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SITA, Gijima dispute reaches ConCourt

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SITA looks to the Constitutional Court to resolve its legal dispute with Gijima.
SITA looks to the Constitutional Court to resolve its legal dispute with Gijima.

There is no end in sight in the legal dispute about the validity of an agreement entered into between the State IT Agency (SITA) and Gijima as the Constitutional Court has reserved judgement.

Yesterday, the ConCourt heard arguments on whether an organ of state can seek the review and setting aside of its decision against proper procurement in terms of the Promotion of Administrative Justice Act (PAJA).

SITA and black-owned IT services company Gijima have been embroiled in a four-year-long legal spat over the abrupt contract termination of services supplied to the Department of Defence.

In September 2006, Gijima entered into a deal with SITA to supply and maintain hardware for services to the South African Police Services (SAPS). SITA terminated the contract in January 2012.

In a bid to stop the cancellation of a more than five-year-old contract, Gijima filed papers against SITA in February 2012. Subsequently, the entities reached an out of court settlement and resulted in Gijima offering services to the defence department.

In terms of the settlement agreement, SITA would compensate Gijima for losses with regards to the cancelled SAPS contract, as termination thereof resulted in a loss of almost R20 million in revenue, according to Gijima.

While Gijima provided services to the defence department as per agreement, a payment dispute with SITA arose.

According to reports, SITA stopped paying Gijima, which then led to arbitration forcing the state agency to pay R9.5 million.

SITA responded by filing an application in the North Gauteng High Court to have the defence department's services agreement set aside due to non-compliance with section 217 of the Constitution. The government agency said the agreement was entered into without complying with proper procurement processes.

The High Court ruled in Gijima's favour. It found it would not be just and equitable to set aside the main agreement.

Among the reasons for its decision, the court said SITA had received services provided by Gijima for a lengthy period of time and substantial payments had been made to Gijima, therefore services cannot be reversed. The court also found there was no indication of corruption or wrongdoing by Gijima in relation to SITA's non-compliance with section 217.

It dismissed the application with costs.

Despite this, last year, SITA decided to approach the Supreme Court of Appeal (SCA) to apply for leave to appeal the judgement.

The issue presented to the SCA was whether the contract between SITA and Gijima fell within the definition of administrative action as contemplated in the PAJA, and consequently, whether SITA was obliged to comply with the Act in seeking to set aside the agreement.

The SCA dismissed SITA's appeal with costs, including the costs of two counsels.

The matter is now before the ConCourt, as the government IT arm has argued that when an organ of state seeks to review or set aside its own conduct, it does this on the basis that its conduct is inconsistent with the Constitution and the question should be one of legality and not of PAJA.

On the other hand, Gijima's argument is that section 217 of the Constitution requires an organ of state to devise a system of fair procurement that admits only exceptional deviations.

According to Gijima: "There is no reason to exempt organs of state from the applicability of PAJA and devise a separate system of judicial review for them."

The ConCourt has reserved judgement in the matter.

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