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CAASA NEWSLETTER APRIL 2025

The motivation behind this monthly newsletter is to provide better and more frequent communication to CAASA members, and to solicit suggestions and responses to the contents. We need input from you to ensure that the content of this newsletter, our webinars and annual conference remain both topical and relevant.

Any comments, suggestions or proposals please forward to secretary@adjudicators.co.za

CONTENTS:
Primary and Secondary Obligations
Mentoring

PRIMARY AND SECONDARY OBLIGATIONS
(with thanks to an article by ENSafrica)

In a recent judgment the Supreme Court of Appeal (“SCA”) had to consider whether a party to a contract that had repudiated the contract could later rely on the terms of the very same contract to defend a claim against it.

Twenty-Third Century Systems (Pty) Ltd, a Zimbabwe company, and Twenty-Third Century Systems Global (Pty) Ltd, a Botswana company, were sister companies. Twenty-Third concluded various agreements with SAP Africa Region (Pty) Ltd (“SAP Africa”) based in South Africa.

SAP Africa is an internationally recognised provider of information technology and Twenty-Third was appointed as a service provider of SAP Africa’s products in specific regions.

In May 2016, Twenty-Third and SAP Africa concluded a suite of agreements. These agreements endured from 30 May 2016 until 1 July 2019, whereupon SAP Africa gave notice of the termination to Twenty-Third. In response to the notice, Twenty-Third informed SAP Africa that it had in fact repudiated the agreements, which repudiation was accepted by Twenty-Third.

Consequently Twenty-Third brought an action against SAP Africa in the High Court of South Africa in terms of which they claimed payment for loss of profit arising from the alleged repudiation and subsequent termination of the Agreement.

SAP Africa raised two special pleas in denying any liability to Twenty-Third. Firstly SAP Africa argued that the loss of profit claim is not permitted due to the exclusion of damages clause contained in the agreements. Secondly SAP Africa contended that the claim by Twenty-Third was time-barred in terms of the agreements.

In response Twenty-Third claimed that SAP Africa was stopped from raising the two special pleas since it had repudiated the Agreement, i.e. having repudiated the agreements SAP Africa could not now rely on the terms of the self-same agreements that it had repudiated.

The High Court allowed the two special pleas and found that the clauses in question survived the termination of the Agreement. Twenty-Third then appealed to the SCA.

The SCA agreed with the High Court of South Africa and dismissed the appeal. It found that although the performance of certain obligations may cease as a result of a party’s repudiatory conduct, the repudiation itself does not terminate the contract. For example, clauses in a contract that give a party mechanisms to address the consequences of a terminated contract (i.e., an arbitration clause) must survive.

The SCA held as follows:-
“By accepting the repudiation, the innocent party brings to an end the duty of the parties to perform their primary obligations under the contract. The effect of bringing an end to the primary obligations is the activation of certain secondary obligations.”

The SCA found that when Twenty-Third accepted the repudiation by SAP Africa, the primary obligations of the parties in terms of the agreements ceased, but the secondary obligations were activated exactly at that time. The secondary obligations resulting from the exclusion of damages and the time-bar clauses survived the termination and prohibited Twenty-Third from bringing an action against SAP Africa.

The importance of this judgment is that it reinforces the distinction between primary and secondary obligations arising from a contract. Simply put, primary obligations are those obligations that are directed at the performance of the contract. Secondary obligations are only activated when the primary obligations no longer exist. They also survive the termination of a contract in order to protect a party’s rights.

MENTORING

CAASA is about to launch a mentoring programme for members to take place over the next 6 months. We have identified 6 CAASA mentors. Each mentor will deal with a specific aspect of the adjudication process.

	The claims process and declaring of a dispute (in each of the 4 standard form contracts)
	Appointment of the adjudicator and management of the adjudication process (including what to do if one party refuses to participate)
	Hearings, expert reports and requests for additional information
	Points in limine, issues of jurisdiction, interdicts and enforcement applications
	Writing the award and dealing with issues of costs
	Adjudicator’s ethics and standards including issues surrounding natural justice, bias, disclosures and confidentiality

We debated the possibility of the mentees “shadowing” a CAASA adjudicator in a real life situation, however this would require the agreement of the parties involved, and could well impact on the confidentiality of the process.

An introductory session will take place on 30th May where each mentor will provide a brief outline of the above. The intention is for the mentees to rotate on a monthly basis.

To date we have 4 CAASA members who requested to be on the programme. Should other members be interested please email chairman@adjudicators.co.za

More details will be forthcoming prior to 30th May.