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When a company is in liquidation, time and certainty matter. Creditors line up, assets are priced and realised, and every unresolved dispute threatens the dividend. Many of those disputes – about contract performance, claims against the estate, or how proceeds are distributed – sit behind arbitration clauses signed long before the liquidation began. An arbitrator's award can cut through the deadlock quickly, but the award is only as useful as its enforceability. If a counterparty (or even the liquidator, in some circumstances) won't comply voluntarily, the winning side must convert the award into a court order under section 31 of the Arbitration Act to access the full toolbox of enforcement – attachment, execution, and, where needed, contempt. In the liquidation context, that step isn't cosmetic; it's how you turn a paper win into money in the estate, sooner and with less noise.
What is an arbitration?
Arbitration is a formal but private process where disputing parties agree to submit their disagreement to an independent and neutral third party (the arbitrator), instead of a court. The arbitrator listens to both sides, considers the evidence, and then issues a decision called an arbitration award, which is binding on the parties.
How does it relate to liquidation?
In liquidation, arbitration may come into play in situations such as:
- Disputes between creditors and the liquidator about claims or payments.
- Contractual disputes where the company in liquidation had an agreement containing an arbitration clause.
- Disagreements about the distribution of assets or liabilities of the company.
Is an arbitration award enforceable?
Yes, an arbitration award has the same effect as a judgment between the parties, meaning it is binding and must be complied with. However, it does not automatically carry the force of a court order. To enforce it, the award must first be made an order of court in terms of section 31 of the Arbitration Act 42 of 1965.
Can an arbitration award be reviewed or appealed?
Arbitration awards are final and binding and cannot be appealed. However, a review may be brought if there are procedural irregularities, misconduct by the arbitrator, or if the arbitrator exceeded their powers.
How to turn an arbitration award into a court order?
To enforce the award, the successful party brings an application in the relevant High Court or Magistrate's Court attaching the award. If the court is satisfied that the award is valid, it will make the arbitration award an order of court.
Once granted, the award can be enforced as if it were a judgment of the court, for example, through writs of execution.
Is it compulsory to turn the arbitration award into a court order?
No, it is not compulsory. If both parties voluntarily comply with the arbitration award, there is no need to approach the court. However, if a party refuses to comply or fails to perform as directed in the award, then it becomes necessary to have the award made an order of court to allow for enforcement.
Talk to Barnard
Arbitration offers an efficient and private method of resolving disputes, but the enforceability of the award depends on whether it is voluntarily complied with or made an order of court. Understanding the process and the limited grounds for interference ensures that parties can effectively uphold their arbitration rights and obligations under South African law.
If an arbitration has intersected with a liquidation you're involved in – whether you're a creditor, a liquidator, or a counterparty – we can map the fastest lawful route from award to enforcement, and help you avoid review traps that burn time and value.
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.
