In the high court of south africa



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IN THE HIGH COURT OF SOUTH AFRICA



(TRANSVAAL PROVINCIAL DIVISION)
DATE: 29/07/2008

CASE NO: 3106/2007

REPORTABLE
In the matter between:
CRAWFORD LINDSAY VON ABO APPLICANT
And
THE GOVERNMENT OF THE

REPUBLIC OF SOUTH AFRICA 1ST RESPONDENT


THE PRESIDENT OF THE REPUBLIC

OF SOUTH AFRICA 2ND RESPONDENT


THE MINISTER OF FOREIGN AFFAIRS 3RD RESPONDENT
THE MINISTER OF TRADE

AND INDUSTRY 4TH RESPONDENT


THE MINISTER OF JUSTICE

AND CONSTITUTIONAL DEVELOPMENT 5TH RESPONDENT




JUDGMENT
PRINSLOO, J
[1] This matter came before me as a special opposed application. Mr Hodes SC, assisted by Mr Katz and Mr Du Plessis, appeared for the applicant. Mr Mtshaulana SC, at times assisted by Mr Sello, appeared for the respondents.
Brief Synopsis

[2] The applicant is a 75 year old South Africa citizen. He hails from Bothaville in the Freestate, where he was born on 6 April 1933. He still lives in Bothaville.


[3] More than fifty years ago, in 1954 or 1955, the applicant began to obtain farming interests, including farming landed property, in the Republic of Zimbabwe (then Southern Rhodesia, later Rhodesia and now Zimbabwe, as it will be referred to throughout for the sake of convenience).
For reasons of commercial expediency, the applicant, from time to time, floated private companies and procured the registration of the farming properties into the name of these private companies, for his ultimate benefit. In 1985 he also arranged for the registration of a trust (known as the Von Abo Trust – “the Trust”), which he also employed in the same manner as the private companies aforesaid. At present the applicant is the sole beneficiary of this Trust with the right to appoint, in his sole discretion, further or other beneficiaries out of the group consisting of direct descendents born in legal wedlock of, or legally adopted by, the applicant.
[4] The final control of all decisions of and actions by the relevant private companies and the Trust at all times vested in the applicant by virtue of the fact that he is, and always has been, the managing director of the companies and the trustee of the Trust.
[5] Over the years, the applicant increased his financial and farming interests in Zimbabwe, accordingly also his involvement in the farming activities of the different companies and the Trust.
[6] The applicant initially found it necessary to finance the activities in Zimbabwe by applying his own South African resources. Within a relatively short period he was, however, able to continue with the farming activities in Zimbabwe by using financial support available in Zimbabwe. He consistently over the past fifty years re invested all profits and capital gains from the Zimbabwean activities, in Zimbabwe. This enabled him to reach the point, as referred to in greater detail below, of being the beneficial owner of a considerable farming empire in Zimbabwe.
[7] The development of the applicant’s Zimbabwean involvement obviously required not only financial ability, but also substantial personal sacrifices, business acumen, the ability to persist in correct decision taking, and unmitigated hard work.
[8] Beginning in 1997, (but, as history shows, in more accelerated fashion since 2000) the government of Zimbabwe violated the applicant’s rights by destroying his property interests in a number of farms in Zimbabwe, or contributing to their destruction. This destruction of property rights was achieved as part of an overall scheme and/or policy of the Zimbabwean government to expropriate land owned by white farmers. The scheme and/or policy continues to this day in Zimbabwe, notwithstanding international condemnation and the fact that the expropriation of property rights in the manner perpetrated by the Zimbabwean government is a clear violation of international law, and, for that matter, South African Law.
[9] No compensation of any sort was paid. This action by the government of Zimbabwe constituted expropriation without the payment of compensation, which action did not comply with the international minimum standard, which standard is to be afforded to all persons, citizens and aliens (foreign nationals) alike.
[10] It is common cause that the applicant has attempted, without success, to protect his rights in Zimbabwe and the rights of the entities under his control, or at least to ameliorate the violation of such rights.
[11] Those attempts failed and there was (and is) no effective recourse available to the applicant and countless others in Zimbabwe. This is not disputed. The applicant has exhausted all remedies available in Zimbabwe. This is also not disputed.
[12] As a national and citizen of the Republic of South Africa, the applicant directed correspondence to the first respondent as represented by the second respondent (the president) and a number of different ministers and officials, which correspondence brought to the first respondent’s attention the applicant’s plight and that of other South Africans similarly situated in Zimbabwe. The cumbersome and futile journey travelled by the applicant in this process, is detailed in the correspondence forming part of the papers.
[13] It appears that the applicant embarked on these written appeals to government when it was plain that his efforts to persuade the Zimbabwean authorities to leave his property alone were unsuccessful. He describes in graphic detail how he attempted, through litigation, to protect his interests with the assistance of the Zimbabwean courts. These efforts failed dismally, there were broken promises, court orders were ignored and eviction notices came flooding in, thick and fast.
[14] Already in March 2002, the applicant wrote to the second respondent in his capacity as Head of State, requesting diplomatic protection concerning the violation of his rights in Zimbabwe.
[15] The protection envisaged consisted of diplomatic assistance in the furtherance of the protection of the applicant’s rights vis-á-vis the State of Zimbabwe.
[16] Early on in the correspondence, the applicant also requested the second respondent or the fourth respondent to become a party to the International Convention on the Settlement of Investment Disputes (ICSID), in order that the applicant might pursue a compensation claim against the government of Zimbabwe pursuant to the ICSID complaint mechanisms, and requested a meeting with the second respondent in order to convince the latter of ICSID’s importance from both a practical and legal perspective.
I pause to point out that part of the relief initially sought before me by the applicant, was a mandamus directing the respondents to take up membership of ICSID. Apart from the fact whether it was open to me to grant mandatory relief of this nature, Mr Mtshaulana strongly argued, by referring to the rules of ICSID, that such an order, if granted, may turn out to be a brutum fulmen, because Zimbabwe would have to consent to take part in such dispute resolution proceedings. It was argued that there was no guarantee that such a consent would be forthcoming. This state of affairs, or perhaps other practical considerations, prompted the applicant, towards the end of the proceedings before me, to abandoned the prayer for this special mandatory relief and only to pursue prayers for more general declaratory, mandatory and supervisory relief.
An initial prayer for the reviewing and setting aside of the failure of the respondents to consider and decide the applicant’s application for diplomatic protection was also abandoned.
[17] The cumbersome correspondence journey, supra, came to Nought. Eventually, the applicant placed the respondents on terms. They did not respond. This prompted the applicant to launch this application.
The Relief Sought

[18] The prayers contained in the original notice of motion were the following:


“1. Reviewing and setting aside the failure of the Respondents to consider and decide the Applicant’s application for diplomatic protection in respect of the violation of his rights by the Government of Zimbabwe;
2. Declaring that the failure of the Respondents to consider and decide the Applicant’s application for diplomatic protection in respect of the violation of his rights by the Government of Zimbabwe is inconsistent with the Constitution, 1996 and invalid;
3. Declaring that the Applicant has the right to diplomatic protection from the Respondents in respect of the violation of his rights by the Government of Zimbabwe;
4. Declaring that the Respondents have a Constitutional obligation to provide diplomatic protection to the Applicant in respect of the violation of his rights by the Government of Zimbabwe;
5. Ordering the Respondents to forthwith, and in any event within 30 (thirty) days of date of this Order, take all necessary steps to have the Applicant’s violation of his rights by the Government of Zimbabwe remedied, including, but not limited to, becoming a party to ICSID or consenting ad hoc to the Applicant’s dispute with the Government of Zimbabwe (in respect of his claim that such Government has violated his rights), being submitted to the International Centre for Settlement of Investment Disputes (ICSID) established under the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States;
6. Directing the Respondents to report by way of affidavit to this Honourable Court within 30 (thirty) days of this Order, what steps they have taken in respect of prayer 5 above and providing a copy of such report to the applicant;
7. That, in the event of the Respondents failing to comply effectively with either the Order in terms of prayer 5 or in terms of prayer 6, ordering the Respondents jointly and severally, (the one paying the other to be absolved) to pay to the Applicant such damages as he may prove that he has suffered as a result of the violation of his rights by the Government of Zimbabwe;
8. Directing that the Respondents, jointly and severally (the one paying the other to be absolved) pay the Applicant’s costs of this Application.”
[19] After the relief sought was scaled down, as I have explained, the prayers now before me are the following:
“1. Declaring that the failure of the Respondents to rationally, appropriately and in good faith consider and decide the Applicant’s application for diplomatic protection in respect of the violation of his rights by the Government of Zimbabwe is inconsistent with the Constitution, 1996 and invalid;
2. Declaring that the Applicant has the right to diplomatic protection from the Respondents in respect of the violation of his rights by the Government of Zimbabwe;
3. Declaring that the Respondents have a Constitutional obligation to provide diplomatic protection to the Applicant in respect of the violation of his rights by the Government of Zimbabwe;
4. Ordering the Respondents to forthwith, and in any event within 30 (thirty) days of date of this Order, take all necessary steps to have the Applicant’s violation of his rights by the Government of Zimbabwe remedied;
5. Directing the Respondents to report by way of affidavit to this Honourable Court within 30 (thirty) days of this Order, what steps they have taken in respect of prayer 4 above and providing a copy of such report to the Applicant;
6. That, in the event of the Respondents failing to comply effectively with either the Order in terms of prayer 4 or in terms of prayer 5, ordering the Respondents jointly and severally, (the one paying and the to be absolved) to pay to the Applicant such damages as he may prove that he has suffered as a result of the violation of his rights by the Government of Zimbabwe;
7. Directing that Respondents, jointly and severally (the one paying the other to be absolved) pay the Applicant’s costs of this application.”
[20] As far as prayer 6 (the damages claim) is concerned, the applicant requested me, in the event of him being successful, to postpone this prayer sine die pending compliance by the respondents with prayers 4 and 5, and granting all parties leave to supplement their papers prior to the hearing of the damages claim.
The Citation of the Respondents

[21] The first respondent is the Government of the Republic of South Africa.


[22] The second respondent is the President of the Republic of South Africa, cited as such in his official capacity. The second respondent is cited inasmuch as he is in terms of section 83(a) of the Constitution both the Head of State and Head of the National Executive. In terms of section 84 of the Constitution, he has been assigned certain powers and functions, and in terms of section 85 he, together with the other members of the Cabinet, exercises the executive authority of the Republic of South Africa.
[23] The third respondent is the Minister of Foreign Affairs of the Republic of South Africa who is cited in her capacity as such.
The third respondent is cited because on 6 April 2006, a letter from the second respondent’s office was sent to the applicant’s attorneys recording that “it is the practice of the President’s office to seek the comments and recommendations of the Ministry of Foreign Affairs as the responsible line functionary dealing with issues affecting Foreign Affairs. As soon as the latter’s response is received, the presidency will take these (sic) into consideration and you will be advised of the outcome.”
[24] The fourth respondent is the Minister of Trade and Industry who is cited in his official capacity. He was also cited because of advice contained in some of the letters to the effect that he had an interest in the matter.
[25] The fifth respondent is the Minister of Justice and Constitutional Development. She was only joined at a later stage. This came about when, in January 2007, an officer in the Department of Foreign Affairs wrote to the applicant’s attorney, telling him that it had been decided that the Department of Justice and Constitutional Development is the Government Department responsible for coordinating matters relating to ICSID.
Of matters ICSID, BIPPA and BIT

[26] I have recorded the applicant’s later decision to abandon the prayer for mandatory relief that would force the respondents to join ICSID. I have mentioned the apparent reason for this late abandonment.


[27] Nevertheless, I consider it convenient and appropriate to make a few brief remarks about ICSID as well as the other two structures mentioned above.
[28] As indicated, ICSID is the International Convention on the Settlement of Investment Disputes.
ICSID is a public international organisation created under a treaty with its head office in Washington DC, in the United States of America. ICSID provides facilities for the conciliation and arbitration of investment disputes between contracting states (Zimbabwe is a contracting state) and nationals of other contracting states. Its objective in making such facilities available is to promote an atmosphere of mutual confidence within states and foreign investors conducive to increasing the flow of private international investment.
[29] South Africa is not a party to ICSID. However, should it join the other 136 states parties to ICSID (including Zimbabwe) by becoming a party to the treaty, it will at no financial or political cost to itself provide to its nationals an avenue to settle investment disputes with other nations (such as those at issue in this matter in respect of Zimbabwe).
[30] Another avenue to assist the applicant would be for South Africa to make an ad hoc declaration of consent under the Additional Facility Rules of ICSID which allow for cases involving nationals of states not a party to ICSID (South Africa) and states parties to ICSID (Zimbabwe) to be arbitrated under ICSID rules.
[31] The above constitute obvious reasons for the applicant to urge the respondents to either join ICSID or make the ad hoc declaration in order to open those obvious opportunities to the applicant and other aggrieved citizens in their quest for compensation.
[32] Of course, both sides agreed, on a proper interpretation of the ICSID rules, that Zimbabwe would have to consent to such a process even if the republic were to join ICSID. Hence the abandonment of the prayer for this particular relief.
[33] Nevertheless, no reason was advanced for the refusal on the part of the respondents to join ICSID and, thereafter, bring pressure to bear on Zimbabwe to give the required consent. The paper trail journey to which I have referred reveals a constant failure on the part of the respondents to even debate the possibility of joining ICSID let alone disclosing reasons of the refusal to do so.
[34] I add that the late Chief Justice I Mahomed, when chairperson of the South African Law Commission (“the Commission”) in the commission’s project report 94 of July 1998, directed to the then Minister of Justice, made specific recommendations in regard to the ICSID convention, “the Washington Convention of 1965”. The commission discussed the purpose of ICSID and its special features and benefits for South Africa and concluded that “the arguments in favour of South Africa ratifying the Convention are strongly persuasive”.
Already at that stage, the Washington Convention enjoyed a high degree of international acceptance, particularly among African States. As at 30 June 1995 it had been rectified by 119 states and signed by a further fifteen states. The only states in the region yet to ratify the Convention were (at that stage) South Africa, Namibia and Angola. The Convention has also generally been positively received by developing countries.
[35] I find it convenient to quote a few extracts from the aforesaid report of the Law Commission:
“92.1.9 Although South Africa is a developing country, its relatively strong infrastructure and position as the major economic power in the region place South Africa in a somewhat unique position as a country which could get a dual benefit from ICSID membership.
92.1.10 On the other hand, the country is anxious to attract more foreign investment and some of the potential projects could benefit from the availability of arbitration or conciliation under the Washington Convention. Ratification of the Convention would therefore be another positive signal which South Africa could send out to indicate that the new Government is eager to create the necessary legal framework to encourage foreign investment. Bilateral investment treaties between states, particularly between a developed and a developing state, commonly contains a provision for arbitration under ICSID as a means of encouraging private investment in the developing country. As appears from the text below, such clauses are already being included in bilateral investment treaties recently entered into by the South Africa Government with the Governments of certain foreign states.
92.1.11 On the other hand, South African companies are eagerly looking for investment opportunities in other African countries, virtually all of which are members of ICSID. Ratification of the Convention by South Africa would facilitate such investment and further the economic development of the region.
92.1.12 Failure to ratify the Convention would leave South Africa as one of the very few African countries which have not done so and a continued failure to do so appears difficult to justify. Moreover, the inclusion of ICSID arbitration clauses in bilateral investment treaties recently entered into by the South African Government with the Governments of, for example, Germany, France, Switzerland, Denmark, Korea and Canada have created the expectation among potential investors in those countries that South Africa intends acceding to the Washington Convention.
92.1.13 Secondly, as appears from paragraphs … above, the ICSID mechanism reduces the involvement of foreign state courts to an absolute minimum, thereby reducing sensitivity concerning national sovereignty.
92.1.14 It is, however, necessary to consider what the possible additional costs of membership of ICSID would be, pursuant to ratification of the Convention.
92.1.15 South Africa would therefore incur no costs in joining ICSID, other than the cost of enacting the legislation to give effect to ratification to the Convention.
92.1.16 For the reasons set out in paragraphs … above, it is submitted that South Africa should follow the example of most other African countries and ratify the Washington Convention. Draft legislation to give effect to this recommendation is contained in chapter 4 of the Draft Bill.”
[36] Against this background, counsel for the applicant, in their very comprehensive and well crafted heads of argument, submitted that it was startling to discover that the advantages of ICSID are not unknown to the respondents. The first respondent, in concluding various bilateral investment treaties prior to the commission’s report of 1998, “created the expectation among potential investors in those countries that South Africa intends acceding to the Washington Convention”. This much was stated in a report of the Law Commission, supra.
Counsel for the applicant submit that the aforesaid expectation created among potential investors, as alluded to by the Commission, is reflected in the fact that in each of a number of investment treaties concluded by the first respondent with foreign states, an ICSID arbitration is referred to as one of the options by which any investment dispute arising between the parties would be settled. Counsel then list seven such agreements or treaties, referring in each instance to the relevant article in the treaty designed to promote and protect reciprocal investments. For example, there was a bilateral agreement between the republic and Canada in 1995, a treaty with Germany in 1995, an agreement with Denmark, an agreement with France, an agreement with Korea and, lastly, an agreement with the Swiss Federal Council on the promotion and reciprocal protection of investments.
The last mentioned agreement, dated 27 June 1995, was handed up as an exhibit during the course of his diligent address by Mr Mtshaulana on behalf of the respondents. He did so to fortify his argument, supra, that an agreement from both sides was required in order to bring about, for example, an ICSID arbitration and, where the consent of Zimbabwe was by no means guaranteed, the original prayer for this court to order the respondents to take out ICSID membership ought not to be entertained.
[37] The fact that the prayer for this specific relief was abandoned as a result, does not mean, in my view, that the consistent failure on the part of the respondents to join ICSID and make a serious attempt to enter into a Bilateral Investment Treaty (“BIT”) with Zimbabwe with the view to protecting its nationals investing in that country should not come under the spotlight when consideration is given to the submissions by the applicant that the failure of the respondent to grant the applicant diplomatic protection is unconstitutional for its irrationality.
Counsel for the applicants, in their heads of argument, put it as follows:
“94. With respect, the above demonstrates that ICSID is in fact considered by the South African Government to be a plausible means by which South African nationals might settle their investment disputes with foreign states. To withhold such a means of dispute settlement from the applicant and similarly situated individuals in respect of investment disputes arising, and within Zimbabwe, is discriminatory, irrational and contrary to the foreign policy commitments made by the first respondent to which reference is made earlier.
95. The question remains unanswered by the respondents: if the South African Governments’ so called efforts to assist the applicant (and others) in disputes with Zimbabwe around that Government’s expropriation of property of South African nationals has ‘not met with great success, if any at all’ then on what plausible rational and Constitutionally sufficient basis are the respondents denying the applicant and others similarly situated an opportunity to proceed under ICSID, a vehicle which, as the Dutch example demonstrates, may well meet with success?”
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