n South African Law Journal - Shielding of parastatals against claims for performance : an unwarranted digression from legal principles

Volume 128, Issue 2
  • ISSN : 0258-2503
  • E-ISSN: 1996-2177



It is a matter of concern to what extent state-owned enterprises (parastatals or public entities), as enterprises or institutions that are directly or indirectly controlled by the state, may shy away from their liabilities behind the shadow of the 'sovereign state' to which they are linked by more than just an umbilical cord. In this contribution it is submitted that these sort of enterprises that are formally recognised as separate legal entities (eg Transnet Ltd) should not be allowed to use their close connection to the state to shield themselves against legal liability. They are, after all, companies subject to company law. An entity is a separate legal persona from its shareholder/s. The content and limits of the perceived blanket protection against liability provided for in the Legal Proceedings Against Certain Organs of State Act 40 of 2002 and the proposed Constitution Eighteenth Amendment Bill of 2009 and the State Liability Bill of 2009 published by the legislature should thus be interpreted restrictively to limit any unwarranted digressions from normal legal principles applicable to all subjects operating in the market place. The 'lifting of the corporate veil' doctrine should not ever be used as an excuse to benefit a corporate institution by allowing it to hide behind the limitations provided to its handicapped or challenged stakeholders in their personal capacities. It is submitted that a close scrutiny of the implications of the explicit formulations used in the proposed State Liability Bill of 2009 should exclude parastatals like Transnet, most notably: ''. It is submitted that, irrespective of the applicability of the defence of estoppel in a related matter, legal certainty will be enhanced if it is accepted from the outset that the limited category of entities to be included under the moniker 'certain organs of state' should not be expanded beyond the clear wording of the Act. The proposed new Bill confirms this submission.

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