SA RUGBY SUBMISSION
28TH AUGUST 2006

PROVISIONS OF THE BILL

IN TERMS OF THE BILL:

2.1.1' SASCOC is a non-governmental sports body comprising a number of statutorily designated constituent components including the National Federations (as defined) in the Bill. (Bill S.1(1)(i) p.4).

2.1.2 SASCOC will be the overall recognised national co-ordinating macro-body for the promotion and development of high performance sport and recreation in the Republic. (Bill S.3(1) p.4). (The Bill does not define "high performance sport" and it is not clear whether the concept can apply to all sporting codes).

2.1.3 SASCOC will have the discretion to require:

2.1.3.1 a government ministry;

2.1.3.2 a government department;

2.1.3.3 a provincial authority,

to consult with it concerning their activities relating to sport, recreation, physical education, training programmes and development of leadership qualities. (Bill 3(c) p.4-5, Act S.3(a)).

2.1.4 SASCOC will have the power to impel all sport and recreation bodies (which includes the National Federations and a trust or registered company of such a Federation or any agency or body involved in sport or recreation) to consult and co-ordinate with it on any matter prescribed by regulation. (Bill 3(a) p.5, 1 (j) p.4 and S.16 p.12 - 14 (a) - (t).

Furthermore, in terms of the Bill:

2.1.5 The National Department of Sport and Recreation will be statutorily required to enter into "a service level agreement" (not defined) in respect of functions assigned to SASCOC under the Act and the Minister must, after consulting with SASCOC, make regulations in relation thereto. (Bill S.5 p.5 - 6).

2.1.6 The Minister must first consult with SASCOC before determining the general policy to be pursued with regard to sport and recreation. (Bill S.6(a) p.6).

2.1.7 SASCOC will determine priorities in the annual allocation, as Ministerial policy, of funds for the creation and upgrading of multi-purpose sport and recreation facilities (in consultation with provincial and local authorities and relevant sport and recreation bodies). (Bill S.6(b) p.6; Act S.4(2) and 4(2)(b».

2.1.8 SASCOC will be empowered to exercise certain. powers in relation to education and training needs in sport and recreation. (Bill S.9 p.7 - 8).

2.1.9 It will be SASCOC which must, in accordance with its funding policy and S.10, provide physical facilities for sport and recreation on a national level (depending on the availability of funds). (Bill S.1 O(a) p.8 - 9).

2.1.10 SASCOC will have the power to allocate funds in relation to the funding of sport and recreation in the Republic in accordance with its funding policy. (Act S.1 0 p.6).

2.1.11 SASCOC is required to establish a national colours board to consider all applications for awarding national colours. (Bill S.13(a) p.1 0, Act S.11).

2.1.12 The Minister will be required to (must) consult with SASCOC before making regulations under the Act. In terms of such regulations matters such as the hosting and funding of major international sporting events, awarding of national colours and the fitness industry will be regulated. (Bill S.14 and particularly (n), (0) and (p».

2.2 Consequences of the Bill

2.2.1 In terms of the Bill, SASCOC will take over the effective control of sport and recreation in the Republic with wide executive and administrative powers (including the disposition of public funds) in the Republic.

2.2.2 SASCOC will in essence, should the Bill become law, substitute for an effective ministry of sport in the Republic which largely abdicates ministerial and government power to SASCOC under the Bill.

2.2.3 The Bill, therefore, gives rise to the following constitutional questions namely:

2.2.3.1 can the legislature appoint or designate a non-governmental private entity - in this case SASCOC - to perform executive and administrative acts and essentially to substitute as a sports ministry of the Republic?

2.2.3.2 can the legislature appoint such a body to exercise powers over the affairs of a series of legal persons with their own constitutions which administer professional sport in the Republic as National Federations in tandem with private companies and/or trusts which administer the professional aspects of the relevant sporting codes?

2.2.4 in particular, can the legislature statutorily determine that the National Federations (as private-law voluntary associations of persons) are impelled to be members of a private company incorporated under Section 21 of the Companies Act, 1973, or of any other non-governmental association of persons?

2.3 A full consideration of the above constitutional issues is beyond the ambit of this memorandum. Suffice it to say, however, that insofar as Section 1 (i) of the Bill impels such of the National Federations comprising voluntary associations of persons to become members of Le. forcibly associated with SASCOC (whether a non-governmental private law

Section 21 company in terms of the Companies Act, 1978, or other non governmental association of persons), the said Section is in conflict with the right to freedom of association entrenched in Section 18 of the Bill of Rights of the Constitution of the Republic of South Africa, 1996 (hereafter the Constitution).

2.4 The provisions of Section 13(9) of the Bill are also of particular concern to us as the section seems to contain mutually exclusive propositions and the second proposition to exclude an appeal or review of the decisions of SASCOC in respect of disputes between members inter se or members of a National Federation and a member or members. This section would, therefore, be in conflict with the right to just administrative action entrenched in Section 33(1) of the Bill of Rights of the Constitution. (Bill 14(d)p.11).

3. COLOURS AND THE ERSTWHILE SOUTH AFRICAN SPORTS COMMISSION (SASC)

In order to record a complete picture we set out our view below of the matter of National Colours during the time of SASC.

3.1 SASC was established as a statutory body on 10. September 1999 in terms of Section 3 of Act 109 which provided: .

"A juristic person to be known as the South African Sports Commission is established."

3.2 SASC was intended to be the overall co-ordinating body for promoting and developing sport and recreation in the Republic and was charged with developing guidelines for this purpose (Section 2(1)(2) of the National Sports and Recreation Act 110 of 1998) (Act 110/98).

3.3 In terms of Section 11 of Act 110/98 SASC "must establish a National Colours Board (hereafter the NCB) which will consider all applications for the awarding of national colours".

3.4 In terms of Section 11 (2) of the Act 110/98 "The National Colours must be awarded in accordance with the applicable Regulations".

3.5 No NCB presently is in existence under the provisions of Section 11 of Act 110/98 and no Regulations have been published pursuant thereto.

3.6 However, in terms of the Bill, the South African Sports Confederation and Olympic Committee (SASCOC) will be substituted for the SASC in Section 11 of Act 110/98, the provisions of which will otherwise remain unchanged.

3.7 Prior to the disbandment of SASCOC by the South African Sports Commission Repeal Act, 8 of 2005, SARU (as it then was) and SASCOC concluded an agreement in principle which gave rise to the National Sports Colours Framework, with which we deal in paragraph 9 below.

4. THE SOUTH AFRICAN SPORTS CONFEDERATION AND OLYMPIC COMMITTEE (SASCOC)

In this paragraph we set out aspects of the proposed relationship between SASCOC and the National Federations which are of real concern to us. We proceed on the basis that the Bill when referring to SASCOC means the Section 21 company referred to in the following paragraphs as this conclusion appears to us to be inescapable.

4.1 SASCOC was incorporated as Section 21 company No. 2004/033949/08 under the Companies Act, 1973, on 26 November 2004 (that is prior to the statutory disbandment of the SASC on 1 August 2005).

4.2 Should the NSR Bill, become law, SASCOC will be vested with wide ranging powers (as it steps into the shoes of SASC in terms thereof) which include extensive powers of control over the affairs of the major National Federations.

4.3 The draft control provisions to be inserted in Act 110/98 include the following:

4.3.1 in terms of the definitions section SASCOC will be a non-governmental sports body consisting of seven constituent components of which the major professional National Federations are but one and whose powers and autonomy will be diluted by the equivalence of the other constituent components, being the Olympic National Federations, the Commonwealth National Federations, school sport, tertiary institution sport, National Federations catering for athletes with disability and the All Africa Games National Federations;

4.3.2 most importantly the definition of "sport or recreation body" means any National Federation,. agency, body, including a trust or registered company of such a National Federation, agent or body, involved in the administration of sport or recreation at national level. In other word SASCOC will exercise control over the companies which professional sport have created under their constitutions to govern the activities of the codes concerned at the professional level. Such companies will include SA Rugby (Pty) Limited, SAFA Promotions (Pty) Limited and Cricket South Africa (Pty) Limited;

4.3.3 If the Bill becomes law, Section 2(1) of the amended Act 110/98 will place SASCOC in the position of the overall recognised national co-ordinating macro-body for the promotion and development of high performance sport and recreation in the republic (high performance sport not being defined);

4.3.4 Section 2(4) of the amended Act 110/98 will require all National Federations to consult and co-ordinate with SASCOC in respect of any matter that might be prescribed under the Act by a Regulation. (Regulations concerning the awarding of national colours are specifically provided for in Section 14(0) of the amended Act 110/98).

4.3.5 These Regulations will concern virtually all aspects of the governance of sporting codes and recreational activities in the Republic. (Bill 5.14 p.1314).

4.4 As a result of its incorporation under the Companies Act, SASCOC also derives extensive powers over the National Federations from the provisions of its registered Memorandum and Articles of Association, which provisions are contractually binding upon its members and which together comprise the constitution of SASCOC in terms of clause 1.1 of its Memorandum of Association.

4.5 National Sports Federations which run codes of sport also on a professional level in the Republic must therefore also be wary of the provisions of the Constitution of SASCOC as they impact upon the financial and other autonomies of the National Federations concerned.

4.6 In regard to the aforegoing VIle have taken cognisance of the following clauses in the Articles of Association of SASCOC namely:

4.6.1 National Sports Federations must make application to and be accepted as a member by a general meeting of SASCOC (articles clause 5.1);

4.6.2 As already recorded herein, the National Federations will be statutorily included as members of SASCOC in any event if the Bill becomes law (see paragraph 2 above);

4.6.3 Membership renders members subordinate to SASCOC and members are required and bound to comply with its constitution, regulations and rules and any directives issued by SASCOC from time to time;

4.6.4 SASCOC may also make rules in relation to the colours and emblems of national members and, notably, also to amendments to the constitution of members which are contracts in private law (clause 7 of the Articles of Association).

4.7 Thus, by virtue of the proposed amendments to Act 110/98 and the taking up of unqualified membership of SASCOC, the professional National Federations leave themselves open to a loss of control and autonomy in the financial and other administration of their codes of sport across the board and therefore also on the professional level. This situation is compounded by the prejudicial provisions taken up in the Draft Regulations (with which we deal herein below).

4.8 We find it noteworthy in the above regard that the main object of SASCOC in its Memorandum of Association "is to promote and develop high performance sport in the Republic of South Africa as well as to act as the controlling body for the preparation and delivery of Team South Africa and all multi-sport international games including but not limited to the Olympics, Paralympics, Commonwealth Games, world games and All Africa Games".

4.9 It appears to us that the Constitution of SASCOC and the National Colours Commission Regulations have been constructed mainly with track and field sports and the like in mind without proper consideration having been given to the particular and different position of the National Federations which control professional sporting codes such as Rugby Union, Association Football and Cricket.

4.10 In our view the activities of SASCOC should be confined to those matters dealt with in paragraph 4.8 above whilst the principle of autonomy should apply to the National Federations which govern professional sporting codes in the Republic. Our position is that these bodies are best suited to this task and should be free to act accordingly.

5. THE NATIONAL COLOURS COMMISSION REGULATIONS. 2006 (DRAFT REGULATIONS)

5.1 In considering the purport of the Draft Regulations it is our position that regard must be had to the following two important underlying considerations namely:

5.1.1 The principle of financial self-sufficiency established under Section 10(1)(b) of Act 110/98 which when amended will require SASCOC to establish a funding policy which will encourage creativity and self-reliance on the part of National Federations in relation to funding;

5.1.2 There is no provision in Act 110/98 which can empower SASC (or SASCOC after amendment) or the Minister to expropriate or take over the property or statutory property rights of a National Federation whether this be by means of Regulations or otherwise.

5.1.3 As we record below, any such provision would in any event be in conflict with Section 25 of the Bill of Rights of the Constitution if applied to National Federations in the context of the sports legislation.

6. EXPROPRIATION

6.1 SARU is the registered proprietor of a number of trade marks in South Africa and numerous overseas territories, the first of which dates from 31 January 1977.

6.2 SARU is the owner of copyright (both locally and internationally) in a number of emblems and marks.

6.3 Furthermore, SARU is the proprietor under the Heraldry Act of a number of emblems of which the earliest registration dates from 10 September 1937.

6.4 The result of all of the aforegoing is that SARU holds statutory ownership rights under Trade Mark, Copyright and Heraldry legislation and common law proprietary rights and goodwill in and to the subject matter of its intellectual properties.

6.5 When regard is had to the definition of "National Colours" in the definition clause of the Draft Regulations, the Regulations are open to the construction that if the Regulations become law, they will purport to expropriate and vest all of the above property in SASCOC.

6.6 The same will apply to the intellectual properties of the National Federations of other major codes, such as SAFA.

6.7 The applicable Draft Regulation (Regulation 7) provides:

"The rights in all national colours and emblem shall vest in SASCOC which shall make such national colours available for use in the public interest subject to such conditions and the payment of such fees or royalties as the (National Colours) Commission may determine in writing, subject to such arrangements as may be agreed in writing between the Commission and the National Federations for payment of fees and royalties. "

6.8 The provisions of Regulation, 7 are ultra vires. Neither the Minister nor the said Commission is empowered by Act 110/98 or any other statute to expropriate property and appropriate the statutory rights of any National Federation or other entity whether by way of Regulation (which is subordinate legislation) or otherwise.

6.9 In relation to this purported expropriation, regard must also be had to Draft Regulation 15, which will directly impede upon the merchandising and licensing businesses of SARU and other National Federations and even vest it in SASCOC if the term "national emblem" (which is not defined) is not appropriately restricted - which it needs to be.

6.10 In relation to the above, Draft Regulation 3(ix) implies that SASCOC, if the Regulations are implemented, will control the trade mark and other commercial usage of national emblems by the National Federations and their sponsors.

6.11 In the context of sponsorship, Draft Regulation 15(4) requires SASCOC to approve all national participation and merchandising items whilst Draft Regulation 17(2) limits the size and placement of sponsor's logos on playing kit.

6.12 The Draft Regulations (and also the Bill) take no cognisance of and make no provision for the fact that the lifeblood of the professional sports codes in South Africa - revenue derived from sponsorships and licences - are entirely based upon their marks and emblems and the goodwill and associative povver which has been engendered commercially thereby over time.

6.13 Furthermore, there are numerous existing private law agreements betvveen the National Federations and sponsors and licensees involving both national and international rights and obligations to which due regard has clearly not been given in the framing of the Draft Regulations.

7. THE PROPERTY CLAUSE IN THE CONSTITUTION OF THE RSA


7.1 The Draft Regulations conflict with the property clause in the Constitution of the Republic of South Africa.

7.2 Section 25(1) of the Constitution provides that "No one may be deprived of property except in terms of law of general application and no law may permit arbitrary deprivation of property."

7.3 The Draft Regulations do not comprise law of a general nature and any purported confiscation of a National Federation's property rights thereunder will be arbitrary.

7.4 It is to be noted that in terms of Section 25(4)(b) of the Constitution "property is not limited to land" and the SARU property which the Regulations will expropriate represents property covered by Section 25 of the Constitution.

7.5 Even were the Regulations to comprise law of general application the expropriation would, in terms of Section 25(2) of the Constitution, have to be for public purposes or in the public interest and subject to compensation (of which there is no mention in the Regulations).

7.6 In our view, the expropriation provisions of the Draft Regulations, if promulgated, will be unconstitutional.

8. NON COMMERCIAL PROVISIONS

We deal hereunder with a number of provisions in the Regulations which we and the other professional National Federations will also find troublesome and which require debate.

8.1 Team Selection

8.1.1 In order to select their national team, National Federations must in each instance hold national trials and apply a selection process approved by SASCOC (Regulation 13(1». The relevant National Federations simply cannot hold national trials each time a test match or international is to be contested.

8.1.2 National Federations must submit a policy to SASCOC regarding the award of national and federation colours (both senior and junior) before making application for the first award of national colours to an athlete in terms of the Regulations (Regulation 13(6))

8.1.3 Managers and coaches qualify for national colours but other members of managerial component will not (Regulations 13(7) and 13(8))

8.2 Colours Procedure

8.2.1 National Federations must make an application in writing for the award of national colours to a player by the NCB on the prescribed form within 30 days of the event in which the player is to be capped (Le. to be awarded national colours) (Regulations 14(1) and 14(2».

8.2.2 Even if a player has previously received colours, the form must still be filled in and submitted (Regulation 14(3)).

8.2.3. The decision of the NCB regarding whether or not it will award or withhold national colours in a particular case is final (Regulation 14(6)).

8.2.4 The award of national colours are reserved for competitions consistent with the "SASCOC High Performance System" which is not defined but which appears to be "continental and world championships" against international teams. This does not cover test matches or internationals which are not part of "championships" contests (Regulation 12(2))
8.3 National Federations Colours

8.3.1 A National Federation can have its own colours, emblems and insignia which it can award as it pleases but not at international match level.

8.3.2 It may not, therefore, award such colours in relation to the national team (i.e. the Springboks or Bafana Bafana).

8.3.3 All team match kit must be approved by SASCOC (Regulation 15(4))

8.3.4 The overriding concept in respect of "first team" colours (e.g. national colours) is one of basic uniformity amongst all sporting codes which would exclude the colours or emblems of SARU (or SAFA or the UCB in one day internationals) (Regulations 16(3), 16(4) and 17).

8.4 Code of Conduct

8.4.1 Each code must have a code of conduct approved by the NCB.

8.4.2 Guidelines as to what the code of conduct must contain are set out in Regulations 18(4) - 18(8) inclusive of the Regulations.

9. NATIONAL SPORTS COLOURS FRAMEWORK

9.1 As a result of the circulation during 2001 of the draft National Sports Colours Regulations, 2001 (the 2001 Draft) which are largely of the same import as the Draft Colours Regulations (2006) and because the 2001

Draft presented .same difficulties as the National Federations presently face in relation to the 2006 Draft, SARFU (as it then was) entered into discussions with SASC with a view to arriving at a National Sports Colours Framework which could accommodate the particular circumstances of the National Federations charged with professional sports.

9.2 As a result an agreement in principle between SARFU and SASC was reached to the following effect:

9.2.1 that the South African Sports Commission's (SASC's) primary objective was to protect National Colours from being misused and to safeguard their prestige;

9.2.2 that the above mentioned objective could be achieved without necessarily involving the expropriation, rendering illegal or redundant of the intellectual property of SARFU (now SARU) and other National Federations.

9.3 It was specifically agreed that SARFU would draft a National Sports Colours Framework which would form the basis for the issuing of new National Colour Regulations and which:

9.3.1 would give effect to the principle of autonomy of the National Federations then enshrined in Section 12(1 )(h) of Act 19 of 1998 (now repealed);

9.3.2 would give effect to the principle of financial self sufficiency of the National Federations as enshrined in Section 10(1)(b) of Act 110 of 1998;

9.3.3 would give effect to the principle of collaboration between the SASC and the National Federations as then enshrined in Section 4 of Act 109 of 1998;

9.3.4 would recognise that certain existing national colours and symbols were used by and were particular to certain National Federations such as SARFU, SAFA and the UCB and would acknowledge that such national colours and symbols constitute valuable intellectual property necessary to sustain the future financial viability of such specified National Federations;

9.3.5 would recognise that the National Federations are best placed to award national colours in respect of their particular codes in view of the fact that they are involved in the day to day administrative affairs of the individual sports codes which they control and in relation to which they are affiliated to the governing international bodies for the code;

9.3.6 would specifically give National Federations the power to award national colours;

9.3.7 would give the National Colours Board an advisory role and the task of maintaining records of persons and individuals who have been awarded national colours.

10. HALLMARKS OF THE FRAMEWORK

The hallmarks of the framework would be the following:

10.1 The National Colours Board would be officially established by the Minister by way of Regulation;

10.2 The Regulations would provide that the function of the Board must in relation to the major professional codes be to maintain an accurate register of national colours, processes and procedures (codes) under which National Federations would award national colours, and maintain information about persons or individuals that have been awarded national colours over time.

10.3 On their part, the National Federations would register their national colours with the National Colours Board within a certain time period after the promulgation of the Regulations.

10.4 In such applications, the National Federations would define colours currently in use and submit a "code" which details the processes and procedures under which such colours were awarded or were proposed to be awarded.

10.5 The Board would evaluate such applications only as to form and not substance, register the colours and issue a certificate. It might however refuse to register on limited grounds such as that the application lacked sufficient information.

10.6 Thereafter and on a continuous basis, the National Federations would be obliged to notify the National Colours Board of individuals who were awarded national colours as soon as possible after such colours had been awarded.

10.7 The National Colours Board would work together with the National Federations to identify and deal with instances of the abuse of national colours.

10.8 The actual awarding of national colours would be carried out by the National Federations in accordance with codes determined by them and then registered with the National Colours Board.

10.9 Once registered and approved by the National Colours Board, National Federations would not use or award different colours without the constructive input of the National Colours Board.

10.10 In sum, the system was designed to recognise that different National Federations use different colours especially SARU, SAFA and the UCB in one day internationals.

10.11 It was also designed to permit or allow the National Federations to award national colours to players and in relation to which the Board would have an advisory role.

10.12 Seen from the perspective of the National Federations, in the light of the intrusive nature of and the appropriation of rights in the Draft Regulations, 2006, the aforegoing National Colours Framework provides a framework around which those National Federations which are charged with the governance of major professional sports could effect changes thereto which recognise their established rights and particular requirements.

11. CONCLUSION

11.1 The promulgation as law of the Draft Regulations as they now stand will be detrimental to the financial interests and autonomy of the National Federations of South African professional sports in general and of SARU, SAFA and the UCB in particular.

11.2 It is to be expected therefore that a strategy will be formulated in relation thereto by SARU and the other National Federations which are adversely affected and this strategy directed at bringing about the requisite amendments to the Draft Regulations to take cognisance of and give effect to the particular established rights and international status of the National Federations concerned.

11.3 It will also be imperative for SARU and the other equally affected National Federations to regard the Draft Regulations as a manifestation of a larger picture constituted by the Bill which, should its provisions become law, will provide the statutory powers under which SASCOC could take effective control of the affairs and constitutions of the National Federation and by

means of which the autonomy and control - including financial control over their own particular codes of sport would in effect be largely excluded by SASCOC.

11.4 Furthermore, the provisions of the Bill and the Draft Regulations are unconstitutional and ultra vires in many respects and these provisions will be illegal if enacted.

11.5 In sum, therefore, both the NSR Bill, 2006, and the Draft Regulations, 2006, will require urgent attention and concerted action by SARU and its brother National Federations.

We trust that the Honourable Minister will, in having regard to the submissions set out herein, assist us in facilitating the necessary changes to the Bill and Regulations so as to secure the interests, position and well-being of the professional sports codes in the Republic.

Yours faithfully

MVELELI NCULA: DEPUTY CHIEF EXECUTIVE