A pactum de non petendo (“pactum”) is an agreement between parties whereby one party agrees not to institute legal proceedings against the other party, either temporarily or permanently. A pactum usually suspends the enforcement of a commercial contract for a specific period or until the occurrence of some contingency.
In the recent decision in Coral Lagoon Investments 194 (Pty) Ltd and another v Capitec Bank Holdings Limited[1] (“Coral Lagoon”) the Supreme Court of Appeal (“SCA”) grappled with the interpretation of a consent agreement entered into between the parties to the dispute, and the question as to whether a pactum in perpetuity was contrary to public policy.
In Coral Lagoon, Ash Brook Investments 15 (Pty) Ltd and Coral Lagoon Investments 194 (Pty) Ltd (“Coral”) (together, the “Appellants”) and Capitec Bank Holdings Limited (“Capitec”) concluded a subscription and shareholders’ agreement (the “Subscription Agreement”) in terms of which Capitec allotted and issued shares to one of the Appellants, Coral, who subscribed for shares in Capitec. In terms of the Subscription Agreement, the Appellants were subject to certain selling restrictions which later became the source of contention between the parties. It was the parties’ understanding that those restrictions contained in the Subscription Agreement meant that Capitec’s consent was required for the sale of Coral’s share in Capitec.
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