Eskom Holdings SOC Limited v Vaal River Development Association (Pty) Limited and Others

Eskom Holdings SOC Limited (Eskom) supplies bulk electricity to Ngwathe Local Municipality and Lekwa Local Municipality under contracts specifying a Notified Maximum Demand (NMD). For extended periods, Eskom supplied electricity exceeding the NMD. The municipalities failed to pay Eskom for all electricity supplied and defaulted on their constitutional and statutory obligations to provide municipal services to residents. In July 2020, Eskom implemented "rotational load reduction," restricting supply to the NMD levels agreed in 2008 and 2010. Residents' associations brought urgent applications in the High Court seeking interim relief to restore electricity supply pending judicial review of Eskom's reduction decision under the Promotion of Administrative Justice Act (PAJA). The residents, who paid for electricity, suffered severe consequences including disruption to water supply, sewage treatment, healthcare, and business operations, described as an "unfolding human and environmental catastrophe." The High Court granted the interim interdict. The Supreme Court of Appeal dismissed Eskom's appeal. Eskom appealed to the Constitutional Court.

• Whether residents have a prima facie right to interim relief pending a PAJA review of Eskom's decision to reduce bulk electricity supply
• Whether the residents must establish a specific constitutional right to the supply of electricity by Eskom or may rely on other constitutional rights adversely affected by the reduction decision
• The application of section 7(2) of the Constitution (state's duty to respect, protect, promote and fulfil rights in the Bill of Rights) in the context of Eskom's obligations to residents
• Whether the principle of subsidiarity requires residents to seek recourse under the Electricity Regulation Act (ERA) rather than directly invoking constitutional rights
• Whether section 7(2)(a) of PAJA (exhaustion of internal remedies) applies at the stage of interim relief pending a PAJA review
• The requirements for granting an interim interdict, including: prima facie right, irreparable harm, balance of convenience, and absence of other satisfactory remedy
• Whether Eskom's decision to reduce supply constitutes administrative action subject to procedural fairness requirements under PAJA
• The application of the Intergovernmental Relations Framework Act (IRFA) to disputes between Eskom and municipalities
• Whether section 21(5) of the ERA authorised Eskom to reduce electricity supply
• The balance of convenience in the context of separation of powers and the protection of fundamental rights

Leave to appeal granted. Appeal dismissed with costs, including costs of two counsel. The interim interdict granted by the High Court is upheld pending the determination of the PAJA review proceedings.

An interim interdict pending a PAJA review may be granted where: (1) the applicants establish that administrative action has materially and adversely affected their constitutional rights (even if those rights are not a specific right to the thing being restored); (2) the applicants have shown grounds for a PAJA review, including that the decision was taken without procedural fairness; (3) the applicants face irreparable harm if the interim relief is not granted; (4) the balance of convenience, taking into account the severity of rights violations and the principles of separation of powers, favours the grant of interim relief. Organs of state exercising public powers must respect rights in the Bill of Rights under section 7(2) of the Constitution by refraining from conduct that infringes those rights. The exercise of statutory powers (such as section 21(5) of the ERA) must comply with constitutional and statutory requirements of procedural fairness, even where the power is exercised for legitimate purposes. Section 7(2)(a) of PAJA (exhaustion of internal remedies) applies to reviews, not to applications for interim relief. Where the nature of a right that may be asserted for purposes of a PAJA review is contested or involves novel legal questions, a prima facie showing at the interim stage may suffice, with definitive determination left to the reviewing court.

MINORITY JUDGMENT: Extensive discussion on the nature and content of constitutional rights, particularly socio-economic rights and whether they include claims to specific state resources. Observations on the dangers of courts allocating public resources and usurping democratic decision-making. Comments on the proper understanding of the relationship between interim relief and prospects of success in main proceedings. Discussion of the regulatory framework under the ERA and the roles of municipalities, Eskom, and NERSA. Observations on whether subsidiarity applies to legislation that does not give effect to a constitutional right. MAJORITY JUDGMENT: Discussion of the evolving jurisprudence on the principle of subsidiarity and whether it applies beyond "effect-giving" statutes. Extensive discussion of the nature of "rights" for purposes of the definition of administrative action in PAJA. Comments on when courts should and should not reach definitive conclusions on complex legal questions at the interim relief stage. Discussion of the role of policy considerations and polycentricity in the balance of convenience enquiry. Observations on the application of separation of powers concerns in the context of fundamental rights violations. Comments on the proper approach to pleadings and the level of specificity required in asserting constitutional rights. The majority left open the question whether residents have a specific constitutional right to the supply of electricity by Eskom, finding it unnecessary to decide.

This case is significant for: (1) Clarifying the requirements for interim interdicts in the context of pending PAJA reviews, particularly where violations of fundamental rights are alleged; (2) Establishing that applicants for interim relief need not prove a specific constitutional right to the precise thing sought to be restored (here, electricity supply), but may rely on broader constitutional rights that have been adversely affected by the impugned administrative action; (3) Confirming that organs of state have obligations under section 7(2) of the Constitution to respect rights in the Bill of Rights by refraining from conduct that infringes those rights; (4) Addressing the application of the principle of subsidiarity where comprehensive regulatory schemes exist; (5) Clarifying that section 7(2)(a) of PAJA (exhaustion of internal remedies) applies to reviews, not to interim relief proceedings; (6) Balancing the interests of the state in the exercise of public powers against the protection of fundamental rights in the most vulnerable circumstances; (7) Addressing the constitutional and statutory duties of municipalities and Eskom in the provision of electricity services; (8) Reinforcing that procedural fairness requirements apply even where decisions are claimed to be urgent or justified by policy considerations; (9) Highlighting the systemic problems of municipal dysfunction and the consequences for residents who are caught between failing municipalities and Eskom's enforcement of contractual rights. The sharp division in the Court reflects fundamental disagreement about the proper approach to rights, remedies, and the role of courts in protecting vulnerable groups affected by administrative decisions in the context of complex regulatory schemes and systemic government dysfunction.