It is common cause that a dispute arose between the applicant (Industrius) and the respondent (IDS) and by agreement the parties referred the matter to arbitration. As a result of the parties being based in separate states during the conclusion of the arbitration agreement, it was agreed that the arbitration would be conducted in accordance with the International Arbitration Act 15 of 2017 (Act) and Model Law, with the seat of arbitration to be South Africa.

The disputes referred to arbitration consisted of a contractual claim by Industrius and a counterclaim by IDS. The hearing proceeded in the absence of IDS as IDS ceased participation in the hearing due to a dispute with its former attorneys. The arbitrator ruled in favour of Industrius, which then applied to court for the enforcement of the award. IDS opposed the application, contending that the enforcement of the arbitration award should be stayed pending the finalisation of a separate action instituted against Industrius in the High Court. The relief IDS sought in this action was the same relief it sought in its counterclaim in the arbitration.

In this regard, the court found that the Act and Model Law do not provide for the court to refuse or delay the enforcement of the award on the basis that a party has instituted other proceedings that are not related to the arbitral award or have no bearing on the finality or enforceability of the award. The judge found it difficult to understand why IDS contended that the same action which failed at the arbitration hearing could be pursued through action proceedings.

IDS further contended that the arbitration award was not final since its counterclaim was dismissed by default due to its absence at the hearing. The counterclaim was thus not decided on the merits thereof.

Findings

The court found that the counterclaim in the arbitration hearing was not dismissed by default and was properly considered by the arbitrator when the arbitral award was made. The arbitrator in the arbitration was quoted by the court as saying “the version advanced by the defendant in its counterclaim given the evidence which was adduced before me, it seems to me, is so improbable as to warrant rejection.” The arbitrator articulated and dealt with all the issues before him. He was required to deal with all the disputes of the parties and he fulfilled that requirement.

In respect of the submission that the counterclaim was not decided on the merits, the court stated that contending simply that the arbitrator had erred in dealing with the counterclaim on merits in the absence of IDS was not a valid ground to refuse enforcement of an arbitral award. In this regard, the court cited Phalabora Copper (Pty) Ltd v Motlokwa Transport & Construction (Pty) Ltd [2008] (3) SA 585 (SCA) in which the court held that:

“The party alleging the gross irregularity (of the arbitrator) must establish it. Where an arbitrator engages in the correct enquiry but errs either on the facts or the law, that is not an irregularity and is not a basis for setting aside an award. If parties choose arbitration, courts endeavour to uphold their choice and do not lightly disturb it. The attack on the award must be measured against these standards.” (para 8)

As a result, the court made the arbitration award an order of court.

It is evident from the authorities  quoted above that the Act and Model Law are pro enforcement of arbitral awards. A party bringing an action in court seeking the same relief sought in arbitration should not be a means of delaying the enforcement of the arbitral award.

In this regard, the Chief Justice of the Supreme Court of Victoria, Australia is quoted as saying:

“In arbitration, the directive role of the court needs to be minimised. The focus instead, turns to ways in which the court can support the arbitration process and enforce arbitral awards in a timely and cost-effective manner.”

This does not mean that the courts can never delay or stay an arbitral award. In terms of section 18 of the Act, a court may refuse to enforce a foreign arbitral award under certain circumstances. These circumstances include, but are not limited to, the court finding that a reference to arbitration is not permissible under the law of the Republic, the enforcement of the award is contrary to public policy, the court is satisfied that a party had no capacity, and the arbitration agreement is found to be invalid.

When opposing a court action to enforce an arbitral award, parties are advised to ensure that the reasons for opposing the action fall within the scope of section 18 of the Act. If the reasons do not fall within the ambit of section 18, a party may apply to have the decision reviewed or set aside in terms of Model Law, which is the exclusive recourse to a court against an arbitral award.