Section 25 of the Arbitration Act, 1965 (Arbitration Act) ostensibly obliges an arbitral tribunal to physically hand down an award to all parties in person. The wording used in this section appears somewhat peremptory. The ambit and meaning of this section recently came under scrutiny in the decision of the full bench in Buildcure CC v Brews and Others 2017 (6) SA 562 (GJ).
In this case, the arbitration agreement between the parties provided that “in order to expedite matters, the arbitrator shall be entitled to initially furnish his award to the legal representatives of the parties by way of electronic mail and, thereafter, furnish the respective parties with a signed hard-copy thereof”.
The arbitrator then sent a hard copy of his award dated 14 August 2014 to each party, which, in each case, was delivered on 18 August 2014. No email was transmitted. No summoning of the parties to his presence was directed and no award was handed down in the presence of the parties. But both parties did receive a copy of the award.
One of the parties, in a Johnny-come-lately manner, contended that no arbitration award was published because what purported to be an “award” was neither delivered in the peremptory manner prescribed by s25, nor in accordance with the procedure agreed between the parties. This was one of the grounds of review in seeking to set aside the award, which application was dismissed and the matter came before the full bench on appeal.
The full bench noted that s25 of the Arbitration Act provides for a high degree of formality. Unlike in other comparable jurisdictions, s25 places a duty on an arbitral tribunal to “deliver” an arbitration award in the presence of the parties. The full bench further undertook a comparative study of the English Arbitration Act, 1996, the Federal Arbitration Act, 9 USC in the United States of America, the Rules of the American Association of Arbitrators and the UNCITRAL model law, 1985. It noted that the South African legislation is exceptional in its prescription as to delivery of an award in the presence of the parties. The court further noted that this strict requirement had been omitted from what was then the South African International Arbitration Bill.
But is s25 of the Arbitration Act capable of variation? Can the parties, by agreement, vary the application of what appeared to be a peremptory provision? The court held that the basis of arbitration is consensus between the parties and to hold that publication in a manner agreed between the parties could result in an invalid award is contrary to the consensual nature of arbitration. Accordingly, the court held that the provisions of s25 the Arbitration Act are not immune from variation by agreement, but are merely a default procedure which shall apply in the absence of a contrary intention evinced by the contracting parties. The full bench found that the arbitrator’s conduct of hand-delivering hard copies of the award to each party on 18 August 2014 satisfied his obligation in terms of the arbitration agreement and thus the arbitration award was validly delivered and published in terms of the Arbitration Act.
The Buildcare case has once again highlighted South Africa’s badly out-of-date Arbitration Act. Hot on the heels of the revision to the law on international arbitration with the recent promulgation of the International Arbitration Act, 2017, our legislature should take steps to bring the Arbitration Act in line with international best practice.
For the time being, litigants can take comfort in the fact that South African courts are supportive of the institution of arbitration, setting awards aside only in limited circumstances. With that said and in order to avoid technical challenges, parties would be well advised to ensure that the arbitration proceedings including the publication of the award are undertaken in a manner that fully complies with the arbitration agreement as well as the Arbitration Act.