In cross-border contracts involving South African concerns and various foreign parties, most often one or other of such foreign parties are unfamiliar with South African law and the South African legal system. Consequently, such parties often insist that the dispute resolution mechanism in the relevant agreement provide for arbitration of potential disputes before a foreign arbitration tribunal. Thus one sees in such international agreements mechanisms for arbitration of disputes in London, Paris or New York under International Chamber of Commerce-, UNCITRAL-, or London Court of International Arbitration rules.

The difficulty for the South African litigant is that arbitration under these mechanisms most often involves application of systems and principles of law equally foreign to them. More particularly, any South African who has arbitrated in theses centres under any of these regimes can testify to the prohibitive cost of doing so. These issues undermine the fundamental principles of arbitration of disputes – that arbitration should be expeditious and cost-effective.

For some time now, the South African Law Commission has recognised the need to address real concerns pertaining to effective and efficient adjudication of cross-border disputes. In a report in 1998, the Law Commission expressly recommended that South Africa should follow the example of most other African countries and ratify the UNCITRAL Model Law on international arbitration, as this would create the necessary legal framework to encourage foreign investment and further economic development in the region.

Regrettably, since the filing of its reports on international and domestic arbitration in 1998 and 2001 respectively, there has been little forward progress in this respect. The Law Commission recorded one possible reason for this being "the danger of a perception, particularly among black lawyers, that some white members of the legal profession see arbitration as a form of single ‘privatised litigation’, enabling them and their corporate clients to avoid courts which increasingly comprise black judicial officers." This thorny issue continues to affect the transformation debate within South Africa, and will continue to hamper and delay the implementation of the Law Commission’s recommendations.

However, on the international front, the domestic situation is being overtaken by events. A recent conference in Mauritius agreed that private commerce should take responsibility for establishing a regional dispute resolution forum for the determination of cross-border disputes within the Southern Africa region, one which is tailored to the requirements of the users themselves. That conference resolved to set up the administrative structures for such a forum.

It is proposed that the seat of the forum be in Mauritius, being a state that has adopted the UNCITRAL Model Law. Moreover, Mauritius has the requisite infrastructure to cater for the hearing and adjudication of disputes, and is conveniently situated within 4-5 hours access from any state within the Southern African Development Community.

  • The fact that Mauritius is the seat of such arbitration tribunal does not prevent the parties from having the hearings conducted in any place that might be more convenient to them, such as the place where the contract is being executed. This highlights one of the material benefits of the arbitral process – that it is inherently flexible to cater for the parties’ specific requirements.
  • The creation of a new forum may well result in foreign parties being less insistent on the incorporation of dispute-resolution clauses that make a foreign system of law the operative law of the contract, and stipulations that disputes be determined by way of litigation or arbitration in a foreign jurisdiction such as New York, London or Paris. Ultimately, whether such disputes can be determined efficiently, expeditiously, and cost effectively will depend on experience in the regional forum itself.

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