Can angry South Africans sue Eskom?

South Africans living under a regime of daily load shedding have become angry to point where an eye-roll or a cluck of the tongue no longer quells their frustration.

So what can be done about it? Last week, Oliver Coull started a crowd sourcing initiative to take Eskom to court to break up the power utility’s monopoly.

People have taken to social media to question the possibility for SA business to sue Eskom for loss of income based on the right to basic municipal services, while others merely want compensation for broken appliances.

Pierre Burger, director at Werksmans Attorneys, spoke to BusinessTech about the prospects of actually successfully suing Eskom.

Burger said that he does not expect to see a deluge of successful claims against Eskom arising from the mere fact of “load-shedding” in and of itself, pointing out that there was not a flood of legal cases issued against Eskom as a result of the rolling blackouts in 2008.

“I think this is because, although there is no bar in principle preventing an aggrieved consumer from suing Eskom in an appropriate case, there are formidable obstacles to doing so in practice.”

The legal expert pointed to numerous concerns that might come into play, including:

1. What the case is founded on

One would have to consider whether a claim is founded in contract (which would be the case where the consumer has an agreement with Eskom), or in delict (where the consumer does not have an agreement with Eskom, but considers itself to have suffered damage through Eskom’s wrongful and negligent conduct).

If the claim is in contract, then any applicable disclaimers of liability would limit the claim. Eskom’s standard conditions exempt Eskom from liability for damage, except where caused by Eskom’s negligence.

They also exclude liability for all damages except direct damages (so, for example, loss of goodwill or of anticipated profits would not be recoverable).

If the claim is in delict, then weighty public policy considerations would come into play in determining whether Eskom’s conduct was wrongful and/or negligent.

Eskom’s position would no doubt be that “load-shedding”, per se, is neither wrongful for negligent – it is a rational, responsible response to the electricity crisis, ensuring that SA’s electricity grid will not collapse, which would be an unmitigated disaster.

There may be scope for individual consumers to argue that Eskom has been negligent in its dealings with them, e.g. businesses that have suffered damage to machinery as a result of a deviation from announced load-shedding schedules, or a preventable “surge”.

It might also be argued that excessive load-shedding in commercial or industrial areas, as opposed to in residential areas, could be foreseen to cause disproportionate loss and is therefore wrongful and negligent.

Each case would have to be evaluated on its own merits, Burger said.

2. The courts might be reluctant

According to Burger, the courts may be reluctant, on public policy grounds, to hold Eskom liable for damages on grounds that to do so would open the floodgates to a proliferation of claims.

3. Internalisation of costs

Related to this is the “internalisation of costs” argument. If Eskom faced a flood of claims and the prospect of being held liable for billions of rand, it would have to get the money from somewhere.

Being a parastatal, it could only get money from internalising the costs to its consumers, and/or receiving a government bail-out derived from tax revenue.

In either case, the bill for the damages paid by Eskom would ultimately be footed by the economically productive segment of the population, creating a kind of circularity.

“So, while I do not exclude the possibility of Eskom being held liable for damages in appropriate cases where the damage to individual consumers can be shown to be disproportionate and preventable, I do not think we are going to see a deluge of successful claims against Eskom arising from the mere fact of ‘load-shedding’ in and of itself,” said  Burger.

“Something more will be required to establish Eskom’s liability in any given case.”

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Can angry South Africans sue Eskom?