Action Recap: Sakeliga’s historic BEE-victory

Action Recap- Sakeliga’s historic BEE-victory

Sakeliga achieved the first significant setback for harmful BEE policies when we reversed illegal BEE and local content regulations in public procurement, unlocking billions in potential savings.

The 2017 procurement regulations constituted a watershed in procurement and BEE in South Africa. Prior to 2017, companies who tendered for state business could be penalised by a maximum of 10% to 20% (of their tender score) if they did not meet BEE requirements. This was harmful enough. Since the 2017 regulations, however, organs of state have gone much further: tender requirements began to exclude companies in advance on the grounds of BEE criteria, for instance if a company was not 100% black owned. Following a legal battle of five years, Sakeliga succeeded in having declared the Minister’s 2017 regulations invalid and unconstitutional, with the final order given by the Constitutional Court.

This victory was the first notable rolling back of BEE through litigation. On 16 February 2022 the Constitutional Court ruled in favour of Sakeliga that the Minister of Finance, Pravin Gordhan at the time, had acted ultra vires (beyond his powers) by regulating as if he had legislative competence. The victory came after Sakeliga’s earlier success in the matter before the Supreme Court of Appeal. As a result of Sakeliga’s victory in court, the Minister had to make new procurement regulations with no BEE or local content requirements for organs of state.

Arising from Sakeliga’s victory in the Constitutional Court on 16 February 2022 against BEE in state procurement, the Minister of Finance brought an urgent court application to amend the order. An amendment of the order may have watered down the relief Sakeliga had obtained following a legal struggle of five years. Sakeliga successfully opposed the application for amendment of the favourable 16 February order. In its judgment on the minister’s application, the court not only ruled in favour of Sakeliga but also admonished the Minister.

This historic victory did not completely stop BEE and other similar laws, but it did pave the way for future battles such as against, for instance, the new Employment Equity Amendment Act, which will give the Minister of Labour unprecedented power to prescribe companies’ appointments, promotions, and management decisions. The risks posed by the EEAA demand coordinated resistance by business leaders and comprehensive legal action against its implementation.

Sakeliga identifies and drives cases in which businesspeople and the public have a common interest. We offer businesspeople a safe avenue to support litigation without public exposure and risks.

  • Our litigation resists state decay and harmful interference where possible and buys time for building alternatives where necessary.
  • We litigate against key threats to commercial order, such as expropriation, BEE, municipal decay and mismanagement, and regulations in the wake of Covid-19.
  • We offer a secure channel for businesspeople to support crucial litigation without public exposure and risks.

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