Foreign money judgments are not always as easy to enforce in South Africa as foreign creditors would like. Among the reasons for this is legislation that was designed for a long-gone siege-mentality era and the limited recognition allowed in South African courts of the international competence of foreign jurisdictions.

However, a ray of hope for foreign creditors has appeared. The recent case of Richman v Ben-Tovim in the Supreme Court of Appeal has ended some of the confusion over the existence of a further ground on which local courts will recognise a foreign judgment. The clarity gained through this could make it easier for foreign creditors to hold an errant South African defendant to account.

A South African court can only enforce a foreign judgment if the foreign court that issued it had the jurisdiction required by South African courts with reference to the enforcement of foreign judgments. Until the latest Supreme Court of Appeal ruling, there were two principal grounds for such jurisdiction and confusion about whether the third existed.

The first established ground was if the defendant resided in the area of the foreign court's jurisdiction when the action commenced. The second was if the defendant had submitted to the foreign court's jurisdiction, such as by defending the matter in the foreign court. Now, the Supreme Court of Appeal has confirmed the third ground – that the presence of the defendant within the jurisdiction of the foreign court at the commencement of the action – is sufficient to confer the requisite jurisdiction on the foreign court.

The two previously recognised principles were severely limiting. In my experience, debtors willing to defend an action in a foreign court are few and far between. Similarly, there are relatively few cases of defendants living in the area of foreign jurisdiction when proceedings commence; debtors of all nationalities who are reluctant or unable to meet their obligations have a tendency to flee when litigation looms. Thus, the third principle confirmed in the Richman v Ben-Tovim case opens a door previously closed to foreign creditors. For the first time, it is clear that the international competence of the foreign court applies if the defendant was in the area of foreign jurisdiction when the action was launched.

In practice, this means that a creditor in London, for example, who becomes aware that a South African debtor is visiting the UK, would be well advised to serve papers on that person as soon as he or she enters the country. In this way, the creditor has the assurance that the money judgment will at least be recognised in a South African court.

However, while this fulfils the jurisdictional requirement, three other conditions must also be met. Firstly, the foreign judgment must be final in the sense that it must be unalterable by the court that gave it. Secondly, enforcement of the foreign judgment should not run contrary to South African public policy or to the rules of natural justice. For example, the defendant should have been given the opportunity to be heard, the tribunal should have been impartial and the defendant should have had due notice of the proceedings against him or her. The third bridge – and arguably the hardest to cross – is section one of South Africa's Protection of Businesses Act of 1978.

Section one of this Act restricts the type of foreign judgments that may be enforced in South Africa. Prohibited judgments are those arising from any transaction connected to product liability cases and the export of raw materials, among others. The only way for a creditor to overcome this constraint is to seek the permission of the country's Minister of Trade and Industry to enforce the judgment. Permission is seldom declined but it adds to the already heavy burden on foreign plaintiffs.

Furthermore, as is evident from the date of enactment, the Protection of Businesses Act is almost 30 years old. It was passed at a time when the South African economy was under political pressures and was designed mainly to shelter South Africans from US-initiated antitrust cases associated with massive damages awards. Today, there is a widespread conviction in South African business and legal circles that the Protection of Businesses Act is superfluous, not to mention obstructive, and should be repealed. Indeed, repeal is under consideration by a law commission and, although no movement has yet occurred, change is seen as long overdue. After all, South Africa is now a player on the world trading stage, it espouses free trade and is courting investors who, in return, should be extended the courtesy of being able to collect their debts with minimal impediment.

Consequently, the clarity obtained as a result of Richman v Ben-Tovim is a step in the right direction. It may not have removed all the obstacles standing in the way of enforcing foreign judgments in South Africa, but it is certainly a welcome sign of progress. n

Roger Wakefield is a director at Werksmans in South Africa