Cross-Border Insolvency; Limitation of Legal Proceedings Against Govt Institutions Bills: briefing; Protected Disclosures Bill:

Meeting report

JUSTICE AND CONSTITUTIONAL AFFAIRS PORTFOLIO COMMITTEE
20 June 2000
CROSS-BORDER INSOLVENCY BILL; LIMITATION OF LEGAL PROCEEDINGS AGAINST GOVERNMENT INSTITUTIONS BILL: BRIEFING; PROTECTED DISCLOSURES BILL: VOTING

Documents handed out:
Summary of Submissions - Limitation of Legal Proceedings Against Government Institutions Bill
Working Document: Draft 1 - Limitation of Legal Proceedings Against Government Institutions Bill
Cross-Border Insolvency Bill [B 4 - 2000]
Limitation Of Legal Proceedings Against Government Institutions Bill [B65-99]
Proposed Amendments to Protected Disclosures Bill [B30-2000] (see Appendix 1)

Chairperson: Advocate JH De Lange

SUMMARY
The Committee gave the Department instructions on redrafting some clauses and rewording of the options provided in the Cross-Border Insolvency Bill and Limitation Of Legal Proceedings Against Government Institutions Bill. The Committee envisages meeting again on the Bills after recess.

The Committee passed the amendments made to the Protected Disclosures Bill while it was with the NCOP Select Committee.

MINUTES
Cross-Border Insolvency Bill
Mr Johan De Lange of the Department said they had prepared optional clauses to be approved by the Committee as amendments to the Bill.

Clause 1
The clause has two options. Since it was felt that there is a need for reciprocity. The Department felt that the application of the Bill should not be linked to a state's having enacted the model law.

The Chairperson said he foresees a situation where some states may not have passed the Model Law but have another Act that has the same purpose and effect. He said he is of the view that Option 2 solves the reciprocity problem.

Mr Tienie Cronje, a South African Law Commission researcher, said that Neil Cooper, President of INSOL, and its past President, Mr Gordon Marantz, were not in favour of inclusion of reciprocity in the Bill. [The two are officials of INSOL International who helped develop the Model Law in association with the United Nations Commission on International Trade Law (UNCITRAL)]. The UNCITRAL Working Group meeting and the Commission meeting had rejected the inclusion of reciprocity in the Model Law. He also mentioned academics such as Professor J Westbrook of the University of Texas and the International Bar Association as being against reciprocity in this type of Bill.

The Chairperson asked whether any countries had included reciprocity in their cross-border insolvency acts. He mentioned that what he was against was first world countries benefiting from the cross-border law in South Africa while South Africans are not extended the same by their laws.

Mr Cronje said Mexico has passed a new bankruptcy reform that includes the substance of the Model Law and, according to Mr Neil Cooper, although it does not specifically mention reciprocity, it provides for it. Mr Cronje also mentioned there is unconfirmed hearsay that Russia and Eritrea had passed laws of this nature but there is no mention of reciprocity.

The Chairperson said Option 1 was too narrow and cumbersome. He mentioned that they would need to engage the Minister to hear the Government's view on reciprocity.

Clause 2
The clause is dependent on what the decision of the Committee would be in clause 1.

Clause 3
The first option regarding retaining clause 3 in its present form was rejected.
It was felt that a better construction is one that provides that an International Agreement shall overturn an Act of Parliament if such agreement has been passed by Parliament.

Clauses 25, 26, 30 and 34
The Committee did not view these clauses as problematic.

Limitation Of Legal Proceedings Against Government Institutions Bill
Mr J Labuschagne of the Department pointed out that a working document with several options on different clauses had been prepared drawn from input at the public hearings and from written submissions. The Committee should consider these to see which ones, if any, would replace certain clauses with which stakeholders were not happy.

Object of the Bill
An optional clause has been drafted where the phrase "government institutions" is replaced by "organs of state".

The Chairperson stated that he was not happy with the word "fresh" in the clause. He urged the drafters to consider rephrasing the word.

Clause 1 Definitions
"creditor": An optional clause defining "creditor" had been provided and would depend on the decision of the Committee as to which phrase to use between "debtor" and "an organ of state".

Mr Labuschagne said the phrase "arising from delict" had been omitted because of submissions from the SAPS and others stating that legal proceedings should not be limited to debts arising only from delict. He gave example of claims that might arise as a result of the Protected Disclosures Act and the Administrative Justice Act. The amendment is dependent on whether the proposed insertion of a definition of "debt" is supported.

"debt": Option 1A defines "debt" to mean anything that is not contractual, falls in the definition of a delict.

The Chairperson said the wording in Option 1B seems a bit complicated.

Mr Labuschagne suggested that Option 1C be discarded altogether since it makes no sense.

The Chairperson said the words "without fault in terms of a statutory provision" may have to be looked at in rewording the clause.

Advocate Masutha (ANC) said there might be debts that arise not from delicts or contracts per se, but from administrative actions such as provision of services. For instance where some organ of the state is required to pay a grant but fails to do so.

The Chairperson said such a situation is covered by the words "or any other unlawful act or omission for which a debtor is liable for payment".

Advocate Masutha said if liability is granted in money terms that would exclude matters such as failure to issue a licence which would have a negative impact on the Administration of Justice Act.

The Chairperson said the question is - does one need to give a notice to institute legal action for complaints around administrative actions? He believed that these would be a separate course of action in terms of administrative law and someone would not need to give a notice for administrative actions if they are entitled to such. The Committee should be careful not to conflate administrative actions with claims that sound in money. He said the drafters should look at rewording the three options.

"debtor": Mr Labuschagne said this definition must be read with Option 1B of "debt":

The Chairperson said the Committee still has to take a decision on the use of either the word "debtor" or "organ of state".

The four public organ bodies specifically mentioned might have to be removed since they may result in an anomaly in the interpretation of the Act.

Ms F Chohan-Kota (ANC) said it might be helpful in this regard to look at the list of public organs drawn up by the Auditor-General to see whether a phrase referring to such a list might not be constructed instead of specifically mentioning only a few public organs.

The Chairperson was not happy with the mention of the word nominal defendant in the clause. He said the person to sue in the organ of state would still be covered by the constructions in options A and B even if they were nominal defendants. Instead he said a better construction would include the words "within the course and scope of duties". He said what is required is three definitions: who can sue, what for, and whom they can sue.

Advocate Masutha said the distinction between officer and person would be critical especially looking at the trend in the public service to contract out to private institutions some of the services state organs have to deliver.

The Chairperson said this would be covered by the principles of vicarious liability of the employer for employee's actions working in the course and scope of duties liable for payment of a debt.

Advocate Masutha pointed to an abnormal situation that would result where a parastatal is not exercising a power or performing a public function and it would require to be given a notice in terms of the Bill.

The Chairperson suggested that to correct this in under the heading "Substitute the definition of "government institution" with any of the following options" under Option 1A (b) after the word "institution" the word "when" be inserted.

A specific definition of "parastatal" has to be looked at. The requirement of 50% ownership by the state makes it more onerous on the claimant because they are required to know at a particular time whether it was regarded as an organ of state or not.

Advocate H Schmidt (DP) suggested the removal of sub-clauses (b)(i) and (ii) under option 1A to limit the application of the Bill.

The Chairperson pointed out that (i) covers the Presidency and constitutional Commissions, and (ii) covers Parliament, for instance, which are organs of state and thus cannot be removed. He agreed that these might result in an anomaly where a functionary that is mostly concerned with private affairs and only performs minor government functions, claims to be an organ of state and hence that a notice be given to it. He suggested the insertion of the adjective 'dominantly' in the phrase "when exercising a public function".

The Committee looked at the exclusion of "courts and judicial officer" and took the view that their exclusion from "organ of state" for purposes of the Bill needs further attention. Members were also of the view that the separation of the court and judicial officers requires further consideration as it is also apparent in the Constitution.

The Chairperson noted that since the opposition parties were late in arriving the Committee was only giving more instructions to the Department for further amendments to the proposed ones. More meetings on the Bill are still envisaged after the recess.

Protected Disclosures Bill
Sufficient members of the opposition had arrived through the course of the meeting so that the Committee was able to start voting on the amendments agreed to by the Select Committee.

Clause 4
The Chairperson pointed out that the proposed amendment in clause 4(1) merely breaks section 4(1) of the Bill into (a) and (b) to make it more user-friendly.

Clause 4(2)(a) states that for purposes of the Labour Relations Act any dismissal in breach of Clause 3 is deemed automatically to be unfair dismissal in terms of Section 187 of the Labour Relations Act and such dispute must follow procedure laid down in the Act.

Clause 4(2)(b) deems any occupational detriment in breach of Clause 3 to be an unfair labour practice as contemplated in the Act and states that such dispute must be dealt with according to procedure set out in the Act. If the matter fails to be resolved through conciliation, it may be referred to the Labour Court.

Clause 10
The clause corrects a reference under the heading Regulations in Clause 10(4)(c) that should point to "paragraph (a)" instead of "subsection (1)"

The Committee agreed to all the amendments.

The meeting was adjourned until the following day.

Appendix 1:
CLAUSE 4
1. On page 6, from line 47, to omit subsection (1) and to substitute:
(1) Any employee who has been subjected, is subject or may be subjected, to an occupational detriment in breach of section 3, may-
(a) approach any court having jurisdiction, including the Labour Court established by section 151 of the Labour Relations Act, 1995 (Act No. 66 of 1995), for appropriate relief; or
(b) pursue any other process allowed or prescribed by any law.
(2) For the purposes of the Labour Relations Act, 1995, including the consideration of any matter emanating from this Act by the Labour Court-
(a) any dismissal in breach of section 3 is deemed to be an automatically unfair dismissal as contemplated in section 187 of that Act, and the dispute about such a dismissal must follow the procedure set out in Chapter VIII of that Act; and
(b) any other occupational detriment in breach of section 3 is deemed to be an unfair labour practice as contemplated in Part B of Schedule 7 to that Act, and the dispute about such an unfair labour practice must follow the procedure set out in that Part: Provided that if the matter fails to be resolved through conciliation, it may be referred to the Labour Court for adjudication.

CLAUSE 10
1. On page 12, in line 10, to omit "subsection (1)" and to substitute "paragraph (a)".