South Africa’s Constitutional Court earlier this week heard an argument made by Airports Company South Africa (ACSA) who is appealing a decision made by the Supreme Court of Appeal (SCA) in a case involving retailers Big Five Duty Free, Flemingo and Tourvest.

The case, which is currently awaiting judgement, revolves around whether or not ACSA should be permitted to re-issue a tender for the operation of duty free shops at OR Tambo, Cape Town and King Shaka International Airports (the original tender took place in 2009).

South African retailer, Big Five, who originally won the tender almost nine years ago, is arguing that ACSA should be bound by the original terms of the contract win and therefore reinstate its agreement with Big Five.

Hulisani Rasivhaga, who works for ACSA’s Corporate Office, made the following comments: “This matter was heard by the Constitutional Court on 22 May 2018 and judgement has been reserved. We cannot advise when we will get the outcome of the hearing as that is determined by when the Constitutional Court is ready to deliver judgement.

“The appeal to the Constitutional Court was brought by Airports Company South Africa to obtain clarity from the court on whether a judgement which pronounces on the legality or constitutional validity of an administrative decision can be overturned by an agreement between private parties, which agreement was subsequently made an order of court.”

Tourvest declined to comment on the case. TRBusiness has also reached out to Big Five and Flemingo and will bring you further comment as necessary.

CASE HISTORY

ACSA originally invited bids for the aforementioned duty free contract on 29 May 2009 and according to the Constitutional Court (CC) Big Five, Flemingo and Tourvest submitted bids. On 26 August 2009, Big Five Duty Free was told that it was the successful bidder.

Big Five, who originally won the tender almost nine years ago, is arguing that ACSA should be bound by the original terms of the contract win.

It was in September that year that Big Five then entered into a lease agreement with ACSA. At the same time, Flemingo brought an application to review and set aside the award of the tender to Big Five and even sought immediate legal measures to halt the ‘implementation of the award’ until the review had been determined.

ACSA and Big Five opposed the review, arguing that the tender was lawful. (Tourvest did not participate in legal proceedings at this time).

On 11 December 2009, the High Court granted an interim interdict sought by Flemingo and on 17 May 2012, the High Court decided the review application and ‘set aside’ the tender award.

Big Five then appealed the review judgment to the Full Court of the Pretoria High Court (once again, Tourvest did not participate). However, after the hearing, but before the judgment was handed down by the Full Court, Big Five and Flemingo agreed to resolve the dispute through a settlement agreement.

The original contract covered operations for Cape Town Airport (pictured) as well as OR Tambo and King Shaka International.

FLEMINGO ABANDONS FIGHT

ACSA could not agree to the settlement agreement without the approval of its board of directors, but Big Five and Flemingo decided to proceed with the settlement agreement.

On 20 June 2014, the Full Court made the settlement agreement an order of court, which meant that Flemingo agreed to abandon the interdict order.

It agreed to withdraw the review application in its entirety, “having the effect that these proceedings were never instituted and/or proceeded with”, thereby acknowledging that ACSA is “free to and can now implement the award of its tender . . . to [Big Five] without limitation or restriction and without any challenge thereto whatsoever by [Flemingo]”.

ACSA took the view that since it was not party to the agreement, it was not bound by it and decided to start a new tender process. Big Five sought an order from the Gauteng Division of the High Court, Pretoria (High Court) that ACSA was bound by the award it had made in 2009 and that it was obliged to conclude the written lease agreements anticipated.

ACSA AND TOURVEST OPPOSE APPLICATION

At this point both ACSA and Tourvest opposed the application. In the High Court the judge refused the application, holding that the previous order was a “public remedy” and could not be set aside by the private parties.

The judge also said that even though the Full Court had made that agreement between Big Five and Flemingo an order of the Court, it was not bound by it because it was “at odds with the Constitution, the law and public policy”.

Big Five Duty Free renovated duty free stores at OR Tambo and Cape town stores in 2012.

Big Five appealed to the SCA against the order. The SCA addressed the question of whether the tender awarded in Big Five’s favour stands and is binding on ACSA, or whether ACSA was free to start a new tender process.

The Court concluded that the effect of the settlement agreement, made an order of court, was that the review proceedings were withdrawn as if they had never happened and that ACSA was bound by the 2009 tender decision.

ACSA is now appealing to the Constitutional Court against the decision of the SCA. Big Five opposes the application. In this Court the central question is whether a judgment that pronounces on the legality or constitutional validity of an administrative decision can be overturned by agreement between private parties where that agreement is made an order of court.