South African Reserve Bank and Another v Shuttleworth and Another

Mark Shuttleworth emigrated from South Africa and sought to externalise substantial blocked assets under the exchange control regime. In terms of regulation 10(1)(c) of the Exchange Control Regulations, the South African Reserve Bank, acting on conditions set by the Minister of Finance, permitted the export of capital subject to payment of a 10% ‘exit charge’. Mr Shuttleworth paid approximately R250 million under protest and later challenged the charge, arguing that it was an unconstitutional tax not enacted in accordance with the Constitution and that parts of the exchange control regime were invalid. The High Court upheld the charge as a regulatory measure but declared some exchange control provisions unconstitutional. The Supreme Court of Appeal overturned the High Court, holding the exit charge to be an unlawful tax. The Reserve Bank and Minister appealed to the Constitutional Court, with Shuttleworth cross‑appealing on the constitutional validity of the exchange control scheme.

Leave to appeal was granted; the main appeal by the Reserve Bank and Minister was upheld; the Supreme Court of Appeal’s order setting aside the exit charge was overturned; Mr Shuttleworth’s application in the High Court was dismissed; the cross‑appeal was dismissed; no order as to costs.

This case is a leading authority on the distinction between taxes and regulatory charges in South African constitutional law. It clarifies the application of sections 75 and 77 of the Constitution to fiscal measures and affirms the ‘dominant purpose’ test. The judgment also confirms the constitutionality of South Africa’s exchange control regime and recognises the necessity of broad executive discretion in complex economic regulation.