Telkom SA Limited v ZTE Mzanzi (Pty) Limited and Others

Telkom SA Limited issued a Request for Proposals (RFP) inviting tenders for the supply of telecommunications equipment. The first respondent, ZTE Mzanzi (Pty) Ltd, submitted a tender which was disqualified at an early stage for alleged non-compliance with certain criteria. The contract was ultimately awarded to the second and third respondents. Mzanzi was aggrieved at the disqualification and its attorneys wrote to Telkom declaring a dispute in terms of clause 43 of the Standard Terms and Conditions, which was incorporated into the RFP by clause 1.2.2. Mzanzi requested an undertaking that Telkom would not proceed with the tender process until the dispute resolution process contemplated by clauses 43.3 and 43.4 had been complied with. Telkom refused to provide the undertaking. Mzanzi applied to the North Gauteng High Court for an interim interdict restraining Telkom from proceeding with the process pending finalization of the dispute resolution. Prinsloo J granted the interdict and Telkom appealed.

• Whether the submission of a tender creates a contractual relationship between the bidder and the entity inviting tenders
• Whether clause 43 of the Standard Terms and Conditions, incorporated by reference into the RFP, obliged Telkom to submit to resolving disputes with unsuccessful tenderers before awarding the contract
• The proper construction of clause 1.2.2 of the RFP read with clause 43 of the Standard Terms and Conditions
• Whether the relief sought was properly characterized as an interim or final interdict

The appeal was upheld with costs. The order of the court below (North Gauteng High Court) was set aside and substituted with an order dismissing the application with costs, including the costs of two counsel.

The binding legal principle established is that a dispute resolution clause contained in standard terms and conditions that would apply to a contract, when incorporated by reference into a request for proposals (RFP), applies only to disputes arising after a contract has been concluded between the tendering entity and the successful bidder. It does not create a contractual obligation on the tendering entity to engage in dispute resolution processes with unsuccessful bidders during the tender evaluation phase. The submission of a tender does not create a contractual relationship between the parties, and dispute resolution clauses must be construed consistently with this principle. A construction that would require a tendering entity to resolve disputes with multiple bidders before awarding a tender would be unbusinesslike and absurd, and cannot be imputed as the parties' intention.

The court made non-binding observations regarding the proper characterization of interdict applications. Nugent JA noted that the matter was incorrectly dealt with as an interim interdict under the rules in Olympic Passenger Service (Pty) v Ramlagan. The court observed that when an interdict is sought only until a defined event occurs (not pending determination of rights by a court), it should be treated as a final interdict for that period, to which ordinary rules for the grant of final relief apply, citing Minister of Defence v SA National Defence Union. The court also observed that the use of 'and/or' in commercial documents, while potentially creating ambiguity, is often tautologous and should be interpreted in light of the overall context and commercial purpose of the agreement.

This case establishes important principles regarding the nature of the tender process in South African law. It reaffirms that the submission of a tender does not create a contractual relationship between the bidder and the inviting entity. The case provides guidance on the interpretation of dispute resolution clauses in tender documents, making it clear that such clauses ordinarily apply only once a contract has been concluded with the successful bidder, not to disputes arising during the tender evaluation process. It prevents unsuccessful bidders from using broadly worded dispute resolution clauses to delay or obstruct tender processes. The judgment also clarifies the distinction between interim and final interdicts in the context of relief pending a defined event rather than pending further court proceedings.