South Africa - ESG Disputes Update

​​​​​​​​​Gas' role in South Africa's just energy transition questioned through challenges to environmental authorisations for gas-to-power plant project and gas to power via powership project via administrative law mechanisms.​

In December 2019, Eskom was granted an environmental authorisation (EA) to construct a gas-to-power plant. Two environmental justice organisations, South Durban Community Environmental Alliance and Trustees of Groundwork Trust, (the applicants) lodged a review application against the decision, on a number of grounds. These included that upstream greenhouse gas emissions were not comprehensively considered and there were shortcomings in the public participation process.

On 6 October 2022, the High Court dismissed the review application, but granted ancillary orders to remedy the defects in the public participation process. The High Court of South Africa (Pretoria) dismissed an application for leave to appeal by the applicants. On 20 February 2023, the applicants filed papers in the Supreme Court of Appeal (SCA) requesting direct leave to appeal the dismissal. They argued that there are compelling reasons for hearing an appeal against a judgement that has significant implications for the way South Africa responds to the twin challenges of climate change and long-term energy generation to deal with its energy shortage.

In a second issue, relating to Karpowership’s proposed three powership projects in South African ports to generate electricity from natural gas to feed into the national grid, the Minister of Forestry, Fisheries and the Environment (the Minister) issued appeal decisions for all three projects on 1 August 2022. The Minister decided to remit the applications back to the competent authority to ensure gaps in the information provided in support of the project and procedural defects in the public participation process that led to the rejection of the EA applications were addressed during the reconsideration and re-adjudication of the applications. The Environmental Impact Assessment (EIA) reports for all three projects were re-submitted on 9 January 2023 for a decision.

On 7 March 2023, the Department of Forestry, Fisheries and Environment refused one of the EA applications. On the second powership project, an NGO raised concerns about defects in the public participation process with respect to the participation of small-scale fisheries, one day before the decision was due. The decision will follow after the NGO's allegations are investigated. On the third project, the EIA report was withdrawn based on an urgent application by the EA practitioner to comply with the regulatory requirements.

ESG class actions

The Supreme Court of Appeal (SCA) has dismissed a bid by DRDGold and East Rand Proprietary Mines (ERPM) to challenge a court certification of a class action which could potentially result in liability for damages suffered by thousands of miners who contracted silicosis. This ruling means that the class action can proceed.

After the certification of the litigation as a class action, several of the initial 32 mining companies (and parent companies), which own 82 mines cited, entered into settlement agreements with miners who worked for them. DRDGold and ERPM tried to challenge the certification ruling. The judge of appeal said it was common cause that over several decades many thousands of underground mine workers in South African gold mines contracted silicosis or pulmonary tuberculosis, caused through the inhalation of large quantities of silica dust. The judge of appeal also confirmed that, as a result of a settlement agreement signed by the majority of the mines, the certification only now applied to six mining companies. Regarding the declarator, the judge of appeal said the potential class members were poor and vulnerable and the litigation had already been ongoing for ten years. ‘For me the overwhelming interest of justice consideration is that the finalisation of the class action should be expedited.’ The SCA accordingly struck the matter from the roll, ordering the mines to pay the costs.

In another groundbreaking ongoing ESG class action matter, the High Court (Johannesburg) heard arguments by residents of Kabwe seeking compensation for lead poisoning, to certify a class action case to be brought against Anglo American. Judgment was reserved. The judgment will set an important precedent.

Other human rights litigation

Eskom, as the national electricity generator, implemented load reduction to two local municipalities, which distribute/supply electricity to residents. The residents claimed that the load reduction caused deplorable living conditions that violated basic human rights including the right to dignity, the right of access to healthcare services, the right to access sufficient water, the right to an environment that is not harmful to health or wellbeing, and the right to basic education. The residents successfully applied for and obtained an interdict against Eskom. Eskom's appeal to the Constitutional Court was dismissed and Eskom was ordered to restore the electricity supply.

In the matter of Becker v Minister of Mineral Resources and Energy and Others, the Minister of Mineral Resources and Energy appointed a director of the National Nuclear Regulator, who was also part of a community organisation which criticized the safety of nuclear energy. The director was subsequently discharged as a director, and he sought judicial review of the decision. The court found in his favour and ruled the discharge was procedurally unfair. Although the court did not expressly state what protections of the right to freedom of expression should be granted to dissenting voices in these circumstances, the court held that the constitutional rights to freedom of expression and association that the director had asserted did not prevent him from being disqualified as a director if he was conflicted.

An important case in the area of refugee rights in South Africa was the recent decision of the High Court (Western Cape) in Scalabrini Centre of Cape Town v Minister of Home Affairs (5441/20) [2023] ZAWCHC 28. Various provisions of the Refugees Act 130 of 1998 and associated regulations created an automatic presumption that asylum seekers had abandoned their application if they did not renew their asylum visas within 30 days after expiry, which could only be reversed if there were compelling reasons. The effect of this provision was that if asylum seekers could not afford to travel to the Refugee Reception Offices within 30 days to renew their permits, they could be undocumented.

This would have created difficulty in obtaining employment and gaining access to essential services such as healthcare and education. The asylum seeker would also effectively be an illegal foreigner under the Immigration Act 13 of 2002. The court held these provisions were inconsistent with the Constitution of the Republic of South Africa, 1996.

These cases have significant implications for the country's response to climate change and long-term energy generation, as well as for the protection of human rights. As Environment, Social and Governance (ESG) become more embedded in legal systems across the globe, the intersection between ESG and other areas of law, such as competition law and dispute resolution, will become important areas to watch.

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