Van Zyl and Others v Government of Republic of South Africa and Others (170/06) [2007] ZASCA 109; [2007] SCA 109 (RSA); [2008] 1 All SA 102 (SCA); 2008 (3) SA 294 (SCA) (20 September 2007)

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[2007] ZASCA 109
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Van Zyl and Others v Government of Republic of South Africa and Others (170/06) [2007] ZASCA 109; [2007] SCA 109 (RSA); [2008] 1 All SA 102 (SCA); 2008 (3) SA 294 (SCA) (20 September 2007)

Links to summary

THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
Case No: 170/06
In the matter between:
Josias
van Zyl
.......................
First Appellant
Josias van Zyl and Gail van Zyl
NNO
(cited in their capacities as
Trustees for the time being of
The
Burmilla Trust NO TMP 4027)
.......................
Second Appellant
Josias van Zyl and Gail van Zyl
NNO
(cited in their capacities as
Trustees for the time being of
The
Josias van Zyl FamilyTrust NO TMP 4028)
.......................
Third Appellant
Swissbourgh
Diamond Mines (Pty) Ltd
.......................
Fourth Appellant
Patiseng
Diamonds (Pty) Ltd
.......................
Fifth Appellant
Motete
Diamonds (Pty) Ltd
.......................
Sixth Appellant
Rampai
Diamonds (Pty) Ltd
.......................
Seventh Appellant
Matsoku
Diamonds (Pty) Ltd
.......................
Eighth Appellant
Orange Diamonds (Pty) Ltd
.......................
Ninth Appellant
and
The
Government of the Republic of South Africa
.......................
First Respondent
The President of the Republic of South Africa
.......................
Second Respondent
The Minister of Foreign Affairs of the Republic of South Africa
.......................
Third Respondent
The Deputy Minister of Foreign Affairs of the Republic of South
Africa
.......................
Fourth Respondent
Coram :
Harms
ADP, Heher, Cachalia JJA, Hurt and Mhlantla AJJA
Heard :
21 and 22 August 2007
Delivered :
20 September 2007
Summary:
Public international law ─ diplomatic
protection
Neutral Citation:
This judgment may be referred to as
Van Zyl v Government of
RSA
[2007] SCA 109 (RSA)
JUDGMENT
HARMS ADP
INTRODUCTION
[1] 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.
1
[2] The appellants requested the Government of the RSA to provide
them with diplomatic protection against the Government of Lesotho.
The international delict on which they relied was the cancellation
and revocation of five mineral leases that had been granted by
the
Government of Lesotho.
[3] The President of the RSA was advised that the Government was
under no obligation to afford diplomatic protection to the
appellants;
that any decision to intervene would involve a policy and
not a legal decision; that the decision is the sole prerogative of
the
Government; that the disputes between the appellants and the
Government of Lesotho had been decided by the Lesotho courts; that
mediation
or intervention by the Government would imply a lack of
faith in the judicial system of a sovereign state; and that
diplomatic intervention
would set an unhealthy precedent. The
President in the result refused to accede to the appellants’
request and they were informed
that they were not, in the
circumstances of the case, entitled to diplomatic protection.
[4] Dissatisfied with this ruling, the appellants sought to review
the Government’s decision. They also applied for a mandamus
directing the Government ‘to take all steps necessary to
vindicate the rights of the applicants, including but not limited
to
providing diplomatic protection.’ The application was heard by
Patel J in the Pretoria High Court. He dismissed the application
but
granted leave to appeal to this Court.
[5] Courts should act with restraint when dealing with allegations of
unlawful conduct ascribed to sovereign states.
2
Unfortunately, in order to decide this case it is necessary to deal
with the allegations made by the appellants to determine whether
or
not Patel J was correct in dismissing their application.
[6] This judgment holds that the appellants have no right under South
African law to diplomatic protection, especially not in respect
of
protection of a particular kind. Nationals have a right to request
Government to consider diplomatic protection and Government
has a
duty to consider it rationally. Government received the request,
considered the matter properly and decided to decline to act
on
rational grounds. This judgment further holds that the Government is
not entitled under international law to afford the appellants
diplomatic protection under the particular circumstances of the case.
Accordingly, the appeal stands to be dismissed.
THE PARTIES
[7] There are nine appellants but the driving force behind the
litigation is the first appellant, Mr Josias van Zyl. He and his wife
are in their capacity as trustees of two trusts, the Burmilla Trust
and the Josias van Zyl Family Trust, the second and third appellants
respectively. Both trusts are registered in South Africa. Mr and Mrs
van Zyl are South African citizens.
[8] There are six corporate appellants, all companies incorporated
and registered in Lesotho. The important one is Swissbourgh Diamond
Mines (Pty) Ltd. The issued shares in Swissbourgh belong to Mr van
Zyl (5%), Burmilla Trust (90%) and the family trust (5%). Swissbourgh
holds 99% of the shares in the other companies and the family trust
holds the remaining 1%. The mineral leases were all held by
Swissbourgh
and the other appellant companies derived their interests
from Swissbourgh by means of tributary agreements (effectively
sub-leases).
Because of this it will not be necessary to distinguish
between the appellant companies and references to Swissbourgh will
usually
be in a generic sense to include a reference to all or most
of the appellants. All the directors are also South African citizens.
[9] The respondents are, respectively, the Government of the RSA, the
President, the Minister of Foreign Affairs and, last, the Deputy
Minister. It is for purposes of the judgment not important to
distinguish between them and I shall refer to them (unless the
context
requires otherwise) as the Government. I also do not intend
to distinguish between the State and the Government and will use the
terms interchangeably.
THE HISTORY
[10] This case has a long and convoluted history. The appellants
displayed an obsessive attention to peripheral facts and factoids
and
their affidavits raise speculation to the level of fact and
thereafter raise argument based on the speculation.
3
And as in the
Kaunda
case, this case has been complicated by
the appellants’ excessive demands and the form in which the
notice of motion was framed.
4
In what follows I intend to limit myself to the salient facts. They
are briefly related at this juncture to set the stage for a more
detailed discussion where and when required.
[11] The RSA and the Kingdom of Lesotho concluded a treaty concerning
the Lesotho Highlands Project on 24 October 1986. The main
purpose of
the project was to supply water to the Witwatersrand from a dam that
had to be built in Lesotho. Joffe J in previous proceedings
between
the appellants and the Government dealt with the detail of the treaty
and what he said need not be repeated.
5
During June 1988, construction operations by the Lesotho Highlands
Development Authority, a Lesotho statutory body established pursuant
to the treaty, began in the Rampai area.
[12] Shortly thereafter, on 4 August 1988, the Government of Lesotho
and Swissbourgh entered into five mining leases. One of these
leases
covered the Rampai area in the basin of the proposed dam. The terms
of the Rampai lease are typical. The lease was entered
into in
Lesotho in terms of s 6 and 15 of the Lesotho Mining Rights Act,
1967. The Commissioner of Mines represented the Basotho
Nation and Mr
van Zyl represented Swissbourgh. Swissbourgh obtained the sole right
to prospect for and mine and dispose of precious
stones within the
Rampai area for a period of ten years with a right of renewal for a
further five years. Swissbourgh had to pay
the Government of Lesotho
a yearly rental of R13 600 (R100 per square kilometre) and a royalty
of 14% on the value of the stones
recovered. The agreement contained
an arbitration clause. The lease had to be registered in terms of the
Mining Rights Act, which
happened soon thereafter. (For purposes of
the rest of the judgment a distinction will be drawn between the
Rampai lease and the
other four because of subsequent events.)
[13] The Authority proceeded with its work on the dam project until
July 1991 when Swissbourgh obtained an interim interdict against
the
Authority preventing it from performing any work within the Rampai
area. The rule was subsequently discharged by agreement but
the final
determination of the application was kept in abeyance pending
settlement negotiations.
[14] Faced with the consequences of a grant of competing rights to
Swissbourgh and the Authority as well as a breach of its treaty
obligations, the Government of Lesotho took a number of steps which
the Lesotho courts in due course found were unlawful.
6
These acts form the crux of the appellants’ complaints against
the Government of Lesotho.
[15] The first step was the cancellation by the Commissioner of Mines
of all the mining leases. This enabled the Authority to rely
on the
cancellation of the Rampai lease as a defence to the interdict
application. (The other leases did not affect the construction
activities.) However, on 20 November 1991, the court, at the behest
of Swissbourgh, on an interim basis set aside the cancellation
of the
mining leases by the Commissioner. It also issued an interim
interdict preventing the Authority from proceeding with its dam
construction activities within the Rampai area. One may assume that
this order must have had a devastating effect on the construction
activities of the Authority.
[16] In another attempt to undo the mining leases the governing
Military Council issued the ‘Revocation of Specified Mining
Leases Order’ of 20 March 1992. This executive order revoked
the five mining leases of Swissbourgh; provided that no person
would
be entitled to compensation for loss or damage as a result of the
cancellation; and prohibited the institution of any legal
proceedings, including arbitration proceedings, resulting from or in
connection with the order or the cancellation of the leases.
[17] Another application to court followed immediately, this time for
an order setting aside the revocation order and for another
interim
interdict.
7
Swissbourgh was successful and Cullinan CJ in his judgment of
September 1994 had some harsh words about the actions of the
Government
of Lesotho, especially for the disrespect for the
Constitution and the negation of the rule of law.
[18] The subsequent appeal was not successful. During January 1995
the Court of Appeal held that the revocation order was in conflict
with the provisions of the Lesotho Human Rights Act and consequently
void.
8
The appeal against the interim interdict, however, succeeded on the
ground that Cullinan CJ had not exercised a proper discretion.
The
balance of convenience, the court found, did not favour Swissbourgh
and that an award of damages would compensate Swissbourgh
adequately.
Swissbourgh was given time to do exploratory work in the Rampai area
to quantify its damages.
9
[19] During March 1995, the Government of Lesotho and the Authority
conceded that the cancellation of the mining leases by the
Commissioner
had been invalid. The Authority nevertheless lodged a
counter-application for a declaration that the Rampai lease had been
void ab
initio because the required formalities had not been
followed. The court consequently set the cancellation aside and
referred the
validity issue for oral evidence. This led to a 58-day
trial before the Chief Justice, Mr Justice Kheola.
[20] Kheola CJ found against Swissbourgh on 28 April 1999, holding
that the Rampai lease was void ab initio. Swissbourgh appealed
to the
Court of Appeal but the appeal was dismissed on 6 October 2000.
10
The reasons are fairly basic. According to Lesotho customary law all
land belongs to the Basotho Nation; this principle is entrenched
in
the Lesotho Constitution; any grant of rights in relation to land
required the consent of the relevant Chiefs; since its promulgation
the Lesotho Mining Rights Act, 1967 (under which the mineral leases
were granted) required the Chiefs’ consent for the grant
of
mineral rights; and the evidence established that no consent had been
sought or granted.
11
The Rampai lease was accordingly void.
[21] Less than three weeks later the appellants made the initial
request for diplomatic protection, which led to these proceedings.
[22] It is convenient to mention two intervening matters. The first
relates to the other four leases that were not involved in the
Rampai
appeal. Faced with the revocation order, which denied it access to
court, Swissbourgh decided to regard the Government of
Lesotho’s
denial of the validity of these leases as a repudiation of contract
and to accept the repudiation, thereby bringing
to an end any
contractual relationship between the parties. (Notably, probably for
tactical reasons, Swissbourgh did not cancel the
Rampai lease.) On 25
October 1993, Swissbourgh instituted action claiming R 930m damages.
There was an additional claim of R 15m
in respect of physical damage
to plant and equipment.
[23] On 16 September 1994, Swissbourgh ceded its rights in respect of
the pending action and the contractual and delictual damages
claims
to Burmilla Trust. Although the rights were valued at R2 637m, the
consideration was a mere R1 000. Burmilla Trust has not
yet been
substituted as plaintiff and the action has not been pursued. Another
action relating to the same or similar causes of action
was
instituted during May 1996 by Swissbourgh. This action is also in
limbo.
[24] Two years later Swissbourgh entered into another cession
agreement with Burmilla Trust in amplification of the first one. It
ceded all Swissbourgh’s claims against the Government of
Lesotho in the event of a declaration that any of the mining leases
were invalid.
[25] The second set of intervening facts concerns the adoption of
legislation by the Government of Lesotho to place matters on a
proper
legal footing and to comply with its national and, coincidentally,
its international obligations especially in relation to
the treaty
with the RSA. The Lesotho Act 5 of 1995, which came into effect on 16
August 1995, provided for the expropriation by the
Authority of
mineral rights for purposes of the water project. Thus far the
Authority had been entitled to take ‘land’
and pay
compensation but the initial legislation did not deal with mineral
rights and did not have adequate compensation provisions.
This Act,
however, provided for full compensation, properly determined, in
respect of any such expropriation to a person in whose
favour a ‘duly
granted and executed mineral right’ was registered. Pursuant to
this Act, the Authority purported to expropriate
the Rampai lease on
17 August 1995 but in the light of the Rampai judgment expropriation
was unnecessary because there was nothing
to expropriate.
[26] On the same day another piece of legislation was promulgated,
namely Lesotho Act 6 of 1995. It validated certain dam construction
activities of the Authority ‘subject to any accrued or vested
right to damages’. Again, as a result of the Rampai judgment
Swissbourgh had no accrued or vested rights, at least not in relation
to the Rampai lease.
THE REQUEST FOR DIPLOMATIC PROTECTION
[27] The first request for diplomatic protection was made per letter
of 25 October 2000 to the Department of Foreign Affairs. It
relied on
the unlawful revocation of the mineral leases during 1992 and the
destruction and confiscation of assets by the Government
of Lesotho.
12
The appellants also complained about corruption ‘at the highest
level’ in the Government of Lesotho. In addition they
alleged
that Swissbourgh had suffered a miscarriage of justice at the hand of
the Lesotho courts. The appellants further said that
they had ‘no
faith in the independence and impartiality’ of the Lesotho
courts
13
and they ‘rejected’ the Rampai judgment because the
judges were ‘specially appointed’ and their analysis
of
the evidence and their findings were ‘one-sided and manifested
bias.’
[28] The next letter of consequence was dated 8 December 2000. Before
dealing with its terms it is necessary to contextualise it.
During
1993, Swissbourgh instituted action against the Government of the RSA
for damages suffered as a result of the loss of their
leases. The
particulars of this action (and a related action against a local
statutory body) need not be mentioned – they are
to be found in
the judgment of Joffe J. In summary, Swissbourgh alleged that the
Government of the RSA interfered unlawfully with
its mining rights,
which caused it to suffer damages of R 945m. Swissbourgh, in
addition, claimed R 507,8m from the statutory body
on similar
grounds. The unlawful interference, according to the particulars of
claim, was done with the improper motive of obtaining
an unlawful
advantage for the joint water supply venture. The defendants in that
case allegedly ‘procured’ (followed
by ten alternatives)
the unlawful interference with Swissbourgh’s rights by the
Government of Lesotho.
[29] The conspiracy issue also formed part of the case before Kheola
CJ and was the main reason for the length of the trial. He found
that
the allegations were without any merit and made a special costs order
against Swissbourgh. The Court of Appeal did not consider
the merits
of the issue because it became irrelevant in the light of the finding
that the Rampai lease was invalid.
[30] During 1995, Mr van Zyl approached the RSA Government with
settlement proposals. This elicited a letter from the State Attorney
written on the instructions of the Minister of Water Affairs (under
whose jurisdiction the dam project fell), dated 15 May 1995.
It is
necessary to quote from the letter: 3/136
‘
The Minister is in principle
not averse to endeavours aimed at settling legitimate claims against
the Government.’
‘
The manner in which you have
conducted the pursuit of your interests as you perceive them, has,
however, created the firm impression
that you set out to coerce the
Republic of South Africa to meet a claim which you may or may not
have against the Government of
the Kingdom of Lesotho and the
Lesotho Highlands Development Authority. This you set out to do
inter alia
by calling upon the
international community to take up your perceived cause against the
Government of the Republic of South Africa,
by widely publicizing
allegations of immoral collusion and improper conduct on the part of
the Government and by making similar
allegations in respect of the
present Government in your recent correspondence to the Minister.’
‘
You have indeed succeeded in
creating a situation where you have offended the dignity of the
Republic of South Africa, not only
under the previous Government,
but also under the present one. The dispute is thus no longer a
simple commercial dispute. Settlement
of the actions with you may
amount to an acknowledgement of the veracity of your allegations and
may compromise the credibility
of the present Government, not only
in its international relations with the Kingdom of Lesotho, but also
with the other states
and international institutions whose
assistance you sought to muster.’
‘
As long as you persist in
your allegations of improper collusion between the Government of the
Republic of South Africa and the
independent and sovereign Kingdom
of Lesotho, no advances of settlement can be entertained.’
‘
Should you withdraw the
actions as well as the offensive allegations against the Government
of the Republic of South Africa unreservedly
and publicly, my
Government may find itself in a position where it may consider
attempts to facilitate mediation of the various
disputes between
yourself and the Government of the Kingdom of Lesotho and the
Lesotho Highlands Development Authority.’
‘
As matters presently stand
this is, however, impossible without prejudicing the dignity of the
Government of the Republic of South
Africa and its credibility in
the international community.’
[31] The appellants rejected the suggestion that they withdraw the
allegations; instead, as mentioned, they proceeded to conduct
a
lengthy trial in order to prove the allegations of collusion and they
harassed the Government in the local litigation as appears
from the
judgment of Joffe J. During July 1999 (shortly after the judgment of
Kheola CJ), Mr van Zyl went yet further: he submitted
a voluminous
request for an inspection by the World Bank (a financier of the
scheme) alleging that the Bank, the RSA Government,
the Government of
Lesotho and the Authority were involved in the ‘patently
unlawful acts’ surrounding the water project
and the leases.
[32] Having lost the Rampai appeal the appellants in the mentioned
letter of 8 December 2001, rather cynically relied on the promises
contained in the State Attorney’s letter; they withdrew the
South African actions and the allegations ‘in respect of
the
ANC government’s involvement’ in an unlawful conspiracy;
and they released a press statement apologising to Government.
[33] The next letter of importance, dated 15 December 2000, argued
the existence of a ‘right to diplomatic protection’
under
the Constitution at length (an assertion repeated in later
correspondence) and submitted that ‘the State is under a
constitutional
obligation to provide diplomatic protection to its
citizens’. The letter also requested the Government to ‘act
in terms
of its undertaking’ contained in the letter of the
State Attorney.
[34] The appellants insisted that Government should provide them with
diplomatic protection by mediating the dispute and convincing
the
Government of Lesotho to pay a ‘settlement’ amount of R
85,4m with interest within a given period. Otherwise Government
had
to institute legal proceedings against the Government of Lesotho in
an international court or arbitration tribunal for payment
of some R1
812,5m with interest on the appellants’ behalf.
[35] In spite of its refusal to grant the request, the Government
sent a Note Verbale to the Government of Lesotho, informing that
government of the complaint. The Government of Lesotho did not
respond but its view appears forcefully from a letter dated 19
November
2001, by its attorneys to Swissbourgh in response to a
parallel paper campaign against the Government of Lesotho. It
rejected the
allegations in no uncertain terms, stating that a number
of premises of the arguments put forward were, to the knowledge of
the claimants,
fundamentally flawed; that the attacks on the
judiciary were scurrilous; and that there was no prospect of any
settlement. (A copy
of the letter is annexed to this judgment.) This
six page letter drew a reply of 138 pages from Mr van Zyl. The
Government of Lesotho
responded by reiterating that it would not
submit to any form of arbitration, international or otherwise.
THE COURT APPLICATION
[36] Review applications, in the ordinary course of events, have to
be brought under Uniform rule 53 (unless covered by the
Promotion of
Administrative Justice Act 3 of 2000
– PAJA). This one was not,
and the failure to follow the rule caused much aggravation.
[37] The founding affidavit of Mr van Zyl set out the nature of the
application under a separate heading. He relied on a violation
of the
appellants’ rights by the cancellation of the mining leases
without payment of compensation (and nothing more). This,
he said,
constituted an expropriation that did not comply with minimum
international standards. The Government of Lesotho was accordingly
obliged to pay the appellants some R 3 089m damages.
[38] Mr van Zyl proceeded to say, as foreshadowed in the
correspondence, that the appellants have ‘a constitutional
right to
diplomatic protection’ and that the Government has ‘a
corresponding obligation to provide such protection’; the
issue
(he said) was the failure of Government to exercise its power in a
constitutionally permissible manner; the decision was irrational
because it was based on a wrong understanding of its legal
obligation; and that the merits of the disputes with the Government
of
Lesotho were not directly in issue.
[39] Then followed 70 pages of ‘history and background’
interspersed with legal argument. Two aspects need to be noted.
The
first concerns the Lesotho courts. After alleging that the appellants
had exhausted their local remedies, Mr van Zyl proceeded
to state
(contrary to the line taken in the preceding correspondence) that the
application was not ‘a reflection on the integrity
of any of
the judges in the Courts of Lesotho’ or on those courts. The
second is a one-liner based on the State Attorney’s
letter of
15 May 1995: this letter allegedly gave the appellants a legitimate
expectation that the Government would afford them diplomatic
protection should they withdraw their South African litigation,
something they had now done.
14
[40] Attached to the founding affidavit are about 850 pages of
exhibits. The allegations contained in these annexures were not
confirmed
in the founding affidavit and are therefore not evidence.
Mr van Zyl and his legal advisers knew that it is not open to a party
merely
to annex documentation to an affidavit and during argument use
its contents to establish a new case. A party is obliged to identify
those parts on which it intends to rely and must give an indication
of the case it seeks to make out on the strength thereof.
15
The fact that the appellants again have ignored the procedural rules
dealt with by Joffe J is probably due to Mr van Zyl’s
belief,
as he said during argument, that fifty per cent of all court rules
are unconstitutional and can be ignored.
[41] The main affidavit in answer was by the Deputy Minister, Mr Aziz
Pahad. It dealt in 91 pages with the appellants’ right
to
diplomatic protection and with the decision of Government in response
to the request. He added that Mr van Zyl had failed to disclose
five
material facts. These facts, according to the deponent, went to the
heart of the application.
[42] This elicited a replying affidavit of about 550 pages and
annexures of some 1700 pages. The main ‘justification’
proffered was that Mr van Zyl indeed had disclosed the five material
facts in the founding affidavit. In other words, this mass of
material was required to underpin five common cause facts. One
illustration should suffice. Mr Pahad alleged that the cession of
Swissbourgh’s claims to Burmilla Trust was material and had not
been stated in the founding affidavit. Mr van Zyl took Mr Pahad
to
task because, he pointed out, the fact of the cession appeared from a
note on two of the annexures to the founding affidavit.
Instead of
admitting the cession and giving the reference, Mr van Zyl now sought
to traverse new ground. In addition, Mr van Zyl
resurrected the
conspiracy case in the reply because, he said, of the Government’s
allegations concerning his failure to disclose
material facts. He
also attacked the Government’s decision on new grounds.
[43] The Government applied for the striking out of major parts of
the reply as either new matter or as otherwise objectionable,
namely
being scandalous, vexatious, irrelevant or inadmissible.
THE PROCEEDINGS IN THE TPD
[44] During the hearing before Patel J, the appellants were
represented by three counsel. Patel J granted the Government’s
striking out application and dismissed the appellants’
application. His judgment dealt in great detail with all the legal
issues
raised. As will appear in the course of this judgment, I agree
in general terms with his reasoning but I do not find it necessary
to
decide all the issues he did.
[45] It is convenient to deal at this stage with the application to
strike out. Both sides filed lengthy heads dealing with each
and
every finding made by Patel J. The learned judge, it should be noted,
took great pains to analyse the complaint. I do not think
that a
court of appeal could reasonably be asked to redo an exercise
concerning an interlocutory matter, especially in the circumstances
of this case. Schutz JA once made these pointed remarks:
16
‘
There
is one other matter that I am compelled to mention – replying
affidavits. In the great majority of cases the replying
affidavit
should be by far the shortest. But in practice it is very often by
far the longest – and the most valueless. It was
so in these
reviews. The respondents, who were the applicants below, filed
replying affidavits of inordinate length. Being forced
to wade
through their almost endless repetition when the pleading of the case
is all but over brings about irritation, not persuasion.
It is time
that the courts declare war on unnecessarily prolix replying
affidavits and upon those who inflate them.’
[46] A reply in this form is an abuse of the court process and
instead of wasting judicial time in analysing it sentence by sentence
and paragraph by paragraph such affidavits should not only give rise
to adverse costs orders but should be struck out as a whole.
Since I
am of the view that Patel J should have taken that route
mero
motu
, I am not going to deal with those few instances where he
quoted a wrong paragraph number (one of the grounds, as I understood
from
what Mr van Zyl volunteered during argument, that led to a
complaint to the Judicial Services Commission against the late judge)
or erred. I shall nevertheless have regard to the reply to the extent
that it contains relevant and admissible material that impacts
on the
merits of the case.
17
THE HEARING IN THE SCA
[47] It is unfortunately necessary to say something (but not all)
about the appeal hearing. Mr Redelinghuys, an attorney with the
right
of appearance, appeared for all appellants excepting Mr van Zyl. Mr
Redelinghuys knows the case because he was Swissbourgh’s
attorney in Lesotho. Mr van Zyl argued in person but chose to follow
Mr Redelinghuys.
[48] The heads of argument filed by the appellants ran to 530 pages.
A few days before the hearing, without explanation, another
set of
325 pages was filed.
18
After a short and well prepared introductory argument, Mr
Redelinghuys proceeded to deal with the additional heads. His main
point
was that the appellants had suffered a denial of justice at the
hands of the Lesotho courts. The nub of the argument was that
‘national
legal systems can be judged objectively for acts and
omissions of its courts with respect to aliens’ and that ‘a
state
incurs international responsibility if it administers justice
to aliens in a fundamentally unfair way’. He relied on art 10
of the Universal Declaration of Human Rights, which provides that
‘
everyone
is entitled in full equality to a fair and public hearing by an
independent and impartial tribunal, in the determination
of his
rights and obligations and of any criminal charge against him.’
[49] Mr Redelinghuys was asked on what basis could he argue this
point since it did not form part of the case set out in the founding
affidavit – indeed, the case of the appellants was, as
mentioned, that the application was no reflection on the Lesotho
courts
– nor was it the case in the high court or in the main
heads of argument. He sought in response to rely on unsupported
allegations
made against the judiciary in the attached correspondence
to which he added
ex cathedra
allegations. It was pointed out
to Mr Redelinghuys that he, as an officer of the court, could not
make submissions that do not have
an evidential basis. Mr
Redelinghuys subsequently retracted and abandoned the point.
[50] This gave Mr van Zyl the opportunity to attack this Court for
having already decided the case; to lecture the Court about justice;
and to renew the attack on the Lesotho judiciary.
19
Those courts, he said, were not only biased, they were manipulated.
Mr van Zyl was given more than one opportunity to identify the
passages in the record where the allegation of a denial of justice
had been made. He did not. I do not wish to belabour the point.
Although the failure of justice was raised in the preceding
correspondence, the appellants deliberately chose to omit it as a
cause
of complaint from the founding affidavit and, apart from a
generalised statement, also from the replying affidavit. The
appellants
are not entitled in this manner to resurrect an abandoned
case.
20
THE REVIEW
[51] The approach to Government and the Government’s response
occurred before the Constitutional Court delivered the
Kaunda
judgment,
21
which brought some clarity on the issue of the right to diplomatic
protection. For purposes of this case the following principles
there
set out are relevant:
Traditional international law acknowledges that states have the
right to protect their nationals beyond their borders but they
are
under no obligation to do so (para 23).
Diplomatic protection is not recognised by customary international
law as a human right and cannot be enforced as such and it remains
the prerogative of the state to exercise it at its discretion (para
29).
It would be inconsistent with the principle of state sovereignty for
South Africa to assume an obligation that entitles its nationals
to
demand, and obliges it to take action to ensure, that laws and
conduct of a foreign state and its officials meet not only the
requirements of the foreign state’s own laws, but also the
rights that our nationals have under our Constitution (para 44).
Although there is no enforceable right to diplomatic protection,
South African citizens are entitled to request South Africa for
protection under international law against wrongful acts of a
foreign state and the citizen is entitled to have the request
considered
and responded to appropriately (para 60).
The entitlement to request diplomatic protection flows from
citizenship and is part of the constitutional guarantee given by s
3
of the Constitution, which provides that all citizens are equally
entitled to the rights, privileges and benefits of citizenship
(para
67, 178, 188, 236).
The
government has an obligation to consider the request and deal with
it consistently with the Constitution ( para 67, 192).
There may be a duty on government, consistent with its obligations
under international law, to take action to protect one of its
citizens against a gross abuse of international human rights norms.
A request to the government for assistance in such circumstances
where the evidence is clear would be difficult, and in extreme cases
possibly impossible to refuse (para 69, cf 242).
A court cannot tell the government how to make diplomatic
interventions for the protection of its nationals (para 73).
A decision as to whether, and if so, what protection should be
given, is an aspect of foreign policy that is essentially the
function
of the executive (para 77).
If government refuses to consider a legitimate request, or deals
with it in bad faith or irrationally, a court could require
government
to deal with the matter properly (para 80, 193). This
does not mean that courts could substitute their opinion for that of
the
government or order the government to provide a particular form
of diplomatic protection (para 79).
[52] The appellants’ request was premised on a ‘right’
to diplomatic protection and not on a right to have a request
considered. It was further based on the duty of Government to provide
a particular type of diplomatic protection. These demands were,
in
the light of the Constitutional Court’s judgment, ill-founded.
22
A further demand (coupled with a threat of an urgent court
application) that Government should withhold all royalties due to the
Government of Lesotho under the treaty until the latter had agreed to
mediate or arbitrate was not only ill-founded but also presumptuous.
[53] I have at the outset of this judgment set out the advice given
to the President.
23
From this (and further documentation attached to the answering
affidavit) it appears that the Government acted within the framework
of the principles of the
Kaunda
judgment: Government knew that
the appellants did not have a ‘right’ at international
law; it recognised the fact that
the Constitution might impact on the
matter; it recognised the appellants’ right to have a request
considered; it was acutely
aware of the appellants’ serious
attack on the Lesotho judiciary as evidenced by the first letter of
request; and it realised
that it had to make a policy decision
bearing in mind what it called the sensitive relationship between the
two countries. (Such
decisions are always political and the prime
consideration remains the relationship with the defendant state
24
and the grounds for refusing to act may be unrelated to the
particular case.
25
)
The Government obtained legal advice from different persons; it held
meetings with Mr van Zyl and his delegation of lawyers and
international legal experts; inter- and intra-departmental memoranda
were prepared; the Government considered the request carefully
over a
period of time; and it made a policy decision – first by the
Deputy Minister, then by the Minister and, eventually,
by the
President himself who twice considered the matter.
[54] Patel J dealt with the facts correctly and fairly there is no
need to redo a job done well. Once again the appellants’
position shifted in the replying affidavit. The justification for the
new case was the fact that they did not have the Government’s
internal documents when the application was launched. The answer to
this is that had they bothered to follow Uniform rule 53, they
would
have had the documents before the answering affidavit was filed; they
would have been entitled to amplify their founding affidavit;
and the
case would have proceeded in an orderly manner and without
complications.
[55] The appellants argue that the Government was not entitled to
introduce a ‘new’ reason during a judicial review,
the
new reason being the reliance on policy considerations. This reason
was not mentioned to the appellants in the preceding correspondence.
The first answer is that had the appellants followed rule 53, the
Government would have disclosed the policy reason. The second answer
is that the case on which the appellants rely for the principle that
an organ of state is not entitled to raise new reasons for an
administrative decision in an answering affidavit was one where the
new reasons were
ex post facto
reasons and, accordingly, not
the true reasons for the decision.
26
The third answer is that the English line of cases
27
on which the principle is based applies where there is a statutory
duty to give reasons (which is not the case in this instance because
the decision is not covered by PAJA). A court is entitled to admit
evidence that elucidates an administrative decision. In any event,
Government had sufficient reason for not disclosing the policy
considerations: international relations by their very nature are
confidential.
[56] There are a number of subsidiary points that have no merit. For
instance, it is said that the evidence of Mr Pahad that the
President
received and accepted advice amounts to hearsay. Then there are ‘new’
points, some raised in the reply and
others in the heads. These
include allegations of mala fides, a denial that the relations
between the two countries are indeed sensitive,
complaints of unequal
treatment and the violation of the right to equal provision of
diplomatic protection.
THE MANDAMUS SOUGHT
[57] The prayer for an order requiring Government to afford the
appellants diplomatic protection appears to be an independent prayer,
and not conditional on the success of the review application. Whether
this relief could be sought independently is an issue that
need not
be decided. At this stage of the judgment I merely wish to mention
that the founding affidavit did not spell out what is
required of
Government although, as stated, the appellants insisted in the
correspondence that Government had to mediate or litigate
in
international
fora
. The replying affidavit dealt with the
matter in some detail. It was no longer a matter of diplomatic
protection – the appellants
sought ‘effective’
diplomatic protection in line with the demand set out in the
correspondence.
[58] The notice of appeal filed in this Court recited the relief
sought in the notice of motion and, once again, gave no indication
of
what order was sought. Appellants’ heads of argument were,
however, of a different order. Government must be ordered to
‘demand’
the payment of compensation. Should this demand not be met,
Government must ‘require’ of the Government
of Lesotho to
submit to international arbitration or to adjudication before the
International Court of Justice. And, finally, if
adequate
compensation is not paid within 90 days, the Government of the RSA
must pay these claims as constitutional damages.
[59] The order now sought is procedurally out of order (the claim for
constitutional damages was not anticipated in nor does it reasonably
arise from the founding affidavit); it flies in the face of the
Kaunda
principle that a court cannot tell the Government how
to conduct foreign affairs and make diplomatic interventions; and it
ignores
the fact that the Government of Lesotho has stated repeatedly
and explicitly that it will not engage in international dispute
settlement
(its consent is required for both arbitration and engaging
the International Court of Justice).
THE INTERFACE BETWEEN NATIONAL AND INTERNATIONAL LAW
[60] A major problem with the appellants’ case is the way they
seamlessly move between national and international law, depending
on
what is convenient at any particular moment. They recognise that
their application is based on South African municipal law because
international law does not recognise a right of a national to
diplomatic protection. However, when arguing their entitlement under
local law, they rely on international law principles that deal with
the power of states to provide diplomatic protection. Although
customary international law is part of our law,
28
it is conceptually difficult to understand how an international law
rule dealing with one relationship (state : state) can be transformed
into a local rule regulating another relationship (citizen : state).
[61] One example suffices. The right to ask for diplomatic protection
derives from s 3 of the Constitution as an aspect of citizenship
–
and nothing else.
29
How then can the Lesotho companies claim diplomatic protection from
Government? The appellants seek the answer in a proposal of the
International Law Commission
30
that the state of nationality of shareholders (the RSA) in a
corporation is entitled to exercise protection ‘on behalf of’
such shareholders (Mr van Zyl and the two Trusts) in the case of an
injury to the corporation (Swissbourgh) if the corporation had,
at
the time of the injury, the nationality of the delinquent state
(Lesotho) and incorporation under the ‘law’ of Lesotho
was required as a precondition of doing business there. Even if one
accepts that this is a rule of international and, therefore,
South
African law, I fail to see how this ‘rule’ can determine
the corporate appellants’ entitlement to diplomatic
protection
under municipal law.
[62] Having said this, it remains necessary to consider whether
Government is entitled in terms of international law to grant the
appellants diplomatic protection. Unless the appellants are able to
establish such a right vesting in Government their application
has to
fail for this further reason, both in relation to the review and the
mandamus.
[63] The appellants argue that they only have to make out a prima
facie case of entitlement but this understates the position. An
applicant must make out a clear case for a mandamus or a review.
Whether an applicant has a right is a matter of substantive law
and
whether that right is clear depends on evidence. But the test is not
really germane for present purposes. In this case the material
and
admissible facts are mainly common cause and the general principle
applies that in motion proceedings the case has to be determined
on
the respondent’s version.
[64] It is necessary to state a number of trite international law
principles in order to understand the debate that follows.
The appellants are not subjects at international law and have,
accordingly, no rights at international law.
31
Aliens in a foreign country are subject to the laws of that country
to the same extent as the nationals of that country.
Property rights are determined by municipal law. The 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:
‘
In principle, the 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.’
32
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.
33
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.
34
Contracts concluded between states and aliens, are also governed by
municipal law.
35
Contracts between states and aliens may be ‘internationalised’,
i.e., the contracts may be made subject to international
law
principles and international adjudication by agreement, expressly or
by necessary implication.
36
Aliens are entitled to request the country of their nationality to
protect them against a breach of international minimum standards
such as the breach of a basic human right. These basic rights are
defined in international human rights instruments:
‘
It
is an elementary principle of international law that a State is
entitled to protect its subject, when injured by acts contrary
to
international law committed by another State, from which they have
been unable to obtain satisfaction through ordinary channels.
By
taking up the case of one of its subjects and by resorting to
diplomatic protection or international judicial proceedings on his
behalf, a State is in reality asserting its own rights ─ its
rights to ensure, in the person of its subject, respect for the
rules
of international law.’
37
A sending state that is willing to afford diplomatic protection can
only do so if: (a) the victim has the nationality of the sending
state; (b) the victim has exhausted local remedies in the errant
jurisdiction; and (c) an international delict whereby the victim
has
been injured by an unlawful act imputable to the other state has
been committed.
38
An international delict presupposes the existence of a right because
without a right there cannot be a wrong.
39
A state may confiscate or expropriate the property of an alien
provided it is in accordance with a law of general application,
in
the public interest and prompt and adequate compensation is paid.
The responsible state is under an obligation to make full reparation
for the injury caused by an internationally wrongful act.
INTERNATIONAL RIGHTS AND WRONGS
[65] Before 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. (Although I am limiting this
part of
the discussion to the Rampai lease, what follows applies equally to
the other four leases save for the fact that their invalidity
has not
yet been determined by the Lesotho courts.)
[66] As Patel J held, and is apparent from the terms of the lease
discussed earlier, the Rampai lease was entered into in Lesotho
by
the Government of Lesotho with a Lesotho company under the Lesotho
mining laws in respect of Lesotho diamond rights. Therefore,
its
validity had to be determined under Lesotho law by Lesotho courts.
[67] It is important to emphasise that this 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. A state is as much
bound
by its own laws as are its citizens and I do not know of a principle
whereby a state, when entering into contract with a corporation
with
alien shareholders, can ignore municipal law that governs that type
of contract.
40
[68] For the sake of completeness I proceed to consider whether the
Government of Lesotho had otherwise agreed to internationalise
the
agreement, i.e., agreed that its validity would be determined
according to international law and by an international tribunal.
This
depends on an interpretation of the lease, i.e., whether there are
any tacit terms to that effect.
[69] The appellants argue that the lease was not covered by the
general principle that agreements between governments and aliens
are
governed by one or other municipal law
41
because (they submit) these leases were long-term international
economic agreements or bi-lateral investment treaties.
42
Such leases may by virtue of their ‘character’ import
international law by implication. In this regard they rely on the
opinion of Prof Dupuy referred to in the
Revere Copper
case.
43
‘
In
this latter respect he refers to such characteristics of these
agreements as their broad subject matter, their introduction into
developing countries of investments and technical assistance, their
importance in the development of the country concerned, their
long
duration implying “close cooperation between the State and the
contracting party” and “requiring permanent
installations
as well as the acceptance of exclusive responsibilities by the
investor”, and the close association of the foreign
contractor
“with the realization of the economic and social progress of
the host country”. Because of the required cooperation
between
the contracting party and the State “and the magnitude of the
investments to which it agreed”, the contractual
nature of the
legal relation “is intended to bring about an equilibrium
between the goal of the general interest sought by
such relation and
the profitability which is necessary for the pursuit of the task
entrusted to the private enterprise”.’
[70] The appellants’ argument is opportunistic. The lease had
hardly any of the characteristics referred to in the cited passage.
Apart from the fact that the lease was of a relatively long duration,
there was no ‘required cooperation’ between the
parties;
there was no obligation to introduce any foreign investment (unless
the R13 000 per annum can be regarded as foreign investment)
or
technical assistance; there is no evidence that the lease was
important for the development of Lesotho; and there was no
requirement
of permanent installations or the acceptance of exclusive
responsibilities by Swissbourgh.
[71] Because the Rampai lease was invalid ab initio,
44
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).
[72] The appellants furthermore rely on the arbitration clause in the
lease. According to the argument the clause, in spite of its
minimalist terms, has far-reaching consequences: because it does not
say that Lesotho law applies and because it does not say that
the
arbitration was to be a local one, it follows from the fact that
Swissbourgh had foreign shareholders that international law
applied
and that the arbitration had to be an international one. The argument
need merely be stated to be rejected.
[73] A related argument concerns the Convention on the Settlement of
Investment Disputes between States and Nationals of other States
(the
Washington Convention of 18 March 1965), referred to as ICSID. The
Government of Lesotho acceded to this Convention and enacted
the
Arbitration (International Investment Disputes) Act 23 of 1974. The
appellants argue that because of this the Government of Lesotho
is
bound to submit the dispute to ICSID arbitration. The Convention (art
25) provides that the jurisdiction of this arbitral court
‘extends
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 the
Centre’.
[74] Without delving any deeper into this murky argument it suffices
to state that South Africa is not ‘another contracting
party’
to the Convention;
45
that the lease was not an investment contract; that Swissbourgh was
not a South African national; and that the parties did not agree
–
in writing or otherwise – to submit to this form of
arbitration.
[75] There remains the issue concerning the so-called extension
leases. According to Mr van Zyl, the Government of Lesotho undertook
to extend the terms of the four leases in settlement of their
dispute. He, in turn, agreed to cancel the Rampai lease. The
extension
leases were also to be subject to the provisions of the
Minerals Rights Act and required the same formalities as the original
leases.
The extension leases were never signed. The Government of
Lesotho did not sign, why is irrelevant. Mr van Zyl says that he
refused
to sign because someone demanded a bribe in spite of an
anti-corruption clause in the draft agreement. His refusal was noble
but
how this entitles him to relief in relation to non-existent
leases is not understood. A promise to contract is not a contract.
46
[76] I accordingly conclude 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. It is,
however,
necessary to say something about the appellants’
subtext. Their real complaint is that the Rampai judgment amounted to
an expropriation
without compensation committed by an organ of state
(the courts) for which the Government of Lesotho was responsible; and
this was
an international wrong because of a denial of justice by the
Lesotho courts.
[77] I have already shown that this was not part of the appellants’
case and that the underlying requirement of the existence
of an
international right is absent. As the appellants correctly accept,
they have to show a fundamental failure of justice.
47
The main thrust of the argument was, however, directed at the merits
of the judgment and because the appellants believe that the
courts
have reached a wrong conclusion they assume that the courts must have
been biased, another fanciful proposition. But there
are other
attacks, which I shall mention briefly to illustrate the lack of
merit of the appellants’ case.
[78] They allege that the Court of Appeal was manipulated because it
consisted of acting judges and the permanent judges of the court
did
not sit in the matter.
48
Because this issue was not raised on the papers it was not possible
for Government to respond with evidence. Nevertheless, the appellants
knew (according to Mr van Zyl) a month in advance, of the composition
of the bench. They did not complain. If they had a ground for
complaint they were obliged to raise it then. They chose not to do
so, maybe because four of the five judges were retired South African
judges. (The fifth, according to the published report, was a
permanent Lesotho appeal judge.) As far as the permanent judges are
concerned, we know that Mr van Zyl was of the view that the President
of the court was disqualified to hear the matter.
49
Another member of the court (as appears from the law reports) acted
as counsel for the Government of Lesotho in the revocation appeal
and
was therefore disqualified to sit.
50
There may have been similar explanations why the other two judges did
not sit.
[79] The appellants also complain about the amount of security they
had to provide for the Rampai appeal and say that it was many
times
higher than the amount set for the revocation appeal. We do not know
what evidence was before that court in relation to both
matters but
one could guess that security for an appeal on a 58-day trial and one
for an appeal on an application could differ materially.
In any
event, the determination of security did not lead to a denial of
justice because the appellants were able to provide and did
provide
security.
[80] The third point under this heading relates to the fact that the
appellants allege that they discovered new evidence after judgment.
They wrote a letter to the President of the court, insisting that he
revoke the judgment. His refusal is said to be yet further evidence
of the bias of the Lesotho courts.
NATIONALITY
51
[81] I have therefore found that Government is not entitled to
intervene on behalf of the appellants because no international delict
had been committed. The claim of the corporate appellants and the
trusts has to fail on an additional ground, namely the issue of
nationality or citizenship
52
[82] It is necessary to distinguish between an international wrongful
act that causes ‘direct injury to the rights of shareholders
as
such’ (in which event the state of nationality of the
shareholders is entitled to exercise diplomatic protection in respect
of its nationals) in contradistinction to injury to the rights ‘of
the corporation itself’ (where that state is not entitled
to
act on behalf of its national shareholders). This case concerns a
delict against the companies and not one against the shareholders
‘as
such’.
53
[83] As mentioned earlier, the appellants rely on draft art 11
contained in the International Law Commission report. It bears
quoting:
‘
The
State of nationality of the shareholders in a corporation shall not
be entitled to exercise diplomatic protection on behalf of
such
shareholders in the case of an injury to the corporation unless:
(a) . . .
(b) The corporation had, at the time of
the injury, the nationality of the State alleged to be responsible
for causing injury, and
incorporation under the law of the latter
State was required by it as a precondition for doing business there.’
[84] The shareholder appellants rely on art 11 because the Government
of Lesotho required the incorporation of Swissbourgh in Lesotho
as a
precondition for entering into the mining leases. Patel J, however,
found that art 11 does not reflect customary international
law –
it is but a recommendation that awaits acceptance by the
international community. I tend to agree with his reasoning,
which is
partly based on the
Barcelona Traction
case,
54
but do not find it necessary to decide the issue because the
shareholders’ claim fails for reasons stated and that follow.
[85] The corporate appellants cannot rely on the rule as formulated.
The rule is expressed in favour of shareholders who are nationals
of
the sending state, and not in favour of the corporation itself.
Article 11 is not and does not purport to be an exception to the
nationality rule (art 3). (It is different with stateless persons and
refugees; they are expressly stated to be exceptions to art
3.)
[86] Another aspect of the nationality rule is the continuing
nationality rule. According to the amended proposal of the
International
Law Commission, a state is only entitled to exercise
diplomatic protection in respect of a person who was a national of
that state
continuously from the date of the injury to date of
claim.
55
As Patel J held, the cession by the corporate appellants to Burmilla
Trust disqualified both the corporate appellants and the Trust
from
diplomatic protection.
56
The whole object of diplomatic protection is to protect a national
against a wrong committed against that national. Someone who has
not
been wronged cannot, by virtue of a cession, become a victim. The
cessionary may be entitled to the proceeds of any claim but
that does
not transform the cessionary into a victim. Likewise, a cedent cannot
be entitled to diplomatic protection in relation
to a right which
that person no longer holds. It follows from this that the
nationality rule disqualified the Government from affording
any
diplomatic protection to all the appellants save, possibly, Mr van
Zyl and the family trust.
EXHAUSTION OF LOCAL REMEDIES
[87] There is yet another reason why Government is not entitled to
grant the appellants diplomatic protection. A state may not bring
a
claim for diplomatic protection before the injured person has
exhausted all local legal remedies unless these do not provide a
reasonable effective redress or there is undue delay attributable to
the state concerned.
57
.
[88] The wrong, as defined in the founding affidavit, was the
cancellation and revocation of the mining leases without payment of
compensation: initially the Commissioner of Mines cancelled the
leases and they were then cancelled by means of the revocation order.
(The Rampai judgment did not cancel any lease; it merely held that
the Rampai lease was void from the beginning.)
[89] It is common cause that these two acts were wrongful. This the
Lesotho courts have held and the Government of Lesotho conceded
in
relation to the acts of the Commissioner and accepted by abiding by
the revocation judgment. It means that the Lesotho courts
have
rectified the wrongs by declaring the acts void and without effect.
One of the reasons for the existence of the ‘local
remedy’
rule is that it is necessary
‘
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 legal system.’
58
If this principle is applied the violation by the Government of
Lesotho has been redressed within the framework of its domestic legal
system. The appellants are not entitled to hark back, resurrect the
past and ignore the supervening facts.
[90] If the cancellation and revocation of the four leases was
illegal, Swissbourgh would in principle be entitled to damages. As
mentioned, Swissbourgh cancelled these leases and instituted action
for breach of contract against the Government of Lesotho but
the
action has not been pursued by Swissbourgh.
[91] The appellants argue that their acceptance of the repudiation
must be discounted because they were forced by the actions of
the
Government of Lesotho to cancel the four leases. The argument is
disingenuous because if that were the case they would also have
had
to cancel the Rampai lease, something they studiously avoided doing.
Their second argument is that they cannot succeed in the
case because
of the Court of Appeal judgment on the Rampai lease. The argument
lacks substance: that judgment is not
res judicata
in respect
of the four leases and the appellants are entitled to use the ‘new’
evidence, which they say they have since
uncovered, to show that the
Rampai judgment was wrongly decided. Furthermore, if they never had
any valid mineral rights (on the
supposition that Rampai was decided
correctly) they can hardly have any cause of complaint.
[92] Another claim to which their request relates is the claim for
damages for the loss and destruction of Swissbourgh’s plant.
The cause of this is said (without any evidence) to have been
unlawful acts committed by servants or agents of the Government of
Lesotho. This cause of action, as mentioned, forms part of the
litigation, which has been pending in Lesotho for more than ten
years.
There is no valid explanation why these actions have not been
pursued and local remedies exhausted.
CONCLUSION
[93] The conclusion is therefore that the appeal must be dismissed
with costs. The employment by the respondents of three counsel
was
fully justified.
[94] ORDER: The appeal is dismissed with costs, including the costs
consequent on the employment of three counsel.
__________________________
L T C HARMS
ACTING DEPUTY PRESIDENT
AGREE:
HEHER JA
CACHALIA JA
HURT AJA
MHLANTLA AJA
ANNEX:
Letter from
the attorneys of the Government of Lesotho to the attorneys of the
appellants dated 19 November 2001.
Dear
Sir,
Re:
SETTLEMENT OFFER IN THE
MATTER BETWEEN THE STATE OF LESOTHO AND THE SWISSBOURGH GROUP, JOSIAS
VAN ZYL, THE JOSIAS VAN ZYL FAMILY TRUST
AND THE BURMILLA TRUST
Introduction
We have
now had an opportunity to study the voluminous documents in which
your clients’ offer of settlement has been set out
and
motivated and to consult with our client in that regard. The
documents occupy some 1600 pages in all and range from the two-page
document left by your clients’ counsel, Mr H Louw, with the
Deputy Attorney-General, Mr K R K Tampi, on or about 2 May, 2001,
in
which payment of M300 000,00 plus costs, coupled with some conditions
is called for; to the “Financial Claims against the
Kingdom of
Lesotho and Claims in respect of the Extension Leases” handed
to Mr Tampi on 3 May, 2001, and five volumes of attachments
thereto
subsequently received; the “Proposed All in Settlement”,
dated 21 May 2001 and signed by Mr Louw, claiming M79
941 943,00,
plus interest thereon; and, finally, the Supplementary Memorandum of
6 August 2001, explaining why the dispute must be
settled, ─ or
adjudicated upon if settlement is not reached, ─ according to
the rules of Public International Law.
No useful
purpose will be served, in view of the decision on the offer which
has been reached by our client, in debating the various
arguments
advanced on behalf of your clients as to their entitlement to
compensation. But there are a number of premises put forward
for such
arguments which are, to the knowledge of your clients, so
fundamentally inaccurate that we can only believe that they are
intended for readers who do not have knowledge of the facts, and must
be corrected:
Expropriation without compensation
The oft repeated justification for the claims made on
behalf of your clients is that their rights were expropriated without
the payment
of compensation. The following are the facts in this
regard:
It is correct that the Revocation of
Specified Mining Leases Order, No 7 of 1992, purported to deprive SDM
and its associated companies,
without compensation, of their rights
in the mining leases they held. That legislation was passed by the
military government which
succeeded the military government of
General Justin Lekhanya which had granted the leases. However, that
legislation was struck down
as unlawful by the High Court of Lesotho
whose judgment was confirmed by the Lesotho Court of Appeal on 13
January, 1995.
By the time the courts’
judgments were delivered SDM and its subsidiaries, (save for Rampai
Diamonds (Pty) Limited) had already,
on 15 March, 1993, cancelled
four of the mining lease agreements pertaining to them on the grounds
that the Government of Lesotho
(“GOL”) had unlawfully
repudiated its obligations under such agreements,
inter
alia
, by passing the Revocation Order
aforementioned.
Consequently, as far as four of the five
leases in question are concerned there is no longer any question of
expropriation without
compensation. Expropriation by the Revocation
Order was declared unlawful and there has been no subsequent
expropriation. It is SDM
and its subsidiary companies who terminated
the leases by electing to cancel them and claim damages (as to which,
see paragraph 3
below).
As to the Rampai lease, this was indeed,
subsequent to the Revocation Order, expropriated. It lies largely in
the catchment area of
the Katse Dam and was expropriated under
provisions providing for expropriation against payment of full
compensation, appearing in
the Lesotho Highlands Development
Authority (Amendment) Act, No 5 of 1995. (It was to the introduction
of this legislation that the
Minister of Natural Resources was
referring in the Memorandum to Cabinet quoted at pp 18/19 of your
clients’ memorandum dated
6 August 2001).
However, that Act provides for
compensation (by LHDA) only to the holder of a “duly granted
and executed mineral right registered
in terms of the Deeds Registry
Act, 1967”. Consequently the finding of the High Court and the
Court of Appeal that the Rampai
lease was not lawfully granted
prevents SDM and Rampai from claiming compensation from LHDA. But it
is not without remedy (see paragraph
4.3 below).
Claimants have exhausted their remedies in the
courts of Lesotho
In paragraph 3.8 of your clients’ Supplementary
Memorandum of 6 August 2001 it is said:
“
This also demonstrates that
all judicial remedies have been exhausted. This requirement for
diplomatic protection to be exercised
has been met.”
The averment that Claimants have exhausted their
remedies in the courts of Lesotho is exactly contrary to the facts.
As to the Motsoku, Patisang, Orange and Motete lease
areas, under Case No CIV/T/213/96, SDM and the four subsidiaries
just mentioned
instituted action against the Government of Lesotho
for damages amounting, in all, to M958 702 281,00 on 20 May 1996.
Further particulars to the claim were requested and
supplied, and a Plea was filed on behalf of Defendant on 9 October,
1996.
The pleadings have been closed and the matter is ripe for
hearing.
As to the Rampai lease:
On 23 July, 1996, SDM and Rampai filed a
claim for compensation under the provisions of section 46A of the
LHDA Order, as amended
by Act 6 of 1995, in the amount of M521 846
548,00.
As pointed out in paragraph 2.5 above the
provision for compensation by LHDA applies only to a lease duly
granted an records have
held that the lease in question was not
lawfully granted to SDM or Rampai.
However, there is nothing to prevent SDM
and Rampai from instituting action against GOL in the courts of
Lesotho, claiming such damages
as are alleged to have been suffered.
Loss of confidence in the courts of Lesotho
It is the courts of Lesotho which struck down, at the
instance of your clients, the legislation which is repeatedly invoked
as justification
for turning to other
fora
for assistance, namely the Revocation of Specified
Mining Leases Order, No 7 of 1992.
In a memorandum submitted to the
Government of South Africa by SDM (before the result of its
application to strike down the Revocation
Order was known) and quoted
in your clients’ Supplementary Memorandum on settlement of 6
August 2001 it is said that:
“
SDM
has not yet exhausted the available judicial remedies in Lesotho. As
the Lesotho Court of Appeal has a high reputation both for
competence
and independence it cannot seriously be suggested that if the
application pending before Cullinan, CJ, fails, it would
be
“obviously futile” to appeal against such decision.”
Of course, not only were your clients
successful before Cullinan, CJ, but the Court of Appeal upheld his
judgment.
Now that a judgment goes the other way,
it is said by your clients that the Judges of Appeal were biased and
their findings one-sided.
In correspondence Mr Van Zyl has gone
further, insulting the President of the Court of Appeal and the
present Chief Justice, who
set aside the Rampai lease and whose
decision was confirmed on appeal.
There is no foundation to these
scurrilous remarks. The five judges who sat on the appeal, four of
whom have held high judicial office
in other Southern African
countries and do not live in Lesotho, behaved throughout with perfect
propriety. The distasteful accusations
which you have seen fit to
forward in this regard are rejected.
The settlement offer
Our client has carefully considered the settlement offer
presented to it and has decided that it is not prepared to accept it.
Naturally,
the factual distortions dealt with above have contributed
to that decision. Some additional considerations are mentioned below.
The financial averments
upon which the offer is based
:
Fundamental to the offer of settlement is that your
clients have spent in the region of M18 million in developing the
lease areas.
Examination of the figures put forward in that regard,
and knowledge of what occurred in the lease areas, gives rise to what
appears
to our client to be a well-founded suspicion that they are
fabricated. No original vouchers bearing witness to the expenditure
allegedly
incurred have ever been presented. The figures are all
taken from financial statements prepared in respect of each company
by a firm
of chartered accountants, Messrs Glutz and Hlasa,
practising in Maseru.
However, it is not Messrs Glutz and Hlasa who
substantiate the correctness of the statements, but a Mr A N Walker,
a chartered accountant
conducting a one-man practice in the town of
Potchefstroom in the Republic of South Africa. Mr Walker states that
he has verified
your clients’ not expenditure “from the
audited accounts prepared by Messrs Glutz and Hlasa”. That, in
our client’s
respectful view, hardly constitutes reliable
impartial substantiation of the claim.
The reliability of Mr J van Zyl, the chief source of
information for the claim:
The impression is created throughout the submissions
made on behalf of your clients that one is dealing here with people
and bodies
of substance who have contributed very large amounts of
money to mining development in Lesotho. That is misleading.
The driving and controlling force behind all the
Plaintiffs is Mr Josias van Zyl. In the papers opposing the
application for an interdict
by SDM some idea of the chequered career
of Mr Van Zyl is provided, together with details of the trail of debt
which his enterprises
have left. Our clients have reason to doubt
that the millions of Maloti it is claimed were spent were indeed
either spent or, to
the extent that expenditure may have been
incurred, paid for by any of the Claimants. Mr Van Zyl’s word
is not considered acceptable
and it is felt that the only way to test
the essentially unsupported contentions about expenditure upon which
your clients’
claims rest is by reference to proper documentary
proof through the process of discovery for which the Court Rules
provide, and by
cross-examination of the witnesses who are called to
substantiate them, chief of whom must be Mr Van Zyl.
Defences to the claim
:
The submissions motivating the settlement are based on
the premise that no defence exists to the claims. That is not so. On
the contrary,
the latest information regarding the cession of the
claims to the Burmilla Trust give rise to a further defence which
will be raised
in an amendment to the Plea in the aforementioned
action instituted by SDM and four of its subsidiaries.
Government’s resistance to corruption
:
This elected Government has demonstrated, by word and
deed, that it is implacably opposed to corruption. The manner in
which the leases
giving rise to your clients’ claims were
awarded, especially that in the Rampai area, by the Military
Government of General
Lekhanya give rise to grave suspicion of
impropriety. Not only were none of the area chiefs consulted (the
reason why the lease was
set aside) but General Lekhanya did not
provide a satisfactory explanation, when called as your clients’
witness, as to how
his government came to award a mining lease for,
effectively, 15 years, in an area which was to be flooded in five
years’ time.
On the information available to Government, no
mining was done in that area until work on the Katse dam was well
advanced, when there
was an attempt to hold Government to ransom by a
court interdict.
By the same token, while huge amounts are claimed for
expenses and lost profits, no cent was ever paid by way of royalties
to Government
by any of your clients, who alleged that no profit had
been made and, indeed, that the leases granted to them could not be
viably
mined without further rights to large tracts of land.
It is true that Government is not in possession of hard
proof of corruption. But it is felt that the circumstances giving
rise to
these claims are such that they should be resisted and
thoroughly tested. And it is Government’s view that the best
way to
test them is by subjecting them to scrutiny in open court.
We have dealt herein with only the most glaring
examples of misinformation contained in the documents put forward
and some of the
reasons for rejecting the proposals therein. As part
of settlement negotiations, what is contained in that offer and this
response
is privileged from disclosure in further proceedings. But
in case your clients should not abide by that rule of law we record
that
apart from what is set out herein, none of the averments made
on your clients’ behalf in the documents in which the
settlement
offer is contained are admitted.
8. Finally, as to the contention that the claims will be
pursued in other
fora
,
we are instructed to advise you that if that should occur our client
will resist any such attempt to the extent that it may be advised
that that is necessary. It is denied that any other forum has
jurisdiction in the disputes which exist. Your clients’
remedies
lie in pursuing the claims already instituted and, if so
advised, instituting fresh claims in the courts of Lesotho. (Subject,
of
course, to our client’s right to raise whatever defences are
available to it.)
1
Kaunda
v President of the RSA
2004 (10) BCLR 1009
(CC),
2005 (4) SA 235
(CC) para 26-27.
2
Swissbourgh
Diamond Mines (Pty) Ltd v Government of the RSA
1999 (2) SA
279
(T) at 330D and follows. Cf.
Kuwait Airways Corp v Iraqi
Airways Co
[2002] UKHL 19
,
[2002] 3 All ER 209
(HL) para 24-26.
3
As
happened in
Swissbourgh
Diamond Mines (Pty) Ltd v
Government of the RSA
1999 (2) SA 279
(T) at 315E-F per Joffe J.
4
Kaunda
v President of the RSA
2004 (10) BCLR 1009
(CC),
2005 (4) SA 235
(CC) at para 128.
5
In
particular, he found (at 327C and follows) that the appellants did
not derive any rights from the treaty.
6
How
it came about that the Government of Lesotho granted conflicting
rights at that stage has been the subject of much speculation
in
Lesotho but has never been explained.
7
The
terms of the order are quoted at
Swissbourgh
Diamond Mines
(Pty) Ltd v Government of the RSA
1999 (2) SA 279
(T) 297E-I.
8
Attorney-General
of Lesotho v Swissbourgh
Diamond Mines (Pty) Ltd
1997 (8)
BCLR 1122
(L AC). The terms of the order are quoted in
Swissbourgh
Diamond Mines (Pty) Ltd v Government of the RSA
1999 (2) SA
279
(T) 298A-D.
9
Attorney
General v Swissbourgh
Diamond Mines (Pty) Ltd 1995-1996 Lesotho
LR 173.
10
Swissbourgh
Diamond Mines (Pty) Ltd v LHDA
2000 Lesotho LR 432 (CA).
11
This
explains why the lease purported to have been entered into by the
Basotho Nation and not by the Government of Lesotho.
12
In
a letter of 10 April 2001 it is referred to as a confiscation
through the cancellation of the mineral leases.
13
The
letter of 19 December 2000 repeated the statement.
14
I
do not propose to deal with the legitimate expectation argument
separately because the facts are destructive of any such argument.
The expectation was not legitimate or reasonable. There is also
something schizophrenic about the argument because, as will appear
later, the replying affidavit resurrected the abandoned conspiracy
argument.
15
Swissbourgh
Diamond Mines (Pty) Ltd v Government of the RSA
1999 (2) SA
279
(T) 323F-325C.
16
Minister
of Environmental Affairs and Tourism v Phambili Fisheries (Pty) Ltd
[2003] 2 All SA 616
(SCA),
2003 (6) SA 407
(SCA) at para 80.
17
A
party is in principle not entitled to rely on new matter, even if it
has not been struck out:
Director of Hospital Services v Mistry
1979 (1) SA 626
(A) 635H-636B;
Bowman NO v De Souza Roldao
1988 (4) SA 326
(T).
18
At
the end of argument, when Mr van Zyl was told he could file further
argument in reply, he immediately produced a third set of
heads
running to 65 pages that had nothing to do with the reply. The
appellants also filed 2 600 pages of authorities.
19
Mr
van Zyl’s wrath was not limited to the judges of Lesotho. It
spilled over to local judges who had held against him and
counsel
who appeared against him. All were involved in a Machiavellian plot.
He even made snide remarks about a professor of law
who, he said,
was in court and advised Government.
20
Relying
on J Paulsson’s
Denial of Justice in International Law
(2005). The argument of a denial of justice at the hand of the
Government of Lesotho was just a variation of the argument which
will be dealt with later.
21
Kaunda
and Others v President of the RSA
2004 (10) BCLR 1009
(CC),
2005
(4) SA 235
(CC).
22
The
argument submitted at the end of the proceedings was that the
appellants have an unwritten constitutional right to diplomatic
protection and that Government has an unwritten duty to provide it.
It is in conflict with the main submission that the appellants
have
a right to submit a request and have a right that the request should
be properly considered.
23
Because
the President made the ultimate decision the preceding decisions
were subsumed and do not require separate consideration.
24
Dugard
International Law: A South African Perspective
3 ed at 290.
25
Kaunda
v President of the RSA (2)
2004 (10) BCLR 1009
(CC) para 23.
26
Jicama
17 (Pty) Ltd v West Coast District Municipality
2006 (1) SA 116
(C) at para 12. The court nevertheless dealt with the additional
reasons and found them bad.
27
Discussed
in
R v Westminster City Council, ex parte Ermakov
[1996] 2
All ER 302
(CA), a case quoted in
Jicama
(supra).
28
Constitution
s 232.
29
Gerhard
Erasmus and Lyle Davidson ‘Do South African have a right to
diplomatic protection?’ (2000) 25
SAYIL
113 at 130.
30
‘
Seventh
Report on Diplomatic Protection’ by John Dugard, Special
Rapporteur (7 March 2006). The appellants laid great score
on this
report as setting out international law in spite of the fact that it
has not yet been adopted. In what follows I shall
assume in favour
of the appellants the correctness of the supposition.
31
Dugard
International Law: A South African Perspective
3 ed and
Booysen
Principles of International Trade Law as a Monistic
System
deal with most of the propositions that follow.
32
Panevezys-Saldutoskis
Railway case (Estonia v Lithuania)
1939 PCIJ Reports Series A/B
no 76 at 18.
33
Cf
International Marine Transport SA v MV ‘Le Cong’ and
Guangzhou Ocean Shipping Co
(Case 080/05) unreported SCA
judgment of 23 November 2005 at para 9.
34
Cf
Annemarieke Vermeer-Künzli ‘
A Matter of Interest:
Diplomatic Protection and State Responsibility Erga Omnes
’
46 (2007)
International & Comparative Law Quarterly
550.
35
Serbian
and Brazilian Loans Case
[1929] PCIJ Series A No 20/21 at 41.
36
Revere
Copper and Brass Inc v Overseas Private Investment Corp
(1978)
56 ILR 258 at 275.
37
Mavrommatis
Palestine Concessions
1924 PCIJ Series A No 2.
38
‘
Seventh
Report on Diplomatic Protection’ art 1; Gerhard Erasmus and
Lyle Davidson ‘Do South African have a right to
diplomatic
protection?’ (2000) 25
SAYIL
113
at 130.
39
‘
Draft
Articles on State Responsibility’
provisionally adopted by the
International Law Commission.
40
Cf
the approach of the arbitrator, Sir Herbert Sisnett in the
Shufeldt
Claim
(
United States of America v Guatemala
II RIAA 1080.
41
Serbian
and Brazilian Loans Case
[1929] PCIJ Series A No 20/21 at 41.
42
See
in general Wenhau Shan ‘Is Calvo Dead?’ 55 (2007)
American Journal of Comparative Law
123. The appellants have
mentioned concessions as another exception. Exactly what must be
understood under a concession is unclear.
It may refer to a
unilateral administrative grant, which is not the case in this
instance:
Amco-Asia Corp v Republic of Indonesia
1985 (24)
ILM 1022 at 1034.
43
Revere
Copper and Brass Inc v Overseas Private Investment Corp
(1978)
56 ILR 258 at 275.
44
Swissbourgh
Diamond Mines (Pty) Ltd v LHDA
2000 Lesotho LR 432 (CA).
45
The
‘failure’ of Government to accede to the Convention
became another bone of contention. The appellants argue that
this
violates their right to access to courts or other tribunals under s
34 of the Constitution. Apart from the fact that the respondents
were never called upon to justify this neglect the argument has no
merit. The appellants had their days in court. They lost. Now
they
want another court. That is not what the Constitution guarantees.
46
Cf
Ondombo Beleggings (Edms) Bpk v Minister of Mineral and Energy
Affairs
[1991] ZASCA 108
;
1991 (4) SA 718
(A).
47
Loewen
v USA
(ICSID case ARB (AF)/98/3) (2003) 42 ILM 811.
48
The
Court of Appeal judges are mostly part-time judges drawn from the
ranks of retired South African judges and practicing advocates.
On
the appointment of acting judges to hear specific cases see Morné
Olivier ‘The Appointment of Acting Judges in
South Africa and
Lesotho’
27 (2006)
Obiter
554.
49
This
is based on the allegation that the President, when he sat on the
revocation appeal, was a director of the Development Bank
of SA. The
complaint is that he wrote the judgment dealing with the interdict
(where Swissbourgh was not successful) but there
is no complaint
about him concurring with the favourable judgment on the invalidity
of the revocation order. Swissbourgh had a
local remedy which was
not pursued:
R v Bow Street Metropolitan
Stipendiary Magistrate, ex parte Pinochet Ugarte
(no
2)
[1999] UKHL 1
;
[1999] 1 All ER 577
(HL).
50
This
illustrates the importance of procedural rules and the danger of
relying on Mr van Zyl’s assertions, whether on affidavit,
in
the annexed documents or during argument.
51
Cf
Nottebohm case (Liechtenstein v Guatemala)
(1955) 22 ILR 349
(ICJ).
52
‘
Seventh
Report on Diplomatic Protection’ art 3 and 9. FS Dunn
The
Protection of Nationals: A Study in the Application of International
Law
(1932) 27-28.
53
‘
Seventh
Report on Diplomatic Protection’ art 12. See also
Standard
Oil Co Tanker
(1926) 2 RIAA 781 at 782
and
Agrotexim v Greece
[1996] 21 ECRR 250 (ECHR).
54
The
Barcelona Traction, Light and Power Co Ltd (Belgium v Spain)
1970 ICJ 3
to which must now be added
Case concerning Ahmadou
Sadio Diallo (Republic of Guinea v Democratic Republic of the Congo)
Preliminary Objections 2007 ICJ General List no 103.
55
‘
Seventh
Report on Diplomatic Protection’ art 5 comments.
Loewen
v USA
(ICSID case no ARB(AF)/98/3)
(2003) 42 ILM 811.
56
The
appellants rely on a report of the International Law Association
(2006) according to which the rule may be dispensed with ‘in
the context of global and financial markets’. Why this
possible exception is mentioned I fail to understand. The appellants
also argue that the rule does not apply to a continuing wrong. There
was no continuing wrong in this case although there may have
been a
series of wrongs.
57
‘
Seventh
Report on Diplomatic Protection’ arts 14 and 16. The other
exceptions are not relevant.
Panevezys-Saldutoskis
Railway case (Estonia v Lithuania)
1939 PCIJ Reports Series A/B no 76. This rule presupposes the
existence of an international delict and compliance with the
nationality
rule.
58
Interhandel
Case (Switzerland v United States)
1959 ICJ 6
at 27 quoted with
approval in the
Case concerning Ahmadou Sadio Diallo (Republic of
Guinea v Democratic Republic of the Congo)
Preliminary
Objections 2007 ICJ General List no 103 at para 42.