South African courts value the principle of party autonomy as a realisation of the freedom of parties to enter into and execute private arbitration agreements.

Court interference is usually limited to the grounds of procedural irregularities set out in section 33(1) of the Arbitration Act 42 of 1965.1 One of the grounds upon which an arbitrator's award may be reviewed is based on gross irregularity and this is determined by whether the arbitrator's conduct prevented a fair trial of issues.

Considerations for ‘Gross Irregularity' and ‘Exceeding of Powers'

Section 33(1)(b) of the Arbitration Act 42 of 1965 governs the review of arbitral awards. It provides that where an arbitration tribunal has committed any gross irregularity in the conduct of the arbitration proceedings or exceeded its powers, the court may, make on the application of any party to the reference after due notice to the other party or parties, an order setting the award aside.

Reference to Case Law

This issue was dealt with in the case of Eskom Holdings Limited v The Joint Venture of Edison Jehamo (Pty) Ltd and KEC International Limited and Others2 (the JV). The JV successfully reviewed an arbitral award in the Johannesburg High Court in respect of six out of 13 claims pursued by the JV against Eskom. The High Court ordered that another arbitrator consider the six claims afresh. It was of the view that ‘expanded issues' (which had not been raised in the pleadings and were raised in argument) were not fully ventilated, and consideration of such issues resulted in an unfair hearing. Interestingly, however, the High Court found that the arbitrator did not exceed his powers as he dealt with those issues referred to arbitration as set out in the notices of dissatisfaction filed by the parties.

Eskom appealed the High Court's decision to the Supreme Court of Appeal (SCA), and the SCA confirmed that no gross irregularity or exceeding of authority was shown on the part of the arbitrator in terms of section 33(1)(b) of the Arbitration Act 42 of 1965. Consequently, the order of the High Court was set aside. 

‘Gross Irregularity'

In its decision, the SCA cited the case of Telcordia Technologies Inc v Telkom SA Limited3, where it considered the interpretation of the terms ‘gross irregularity' and ‘exceeding its power', which justifies interference by courts with arbitral awards as provided for in Section 33(1)(b).

It reaffirmed the principle of party autonomy and also outlined the test to determine whether an arbitrator's conduct constituted gross irregularity as being whether the conduct of the arbitrator or arbitral tribunal prevented a fair trial of the issues.4

‘Exceeding of Powers'

Furthermore, the SCA in Telcordia also referred to the distinction made by Lord Steyn in Lesotho Highlands Development Authority vImpregilo Spaand Others5 between a tribunal purporting to exercise a power or jurisdiction which it does not have and erroneous exercise of power that it does have. ‘If it is merely a case of erroneous exercise of power vesting in the tribunal no excess of power under section 68(b) is involved.'

Conclusion

It is imperative to distinguish between situations where a tribunal purports to exercise power which it does not have and where a tribunal erroneously exercises power that it does have. In the latter case, the tribunal has not exceeded its power and its decision cannot be reviewed based on the fact that it has exceeded its power.6

The test in determining whether an arbitrator's conduct constitutes gross irregularity is whether the arbitrator's conduct prevented a fair trial of issues. In the Eskom case, it is clear that the arbitrator's conduct did not prevent a fair trial of issues and therefore did not amount to gross irregularity or exceeding of authority.

Footnotes

1. Telcordia Technologies Inc v Telkom SA Limited 2007 (3) SA 266 (SCA), para 51.

2.Eskom Holdings Limited v The Joint Venture of Edison Jehamo (Pty) Ltd and KEC International Limited and Others (case no 177/2020) [2021] ZASCA 138 (06 October 2021).

3.Telcordia Technologies Inc v Telkom SA Limited 2007 (3) SA 266 (SCA), para 4, 47-48 and 52 – 79.

4.Eskom Holdings Limited v The Joint Venture of Edison Jehamo (Pty) Ltd and KEC International Limited and Others (case no 177/2020) [2021] ZASCA 138 (06 October 2021), para 22.

5.Lesotho Highlands Development Authority v Impregilo SpA and Others [2005] UKHL 43 at para 24

6.Lesotho Highlands Development Authority v Impregilo SpA and Others [2005] UKHL 43 at para 24-25

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.