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Commercial Arbitration

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South Africa

Gerhard Rudolph
Baker McKenzie South Africa

    Infrastructure

  1. 1.The New York Convention
    Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?
  2. Yes. South Africa is a party to the New York Convention (Convention). In May 1976, South Africa acceded to the Convention without reservation and the Convention has been in force since 1 August 1976. Furthermore, South Africa enacted the Recognition and Enforcement of Foreign Arbitral Awards Act 1977 in order to give effect to the principles of the Convention. However, South Africa has received no notification from the Secretary-General of the declarations or reservations pursuant to articles I, X and XI of the Convention.

  3. 2.Other treaties
    Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?
  4. Although recent legislative developments favour the ratification of the 1965 Washington Convention for Settlement of Disputes between States and Nationals of Other States, South Africa has not yet adopted this convention. South Africa is, however, a member of the World Bank Group. 

    South Africa is a party to the Multilateral Investment Guarantee Agency ratified on 2 March 1994. No bilateral agreements relating to arbitration exist with other countries.

    South Africa is also a party to the 1907 Hague Convention for the Pacific Settlement of International Disputes, which created the Permanent Court of Arbitration in The Hague.

    Previously, South Africa was party to many bilateral investment treaties (BITs). The BITs ordinarily required submission to international arbitration for the settlement of disputes. Recently, South Africa has cancelled or allowed many of its BITs to lapse and replaced the protections afforded with domestic legislation, including the new Protection of Investment Act, 2015. The Protection of Investment Act has now been signed into law, but a date for its operation is yet to be set in the Official Government Gazette.

    The Protection of Investment Act, when it is in operation, provides a legal framework for investments and addresses the legal protection of investors in line with the requirements of the South African Constitution. The Protection of Investment Act’s principal aim will be to strengthen South Africa’s ability to attract foreign investment and increase exports. It also seeks to maintain a balance between the rights and obligations of all investors in South Africa, and provide adequate and equal protection for both foreign and local investors by providing that all investments will be protected, irrespective of their origin, and aims to promote a stable business environment to attract investment. When it is in force, it will require that all investments will have to be made in compliance with South Africa’s laws and makes reference to the state’s right to regulate in the public interest. In addition, the Protection of Investment Act provides that the state may consent to international arbitration with respect to foreign investments only after domestic remedies have been exhausted.

  5. 3.National law
    Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?
  6. The Arbitration Act No. 42 of 1965 (the Act) governs arbitration proceedings in South Africa. However, the Act makes no distinction between domestic and international arbitration. The Act is not based on the UNCITRAL model law. The South African Law Reform Commission has, however, proposed extensive reform including the implementation of an International Arbitration Act in South Africa, which will align with the UNCITRAL model law. 

    In line with this proposal for reform, an International Arbitration Bill has now been drafted and the latest Bill has been published by the Department of Justice. In its Bill form, it is understood that the main objective of the International Arbitration Bill will be to adopt the UNCITRAL Model Law on International Commercial Arbitration as the basis of the international arbitration regime in South Africa. The Bill in its current form, aims to exclude arbitrations covered under its provisions from the application of the Arbitration Act. 

    For international investment disputes, the Protection of Investment Act, when it is in operation, will prescribe domestic mediation as a first step to the resolution of a foreign investment dispute, provided the foreign investor and the government can agree on the appointment of a mediator. An alternative is for foreign investors to approach the domestic courts. While the Protection of Investment Act contains a provision for the government to consent to international arbitration, this is subject to the exhaustion of domestic remedies. In addition, if the government consents to international arbitration, the Protection of Investment Act will require the arbitration be state-to-state arbitration (between South Africa and the home state of the applicable investor) as opposed to investor-state arbitration (between the foreign investor and the host state, South Africa).

  7. 4.Arbitration bodies in your jurisdiction
    What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?
  8. The prominent arbitral institutions in South Africa are:

    • the Arbitration Foundation of South Africa (AFSA) (www.arbitration.co.za); and
    • the Association of Arbitrators (ASA) (www.arbitrators.co.za).

    Parties may use an institution to administer the arbitration according to its own rules (known as institutional arbitration). Here, the institution carries out all the administrative tasks. Alternatively, the parties may convene ad hoc arbitration proceedings. Although they may use the procedural rules of one of the institutions, they must attend to the administration of the arbitration themselves.

    The standard procedural rules published by the institutions are closely aligned with those of the UNCITRAL Model Law and specifically regulate matters not regulated in the Act. This includes:

    • the ability of an arbitrator to rule on his or her own jurisdiction; and
    • the rules of law applicable to a dispute, as well as the grounds and procedure for challenging an arbitrator's appointment.

    Both the ASA and the AFSA have published expedited or summary rules, which are to find application in less complex matters.

    A notable new development is the creation of the China Africa Joint Arbitration Centre Johannesburg (CAJAC) in cooperation with AFSA, Africa ADR (AFSA’s external arm), the Association of Arbitrators and the Shanghai International Trade Arbitration Centre. It will serve as an international arbitration venue for disputes involving parties from China and Africa. It is envisaged that CAJAC will operate from both South Africa and China and will hear disputes relating to business in Africa in Johannesburg and disputes relating to business in China in Shanghai, respectively.

  9. 5.Foreign institutions
    Can foreign arbitral providers operate in your jurisdiction?
  10. Yes. There are no restrictions preventing foreign arbitral providers from operating in South Africa.

  11. 6.Courts
    Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with the law and practice of international arbitration?
  12. No specialist arbitration court exists. It should be noted that, even if the parties agree to arbitrate a matter in terms of an arbitration clause in their contract, the High Courts in South Africa retain an inherent discretion to be able to hear the matter. Courts, however, tend to be deferent (and thus supportive) of the arbitration process.

    Agreement to arbitrate

  13. 7.Formalities
    What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?
  14. Section 1 of the Act defines an arbitration agreement as meaning ‘a written agreement providing for the reference to arbitration of an existing dispute or any future dispute relating to a matter specified in the agreement, whether an arbitrator is named or designated therein or not’. An arbitration agreement must be in writing. It is, however, not a requirement for the arbitration agreement to be signed by the parties or to be contained in a single document. For example, an exchange of correspondence may result in the conclusion of a written arbitration agreement.

    Although the Act requires arbitration agreements to be in writing, oral agreements are not invalid. In contrast, oral agreements are regulated by common law and not by the Act. Generally, most commercial arbitration agreements are in writing and are regulated by the Act.

    For foreign investors, the Protection of Investment Act, when it is in operation, will require the exhaustion of local remedies, which may be mediation or process through the domestic courts, before the government can be approached to consent to international investment arbitration. 

  15. 8.Arbitrability
    Are any types of dispute non-arbitrable? If so, which?
  16. The Act dictates that the following disputes or causes of action are not capable of resolution by way of arbitration:

    • matrimonial matters; and
    • matters relating to the status of a person.

    At common law, arbitration may not be pursued in criminal matters. Section 35(3)(c) of the Constitution of South Africa, 1996 makes this clear. Adjudication of criminal matters is limited to the ordinary courts.

    In terms of competition law, disputes pertaining to the possible contravention of competition legislation, must be referred to the Competition Tribunal.

    For insurance-related claims, unless the contract provides otherwise, the owner of a domestic policy must enforce his or her rights against an insurer in a court of competent jurisdiction, but this does not extend to disputes relating to quantum.

    For foreign investors, the Protection of Investment Act, when it is in operation, will require the exhaustion of local remedies, which may be mediation or process through the domestic courts, before the government can be approached to consent to international investment arbitration.

  17. 9.Third parties
    Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?
  18. A third party will be bound by an arbitration agreement where it seeks to participate and submits to the arbitral process and all parties to the agreement have consented (ie, it becomes an additional party to the arbitration agreement), or in circumstances where a third party replaces a party to the arbitration agreement. Moreover, a court may allow a third party to intervene, on good cause shown, and order that the dispute that is the subject of the arbitration proceedings be determined by way of interpleader proceedings in court.

  19. 10.Consolidation
    Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?
  20. Consolidation is not possible unless the agreement provides for it. This is because the power to consolidate, either by the arbitrator or court, would frustrate the parties’ choice or agreement to arbitrate their own matter with their chosen arbitrator or tribunal.

  21. 11.

    Groups of companies
    Is the 'group of companies doctrine' (or any other basis for piercing the corporate veil) recognised in your jurisdiction?

  22. South African law dictates that each company in a group has a separate legal personality with its own distinct rights, privileges, duties and liabilities. In other words, the holding company and its subsidiaries are separate legal entities and the acts of the holding company are not attributable to the acts of its wholly owned subsidiary or vice versa.

    Section 65 of the Close Corporation Act 69 of 1984 and section 20(9) of the Companies Act 71 of 2008 permits the court to disregard the separate juristic personality of a company and impose personal liability on directors and shareholders. The court will pierce the corporate veil where the corporate structure's separate personality has been abused or thwarted. 

  23. 12.Separability
    Are arbitration clauses considered separable from the main contract?
  24. Generally, South African law does not endorse the principle of separability unless the contract was terminated by repudiation or due to the voidability of the contract. In such cases, the arbitration clause may be severed, surviving the termination.

    Otherwise, if the contract is invalid the arbitration clause will also be invalid. In terms of the arbitrator's jurisdiction, although he or she may arbitrate on the issue of his or her jurisdiction, his or her decision may ultimately be taken on review. If the court on review holds the contract to be invalid, then the arbitrator's jurisdiction is compromised retrospectively and any resulting award is invalid and unenforceable. 

  25. 13.Competence-competence
    Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
  26. An arbitrator is not permitted to rule on an issue or question of his or her own jurisdiction unless expressly empowered to do so in terms of his or her appointment. 

    Where one of the parties contests the validity of the agreement containing the arbitration agreement and alleges that the arbitrator has no jurisdiction, absent express authority to rule on his own jurisdiction the parties will be obliged to approach the court for declaratory relief on the issuer. 

  27. 14.Drafting
    Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?
  28. In terms of validity, the arbitration clause needs to conform to the Act. The Act states that the arbitration agreement must refer an existing dispute, or any future dispute relating to a matter so specified, to arbitration and it must be in writing.

    It may be worthwhile for the parties to set out with greater particularity the rules under which they wish to arbitrate. For example, whether the arbitration will be administered by a secretariat or institution as well as provide a more detailed procedural framework.

  29. 15.Institutional arbitration
    Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?
  30. Domestic arbitration is frequently encountered in ad hoc referrals, typically flowing from civil court proceedings or rudimentary contractual submissions to arbitration, where the parties often agree to follow High Court Rules on process and taking evidence and the arbitrator acts as quasi judge. More frequently, and in more sophisticated domestic and cross border transactions, the arbitration submissions are likely to be institutional. Domestic arbitrations  seldom contemplate adoption of the UNCITRAL Rules in ad hoc proceedings whereas international arbitration proceedings conducted on an ad hoc basis will often use the UNCITRAL Rules, coupled with the IBA Rules on the Taking of Evidence in International Arbitration. Domestic arbitration is facilitated by AFSA and its rules are widely used. AFSA's fully administered service offers specialised case management within a flexible process and a choice of rules depending on the size and complexity of the arbitration matter.

    On the other hand, the most prominent international institutions that are widely used in international arbitrations are the Court of Arbitration of the International Chamber of Commerce (ICC) and the London Court of International Arbitration (LCIA). Accordingly, the rules of the ICC and LCIA will apply to international arbitrations.

    The parties to ad hoc domestic proceedings may agree to the adoption of rules and procedure specifically for the purpose of arbitration. Parties often choose to apply the rules of the High Court.

  31. 16.Multi-party agreements
    What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.
  32. All arbitral proceedings are premised on the notion of contractual privity. There are no particular form requirements for a multiparty arbitration agreement.

    Commencing the arbitration

  33. 17.Request for arbitration
    How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?
  34. Any party to an arbitration agreement may initiate proceedings by providing a referral notice, notifying the counterparty or parties of its intention to refer a particular dispute or disputes to arbitration and calling upon such party or parties to agree to the appointment of an arbitrator. If parties have agreed to an administered arbitration, the applicable secretariat will make or confirm his or her appointment.

    Parties may agree on a pre-arbitration conference to discuss logistical or procedural issues, including time periods for the delivery of process.

    In terms of the principle of extinctive prescription, certain types of obligations or debts may prescribe or become unenforceable if not exercised within the prescribed time periods. The Prescription Act 68 of 1969 provides for different prescription periods, depending on the type of debt and the type of debtor.

    When it is in operation, section 13 of the Protection of Investment Act relating to disputes brought by a foreign investor will prescribe that certain information and a prescribed form must be submitted by the foreign investor when mediation of the dispute is contemplated. These include contact details of the foreign investor; a summary of the claim, including the measures giving rise to the investment dispute; the specific organ, agency, province or other subdivision of South Africa allegedly responsible for the measures which the foreign investor alleges constitute a breach of any of the investment protection contained in the Protection of Investment Act; the provisions of the Protection of Investment Act that the foreign investor alleges have been breached and the relief sought.

    Choice of law

  35. 18.Choice of law
    How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
  36. Generally, the substantive law applicable to the dispute is agreed to by the parties as the governing law of the contract. In the absence of prior agreement, the arbitral tribunal will determine which substantive law applies in accordance with the applicable principles of private international law, as applied at the seat of arbitration in relation to the contractual choice of law.

    Appointing the tribunal

  37. 19.Choice of arbitrators
    Does the law of your jurisdiction place any limitations in respect of a party’s choice of arbitrator?
  38. There are no statutory restrictions to a party's choice of an arbitrator or arbitrators in terms of the Act. 

    When it is in operation, section 13 of the Protection of Investment Act relating to disputes brought by a foreign investor will prescribe that mediation, or the involvement of a domestic court is a prerequisite before proceeding to arbitration by government consent. The Protection of Investment Act states that the department responsible for trade and industry must maintain a list of qualified mediators of high moral character and recognised competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment and who are willing and able to serve as mediators. In the absence of a list being kept, the parties may choose a mediator from individuals proposed by either party

  39. 20.Foreign arbitrators
    Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?
  40. There is no restriction. Arbitrators travelling to South Africa for a hearing or site visit may need to comply with applicable visa requirements.

  41. 21.Default appointment of arbitrators
    How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?
  42. As a general rule, courts play no role in the selection and appointment of an arbitrator. However, section 12 of the Act provides that a court will, upon application by any of the parties to the arbitration agreement, intervene in the selection and appointment of an arbitrator if the parties' method of selection fails.

  43. 22.Immunity
    Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?
  44. There is also no restriction on the arbitrator’s entitlement to require the parties who undergo an arbitration to contractually indemnify him or her on acceptance of the mandate. This is often an express preliminary requirement of the arbitrator on accepting his appointment in ad hoc proceedings, the issue being expressly dealt with in the rules of local arbitration institutions. 

  45. 23.Securing payment of fees
    Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?
  46. It is common practice for the arbitrator to enter into a fee arrangement with the parties at the time of his appointment in ad hoc proceedings. Where the parties are engaged through local arbitration institutions, these entities require payment of administration fees along with deposits to serve as security for the payment of arbitrators' fees. 

    Section 34(1) of the Act provides that where the fees of the arbitrator have not been fixed by an agreement, any party to the reference may, notwithstanding that such fees may already have been paid, require such fees to be taxed. These fees are taxed by the taxing master of the High Court.

    Section 34(4) of the Act makes provision for the arbitrator's right to withhold his or her award pending payment of his or her fees and any expenses incurred by him or her in connection with the arbitration proceedings.

    Challenges to arbitrators

  47. 24.Grounds of challenge
    On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?
  48. There are no specific rules governing challenges in relation to the arbitrator. But the IBA Guidelines on Conflicts of Interest in International Arbitration are increasingly being used.

    The parties may regulate the grounds for challenge in relation to the arbitrator. If the contract does not provide for a particular ground of challenge within the arbitration agreement, then a party cannot unilaterally remove the arbitrator. This means that the party would need to apply to court and show good cause as to why the arbitrator should be removed from office.

    The Act says that ‘good cause’ includes the following:

    • a failure on the part of an arbitrator to use all reasonable dispatch in entering on and proceeding with the arbitration and making an award; or
    • in a case where two arbitrators are unable to agree, in providing the parties with notice to this effect.

    When the Protection of Investment Act comes into operation, a ground of challenge to an arbitration initiated by a foreign investor by the government may be the failure to exhaust domestic remedies, mediation or process through the domestic courts. A further ground of challenge could be the failure of the foreign investor to obtain the necessary consent of the government to proceed to international arbitration after local remedies are exhausted.

    Interim relief

  49. 25.

    Types of relief
    What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

  50. In accordance with section 21 read together with section 26 of the Act, a court may make an order relating to the following interim measures:

    • security for costs;
    • discovery of documents and interrogatories;
    • the giving of evidence by affidavit;
    • the examination of any witness before a commissioner in South Africa;
    • the inspection, the interim custody, the preservation, or the sale of goods or property;
    • an interim interdict or similar relief;
    • securing the amount in dispute in the reference;
    • substituted service of notices required by the Act or summonses; and
    • the appointment of a receiver.

    A court has the same powers as the arbitration tribunal for making the interim orders listed under section 21 of the Act.

    There are no reported cases where a South African court has issued an anti-suit injunction preventing a party from commencing or continuing arbitration proceedings in another jurisdiction or forum. However, a party is entitled to raise a special defence of lis pendens and demonstrate that there are proceedings pending between the parties based on the same cause of action. This usually results in the dismissal or the suspension of the secondary proceedings pending the outcome of the first proceedings.

  51. 26.Security for costs
    Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?
  52. The Act does not specifically empower the arbitrator to make an order for security for costs. In the absence of express agreement, the party would have to apply to court for an order of security.

    The Act does do so indirectly, however. Section 26 of the Act deals with interim awards. The arbitrator may make an interim award, unless the agreement provides otherwise. For the award to be valid and binding by the courts, it must be made within the stipulated time frame, be in writing and signed by the arbitrator. Security of costs may be included as an interim measure.

    Also, in terms of the matters listed in section 21 of the Act, including matters relating to the security of costs, the South African courts have the power to grant such relief.

    Procedure

  53. 27.

    Procedural rules
    Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

  54. There are no statutory rules governing the procedure of arbitration in South Africa. The procedure will usually be determined by the rules of the arbitration institution administering the arbitration. In the absence of a set of rules, the parties usually agree on procedural rules specifically for purposes of arbitration. 

    When it is in operation, section 13 of the Protection of Investment Act relating to disputes brought by a foreign investor will prescribe that certain information and a prescribed form must be submitted by the foreign investor when mediation of the dispute is contemplated. These include contact details of the foreign investor; a summary of the claim, including the measures giving rise to the investment dispute; the specific organ, agency, province or other subdivision of South Africa allegedly responsible for the measures which the foreign investor alleges constitute a breach of any of the investment protection contained in the Protection of Investment Act; the provisions of the Protection of Investment Act that the foreign investor alleges have been breached and the relief sought.

    Further, section 13 will prescribe that consideration of a request for international arbitration to the government will be subject to the administrative processes set out in section 6. This section relates to fair administrative treatment.

  55. 28.Refusal to participate
    What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?
  56. The arbitrator's power to deal with a dilatory or non-compliant party is limited. This depends on the terms of the contract and, to some extent, the Act. Although the Act does not provide for the barring of a party (as in litigation proceedings), the Act does provide for certain instances where the arbitrator can proceed with the arbitration in the absence of a dilatory party. This may occur if the party receives adequate notice of the arbitration proceedings, fails to attend the proceedings and fails to provide sufficient cause for such non-attendance.

  57. 29.Admissible evidence
    What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Commercial Arbitration generally be taken into account?
  58. Sections 14 and 22 of the Act govern the powers of the arbitration tribunal in relation to the procedure and procurement of evidence. The Act does not, however, contain any provision regarding the manner in which the arbitration tribunal is required to establish the facts of the case.

    As a general rule, the arbitrator will usually apply the rules of the South African Law of Evidence. There is no strict obligation to do so, however, as the arbitrator is bound by the rules of natural justice only. The parties usually determine the type of evidence that will be led and the procedure for procuring evidence. For example, expert evidence is presented in an expert report prior to the hearing and the expert will give oral evidence with reference to his or her report.

    It is unusual for domestic arbitration tribunals to apply the IBA Rules on the Taking of Evidence in International Arbitration. They are not used frequently and common practice is to apply the South African Law of Evidence and Proof, corresponding to conventional civil court practice on standards of discovery and document production, documentary evidence, rules of privilege and admissibility of evidence, qualification of experts and the presentation of expert evidence, the need for and conduct of oral evidence and cross-examination of witnesses in the common law tradition.

    Where international arbitration proceedings are initiated on an ad hoc basis, the parties commonly resort to adoption of the IBA Rules on the Taking of Evidence in International Arbitration. 

  59. 30.Court assistance
    Will the courts in your jurisdiction play any role in the obtaining of evidence?
  60. In terms of the Act, unless the arbitration agreement provides otherwise, the process of discovery in relation to an arbitration is similar to court procedure. The arbitrator may order the defaulting party to make discovery on application. That said, however, there is no prescribed procedure for the production of documents, and the parties may agree this themselves.

    In terms of section 21(1) of the Act, the process of discovery is a matter in which the court retains its ordinary powers in relation to arbitration. Since the arbitrator has the same powers as the court in relation to discovery, in practice (usually), the parties will only involve the court when third parties are involved. This may occur when one of the parties applies for discovery in terms of the Act vis a vis a third party and that party fails to disclose. Here, the party may then apply to court to compel the third-party discovery. 

  61. 31.Document production
    What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?
  62. Section 21(1) of the Act, provides that for the purposes of and in relation to a reference under an arbitration agreement, one of the matters in respect of which the court has the same power of making orders is the discovery or disclosure of documents.

    There are no prevailing practices relating to document production in international arbitration in South Africa. The ordinary Redfern-type process, or a Request to Produce procedure under the IBA Rules on the Taking of Evidence in International Arbitration, may find application, particularly in the arena of construction and engineering disputes.

  63. 32.Hearings
    Is it mandatory to have a final hearing on the merits?
  64. While the Act, AFSA and ASA procedural rules envisage a hearing, the parties may agree to dispense with a hearing and refer a stated case to the arbitrator for determination. This is possible where narrow issues are concerned that are not subject to material disputes of fact and, as a result, do not require the leading of oral evidence.

  65. 33.Seat or place of arbitration
    If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?
  66. Yes. The parties can agree to conduct hearings and procedural meetings elsewhere irrespective as to the jurisdictional seat. 

    Award

  67. 34.Majority decisions
    Can the tribunal decide by majority?
  68. Unless there is an agreement between the parties to the contrary, a decision sanctioned by the majority of the arbitral tribunal is sufficient. If there are only two arbitrators and there is disagreement, the Act provides for the appointment of an umpire to resolve the disagreement. 

  69. 35.Limitations to awards and relief
    Are there any particular types of remedies or relief that an arbitral tribunal may not grant?
  70. Yes. For example, arbitrators are not allowed to award punitive or exemplary damages as such awards are unenforceable under South African law.

  71. 36.Dissenting arbitrators
    Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?
  72. Yes they are permitted, but are not common in practice. An award sanctioned by the majority of an arbitration tribunal is sufficient. 

  73. 37.Formalities
    What, if any, are the legal and formal requirements for a valid and enforceable award?
  74. The legal and formal requirements for a valid and enforceable award are the following:

    • the award must be in writing and signed by all members of the arbitration tribunal;
    • the award must be made within the period prescribed by the Act or by the arbitration agreement, or within any extended period allowed by the parties or the court; and
    • the award is required to be delivered by the arbitration tribunal, the parties or their representatives being present or having been summoned to appear, unless otherwise agreed.
  75. 38.Time frames
    What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?
  76. On good cause shown, the court may extend the time for making the award, whether it has expired or not. If the time period for making an award has expired, a party can apply to court for an extension or, alternatively, for an order that the arbitration agreement ceases to have effect.

    The arbitration tribunal must, unless the parties agree otherwise, deliver its award within four months of the date upon which the arbitrator was called on to act as arbitrator or on or before any later date to which the parties may agree.

    In the case of an award by an umpire (a person called upon by the parties or arbitrators to resolve a matter of procedure or any interlocutory question), the award must be made within three months of the date upon which the umpire was called on to act as umpire (or before any later date to which the parties may agree).

    The Act says that if a period of six weeks has lapsed after the publication of an award, the parties to the reference may (in writing and signed by them) remit any matter that was referred to arbitration to the arbitration tribunal for reconsideration. An arbitration tribunal may correct any award, any clerical mistake or any patent error arising from an accidental slip or omission. There is no fixed time limit on this.

    When it is in force, section 13 of the Protection of Investment Act relating to disputes brought by a foreign investor will prescribe that when an investor has a dispute in respect of action taken by the government, which action affected an investment of such foreign investor, he may, within six months of becoming aware of the dispute request the department responsible for trade and industry to facilitate the resolution of such dispute by appointing a mediator. However, a foreign investor is not precluded from approaching any competent court, independent tribunal or statutory body within South Africa upon becoming aware of a investment dispute. The time-frame in which the investor should refer or institute proceedings in any competent court, independent tribunal or statutory body is not specified, with the Protection of Investment Act merely stating it is subject to applicable legislation

    Costs and interest

  77. 39.

    Costs
    Are parties able to recover fees paid and costs incurred? Does the 'loser pays' rule generally apply in your jurisdiction?

  78. Yes. Parties are able to recover costs incurred in the arbitration. Unless the arbitration agreement provides otherwise, the arbitration tribunal has unfettered discretion to award costs incurred in the arbitration. The arbitration tribunal is required to give directions as to the scale on which such costs are to be taxed and by whom and in what manner such costs, or any part, are to be paid. Moreover, the arbitration tribunal may tax or settle the amount of costs, or any part thereof, and may award costs as between attorney and client.

    The general principle in awarding costs is that they follow the successful party.

  79. 40.Interest on the award
    Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?
  80. The Act states that where an award orders the payment of a sum of money, such sum shall, unless the award provides otherwise, carry interest as from the date of the award and at the same rate as a judgment debt.

    Where the rate of interest on outstanding sums of money has not been agreed by the parties, the Prescribed Rate of Interest Act applies. From 1 March 2016, the applicable rate of interest is 10.25 per cent per annum, calculated daily without compounding.

    Challenging awards

  81. 41.Grounds for appeal
    Are there any grounds on which an award may be appealed before the courts of your jurisdiction?
  82. Neither errors of fact nor errors of law are ordinarily appealable. Section 28 of the Act provides that unless the arbitration agreement provides otherwise, an award, shall, subject to the provisions of the Act, be final and not subject to an appeal and each party to the reference shall abide by and comply with the award in accordance with its terms. The parties are only entitled to appeal the award if the arbitration agreement provides as much. 

  83. 42.Other grounds for challenge
    Are there any other bases on which an award may be challenged, and if so what?
  84. An award may be set aside in terms of the Act, upon application by either of the parties on notice, in instances where:

    • any member of the arbitration tribunal has misconducted him or herself in relation to his or her duties as arbitrator or umpire;
    • an arbitration tribunal has committed any gross irregularity in the conduct of the arbitration proceedings;
    • an arbitration tribunal has exceeded its powers; and
    • an award has been improperly obtained.

    These are difficult applications to make.

    If the parties agree (or an application is made to the court), a court may rule on any point of law that arises during the proceedings but before a final award is made. This declaratory order is binding and final. If it is ignored by the arbitrator, this would constitute misconduct or a gross irregularity, unless the court's decision is effective pending the arbitrator's final decision.

  85. 43.Modifying an award
    Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
  86. YAs indicated above there is no right of appeal unless expressly provided for in an arbitration agreement. The remaining grounds of recourse or challenge, as provided for above, accrue statutorily and are not capable of contractual exclusion.

    Enforcement in your jurisdiction

  87. 44.Enforcement of set-aside awards
    Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
  88.  In terms of the Recognition and Enforcement of Foreign Arbitral Awards Act of 1977, a court will refuse to enforce a foreign arbitral award in the following circumstances:

    • if the award is not yet binding on the parties; or
    • it has been set aside or suspended by a competent authority of the country in which (or in terms of the law in that country) the award was made.

    Please note that the new International Arbitration Bill which has recently been tabled in Parliament aims to repeal the Recognition and Enforcement of Foreign Arbitral Awards Act of 1977 and instead incorporate provisions relating to the recognition and enforcement of foreign arbitral awards into the text of the International Arbitration Bill.

  89. 45.Trends
    What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?
  90. The South African courts continue to strongly support arbitration as a method of resolving commercial disputes and the Supreme Court of Appeal has affirmed the international principle that there should be minimal court intervention when reviewing and enforcing international commercial arbitration awards.

    As discussed above, the South African Law Commission's report on international arbitration has proposed various reforms, which include the implementation of a draft bill based on the UNCITRAL model law. The International Arbitration Bill is currently tabled in Parliament and it has been published by the Department of Justice. The Bill, if passed into law, will repeal the Recognition and Enforcement of Foreign Arbitral Awards Act, 1977 and will align international arbitration law in South Africa with the UNCITRAL Model Law on International Commercial Arbitration. The Protection of Investment Act will also affect international investment disputes but it is yet to be brought into operation.

  91. 46.State immunity
    To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
  92. The government of South Africa is obliged to honour judgment debts as granted against it. The State Liability Amendment Act came into force on 30 August 2011. This legislation amends and regulates the manner in which enforcement and execution proceedings ought to be conducted.

    The state attorney is obliged to inform the relevant government department of the existence of a court order sounding in money against it. This must be done within seven days of the final court order having been granted. The department then has 30 days in which to settle the money owed. If payment is not effected within the stipulated time period, the creditor may then apply for a writ of execution against the moveable property of the state. The Sheriff of the Court ought to attach moveable property that is not crucial for service delivery or threaten life if removed. The attached property may be sold by a Sheriff of the Court within 30 days of the date of attachment.

    In terms of the Foreign States Immunities Act, if a foreign state has agreed in writing that if a dispute has arisen or will arise and is referred to arbitration, then that state will not be immune from the jurisdiction of the courts in relation to any proceedings that arise from the arbitration.

    Further considerations

  93. 47.Confidentiality
    To what extent are arbitral proceedings in your jurisdiction confidential?
  94. The Act does not provide for the confidentiality of arbitration proceedings. However, parties may include a confidentiality clause in their arbitration agreement. Even if the parties fail to include a confidentiality clause in their arbitration agreement, such a term is considered to be implied through the common law.

    The ASA and AFSA procedural rules expressly provide for the confidentiality of arbitration proceedings and the final award.

    The International Arbitration Bill, in its current form, will provide that arbitration proceedings to which a public body is a party are held in public, unless for compelling reasons, the arbitrator directs otherwise. The Bill also provides that where the arbitration is held in private, the award and all documents created for the arbitration which are not in the public domain must be kept confidential by the parties and tribunal, except to the extent that the disclosure of such documents may be required by reason of a legal duty or to protect or enforce a legal right. However, the Bill is still to be passed into law and this provision may change.

  95. 48.Evidence and pleadings
    What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?
  96. All pleadings, process, evidence exchanged and led during the proceedings and the details of the arbitration award are confidential. This is subject to the agreement. The parties may, of course, waive their right to confidentiality.

    When an application is made in terms of the Act, in order to declare an award an order of court, the award becomes a matter of public record. But often this is uncontroversial since the court will only disclose limited aspects of the matter in relation to the award.

    Although arbitrators are entitled to claim privilege, the court retains its inherent power to compel the discovery of any document. 

  97. 49.Ethical codes
    What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
  98. There are no specific provisions, ethical codes or professional standards regarding the ethical duties of arbitrators. However, legal professionals are bound by the professional codes that regulate the conduct of attorneys and advocates.

  99. 50.Procedural expectations
    Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?
  100. The arbitration process in South Africa is typically grounded in the English model of adversarial process as opposed to the inquisitorial model encountered in Europe.

    In relation to exchange of process, the conduct of hearings and dealing with evidence, process generally follows the norms of the civil court, although the arbitration procedures are generally more flexible and less formal.

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GAR know-how provides reliable cross-jurisdictional insight to help cement the building blocks of international practice. In this section, select experienced practitioners answer commonly-asked questions for key jurisdictions so allowing readers to be better-placed to solve the challenges of their working days.

Questions

    Infrastructure

  1. 1.The New York Convention
    Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?
  2. 2.Other treaties
    Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?
  3. 3.National law
    Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?
  4. 4.Arbitration bodies in your jurisdiction
    What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?
  5. 5.Foreign institutions
    Can foreign arbitral providers operate in your jurisdiction?
  6. 6.Courts
    Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with the law and practice of international arbitration?
  7. Agreement to arbitrate

  8. 7.Formalities
    What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?
  9. 8.Arbitrability
    Are any types of dispute non-arbitrable? If so, which?
  10. 9.Third parties
    Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?
  11. 10.Consolidation
    Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?
  12. 11.

    Groups of companies
    Is the 'group of companies doctrine' (or any other basis for piercing the corporate veil) recognised in your jurisdiction?


  13. 12.Separability
    Are arbitration clauses considered separable from the main contract?
  14. 13.Competence-competence
    Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
  15. 14.Drafting
    Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?
  16. 15.Institutional arbitration
    Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?
  17. 16.Multi-party agreements
    What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.
  18. Commencing the arbitration

  19. 17.Request for arbitration
    How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?
  20. Choice of law

  21. 18.Choice of law
    How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
  22. Appointing the tribunal

  23. 19.Choice of arbitrators
    Does the law of your jurisdiction place any limitations in respect of a party’s choice of arbitrator?
  24. 20.Foreign arbitrators
    Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?
  25. 21.Default appointment of arbitrators
    How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?
  26. 22.Immunity
    Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?
  27. 23.Securing payment of fees
    Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?
  28. Challenges to arbitrators

  29. 24.Grounds of challenge
    On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?
  30. Interim relief

  31. 25.

    Types of relief
    What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?


  32. 26.Security for costs
    Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?
  33. Procedure

  34. 27.

    Procedural rules
    Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?


  35. 28.Refusal to participate
    What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?
  36. 29.Admissible evidence
    What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Commercial Arbitration generally be taken into account?
  37. 30.Court assistance
    Will the courts in your jurisdiction play any role in the obtaining of evidence?
  38. 31.Document production
    What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?
  39. 32.Hearings
    Is it mandatory to have a final hearing on the merits?
  40. 33.Seat or place of arbitration
    If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?
  41. Award

  42. 34.Majority decisions
    Can the tribunal decide by majority?
  43. 35.Limitations to awards and relief
    Are there any particular types of remedies or relief that an arbitral tribunal may not grant?
  44. 36.Dissenting arbitrators
    Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?
  45. 37.Formalities
    What, if any, are the legal and formal requirements for a valid and enforceable award?
  46. 38.Time frames
    What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?
  47. Costs and interest

  48. 39.

    Costs
    Are parties able to recover fees paid and costs incurred? Does the 'loser pays' rule generally apply in your jurisdiction?


  49. 40.Interest on the award
    Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?
  50. Challenging awards

  51. 41.Grounds for appeal
    Are there any grounds on which an award may be appealed before the courts of your jurisdiction?
  52. 42.Other grounds for challenge
    Are there any other bases on which an award may be challenged, and if so what?
  53. 43.Modifying an award
    Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
  54. Enforcement in your jurisdiction

  55. 44.Enforcement of set-aside awards
    Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
  56. 45.Trends
    What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?
  57. 46.State immunity
    To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
  58. Further considerations

  59. 47.Confidentiality
    To what extent are arbitral proceedings in your jurisdiction confidential?
  60. 48.Evidence and pleadings
    What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?
  61. 49.Ethical codes
    What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
  62. 50.Procedural expectations
    Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?