The Pretoria High Court has ruled that Trade, Industry and Competition Minister Parks Tau violated legal procedures in gazetting the broad-based black economic empowerment (BBBEE) legal sector code, effectively nullifying the transformation framework for law firms. The judgment, delivered by a full bench of judges, found Tau failed to independently evaluate the code’s deviations from generic standards, relying instead on his department’s brief. This procedural error invalidates the code, which aimed to increase black ownership, management, control and procurement in the legal sector, including targets of 30%-50% black equity directors within five years.
The ruling follows legal action by major law firms, Deneys, Bowmans, Webber Wentzel and Werksmans, who argued the code set unattainable goals. The court did not address the code’s constitutional validity but focused solely on procedural compliance. Tau’s predecessor, Ebrahim Patel, had previously withheld approval over similar concerns about legal adherence. This comes as government policies aimed at transformation face major pushback and fail to pass the constitutional muster in courts.
According to the court, the law required Tau to personally assess whether the proposed code and its departures from previous frameworks were justified under section 9(1) of relevant legislation. The judgment noted Tau misunderstood his role in the gazetting process. The code, developed since 2020 with support from legal bodies, has now been scrapped from operation, leaving law firms in limbo as no framework is operational.
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The code’s requirements included mandating firms to boost black representation in equity director roles, a move firms contended was unrealistic. Deneys welcomed the ruling, acknowledging the court’s regret that substantive constitutional questions could not be resolved given transformation’s urgency. “Deneys shares the wish to see a lawful sector code in place,” the firm stated, reflecting broader industry concerns about achieving meaningful change within prescribed timelines.
The ruling highlights tensions between government transformation agendas and legal compliance. While the court stopped short of declaring the code unconstitutional, its procedural ruling leaves the legal sector without a mandated transformation pathway. Law firms may need to await a revised code or face uncertainty in their BBBEE compliance efforts, as the government potentially reconsiders its approach under stricter legal scrutiny.
