The highly anticipated statute, the International Arbitration Act, No.15 of 2017 (the Act) came into effect on 20 December 2017 and will govern all international arbitrations seated in South Africa, including the enforcement of foreign arbitral awards. The Act replaces the outdated Arbitration Act, No. 42 of 1965, in respect of international arbitrations and the Recognition and Enforcement of Foreign Arbitral Awards Act 1977, in its entirety.
Fundamental features of the Act
- The Act will have a binding effect on public bodies which have entered into international commercial agreements.
- The United Nations Commission on International Trade Law Model Law (UNCITRAL Model Law) will have force of law in South Africa.
- Parties may refer disputes to conciliation in accordance with the UNCITRAL Conciliation Rules provided that the parties in question have agreed that the Rules will apply.
- Arbitrators and arbitral institutions acting in good faith will be granted immunity.
- South Africa's obligations under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards will be given effect to and therefore aligning national law with the New York Convention.
- A foreign arbitral award must be made an order of court upon application, save for certain exceptions such as the subject matter not being arbitrable in South Africa, or enforcement being against public policy or in bad faith.
- International arbitrations involving any South African public body are to be held in public, unless the arbitral tribunal, based on compelling reasons, directs otherwise.
What does this mean for you?
The Act will apply to:
- International commercial agreements which came into force either before or after the commencement of the Act; and every arbitration under such an agreements. However, arbitral proceedings which commenced before the Act came into force will not be bound by the Act.
- Every arbitral award whether the award was made before or after the date of commencement of the Act. The Act will not apply to proceedings relating to:
- the enforcement of an arbitral award under the Recognition and Enforcement of Foreign Arbitral Awards Act, 1977 (Act No. 40 of 1977); or
- the enforcement, setting aside or remittal of an award under the Arbitration Act, 1965 (Act No. 42 of 1965); which commenced before the Act came into force, and these proceedings will continue as if the Act had not commenced.
The Act entrenches a "hands-off" approach by the courts. Fast-track and universally understood dispute resolution mechanisms can be applied to international commercial disputes. This will result in litigants achieving major cost savings in the actual preparation and during the arbitration proceedings. The Act will ensure that South Africa is well positioned to be an international arbitration destination in resolving international commercial disputes and South African multinational businesses will be first in line to benefit from the legal reform. This will make South Africa an attractive seat for international arbitration.
