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International Arbitration Act – What Are The Implications For South Africa?

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International Arbitration Act – What Are The Implications For South Africa?

4th May 2018

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In recent years, International Arbitration has developed into an efficient process of resolving commercial disputes without resorting to the Courts.

The International Arbitration Act, 15 of 2017, (hereafter referred to as the “The Act”) came into operation on 20 December 2017. The Act incorporates the United Nations Commission on International Trade Law (UNCITRAL) Model Law into South African law.

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What does it mean for South Africa?

This Act ensures that South Africa, like many other Countries, has a reformed and modernised International Arbitration Law.

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It is envisioned that the reforms contained in the Act will place the South African Arbitration legislation in line with International Arbitration best practices.

South African businesses will be assisted in resolving their disputes cost effectively and timeously. The Act will also provide more efficient legal protection to South African investments overseas.  The Act will hopefully encourage more investments in South Africa seeing that the Business World will be assured that their business interests will be protected by the Act which in turn could lead to economic growth in South Africa.

 The Act repeals the outdated Arbitration Act 42 of 1965 in respect of International Arbitrations and the Recognition and Enforcement of Foreign Arbitral Awards Act, 40 of 1977 in its entirety. The purpose of this exclusion is to provide legal certainty to foreigners in South Africa and to eradicate any discrepancies.

The Act gives UNCITRAL the recognition as law in South Africa.

Key features of The Act

South Africa’s obligations under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards will be given effect to and therefore align our National Law to International Law. 

Parties may now refer disputes to Conciliation in accordance with the UNCITRAL Conciliation Rules, provided that the parties have agreed that the said Rules will apply.

A Foreign Arbitration Award must upon application be made an Order of Court, save for certain exceptions namely that the subject matter being arbitrated on cannot be done in South Africa. Another exception would be that the enforcement of the Arbitration Award would be contrary to public policy or in bad faith.

The Act specifically states that Arbitrators and Arbitral Institutions acting in good faith will be granted immunity.

International Arbitrations involving any South African Public Body are now to be held in public, unless the Arbitral Tribunal indicates that it would be against public policy or in bad faith for the Arbitration to be held in public. Public Interest dictates that where an Organ of State is a party to Arbitration proceedings, such proceedings must be held in public.

Where Arbitration proceedings are conducted in private, The Act makes provision that such proceedings be kept confidential.

Where the parties have agreed to Arbitration as a dispute resolution mechanism, in an Arbitration Agreement, any International Commercial dispute may thus be resolved by arbitration except where such dispute is not capable of being resolved by Arbitration or where is it contrary to public policy.

What does this practically mean?

The Act will be applicable to all International Commercial Agreements which came into operation either before or after the commencement of The Act. The Act will furthermore be applicable to every Arbitration under such Agreements. Arbitration proceedings which commenced before the Act came into operation will not be bound by the provisions of The Act.

The Act will not apply to Arbitration proceedings relating to the enforcement of an Arbitration Award under the Recognition and Enforcement of Foreign Arbitral Awards Act, 40 of 1977.

The Act will furthermore not be applicable to the enforcement, setting aside or remittal of an Arbitration Award under the Arbitration Act, 42 of 1965.  Arbitration proceedings which commenced before The Act came into operation will proceed as if The Act had not become effective.

Conclusion

The Act established a dispute resolution mechanism without involvement of the Courts. Universal dispute resolution mechanisms can now be applied to International Commercial Disputes. Parties will have access to cost effective and time efficient mechanisms to resolve their disputes. The Act will ensure that South Africa can become a choice International Arbitration destination when resolving International Commercial Disputes. Let SchoemanLaw Inc assist you with your Arbitration Agreements to ensure that it aligns with International legislation.

Written by Helena Roodt, SchoemanLaw Inc

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