The new South African Constitution of 1996, in its article 38.c, gives individuals and legal persons the right to file a class action. Originally, these were only filed in connection with violations of constitutional rights, however, in Children’s Resource Centre Trust and Others v Pioneer Foods (Pty) Ltd and Others (2012), the South African Supreme Court expanded their availability to all kinds of civil cases, potentially including securities claims. Nonetheless, South African courts will only authorize a case to be tried as a class action when such a mechanism proves the most effective way to adjudicate the controversy.
The law of class actions in South Africa is strictly judge-made and there is still no Act of Parliament regulating their procedure. The seminal case for class actions claiming civil damages was Children’s Resource Centre Trust and Others v Pioneer Foods (Pty) Ltd and Others (“Children’s Resources”) which laid down the first guiding factors for courts to consider when determining whether or not to certify a class action. Another important case was Nkala & Others vs. Harmony Gold Mining Co. Ltd. & Others (“Nkala”) (less formally known as the “Silicosis Case”) from 2012, which applied the same standards, but recognized that the procedure could be divided into a liability phase (opt-out) and a damages phase (opt-in).
Even though court fees in South Africa are minimal, because of the “loser pays” rule, entities acting as plaintiffs might have to post an appropriate security bond. The adverse party cost risk is limited as the attorney’s fees are set by statute. Costs are usually awarded in a joint and several manner, but there are currently no rules on how to allocate costs among class members. Lawyers may not work exclusively under contingency, although they may enter into “no win-no pay” arrangements. Even though success bonuses are allowed, total compensation cannot, in any case, surpass 25% of the gross amount recovered. Third-party funders who are not retained as lawyers, are not subject to these restrictions and can, consequently, agree on a pure contingency fee.
Are proceedings public or confidential? Is there a discovery proceeding?
South Africa upholds the principle of open justice, which means that trials are public. In addition, court documents are available to the public as soon as they are filed, albeit only for in situ examination. A party may request for certain documents to be sealed, but the other party may oppose such request. Passive members of a class action face very little publicity risk, since they are not named in the complaint. Furthermore, discovery, which remains much less comprehensive than in the United States, only requires the named parties to make voluntary offers of all relevant documentation.
Is there a specialized investor protection law?
In the case of shareholders, the South African Companies Act of 2008 (“the Companies Act”), imposes, in its Article 104, prospectus liability for untrue statements. False statements or omissions in prospectuses can result in either criminal or civil liability. However, as there is no private right of action attached to the violation of the Companies Act, shareholders must resort to the common law of delict in order to recover losses caused by a director’s negligent or intentional acts. The statute of limitation for these claims expires three (3) years after the date when the cause of action arose.
 2013 (2) SA 213 (SCA) (“Children’s Resources”).
 2016 (5) SA 240 (GJ) (“Nkala”).
 See Rules regulating the conduct of the proceedings of the several provincial and local divisions of the High Court of South Africa (Rules of procedure SA). Rule 67 et seq.
 Contingency fee act, 1997 paragraph 2(2), further clarified by Masango and Another v Road Accident Fund and Others (2012/21359) , paragraph 22 et seq..
 Rules of procedure, rule 35 et seq.