International Arbitration 2024 Comparisons

International arbitration is being increasingly utilised in South Africa, particularly in cases involving complex, cross-border commercial disputes. At the end of 2017, South Africa’s legal framework was modernised and brought in line with the UNCITRAL Model Law on International Commercial Arbitration (“UNCITRAL Model Law”) through the adoption of the International Arbitration Act 15 of 2017 (IAA). The IAA now provides a comprehensive legal regime that is conducive to international arbitration, addressing all stages of the arbitral process and limiting court intervention to specific grounds, such as procedural or jurisdictional issues. South Africa is also a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), which facilitates the recognition and enforcement of foreign arbitral awards in the country.

Since the adoption of the IAA, the prevalence of international arbitrations seated in South Africa has increased. Recent statistics published by the Arbitration Foundation of Southern Africa (AFSA) show this increased prevalence. According to AFSA’s 2022 report, international arbitrations constituted 65% of the overall disputes lodged with AFSA, while domestic arbitrations accounted for the remaining 35%. The composition of parties involved in AFSA international arbitrations reflects significant international engagement, with 71% hailing from the Southern African Development Community (SADC) region and the remaining 29% originating from non-African nations.

South Africa is increasingly being chosen as a seat of arbitration in parties’ commercial contracts, particularly due to the availability of skilled arbitrators and the supportive judiciary that respects the autonomy of the arbitration process. This has made international arbitration in South Africa an attractive option for parties, particularly those hailing from the SADC region. South Africa’s courts are also currently overburdened with a high volume of cases, leading to delays and inefficiencies. The courts’ workload is exacerbated by systemic issues, which undermine public confidence in the legal system, and commercial litigants appear to be resorting to arbitration (whether international or domestic) more frequently for this reason as well.

Notwithstanding this, court litigation remains the dominant dispute resolution mechanism in certain sectors, particularly those involving public procurement and regulatory compliance. This is largely because those matters often involve government or regulatory bodies, and statutes require that these issues be resolved in the courts. There are also certain disputes which cannot be arbitrated in South Africa, such as criminal matters and matters involving status (eg, liquidations and divorces).

In light of the fact that arbitration awards and proceedings are not publicised in South Africa, it is difficult to determine whether there are any industries that have experienced significant international arbitration activity in recent years.

However, the data collected by AFSA from 2013 to 2023 indicates that the arbitrations launched under the auspices of its rules (both international and domestic) have predominantly been from the financial sector, which accounts for 33% of its total cases. This is followed by the energy and resources sector at 20%, industrial and manufacturing at 12%, and commodities and trading at 10%.

It is likely that the players in these industries, which often experience complex, high-value contractual disputes, have in recent years opted to include dispute resolution mechanisms requiring arbitration in their contracts. This has likely been done in order to ensure that the parties are able to appoint arbitrators with specialist subject matter expertise and resolve their disputes confidentially and as efficiently and cost-effectively as possible (which is not assured through the South African court systems).

AFSA is South Africa’s leading arbitral institution, and it has played a significant role in the development of international arbitration in South Africa.

Although it is not a new institution, in 2021, the AFSA International Court was established under the revised AFSA International Arbitration Rules and AFSA began to offer services that catered to both domestic and international disputes in diverse sectors, reflecting its capacity to manage complex cases and its importance in the South African arbitration landscape.

The AFSA International Court is the first of its kind in South Africa and is tasked with taking decisions on behalf of AFSA, including the appointment of arbitrators and resolution of any challenges to appointments and issues of jurisdiction.

The China-Africa Joint Arbitration Centre (“CAJAC Johannesburg”) is a subsidiary of AFSA and was established in response to the need for a credible China-Africa dispute resolution mechanism, necessitated by the increasing trade between China and Africa.

There are no specific courts in South Africa that are designated to hear disputes related to international arbitration and/or domestic arbitrations.

The statute governing international arbitration in South Africa is the IAA, which came into force in December 2017.

The IAA explicitly incorporates the UNCITRAL Model Law into South African law. As a result, the UNCITRAL Model Law serves as the foundational framework for international arbitration in South Africa, ensuring alignment with global standards and offering a predictable legal environment for international commercial disputes. The IAA also provides for the recognition and enforcement of foreign arbitral awards, thus replacing South Africa’s prior legislation (the Recognition of Foreign Arbitral Awards Act, 1977).

While the IAA closely follows the UNCITRAL Model Law, there are a few notable distinctions:

Public Policy and State Parties

The IAA emphasises public policy considerations, particularly concerning state parties involved in arbitration. It mandates that arbitration proceedings involving public bodies be held publicly, diverging from the UNCITRAL Model Law’s typical confidentiality provisions.

Investor-State Dispute Settlement

The IAA does not provide for automatic recourse to investor-state dispute settlement (ISDS) mechanisms (such as International Centre for Settlement of Investment Disputes (ICSID) arbitration), reflecting a cautious stance towards ISDS.

This stance is also reflected in the Protection of Investment Act, which makes international arbitration voluntary but not compulsory for the South African government in ISDS matters.

There have been no significant amendments to the IAA in the past year; however, the ongoing interpretation and application of the IAA by the courts continues to shape its implementation and effectiveness.

This judicial involvement has been crucial in refining the arbitration landscape in South Africa, ensuring that the IAA evolves together with emerging legal and commercial needs.

Currently, there is no pending legislation which may significantly alter the international arbitration landscape in South Africa.

Arbitration agreements are contractual in nature and accordingly, the general requirements for the existence of a contract must be met. These include:

• The parties must be aligned in respect of the rights and obligations that they wish to create;
• The parties must intend to be bound by the agreement;
• The agreement must be lawful; and
• The parties must have the legal capacity to contract.

The IAA also specifically provides that for an arbitration agreement to be enforceable, it must be in writing (Article 7 of Schedule 1 to the IAA).

In order for the “in writing” requirement to be satisfied, it is not necessary that the agreement be signed, provided that all of the parties adopted and acted on the agreement. However, it is recommended that the agreement be signed to avoid potential disputes.

In South Africa, the arbitrability of disputes is determined based on public policy considerations and statutory provisions.

Generally, commercial disputes are arbitrable, but certain matters are deemed not to be arbitrable, due to public interest concerns or in light of specific statutory provisions requiring a court to determine the dispute.

Examples include:

• disputes involving issues of status (such as solvency and liquidation proceedings);
• criminal matters;
• administrative review proceedings (for example, the review of government/public procurement decisions); and
• family and marital disputes.

These limitations ensure that matters with broader societal implications or requiring state intervention remain within the judicial domain.

South African courts generally uphold arbitration agreements, honouring the parties’ autonomy and the principle of separability.

The South African courts have consistently demonstrated a pro-arbitration stance, referring matters to arbitration when a valid arbitration agreement exists, and enforcing arbitral awards. This is consistent with both the statutory framework under the IAA and the common law principles that have been developed by the courts over the years.

By way of example, the South African courts have demonstrated their pro-arbitration stance in the following cases, where party autonomy was emphasised and judicial intervention was avoided:

• Tee Que Trading Services (Pty) Ltd v Oracle Corporation South Africa (Pty) Ltd and Another (case no 065/2021) [2022] ZASCA 68 (17 May 2022) (“Tee Que case”): The Supreme Court of Appeal decisively limited its own discretion in disputes where the contracts contained international arbitration clauses. It mandated that unless an arbitration agreement is void or inapplicable, court litigation must be stayed in favour of arbitration. This case reinforced the autonomy of arbitration agreements and streamlined the enforcement process.
• Lukoil Marine Lubricants DMCC v Natal Energy Resources and Commodities (Pty) Ltd [2023] ZAKZPHC (“Lukoil case”): The High Court stayed a court application for the return of goods and the repayment of certain funds pending finalisation of arbitration proceedings in England. In making this order, the court emphasised that the agreement between the parties provided for disputes arising from the agreements to be resolved by way of arbitration in England, in terms of English law, and saw no reason to depart from the terms of those agreements.

As can be seen from the above, South African courts are supportive of enforcing arbitration agreements, provided they meet the legal requirements and do not contravene public policy. This support extends to both domestic and international arbitration agreements, reflecting a consistent judicial approach aimed at upholding arbitration as a legitimate and effective means of dispute resolution.

In South Africa, an arbitration clause may be considered valid and enforceable even if the main contract in which it is contained is found to be invalid. This principle is grounded in the doctrine of separability, which treats the arbitration agreement as distinct and independent from the main contract.

The Lukoil case illustrates this principle. The court held that allegations that the agreement in question was invalid did not call into question the parties’ agreement to resolve any dispute by way of arbitration.

Under the IAA, parties have significant autonomy in selecting arbitrators, a principle that aligns with international arbitration standards. The IAA allows parties to agree on the number of arbitrators, the selection process and the qualifications required. However, this autonomy is subject to the requirement that the appointed arbitrators must be impartial and independent.

If the parties fail to agree on the method of selecting arbitrators and there is no chosen method, or if their chosen method fails, the IAA provides a default mechanism.

Article 11 of Schedule 1 to the IAA stipulates that:

• in an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, they will be appointed, on request of a party, by the relevant court with jurisdiction (which is determined with reference to Article 6 of Schedule 1 to the IAA); and

• in an arbitration with three arbitrators, each party must appoint one arbitrator, and the two appointed arbitrators will appoint the third arbitrator. If a party fails to appoint an arbitrator within 30 days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within 30 days of their appointment, the appointment will be made, on request of a party, by the relevant court with jurisdiction (which is determined with reference to Article 6 of Schedule 1 to the IAA).

The South African courts may only intervene in the selection of arbitrators under specific circumstances, as outlined in the IAA.

This intervention can occur in the following circumstances:

• when there is a failure in the agreed procedure for appointment and the court is requested to intervene; or
• when a party challenges an arbitrator’s appointment on grounds such as bias or lack of independence, and if its challenge under the agreed procedure is not successful (although the arbitral proceedings will continue pending this determination).

The court’s role is generally limited to upholding the integrity of the arbitration process and ensuring that arbitrators are impartial and independent.

Under the IAA, arbitrators can be challenged and potentially removed if:

• there are justifiable doubts concerning their impartiality or independence; or
• they do not possess the qualifications agreed upon by the parties.

The process for challenging arbitrators is outlined in Articles 12 and 13 of Schedule 1 to the IAA.

The IAA mandates that arbitrators must:

• be independent and impartial; and
• disclose any potential conflicts of interest at the time of their appointment and throughout the arbitration process.

The AFSA International Arbitration Rules reflect these standards, requiring arbitrators to disclose any circumstances that might give rise to justifiable doubts regarding their independence or impartiality.

In South Africa, not all disputes can be referred to arbitration. The IAA specifically states that if a dispute is not capable of determination by arbitration under any law of the Republic, then it may not be determined by arbitration.

For instance, the below-mentioned matters have been held not to be arbitrable under South African law and are therefore excluded from arbitration:

• Disputes involving divorce, custody or maintenance are deemed inappropriate for arbitration due to their personal nature and the need for judicial oversight;
• Criminal offences cannot be resolved through arbitration as they involve public prosecution and punishment, which are exclusive state functions; 
• Insolvency proceedings, which affect the rights of third-party creditors and involve the public interest, cannot be arbitrated; and
• The review of decisions of public and governmental bodies, such as public procurement decisions, cannot be arbitrated.

These exclusions are premised on the view that certain matters require the protections and procedural guarantees provided by the court systems, and the arbitrability of these issues could undermine public policy or result in unjust outcomes.

The principle of Kompetenz-Kompetenz is entrenched in South African law through the IAA and judicial precedent.

The IAA

Article 16 of the UNCITRAL Model Law is incorporated into South African law through the IAA. This provision allows arbitral tribunals to rule on their own jurisdiction, including making determinations on the validity and scope of the arbitration agreement.

Judicial Precedent

The principle was also upheld by the Supreme Court of Appeal, prior to the IAA, in the case of Zhongji Development Construction Engineering Co Ltd v Kamato Copper Co Sarl 2015 (1) SA 345 (SCA), where the court held that the arbitration agreement must be given effect to and that it was for the arbitrator to determine the issues of jurisdiction that had been raised.

The doctrine ensures that tribunals have the first opportunity to resolve jurisdictional disputes, promoting the efficiency and autonomy of the arbitration process.

However, a party may request any such ruling by the arbitral tribunal to be reviewed by a court review, either at the stage of the enforcement of the award or during the proceedings and before the award (although the arbitration proceedings will not be suspended pending the outcome of the review).

South African courts respect the autonomy of arbitral tribunals and intervene only in specific circumstances, where this is allowed by the IAA. According to the IAA, no court may intervene except where expressly provided therein and the South African courts have, to date, shown a general reluctance to intervene.

In the context of a jurisdictional dispute, a court is entitled, under the IAA, to intervene in the following scenarios:

• When the tribunal has ruled on its jurisdiction as a preliminary issue, a party can, within 30 days, seek a judicial determination on this ruling, although the judicial review will not suspend the arbitration proceedings (Article 16 of Schedule 1 to the IAA).
• When the tribunal has ruled on its own jurisdiction in the final award:
1. a party can apply to have the award set aside on the basis that the agreement is invalid or the award deals with a dispute which is not within the scope of the matters referred to arbitration (Article 34 of Schedule 1 to the IAA);
2. a court may refuse to enforce the award on the basis that the tribunal has gone beyond the scope of the dispute (Article 36 of Schedule 1 to the IAA).
• If court proceedings are launched and, when analysing whether the dispute should be referred to arbitration, the court finds that the arbitration agreement is null and void, inoperative, or incapable of being performed, it can proceed to hear the dispute (Article 8 of Schedule 1 to the IAA).

Parties may challenge the tribunal’s jurisdiction at the outset of the arbitration process; however, it is only once the tribunal has made a ruling on this issue that a party has the right to go to court to challenge its jurisdiction.

According to the IAA, objections to the tribunal’s jurisdiction must be raised no later than the submission of the statement of defence (unless the delay is justified in the view of the tribunal) and a party is not precluded from doing so by virtue of the fact that it has participated in the appointment of the arbitrator (Article 16(2) of Schedule 1 to the IAA). If the tribunal makes a preliminary ruling on jurisdiction, the court review process must be launched within 30 days after the preliminary ruling has been handed down; however, the arbitration proceedings will not be suspended during the court review.

If the tribunal makes a ruling in the final award, the court review process must be launched within three months after the award is received.

The standard of judicial review for questions concerning issues of admissibility and jurisdiction involves a deferential approach.

Courts respect the tribunal’s findings unless there is a clear and compelling reason to intervene, such as manifest error or inconsistency with public policy.

The IAA mandates that courts must stay judicial proceedings and refer the matter to arbitration unless the agreement is found to be null and void, inoperative, or incapable of being performed. This stance has since been reinforced in several cases, including the Tee Que case and the Lukoil case.

The IAA does not explicitly allow an arbitral tribunal to assume jurisdiction over parties that are neither party to an arbitration agreement nor signatories to a contract containing an arbitration agreement. However, if those parties subsequently agree to become a party to the arbitration, jurisdiction may be assumed.

The ‘group of companies’ doctrine, which allows for possibly extending arbitration agreements to non-signatory companies within the same group, is not recognised in South African law. However, South African law does recognise the doctrine of the ‘piercing of the corporate veil’, and in exceptional circumstances, the separate legal personality of a company may be disregarded in order to hold the associated companies accountable. It should be noted that this doctrine has not, to date, been applied by the South African courts to justify the extension of an arbitration agreement to non-signatories.

Arbitral tribunals have the authority to award preliminary or interim relief, at the request of a party, in terms of the provisions of the IAA.

The type of interim measures which are permitted include an award requiring a party to:

• maintain or restore the status quo, pending determination of the dispute;
• prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself;
• provide a means of preserving assets out of which a subsequent award may be satisfied;
• preserve evidence that may be relevant and material to the resolution of the dispute; or
• provide security for costs (only against a claiming or counter-claiming party).

The interim measure is recognised as binding and must be enforced, upon application, by a court unless there are specific grounds for refusing the recognition and enforcement.

The AFSA International Arbitration Rules also recognise the tribunal’s power to grant interim relief, ensuring that these measures are enforceable and effective.

The Role of the Courts in Granting Interim Relief

The IAA allows the South African courts to order interim relief upon the application of a party only in the following circumstances:

• the arbitral tribunal has not yet been appointed and the matter is urgent;
• the arbitral tribunal is not competent to grant the order; or
• the urgency of the matter means that obtaining the order form the arbitral tribunal would be impractical.

A court may not grant such an order if the arbitral tribunal, being competent to grant the order, has already determined the matter, nor may it grant such an order beyond the scope of the above-listed circumstances.

Interim Relief in Aid of Foreign-Seated Arbitrations

The IAA allows courts to issue orders in support of arbitration, irrespective of whether the seat of arbitration is within South Africa or abroad. The interim measures that may be ordered are the following:

• an order for the preservation, interim custody or sale of any goods that are the subject matter of the dispute;
• an order securing the amount in dispute, but not an order for security for costs;
• an order appointing a liquidator;
• any other orders to ensure that any award that may be made in the arbitral proceedings is not rendered ineffectual by the dissipation of assets by the other party; and
• an interim interdict or other interim order.

Furthermore, the South African courts are required to stay any proceedings which are brought before them, if the dispute is subject to an arbitration agreement, regardless of the seat of the dispute.

Anti-suit Injunctions/Interdicts

In South Africa, the only reported case pertaining to anti-suit injunctions is the case of Vedanta Resources Holdings Limited v ZCCM Investment Holdings PLC 2019 JDR 1425 (GJ), which has confirmed that South African courts are prepared to issue anti-suit injunctions in appropriate circumstances. The High Court held that the following requirements must be satisfied in order to obtain such relief:

• The arbitration clause must indicate that arbitration is mandatory;
• The dispute referred to the foreign courts must fall within the ambit of the arbitration agreement and the nature of the dispute must be one capable of resolution by arbitration (arbitrability); and
• The applicant must also show the requirements for an interdict under South African law, namely, that:
1. it has a clear right to the relief;
2. it has a well-grounded apprehension of irreparable harm in the event that the injunction is not granted;
3. the balance of convenience favours the granting of the injunction; and
4. there is no adequate alternative remedy available to it.

Emergency Arbitrators

Provisions under national legislation and arbitral rules

The IAA is silent on the use of emergency arbitrators, and this has not been expressly dealt with under South Africa’s national legislation.

To the extent that the dispute has been referred to arbitration under the auspices of AFSA, the AFSA International Arbitration Rules permit the use of emergency arbitrators to grant urgent interim or conservatory relief, before the arbitral tribunal has been constituted.

Status of decisions of emergency arbitrators

According to the AFSA International Arbitration Rules, emergency arbitrators may make any decision or order which the arbitral tribunal could make under the arbitration agreement. These decisions are binding on the parties, although they may be subject to review, modification or revocation by the subsequently appointed tribunal.

Court intervention in the context of emergency arbitrators

As mentioned above, South African national laws do not expressly deal with emergency arbitrators. However, the IAA defines an “arbitration” as “any arbitration whether or not administered by a permanent arbitral institution” and an “arbitral tribunal” as a “sole arbitrator or a panel of arbitrators”.

An “emergency arbitrator” and the proceedings conducted under that arbitrator’s appointment are likely to fall within the definitions of “arbitration” and “arbitral tribunal” and, given the South African courts’ approach to limiting interference in arbitrations, it is likely that they would adopt a similar approach in the context of proceedings under an emergency arbitrator. South African courts are generally supportive of arbitration, recognise the principle of party autonomy and favour the approach that court interference in arbitration should be restricted.

However, as noted previously, the South African courts do retain the power to enforce or set aside arbitral awards if there are grounds to do so, such as when the decision is contrary to public policy or when the arbitrator exceeded their mandate (although the courts’ intervention is limited to ensuring the proper administration of justice and upholding the integrity of the arbitral process). It is anticipated that the courts would continue to have such powers in the context of an emergency arbitration.

Under the IAA, arbitral tribunals have the power to order security for costs, although this is limited only to the claimant and counter-claimant. This measure can be crucial in preventing frivolous claims.

The South African courts are not empowered to order security for costs, but they can make an order securing the amount in dispute.

The IAA

International arbitration in South Africa is primarily governed by the IAA, which incorporates the UNCITRAL Model Law.

It sets out the framework for the conduct of international arbitration, ensuring compliance with international standards and contains fall-back provisions relating to various procedural aspects which may not have been agreed by the parties (or in the event that their elected mechanism failed) including the appointment of arbitrators, the conduct of the proceedings, the presentation of evidence and the issuing of awards.

AFSA

The main arbitral institution in South Africa, AFSA, has also published the AFSA International Arbitration Rules, which provide detailed procedural guidelines and which parties may adopt if they choose to arbitrate under the auspices of AFSA.

Arbitral proceedings seated in South Africa are governed by the arbitration agreement, and parties can decide on the rules that are to regulate the proceedings or agree to submit to the rules of an arbitral institution.

The majority of the procedural steps set out in the IAA are subject to any other agreement having been reached by the parties and are not mandatory. While the IAA provides a flexible framework, it does require that proceedings to which a public body is a party must be held in public, unless there are compelling reasons for the tribunal to direct otherwise (Section 11 of the IAA).

The IAA confers the following powers and duties on arbitrators.

Powers of Arbitrators Under the IAA

The powers of arbitrators under the IAA include:

• the power to rule on their own jurisdiction;
• the power to grant interim measures at the request of a party (unless otherwise agreed by the parties);
• the power to order security for costs (only as against the claimant and counter-claimant);
• the power to modify, suspend or terminate an interim measure they have granted;
• the power to require the party requesting an interim measure to provide appropriate security in connection with the measure;
• the power to award any costs and damages to the party requesting an interim measure at any point during the proceedings;
• the power to conduct the arbitration in a manner as they consider appropriate, in the absence of the parties’ agreement. This includes the power to determine the admissibility, relevance, materiality and weight of any evidence;
• the power to determine the language of the arbitration, in the absence of the parties’ agreement; and
• the power to decide whether it is necessary to hold oral hearings for presentation of oral arguments (subject to any contrary agreement by the parties).

Duties of Arbitrators Under the IAA

The duties of arbitrators under the IAA include:

• the duty not to exceed the limits of the powers granted by the arbitration agreement or as agreed between the parties;
• the duty to act impartially and disclose any circumstances likely to give rise to justifiable doubts as to their impartiality or independence, at the time of appointment and throughout the proceedings; and
• the duty to maintain confidentiality of the award and all documents created for the arbitration.

In South Africa, there is a traditional division between advocates and attorneys, although the distinction has become less prominent since the enactment of the Legal Practice Act in 2014. Traditionally, however, advocates specialise in court advocacy, and attorneys are less involved in this aspect of practice unless they have specifically obtained the right to appear in the High Court.

In respect of international arbitrations seated in South Africa (and domestic arbitrations), there is no specific requirement for a “right of appearance” or any additional local qualification, and the distinction between advocates and attorneys in this area is becoming less rigid. Historically, although advocates primarily handled advocacy, attorneys are increasingly taking on this role.

Legal representatives may also be from different jurisdictions, provided they are qualified and capable of representing their clients’ interests effectively. This flexibility aligns with international arbitration’s transnational nature, allowing parties to select legal representatives who possess specific expertise or experience relevant to the dispute, regardless of their jurisdictional qualifications.

General Approach to Evidence in International Arbitrations Seated in South Africa

In international arbitration proceedings seated in South Africa, the approach to evidence collection and submission is generally governed by:

• the rules agreed upon by the parties;
• the rules of the chosen arbitral institution; or
• in the absence of such agreement, the discretion of the arbitral tribunal.

The IAA and AFSA International Arbitration Rules also offer guidance in this regard but are not as prescriptive as the rules which are applied in the domestic courts.

South Africa is a common law jurisdiction and, to the extent that the parties choose to appoint a South African arbitrator, the arbitrator would generally expect disclosure to take place, as well as witnesses to be called at the hearing.

Until recently, the collection and submission of evidence in South African arbitrations often closely mirrored the High Court procedure, with many parties agreeing to apply the High Court rules. However, in recent years there has been a marked shift from this practice and a noticeable modernisation in the way arbitrations are conducted in this regard.

Discovery/Disclosure of Evidence

The process of discovery (also referred to as disclosure) in arbitrations is usually less formal and more flexible compared to court litigation. Unlike court litigation, there is no automatic right to broad discovery.

Parties in international arbitrations often agree to apply the International Bar Association Rules on the Taking of Evidence in International Arbitrations (“IBA Rules”) and typically agree to exchange Redfern Schedules where requests for relevant documents which are material to the outcome of the proceedings (subject to the relevant exclusions in the IBA Rules) are exchanged, before disclosure takes place.

However, the extent and scope of disclosure can vary significantly depending on the agreement between the parties or the tribunal’s orders.

Privilege

South African law recognises the concept of legal privilege, which protects certain communications from being disclosed. This takes the form of:

• Legal advice privilege: Communications exchanged between a legal adviser, acting in their professional capacity, and their client, for the purposes of obtaining legal advice; and
• Litigation privilege: Communications exchanged and documents prepared in contemplation of litigation.

These rules of privilege apply equally in international arbitration proceedings.

Witness Statements

There is no set requirement that witness statements should be exchanged in international arbitrations; however, parties often agree to exchange witness statements in written form, which stand as the evidence-in-chief of the witness.

Depending on the type of matter and the agreement between the parties, witness statements are sometimes submitted together with the pleadings (memorial-style pleadings). However, parties may also agree to exchange witness statements after pleadings have been exchanged and discovery has taken place.

There are no set rules as to the content of those statements, and the parties are free to agree on this as they see fit. Witness statements usually provide a comprehensive account of the witnesses’ evidence, and the witnesses are then subjected to cross-examination by theopposing party, followed by re-examination by theparty that called them. The tribunal may also question the witnesses.

The IAA (and AFSA International Arbitration Rules) do not impose any rules of evidence, granting the parties the ability to agree on such rules, and the tribunal considerable discretion in determining the admissibility, relevance, materiality and weight of evidence.

As mentioned above, if a South African arbitrator is appointed, they may be more inclined to apply the South African rules of evidence.

The IBA Rules are also often used as a guide, although these are not binding unless agreed upon by the parties. The IBA Rules adopt a more flexible and pragmatic approach than the formal rules of evidence found in South African domestic litigation.

While South African domestic arbitration may adhere to more structured rules similar to those found in court proceedings, international arbitration enjoys greater flexibility. The strict rules of evidence applicable in the South African courts, such as the hearsay rule, may not apply unless the parties agree to their application.

Arbitral tribunals seated in South Africa do not possess the same powers as courts to compel the production of documents or the attendance of witnesses. However, under the IAA, tribunals can request the assistance of South African courts in these matters (Article 27 of Schedule 1 to the IAA).

Parties Involved in the Arbitration

For parties involved in the arbitration, compliance with the tribunal’s orders regarding evidence and witness attendance is generally expected, as failure to do so may result in adverse inferences being drawn.

Non-parties to the Arbitration

The courts can issue subpoenas or orders compelling non-parties to produce documents or appear as witnesses, if such assistance is requested. The South African courts are generally supportive of arbitration and are likely to enforce such requests, provided they are reasonable and necessary for the proceedings.

The General Position

In South Africa, arbitration proceedings are generally considered confidential, although there are some exceptions to the rule.

In this regard, the IAA provides that where the arbitration is held in private, the award and all documents, which are not otherwise in the public domain, must be kept confidential by the parties and tribunal, except where disclosure of those documents may be required for legal reasons (Section 11(2) of the IAA).

The confidentiality of these components is also often explicitly stated in the arbitration agreement or the rules of the chosen arbitral institution. For instance, the AFSA International Arbitration Rules include provisions for maintaining the confidentiality of the arbitration process.

Confidentiality typically extends to pleadings and submissions, documents submitted as evidence, the hearing process and the arbitral award.

Exceptions to the Rule

While confidentiality is a default position, it is not absolute. There are circumstances under which information from arbitral proceedings may be disclosed in subsequent proceedings. These exceptions include:

• If there is a legal duty or right to disclose, such as in the case of court-ordered disclosure or a statutory requirement, confidentiality may be overridden.
• Disclosure may also be permitted in situations where it is necessary to protect the public interest, such as in cases involving allegations of corruption or criminal activity.
• The parties to the arbitration may agree to waive confidentiality, allowing the information to be disclosed.
• In instances where a party challenges an arbitral award in court, the court may require disclosure of certain aspects of the arbitration, such as the pleadings or the award, to assess the validity of the challenge.

Arbitrations Involving Public Bodies

A further exception can be found in Section 11(1) of the IAA, which directs that arbitration proceedings to which a “public body” is a party must be held in public, unless there are “compelling reasons” and the arbitral tribunal directs otherwise. However, the law is not yet settled as to whether this would also extend to disclosure of the pleadings and other documents exchanged during the course of those arbitral proceedings.

The IAA contains specific requirements with which an arbitral award in an international arbitration seated in South Africa must comply, as follows:

• The award must be in writing (Article 31(1) of Schedule 1 to the IAA).
• The award must be signed by the arbitrator(s). If there is more than one arbitrator, the signatures of the majority are sufficient, provided the reason for any omitted signature is stated (Article 31(1) of Schedule 1 to the IAA).
• The award must state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is on agreed terms (Article 31(2) of Schedule 1 to the IAA).
• The award must state its date and the place of arbitration as determined in accordance with the agreement of the parties or, failing such agreement, the place determined by the tribunal (Article 31(3) of Schedule 1 to the IAA).

The IAA does not specify a strict time limit for the delivery of the award, unless the parties have agreed otherwise. However, the chosen arbitral institution may have its own rules regarding the timeframe for delivering awards.

Arbitral tribunals in South Africa have a broad discretion when awarding remedies, but there are some limitations. These limitations are not explicitly set out in the IAA, but arise in the context of a risk that the award may be set aside, or the South African courts refusing to enforce the award.

The IAA provides specific circumstances when an award may be set aside or where enforcement may be refused, which highlights the limits of the arbitrator’s power to hand down certain awards, namely:

• A tribunal cannot make an award which conflicts with the public policy of South Africa. A typical example of this is punitive or exemplary damages, as such awards are not recognised under South African law.
• A tribunal cannot make an award where the subject matter of the dispute is not capable of settlement by arbitration. For example, an arbitrator cannot make an award placing a company in liquidation or imposing a criminal sanction.
• A tribunal cannot make an award which is outside of the scope of the dispute that has been referred to it.

Tribunals can order specific performance, rectification and injunctions, provided such remedies:

• are within the scope of the arbitration agreement;
• are within the scope of the dispute referred to it;
• do not conflict with South African public policy; and
• do not fall outside the scope of an arbitrable dispute under South African law.

Recovery of Interest

Arbitral tribunals in South Africa can award interest.

The rate and the period for which interest is awarded will depend on the agreement of the parties, the applicable law, or the tribunal’s discretion if no specific agreement exists.

The South African default position is set out in the Prescribed Rate of Interest Act, 1975, which states that if the rate at which the interest is to be calculated is not governed by any other law, agreement or trade custom or in any other manner, such interest shall be calculated at the South African “repurchase rate” plus 3.5% (currently 11.75%).

Interest shall commence running:

• In the case of a liquidated debt: On the date that the debt becomes due.
• In the case of an unliquidated debt: On the date on which the creditor sends a demand or takes steps to initiate arbitration proceedings, whichever is the earlier.

Unless otherwise agreed, “simple interest” is generally utilised.

Legal Costs

Legal costs are not governed by the IAA; however, they are generally awarded in South Africa based on the principle that costs follow the event (the losing party pays the legal costs of the winning party). However, this is dependent on the agreement of the parties, or the rules of the chosen arbitral institution.

The general position which is adopted in court proceedings and agreed in domestic arbitrations is that the costs awarded are the “taxed” costs of the parties’ legal representatives (which is based on a “tariff” published in the rules of the High Court), the arbitrators’ fees, experts’ fees, fees and disbursements payable to the arbitration institution, and similar fees and disbursements.

The “tariff” does not reflect the actual legal costs incurred by the parties and therefore the winning party does not always recover their full legal spend. Although agreeing to apply this “tariff” means that the winning party may not be made “whole”, it does mitigate the potential liability of the losing party.

However, there is no reason why the parties need to agree to apply the “tariff” and they are entitled to agree that costs will be awarded in the award, at the discretion of the arbitrators. It should be noted, however, that to the extent that a South African arbitrator is appointed, the arbitrator may be inclined to revert to the “tariff” approach, unless expressly agreed otherwise between the parties.

Appeals of Arbitration Awards

In South Africa, unless the parties have expressly agreed that there will be a right to appeal the merits of the award, arbitral awards are not appealable.

Judicial Reviews of the Arbitration Award

Parties are entitled to judicially review the award in one of two ways:

• By way of application to set the award aside. This application must be made to the High Court within three months of the date on which the party making the application received the award.
• By opposing an application to enforce the award.

Under the IAA, an award may only be judicially reviewed on the following grounds:

• if the arbitration agreement is found to be invalid;
• if there were procedural irregularities in the arbitration, on the following grounds;
1. a party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present their case; or
2. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement or the IAA;
• if the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration (lack of jurisdiction);
• if the court finds that the subject matter of the dispute is not capable of settlement by arbitration under South African law; or
• if the court finds that the award is in conflict with the public policy of South Africa.

Inclusion of an Appeal Mechanism

Parties in international arbitrations seated in South Africa can agree to include an appeal mechanism in their arbitration agreement, even though this is not expressly provided for under the IAA.

Excluding/Expanding the Judicial Review Grounds

There is no precedent for a situation where parties have attempted to exclude or expand the grounds of judicial review as set out in the IAA, in South Africa. It appears unlikely that they will be able to do so, as the provisions of the IAA which set these grounds are mandatory provisions which do not expressly allow the parties to vary them, and as their purpose is to protect the integrity, finality and efficiency of arbitration in South Africa.

The standard of judicial review for arbitral awards in South Africa is typically deferential rather than de novo.

South African courts respect the autonomy of the arbitral process and will not re-examine the merits of the case. Instead, judicial reviews are aimed at ensuring that the arbitral proceedings were conducted fairly and in accordance with the agreed procedural rules and applicable law. The courts will intervene only on the narrow grounds set out above, such as serious procedural irregularities, lack of jurisdiction, or if the award contravenes public policy.

This deferential standard is viewed as necessary in order to uphold the integrity, finality and efficiency of arbitration as a dispute resolution mechanism.

South Africa has signed and ratified the New York Convention without any reservations.

The New York Convention was initially incorporated into domestic law through the Recognition and Enforcement of Foreign Arbitral Awards Act, but this was subsequently repealed following the enactment of the IAA. The IAA now incorporates the New York Convention (Chapter 3 read with Schedule 3).

Procedures and Standards for Recognising and Enforcing a Foreign Arbitral Award

The IAA states that a foreign arbitral award must be recognised and enforced in South Africa, except as expressly provided for in the IAA.

The procedure for enforcing an arbitral award (whether foreign or otherwise) requires an application to be made to the High Court, producing:

• the original (if foreign, this must be authenticated) or certified copy of the award;
• the authenticated original (if foreign, this must be authenticated) or certified copy of the arbitration agreement; and
• if the agreement or award is in a foreign language, an authenticated sworn translation.

The IAA states, however, that the court may accept other documentary evidence regarding the existence of a foreign arbitral award and arbitration agreement as sufficient proof where the court considers it appropriate to do so.

Grounds for Refusing to Recognise and Enforce a Foreign Arbitral Award

The court must enforce the award unless one of the grounds for refusal under the New York Convention is established, namely:

• if the court finds that:
1. a reference to arbitration of the subject matter of the dispute is not permissible under the law of South Africa; or
2. the recognition or enforcement of the award is contrary to the public policy of South Africa; or
• if the opposing party proves to the satisfaction of the court that:
1. a party to the arbitration agreement had no capacity to contract under the law applicable to that party;
2. the arbitration agreement is invalid under the law to which the parties have subjected it, or where the parties have not subjected it to any law, the arbitration agreement is invalid under the law of the country in which the award was made;
3. they did not receive the required notice regarding the appointment of the arbitrator or of the arbitration proceedings or was otherwise not able to present their case;
4. the award deals with a dispute not contemplated by, or not falling within the terms of the reference to arbitration, or contains decisions on matters beyond the scope of the reference to arbitration (partial recognition and enforcement may be awarded if certain decisions did fall within the scope);
5. the constitution of the arbitral tribunal or the arbitration procedure was not in accordance with the relevant arbitration agreement or, if the agreement does not provide for such matters, with the law of the country in which the arbitration took place; or
6. the award is not yet binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made.

Foreign Awards That are Subject to Ongoing Set-Aside Proceedings

The IAA states that if an application for the setting aside or suspension of an award has been made to a competent authority at the seat, the South African court may, if it considers it appropriate:

• adjourn its decision on the enforcement of the award; and
• on the application of the party claiming enforcement of the award, order the other party to provide suitable security.

South African courts will not enforce an arbitral award that has been set aside by the courts at the seat of arbitration.

Awards Subject to Ongoing Set-Aside Proceedings at the Seat

When an award is subject to ongoing set-aside proceedings at the seat of arbitration, South African courts may suspend the enforcement proceedings pending the resolution of those proceedings. There has not been any case law around this point, but this approach would avoid conflicting judgments and respect the authority of the courts at the seat of arbitration.

State and State Entity Immunity

In South Africa, the Foreign States Immunities Act, 1981 (FSIA) provides foreign states with general immunity from the jurisdiction of South African courts. However, Section 10 of the FSIA states that if a foreign state has agreed in writing to submit a dispute to arbitration, it shall not be immune from the jurisdiction of the courts of South Africa in any proceedings which relate to arbitration.

General Approach of the South African Courts to the Recognition and Enforcement of Arbitration Awards

• Foreign arbitral awards: As mentioned above, the IAA states that a foreign arbitral award must be recognised and enforced in South Africa, except as expressly provided for in the IAA. The grounds provided for in the IAA accord with the grounds set out in the New York Convention.
• Arbitral awards in South African-seated arbitrations: The IAA also states that arbitral awards in international arbitrations which are seated in South Africa must be recognised, except as provided for in the IAA. Those grounds for refusal essentially mirror the grounds for refusing to recognise a foreign arbitral award.

The IAA has reduced the scope for challenging awards for tactical reasons. For example, in early 2023, the Supreme Court of Appeal in the case of Snowy Owl Properties 284 (Pty) Ltd v Mziki Share Block Limited (the “Snowy Owl case”) found that, although it is contrary to public policy to enforce an arbitral award that is at odds with legislation, the force of the prohibition must be weighed against the important goals of private arbitration. The court’s ultimate decision to enforce the award reflected the concern that if such a defence is only raised after the arbitrator has handed down their award, this “self-evidently” erodes the utility of arbitration as an expeditious, out-of-court means of finally resolving the dispute.

Another example can be seen in the case of GFE MIR Alloys and Minerals SA (Pty) Ltd v Momoco International Limited (the “Momoco case”), where the High Court rejected a request for leave to appeal against an order enforcing an arbitral award and ordered that the award should be enforced pending any future appeals the losing party may wish to lodge, in order to avoid delays (under South African law, further appeals generally suspend the enforcement of court orders). The court emphasised that public policy considerations support the general rule that arbitration awards should be enforced by South African courts.

Refusal of Foreign Arbitral Awards on Public Policy Grounds

While the South African courts are supportive of arbitration, they will refuse enforcement on public policy grounds if the award is fundamentally offensive to the country’s notions of justice and morality.

As can be seen from the Snowy Owl and Momoco cases, this standard is applied narrowly to ensure that only awards that egregiously violate public policy are refused at the enforcement stage. Grounds for refusal include fraud, corruption, serious procedural irregularities, and awards that contravene fundamental principles of South African law.

South Africa does not specifically provide for class action arbitration or group arbitration under its current legal framework. As far as we are aware, no such arbitrations have been instituted in South Africa, and the IAA primarily focuses on bilateral arbitrations between specific parties that have consented to the arbitration of their disputes..

Given that South African law does not explicitly address class action arbitration or group arbitration, there are likely to be inherent limitations to the arbitrability of such claims. The fundamental principle of arbitration in South Africa is based on the consent of the parties to resolve their disputes through arbitration. In class action or group arbitration, the collective nature of the claims may complicate this principle of consent.

Legal Counsel

Lawyers practising in South Africa are bound by the ethical codes and professional standards applicable to legal practitioners in the country. These standards are primarily governed by the Legal Practice Act, 2014, which regulates the conduct of attorneys and advocates.

South African attorneys are members of the Law Society of South Africa and must adhere to its code of conduct, which includes duties of honesty, integrity, confidentiality, and the avoidance of conflicts of interest. South African advocates are members of the General Council of the Bar of South Africa and they are similarly bound by the ethical rules of the Bar, emphasising independence, diligence and fairness.

There are no specific restrictions or codes applicable to non-South African legal counsel who may appear in an international arbitration seated in South Africa; however, those practitioners will be bound by their own domestic standards of ethics, regardless of where the arbitration is seated. Unethical conduct by a party during the arbitration which affects the award may result in grounds for judicial review of the award or grounds to impose higher costs against that party.

Arbitrators

Arbitrators in South Africa are expected to adhere to the ethical standards set by their professional bodies and the arbitral institutions they may be affiliated with.

AFSA and the Association of Arbitrators (Southern Africa) provide guidelines and codes of conduct for arbitrators. These codes emphasise impartiality, independence, and the duty to disclose any potential conflicts of interest. The IBA Guidelines on Conflicts of Interest in International Arbitration and the IBA Rules of Ethics for International Arbitrators are also often referenced and adhered to, ensuring that the proceedings are conducted fairly and transparently.

Third-party funding in South Africa is not prohibited, but it is not comprehensively regulated by specific legislation.

The arbitral rules chosen by the parties may, however, expressly deal with third-party funding. For example, the AFSA International Arbitration Rules require a party that is funded by a third-party funder to disclose the existence of a funding agreement and the identity of the funder, in the Request for Arbitration, or as soon as practicable after the third-party funding agreement has been entered into.

In South Africa, parties to an arbitration agreement are entitled to agree that the arbitral proceedings be consolidated with other arbitral proceedings, according to Section 10 of the IAA. The section specifically stipulates that the arbitral tribunal may not order consolidation unless the parties have agreed.

The AFSA International Arbitration Rules also allow for consolidation in these following instances, and subject to the following:

• Prior to the constitution of any arbitral tribunal in the arbitrations sought to be consolidated, a party may file an application to consolidate provided that:

1. all parties have agreed; or
2. all the claims in the arbitrations are made under the same arbitration agreement.

• After the constitution of any arbitral tribunal in the arbitrations sought to be consolidated, a party may file an application to consolidate, provided that:

1. all parties have agreed to the consolidation;
2. all the claims in the arbitrations are made under the same arbitration agreement; or
3. the same arbitral tribunal has been constituted in each of the arbitrations, or no arbitral tribunal has been constituted in other arbitrations.

In South Africa, the general principle is that only the parties that have agreed to an arbitration agreement are bound by it.

However, there are certain circumstances under which third parties can be bound by an arbitration agreement or award. This may occur through doctrines such as agency, assignment, succession or subrogation. For example, if a third party steps into the shoes of an original party to the contract (eg, through assignment of rights or obligations), they may be bound by the arbitration agreement contained in that contract. Additionally, third parties can be bound if they have explicitly consented to the arbitration agreement.

Group or multi-party arbitration can also bind third parties if the arbitration agreement explicitly includes provisions that bind such parties, or if all parties consent to a consolidated or joint arbitration process. The AFSA International Arbitration Rules and other institutional rules may facilitate such arrangements, provided there is clear consent and agreement from all parties involved.

South African national courts do not generally have the jurisdiction to bind foreign third parties to an arbitration agreement or award unless those third parties have a direct connection to the arbitration agreement or the underlying contractual relationship. The principle of privity of contract dictates that arbitration agreements typically bind only the parties that have expressly agreed to them. However, there may be exceptions based on reciprocity principles, or if the foreign third party has engaged in conduct that brings them within the jurisdiction of South African courts.