International Arbitration Act now operational

16 Jan 2018

Arbitration offers many advantages. Arbitration is typically faster, less formal and more tailored to the particular dispute than court proceedings while, at the same time, retaining the benefits of impartial expert adjudication. Possibly the biggest benefit of arbitration is that it is a method of dispute resolution that is chosen and controlled frequently by the parties themselves.

Over time, international arbitration has developed as a practical, efficient and well-established method of settling commercial disputes without resorting to the courts. Arbitration – and thus also the broader administration of justice – is not something static, but develops and must keep up with the times.

The International Arbitration Act, 2017, (Act 15 of 2017) came into operation on 20 December 2017.

This Act incorporates the United Nations Commission on International Trade Law (UNCITRAL) Model Law into South African law. The Model Law is the current international benchmark for arbitration laws developed by the UNCITRAL in order to address the wide divergence of approaches taken in international arbitration throughout the world and to provide a modern and easily adapted alternative to outdated national regimes.

This Act ensures that South Africa, like its Commonwealth, African Union and SADC counterparts has a reformed and modernised law on international arbitration.

It is envisaged that the reforms contained in the Act will position the arbitration regime in South Africa at the forefront of international arbitration best practices.

The new arbitration regime will also assist South African businesses in resolving their disputes speedily and cost effectively, while keeping up with the times on the resolution of international commercial disputes front. This will lead to South Africa being an attractive venue for parties around the world to resolve their commercial disputes.

This will also to give greater legal protection to South African investments abroad. The new Act will encourage investment in South Africa, as the business community will know that there is a mechanism through which their commercial interests will be protected by the law, this will in turn have a positive impact on economic growth and investment in South Africa.

In terms of the new International Arbitration Act, the 1965 Arbitration Act is not applicable to arbitration matters which are subject to the Model Law. The purpose of this exclusion is to provide certainty for foreign users of the Model Law in South Africa so that they will know that they do not have to search outside the enacting legislation for possible discrepancies.

The Act, subject to the provisions of section 12 of the Promotion and Protection of Investment Act binds public bodies, and applies to any arbitration in terms of an arbitration agreement to which a public body is a party.

The Act gives the Model Law the force of law in South Africa. Since the primary goal of the Model Law is to reduce discrepancies between procedural laws affecting international commercial arbitration, it is desirable that the Model Law should be interpreted and applied uniformly.

The other features of the Act include the following:

1. The Act also makes provision for the confidentiality of arbitral proceedings where such proceedings are held in private. Where an organ of State is a party to arbitration proceedings, such proceedings must be held in public due to the public interest in the matter.
2. A foreign arbitral award may be recognised in the Republic as required by the the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, signed in New York in 1958 (the “New York Convention”).
3. A foreign arbitral award must, on application, be made an order of court, and be enforced in the same manner as any judgment or order of court, provided it complies with the provisions of the clauses of the Act dealing with the recognition and enforcement of foreign arbitral awards.
4. Any international commercial arbitration dispute which the parties have agreed to submit to arbitration under an arbitration agreement may be determined by arbitration, except where a dispute is not capable of determination by arbitration or the arbitration agreement is contrary to public policy.

Arbitration practitioners will be able to use a framework which fits the purpose, and which has been specifically designed to deal with international commercial disputes. This will effectively promote South Africa as a business destination and boost her image and reputation.

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)