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SETTLEMENT OF INTERNATIONAL COMMERCIAL DISPUTES IN SOUTH AFRICA: THE NEW INTERNATIONAL ARBITRATION ACT 15 OF 2017

This is a matter of interest for all the players in the construction industry, particularly those who are involved in cross border construction projects. This Act introduces a model of dispute resolution that is based on the Model Law on International Commercial Arbitration. To put it in simple words, this Act will to a great extent adopt the international best practice on international dispute resolution and perhaps also lead to some future changes in the Arbitration within the borders of South Africa. The Act has been signed into law, under Government Gazette No. 41347 on 20 December 2017 and will be known as International Arbitration Act 15 of 2017. It is now the law of the land.

From the reading of the Act, it appears or can at least be argued that it seeks to adopt the Model Law on International Commercial Arbitration as part of South African law. This can be seen in section 2 of the Act which deals with “interpretations” read with section 6. The former section provides that the interpretation must be consistent with the Model Law unless it is inconsistent with the Constitution, while latter section provides that the Model Law shall have legal force in the Republic unless inconsistent with the Act. In Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews and another 2009 (4) SA 529 (CC), the court held that our arbitration law is not only consistent with but also in full harmony with the international best practices.

This Act repealed the Recognition and Enforcement of Foreign Arbitral Award Act 40 of 1977. It is also worth noting that the Act is binding on all public bodies on any arbitration proceedings. It is clear that the arbitration award are consistent with legal system in that they are enforceable and must be respected. The courts should not stand in the way of enforcement of arbitration away. This was the sentiment shared by the Supreme Court of Appeal in Zhongji Development Construction Engineering Company Limited v Kamoto Copper Company Sarl (421/2013) [2014] ZASCA 160; 2015 (1) SA 345 (SCA); [2014] 4 All SA 617 (SCA) (1 October 2014). The Act makes it almost impossible by the courts to refuse recognition and enforcement of the arbitration award unless there are procedural or technical grounds such as lack of capacity by the parties, unlawful arbitration agreement, etc.

It is important for organs of the state who are involved in cross-border transaction to observe and keep track of the development of this Act. It is worth mentioning that this Act will now govern the international arbitration and replace the Arbitration Act of 1956 to the extent that the Arbitration Act dealt with international arbitration. This is a change in law that is worth noting and the players in the construction space who are typically involved in cross border transaction will have to understand  the implications of this change and align its processes, including drafting international agreements that include the provision of international arbitration as contemplated in the Act.
 

Contributor:  SIKHUMBUZO HLOPE (Candidate Attorney) (Public Law Deptartment) (PMB Office)

E-mail:  sikhumbuzoh@tmj.co.za

Tel:  033 341 9100