Diplomatic immunity challenge for five-state Southern African Customs Union

31 May 2019 · Carmel Rickard

The Southern African Customs Union is the world’s oldest. Based in Windhoek, its origins date back to 1889. It was formally established in 1910 and forms a crucial commercial link between South Africa and all its immediate neighbours: Botswana, Namibia, eSwatini (formerly Swaziland) and Lesotho. It is also a union liable to stir strong commercial and other feelings. Most recently, it was the subject of an international law dispute, heard in the high court, Namibia, involving not just the union, but most of its individual members as well. As this analysis from Legalbrief Africa explains, the case concerns the claim by Clear Enterprises (CE), a transport outfit based in Botswana, that South Africa does not honour its obligations towards other members of the union. CE wanted to bring an action against the union, forcing it to make SA act towards its members as CE believes it should. But how could CE do so, when the customs union has been granted absolute immunity by the host state, Namibia?

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Clear Enterprises (CE) is a transport company based in Botswana, but also operating vehicles in neighbouring countries, particularly South Africa. CE is annoyed with the Southern African Customs Union (SACU), the world’s oldest such union, with roots going back to 1889. It formally dates back to 1910 and links SA, Lesotho, Namibia, Botswana and eSwatini (formerly Swaziland). CE's chief gripe seems to be its view that the union allows SA to get away with constantly infringing its obligations and promises in relation to aspects of the customs agreements between SA and other members of the union.

In 2011, a series of cases brought by CE in the SA courts culminated with a matter heard by the Supreme Court of Appeal in which CE squared up against the SA Revenue Services, the Cross-Border Road Transport Agency and the International Trade Administration Commission among others. The case was struck from the roll when the court decided that the issue was moot.

But CE has gone back to court, this time in Windhoek, where the SACU is based. The judgments show the thread linking the two cases: CE claims that there should be more freedom for its trucks to operate in SA if the union is to have any real meaning. The target is different this time – the customs union itself rather than the SA tax authorities – but though CE has had no better luck with the court in Namibia than it did in SA, the judge in Windhoek has at least indicated how CE could proceed if it intended to take the matter further.

CE wanted to serve summons on the customs union, in an effort to have it deal with CE’s allegations that SA was not honouring its obligations under the customs agreement. In the view of CE, the union is obliged to deal with what CE claims is SA’s failure honour its undertakings in relation to other members of the customs union. The union was supposed to ensure that member states complied with their undertakings, but the SACU did not do so when it came to SA.

CE says that under the SACU agreement, member states agreed to treat motor operators from other union states, carrying passengers or goods, no less favourably than they treat motor transport operators within their own area. CE says SA is in breach of this undertaking and effectively prohibits transport operators registered in other members states from operating in SA.

According to CE, Botswana had failed to take any remedial action, so now it (CE) had to approach the SACU to deal with the problem. But as Namibia had given the union diplomatic immunity, CE could not bring the union to court. CE therefore wanted the Namibian finance minister’s grant of immunity to be reviewed and set aside.

When the matter was finally argued in court, however, the only question before the court was whether the sheriff could be ordered to serve the summons on the SACU.

Namibia’s finance minister and his colleague, the country's foreign affairs and international relations minister, said the agreement establishing the union allowed the SACU to waive its immunity. CE could have requested the union to waive its immunity, but had not done so.

Judge Thomas Masuku, who heard the case, said in his view, the SACU “cannot be sued at all” and it was not subject to the court’s jurisdiction, although Namibia’s finance minister “may well be correct” in arguing that CE should have requested the union to waive its immunity in this matter.

Judge Masuku said that “in good conscience” the court could not “close its eyes” to the possibility of doing injustice to CE by effectively denying it access to the courts or other tribunals where its complaints could be heard. Even though CE could not summons the union, however, there was another way forward.

The current SACU Agreement, formally concluded in 2002, set up a council of ministers from the participating states as the effective decision-making body of the union. In case of any dispute related to the customs agreement, this council would refer the matter to an ad hoc tribunal which, having considered the issue, would make recommendations to the council.

It was thus clear, said Judge Masuku, that despite the prohibition on summonsing the union, CE was not “entirely without a remedy”: it could approach the council and ask that its dispute be put before the tribunal for determination.

Will CE follow up the judge’s interpretation of the SACU agreement? Hard to say, particularly since CE was ordered to pay the costs of both its failed applications, in SA and now in Windhoek. But its determination in litigating a second time and in a completely different country, might indicate that the union’s council of ministers should prepare themselves for a petition requesting that the tribunal sit to hear CE’s dispute.

* "A matter of justice", Legalbrief

Carmel Rickard

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