During the next few months, the International Arbitration Bill, 2016 will be presented to the South African National Assembly.
The Bill, once enacted, is set to place South Africa on the main international arbitration stage by aligning the administration of arbitrations in South Africa to the Model Law of the United Nations Commission on International Trade Law (UNCITRAL).
Previously, arbitrations were subject to the Arbitration Act (Act No. 42 of 1965), unless otherwise agreed.
In terms of the Bill, any international commercial dispute which the parties have agreed to submit to arbitration under an arbitration agreement, and which relates to a matter which the parties are entitled to dispose of by agreement to be determined by arbitration will be administered under the UNCITRAL model, subject to the exclusions listed under clause 7.
Clauses 16, 17 and 18 of the Bill incorporate the wording of the Recognition and Enforcement of Foreign Arbitral Awards Act, 1977, which was a stand-alone piece of legislation, directly into the Bill. The applicability of the Recognition and Enforcement of Foreign Arbitral Awards Act will be repealed in its entirety once the Bill comes into effect as legislation.
The applicability of the Arbitration Act 42, of 1965 which has been the governing statute in respect of arbitrations for 51 years, is excluded in section 4 of the Bill. The Bill provides that subject to subsection (2), the Arbitration Act (Act No. 42 of 1965), is not applicable to an arbitration agreement, arbitral award or reference to arbitration covered by this Act. Section 2 of the Arbitration Act, 1965 (Matters not subject to arbitration) applies for purposes of Chapter 3 of the Bill.
The Bill, subject to the provisions of section 12 of Promotion and Protection of Investment Act, 2015, binds public bodies and applies to any arbitration in terms of an arbitration agreement to which a public body is a party.
Any international commercial dispute which the parties have agreed to submit to arbitration under an arbitration agreement and which relates to a matter which the parties are entitled to dispose of by agreement may be determined by arbitration, and will be subject to the application of the Bill.
Such dispute will be excluded only where the dispute is not capable of determination by arbitration under any law of the Republic; or the arbitration agreement is contrary to the public policy of the Republic.
Arbitration may also not be excluded solely on the ground that an enactment confers jurisdiction on a court or other tribunal to determine a matter falling within the terms of an arbitration agreement.
According to clause 12, parties to an arbitration agreement may refer a dispute covered by the arbitration agreement to conciliation, before or after referring the dispute to arbitration, subject to the terms of the agreement. Conciliation is defined as including mediation.
The parties to an arbitration agreement who intend to settle their dispute by conciliation may, subject to the Bill, agree to use the UNCITRAL Conciliation Rules set out in Schedule 3.
The Bill also grants arbitrators immunity and their institutions and representatives for acts or omissions arising during the course of the discharge or purported discharge of that arbitrator’s functions as arbitrator, unless the act or omission is shown to have been done in bad faith.
These changes are deemed necessary as it brings South Africa’s arbitration laws in line with international norms and standards. The force of law will still be overseen by the executive powers within South Africa but the arbitral procedures between international parties will be governed by the laws outlined in UNCITRAL.
The Bill aims to promote the uniformity of national laws pertaining to international arbitration proceedings. The passing of this Bill would improve the access to justice for companies doing business outside the country and foreign companies in South Africa and an essential tool for doing business across borders; this is seen as one of the Department of Trade and Industry’s motives behind the Bill being promulgated into legislation. Besides the Bill aligning South African international arbitration law with international best practice it should inter alia establish South Africa as a venue of choice for international arbitrations in Africa and bring in an influx of foreign spending in the country.
The enactment of the Bill is a positive for step forward for arbitration in South African and it will facilitate the desirability of using South Africa as a seat for international arbitrations in the future.