1.
Introduction to Transformative Constitutionalism in Insolvency Law
• The 1993 Interim Constitution and the 1996 Constitution of South Africa, particularly the Bill of
Rights, impact insolvency law.
• Insolvency law is undergoing constitutional transformation due to the contentious nature of the law
and the diverse interests of the parties involved.
• Section 8(1) of the Constitution makes the Bill of Rights applicable to all law, affecting natural and
juristic persons. It involves the judiciary, legislature, executive, and state organs like the Master of
the High Court, sheriffs, and registrars.
• Transformational constitutionalism involves analyzing insolvency law against the Constitution,
promoting economic transformation and a change in legal culture.
2. What is Transformative Constitutionalism?
• Transformative constitutionalism is a long-term project focusing on constitutional enactment,
interpretation, and enforcement to transform political and social institutions.
• Chief Justice Langa emphasized that it includes economic transformation and legal culture change,
seeing transformation as a continuous process.
• Factors influencing transformative constitutionalism include access to justice, legal education, legal
culture, separation of powers, and reconciliation.
Ubuntu as a Guiding Principle
• Ubuntu is a Nguni concept denoting community, sharing, mutual respect, and human dignity.
• It promotes restorative justice, reconciliation, civilized dialogue, and mutual tolerance, contributing
to constitutional values and insolvency law.
3. Examples of Transformative Constitutionalism in Insolvency Law
3.1 Married Women and Insurance Benefits
• The Insurance Act 27 of 1943 discriminated against married women, limiting their insurance benefits
if their husband’s estate was sequestrated.
• In Brink v Kitshoff (1996), this was found unconstitutional for violating equality rights (section 8 of
the Interim Constitution; now section 9 of the 1996 Constitution).
• The Long-Term Insurance Act 52 of 1998 remedied this inequality, showing transformative
constitutionalism in action.
3.2 Solvent Spouse’s Property Rights under Section 21 of the Insolvency Act
• Section 21 of the Insolvency Act allows the Master or trustee to control the solvent spouse's
property in the event of the other spouse's insolvency.
• In Harksen v Lane (1998), the Constitutional Court ruled that section 21 did not violate the equality
and property rights under the Constitution, although dissenting judges saw potential unfairness.
3.3 Evidence and Interrogations in Insolvency Proceedings
• Insolvents and witnesses may be compelled to testify under section 32(3) of the Insolvency Act,
even if self-incriminating.
• The Constitutional Court in Ferreira v Levin (1996) found parts of section 417(2)(b) of the Companies
Act, 1973 to be unconstitutional, reflecting the Constitution’s protection of personal freedom and a
fair trial.
3.4 Winding up of Companies
• The Companies Act 2008 (section 7(a)) aims to promote compliance with the Bill of Rights in
company law, emphasizing constitutional values in business rescue and liquidation processes.
3.5 Business Rescue
• Section 7(k) of the Companies Act, 2008 prioritizes business rescue over liquidation, balancing
stakeholders' interests, including employees.
• Business rescue is considered an alternative to winding up, supporting fair labour practices and
offering a fresh start for companies.
4. Areas of Potential Conflict in Insolvency Law
4.1 Section 27 of the Insolvency Act
• Section 27 protects immediate benefits to a wife or child under an antenuptial contract from being
set aside if the husband’s estate is sequestrated.
• This is potentially discriminatory against same-sex couples, unmarried partners, and children born
outside of wedlock, potentially violating the equality clause.
4.2 Rehabilitation and Discharge of Debt
• The rehabilitation process under the Insolvency Act can be burdensome, taking six months to ten
years.
• This might infringe section 22 of the Constitution, which guarantees freedom of trade, considering
international standards where discharge can occur sooner.
5. Conclusion
• The Insolvency Act, 1936 generally aligns with the Bill of Rights, ensuring fairness, equity, and
humane treatment of debtors.
• Transformative constitutionalism and ubuntu guide the evolution of insolvency law, promoting
procedural fairness and human rights.
• Certain provisions still need legislative or judicial reform to prevent constitutional infringements
and enhance alignment with transformative constitutionalism principles.
Key Takeaways:
• Transformative constitutionalism shapes insolvency law by ensuring alignment with constitutional
principles, especially the Bill of Rights.
• The concept of ubuntu enriches insolvency law by promoting compassion, dignity, and social justice.
• There are ongoing challenges and opportunities for constitutional transformation, ensuring
insolvency law remains fair, just, and inclusive in South Africa.
