THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no : 225/2023
In the matter between:
EAST ASIAN CONSORTIUM B.V. APPELLANT
and
MTN GROUP LIMITED FIRST RESPONDENT
MTN INTERNATIONAL
(MAURITIUS) LIMITED SECOND RESPONDENT
MOBILE TELEPHONE NETWORKS
HOLDINGS (PTY) LTD THIRD RESPONDENT
MTN INTERNATIONAL (PTY) LTD FOURTH RESPONDENT
NHLEKO, PHUTHUMA FREEDOM FIFTH RESPONDENT
CHARNLEY, IRENE SIXTH RESP ONDENT
2
Neutral citation: East Asian Consortium B.V. v MTN Group Limited and Others
(225/2023 ) [2025] ZASCA 50 (29 April 2025)
Coram: MOLEMELA P and MOCUMIE, MABINDLA -BOQWANA and
UNTERHALTER JJA and KOEN AJA
Judgments : Unterhalter JA (majority): [01] to [113]
Molemela P (dissenting): [114] to [144]
Heard : 26 and 27 August 2024
Delivered : This judgment was handed down electronically by circulation to the
parties’ representatives by email; publication on the Supreme Court of Appeal website
and released to SAFLII. The time and date for hand -down is deemed to be 11h00 on
29 April 2025
Summary: Delict – unlawful inducement – unlawful competition – conflict of law –
transnational delict s – lex loci delicti – significant relationship test – jurisdiction –
agreement to the exclusive jurisdiction of a foreign court – state immunity – s 2
Foreign States Immunities Act 87 of 1981 – the United Nations Convention of
Jurisdictional Immunities of States and their Property (2004) – foreign act of state
doctrine – customary international law – ss 7 and 8 of the Constitution .
3
ORDER
On appeal from: Gauteng Division of the High Court , Johannesburg (Wepener J
sitting as court of first instance ):
(a) On the issue identified in paragraph 1.1 of the court order dated 31 January
2022 (the separation order) and the order made by the high court in paragraphs 1.2
and 3 in respect thereof, the appeal is dismissed with costs, including the costs of two
counsel.
(b) On the issue identified in paragraph 1.8 of the separation order concerning the
special plea of the exclusive jurisdiction of the Iranian courts and the order made by
the high court in paragraphs 4, 5 and 6 i n respect thereof:
(i) The appeal is upheld, with costs, including the costs of two counsel;
(ii) Paragraphs 4, 5 and 6 of the order of the high court are set aside and
replaced with the following order: ‘the special plea is dismissed with costs,
including the costs of two counsel’;
(c) On the issue identified in paragraph 1.8 of the separation order concerning the
special plea of state immunity and the order made by the high court in paragraphs 7,
8 and 9 in respect thereof:
(i) The appeal is upheld, with costs , including the costs of two counsel;
(ii) Paragraphs 7, 8 and 9 of the order of the high court are set aside and
replaced with the following order: ‘the special plea is dismissed with costs,
including the costs of two counsel’;
(d) On the issue identified in paragraph 1.8 of the separation order concerning the
special plea of the foreign act of state doctrine and the order made by the high court
in paragraphs 10, 11 and 12 in respect thereof:
(i) The appeal is upheld, with costs, including the costs of two cou nsel;
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(ii) Paragraphs 10, 11 and 12 of the order of the high court are set aside and
replaced with the following order: ‘the special plea is dismissed with costs,
including the costs of two counsel’.
JUDGMENT
Unterhalter JA (Mabindla -Boqwana JA and Koen AJA concurring):
Introduction
[1] The appellant, East Asian Consortium BV (EAC), is a private company
incorporated in the Netherlands. Upon its incorporation, EAC came to hold a 60%
interest in a consortium, the Turkcell Consortium, which was constituted to bid for
Iran’s first licence to provide a global system for mobile communications (the GSM
licence). In October 2003, the Ministry of Post, Telegraph and Telephone (MCIT) of
the Islamic Republic of Iran (Iran) issued a tender for the GSM licence. The Turkcell
Consortium qualified to bid for the GSM licence, as did two other consortia. In
February 2004, the outcome of the tender was announced. The Turkcell Consortium
was the winning bidder, and MCIT notified the Turkcell Consortium that it was the
provisional l icensee.
[2] The first to fourth respondents are companies forming part of the MTN group
of companies. The second , third and fourth respondents are wholly -owned
subsidiaries of the first respondent , MTN Group Limited. I will refer to the se
companies collectively as the MTN companies . The fifth and sixth respondents (Mr
Nhleko and Ms Charnley) were directors of the MTN companies . Mr Nhleko was also
the chairman of MTN Group Limited. I will refer to the respondents as the defendants.
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[3] EAC instituted a claim against the defendants. In its amended particulars of
claim, EAC complains that the MTN defendants, upon the direction of Mr Nhleko and
Ms Charnley, took various steps to induce MCIT to replace EAC with the second
respondent, MTN Int ernational (Mauritius) Ltd (MTN International), as th e beneficial
holder of a 49% share in the ultimate license holder of the GSM licence, the Irancell
Telecommunications Services Company (ITSC) . EAC allege s that the defendants
deliberately acted to secure this result; that they did so with knowledge of the award
of the tender to the Turkcell Consortium; that their actions were intended to induce
the government of Iran (including MCIT) to replace EAC with MTN International as
a shareholder of ITSC; and the government of Iran was so induced, in breach of EAC’s
rights , alternatively to prevent the final conclusion of an agreement with the Turkcell
Consortium, including EAC, to provide the service s under the GSM licence.
[4] The conduct by recourse to which the defendants are alleged to have unlawful ly
induce d the government of Iran to replace EAC as a shareholder of the ultimate licence
holder is wide -ranging. EAC’s claim sets out a course of conduct that it describes as
corrupt, and it avers that this conduct was orchestrated by the defendants so as to
secure their objective: to deprive EAC of the benefits it would otherwise have enjoyed
as a member of the winning consortium for the GSM licence. EAC a vers that the GSM
licence was granted to ITSC , which establis hed and operates a cellular network in
Iran. The exclusion of EAC from this business opportunity , by reason of the wrongful
conduct of the defendants , is alleged to have caused EAC to suffer damages in the
amount of $4.2 billion, together with interest.
[5] The defendants set out their defences in their pleas. In their main plea, the MTN
companies explain that one or more MTN companies were members of a consortium
that submitted a bid for the GSM licence. The outcome of the bid was that its
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consortium was the runner up . However, the Irancell Act came into force on 2 June
2005 . It required that at least 51% of the shares of the operating company that was to
be granted the GSM licence had to be held by Iranians. The Irancell Act rendered
invalid or unenforceable any rights that EAC might have acquired . The MTN
companies allege that in August 2005, local partners of what they describe as the
Irancell Consortium incorporated a company, Irancell Communication Services
Company (Irancell). The Iranian local shareholde rs of Irancell concluded a letter
agreement with MTN International in terms of which MTN International would
acquire 49% of the shares of Irancell , and fund the licence fee for the GSM licence.
In sum, MTN International acquired its shareholding in Irancel l, which was granted
the GSM licence, by lawful means.
[6] The defendants deny that they had recourse to bribery and corruption to secure
the position of MTN International as a shareholder of Irancell. Their engagements
with members of the governments of Iran and South Africa were to build lawful
business relationships with Iran. There was no unlawful inducement of officials in the
government of Iran to supplant EAC and replace it with MTN International.
[7] The defendants also rely upon a number of special pleas . Those relevant to this
case are the following. First, Mr Nhleko pleads that Article 29 of the Tender
Regulations, pursuant to which EAC claims to have acquired the rights upon which it
relies, requires any dispute or litigation ‘relative to ’ these regula tions or the call for
competitive bids to be submitted to the competent Iranian court. EAC’s claim , it is
pleaded, relates to the Tender Regulations. Hence, Mr Nhleko pleads, EAC was
required to submit its claims to the competent Iranian court. EAC has not complied,
and on this basis, the South African courts should decline to adjudicate EAC’s action.
I shall refer to this special plea as the Article 29 defence.
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[8] Both Mr Nhleko and Ms Charnley rely upon state immunity, and in particular,
the Foreign States Immunities Act 87 of 1981 (the Immunities Act). Section 2 of the
Immunities Act , they contend, should be interpreted consistently with Article 6(2) of
the 2004 United Nations Convention on Jurisdictional Immunities of States and their
Property (the Immunit ies Convention) . Article 6(2) in relevant part provides that:
‘A proceeding before a court of a State shall be considered to have been instituted against another
State if that other State: . . .
(b) is not named as a party to the proceeding but the proceed ing in effect seeks to affect the property,
rights, interests or activities of that other State.’
EAC’s claim, it is pleaded, relate s to the exercise of sovereign authority by the
government of Iran because the rights that EAC claims derive from the award of the
GSM licence , pursuant to the tender , and its consequences. These are matters that
engage the public powers of the government of Iran, and affect the property, rights,
interests or activities of Iran. Once that is so, s 2 of the Immunities Act preclu des a
South African court from adjudicating EAC’s action. The action should therefore be
dismissed or made subject to a permanent stay. I shall refer to this special plea as the
state immunity defence.
[9] The defendants all rely upon the foreign act of state doctrine. They plead that
EAC’s claim is based upon allegations that the government of Iran unlawfully
excluded EAC from the consortium that was granted the GSM licence either in breach
of EAC’s rights or simply because it was bribed to do so. EAC’s claim requires a
South African court to decide whether the conduct of the government of Iran, taken
within its territory, was lawful under Iranian law. The foreign act of state doctrine
precludes this enquiry, and consequently EAC’s claim should be dismissed,
alternatively a perpetual stay of EAC’s action should issue. I shall refer to this special
plea as the foreign act of state defence.
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[10] On 31 January 2022, Wepener J in the high court made an order, at the instance
of the parties, that certain issues arising from the pleadings would be decided without
leading any evidence and in advance of the remaining issues in the action (the
separation order). The separation order is framed in a so mewhat complex way. In
essence , the issues that were separated for determination were the following. First,
whether Iranian or South African law should apply to decide the essential elements of
the cause of action pleaded by EAC. I shall refer to this as t he choice of law issue.
Second, the special pleas raised by the defendants which I have styled the Article 29
defence, the state immunity defence, and the foreign act of state defence.
[11] These issues came before Wepener J in the high court. In a carefully reasoned
judgment, he made the following order s in respect of th e issues he considered he was
in a position to decide. First, that the law of Iran applies to the delict alleged in
paragraphs 30 -60 and paragraph 66 of EAC’s particulars of claim. Second, in relation
to the Article 29 defence, that the Iranian courts have jurisdiction to hear the dispute.
Third, in relation to the state immunity defence, that the South African courts lack
jurisdiction, and EAC’s action must be dismissed. Fourth, in relation to the foreign
act of state defence, the court declined to exercise jurisdiction ‘due to the involvement
of the State of Iran’, and EAC’s action was dismissed. EAC appeals these orders with
the leave of the high court.
[12] I will consider the issues that arise on appeal in the following order. I will first
consider the special plea that raises the Article 29 defence; next, the state immunity
defence; thereafter, the foreign act of state defence; and finally, the choice of law
issue. Before doing so, there are a number of preliminary issues that require
consideration .
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Preliminary issues
[13] There was no dispute between the parties as to how EAC’s cause of action is to
be charact erised under South African law . In Country Cloud ,1 the Constitutional Court
recognised two species of delict that render actionable an unlawful interference with
contractual relations. First, a party to a contract enjoys a remedy in delict where a third
party to the contract intentionally , and without justification, induces another party to
the contract to breach the contract. I shall refer to this delict as interference by
inducement. Second, a third party that interferes with the contractual right of anot her
by usurping that right will be liable for such conduct , even absent inducement.
[14] There can be little doubt that EAC’s particulars of claim set out a cause of action
that relies upon the delict of interference by inducement. What matters for the
purposes of deciding the special pleas is to analyse what essential allegations are made
by EAC in its particulars of claim. First, EAC alleges that it secured contractual rights
through the Turkcell Consortium that were enforceable against MCIT. It claims that
the conclusion of the final GSM licence agreement, alternatively that the certificate
issued to the Turkcell Consortium confirming that it had been selected as the
provisional licensee, read with the draft license agreement, gave rise to ‘binding and
enforceable rights in favour of the Turkcell Consortium, alternatively the Turkcell
Consortium, acting on its own behalf and for the benefit of the Operating Company
to be formed, against MCIT, with which the defendants were precluded from
unlawfully inte rfering’ .
[15] Second, EAC pleads that the defendants engaged in a course of conduct with
the intention of inducing the government of Iran (including MCIT) to replace EAC
1 Country Cloud Trading CC v MEC, Department of Infrastructure Development, Gauteng [2014] ZACC 28; 2015 (1)
SA 1 (CC); 2014 (12) BCLR 1397 (CC) (Country Cloud ) paras 30 -31.
10
with MTN International as a shareholder of the operating company that would hold
the GSM license. The Iranian government was induced to do so . This constituted a
wrongful and unlawful interference in ‘the trading and contractual rights of the
plaintiff [EAC]’ as a result of which EAC was prevented from receiving the benefits
to which it was e ntitled pursuant to the conclusion of the licence agreement and the
granting of the GSM licence. ITSC, the operating company that was incorporated to
hold the GSM licence, it is averred, established and operates a cellar network in Iran.
But for the unlawf ul interference of the defendants, EAC claims that it would have
had a 49% share of the revenue and business opportunities that ITSC has enjoyed.
And, as a result, EAC has suffered damages in the amount of $4.2 billion (plus
interest) by reason of ‘the los s of business opportunities, turnover and profits
associated with the GSM licence’. Th is then is a claim framed on the basis of
interference by inducement , and I shall reference it as the inducement claim.
[16] It is not the only cause of action upon which EAC relies. EAC’s particulars of
claim also contemplate that it may not establish that the government of Iran (including
MCIT) owed any ‘binding obligations’ to the Turkcell Consortium or EAC. In that
event, EAC avers that the defendants’ conduct, by way of b ribery and corruption, was
designed to prevent the conclusion of ‘finally binding contractual obligations between
the Iranian government (including MCIT) and the Turkcell Consortium, including the
plaintiff [EAC], that would lead to the implementation and operation of the GSM
cellular phone system public network’ . EAC then alleges that the government of Iran
(including MCIT) was induced, through such bribery and corruption, to replace EAC
with MTN International as the shareholder of ITSC. The defendants’ conduct was an
unlawful interference that prevented EAC from acquiring the enforceable rights from
the government of Iran (including MCIT) that ‘it was destined to acquire following
the selection of the Turkcell Consortium as the winning bidder in the tender for the
11
GSM licence and the conclusion, by the Turkcell Consortium, of the Final Licence
Agreement’. But for this unlawful conduct, EAC, as a member of the Turkcell
Consortium, would have been entitled to a share of the benefit arising from the grant
of the GSM license. As a result it has suffered damages as alle ged in the inducement
claim. I shall refer to this as the prevention claim.
[17] The prevention claim cannot be understood to constitute either of the species
of unlawful interference delicts identified in Country Cloud . This is so because the
prevention claim is predicated upon the proposition that EAC did not acquire any
contractual rights , but was prevented from doing so by reason of the unlawful
interference of the defendants. It follows that, upon the predicate of the prevention
claim, the conduct of the d efendants could neither have induced the government Iran
to commit a breach of contract, nor could the defendants have acted to usurp the
contractual right s of EAC. If EAC acquired no contractual rights, there was no
contract to breach and no contractual rights to usurp.
[18] What then is the basis of the prevention claim? There was rather less attention
devoted to this enquiry by the parties. However, I did not understand the defendants
to demur from the submission that the prevention claim could fall within t he capacious
remit of the boni mores that determines the wrongfulness enquiry in the law of delict.
In Atlas Organic ,2 it was emphasised that the general criterion of wrongfulness in our
law, when applied to the delict of unlawful competition, would require the
consideration of the morals of the marketplace. And the usurpation by way of bribery
and corruption of a business opportunity that had been won by way of competition on
the merits may be said to offend against the morality of the marketpl ace. However,
2 Atlas Organic Fertilizers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd and Others 1981 (2) SA 173 (T) (Atlas Organic ) at
188-189.
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what signifies, as with the inducement claim, are the allegations made in support of
this claim. It is by reference to these allegations that the special pleas must be decided.
[19] I have set out my understanding of the claims advanced by EAC in its
particulars of claim for two reasons. First, counsel for EAC acknowledged the scope
of these claims, and did not seek to qualify their amplitude. Second, in developing
their submissions , counsel have placed emphasis upon different aspects of the cause
of action pleaded by EAC . It is important to read the particulars of claim in their
totality.
[20] There was some debate before us as to what we might have regard to in deciding
the special pleas. In Gcaba ,3 the Constitutional Court observed that jurisdiction is
determined on the basis of the pleadings, and not on the basis of the merits of the
substantive case. In order to decide the special pleas, summarised above, that raise the
Article 29 defence, the state immunity defence and the foreign act of state defence , I
take a strict view as what constitutes the pleadings that we should consider. A
challenge to jurisdiction or a defence that the court should decline to adjudicate a
matter , taken as a special plea, seek s to determine at the outset whether the co urt can
or should hear the case. That is ordinarily decided by reference to the plaintiff’s
particulars of claim , read with the averments made in the special plea that give rise to
the challenge. The particulars of claim set out the basis upon which the pl aintiff
invokes the competence of the court to hear the matter . If they do not permit the court
to do so, that is the end of the matter. The plaintiff’s particulars of claim may also rest
upon allegations that incline a court not to entertain the claim . That is also a function
of the allegations of fact advanced by the plaintiff in its particulars of claim, and may
result in the stay of such a claim. These issues arise for decision as a preliminary
3 Gcaba v Minister for Safety and Security and Others [2009] ZACC 26; 2010 (1) SA 238 (CC); 2010 (1) BCLR 35
(CC); (2010) 31 ILJ 296 (CC); [2009] 12 BLLR 1145 (CC) (Gcaba ) para 75.
13
question . The plaintiff should only be non -suited on the ba sis of what it has claimed,
and not by recourse to a substantive defence advanced by the defendants in their plea
on the merits, much less the documentary yield of discovery.
[21] The corollary of this strict view is that the allegations set out in a plaintiff ’s
particulars of claim must be taken to be true for the purposes of deciding the se special
pleas. That is so because a court, in fairness to the plaintiff, must decide whether it
can or should hear a case, at the outset, on the premise that the plaintiff will ultimately
prove what its pleadings allege. But that premise does not mean tha t any of the
allegations pleaded in the plaintiff’s particulars of claim are or will be proven. That
will only be decided if the court decides that it can or should entertain the case. This
distinction is of great importance in the case before us. Wide -ranging and damaging
allegations of bribery and corruption are made by EAC in their particulars of claim.
We must decide the special pleas as if these allegations will be proven. That does not
mean that they are true. This Court, at this stage of the proceedi ngs, can form no view
as to their veracity , and does not do so.
The Article 29 defence
[22] Mr Nhleko raised in his second special plea the Article 29 defence. Article 29
of the Tender Regulations read as follows:
‘Article 29 APPLICABLE LAWS AND COMPETENT JURISDICTION
These Regulations and the call for competitive bids to which they relate are regulated by Iranian
law, notably as regards their validity, interpretation, performance and termination.
Any dispute or litigation relative to these present Regulati ons, or to the call for competitive bids to
which they relate, will be submitted to the competent Iranian courts.’
Mr Nhleko pleads that : ‘The present litigation relates to the said Tender Regulations
and/or to a call for competitive bids and was required to be submitted to the competent
Iranian court. The plaintiff [EAC] is bound thereby and the present proceedings
14
infringe the provisions of Article 29’. On this basis, Mr Nhleko sought an order that
the Court should decline to adjudicate the matter, dismis s the action or grant a
permanent stay.
[23] The high court found that EAC , as a bidder , was bound by the Tender
Regulations. In EAC’s claim, the conduct of the government of Iran ‘looms large’.
Findings against the conduct of the government of Iran would have to be made to
sustain EAC’s claim in delict . The Tender Regulations were of application beyond the
announcement of the winning bid. The language of Article 29 is widely framed. EAC,
the high court held, was thus enjoined to submit its dispute to the compe tent Iranian
court, unless it could show that the court should exercise its discretion not to enforce
a foreign jurisdiction clause . The high court found no basis to do so.
[24] Counsel for Mr Nhleko, in their written and oral submissions, have undertaken
a detailed analysis of EAC’s particulars of claim, the averments there made, and their
connection to the Tender Regulations. I have summarised the inducement claim . Of
this claim, the following may be said . First, t here can be no doubt that the inducement
claim rests upon allegations that the Turkcell Consortium acquired enforceable rights
as against the government of Iran, and in particular MCIT, pursuant to its successful
participation in the tender , governed by the Tender Regulations. S econd , EAC alleges
that MCIT and the Iran Electronic Development Company ( IEDC ) breach ed the award
of the tender to the Turkcell Consortium, alternatively breached ‘the rights arising
from the award of the tender’ by replacing EAC’s interest in the licensee with the
interest of the MTN defendants. These are breaches of the competitive bidding process
regulated by the Tender Regulations. Third, the conduct by way of unlawful
inducement attributed to the defendants w as to induce the government of Iran to
replace the members of the Turkcell Consortium as the shareholders of the operating
15
company, and hence as the ‘ultimate license holder’. Of this, EAC pleads as follows:
‘the defendants therefore engaged in a second, s ecret tender bidding process after the
tender had been awarded to the Turkcell Consortium’. This secret tender is the
unlawful process by which the rights flowing from the lawful award of the tender w ere
undone. Here too, what should have resulted from the lawful outcome of a competitive
bidding process is determined by reference to the Tender Regulations.
[25] The prevention claim, as I have explained, does not rest upon the acquisition of
rights by EAC. Rather, the conduct of the defendants prevented the conc lusion of a
binding agreement between the Turkcell Consortium and the government of Iran,
through which EAC would have acquired rights. The rights that the Turkcell
Consortium would have acquired , but for the wrongful conduct of the defendants , rest
upon t he outcome that would have resulted from a competitive bidding process. That
process is governed by the Tender Regulations. The Tender Regulations constitute the
normative benchmark of competitive bidding against which the wrongful interference
of the defe ndants is to be measured . Their conduct prevented the Turkcell Consortium,
and ultimately EAC, from acquiring the rights that the tender process would otherwise
have yielded. The counterfactual contemplated by the prevention claim is thus bound
up with wha t an application of the Tender Regulations would have produced.
[26] There can be no doubt therefore that the Tender Regulations will be relevant to
a number of the central issues that arise from EAC’s particulars of claim , which will
form part of the trial. Mr Nhleko’s special plea, setting out the Article 29 defence, is
pleaded without elaboration. It states that EAC claims to have acquired rights pursuant
to the Tender Regulations; it reproduces the text of Article 29; it contends that ‘the
present litigati on relates to the said Tender Regulations and/or to a call for competitive
bids . . .’; and concludes that EAC is bound by Article 29 and ‘the present proceedings
16
infringe the provisions of Article 29 . . .’. The special plea does not rely on any
backgroun d facts to assist the interpretation of Article 29. More especially, how a
clause of this kind fits within the scheme of the regulation of procurement and its legal
consequences within Iran. Once that is so, we must apply the entrenched triad of text,
context and purpose to interpret Article 29 on the basis of the Tender Regulations that
form part of the pleadings.
[27] That the present litigation relates to the Tender Regulations and the call for
competitive bids, as the special plea alleges, is plain. It is n ot however all that the
present litigation relates to. The wrongful conduct that the defendants are alleged to
have engaged to induce a breach of contract or prevent the acquisition of rights by
EAC does not fall within the remit of the Tender Regulations. But the subversion of
the Tender Regulations is claimed to be the object of that conduct, and hence, as I
have sought to explain, provide s the normative and causal comparator for EAC’s
claims.
[28] Nor can it reasonably be contested that EAC is bound by Artic le 29. EAC
formed part of the Turkcell Consortium that bid for the tender under the discipline of
the Tender Regulations, and if the claims now advanced by EAC in its suit before the
South African courts is one ‘relative to these present Regulations’, to r ecall the text
of Article 29, then EAC must comply with its obligation to submit these claims to the
competent Iranian courts, as Article 29 requires , save for any question of the court’s
discretionary competence to relieve EAC of this obligation.
[29] The spe cial plea concludes that , if the present litigation relates to the Tender
Regulations and EAC is bound by Article 29, then ‘the present proceedings infringe
the provisions of Article 29’. EAC is only bound to submit a dispute to the Iranian
17
courts, if the dispute is one ‘relative to these present Regulations or to the call for
competitive bids to which they relate’. I will reference this provision as the provision
of relativity. And it is to its interpretation that I now turn.
[30] I begin with the text of the provision, read in the context of Article 29 and the
Tender Regulations as a whole, and in light of their purpose, following the well -
established principles of interpretation.4 Article 29 commences with the following
words: ‘These Regulations and the call for competitive bids to which they relate are
regulated by Iranian law, notably as regards their validity, interpretation, performance
and termination’ . (My emphasis .) This lan guage forges the link between the Tender
Regulations and the call for competitive bids. That is entirely unsurprising. The
Tender Regulations are properly titled in full the ‘Regulations for International and
National Public Calls for Competitive Bids’, with the following description on the
title page, ‘Terms for the competitive call for bids for the grant of a license for the
implementation and operation of a GSM -type cellular phone system public network
in the Islamic Republic of Iran’ .
[31] The introduction to the Tender Regulations explains why the Tender
Regulations were promulgated by the government of Iran and their purpose. The
government of Iran h ad a policy to liberalise the post, telegraph and telephone sectors.
It stated that it was ‘putting forward’ the Tender Regulations in relation to a tender
for the grant of a licence for the implementation and operation of a GSM -type cellular
system public network. The award of the licence was, inter alia , to develop
competition in the Iranian telecommunications sector and improve the quality of the
telephone services. The purpose of the Tender Regulations is stated in the introduction
to be ‘to define the applicable rules and procedures for competitive bidding for the
4 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA
99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 50.
18
grant of a license’. And i n Article 1 , under the heading ‘ Purpose of the Tender’, the
following is s aid: ‘The tender organised by the Regulations has as its purpose the
selection of an operating company (the Operating Company) to which the license will
be granted (the licensee)’ .
[32] These provisions make it plain that the Tender Regulations regulate a
competitive bidding process to select a bidder to which a licence will be granted. The
Tender Regulations were issued by the government of Iran to govern the select ion and
licens ing of an operator of a GSM -type cellular network so as to enhance com petition
and improve telecommunications. The Tender Regulations evidently constitute an act
of public regulation to secure a public good.
[33] The regulatory scope of the Tender Regulations may rea dily be discerned from
their contents. The Tender Regulations determine who may participate in the tender;
the qualification requirements to bid; the review and evaluation of qualifications; the
bidding process; the validity of bids; the opening of bids an d the evaluation of
technical and financial proposals; the selection of the winner and the notification of
the provisional licensee; the finalising of the License Agreement and the payment of
the license fee. These provisions give effect to the purpose of the Tender Regulations
that I have identified.
[34] Any dispute or litigation ‘relative to these present Regulations’ means relative
to what the Tender Regulations are there to do , and their purpose. The Tender
Regulations constitute an exercise of public powe r by the government of Iran. We
would call this administrative action. Disputes as the exercise of public power are
required to be submitted to the court of Iran. This makes good sense. A party that bids
in a public tender process and wishes to dispute som e aspect of the rules governing
19
that process or the decision s taken must do so before the courts of Iran that discipline
the exercise by the authorities of public powers. Disputes as to the validity,
interpretation, performance and termination of the Tender Regulations, instanced in
Article 29, are typical of disputes that may arise concerning the exercise of public
power .
[35] What the Tender Regulations do not regulate are the private law obligations
that one bidder may owe another. The contents of the Tender Regulations have
nothing to say about such liability. Nor are such obligations relevant to the purpose
served by the Tender Regulations. The Tender Regulations regulate how a
competitive tender is to be run by means of the exercise of public powers. They do
not regulate what is to be done if one bidder has recourse to bribery and corruption to
suborn the government of Iran to subvert the competitive bidding process that the
Tender Regulations serve to entrench. Nor do the Tender Regulations seek to
determine what liability one bidder may bear to another as a matter of private
obligation should a bidder have recourse to such subversion. The Tender Regulations
are concerned with the exercise of public powers to secure a public object; they are
not conce rned to regulate the private law rights of one person that may arise from the
wrongful conduct of another.
[36] Accordingly, the text of Article 29 that requires any dispute or litigation relative
to these present Regulations to be submitted to the competent I ranian courts does not
include the claims made by EAC.5 They are claims that neither challenge nor seek
remedies in respect of the exercise of public power s which constitute the essential
content of the Tender Regulations. They are claims that assert a private law right for
the wrongful acts of the defendants that are said to have caused EAC patrimonial loss.
5 Emphasis added.
20
Rights and obligations of this kind are matters the Tender Regulations do not reach.
They are beyond its remit. And hence disputes concerning these ma tters are not
‘relative to these present Regulations’. Once that is so, no duty rests upon EAC to
submit the dispute arising from its particulars of claim to the competent Iranian courts.
[37] Accordingly, t he appeal must succeed in respect of the Article 29 d efence. The
order made by the high court upholding the special plea that raised this defence and
staying the proceedings must be set aside. In its stead, this special plea must be
dismissed , with costs.
The state immunity defence
[38] Both Mr Nhleko and Ms Charnley advance the contention in their special pleas
that EAC’s action cannot be adjudicated by a South African court by reason of the
application of s 2 of the Immunities Act. They allege that EAC’s claim s relate to the
exercise of sovereign authority b y the government of Iran. T he action that EAC seeks
to bring before the South African courts affects the property, rights, interests and/or
activities of the government of Iran (and Iran -state entities) and contravenes the
sovereign immunity of Iran. The i mmunity conferred by s 2 of the Immunities Act
thus precludes a South African court from adjudicating upon EAC’s action.
[39] The high court upheld this contention. It found that EAC’s action will require
the high court ‘to make adverse findings regarding the unlawful acts of Iran as a
finding will affect the interests or activities of Iran. In my view the provisions of the
Immunities Act result in this Court having no jurisdiction to entertain the matter as
pleaded by EAC and the special plea is to be upheld .’
21
[40] State immunity from the jurisdiction of another State is a rule of customary
international law. The rule is predicated upon the sovereign equality of states. As this
Court has held, it is a rule of application in South African law :6 immunity is available
when it is sought to implead a foreign state, whether directly or indirectly, before
domestic courts. A state is directly impleaded by legal proceedings taken against it,
without its consent. Where a state is not a party to the proce edings, it may nevertheless
be indirectly impleaded, and enjoy immunity. Whe ther that is so lies at the heart of
the issues raised by the state immunity defence.
[41] State immunity enjoys statutory expression in s 2 of the Immunities Act. It reads
as follows:
‘2 General Immunity from jurisdiction
(1) A foreign state shall be immune from the jurisdiction of the courts of the Republic except as
provided in this Act or in any proclamation issued thereunder.
(2) A court shall give effect to the immunity conferred by this section even though the foreign
state does not appear in the proceedings in question.
(3) The provisions of this Act shall not be construed as subjecting any foreign state to the
criminal jurisdiction of the court s of the Republic. ’
Secti on 2(1) of the Immunities Act recognises that state immunity may be of
application in situations where the state is directly impleaded; and s 2(2) does so
where the state is indirectly impleaded.
[42] As was the case in Cherry Blossom ,7 counsel for Mr Nhleko and Ms Charnley
sought to have us interpret s 2(2) of the Immunities Act in a manner consistent with
the United Nations Convention on Jurisdictional Immunities of States and their
Property (2004) (the Immunities Convention). Article 6 (2)(b) of the Immunities
6 Minister of Justice and Constitutional Development and Others v Southern African Litigation Centre and Others [2016]
ZASCA 17; 2016 (4) BCLR 487 (SCA); [2016] 2 All SA 365 (SCA); 2016 (3) SA 317 (SCA) para 66.
7 Saharawi Arab Democratic Republic and Another v Owner and Charterers of the MV 'NM Cherry Blossom' and Others
[2017] ZAECPEHC 31; 2017 (5) SA 105 (ECP); [2018] 1 All SA 593 (ECP) (Cherry Blossom ) para 76.
22
Convention provides that: ‘A proceeding before a court of a State shall be considered
to have been instituted against another State if that other State: . . . is not named as a
party to the proceeding but the proceeding in effect s eeks to affect the property, rights,
interests or activities of that other State’ . This provision, it was argued, is a
codification of customary international law. And s 233 of the Constitution requires of
us, when interpreting any legislation, to prefer a ny reasonable interpretation of the
legislation that is consistent with international law, over any alternative interpretation
that is inconsistent with international law.
[43] The Immunities Convention is not in force. It was adopted by the General
Assembly o f the United Nations, but it has not secured , thus far , a sufficient number
of ratifications to enter into force. While certain courts have considered the
Immunities Convention to reflect an international consensus as to the existing rules of
customary int ernational law on immunity , greater caution has been expressed by other
courts as to whether all of its provisions, including Article 6(2)(b) , are an authoritative
statement of customary international law. In Belhaj ,8 Lord Sumption found it
unnecessary to decide whether Article 6(2)(b) represented ‘the current consensus of
nations’ , but observed that the drafting history suggested that some states considered
the wording ‘to affect the property, rights, interests or act ivities of that State’ too
broad. Lord Mance’s speech in Belhaj describes Article 6(2)(b) as ‘the use in a
Convention with no binding international status of ambiguous terminology’ .9 Lord
Mance also references academic commentary that the uncertainty as to the scope of
the concluding wording of Article 6(2)(b) should be ‘limited to a claim for which there
is some legal foundation ’.10 Nor do I read Cherry Blossom to have reached any
8 Belhaj and Another v Straw and Others [2017] 2 WLR 456 ; [2017] HRLR 4 ; [2017] WLR(D) 51 ; [2017] UKSC 3
(Belhaj ) paras 194 -195.
9 Ibid para 25 .
10 Ibid para 26 .
23
conclusion different to those arrived at by Lords Mance and Sumption in Belha j,
whose speeches on the point are extensively reproduced in Cherry Blossom .
[44] While there may well be circumstances in which an unratified treaty (or certain
provisions thereof) may evidence the rules of customary international law ,11 I cannot
find that this is so of Article 6(2)(b) of the Immunities Convention, on the basis of
what has been placed before us. The drafting history reflects the concern of certain
States as to the overbreadth of Article 6(2)(b). An insufficient number of States have
ratifi ed the Immunities Convention for it to enter into force. There appears to be no
evidence of the subsequent practice of States, including non -parties, that would
indicate that Article 6(2)(b) is a rule of customary international law. Nor i s there
evidence of States acquiescing in its precepts. I am not therefore required to interpret
s 2(2) of the Immunities Act on the basis that I should prefer any reasonable
interpretation of that provision that is consistent with Article 6(2)(b) of the I mmunities
Conventi on.
[45] The plain language of s 2(2) of the Immunities Act requires a court to give
effect to the immunity conferred by s 2, even though the foreign state does not appear
in the proceedings. When, as here, the foreign state is not a party t o the proceedings ,
nor does it appear before a South African court , what does it mean to give effect to
the immunity conferred by s 2? Can it mean that the foreign state enjoys immunity
unless it falls within one of the exceptions that the Immunities Act provides for ?
Counsel for Mr Nhleko and Ms Charnley do not contend for so broad an interpretation.
And rightly so. They have submitted that s 2(2) should be read, in essence, to mean
that a foreign state is indirectly impleaded when, as Article 6(2) (b) stipulates, the
proceedings in effect seek to affect the property, rights, interests or activities of that
11 North Sea Continental Shelf , Judgment, ICJ Report s 1969 p 3, 32 -41, 86 -87.
24
state. On this construction, Article 6(2) (b) defines what it is that the proceedings must
affect before a foreign state is rendered immune from the juri sdiction of the South
African courts. And broad as that class may be, even on counsel’s interpretation of
Article 6(2)(b), it is a finite class.
[46] The question that then arises is this: since s 2(2) incorporates the concept of a
foreign state indirectly imp leaded , what interests of the foreign state are recognised
by s 2(2) so as require its immunity from the jurisdiction of the South African courts?
The immunity with which s 2 of the Immunities Act is concerned is the personal
immunity of states in respect of their sovereign activities. The proceedings before the
South African courts must affect those activities in such a way as to require immunity .
[47] Belhaj , was required to interpret the provisions of the United Kingdom’s State
Immunity Act, 1978, upon which the Immunity Act is modelled , and the common law
that preceded it. Section 1 of the 1978 Act is identical to s 2 of the Immunities Act.
Belhaj was thus concerned with the same problem that confronts us: what interests of
the foreign state signify to rende r a state indirectly impleaded. Lord Mance found that
the indirect impleading of a state arise s principally in cases that might affect a
sovereign’s interest in property. Article 6 of the Immunities Convention , following
the Report of the International Law Commission (Yearbook 1991) , has as its focus ,
he found, ‘avoiding the exercise of State jurisdiction in a way which would put any
foreign sovereign in the position of having to choose between being deprived of
property or otherwise submitting to the juris diction’.12 Lord Mance was reluctant to
extend immunity in cases of a state indirectly impleaded beyond issues of proprietary
or possessory title.
12 Belhaj fn 8 above para 26 .
25
[48] Lord Sumption’s speech in Belhaj also recognised that a state is indirectly
impleaded by proceedings against its interest in property. The question was whether
a state is to be treated as indirectly impleaded in cases beyond the state’s interest in
property, and in particular, where the court is required to adjudicate on the state’s legal
rights or liabilities. L ord Sumption was not willing to ‘rule out the possibility that
litigation between other parties might directly affect interests of a foreign state other
than interests in property ’.13 But, as I have observed, it is not easy to imagine such a
case. At the very least, he found, the foreign state must have a legal interest to defend.
[49] Belhaj thus holds as follows. First, the paradigm case of a state indirectly
impleaded are proceedings in which the foreign state’s interests in property are
affected. S econd, the outer reaches of the concept of a state indirectly impleaded
require that the legal interests of the state are affected . Third, the concept does not
extend to the social, economic, political or moral effects of the proceedings upon the
foreign s tate.
[50] I consider that the careful framing of the interests of a foreign state that signify
to determine whether that state is indirectly impleaded were correctly set out in Belhaj ,
and even there, there is considerable caution expressed as to whether, and if so in what
circumstances, the class of interests may extend beyond a legal interest in property. I
take this position for the following reasons.
[51] First, as both Lord Sumption and Lord Mance observed in Belhaj , the species
of immunity accorded a foreign state, with which we are concerned, is a personal
immunity (ratione personae ). The foreign state is indirectly impleaded because the
proceedings affect the existence or exercise of the foreign state’s legal rights (putting
13 Ibid para 196 .
26
aside the question of which righ ts), and hence the performance by the foreign state of
its functions . The immunity is given to avoid such performance being made subject
to the adjudicative jurisdiction of foreign domestic courts. The immunity is not subject
matter immunity ( ratione materiae ). It does not limit the subject matter that a
domestic court may entertain in proceedings to which the foreign state is not a party .
The immunity i s concerned with the relationship between a foreign state and its legal
rights. If the proceedings to which the foreign state is not a party do not affect the
rights of the foreign state, then there is no basis to give effect to any immunity for the
benefit of that state , at the instance of a litigant that is a party to the proceedings.
[52] Second, as the English cases traversed in Belhaj make plain , the concept of a
foreign state being indirectly impleaded was predicated on the position that a claim
upon the property of the state is a claim against the state. The foreign state is indirectly
impleaded becau se the domestic court would be required to adjudicate upon its rights
(or liabilities), even in proceedings to which it is not a party. As it has been framed,
the immunity is granted to the foreign state to spare it the choice of having ‘to sacrifice
either his property or his indepen dence ’.14 The foreign state is indirectly impleaded
because it should not have to submit to the jurisdiction of the court to defend it self.
[53] If immunity spares the foreign government the choice of submission or the risk
of prejudice to its rights, the immunity then rests on the proceedings posing that risk.
If it has no such interest, then there is nothing to spare it from. It follows that a foreign
state cannot be indirectly impleaded, if the proceedings do not concern the rights of
the foreign state and could not result in any order that affects those rights.
14 Per Brett LJ in The Parlement Belge (1880) (1878. O. 60.) 5 PD 197 at 218 -219.
27
[54] Section 2(2) of the Immunities Act is to be interpreted as follows . The
proceedings in question must affect the legal interest of the foreign state, even though
it is not a party to the proceedings. The foreign state has such an interest if the
proceedings might affect the legal rights (or liabilities) of the foreign state. Other
interests, such as political, moral or diplomatic inte rests, do not register as relevant
interests because courts of law do not give judgments or issue orders that redeem these
interests. The foreign state’s rights in property fall within the class of legal rights that
may indirectly implead the foreign state . That is so because the parties to the
proceedings may claim property rights that, if recognised by a court and reflected in
its orders, may thereby diminish the bundle of rights in property to which the foreign
state claims an entitlement.
[55] With Lord Su mption, I do not hold that the class of rights of the foreign state
that may give rise to a foreign state being indirectly implead is confined to rights in
property. However, the rights of the foreign state that might qualify for inclusion in
the class mus t have the attributes that the property cases exemplify. In particular, the
proceedings must be such that the legal rights of the foreign state would be affected
because the judgment and order of the court may diminish or otherwise adversely
affect the for eign states’ entitlement to these rights , or their exercise.
[56] The issue that then arises for consideration is whether the action instituted by
EAC concerns the legal rights of Iran, and whether any judgment and order that may
issue from a South African court seized of the matter may adversely affect Iran, in the
sense that I have described. The claims of EAC in delict are not made against Iran.
That alone does not mean that Iran is not indirectly impleaded. EAC’s particulars of
claim, as I have explained, allege that EAC acquired contractual rights against the
governm ent of Iran and that Iran was induced to breach those rights. The government
28
of Iran is also alleged to have acted unlawfully, in concert with the defendants, to
deprive EAC of the fruits of the GSM license that it would otherwise have enjoyed as
a shareho lder of the operating company. Ultimately, EAC seeks an order for the
payment of damages by the defendants for the loss sustained by it as a result of being
deprived of this opportunity.
[57] What rights or liabilities of Iran might be adversely affected shoul d the claims
of EAC proceed to trial? No claim is made against the government of Iran as a joint
tortfeasor. No property rights of the government of Iran are exposed to jeopardy. EAC
does not seek to set aside what it alleges to be the subversion of a comp etitive tender.
The outcome of the tender remains in place. The claims of EAC would not undo the
actions of the government of Iran. EAC’s claims, if they were to be proven at trial,
would establish that EAC acquired rights as against the government of Iran which
were breached by that government. But no liability attaches to any such finding. Nor
would a finding that the government of Iran may be found to be responsible for the
substitution of EAC for MTN International have any adverse entailment upon the
legal rights or liabilities of Iran. The liability that would accrue from any award of
damages would be borne by the defendants, not Iran. It will suffer no detriment to any
of its rights, nor accrue any liability from such a judgment.
[58] Once that is so, Iran is not indirectly impleaded. Section 2(2) of the Immunities
Act did not require that the high court to decline jurisdiction. It was in error in doing
so. And in the result, the state immunity defence must fail. The appeal succeeds on
this aspect of the ma tter and the special plea raising the state immunity defence must
be dismissed, with costs.
29
The foreign act of state defence
[59] The defendants all rely upon the foreign act of state doctrine. The MTN
defendants contend that EAC’s claims will require a South African court to decide
whether the government of Iran unlawfully excluded EAC from the consortium that
was awarded the GSM licence. It acted either in breach of EAC’s contractual rights
or simply because it was induced to do so. The MTN defendants contend in their
special pleas that under the foreign act of state doctrine, it is not permissible or
appropriate for a South African court to determine the conduct of a fore ign state acting
within its own territory. The MTN defendants seek, on this basis, the dismissal of
EAC’s action.
[60] Mr Nhleko also invokes the foreign act of state doctrine across a somewhat
wider canvass in his special plea. He pleads that the GSM tender w as a public project
for a public purpose; under the control of the Iranian Parliament, subject to the
authority of the relevant Ministry of the government of Iran, MCIT, and the binding
terms and conditions of the tender Regulations. These are matters that relate to the
sovereign authority of the government of Iran. Integral to the claims of EAC are
allegations of the unlawful conduct of the government of Iran which a South African
court will be required to determine. The award of the tender took place unde r the
executive authority of MCIT, implementing the applicable legislation of the Iranian
parliament. This warrant ed the application of the foreign act of state doctrine by the
high court to decline to adjudicate the matter and dismiss it, alternatively to grant a
perpetual stay of action.
[61] Ms Charnley pleads that foreign acts of state are implicated in the issues arising
in the action, and such acts are not justiciable, alternatively their lawfulness and
validity must be accepted , and cannot be impugned. I ssues in the action, she alleges,
30
necessarily require findings to the effect that the government of Iran had made
‘unlawful laws’ and/or had acted unlawfully under Iranian law. These issues are not
justiciable , and such findings are precluded , under the fo reign act of state doctrine .
The special plea sets out the unlawful acts and breaches that EAC’s particulars of
claim allege against the government of Iran. On this basis, Ms Charnley pray ed that
EAC’s action be dismissed.
[62] The high court provided a detail ed account of the acceptance of the foreign act
of state doctrine in South African law , and its exposition in English law. Ultimately,
the high court upheld the defendants ’ reliance on the doctrine. Wepener J found that
the pleading s of EAC required a South African court to enquire into the unlawful
conduct of the government of Iran. Those allegations form the basis of EAC’s claim,
and would be ‘scrutinised and judged’. The high court thus declined to exercise
jurisdiction, and dismis sed EAC’s claims.
[63] The foreign act of state doctrine was recognised to form part of our law in
Swissborough Diamond Mines ,15 and since then has been affirmed in this Court in
Van Zyl ,16 and more recently in Cherry Blossom17 and Obiang .18 It is of importance
to be clear as to what this doctrine is , and what it is not. First, it is not a doctrine
located in the application of choice of law rules in private international law. Second,
though it shares a justificatory premise with state immunity, that is to say the mutual
respect that is due to the equality of sovereign states, it is a distinct doctrine. The
doctrine, unlike state immunity, is not based upon personal immunity. It is not a
doctrine required by customary international law (though it may be permitted by it)
15 Swissborough Diamond Mines (Pty) Ltd and O thers v Government of the Republic of South Africa and Others 1999
(2) SA 279 (T) (Swissborough ) at 334 .
16 Van Zyl and Others v Government of Republic of South Africa and Others [2007] ZASCA 109; [2007] SCA 109
(RSA); [2008] 1 All SA 102 (SCA); 2008 (3) SA 294 (SCA) (Van Zyl ) para 5.
17 Cherry Blossom fn 7 above paras 86 -88.
18 Obiang v Janse van Rensburg and Another [2019] ZAWCHC 105; [2019] 4 All SA 287 (WCC) para 66 .
31
because that body of law does not limit the subject matter jurisdiction of a domestic
court to which a foreign state is neither a party, nor indirectly impleaded. Third, t he
doctrine is part of our common law, although its recognition as such is of relatively
recent pedigree.
[64] The recognition of the doctrine by our courts has lent heavily upon English law
and, in some measure, the expression of the doctrine that has taken root in the
American cases. And while we owe much to the English common law , and have much
to learn from it, our common law is not a supplicant species. Many of the submissions
we heard pressed us to adopt one or other passage from the English cases. But t his
selective comparativism is not altogether helpful. In part this is so because there are
disagreements, some in kind and some in degree, that are to be found in these cases.
More importantly, the question for us is how persuasive is the exposition of th e
doctrine that has been adopted in English law (and indeed, in other relevant
comparative law).
[65] As I shall explain, in English law, the content of the doctrine, its limitations,
and the exceptions to it , have been the subject of much judicial considerat ion, and no
small measure of disagreement. Nor have all common law jurisdictions, embraced the
doctrine with unalloyed enthusiasm. In Moti ,19 the Australian high court considered
an appeal in which the question was whether an indictment should be stayed as an
abuse of process. The appellant had been brought from the Solomon Islands without
his consent. The officials of the Solomon Islands who deported the appellant lacked
the power to do so. The appellant contended that he had been unlawfully deported
from t he Solomon Islands. The primary judge in the court below had held that it was
19 Moti v The Queen [2011] HCA 50 ; 245 CLR 456; 86 ALJR 117; 283 ALR 393; 218 A Crim R 204 (Moti ) paras 50 -
52.
32
not for an Australian court to express an opinion on decisions made by the Solomon
Islands government, relying upon the dictum of Fuller CJ in Underhill v Hernandez20
in the US Supreme Court that ‘the Courts of one country will not sit in judgment on
the acts of the government of another done within its own territory’. Of this case, the
high court stated that it should not be understood, ‘as establishing as a general a nd
universally applicable rule that the Australian courts may not be required (or do not
have or may not exercise jurisdiction ) to form a view about the lawfulness of conduct
that occurred outside Australia by reference to foreign law’ . The high court cons idered
that rather than adopting a general rule, the application of the rules governing the
choice of law may provide a satisfactory basis to resolve issues of the kind that arise
in cases where the foreign act of state doctrine is invoked. Ultimately , it favoured the
position taken by FA Mann that ‘the courts are free to consider and pronounce an
opinion upon the exercise of sovereign power by a foreign Government, if the
consideration of those acts only constitutes a preliminary to the decision of a quest ion
. . . which in itself is subject to the competency of the Court of Law’ .21
[66] In Nevsun ,22 three Eritrean workers alleged that they were required to work in
a mine in Eritrea where they were subjected to cruel and inhuman treatment. The mine
was owned by Nevsun , the appellant. The workers sued Nevsun in the Canadian courts
for br eaches of customary international law and domestic torts. Nevsun , invoked the
foreign act of state doctrine to bar the proceedings against it, contending that the
doctrine preclude d domestic courts from assessing the sovereign acts of a foreign
government. The majority of the Supreme Court of Canada, while acknowledging that
its common law has grown from the same roots as the English common law, held that
20 Underhill v Hernandez 168 US 250 (1897) at 252 .
21 Moti fn 19 above para 52 citing FA Mann ‘The Sacrosanctity of the Foreign Act of State’ Studies in International
Law (1973) 420 at 433 -434, quoting von Bar, Das Internationale Privat - und Strafrecht , (1889), vol 2 at 685, translated
by Gillespie as Private International Law, (1892) at 1121 .
22 Nevsun Resources Ltd v Araya and O thers 2020 SCC 5 ; [2020] 1 SCR 166 .
33
Canadian law had developed its own approach based on conflict of laws and judicial
restraint, rather than ‘an all -encompassing “ foreign act of state doctrine” ’.23 Of the
exercise of judicial restraint when considering foreign law questions, the court had
this to say: ‘This restraint means that courts will refrain from making findings which
purport to be legally binding on foreign state s. But our courts are free to inquire into
foreign law questions when doing so is necessary or incidental to the resolution of
domestic legal controvers ies properly before the court’ .24
[67] I turn next to the English law, to which we were invited by counsel to give our
close attention, and deservedly so. In Belhaj , the foreign act of state doctrine was
conceptualised as a set of rules, subject to limitations and exceptions. Lord Neuberger
considered that the doctrine could be framed as four possible rules , whil e Lord Mance
proposed a tripartite classification. Lord Sumption distinguished ‘municipal law act
of state’ and ‘in ternational law act of state’.25 The former captures the principle that
the English courts will not adjudicate on the lawfulness or validity of a foreign state’s
sovereign acts under its own law. The latter holds that the English courts will not
adjudicate on the lawfulness of the extraterritorial acts of foreign states in their
dealings with other states or the subjects of other states. While there is some
intersection in these rule-based formulations, there are also important differences.
Lord Mance consid ered that his formulation that approximates the municipal law
foreign act of state should be limited to acts relating to property within the jurisdiction
of the foreign state. Lord N euberger, under his articulation of the rules, had further
difficulty with the notion that an executive act of a foreign state, unlawful under the
laws of that state, should be given effect to by an English court. Lord Sumption’s
speech in Belhaj does not support either of these qualifications.
23 Ibid para 4 4.
24 Ibid para 47.
25 Belhaj fn 8 above para 227.
34
[68] In the most recent treatment of the foreign act of state doctrine in English law
by the Supreme Court, in Deutche Bank ,26 the formulation of Lord Sumption has
prevailed. Lord Lloyd -Jones articulates the foreign act of state doctrine as an
exclusionary rule, ‘limiting the power of the courts to decide certain issues as to the
legality or validity of the conduct of foreign states within their proper jurisdiction. It
operates not by reference to law but by reference to the sovereign character of the
conduct which forms the subject matter of the proceedings’ .27 The rule, he considered,
is of application to legislative acts and executive acts. But the rule is subject to
limitations and exceptions. These were framed as follows:
‘(1) [T]he foreign act of state must, generally speaking, take pla ce within the territory of the
foreign state itself. This limitation may not always apply to Rule 3 ( Yukos Capital (No 2) , para 68).
(2) [T]he doctrine will not apply to foreign acts of state which are in breach of clearly established
rules of internation al law, or are contrary to English principles of public policy, as well as where
there is a grave infringement of human rights ( Oppenheimer v Cattermole [1976] AC 249, 277 -278,
per Lord Cross of Chelsea; Kuwait Airways (Nos 4 and 5) [2002] 2 AC 883 and Yukos Capital (No
2), paras 69 -72).
(3) Judicial acts will not be regarded as acts of state for the purposes of the foreign act of state
doctrine ( Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 and
Yukos Capital (No 2) , paras 73 -91).
(4) The doctrine does not apply where the conduct of the foreign state is of a commercial as
opposed to a sovereign character ( Empresa Exportadora de Azucar v Industria Azucarera Nacional
SA (The Playa Larga) [1983] 2 Lloyd’s Rep 171; Korea National Insurance Corpn v Allianz Global
Corporate & Specialty AG [2008] 2 CLC 837 and Yukos Capital (No 2) , paras 92 -94).
(5) The doctrine does not apply where the only issue is whether certain acts have occurred, as
opposed to where the court is asked to inquir e into them for the purpose of adjudicating on their
legal effectiveness ( Kirkpatrick (1990) 493 US 400 and Yukos Capital (No 2) , paras 95 -104).
26 Maduro Board of the Central Bank of Venezuela v Guaido Board of the Central Bank of Venezuela [2022] 1 CLC
391, [2021] WLR(D) 638, [2022] 2 WLR 167, [2023] AC 156, [2022] 2 All ER 703, [2021] UKSC 57 (Deutsche Bank ).
27 Ibid para 135 .
35
(6) For the doctrine to apply, challenges to foreign acts of state must arise directly “and not be
a matter of merely ancillary or collateral aspersion” ( Yukos Capital (No 2) , para 109).
(7) The foreign act of state doctrine should not be an impediment to an action for infringement
of foreign intellectual property rights, even if validity of a grant is in issue, simply because the action
calls into question the decision of a foreign official ( Lucasfilm Ltd v Ainsworth [2012] 1 AC 208,
para 86 per Lord Collins of Mapesbury and Lord Walker of Gestingthorpe JSC and Yukos Capital
(No 2) , paras 63 -64).’28
[69] I turn to con sider whether we should adopt this formulation of the foreign act
of state doctrine as the best expression of our common law. I make t hree preliminary
observations. First, the foreign act of state doctrine is a doctrine of our domestic
common law. It is no t required by treaty or customary international law. Second, it is
a doctrine that provides reasons for a domestic court to decline to decide certain
matters , even though the court’s jurisdiction has been established. Third, while our
courts have recognise d the doctrine, they have given considerably less attention to its
contents than is the case in other jurisdictions, as we have observed.
[70] Of the English case law , the first issue that requires consideration is conceptual.
Generally, a clearly formulated r ule that gives expression to the rationale for the rule
provides certainty, and thus fosters the rule of law. The English cases, however,
demonstrate that it has proved difficult to formulate the doctrine as a body of rules.
Even the most recent formulati on in Deutsche Bank is a lattice of rules, exceptions
and limitations. This has occasioned academic commentary to describe the doctrine
as ‘shot through with indeterminacy’.29 The difficulty is that the reasons that count in
favour of limiting the power of a court to adjudicate upon the validity or lawfulness
of a foreign state’s sovereign acts , carried out within its own territory , must be
28 Ibid p ara 136.
29 Teo, M. 2021. Narrowing Foreign Affairs Non -Justiciability. International and Comparative Law Quarterly , 70(2),
pp 505-527.
36
reckoned against countervailing reasons that pull against such limitation. But it is
apparent that the English courts have struggled to fit the doctrine into this framework.
Deutsche Bank references what it calls ‘limitations and exceptions ’ to the rule. They
combine conditions for the application of the rule and exceptions to t he rule. This
appears to muddle requirements of the rule, with grounds upon which the rule should
not be followed. And this grounds the critique that the doctrine is principally
comprehended by what it is not.
[71] No doubt efforts could be made to formulate t he rule on the basis of its
limitations and demarcate more clearly the grounds of exception that exclude the duty
to follow the rule. There is however a larger issue at play, beyond legal architecture.
The doctrine must capture the reasons for a court to d ecline to adjudicate the conduct
of a foreign state and must also allow for reasons that favour such adjudication. It is
difficult to formulate this weighing of reasons as a rule, with exceptions. There may
be reasons that incline a court to abstain from a djudicating certain issues or weigh
with the court to adjudicate these issues, notwithstanding the reasons to abstain. This
balancing of reasons is not the sam e things as a want of jurisdiction , which a court
either enjoys or lacks. The doctrine frames wha t a court ought to do, having considered
the reasons for and against abstention. I do not think that the doctrine is correctly
conceptuali sed as an exclusionary rule, subject to limitations and exceptions , because
the weight of reasons is not readily susce ptible of expression as a rule or an exception
of invariable application.
[72] I turn to a consideration of the basis of the doctrine in English common law,
and its fit with our common law. The foreign act of state doctrine is often said to be
based on comity. Lord Sumption in Belhaj elaborated upon the constitutional
dimensions of comity: the United Kingdom is ‘a unitary body’ and ‘ [l]ike any other
37
organ of the United Kingdom , the courts must respect the sovereignty and autonomy
of other states’ .30 This is the same foundation that supports the doctrine of state
immunity. In addition, Lord Sumption considered the foreign act of state doctrin e to
rest upon the constitutional principle of the separation of powers.31 It is for the
executive to conduct the foreign affairs of the country , and the courts should not
trespass upon this competence. Lord Neuberger and Lord Mance referenced a possible
rule, derived from Yukos ,32 that would preclude the courts of the United Kingdom
from investigating acts of a foreign state ‘when and if the Foreign Office
communicated the Government’s view that such investigation would “embarrass ” the
United Kingdom in its international relations’ .33 Of this possible rule, both Law Lords
doubted its exclusionary remit , and Lord Mance sai d of this: ‘I see little attraction in ,
and no basis for , giving the Government so blanket a power over court proc eedings,
although I accept and recognise that the consequences for foreign relations can well
be an element feeding into the question of justiciability’.
[73] How do these twin pillars, upon which the doctrine is constructed in English
law, stand within our co mmon law? Our common law, unlike English common law,
is shaped and controlled by the Constitution. Pharmaceutical34 made the monist
structure of our law clear: ‘There is only one system of law. It is shaped by the
Constitution which is the supreme law, and all law, including the common law,
derives its force from the Constitution and is subject to constitutional control’ . What
this has required of the courts is that the common law must be developed to fulfil the
purposes of the Constitution and ‘the legal or der that it proclaims’.35 Section 39(2) of
30 Belhaj fn 8 para 225.
31 Belhaj fn 8 para 225.
32 Yukos Capital SARL v OJSC Rosneft Oil Co (No 2) [2014] QB 458 ; [2013] 3 WLR 1329, [2013] 1 All ER 223, [2012]
WLR(D) (Yukos ) 186 para 65 .
33 Belhaj fn 8 para 41 .
34 Pharmaceutical Manufacturers Association of South Africa and Another: In re Ex Parte President of the Republic of
South Africa and Others 2000 (2) SA 674; 2000 (3) BCLR 241 (Pharmaceutical ) para 44.
35 Ibid para 49.
38
the Constitution requires that when developing the common law, every court must
promote the spirit, purport and objects of the Bill of Rights.
[74] If the foreign act of state doctrine rests upon the constitutional principle of the
separation of powers, then it is a principle, in this context , that does not render the
decisions of government , in their dealings with foreign governments , immune from
constitutional control. The government enjoys a large measure of discretion in
conducting its foreign affairs, however, the Constitutional Court has recognised that ,
even in this sphere , a court may intervene in the face of abuse of power or the use of
foreign policy contrary to the provisions of the Constitution.36 In Kaunda ,37 the
Constitutional Court again recognised the particular expertise of government, and its
wide discretion , to deal with foreign affairs . Yet decisions made by government on
these matters may be subject to constitutional review . The act of foreign state doctrine
thus cannot rest on the absolute and exclusive authority of the executive to decide
upon how to conduct its relationships with other sovereign states . If, as the ca ses
establish, our courts may bring under constitutional review the conduct of foreign
policy by the executive, then , the foreign act of state doctrine cannot rest upon the
separation of powers as the basis for an exclusionary rule because the executive do es
not enjoy a con stitutionally unbounded power to decide upon how the country’s
foreign policy is to be conducted.
[75] The reach of the Constitution has consequences also for the variety of the
doctrine, to which I have referred, styled in Belhaj as international law act of state. To
recall, a court will not adjudicate on the lawfulness of the extraterritorial acts of
36 Geuking v President of the Republic of South Africa and Others 2003 (3) SA 34 (CC); 2004 (9) BCLR 895 (CC);
2003 (1) SACR 404 (CC) para 27.
37 Kaunda and Others v President of the Republic of South Africa 2005 (4) SA 235 (CC); 2004 (10) BCLR 1009 (CC);
2005 (1) SACR 111 (CC) (Kaunda ).
39
foreign states in their dealings with other states. In Buttes Gas ,38 a claim was made
that the United Kingdom had intervened politically with the Ruler of Umm al -Qywain,
to forbid drilling by an oil company , Occidental, thereby defrauding it of the benefits
of oil -bearing deposits. In a widely cited speech, Lord Wilberforce concluded that the
claim was not justiciable , as it concerned acts ‘operating in the area of transactions
between states’ ,39 that would require adjudication without ‘judicial or manageable
standards’ .40
[76] Yet it is precisely into this realm that the Constitutional Court has ventured. In
Law Society ,41 the Constitutional Court declared the President’s participation in
support of a resolution by the Southern African Development Community (SADC)
Summit to suspend the operation of the SADC Tribunal to be unconstitutional,
unlawful and irrational. SADC was e stablished by treaty and the Summit comprises
heads of government of its member states. By agreeing to amend the treaty, at the
behest of Zimbabwe, the President had failed to comply with his obligations under the
Constitution. Mogoeng CJ, writing on this point for the Court, had this to say: ‘Comity
and sound diplomatic relations ought never to be a product of illegal or
unconstitutional compromises that could, rightly or wrongly, be viewed as
capitulating to the desires of others to exercise unche cked pow er to the potential
prejudice of the rights of citizens’ .42 The Constitutional Court demonstrated no
inhibition adjudicating upon the actions of the Government in its dealings with other
states , within the framework of the SADC treaty. Litigants , following this decision,
then sought damages from the Government on the basis that the wrongful and
38 Buttes Gas and Oil Co. and Another Respondents v Hammer and Another Appellants Buttes Gas and Oil Co. and
Another Appellants v Hammer and Another Respondents [1982] A.C. 888 (1981); [1981] 3 W.L.R. 787 ( Buttes Gas ).
39 Ibid a t 931
40 Ibid a t 938.
41 Law Society of South Africa and Others v President of the Republic of South Africa and Others [2018] ZACC 51;
2019 (3) BCLR 329 (CC); 2019 (3) SA 30 (CC) (Law Society ).
42 Ibid para 90 .
40
unconstitutional conduct of the President precluded access to the SADC Tribunal ,
causing them to suffer damages . Though their claims were found to have prescribed ,43
the cause of action was not excluded by reason of its trespass upon diplomatic
relations.
[77] What the Law Society case illustrates is that a claim against the Government,
on constitutional grounds, implicating actions taken with other states in the realm of
international law , is not beyond the adjudication of our courts. The foreign state
doctrine was not raised in this matter . But what signifies is how far claims based on
constitutional rights may implicate the actions of foreign states without presumptive
exclusion.
[78] The other pillar upon which the foreign act of state doctrine rests, tha t is, that
the courts, as part of the South African state, must respect the sovereignty and
autonomy of other states , runs into similar difficulties. The constitution may re quire
that our courts consider the legality of the legislative or executive actions of another
sovereign state. In Mohamed ,44 the Constitutional Court had to consider whether to
grant relief to an applicant who had been handed over by the South African auth orities
to agents of the Federal Bureau of Investigation in Cape Town for interrogation. Mr
Mohamed was then removed to New York to stand trial on serious charges which
carried the death penalty. No assurances were obtained by the South African
authorities from the United States that Mr Mohamed would not be sentenced to death.
The Constitutional Court held that the South African government had co -operated
with a foreign government to secure the removal of a fugitive to be put on trial for his
43 President of the Republic of South Africa and Another v Tembani and Others [2024] ZACC 5; 2024 (9) BCLR 1152
(CC) .
44 Mohamed and Another v President of the Republic of South Africa and Others [2001] ZACC 18; 2001 (3) SA 893
(CC); 2001 (7) BCLR 685 (CC) (Mohamed ).
41
life. This was inconsistent with the government’s obligations to protect the
constitutional right to life of everyone because it may not make itself party to the
imposition of cruel, inhuman or degrading punishment.45
[79] While the offending conduct of the South African government in Mohamed
took place in South Africa, the infringement of Mr Mohamed’s rights to life and not
to suffer cruel punishment came about because of our constitutional repugnance for
the laws and execu tive actions of the United States in exacting the death penalty for
crimes of the kind with which Mr Mohamed was to be charged. If the extraterritorial
actions of the United States to impose and execute the death penalty under its laws
were beyond the remi t of our courts because of the respect that our courts owe to the
sovereignty and autonomy of the United States, then it is not apparent how Mr
Mohamed’s constitutional rights were adversely affected. Mohamed was reaffirmed
in Tsebe .46
[80] The foreign act of s tate doctrine, as part of our common law, must reflect the
legal order that the Constitution proclaims. That legal order asserts the primacy of the
Constitution and the Bill of Rights. This entails that there is no hard separation of
powers that immunises government’s diplomatic engagements from any
constitutional review. Nor is the principle of respect for the autonomy and sovereignty
of the laws and executive actions of a foreign state presumptively controlling when
constitutional rights are at stake. The foreign act of state doctrine in our common law
must reflect this constitutional primacy.
45 Ibid para 58.
46 Minister of Home Affairs and Others v Tsebe and Others, Minister of Justice and Constitutional Development and
Another v Tsebe and Others [2012] ZACC 16; 2012 (5) SA 467 (CC); 2012 (10) BCLR 1017 (CC) (Tsebe ).
42
[81] What does this mean for a proper understanding of the foreign act of state
doctrine , as a doctrine of our common law? First, the doctrine is not one of
jurisdiction. The premise of the doctrine is th is: even though the court enjoy s
jurisdictional competence, should the court nevertheless decline to adjudicate the
matter? Second, it is uncontroversial that the doctrine is based on the principle of
comity. Comity here stands for two principle s: (i) that sovereign states recognise each
other’s sovereign power to act within their own territory whether by legislative or
executive action or both; and (ii) sovereign states have the power to engage in deal ings
with one another , and that this is the terrain of state power and international law. These
principles are owed respect when the acts of a foreign state are pleaded in a proceeding
before our courts.
[82] Third , to show respect for these principles does n ot entail that our common law
requires that these principles must be expressed as exclusionary rules. Some of the
conceptual difficulties of doing so have been referenced above in my exposition of
the English law. The heart of the problem is this. The prin ciples afford reasons to
decline to adjudicat e certain issues. But there are reasons that count and pull in the
opposite direction. In English law these reasons are treated as exceptions. But for us,
the claims of constitutional conformity are not matters of exception, but foundational.
They provide counter -veiling reasons for a court to abjure abstention. And the
invocation of constitutional rights and the value of adjudication in the service of
upholding the constitution are not the only reasons that may signify in this way.
Breaches of international law and questions of remedial efficacy may also be availing.
All of which points to the adoption of a doctrine that invites a court to weigh reasons,
for and against, a decision to decline to adjudicate upon f oreign acts of state.
43
[83] To conceptualise the doctrine in this way recognises that comity is a matter of
deference to interests that require respect from the court s. These interests m ay be
weighty . But to defer is not to abdicate. Other interests also warrant recognition and
may move a court to decide the issues before it. As we have observed, our courts have
been willing to subject to constitutional review conduct that might otherwise qualify
for abstention on grounds of comity because the infringement of constitutional rights
or international law is the more compelling value. It might be thought that a doctrine
framed as a realm of reasons is to favour imprecision at the cost of rule -bound
certainty. That is not, I apprehend, the real choice. It is a c hoice between a doctrine
framed as rule s that must yield to exceptions and limitations which, under our
constitution, are of considerable and necessary amplitude, or a doctrine which weighs
the reasons that are relevant to a decision as to whether the cour t should or should not
adjudicate upon issues concerning foreign acts of state. The weight of reasons appears
to me to be more congruent with the recognition that the principle of comity can
command in our common law , a law that is required to give express ion to the values
of the Constitution.
[84] In Swissborough , the court was content to adopt a formulation of the foreign
act of state doctrine from English law, but did not examine the doctrine within the
framework of the Constitution. Cherry Blossom was not r equired to decide the ambit
of the doctrine, and Van Zyl simply enunciated a principle of restraint. I find that the
foreign act of state doctrine forms part of our common law. It is a doctrine composed
not of rules but of reasons that count for and agains t the court’s adjudication of a
foreign state’s acts. The weighing of reasons will take account of the restraint that is
warranted by considerations of comity and the counter -veiling reasons that count in
favour of entertaining the claim and adjudicating t he acts of a foreign state .
44
The weighing of reasons in this case
[85] I turn to the application of the foreign act of state doctrine, as I have sought to
conceptualise it, in the appeal before us. Unsurprisingly, the parties placed their
emphasis on different components of EAC’s pleaded cause of action. EAC submitted
that their case is to hold the defendants liable for their wrongful conduct in depriving
EAC of the economic benefits of the GSM license. The defendants drew attention to
the allegations in the par ticulars of claim that attribute unlawful conduct to the
government of Iran, as integral to EAC’s cause of action.
[86] I recall that EAC did not seek to curtail their reliance on any averments
comprising their claims. EAC contended in its written argument tha t its cause of
action does not depend upon a finding that the government of Iran acted unlawfully.
That contention cannot be accepted. The inducement claim requires a finding that the
government of Iran was induced to replace EAC as a shareholder of the op erating
company that would hold the GSM license, and did so in breach of EAC’s contractual
rights. Atlas Organic47 makes it plain that the delict of inducement rests upon a third
party inducing a party to the contract to commit a breach thereof. If the indu cement
fails to bring about a breach of contract, the plaintiff suffers no harm because it
continues to enjoy the performance due to it under the co ntract. The inducement claim
thus depends upon the government of Iran having breached the contractual rights of
EAC. Put differently, if the government of Iran was at liberty to replace EAC as a
shareholder of the consortium that would hold the GSM license , without legal
constraint, EAC would have no claim against the defendants. Hence, the legality of
the actio ns of the government of Iran is integral to the inducement claim.
47 Atlas Organic fn 2 at 202G -H.
45
[87] The prevention claim, as I have explained, stands on a different footing. It is
premised on a finding that the government of Iran did not owe ‘binding obligations’
to EAC, as the inducement claim posits. However, the prevention claim alleges that
the defendants engaged in bribery and corruption to induce the government of Iran
not to conclude a binding contract with the Turkcell Consortium (including EAC) that
would otherwise have led to the consortium implementing and operating the GSM
cellular phone system in Iran. The pleadings identify the individuals in the
government of Iran with whom the defendants engaged ‘in corrupt acts with these
individuals’. These representatives of the gover nment of Iran are alleged to have been
parties to acts of corruption as a result of which the government of Iran did not
conclude the contract with the Turkcell Consortium that would otherwise have
materialised. Although the government of Iran is not sued as a joint tortfeasor with
the defendants, the complicity of its representatives in the corrupt scheme planned by
the defendants is a necessary causal link in the liability that is sought to be established
by recourse to the prevention claim. If the govern ment of Iran had acted free of any
complicity in the alleged corruption, the corruption alleged against the defendants
would have visited no harm on EAC. The prevention claim thus depends upon the
complicity of representatives of the government of Iran in acts of corruption that
induced the government to deprive EAC of the benefits of the GSM license which it
would otherwise have enjoyed. The unlawful conduct of the government of Iran is a
necessary allegation in this cause of action.
[88] The lawfulness of the acts of the government of Iran cannot, thus, be said to be
incidental to the cause of action upon which EAC relies. The foreign act of state
doctrine is not of application if the pleading incidentally references the unlawful acts
of a foreign state. But t hat is not the position here: the allegations of unlawful conduct
on the part of the government of Iran are necessary for EAC to sustain its case. EAC
46
placed some emphasis on the decision of the US Supreme Court in Kirkpatrick .48 But
I do not consider that it assists EAC. In Kirkpatrick , the legality of the contract that
was secured in Nigeria , by reason of the corrupt payments made to foreign
government officials , was not a question that the US courts had to decide. The fact of
such payments sufficed. EAC’s claims, by contrast, require a court to decide upon the
legality of the acts of the government of Iran.
[89] It follows from this analysis that the lawfulness of t he executive acts of the
government of Iran, taken within its territory, will have to be adjudicated upon by a
South African court in order to decide EAC’s claims. That triggers the deference that
our courts accord to the autonomy of the sovereign power of another state to legislate
and act within the bounds of its own territory. That deference means that courts in this
jurisdiction have reason to proceed with caution as to whether to adjudicate the
lawfulness or validity of an executive act of a foreign st ate performed within the
territory of that state.
[90] The other dimension of the doctrine that requires consideration is whether there
is some issue of the legality of the extra -territorial acts of foreign states in their
dealings with each other that warran ts deference by a South African court. EAC’s
particulars of claim make wide ranging allegations as to how the defendants acted to
influence the South African government to provide diplomatic assistance for Iran’s
nuclear programme and to secure defence coo peration between the South African
government and the Iranian Ministry of Defence. However, it does not appear that
EAC’s claims require any finding that the diplomatic cooperation that is alleged to
have taken place between Iran and South Africa was itsel f unlawful, even if it came
about as a result of what are said to be corrupt interventions. Nor is there any evidence
48 Kirkpatrick & Co Inc v Environmental Tectronics Co rp Int 493 US 400 (1990) .
47
offered by t he South African government to suggest that the airing of these matters in
court would damage some specific aspect of the dipl omatic relationship between
South Africa and Iran, or indeed South Africa’s relationship with another state. The
evidence that may be led on these issues may be a source of some embarrassment, but
that is not a consideration of much weight. The currency of our courts is justice not
discomfort. I can find little, on this dimension of judgment, to weigh in the scales in
favour the invocation of the doctrine to decline adjudication in a South African court
of the diplomatic engagements between South Africa and Iran.
[91] I turn next to consider what considerations weigh in favour of our courts
adjudicating EAC’s claims. First among these is to ascertain whether the claims
involve matters that tranche upon the Bill of Rights or other foundational
constitutional principles. Section 8 of the Constitution states that the Bill of Rights
applies to all law, and binds the legislature, executive and the judiciary. And s 7 of
the Constitution requires the State, which includes the courts, to respect, protect and
fulfil the Bill of Rights . The Constitution is the supreme law, and hence a common
law doctrine that we are here concerned with must be applied in conformity with the
Constitution.
[92] EAC, a peregrinus , has brought its case in the forum in which all of the
defendants, save for MTN International , reside. It has observed the general rule, of
considerable pedigree, actor sequitur forum rei .49 EAC has , in consequence, the right
conferred by s 34 of the Constitution to have any dispute that can be resolved by the
application of law decided before a court. This right has both a formal and a
substantive content. Formally , EAC has enjoyed access to the courts and the only
question is whether our courts should adjudicate its claims. Substantively, EAC has
49 Sciacero & Co v Central South African Railways 1910 TPD 119 at 121.
48
made claims against the defendants, all but one of whom are resident within the
court’s jurisdiction, and all of whom are alleged to have committed acts of some
gravity. The wrongful conduct levelled against the defendants concern s a conspiracy
of bribery and corruption , involvin g officials of the governments of South Africa and
Iran. EAC comes to a South African court and seeks access to have its claims decide d.
It thus seeks the substantive enjoyment of its constitutional right of access to the
courts. This too must be weighed i n the balance. In addition, the constitutional
significance of EAC’s claims warrants consideration, and it is to this matter that I now
turn.
[93] In Glenister ,50 the majority of the Constitutional Court held that the
Constitution imposes an obligation on the S tate to establish and maintain an
independent body to combat corruption and organised crime. In the course of their
judgment, Moseneke DCJ and Cameron J, set out the basis upon which corruption
‘threatens to fell at the knees virtually everything we hold d ear and precious in our
hard-won constitutional order’ .51 The judgment recounts the international agreements
on combating corruption that bind South Africa; the extensive domestic legislation
that seeks to prevent and punish corruption; and the repeated adm onitions of our
courts, including this Court, that corruption offends against the rule of law and
threatens our constitutional order.52 In a passage of importance, the following is said:
‘Section 7(2) casts an especial duty upon the State. It requires the S tate to “respect,
prote ct, promote and fulfil the rights in the Bill of Rights ”. It is incontestable that
corruption undermines the rights in the Bill of Rights, and imperils democracy. To
combat it requires an integrated and comprehensive response’.53
50 Glenister v President of the Republic of South Africa and Others [2011] ZACC 6; 2011 (3) SA 347 (CC); 2011 (7)
BCLR 651 (CC) (Glenister ).
51 Ibid para 166.
52 Ibid paras 167 -173.
53 Ibid para 177.
49
[94] These pronouncements by the Constitutional Court are salient for the weighing
that must be done to decide whether the South African courts should adjudicate upon
the claims of EAC. EAC brings a private law claim for damages. But it seeks to hold
to account defendants , two of whom are South Africans acting in positions of
substantial corporate responsibility , in respect of a powerful group of South African
companies, which are alleged to have corrupted the government of South Africa for
private commercial ga in. Alleged conduct of this kind cannot be relegated to the realm
of private interest alone because it concerns the corruption of the South African
government , and hence traverse allegations that go to the heart of the integrity of our
constitutional order . As Glenister affirmed, the state, including the courts, have a duty
to act against corruption. When a court has before it a case in which defendants are
alleged to have committed serious acts of corruption involving high officials of the
South African an d Iranian government s, which, if proven, are deeply inimical to our
constitutional order, it must consider the importance of adjudicating such a case in the
interests of affirming the rule of law and upholding constitutional supremacy, as its
primary duty. That the opportunity to do so arises from litigation brought by a litigant
in a civil suit for damages can make no difference to the observance of this duty. As
Glenister has made clear , what is required is a comprehensive and integrated response,
and the courts are not exempt from playing their part. The allegations of corruption of
high officials and the improper influence brought to bear upon decisions of
government , of great importance , allegedly taken at the bidding of powerful corporate
interests are matters our courts will not lightly retreat from adjudicating upon. That is
so because conduct of this kind , if proven, is corrosive of our constitutional order . A
civil suit which requires the adjudication of these issues allows the courts , should th e
case be proven, to remedy wrongful conduct of grave consequence both for the private
interests of EAC , and the wider public interests that require corruption to be
50
confronted. The re are thus strong reasons to favour adjudication over abstention when
a litigant seeks access to the courts to adjudicate a case of this kind .
[95] Let me be quite clear as to this conclusion. First, the reasons that weigh in
favour of adjudicating EAC’s claim is not an invocation of international law on the
combatting of corruption as a peremptory norm of international law , that is , as jus
cogens. I do not consider the treaties to which South Africa is bound to enjoy that
status. Nor do I rely upon some narrow public policy exception of the kind that
prevailed in Belhaj. For reasons I have explained, the foreign act of state doctrine that
I favour , rests upon a broader weighing test. And hence, I do not need to engage the
exercise that much preoccupied the parties as to whether corruption can be compared
to torture for the purposes o f applying the doctrine. Third, what counts in favour of
adjudication is whether there are rights or issues raised by the litigation that the court
should decide because they engage matters of constitutional importance , of which the
courts are the principa l guardians . South African courts should not lightly side -step
that responsibility .
[96] What then does the weighing exercise yield? Deference is due to the autonomy
of Iran as a sovereign state t hat has acted to put in place a GSM licensee to provide
cell ph one services in Iran. And if it acted unlawfully in doing so , within its own
territory , even as a result of the corruption of Iranian officials, there are reasons to say
that this remains a matter for Iran, and not adjudication before the South African
courts. As against this, a South African court is asked to adjudicate upon the alleged
corruption by South African companies and their directors of high officials of the
South African and Iranian government s for private gain. Corruption of this kind, if
prove n, is a grave threat to our constitutional order, and the South African courts have
a duty to preserve that order. The primary way courts can do so is to adjudicate cases
51
of this kind. It would engender no small measure of surprise, given everything our
courts have said about the dangers of corruption in South Africa, that a South African
court, faced with a case of corruption of this alleged magnitude , considered, for
reasons of deference, that it should decline to adjudicate the matter, and thought it
preferable for the courts of Iran to do so.
[97] The balancing exercise, must also have regard to the component parts of the
cause of action. The conspiracy pleaded by EAC is alleged to have been planned and
developed by the defendants in Johannesburg. The bri bery and corruption are said to
have ensnared both South African and Iranian officials, and have influenced the policy
of both government in dimensions of global significance. Ultimately, the actions of
the defendants were intended to affect the ultimate a ward of the GSM licence in Iran,
and allegedly did so. The cause of action is thus not bounded by one sovereign
territory, nor confined to the gratification extended by South African companies to
South African officials. The parties were at odds as to wher e the centre of gravity of
the case lay. I take account of the fact that EAC’s claims traverse wide -ranging
allegations of illegality not only by officials of the South African government but also
officials of the government of Iran. The particulars of cla im also rest upon the
unlawful usurpation of EAC’s commercial opportunity by the government of Iran in
Iran and the harm thereby caused to EAC. In sum, the illegality of the conduct of the
government of Iran looms large in the formulation of EAC’s claims. In the end, what
weighs more heavily in the balance is the strength of the South African courts’ duty
to adjudicate cases which allege that South Africans have used bribery and corruption
to suborn highly placed officials of the South African government fo r commercial
gain. These allegations are not incidental or peripheral to the case. They implicate
grave constitutional interests. For these reasons deference must yield to the court’s
greater duty to uphold the South African constitutional order.
52
[98] For thes e reasons the appeal must succeed on this issue. The high court adopted
an exclusionary rule as the basis of the foreign act of state doctrine. It did so by
adopting the English law. That was not warranted. The better conception of the
doctrine, congruent with our constitution, is to allow for a broader weighing of
reasons. The high court thus proceeded to decline to adjudicate EAC’s claims on an
incorrect understanding of the foreign act of state doctrine in our law. Once that is so,
whatever species of di scretion the high court may have exercised, it is open to
appellate revision. On the application of the correct standard, the weighing yields an
answer that requires the court to adjudicate EAC’s cause of action. The special plea,
on this score, thus falls to be dismissed with costs.
Choice of Law
[99] I recall that in terms of the separation order, the following issue fell to be
decided: ‘Does Iranian or South African law (or any other legal system) determine
whether the allegations made in paragraphs 36 to 60 and 66 of the particulars of claim,
both individually and collectively , (read with the corresponding pleas of the
defendants thereto) found a claim for damages as the plaintiff contends’? The high
court answered this question in the following way. The delict pleaded by EAC
occurred in Iran or may be framed on the basis that the loss suffered by EAC was both
caused and suffered in Iran. Whether the test of the lex loci delicti commissi is applied
or the test of the country with the most significant relationship, the result is the same:
the law of Iran is the operative legal system to decide whether the specified allegati ons
in the particulars of claim found a claim for damages.
[100] EAC complains that the high court did not correctly formulate the conflict of
law rules of application to the cause of action pleaded by EAC; nor did it properly
53
apply the rules it did comprehend. And consequently, the high court arrived at the
wrong answer to the question that it was required to de cide. The answer the high court
should have given, so EAC contended, was that the law of South Africa is the lex
causa e. The defendants submit that the high court’s judgment on this issue cannot be
faulted.
[101] The parties were agreed on the starting point of the analysis. In order to decide
the law that should be applied to the case before the court, the first step is one o f
characterisation.54 The issue raised by the allegations in EAC’s particulars of claim is
one of substance. The claims are framed in delict. This was common ground between
the parties . It was also the finding of the high court , and correctly so. The next step in
the analysis is then to determine the conflict of law rules applicable to a delict of this
kind. After some rather fragmentary judicial treatment of the question, t he leading
case in our law on this point is Burchell .55 There is some doubt as to the precise ratio
of the case. Ultimately , Crouse AJ , after a scholarly treatment of the comparative law,
came to the following conclusion: ‘After considering the lex loci delicti as a possible
test, I ultimately decided that the lex loci was only to be used as a factor in a balancing
test to decide which jurisdiction would have the most real or significant relationship
with the defamation and the parties’ . She thus appears to have adopted the position
that the applicable law is the law of the jurisdiction which has the most significant
relationship with the delict and the parties.
[102] There has been a fair measure of scholarly debate in the wake of Burchell as to
precisely how the choice of law rule should be formulated.56 Various permutations of
54 Society of Lloyds v Price; Society of Lloyd's v Lee' [2006] ZASCA 88; 2006 (5) SA 393 (SCA).
55 Burchell v Anglin 2010 (3) SA 48 (ECG) (Burchell ).
56 The debate is usefully summari sed in Lawsa 3 ed vol 7(1) para 366.
54
the application of the proper law have been suggested in order to frame a rule that will
be, as Professor Forsyth has observed, ‘clear, certain and appropriate to the resolution
of the dispute before the court’.57 I am persuaded, along the lines that Professor
Forsyth has suggested, that the rule that best satisfies these criteria may be formulated
as follow s. The law applicable to a delict shall be the lex loci delicti, but the lex loci
delicti may be displaced in favour of the law of the country with a manifestly closer ,
significant relationship to the occurrence and the parties . In cases where there is
uncertainty as to the lex loci delict , the legal system with which there is a significant
relationship will decide the question of the lex causae . So formulated, the choice of
law rule of general application is the lex loci delicti . That is a clear rule that has been
wide ly adopted . The displ acement of the rule requires a manifestly closer connection .
This ensures that the rule is not supplanted , unless there is a clear showing that the
law of another jurisdiction is plainly more appropriate. Flexibility of course yields
some measure of uncert ainty, strongly mitigated by the gravitational pull of the
general rule. S ince this formulation of the choice of law rule is at some variance with
the conclusory framing in Burchell , Burchell is, in this respect , no longer to be
followed.
[103] There remains a conceptual puzzle. Where, as in this case, the delict is
transnational, that is to say, the conduct or events constituting the delict do not take
place in one country, how is the lex loci delicti to be determined ? There are three
broad answers. First, the courts may adopt subsidiary rules that specify for particular
delicts that the lex loci delicti is the place where the central element of the delict took
place , and identify what should be taken to be the central element of the delict. I shall
call this t he essentialist approach. In some measure this was the approach taken in
Burchell . The court reasoned as follows. At issue was a defamation. The essential
57 Forsyth, C F. 2012. Private International Law: The Modern Roman Dutch Law including the jurisdiction of the High
Courts . Cape Town: Juta. 5th ed, at 364.
55
element of a defamation is publication. Publication took place in Nebraska in the
United States. That is then the lex loci del icti.58 Second, the courts may hold that in a
transnational delict the lex loci del icti is the country in which the greater part of the
events or conduct making up the elements of the delict took place. I shall call this the
plurality approach. The third approach is this. W here events constituting the delict
take place in different countries, there is no lex loci de licti. The object of the enquiry
is illusory. B etter then to accept that the lex causae shall be determined on the basis
of the significant relationship test. I shall call this the sceptical approach.
[104] The essentialist approach may give rise to some uncertainty as to what should
be taken to be the central element of a particular delict . It is a lso predicated upon the
doctrinal heresy that we have a law of delicts . The plurality approach may shade into
the significant relationship test. And the third approach abandons the notion that a
transnational delict can have a lex loci delicti .
[105] EAC and the defendants have adopted opposed positions as to the place of the
commission of the delict. EAC contends that the focal point of the delicts that it relies
upon is the intentional conduct of the defendants to induce a breach of contract or
wrong fully to interfere with the commercial opportunity EAC would have enjoyed as
a result of the Turkcell Consortium winning the tender. EAC argues that t his
intentional conduct issued from a conspiracy planned in South Africa by the
defendants who comprise So uth African companies and citizens, save for MTN
International. That the execution of that conspiracy took place only in part in South
Africa, and its harmful consequences were felt in Iran, does not detract from the fact
that the heart of what renders the conduct of the defendants wrongful took place in
58 Burchell fn 55 above para 118.
56
South Africa. This qualitative judgment of wrongfulness should be determining as to
where the delicts took place.
[106] The defendants’ analysis is different. They contend that the greater part of the
averments comprising EAC’s cause of action is conduct tied to Iran. The tender was
initiated by the government of Iran, under its laws, pursuant to which EAC claims to
have secured rights that were breached by that government in Iran. Much of the
influence that was brought to bear, constituting what is said to be an unlawful
inducement, took place in Iran. And the ultimate harm visited upon EAC, being the
usurpation of its participation in the business that the GSM licence enabled, also took
place in Iran. Counsel fo r the MTN defendants provided us with a copy of EAC’s
particulars of claim marked up according to those averments that reference events in
Iran, events in South Africa and those in both countries. That mark -up is an accounting
that shows that a significant plurality of the pleaded case concerns conduct that is
alleged to have taken place in Iran.
[107] EAC thus, in effect, follows the essentialist approach, while the defendants
proceed along the lines of the plurality approach . I am disi nclined to follow the
sceptical approach. Many transnational delicts will have a centre of gravity which
reflects a common -sense understanding of where the delict s took place. Nor do I
consider that the essentialist approach should ordinarily prevail over the plurality
approach. Unlike English law, we do not have a law of torts. The lex aquilia is a
unified scheme of liability in which it is not apparent that one requirement of liability
(or some combination) has centrality. Each requirement is necessary. T here is no a
priori reason to say that the place where the wrongful conduct was initiated is more
salient tha n where the harm was done. I n my view , the plurality approach best captures
the sense of place in the case of a transnational delict.
57
[108] Once that is so, the lex causae in this case is the law of Iran because the greater
part of the events or conduct making up the elements of the claims pleaded by EAC
took place in Iran. If however, there is any uncertainty on this score, which I don’t
consider to be so, Iran is in any event the country with the closer, significant
connection to the delict.
[109] I note parenthetically that what the application of the law of Iran will entail for
the plead ed claims of EAC forms no part of the separation order. It may indeed have
a bearing on what acts of state of the government of Iran , and their legality, can or
must be pleaded. And this in turn could have a bearing on the subject matter of the
other speci al pleas that form part of this appeal. This however is a function of how the
parties have chosen to litigate this matter .
[110] It follows that on the issue of the choice of law , EAC’s appeal must be
dismissed with costs.
Conclusion
[111] EAC has prevailed in its a ppeal in respect of the Article 29 defence, the state
immunity defence, and the foreign act of state defence. Its appeal fails on the choice
of law issue. These are discrete issues identified for determination in the separation
order. The costs, including the costs of two counsel, must follow the outcome of the
appeal in respect of each of these issues.
[112] In the result the following order is made:
(a) On the issue identified in paragraph 1.1 of the court order dated 31 January
2022 (the separation order) and the order made by the high court in paragraphs 1 .2
58
and 3 in respect thereof, the appeal is dismissed with costs, including the costs of two
counsel .
(b) On the issue identified in paragraph 1.8 of the separation order concerning the
special plea of the exclusive jurisdiction of the Iranian courts and the order made by
the high court in paragraphs 4, 5 and 6 in respect thereof :
(i) The appeal is upheld, with costs, including the costs of two counsel;
(iii) Paragraphs 4 , 5 and 6 of the order of the high court are set aside and
replaced with the following order: ‘the special plea is dismissed with costs,
including the costs of two counsel ’;
(c) On the issue identified in paragraph 1.8 of the separation order concerning the
special plea of state immunity and the order made by the high court in paragraphs 7,
8 and 9 in respect thereof :
(i) The appeal is upheld, with costs, including the costs of two counsel;
(iii) Paragraphs 7, 8 and 9 of the order of the high court are set aside and
replaced with the following order : ‘the special plea is dismissed with costs,
including the costs of two counsel ’;
(d) On the issue identified in paragraph 1.8 of the separation order concerning the
special plea of the foreign act of state doctrine and the order made by the high court
in para graphs 10, 11 and 12 in respect thereof :
(i) The appeal is upheld, with costs, including the costs of two counsel;
(iii) Paragraphs 10, 11 and 12 of the order of the high court are set aside and
replaced with the following order: ‘the special plea is dismissed w ith costs,
including the costs of two counsel ’.
________________ ______ _
D N UNTERHALTER
JUDGE OF APPEAL
59
Molemela P ( Mocumie JA concurring)
[113] I have read the judgment of my colleague, Unterhalter JA (the first judgment) ,
and am in agreement with the order granted in paragraph 112(a) of the judgment in
respect of the choice of law issue . I, however, respectfully disagree with the rest of
the orders as well as the underlying reasoning . The relevant facts of this case have
been correctly set out in the first judgment. I will, in this dissenting judgment, focus
mostly on the areas of disagreement in respect of the law that should, in my respectful
view, be applied to the facts.
[114] Like the high court, I hold the view that (i) EAC, as a bidde r, was bound by the
Tender Regulations ; (ii) the conduct of the Iranian government is integral to the case ;
(iii) a finding regarding unlawful actions o n the part o f the Iranian government is a
sine qua non to establish the delict ual claim instituted by EAC ; (iv) the Iranian
government ’s allegedly unlawful conduct i s central to EAC’s claim ; (v) the Tender
Regulations were of application beyond the announcement of the winning bid ; (vi)
the language of Article 29 is widely framed ; (vii) EAC was enjoined to submit its
dispute to the competent Iranian court, unless it could show that the court should
exercise its discretion not to enforce a foreign jurisdiction clause. Like the high court,
I, too , find that there is no basis to do so. My reasons for this concl usion are set out in
the succeeding paragraphs .
[115] I must state from the outset that I agree that what matters for the purposes of
deciding the special pleas is to analyse what essential allegations are made by EAC in
its particulars of claim . The particulars of claim state that the intended effect of the
actions of MTN International was to induce the Iranian government to breach its
60
contractual obligations to EAC and have it replaced, and that the Iranian government
was induced through bribery and corruption to replace EAC.
[116] The well -established maxim of Lord Denning in Lazarus Estates Ltd v
Beasley59 comes to mind. This maxim recognises that fraud is a fundamental flaw that
can undermine the validity of any legal arrangement. The principl e is essentially
aimed at protecting the victim of fraud. Obviously, this is the reason why EAC is
determined to seek redress in the courts, almost two decades after the commission of
the alleged breach. To my mind, allegations of unlawful conduct directed at the
government of Iran, predicated on collusion, bribery and corruption, entail putting the
entire tender process to scrutiny.
Article 29 (foreign jurisdiction clause)
[117] MTN International invoked the foreign jurisdiction clause as contained in
Article 29 of the Tender Regulations . Article 29 stipulates that the Regulations and
the call for competitive bids to which they relate are regulated by Iranian law as
regards their ‘validity, interpretation, performance and termination’ . It is well-
established that where a party seeks to invoke the protection of a foreign jurisdiction
clause, it should, as was done in this case, file a special plea seeking a stay of the
proceedings pending the outcome of foreign proceedings . Once a special plea of that
nature has been filed, the court will then be called upon to exercise its discretion
whether to enforce the clause in question. The discretion to be exercised is fact -
specific as each case must be considered on its own discrete facts.60 A decision n ot to
59 Lazarus Estates Ltd v Beasley [1956] 1 Q.B. 702; [1956] 2 W.L.R. 502; [1956] EWCA Civ 6 at 712. In ABSA Bank
Ltd v Moore and Another [2016] ZACC 34; 2017 (1) SA 255 (CC) ; 2017 (2) BCLR 131 (CC) para 39, this maxim was
qualified as follows: ‘[The maxim] is not a flamethrower, withering all within reach. Fraud unravels al l directly within
its compass, but only between victim and perpetrator, at the instance of the victim. Whether fraud unravels a contract
depends on its victim, not the fraudster or third parties.’
60 Foize Africa (Pty) Ltd v Foize Beheer BV and Others [2012] ZASCA 123; [2012] 4 All SA 387 (SCA); 2013 (3) SA
91 para 29.
61
enforce a foreign jurisdiction clause in an agreement should only be made when there
is a strong case for it.61
[118] As correctly recorded by the high court, MTN International contended that the
reference to ‘any dispute relative to these present re gulations or the call for
competitive bids to which they relate . . .’ is wide and encompasses the present
litigation , while EAC submitted that its action falls outside the ambit of the
Regulations as the regulations in question provided for the competition phase only.
EAC formed part of the Turkcell Consortium that bid for the tender under the
discipline of the Tender Regulations . MTN International contended that if the claims
now advanced by EAC in its suit before the South African courts is one ‘relative to
these present Regulations’, as stated in the text of Article 29, then EAC must comply
with its obligation to submit these claims to the competent Iranian courts, as Article
29 requires unless the South African court, in its discretion, finds that it should not do
so. The question is whether the high court properly exercised its discretion to uphold
the foreign jurisdiction clause. I can do no better than agree with the following apt
summation of the high court:
‘Although the tender document provides for two distinct trajectories for the award of the tender, it
was not in dispute that in this matter the bidder or EAC was a consortium to which a specific
trajectory applied. That trajectory allowed for the successful bidding consortium an opport unity to
create an operating company which would be the recipient of the licence. This provision, and the
provisions in general, show that the article 29 provision remained operative beyond the allocation
of the tender to a bidder as part of an extended pr ocess involving a provisional licence . It is EAC’s
case that the cause of action is grounded in MTN’s conduct and not that of the government of Iran.
Although this may be so, the summary of facts shows that the conduct of the government of Iran
looms large in the matter and findings of untoward conduct by it will have to be made to sustain the
delictual claim . The thrust of MTN’s argument was that EAC, as a bidder, is bound by the provisions
61 Polysius (Pty) Ltd v Transvaal Alloys (Pty) Ltd and Another; Transvaal Alloys (Pty) Ltd v Polysius (Pty) Ltd 1983 (2)
SA 630 (W) at 656D -E; Universiteit van Stellenbosch v J A Louw (Edm s) Bpk 1983 (4) SA 321 (A) at 333H -334A.
62
of art 29 and is thus forced to make its claim in the courts of Ir an. This is so due to the fact that the
regulations remain binding also beyond the time of the allocation of the bid . This is no doubt so as
counsel for MTN demonstrated, one cannot compartmentalise the bid and its consequences. Much
was still to happen su bsequent to the award of the tender, resulting from the provisions of the tender,
including art 29, which had a reach and application far beyond the acceptance of the bid . It is the
acceptance by EAC of the terms of art 29 that binds it to the terms, also beyond the award of the
bid. EAC’s contrary argument cannot be sustained and is in conflict with its pleaded case. ’62
(Emphasis added .)
[119] Having provided the above context, the high court then gave no less than 13
reasons for having decided to exercise its discretion in favour of upholding the special
plea relating to the foreign jurisdiction clause as set out in Art icle 29. Among weighty
considerations were the following: (a) save for the preparatory actions, assertions
made in support of alleg ed bribery, collusion and corruption relate to incidents which
happened in Iran ; (b) the central involvement of the government of Iran ; (c) some of
the documents EAC relied on were in the vernacular language of Iran ; (d) EAC
indicated that it could claim damages under Iranian law; (e) Iranian courts would not
require expert testimony on Iranian law , including the justification for regulatory
processes that were followed i n the tender . . . ; (f) it appeared that the c laim could be
decided within a single action , and a multiplicity of actions was not foreseen by any
party . In my view, t hese are weighty considerations that , collectively, warranted the
exercise of the discretion in favour of upholding the special plea relating to the
application of the foreign jurisdiction clause.
[120] EAC has instituted an action that, by its nature, necessitates attributing unlawful
conduct to both the Iranian Government and MTN International . For EAC to be
awarded the billions of rands sought as damages , it must show that its replacement by
62 East Asian Consortium, B. V. v MTN Group Limited and Others [2022] ZAGPJHC 969; [2023] 1 All SA 632 (GJ);
2023 (3) SA 77 (GJ) para 36.
63
MTN International as a service provider was motivated by MTN International ’s
inducement and the bribes received by Iranian government officials, among other
thing s. The high cour t correctly observed that the Tender Regulations constitute the
exercise of public power by the government of Iran.63 Indeed, d isputes as to the
validity, interpretation, performance and termination of the Tender Regulations, as
specified in Article 29 thereof , are typical of disputes that may arise concerning the
exercise of public power.
[121] There is no denying that the Tender Regulations stand front and centre in the
litigation instituted by EAC. Compartmentalis ing the bid and its consequences by
arguing that the Tender Regulations were applicable only until the appointment of the
winner and that the wrongful conduct attributed to the Iranian government and MTN
International does not fall within the remit of the Tender Regulations does not advance
EAC’s cause . This is because EAC is standing on the very Tender Regulations in its
attempt to show that there were deviations from procedures and a subversion of the
Tender Regulations which , according to EAC, could only have been as a result of
MTN Inter national ’s inducement and bribery . The fundamental relevance of the
Tender Regulations (in which the foreign jurisdiction clause is set out in Art icle 29)
to this case cannot be downplayed.
[122] Tritely, every case can only be proven by evidence. It is plain that in the
determination of whether MT N International ’s replacement of EAC as the winning
bidder was motivated by nothing else but corruption, it would be far easier for an
Iranian court to subpoena the officials who were part of the tender process as witnesses
than a South African court. It would therefore be ideal for such disputes to be
submitted to the court s of Iran , which, as demonstrated by the annexures to EAC’s
63 Paras 34-35 of the first judgment.
64
particulars of claim, has an array of legis lative measures directed at curbing bribery
and corruption .
[123] Nothing stands in the way of EAC pursuing its claim in the country it elected
to be the adjudicator of the disputes pertaining to the tender. EAC has failed to
demonstrate a compelling reason for the exercise of the court’s discretion against
enforcing the foreign jurisdiction clause as set out in Article 29. As I see it, the high
court correctly exercised its discretion in favour of upholding the invocation of the
foreign jurisdiction clause. Since the high court exercised its discretion judici ally,
there is no basis for this Court to interfere with its decision to uphold the special plea
of foreign jurisdiction. EAC should not be allowed to escape the consequence of its
own election.
The Foreign Act of State (FAOS) Doctrine
[124] I am of the view that a compelling case has been made for the application of
the foreign act of state doctrine. As a point of departure, I am of the respectful view
that the distinction made in the first judgment between what is termed an inducement
claim and a prevention claim is tenuous. In effect, it is a distinction without a
difference. A perusal of the particulars of claim reveals that the central plank of EAC’s
case was the delict of interference by inducement. Acco rding to the Shorter Oxford
Dictionary 6 th edition, the ordinary grammatical meaning of the word ‘induce’ is ‘to
succeed in persuading or leading someone to do something ’.64 In Country Cloud , the
Constitutional Court, in the course of adjudicating a claim o f pure economic loss,
considered the role of inducement as follows:
‘The cases where conduct may arguably be prima facie wrongful are limited. They involve a
situation where a third party, A, the defendant, intentionally induces a contracting party, B, to breach
64 Emphasis added.
65
his contract with the claimant, C, without lawful justification for doing so. But the Department did
not induce iLima’s breach in the relevant sense. In these circumstances this would require an act of
persuasion directed at iLima with the intent t hat it dishonour its agreement with Country Cloud. The
defendant wrongdoer thereby becomes an accessory to the primary wrong: the breach of
contract . The act of persuasion, paired with intent, establishes this accessory liability. ’65
This is a binding find ing.
[125] I am of the view that by parity of reasoning, the passage above applies with
equal force in the present case. This is because EAC unequivocally asserts that not
only was the Iranian government, inclusive of MCIT, induced to replace it (EAC) wi th
MTN International as a shareholder of the operating company that would hold the
GSM licen ce, but that this constituted a wrongful and unlawful interference in its
‘trading and contractual rights’. EAC’s imputation of wrongdoing to the Iranian
government is self -evident. The fact that wrongdoing is also imputed to the
respondents does not change EAC’s pleaded case in terms of which wrongdoing is
attributed to the Iranian government. Inducing a party to agree to what is prohibited
under the law taints the agreement and renders it unlawful. EAC pleads that unlawful
interference is what prevented it from receiving the benefits to which it was entitled
pursuant to the conclusion of the licence agreement and the granting of the GSM
licence.
[126] EAC asserts further that but for the unlawful interference of the respondents, it
would have received a 4 9% share of the revenue. It goes on to claim that as a result
of that unlawful interference, it suffered damages in the amount of $4.2 billion (plus
interest) by reason of ‘the loss of business opportunities, turnover and profits
associated with the GSM li cence’. Shorn of all the surplusage, EAC avers that it is the
inducement, to which the Iranian government was a party, which resulted in it
65 Country Cloud fn 1 above para 30.
66
suffering damages. Thus, if the case as pleaded by EAC is to be accepted as a true
reflection of the facts, the cour t adjudicating the matter would obviously find both the
Iranian government and the respondents to be complicit in the inducement . But more
than that, it would have to find that the Iranian government committed the primary
wrong, namely the breach of contra ct, for nefarious considerations. I am fortified in
this belief by the dictum in Country Cloud , alluded to in the preceding paragraph. The
fact that the same conduct is separately considered under the rubric of boni mores
and/or public policy consideration s does not make a difference, in my view.
[127] The above conclusion is equally applicable to EAC’s allegation that the
government of Iran (including MCIT) was induced through bribery and collusion, to
replace EAC with MTN International as the shareholde r of ITSC. Here too, serious
wrongdoing is being imputed to the government of Iran in the form of it having been
complicit in bribery and corruption, which allegedly led to EAC suffering damages.
As was the case in respect of inducement, here too, not only the allegations but a
finding of unlawful conduct on the part of the government of Iran are necessary for
EAC to succeed with its claim. Expressed differently, the outcome of the case turns
upon a finding of inducement leading to unlawful conduct on the p art of the Iranian
government. In the language of the high court, they are a sine qua non to establish a
delict. I therefore have no difficulty in concluding that a court adjudicating the matter
cannot find in favour of EAC without finding that the Iranian government was
complicit in activities of bribery and corruption.
[128] Given MTN International’s defence as raised in its plea, the processes leading
up to and the impact of the promulgation of the Irancell Act, which required that 51%
of the sharehold ing be held by Iranians, will be key aspects in the consideration of
whether the Iranian government acted unlawfully. It follows that the validity of the
67
legal arrangements that saw EAC being replaced by MTN International will be among
the key factors that warrant consideration in the legal proceedings. The fact that a
pronouncement might have to be made in relation to internal regulatory processes of
another sovereign country (the passing of the Irancell Act) , as is the case in the present
case, is a weigh ty consideration that should urge our courts to decline to adjudicate a
case on account of the FAOS doctrine. As correctly pointed out in Belhaj , ‘there is no
more fundamental competence than the power to make laws ’.66
[129] I find no basis for EAC’s contention that the doctrine does not find application
on the facts of the present case. In my view, a court should not ignore the applicability
of the FAOS doctrine merely because the foreign state has not been cited , or relief h as
not specifically been sought against that state . To accept that as a reason not to apply
the doctrine would be to depart from a body of authorities that recognise this doctrine
as part of our law and would constitute expediency, in my view. In the prese nt case,
although no relief is sought against the Iranian government and MCIT, a finding of
the Iranian government being complicit in corrupt activities through the acts of its
officials is serious enough to tarnish its reputation. Moreover, bribery also t riggers
criminal sanctions for the implicated individuals. All of this, in proceedings in which
neither the Iranian government nor the implicated officials have been cited, in
circumstances where the parties expressly chose Iranian law as the law applicabl e to
their dispute and where it is clear that, substantively, the lex causae is the law of Iran.
66 See Belhaj para 135, where Lord Neuberger said: ‘ There is no doubt but the first rule exists and is good law in relation
to property (whether immovable, movable, or intellectual) situated within the territory of that state concerned.
Sovereignty, which founds the basis of the Doctrine, “denotes the legal competence which a state enjoys in respect of
its territory” (Brownlie's Principles of Public International Law, 8th ed, (2012), p 211), and there is no more fundamental
competence th an the power to make laws. There is no doubt, however, that the first rule only applies to acts which take
effect within the t erritory of the state concerned . . . I find aspects of the second rule in relation to property and property
rights more problemat ical. In so far as the executive act of a state confiscating or transferring property, or controlling or
confiscating property rights, within its territory is lawful, or (which may amount to the same thing) not unlawful,
according to the law of that territ ory, I accept that the rule is valid and well -established .’ (Emphasis added).
68
[130] I disagree with EAC’s contention that the facts of this case resemble those in
the US Supreme Court decision of Kirkpatrick .67 An important distinguishing factor
on the facts is that in that case, the foreign officials accused of corrupting the tender
had already pleaded guilty, and a letter to that effect was sent by the legal advisor of
the State Department to the district cour t before the hearing of the matter. Thus, the
court proceeded on the basis that, on the strength of the plea of guilty, it was
unnecessary for it to enquire into the legality of the primary contract. In the present
matter, the adjudicating court will have to make that determination.
[131] An important observation in Kirkpatrick is that the Supreme Court of the United
States made a distinction between the validity of a foreign act and the motivation
behind the act. It considered the FAOS doctrine to be appl icable in the former scenario
but not in the latter. Having considered several cases as a way of illustrating that its
decisions on FAOS had consistently adhered to the validity -motive distinction, it
stated that ‘ [i]n every case in which we have held the act of state doctrine applicable,
the relief sought or the defen ce interposed would have required a court in the United
States to declare invalid the official act of a foreign sovereign performed within its
own territory’. It concluded that the FAOS doctri ne does not establish an exception
for cases and controversies that may embarrass foreign governments, but merely
require s ‘that in the process of deciding, the acts of foreign sovereigns taken within
their jurisdictions shall be deemed valid ’.68
[132] That the FAOS doctrine is part of our domestic common law was settled more
than a decade ago in Swissborough .69 When deciding Swissborough , Joffe J was
already au fait with the two US judgments of Underhill v Hernandez and Kirkpatrick .
67 Kirkpatrick fn 48 above.
68 Kirkpatrick fn 48 above at 707.
69 Swissborough fn 15 above at 334D -E.
69
The dictum in Swissborough was approved by Harms ADP in Van Zyl , where he also
referred to the House of Lords judgment of Kuwait v Iraqi Airways (Kuwait ) with
approval.70 In concluding that the FAOS doctrine is part of our common law, t he high
court referred to Swissborough , Van Zyl and Kuwait . The specific paragraphs referred
to by Harms ADP in Kuwait accord with a human rights -based approach that is
consonant with the provisions of ss 7, 34 and 39(2) of our Constitution . I am therefore
unable to agree that the high court adopted an exclusionary rule and adopted English
law as the basis of the FAOS doctrine. Similarly, I disagree with the suggestion that
the high court declined to adjudicate EAC’s claims on an incorrect understanding of
the FAOS doctrine in our l aw. Indeed, there are instances where courts will decline to
apply the doctrine. However, on the facts of this case, I am unable to find any plausible
reason why the respondents cannot successfully invoke the act of state doctrine.
70 Van Zyl fn 16 above para 5 referring to Kuwait v Iraqi Airways Co and Anor [2002] UKHL 19 ; [2002] 3 All ER 209
paras 24 -26 which read as follows: ‘[24] On behalf of IAC Mr Donaldson submitted that the public policy exception to
the recognition of provisions of foreign law is limited to infringements of human rights. The allegatio n in the present
action is breach of international law by Iraq. But breach of international law by a state is not, and should not be, a ground
for refusing to recognise a foreign decree. An English court will not sit in judgment on the sovereign acts of a foreign
government or state. It will not adjudicate upon the legality, validity or acceptability of such acts, either under domestic
law or international law. For a court to do so would offend against the principle that the courts will not adjudicate upon
the transactions of foreign sovereign states. This principle is not discretionary. It is inherent in the very nature of the
judicial process: see Buttes Gas and Oil Co v Hammer (No 3) [1982] AC 888, 932. KAC's argument, this submission
by IAC continued, in vites the court to determine whether the invasion of Kuwait by Iraq, followed by the removal of
the ten aircraft from Kuwait to Iraq and their transfer to IAC, was unlawful under international law. The courts below
were wrong to accede to this invitation.
[25] My Lords, this submission seeks to press the non -justiciability principle too far. Undoubtedly there may be cases,
of which the Buttes case is an illustration, where the issues are such that the court has, in the words of Lord Wilberforce
at page 938, 'no judicial or manageable standards by which to judge [the] issues ’: ‘the court would be asked to review
transactions in which four sovereign states were involved, which they had brought to a precarious settlement, after
diplomacy and the use of force an d to say that at least part of these were "unlawful" under international law. ’ This was
Lord Wilberforce ’s conclusion regarding the important inter -state and other issues arising in that case: see his summary
at page 937.
[26] This is not to say an English court is disabled from ever taking cognisance of international law or from ever
considering whether a violation of international law has occurred. In appropriate circumstances it is legitimate for an
English court to have regard to the content of internat ional law in deciding whether to recognise a foreign law. Lord
Wilberforce himself accepted this in the Buttes case, at page 931D. Nor does the 'non -justiciable' principle mean that
the judiciary must shut their eyes to a breach of an established principle of international law committed by one state
against another when the breach is plain and, indeed, acknowledged. In such a case the adjudication problems
confronting the English court in the Buttes litigation do not arise. The standard being applied by the court is clear and
manageable, and the outcome not in doubt. That is the present case. ’
70
[133] Having considere d all the judgments alluded to earlier (including the judgment
of Banco Nacional de Cuba v Sabbatino ,71 which was considered in Kirkpatrick ), as
well as the various separate judgments authored in Belhaj ), which traversed complex
questions of law, it seems to me that all the available authorities figuratively swim in
the same channel that accepts that the FAOS doctrine is not absolute , and every case
must be judged on its own facts . It is for that reason that Lord Sumption stated that he
would not altogether rule out the possibility that litigation between other parties might
directly affect interests of a foreign state other than interests in property. Furthermore,
Belhaj illustrates that the FAOS is applicable subject to public policy exceptions. The
Belhaj type of public policy considerations are not applicable in the present case. The
facts, too, are distinguishable, as the defendants in th e Belhaj matter were alleged to
have commi tted human rights violations, including unlawful detention, rendition and
torture . In the present matter, the dispute pertains to an alleged breach of contractual
rights, and no violations of human rights are attributed to the implicated Iranian
government officials .
[134] As regards the constitutional context, I readily agree that the FAOS doctrine,
as part of our common law, must reflect the legal order that the Constitution
proclaims. It is evident from the provisions of s 39(2) of the Constitution , that South
African courts must , when developing the common law, promote the spirit, purport
and objects of the Bill of Rights . It follows that even when following policies of non -
justiciability fashioned from other jurisdictions , as was done in Swissborou gh and Van
Zyl, courts must do so within the framework of the Constitution of South Africa. It
follows that the principle s of respect for the autonomy and sovereignty of the laws
and executive actions of a foreign state should not supersede the imperatives of the
Constitution when constitutionally protected human rights are at stake. In endors ing
71 Banco Nacional de Cuba v Sabbatino 376 U.S. 398, 401 -06 (1964).
71
a proposition enunciated by the authors in International Law, A South African
Perspective ,72 which was approved in Obiang , I agree that a court cannot fashion a
principle of judicial restraint or non -justiciability for South Africa w ithout t aking
South Africa’s own constitutional framework into account. The FAOS doctrine in our
common law must yield to this constitutional primacy . Indeed, a court may intervene
in the face of abuse of power or the use of foreign policy if it is inconsistent with the
provisions of the Constitution . This approach largely accords with the one followed
by the Canadian court in Nevsun , even though Nevsun is disting uishable from the
present case, on the facts. In applying all these constitutional principles to this case , it
bears mentioning that EAC has not alleged any fear of abuse of power or a violation
of human rights in Iran .73
[135] The fact that EAC was prepared to spend a substantial amount of money and
obtain funding to do business in that country speaks volumes. It is significant that i n
para 66 of its amended particulars of claim, EAC pleaded that it ‘relies for its
assertions concerning the unla wfulness of the [MTN International ] conduct and the
manner of calculation of damages, in the alternative to its reliance on South African
law’ on several provisions of Iranian Law. It not only referenced those provisions but
quoted liberally from them. Various Iranian statutes and articles thereon were attached
to EAC’s particulars of claim. These include articles of Iranian Civil Code; art icle 1
of the Civil Responsibility Code of Iran; articles of the law promoting the Health of
Administrative System and Countering Corruption in Iran; articles of the Act on
Aggravated Penalties for Offender of Bribery, Embezzlement and Fraud; articles of
the L aw on Punishment of Disrupters in the Economic System of the State; articles of
72 Dugard J, Du Plessis M, Maluwa T and Tladi D. Dugard’s International Law: A South African Perspecti ve 5 ed
(2019) at page 118.
73 The high court stated as follows on this aspect at para 8 : ‘A further aspect relied upon by counsel for EAC is the
submission that, in the event of a finding that a foreign law applies, it must be determined if that law passes constitutional
muster in this country. However, nothing has been pleaded to show that the Iranian law of delict, or any other foreign
law, if applicable, would be repugnant to our constitutional dispensation and I need say no more about that argument. ’
72
the Islamic Criminal Code; articles of the Law on Punishment of Exerting Undue
Influence; an article on the Law on Punishment of Collusion in Government
Transactions; an articl e of the Governmental Transactions Regulations; articles of the
Law on Prohibition of Intervention by Ministers, Members of Parliament and
Government Personnel in Government and Civil Transactions; an article on the
Transfer of Property of Others Punishmen t Act; and an article of the Registration of
Deeds and Real Properties Act.
[136] Based on EAC’s reliance on an array of legislative measures available to it in
Iran, including those directed at addressing bribery and corruption , which include
criminal s anctions,74 it is reasonable to accept that Iran, too, has an integrated and
comprehensive response to corruption as envisaged in the Glenister judgment.75 This
militate s against any suggestion of practices that are inconsistent with our
Constitution . As mentioned earlier, no such assertions were made in EAC’s pleadings .
Under the circumstances, there is no basis for suspecting that the constitutionally
protected right of access to justice , as enshrined in s 34 of the Constitution , will be
violated if the FAOS doctrine is applied . This is a weighty consideration that accords
with the high court’s reasoning and conclusion.
[137] Insofar as t he first judgment states that the better conception of the doctrine,
congruent with our constitution, is to allo w for a broader weighing of reasons , there
is nothing to suggest that the approach of the high court did not include a weighing of
reasons. In my view, a balancing of all relevant considerations in the present matter
does not suggest that the reasons for a pplying the doctrine were outweighed by those
74 At para 66.6 of the amended particulars of claim, EAC pleaded as follows:
‘The Iranian parliament has passed various Acts prohibiting bribery either as part of general criminal codes or particular
laws since 1925’. At para 66.7 of the amended particulars o f claim, EAC stated that a codification of various laws
existing at the relevant times renders illegal conduct that falls within a collective definition of corruption.
75 Glenister fn 50 above para 177.
73
opposed to it. The high court’s conclusion that the FAOS doctrine poses a bar to the
adjudication of this matter , is unassailable, in my view.
State Immunities Act
[138] Section 2(2) of the Foreign States Immunities Act 87 of 1981 states, in
peremptory terms, that ‘a court shall give effect to the immunity conferred by this
section even though the foreign state does not appear in person ’. A plain reading of
this text suggests that immunity ought to be exten ded to the officials of a foreign
government that is implicated. This interpretation accords with the interpretation
attached to a similarly worded clause by the House of Lords judgment in Jones v
Ministry of the Interior of the Kingdom of Saudi Arabia (Se cretary of State for
Constitutional Affairs intervening ,76 which held that state immunity can be extended
to foreign officials acting in that capacity. Since the unlawful conduct bemoaned by
EAC is equally that ‘of all the actors ’77, including the Iranian government , the
invocation of the Immunities Act in this matter is appropriate.
[139] The first judgment correctly points out that in Belhaj , Lord Sumption was not
willing to rule out a possibility that litigation between other parties might directly
affect interests of a foreign state other than property interests , and found that, at the
very least th e foreign state must have a legal interest to defend. My inclination, too, is
that the class of rights of the foreign state that may give rise to a foreign state being
indirectly implead ed should not be confined to rights in property and should be
extended to a protectable legal interest . In my opinion, it suffices if the pleaded case
is of such a nature that the legal rights of the foreign state would be aff ected because
76 See Jones v Ministry of the Interior of the Kingdom of Saudi Arabia (Secretary of State for Constitutional Affairs
intervening) ; [2006] UKHL 26 [2007] 1 AC 270 paras 31 and 69. The court held that insofar as the agents of a state act
in their public capacities, they are identified with the state in interna tional law, so that references in the Act to a state
‘must be construed to include any individual representative of the state acting in that capacity. ’
77 At para 31 of its judgment, t he high court held that ‘ The unlawful conduct is equally that of all the actors, including
the Iranian government.’
74
the judgment and/or order of the court might implicate the foreign state’s entitlement
to those rights, or the exercise thereof . Under such circumstances, the foreign
government (and in the circumstances of this case, the Iranian government a nd / or
MTN International) can seek intervention by way of state immunity on the basis that
they have a legal interest to defend themselves against the imputation of delictual
liability.78 I therefore disagree that the rights of the foreign state that qua lify for
inclusion in the class must have the attributes that the property cases exemplify .
[140] Notwithstanding what is stated in the preceding paragraph, it seems to me that
EAC’s case is , in any event , predicated on interests in property , which would bring
this case within the protectable rights envisaged in Belhaj . EAC specifically pleaded
that for its assertions of unlawfulness and the manner of calculation of damages, it
relies inter alia on various provisions of Iranian law.79 In para 66.3 of the a mended
particulars of claim, EAC pleaded that ‘under Articles 308 and 310 of the Iranian Civil
Code, the transfer of property rights of one person without their express consent may
be considered as usurpation . . .; according to Iranian law, the usurper [MTN
International] is liable to the owner [EAC] not only for the return of the subject matter
of the transaction, but also to damages, including consequential damages . . .’. It can
therefore be inferred that EAC’s reliance on these statutes is because it considers the
granting of the license to be a form of property rights.
[141] It must be borne in mind that the license was awarded to MTN International by
MCIT .80 Notably, EAC considers the awarding of this license to have impinged on its
78 See paras 20 – 21 of Country Cloud . The lex aquilia is a unified scheme of liability and all the key elements thereof,
including wrongfulness and causation, are necessary for a delictual claim to succeed.
79 Several statutes relied upon by EAC have provisions making specific reference to property. One of the provisions
relied upon, Art 259 provides that where an unauthorised party has handed over the subject matter of a transaction to
another party and the ow ner of the property does not authorise that transaction, then the party who has taken possession
of that property ‘is liable for the property and its usufruct’.
80 Para 44 of EAC’s amended particulars of claim.
75
propert y rights (the Belhaj type of rights). MTN International pleads that the passing
of the Irancell Act by the Iranian government justified MCIT’s decision to replace
EAC with it (MTN International). Logic dictates that the imputation of wrongfulness
to the government of Iran in a court finding would be tantamount to negating the
Iranian government’s entitlement to grant property rights in the form of awarding a
license to MTN International. The corollary is that MCIT, together with the Iranian
government, are indirect ly impleaded in a case premised on a breach of property
rights. It is this form of indirect impleading of a foreign sovereign state that triggers
the application of the Immunities Act .
[142] I am unable to agree with the proposition that a finding that the government of
Iran was responsible for the substitution of EAC for MTN International will not have
any adverse entailment upon the legal rights or liabilities of Iran because the liability
that would accrue from any award of damages would be borne by the defendants, not
Iran. Neither do I agree with the proposition that Iran will suffer no detriment to any
of its rights, nor accrue any liability from a judgment that finds it to have been
complicit in acts of bribery , corruption and unlawful inter ference . As correctly pointed
out by the high court, the unlawful conduct , if found, is equally that of all the actors,
including the Iranian government.81 It bears emphasising that imputing wrongfulness
to the Iranian government will not merely be an obiter dictum in which the South
African court remarks that the Iranian government was ‘responsible’ for the
substitution of EAC by MTN International’. Based on the principles laid down in
Country Cloud , I agree with the contention that EAC’ s delictual claim against MTN
International cannot succeed in a South African court unless that court makes a
specific finding , as a matter of law , that the government of Iran acted wrongfully and
that it is such unlawful conduct that led to MTN Internation al replacing EAC as the
81 Para 31 of the judgment of the high court. E mphasis added.
76
successful bidder and being awarded the GSM license . Without such a finding, the
element of causation cannot be proven, and the claim cannot succeed.
[143] From my point of view, it is not inconceivable that indeterminable reputational
damage may ensue for the government of Iran in the marketplace82 because of
evidence denouncing the executive actions of its officials relating to the award of a
license ,83 adduced in a forum in which it, as an implicated party, has been denied an
opportunity to give its side of the story to refute EAC’s claims. That the first judgment
opines that the usurpation of a business opportunity by way of bribery and corruption
on the merits may be said to offend against the morality of the marketplace84 only
serves to bolster my view regarding the negative impact of this litigation on a foreign
state which purports to have acted in accordance with its laws .
[144] For all the reasons set out above, I would dismiss the appeal with costs,
including the costs occasioned by the employment of more than one counsel.
________________________
M B MOLEMELA
PRESIDENT
82 See para 18 of the first judgment, where it is stated that:
‘And the usurpation by way of bribery and corruption of a business opportunity that had been won by way of competition
on the merits may be said to offend against the morality of the marketplace.’
83 The implicated officials are named in EAC’s response to the request for further particulars.
84 See para 18 of the first judgment, where it is stated that:
‘And the usurpation by way of bribery and corruption of a business opportunity that had been won by way of competition
on the merits may be said to offend against the morality of the marketplace.’
77
Appearances
For the appellant : A E Franklin SC (with him J Meiring)
Instructed by: Vasco De Oliveira Incorporated, Johannesburg
Honey Attorneys Inc. , Bloemfontein
For the first to fourth respondent s: W Trengove SC (with him S Symon SC and P
Ngcongo)
Instructed by: Webber Wentzel, Johannesburg
McIntyre van der Post , Bloemfontein
For the fifth respondent: J Cane SC (with her L Sisilana)
Instructed by: Werksmans Attorneys, Johannesburg
MM Hattingh Attorneys , Bloemfontein
For the sixth respondent: K Hopkins SC (with him A Coutsoudis and D
Mokale)
Instructed by: Glyn Marais Incorporated, Johannesburg
Lovius Block, Bloemfontein .