Fleet Africa (Pty) Limited v Polokwane Local Municipality

Fleet Africa (Pty) Ltd was awarded a municipal tender (Bid 49/2012) by the Polokwane Local Municipality in 2012 to provide fleet management services for five years, governed by a Service Level Agreement (SLA) concluded in February 2013. The SLA included dispute resolution through arbitration and a ‘put and call’ option requiring the Municipality, upon termination, to purchase the leased vehicles. When the Municipality elected not to renew the SLA in 2017, Fleet Africa exercised this option and claimed payment of approximately R53.9 million. The Municipality refused to pay, alleged overpayment, and later—eight years after the tender award—raised a defence in arbitration that the tender and SLA were unlawful due to non-compliance with Municipal Supply Chain Management Regulations. Fleet Africa approached the Limpopo High Court for declaratory relief that these defences lacked merit and that the SLA was binding. The High Court dismissed the application on the basis that it lacked jurisdiction, holding that the SLA conferred exclusive jurisdiction on the Gauteng Division, Johannesburg.

The appeal was upheld with costs (including two counsel). The High Court’s order was set aside and replaced with an order declaring that the Municipality’s defences in the arbitration based on alleged procurement illegality had no merit and could be disregarded, that the SLA is binding on the Municipality, and that the Municipality must pay the costs of the application on an attorney-and-client scale.

The case affirms that jurisdiction clauses consenting to a particular High Court do not create exclusive jurisdiction or oust the jurisdiction of other competent courts. It reinforces principles of pacta sunt servanda, legality, and delay in self-review by organs of state, and clarifies the limits on municipalities raising belated procurement invalidity defences in contractual and arbitration contexts.