It is common to find a condition in South African insurance
policies providing that where there is a dispute between the
insured and the insurer in respect of the quantum of a claim,
the matter must be resolved by way of
That formulation is a hangover from the previous statutory
regime in respect of insurance under the now repealed Insurance
Act of 1943, which imposed certain limitations in terms of
arbitration in respect of domestic policies of insurance. Under
that restriction, the Insurance Act provided that
notwithstanding any contrary provision in the policy or in any
agreement relating thereto, the owner of a domestic policy was
entitled to enforce its rights under the policy against the
insurer concerned in any competent South African court
according to South African laws.
There was, however, no bar to the policy providing that the
amount of any liability under the policy could be determined by
arbitration if the insurer demanded that the amount be so
The provisions of arbitration were not repeated in the 1998
Insurance Acts2 and in the short-term context, were
replaced by the measures contained in The Policyholder
In terms of those rules, the provisions in a personal lines
short-term policy which determine that any dispute arising
under the policy can only be resolved by means of arbitration
There is, however, nothing preventing the policy recording
that the parties may, after a dispute has arisen, voluntarily
agree to submit the dispute to arbitration.
The position is, however, different to that under the 1943
insurance act regime. Now, there is no bar to an arbitration
clause including disputes regarding liability provided
according to the Bill of Rights it is a fair and independent
There can be no objection to any agreement between the
insurer and insured after a dispute has arisen to refer the
matter to arbitration.
Similarly, there are no such limitations or restrictions in
respect of long-term insurance policies.
A policy cannot, however, oust the jurisdiction of the
courts altogether. That would be contrary to public policy.
What South African insurance policies do not do is set out
the arbitration regime.
While it is common to record with some particularity the
arbitration regime in commercial contracts that is not commonly
done in policies of insurance. At best, the policy may record
that any arbitration would be governed by the Arbitration Act
The Arbitration Act empowers the arbitrator, unless the
arbitration agreement otherwise provides, delivery of pleadings
and the inspection of documents, goods and property. Very
often, arbitration can simply result in privatised litigation
with all the delays of litigation and the additional costs of
There is, however, a growing realisation by South African
insurers to look to arbitration to resolve insurance disputes;
but subject to an arbitration regime which is expeditious and
which avoids the pitfalls of privatised litigation. In that
regard, insurers are increasingly looking to adapting and
making use of the best of the Uncitral Rules, the London Court
of International Arbitration Rules and the ICC rules. That is,
however, all subject to the insured and insurer after a dispute
has arisen, agreeing to arbitration on these terms.
There is yet to come into existence an industry preferred
arbitration regime or any detailed policy formulation dealing
1. An example of such a
clause, as appearing in the industry's standard Multi-Mark
III policy reads:
"If any difference shall arise as to the
amount to be paid under this Policy (liability being
otherwise admitted) such difference shall be referred to
arbitration in accordance with the statutory provisions in
force at the time. Where any difference is by this Condition
to be referred to arbitration, the making of an award shall
be a condition precedent to any rights of action against the
2. The Short-term
Insurance Act, 53 of 1998 and the Long-term Insurance Act, 52
Protection Rule 8.1 (d)
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This case, in which Al Tamimi successfully represented the Defendant at all stages of the proceedings, is significant because the Court of Cassation established a new legal precedent with respect to Contracts of Adhesion.