Take notice, not every organ of state requires section 3 notice

In April 2026, the Supreme Court of Appeal found that not all state-owned entities qualify as organs of state entitled to prior written notice under the Institution of Legal Proceedings against certain Organs of State Act. More specifically, the Act does not apply to Eskom.

A group of farmers instituted a delictual action against Eskom, alleging that their farms were destroyed by fires caused by Eskom’s negligence. The farmers did not serve the prior written notice required under section 3 of the Act before commencing proceedings. Eskom raised a special plea, contending that it is an organ of state entitled to receive such notice and that the claim was therefore unenforceable.

The Act requires claimants to serve written notice on an organ of state within six months of a debt becoming due, briefly setting out the facts giving rise to the debt. If such notice is not served, legal proceedings to recover the debt may not be instituted against the organ of state.

Section 239 of the Constitution defines an organ of state, to include any functionary or institution exercising a public power or performing a public function “in terms of the Constitution” or “in terms of any legislation”. Section 1(1)(c) of the Act defines an organ of state to include any functionary or institution exercising a power or performing a function “in terms of the Constitution”.

Because the notice requirement in section 3(2) of the Act restricts a claimant’s right of access to courts under section 34 of the Constitution, the court emphasised that it must be construed narrowly. The preamble of the Act itself acknowledges section 34, and any provision in the Act limiting access to justice must be interpreted restrictively.

Eskom contended that it falls within section 1(1)(c) of the Act as a functionary or institution performing a function “in terms of the Constitution”. It relied on a broad interpretation of the phrase “in terms of”, arguing that it is synonymous with “pursuant to” and “in accordance with”, and submitted that its role in generating and distributing electricity amounts to a function performed in terms of the Constitution.

The court rejected this submission. The phrase “in terms of” in section 1(1)(c) must be narrowly construed: there must be a direct and immediate connection between the institution and the powers and functions expressly set out in the Constitution. The Constitution does not refer to Eskom, nor does it set out its functions. The court drew attention to the title and preamble of the Act, which refer to “certain” organs of state, confirming that the Act does not apply to every public body recognised as an organ of state under the Constitution.

The court illustrated the point by contrasting Eskom with institutions whose powers and functions are expressly set out in the Constitution. Section 205(3) of the Constitution, for example, sets out the functions of the national police service. Likewise, the powers of the defence force are set out in section 200(2) of the Constitution. Eskom, by contrast, is not mentioned in the Constitution. Furthermore, the Act defines an organ of state with reference to specific entities, for instance, the South African Maritime Safety Authority and the South African National Roads Agency Limited. Eskom is not listed in the Act.

Parliament is presumed to have been aware of the constitutional definition of an organ of state when it enacted the Act in 2002, some eight years after the Constitution came into force.

Eskom argued in the alternative that it falls within section 1(1)(g) of the Act, which includes “any person for whose debt an organ of state … is liable”. It contended that the National Treasury is liable for its debts, relying on debt relief legislation that provides for a direct charge against the National Revenue Fund for debt relief.

The court rejected this argument. The relevant debt relief legislation does not transfer liability for Eskom’s debts to the National Treasury. That legislation establishes a framework for the provision of loans to Eskom, subject to conditions determined by the Minister of Finance. It merely facilitates financial support through loans and potential equity conversion, and does not make the Treasury liable for debts owed to third parties. The court held that no statutory or legal basis exists to establish liability on the part of the National Treasury for Eskom’s debts.

Eskom’s special plea was dismissed.

This judgment confirms that not every state-owned entity requires prior statutory notice before legal proceedings are brought against it. Organs of state not expressly listed in or contemplated by the definition in the Act cannot claim entitlement to prior statutory notice.

The question is not simply whether the entity is an organ of state in the constitutional sense, but whether it qualifies as an organ of state as defined in the Act. Claimants who fail to distinguish between the two definitions risk unnecessary delays or, conversely, may serve notice where none is required.

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[Eskom Holdings SOC Ltd v Botha and Others (1332/2024) [2026] ZASCA (9 April 2026)]