Jurisdiction refers to the ability of a particular court to hear a matter which has been brought before it and to grant the appropriate relief in respect thereof.
Generally, South African courts enjoy jurisdiction over persons (natural and juristic), resident or domiciled in the particular court’s geographical area or in respect of causes of action that took place within the particular court’s geographical area. In South Africa, a company is said to reside at its principle place of business or registered office.
This article will focus on establishing jurisdiction over foreign defendant companies when suing for a claim sounding in money.
A non-South African company which does not have its principal place of business in South Africa is not generally subject to the jurisdiction of a particular South African court unless it has expressly submitted to such court’s jurisdiction.
We can illustrate the above principles as follows:
- Suppose Company B (a South African company) breaches a lease agreement that was entered into between it and Company A (also a South African company). Assume the agreement contained no clause dealing with the submission to a particular court’s jurisdiction. Company A decides to seek an award for compensation in the form of damages and wants to institute action against Company B. How does Company A go about doing this? Company A must decide from which court to institute its action, and in essence has 2 options:
- it can sue Company B in a court enjoying jurisdiction over the area in which Company B has its principal place of business or registered office (where it resides); or
- it can sue Company B in a court enjoying jurisdiction over the area in which the lease agreement was signed (i.e. where the cause of action arose).
- now suppose Company B is a non-South African company. In such an instance, the attachment of Company B’s property in South Africa becomes essential in order for Company A to establish jurisdiction and consequently, Company A must attach an asset / assets in South Africa belonging to Company B in order for it to be able to institute action against Company B in a court exercising jurisdiction over the area in which the cause of action arose. It is important to note that the position may however differ if Company A was suing Company B in respect of a claim involving immovable property situated within the court’s jurisdictional area. Here, it would be unnecessarily burdensome for Company A to attach such property in order to found jurisdiction. Company A is however, in such a context, advised to make application for an interdict preventing Company B from transferring such property to someone else.
As seen from the above, it is important to be knowledgeable of the various jurisdictional principles when instituting legal proceedings, especially when dealing with a foreign company, as proceeding in an incorrect court result in the matter being thrown out.