ARTICLE
11 March 2024

International Arbitration In South Africa

International arbitration in South Africa has experienced a surge in recent years, especially after the introduction of the International Arbitration Act (IAA) in 2017..
South Africa Litigation, Mediation & Arbitration
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International arbitration in South Africa has experienced a surge in recent years, especially after the introduction of the International Arbitration Act (IAA) in 2017, making South Africa a real "regional arbitration hub with considerable success."1

Historically, arbitration in South Africa was governed by the Arbitration Act 42 of 1965, which primarily dealt with domestic arbitration. The need for a modern and comprehensive framework that catered to international commercial arbitration led to the enactment of the IAA. The IAA incorporates the UNCITRAL Model Law2 and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, thus giving effect to South Africa's obligations under it.3

Accordingly, South Africa now has a modern and favourable legal framework encouraging arbitration as a process in the region. The IAA, in fact, has significant features that make South Africa an arbitration-friendly jurisdiction.4

Arbitral Institutions in South Africa

A number of arbitral institutions administrating arbitration proceedings in South Africa have been established. The Arbitration Foundation of Southern Africa (AFSA), including the Arbitration Foundation of South Africa International (AFSA International), manages all types of dispute resolution, particularly arbitration. AFSA administers numerous local business disputes and has handled a wide range of international arbitration disputes since 2017. Its head office is in Sandton, Johannesburg, but it also has regional offices in Pretoria, Cape Town and Durban.5

The China-Africa Joint Arbitration Centre (CAJAC Johannesburg) is a subsidiary of AFSA. CAJAC was established in answer to the increasing trade between China and Africa. The CAJAC offers disputing parties internationally-based rules, tailor-made for China-Africa disputes.6

Arbitrability

Pursuant to Section 7 of the IAA, the Parties are free to resort to arbitration for any international commercial dispute which relates to a matter that the parties are entitled to dispose of by way of arbitration.7

International arbitration in South Africa is, however, excluded if the dispute is not capable of determination by arbitration under any law of the Republic or if the arbitration agreement is contrary to the public policy of the Republic of South Africa.8

Formal Requirements for Arbitration

The arbitration agreement must be written and typically signed by the parties.9 The High Court of South Africa has confirmed that the agreement remains valid and binding even if it is not signed or if it is only signed by one party, provided that "the parties have deliberately intended to record their agreement in writing and have shown that the document so produced constitutes the agreement between them."10

Separability

Among the principles governing international arbitration in South Africa is that of the separability of the arbitration agreement, meaning that the arbitration clause inserted in a contract will be treated as an independent agreement which will not be affected by any invalidity of the main contract.11

Kompetenz-Kompetenz

This widely recognised principle is also clearly established in the context of international arbitrations in South Africa. It stems from Article 16(1) of the UNCITRAL Model Law, as the IAA is itself silent regarding the jurisdiction of the arbitral tribunal. The principle gives the arbitral tribunal the power to rule on its own jurisdiction and to decide on any objections thereon.12 The principle has been applied by South African courts.13

Seat of Arbitration

The parties are free to designate the seat of the arbitration. Where they have failed to do so, the arbitral tribunal can itself determine such seat "having regard to the circumstances of the case, including the convenience of the parties" as provided under Article 20(1) of the UNCITRAL Model Law to which Section 15 of the IAA refers.14

Composition of the Arbitral Tribunal

The parties are free to determine the number of arbitrators. Where the parties have failed to do so, one arbitrator shall be appointed pursuant to Article 10 of the UNCITRAL Model Law.15 The parties are also free to designate the procedure for appointing the arbitrator or arbitrators. Failing to agree on such a procedure, local courts have the power to decide thereon and appoint the arbitrators.16

Confidentiality of the Proceedings

International arbitration proceedings in South Africa are, in principle, confidential unless a public body is a party to the proceedings or if disclosure of the award and all documents related to the proceedings is "required by reason of a legal duty or to protect or enforce a legal right."17

Challenge of the Award

The challenge of international awards in South Africa is possible according to Article 34 of the UNCITRAL Model Law for procedural matters (namely, lack of a valid arbitration agreement, composition of the tribunal not in accordance with the parties' agreement, non-arbitrable subject matter of the dispute, etc.) or public policy reasons (lack of due process, the award being affected by fraud or corruption).18

Refusal of Recognition or Enforcement

The IAA provides that foreign arbitral awards must be recognised and enforced in South Africa as required by the New York Convention.19 Recognition or enforcement may only be refused on the same grounds as those available for challenging the award pursuant to Section 18 of the IAA.20 In addition, however, the award may also be refused recognition or enforcement if it is not yet binding on the parties, or if it has been set aside or suspended in the seat of the arbitration.21

* * *

South Africa is undisputedly a pro-arbitration jurisdiction, as courts have consistently supported the autonomy of arbitral proceedings according to international best practice. A recent example is the case Lukoil Marine Lubricants DMCC v Natal Energy Resources and Commodities (Pty) Ltd, where the Kwazulu-Natal Division of the High Court stayed an application before local courts for the return of goods and re-payment of sums, pending finalisation of arbitral proceedings in London in accordance with the parties' agreements.22

Footnotes

1. P. Burger, Perspectives on dispute resolution from South Africa (15 June 2023), https://www.ciarb.org/resources/features/perspectives-on-dispute-resolution-from-south-africa/ (last accessed 28 February 2024).

2. 2017 International Arbitration Act, Section 6 and Schedule 1.

3. 2017 International Arbitration Act, Section 16(1) and Schedule 3.

4. S. McKenzie et al., Arbitration in South Africa (2019), https://www.webberwentzel.com/Documents/arbitration-in-south-Africa.pdf (last accessed 28 February 2024).

5. Arbitration Foundation of Southern Africa website, Home, https://arbitration.co.za/ (last accessed: 28 February 2024).

6. Arbitration Foundation of Southern Africa website, Home, https://arbitration.co.za/ (last accessed 28 February 2024).

7. 2017 International Arbitration Act, Section 7.

8. 2017 International Arbitration Act, Section 7.

9. 2017 International Arbitration Act, Schedule 1, Article 7(2).

10. Morlite Industries CC and Another v Michael Van Der Nest NO and Others (8160/07) [2009] ZAGPJHC 91 citing Fassler and Others v Stallion Group of Companies (Pty) Ltd [1992] (3) SA 825 (W).

11. 2017 International Arbitration Act, Schedule 1, Article 16(1).

12. 2017 International Arbitration Act, Schedule 1, Article 16(1).

13. Zhongji Development Construction Engineering Company Ltd v Kamoto Copper Company SARL (421/13) [2014] ZASCA 160, para. 31, citing Fili Shipping Co Ltd v Premium Nafta Products and Others [2007] UKHL 40 and para. 58.

14. 2017 International Arbitration Act, Section 15 and Schedule 1, Article 20(1).

15. 2017 International Arbitration Act, Schedule 1, Article 10.

16. 2017 International Arbitration Act, Schedule 1, Article 11(3).

17. 2017 International Arbitration Act, Section 11.

18. 2017 International Arbitration Act, Schedule 1, Article 34.

19. 2017 International Arbitration Act, Section 16(1).

20. 2017 International Arbitration Act, Section 18.

21. 2017 International Arbitration Act, Section 18(1)(b)(iv).

22. Lukoil Marine Lubricants DMCC v Natal Energy Resources and Commodities (Pty) Ltd (12583/21P) [2023] ZAKZPHC 31 citing Tee Que Trading Services (Pty) Ltd v Oracle Corporation South Africa (Pty) Ltd and Another (065/2021) [2022] ZASCA 68 which held that: "The Model Law reflects the international approach to international commercial arbitration agreements that, unless an arbitration agreement is null and void, inoperable or incapable of being performed, courts are obliged to stay action proceedings pending referral to arbitration."

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.

ARTICLE
11 March 2024

International Arbitration In South Africa

South Africa Litigation, Mediation & Arbitration

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