IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
REPORTABLE
Case no:  439/03
In the matter between

HAY MANAGEMENT CONSULTANTS LTD

APPELLANT

and

P3 MANAGEMENT CONSULTANTS (PTY) LTD

RESPONDENT

Coram:
SCOTT, CAMERON, CONRADIE, HEHER JJA and PATEL AJA

Heard:
23 NOVEMBER 2004

Delivered: 30 NOVEMBER 2004

Summary: Practice: jurisdiction – implied contractual submission – whether
can be relied on in action not arising from the contract – weight to be attached to
domicilium and choice of law clauses – submission by peregrinus in action by
incola – whether sufficient of itself to found jurisdiction.

____________________________________________________________________
_

JUDGMENT
__________________________________________________________________
A

HEHER JA

HEHER JA:
[1] This is an appeal with leave of the court a quo from a judgment of Rabie J,
sitting in a trial in the Witwatersrand Local Division, in which he dismissed a special
plea to the jurisdiction of the court with costs. The issue of jurisdiction had by
agreement between the parties been tried separately prior to embarking on the trial of
the merits of the case. Neither party chose to adduce evidence and the issue was
consequently argued on the pleadings.
[2] The plaintiff in the action (the respondent on appeal) is an incola of the
Witwatersrand court. The defendant (the appellant) is a company incorporated in
England and Wales and a peregrinus of the Republic of South Africa.
[3] In September 2000 the plaintiff instituted the action against the defendant
claiming repayment of an amount of R515 815 paid under protest and alleged to be
subject to the condition that it would be repaid if found not to be due. (The claim was
subsequently reduced by an amount of R117 604,85 which, the plaintiff conceded,
had indeed been due and payable.) An alternative claim was based on the condictio
indebiti. The parties had during November 1989 in London concluded a written
agreement the essence of which was that the defendant granted the plaintiff a licence
to operate a management consultancy in a number of Southern African countries
including the Republic. In consideration for the rights the plaintiff undertook to pay
royalties to the defendant in London.

[4] The plaintiff averred in its particulars of claim that the trial court possessed
jurisdiction to try its cause because the plaintiff was an incola and the defendant had
consented to the jurisdiction of the court. The plaintiff alleged that its cause of action
arose ‘in connection with the agreement’ and relied specifically upon the terms of
clauses 15 and 16.1 thereof.
[5] Clause 15 stipulated that the proper law of the agreement was to be the law of
the Republic of South Africa. Clause 16.1 provided as follows:
’16.1 addresses and notices

16.1.1 For the purposes of this agreement, including the giving of notices and the serving of legal
process, the parties choose domicilium citandi et executandi (“domicilium”) as follows:

Group

:
c/o Deneys Reitz

Crusader House

10 Anderson Street

Johannesburg

(Att. K. Cron)
Fax No.

:
838-7444

with an information copy to:

52 Grosvenor Gardens

Victoria

London

SW1W OAU
Telex No.

:
Fax No.

:
730-7004

HSA and

:
1st Floor, Norwich Park, Cor 5th Street
Ravnsborg

& Grayston Drive, Sandown, Sandton

2146, SOUTH AFRICA
Telex

:
Fax No. 884-4339

:

16.1.2 A party may at any time change that party’s domicilium by notice in writing, provided that
the new domicilium is in the Republic of South Africa and consists of, or includes, a
physical address at which process can be served.’

[6] The defendant raised a special plea to the jurisdiction. It pleaded that it was a
peregrinus of the Republic and the plaintiff had not attached its property to found or
confirm jurisdiction and denied that it had expressly or tacitly consented to the
jurisdiction by concluding the agreement containing the clauses relied on by the
plaintiff.
[7] In its plea to the merits the defendant averred that the agreement had been
varied by an exchange of letters, denied that the plaintiff had calculated the fees
which it owed on a proper basis and denied that the plaintiff was entitled to recover
any part of the amount that it had paid.
[8] The judgment of the court a quo addressed two questions:
(i)
whether a submission by the defendant to the jurisdiction of the court
was sufficient of itself (there being no other ratio jurisdictionis available
to the plaintiff) to found jurisdiction in an action for money by an incola
of the court against a peregrinus or whether the plaintiff required an
attachment of the defendant’s property in addition;
(ii)
whether the grounds relied on by the plaintiff established a submission
to the jurisdiction by the defendant.
[9] In regard to the first question the learned judge followed, as authority binding
on him, the judgment of the Full Bench of the Witwatersrand Local Division in
American Flag plc v Great African T-Shirt Corporation CC; American Flag plc v
Great African T-Shirt Corporation CC: In re Ex parte Great African T-Shirt
Corporation CC 2000 (1) SA 356 (W) in which it was held that, in an action for

money by a plaintiff incola of the court, absent a causa jurisdictionis, submission by
a peregrine defendant is sufficient of itself to confer jurisdiction.
[10] As to the second question, the learned judge considered the totality of the
evidence, consisting not only of the contractual terms but also the admitted facts
relating to the parties and their business relationship. He found that the plaintiff had
proved on a balance of probabilities that the parties ‘intended disputes arising from
the agreement to be adjudicated by the South African courts’ and, consequently, that
he had jurisdiction to decide the main dispute.
[11] Before us counsel for the defendant submitted that the plaintiff’s causes of
action on the main and alternative claims were not founded on the contract and in fact
disavowed that the payment which it made was required by any contractual
obligation. In these circumstances, he submitted, the plaintiff could not rely on the
provisions of the contract to found jurisdiction. Even if, properly interpreted, the
contract embodied a consent to jurisdiction, that consent was confined to disputes
arising in relation to it.
[12] Although, at first blush, this submission possesses the attraction of logic, I
think it ignores the reality. The parties concluded the agreement to regulate an
ongoing business relationship. They fixed on a choice of law and, as will be seen, a
forum to decide their disputes. Both would necessarily have regarded the situation as
anomalous and unsatisfactory if only disputes arising strictly within the terms of the
agreement could be decided in that forum according to the selected legal regime,
while all other disputes, no matter how cardinal to their business, had to determined

by another court according to a different system of law. The present dispute
demonstrates the absurdity: the plaintiff paid because the defendant insisted that their
contract required it to do so; in the action the defendant maintains that stance and
whether the plaintiff wins or loses will depend largely on the true content of the
agreement and its interpretation; if the objection is good these questions will have to
be decided by an English court according to English law whereas if the plaintiff had
withheld the payment and been sued by the defendant the dispute would have been
resolved in this country according to South African law. To give proper effect to the
parties’ intentions we must allow the submission a scope which serves all disputes
that have the terms and performance of the contract as their substance. The first point
is therefore answered in favour of the respondent.
[13] I think that the trial judge correctly approached the question whether the
defendant had submitted to the jurisdiction by asking whether the cumulative effect of
the proved facts established submission on a balance of probability, cf Beverley
Building Society v De Courcy and Another 1964 (4) SA 264 (SR) at 268 C-E. That
being so it does not signify that, on its own, the domicilium clause (Standard Bank
Ltd v Butlin 1981 (4) SA 158 (D)) or the choice of law clause (Reiss Engineering Co
Ltd v Insamcor (Pty) Ltd 1983 (1) SA 1033 (W)) may not have discharged the onus.
[14] The proved facts which are relevant in the present case are the following:
1.
The defendant, an English company, with no apparent past or present
connection with South Africa, apart from its business relationship with
the plaintiff, was content to select a domicilium for service of process

and writs of execution in this country. This was recognised as a
significant factor leaning towards submission in Beverley Building
Society (at 270C-E) and Standard Bank (at 164D-F) and, with respect,
rightly so. The defendant moreover undertook that, in the event of
changing its chosen domicile, it would provide a physical address within
the Republic for such purposes.
2.
The ongoing relationship encompassed business in countries with
varying legal systems (inter alia Angola, Malawi and South Africa).
English law was an obvious option as the governing law of the contract
given that the defendant was an incola of England. The fact that South
African law was chosen is an indication, although slight in itself, of an
intention to establish a connection with the courts of this country.
[15] In Ex parte Hay Management Consultants (Pty) Ltd 2000 (3) SA 501(W)
Wunsh J sought to ascertain the intention of the parties to the very contract presently
under consideration. He said (at 508G-I):
‘At the time of the [defendant] so agreeing it was a peregrinus and there is no reason to believe that
it then contemplated becoming resident in South Africa. It is still a peregrinus. It could hardly have
intended that an action against it would be brought or have to be brought in the English Courts. It is
bizarre to suggest that what was contemplated, as a possibility, was that the applicant would have to
institute proceedings against the defendant in England, have the process served here (that being the
only reason for the choice of a domicilium citandi et executandi here) and have the English Courts
try the action according to South African law. It is far more probable that it consented to the
jurisdiction of a South African Court within the area of which its domicilium citandi would be

situated.’
This was also the line of reasoning pursued by Rabie J in the court below. I find it
persuasive and sufficient (even without the considerations to which I have already
referred) to raise a probability that the defendant intended to submit to the jurisdiction
of a South African court. At the time of the conclusion of the contract (and at all
subsequent times) the Johannesburg court was the appropriate court in the context of
the agreement. I cannot divine the existence of any countervailing considerations and
counsel could not take the matter further. In the circumstances I find it unnecessary to
address certain other reasons relied on by the learned judge as support for his
conclusion, such as the place at which the plaintiff’s obligations under the contract
were to be performed and the relevance of the conditions attached to the payment
under protest. Suffice to say that I agree with the trial judge that the defendant
consented to the jurisdiction of the Witwatersrand Local Division.
[16] The final leg of the appeal resolves itself into a question of whether American
Flag plc supra was correctly decided.
[17] Counsel for the appellant frankly conceded that recognising consent by a
peregrinus as sufficient of itself to found jurisdiction in an action for money brought
by an incola of the court reflected sound commercial reality. The wisdom of that
concession is borne out by reference to Forsyth, Private International Law, 4th ed
215-6 where the learned author discusses ‘a fundamental issue of policy’:
‘However, as we have seen, today the doctrine of effectiveness is artificial and conceptual rather
than realistic. And indeed even those cases that would most severely restrict submission do not

reject it altogether. Moreover, submission is widely recognised in legal systems across the world as
a ground on international competence justifying the enforcement of the judgment of a foreign court
to which the defendant has submitted. Thus, on the whole, a judgment based on submission will be
effective. It is submitted that effectiveness in this slightly attenutated sense should suffice to justify
the exercise of jurisdiction on the grounds of submission. The fact is that most other legal systems-
and in particular the legal systems of South Africa’s trading partners-give wide recognition to and
encourage submission as a ground of jurisdiction. And this is widely welcomed by the parties to
international contracts who frequently submit their disputes to resolution by courts with which they
have but little connection. This is for good and obvious reasons-convenience, speed, judicial
reputation, expense, neutrality (ie no link with any of the parties). It is to the benefit of international
commerce that this should be so. The South African courts should as a matter of policy encourage
submission. As economic development in Southern and Central Africa proceeds, there is no reason,
other than archaic restrictions on the exercise of jurisdiction, why the local courts should not
develop an international role akin to that of the Commercial Court in London. The judicial policy
should not be ‘Peregrines go home’ but ‘Peregrines welcome’. Thus peregrines should not find that,
if they have submitted to the jurisdiction of the South African courts, their property is still at risk of
being seized to found or confirm jurisdiction. That is a brake on inward investment. Moreover, there
should be no bar on the submission to the South African courts of disputes where neither party is an
incola and there may be no obvious link with South Africa. Such use of the South African courts is
a tribute to them and it encourages international trade and commerce to the general benefit.’
Similar sentiments have been expressed in our courts and by academic writers over
many years. See the authorities cited in American Flag plc at 363A-365B and
Jamieson v Sabingo 2002 (4) SA 49 (SCA) at 58D-H. We are not in this case
concerned with a peregrine plaintiff and my approval of the practical advantages of

recognising jurisdiction on the grounds discussed by Forsyth should not be
understood as necessarily extending to such a person.
[18] Counsel’s attack on American Flag plc was two-pronged. First, he submitted
that it flies in the face of what was laid down by this Court in Veneta Mineraria SPA
v Carolina Collieries (Pty) Ltd (in liquidation) 1987 (4) SA 883 (A) at 894A-B:
‘This dictum [in The Owners, Master and Crew of the SS Humber v The Owners and Master of the
SS Answald 1912 AD 546 at 554] again emphasises the principle that in addition to the machinery
of arrest (which, in the case of a local peregrinus, is dispensed with by law) something more is
required before a Court can take cognizance of a matter in its area of jurisdiction. By prorogation a
defendant subjects his person to the jurisdiction of the Court, but that is not enough. One or more of
the traditional grounds of jurisdiction must also be present.’
Counsel conceded, rightly, that in so far as the quoted passage was intended to apply
to proceedings against peregrine defendants generally it might be obiter since the
issue before that court was jurisdiction over such a defendant at the instance of a
peregrine plaintiff. He submitted however that it was not the intention of the court to
recognise any such distinction.
[19] That submission tied in with the thrust of counsel’s second criticism of
American Flag plc, viz that the Veneta dictum (on the basis that it extended to all
peregrine defendants) was consistent with long-established principles of South
African law. Judgments such as those relied on by the Court in American Flag plc (at
363E-G) for a contrary principle were either wrong or were themselves obiter since,
so counsel submitted, in all (or almost all) instances an accepted ratio jurisdictionis

was present.
[20] The first submission reflects a controversy that raged before American Flag
plc. See the authorities referred to by Wunsh J at 376J-377A. In my view the learned
Judge disposed thoroughly and comprehensively of the argument that Viljoen JA in
Veneta Mineraria intended to enunciate a principle applicable to all peregrine
defendants irrespective of whether the plaintiff was an incola or a peregrinus. No
purpose will be served by traversing the ground again. Nothing said by counsel for
the defendant persuades me that the learned judge was wrong.
[21] The second ground of attack is founded upon a passage from the judgment of
Innes CJ in Ueckermann v Feinstein 1909 TS 913 at 919-20 which was cited by
Viljoen JA in Veneta Mineraria SPA at 891G:
‘There remains the much more difficult question, whether acquiescence in a judgment in personam,
pronounced by a Court competent as to the cause, against a defendant over whose person the Court
had at the time no jurisdiction, operates to prevent such defendant from thereafter challenging the
validity of the judgment. The inquiry may be put in a different shape- could such a defendant, under
such circumstances, have conferred jurisdiction originally upon the Court by consent? Because, if
he could consent originally, it follows that he could acquiesce subsequently. Apart from statute, the
common law of Holland undoubtedly recognised the doctrine of the prorogation of jurisdiction- that
is, that jurisdiction might be conferred or extended by consent of parties so as to enable the Court to
deal with a dispute which, apart from such consent, it would have had no jurisdiction to entertain.
And that prorogation of jurisdiction might take place in regard to inferior as well as Superior Courts
is clear from what Voet says at 2.1.15. Some of the authorities favoured a very wide application
being given to this doctrine of prorogation. But I think it must be recognised as settled law in South

Africa that there can be no prorogation in regard to cases where the Court has no authority at all
to adjudicate upon the subject-matter of the dispute; because in such cases, the matter at issue being
by law outside the cognizance of the Court, the consent of parties cannot confer a coercive
jurisdiction upon the Court, which the law expressly denies to it.’
As I understand counsel’s reliance on this extract (and the weight which, according to
him, it carried with Viljoen JA) the point is this: although any peregrine defendant
may effectively submit his person to the jurisdiction whether the plaintiff is an incola
or peregrinus, there must, in the absence of a ratio jurisdictionis, exist some
connection between the subject-matter of the suit and the court which hears it; only
then may a court take cognizance of and adjudicate upon the subject matter. As a
general proposition that is no doubt correct. Mr Eloff submitted, however, that the
rule is that such connection can only be established by an attachment of the person or
property of the peregrine defendant. But Ueckermann v Feinstein supra did not hold
that. On the contrary, the court upheld, as an effective basis for jurisdiction, a
submission without any attachment, without reference to the presence of or need for
any other ratio jurisdictionis. (Although one cannot be certain, the probable inference
from the summary of the facts is that the plaintiff was an incola of the court: Innes CJ
at 919 suspected that he was a nominee for the real creditor, one Wessels, who was a
local attorney at the seat of the court.) Our courts have long treated an incola plaintiff
more leniently than his peregrine counterpart. (The historical reasons for doing so
were explained by Wessels J in Springle v Mercantile Association of Swaziland Ltd
1904TS 163 at 165 in fine – 167). The former may found jurisdiction by attachment

or arrest; no other ground of jurisdiction is required. The latter may also attach or
arrest to found jurisdiction but only if another ground is present: the connection
between court and subject matter is established by the existence of that ground. When
the plaintiff is an incola whether the connection is made ipso facto or because the
connection is regarded as subservient to the policy of relieving the incola from the
disadvantages of the rule actor sequitur forum rei does not matter: jurisdiction is
assumed; the suit is a matter of which a court may take cognizance according to law: s
19(1) of the Supreme Court Act 59 of 1959.
[22] I can see no difference in principle in the case of a consent to jurisdiction.
There are the same reasons for coming to the assistance of an incola plaintiff. The
practical advantages of recognising jurisdiction which are referred in para 17 are
manifest.
[23] Nor can counsel be right in contending that attachment is required when a
submission already exists. As pointed out in Jamieson v Sabingo supra at 57I-58I the
reasons for requiring an attachment to found jurisdiction against a pereginus are as
well if not better satisfied by a submission. What is additionally required in both
cases is the link between the cause and the court, a link that is established when the
plaintiff is an incola.
[24] The cases relied on by Wunsh J in American Flag plc at 363A-G were
therefore correct to the extent that they held or recognised that submission by a
peregrinus is sufficient to confer jurisdiction without an attachment ad fundandam
jurisdictionem.

[25] Counsel for the defendant submitted that some importance resides in the
question whether the submission is relied on to found or to confirm jurisdiction. In
the context of the present case I think the distinction is without significance.
[26] In the result I am satisfied that American Flag plc correctly reflects the law in
actions for money between a plaintiff incola of a court and a peregrinus when the
defendant has submitted to the jurisdiction.

[27] The appeal is dismissed with costs including the costs of two counsel.

___________________
J  A HEHER

JUDGE OF APPEAL

Concur:
SCOTT JA

CAMERON JA
CONRADIE JA
PATEL AJA