International Arbitration in South Africa
20 October 2021 17:00 by Nicolene Schoeman-Louw
South African courts are willing to enforce any valid foreign arbitral award involving international or cross-border commercial disputes, as regulated by the International Arbitration Act 15 of 2017, on the same basis as a High Court judgment.
Written by Nicolene Schoeman-Louw, Managing Director SchoemanLaw Inc, for LexisNexis South Africa.
Arbitration is a well-known alternative dispute resolution mechanism in South Africa.
The courts are willing to enforce any valid arbitral award on the same basis as a judgment of the High Court of South Africa. Unless there is an exceptional reason for not doing so. International or cross-border commercial disputes are regulated by the International Arbitration Act 15 of 2017 ("IAA") in South Africa.
The parties must have agreed to submit to arbitration under an agreement to refer to arbitration, unless:
* The dispute is not capable of determination by arbitration under any law of the Republic.
* The arbitration agreement is contrary to the public policy of the Republic.
According to De Lange v Presiding Bishop, Methodist Church of Southern Africa 2015(1) SA 106 (SCA), the general requirements for the existence of a contract must be met. This includes consensus (an agreement between the parties on the obligations they wish to create), the intention of the parties to be legally bound by the contract, and awareness by the parties of the agreement.
Article 7 of Schedule 1 to the IAA 2017 defines an arbitration agreement as:
"an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not"
Importantly though, the arbitration agreement must be in writing.
Form of the award
An award will be made in writing and will be signed by the arbitrator(s). In arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal will suffice, provided that the reason for any omitted signature is stated. The award must state the reasons it is based on unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms.
Binding nature of the award
Irrespective of the country in which it was made, an award is binding.
According to section 16(3), a foreign arbitral award can only be enforced in South Africa after being made an order of the court. It can be enforced in the same manner as any judgment or order to the same effect as the award. An application to the court must be accompanied by the original foreign arbitral award and the original arbitration agreement. Authenticated appropriately to enable them to be produced in court. If the award or arbitration agreement is in a language other than one of the official languages of South Africa, they must be accompanied by a sworn translation into one of the official languages, authenticated in the appropriate manner to enable them to be produced in court.
The court may refuse to enforce the award only on the following grounds as outlined in section 18 of IAA:
"(a) If the court finds that-
(i) a reference to arbitration of the subject matter of the dispute is not permissible under the law of the Republic; or
(ii) the recognition or enforcement of the award is contrary to the public policy of the Republic; or
(b) the party against whom the award is invoked, proves to the satisfaction of the court that—
(i) a party to the arbitration agreement had no capacity to contract under the law applicable to that party;
(ii) the arbitration agreement is invalid under the law to which the parties have subjected it, or where the parties have not subjected it to any law, the arbitration agreement is invalid under the law of the country in which the award was made;
(iii) that he or she did not receive the required notice regarding the appointment of the arbitrator or of the arbitration proceedings or was otherwise not able to present his or her case;
(iv) the award deals with a dispute not contemplated by, or not falling within the terms of the reference to arbitration, or contains decisions on matters beyond the scope of the reference to arbitration, subject to the provisions of subsection (2);
(v) the constitution of the arbitration tribunal or the arbitration procedure was not in accordance with the relevant arbitration agreement or, if the agreement does not provide for such matters, with the law of the country in which the arbitration took place; or
(vi) the award is not yet binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made."
Managing Director SchoemanLaw Inc