SOUTH AFRICA. South Africa’s Constitutional Court will soon make a judgement on a long-running case involving Airports Company South Africa (ACSA) and retailers Big Five Duty Free, Flemingo and Tourvest.
The court this week heard an appeal from ACSA against a decision made by the Supreme Court of Appeal (SCA) in the case on 15 September 2017.
ACSA wants to reissue a tender for the operation of duty free shops at OR Tambo, Cape Town and King Shaka International airports won by Big Five in 2009. Flemingo and Tourvest also submitted bids.
Big Five entered into a lease agreement on 25 September 2009 with ACSA on terms set out in a pro forma lease agreement.
Following the award of the tender in 2009, Flemingo brought an application to review and set it aside. It also sought an urgent interim interdict to stop the implementation of the award until the review had been determined. ACSA and Big Five opposed the review, arguing that the tender was lawful. Tourvest did not participate.
On 11 December 2009, the High Court granted the interim interdict. On 17 May 2012, the High Court decided the review application and set aside the tender award. Big Five then appealed the review judgment to the Full Court of the Pretoria High Court. Tourvest did not participate.
The appeal was argued by Big Five and Flemingo before the Full Court and judgment was reserved. After the hearing, but before the judgment was handed down by the Full Court, Big Five and Flemingo agreed to resolve the dispute through a settlement agreement. ACSA could not agree to the settlement agreement without the approval of its board of directors. Big Five and Flemingo went ahead with the settlement agreement without ACSA.
On 20 June 2014, the Full Court made the settlement agreement an order of court. In the settlement agreement, Flemingo agreed to abandon the interdict order and withdraw the review application in its entirety, “having the effect that these proceedings were never instituted and/or proceeded with”, thereby acknowledging that ACSA is “free to and can now implement the award of its tender . . . to [Big Five] without limitation or restriction and without any challenge thereto whatsoever by [Flemingo]”.
ACSA took the view that since it was not party to the agreement, it was not bound by it and decided to start a new tender process. Big Five sought an order from the Gauteng Division of the High Court, Pretoria (High Court) that ACSA was bound by the award it had made in 2009 and that it was obliged to conclude the written lease agreements anticipated. ACSA and Tourvest opposed the application.
In the High Court the judge refused the application, holding that the order was a “public remedy” and could not be set aside by the private parties; and that even though the Full Court had made that agreement between Big Five and Flemingo an order of the Court, ACSA was not bound by that order because it was “at odds with the constitution, the law and public policy”.
Big Five appealed to the SCA against the order. The SCA addressed the question of whether the tender awarded in Big Five’s favour stands and is binding on ACSA, or whether ACSA was free to start a new tender process. The court concluded that the effect of the settlement agreement, made an order of court, was that the review proceedings were withdrawn as if they had never happened and that ACSA was bound by the 2009 tender decision.
ACSA now seeks leave to appeal to the Constitutional Court against the decision of the SCA. Big Five opposes the application.
The Constitutional Court will answer the question of whether a judgment that pronounces on the legality or constitutional validity of an administrative decision can be overturned by agreement between private parties where that agreement is made an order of court.
