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Two essential keys to unlocking the new Companies Act - Carl Stein — by Simon Sephton — posted on 2011-08-19 12:18 — 0 comment(s) — Companies Act Company Law Stein, Carl Unlocking the New Companies Act

The Act contains a host of new rights, obligations, remedies, procedures and sanctions, many of which are innovative, and some of which may even be termed revolutionary. A large number of these innovations are based on two fundamental decisions taken by government. The first, a philosophical decision, was to adopt the ‘enlightened shareholder value’ model. The second was to forbid the formation of new CCs and, instead, to attempt to ensure that the Act caters for the needs of small businesses at least as well as the CC Act. These two decisions and their profound impact on the Act are explained below.

Adoption of the enlightened shareholder value model

As the power and influence of the private sector, in particular the multinational company, has grown, the fundamental philosophical question as to the role of a company in society has become increasingly vexed. During the past 20 to 30 years, strong arguments have increasingly been made, and by and large accepted, that companies should be compelled to care about more than just maximisation of profits for their shareholders. Intense debates on this subject preceding the Act’s finalisation saw discussion of different models of a company’s (and, therefore, its directors’) duties and responsibilities. These debates and models are evidence that company laws are integral to the macro‑economic policies of South Africa’s various political groupings and, therefore, to the South African economy as a whole. There are three fundamental models:

The classic model holds that a company’s duties are essentially to promote and protect the interests of its shareholders only, to the exclusion of all its other stakeholders, including its employees. The 1973 Act was based on this capitalistic model.
The pluralist model sets the interests of stakeholders as an ‘end in themselves’, requiring a company to continuously balance the interests of all its stakeholders and to prefer the interests of one stakeholder above those of another only where it is in the best interests of the general body of stakeholders to do so. This holistic approach was advocated by the Congress of South African Trade Unions in debates on the Act.
The enlightened shareholder value model, like the classic model, puts the interests of shareholders first, but holds that in pursuing shareholders’ best interests in the long term the interests of all other stakeholders, including employees, suppliers and creditors, as well as the environment and the community at large, must be considered. The ‘triple bottom line’ concept — that it is good for business for companies to be good corporate citizens and to consider social, environmental and economic interests — was favoured by the 2002 King Report on Corporate Governance (‘King II’). King III goes somewhat further by recommending that companies strive to achieve the correct balance between their various stakeholder groupings in order to advance the interests of the company. The principles of the King Code are not legally binding except, to some extent, in the case of companies listed on the JSE.

The enlightened shareholder value model has been adopted by the Act, as it has been by most Western countries, including the UK in its 2005 Companies Act. The DTI’s stated approach in the 2004 Policy Paper was that, in developing new companies legislation, it would be guided by a legislative framework that
‘reflects the recognition that the company is a social as well as an economic institution, and accordingly that the company’s pursuit of economic objectives should be constrained by social and environmental imperatives’.

On the face of it, the definition of a ‘profit company’ in s 1 of the Act as ‘a company incorporated for the purposes of financial gain for its shareholders’ contradicts this philosophy. It certainly does evidence the fact that the primary duty of the directors of a profit company remains that of maximising profits for its shareholders, but it is equally certain that this duty is severely tempered by a host of other provisions which confer rights on, and impose obligations on companies towards, all their other stakeholders.

The Act has partially codified the common-law fiduciary duties of directors, the most important of which requires that directors ‘act in the best interests of the company’. Protagonists of the pluralist approach argued that the Act should spell out exactly what this duty entails and that it should include social and environmental responsibilities. The position taken by government was to embrace the enlightened shareholder value model, but not to legislate on the specifics as to what a director’s duty to act in the company’s best interests means. Instead, government has chosen to leave it to our courts to determine the ambit of directors’ duties through the development of our common law. It also concluded that the manifestation of the enlightened shareholder value model in various new provisions of the Act, particularly those which give stakeholders significant new rights and remedies, coupled with the rights and remedies given to stakeholders by numerous other statutes, provided sufficient protection for them. It decided that this approach, coupled with the self-regulating principles of the King Code, should encourage companies to comply not just with the letter of the law but with the spirit of good corporate governance.

Protagonists of the pluralist approach also argued that a voluntary self- regulating approach such as the enlightened shareholder value model disregards the fact that companies are legally bound by the Bill of Rights in terms of s 8(2) of the Constitution. Therefore a specific duty should be included for directors to realise and comply with fundamental human rights in the Constitution and the Bill of Rights to the extent that companies are required to do so. This did not happen, but there are nevertheless a number of provisions of the Act which refer to sections of the Constitution. For example, s 7(a) states that one of the purposes of the Act is to ‘promote compliance with the Bill of Rights in the application of company law’.

The adoption of the enlightened shareholder value model has resulted in a host of new provisions being introduced into the Act to give effect to it. It is epitomised in s 7(a), (b)(iii) and (d), which state that two other purposes of the Act are to:

‘promote the development of the South African economy by encouraging transparency and high standards of corporate governance as appropriate, given the significant role of enterprises within the social and economic life of the nation’; and
‘reaffirm the concept of the company as a means of enhancing economic and social benefits’.

Section 7 is given legal backing by s 5(1), which states that the Act must be interpreted ‘and applied’ in a manner that gives effect to these purposes.

Another important innovation occasioned by this new approach is the obligation of public and certain other companies to have a social and ethics committee.

John F Olson describes the Act’s corporate social responsibility model as follows:

‘Over the past twenty years, corporate governance has seen a surge in interest with regard to corporate responsibilities to society. Often, these interests have not been embedded in statutes but instead have been implemented through guidelines and codes. The Companies Act directly provides a clear framework for the empowerment of stakeholders and includes a directive that companies operate to enhance not only shareholder-profits but also societal welfare. To ensure that these purposes are fulfilled, the South African Government is provided greater power in governance decisions than is typically found in most other general corporate statutes.’ (‘South Africa moves to a global model of corporate governance but with important national variations’ in Tshepo H Mongalo (ed) Modern Company Law for a Competitive South African Economy (Juta 2010) 219.)

The Act also gives significantly greater rights and remedies to stakeholders, including minority shareholders, and thus encourages stakeholder activism. Two of the most striking — even alarming, in some instances — aspects of the Act are:

the number of remedies it provides, in particular the number of remedies it provides to minority shareholders, employees and directors; and
the number of methods by which its remedies may be enforced.

In both these respects the Act generally goes further than the companies legislation of other Western countries, including the USA and the UK. Unfortunately this could lead to increased litigation and a fair amount of ‘remedy shopping’.

TO READ ON, CLICK HERE to download the pdf of the whole chapter.

This is an extract from Chapter Two of Carl Stein's forthcoming The New Companies Act Unlocked - A Businessperson's Guide, which will be published by Siber Ink in late October 2011. It is currently available on a special prepublication offer at a 20% discount on the published price. To purchase online now at this discounted price, click here.

SA Constitutional Court unanimously declares presidential extension of Chief Justice's term to be unconstitutional. — by Simon Sephton — posted on 2011-07-29 11:55 — 0 comment(s) — Constitutional Law Legislation

Section 8(a) of the Judges’ Remuneration and Conditions of Employment Act (the Act) allows the President to request a Chief Justice who is about to be discharged from active service to continue in office as the Chief Justice for an additional period determined by the President if the Chief Justice accedes to that request. On Friday, 29 July 2011 the Constitutional Court handed down a judgment in three urgent applications for direct access about the purported extension of the term of office of the Chief Justice for 5 years by the President of the Republic of South Africa. But for this extension, the term of office of the Chief Justice will expire on 14 August 2011. The Constitutional Court accordingly granted direct access, declared section 8(a) and all conduct pursuant to it unconstitutional. The extension of the term of office of the Chief Justice was of no force and effect.

Justice Alliance of South Africa v President of Republic of South Africa and Others, Freedom Under Law v President of Republic of South Africa and Others, Centre for Applied Legal Studies and Another v President of Republic of South Africa and Others [2011] ZACC 23;CCT 53/11, CCT 54/11, CCT 62/11 (29 July 2011)

NOTE & acknowldegement of source: This summary has been published by SAFLII, the Southern African Legal Information Institute. What follows is a verbatim copy of the SAFLII summary published at http://www.saflii.org/za/cases/ZACC/2011/23.html.

On Friday, 29 July 2011 the Constitutional Court handed down a judgment in three urgent applications for direct access about the purported extension of the term of office of the Chief Justice for 5 years by the President of the Republic of South Africa. But for this extension, the term of office of the Chief Justice will expire on 14 August 2011.

Section 176(1) of the Constitution provides that a Constitutional Court judge holds office for a non-renewable term of 12 years or until he or she reaches the age of 70 years, whichever is the sooner, except where an Act of Parliament extends the term of office of a Constitutional Court judge. Section 8(a) of the Judges’ Remuneration and Conditions of Employment Act (the Act) allows the President to request a Chief Justice who is about to be discharged from active service to continue in office as the Chief Justice for an additional period determined by the President if the Chief Justice accedes to that request. The applicants asked the Constitutional Court to declare section 8 (a) of the Act inconsistent with section 176(1) of the Constitution. All the applicants contended that section 176(1) empowers an “Act of Parliament” to extend the term of office of the Chief Justice. Accordingly, to the extent that section 8(a) gives this power to the President, it is an unlawful delegation of a legislative power. FUL and JASA relied on a second ground. They argued that the phrase “a Constitutional Court Judge” in the second half of section 176(1) authorises Parliament to extend the term of all the judges of the Constitutional Court and not the term of office of the Chief Justice alone. The Act is inconsistent with the Constitution because it allows the office of the Chief Justice alone to be extended without extending the terms of office of the other Constitutional Court judges.

The President of South Africa and the Minister for Justice and Constitutional Development, argued that Parliament had not delegated its power but had in fact extended the term of office of the Chief Justice by authorising the President to do so by requesting the Chief Justice to continue active service. The President and the Minister, supported by CALS and CASAC, contended that section 176(1) did permit an extension of the term of a category of Constitutional Court judge like the Chief Justice.

The Chief Justice did not take part in the case except to say that he abides the decision of the Constitutional Court.

NADEL and the BLA submitted as amici curiae that the Court should, if it found the section unconstitutional, suspend the order of invalidity to give Parliament a chance to remedy the defect. Member of Parliament, Mario Orini-Ambrosini, also an amicus, gave the Court certain information and asked it to give guidance to Parliament on what was necessary to cure the defect. The submission of the Democratic Governance and Rights Unit that Parliament could extend the term of office of a specific judge only was considered by the Court although the Unit could not be admitted as amicus curiae before the hearing.

The parties agreed by the end of argument that direct access should be granted and that the case should be decided urgently so that Parliament had time, if necessary, to cure the defect before the office of the Chief Justice came to an end on 14 August 2011. This the Court did.

In its judgment, the Court unanimously held that section 176(1) must be interpreted against the background of the constitutional imperatives of the rule of law, separation of powers and the independence of the judiciary. The Court found that a non-renewable term of office is an important feature of these constitutional imperatives.

Against this background, the Court held first, that section 8(a) permitted the President to extend the term of office of the Chief Justice and by this surrendered and usurped the power of Parliament. Parliament alone had the power to extend a Constitutional Court judge’s term of office. It therefore amounted to an unlawful delegation of a legislative power.

The Court held secondly, that the term “a Constitutional Court judge” in the second half of section 176(1), properly interpreted, meant that section 176(1) does not permit the singling out of any one of the Constitutional Court judges for the extension of their terms. The Court was unanimous that the extension of the term of office of the Chief Justice only was unconstitutional in this case.

Three members of the Court were of the opinion that the singling out of the Chief Justice may be permitted by section 176(1) if done by an Act of Parliament of general application, rationally connected to a legitimate governmental purpose and furthering judicial independence. They however held that these requirements have not been satisfied.

Further, the Court held that it was not just and equitable to order a suspension of invalidity for two reasons. Firstly, insufficient information had been placed before the Court to justify an order suspending the declaration of invalidity. Secondly, it was not appropriate to suspend a declaration of invalidity of a provision that had not yet been effectively utilised in circumstances where material dislocation would not result.

The Constitutional Court accordingly granted direct access, declared section 8(a) and all conduct pursuant to it unconstitutional. The extension of the term of office of the Chief Justice was of no force and effect. It also ordered the respondents to pay the costs of each of the applicants including the costs of two counsel.

Download the full judgment by clicking here.

Viva Vilacabamba! The first successful case protecting the rights of Nature in Ecuador - By Cormac Cullinan — by Simon Sephton — posted on 2011-07-05 16:52 — 0 comment(s) — Cormac Cullinan Earth Governance Earth Jurisprudence Ecuador Environment Vilacabamba Wild Law

The first successful case has been brought on behalf of the Rights of Nature in Ecuador. These rights are protected in Article 71 of the Ecuadorian Constitution. The case was presented before the Provincial Court of Justice of Loja on March 30, 2011 which granted a Constitutional injunction in favor of nature, specifically the Vilcabamba River, against the Provincial Government of Loja.

Cormac Cullinan comments:

"This judgment shows the practical value of recognising the rights of Nature. Most environmental law cases that come before our courts are decided on the basis of whether or not the person undertaking the environmentally harmful activity had validly obtain the necessary permit (to damage the environment) and was in compliance with it. The rights of Nature approach allows courts and tribunals to avoid having to decide crucial matters on the basis of procedural trivia and to get to the heart of the matter - namely whether or not the person harming Nature can justify that harm on the basis that is is necessary and reasonable in the circumstances to protect human rights . This means that the rights of humans have to be balanced against the rights of rivers, mountains, forest and animals to exist and fulfil their natural ecological function. Consequently interfering with the flow of a river in a way that causes harm merely to widen a road is not justifiable, but it might be to protect human life."

Cormac Cullinan is the author ofWild Law, which has just been published in its second edition, and which is at the root of the global 21st century movement towards recognition of the Rights of Nature, giving Nature the same standing in the world's courts that is enjoyed by other non-human entities such as corporations. Wild Law can be bought online on the Siber Ink website, as an ebook from Little White Bakkie, or from your local bookseller.

An account of the recent Wild Law launch can be read here.

The full statement on the Ecuadorian judgment can be downloaded here.

Xolobeni: AmaDiba Crisis Committee & Legal Resources Centre respond to Minister Shabangu on Transkei titanium rights. — by Simon Sephton — posted on 2011-06-14 16:18 — 0 comment(s) — Amadiba Crisis Committee Environment Legal Resources Centre Mining Xolobeni

"In the circumstances, we call on you to notify TEM that its original application is of no force and effect and that it must submit a fresh application if it is still inclined to pursue the mining right." - Sarah Sephton of the LRC on behalf of the AmaDiba Crisis Committee

The Legal Resources Centre, Grahamstown

Media Release

Xolobeni: AmaDiba Crisis Committee response to DMR

Tuesday 14 June 2011

On behalf of the AmaDiba Crisis Committee (ACC) the Legal Resources Centre (LRC) has urged the Minister of Minerals and Energy, Susan Shabangu, to notify Transworld Energy and Minerals (TEM) to submit a new application and follow processes mandated by the MPRDA, should it still wish to pursue a mining right in the Xolobeni area of the Eastern Cape.

Responding to Shabangu’s recent decision to cancel TEM’s mining right issued in 2008, Sarah Sephton of the LRC said; “In the circumstances, we call on you to notify TEM that its original application is of no force and effect and that it must submit a fresh application if it is still inclined to pursue the mining right.

“In any event, the MPRDA requires that information submitted in support of an application must be current and correct. In the absence of up-to-date information, the Department cannot properly satisfy itself that the requirements of section 24 of the MRPDA have been met. TEM’s application was submitted during 2007 and the information contained therein is outdated.”

While Shabangu conceded that the decision to grant the mining right was taken when several environmental issues were still outstanding, she directed TEM to submit ‘such further’ information within three months of the date of her letter.

“The ACC does not accept that TEM took all proper steps to consult with interested and affected parties. In this regard, they persist in the allegations set out in the internal appeal documents,” Sephton said.

Furthermore, Shabangu in her decision, failed to consider and determine the community’s challenge to the grant on the grounds that mining can not take place in the Xolobeni area at all because:

The proposed mine encroaches on a Marine Protected Area, where mining is completely prohibited;
No authorisation has been obtained from the national and provincial department of environmental affairs and, to the contrary, they have indicated their opposition to the grant of the mining right;
The proposed mining area is reserved for a public purpose under section 48 of the MPRDA and;
No community resolution has been obtained, as required by section 2 of the Interim Protection of Informal Land Rights Act 31 of 1996.

Mining in this area will cause unacceptable pollution, ecological degradation and damage to the environment and the mining right accordingly cannot be granted in terms of section 23 (1) (d) of the MPRDA.

Xolobeni is the traditional homeland of the AmaDiba people and they have occupied the area for centuries. The area is also part of the Pondoland region acknowledged to be one of the most important centres of plant diversity in South Africa. Since the land is registered in the name of the State, the AmaDiba community is deemed to be the co-owner of the land.

The LRC has been acting on behalf of the ACC and Xolobeni community since 2 September 2008 when the Grahamstown office of the LRC filed an appeal with the Minister of Minerals and Energy requesting that she suspends and then appeals the decision, signed by the Regional Manager of the Eastern Cape, to award a mining right to TEM.

______________________________________________________________________
NOTE: For more information, please contact the LRC’s Sarah Sephton, on 046 622 9230 or Khumbulani Mpofu at khumbulani@lrc.org.za or 011 836 6601.
You can also contact the ACC’s Mzamo Dlamini on 072 194 0949 or Sinegugu Zukulu on 073 206 2429.
The LRC is an independent, non-profit, public interest law clinic, which uses law as an instrument of justice to provide legal services for the vulnerable.

Xolobeni mining rights to Transkei titanium revoked by Minister Shabangu — by Simon Sephton — posted on 2011-06-07 14:11 — 0 comment(s) — Amadiba Crisis Committee Environment Mining Shabangu Transworld Energy and Minerals Xolobeni

Minister Susan Shabangu has informed Sarah Sephton, legal representative of the Amadiba Crisis Committee that the mining rights awarded in July 2008 to Australian owned Transworld Energy and Minerals (Pty) Ltd (TEM) and the Xolobeni Empowerment Company (Pty) Ltd (Xolco) have been revoked.

Accordingly the complaint lodged by the Amadiba Crisis Committee with the Public Protector last week against the Minister for the long delay in announcing her decision has been withdrawn.

The Amadiba Crisis Committee and Sun International together lodged objections to the award of the mining rights in September 2008. A Special Task Team chaired by senior ANC MP Nkosi Patekile Holimisa found that the award of mining rights was in several respects in violation of legislated requirements.

The Minister has however left the door slightly ajar to allow the applicants a ninety day period in which to re-apply.

The attached documentation explains the Minister's decision.

STATEMENT by John G I Clarke - Consultant Social Worker, Development Facilitator, Writer

The decision of Minister Shabangu closes a very long and frustrating chapter in the quest of the Amadiba residents for sustainable livelihoods.

To put it colloquially, a large and aggressive “dog” has been removed from the manger that it has occupied over the past three years, obstructing the local residents from pursing sustainable livelihood’s from nature and heritage based eco tourism. Although the ‘dog’ has been given the chance to reapply for control over the ‘manger’ it is now inconceivable that it would ever be able to take up occupation again, because over the next six months plans are afoot to revive the once celebrated community based eco-tourism initiative known as Amadiba Adventures.

With the COP 17 Talks taking place in six months time in Durban, together with the Wild Coast Sun Resort and other partners, the local residents will now ensure all available tourism accommodation on the Wild Coast is fully booked with international visitors who will be invited to celebrate an Avatar like victory of an indigenous people who cherish their natural environment and ancestral traditions. They declared the rich titanium deposits on the Wild Coast ‘unobtanium’ after they saw that film, and have gone one better than the NaVi warriors by using non-violent, constitutional means to oust the mineral addicted invaders.

The Amadiba Crisis Committee is now planning a huge celebration and plans to reconstitute themselves and the Amadiba Peace and Development Committee to facilitate healing and peace building in a community that was once a peaceful haven, but which has over the past five years seen constant tension and conflict.

While I welcome the Ministers decision I cannot understand how the Minister can conclude that the applicants took all reasonable steps to consult with the relevant parties. The Human Rights Commission found that consultation was woefully lacking as far back as 2007, and the only remedial ‘consultation’ process that I am aware of was when the BEE partner Xolco submitted forged and fraudulent names of some 3000 local residents claiming their free and informed consent. Minister Shabangu also has in her possession a long interview with a former Xolco member who resigned in protest together with two other directors after they realised that he had been co-opted into what he described a “corrupt scheme to sell the land of the people”.

Moreover it is worth noting that during the Local Government Elections ANC members from the mining affected area nominated candidates who were opposed to the mining to contest the elections. The voters followed suit by overwhelmingly electing the ANC candidates with their declared anti-mining position, rather than the rash of independent candidates who suddenly appeared, backed by the pro-mining lobby.

I assume that Minister Shabangu was waiting for the elections before announcing her decisions, and hope that she is reassured that there can be no local political backlash. The Mbizana municipality is one of the poorest in the country and the local council needs support to make full use of the astounding natural and heritage resources at its disposal to promote jobs and development.

Notwithstanding these reservations, I wish to personally congratulate the Honourable Minister bringing some measure of closure. She has had to juggle a very hot potato which has not cooled down over the past two years since she assumed office.

FRACKING – A LEGAL FRAMEWORK FOR THE DEBATE - by Peter Kantor — by Simon Sephton — posted on 2011-05-05 17:24 — 0 comment(s) — Environment Fracking Kantor, Peter Karoo Legislation MPRDA Mining NEMA Oil

Which rights trump which in the debate over whether or not Shell should be allowed exploration rights to 'frack' for natural gas in the Karoo? Which legislation applies? And which Minister decides - environmental or mining? The debate has generated many column inches in the press and much heated argument between opposing sides. Here Peter Kantor leads us through the legal issues involved in the application and points out the considerations that will have to be made in the reaching of a decision

The well-publicised outcry against the proposed fracking (hydraulic fracturing) natural gas exploration project in the Karoo will hopefully fuel a much-needed debate on the responsibilities of the state in its role as guardian of our natural environment. At what risk of environmental harm can our government allow exploration for natural gas in the Karoo? What can one do about the concerns about environmental harm in the face of incomplete scientific knowledge?

The Shell Exploration Company B.V. has applied for exploration rights in terms of the Mineral and Petroleum Resources Development Act (MPRDA), to explore for natural gas in three areas of the Karoo covering a total of 90 000 km². The method of exploration involves fracking, which is drilling deep below the surface and pumping water and chemicals under high pressure that fracture the shale rock formation to help to release any natural gas that might be there. Shell’s application has met with vocal resistance for various reasons, mostly to do with protecting the environment, including water aquifers and resources, and there has been talk of taking the matter all the way to the Constitutional Court.

To set the debate in a legal framework, section 24 of the Bill of Rights in our Constitution gives everyone the right to an environment not detrimental to their health or well-being, and to have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures that -

prevent pollution and ecological degradation
promote conservation; and
secure ecologically sustainable development and use of natural resources while promoting economic and social development.

The MPRDA and the National Environmental Management Act (NEMA) are two of a number of legislative measures designed to give effect to this constitutional right. Other more specific laws cover things like water, biodiversity, air pollution, waste, protected areas, heritage resources, spatial planning, health, and so on. The MPRDA asserts the sovereignty of the state over all mineral and petroleum resources, but also gives the state the important role of custodian of the environment in order to strike a balance between development and conservation. It has a constitutional duty to secure ecologically sustainable development and use of natural resources.

The MPRDA gives anyone the right to apply for a right to explore for a mineral in a piece of land, no matter who owns the land. The applicant submits an application for an exploration right followed by an environmental management programme, and must notify and consult with affected parties. Other rights, such as prospecting, mining and production can also be applied for under the MRPDA, and the Act promotes the exploitation of the country’s mineral wealth. It also provides for the equitable distribution of mineral resources. Once granted, mineral rights are a type of property right, and property rights also enjoy constitutional protection.

The Petroleum Agency of South Africa (PASA) is authorised to decide Shell’s application and the MPRDA states it must grant the exploration right if certain criteria are fulfilled. One criterion is that an environment management programme (EMP) has been approved by PASA, and the MPRDA prescribes what the EMP must contain. This includes an investigation, assessment and evaluation of the impact of the exploration on the environment, on socio-economic conditions of those directly affected, and on heritage resources in the national estate. It does not specify the grounds on which an application may be turned down and PASA may in its discretion accept the EMP.

However, that discretion must be exercised in the light of the Constitution and other relevant legislation and the common law. Our mining legislation has a history of having its own environmental controls and at present these are still the responsibility of the Minister of Minerals and Energy, not the Minister of Water and the Environment, though in due course this will shift in order to avoid this obvious conflict of interest.

Shell’s consultants, Golder Associates, drew up and recently put out for public consultation ‘Draft Environmental Management Plans’ for the three areas. The comment period has now closed and the final reports were submitted to PASA on 12 April 2011. Affected parties have a right to access relevant information, to submit their own information and representations, to have these considered, and to comment further on any new substantive information in the final environmental management plan. The constitutional right to administrative justice also includes the right to have the prescribed processes followed lawfully, and to a decision on the exploration application that is reasonable and justifiable.
There is no precise legal test for what level of risk of harm to the environment is acceptable when it comes to granting an exploration right or a mining right in general. Environmental management best practice requires unacceptable risks to be red-flagged. Mining is well known to be detrimental to the environment, and this gives rise to duties to mitigate harm and rehabilitate afterwards. NEMA creates a legal duty of care to prevent significant pollution or degradation of the environment, and sets out guiding principles.

To read Peter Kantor's complete article, click here.

Peter Kantor is an advocate of the High Court of SA and the national chairman of the Environmental Law Association in South Africa. He is also a well known labour lawyer and the author of Siber Ink's Commentary on the Rules of the CCMA, a third edition of which will be published in 2011, and a co-author with Barney Jordaan and Craig Bosch of the forthcoming second edition of Jordaan & Stelzner: Labour Arbitration.

GOVERNING PEOPLE FOR EARTH – THE CHALLENGE OF THE 21ST CENTURY - an address by Cormac Cullinan to the United Nations — by Simon Sephton — posted on 2011-04-28 16:24 — 0 comment(s) — Cormac Cullinan Earth Governance Earth Jurisprudence United Nations Wild Law

This address was made by Cormac Cullinan, the author of Siber Ink's WILD LAW, the second edition of which will shortly be published, to the United Nations General Assembly Interactive Dialogue on living in harmony with Nature, on Wednesday 20 April 2011. In it he proposes a radical revision of the way legal systems regard the Earth and the way in which legal rights are viewed and granted. Read his introductory comments below and download the entire address in pdf form by clicking the link provided.

THE CONTEXT FOR THIS DIALOGUE

Living on borrowed time

Perhaps the most obvious but fundamental point to make is that human activities are degrading Earth, the community that gave rise to humanity and is our only home, at an accelerating rate. Human activities have already caused such severe impacts on natural systems that several crucial boundaries or limits have been exceeded, for example in relation to the emission of greenhouse gasses and the degradation of many ecosystems. This has destabilised ecological balances and means that unless we are able to reduce those impacts to within these boundaries, Nature will establish new ecological balances – probably under conditions unsuitable for humans. In other words we are already living on borrowed time. It is no longer valid to ask how much further we can exploit Earth. We must now focus on preventing further harm and healing the damage already done.

The magnitude of the task

The second point to appreciate is the magnitude and significance of the challenge now facing humanity because under-estimating this has led us to pursue inadequate responses. Human impacts have precipitated changes in Earth’s systems that are significant, not merely on historical time-scales, but on geological time scales. The point here is that we are not dealing with an historic crisis such as a world war, which is significant on a scale of decades or possibly even a century. The transition in planetary conditions that has already commenced is significant on a scale of many millions of years. To give but one example, as many of you will know, we are already in the early stages of the 6^th period of mass extinction – the last one of which saw the demise of the dinosaurs approximately 65 million years ago.

The United Nations and the international community has in the past dealt with many wars, political changes and humanitarian crises and other events of great historic significance. However it is important to appreciate that the situation that we now face is of a different order of magnitude and that a different order of responses is required. We are dealing here with issues that go far beyond national self-interest and geo-political balances of power – we are required now to make decisions and to take action that will play a significant part in determining the future conditions for life on this planet. We are dealing with a transition that is unparalleled in our evolutionary history, a transition the likes of which our species has never seen before. In my view we have been attempting to deal with these issues using governance techniques designed for dealing with problems of a different order of magnitude and of a different nature. If we use inadequate tools and approaches we will fail.

A crisis of governance

Thirdly it is important to appreciate that what are commonly referred to as “environmental crises” are in fact symptoms of flawed governance systems. Climate change, desertification, the loss of fertile soil, the depletion and pollution of fresh water systems, deforestation, the catastrophic decline in biological diversity, the collapse of fish stocks, and so and so on, are all caused by what humans are doing. For thousands of years the human species has flourished largely as a consequence of modifications that we made to our environment which altered it in our favour and made it possible for more and more of our children to survive. However it is now clear that we have modified Nature, our habitat, to the extent that the prospects of the majority of our children surviving and flourishing is now being diminished rather than enhanced. Any species that degrades its habitat to the extent that it severely diminishes the prospects of its offspring flourishing is heading for a precipitous decline in population and potentially extinction. In other words, from an evolutionary perspective our on-going degradation of Nature does not make sense and the fact that we are continuing to behave in this manner indicates that our methods of regulating and guiding human behaviour are dysfunctional. In other words there is something fundamentally wrong with our governance systems.

By governance I mean the systems which societies consciously use to influence the behaviour of people, including policies, laws, institutional arrangements, values and economic instruments. This is closely related to our own internal governance systems such as personal ethics, morals and values. Changing the patterns of human behaviour that are degrading Earth is primarily, a question of governance systems – and as you all know, the governance of world affairs is at the heart of the United Nations.

Inadequate responses

The fourth point that is essential to contextualise this dialogue is that the strategies, actions plans, treaties and laws that the international community and national governments have adopted to date in response to these issues are failing. Furthermore, in my opinion, it is now implausible to conclude that doing more of the same will succeed.

This may sound like a harsh assessment. The last two or three decades has seen an unprecedented increase in the volume of international instruments dealing with environmental issues as well as a proliferation of regional, national and sub-national legislation, policies and other instruments dealing with the environment. However despite some notable successes, judged by the standard of the health of Earth, rather than by political standards, we are undoubtedly failing. Only has to read the succession of reports produced by the United Nations itself, such as the Global Environmental Outlook series, to appreciate that the situation is getting worse not better. In fact, despite technological advances and a greater public awareness, global society has almost certainly never been as far away from being ecologically sustainable as it is today. And tomorrow it will be further away.

What the decades of data about the deteriorating condition of the global environment is telling us is that our current governance systems are not fit for purpose.

THE CRUCIAL QUESTIONS

If our governance responses are not working it raises the question of why not?

Cormac Cullinan's entire address can be downloaded by clicking on this link. The second edition of Wild Law will be published in May 2011 by Siber Ink and will be available as an ebook and a conventional paper book. If you wish to be sent an order form on publication, please click here.

The Hawks have some constitutional issues: ConCourt rules in Glenister v President of the Republic of South Africa and Others (CCT 48/10) [2011] ZACC 6 (17 March 2011) — by Simon Sephton — posted on 2011-03-17 16:56 — 0 comment(s) — Constitutional Law

In Glenister v President of the Republic of South Africa and Others (CCT 48/10) [2011] ZACC 6 (17 March 2011) the Constitutional Court found that part of the legislation establishing the Hawks is unconstitutional in that it does not allow for sufficient independence from political interference. The full judgment and the media summary (which appears below) can be sourced on the SAFLII website at http://www.saflii.org/za/cases/ZACC/2011/6.html

Case No: CCT 48/10

Date of Hearing: 2 September 2010

Date Decided: 17 March 2011

Hugh Glenister v President of the Republic of South Africa & Others

MEDIA SUMMARY

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

The key question in this case is whether the national legislation that created the Directorate for Priority Crime Investigation, known as the Hawks (DPCI), and disbanded the Directorate of Special Operations, known as the Scorpions (DSO), is constitutionally valid.

The majority of the Court (in a joint judgment by Moseneke DCJ and Cameron J, in which Froneman J, Nkabinde J and Skweyiya J concur) finds that Chapter 6A of the South African Police Service Act 68 of 1995, as amended, is inconsistent with the Constitution and invalid to the extent that it fails to secure an adequate degree of independence for the DPCI. The Court makes two key findings.

First, it holds that the Constitution imposes an obligation on the state to establish and maintain an independent body to combat corruption and organised crime. While the Constitution does not in express terms command that a corruption-fighting unit should be established, its scheme taken as a whole imposes a pressing duty on the state to set up a concrete, effective and independent mechanism to prevent and root out corruption. This obligation is sourced in the Constitution and the international law agreements which are binding on the state. The Court points out that corruption undermines the rights in the Bill of Rights, and imperils our democracy. Section 7(2) of the Constitution imposes a duty on the state to “respect, protect, promote and fulfil” the rights in the Bill of Rights. When read with s 8(1) (which provides that the rights in the Bill of Rights bind all branches of government), section 39(1)(b) (which provides that Courts must consider international law when interpreting the Bill of Rights) and section 231 (which provides that an international agreement that Parliament approves “binds the Republic”), this provision places an obligation on the state to create an independent corruption-fighting unit.

A number of international agreements on combating corruption have been approved by Parliament and are binding on the Republic. These require that states create independent anti-corruption entities. Implicit in section 7(2) is the obligation that the steps the state must take to protect and fulfil constitutional rights must be reasonable. To create an anti-corruption unit that is not adequately independent, thereby ignoring binding international law, is not a reasonable constitutional measure.

Second, the Court finds that the DPCI does not meet the constitutional requirement of adequate independence. Consequently the impugned legislation does not pass constitutional muster. The main reason for this conclusion is that the DPCI is insufficiently insulated from political influence in its structure and functioning. This is because the DPCI’s activities must be coordinated by Cabinet – the statute provides that a Ministerial Committee may determine policy guidelines in respect of the functioning of the DPCI, as well as for the selection of national priority offences. This form of oversight makes the unit vulnerable to political interference. Further, the Court holds that the safeguards that the provisions create are inadequate to save the DPCI from a significant risk of political influence and interference.

In addition, the conditions of service of the unit’s members and in particular those applying to its head make it insufficiently independent. Members thus have inadequate employment security to carry out their duties vigorously; the appointment of members is not sufficiently shielded from political influence; and remuneration levels are flexible and not secured. These aspects make the unit vulnerable to an undue measure of political influence.

Hence, the Court upholds the appeal, declares the offending legislative provisions establishing the DPCI constitutionally invalid to the extent that they do not secure adequate independence, and suspends the declaration of constitutional invalidity for a period of eighteen months to give Parliament the opportunity to remedy the defect.

The minority judgment by Ngcobo CJ, in which Brand AJ, Mogoeng J and Yacoob J concur, holds that section 7(2) of the Constitution, while giving rise to a positive obligation on the state to fight corruption and organised crime, does not specifically impose an obligation on the state to establish an independent corruption-fighting unit. It further holds that, insofar as such a constitutional obligation is found, the structural and operational autonomy of the DPCI is secured through institutional and legal mechanisms that are adequately designed to prevent undue interference and safeguard the independence of the DPCI. The minority judgment therefore concludes that the appeal must be dismissed.

Both the majority and the minority judgments conclude that the legislation that created the DPCI cannot be invalidated on the grounds that it is irrational or that Parliament had failed to facilitate public involvement in the legislative process that led to its enactment. Both judgments further conclude that the Constitution does not oblige Parliament to locate a specialised corruption-fighting unit solely within the National Prosecuting Authority and nowhere else.

Sources:

Click here for the summary.

Click here for the full judgment.

THE EMPLOYMENT EQUITY AMENDMENTS: seek the substance, not the form - By ANTHONY HARTMAN — by Simon Sephton — posted on 2011-02-22 15:36 — 0 comment(s) — Dismissal Employment Equity Act Hartman, Anthony Labour Law Legislation MindWalk Consultants

Is the recent fuss over the proposed amendments to the Employment Equity Act warranted? Will it really result in massive job losses for coloured persons in the Western Cape? Anthony Hartman, an attorney and Employment Equity consultant, thinks not.

Employment Equity amendments: Substance Matters, not Form.

By Anthony Hartman BA (Hons) LLB, Attorney of the High Court of SA - Mindwalk Consulting

The recently mooted amendments to the Employment Equity Act have certainly provoked comment from all sides of the political spectrum. Lately it has been the issue of demographic targets that has been in the spotlight. The IOL Business Report of Monday 21 February 2011 notes that Cosatu has condemned the reports of possible unprecedented job losses among Coloured workers in the Western Cape if the amendments are passed as being “irresponsible and inflammatory propaganda” and Solidarity has cited claims of “massive social engineering”. The claims and counter-claims, while making for good headlines, do nothing to encourage rational debate around an issue that is often misunderstood and that has already been hugely divisive.

In this brief note I’d like to look at the issue of demographics and targets both in relation to both the current Employment Equity Act (EEA) and the proposed amendments. So where does the notion of employment equity targets come from? The current EEA was originally introduced to correct, inter alia, racial imbalances in the workplace caused by previous unfair discrimination. The setting of targets in terms of improving the representation of Black persons, women and disabled persons is one of the measures that could form part of an affirmative action programme. This is the first notable point – targets were never the be all and end all of Employment Equity. Other interpretations might disagree – but the setting of targets in isolation without taking into account the need to develop skills and to address differences in the workplace meant that Employment Equity programmes would come to nought.

The EEA requires that when employers (those required to develop Employment Equity Plans) implement affirmative action measures then such measures must include “measures to ensure the equitable representation of suitably qualified people from designated groups in all occupational categories and levels in the workforce” The Act continues and says that the measures may include preferential treatment and numerical goals, but exclude quotas.

So, setting targets and preferential treatment such as targeted recruitment are allowed but quotas are excluded.

Also, note that “equitable representation” has not been defined. The Department of Labour’s EE Guideline suggest the use of demographics such as the economically active population and this has been what the drafters of EE plans have typically done – the setting of targets in the Western Cape is a different kettle of snoek when compared to the setting of targets in Gauteng. Nowhere is it cast in stone what the targets must be.

So, what’s all the fuss about? Firstly, the amendments propose to simplify the definition (although legislation is never simple!) of designated persons by grouping designated persons as Black persons, women and people with disabilities who are citizens of South Africa by birth or descent or who have become citizens by naturalisation prior to 1994 or who would have, but for apartheid, been citizens by naturalisation prior to 1994. So, nothing specific in that referring to the exclusion of Coloured persons.

The current Act also refers to targets in relation to the assessment of compliance by the Department of Labour. Section 42 (a) provides some hints as to what might constitute equitable representation. The factors that must be considered when assessing the extent of compliance include the “extent to which suitably qualified people from and amongst the different designated groups are equitably represented within each occupational category and level in that employer's workforce in relation to the –

i) demographic profile of the national and regional economically active population;

ii) pool of suitably qualified people from designated groups from which the employer may reasonably be expected to promote or appoint employees;

iii) economic and financial factors relevant to the sector in which the employer operates;

iv) present and anticipated economic and financial circumstances of the employer; and

v) the number of present and planned vacancies that exist in the various categories and levels, and the employer's labour turnover.”

There are various other factors but the point to be made is that compliance cannot and should never only be assessed in relation to numerical targets.

The amendments propose that the assessment of EE compliance MAY take certain factors into account; one of which is the extent of the equitable representation of suitably qualified persons in relation to, inter alia, the demographic profile of the economically active population – and herein lies the bone of contention: What is meant by “economically active population”? Does it mean regional or does it mean national? If the latter then the writers who are suggesting that up to a million Coloured persons might lose their jobs (hope the CCMA is prepared!!) could have a point… However this would be absurd in the bigger context. Can the drafters of the legislation really have intended to achieve an outcome that goes contrary to the legislation? Interestingly, points ii, iii, and iv are also proposed to be substituted. Most commentators consequently agree that the proposed amendments are more restrictive in their impact and are worded in order to limit the reasons that employers may put forward when questioned about a perceived non-compliance. From that point of view I suggest that the amendment has not been well thought through – there are factors such as regional skills availability, financial factors and so on that do merit serious consideration.

I’d like to close with some passing thoughts:

Neither the Act nor the amendments stipulate precisely how targets are to be set.
There is no stipulation excluding any designated group from the ambit of the Act.
A compliance assessment MAY take certain factors into account.
One of those possible factors is the degree to which there is “equitable representation” of the economically active population.
Economically active population is not clearly defined.
Equitable representation is undefined – using only numbers to determine equitable representation would lead to absurd and unworkable results.

So we have to look outside the Act for a suitable interpretation – my submission is that “equitable” and “equity” refer to a state of “fairness” or “ justice” or “appropriateness”. What is equitable depends on a variety of circumstances that need to be considered holistically. Ultimately what matters is not so much the EE document with its “correct” numbers but rather the actual intention and actions of those implementing the Plan. Ultimately it is substance, and not form that matters.

THE SOUNDS OF SILENCE? - Jeremy Gauntlett — by Simon Sephton — posted on 2011-02-07 16:06 — 0 comment(s)

Adv Jeremy Gauntlett SC addressed the Society of Law Teachers in January 2011 about 'a common malaise: a lack of critical faculty not merely in the Faculty, but across the face of legal life in South Africa. My thesis is that, for all lawyers, there are disturbing developments about which we are insufficiently articulate and active.' His full address can be downloaded by clicking on the pdf link following the introductory excerpt below.

CONFERENCE OF THE SOCIETY OF LAW TEACHERS
STELLENBOSCH, 17 JANUARY 2011

PLENARY ADDRESS:

THE SOUNDS OF SILENCE?

Jeremy Gauntlett

Thank you for the honour this invitation constitutes. It stirred many feelings in me. The first was doubt as to how your Society took that decision. I say this because I know the way my own profession takes decisions. This is best exemplified by the decision of the Johannesburg Bar Council some 40 years ago. A well-regarded but cantankerous judge was hospitalised. A delegation was despatched by the Bar Council to his hospital bedside. The leader cleared his throat and told the judge that the Johannesburg Bar Council had mandated him to convey two messages. The first was that he was asked to wish the judge on behalf of the Johannesburg Bar a speedy recovery. The second was to tell the judge that this was on a vote of six to five.

My second feeling was one of nostalgia: nostalgia for those who taught me here, and who either as teachers or as fellow students became my friends for life; and those who taught me, or with whom I worked, in my own postgraduate life. Allow me to mention JC de Wet, Willem Joubert and Tony Honoré – now in his 62nd year of teaching at Oxford. I and many of my colleagues in practice owe an inexpressible debt to you and to your predecessors. It concerns me that often law teachers seem to doubt the worth of what they do. Their task is ancient and vital. As CP Snow writes of Cambridge in his elegaic novel about university ambition, The Masters, it “[i]s hard not to think of other men walking as we did, of the chain of lives going back so long a time, of others walking those same narrow streets in the rain”.

That is not to say that law teachers at times lack brutality. I remember Sir Rupert Cross, great writer and teacher on the law of evidence, handing back collections (essays) at Oxford and saying: “I know you can’t help your laziness, but you should really try to do something about your stupidity”.

When you invite a practitioner to speak, you should know that his own scholarship will not have been sustained by the bits of writing and lecturing which only earlier years at the Bar readily allowed. So I do not venture a scholarly theme. On the other hand, if you expect me to speak about things that matter to the profession, I shall do so, but only in part. For what I want to talk about today is a common malaise: a lack of critical faculty not merely in the Faculty, but across the face of legal life in South Africa. My thesis is that, for all lawyers, there are disturbing developments about which we are insufficiently articulate and active.

I have often thought that the trouble with political revolution, velvet or otherwise, is that it gives rise to the same illusions as university graduation. There is the sense of attainment and finality, of a status achieved and no more to be learnt or done. I believe the converse is true. It is just a beginning. That is true of the commencement of constitutionalism in 1994.

Let me illustrate my point with scattered examples from three different areas of our shared complacency. The first concerns adjudication. The second concerns legal practice. And the third concerns you, law teachers, what you do in legal education and what we, the legal profession, do or should ourselves do in legal education.

Time does not permit today to speak in detail of the many challenges with which I believe courts in Southern Africa are confronted. I would however like to say two things in this respect. The first is that it is time to end an approach which is insufficiently rigorous in its scrutiny of the judgments of courts, and how they function. I do not mean by this that there should be anything less than professional respect for judges, and least of all that there should be the kind of attacks on courts, chiefly by political figures, which from time to time have been manifested. But other than the writing of David Dyzenhaus, Stu Woolman and Jonathan Lewis, in the tradition of John Dugard, Tony Mathews and Barend van Niekerk, and later Fink Haysom, Clive Plasket and Etienne Mureinik, what probing critique has there been in the last five years of the work of the Constitutional Court?

Those of you who are public lawyers may not agree with it all. You may or may not agree with Jonathan Lewis when he describes the output of the Constitution Court in recent years as “evidenced by an atavistic sentimentality”, “outcome-based” and “mock-Solomonic”. But then we would all benefit if you said so. Do you have nothing to say when the Constitutional Court, in the New Clicks case, produced 446 pages of judgments (deciding the matter, like the Johannesburg Bar Council, “by six to five”). Why have you not criticised the refusal by Justice Sachs in the Sidumo case to join Justice Ngcobo and others in determining whether the right in issue was a labour right or an administrative justice right, he urging a “move away from unduly rigid compartmentalisation so as to allow judicial reasoning to embrace fluid concepts of hybridity and permeability”? Do you share my inability to understand language like that, and the concern that it is inexact because the reasoning is not rigorous?

This is not a matter of words, although as lawyers we know that there can scarcely be expressed thought without them. As Lord Hoffmann has written, our legal lives are, as TS Eliot suggested, essentially an “intolerable wrestle with words and meanings”.

No, what we are concerned with is the lack of legal clarity. And as Lord Bingham has recently written in his wonderful book on the rule of law, which I commend to all of you, one of the first requisites for the rule of law is clarity in the law. The consequence, we have seen too often in recent years, has been decisions in which one battles to find a ratio, when there is a self-indulgent multiplicity of voices, and when, as Nugent JA stated in Makambi v Member of Executive Council, various Constitutional Court decisions on the same issue require the courts to go “in diametrically opposed directions”.

Beyond this, there are other institutional issues relating to the courts. One is the gross disparity in funding. The Constitutional Court draws on R8 million in funding for its library. The Supreme Court of Appeal, having to cover all fields in the law, submitted a budget for R1,2 million this year. It has received just R100 000. That includes acquisitions for the chambers of the 22 judges. Obviously no text books can be bought, or subscriptions to law journals sustained. The Johannesburg High Court is in a similar crisis. Yet in recent months we found R71 million to subvent a gathering of world youth on the not-new topic of imperialism. It was Heine who said (with deadly prescience) that the nation that begins by burning books ends by burning people. Perhaps we can say that the nation that begins by disparaging legal scholarship risks renouncing law itself....

To download the full address in pdf form, click here.

Jeremy Gauntlett SC is a Beit and Rhodes Scholar, and was awarded a Harvard Graduate Fellowship. He is an advocate and senior counsel admitted to Cape and Johannesburg Bars, and member of Gray's Inn, London. He has been a Judge of Appeal of Lesotho since1996. He is a former chair of the General Council of the Bar of South Africa, president of the Cape Bar and commissioner of the SA Law Reform Commission. He is currently co-chair of the Forum for Barristers and Advocates of the International Bar Association. He has been a member of the UCT Council since 1996.

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