The appellants (the Burmilla Trust and Mr Josias van Zyl) claimed constitutional damages against the respondents (President and Government of South Africa) for preventing prosecution of their claims before the now-defunct SADC tribunal. The claim arose from a mining lease (Rampai lease) granted by Lesotho in 1988 to Swissborough Diamond Mines (Pty) Ltd (controlled by Van Zyl). The area would be flooded by the Lesotho Highlands Water Project. Lesotho courts declared the lease void ab initio in the late 1990s/2000 for failure to obtain Chiefs' consent as required by Lesotho law. The appellants launched proceedings before the SADC tribunal in 2009, claiming Lesotho had violated the SADC treaty by expropriating the lease without compensation. In 2010-2011, the SADC Summit (with South Africa's then President participating) suspended and effectively dismantled the SADC tribunal, rendering it unable to hear the claim. The appellants then pursued arbitration before the PCA tribunal and Mauritius tribunal, but ultimately the Singapore courts set aside the PCA award for lack of jurisdiction. The appellants sued for constitutional damages in South Africa, claiming: (A) R641 million for value of Rampai lease; (B) R80 million moral damages for Van Zyl; (C) R15 million legal costs for SADC claim; (D) R2.7 million costs of SADC saving application; (E) R64 million wasted costs of subsequent proceedings. The respondents excepted to the particulars of claim, arguing they disclosed no cause of action. The high court (Tuchten J) upheld most grounds of exception.
The appeal of the first appellant (Burmilla Trust) was upheld with costs including three counsel. The appeal of the second appellant (Van Zyl) was dismissed with costs including three counsel. The order of the court a quo was set aside and replaced with: (a) Exception dismissed in respect of Burmilla Trust's claims for value of Rampai lease and costs of prosecuting that claim before SADC tribunal, with costs including two counsel; (b) Exception allowed and all other claims of Burmilla Trust struck out; (c) Exception allowed and all claims of Van Zyl struck out with costs including two counsel. The appellants were granted leave to seek to amend their particulars of claim within 30 days.
Majority: (1) Under international law, an international tribunal is not bound by decisions of domestic courts on the validity of property rights under municipal law, though it exercises restraint. It may reach a different conclusion if there are proper grounds such as: admission by the state, new evidence not before domestic courts, or denial of justice/illegality by domestic courts. (2) Judicial expropriation can occur through court decisions but requires some form of denial of justice or illegality - mere misapplication of law is insufficient. (3) A claim for constitutional damages under s 172(1)(b) for violation of s 34 rights due to state conduct preventing access to an international tribunal can be sustained if the claimant shows the tribunal would probably have found in their favor on proper grounds. (4) Van Zyl SCA did not constitute res iudicata as it involved different causes of action (diplomatic protection vs constitutional damages), different relief, and did not decide the key issues of what the SADC tribunal would have found or whether respondents violated constitutional rights. (5) Claims for wasted costs of subsequent litigation cannot be awarded as constitutional damages without factual allegations showing why such costs would be a just and equitable remedy under s 172(1)(b). Dissent: (1) Van Zyl SCA should bind through issue estoppel or precedent as it determined the legal principles governing existence of international rights and how alleged expropriation must be examined. (2) Under the subsidiarity principle, international tribunals defer to domestic courts' interpretation of municipal law unless manifestly incorrect. (3) Judicial expropriation requires denial of justice or illegality by domestic courts - egregiously wrong application of law such that no honest, competent court could have reached that conclusion. (4) The exhaustion of domestic remedies requirement means parties must pursue all available legal recourse, including applying to reopen proceedings to present new evidence, before accessing international tribunals.
The majority noted that the doctrine of estoppel in international law has limited application and cannot create rights where none came into existence or was officially recognised. It may apply where a state by official act granted a right and created a legitimate expectation it was validly granted, but this was not applicable here due to the subsequent Lesotho court proceedings. The majority also observed that although official acts of Lesotho represented the Rampai lease was validly granted, the Burmilla Trust fully participated in proceedings that resulted in declarations of invalidity. The court noted that the respondents rightly did not challenge that judicial expropriation of valid rights without compensation would constitute a violation of the SADC treaty, or that deliberate collusive preclusion of prosecution of the SADC claim would violate s 34 rights. The dissent emphasized that international tribunals are not courts of appeal of last resort and cannot scrutinize domestic court proceedings for mere errors unless there is fundamental failure of justice. The dissent also observed that if mere allegations of wrong application of law permitted international intervention, it would undermine sovereignty, independence of states, the subsidiarity principle, and the doctrine of finality which forms part of justice and the rule of law. The majority noted that this was not a case of expropriation or confiscation of existing rights but a question of whether rights came into existence according to local law requiring compliance with prescribed formalities. The court also observed that Article 21 of the Protocol required the SADC tribunal to develop its own jurisprudence having regard to applicable treaties, general principles and rules of public international law.
This case is significant for: (1) Clarifying the relationship between domestic court decisions and international tribunal jurisdiction - international tribunals are not bound by domestic courts but exercise restraint and deference under the subsidiarity principle; (2) Establishing that judicial expropriation under international law requires denial of justice or illegality by domestic courts, not mere misapplication of law; (3) Confirming that property rights are determined by municipal law but international law governs whether expropriation occurred; (4) Demonstrating the availability of constitutional damages under s 172(1)(b) as remedy for violation of s 34 access to justice rights where the state prevents access to an international tribunal; (5) Clarifying principles of res iudicata and issue estoppel in complex international litigation; (6) Emphasizing the requirement to exhaust domestic remedies before accessing international tribunals; (7) Illustrating how South African courts may need to assess what an international tribunal would have decided as part of determining constitutional damages claims.
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