Joint Venture between Aveng (Africa) (Pty) Ltd and Strabag International GmbH v South African National Roads Agency Soc Ltd and Another

SANRAL and a joint venture between Aveng (Africa) (Pty) Ltd and Strabag International GmbH concluded a construction contract in August 2017 for the Mtentu River Bridge project, governed by the FIDIC Red Book. Lombard Insurance issued a performance guarantee in favour of SANRAL pursuant to the contract. In October 2018, violent community disruptions halted construction. The Joint Venture claimed the unrest constituted force majeure and, after 84 days of suspension, purported to terminate the contract on 30 January 2019. SANRAL denied force majeure, instructed the Joint Venture to return to site, and when it failed to do so, SANRAL itself purported to terminate the contract on 5 February 2019. A dispute over force majeure and termination was referred to arbitration. Pending arbitration, the Joint Venture sought an interdict preventing SANRAL from calling up the performance guarantee, arguing that SANRAL had not met contractual conditions entitling it to do so.

The appeal was dismissed with costs, including the costs of two counsel. SANRAL was not interdicted from calling up the performance guarantee.

The case reinforces the autonomy principle in South African law relating to performance guarantees and letters of credit, and confirms judicial reluctance to interfere with their operation. It clarifies that alleged restrictions in underlying contracts will not easily justify interdicting a call on a guarantee, especially where disputes are pending arbitration. The judgment aligns South African law with cautious comparative developments in Australian and English law, while prioritising commercial certainty.