In a significant ruling, the Pretoria high court has set aside the promulgation of the broad-based black economic empowerment (B-BBEE) legal sector code. The code, aimed at transforming South Africa's legal sector, was introduced by Trade, Industry and Competition Minister Parks Tau. However, the court found that Tau did not follow the required legal procedure when gazetting the code. As a result, the first transformation framework specifically for the legal sector is now legally invalid.
The court case was brought by several top law firms, including Deneys, Bowmans, Webber Wentzel, and Werksmans. They argued that the code set "impossible targets" and sought to have its promulgation reviewed and set aside. The court's decision was delivered by a full bench of judges, who found that Tau had not fully considered the framework as required by law. The code had been in development since 2020 and was supported by several legal bodies.
The B-BBEE legal sector code required law firms to increase black ownership, management, control, and procurement. Specifically, it stipulated that law firms should have 30-50% black legal practitioners as equity directors within the next five years. However, the court found that Tau had relied on his department's brief rather than evaluating the code's deviations from previous generic codes himself.
The court's judgment noted that Tau's predecessor, former minister Ebrahim Patel, had raised concerns about the code's compliance with legal provisions before leaving office. Patel had not approved the codes, and the court found that Tau had not adequately addressed these concerns. The ruling highlights the challenges faced by government policies aimed at transformation, which have faced significant pushback and struggled to pass constitutional muster in courts.
In response to the judgment, law firm Deneys welcomed the decision. The firm expressed regret that the substantive questions about the code's constitutionality could not be determined at this stage. Deneys shares the wish to see a lawful sector code in place, highlighting the urgency of transformation in the legal sector.
The court's decision has significant implications for the legal sector, which will no longer be rated according to the invalidated code. Law firms will need to await a new code, should one be promulgated, that adheres to the required legal procedure. The ruling underscores the importance of following proper procedures in the development and implementation of regulations.
The judgment also highlights the complexities surrounding B-BBEE policies in South Africa. While the government has sought to promote transformation and empowerment, these efforts have faced challenges in the courts. The ruling against Minister Tau's promulgation of the B-BBEE legal sector code adds to the ongoing debate about the balance between transformation and compliance with constitutional requirements.
Key points
- The Pretoria high court ruled that Minister Parks Tau did not follow the required legal procedure when gazetting the B-BBEE legal sector code.
- The code required law firms to increase black ownership, management, control, and procurement, with targets including 30-50% black legal practitioners as equity directors within five years.
- The court's decision renders the first transformation framework for the legal sector legally invalid, and law firms will no longer be rated according to the code.
