The Business Zone 1010 CC t/a Emmarentia Convenience Centre v Engen Petroleum Limited and Others

Business Zone, a licensed petroleum retailer, operated a service station under lease and supply agreements with Engen, a licensed petroleum wholesaler. An addendum required Engen to provide upgraded premises and additional access points. Disputes arose when Engen allegedly failed to provide the access points and later purported to cancel the lease, alleging unauthorised alterations and later the sale of foreign petroleum products. Business Zone contended that Engen’s conduct constituted unfair or unreasonable contractual practices under section 12B of the Petroleum Products Act and sought referral to arbitration. The Controller of Petroleum Products and, on appeal, the Minister refused the referral, reasoning that the contract had been cancelled and that a single act of cancellation could not constitute a contractual practice. Business Zone successfully reviewed those decisions in the Pretoria High Court, but the Supreme Court of Appeal reversed that decision. Business Zone then appealed to the Constitutional Court.

Leave to appeal was granted; the appeal was upheld; the order of the Supreme Court of Appeal was set aside and replaced with an order dismissing Engen’s appeal with costs; Engen was ordered to pay the costs in the Constitutional Court. The effect was to reinstate the Pretoria High Court’s order directing referral of the dispute to arbitration under section 12B.

The case authoritatively clarifies the interpretation of section 12B of the Petroleum Products Act. It confirms that the arbitration mechanism is accessible on a low threshold, that a single act such as cancellation may constitute an unfair or unreasonable contractual practice, and that the Controller and Minister may not pre-emptively decide contractual validity or merits. It also affirms that refusals to refer disputes under section 12B constitute reviewable administrative action under PAJA.