The Act does not provide statutory guidance with respect to the admissibility of evidence in arbitration proceedings. Section, 14, 16 and 17 of the Act deal with the issue of competence and compellability of witnesses and the recording of evidence, but are silent regarding the incorporation of the formal rules of evidence into arbitration proceedings.
The question of admissibility is therefore within the jurisdiction of the arbitrator and as a result the extent to which the rules of evidence are applicable will differ from one case to another.
Are arbitrators bound by strict rules regarding the admissibility of evidence?
There are two divergent views: The first being that arbitrators are not strictly bound by the rules of evidence and the second being that arbitrators appointed under a statute are under a duty to act in accordance with the essential rules of natural justice and are therefore bound by the same rules of evidence as those applicable to any court of law, unless the parties have agreed otherwise.
In Dexgroup (Pty) Ltd v Trustco Group International (Pty) Ltd and Others  1 ALL SA 375 (SCA) Wallis JA advanced the former view, stating that unless precluded by the arbitration agreement, arbitrators should be free to adopt procedures as they regard appropriate to resolve the dispute they are seized with. He went on further to state that arbitrators should be free to determine the admissibility of evidence without being shackled by the formal rules of evidence and the correct approach would therefore be that they can receive evidence in any form subject to such restrictions as they may deem appropriate.
The party autonomy of arbitration proceedings entails that the arbitration takes place pursuant to the referral by the parties. The parties may exclude the applicability of some rules by inserting the following clause in their arbitration agreement:
The arbitrator shall have regard to evidence which would normally be inadmissible in a court of law, but which is relevant to the matter before him/her.
In the circumstances, an evidentiary provision in an arbitration agreement is valid and enforceable and the arbitrator is bound to adopt a procedure that conforms to natural justice. The arbitrator is therefore not bound by the rules of evidence that are applicable in court proceedings and evidence which is inadmissible in court proceedings will not on that basis alone be rejected. The arbitrator is entitled to admit any material which is logically probative, even hearsay evidence where it can be regarded as reliable.
If the evidentiary provision in the arbitration agreement properly construed demonstrates that the parties have expressly or impliedly agreed that evidence may be lead which would not be admissible in a court of law then the arbitrator’s duty to receive such evidence is accordingly enlarged. The parties may also, by express agreement, exclude the right to lead certain types of evidence or to adduce any evidence at all on certain or all issues in dispute.
The parties do not have an unrestricted right to lead any type of evidence - the arbitrator may only receive evidence that is relevant to the issues in dispute. This means that the arbitrator must, within certain limits, permit all evidence tendered by the parties.
One of the other pivotal questions that arise in arbitration proceedings is whether the arbitrator is entitled to receive evidence from third parties that are not a party to the referral.
In Roman-Dutch law, the submission of a dispute to arbitration is subject to the implied condition that the arbitration should proceed in a fair manner or in accordance with the law and justice. The recognition of this implied condition is in accordance with modern constitutional values. Each party has the right, and must be given a reasonable opportunity, to challenge the case put forward by the other party.
In the scenario where the arbitrator obtains evidence which has not been led by either party to the referral, two premises emerge.
On the one hand, the nature of arbitration proceedings is that they are conducted with the consent of both parties and therefore an agreement that the arbitrator can conduct his own investigations without necessarily communicating the findings to the parties would be valid. However, if the investigations of the arbitrator were to reveal something entirely new, the arbitrator should draw this to the attention of the parties who should be given an opportunity to deal with it.
On the other hand, in the absence of an express or implied agreement permitting the arbitrator to receive evidence in this manner, the inclusion of such evidence would constitute an irregularity or an act in excess of the arbitrator’s powers. It is, however, suggested that it would not be fatal to the award should the arbitrator admit evidence in the absence of the parties, provided that he subsequently informs the parties and affords them an opportunity to test the evidence. In terms of the Act, this perhaps would be a cause for the setting aside of an award on the basis of misconduct of the arbitrator or gross irregularity in the conduction of the arbitration proceedings and that the award has been improperly obtained.