JURISDICTIONAL ARREST OF A FOREIGN ... - SSRN papers

August 2008

Journal of Private International Law

329

August 2008 Jurisdictional Arrest of a Foreign Peregrinus

JURISDICTIONAL ARREST OF A FOREIGN PEREGRINUS NOW UNCONSTITUTIONAL IN SOUTH AFRICA: BID INDUSTRIAL HOLDINGS v STRANG OMPHEMETSE SIBANDA*

A. I NTRODUCTION 1. General Remarks In the South African legal system the rule is that a long-established and generally accepted practice should be followed1 except in cases where it is legally unwarranted and wrong,2 or logically indefensible.3 The exception part of this rule speaks to the fact that the law needs to adapt to new challenges, and to the changing conditions and environment within which it operates. To this end, and in respect to the development of common law, I would like to quote a dictum by Lacobucci J in R v Salituro,4 quoted with approval by the South African Constitutional Court in Du Plessis v De Klerk,5 in which it is stated that: “Judges can and should adapt the common law to reflect the changing fabric of the country. Judges should not be quick to perpetuate rules whose social foundation has long since disappeared.”

One such long-established rule of common law origin practised in South Africa that recently came under constitutional scrutiny is jurisdictional arrest of foreign defendants in civil (tort) cases. As noted in Section B below, the practice of arrest to confirm or found jurisdiction can be traced back to seventeenthcentury Holland. The local residents (incolae) could have the foreign defendants (peregrini) arrested if they were within the jurisdictional area of local courts at the time. On 23 November 2007 the Supreme Court of Appeal (SCA)6, in Bid Indus*

LLM (Georgetown Law Center); LLB, B JURIS (Vista); Associate Professor, College of Law, University of South Africa.

1

See Rainbow Diamonds (Edms) Bpk v SA Nasionale Lewensasuransiemaatskappy 1984 (3) SA 1 (A) at 141. See Bydawell v Chapman NO 1953 (3) SA 514 (A) at 521C–E; Du Plessis v Strauss 1988 (2) SA 105 (A) at 142E–H. See Ex parte Kaplan and others NNO: in re Robin Consolidated Industries Ltd 1978 (3) SA 413 (W) at 423A–D. (1992) 8 CRR (2d) 173, [1999] 3 SCR 654. 1996 (3) SA 850 (CC) para 61. The SCA is the highest court of appeal in respect to all issues other than constitutional issues pursuant to s 168(3) of the Constitution of the Republic of South Africa of 1996. Thus, further

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4 5 6

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trial Holdings (Pty) Ltd v Strang,7 had to decide on the constitutionality or otherwise of jurisdictional arrest as contained in section 19(1)(c ) of the Supreme Court Act of 1959. There have been some divergent opinions on the justifiability and/or constitutionality of jurisdictional arrest even before this case.8 The matter has now been put to rest by the court in Bid Industrial Holdings v Strang. The court abolished arrest as a basis for jurisdiction in civil cases. It is important in this context to determine the impact of the decision in Bid Industrial v Strang on admiralty arrest and on public international law in general. One may be tempted to conclude that the abolition of the doctrine of arrest in Bid Industrial Holdings v Strang has ramifications on the security arrest procedures in admiralty jurisdictions. 2. Scope and Limitations of the Study This article is divided into five parts including the introductory part, Section A. Section B briefly sets out the background to the nature of the South African legal system. This serves to introduce the South African law of jurisdiction to the reader, thereby making the article more accessible. There will also be a brief presentation of the historical development of jurisdictional arrest. Section C gives an account of the South African Bill of Rights, and the Limitation Clause in the Constitution of 1996. In order to lay a proper foundation for the discussion in this article, and to put the discussion in a proper context, we outline the limitation clause in the Bill of Rights and explain its application. The decision in Bid Industrial Holdings (Pty) Ltd v Strang is evaluated in Section D. Here we will specifically look at the Bid Industrial Holdings (Pty) Ltd v Strang decision on the unconstitutionality of the doctrine of arrest, and the possible alternatives to jurisdictional arrest, including submission. The facts of Bid Industrial v Strang are briefly restated in Section D. Section E looks at the broad significance of the decision for South African (and final) appeals from the SCA on constitutional matters lie to the Constitutional Court pursuant to s 167(3)(c) of the Constitution. Note that although the SCA is endowed with constitutional adjudication powers, certain constitutional matters listed in s 167(4) of the Constitution are within the exclusive and original jurisdiction of the Constitutional Court. These matters can be initiated only in the Constitutional Court. 7 8

Bid Industrial Holdings (Pty) Ltd v Strang and another [2007] SCA 144 (RSA). See CH van Zyl, The Theory of the Judicial Practice of the Colony of the Cape of Good Hope (Cape Town, Juta, 1st edn, 1893), 121 in which it is stated that arrest “affects the liberty of the subject” (Quoted in Tsung v Industrial Development Corp. of SA Ltd, para 5); For instance, the issue is commented on in E Schoeman and C Roodt, “South Africa, Private International Law”, in B Verschraegen (ed), R Blanpain (general ed), International Encyclopedia of Laws (Dordrecht, Kluwer, 2007), para 253. For the courts’ opinion on the subject, see Einwald v German West African Co 1887(5) SC 86, where the Cape Supreme Court held that arrest or attachment to found jurisdiction was not possible. But see Halse v Warwick 1931 CPD 233, reversing Einwald v German West African Co, and approving and adopting Lecomte v W and B Syndicate of Madagascar Ltd 1905 TS 295. See also Hilelsein v Super Rich CC 1998 (1) SA 929 (W) in which it was indicated that jurisdictional arrest has a constitutional dimension.

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private international law. To this end a brief reference will also be made to the Admiralty Jurisdiction Act of 1983.9 Jurisdictional arrest in maritime cases has been dealt with fully elsewhere and does not merit an extensive discussion in this article.10 Section F concludes this article. The court in Bid Industrial Holdings (Pty) Ltd v Strang was concerned mainly with jurisdictional arrest in the area of a High Court other than the High Court in which the action is being brought. However, given the importance of the decision and having due regard to the South African system of precedence, Section F also discusses the impact of the Bid Industrial Holdings v Strang decision on section 30bis of the Magistrates’ Courts Act of 1944.11 The latter also provides for the attachment/arrest of foreign persons to found or confirm jurisdiction.

B. B ACKGROUND D ISCUSSIONS 1. The Nature of the South African Legal System The historical foundations and the nature of the South African legal system have been succinctly outlined in several academic publications.12 The South African legal system belongs primarily to the Anglo-American law family, also known as common law, together with countries such as Australia, British-Guinea, England and Wales, Ghana, India, Ireland, Israel, Liberia, New Zealand, Northern Ireland, Sri Lanka, the USA, and Zimbabwe.13 The legal system is a “hybrid system”14 made up of Roman-Dutch law, which has been profoundly influenced by continental civil law, English common law and African indigenous (customary) law. Roman-Dutch law refers to the fusion of medieval Dutch law, which was mainly of Germanic origin, and the Roman law of Justinian.15 RomanDutch law resulted from the reception of Roman law as developed by civilisation 9 10

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Act 105 of 1983. See J Dyason, “Security Arrests in South Africa” [1990] Pt 1 Lloyd’s Maritime and Commercial Law Quarterly 9; J Dyason, “Judicial Sales of Vessels and Priority Claims – South Africa”, Kluwer Maritime Law Handbook (1999); J Dyason, “A Jurisdictional Lacuna – The Need for the Amendment of Section 26 of the Supreme Court Act 1959” (1986) 103 South African Law Journal 670; J Dyason, “South African Maritime Law – An Overview of Some Developments” (2001) 32 Journal of Maritime Law & Commerce 475. Act No 32 of 1944. See, PHJ Thomas, CG Van Der Merwe and BC Stoop, Historical Foundations of South African Private Law (Durban, LexisNexis Butterworths, 2nd edn, 2000), 5–106. See generally HR Hahlo and E Kahn, South African Legal System and its Background (Cape Town, Juta, 1968). See Thomas et al, supra n 12, 79. E Schoemann, Private International Law (The Hague, London, Boston, Kluwer Law International, 2001), 11. See HR Hahlo and E Kahn, The South African Legal System and Its Background (Cape Town, Juta, 1973), 485.

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in Western Europe during the fifteenth and sixteenth centuries, particularly in Germany and the Netherlands. This was the law that was transplanted to the Cape in 1652 and forms the foundation of modern South African law. Therefore, South Africa essentially falls under a “mixed” common/civil law jurisdiction.16 The legal system is derived partly from the uncodified civil law tradition and partly from the common law tradition (typical of that which evolved in England from the eleventh century onwards).17 As Tetley points out, South Africa, like Scotland and certain other countries, received Roman law, as presented in the Corpus Juris Civilis of Justinian, without codifying it.18 History reveals that the establishment of a refreshment station at the Cape of Good Hope by the Dutch Vereenigde Geoctroyeerde Oost-Indische Compagnie (Dutch East India Company) in 1652 eventually resulted in the reception of Roman-Dutch law as South African law.19 The British occupations of the Cape in 1795–1803 and 1806–1910 also resulted in the “infiltration and reception of English law”,20 with the British administration at the same time resolving to maintain the RomanDutch law in force at the time in terms of the proclamation of 11 October 1795.21 As indicated above, South African law is not codified. Therefore, several authoritative sources of the law exist. For the purposes of this study the notable sources of the law are the Constitution, statutory law, common law, case law and international law.22 Statutory law refers to the law contained in the legislation or statutes enacted by law-making bodies, namely: the South African national parliament; the provincial councils; the town councils; municipal councils; and any other similar body with law-making powers. Common law refers to that part of South African law which is not found in legislation, namely Roman-Dutch law as found in the Corpus Juris Civilis, the placaats applicable at the Cape and the writings of seventeenth- and eighteenth-century writers on Roman-Dutch law.23 16

17 18 19 20 21 22

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See Thomas et al, supra n 12, 7. See also W Tetley, “Mixed Jurisdictions; Common Law vs Civil Law (Codified and Uncodified)” (2000) 60 Louisiana Law Review 677, 679. Tetley, 685, defines a “mixed” legal system as one “in which the law in force is derived from more than one legal tradition or legal family”. See Tetley, supra n 16, 684. Ibid. See Thomas et al, supra n 12, 95; Tetley, supra n 16, 692. See Tetley, supra n 16, 692. Thomas et al, supra n 12, 97, 104. Here a distinction must be made between international agreements and customary international law. The former is in terms of s 231(4) of the Constitution becomes law in South Africa once enacted into law by legislation, with the exception of self-executing agreements. In terms of s 232 of the Constitution, self-executing agreements are regarded as law applicable in South Africa to the extent that it is not inconsistent with the Constitution or any legislation. See JR Du Plessis and L Kok, An Elementary Introduction to the Study of South African Law (Cape Town, Juta, 2nd edn, 2001), 24. Note that in another context reference to common law is used to distinguish between “common-law legal systems” (ie, Anglo-American systems) and “civil law legal systems” (ie, Continental systems).

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Case law is the decisions of the courts which illustrate the practical application of South African legal principles, rules and values. In terms of the system of judicial precedence applicable in South Africa, lower courts are bound by the decisions of higher courts. In terms of this system, if a court makes a decision on a question of law, that court and all other subordinate courts are bound by that decision.24 In respect of international law, section 39(1)(b) of the Constitution makes it compulsory for a court to consider international law in interpreting the Bill of Rights.25 2. General Jurisdiction in the High Courts The South African judicial system is divided into the Constitutional Court; the Supreme Court of Appeal; the high courts; the magistrates’ courts; and other courts and tribunals.26 Unlike the magistrates’ courts, which are creatures of statute,27 the high courts do not derive their jurisdictional powers and capacities solely from statute.28 The jurisdiction of the high courts also derives from common law. Arrest and attachment to find or confirm jurisdiction is one of the common 24

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When applied to court decisions, the judicial doctrine precedence has the following implications: (a) a decision of the Constitutional Court binds all other courts; (b) the Supreme Court of Appeal is bound by the decisions of the Constitutional Court and its own previous decisions, unless it is convinced that one of its previous decisions was wrong; (c ) the Supreme Court of Appeal is not bound by decisions of provincial and local divisions of the High Court; (d) a decision of the Supreme Court of Appeal binds all divisions of the High Court and all lower courts; (e) a provincial division of the High Court is bound by its previous decisions; (f) the decisions of one provincial division do not bind all other provincial divisions; however, they do have persuasive value; (g) magistrates’ courts are bound by the decisions of the High Court, the Supreme Court of Appeal and the Constitutional Court; and (h) The decisions of lower courts have no binding force on any other court. Note that foreign law is merely of persuasive value to the court in interpreting the Bill of Rights. S 39(1)(c ) of the Constitution provides that South African courts and tribunals “may consider foreign law”, In this instance the courts are granted discretionary powers to consider and apply foreign law. Thus, the courts may choose to consider case law and legislation (and regulations) from other countries such as England, Canada and the United States where authoritative sources of the South African law provide insufficient guidance in resolving any issue before the court. See s 166 of the Constitution of 1996. The Magistrates’ Courts Act and the Magistrates’ Courts Rules. The magistrates’ courts may only hear matters that they are permitted to hear in terms of the Magistrates’ Courts Act and the Magistrates’ Courts Rules. See C Theophilopoulus, AWR Rowan, CM van Heerden and A Boraine, Fundamental Principles of Civil Procedure (Durban, LexisNexis Butterworths, 2007), 65–85. In this respect the High Courts are commonly said to have inherent jurisdiction. According to Theophilopoulus et al, supra n 27, 47, the term “inherent jurisdiction” properly refers to the power of the court to regulate its own procedures. As far as the common law or general jurisdiction is concerned, the term ”innate jurisdiction” appears to be the proper one. Innate jurisdiction refers to an unfettered power of the high court to adjudicate almost every issue that comes before it. The understanding of the term “inherent jurisdiction” by Theophilopoulus et al accords with the concept of inherent power as provided in s 173 of the Constitution. In terms of s 173, The Constitutional Court, Supreme Court of Appeal and the High Courts have the inherent power to protect and regulate their own process, and to develop the common law, taking into account the interest of justice.

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law jurisdictional grounds that have been adopted into the Supreme Court Act of 1959.29 Other jurisdiction-related factors that are applicable in the high courts include the domicile or residence of a defendant; res gestae; submission; and location of property, where such property is the subject of a dispute (the forum rei sitae).30 These factors may serve as links between a court’s area of jurisdiction and the defendant, or the court’s area of jurisdiction and the facts from which the dispute arose.

3. Historical Development and Present Status of Jurisdictional Arrest (and Attachment) The long-established practice in South African common law has been that the mere presence of foreign domiciled defendants in South Africa does not vest the court with jurisdiction over such defendants.31 In terms of this practice, the court can only assume jurisdiction if the arrest or attachment of the defendant’s person or property has taken place, in order to found or confirm jurisdiction. In such cases the court is said to have jurisdiction ad fundandam or ad confirmandum. Jurisdictional arrest or attachment was necessitated by the need to enable a court to take cognisance of a suit and deliver an effective judgment. A further objective was to enable South African resident plaintiffs “to establish jurisdiction which would not otherwise exist and so avoid the trouble and expense of suing abroad”.32 The doctrine of arrest is a Roman-Dutch common law doctrine, which owes its historical origin to the seventeenth-century law of Holland.33 Under Roman law and Roman-Dutch law a defendant’s property or person could be attached to confer jurisdiction upon a court.34 In 1999 the common law jurisdictional arrest rule obtained statutory extension, or rather acknowledgement, with the insertion of section 19 into the Supreme Court Act of 1959, upon the recommendation of the South African Law Reform Commission (then the South African Law Commission). To quote the words of the Supreme Court of Appeal in Bid Industrial Holdings v Strang,35 the purpose of section 19(1)(c) was “”merely to 29 30 31

32 33

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Eg, through s 19 of the Supreme Court Act of 1959. See generally Theophilopoulus et al, supra n 27, 65–85. See RF Oppong, “Mere Presence and International Competence in Private International Law” (2007) 3 Journal of Private International Law 321, 328. Bid Industrial Holdings v Strang, supra n 2, para 45. See generally Sir John Wessels, “History of our Law of Arrest to Found Jurisdiction” (1907) 24 South African Law Journal 390, 393, 400 quoted in Bid Industrial Holdings, supra n 2, para 26, n 9, and Tsung v Industrial Development Corp of SA Ltd 2006(4) SA 177 (Tsung v Industrial Development Corp of SA Ltd 2006 SCA 27 (RSA), para 4, n 8). Theophilopoulus et al, supra n 2, 53-54 (quoting D Pistorius, Pollak on Jurisdiction (Cape Town, Juta, 2nd edn, 1993), 60). See also Owners of SS Humber v Owners of SS Anwald 192 AD 546 at 555; Siemens Ltd v Offshore Marine Engineering Ltd 1993 (3) SA 913 (A) at 918E–H, 920C–J. Bid Industrial Holdings v Strang, supra n 2, para 61.

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effect an extension of a High Court’s jurisdiction to order certain arrests and attachments”. Section 19(1)(c) in particular made it procedurally possible to effect arrest or attachment anywhere in South Africa, and not merely in the area of the court concerned. Section 19(1)(c) of the Supreme Court Act reads: “Subject to the provisions of section 28 and powers granted under section 4 of the Admiralty Jurisdiction Act, 1983 (Act No 105 of 1983), any High Court may – (i) issue an order for attachment of property or arrest of a person to confirm jurisdiction or order the arrest suspectus de fuga also where the property or person concerned is outside the area of its jurisdiction but within the Republic: Provided that the cause of action arose within its area of jurisdiction; and (ii) where the plaintiff is resident or domiciled within its area of jurisdiction, but the cause of action arose outside its area of jurisdiction, issue an order for attachment of property or arrest of a person to found jurisdiction regardless of where in the Republic the property or person is situated.”36 (original emphasis)

In brief, whenever the cause of action arises within a South African court’s area of jurisdiction, and the defendant is a peregrinus of the whole Republic, the court may arrest the defendant’s person or property to confirm its jurisdiction over the matter. The rationale here is that the court’s jurisdiction is impartial by virtue of the defendant being a foreign peregrinus. Thus, the impartial jurisdiction needs to be affirmed through arrest of the foreign defendant (or his/her property).

C. T HE L IMITATION

OF

F UNDAMENTAL R IGHTS

Section 36 of the Constitution of 1996, known as the general limitation clause, authorises the limitation of fundamental rights in the Bill of Rights. As indicated in Section A above, the respondents in Bid Industrial Holdings v Strang argued that the jurisdictional rule requiring the arrest of the defendant in cases where a resident plaintiff is suing a foreign defendant was unconstitutional. In particular, it was argued that this rule infringed the foreign defendant’s right to equality before the law, the guarantee against unfair discrimination, the right to human dignity, the right to freedom of movement, and the right to a fair civil trial as enshrined in the Bill of Rights. Thus, the court in Bid Industrial Holdings v Strang had to decide whether there has been a limitation or a breach of fundamental rights as alleged. And if it is determined that the jurisdictional arrest limits fun36

A similar rule of arrest and attachment maintains in the Magistrates’ Courts Act of 1944, under section 30bis. The purpose of section 30bis of the Magistrates’ Courts Act was to bring the magistrates’ courts in line with the common law. See TM Paterson (ed), Eckard’s Principles of Civil Procedure in the Magistrates’ Courts (Kenwyn, Juta, 1996), 25.

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damental rights, the court would have to decide whether such limitation can be justified in terms of section 36 of the Constitution. Section 36 provides as follows: (1) The rights in the Bill of Rights may be limited only in terms of law of general application to the extent that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom, taking into account all relevant factors, including– (a) the nature of the right; (b) the importance of the purpose of the limitation; (c) the nature and extent of the limitation; (d) the relationship between the limitation and its purpose; and (e) less restrictive means to achieve the purpose. (2) Except as provided in subsection (1) or in any other provision of the Constitution, no law may limit any right entrenched in the Bill or Rights.

The limitation of fundamental rights is subject to the meeting of certain requirements. The rights in the Bill of Rights cannot be limited or restricted simply because it is convenient to do so. To begin with, section 36(1) of the Constitution requires that the law which authorised the limitation should be of general application. That is, it should be a law that is clear and that applies generally. With reference to the subject of our discussion, the question would therefore be whether jurisdictional arrest pursuant to section 19(1)(c) of the Supreme Court Act of 1959 is of general application. Moreover, it should also be determined whether jurisdictional arrest is a reasonable and justifiable course to take in an open and democratic society. Section 36(1) lists five factors to be taken into account when deciding whether the limitation is reasonable and justifiable. According to the Constitutional Court in S v Manamela (Director-General of Justice Intervening),37 these factors should not be understood to create a rigid test. Their importance is to serve as a guidepost to assist a court to “engage in a balancing exercise and arrive at a global judgment on proportionality”.38 What the limitation clause requires to be undertaken is the weighing up of conflicting values and interests.39 The use of less invasive means of achieving the purpose of the limitation has to be taken into account as well. Supplementary to the balancing of constitutional values and interests is the consideration whether the limitation of the rights in question is in proportion to other factors, including the purpose and effects of the limitation.40 These additional exercises, read with the requirement that the limitation should be reasonable and justifiable in an open and democratic society, would require the party seeking to justify the limitation to present evidence to show the following: 37 38 39 40

2000 (5) BCLR 491 (CC). Ibid, para 32. S 38(1)(a). See s 38(1)(b)–(d).

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that the purpose of the limitation is important; that there are no other means of achieving the limitation (eg, other than arrest in this case) and that the purpose of the limitation outweighs the adverse effects of the limitation of the right in question.41 The Constitutional Court in S v Bhulwana42 has illustrated the balancing exercise as follows: “[T]he Court places the purpose, effects and importance of the infringing legislation on one side of the scales, and the nature and effect of the infringement caused by the legislation on the other. The more substantial the inroads into fundamental rights, the more persuasive the grounds of justification must be.”43

D. E VALUATION OF THE D ECISION IN B ID I NDUSTRIAL H OLDINGS v S TRANG

1. General: Brief Facts of the Case In Bid Industrial v Strang the appellant, a South African company, wished to sue two Australian citizens, John and Andrew Strang, for delictual (torts) damages and, as a result, sought an order for the respondents’ arrest to establish jurisdiction. The respondents opposed this application on the basis that the common law rule requiring jurisdictional arrest in cases where a resident plaintiff is suing a foreign defendant was unconstitutional. In particular, the respondents argued that section 19(1)(c) of the Supreme Court Act of 1959,44 which the applicant relies on to empower such an arrest, infringed various of their constitutional rights as enshrined in the Bill of Rights45 contained in the South African Constitution of 1996. According to the respondents, the rights infringed included the right to equality before the law; the guarantee against unfair discrimination; the right to human dignity; the right to freedom of movement; and the right to a fair civil trial. And thus section 19(1)(c) should be declared invalid.46 Furthermore, it was argued that the common law rule from which section 19(1)(c) derives should be developed in order to abolish the jurisdictional arrest.47 41

42 43 44

45 46 47

See generally at 164–8. I Currie and J de Waal The Bill of Rights Handbook (Durban, Juta, 5th edn, 2005), 164–85. The following case clearly illustrates the application of the limitation clause: Minister of Home Affairs v National Institute for Crime Prevention and the Re-integration of Offenders (NICRO) 2004 (5) BCLR 445 (CC). 1996 (1) SA 388 (CC). Ibid, para 18. Act No 59 of 1959. For easy access to the South African civil procedure statutes, see generally J Faris and E Hurter, Student Handbook for Civil Procedure (Durban, Butterworths, 4th edn, 2002). Bid Industrial Holdings, supra n 2, para 4. Ibid, para 23. Ibid, para 4.

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2. The Decision and Reasons for the Decision (a) Jurisdictional Arrest Unconstitutional The SCA in Bid Industrial Holdings v Strang declared the common law doctrine of jurisdiction as contained in the Supreme Court Act abolished as far as it related to the “arrest” of the foreign defendant to find or confirm jurisdiction. Accordingly, the word “arrest” in section 19(1)(c) of the Supreme Courts Act has become redundant. Section 19(1)(c) should be “read down”, be interpreted in conformity with the Constitution, until the word “arrest” is removed by legislative amendment.48 The word “attachment” in section 19(1)(c) is unaffected by the decision. It is still possible for a court to assert jurisdiction over a foreign defendant through attachment of his/her property. According to the court, attachment, unlike arrest, does not ordinarily involve the infringement of constitutional rights and it remains a useful means by which jurisdictional effectiveness may be obtained in the form of security or the prospect of successful execution.49 In contrast, arrest by itself achieves neither security nor the prospect of successful execution. The court’s ruling involved a meticulous consideration of whether jurisdictional arrest meets the limitation requirements of section 36 of the Constitution. It came to the conclusion that jurisdictional arrest does not meet the requirements of the South African constitutional limitation clause. In particular, the court held that infringement by this common law rule cannot be reasonably justified under the limitation clause of the Bill of Rights, as it erodes the foundational rights of our Constitution, namely the rights to human dignity, equality and freedom and security of a person.50 Put differently, the jurisdictional arrest rule fails to provide a justifiable limitation to these fundamental rights. Noteworthy are the remarks by the court comparing the case of a defendant found civilly liable and a defendant whose liability has yet to be proved. According to the court, “[i]f there is no legal justification for incarcerating a defendant who has been found civilly liable there cannot be any for putting a defendant in prison whose liability has not yet been proved”.51 In South Africa the right to equality before the law forms one of the cornerstones of the democratic structure, and is the first substantive right in the country’s Constitution. The courts jealously protect and promote the right to equality before the law as contained in section 9 of the Constitution, which guarantees that South African law will both protect and benefit everyone equally without undue discrimination. 48 49 50 51

Ibid. Ibid, para 38. Ibid, para 43 read with 44. Ibid, para 41.

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The right of equality before the law, though not argued in this case, played a very important role in guiding the decision of the court.52 As discussed in Section C above, section 36 of the Constitution sets a stringent criterion on the basis of which the rights in the Bill of Rights may be limited. Thus jurisdictional arrest may not be used to merely limit rights for the convenience of the South African resident or domiciled plaintiff. As to the question whether limitation based on jurisdictional arrest is reasonable and justifiable in an open and democratic society, it should be noted that the court found no comparative experiences, in either legislation or case law, requiring arrest as a prerequisite for civil jurisdiction over foreign defendants.53 In this case the respondents alleged that jurisdictional arrest infringes their constitutional right to freedom and security of the person. The court agreed with the respondents that such an arrest seeks to limit the liberty of the arrestee,54 and is thus unconstitutional. Perhaps we should note that the right to freedom and security speaks to the dignity of persons or human dignity, which itself “informs the interpretation of many, possibly all, other rights”.55 The inevitable consequence of a jurisdictional arrest is detention. To avoid detention a defendant must consent to jurisdiction of the court and/or offer security or make payment into court.56 An important observation by the court is that the policy consideration behind jurisdictional arrest was to ensure that a court should have the power both to hear the suit and to give effect to its judgment.57 However, in reality it is “not the arrest which might render any subsequent judgment effective but the defendant’s coerced response”.58 The court held that there can be no justification “to coerce security, or more especially payment, from a defendant who does not owe what is claimed or who, at least, is entitled to the opportunity to raise non-liability in the proposed trial”.59 2. The Need for Alternative Grounds of Jurisdiction over Foreign Defendants (a) General The court in Bid Industrial Holdings v Strang called for alternative and less constitutionally restrictive rules for establishing jurisdiction over foreign defendants, in 52

53 54 55 56 57 58 59

In another case, Coetzee v Government of the Republic of South Africa 1997 (3) SA 527 (CC), civil imprisonment was held to be unconstitutional. Bid Industrial Holdings, supra n 2, para 54. Ibid, para 35. Dawood v Minister of Home Affairs 2000 (1) SA 997 (C) para 35. Bid Industrial Holdings v Strang, supra n 1, para 34. Ibid, paras 29 and 41. Ibid. Ibid, para 41.

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addition to jurisdiction through attachment.60 According to the court, one of the new practices would be the service of summons on the defendant while he or she is in South Africa, coupled with the presence of sufficiently close connecting factors between the action and the area of the court with due consideration of forum conveniens.61 But what are the “sufficiently close connecting” factors? The court did not elaborate what it means by “sufficiently close connecting” factors. Be that as it may, it would seem that the use of existing and practised common law and statutory ratione jurisdictionis or links will be vital in establishing the sufficiently close connection required to empower the court to have jurisdiction over a foreign defendant. Notable among these links or ratione jurisdictionis are rei sitae (place where the property is situated if such property is the subject matter of the suit), ratione domicilii (the place of domicile of the defendant); locality or residence of the defendant; ratione rei gestae (the cause of the action);62 and submission. (b) Cause of Action According to the court the occurrence of the cause of action within the area of jurisdiction of a court concerned is the strongest sufficiently close connecting factor so far. Section 19(1)(a) of the Supreme Court Act gives the High Court jurisdiction over “all causes arising” within its area of jurisdiction. In brief, section 19(1)(a) gives a court jurisdiction over a suit when the “cause” of action arose within its area of jurisdiction. The “cause of action” is also an established and accepted ground of jurisdiction in the High Courts under the common law’s ratione rei gestae principle. In the context of contract-related suit the court that would have jurisdiction over the defendant would be the court where either the contract was concluded, or was to be performed, or was breached. This is commonly identified as jurisdiction ratione contractu.63 The use of the word “or” signals that the conclusion, performance and breach of the contract are mutually exclusive words. This means that the place of conclusion of the contract alone, irrespective of the fact that performance thereof is in another place, suffices to designate such place as the place in whose area of jurisdiction the cause of action arose. The “cause of action” may be one of the more viable and realistic connecting factors in respect to jurisdiction over foreign defendants in the High Courts.64 60 61 62 63 64

See ibid, para 47 read with para 59. Ibid, par 56 read with para 59. See Theophilopoulus et al, supra n 27, 50; Paterson, supra n 36, 17–18. In the case of delicts (torts) the jurisdiction will be based on ratione delicti. Note that the cause of action will be a difficult connecting factor to satisfy pursuant to s 28 of the Magistrates’ Courts Act. Personal jurisdiction based on cause of action applies differently in the magistrates’ courts. In terms of s 28(1)(d) of the Magistrates’ Courts Act of 1944 a magistrates’ court shall have jurisdiction over “any person, whether or not he resides, carries on business or is employed within the district, if the cause of action arose wholly within the district” (own emphasis). Not only does s 28 establish jurisdiction based on cause of action, it is required that

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The problem with this approach is that it still leaves the issue of jurisdiction over a foreign defendant uncertain as far as effectiveness of the judgment is concerned. (b) Residence and Presence Section 19(1)(a) of the Supreme Court Act gives the High Court jurisdiction over all persons residing within its area of jurisdiction. This jurisdictional basis follows from the common law rule of actor sequitur forum rei, in terms of which the plaintiff must follow the defendant to his/her forum and sue the defendant there. In order to determine the viability of residence as a jurisdictional basis in respect to foreign defendants it is necessary to establish what “residence” traditionally entails or means in South African law and the relationship between residence and physical presence. Obviously, ”residence” includes some physical presence in the area of the court which does not have to be continuous. An important qualification emphasised by the Appellate Division, now reconstituted and renamed the SCA, in Ex parte Minister of Native Affairs,65 is that transitory, brief or momentary presence in the area of a court does not suffice to establish jurisdiction of such a court over any defendant. From the above discussion it is clear that residence as a jurisdictional foundation with respect to foreign defendants will be problematic, particularly where such a foreign defendant is temporarily present or merely present in the area of the high court. The established rule is that mere presence in the area of a particular court cannot provide such a court with jurisdiction over a defendant. In this case the SCA made a clear reference to its earlier decision in Richman v Ben-Tovin,66 where it went against the practice in South Africa and accepted jurisdiction based on the defendant’s mere physical presence for the purposes of reciprocal enforcement of a foreign judgment.67 The court once again regarded and accepted mere physical presence as a “workable substitute”68 for jurisdicthe “cause of action arose wholly within the district” of the court. This requires that all the facts essential to prove a cause of action, or simply facts in issue (the facta probanda) must have occurred within the jurisdiction of the court. For example, the practical application in a case involving a breach of contract would be that both the conclusion and the breach of contract must have happened in the area of the court petitioned. The conclusion and the breach of contract seldom happen all at once in one area. To further demonstrate this point, it would be difficult to establish jurisdiction in the magistrates’ courts in South Africa in a dispute involving a contract concluded through the Internet owing to the non-existent geographical boundaries of the Internet. As it is the South African courts are ready to decline to hear a matter based on s 28(1)(d) when the place of conclusion of the contract and breach differ, or when the locations are, in effect, shared between magisterial districts. See Abrahamse & Sons v SAR & H 1933 CPD 626 on the meaning of the word ”wholly” within the context of this section. See also Paterson, supra n 36, 21–2; Theophilopoulus et al, supra n 27, 72. 65 66 67 68

1941 AD 53. See also CF Forsyth, Private International Law (Durban, Juta, 4th edn, 2003), 191–3. 2007 (2) SA 283 (SCA). Bid Industrial Holdings v Strang, supra n 2, para 52. Ibid.

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tional arrest of a foreign defendant. However, one should be mindful of the fact that the decision in Richman v Ben-Tovin was more concerned with its international competence under rules of private international law to enforce a judgment of a foreign court than with the court’s authority and power to hear the original institution of a suit under private national law. In order for temporary presence to succeed as a jurisdictional basis there must be some “connection” with South Africa.69 This qualifier lends some credence to physical presence as an alternative jurisdictional ground. However, the court’s suggestion in this regard is highly circuitous and unnecessary since it leads us back to other connecting factors such as cause of action. A very illuminating and well-considered article on mere presence as founding international competence in private international law has been written by Richard Oppong.70 Taking the case of Richman v Ben-Tovin as his focal point, Oppong highlighted the negatives of mere presence that make it “unwise to affirm it as a basis of international competence”.71 Mere presence is a potential minefield and may never be fruitful as a jurisdictional ground over a foreign defendant owing to its exposed inadequacies and negatives. It its perhaps arguably correct, and equally applicable to the subject of this article, that jurisdiction founded on mere presence, itinerant presence or casual presence undermines the legitimate expectation of being brought before a court on the basis of real and sustainable grounds (such as cause of action, residence and domicile), and not on mere opportunistic grounds.72 This opportunistic jurisdiction is akin to an extradition request preceded by the abduction of the accused person. Jurisdiction based on mere presence is open to abuse,73 and may also attract constitutional objections. (c) Submission Submission of the foreign defendant to the jurisdiction of the South African courts stands out as the most attractive and desirable alternative approach in the context of this article. This is due mainly to submission not having a constitutional dimension. The potential hurdle with submission as an independent jurisdiction-conferring factor is the likelihood of a foreign defendant out of his or her own volition allowing himself/herself to be subject to the jurisdiction of the South African court. It should be taken into consideration that here we are dealing not only with a foreign party to a suit, but also a party who is being sued in a civil action. Currently it is possible for a foreign defendant to avoid attachment of his or 69 70 71 72

73

Ibid. Oppong, supra n 3. Ibid, 325–8. Ibid, 327, noting that a defendant hardly expects to be served with a claim while shopping duty-free in transit at Heathrow Airport. Ibid, 327.

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her property by the court for jurisdictional purposes by submitting to the jurisdiction of the court before the attachment has taken place. There were earlier conflicting positions regarding the application of submission with respect to submission by a foreign defendant. For example, the Appellate Division (now renamed the SCA) in the case of Veneta Mineraria Spa v Carolina Collieries (Pty)74 held that “[b]y prorogation a defendant subjects his person to the jurisdiction of the court, but that is not enough. One or more of the traditional grounds of jurisdiction must also be present.”75 This has been widely interpreted and understood to mean that submission alone cannot be an independent substitute for attachment (and arrest).76 However, in Hay Management Consultants (Pty) Ltd v P3 Management Consultants (Pty) Ltd77 the court held that submission by a foreign peregrinus was sufficient to confer jurisdiction on the court where the plaintiff is an incola of this court.78 The court in this instance confirmed the ruling in the case of American Flag Plc v Great African T-shirt Corporation79 and held that the denial of submission as conferring jurisdiction over a foreign peregrinus had been based on an incorrect interpretation of the Veneta Mineria Spa ruling, where both the plaintiff and the defendant were peregrini of the court. In the light of the cases of American Flag Plc and Hay Management Consultants (Pty) Ltd the proper rule therefore is that submission is an independent ground for jurisdiction over a foreign defendant,80 except in cases where both the defendant and the plaintiff are foreign peregrini.

E. T HE ( IN )S IGNIFICANCE OF THE D ECISION IN S OUTH A FRICAN P RIVATE I NTERNATIONAL L AW, AND A DMIRALTY J URISDICTION It is important in this context to determine the impact of the decision in Bid Industrial v Strang on admiralty arrest and on public international law in general. One may be tempted to conclude that the abolition of the doctrine of arrest in Bid Industrial Holdings v Strang has ramifications on the security arrest procedures in admiralty jurisdictions, and further, amounts to an intrusion into private international law by the public law values of the South African Constitution. In respect to the latter, one has to be mindful of the fact that the values contained in the South African Constitution are both public law and private law values. 74 75 76 77 78 79 80

1987 (4) SA 883 (A). Ibid, 894A. The interpretation stems from the decision of Briscoe v Marais 1992 (2) SA 413(W). 2005 (2) SA 522(SCA). Ibid, 526B–E and 529I–J. 200(1) SA 356 (W). American Flag Plc, ibid, 377F; Hay Management Consultants (Pty) Ltd 526B–E and 529I–J. See Theophilopoulus et al, supra n 27, 60–62, where a short, clear and succinct discussion is made on jurisdictional submission with reference to the cases of American Flag Plc, ibid, 377F, Hay Management Consultants (Pty), Veneta Mineraria Spa and Briscoe v Marais.

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The Constitution applies to both public relations and private relations. Section 8(2) of the Constitution states clearly that the Bill of Rights binds a natural or a juristic person to the extent that it is applicable. Moreover, the use of the limitation clause to test the validity of jurisdictional arrest may be an exciting event in South African jurisprudence, but is not a groundbreaking development with serious consequences and broad significance for private international law. Arrest in the context of the South African admiralty rules of jurisdiction is not affected by the decision in Bid Industrial Holdings v Strang either. Admiralty jurisdiction in South Africa is governed by the Admiralty Jurisdiction Regulation Act of 198381 (AJRA). AJRA, which among other things repealed the United Kingdom’s Colonial Courts Admiralty Act of 1890, empowers the South African courts to exercise admiralty jurisdiction by ordering the arrest of “any property” as security for a claim in action in personam against the owner of such property or in an action in rem against such property.82 Arrest is possible whether or not the admiralty claim83 is subject to the law of South Africa or whether or not the proceedings are in South Africa or elsewhere.84 Thus, the decision in Bid Industrial Holdings v Strang has little consequence in this area of the law. To begin with, the meaning of arrest in the context of the AJRA is different from that which attaches to section 19 of the Supreme Court Act. Arrest in the former legislation speaks to attachment of property, whereas in the latter legislation it speaks to the incarceration of a natural person. Therefore, even if one were to apply the decision in maritime claims, the conclusion would be that arrest or attachment in this instance is constitutional. Secondly, arrest under section 19 of the Supreme Court Act is for the purposes of proceeding in South Africa, while arrest under section 3(a) of AJRA is for the purposes of providing security for a claim. In Bid Industrial Holdings v Strang the attachment of property was held to be justifiable and thus constitutional. In the light of this holding of the court in Bid Industrial Holdings v Strang in respect to attachment, the international rules on the arrest of ships around the world, such as the 1952 International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-going Ships, remain unaffected.

81 82

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Admiralty Jurisdiction Regulation Act 105 of 1983. See AJRA s 3(a). The UK Supreme Court Act of 1981 also provides for action in rem and in personam as the two means of exercising admiralty jurisdiction. See in particular ss 20(1)(a) and 20(2) on the claims for which admiralty jurisdiction may be exercised. For further discussion on arrests in maritime cases, see Dyason supra n 10. AJRA s 1 defines an “admiralty action” as “the proceedings . . . for the enforcement of a maritime claim whether such proceedings are by way of action or b way of any other competent procedure”. AJRA s 3(a).

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F. C ONCLUSION The doctrine of arrest as the basis for finding or confirming jurisdiction is no longer a basis for jurisdiction under South African law. It is now unconstitutional for a defendant to have a foreign defendant arrested in order to secure the jurisdiction of the South African court. Other means of securing the jurisdiction of the court, such as submission to the jurisdiction of the court by the foreign defendant, should be used. The court in Bid Industrial Holdings v Strang refers to the so-called alternative rules and “new practice”, which should replace jurisdictional arrest.85 The unconstitutionality ruling of the court came as no surprise given the illustrious record and reputation of South African courts for fearlessness. They do not hesitate to overturn even long-established rules to safeguard the country’s constitutional principles and values, including the development of the common law and interpretation of statutes as mandated by the Constitution. As the Constitutional Court in Du plessis v de Klerk 86 stated, “Judges can and should adapt the common law to reflect the changing social, moral and economic fabric of the country. Judges should not be quick to perpetuate rules whose social foundation has long since disappeared.” The decision is a relief to foreign defendants, and an affirmation that South African constitutional justice is indeed functioning fairly. The decision has the following other imports: (a) the common law rule and section 19(1)(c) are preserved in relation to attachment; (b) the use and application of similar rules to section 19(1)(c) will inevitably be impinged. In particular, section 30bis of the Magistrates’ Courts Act, which allows the “attachment of person or property to found to confirm jurisdiction against any person who does not reside in the Republic” will be affected. Although section 30bis does not refer to the word “arrest”, it remains unconstitutional in the light of the decision and reasoning in Bid Industrial Holdings v Strang since “attachment of person” can only mean one thing, namely “arrest” or “detention”. Unlike section 19(1)(c ) of the Supreme Court Act, which distinguishes between “arrest of a person” and “attachment of property”, in section 30bis the words “arrest” and “attachment’ are used interchangeably. Therefore, should section 30bis be challenged it is likely to get the chop on the same grounds as section 19(1)(c). Section 30bis reads:

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In reality these are merely the restatements of the existing jurisdictional basis employed in both the High Court and the Magistrates’ Court. 1996 (3) SA 850 (CC) para 61.

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“The court may order attachment of person or property to found to confirm jurisdiction against any person who does not reside in the Republic, in respect of an action within its jurisdiction.”87 (original emphasis)

87

In general, the continued existence of the order of arrest tamquam suspectus de fuga, also part of the provision of s 19(1)(c), though not aimed at establishing jurisdiction but rather at providing a creditor with an effective means to secure the presence of a debtor within the court’s area of jurisdiction pending final judgment on the matter, seems to be under threat too. Arrest tamquam suspectus de fuga may be equated to civil imprisonment, which has been declared unconstitutional by the South African Constitutional Court.