Last week in commercial law: when things don’t speak for themselves, litigation delays, and something about Bitcoin

Mrs Williams goes to Beyerskloof for dinner. She orders a burger. After a few bites of the burger, she feels something stuck in her throat. She goes to hospital, where x-rays show something that looks like a needle. Seven hours of surgery could not dislodge the object. A few days later, she is discharged. She sues Beyerskloof, alleging that the object could only have come from the kitchen. She offers not much in the way of evidence. High Court: res ipsa loquitur, and Beyerskloof did not explain how the object ended up there. Western Cape Division (full court): that’s not at all how res ipsa loquitur works; you still need evidence, and on the evidence this was not foreseeable and there was not much more Beyerskloof could reasonably have done [your summarist is no restaurateur, but Mrs Williams’s argument that Beyerskloof should x-ray all its food seems…impractical].

Everyone knows that Einstein’s theory of special relativity posits that time and space stretch or shrink depending on how fast you’re moving. And every lawyer knows that similarly strange things happen to time and space in litigation: 24 hours in an urgent is worth about 6 weeks in the ordinary course, and before you know it it’s 12 years later, there’s 10,000 pages of discovery, and each page has 4 sets of pagination. If enough litigation spacetime passes, a wormhole opens: dismissal for unreasonable delay. In 2017, Tuhf, a property fund, sues Sasria, the state-owned riot and other special risks insurer, after some of Tuhf’s buildings were damaged. The case winds its way through pleadings and pre-trial and a trial date is set for the beginning of 2019. Tuhf and Sasria agree that the trial is not ripe, so the trial is postponed. Tuhf ends up settling with other defendants, but not much happens to the claim against Sasria until 2021, when, after Sasria asks what’s going on, Tuhf tells Sasria that it still intends to go to trial (and it seems that the delay is caused by Tuhf trying to find the right expert witness). Another two years tick by and, in 2023, Sasria applies for Tuhf’s action to be dismissed because of an unreasonable delay. Gauteng Division, Johannesburg (full court): dismissing for unreasonable delay is strong medicine, but Tuhf did nothing for four years and Sasria would be prejudiced if the trial goes ahead [your summarist, looking nervously at some of his own dusty cases waiting their turn for trial, thinks dismissal is harsh on this timeline].

Prescription pop quiz! When does prescription run against a foreign defendant? The answer might be never: section 13(1)(b) of the Prescription Act delays prescription if “the debtor is outside the Republic” without distinguishing between debtors living in South Africa on a sojourn overseas and debtors who were never in South Africa to begin with. Which is…radical [dedicated readers may consult Grinaker Mechanicals (Pty) Ltd v Société Francaise Industriale et D'Equipment 1976 (4) SA 98 (C)]. That’s a largely off-topic amuse-bouche to these facts: Ms Barnard wants to sue Dr Gouws for medical malpractice; leaving things late, Ms Barnard sends the sheriff to serve summons the day before prescription runs; a few days before that, Dr Gouws goes overseas for two weeks; the sheriff leaves the summons at the front gate of Dr Gouws’s complex. The High Court upholds a special plea of prescription. SCA, upholding a reconsideration application [which is, to your summarist’s knowledge, the first time a reconsideration application in a civil appeal has succeeded]: Dr Gouws did not prove that the summons was not properly served, so the special plea fails (and even if there had not been proper service, Dr Gouws’s trip overseas would probably trigger section 13(1)(b), giving Ms Barnard another year to interrupt prescription) [the SCA split 2-1 on whether the reconsideration application should be granted—cementing reconsideration’s place as the single most divisive issue at the SCA].

Discovery Health Medical Scheme’s rules requires members to reimburse the Scheme if they get payouts from the Road Accident Fund. In 2022, the RAF’s CEO issues a diktat that the RAF will not pay road accident victims if an insurer like Discovery paid their hospital bills. Discovery successfully challenges that rule. Undeterred by pesky things like court orders, the RAF issues two more rules that look a whole lot like the first rule. Discovery brings a contempt application. High Court: res judicata does not bar relitigation of the lawfulness of the new rules, and Discovery’s payouts to its members are not res inter alios acta because, well, the RAF can’t afford to pay people who have insurance. SCA: the previous litigation decided the lawfulness of the RAF’s rule, which is the same issue raised in this litigation, so res judicata applies and RAF doesn’t get a do-over, and in any event the High Court is wrong about res inter alios acta (an insurance payout is a textbook example of when res inter alios acta applies).

Exciting conflict of laws news from England! Bitcoin promises fun new ways to launder money freedom from government control. Ironic, then, that governments around the world are getting quite good at seizing bitcoin from money launderers freedom-loving libertarians. Zhimin Qian is resident in England. She starts a company in China. The company ends up being a giant Ponzi schemethat generates more than £4 billion [with a b] for Ms Qian. As any diligent money launderer freedom-loving libertarian would do, Ms Qian converts a large amount of her cash into Bitcoin. Ms Qian flees China to Myanmar, and then arrives in England, using her St Kitts & Nevis passport—a jurisdiction known for generally not asking too many questions. Ms Qian is arrested in England, and the police seize about 60,000 Bitcoin (or £3 billion and some change). Victims of Ms Qian’s fraud claim the bitcoin under an English statutory provision that allows victims of crime to recover stolen property. But—[and here comes the exciting part, your summarist notes while on the very edge of his chair]—which law governs whether the victims have any proprietary interest in the seized bitcoin: Chinese law or English law? The victims argue that English law applies. The UK government (through the Director of Public Prosecutions) presumably wants a couple billion for the Exchequer, so it argues that Chinese law, not English law, applies to the victims’ claims (or at least the proprietary issues raised in those claims). The first step in determining which law applies is to characterise the victims’ claims (or, more accurately, characterise the issue(s) that the victims’ claims raise(s)). The victims argue that they have a proprietary claim to the bitcoin because, amongst other complicated arguments [and your summarist suggests you take a sip of strong coffee now], the victims rescinded in equity their contracts with Ms Qian (or her company) and, as a result, the bitcoin are held on constructive trust, which gives the victims a proprietary interest, which entitles the victims to trace in equity through any subsequent dispositions of the bitcoin [your summarise recommends this helpful video that explains both how bitcoin works and the remedial consequences of constructive trusts and tracing under English law]. Commercial Court [fans of the conflict of laws will swoon when they note that none other than Adrian Briggs argued for the victims]: the issue whether the victims have a proprietary interest in the bitcoin is probably best characterised as contractual (or the consequences of nullity of the investment contracts), which means Rome I applies (and there was no dispute that Rome I points to Chinese law), but it doesn’t really matter because the answer—Chinese law—is the same even if the issue is characterised as non-contractual (if it’s to do with pre-contractual dealings between the parties) or characterised as proprietary (in which case neither Rome I nor Rome II applies). Stay tuned to find out, presumably after further proceedings, what Chinese law has to say about all of this [and this is a good occasion to note that one of your summarist’s favourite judgments involves a headache-inducing dive into characterisation and prescription that, in your summarist’s humble opinion, the SCA got very wrong].

In more news from England, Central Térmica, a company in Mozambique, is building a power plant. It hires several sub-contractors, including TSK, a Spanish company. The sub-contract requires TSK to arrange a performance bond in favour of Central Térmica. Santander issues the bond, which is governed by English law. Central Térmica makes a demand on the bond. A Spanish court grants an interim injunction restraining Santander from paying on the bond. Central Térmica sues for payment on the bond in England. Santander raises an illegality defence, arguing that it has become illegal for it to pay on the bond. The general rule under English law is that if English law governs a contract, illegality under a foreign law does not frustrate the contract or relieve a party from performance. There is an exception called the rule in Ralli Brothers: a contract is invalid and unenforceable if performance is illegal under the law of the place of performance (Ralli Brothers is a substantive rule of English law, so it applies only if English law governs the contract). Commercial Court: the Spanish injunction could, in principle, trigger the rule, but the place of performance is Mozambique, not Spain, because the bond has to be paid in Mozambique, so the rule doesn’t apply [your summarist notes that there is support in at least one High Court judgment, Henry v Branfield, that Ralli Brothers applies in South African law, so a similar path to escaping payment on a guarantee could work here if a guarantee, governed by South African law, is payable in a foreign jurisdiction and an interdict against payment is issued in that jurisdiction. Cool!].

The one thing that English courts enjoy more than exercising jurisdiction over far-flung disputes is telling far-flung defendants what they may or may not do with their assets—a powerful thing called a worldwide freezing order. VietJet, a Vietnamese airline, breaches some complicated leases for some of its planes. VietJet is ordered to pay damages of about £200 million. The Vietnamese courts refuse to enforce the English judgments in Vietnam. Meanwhile, VietJet gets up to all sorts of shenanigans to avoid enforcement of the English judgments in other jurisdictions (including no longer flying to Singapore). The requirements for a worldwide freezing order [or a WFO if you just can’t kick the abbreviation habit] are a good arguable case on the merits; a real risk of a dissipation of assets owned by the respondent; and that it is just and convenient to grant the order. Commercial Court: WFO granted because there is a real risk of dissipation, mostly because VietJet just sold its entire order book of 300 new planes that it’s in the process of buying from Boeing for not much to a brand new company in the Cayman Islands, and because VietJet’s hasty changes to its flight schedule to avoid countries where the English judgments have been recognised and enforced are forcing the claimant to play enforcement whack-a-mole [the first reason persuades your summarist, but the second reason less so].