Eskom has warned that an urgent application seeking to interdict the appointment of a new panel to provide legal services to the state entity could trigger contractual claims.
It also risks delaying new infrastructure projects worth billions of rand that are undergoing legal processes. This would leave Eskom’s legal functions in a state of uncertainty.
The litigation takes place as Eskom recently announced it would take legal action against defaulting municipalities owing the entity more than R110bn. The multimillion-rand tender is significant for law firms that rely on state work for steady income.
Eskom faces litigation from a Johannesburg-based law firm, Koikanyang Inc, seeking to block the appointment of a new panel of attorneys set to be appointed on March 15. The multimillion-rand tender, lucrative for law firms, is for a period of five years.
The firm decries being unfairly disqualified from the tender over a contested invalid broad-based-BEE sworn affidavit.
The litigation led by senior attorney Chopologe Olckers Koikanyang seeks to halt the appointment of the panel pending a review application over the firm’s disqualification. The review application is expected to take about two years to conclude, meaning Eskom would be unable to appoint successful bidders while it is pending.
The entity plans to appoint more than 40 firms to be part of the five-year legal services provision tender.
Eskom’s acting legal head, Liza Brown, argues the interdict application before the high court in Johannesburg, if granted, would have a “catastrophic” impact on the power utility.
Brown argues the appointment of a panel of legal services is essential for the utility’s day-to-day operations.
Services rendered by firms include the negotiation, drafting and execution of commercial agreements, initiating and defending litigation and ensuring their own compliance with the statutory and regulatory framework.
“Eskom currently has a total of 381 open litigious files (excluding opinions, contracts, project negotiation and discussion and other non-litigious matters), each of which is at a different stage in the litigation process,” Brown says.
“This gives an indication of the number of litigious matters Eskom has to advise with regard to contractual claims and new infrastructure projects on a daily basis. These claims and projects run into billions of rand,” she argues.
“The interdict sought would therefore preclude Eskom from issuing any new instructions to attorneys pending the outcome of the review application. The effect of this on Eskom, and the knock-on effect for those relying on Eskom’s services, would be catastrophic.”
Brown argues, based on the applicant’s papers, the review could take two years; the interdict would leave Eskom’s legal functions in limbo.
“That is an extremely intrusive relief. Eskom relies on its panel of selected attorneys’ firms for ongoing advice and for defending legal proceedings on an almost daily basis. The new panel selected pursuant to the tender consists of a large number of firms of attorneys, intended to provide Eskom’s extensive needs and risks.”
Koikanyang says Eskom’s disqualification of the firm from the tender will not hold water under legal scrutiny in the review application.
He argues the firm was disqualified because its sworn affidavit submitted in 2024 as proof of broad-based BEE status was not dated by the commissioner “because the commissioner’s stamp inadvertently obscured the date”.
“In any event, and without admitting the invalidity of the 2024 affidavit, organs of state are not permitted to disqualify bidders based on non-material errors,” he contends.
Eskom, however, argues the date issue was a valid ground for disqualification. It maintains the firm would not suffer harm when compared to the utility because the entity plans to appoint more firms in the contract and could apply again.
The urgent application is set to be heard in the high court this week.
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