Important legal ruling for foreigners with assets in South Africa

A landmark ruling by the Supreme Court of Appeal (SCA) means foreigners with assets in South Africa could see surplus local funds transferred abroad to satisfy foreign creditors once local debts are settled.

The recent SCA case, where South African law firm Cox Yeats secured a landmark victory, has delivered a precedent-setting judgment.

According to the firm, this ruling, handed down on 23 March 2026 in Scheer v Wagner N.O. & Others, provides long-awaited clarity on the treatment of cross-border insolvency matters in South Africa.

It marks the SCA’s first authoritative pronouncement on the interaction between South Africa’s statutory insolvency regime and common-law principles of international comity in cases involving dual-jurisdiction sequestrations.

The SCA dismissed an appeal by Jurgen Scheer, ruling in favour of the duly appointed Austrian trustee of his insolvent estate, Raoul Gregor Wagner, who was represented by Cox Yeats.

The decision establishes a coherent legal framework for managing cross-border insolvency disputes and provides critical guidance to courts, practitioners, and international stakeholders.

Scheer, who was domiciled in Austria at the time of his sequestration in 2017, had his estate sequestrated in South Africa in 2018.

Acting in his capacity as trustee of the Austrian insolvent estate, Wagner successfully applied to the Western Cape High Court for recognition within South Africa.

He also applied for an order permitting the transfer of surplus funds from the South African estate to Austria following the settlement of local creditor claims.

This surplus is specifically intended to benefit Austrian creditors who face a shortfall of more than €4.4 million (R86.19 million).

The High Court granted the relief sought by Wagner, and the insolvent Scheer appealed the decision to the SCA.

A landmark judgment

In dismissing the appeal, Cox Yeats said the SCA delivered several important findings with far-reaching implications for insolvency law and practice in South Africa.

The Court held that section 116 of the Insolvency Act, which requires surplus funds to be paid into the Guardians’ Fund, does not apply where a recognised foreign trustee exists and the foreign estate reflects a deficit.

Instead, the court held that the provision applies only in the absence of such a foreign estate. The court reaffirmed that legislation does not alter the common law unless it is clearly intended to do so.

Section 116 was found to coexist with, rather than override, established common law principles governing cross-border insolvency.

The judgment also confirmed the principles in Ex Parte Palmer NO: In re Hahn and Lagoon Beach Hotel v Lehane.

In this case, it was held that a foreign trustee appointed in the jurisdiction of the insolvent’s domicile is entitled to any surplus remaining after local creditors have been satisfied.

Importantly, the foreign trustee must first be recognised in South Africa. They are entitled to the surplus even in cases of concurrent local sequestration.

The court in the Wagner case applied a purposive interpretative approach and rejected an interpretation that would have led to an untenable outcome where no party could claim surplus funds indefinitely.

The court cited the Constitutional case of Cool Ideas 1186 CC v Hubbard and Another, which stressed that “in addition to context and purpose, meaning must be informed by constitutional values”.

Cox Yeats said the ruling provides clear guidance for practitioners, confirming that recognised foreign trustees may seek substantive relief in South African courts.

This includes the transfer of surplus funds, without the need to prove claims as ordinary creditors under section 44.

“The SCA’s dismissal of the appeal confirms and strengthens the legal framework governing cross‑border insolvency in South Africa,” said Cox Yeats partner Gareth Cremen.

“This judgment is expected to have far‑reaching implications for insolvency practitioners, the courts, and international stakeholders.”

He added that it reinforces South Africa’s alignment with global insolvency principles and promotes fairness in the distribution of assets across jurisdictions.

The judgment is expected to be widely cited in South African insolvency and private international law matters and will play a central role in shaping how future cross‑border insolvency cases are approached and adjudicated.