneously regarded claim A as a claim for loss of
profits. In
respect of that claim
it essentially reasoned that the Burmilla Trust could not ‘escape
the consequences’ of the Lesotho court
decisions that the Rampai
lease had been void
ab initio
and that it was bound by
Van
Zyl SCA
(as well as the judgment of the Pretoria High Court). In
addition, it regarded the fact that it had originated in the hands of
Swissborough
as ‘an insuperable obstacle’ to claim A, on the
ground that the respondents owed no duties to foreigners. The court
said that
claim B had been put forward in terms that were ‘simply
too terse to pass muster’. It did not deal separately with claims C
or
D, but swiftly disposed of claim E, mainly on the ground that
these costs were incurred as a result of a wrong legal decision of
the appellants that had not been caused by the respondents.
Discussion
[15]
The respondents’ grounds of exception substantially overlapped. It
would be quite cumbersome to consider
them separately. In the
circumstances I regard it proper to consider whether the particulars
of claim disclosed a cause of action
in law, in respect of each of
claims A to E. This approach will also be reflected in the order of
this Court.
[16]
It is trite that in deciding an exception, a court has to accept the
facts alleged in the relevant pleading
(save for those that are
palpably untenable). It is for the excipient to satisfy the court
that upon every reasonable interpretation
of those facts, the
pleading is excipiable.
[3]
An interpretation that disregards the context in which the factual
allegations are made would generally not qualify as a reasonable
one.
[17]
It is apparent from what I have said that it was an integral part of
the appellants’ pleaded case that
the SADC tribunal would
(probably) have upheld the SADC claim against Lesotho. This brings
principles of international law into play.
The basic sources of
international law are treaties (general or particular), customary
international law, general principles of law,
judicial decisions and
‘the teachings of the most highly qualified publicists’.
[4]
[18]
There are two main requirements for the existence of a rule of
customary international law. The first
is that the rule is in
accordance with general and widespread practices of states, which
may, of course, be evidenced in a variety
of ways. The settled
practice must in the second place be accompanied by a sense of
obligation on the part of states that they are
bound by the rule in
question.
[5]
Because international law knows no doctrine of
stare
decisis
, judicial
decisions do not themselves constitute rules of international law.
They do, however, provide a means for identifying international
law
rules. The same applies to the writings of jurists.
[6]
Many international tribunals are constituted and make decisions under
bilateral investment treaties and for this reason their decisions
must be applied with caution. Article 21 of the Protocol should be
seen against this backdrop. It provided:
‘
The
Tribunal shall:
(a)
apply the Treaty, this Protocol and other Protocols that form part of
the Treaty, all subsidiary instruments adopted by the Summit,
by the
Council or by any other institution or organ of the Community
pursuant to the Treaty or Protocols; and
(b)
develop its own Community jurisprudence having regard to
applicable treaties, general principles and rules of public
international
law and any rules and principles of the law of States.’
[19]
In an argument not foreshadowed in their comprehensive heads of
argument (nor in their supplementary
heads of argument filed with the
leave of this Court), the appellants contended that the particulars
of claim disclosed three distinct
main causes of action. As I
understood the argument, they were the following: (a) a common law
delictual claim on the basis that
the respondents are liable as joint
wrongdoers with Lesotho for dispossessing the Rampai lease without
compensation; (b) a self-standing
constitutional claim based on a
conspiracy to prevent the prosecution of the SADC claim before the
SADC tribunal; (c) a claim for
constitutional damages under
s
172(1)
(b)
of the Constitution as a just and equitable remedy
for the violation of the appellants’ rights under s 34 of the
Constitution.
As will soon become apparent, I agree with the
respondents that in terms of the particulars of claim, (b) and (c)
above are part
and parcel of one alleged cause of action for
constitutional damages. And for the reasons that follow, I am unable
to detect a common
law delictual claim in the particulars of claim.
[20]
It must be stated at the outset that the appellants rightly accepted
that the alleged delictual cause
of action would have nothing to do
with international law and would from its inception have been
justiciable by a South African court.
With this in mind, I turn to an
analysis of the particulars of claim as amended. In paras 1 to 3
thereof, the appellants identified
the parties to the action.
Paragraph 4 read as follows:
‘
4.
The cause of action relied on is for an appropriate, just and
equitable remedy for the Defendants’ unlawful violation
of the
Plaintiffs’ rights including their rights in terms of Sections
7(2), 9(1), 25, 34, 195 and 232 of the Constitution of the
Republic
of South Africa. Plaintiffs contend that the payment of compensation
will be the appropriate, just and equitable remedy.
Furthermore:
4.1
These rights were violated by the Defendants’ knowing participation
in the shuttering and dismantling of the SADC Tribunal
at a time when
the Plaintiffs had a pending case against Lesotho before that
Tribunal. In so doing, the Defendants violated the Plaintiffs’
right to access to justice, as well as basic principles of human
rights and the rule of law, as enshrined in the SADC treaty,
international
law and the Constitution.
4.2
The consequence of the shuttering and dismantling was to deprive the
Plaintiffs of their right of access to justice before
an independent
and impartial tribunal having jurisdiction to decide the case.
4.3
The relevant facts pleaded below are of a wide scope and are
interrelated. Subject to the foresaid the broad structure is:
4.3.1
The SADC Treaty and Tribunal are set out in paragraphs 5 to 11;
4.3.2
The Plaintiffs’ pending case before the SADC tribunal and the
procedural steps already taken in those proceedings are set
out in
paragraphs 12 to 28;
4.3.3
The key defences raised by Lesotho in those proceedings are set out
in paragraph 29;
4.3.4
The reasons why none of Lesotho’s defences would have been upheld
are set out in paragraph 30;
4.3.5
The outcome of those proceedings in Plaintiffs’ favour is set out
in paragraphs 31 to 32;
4.3.6
The interests of South Africa in the outcome of those proceedings is
set out in paragraph 33;
4.3.7
The Defendants’ interference with those proceedings and the steps
taken to shutter and dismantle the SADC Tribunal are set
out in
paragraphs 34 to 46;
4.3.8
The legal costs reasonably incurred by the Plaintiffs in the pursuit
of their rights before the SADC Tribunal are set out in
paragraph 47;
4.3.9
The Plaintiffs’ further reasonable efforts to pursue their rights
in an alternative forum and the costs reasonably incurred
in the
pursuit thereof are set out in paragraphs 48 to 60;
4.3.10
The unlawful violation of the Plaintiffs’ rights by the Defendants
are set out in paragraphs 61 to 64;
4.3.11
The Plaintiffs’ primary claim against the Defendants is set out in
paragraphs 65 to 66;
4.3.12
The Plaintiffs’ alternative claim against the Defendants is set out
in paragraph 67;
4.3.13
The reasons and circumstances supporting Plaintiffs’ contention
that the payment of compensation will be the appropriate
just and
equitable remedy are set out in paragraph 68 and 69.’
[21]
Paragraphs 61 to 64 of the particulars of claim fell under the rubric
‘THE CONSTITUTIONAL CLAIM OF
THE PLAINTIFFS’. In para 63 it was
alleged that the conduct of the then President of the Republic of
South Africa ‘when he acted,
on behalf of South Africa, together
with other SADC members in taking the SADC decisions’ described
above, had violated the rule
of law, the appellants’ fundamental
right to access to court protected by s 34 of the Constitution and
the appellants’ right
not to be arbitrarily deprived of property.
All of this culminated in para 64, which read:
‘
The
Plaintiffs are accordingly entitled, in terms of sections 38 and
172(1)(b) of the Constitution to appropriate and just and equitable
relief from the Defendants for their unconstitutional conduct and
violation of the fundamental rights of the Plaintiffs.’
The
concluding paragraphs of the particulars of claim were paras 65 to
69. They set out the alleged primary and alternative ‘appropriate
and just and equitable relief as a remedy’ for the aforesaid
alleged violation of the appellants’ constitutional rights, as well
as the grounds relied upon by the appellants for this relief.
[22]
Thus, no reasonable reading of the allegations in the particulars of
claim supports a delictual cause
of action. The appellants, however,
particularly referred to paras 13 and 23.7 (the latter was further
particularised in paras 68.6
and 69.1 to 69.3). But neither of these
paragraphs assists the appellants’ argument. Both formed part of
the description of the
SADC claim against Lesotho. Paragraph 13
stated that the SADC claim arose from Lesotho’s conduct, acting in
concert with the second
respondent, in unlawfully dispossessing the
mining leases to make way for the execution of the Lesotho Highlands
Water Project, ‘.
. . in violation of the International Minimum
Standard (“IMS”), international law, customary international law
and the Constitution,
in conflict with the SADC Treaty and the SADC
Tribunal Protocol and related legal instruments’. In para 23.7 it
was essentially
stated that in terms of a ‘combined litigation and
legislation plan’, of which details were pleaded, Lesotho
unlawfully failed
to pay compensation for the expropriated rights,
with the consent of South Africa. Quite apart from the powerful
indications to the
contrary contained in the context of these
allegations, they fall woefully short of disclosing a cause of action
in delict.
Claim
A (value of the Rampai lease)
[23]
In my view the particulars of claim encapsulated the following
averments in respect of claim A:
(a)
The SADC tribunal would have held in favour of the Burmilla
Trust: (i) that the Rampai lease was validly granted
in terms of the
law of Lesotho; (ii) that the Lesotho court decisions constituted
judicial expropriation of the Rampai lease; (iii)
that the
expropriation took place without compensation; (iv) that the
expropriation without compensation constituted a violation
of the
SADC treaty justiciable before the SADC tribunal; (v) that the
international law claim for compensation for expropriation
without
compensation was properly ceded and transferred to a South African
national, to wit the Burmilla Trust; (vi) that Lesotho
should be
directed to compensate the Burmilla Trust in accordance with the
value of the Rampai lease at the relevant time;
(b)
The then President of the Republic of South Africa
deliberately participated in precluding the prosecution of the
SADC
claim before the SADC tribunal;
(c)
That conduct, for which the respondents are liable in law,
constituted a violation of the Burmilla Trust’s constitutional
right under s 34 to have the SADC claim determined before the SADC
tribunal;
(d)
In terms of s 172(1)
(b)
of the Constitution the just
and equitable remedy is an award of constitutional damages in
accordance with the compensation that
the SADC tribunal would have
determined.
[24]
It cannot be gainsaid that these averments constitute a cause of
action in our law. As I have said, the
factual allegations have to be
accepted for present purposes. These are contained in (a)(iii) (no
compensation paid) and (b) (prevention
of the prosecution of the SADC
claim). There is no reason to question (a)(v) in fact or in law. The
high court erred in this regard,
by failing to recognise that claim A
was that of a South African national based on the violation of its
own constitutional rights
by the respondents.
[25]
The respondents rightly did not challenge most of the aforesaid
conclusions of law. It could hardly be
placed in dispute that
judicial expropriation of valid rights without compensation would
constitute a violation of the SADC treaty.
[7]
There is no doubt that in principle the SADC tribunal could have
awarded compensation to the Burmilla Trust based on the value of
the
Rampai lease. It must be accepted as a matter of law that the
deliberate and collusive preclusion of the prosecution of the SADC
claim would constitute a violation of s 34 rights. And decisions such
as
Fose v Minister of
Safety and Security
[8]
and
President of the
RSA and Another v Modderklip Boerdery (Pty) Ltd
[9]
provide a sound basis for awarding constitutional damages as a just
and equitable remedy under s 172(1)
(b)
of the Constitution.
[26]
It follows that only two of these averments remained in contention,
namely (a)(i) and (a)(ii) above.
In this regard the respondents put
forward two main arguments. These were, first, that as a matter of
law the SADC tribunal could
not interfere with the Lesotho court
decisions and secondly, that the court a quo (and this Court) were
bound by
Van Zyl
SCA
. I shall deal with these
contentions in turn. But first I need to say something about the
appellants’ reliance on the doctrine
of estoppel.
[27]
The principle of estoppel (also referred to as the principle of
preclusion) forms part of international
law.
[10]
But its application is limited. It cannot create rights where none
came into existence or was officially recognised.
[11]
In the present context the principle of estoppel is applicable where
a state by official act granted a right and thereby represented
or
created a legitimate expectation that the right had been validly
granted under its municipal law or would be honoured. If the
grantee
in good faith acted upon the representation the state may in
appropriate circumstances be estopped from contesting the validity
of
the right on the basis of non-compliance with some internal
requirement of municipal law.
[28]
The decision in
Southern
Pacific Properties v Egypt
[12]
provides a good example hereof. There the government entered into
comprehensive agreements with the claimant in terms of which the
latter was granted the right to develop certain land and commenced
the development. The tribunal dealt as follows with the contention
that certain acts of Egyptian officials on which the claimant relied
were void under Egyptian law:
‘
82.
It is possible that under Egyptian law certain acts of Egyptian
officials, including even Presidential Decree No.
475, may be
considered legally non-existent or null and void or susceptible to
invalidation. However, these acts were cloaked with
the mantle of
Governmental authority and communicated as such to foreign investors
who relied on them in making their investments.
83.
Whether legal under Egyptian law or not, the acts in
question were the acts of Egyptian authorities, including the
highest
executive authority of the Government. These acts which are now
alleged to have been in violation of the Egyptian municipal
legal
system, created expectations protected by established principles of
international law. A determination that these acts are
null and void
under municipal law would not resolve the ultimate question of
liability for damages suffered by the victim who relied
on the acts.
If the municipal law does not provide a remedy, the denial of any
remedy whatsoever cannot be the final answer.
.
. .
85.
The principle of international law which the Tribunal is
bound to apply is that which establishes the international
responsibility of States when unauthorized or
ultra vires
acts
of officials have been performed by State agents under cover of their
official character. If such unauthorized or
ultra vires
acts
could not be ascribed to the State, all State responsibility would be
rendered illusory. For this reason,
“
.
. . the practice of states has conclusively established the
international responsibility for unlawful acts of state organs, even
if accomplished outside the limits of their competence and contrary
to domestic law.”’
This
reasoning was adopted in
Kardassopoulos
v Georgia
.
[13]
[29]
Although official acts of Lesotho represented that the Rampai lease
was validly granted, there is in
my view no room for the application
of the doctrine of estoppel in respect of claim A as pleaded. This is
so because Lesotho subsequently
instituted successful proceedings to
declare the Rampai lease void
ab initio
. The Burmilla Trust
fully participated in the proceedings that culminated in the Lesotho
court decisions. In
the circumstances
it was necessary for the Burmilla Trust to allege (and prove at the
trial) that the SADC tribunal would have held
that the Lesotho court
decisions were wrong and/or constituted judicial expropriation.
Could
the SADC tribunal hold that the Rampai lease was valid and
expropriated?
[30]
It is a tenet of international law that the existence of property
rights has to be determined under municipal
law.
[14]
However, international law governs the decision of whether an
expropriation occurred.
[15]
Although international tribunals exercise restraint in evaluating the
decisions of municipal courts (especially the highest court
of a
state), they are not bound by those decisions.
[16]
This was articulated as follows in
Amco
v Indonesia
:
[17]
‘
177.
. . . In any case, an international tribunal is not
bound to follow the result of a national court. One of the reasons
for instituting an international arbitration procedure is precisely
that parties - rightly or wrongly - feel often more confident
with a
legal institution which is not entirely related to one of the
parties. If a national judgment was binding on an international
tribunal such a procedure could be rendered meaningless,
Accordingly,
no matter how the legal position of a party is described in a
national judgment, an international arbitral tribunal enjoys
the
right to evaluate and examine this position without accepting any
res
judicata
effect of a national court. In its evaluation,
therefore, the judgments of a national court can be accepted as one
of the many factors
which have to be considered by the arbitral
tribunal.’
[31]
What this must necessarily mean is that an international tribunal may
differ from the conclusion of a
national court on the validity of
property rights under municipal law, if there is a proper ground for
doing so. In
Vigotop v
Hungary
[18]
,
for instance, the claimant
inter
alia
claimed that
rights emanating from an agreement referred to as the Land Swap
Agreement had been expropriated. This agreement had,
however, been
declared null and void by the Hungarian courts. The tribunal
carefully considered the reasoning of the Hungarian courts
and came
to the conclusion that, contrary to the claimant’s view, it was
‘credible’ and persuasive under the circumstances.
The tribunal
concluded at para 535: ‘The Tribunal does not perceive any reason
to disagree with the
Curia’s
findings and will therefore treat the Land Swap Agreement as null and
void in line with the
Curia’s
decision’. Thus, the claimant’s claim failed, not because the
tribunal was bound by the decisions of the Hungarian courts, but
because the claimant did not establish any ground for coming to a
different conclusion.
[32]
The two decisions that the respondents particularly relied upon in
this regard,
Arif v
Moldova
[19]
and
Cortec Mining v
Kenya,
[20]
do not support their contention and actually point the other way. In
Arif v Moldova
the Moldovan Government awarded a tender to the claimant for the
creation of a network of duty free stores on its border with Romania.
The award of the tender was formalised by agreements entered into
between Moldova and the claimant. However, the Moldovan judiciary
annulled the tender, as well as the subsequent agreements. The
tribunal also carefully considered whether there was any ground to
come to a different conclusion than that of the Moldovan courts. It
concluded at paras 415-416:
‘
415.
. . . Moreover, there is no evidence in the record that persuades the
Tribunal to conclude that the Moldovan judiciary
has not applied
Moldovan law legitimately and in good faith in the proceedings
commenced by Claimant’s competitors.
416.
Le Bridge has had a fair opportunity to defend its position under
Moldovan law before the Moldovan courts.
This Tribunal is not a court
of appeal of last resort. There is no compelling reason that would
justify a new legal analysis by this
Tribunal regarding the
invalidity of these agreements which has already been repeatedly,
consistently and irrevocably decided by
the whole of the Moldovan
judicial system.’
[33]
In
Cortec Mining v
Kenya
[21]
the case of the claimants was that a mining licence had been
expropriated. The Kenyan courts held that the alleged mining licence
never had any legal existence, because the claimants failed to comply
with statutory conditions precedent for the issuance of such
a
licence. The claimants had the duty to comply with these legal
requirements. The tribunal held that the claimants knowingly failed
to so comply and knew that they had no entitlement to the mining
licence, but were ‘successful in bending Mr Masibo (the relevant
official) to their will’.
[22]
This firstly illustrates that the matter is entirely distinguishable
from the present matter. And in respect of the point under
discussion,
the tribunal held that the mining licence was void
ab
initio
under
international law,
inter
alia
, because the
tribunal agreed with the decisions of the Kenyan courts.
[23]
To state the obvious, the tribunal could have disagreed with the
Kenyan courts if there was a proper ground to do so.
[34]
The particulars of claim reveal that the Burmilla Trust relied on
three independent grounds for the proposition
that the SADC tribunal
would have held that the Rampai lease was valid and thus
expropriated. These were: (a) that in the pleadings
before the SADC
tribunal, Lesotho admitted the validity of the Rampai lease; (b) that
after the Lesotho court decisions, the Burmilla
Trust discovered new
evidence which it would have presented before the SADC tribunal and
which would have led it to conclude, contrary
to the Lesotho court
decisions, that the Rampai lease had indeed been validly issued; and
(c) that the Lesotho court decisions constituted
a denial of justice.
[35]
A state may no doubt formally admit before an international tribunal
that a right that was allegedly
expropriated was valid, despite
decisions of its courts to the contrary. This may, for instance, be
based upon advice or because
of a subsequent change of heart on
whatever ground. There can be no reason in principle why a state
should not be held to such an
admission before an international
tribunal. Whether the alleged admission was made, is obviously for
the trial court to determine.
And, in any event, the pleadings in the
SADC claim were not before us. It follows that the SADC tribunal
could have held that the
Rampai lease was valid because Lesotho
admitted that much before it.
[36]
The alleged new evidence was that during the period from 1967 to
1972, the relevant Chiefs had transferred
the land rights in question
to a parastatal of Lesotho, namely the Lesotho National Development
Corporation. This, so it was alleged,
extinguished the need for the
Chiefs to consent to the Rampai lease. It was not a ground of
exception that the appellants had failed
to aver that they exhausted
domestic remedies in respect of the new evidence. The reason for
this, no doubt, was that the appellants
explicitly averred that they
had exhausted all available domestic remedies, alternatively
were excused under international
law from further attempts at
pursuing domestic remedies.
[24]
It is clear, moreover, that the SADC tribunal could have received the
said new evidence. The Rules provided for the calling of witnesses
by
the parties,
[25]
as well as by the SADC tribunal of its own motion or on application
by a party.
[26]
In
terms of the Rules the SADC tribunal had wide
powers to determine its
own procedure
[27]
and had inherent power ‘to make such orders as may be necessary to
meet the ends of justice’.
[28]
As I have demonstrated, the SADC tribunal would not have been bound
by the Lesotho court decisions and the new evidence could have
constituted a good ground for it to reach a different conclusion.
[37]
In terms of international law an indirect expropriation may be
effected by a court order.
[29]
This is referred to as judicial expropriation. In
Sistem
Mühendislik v Kyrgyz Republic
[30]
the tribunal succinctly summarised the salient facts as follows (at
paras 121 and 122):
‘
121.
The Claimant was deprived of all of its rights in the hotel, and the
appropriate form of reparation is compensation for the value
of the
hotel. Article III (2) of the Turkey-Kyrgyz BIT stipulates that in
cases of expropriation compensation “shall be equivalent
to the
real value of the expropriated investment before the expropriatory
action was taken or became known.”
122.
The history of the investment in the Kyrgyz courts is convoluted. Two
things are, however, clear beyond doubt. First, the
Claimant operated
the hotel and was treated by the Kyrgyz authorities as owner of the
hotel from 1999 to March 2005 – and indeed,
for some time
afterwards, when the Kyrgyz authorities appeared disposed to take
steps to restore control of the hotel to Sistem.
Second, in March
2005, the Claimant lost control of the hotel as a matter of fact and,
by virtue of the decision of the Kyrgyz court
on June 27, 2005, the
Claimant was deprived of all of the rights in the hotel which it had
obtained under the 1999 Agreements.’
The
court decision referred to, was that of the Kyrgyz Supreme Court. The
tribunal said at para 118 that that decision ‘deprived
the Claimant
of its property rights in the hotel just as surely as if the State
had expropriated it by decree’.
[38]
Far be it from me to attempt to define a denial of justice under
international law. I can do no better
than repeat what was said in
Infinito Gold v Costa
Rica
[31]
para 445:
‘
From
the authorities cited above, the Tribunal concludes that a denial of
justice occurs when there is a fundamental failure in the
host
State’s administration of justice. The following elements can lead
to this conclusion (i) the State has denied the investor
access to
domestic courts; (ii) the courts have engaged in unwarranted delay;
(iii) the courts have failed to provide those guarantees
which are
generally considered indispensable to the proper administration of
justice (such as the independence and impartiality of
judges, due
process and the right to be heard); or (iv) the decision is
manifestly arbitrary, unjust or idiosyncratic. The Tribunal
thus
concludes that a denial of justice may be procedural or substantive,
and that in both situations the denial of justice is the
product of a
systemic failure of the host State’s judiciary taken as a whole.
The latter point explains that a claim for denial
of justice
presupposes the exhaustion of local remedies, a requirement that is
met here as the complaint targets decisions of the
highest courts.’
[39]
In
OOO Manolium
v Belarus
[32]
para
591, it was stated that judicial expropriation must result from a
denial of justice. There are, however, convincing decisions
to the
contrary. They held that a denial of justice is not a requirement for
judicial expropriation, in other words, that judicial
expropriation
is not limited to instances of denial of justice. In this regard I
refer to the well-reasoned majority decision in
Infinito
Gold v Costa Rica
paras 359-367,
[33]
as well as to
Standard
Chartered Bank v Tanzania
[34]
where the following was said at para 279:
‘
The
Tribunal does not disagree with the Respondent that the judiciary
should not be implicated, or its acts be described as “
judicial
expropriation”
simply
because judicial decisions were taken in error or may be considered
aberrant. However, judicial decisions that permit the actions
or
inactions of other branches of the State and which deprive the
investor of its, property or property rights, can still amount
to
expropriation. While denial of justice could in some case result in
expropriation, it does not follow that judicial expropriation
could
only occur if there is denial of justice.’
[40]
This is also illustrated by
Sistem
Mühendislik v Kyrgyz Republic
[35]
where
the tribunal held that the court decision constituted a judicial
expropriation without consideration of whether there had been
a
denial of justice. It follows that at least at the exception stage,
it has to be accepted that in developing its own jurisprudence
under
Article 21 of the Protocol, the SADC tribunal might have adopted the
principle set out in these international tribunal decisions.
Thus,
the SADC tribunal could have held that the Rampai lease was valid
because the respondents admitted that or the Burmilla Trust
proved
that before it. On this basis, it could have held that despite the
absence of a denial of justice, the Lesotho court decisions
amounted
to judicial expropriation.
[41] In
any event, the particulars of claim could reasonably be read as
follows. The LDHA instituted the proceedings
that culminated in the
Lesotho court decisions. It
failed to disclose in those proceedings that the Lesotho National
Development Corporation had previously acquired the land rights
in
question from the relevant Chiefs and that they therefore had no
further say in respect of whether the Rampai lease should be
granted.
This took place in the execution of a ‘combined litigation and
legislation plan’ to unlawfully prevent payment of compensation
for
the expropriated rights. Lesotho therefore deliberately suppressed
vital evidence before the Lesotho courts. That constituted
a denial
of justice.
[42] In sum,
on the pleaded case the SADC tribunal could well have held that the
admittedly or proven valid Rampai
lease was judicially expropriated,
despite the absence or because of a denial of justice.
Did
Van Zyl SCA
preclude claim A?
[43]
This is not about
stare
decisis
,
but about
res
iudicata
.
The question is not whether
Van
Zyl SCA
constituted a binding precedent, but whether it finally decided any
of the issues in the present action. The trite requirements of
res
iudicata
are that the same relief on the same cause of action must have been
finally decided in proceedings between the same parties. Our
courts
have, however, relaxed these requirements where appropriate
situations gave rise to a form of
res
iudicata
conveniently referred to as issue estoppel, that is, where the same
issue of fact or law was finally decided in previous litigation
between the same parties.
[36]
However, where the relaxation of the strict requirements of
res
iudicata
is likely to give rise to potential inequity, issue estoppel should
not preclude subsequent proceedings.
[37]
[44]
There is a particular danger of unfair consequences in applying issue
estoppel in this matter. Its application
requires the comparison of
the issues in two complex matters for vastly different relief
instituted many years apart. Because many
of the factual events
relied upon in the second matter took place after the first had been
decided, it would not have been easy to
foresee their implications at
the time of the first matter. Against this background I turn to an
analysis of
Van Zyl SCA
.
[45]
There the present appellants (and others) requested the present
respondents to provide them with diplomatic
protection in respect of
the five aforesaid mining leases, including the Rampai lease. When
this request was denied, the appellants
approached the Pretoria High
Court for an order reviewing and setting aside the decision to
decline diplomatic protection and for
a
mandamus
essentially
aimed at directing the respondents to provide diplomatic protection.
The High Court dismissed the application and the
appellants appealed
to this Court. In the opening paragraph of the judgment on appeal,
Harms ADP, writing for the court, characterised
the matter as
follows:
‘
This
appeal relates to a claim for diplomatic protection, i.e., action by
one state against another state in respect of an injury
to the person
or property of a national of the former state that has been caused by
an international delict that is attributable
to the latter state.
Diplomatic protection includes, in a broad sense, consular action,
negotiation, mediation, judicial and arbitral
proceedings, reprisals,
a retort, severance of diplomatic relations, and economic pressures.’
[46]
The court proceeded to state that the appellants had recognised that
their application was based on South
African law, because
international law did not recognise a right of a national to
diplomatic protection.
[38]
This Court held, however, that under our law there was similarly no
right to diplomatic protection; a national only had the right
to the
rational consideration of a request for diplomatic protection.
[39]
This Court held that the respondents had not in the circumstances
been entitled to afford the appellants diplomatic protection. The
essential reasons for this conclusion were threefold.
[47]
The first and main reason was that the appellants did not establish
that an international delict had
been committed.
[40]
The court reasoned that there can only be an international wrong if
there is an international right.
[41]
Therefore the appellants had to show that the Rampai lease was valid
under Lesotho law and subject to international law. They did
not do
so. The Lesotho court decisions held that the Rampai lease was void
ab
initio
.
It was in any event not internationalised by express or tacit
agreement between the parties thereto.
[42]
[48]
Secondly, the alleged delict had been committed against Lesotho
companies (including Swissborough) and
not against their South
African shareholders. Under the nationality rule the respondents were
not in these circumstances entitled
to exercise diplomatic protection
in respect of their national shareholders.
[43]
Moreover, so the court said, in terms of the continuing nationality
rule (an aspect of the nationality rule) the cession of rights
by the
Lesotho companies to Burmilla Trust disqualified it (and the
companies) from diplomatic protection. A cessionary may be entitled
to the proceeds of a ceded claim but cannot by virtue of the cession
become a victim for purposes of diplomatic protection.
[44]
[49]
Finally, the appellants did not exhaust all legal remedies against
Lesotho, which was a prerequisite
for the respondents to claim
diplomatic protection in respect of the appellants from Lesotho.
[45]
The court pointed out that the Lesotho court decisions related only
to the Rampai lease and were not
res
iudicata
in respect of the four other mining leases. Importantly, the court
said that the appellants were entitled to use the aforesaid new
evidence in future proceedings aimed at showing that the Lesotho
court decisions had been wrongly decided.
[46]
[50]
This Court emphasised that the ‘real complaint’ of the
appellants, namely that the Lesotho court
decisions amounted to an
expropriation without compensation and a denial of justice, had not
been part of the appellants’ case
before it.
[47]
In the result, this Court in
Van
Zyl SCA
was not called upon (and was not clothed with jurisdiction) to decide
whether the Lesotho court decisions that the Rampai lease was
invalid
withstood scrutiny under international law, nor whether they
constituted judicial expropriation.
[51]
Van
Zyl SCA
clearly did not determine the same relief on the same
cause of action as in this matter. And for obvious reasons it did not
determine:
(a) what the SADC tribunal would have held in respect of
the SADC claim; (b) whether Lesotho violated the SADC treaty; (c)
whether
the respondents violated the constitutional rights of the
appellants; and (d) whether constitutional damages would be a just
and
equitable remedy for such violation. In my view
Van Zyl SCA
did not decide any of the issues set out in para 23 above against the
appellants. It follows that the present action is not barred
by
Van
Zyl SCA
.
[52] For
these reasons I conclude that the particulars of claim disclosed a
cause of action in respect of
claim A. The exception should not have
been allowed in respect thereof.
Claim B (moral damages)
[53]
This curious claim was for ‘. . . severe humiliation and indignity,
insult, damage to his good name
and reputation and the fear and
anxiety caused by harassment and intimidation’. No further
particulars were pleaded. In context
these allegations related to the
conduct of Lesotho. The novel claim for a
solatium
or general damages as constitutional damages
[48]
was, of course, brought on the basis that the SADC tribunal would
have allowed Mr van Zyl’s claim against Lesotho.
[54]
Article 15.2 of the Protocol articulated a trite principle of
international law as follows:
‘
No
natural or legal person shall bring an action against a State unless
he or she has exhausted all available remedies or is unable
to
proceed under the domestic jurisdiction.’
It
is clear from the particulars of claim that Mr van Zyl did not
prosecute this claim against Lesotho in the Lesotho courts. It
follows
as a matter of law that the SADC tribunal would have
dismissed the claim for moral damages. This point was adequately
raised in ground
4 of the exception. Therefore, the particulars of
claim did not disclose a cause of action in respect of claim B.
Claim C (costs of the SADC
claim)
[55] In
the light of my conclusion in respect of claim B, it is strictly
speaking only necessary to consider
the remaining claims as far as
the Burmilla Trust is concerned. For completeness I shall
nevertheless do so in respect of both appellants.
Claim C is for
constitutional damages on the same basis as claims A and B, namely
that the SADC tribunal would have awarded the appellants
the costs of
their SADC claim. Article 29 of the Protocol provided that unless the
SADC tribunal decided otherwise, each party to
a dispute shall pay
its, his or her own legal costs. This was echoed in Rule 78.1, but
Rule 78.2 provided that the SADC tribunal
might, in exceptional
circumstances, order a party to proceedings to pay the costs incurred
by the other party.
[56] The
appellants did not allege that exceptional circumstances would have
entitled them to a costs order.
However, the respondents did not
except to the particulars of claim on the ground that even if the
SADC claim would have succeeded,
costs would not have been awarded
against Lesotho by reason of the absence of exceptional
circumstances. In the circumstances I think
that it must on exception
be accepted that these costs could have been ordered against Lesotho
and could therefore be awarded as
constitutional damages in favour of
the Burmilla Trust. On this basis the exception against claim C
should also have been dismissed.
Claims D and E (wasted
subsequent legal costs)
[57] The
appellants did not plead any legal basis for claim D (legal costs
incurred in respect of the SADC
saving application). For this reason
alone, the exception against claim D was correctly upheld. In respect
of claim E (legal costs
incurred in respect of the proceedings before
the PCA tribunal, the Mauritius tribunal and in the Singapore
courts), the appellants
pleaded:
‘
Those
costs were reasonably incurred, and would not have been incurred but
for the shuttering of the SADC Tribunal. The wrongful and
unlawful
conduct of the defendants was a direct cause of plaintiffs incurring
those costs, which was reasonably foreseeable, and
plaintiffs
therefore include those amounts in their claim for compensation.’
[58] On a
proper analysis of these allegations, they speak to causation in
delict. But as I have demonstrated,
claim E was not based on delict.
It was a claim for constitutional damages under s 172 of the
Constitution. For present purposes
it must be accepted that
unconstitutional conduct for which the respondents are liable
precluded the prosecution of the SADC claim.
[59]
In
Minister
of Law and Order v Kadir
[49]
at 318G-J Hefer JA said, in respect of the determination of
wrongfulness in delict on exception:
‘
Decisions
like these can seldom be taken on a mere handful of allegations in a
pleading which only reflects the facts on which one
of the contending
parties relies. In the passage cited earlier Fleming rightly stressed
the interplay of many factors which have
to be considered. It is
impossible to arrive at a conclusion except upon a consideration of
all the circumstances of the case and
of every other relevant factor.
This would seem to indicate that the present matter should rather go
to trial and not be disposed
of on exception. On the other hand, it
must be assumed - since the plaintiff will be debarred from
presenting a stronger case to
the trial Court than the one pleaded -
that the facts alleged in support of the alleged legal duty represent
the high-water mark
of the factual basis on which the Court will be
required to decide the question. Therefore, if those facts do
not
prima
facie
support
the legal duty contended for, there is no reason why the exception
should not succeed.’
The
Constitutional Court expressly approved this passage in
Carmichele
v Minister of Safety and Security.
[50]
In my view this decision is equally applicable in the present
context. It follows that the question is whether the factual
allegations
of the appellants did not even prima facie support the
proposition that it would be a just and equitable remedy to award
compensation
for the legal costs incurred in respect of the
proceedings before these tribunals and in the Singapore courts as
constitutional damages
under s 172(1)
(b)
.
Ground 10 of the exception specifically raised this issue.
[60]
Because the appellants in this regard pinned their colours to the
delictual causation mast, their particulars
of claim lacked factual
allegations that could support claim E as constitutional damages.
Moreover, the particulars of claim made
clear that the appellants’
causes of action in respect of claims A and B had arisen by May 2011
at the latest. These claims against
the respondents could therefore
have been instituted forthwith. Yet, claim E was for the costs
subsequently incurred in proceedings
against Lesotho. In the absence
of factual allegations that could fill this lacuna, I find no basis
for claim E. It follows that
claim E was not prima facie supported by
factual allegations. The exception in respect thereof was correctly
allowed.
[61]
To summarise, the exception should have been dismissed in respect of
claim A and claim C, only as far
as the Burmilla Trust was concerned,
but was otherwise correctly allowed. This finding results in
substantial success for the Burmilla
Trust in the court a quo and on
appeal. As I have explained, the appeal of Mr van Zyl must fail
in
toto
.
Costs should follow these results. Both sides employed three counsel
and I believe that that was reasonable in the circumstances.
The
appellants should, of course, be offered the opportunity to seek to
amend their particulars of claim subsequent to this judgment.
[51]
[62] In
the result, I make the following order:
1 The appeal of the first
appellant is upheld with costs, including the costs of three counsel.
2 The appeal of the second
appellant is dismissed with costs, including the costs of three
counsel.
3 The order of the court a quo is
set aside and replaced with the following:
‘
(a)
The exception against the claims of the first plaintiff in respect of
the value of the Rampai mining lease and the costs of the
prosecution
of that claim before the SADC tribunal, is dismissed with costs,
including the costs of two counsel;
(b) The exception is allowed in
respect of all other claims of the first plaintiff and they are
struck out;
(c) The exception is allowed in
respect of all the claims of the second plaintiff and they are struck
out with costs, including the
costs of two counsel.’
4 The appellants may seek to
amend their particulars of claim by notice delivered within 30 days
of the date of this judgment.
C H G VAN DER MERWE
JUDGE OF APPEAL
Mabindla-Boqwana JA dissenting
(Mbatha JA concurring)
Introduction
[63]
I have had the privilege of reading the
carefully reasoned judgment of my brother Van der Merwe JA (first
judgment). I agree with
its conclusions in regard to Mr
van Zyl’s appeal, the inapplicability of the doctrine of estoppel
in this case
and its outcome on the wasted costs claimed by the
appellants for the litigation embarked upon subsequent to the demise
of the SADC
tribunal. However, I differ with the first judgment in
relation to the outcome of Burmilla Trust’s appeal. These are my
reasons
.
[64]
Naturally,
I agree with my colleague that we are dealing with the matter at an
exception stage and the well-established principles
applicable
therein, which he has set out above, should be kept in mind. It
should also be emphasised that as a remedy an exception
is available
when the objection goes to the root of the opponent’s claim or
defence
[52]
and its true objective is
either,
to settle the case, if possible, or at least part of it in a way that
would avoid a possibly protracted and costly trial.
[53]
It is a useful mechanism to weed out cases without legal merit
[54]
at an early stage.
[65]
This
matter has a long and tortuous litigation history, the kernel of
which began with the findings made by the Lesotho courts
[55]
more than two decades ago that the Rampai lease was null and void
(the Lesotho Rampai judgment). The appellants have litigated in
different fora, starting in the Lesotho high court with a trial that
lasted more than 50 days in the 1990s. Having lost in both the
Lesotho high court and appeal court, they continued to explore
different avenues, across the world, seeking a claim rooted in the
validity of the Rampai lease. The latest iteration of the appellants’
claim developed into the case before the court a quo, from
which this
appeal arises. I
demonstrate why I am of the view that the court a quo was correct in
upholding the wholesale of exceptions raised by the respondents,
the
effect of which was to dispose of the appellants’ claim.
[66]
The
crux of the appellants’ case at the trial, as defined by the
appellants in their particulars of claim, is whether the now defunct
SADC tribunal would have awarded them the claimed amounts, had it not
been shuttered and dismantled by the SADC Summit, with the
participation and signature of our then President, whose conduct was
found to have been unlawful and unconstitutional by the
Constitutional
Court in
Law
Society
.
[56]
[67]
On the basis of that unlawful conduct the
appellants claim constitutional damages against the respondents.
These are made up of amounts
claimed in the SADC tribunal, wasted
costs for ‘attempting’ to have their dispute determined at the
SADC tribunal and for taking
their disputes before the PCA tribunal,
the Mauritius tribunal and the Singapore courts.
[68]
According to the appellants, a South
African court would be called upon to step into the shoes of the SADC
tribunal. While that may
be required, it is important to state that
the appellants’ claim is for constitutional damages, brought under
South African law
and premised upon ss 38 and 172(1)
(b)
of the Constitution. Asking a question of what the SADC tribunal
would have found does not transform the trial court seized with
this
action into the SADC tribunal. The question to be asked by the trial
court is whether the appellants are entitled to constitutional
damages on the basis that, had it not been for the actions of the
respondents in concert with other SADC member states and their
heads,
the SADC tribunal would have found in the appellants’ favour and
awarded their claim.
The implications of the
Van
Zyl SCA
judgment
[69]
It
is perhaps opportune to start with the impact of the
Van
Zyl
judgments in the appellants’ claim, if any. Mr van Zyl and
associated entities approached the South African government to
provide
them with diplomatic protection against Lesotho on the basis
that Lesotho had committed an international delict by cancelling and
revoking five mineral leases, including the Rampai lease. When the
government refused, they brought an application to review that
decision before the now Gauteng Division of the High Court, Pretoria
contending that Lesotho had expropriated
their
property rights without compensation.
The application served before Patel J, who gave a detailed
judgment
[57]
dealing with international law, dismissing the application on a
number of bases including that the mining leases concerned were a
matter of domestic law and not internationalised. The matter came
before this Court on appeal (
Van
Zyl SCA
),
which agreed in general terms with Patel J’s reasoning.
[58]
[70]
In
his founding affidavit of that application Mr van Zyl had relied on
the claim of a violation of the appellants’ rights by cancellation
of the mining leases by Lesotho without payment of compensation. He
said that this constituted an expropriation that did not comply
with
minimum international standards and as a result Lesotho was obliged
to pay the appellants damages in an amount of some R3 billion.
[59]
In
considering whether the government was entitled to grant the
appellants’ diplomatic protection in international law, the court
in
Van
Zyl SCA
said that the appellants had to show that such a right vested in the
government.
[60]
[71]
The
court went on to state a number of international law principles.
[61]
These included the principle that the appellants were not subjects of
international law, and therefore held no rights under international
law; as well as the principle that aliens in a foreign country are
subject to the laws of that country in the same way as nationals
of
that country. Importantly, for the purposes of this judgment, the
court in
Van
Zyl SCA
also stated the following pertinent tenets of international law.
[72]
Firstly,
that property rights are determined by municipal law, in particular
‘questions whether any rights have been granted, exist
or whether
they have terminated are all questions that have to be determined
according to local law’.
[62]
In
this regard, it referred to
Panevezys-Saldutiskis
Railway (Estonia v Lithuania)
,
[63]
which stated the principle that ‘t
he
property rights and the contractual rights of individuals depend in
every State on municipal law and
fall
therefore more particularly within the jurisdiction of municipal
tribunals
’.
[64]
(My emphasis.)
In
this vein,
the
court in
Van
Zyl SCA
captured
the following:
‘
There
is no universally acceptable concept of property rights because the
Western concept based on Roman law principles does not apply
everywhere. According to African customary law, as expressed in the
Lesotho Constitution, land belongs to the nation, in this case
the
Basotho Nation, and all interests in land are granted by the nation,
represented by the King and the Chiefs. Chinese law, for
instance,
has its own complexities. The finding by Patel J that there
is no support for the thesis that international law
recognises the
protection of property (at least in the Roman-Dutch legal sense) as a
basic human right appears to have merit.’
[65]
[73]
Secondly,
contracts between states and aliens may be made subject to
international law principles and international adjudication by
agreement, expressly or by necessary implication. And thirdly, a
sending state may afford diplomatic protection only when a number
of
things have been fulfilled: (a) the victim must be a national of the
sending state; (b) the victim must have exhausted local remedies
of
the state that acted errantly; and (c) ‘
an
international delict whereby the victim has been injured by an
unlawful act imputable to the other state
[
must
have
]
been
committed
’.
[66]
(My emphasis.)
[74]
The
court in
Van
Zyl SCA
then went on to determine if there were any international rights and
wrongs in the case before it. The court, firstly, held that,
‘[b]efore there can be an international wrong there must be an
international right.
In
this case the appellants have to show that the Rampai mineral lease
was subject to international law, i.e., that it had been
internationalised
’.
[67]
(My emphasis.) The court agreed with Patel J that because the lease
was concluded between Lesotho and a Lesotho company under Lesotho
mining laws, its validity had to be determined according to Lesotho
law by Lesotho courts.
[68]
[75]
Most importantly, the court emphasised
that:
‘
[T]his
is not a case of expropriation or confiscation of existing rights
.
The issue is whether rights had come into existence according to
local law that requires compliance with prescribed formalities.
All
the authorities quoted by the appellants, and there were many, deal
with a situation where a state that had agreed not to amend
its laws
in order to undo an international contract (so-called stabilisation
clauses), reneges on its undertaking. This is not such
a case.’
[69]
(My emphasis.)
[76]
Then,
the court proceeded to deal with whether Lesotho had agreed that the
Rampai lease would be determined according to international
law and
by an international tribunal.
[70]
There, the appellants had argued that the mining leases in question,
including the Rampai lease, were long-term international agreements
or bilateral investment treaties, which by virtue of their character
import international law by implication.
[71]
The argument was found to be opportunistic and that the Rampai lease
hardly had any characteristics in the authority referred to
by the
appellants, which largely spoke to foreign investments, co-operation
and obligations between parties.
[72]
[77]
The
court stated, ‘[b]ecause the Rampai lease was invalid ab initio,
whatever the Government of Lesotho did by cancellation or revocation
to undo the putative lease was without effect because there was
nothing to undo. The acts of the Government of Lesotho at the time
may have been wrong in the moral sense but they were not wrongful (at
least not with full knowledge of the facts)’.
[73]
[78]
The
court further rejected an argument that an arbitration clause, which
was silent on the fact that Lesotho law was applicable or
that the
arbitration had to be local, meant that it had to be international.
Similarly, a related argument that because Lesotho had
acceded to the
Convention on the Settlement of Investment Disputes between States
and Nationals of Other States (ICSID), it was bound
to submit to
ICSID arbitration, was rejected. The court noted that article 25(1)
of the ICSID provided that ‘[t]he jurisdiction
of [this arbitral
court] shall extend to any legal dispute arising directly out of an
investment, between a Contracting State . .
. and a national of
another Contracting State,
which
the parties to the dispute consent in writing to submit to [this
arbitral court]
’.
[74]
This finding becomes important in my later deliberation of the case,
in relation to the international authorities that the appellants
have
relied on to suggest that the SADC tribunal would have had a free
hand in assessing their claim without any preliminary constraints.
[79]
Returning
to the findings of the court in
Van
Zyl SCA
on the aspect under consideration. Apart from finding that South
Africa was not another contracting party to the ICSID, that
Swissborough
was not a South African national and that the parties
did not agree in writing otherwise to submit to the ICSID
arbitration, the
court found that the Rampai lease
was
not an investment contract
.
[75]
(My emphasis.)
[80]
The
court then concluded that ‘the appellants did not establish that
they had any rights and, accordingly, that no international
wrong
could have been committed against them which would have entitled the
Government to afford diplomatic protection’.
[76]
[81]
Lastly,
the court went on to say something about the appellants’ actual
underlying claim: the insinuation that the Lesotho Rampai
judgment
amounted to expropriation without compensation for which Lesotho was
responsible; and further that it amounted to an international
wrong,
because it was a denial of justice by the Lesotho courts. In this
regard, the court made two observations: first, it stated
that it had
shown that that was not part of the appellants’ case before the
court; and secondly, that the underlying requirement
of the existence
of an international right was absent. The latter statement suggests
that even if the case of denial of justice was
before it, the
existence of the international right would need to be shown. The
court went on to say that to succeed the appellants
had accepted that
they had to show ‘a fundamental failure of justice’.
[77]
And since the main thrust of the appellants’ argument was really
directed at the merits of the Lesotho Rampai judgment, and because
the appellants believed that the Lesotho courts were wrong, they had
assumed that there must have been a denial of justice.
[78]
[82]
What is demonstrated by the analysis of the
Van Zyl SCA
judgment above is that although the cause of action was different,
namely, the seeking of diplomatic protection, the factual underlying
basis – which was the alleged expropriation without compensation,
that resulted from a finding that the Rampai lease was void
ab
initio
– formed the same factual
basis for the claim in the present matter as well as at the SADC
tribunal. As it has been illustrated
by the court in
Van
Zyl SCA
, in order to determine whether
the appellants were entitled to diplomatic protection, it had to
consider, among others, if an international
delict was committed. In
doing so, it set out legal principles applicable to come to that
conclusion and made firm findings as regards
the law applicable
internationally, and as to how the alleged expropriation of the
Rampai lease was to be examined. It found that
no rights had been
established, and accordingly no international wrong.
[83]
The appellants submitted that the courts in
the
Van Zyl
judgments found that there was no international delict committed by
the Lesotho courts based on customary international law, however,
they were not asked to consider the violation of the SADC treaty, and
the relevant treaty was in any event not applicable at the
time.
Articles 4(c) and 6.1 of the SADC treaty are general obligations
dealing with protection and promotion of the rule of law and
fundamental rights by member states. They say nothing about the
acquisition of mining rights or how those rights are created, their
ownership or expropriation.
[84]
Whether
the courts involved in the
Van
Zyl
judgments were asked to deal with the question of the breach of the
SADC treaty does not assist the appellants in my view, because
that
would undoubtedly be a conclusion reached when an international wrong
is committed by a member state. To get to that conclusion,
a
determination of the fundamental question relating to the existence
of the rights under the Rampai lease would be required, and
Van
Zyl SCA
has stated in many ways how that is to be done. Reliance would still
need to be placed on international law principles, including
customary international law (as did the
Van
Zyl
courts) and/or any other relevant treaty that deals directly with the
questions of whether expropriation had occurred and whether
compensation was due. The claim of constitutional damages rests on
the finding by the trial court that the SADC tribunal would have
found the Rampai lease to be valid. It is not a self-standing claim
for an injury caused simply by the respondents infringing the
appellants’ constitutional rights. As regards the entitlement of
the use of new evidence mentioned by the court in
Van
Zyl SCA
,
this was made in the context of the Lesotho judgments not being
res
iudicata
in respect of the four remaining leases and not the Rampai lease.
[79]
[85]
In light of this, I agree that the case is
not
res iudicata
in the traditional sense, as the first judgment has described.
However, I am of the view that this is a kind of case where the
doctrine
should be relaxed and issue estoppel applied. It will not be
unjust to apply issue estoppel in this case, for the reason that the
appellants have had a fair chance of the issues determined by the
courts in lengthy hearings. In both the high court and before this
Court there has been an enquiry of issues of fact and the law that
underlie the appellants’ claim. While there is no commonality
in
the cause of action and the relief claimed, the issue raised in this
case constitutes an integral part of the issues determined
in
Van
Zyl SCA
.
[86]
Even
if the doctrine of
res
iudicata
cannot be relaxed in this case, in my view, there is something to be
said about the fact that the court a quo was bound by the reasoning
in
Van
Zyl SCA
insofar as the findings were made as to how the issue of the alleged
expropriation of the Rampai mining lease was to be treated.
[80]
In
Mkhize
NO v Premier of the Province of KwaZulu-Natal and Others
,
[81]
in the Constitutional Court, Dlodlo AJ held that a ‘final
determination of a legal issue is relevant to the application of the
doctrine of
res
judicata
,
but also to that of precedent’.
[82]
The doctrine of precedent requires that where a legal issue has been
authoritatively decided by a higher court, later issues arising
from
similar facts must be resolved on the authority of the precedent set
by the higher court.
[83]
Dlodlo AJ importantly observed:
‘
Irrespective
of whether we apply the doctrine of precedent or issue estoppel, the
crucial question is whether the Supreme Court of
Appeal made a final
determination on the legal issue that subsequently came before Sishi
J. If it did not, neither precedent nor
res
judicata
– even in the extended form of issue estoppel – can assist Ms
Mkhize. If it did, then Ms Mkhize must succeed on the basis of
issue
estoppel and the doctrine of precedent,
which
overlap in this case
.’
(My emphasis.)
[87]
In my view the same can be said about this
case. A determination was made in
Van
Zyl SCA
not only on factual issues
peculiar to this case but also on legal issues which I have dealt
with above. Thus, the court a quo was
not wrong in its finding that
it was bound by the findings of the court in
Van
Zyl SCA
. Be that as it may, the
findings pronounced by the court in
Van
Zyl SCA
were consonant with
international law and, even independently, the SADC tribunal would
have asked the same questions posed and determined
by the court in
Van Zyl SCA
.
[88]
Before I deal with that issue,
en
passant
, let me address what I thought
was a submission made by counsel for the appellants during oral
argument which seemed to suggest that
because the trial court would
be required to inquire into questions of what the SADC tribunal would
have found, it could not be bound
by the South African judgments. To
the extent that such a suggestion was made, I differ. The trial court
as a South African court
would still be bound by the Constitution,
the law and judgments of the Republic.
The approach to be followed by
the SADC tribunal
[89]
The
views taken by the court in
Van
Zyl SCA
and earlier in the high court by Patel J are in concert with
international law, namely, that the creation and existence of a
property
right is determined by the relevant domestic law. Further,
that a clear legal title to the property is a requisite to
compensation
for expropriated property. This much was also found in
the SADC tribunal’s own decision of
Mike
Campbell (Pvt) Ltd and Others v Republic of Zimbabwe
[84]
(
Campbell
).
In
Campbell
,
the applicants’ legal title was beyond question, so it was not the
issue the SADC tribunal had to determine. The
question (apart from the issues of jurisdiction and denial of
justice) was whether compensation was payable for agricultural land
compulsorily acquired by the Republic of Zimbabwe under the land
reform programme it had undertaken.
[85]
In other words, there was no dispute as to the title of the
applicants to the land.
[90]
The
same view was followed by the Singapore Court of Appeal in
Swissbourgh
Diamond Mines (Pty) Ltd v Kingdom of Lesotho
,
[86]
the Singapore leg of the dispute between the appellants and Lesotho.
Referring to investment treaty case law, there the court held:
‘
In
Emmis
International Holding, BV and others v Hungary,
(ICSID
Case No ARB/12/2), Award, 16 April 2014, the tribunal noted (at
[162]) that:
“
[i]n
order to determine whether an investor/claimant holds property or
assets capable of constituting an investment
it
is necessary in the first place to refer to host State law
.
Public international law does not create property rights. Rather, it
accords certain protections to property rights created according
to
municipal law. . . .”
Similarly,
in
Urbaser SA and Consorcio de Aguas Bilbao Bizkaia, Bilbao
Biskaia Ur Partzuergoa v The Argentine Republic
, ICSID Case No
ARB/07/26, Award, 8 December 2016, the tribunal observed (at [556])
that:
“
.
. . [g]eneral international law does not accurately define the
concepts of contract, action, patent, etc. This is provided for by
domestic law. These rights, once defined, are protected by certain
rules of international customary and treaty law.”’
[87]
[91]
It is, thus, incorrect for the appellants
to suggest that domestic law will have no bearing on international
law, or rather a leap
could be made to consider international law
regardless of the domestic law. The SADC tribunal would have had to
determine the validity
of the Rampai lease, if it gets to that stage,
in terms of Lesotho law. It would have to assess whether a right in
title was acquired
in terms of Lesotho law.
[92]
Without
a clear legal right,
[88]
international law is not triggered, as there is no expropriation.
[89]
The issue, in my view, is not whether the SADC tribunal would be
bound by the Lesotho court judgments. The question is whether, taking
into account the principle of subsidiarity in international law, the
SADC tribunal would show the attendant deference to the Lesotho
courts’ decisions.
[93]
It
has been recently held by the Constitutional Court in
Zuma
v Secretary of the Judicial Commission of Inquiry into Allegations of
State Capture, Corruption and Fraud in the Public Sector
Including
Organs of State and Others
:
[90]
‘
In
fact,
far
from international law being reified to some superior status,
crystallised as a structural, even constitutional, principle of
international law is the doctrine of subsidiarity, and, more
regionally-specific, the margin of appreciation doctrine. . . As a
principle,
subsidiarity recognises the centrality of State consent in
creating legal obligations and the exercise of discretion in binding
themselves
thereto. It is a manifestation of an understanding, at the
international level, that the main social function of international
law
is to supplement, not supplant, domestic law.
Thus,
latitude is granted to States, the conduits through which
international law is given effect, in recognition of the fact that
national institutions are better situated and equipped to implement
this law domestically. And, far from reifying international law
as
some ultimate paragon, when measuring a State’s compliance with
international obligations, international fora exercise restraint
and
defer to the measures adopted by the member State
.’
(My emphasis.)
[94]
It
was stated in
Ahmadou
Sadio Diallo (Republic of Guinea v Democratic Republic of the Congo),
Merits, Judgment
,
[91]
that ‘it is for each State, in the first instance, to interpret its
own domestic law. The Court does not, in principle, have the
power to
substitute its own interpretation for that of the national
authorities, especially when that interpretation is given by
the
highest national courts . . . Exceptionally, where a State puts
forward a manifestly incorrect interpretation of its domestic
law,
particularly for the purpose of gaining an advantage in a pending
case, it is for the Court to adopt what it finds to be the
proper
interpretation’. I deal with this issue more when I examine the
denial of justice question. On the strength of this authority,
as to
the question of whether the Rampai lease was void
ab
initio
,
the SADC tribunal would not undertake a new legal analysis of the
Lesotho law, but would defer to the Lesotho courts on this issue
unless exceptional reasons exist for it to interfere. The nuanced
issue proposed in the first judgment is that it would be up to
the
SADC tribunal to decide whether to evaluate the issues afresh or
confirm the analysis adopted by the domestic courts.
[95]
It
is important to note that, in advancing the proposition that the SADC
tribunal would be free to assess the facts afresh with no
preliminary
considerations or constraints (as long as expropriation is involved
or alleged), the appellants significantly placed
reliance on
international investment arbitration decisions which were made
pursuant to matters brought in terms of international
investment
treaties, including bilateral investment treaties and/or multilateral
investment treaties. However, the appellants’
claim before the SADC
tribunal is not premised on any bilateral or multilateral investment
treaty. Investment treaties bind states
that are members to those
treaties. They are directed at the overall aim of encouraging foreign
investment and strengthening the
parties’ mutual economic
relations. They define the nature of the investment. And for present
purposes, they tend to define what
constitutes expropriation, and the
requirement to pay compensation, as well as provide rights in
relation to those investments and
member states.
[92]
Such was found by the Singapore Court of Appeal in the
Swissborough,
Singapore Appeal Court
[93]
matter
when it said:
‘
In
any event, we doubt whether the Appellants even had a right to refer
to begin with. The Kingdom asserts that the SADC Treaty and
the
Tribunal Protocol are
not
investment protection instruments, and confer upon the Appellants no
enforceable right of access to the SADC Tribunal and no corresponding
obligation on the part of the SADC Member States to protect or defend
the existence of the SADC Tribunal. This submission, taken
to its
logical conclusion, would suggest that the right of investors to
refer a dispute to the SADC Tribunal did not even exist at
the time
the SADC Claim was brought. In our judgment, the SADC Treaty and the
Tribunal Protocol are indeed
not
investment
protection instruments, and there was indeed no substantive right to
refer. . . .’
[94]
[96]
As
already stated, in
Van
Zyl SCA
,
this Court found that the Rampai lease was not an investment
contract.
[95]
Reliance on the ICSID was therefore not helpful to the appellants’
cause. The SADC treaty upon which the appellants rely is not
an
international investment treaty and is not pleaded to be such by the
appellants, but as a treaty that generally protects human
rights and
the rule of law. The cases relied upon must accordingly be treated
with caution. This takes me to what I would term ‘preliminary
constraints’ that the SADC tribunal would have had to take into
account before it could get to assess the merits of the case.
Denial of justice and
exhaustion of local remedies
[97]
In
an attempt to get around the difficulty posed by the fact that the
existence of rights is assessed under the Lesotho law – and
in
terms of that law the Rampai lease was found to be void
ab
initio
,
which means there could be no expropriation under international law –
the appellants seek to rely on judicial expropriation. As
stated in
Van
Zyl SCA
,
even this type of expropriation requires there to be a right or a
title to start with. As mentioned before, even though the case
of
denial of justice was not before the court in
Van
Zyl SCA
,
it nevertheless stated that the existence of the right must still be
shown.
[96]
[98]
The
appellants have argued that the annulment of the Rampai lease by the
Lesotho courts, in itself, constituted a judicial expropriation,
which constitutes a violation of Lesotho’s international
obligations. Indirect expropriation based on a judicial decision has
been
recognised. However, in order for there to be judicial
expropriation there must be a denial of justice or some kind of
illegality
by the courts.
[97]
In
OOO
Manolium-Processing v Belarus
,
[98]
it was concluded that ‘[w]hile taking of property through the
judicial process could be said to constitute expropriation, the rules
and criteria to be applied for establishing the breach should come
from denial of justice’.
[99]
The
appellants refer to the case of
Saipem
SpA v People’s Republic of Bangladesh
[99]
(
Saipem
)
to advance an argument that a judicial act could result in an
expropriation where a domestic court’s ruling was tantamount to
a
taking of residual contractual rights arising from the investments.
Saipem
was discussed in
Swisslion
DOO Skopje v Macedonia
(
Swisslion
),
[100]
where it was pointed out that Saipem (the claimant in that case) had
itself recognised that ‘a predicate for alleging a judicial
expropriation is unlawful activity by the court itself’.
[101]
In that regard, the tribunal in
Swisslion
held:
‘
The
award [in
Saipem
]
recounts the claimant’s acknowledgement that it is “
an
illegal action of the judiciary
which has the effect of depriving the investor of its contractual or
vested rights constitutes an expropriation which engages the
State’s
responsibility”. This point, with which the respondent in that case
agreed, was accepted by the tribunal, which noted
that it concurred
“with the parties that expropriation by the courts
presupposes
that the courts' intervention was illegal. . .”
.’
[102]
[100]
As
observed in
Swisslion
,
viewed in its context, the tribunal’s finding, in
Saipem,
which favoured the claimant, was focused on the abusive manner in
which the Bangladeshi courts had intervened.
[103]
There, the tribunal had found the courts to have exercised their
‘supervisory jurisdiction for an end which was different from
that
for which it was instituted and thus violated the internationally
accepted principle of prohibition of abuse of rights’.
[104]
The tribunal in
Swisslion
accordingly concluded, in respect of the case before it, that
‘[s]ince there was no illegality on the part of the courts, the
first
element of the Claimant’s expropriation claim [was] not
established’.
[105]
[101]
A
similar approach was adopted by the tribunal in the more recent case
of
Infinito
Gold Ltd v Republic of Costa Rica
,
[106]
where it was held:
‘
.
. . The Administrative Chamber found that the 2008 Concession was
vitiated by a legal flaw that rendered it null and void
ab
initio
.
This means that the 2011 Administrative Chamber Decision merely
confirmed this legal status.
Had
this decision been rendered in bad faith, in order to deprive
Industrias Infinito of a validly held concession, it would have
been
open to the Tribunal to assess whether it was expropriatory.
However, this is not the case here: as discussed in Section VI.C.2.c
supra
,
the 2011 Administrative Chamber Decision cannot be characterized as a
denial of justice, nor was it fundamentally arbitrary or unfair.
It
was a bona fide decision of the Costa Rican Supreme Court that found
that Industrias Infinito did not hold valid rights under Costa
Rican
law. Accordingly, it cannot be characterized as an expropriatory
measure
.’
(My emphasis.)
[102]
Further,
the passage from the decision of
Standard
Chartered Bank
,
[107]
which the appellants rely on to submit that the SADC tribunal can
simply interfere without any illegality or denial of justice by
the
courts, in fact, starts with the tribunal’s agreement that ‘the
judiciary should not be implicated, or its acts be described
as
“judicial expropriation” simply because judicial decisions were
taken in error or may be considered aberrant’.
[108]
Clearly something more is required. Reference to ‘judicial
decisions that permit the actions or inactions of other branches of
the State and which deprive the investor of its property or property
rights’,
[109]
accentuates that there must be some form of abuse of power or illegal
action by the courts for there to be judicial expropriation
other
than resulting from denial of justice. The conduct of the judiciary
in this case was called into question and described as
being
injudicious and reckless by allowing an illicit and fictitious
sale.
[110]
In any case, to establish expropriation, it must be remembered that
the claimant needs to show
the
rights
it would otherwise enjoy have been deprived.
[111]
(My emphasis.)
[103]
The
weight of authority including that which is relied upon by the
appellants supports the view that for there to be judicial
expropriation,
there must have been some illegality or denial of
justice by the domestic courts. A denial of justice cannot arise from
a mere misapplication
of the law.
[112]
To get a foot in an international ‘investment’ tribunal, more is
required than an allegation of the misapplication of the law
by a
domestic court; the domestic courts
must have ‘misapplied the law in such an egregiously wrong way,
that
no honest
,
competent court could have possibly done so’.
[113]
(My
emphasis.). This is because an international tribunal is not a court
of appeal of last resort.
[114]
[104]
Therefore, absent an infringement of a
fundamental obligation of international law, international tribunals
are not there to scrutinise
whether court proceedings of member
states were free from error or defect. This is even if it were to be
shown that their decisions
were obviously wrong. Such incorrect
application of the law does not permit interference from an
international tribunal, except if
there is illegality or denial of
justice by the domestic courts. If this were not to be the standard
for international intervention,
one can imagine a flurry of cases,
brought by unsuccessful litigants who are unhappy with how the
domestic courts had applied the
law, to the SADC tribunal. This could
potentially undermine not only the sovereignty and independence of
states, but the principle
of subsidiarity as well as the doctrine of
finality which, in my view, forms part of the substratum of justice
and the rule of law.
[105]
After
the creation of the
Lesotho
Highlands Development Authority (LHDA)
by
statute in 1986 and the conclusion of the lease agreement in respect
of the Rampai area between Lesotho and Swissborough in August
1988,
it was envisaged that a dam would be built by November 1991 and the
area would be flooded, which would make it impossible to
mine. Before
the Lesotho courts, the dispute between the parties was whether ss 6
and 7 of the Mining Rights Act 43 of 1967 (Mining
Rights Act), which
required, among others, consultation with the Chiefs prior to the
granting of mineral rights, were abolished following
coup
de tats
,
which took place in Lesotho during the period of 1970 executed by
Prime Minister Chief Leabua Jonathan and in 1986 by Major General
Lekhanya. The matter served in the Lesotho high court before Chief
Justice Kheola. Evidence was led, which took more than 50 days
to
conclude, as illustrated in
Swissborough
Diamond Mines (Pty) Ltd and Another v Commissioner of Mines and
Geology and Others
.
[115]
The Lesotho high court declared the Rampai lease void
ab
initio
.
The basis for this finding, in summary, was that the office of the
King of Lesotho continued to exist both under statutory and customary
law, without break. As the office continued to exist, the
constitutional recognition and confirmation of the holder of the
office
continued to be valid, both under statutory and customary law.
The allocation of land or grant of rights in the land were the
function
of the King and Chiefs under customary law. These rights are
derived from customary law and not from the executive functions, and
such was confirmed by s 93(2) of the 1966 Constitution of
Lesotho,
[116]
which provided:
‘
(1)
The power to allocate land that is vested in the Basotho Nation, to
make grants of interests or rights in or over such land, to
revoke or
derogate from any allocation or grant that has been made or otherwise
to terminate or restrict any interest or right that
has been granted
is vested in the King in trust for the Basotho Nation.
(2)
The power that is vested in the King by subsection (1) of this
section shall be exercised by him and, on his behalf, by the Chiefs
in accordance with the provisions of this Constitution and any other
law and the King and the Chiefs shall, in relation to the exercise
of
that power, be subject to such duties and have such further powers as
may be imposed or conferred on them by this Constitution
or any other
law.’
[117]
[106]
On
appeal before a bench mainly composed of South African judges, the
Court of Appeal of Lesotho gave a detailed analysis of Lesotho’s
system of government, its history and the evolvement of various laws
and how they were affected by the respective coups.
[118]
It was accepted on behalf of Swissborough that the 1966 Constitution
had remained in force, but that the peremptory nature of the
s 6
requirements had fallen away with the 1970 and 1986 coups. The appeal
court found that while the 1966 Constitution put an end
to the King’s
unfettered powers, the Mining Rights Act was given continuity.
Section 6 dealt with how applicants for prospecting
and mining rights
made their applications. No different statutory provision was ever
made in 1970 or thereafter to regulate the procedure
for the making
and consideration of such applications.
[119]
[107]
The following were the key findings of the
court:
‘
.
. . [T]he dictates of both common sense and of deeply rooted
tradition enshrined in customary law concerning grants related to
land
point to prior consultation with, and agreement of, the relevant
Chiefs being an absolute necessity. The peremptory requirement of
section 6 of the Mining Rights Act that “the King and the Chiefs on
his behalf, may in accordance with the terms of a recommendation
of
the Mining Board and in the manner prescribed in this Act, but not
otherwise, grant mineral titles” is not inconsistent with
section
9(2) of the Lesotho (No.2) Order 1986.
To
be validly granted, an application for a mining lease must be dealt
with by the King and the Chiefs in the manner prescribed by
section 6
of the Mining Rights Act and the power vested in the Military Council
to overturn such a grant, should it not agree with
it, does not
render the compulsory procedures that are enjoined by section 6 of
the Mining Rights Act for validly obtaining the grant
inconsistent
with the provisions of section 9(2) of the Order
.
If
these section 6 procedures had become mere directory procedures the
Military Council would have been free to grant a mining lease
without
the application ever having been considered by the Mining Board or by
the Chiefs. Not only is such a conclusion impractical,
as well as
being contrary to the long established tradition that rights
pertaining to land fall to be dealt with by the Chiefs, but
nowhere
in the evidence was it ever suggested that this is how matters were
understood at the time. On the contrary, General Lekhanya
himself,
who was called as a witness by [Swissborough], said that “Without
the Council of Minister’s recommendations the Military
Council
would not approve any application”. (The Council of Ministers, as
set out above, was regarded by the Military Council as
the body which
was tasked with the functions of the Mining Board). Documents were
also produced which emanated, in 1988 and 1989,
from the Minister of
Water, Energy and Mining, addressed to the Mining Board, in which the
Minister wrote “The Mining Board may
wish to note that in terms of
section 6 of the Mining Rights Act No.43 of 1967, His Majesty the
King and the Chiefs on his behalf
may, in accordance with the advice
of the Mining Board, grant mineral titles. Therefore, consultations
with Principal Chiefs is mandatory.”
And in a Brief addressed by
the Attorney-General to the Minister of Law, Constitutional and
Parliamentary Affairs in 1988 the Attorney-General
wrote “the
Mining Rights Act 1967 lays down the conditions and procedures for
mining”.’
[120]
[108]
As
with the Lesotho high court, the appeal court found no evidence to
support allegations of conspiracy against the Lesotho
government.
[121]
I go to this level of detail to demonstrate that insofar as the
interpretation of the law is concerned, the Lesotho courts took time
to analyse the law and gave reasons in detail as to why they reached
the conclusions they did, based on their application of the
Lesotho
law. Whether they were wrong, or applied the law incorrectly is not a
mere entitlement, making it open for the SADC tribunal
to re-look at
the issues.
[109]
In order to disregard these decisions, the
SADC tribunal would have had to find that there was illegality
committed by the Lesotho
courts. The appellants, in their particulars
of claim, give a long list of instances where it alleges that the
Lesotho government
committed litigation misconduct. This is not
judicial expropriation. To try and entangle the courts to this
alleged misconduct, the
appellants tersely plead that the Lesotho
courts misconducted themselves by (a) sanctioning Lesotho’s
misconduct, (b) disregarding
the material evidence and applicable law
and (c) that ‘the President of the Lesotho Court of Appeal refused
to reopen the case
C of A (civ) 9/1999 following the discovery of the
LNDC leases after judgment was delivered in the Lesotho Court of
Appeal on 6 October
2000’.
[110]
The
Lesotho courts dealt with the conspiracy levelled against that
country. In fact, most
of
the days in the 54-day trial were dedicated to hearing the evidence
of conspiracy by Lesotho.
[122]
Six lever arch files containing between 1500 and 2000 pages were
placed before the trial court in Lesotho in pursuance of the
conspiracy
allegations. Subpoenas were issued to more than 109
witnesses, including one of the former South African State
Presidents, and erstwhile
Ministers. Of all the witnesses who were
subpoenaed only three were called, including General Lekhanya, who
was the appellants’
key witness, and who denied that there was any
conspiracy as alleged by the appellants.
[123]
[111]
The fact that the appellants do not like
the decision of the courts as regards the conspiracy allegations
against Lesotho does not
amount to judicial expropriation.
Furthermore, in an earlier matter arising from the same set of facts,
involving the same parties,
the Lesotho courts had called out the
government for its conduct of unilaterally cancelling the mining
lease and set Lesotho’s
decision aside. Lesotho’s misconduct
cannot be imputed to the judiciary to find judicial expropriation. In
an attempt to locate
the claim within the illegality realm, the
appellants make broad and vague allegations against the courts. How
the court sanctioned
such misconduct is not alleged.
[112]
Allegations
of lack of independence of the Lesotho courts are not made for the
first time in the current action either. They were
made by the
appellants and found to be spurious by the Singapore Court of Appeal,
given that the Court of Appeal and the High Court
of Lesotho both
‘struck down the Military Council’s 1992 revocation order.
Further, the domestic courts in the Kingdom had not
hesitated to be
“critical and dismissive of the actions of [their] own government
during the earlier stages” of the proceedings
in the Expropriation
Dispute’.
[124]
A similar rebuke was handed to Mr van Zyl and the then appellants by
Patel J.
[125]
While the court in
Van
Zyl SCA
had stated that the issue of denial of justice was not part of the
appellants’ case, it nevertheless found attacks made on judges
of
the Lesotho Court of Appeal to be without merit.
[126]
[113]
The appellants claim
that the President of the appeal court refused to reopen the case
after new evidence was discovered. To this
end, the respondents
raised an exception stating that, that allegation, among others,
lacked the necessary averments to sustain a
cause of action and/or
was vague and embarrassing. It was on this basis that the court a quo
was entitled to determine the matter
and make the findings which I
deal with below. As regards the appellants’ averments that they had
exhausted all available remedies,
the context in which those
allegations were raised, in my view, was in relation to the
non-availability or ineffectiveness of any
claim for damages.
According to the appellants, pursuing these legal proceedings would
be futile, because of the finding made by
the Lesotho courts that the
Rampai lease was void
ab
initio
; a
finding which would follow in respect of the other four remaining
leases. This explains the respondents’ exception raised in
relation
to this point, which I do not address in the judgment. To the extent
that the averments relating to exhaustion of local
remedies could be
read to include the allegations on new evidence, the particulars of
claim were excepted on the basis that they
lacked the necessary
averments to sustain the cause of action, as discussed below.
[114]
As found by the court a quo, what is
lacking in the particulars of claim is any description of the process
by which the appellants
sought to have the proceedings reopened. The
court a quo said:
‘
The
plaintiffs would have to allege and ultimately show that by denying
the plaintiffs a hearing or otherwise improperly frustrating
the
plaintiffs from having their case on the new material heard in
accordance with Lesotho law, Lesotho committed an international
wrong. If the then claimants did not follow the proper procedural
path to have their case on the new material heard, then the
plaintiffs
could not have been the victims of an international wrong.
And if the plaintiffs have not properly sought relief on the new
material
in the courts of Lesotho, then the plaintiffs are in the
position of having unutilised domestic remedies available to them. On
either
basis, their present claim, as formulated, must fail.’
[127]
[115]
Article 15 of the SADC tribunal’s
Protocol articulates the scope of the tribunal’s jurisdiction as
follows:
‘
SCOPE
OF JURISDICTION
1.
The Tribunal shall have jurisdiction over disputes between States,
and between natural or legal persons and States.
2.
No natural or legal person shall bring an action against a State
unless he or she has exhausted all available remedies or is unable
to
proceed under the domestic jurisdiction
.
3.
Where a dispute is referred to the Tribunal by any party the consent
of the other parties to the dispute shall not be required.’
(My
emphasis.)
[116]
In
Campbell
,
[128]
the SADC tribunal observed that the exhaustion of local remedies was
not unique to the Protocol. It referred to Article 26 of the
European
Convention on Human Rights, which provides that ‘[t]he Commission
(of Human Rights) may only deal with a matter after
all domestic
remedies have been exhausted, according to the generally recognised
rules of international law’. It also made reference
to Article 50
of the African Charter on Human and Peoples’ Rights, which states:
‘
The
Commission can only deal with a matter submitted to it after making
sure that all local remedies, if they exist, have been exhausted,
unless it is obvious to the Commission that the procedure of
achieving the remedies would have been unduly prolonged’.
[117]
The
rationale to exhaust local remedies through the local court system,
as stated in
Campbell
,
‘is to enable local courts to first deal with the matter because
they are well placed to deal with the legal issues involving
national
law before them. It also ensures that the international tribunal does
not deal with cases which could easily have been disposed
of by
national courts’.
[129]
[118]
It is
so, that exhaustion of internal remedies is not a bar to accessing
the SADC tribunal. However, this rule will only be relaxed
when the
municipal law offers no remedy or the remedy offered is
ineffective.
[130]
In
Campbell
,
the SADC tribunal dispensed with the requirement of internal
exhaustion, because 16B(2)
(a)
(i)
and (ii) of Amendment 17 of the Zimbabwean Constitution,
[131]
under which Campbell’s land was acquired, precluded judicial review
of any matter challenging acquisition of agricultural land
under the
relevant sections. It was clear in that case that there would be no
effective remedy available to Campbell before the Zimbabwean
courts.
[119]
In some
international courts the issue of exhaustion of internal remedies is
seen as a matter of admissibility rather than jurisdiction,
[132]
given that it may be a temporary impediment to the exercise of
jurisdiction. Whichever way this rule is characterised, the principle
is the same and it is as follows: in order for a dispute to be
entertained by the international tribunal, parties must show that,
in
the circumstances of their case, remedies in domestic courts would
have been unduly prolonged, ineffective or unavailable.
[133]
[120]
The appellants had
legal recourse in the Lesotho courts. This is on the basis, that new
evidence had come to light after the appeal
court judgment was handed
down, which was substantively
determinative
of the matter, such that it could
render
the prior judgment
erroneous, in
that it was made on old or incorrect or fraudulent facts or law, and
that a
gross
injustice and/or a patent error was brought upon the parties, or so
their contention might go.
[121]
In
Hippo
Transport (Pty) Ltd v The Commissioner of Customs and Excise and
Another
,
[134]
it was
held that the Lesotho appeal court had the power to review its
earlier decisions, in exceptional circumstances.
[135]
The
said power derived from s 123(4) read with s 118 of the
Constitution.
[136]
Circumstances
would be viewed as exceptional ‘only when gross injustice and or a
patent error has occurred in the prior judgment.
The
power of this court to review its own decisions
should therefore not
be a disguised rehearing of the prior appeal. It is therefore not a
disguised rehearing of the prior appeal,
going over it with a fine
comb for the re-determination of aspects of that judgment. It is
therefore not done for purposes other
than to correct a patent error
and or grave injustice, realised only after the judgment had been
handed down’.
[137]
[122]
The appellants cannot
claim to have properly and fully exhausted all possible avenues for
legal recourse through the judicial system
of Lesotho, unless and
until the parties have made application for a review of the impugned
judgment by the Court of Appeal of Lesotho.
This is especially
pertinent where the claim lies against the Lesotho government and
legal authorities themselves. This is so, as
it may provide the
opportunity for the new evidence to be fully ventilated in court,
where all relevant parties may have the chance
to challenge the new
evidence in reply, should the court deem this necessary. There is no
basis to have this alleged new evidence
aired for the first time in
the SADC tribunal without having given an opportunity to the Lesotho
courts to pronounce on it. It seemed
in argument that this allegation
of new material was a sole string that the appellants were pinning
their hopes on, to have the matter
returned in their favour by the
SADC tribunal.
[123]
Counsel for the appellants conceded in oral
argument that (from the reading of the particulars of claim) it did
not look like that
any application to reopen the case was ever
brought before the Court of Appeal of Lesotho.
It therefore cannot be assumed that
no justice would have been received, had that application been
brought. In
Van Zyl SCA
at para 80, it appears that the appellants wrote a letter to the
President of the Lesotho appeal court and
insisted
that he revoke the judgment
. He
refused, and his refusal was alleged to be further evidence of bias
of the Lesotho courts. Litigation is not conducted by way
of
correspondence. Writing a letter to the President of the Court of
Appeal, as appears to have been the case (a fact not even alleged
in
the particulars of claim), is not a process to reopen legal
proceedings. It would not be surprising that any such correspondence
would be met with a flat refusal or not be heeded to at all (this
would be the case in any court).
[124]
The alleged new evidence is that the
relevant Chiefs in Lesotho had transferred the land rights to the
Lesotho National Development
Corporation (LNDC), a Lesotho parastatal
organisation, during the period 1967 to 1972, and therefore they no
longer had any say on
the grantor of further rights to the land. It
is alleged that this was in compliance with the United Nations
General Assembly Resolution
1803 (XVII) of 14 December 1962 and that
Lesotho and other states took steps in terms of that resolution to
vest powers to grant
mining rights in the State. Accordingly, all
mining leases were correctly granted by the Lesotho government
without the need for
the Chiefs to consent.
[125]
No allegation is made
in the particulars of claim that the LHDA knew or must have known
about the alleged new evidence and that it
failed to disclose it in
the proceedings which resulted in the Lesotho judgments. The LHDA
appears to be a different organisation
to the LNDC. Such is apparent
from the particulars of claim. The transfer
is alleged to have been to the
LNDC and not the LHDA. The LHDA only
came into existence after the signing of the Lesotho Highlands Water
Project (LHWP) between
South Africa and Lesotho on 24 October 1986,
while the transfer to the LNDC is said to have taken place between
1967 and 1972. The
LHDA was set up to manage that part of the LHWP
that fell within Lesotho’s borders. No allegation is made that the
LHDA conspired
with Lesotho to hide the alleged new evidence. I
accordingly differ with the first judgment that the particulars of
claim could reasonably
be read to show deliberate actions by the LHDA
to suppress vital evidence in collusion with Lesotho.
[126]
As regards to the admission the respondents
are alleged to have made regarding the validity of the Rampai lease,
in my view, the reasonable
reading of the particulars of claim does
not bear this out. I differ with the first judgment that the
particulars of claim reveal
that in the pleadings before the SADC
tribunal, Lesotho admitted the validity of the Rampai lease. In the
particulars of claim, the
appellants allege that ‘Lesotho admitted
in the pleadings before the SADC tribunal that the rights were vested
as alleged by the
Claimants’. This is somewhat vague.
[127]
In their heads of argument, counsel for the
appellants submitted that this alleged admission is drawn from para
46 of the SADC claimants’
heads of argument, which is annexed to
the particulars of claim. According to this paragraph, what was
admitted by Lesotho in its
answering affidavit was: ‘
The
registration
of
the leases vested the stated rights in the 1st applicant
’.
In the founding affidavit, the claimants had alleged that they had
been granted mining rights by virtue of the registration of
the lease
and accordingly had rights flowing from that. It is clear that the
admission was solely directed at the fact that mining
leases were
lodged, granted, executed and registered in the Deeds Registry in
Maseru in 1986.
[128]
Since then the Rampai lease was found to be
null and void by the courts. Accordingly, no rights existed
therefrom. The meaning of
what was admitted is clear from the
appellants’ argument. Their contention is that the Rampai lease
vested
de facto
in Swissborough by virtue of the registration in the
Deeds
Registry and thus existed as a fact, producing legal consequences.
This was so, but only until set aside by the Lesotho courts.
[129]
In addition, on the
principle that pleadings must be considered as a whole,
[138]
the reading that Lesotho admitted the validity of the Rampai lease is
inconsistent with the stated defences imputed to Lesotho, the
gravamen of which is that failure to consult with the Chiefs prior to
the granting of the Rampai lease invalidated the mining lease,
as
found by the courts. Meaning, the appellants had no rights under
Lesotho’s domestic law. The pleadings and hence the appellants’
claims are geared at dislodging that alleged defence.
[130]
I agree with the first judgment that the
question of whether Lesotho admitted the validity of the Rampai lease
is relevant at the
trial stage. However, at this stage the question
asked is whether the particulars of claim, reasonably read, bear out
that admission.
In my view, they do not, as indicated above. As to
reference to the SADC pleadings, the portion relating to the
admission, allegedly
made therein, was sourced from the SADC tribunal
claim document annexed to the particulars of claim, to which counsel
for the appellants
referred. It is accordingly relevant in the
construal of the allegation in question.
[131]
In the end, the
issue in any event turns on the interpretation of the Lesotho law.
Assuming Lesotho had made an admission that the
Rampai lease was
valid, which in my view on the contextual reading of the pleadings it
did not, its admission does not change the
law, which is a matter for
the courts to determine.
[139]
Thus, I
am of the view that, on the reasonable reading of the pleaded case,
the SADC tribunal would not have held that there was expropriation,
judicial or otherwise.
Conclusion
[132]
In conclusion, I have found, firstly, that
the findings made in
Van Zyl SCA
were integral to the appellants’ current claim. Accordingly, the
court a quo was bound by them whether by extension of
res
iudicata
on the application of issue
estoppel or by precedent, as findings were made that were not only on
factual but legal issues similar
to those in the present case.
Secondly, the international principles and findings made in
Van
Zyl SCA
were in any event consistent
with international law and thus would have been similarly applied by
the SADC tribunal. Thirdly, the
SADC tribunal would have deferred to
Lesotho based on the principle of subsidiarity. It would also not
interfere, because before
it could do so denial of justice or some
illegality on the part of the domestic courts must be shown -
misapplication of the law
is not enough. In regard to the alleged
misconduct by the Lesotho courts, the particulars of claim lack the
necessary allegations
to disclose the cause of action, and no
allegations were made that an application was brought before the
Lesotho courts to introduce
new evidence. Accordingly, domestic
remedies were not utilised. Finally, on a contextual reading of the
particulars of claim, the
SADC tribunal would not have held that
there was expropriation. On those grounds, the court a quo was
correct to uphold the various
exceptions.
[133]
In the result, I would have dismissed the
appeal with costs including the costs of three counsel.
N P MABINDLA-BOQWANA
JUDGE OF APPEAL
Appearances:
For
appellants: M du Plessis SC
(with him T Ngcukaitobi SC and B Winks)
(heads also
prepared by M Chaskalson SC)
Instructed
by:
Couzyn Hertzog & Horak, Pretoria
Pieter Skein
Attorneys, Bloemfontein
For
respondents: N Maenetje SC (with him A
Coutsoudis and L Zikalala)
Instructed
by: State
Attorney, Pretoria
State
Attorney, Bloemfontein
[1]
Van
Zyl and Others v Government of Republic of South Africa and Others
[2007] ZASCA 109
;
2008 (3) SA 294
(SCA).
[2]
Law
Society of South Africa and Others v President of the Republic of
South Africa and Others
[2018] ZACC 51;
2019 (3) SA 30 (CC);
2019 (3) BCLR 329 (CC).
[3]
Fairlands
(Pty) Ltd v Inter-Continental Motors (Pty) Ltd
1972 (2) SA 270
(A) at 275F-H;
Theunissen
en Andere v Transvaal Lewendehawe Koop Bpk
1987 ZASCA 93
;
1988 (2) SA 493
(A) at 500D-E; and
Lewis
v Oneanate (Pty) Ltd and Another
[1992] ZASCA 174
;
1992 (4) SA 811
(A) at 817F-G.
[4]
J
Dugard and M du Plessis
Dugard’s
International Law: A South African Perspective
5 ed (2019) at 28; and 1
Lawsa
2
ed para 437.
[5]
Ibid p
31-37.
[6]
Ibid p
45-46.
[7]
See
Van
Zyl SCA
para
64.
[8]
Fose
v Minister of Safety and Security
[1997] ZACC 6
;
1997 (3) SA 786
(CC);
1997 (7) BCLR 851
para 60.
[9]
President
of the Republic of South Africa and Another v Modderklip Boerdery
(Pty) Ltd (Agri SA and Legal Resources Centre, Amici
Curiae)
[2005] ZACC 5;
2005 (5) SA 3 (CC);
2005 (8) BCLR 786 (CC).
[10]
Dugard
fn 4 at 201;
Bankswitch
Ghana Ltd v The Republic of Ghana acting as the Government of Ghana
(PCA
Case No.2011-10) (award save as to costs) paras 11.71 to 11.81.
[11]
Vestey
Group Limited v The Bolivarian Republic of Venezuela
(ICSID
Case No. ARB/06/04) (award) para 257.
[12]
Southern
Pacific Properties (Middle East) Limited v Arab Republic of Egypt
(ICSID
Case No.
ARB/84/3) (awards on the merits).
[13]
Ioannis
Kardassopoulos v Georgia
(ICSID Case No. ARB/05/18) (decision on jurisdiction) paras 193-194.
[14]
Van Zyl SCA
fn
1 para 64;
Vestey
Group Limited v Venezuela
,
supra para 257;
Cortec Mining Kenya
Limited, Cortec (Pty) Limited and Stirling Capital Limited v
Republic of Kenya
(ICSID Case No.
ARB/15/29) (award) para 319.
[15]
Vigotop Limited v
Republic of Hungary
(ICSID Case No. ARB/11/22) (award) para 583-584.
[16]
P
Muchlinski et al (2008)
The
Oxford Handbook of International Investment Law
at 1017;
Kardassopoulos
v Georgia
supra
para 146;
Burlington
Resources, Inc v Republic of Ecuador
(ICSID
Case No. ARB/08/5) (decision on liability) paras 410 and 419;
Luigiterzo
Bosca v Republic of Lithuania
(PCA
Case No. 2011-05) (award) para 163;
Vigotop
v Hungary
supra
para 508-509;
EDF
International S.A., SAUR International and León Participaciones
Argentinas S.A. v Argentine Republic
(ICSID
Case No. ARB/03/23) (award) paras 1130-1131;
Infinito
Gold Ltd v Republic of Costa Rica
(ICSID
Case No. ARB/14/5) (award)
para 359.
[17]
Amco Asia Corporation
and Others v Republic of Indonesia
(ICSID Case No. ARB/81/1) (award) para 177.
[18]
Footnote
15 supra.
[19]
Mr Franck Charles Arif
v Republic of Moldova
(ICSID Case No. ARB/11/23) (award).
[20]
Footnote 14 supra.
[21]
Footnote
14 supra.
[22]
Ibid
Cortec Mining
paras 222-223 and
363.
[23]
Ibid
Cortec Mining
para 333.
[24]
They pleaded: ‘23.12 Furthermore, Claimants had exhausted all
local remedies available in Lesotho, to no avail. In any event,
as
the claimants suffered a denial of justice in Lesotho and as the
pursuit of any local judicial remedies would have been futile,
no
further attempted exhaustion of local remedies was required under
international law as applied by the SADC Tribunal.
.
. .
30.14
In terms of international law as applied by the SADC Tribunal that
Tribunal would have been satisfied that Plaintiffs had
exhausted all
available domestic remedies alternatively that Plaintiffs were
entitled to rely on the futility exception and that
there was no
need to attempt to pursue any further domestic remedies in Lesotho.’
[25]
Rule 48.
[26]
Rule 49.
[27]
Rule 46.
[28]
Rule 2.
[29]
Saipem SpA v The
People’s Republic of Bangladesh
(ICSID Case No. ARB/05/7) para 129;
Standard
Chartered Bank (Hong Kong) Limited v United Republic of Tanzania
(ICSID Case No. ARB/15/41|) para 279.
[30]
Sistem Mühendislik
Inșaat Sanayi ve Ticaret A.Ş. v Kyrgyz Republic
(ICSID
Case No. ARB(AF)/06/1).
[31]
Footnote 16 supra
.
[32]
OOO
Manolium-Processing v The Republic of Belarus
(PCA
Case No. 2018-06) (final award) paras 536-537, where the
consequential point was made that the mere bona fide misapplication
of the law by a domestic court would not constitute the denial of
justice.
[33]
Footnote
16 supra. I
t
concluded: ‘The authorities cited above corroborate the Tribunal’s
majority conclusion that Costa Rica may incur international
responsibility as a result of the decisions of its courts even in
the absence of a denial of justice. The existence of such
responsibility
will depend on whether the requirements of the
various treaty standards, such as FET or expropriation, are met.’
[34]
Footnote 28 supra
.
[35]
Footnote 29 supra
.
[36]
Kommissaris van
Binnelandse Inkomste v Absa Bank Bpk
[1994]
ZASCA 144
;
1995 (1) SA 653
(A);
[1995] 1 All SA 517
(A) at 669F-G;
Prinsloo NO and Others
v Goldex 15 (Pty) Ltd and Another
[2012] ZASCA 28
;
2014 (5) SA 297
(SCA) paras 10 and 23.
[37]
Prinsloo NO v Goldex
supra paras 23-27;
Hyprop Investments Ltd
v NSC Carriers and Forwarding CC and Others
[2013]
ZASCA 169
;
2014 (5) SA 406
(SCA);
[2014] 2 All SA 26
(SCA) paras
20-23.
[38]
Van Zyl SCA
fn
1 para 60.
[39]
Ibid paras 6 and 51.
[40]
Ibid paras 76 and 81.
[41]
Ibid para 65.
[42]
Ibid para 65-72.
[43]
Ibid para 82.
[44]
Ibid para 86.
[45]
Ibid para 87.
[46]
Ibid para 91.
[47]
Ibid paras 48-49, 67-77.
[48]
See
Minister of Police
v Mboweni and Another
[2014]
ZASCA 107
;
2014 (6) SA 256
(SCA) paras 23 and 24; and
Komape
and Others v Minister of Basic Education
[2019]
ZASCA 192
;
2020 (2) SA 347
(SCA) para 58.
[49]
Minister of Law and
Order v Kadir
[1994]
ZASCA 138;
1995 (1) SA 303 (A); [1995] 1 All SA 457 (A).
[50]
Carmichele v Minister
of Safety and Security and Another (Centre for Applied Legal Studies
Intervening)
[2001]
ZACC 22
;
2001 (4) SA 938
(CC) para 80.
[51]
Ocean Echo Properties
327 CC and Another v Old Mutual Life Assurance Company (South
Africa) Limited
[2018]
ZASCA 9
;
2018 (3) SA 405
(SCA) para 8.
[52]
A C
Cilliers, C Loots and H C Nel
Herbstein
and Van Winsen: The Civil Practice of the High Courts and the
Supreme Court of Appeal of South Africa
5
ed (2009) at 632.
[53]
Ibid
at 630 and 632. ‘[I]t is the duty of the court, when an exception
is taken to a pleading, first to see if there is a point
of law to
be decided which will dispose of the case in whole or in part.’
(
Kahn
v Stuart
1942
CPD 386
at 391).
[54]
D E
van Loggerenberg
Erasmus
Superior Court Practise
(vol 2) 2 ed (2015) at D1-294.
[55]
In
Swissborough
Diamond Mines (Pty) Ltd and Another v Commissioner of Mines and
Geology and Others
(CIV/APN/394/91) [1999] LSHC 41 (28 April 1999) (
Swissborough
I
)
and in
Swissborough
Diamond Mines (Pty) Ltd and Another v Lesotho Highlands Development
Authority
[2000] LSHC 119; 1999-2000 LLR-LB 432 CA (01 January 2000)
(
Swissborough
II
).
[56]
Footnote
2 supra.
[57]
Van
Zyl and Others v Government of the Republic of South Africa and
Others
2005 (11) BCLR (11) 1106 (T) (
Van
Zyl HC
).
[58]
Van
Zyl SCA
footnote
1 supra para 44.
[59]
Van
Zyl SCA
para 37.
[60]
Van
Zyl SCA
para 62.
[61]
Van
Zyl SCA
para 64.
[62]
Ibid.
[63]
Panevezys-Saldutiskis
Railway (Estonia v Lithuania)
1939
PCIJ (Reports Series A/B) no 76.
[64]
Panevezys-Saldutiskis
Railway
para
73.
[65]
Van
Zyl SCA
para 64.
[66]
Ibid.
[67]
Van
Zyl SCA
para 65.
[68]
Van
Zyl SCA
para 66.
[69]
Van
Zyl SCA
para 67.
[70]
Van
Zyl SCA
para 68.
[71]
Van
Zyl SCA
para 69.
[72]
Van
Zyl SCA
para 70.
[73]
Van
Zyl SCA
para 71.
[74]
Convention
on the Settlement of Investment Disputes between States and
Nationals of Other States (ICSID), art 25(1).
[75]
Van
Zyl SCA
para 74.
[76]
Van
Zyl SCA
para 76.
[77]
Van
Zyl SCA
para 77.
[78]
Van
Zyl SCA
paras 76 and 77.
[79]
Van
Zyl SCA
para 91.
[80]
S v
Zuma and Another
[2021] ZAKZPHC 89;
[2022] 1 All SA 533
(KZP) para 157.
[81]
Mkhize
NO v Premier of the Province of KwaZulu-Natal and Others
[2018] ZACC 50;
2019 (3) BCLR 360 (CC).
[82]
Ibid
para 46.
[83]
Ibid
para 47.
[84]
Mike
Campbell (Pvt) Ltd and Others v Republic of Zimbabwe
SADC (T) Case No 2/2007 [2008] SADCT 2 (28 November 2008) at 57.
[85]
Campbell
at 17.
[86]
Swissbourgh
Diamond Mines (Pty) Ltd v Kingdom of Lesotho
[2018] SGCA 81
(27 November 2018) (
Swissborough,
Singapore Appeal Court
).
[87]
Ibid
paras 105 and 106. See also para 103 where the court held: ‘. . .
“[I]t is the municipal law of the host state that determines
whether a particular right
in
rem
exists,
the scope of that right, and in whom it vests. It is the investment
treaty, however, that supplies the classification of
an investment
and thus prescribes whether the right
in
rem
recognised
by the municipal law is subject to the regime of substantive
protection in the investment treaty”.’ See also United
Nations
Conference on Trade and Development (UNCTAD), Expropriation: A
Sequel (2012).
[88]
‘
Clear
title is a
title
free
of
claims
,
doubts, or
disputes
about
ownership
’
.
See Cornel Law School, Information Institute,
available
at:
https://www.law.cornell.edu/wex/clear_title
.
[89]
United
Nations Conference on Trade and Development (UNCTAD) Expropriation:
A Sequel (2012) at 22, available at:
https://unctad.org/search?keys=+EXPROPRIATION%3A+A+SEQUEL+-+UNCTAD
.
[90]
Zuma
v Secretary of the Judicial Commission of Inquiry into Allegations
of State Capture, Corruption and Fraud in the Public Sector
Including Organs of State and Others
[2021] ZACC 28
;
2021 (11) BCLR 1263
(CC) para 119.
[91]
Ahmadou
Sadio Diallo
(Republic
of Guinea v. Democratic Republic of the Congo), Merits, Judgment,
ICJ Reports 2010 p 639 para 70.
[92]
C
McLachlan, L Shore and M Weiniger
International
Investment Arbitration: Substantive Principles
2
ed (2017) Chapter 2 ‘The Basic Features of Investment Treaties’
at 26ff.
[93]
Footnote
86 supra.
[94]
Swissborough,
Singapore Appeal Court
para
146. See also
Barcelona
Traction, Light and Power Company Limited (Belgium v Spain)
(Judgment)
1970 ICJ Reports 3 para 63, where it was held that most cases in the
general arbitral jurisprudence ‘rested upon the
terms of
instruments establishing the jurisdiction of the tribunal or claims
commission and determining what rights might enjoy
protection; they
cannot therefore give rise to generalization going beyond the
special circumstances of each case’.
[95]
Van
Zyl SCA
para
74.
[96]
Van
Zyl SCA
para
77.
[97]
See A
Reinisch and C Schreuer
International
Protection of Investments: The Substantive Standards
(2020)
at 76-81.
[98]
OOO
Manolium-Processing v Belarus
,
(PCA Case No 2018-0), Final Award, 22 June 2021 para 591 referring
to M Paparinskis
The
International Minimum Standard and Fair and Equitable Treatment
(2013) at 208. See also
The
Loewen Group Inc and Raymond L Loewen v United States of America
(Award)
(ICSID Case No ARB(AF)/98/3), Award dated 26 June 2003 para 141,
where it was held ‘Claimant’s reliance on Article 1110
adds
nothing to the claim based on Article 1105. In the circumstances of
this case, a claim alleging an appropriation in violation
of Article
1110 can succeed only if Loewen established a denial of justice
under 1105’.
[99]
Saipem
SpA v People’s Republic of Bangladesh,
(ICSID Case No. ARB/05/07), Award, 30 June 2009.
[100]
Swisslion
DOO Skopje v The Former Yugoslav Republic of Macedonia
,
(ICSID Case No. ARB/09/16), Award, 6 July 2012.
[101]
Swisslion
para
313.
[102]
Ibid.
[103]
Swisslion
fn 377 therein.
[104]
Saipem
para
161.
[105]
Swisslion
para
314.
[106]
Infinito
Gold Ltd v Republic of Costa Rica
(ICSID
Case No. ARB/14/5) Award 3 June 2021 para 718.
[107]
Standard
Chartered Bank (Hong Kong) Limited v United Republic of Tanzania
(ICSID Case No. ARB/15/41) Award 11 October 2019.
[108]
Standard
Chartered Bank
para 279.
[109]
Ibid.
[110]
Standard
Chartered Bank
para 380.
[111]
Standard
Chartered Bank
para 277.
[112]
AMTO
v Ukraine
SCC Case No. 080/2005.
[113]
Arif
v Republic of Moldova
(ICSID
Case No ARB/11/23), IIC 585 Award 8 April 2013 para 442.
See also
Krederi
Ltd v Ukraine
(ICSID Case No. ARB/14/17) paras 442-490, which dealt with different
forms of violation of the fair and equitable standard through
unpacking of jurisprudence on denial of justice and its
interpretation of the various components through notable cases.
[114]
Krederi
Ltd v Ukraine
para
449.
[115]
Swissborough
Diamond Mines (Pty) Ltd and Another v Commissioner of Mines and
Geology and Others
(CIV/APN/394/91)
[1999] LSHC 41 (28 April 1999) (
Swissborough
I
).
[116]
Swissborough
I
at
21 and 28.
[117]
Swissborough
I
at
28-29.
[118]
Swissborough
Diamond Mines (Pty) Ltd and Another v Lesotho Highlands Development
Authority
[2000]
LSHC 119; 1999-2000 LLR-LB 432 CA (01 January 2000) (
Swissborough
II
).
[119]
Swissborough
II
at
440 and 441. The Lesotho Orders 1970, 1973 and 1986 which followed
the coups all had a s 3, which said the following:
‘
(1)
Subject to this Order, all laws which were enforceable in Lesotho
immediately before the coming into operation of this Order
shall
continue in full force and effect.
(2) Any existing law which is
inconsistent with this Order shall, to the extent of such
inconsistency, be void.
(3) This section is without
prejudice to any powers to make provision for any matter, including
the amendment or repeal of any existing
law.
(4) The existing laws shall,
from the coming into operation of this Order, be construed with such
modification, adaptations, qualifications
and exceptions as may be
necessary to bring them into conformity with this Order.’ (See
Swissborough II
at 441.)
[120]
Swissborough
II
at 445-446.
[121]
Swissborough
II
at
453.
[122]
Swissborough
I
at
257 and
Swissborough
II
at 451-453.
[123]
Swissborough
II
at
451-452.
[124]
Swissborough
,
Singapore
Appeal Court
para
222.
[125]
Van
Zyl HC
para 104.
[126]
Van
Zyl SCA
para 78.
[127]
Trustees
for the time being of the Burmilla Trust v Van Zyl and Others
[2020] ZAGPPHC 802;
[2021] 1 All SA 578
(GP) para 56.
[128]
Campbell
at
19.
[129]
Campbell
at 20. See also
Swissborough
,
Singapore
Appeal Court
para 210 where it was held ‘[t]he rationale for the requirement is
that “the State where the violation occurred should have
an
opportunity to redress it by its own means, within the framework of
its own domestic system” (Report of the International
Law
Commission on the work of its fifty-eighth session, Draft Articles
on Diplomatic Protection with commentaries, reprinted in
Yearbook of
the International Law Commission, 2006, vol II, Part Two, UN Doc
A/CN4/SERA/2006/Add1 (Part 2) (“the Draft Articles”
and “ILC
Commentary”) at p 71 (Draft Art 14, para 1), quoting the
Interhandel
case at 27)’.
[130]
Campbell
at 21.
[131]
Campbell
at 21, 37-41.
[132]
Swissborough
,
Singapore
Appeal Court
para 206.
[133]
Campbell
at 21.
[134]
Hippo
Transport (Pty) Ltd v The Commissioner of Customs and Excise and
Another
(C
of A (CIV) 06 of 2017) [2018] LSCA 5.
[135]
Ibid
para 20.
[136]
Ibid
para 21.
[137]
Ibid
para 22.
[138]
Nel
and Others NNO v McArthur
2003 (4) SA 142
(T) at 149F.
[139]
Potters
Mill Investments 14 (Pty) Ltd v Abe Swersky & Associates and
Others
[2016] ZAWCHC 5
;
2016 (5) SA 202
(WCC) paras 11-13.
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