Hay Management Consultants Ltd v P3 Management Consultants (Pty) Ltd

The respondent (P3 Management Consultants, a South African company and incola of the Witwatersrand court) sued the appellant (Hay Management Consultants Ltd, an English company and peregrinus of South Africa) for repayment of R515,815 paid under protest. The parties had concluded a written agreement in London in November 1989 whereby the appellant granted the respondent a licence to operate a management consultancy in Southern African countries including South Africa. The agreement contained: (i) a choice of law clause (clause 15) selecting South African law as the proper law; and (ii) a domicilium clause (clause 16.1) requiring the English company to choose a domicilium citandi et executandi in South Africa (Johannesburg) for service of legal process. The respondent claimed repayment of amounts paid as royalties, alleging they were not due under the agreement. The appellant raised a special plea to jurisdiction, arguing it was a peregrinus, had not consented to jurisdiction, and no property had been attached. The jurisdictional issue was tried separately on the pleadings without evidence.

• Whether submission by a peregrine defendant to the jurisdiction of a South African court is sufficient of itself to found jurisdiction in an action for money brought by an incola plaintiff, without attachment of property
• Whether the contractual provisions (domicilium clause and choice of law clause) established submission to jurisdiction by the defendant
• Whether a submission to jurisdiction arising from a contract can be relied upon in an action not strictly arising from the contract but related to its performance
• The correct interpretation of the principle in Veneta Mineraria SPA v Carolina Collieries regarding the requirements for jurisdiction over peregrinus defendants

The appeal was dismissed with costs, including costs of two counsel. The special plea to jurisdiction was dismissed, confirming the Witwatersrand Local Division's jurisdiction to hear the matter.

Where a plaintiff is an incola of a South African court and a peregrine defendant has submitted to the jurisdiction of that court, such submission is sufficient of itself to found jurisdiction without requiring attachment of the defendant's property ad fundandam jurisdictionem. The link between the cause and the court required for a court to take cognizance of a matter is established when the plaintiff is an incola. A domicilium citandi et executandi clause requiring a foreign defendant to maintain a South African address for service of process, particularly when combined with a choice of South African law as the proper law of the contract, establishes submission to the jurisdiction of South African courts on a balance of probabilities. Such contractual submission extends to disputes that have the terms and performance of the contract as their substance, even if the cause of action is not strictly founded on the contract itself (such as claims for repayment of money paid under protest or condictio indebiti).

The court made several important obiter observations: (1) It strongly endorsed, as a matter of policy, the liberalization of jurisdiction based on submission, quoting extensively from Forsyth's Private International Law regarding the benefits to international commerce and the desirability of South African courts developing an international role comparable to the Commercial Court in London; (2) The court noted (at para 17) that its approval of recognizing jurisdiction based on submission "should not be understood as necessarily extending" to peregrine plaintiffs - leaving open the question of jurisdiction where both parties are peregrini; (3) The court observed that in the context of submission to found jurisdiction by an incola plaintiff against a peregrinus, the distinction between founding and confirming jurisdiction is "without significance"; (4) The court noted it found it unnecessary to address certain other reasons relied upon by the trial judge, such as the place of performance of contractual obligations and the relevance of conditions attached to payment under protest; (5) The historical reasons for treating incola plaintiffs more leniently than peregrine plaintiffs were noted by reference to Springle v Mercantile Association of Swaziland Ltd.

This is a leading South African case on jurisdiction over foreign defendants based on contractual submission. It authoritatively confirms that: (1) submission by a peregrine defendant is sufficient of itself to found jurisdiction when the plaintiff is an incola of the court, without requiring attachment of property ad fundandam jurisdictionem; (2) domicilium citandi et executandi clauses combined with choice of law clauses constitute strong evidence of submission to jurisdiction; (3) contractual submission extends to disputes substantially connected to the contract's performance, not merely those strictly "arising from" the contract; (4) the principle in Veneta Mineraria requiring "something more" than submission applies only to peregrine plaintiffs, not incola plaintiffs. The judgment reflects a pro-commerce, internationalist approach to jurisdiction, encouraging South Africa's courts to play a role in international commercial dispute resolution. It is fundamental to understanding South African private international law and the exercise of jurisdiction over foreign parties.