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FULL STATEMENT: ConCourt summary of Eskom judgment

Dec 21 2016 13:19

Cape Town - The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On 21 December 2016 the Constitutional Court handed down its judgment in an application for leave to appeal brought by Areva NP (Areva) against a decision of the Supreme Court of Appeal concerning a tender which Eskom awarded to Areva in 2014 for the replacement and installation of six steam generators in the Koeberg Nuclear Power Station, Western Cape (Koeberg).

Koeberg is the only nuclear power station in Africa. It comprises two units. Each unit has three steam generators. Since 2010 Eskom has been aware of the need to replace the steam generators. It intended that the installation and replacement of the steam generators should occur in 2018 during a shutdown for routine maintenance that takes place every 18 months.

In June 2012 Eskom called for expressions of interest for the replacement of the six steam generators for Koeberg. This was directed to suppliers which would be capable of supplying these services.

In June 2014 the Bid Tender Committee (BTC) decided to invite Westinghouse Electric Belgium Société Anonyme (Westinghouse Belgium) and Areva, the two bidders, to parallel negotiations in regard to the tender. The negotiations took place between 24 June 2014 and 4 July 2014. On that last day the bidders were asked to make their final offers to Eskom by 11 July 2014.

On 11 July 2014 Westinghouse Belgium submitted a bid under cover of a letter, which was on Westinghouse Belgium’s letterhead. The letter was addressed to Eskom.

Its subject was given as “Westinghouse Offer In response to Eskom Request for Offer Post Negotiations for The Replacement of the Steam Generators at the Koeberg Nuclear Power Station for Units 1 and 2 (Tender no: PSE020; 021 and 022)”.

There was very little to differentiate between Areva’s bid and the bid submitted by Westinghouse Belgium on behalf of Westinghouse Electric Company (Westinghouse USA). There were differences of opinion among different committees within Eskom as to which of the two companies should be awarded the tender.

In August 2014 the BTC of Eskom awarded the tender to Areva. Westinghouse Belgium brought a review application in the High Court to have the award reviewed and set aside. Both Eskom and Areva opposed the application. One of the grounds upon which Areva opposed the application was that Westinghouse Belgium, which maintained that it was bringing the review application in its own name, had no locus standi (standing) to bring the review application in its own name.

Areva’s contention was that, when submitting the bid, Westinghouse Belgium was acting as an agent for Westinghouse USA and that, therefore, it was Westinghouse USA that had standing to bring the review application in its own name.

The High Court dismissed Areva’s point that Westinghouse Belgium was not the correct party to bring the review application. However, on the merits it dismissed the review application with costs. Westinghouse Belgium then appealed to the Supreme Court of Appeal. Areva appealed against the High Court’s decision not to extend its costs order to costs for three counsel.

The Supreme Court of Appeal also dismissed Areva’s contention that Westinghouse Belgium had no standing to challenge the award of the tender to Areva. It held that Eskom had committed various irregularities in the manner in which it handled the tender and that its award of the tender to Areva was unlawful.

It turned down Westinghouse Belgium’s plea that the tender be awarded to it and instead remitted it to Eskom for reconsideration. In the light of this conclusion, it dismissed Areva’s cross-appeal in relation to costs.

Areva and Eskom then applied to the Constitutional Court for leave to appeal against the decision of the Supreme Court of Appeal. Westinghouse Belgium sought leave to appeal against the Supreme Court of Appeal’s refusal to award it the tender.

Westinghouse Belgium also brought two applications for the admission of new evidence. Areva persisted in its contention that Westinghouse Belgium had no standing to challenge the award of the tender to it.

In a judgment (concurred in by Mogoeng CJ, Froneman J, Jafta J, Khampepe J, Madlanga J, Mhlantla J and Nkabinde J) Zondo J upheld Areva’s contention that Westinghouse Belgium had no locus standi to institute the review proceedings. He said that the documentation revealed that the real bidder was Westinghouse USA and that Westinghouse Belgium had simply acted as an agent of Westinghouse USA.

Zondo J held that, as such, Westinghouse Belgium was not the correct party to have instituted the review application.  He, accordingly, set aside the decision of the Supreme Court of Appeal and replaced the decision of the High Court with one dismissing Westinghouse Belgium’s review application with costs. He awarded Areva costs in all the courts.

Moseneke DCJ (with Bosielo AJ concurring) (minority judgment) held that Westinghouse Belgium had a direct and substantial interest under the common law and standing conferred to it by section 38 of the Constitution brought about by the section 33 right to just administrative action. Relying on Giant Concerts, the minority judgment held that it was not in the interest of justice for a court of final instance to dispose of a matter of this constitutional magnitude, commercial import and high public interest merely by way of the technical bar of lack of standing.

On the merits, the minority judgment found that Eskom had acted meticulously and properly in its assessment of the bids. Therefore, the minority judgment would have found the tender process to have been procedurally fair, upheld Areva’s appeal and dismissed all counter-appeals with costs.

areva  |  koeberg  |  eskom  |  nuclear energy

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