In a significant ruling, the Pretoria high court has set aside the promulgation of the broad-based black economic empowerment (BBBEE) 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. The ruling means that law firms will no longer be rated according to the code, which they had argued set "impossible targets".
The BBBEE legal sector code was designed to increase black ownership, management, control, and procurement in law firms. It stipulated that firms should have 30-50% black legal practitioners as equity directors within five years. Several legal bodies had supported the code, which had been in development since 2020. However, top law firms Deneys, Bowmans, Webber Wentzel, and Werksmans took Tau to court, seeking to have the promulgation of the code reviewed and set aside.
The court's decision was based on the finding that Tau did not fully consider the framework as required by law. When publishing the code, two months into his office, Tau relied on his department's brief rather than evaluating the code himself. The court found "compelling evidence" of Tau's misunderstanding of his role in gazetting the code. His predecessor, former minister Ebrahim Patel, had raised concerns about the code's compliance with legal provisions before leaving office.
The court's ruling did not address the constitutionality of the code but rather focused on the procedural issues surrounding its promulgation. The full bench of the Pretoria high court, consisting of judges Nicolene Janse van Nieuwenhuizen, Selemang Mokose, and Annali Basson, delivered the judgment. While the court acknowledged the urgency of transformation in the legal sector, it was unable to determine the substantive questions at this stage.
The ruling has been welcomed by Deneys, one of the law firms that took Tau to court. In a statement, the firm said it shared the wish to see a lawful sector code in place. The court's decision comes as government policies aimed at transformation face pushback and struggle to pass constitutional muster in courts. The BBBEE legal sector code has effectively been scrapped from operation, pending a possible appeal or reintroduction.
The code's demise may have significant implications for the transformation of South Africa's legal sector. The sector has long been criticized for its lack of diversity and limited representation of black professionals. While some argue that the code's targets were unrealistic, others see it as a necessary step towards achieving greater transformation. The court's ruling may prompt a re-evaluation of the code and its objectives.
The judgment highlights the complexities surrounding the implementation of BBBEE policies in South Africa. While the government has emphasized the importance of transformation, the courts have shown a willingness to scrutinize policies and ensure that they comply with constitutional requirements. As the government continues to push for transformation, it will need to navigate these complexities and ensure that its policies are lawful and effective.
Key points
- The South African high court has set aside the promulgation of the BBBEE legal sector code due to procedural issues.
- The code aimed to increase black ownership, management, control, and procurement in law firms.
- The court's ruling may have significant implications for the transformation of South Africa's legal sector.
