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SAP Escapes R12 Billion Lawsuit After South African Supreme Court of Appeal Orders Judge Recusal

Published March 25, 2024
2 months ago

In a legal skirmish that has been dragging on for years, multinational software behemoth SAP was granted a hiatus in a twelve billion Rand lawsuit, following a ruling by South Africa's Supreme Court of Appeal (SCA). The court endorsed SAP's application for recusal of the judge who had previously ruled unfavorably against the company.

The SCA’s decision to overturn the high court's previous verdict sheds light on the complexity and lengthiness of legal battles involving global corporations and local entities. The dispute hinges on allegations that SAP, in its capacity as the parent company, reneged on a business deal with System Applications Consultants (SAC), operating as Securinfo, that dates back to 2004.

SAP was sued for its alleged failure to honor an agreement to promote SAC's software, intertwined with its products. SAC maintains that SAP interrupted the deal to favor a competing product, precipitated by its acquisition of American company Virsa Systems in 2006. The acquisition, as argued by SAC, led to SAP's consultants pulling back from selling and championing SAC's software, a move SAC claimed amounted to a breach of their pact, culminating in whopping losses.

However, the SCA took a decisive turn on the matter when it found that high court judge Moroa Tsoka displayed an attitude of impatience and disengaged from trial proceedings, thereby not living up to the standards demanded of judicial officers. The SCA stressed the obligation of courts to adjudicate impartially and with an open mind, up until the final arguments are heard, noting that Tsoka’s behavior justified his recusal from the case.

This development is a significant shift as it means SAP is, at least for the moment, not held liable for the alleged R12 billion breach of contract. SAC, drained by the protracted legal tussle, which has seen significant depletion of funds, had been backed financially by Ungani Investments to continue the litigation. The SCA's ruling, however, leaves the future course of action uncertain, as attempts to reach Peter Tattersall regarding plans to appeal the decision were unsuccessful.

The unfolding of this high-stakes lawsuit is a testament to the intricacies of legal proceedings involving large corporations and their impacts on smaller players in the industry. The case serves as a reminder of the scrutinizing role that judicial conduct plays in the fairness and outcome of legal processes.

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