South Africa: A Powerful Dilemma - The Struggle Between Power And Procedure In Administrative Law

Originally published in LEGAL TIMES, Friday March 23 | 2012

The advent of the South African constitutional era brought with it a vigorous inquiry into the relationship between the exercise of power and the procedural framework by which such power is constrained. The struggle between "power " and "procedure" has been marked by numerous cases which have delved into the manner in which administrative bodies are to exercise their powers on a case-by-case basis. It appears that, in the continued application of, and inquiry into, the principle of legality, which is further explored below, "[o]ur nettlesome task is to discover how to organise our strength into compelling power".

Granted, the juxtaposition of the words of Martin Luther King Jr with principles of administrative law may appear anomalous; however, the tension between strength and compelling power aptly reflects the challenges facing administrative bodies in translating their considerable strength into a compelling application of the law.

The Constitutional Court in the case of Fedsure Life Assurance Limited and Greater Johannesburg Transitional Metropolitan Council probed the concept of legality in the context of the exercise of administrative action. One of the effects of the Fedsure decision was to bind the somewhat nebulous principle of legality to the firmer roots of the Constitution by holding that the principle of legality was "necessarily implicit in the Constitution".

This provides a more certain legal basis against which the legality of administrative actions can be tested. More importantly, the court held that the exercise of administrative action pursuant to any law was accountable to the Constitution.

This has mandated those who exercise administrative functions, in various areas of law, to draw guidance from the Constitutional Court in their application of those functions.

A recent example of this can be seen in the matter between the Competition Commission and Senwes Limited. For the first time in South African legal history, competition law has made an appearance before the Constitutional Court, and the powers of the competition authorities are currently being scrutinised.

On February 3 2009, the Competition Tribunal found that Senwes had contravened section 8(c) of the Competition Act through engaging in so-called "margin squeeze". Senwes was found to be charging grain traders a higher fee for grain storage than that company, in its capacity as a trader in grain, would either have paid or could reasonably expect to pay for the same service were it an independent in the market.

However, the substantive elements of "margin squeeze" in this case form a fairly mundane backdrop to the more thought-provoking questions concerning the nature and scope of the tribunal's inquisitorial powers.

An important element of Senwes 's defence focused on whether the tribunal was competent to make a ruling on "margin squeeze" in this matter. Senwes submitted that a reading of the commission's complaint referral did not justify a conclusion that the case brought by the commission encompassed a "margin squeeze".

Furthermore, it was argued by Senwes that, on the basis of the tribunal's finding, a respondent would be expected to read a complaint referral not merely in the terms directly pleaded, but as if it encompassed almost all of the contraventions of the Competition Act that could potentially be prosecuted on the basis of the allegations made.

Senwes 's argument in this regard focused on the potentially detrimental effect that procedural flexibility could have on procedural fairness in the competition law arena.

The commission's rebuttal to this argument was that even if Senwes's conduct, which led to its conviction, was not covered by the terms of the referral, the tribunal was entitled to go beyond its terms in the circumstances of this case. It was advanced that the tribunal proceedings should not be equated with civil disputes, as the former are entitled to a more flexible approach to pleadings. The commission appeared to focus on the unique nature of the competition law platform, under which the tribunal has entitlements which allow it properly to probe the allegations before it.

The arguments presented by the parties in this matter bring to the fore the difficulties to be found in balancing competing, but equally important, legal concerns in the development of a nation's jurisprudence. Can the principle of legality be compared to a legal safety net which parties to a matter may employ to sift abuses of power, leaving credible and legitimate rulings of law?

Or does the principle of legality act as a stifling restraint on the control of unlawful practices by administrative authorities? These differing views also find a voice in the preamble to the Competition Act, which calls for independent institutions to "monitor economic competition ", but also highlights that competition law should be "credible" and have "efficient structures to administer that law".

The Constitutional Court has been left with the unenviable task of marrying competition policy, defensible administrative action and constitutional ideals into a coherent framework to be applied by our competition authorities in the execution of their functions. It remains to be seen how the Constitutional Court will resolve to organise the strength of the competition authorities into compelling power.

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