What Rule 53 means in the context of a review of arbitral awards
What Rule 53 means in the context of a review of arbitral awards
Arbitration, as a means to resolve commercial disputes, has in recent years surpassed other alternative dispute resolution methods and is now entrenched in the South African market.
At a glance
- Arbitration has become a preferred method for resolving commercial disputes in South Africa due to its advantages, such as party autonomy, efficiency, simplicity, privacy, confidentiality, and finality.
- Despite the perception of finality, arbitration awards are not always truly final, and there are mechanisms to challenge them, albeit with limited grounds.
- The case of Zamani Marketing and Management Consultants v HCI Invest 15 Holdco highlights that Rule 53 of the Uniform Rules of Court is applicable to the review of arbitration awards, providing a legal framework for such reviews. Additionally, the court ruled that the notes of the arbitrator do not form part of the record of decision and do not have to be disclosed, preserving the arbitrator's freedom and protecting the adjudicative function.
Its advantages are also well documented, namely: party autonomy, in that an arbitration stems from an agreement to refer a dispute to arbitration and is a choice made by the parties which must be respected; efficiency and flexibility, in that it can lead to a quicker resolution; simplicity, in that it offers simplified rules of evidence and procedure as opposed to the more complicated rules of court; privacy and confidentiality, in that it leads to a private resolution, so the information and documents disclosed during the proceedings are kept confidential; and, most importantly, finality, in that the arbitrator’s decision is final and there is no appeal against it, unless the arbitration agreement specifically makes provisions for an appeal to an appeal tribunal. These features, and in particular “finality”, make arbitrations appealing to users.
The reality however is that an award is not always “final”.
There are various mechanisms to challenge the outcome of an arbitration, such as the remittal for consideration and the setting aside of an award, even though the grounds are severely limited. Our courts have therefore had to grapple with a litany of matters where dissatisfied parties challenge awards. It is therefore unsurprising that the law reports are replete with such cases. One example is Zamani Marketing and Management Consultants Proprietary Limited and Another v HCI Invest 15 Holdco Proprietary Limited and Others  (5) SA 315 (GJ). In this matter, two issues arose for determination, first, whether Rule 53 of the Uniform Rules of Court is applicable to the review of an award brought in terms of section 33 of the Arbitration Act 42 of 1965 and second, whether the notes of the arbitrator form part of the record of decision and must be disclosed.
Applicability to arbitration reviews
Rule 53 triggers a duty on the decision maker to deliver a record of proceedings sought to be corrected or set aside. The Rule 53 record has been interpreted broadly by South African courts to include the documents, evidence, arguments and other information before the tribunal relating to the matter under review, at the time of the making of the decision in question and is filed to bolster an applicant’s right of access to the courts by ensuring both that the court has the relevant information before it and that there is equality of arms between the person challenging a decision and the decision maker.
On the first issue, the court in Zamani held that Rule 53 is applicable to arbitration reviews even though an application for the review of an arbitration award without recourse to Rule 53 is itself not fatal and nothing prevents a court from entertaining such a review. The court advanced four reasons for this. First, it found that the introductory language of Rule 53 references proceedings of the kind described in section 33 of the Arbitration Act and those proceedings bear all of the hallmarks of a review. Second, the conclusion was fortified by the cases that have applied Rule 53 to arbitration reviews or have done so in analogous proceedings and held that Rule 53 was a procedure available to the applicant, though its use was not obligatory. Third, Rule 53 may be adapted as to time periods to meet the circumstances of a particular case – as occurs frequently in lengthy and complex cases of judicial review involving public law. Fourth, the fact that Rule 53 is applicable to the review of executive and administrative action does not mean it is confined to these types of reviews. Rather, the application of Rule 53 is to be determined by reference to what the rule states as to its application, and the question of whether the procedures required by the rule have utility in an arbitration review for the record of the proceedings constitutes the documentary foundation for many of challenges that may be brought on the grounds set out in section 33(1) of the Arbitration Act. The conduct of the arbitration proceedings is also largely to be found in the record of decision.
On the second issue, the court in Zamani held that the notes of the arbitrator do not form part of the record of decision and, as a result, cannot be disclosed in terms of Rule 53. First, the court observed that the notes of the arbitrator may record matters that are preliminary, subject to revision, or of no use for the ultimate consideration of the issues that require determination. Second, the Arbitration Act requires that an award be in writing and signed by the arbitrator. The award must therefore set out the arbitrator’s reasons and provide a dispositive and authoritative reason on which the arbitrator reached the decision. The notes on the other hand may contain a distillation of (perhaps) disparate views expressed during argument. The notes of an arbitrator do not bear any relationship to the award. They may record diverse subjects: evidence, impressions of a witness, a point of law or fact for consideration, an analogy, a half-remembered authority, a reminder to collect dry cleaning and so forth. Notes of this kind may be fragmentary, provisional, exploratory, and subject to discard or revision. The notes do nothing more than show what an arbitrator was thinking at a point in time in the proceedings. Third, what an arbitrator then does with these notes is entirely contingent. The salient consideration is this: he/she is required to publish an award and in so doing provide the reasons for the decision. It is the reasons for the award that must survive scrutiny. What an arbitrator was thinking at a point in time when a note was made is not what matters. What matters is what the award contains, and how the proceedings were conducted. These are the matters relevant to the grounds of review as set out in the Arbitration Act.
The decision in Zamani is a welcome development for the ever-growing arbitration community. First, it lays out a legal framework for the review of awards under Rule 53 and dispels the perception that Rule 53 is only appropriate in judicial reviews involving public law as opposed to reviews of awards under the Arbitration Act. Second, it preserves the arbitrator’s freedom to take notes without having to justify (at a later stage) why a note was made, how it might have influenced the ultimate decision, or why it was discarded. Without the freedom to take notes, the adjudicative function of an arbitrator may well be compromised as the prospect of an unsuccessful party dissecting an arbitrator’s notes for some fragment to support a claim of irregularity would encourage arbitrators to either not take notes at all or take them in such a way that stultifies the freedom of thought and enquiry that should be encouraged to secure sound adjudication.
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