This blog was authored by Felix Le Roux.
In an August 2023 judgment, the Johannesburg High Court struck from the roll an urgent application brought by a South African distributor to interdict a Chinese manufacturer from selling certain of its products to third parties who are known by it to be distributing those products on Takealot in competition with the distributor. The court affirmed the principle that a South African court will only grant interdictory relief against a foreign respondent if the acts that are the subject of the interdict take place within South Africa.
The distributor and manufacturer concluded an agreement in May 2023 in terms of which the distributor had the exclusive right to sell the manufacturer’s renewable energy products on the online shopping platform, Takealot, for 36 months. The distributor brought the urgent application on the basis that a number of its competitors were selling the manufacturer’s renewable energy products on Takealot, and that the distributor’s sales were dwindling as a result. The manufacturer opposed the application on the basis that the court lacks jurisdiction. The court was therefore required to determine whether it had jurisdiction to grant the interdict.
The court analysed the agreement between the distributor and the manufacturer and highlighted the following:
- The distributor failed to establish that the agreement was concluded in South Africa.
- The risk in the products sold by the manufacturer passes from the manufacturer to the distributor when the manufacturer hands over the products to the carrier at the Port of Shenzhen – accordingly, the manufacturer’s delivery obligation is carried out in China.
- When regard is had to these delivery arrangements, the manufacturer’s obligation not to sell its renewable energy products to third parties who are known by it to be distributing those products on Takealot is incurred in China.
- The manufacturer’s negative obligation not to authorise third parties to sell its renewable energy products on Takealot is incurred in China.
The manufacturer’s only obligation in South Africa is to set up a local service centre for after-sales service and repairs. The manufacturer’s primary obligations are therefore performed in China. Importantly, the relief sought by the distributor cannot be enforced by a South African court because the acts which are the subject of the interdict would all take place in China.
The application was struck from the roll due to the court’s lack of jurisdiction and the distributor was ordered to pay the manufacturer’s costs.