Ripple effects of Trump FCPA pause
Despite order, businesses cannot afford to relax their anticorruption compliance efforts
By STEVEN POWELL ENS
On February 10 2025, US President Donald Trump signed an executive order (EO) directing Attorney General Pam Bondi to pause enforcement of the Foreign Corrupt Practices Act (FCPA) for 180 days.
The move, framed as an effort to reduce regulatory burdens and promote American competitiveness, has raised serious concerns about the future of global anticorruption enforcement.
For decades, the US has led the charge against corporate bribery, holding multinational companies accountable under the FCPA. The pause in enforcement does not repeal the law. Still, it signals a fundamental shift in the US Department of Justice’s (DOJ) approach, potentially creating ripple effects across international compliance landscapes.
What is the FCPA and why does this matter?
The FCPA, enacted in 1977, prohibits US companies and individuals from bribing foreign officials to gain business advantages. The law, which was introduced in response to major corporate corruption scandals, imposes severe penalties, including:
● Up to 20 years in prison for individuals convicted of bribery-related offences; and
● Corporate fines reaching billions of dollars for companies guilty of violating FCPA provisions.
Strict internal accounting requirements ensure that companies maintain accurate books and records to prevent fraud.
Trump’s anti-FCPA stance is not new. During his first term, he called the FCPA a “ridiculous and horrible law arguing that it made it difficult for US companies to compete overseas. His recent executive order aligns with his administration s pro-business, deregulation-focused policies. What does this mean for corporate compliance?
Although the pause in enforcement temporarily limits DOJ-led FCPA actions, companies should not interpret this as a green light for corruption.
Key considerations include:
● The SEC’s FCPA enforcement continues the US Securities and Exchange Commission (SEC), responsible for civil FCPA violations, has not paused enforcement. Companies must still ensure compliance with books and records provisions.
● Bribery remains illegal the FCPA itself has not been repealed. Companies engaging in corruption during this pause may still face prosecution in the future.
● Other jurisdictions are stepping up many countries have strengthened anticorruption enforcement in recent years. Even if the US steps back, global regulators are unlikely to follow suit. Will other countries fill the void? The US has long been the global leader in anticorruption enforcement, often coordinating cross-border investigations with international counterparts. However, with the DOJ stepping back, attention now turns to other major enforcement players:
● UK the Bribery Act 2010 is one of the strictest anticorruption laws globally, imposing criminal liability for failing to prevent bribery.
● France Sapin II, enacted in 2016, requires companies to implement strong compliance
programmes or face heavy penalties.
● Germany and China both countries have taken an increasingly aggressive stance on corporate bribery.
● SA the recent Prevention and Combating of Corrupt Activities Act (Precca) amendments introduce a Failure to Prevent Corrupt Activities offence, similar to the UK Bribery Act. As a result of the FATF greylisting enforcement is a key state priority.
In major cases such as Rolls-Royce, Airbus and the Brazilian Car Wash Scandal, global regulators worked alongside US authorities to pursue
Bribery remains illegal companies engaging in corruption during this pause may still face prosecution in the future
corruption charges. With the US stepping back, it remains to be seen whether the UK, France or Germany will take the lead in major international investigations.
What should companies do now?
Despite the DOJ s pause, businesses cannot afford to relax their anticorruption compliance efforts.
Companies should:
● Maintain robust compliance programmes future administrations may pursue retroactive enforcement, holding businesses accountable for misconduct during this period.
● Strengthen internal controls ensuring compliance with SEC requirements, international regulations and best practices remains crucial.
● Monitor global enforcement trends companies with operations outside of the US remain subject to foreign anticorruption laws and should expect continued scrutiny.
Will the FCPA pause last?
Trump s executive order is temporary, lasting only 180 days. However, it raises broader concerns about the US’s longterm commitment to fighting corruption. Several uncertainties remain, including:
● Will the SEC also scale back enforcement? Currently, there is no indication of this, but regulatory priorities may shift in the coming months.
● Will a future administration reinstate strict FCPA enforcement? The FCPA has a five-year statute of limitations, meaning violations committed during this pause could be prosecuted by a new administration.
● Will global anticorruption enforcement weaken? While the US pause creates uncertainty, most experts believe international regulators will remain active.
SA s evolving anticorruption framework
While the US moves toward deregulation, SA is moving in the opposite direction. Precca has been strengthened with the addition of Section 34A, which introduces:
● A Failure to Prevent Corrupt Activities offence, holding companies accountable for corruption within their ranks.
● A requirement for companies to demonstrate adequate procedures to prevent bribery.
● Alignment with global best practice, mirroring provisions in the UK Bribery Act.
Additionally, the National Prosecuting Authority (NPA) has introduced an Alternative Dispute Resolution (ADR) directive, offering nonprosecutorial outcomes for companies that selfreport corruption and cooperate with authorities. Compliance still matters
The temporary pause in FCPA enforcement does not mean the end of anticorruption efforts.
Ethical businesses will continue to uphold high compliance standards, recognising that:
● Bribery is not a sustainable business strategy it increases costs, reputational risk and legal exposure.
● Global enforcement remains strong the UK, France, Germany, China and SA continue to aggressively pursue corporate corruption cases.
● Future US administrations may reintroduce stricter enforcement companies engaging in bribery now may still face legal consequences later.
As the legal and regulatory landscape shifts, businesses must stay vigilant. Companies are advised to obtain expert advice to navigate these changes to ensure compliance and to mitigate risk in an evolving enforcement environment.
Navigating indirect taxes in Namibia-SA trade
ecently, import tariffs have become quite a topical issue, with US President Donald Trump increasing tariffs quite substantially for many countries. These tariffs are, in the main, customs tariffs. It is now a good time, more than ever, to consider indirect tax implications for importing goods between the two southern African neighbours.
Indirect taxes, for the most part, consist of customs duties and value-added tax (VAT). From a customs perspective, both SA and Namibia are members of the South African Customs Union (Sacu), established in 1910, with a common external tariff and shared customs revenues that allow for less strenuous customs clearance procedures between its members. Namibia and SA are also members of the South African Development Community (SADC), which allows for the importation of goods between the two countries to be free from customs duty. Customs duty for Namibian and South African businesses is, therefore, generally not an additional cost. The same cannot be said for VAT. Both countries VAT legislation operates a regime where the importation of goods is subject to VAT at 15% in Namibia and 15% in SA. The VAT is payable by the importer of the goods and depends on the customs value thereof as determined by customs legislation. Therefore, it is very important for businesses to understand the customs valuation principles set out in the Namibian and South African customs legislation. For goods imported from SA into Namibia, the value of imported goods for VAT purposes is the greater of the free-on-board (FOB) value plus 10% of that value or the open market value of the goods. For importation from Namibia into SA, the VAT is calculated based only on the customs value of the goods (there is no 10% step-up ). The goods sale terms are also critical in establishing who the importer of record is, as the importer is liable for VAT in the relevant country of importation. The Incoterms are therefore essential as, for example, a sale on the FOB basis would make the buyer effectively the importer. In contrast, a delivery-duty-paid (DDP) basis would make the seller the importer. Furthermore, which party is responsible for the exportation and the mode of transport would need to be considered to determine whether the seller may zero-rate the supply of the goods for VAT purposes. Whether the supply constitutes a direct or an indirect export significantly impacts whether the seller has to levy VAT on the sale of the goods. In addition to the importation and exportation considerations, the two countries VAT legislation provides for the importation of goods under certain circumstances to be exempt from VAT. -Leonard Willemse is Director: SA Indirect Tax at specialist tax and transaction adviser AJM.
LEONARD WILLEMSE COLUMNIST
Reuters
Finding ways to resolve disputes more efficiently
Bulletin encourages use of mediation where suitable, and use of the commercial court
By ASLAM MOOSAJEE, SHENAAZ MUNGA & OLONATHANDO NXUMALO ENS
In a bulletin published by the Deputy Judge President (DJP) of the Johannesburg high court regarding lead times for set down dates in the Johannesburg high court as at August 31 2024, the DJP disclosed the crisis faced by the Johannesburg high court pertaining to long lead times that are continuing to be exacerbated. The lead times, where litigants took steps to apply for a hearing date in July 2024, were:
● For trials that require more than five days, one was likely to end up with a date after July 19 2027 a waiting time of just short of three years;
● For unopposed matters, one was likely to get a hearing date after November 26 2024 a waiting time of three months (where there is no opposition to a matter); and
● For opposed applications, one was likely to get a date after May 26 2025 a waiting time of 11 months.
This cannot be described as swift justice There is a desperate need to assist litigants by finding ways to resolve disputes more efficiently. As a solution to minimise these delays, the bulletin encouraged the use of mediation where suitable in a case and proposed the expansion of arbitrations beyond the commercial sector. A further solution is the use of the commercial court in matters concerning commercial disputes.
In SA, “the commercial court aims to promote efficient conduct of litigation in the high court and resolve disputes quickly, cheaply, fairly and with legal acuity
A trial matter, an application (where all the evidence is presented in affidavits), and urgent applications can be dealt with in the commercial court. The DJP issued a directive which identifies commercial court matters as a substantial case that has as its foundation a broadly commercial transaction or commercial relationship. This includes, but is not limited to, claims arising out of transactions of trade and commerce.
For litigants to come before the commercial court in SA, the matter will be ordinarily instituted in the high court. Thereafter, a letter must be addressed to the DJP, motivating why the matter should be designated as a commercial court matter. When determining whether the case is a
commercial case the DJP will consider the complexity or novelty of law; complexity of fact; value at stake is a minimum of R25m; and [the] public interest”
If the letter to the DJP results in a matter being designated as a commercial court matter, the DJP will allocate a judge to manage the matter. This judge manages the commercial court matter to conclusion. If a party conducts itself, unjustifiably, in a dilatory manner, that party could face sanctions in the form of adverse costs orders and will be put on terms to deliver information by specified dates.
among other things, act as arbitral appointing or confirming authority and to decide any arbitral challenge under the Afsa International Rules for the Conduct of Administered Arbitration, the Afsa International Rules for the Conduct of Unadministered International and Construction Arbitration, any rules or procedures published pursuant to Article C2, the Uncitral Arbitration Rules and in any other case where an agreement provides for arbitral or other alternative dispute resolution appointment, confirmation or challenge decisions by Afsa
Legal duty of care in running events
By JEAN-PAUL RUDD Adams & Adams
SA boasts a vibrant running culture, with a wide array of organised races held throughout the year.
The organisation of these events varies significantly some races ensure that runners are shielded from spectators and the public, while others allow for potential interaction between runners and the public. The recent Supreme Court of Appeal judgement in Kalmer v Davids NO highlights the legal implications of such interactions, particularly the importance of runners maintaining a proper lookout to avoid potential liability.
The case of Kalmer v Davids NO arose from an incident during a ladies race in Cape Town in 2014. Kalmer, an elite runner, collided with Salie, a member of the public, on a part of the racecourse that was open to the public. Salie, who was taking a photo for a fellow participant, was stationary on the promenade (pavement) when the collision occurred.
As a result of the injuries sustained, Salie instituted an action for damages against Kalmer and Western Province Athletics (WPA), the race organiser.
The high court initially dismissed Salie s claim, but a full bench of the high court later found Kalmer liable for 30% of the damages, dismissing the claim against WPA. Dissatisfied with this outcome, Kalmer appealed to the Supreme Court of Appeal (SCA).
Elements of delict
Delictual liability is established through the presence of five elements conduct, wrongfulness, fault (negligence or intent), causation and harm.
Areally famous business TV presenter once told me that if you follow the money, there will always be a news story lurking.
Unfortunately, in SA, it is often the case that if you follow the crime, there is money at the root of it.
Crime and business have become intertwined in a society where life costs little and money is everything.
The fabric of society is ripped asunder by these increasingly blatant acts of criminality, notably where punishment does not fit the crime or, even worse, when perpetrators get off scot free on a technicality. This then permeates the broader economy too, leaving victims with scars for life. The affected businesses feel significant pain in their bottom lines, too, if they are the victims of fraud, or when employees or their family members are victims of rising crimes like kidnapping for ransom.
I have recently been in court for a matter involving a Chapter 9 institution accused (unfairly, in my view) of not doing its job in an investigation into sexual abuse allegations. In that case, no legal argument has been made on
In SA, the commercial court aims to resolve disputes quickly, cheaply, fairly and with legal acuity’
An alternative to the South African commercial court is for litigants to refer their disputes to arbitration. The Arbitration Foundation of Southern Africa (Afsa) is a body that administers many of the arbitrations in SA, but parties can also choose other bodies such as the Association of Arbitrators in SA or the International Commercial Court to administer the arbitrations, which is more common when at least one party to the dispute is not domiciled in SA.
Where parties have agreed for their arbitrations to be administered by Afsa, it shall be deemed that they have agreed that arbitrations between them shall be conducted in terms of the Afsa’s international arbitration rules.
The rules came into force on June 1 2021 and they align themselves with best international standards for arbitrations which are designed to ensure efficient, flexible and impartial arbitrations”. The rules also introduced the Afsa international court which consist of members from different parts of the world including the UK, Hong Kong, France, Botswana and SA. The Afsa international court does not decide the merits of the disputes, but supervises the administration of the resolution of disputes by arbitral tribunals.
The Afsa international court has the powers to,
The decisions of the Afsa international courts are final and binding, unless otherwise directed by the court, are confidential and do not need to contain reasons.
The creation of a South African commercial court and Afsa s international arbitration rules are in line with international developments.
Internationally, there has been a notable increase in international commercial courts across various jurisdictions. International commercial courts are established by a state to settle international disputes, although their jurisdiction may not be strictly confined to cross-border disputes.
To achieve internationalisation, some of these courts appoint foreign judges to hear disputes alongside domestic judges. Modern international commercial courts provide more flexible proceedings, similar to arbitrations, when compared to domestic courts.
In SA, high courts have introduced rules, which compel litigants to consider mediation, and they run the risk of adverse costs orders if a litigant has unjustifiably objected to a mediation. Without mediation, the backlogs that currently exist in South African high courts will increase and litigants will wait a very long time for disputes to be finalised through the court system.
The creation of a South African commercial court and Afsa’s international arbitration rules are in line with international developments
The court examined whether Kalmer s conduct was wrongful. Wrongfulness in delict involves a breach of a legal duty not to cause harm. The court noted that the race was held on a public promenade, not a controlled environment, where the organisers are usually responsible for the safety of spectators. Therefore, Kalmer bore a duty of care to take reasonable steps to avoid causing harm to members of the public.
Negligence is determined by whether a reasonable person in the defendant s position would have foreseen the possibility of harm and taken steps to prevent it. Kalmer admitted that she focused solely on the ground in front of her and her competitors, without regard for other users of the promenade. The court found that a reasonable runner would have kept a proper lookout, especially in a public space where the presence of pedestrians was foreseeable.
The court concluded that Kalmer’s failure to keep a proper lookout directly caused the collision and the resultant harm to Salie. The evidence showed that Kalmer could have easily avoided the collision by adjusting her path or slowing down.
The SCA upheld the full bench’s finding that Kalmer was negligent and thus liable for 30% of the damages. The court emphasised that runners in public races must be aware of their surroundings and take reasonable steps to avoid collisions with members of the public.
The Kalmer v Davids NO judgment underscores the critical importance of runners maintaining a proper lookout during races, particularly those held in public spaces. Failure to do so can result in significant legal liability.
This case also highlights the importance of event liability insurance for businesses involved in organising, sponsoring or hosting running events, particularly in controlled environments where it is expected of those businesses to control access. As the running culture in SA continues to thrive, both runners and organisers must navigate the track with caution to avoid legal liability.
Action needed to put criminals out of business
the merits, yet the institution is being blamed (including in the media, which should know better).
However, I was pleased to see several Chapter 9 institutions recently joining forces to tackle the acquittal of Nigerian televangelist Timothy Omotoso and his co-accused of rape, racketeering and human trafficking. Of course, wealth and money is a key theme here, too, as not only were there accusations against prison officials for giving the pastor an easier ride in prison, but the church was very wealthy by all accounts.
Yet the travesty in the acquittal was that it boiled down to incompetence by the prosecution. I read the ruling and was appalled at the litany of errors and incompetence, though the main issue related to the fact that witness statements given to the police differed from what was in the indictment and, later, interviews, yet the lead prosecutor is alleged to have insisted that the police statements be used. The cross-examinations of the accused did not hold up. The evidence was tainted, it was a mess.
Any business out there hoping that the fight against crime is going to
The Chapter 9 bodies have agreed to independently interrogate the gaps highlighted in the judgment
become a greater priority will be left with a sour taste. It is shocking to hear that the same prosecutor, Nceba Ntelwa, is involved in the highly contentious Fort Hare fraud matter.
I have spoken to two forensic lawyers who have been very poorly treated and lumped together in jail
with people they had evidence against in the Fort Hare case. They had been forcibly removed from their offices and thrown in jail in the Eastern Cape. That matter is ongoing, but it is hoped that sanity will prevail and the NPA sorts out the mess. We need a strong NPA and a strong crime-fighting system if SA is to thrive, yet evidence of dishonesty by prosecutors or rogue forces acting without abandon against lawyers investigating crime is an immense cause for concern.
Yet, I did find the joint statement by the Commission for the Promotion and Protection of Rights of Cultural, Religious and Linguistic Communities (CRL), Commission for Gender Equality (CGE) and The South African Human Rights Commission (SAHRC) in response as giving some reason for hope.
They are not taking the Omotoso matter lying down. The CRL says it was approached by the late Pamela Mabini, with a case of alleged sexual violation and possible human trafficking at Umhlanga, KwaZulu-Natal by a religious leader. That is how the case of Pastor Omotoso came into being.
Witnesses soon attracted unwelcome attention as the Pastor Omotoso case unfolded, placing them in harm s way. This was further exacerbated by an inefficient witness protection programme, changes in the prosecution team and the presiding officer that required one of them to retell her testimony to the new team.
The Chapter 9 bodies have agreed to independently interrogate the gaps highlighted in the judgment and recommend measures that must be introduced to ensure these do not similarly recur.
To this end, the three commissions resolved to jointly conduct an inquiry into the processes that led to the outcome of this case and others. For that reason, several institutions and individuals will be called on to appear before an inquiry within the next few months to investigate the whole process and make possible recommendations.
I understand the NPA is also investigating, and it is hoped some stern action will be taken. SA s future is inherently tied to the fight against crime, and some urgent wins are desperately needed.
EVAN PICKWORTH EDITOR
123RF KEKOKA
Guidelines provide clarity on approvals
By BURTON PHILLIPS Webber Wentzel
The Competition Commission recently published guidelines aiming to provide clarity on whether internal restructurings require prior approval from the competition authorities.
The final guidelines, published on April 4 2025, distinguish between transactions occurring within the same group of companies, referring to those as “purely internal” and restructurings involving external minority shareholders.
This is an important development as businesses undergoing purely internal restructurings no longer need to wrestle with the uncertainty of whether such transactions should first be approved by the competition authorities. The debate on whether such transactions should be subject to competition approval before implementation has arisen in several cases before the competition authorities.
Much of the uncertainty revolved around the Competition Appeal Court s decision in the Distillers case in which the court stated that the Competition Act makes no express provision for the exclusion of transactions between a company and its wholly owned subsidiary” from being subject to competition approval. On this basis, all transactions involving an acquisition of direct control over a firm (including transactions between wholly owned subsidiaries) could be subject to approval (if the relevant threshold is met), even if there is no change in ultimate, indirect control, an approach which the commission has relied on to assert jurisdiction over some transactions.
Despite the appeal court’s ruling, the commission in its guidelines appears to be adopting a more pragmatic approach to restructurings within the same group of companies. This will mean that in internal restructurings where there is no third party, minority shareholders will not be subject to competition approval. However, if there are minority shareholders holding interests in one or more of the companies within the group undertaking the restructure, such restructure would need to be closely assessed to determine whether they fall outside the purview of what the commission perceives as being a purely internal restructure.
In this regard, the commission remains concerned with transactions that may impact the control rights of minority shareholders. The guidelines draw a further distinction between ordinary minority shareholders and those with socalled negative control rights.
Negative control rights typically refer to those rights that afford minority shareholders the ability to veto certain strategic decision-making and generally manifests in the form of approval rights over matters such as senior management appointments, business plans and budgets. Based on the guidelines, transactions that may otherwise be construed as an internal restructuring could nevertheless be subject to approval, in the commission s view, if it has an impact on the negative control rights of minority shareholders.
This aspect is likely to be the subject of further debate since it suggests that even a loss of negative control rights by a minority shareholder could impact whether an internal restructuring requires competition approval, an interpretation that is not supported by the Competition Act which only requires the approval of transactions involving an “acquisition” or “establishment” of control, not a loss thereof.
Potential impact
While the guidelines may raise unintended complexities for restructurings involving external minority shareholders, it provides clarity, at least as it relates to internal transactions within the same group of companies, on the commission s position and practical approach to restructurings. Internal restructurings involving minority shareholders at any level of the group of companies will need to be carefully considered with reference to the potential impact on the control rights of minority shareholders, although it remains to be seen how the commission will treat internal restructurings which may have an impact on minority negative control rights, but which would not otherwise require approval outside of an internal restructuring scenario.
Either way, the guidelines is a welcome step towards easing the regularly complexities and allowing internal restructurings, at least the pure ones, to be implemented quickly and efficiently. -Please
Competition Commission issues guidance on internal restructuring
By IAN JACOBSBERG Fluxmans Attorneys.
According to the Competition Act, any “merger” that is of a value above certain monetary thresholds may not be implemented unless it has been approved by the Competition Commission or Tribunal (collectively generally referred to as the competition authorities).
A merger is any transaction in which a firm (a catch-all phrase including any entity capable of carrying on a business) establishes control over the business of another firm. The parties to a merger are required to notify the commission of their intention to implement the merger, to enable the commission to investigate the effect the merger will have on competition in the market in which the parties are active.
The act provides that “control” can be established (and therefore a merger accomplished) in several ways, namely that the acquiring firm –
● Becomes the beneficial owner of more than half the issued share capital of the target firm;
● Becomes entitled to vote a majority of the votes at a general meeting of the target firm, or controls the voting of a majority of those votes, either directly or through a controlled entity;
● Becomes able to appoint or to veto the appointment of a majority of the directors of the target firm;
● Is a holding company, and the target firm is a subsidiary of that company as defined in the Companies Act;
● In the case of a trust, becomes able to control the majority of the votes of the trustees, to appoint the majority of the trustees or to appoint or change the majority of the beneficiaries;
● In the case of a close corporation, owns the majority of members’ interest or controls directly or has the right to control the majority of members votes in the close corporation; or
● Becomes able to materially influence the policy of the target firm in a comparable manner to a
person who, in ordinary commercial practice, can exercise an element of control referred to in the preceding points.
Internal restructurings within a group of companies often involve a transaction that, strictly speaking, results in one or more of the effects listed above and, on the face of it, requires the competition authorities consent. This, despite the fact that the transaction has no impact on competition in a market or on any party outside the group of companies to which the acquiring and target firms belong.
Responding to this, the Competition Commission has issued guidelines on when the parties to an internal restructuring will be required. In the guidelines, the commission states that, generally, it “will not require notification of a transaction that is ‘purely internal’ and has no implications on the control rights of other shareholders who are not part of the group of firms but may have an interest in one or more of
The commission stressed that, while parties should take them into account for guidance, each transaction will be assessed on its particular facts and on a case-by-case basis
the group of firms”
Where the parties are part of the same group, the ultimate controlling company may not change, but a merger notification may still be required if a transaction results in a change in the control rights of minority shareholders who have an interest in one or more firms with a group …”. This will usually be when the minority shareholder holds negative control rights (ie veto rights relating to strategic matters of the target firm, such as budgets, business plans, appointments and removal of managers and directors). If there are no minority shareholders with negative control rights, the commission will view the transaction as purely internal, and notification will not be necessary.
According to the guidelines, the commission will adopt the following approach when assessing whether a transaction is an internal restructuring, whether it affects the negative control rights of minority shareholders and whether notification is required –
● Does the restructuring amount to a “merger” as defined by the act?
● Would the restructuring result in a loss or gain of any form of negative control by a shareholder that is not part of the group?
● Is a there an external shareholder who has negative control/veto rights, whose control will be changed by the transaction?
If the restructure will not change the control rights of external minority shareholders, notification will not be necessary. On the other hand, if the external minority control rights are affected notification will likely be necessary. In issuing the guidelines, the commission stressed that, while parties should take them into account for guidance, each transaction will be assessed on its particular facts and on a case-bycase basis. Parties should therefore consider and seek advice on the competition law implications of each transaction, even where it is a purely internal restructuring and the ultimate holding company will not change.
-Ian Jacobsberg is a Director at Fluxmans Attorneys.
Labour reforms set to modernise workplace
By JONATHAN GOLDBERG & JOHN BOTHA Global Business Solutions
As we reported in April, the historic Nedlac report which delivers balance between worker protection and business flexibility is heading to parliament.
SA is cautiously optimistic following 28 months of intense negotiations regarding a raft of labour law amendments, which parliament will now consider. This is hopefully the start of measures to modernise the workplace while maintaining SA s commitment to worker rights. It is not about reducing rights but rather making labour law work for the real economy.
To summarise, the October 2024 Nedlac social partner report introduces at least five gamechanging reforms that business leaders have long advocated for.
● High-earner dismissal flexibility
The Labour Relations Amendment establishes a R1.8m earnings threshold that creates separate dismissal rules for top-tier employees. This change prevents costly executive stand-offs while ensuring robust protections remain for vulnerable workers. Reinstatement remedies will now be limited to automatically unfair dismissals for high earners, so allowing companies more strategic flexibility with executive talent. In addition, maximum unfair dismissal damages awarded may not exceed R1.8m, even if the high earner earns more than this.
● Start-up exemptions boost entrepreneurship
In a direct response to small business concerns, new enterprises with fewer than 50 employees will receive a 24-month exemption from extended bargaining council agreements. This provision which is carefully balanced with anti-abuse measures is expected to benefit nearly 80% of manufacturing start-ups, according to Nedlac data.
● Practical probation period framework
After intense debate, negotiators settled on a three-month qualifying period before employees gain full unfair dismissal protection, which is a significant compromise from business 12-month proposal. Companies retain the ability to negotiate longer probation periods in employment contracts, providing crucial flexibility for talent assessment.
● Streamlined retrenchment processes
Large-scale retrenchment procedures have been modernised with clearer CCMA facilitation rules and dispute resolution pathways. Business leaders highlight that these changes maintain substantive worker protections while reducing average case duration from 18 months to merely six. This is a critical efficiency gain during economic transitions.
● Progressive disciplinary approach
Perhaps most revolutionary is the new dismissal code that replaces adversarial, court-like procedures with dialogue-driven solutions. Small businesses secured exemptions allowing informal corrections for minor infractions, moving away from the legalistic approach that has hampered workplace relationships.
The reforms directly address 63% of operational constraints identified in Business Unity SA s 2023 survey, demonstrating how strategic engagement in social dialogue can produce balanced outcomes that serve multiple stakeholders. As parliament debates implementation timelines, business leaders are already preparing new hiring and operational strategies. The amendments arrive at a crucial moment as remote work, digital transformation and gig economy models challenge traditional employment frameworks.
For a country seeking to boost employment rates and attract investment, these reforms signal SA’s commitment to creating a business environment that can compete globally while preserving its progressive social values.
The true test will come during implementation, with unions promising vigilant monitoring of worker protections.
Shadow AI: the risks of the AI you don’t see
These tools introduce significant hazards if used without proper checks and balances
By ISAIVAN NAIDOO & ALEXANDER POWELL ENS
Artificial intelligence (AI) is transforming modern business, but not all usage of AI within an organisation is visible to internal governance structures, IT or risk management teams and could pose a risk to businesses if not actively monitored and controlled.
The term shadow AI refers to AI tools that are adopted by employees or business units without the knowledge or approval of an organisation s internal governance structures or IT department.
Much like shadow IT, shadow AI can emerge when employees use AI tools, such as generative AI and other AI tools, outside the confines of official policies, such as an AI governance policy or risk management policy. While these tools often enhance efficiency and productivity, they introduce significant risks to organisations if they are used without proper checks and balances.
The risks of shadow AI
Shadow AI presents various legal, security and operational risks that can compromise an organisation s compliance, data security and overall AI governance. Some of the key risks include:
rights. It is critical for organisations to properly vet third-party AI service provider terms and conditions and to understand clearly who retains ownership over inputs and outputs.
by implementing some of the following processes:
If you ever intend to sell anything, you need to understand the voetstoots clause. Whether you believe that the clause is spelt voetstoots, implying a shove of the foot at the time of sale, or voetstoets requiring the buyer to test the property sold before buying, the clause gives limited protection. The law has been clear for centuries. A sale voetstoots means a sale of fixed property “as it stands” or “with all faults”. The seller will not, however, be relieved of responsibility for faults in the thing sold by a voetstoots clause if the seller deliberately conceals a material defect in the property sold. There is another relevant clause commonly contained in written agreements. The parties agree that the written document is the entire agreement. No warranties or representations other than those contained in the written agreement are
It is important to ensure that employees are made aware of and trained on approved
AI tools and their proper usage
● Violation of data privacy laws many AI applications process sensitive data and, without oversight, they can inadvertently expose personal information or sensitive corporate information. This can lead to violations of data privacy legislation, such as the Protection of Personal Information Act, 2013 or industry-specific compliance frameworks and regulations.
● Violation of intellectual property rights employees may use AI tools to generate content without understanding the ownership implications. Some AI tools retain rights over user-generated content, potentially leading to IP disputes or loss of proprietary information or IP
● Introduction of security vulnerabilities AI tools may lack proper security protocols, making them susceptible to data breaches. When employees use AI tools outside of secure environments, they may introduce vulnerabilities that cybercriminals can exploit to gain access to their accounts and any information which has been shared with such accounts.
● Bias and other ethical issues bias is an issue that plagues most AI systems, and if a specific AI tool has been trained on biased datasets, this could lead to unfair or discriminatory outputs.
Unvetted AI tools can reinforce biases in decisionmaking, which could affect customer relations. This could ultimately result in reputational harm for an organisation should a client or public-facing AI model become discriminatory in its decisionmaking or outputs.
● Hallucination and incorrect outputs AI tools can generate misleading or incorrect information, impacting the reliability and credibility of the output. For example, using AI for legal research or drafting without verification of the output could lead to liability, reputational harm and damages
Mitigating the risks
Organisations can take proactive steps to manage and mitigate the risks associated with shadow AI
● Develop a clear AI governance framework establish policies that define acceptable AI usage, data privacy and security measures, and governance and compliance requirements. It is also important to ensure that employees are made aware of and trained on approved AI tools and their proper usage.
● IT oversight and monitoring implement AI usage monitoring tools that can detect use of unauthorised AI applications. Conduct regular audits to help identify instances of shadow AI and bring them under formal oversight and within the AI governance framework.
● Employee training and awareness educate employees on the risks of shadow AI and encourage them to seek approval before utilising AI tools. Providing training and guidance on responsible and ethical AI usage and compliance requirements can reduce the temptation to use unauthorised AI tools.
● Integrate AI risk management into vendor assessments if third-party AI tools are being used, ensure the third party s legal terms have been legally reviewed and vetted. Conduct an AI risk and privacy impact assessment on the thirdparty AI tool and ensure that the third-party AI tool meets security and AI compliance and governance requirements. By addressing shadow AI proactively, organisations can harness AI’s benefits while mitigating its risks
Policy limit lessons from Hurricane Ian
By JEAN-PAUL RUDD Adams & Adams Disputes
often arise between insurers and policyholders regarding the value of insured property.
Some of these disputes are resolved with little difficulty, as the value can be relatively easily established. For example, in cases where a storm causes partial damage to a home and its contents, the insured property remains assessable. However, other disputes are more challenging, especially when a home and its contents have been completely destroyed, such as by a hurricane or fire. In these instances, an appraiser is often required to determine the value of the insured property.
To complicate things further, insurance policies often have limits on coverage amounts for specific types of property or damage. These limits can result in situations where the actual cost of repairs or replacement exceeds the maximum payout defined in the policy.
An example of the complexities arising from policy limits can be seen in a recent case in
Florida, US, following Hurricane Ian. The US District Court for the Middle District of Florida was called on to resolve a property dispute in the case of Wood v GeoVera Specialty Insurance Company.
In the aftermath of Hurricane Ian, Nancy and John Wood filed an insurance claim with GeoVera Specialty Insurance Company. Disagreements over the valuation of damage led to the involvement of an appraiser. The appraisal revealed damages that exceeded the policy s limits for specific items. Although GeoVera paid the maximum allowable under the policy, they refused to cover the additional amounts indicated by the appraisal. As
The voetstoots clause – are we all
binding on the seller. Such a clause is common in agreements of sale of fixed property.
The seller is also not liable for any defects which exist at the time of the sale which a reasonable person examining the property would have noticed. But even defects which would be apparent on inspection by the ordinary reasonable person, could give the purchaser rights if the seller designedly conceals their existence from the purchaser.
In a recent case, the purchaser of a residence was found to have fraudulently concealed a crack in the swimming pool and damp in the house because repairs and repainting had been done immediately before the house was put on the market.
The difficult question is how this leaves someone who is selling a 15year-old motor vehicle which has done substantial mileage or an 80-year-old house. There are inevitably going to be many defects in the property sold. If
PATRICK BRACHER COLUMNIST
the seller has to give a long list of every possible defect in the property, nothing will be sold. The second-hand market will take on a different face. If a full defects list is not given, the potential for future disputes is extensive.
The Consumer Protection Act partially deals with this problem where goods are sold. The buyer’s rights to good quality goods, in good working order and free from any defects do not apply to a transaction if the buyer has been expressly informed that particular goods are offered in a specific condition and the buyer expressly
a result, the Woods initiated legal action against their insurer to recover the difference. The difference in certain items was substantial. For example, the damage to the pool enclosure was appraised at $12,695, while the policy limit was only $5,000. The court ruled that GeoVera was not obligated to pay more than the policy limit, even if the damage exceeded that amount.
Disputes can also centre on the cause of the damage, not just its extent. In the Woods case, the interior damage was appraised at $52,282. While their policy limited water damage coverage to $10,0000 under a water damage endorsement, there was no specific limit for wind damage.
According to the court, it was unclear whether the appraisal attributed the interior damage to water or wind. Consequently, the court postponed its decision on this aspect to allow for further evidence to be led on the cause of the damage.
Takeaway
While appraisals assist in determining the extent of the loss, they do not override unambiguous policy limits.
agreed to accept the goods in that condition. But even then, the law will never enforce a fraudulent transaction.
That does not mean that a proper declaration regarding the general nature of the property sold should not have some meaning. Similarly, a clause relating to the effect of representations made at the time of sale could be crafted to include a clear overall description of what is being sold rather than a detailed defects list.
The balancing of rights between seller and buyer is essential to discourage an endless train of disputes.
The overall test should be similar to
The courts have always turned away buyers who complain they made a bad bargain
that in relation, for instance, to a claim for motor vehicle damage resulting from a collision. The cost of the repairs of the damage, or in the case of a sale the defect, must be weighed up against the value of the property with and without the damage or defects. If the seller’s financial position is no worse off because of the bargain received, there should be no justification for a claim of fraud.
The courts have always turned away buyers who complain they made a bad bargain. Deliberate concealment of material defects will seldom be condoned, however.
The problem is that every nondisclosure of a minor defect cannot be labelled fraudulent, even if it costs money to fix. It is difficult to draw the line somewhere between a missing screw in the cupboard and a leaking roof. We cannot label every defect as fraudulently concealed.
Eskom clarifies grid connection readiness criteria
Among these are the application documents needed
By ALEXANDRA FELEKIS, EMMA BLEEKER & SARAH LONGDON Bowmans
To address the capacity-constrained national grid, the interim grid capacity allocation rules (Icgar), released by Eskom s Grid Access Unit (GAU) in 2023, have shifted from a first-come, first-served connection process to a first-ready, first-served model.
Broadly speaking, the Icgar aims to provide clarity on several fronts, including the documents to be included in a grid connection application, the guidelines governing the budget quote application process, how project readiness is determined and various budget quote conditions.
On March 12 2025, the GAU released the Icgar assessment criteria document, which seeks to clarify the criteria used to assess the readiness of a project, and guides budget quote applicants on how to package their submissions to the GAU.
Some notable points from the document are as follows:
Eskom acknowledged that clarity is required on a trader’s role in the grid allocation process.
For this reason, Eskom stated that “no traders’ details will go into Network Service Provide (NSP) consent letters from November 8 2024 . Eskom further noted that traders will be seen as end users who actually consume energy and therefore must provide account details of account/ point of delivery for the NSP letter Prior to the document being published,
applicants were able to obtain NSP consent letters by naming the relevant trader to whom they intended to supply their energy. The GAU has sought to close the loop on committed offtakers and now requires that traders provide the list of their customers to the GAU to obtain the NSP consent letter.
The NSP consent letter is required for any application to Nersa for registration in terms of Schedule 2 of the Electricity Regulation Act, 2006, and is therefore required as part of the readiness assessment under Icgar.
The GAU states in multiple instances that, in terms of the documents to be submitted as part of a budget quote application, the generator s maximum export capacity (MEC) must match the end-user s notified maximum demand (NMD). Applicants will need to consider the GAU’s emphasis on this issue.
The GAU further requires that traders furnish Eskom with their trading licences. This was not the case prior to the document being published. The GAU previously accepted a demonstration from traders that they had applied for their respective trading licences.
The Icgar requires that an applicant must furnish an environmental authorisation (EA) and a water use licence (WUL) as part of its application, for purposes of assessing the readiness of the project. It has now clarified that the project must preferably have an EA , but that the GAU may approve the application if this is not the case
depending on the project and the risk and provided that the GAU “does not spend any unrecoverable money”
Eskom has similarly said they will accept proof of submission of the application for a WUL. This is aligned with Eskom s clarification statements made in 2023, where it held that they “may accept proof of submission of application to relevant authorities as commensurate compliance taking into account specific details and circumstances of the project, including unreasonable delays in processing such applications by the relevant authorities”
Both the EA and WUL have long lead times, and these clarifications allow applicants to commence with budget quote applications sooner.
The GAU noted that it would accept power purchase agreement (PPA) heads of terms in lieu of an executed PPA, but not in the case where “the power is used for offsetting and own-use”
Under the Igcar, the GAU requires that the applicant furnish it with a grid capacity allocation guarantee (Igcar Guarantee), which may be called upon where the customer has:
● Breached any requirement of the budget quote or the customer has failed to comply with any terms of its budget quote and/or related
IN YOUR COURT
connection agreements and/or related grid
connection undertakings and/or budget quote development milestones as agreed to between Eskom and the customer; or
● Had its reserved capacity or allocated capacity revoked as a result of the customer s actions; and/or failed to utilise the allocated grid capacity within the timelines stipulated in the budget quote.
The GAU has reiterated that the Igcar Guarantee must be the Eskom-approved template original Igcar guarantee . Albeit not a new requirement, this form is onerous and secures a broad range of customer obligations.
The clarifications to Igcar that relate to the EA, WUL and the acceptance of PPA term sheets provide some welcome leniency to the readiness assessment requirements in the context of a lengthy and expensive grid connection process. However, the applicants who intend to supply their energy to traders should note the new criteria. In terms of the Igcar assessment criteria document, traders are required to be more ready than before and must be able to furnish their trading licences and list of customers, demonstrating a committed offtake that matches the applicant s MEC.
Case affirms importance of common law principles
In Tarentaal Centre Investments (Pty) Ltd v Beneficio Developments (15/2025) [2025]
ZASCA 38 (April 8 2025)
(Tarentaal), a recent judgment handed down by the Supreme Court of Appeal, the court considered, inter alia, the requirements of a successful leave to appeal in terms of section 17(2)(b) of the Superior Courts Act 10 of 2013 (act). In Tarentaal, the high court had found against the appellants and had, inter alia, refused the appellants leave to appeal. The appellants then applied in terms of section 17(2)(b) which allows the Supreme Court of Appeal to grant leave to appeal in those cases where a court a quo has refused leave to appeal. The section itself does not set out in detail the grounds upon which the Supreme Court of Appeal may grant leave to appeal. In Tarentaal the court fleshed out the law in this regard.
First, the President of the Supreme Court of Appeal must only refer an application in terms of section 17(2)(b) of the act if she is of the view that exceptional circumstances exist. Further, the court referred to section 28 of the Judicial Matters Amendment Act 15 of 2023, which came into operation on April 3 2024, which dictated that the President of the Supreme Court of Appeal, in order to exercise her discretion favourably, must also conclude that failure to allow the consideration of a further appeal would lead to circumstances where a grave failure of justice would otherwise result or the administration of justice may be brought into disrepute” The main issue in this case was whether interest charged on a loan
between two commercial entities of substance was usurious. The interest charged as per the formal agreements entered into between the parties was at a rate of 1% per week, capitalised monthly. It was common cause that the agreements were entered into between the parties without duress or fraud.
The crisp issues for analysis by the court dealt with the common law principles of stare decisis (binding precedent), pacta sunt servanda (sanctity of contract) and perceptive restraint
The court dealt first with the principle of stare decisis and favourably quoted the following dictum issued by the Appellate Division in 1938, namely:
The ordinary rule is that this court is bound by its own decisions and unless a decision has been arrived at on some manifest oversight or misunderstanding, that there has been something in the nature of a palpable mistake, a subsequently constituted court has no right to prefer its own reasoning to that of its predecessors such preference, if allowed, would produce endless uncertainty and confusion. The maxim stare decisis should, therefore, be more rigidly applied in this the highest court in the land, than in all others”
The court then dealt with the maxim pacta sunt servanda. The court referred in this regard to AB and Another v Pridwin Preparatory School and Others [2018] ZASCA 150 (Pridwin). In Pridwin the Supreme Court of Appeal pronounced the following principles that govern judicial discretion to invalidate or refuse to enforce contracts that are contrary to public policy: (a) public policy demands that contracts freely and
voluntarily entered into must be honoured; (b) a court will declare invalid a contract that is prima facie inimical to a constitutional value or principle, or otherwise contrary to public policy; (c) where a contract is not prima facie invalid but its enforcement in particular circumstances is, a court will not enforce it; (d) a party who assails the contract or its enforcement bears the onus to establish the facts; (e) a court will use the power to invalidate a contract or not to enforce it, sparingly, and only in the clearest of cases in which harm to the public is substantially incontestable and does not depend on the idiosyncratic inferences of a few judicial minds; (f) a court will decline to use this power where a party relies directly on abstract values of fairness and
Public policy demands that contracts freely and voluntarily entered into must be honoured
reasonableness to escape the consequences of a contract because they are not substantive rules that may be used for this purpose”
Smith JA, having cited the above, went on to deal with the doctrine of perceptive restraint which has been, he held, repeatedly espoused by the Supreme Court of Appeal. In terms of this principle, Smith JA held that courts must use the power to invalidate a contract or not to enforce it, sparingly, and only in the clearest of cases. In short, the principle of pacta sunt servanda was viewed by the court as a fundamental protective mechanism for the sanctity of commercial transactions only to be disturbed by unusual circumstances. The court then dealt with a caveat which was set out in Beadicia 231 CC and Others v Trustees of the time being of the Oregon Trust and Others (CCT109/19) [2020] ZACC 13 (Beadicia). In Beadicia, the Constitutional Court held that “[i]n our new constitutional era, pacta sunt servanda is not the only, nor the most important principle informing the judicial control of contracts. The requirements of public policy are informed by a wide range of constitutional values. There is no basis for privileging pacta sunt servanda over other constitutional rights and values. Where a number of constitutional rights and values are implicated, a careful balancing exercise is required to determine whether enforcement of the contractual terms would be contrary to public policy in the circumstances From this quotation it is clear that there is some tension between the rulings of the Constitutional Court and the Supreme Court of Appeal regarding
the implementation of the common law principles of pacta sunt servanda as read with perceptive restraint Notwithstanding, the Constitutional Court was of the view that such differences are more perceived than real and that the principle of pacta sunt servanda gives effect to the central constitutional values of freedom and dignity” and that, in general, “public policy requires that contracting parties honour obligations that have been freely and voluntarily undertaken (Beadicia at para 90).
The court unanimously held that, in the circumstances before it, namely that the appellants were sophisticated businesses and had entered into contracts of loan without duress or any aspect of fraud, the fact that an interest rate agreed upon might be considered to be on the high side is not a matter for a court at a latter stage to set aside or alter. The court accordingly held that there were no reasonable prospects that a court of appeal would find for the appellants and refused its application in terms of section 17(2)(f) for leave to appeal.
Finally, the court considered the question as to whether the common law should be further developed so as to incorporate a different or broader interpretation which in some fashion incorporated an extended inclusion of public policy, and concluded that no court of appeal would find any rationale for such further development.
This case is an important affirmation of the continued importance of the three common law principles, stare decisis, pacta sunt servanda and “perceptive restraint” -Peter Blanckenberg is a Director at Blanckenberg & Associates Inc.
PETER BLANCKENBERG COLUMNIST