In its recent judgment in Famous Idea Trading 4 (Pty) Ltd t/a Dely Road Courier Pharmacy v Government Employees Medical Scheme 2026 (4) BCLR 291 (CC), the Constitutional Court confirmed the stringent conditions that apply to review applications in respect of commercial decisions of private entities.

In doing so, the Court endorsed the use of preliminary objections by such commercial entities to make quick work of unmeritorious review applications that may jeopardise the confidentiality of commercially sensitive information.

The facts

Dely Road Courier Pharmacy (DRCP) instituted legal proceedings, following its unsuccessful tender bid for the delivery of medical courier pharmacy services for the Government Employees Medical Scheme (GEMS). DRCP contended that GEMS’ decision was reviewable on the following grounds:

• it constituted administrative action as defined under the Promotion of Administrative Justice Act, 2000 (PAJA);
• it constituted the exercise of public power and was therefore reviewable for lawfulness and rationality; or
• it was reviewable under the common law.

In accordance with Rule 53 of the Uniform Rules of Court (which entitles an aggrieved party to obtain the record of a decision, comprising all the documents, records, and reasons underlying the decision), DRCP requested GEMS to furnish the full record of its tender decision. In response, and rather than furnish the record, GEMS filed a Rule 6(5)(d)(iii) Notice, raising an objection (point of law) on the grounds that the High Court lacked the jurisdiction to adjudicate the matter.

The judgment

On the question whether to accept the case and resolve the dispute, the Constitutional Court held that the dispute raised two arguable points of law: (i) whether commercial decisions, which are neither administrative action nor exercises of public power, are reviewable under the common law; and (ii) whether Rule 53 is applicable to such common law private reviews.

In deciding to entertain GEMS’ legal objection, the Court reasoned that raising a point of law objection, in terms of Rule 6(5)(d)(iii), rather than furnishing a Rule 53 record, is permissible because the purpose of such a step is to resist a review application devoid of legal merit by raising a preliminary objection. With the effect of the step being that a court may dispose of such legal proceedings without having to consider the merits of the main dispute. The Court further held that if a party fails to establish, on the facts, that a decision is reviewable either under PAJA, the principle of legality or the common law, it will have failed to engage a court’s review jurisdiction. Consequently, in such circumstances that party would not be entitled to a Rule 53 record.

Having found that GEMS’ objection was procedurally permissible, the Court decided the objection in GEMS’ favour. In doing so, the Court re-affirmed that GEMS is not an organ of state, nor do its tender decisions constitute the performance of a public function or exercise of a public power. In reaching this conclusion, the Court reasoned that the business of a medical scheme is quintessentially commercial, and therefore neither PAJA nor the principle of legality applies.

The Court then went on to consider whether a common law review was appropriate. The Court held that where a private entity exercises decision-making or adjudicative powers in terms of a contract, the rules of natural justice may be implied terms of that contract. However, DRCP’s case failed on this ground because, although GEMS exercised adjudicatory powers when it decided to award the tender, DRCP failed to specifically plead that the tender process’ terms and conditions constituted a contract which implicated the rules of natural justice. The Court held that in the absence of this assertion, a private law review could not be undertaken. Having disposed of the matter on this basis, the Court declined to decide whether Rule 53 records must also be furnished when common law reviews of commercial decisions are sought.

Rules of thumb arising from the judgment

The Court confirmed that, unlike review applications concerning public-sector decisions, courts will not presume review jurisdiction in disputes involving private commercial decisions. Instead, the aggrieved party must establish that a court’s review jurisdiction has in fact been engaged.

This requires the aggrieved party to establish that:

• there exists a contract between the parties;
• the contract empowers one of the parties to exercise some form of decision-making or adjudicative power;
• the aggrieved party must specifically plead that the rules of natural justice are implied terms of the contract; and
• the decision must be challenged on the basis that it was made in a manner that offends the rules of natural justice.

The Court also endorsed the use of preliminary legal objections at the earliest stage of the dispute, including as a private entity’s first response to a review application, before delivering a notice of intention to oppose, and even before being required to furnish the record of the decision sought to be reviewed. As noted by the Court, if upheld, such an objection may be dispositive of the review proceedings and bring the matter to an end without the need to engage with the merits.

Practical implications for private procurement

Although the judgment dealt with competitive procurement processes, its principles are applicable to all adjudicative private commercial decisions. The judgment also reduces the litigation risks associated with most adjudicative commercial decisions; however, the insulation it affords is not absolute.

The reviewability of commercial decisions continues being dependant on the terms of the underlying commercial contracts. Therefore, private entities must exercise caution when drafting these contracts, particularly when soliciting bids for the provision of services in competitive procurement processes. In such instances, the terms and conditions governing the bidding process may result in the rules of natural justice being implied into the process.

Following this judgment, the invocation of the rules of natural justice is likely to become the new battleground in such review applications. Although the judgment narrows the scope of such review applications, it introduces new strategic considerations for private entities defending them. In particular, private entities will need to raise preliminary objections capable of disposing of these applications at an early stage, and where such objections fail, consider other means of securing the protection of commercially sensitive information.

What this means moving forward

While the Court has endorsed the use of preliminary objections as an efficient mechanism for disposing of review applications directed at private commercial decisions, important questions remain. These include whether private entities will be required to produce a full record of their decision-making processes and the extent to which commercially sensitive information will be protected from disclosure. In navigating these lingering issues, private entities will need to adopt astute litigation strategies aimed at protecting sensitive information while minimising disruption to ongoing commercial operations.

Ultimately, the judgment firmly distinguishes public and private sector review applications. It reaffirms the constitutional commitment to the principle that agreements freely and lawfully entered into must be honoured by the parties to them, and courts should not unduly interfere in private bargains unless the high threshold identified in the judgment is met.

Written by Bongumusa Sibiya, Partner and Yanga Keva, Associate, Bowmans