17 May 2017 by Dispute Resolution Alert

Arbitration in South Africa: Presumption of “one stop” arbitration (courts adopting a non-interventionist approach)

A robust arbitral regime is critical to a country’s economy, in particular its attractiveness for business and foreign investment. Integral to such a regime is the certainty and finality of the arbitral process, which in turn requires a non-interventionist approach from the local courts. Historically, South African courts tended to be fairly interventionist in their approach, in terms of reviewing and setting aside arbitral awards due to procedural irregularities. They also sometimes went further by going into the merits of a matter and ruling on mistakes of law made by arbitral tribunals. 

South African courts have, however, in recent years, adopted a less interventionist approach, as exemplified in the recent decision in Riversdale Mining Ltd v Du Plessis (536/2016) [2017] ZASCA 007. 

In this case, the court was asked to review and set aside an arbitrator’s award on the grounds that the arbitrator had exceeded his jurisdiction. The applicant argued that the arbitrator was, in terms of the arbitration agreement, empowered to deal only with “existing disputes” whereas certain of the issues that the arbitrator ultimately ruled on had not existed at the time of the conclusion of the arbitration agreement. The applicant therefore sought to challenge the arbitrator’s jurisdiction and have the court set aside the award made by the arbitrator.

In terms of South Africa’s Arbitration Act, No 42 of 1965 (as amended), the court is empowered to set aside an arbitrator’s award on certain limited grounds, including where the arbitrator has committed a gross irregularity in the conduct of the arbitration proceedings or has exceeded his powers.

It was held in this case that the basic principle in the interpretation of arbitration clauses is that they must be construed to give effect to their purpose, that is to resolve legal disputes before privately agreed tribunals instead of through the courts. Unless parties expressly exclude an issue from the arbitrator’s jurisdiction, business people generally intend their legal disputes to be determined by the same tribunal. The court confirmed that there is a presumption in favour of “one stop arbitration” in our law, that is where all the relevant disputes between the parties are to be determined in a single arbitration.

While this commercially sensible approach, and in particular the principle of a “one stop” arbitration, is laudable, parties should avoid costly and unnecessary challenges to an arbitrator’s jurisdiction by ensuring that arbitration clauses or arbitration agreements are drafted in such a way as to ensure that all potential disputes fall within the ambit of the relevant clause or arbitration agreement. 

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