High Court of South Africa develops common law to address jurisdiction over foreign entities

On 9 July 2025, the High Court of South Africa, Gauteng Division, Pretoria, delivered a landmark judgment in the case between the Financial Sector Conduct Authority (FSCA) and Viceroy Research Partnership LLC, along with its partners Fraser John Perring, Aiden Lau, and Gabriel Bernarde (the Respondents). This judgment has significant implications for the jurisdiction of South African regulatory bodies over foreign entities, known as peregrini.

The case originated from the publication of a document titled, "Capitec: A wolf in sheep's clothing" by Viceroy on 30 January 2018. This document, widely distributed in South Africa, caused a dramatic drop in Capitec's share price, wiping out more than R25 billion of its market capitalisation, before it recovered to end 3 per cent down on the day. Following an investigation, the FSCA found that the Respondents had made false, misleading or deceptive statements, contravening Section 81 of the Financial Markets Act, 2012. Consequently, the FSCA imposed an administrative penalty of R50 million on the Respondents.

The Respondents applied for reconsideration of the FSCA's decision, arguing that the FSCA lacked jurisdiction over them as peregrini. On 15 November 2022, the Financial Services Tribunal upheld the application for reconsideration, setting aside the administrative penalty on the basis that the FSCA did not have jurisdiction over the persons of the respondents, despite having jurisdiction over their conduct.

The FSCA sought a review of the Tribunal's decision, advancing several grounds for review, including the argument that the common law requirements for personal jurisdiction should not apply to the imposition of an administrative penalty. The High Court, presided by Judge Janse Van Nieuwenhuizen, addressed these grounds and ultimately decided to develop the common law to accommodate modern digital communication and the global nature of financial markets.

The High Court declared that the FSCA may impose an administrative penalty on a peregrinus if the requirements of Section 167 of the Financial Sector Regulation Act, 2017 are satisfied. The court established that jurisdiction over a peregrinus can be based on the delivery of notice by any means, including electronic means, provided there is a sufficiently close connection between the conduct of the peregrinus and South Africa.

This judgment marks a significant development in South African common law, recognising the need for regulatory bodies to effectively address breaches of financial sector laws in a globalised and digital world. The decision ensures that foreign entities cannot evade regulatory penalties simply due to their physical absence from South Africa, thereby enhancing the FSCA's ability to enforce financial regulations and protect the integrity of South African financial markets.

The High Court's decision to develop the common law to allow jurisdiction over foreign entities based on electronic service and conduct connected to South Africa is a progressive step towards modernising legal practices in line with global financial activities. This judgment not only strengthens the regulatory framework but also underscores the importance of adapting legal principles to contemporary realities.