Jurisdiction is the power or competence of a court to hear and determine an issue between parties. South African courts have historically maintained that, in matters involving a foreign defendant, there must be sufficient connection between the cause of action and the court hearing the matter, as well as the attachment of the foreign defendant’s assets in South Africa, before jurisdiction is exercised.
Recent South African judgments indicate South African courts are developing this position to align it with the rapid advances of a modernising and digitising society in which businesses operate on a global scale. These developments indicate that South African courts are taking an increasingly more practical approach with respect to claims sounding in money while non-pecuniary matters are treated differently.[1]
The developments are also aligned with others in many other jurisdictions, where courts are grappling with similar challenges brought about by the rapid growth of the digital economy and the rise of multinational technology companies, where cloud-based services and decentralised applications challenge traditional conceptions of physical presence in a particular jurisdiction.
Historic legal position
The doctrine of effectiveness is the traditional basis of jurisdiction. It serves as the primary guiding principle in determining whether a court should exercise jurisdiction and requires that a court possess sufficient authority over a defendant to ensure the enforceability of its judgement.[2] Generally, there must be some link between the parties’ dispute and the relevant court before the court can be said to have jurisdiction over a matter.[3]
In matters involving foreign defendants, it is not enough that the cause of action arose within the court’s territorial jurisdiction (thereby establishing a connection between the court and the suit). In these matters a further step is required – the attachment of the foreign defendant’s assets is necessary to ensure that the court is able to render a judgment capable of being effectively enforced.
Before the decision in Strang[4], absent attachment of a foreign defendant’s assets,[5] a court would decline to exercise jurisdiction in a matter against a foreign defendant (even in cases in which the cause of action arose within the court’s territorial jurisdiction).
Strang[6] held that attachment is not the only possibility with respect to establishing jurisdiction over a foreign defendant, and that, provided that a sufficient connection between the suit and the court exists, and that the summons was served on the foreign defendant while present in South Africa[7], a South African court would have jurisdiction over the suit.
Alternatively, and where there is no presence and thus no property within South Africa to attach, a foreign defendant’s submission to the court’s jurisdiction suffices as a connecting factor. Further, where the defendant has submitted to the court’s jurisdiction, attachment is neither necessary nor permissible.[8]
These requirements are particularly relevant when it comes to establishing jurisdiction over technology companies which do not have a physical presence or any assets in South Africa, but whose activities have an impact within South Africa.
Due to the nature of the business of many technology companies, it is common for technology companies to operate in jurisdictions in which they have no physical presence or assets. As a result of this, it is often not possible to (i) physically serve legal process on these types of entities while present in South Africa; or (ii) attach the assets of such entities. It would therefore be unlikely, generally, for a South African court to have jurisdiction over these types of entities.
Analysis of the recent developments
Recent case law reflects a growing trend in which courts are increasingly willing to dispense not only with the requirement of asset attachment, but also with the requirement set out in Strang that the initiating process be served on the foreign defendant while physically present in South Africa.
In Financial Sector Conduct Authority v Financial Services Tribunal and Others[9] (FSCA case), the court deviated, without entirely abandoning, the formalistic approach to founding jurisdiction. In the FSCA case, the respondents were foreign respondents, who, from the United Kingdom, electronically published a document titled ‘Capitec: A wolf in sheep’s clothing’ which breached section 81 of the Financial Markets Act[10], pursuant to which the FSCA imposed a fine on the foreign respondents. The foreign respondents reviewed the decision in the Financial Services Tribunal (FST) on grounds that the FSCA did not have jurisdiction over them to impose the fine. The FST upheld the foreign respondents’ review, and the FSCA then applied to the High Court to review the FST’s decision.
In the High Court, it was common cause that the FSCA did not serve initiating process on the foreign respondent’s while in South Africa, and there was neither attachment of property nor submission by the respondents to the jurisdiction of the South African High Court. The question before the High Court was whether, given the clear connection between South Africa and the suit – which in this case was established by virtue of the fact that the publication involved a South African company, was widely distributed in South Africa and had harmful effects within South Africa – jurisdiction could be established despite the fact that the FSCA could not serve the initiating processes personally on the foreign respondents while in South Africa as laid down in Strang.
The High Court found that electronic service of the initiating process, despite not being in strict compliance with the requirement of personal service in terms of the Uniform Rules of Court, was sufficient to establish jurisdiction over the foreign respondents. The court therefore developed the common law test for jurisdiction as set out in Strang to essentially do away with the requirement that service of process needs to occur on the foreign respondent personally while in South Africa, insofar as it relates to the exercise of the FSCA’s powers to impose administrative penalties in terms of the 167 of the Financial Sector Regulation Act 9 of 2017. This development underscores the court’s appreciation of modern commerce and trade which, as noted by the High Court, often makes traditional personal service impracticable. Indeed, this development was also pre-empted by the SCA itself in Strang, in which the court noted that a ‘new practice could itself be subject to development with time’.[11]
This trend, which is mirrored across other African jurisdictions, is likely to have an impact on companies whose activities have an impact within South Africa, but which have no physical presence nor assets in South Africa, such as technology companies. For instance, Kenya’s draft Significant Economic Presence Tax Regulations, specifically aimed at regulating business carried out digitally and without any physical presence in the country, evidences the transition into the digital era and the transformation of how we conduct business and transact on a day to day basis.
What this means for foreign technology companies
While the decision of the court in the FSCA case may have been influenced by the unique nature of the FSCA, as a regulator, and its regulatory mandate, the South African court’s decision as well as the legal developments in other African jurisdictions, demonstrate a willingness to adopt a flexible and pragmatic approach to the question of jurisdiction having regard to evolving circumstances.
It is likely that courts and legislatures globally will extend this pragmatic approach to disputes in the wider commercial and technological space. International clients, particularly those operating in technology, media and telecommunications sectors, ought to be aware that, despite operating from outside of a particular jurisdiction, provided there is a sufficient connection between the suit and the court, the client may be subject to a court’s jurisdiction notwithstanding the client not having assets capable of attachment, nor having a physical presence in said jurisdiction.
[1] Christopher Forsyth Private International Law 5 ed (2012) 221.
[2] David Pistorius Pollack on Jurisdiction 2 ed (1993) 3.
[3] Ibid note 1 at 169.
[4] Bid Industrial Holdings (Pty) Ltd v Strang and Others 2008 (3) SA 355 (SCA).
[5] Either by virtue of an application to found or confirm jurisdiction, depending on the circumstances.
[6] Supra note 4.
[7] Ibid at para 56.
[8] Ibid at 232.
[9] (009838/2023) [2025] ZAGPPHC 675 (9July 2025).
[10] 19 of 2012. Section 81 of this act prohibits direct or indirect publication of false, misleading or deceptive material which the person knows or ought to know is false, misleading or deceptive.
[11] Supra note 4 para 59.
