South African courts have shown great reluctance to interfere in arbitral proceedings. This approach positions SA well as a neutral arbitral seat and an attractive seat for international arbitrations.
The enactment of the International Arbitration Act (the Act),1 set the foundation for South Africa to establish itself as an attractive seat for international arbitrations in Southern Africa and across the continent, more broadly. Whether this would be achieved, however, depends on how the Act is applied by courts and whether the "hands-off" approach envisaged by the Act, where courts confine themselves to playing a supportive role to arbitrations, is embraced.
Fortunately, since the enactment of the Act, the South African courts have generally shown a reluctance to intervene in arbitral proceedings, review arbitral decisions and refuse the enforcement of arbitral awards when called upon to do so on questionable grounds. Below are a few recent judgments which illustrate the way the courts have applied the Act and viewed their own role under the Act.
The court's willingness to recognise an arbitral award in the face of opposition was tested in
Vodacom International Limited and another v Mabanga.2 The case concerned the court's discretion under the Act to refuse to recognise or enforce a foreign arbitral award in circumstances where to do so would be contrary to public policy. The respondent argued that due to his visa being denied, he was unable to attend the arbitration proceedings that gave rise to the award and, as a result, the enforcement of the award in South Africa would be against public policy. Although the court acknowledged and considered the principles of public policy in this context, it found that the respondent's averments in relation to the visa were factually incorrect. The court therefore determined that there was no impediment in making the arbitral award an order of court and did so.
The court in
Industrius D.O.O v IDS Industry Service and Plant Construction South Africa (Pty) Ltd
3 was also requested to decline the enforcement of an arbitral award. The defence raised was that a counter-claim, which was dismissed in the arbitration in the absence of an appearance by the respondent, had been issued and was pending determination before the same court. In considering whether to decline the enforcement of the award, the court observed that the onus was on the party seeking resistance of the award to allege and prove that it was not enforceable under one or more of grounds contemplated under the Act. The respondent did not to do so and failed to take any steps to challenge the award once it had been issued. The court therefore found that the counter-claim was disposed of and that the arbitral award could be enforced.
JMH-Doctors SPV (RF) (Pty) Ltd v 3 Health Holdco Mauritius Ltd and Others,4 concerned a review of the decision of an appeal tribunal to grant an amendment, in circumstances where no substantive application for amendment had been moved. The first question the court considered was whether the tribunal's decision constituted an award that was reviewable under the Act, or a procedural ruling that was not. The court acknowledged that in terms of the Act and the Model law, only 'awards' and not 'rulings' were subject to a review. Since the Model Law itself did not directly distinguish between the two, the Court considered the English law position on this distinction, together with the language of the decision itself, and determined that the tribunal's decision did in fact constitute a ruling rather than an award. It therefore concluded on this basis that the award was not reviewable. The court proceeded to consider whether the applicant had established any grounds of review under the Act. The court noted that the applicant's primary objection was that the amendment was granted in the absence of a substantive application, as envisaged in the Uniform Rules of Court. The court held on this point that the appeal tribunal was not bound to follow this procedure, as the arbitration agreement between the parties conferred upon the panel an overriding discretion to follow whatever procedure they thought fit in the circumstances. This accorded with the approach in the Act, which permitted the amendment of pleadings unless the tribunal considered it inappropriate having regard to the delay in making it. The tribunal was aware of the reasons for the delay as it was occasioned by the point raised by the tribunal itself. The court accordingly dismissed the review on more than one ground.
Ircon International Limited v Tension Overhead Electrification (Pty) Ltd and Others5 the court declined to stay arbitral proceedings in circumstances where a jurisdictional challenge was dismissed by the arbitrator and no steps had been taken to timeously challenge that award. The court noted that insofar as an award was granted against the applicant at the end of the arbitration, it still had recourse under the Act to oppose the recognition and enforcement of the award at that stage. The court accordingly found that the application for a stay was unnecessary, premature and amounted to "forum shopping", as the applicant sought to get a decision that suited its own purpose, having sought the same relief before the arbitrator.
While the courts appropriately declined to intervene in the above matters, in
Vedanta Resources Holdings Limited v ZCCM Investment Holdings PLC
6 and another the court recognised its supervisory role under the Act and the need for it to intervene when required. In this case, Johannesburg was selected as the seat in an arbitration clause in an agreement between non-South African parties. As a result, the court was approached by one of the parties to stay legal proceedings instituted in the court of Zambia, on the basis that those proceedings were the subject of a dispute between the parties that ought to have been resolved by way of arbitration. The respondent, however, disputed the court's jurisdiction. Recognising that the selection of Johannesburg as the seat of the arbitration created an 'adequate connection' for the Court to establish jurisdiction, the court confirmed its jurisdiction having regard to the fact that the dispute was arbitrable and would constitute an international arbitration as defined in the Act, with the Model Law also empowering the court to recognise the arbitration agreement and to grant interim measures in relation to arbitration proceedings.
The above cases show the reluctance of the Court to interfere in arbitral proceedings on tenuous grounds, demonstrating that the South African courts are giving effect to Article 5 of the Model Law, which provides that
"In matters governed by this Law, no court shall intervene except where so provided in this Law." At the same time, foreign parties can take comfort from the court's willingness to perform its supervisory role under the Act in circumstances where South Africa is selected as a neutral arbitral seat. The robust approach taken by the courts to date in addressing the questions around how the Act should be applied certainly builds upon the foundation provided by the Act for South Africa to establish itself as an attractive seat for international arbitrations.