The concept of "data ownership" is complex, with a fundamental legal question remaining unresolved: can data be owned? A recent Supreme Court of Appeal judgement highlighted the critical importance of properly defining and describing data, as well as the return of data upon termination of an agreement. In Inzalo Enterprise Management Systems (Pty) Ltd v Chief Albert Luthuli Municipality ZASCA 85 (11 June 2025), the Supreme Court of Appeal was faced with a dispute arising from an agreement that regulated the installation and management of designated software and hardware by Inzalo for the Municipality. The services included managing the Municipality's financial accounting, project management, treasury and cash management, valuation roll management, land use, human resource and payroll management, building control management, and revenue management.
On termination of the agreement, the Municipality requested all data files and documents on the Inzalo EMS Financial System from Inzalo. A dispute arose between the parties, and the Municipality brought an urgent application to the High Court to obtain its data. The High Court found that Inzalo was not entitled to the Municipality's data and nothing in the agreement provided otherwise. It therefore ordered Inzalo to hand back all data files to the Municipality.
On appeal, the Supreme Court found that the order granted by the High Court did not make any effort to differentiate the types of data to which the Municipality and Inzalo may have a claim. The court found that, for instance, some of the data claimed by the Municipality, such as "Applications", "Operating System files and configurations" and perhaps "all full backups that were run on the FMS system" include the intellectual property of Inzalo. The court found that the agreement vests no proprietary claim in the Municipality to such property. On the contrary, it specifies that Inzalo is the sole proprietor of the intellectual property attaching to data embodied in the Designated Software. The Supreme Court found that the High Court order was "overbroad". The matter was remitted back to the High Court to determine what data, if any, the Municipality is entitled to.
The Appeal Court highlighted, the relevant agreement was conspicuously silent or ambiguous on the scope of "captured data". It did not define precisely what fell within "captured data", nor did it specify in any detail how data should be delivered back after the contractual relationship ended. The lack of specificity in the contract gave rise to factual disputes that the Appeal Court found significant enough to remit the issue back to the High Court for oral evidence.
The judgment underscores the fundamental principle that rich detail in data clauses and intellectual property clauses is essential to avoid this sort of conflict. If an agreement is silent or poorly drafted, the supplier may unwittingly commit to hand over assets it never intended to transfer, particularly technology, software configurations, and related proprietary materials. Likewise, the customer may be placed in the vulnerable position of being unsure about whether they can retrieve or continue to use data if the contract is terminated.
What will the High Court decide? Who owns what data? Can data be owned in the first place? Our next few articles will explore these questions and related issues on data ownership. Stay tuned and get in touch below should you have any questions:
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