What does it do?
Parties decide which court is competent to hear a specific case. When it comes to criminal matters serious matters cannot be heard by lower courts and must be referred to higher courts. When it comes to civil matters there are monetary limits to which courts can hear a matter.
The following monetary limits apply:
Small Claims Court – Up to R15 000.00
Local Magistrates Court – Up to R 200 000.00
Regional Magistrates Court – R 200 000.00 – R 400 000.00
Thereafter you usually must take your case to the High Court. The High Court can be much more expensive to litigate out of as you require the assistance of an advocate to present your case. You will now be paying for two rather than one legal counsel. For this reason we suggest and sometimes draft our Kleva Contracts, so that parties agree to the jurisdiction of the magistrates court even if the monetary value is higher than R 400 000.00.
Kleva Contracts sample wording:
he parties submit all their disputes arising out of or in connection with this Agreement to the exclusive jurisdiction of the Courts of South Africa
What does it do?
A governing law clause is where parties will decide which law will apply to their relationship. It is not unusual for contracts to be between parties from different countries. You will usually insert a clause which chooses which countries laws will apply.
This is different from the Jurisdiction Clause which decides which court and in which country the case will be heard.
Our Kleva Contracts are drafted in line with South African law but you can decide that the law of a different country will apply. Bear in mind that this might change the legal effect of the contract and should only be considered with expert advice as to the effect.
Real life example:
You are importing goods from Germany. You know that the EU legislation on product liability favours the purchaser more than South African laws. You can choose that the laws of the EU govern the agreement between you, even if you sue out of South Africa.
Kleva contract sample wording:
The Laws of the Republic of South Africa shall govern this agreement