Vuk’uzenzele. Before attending the arbitration training sessions held by Herbert Smith Freehill in partnership with South African Black Women in Law (SABWiL), I initially thought my studies had given me a firm grasp on how arbitral processes are conducted on an international scale between individuals and various forms of companies. Participation in the training session has made me realise that my initial comprehension of international arbitration as a whole was insufficient. I was operating under the misconception that international arbitral processes were conducted entirely in an informal manner, participants merely engaged with one another face to face and conclude agreements by a signing of a contractual document that creates a legally binding obligation between the parties. On the contrary, arbitral processes are much more complex in nature than I initially thought, though far easier to institute than formal court proceedings and bear more nuance than regular court procedures. It is this ‘nuance’ that interested me in participating in the arbitration training sessions. Different courts all over the world tend to enforce the arbitration agreements and would prefer not to permit any court proceedings that might contravene the agreement.

The sessions began with the participants getting orientated on the various legal principles that govern international arbitral processes. The competent team of Herbert Smith Freehill gave us an in-depth explanation on international arbitral processes mainly focusing on international commercial arbitration. I personally enjoyed the focus on international arbitration since I am of the opinion that the subject was not covered in as much detail in earlier lessons, unlike how the team of Herbert Smith Freehill presented the process to us. We learned that international arbitration in essence refers to a private, non-national system of dispute resolution whereby the parties to a dispute refer that dispute to a third party, known as an arbitrator, for a final legally binding decision.[1] An arbitrator is a person chosen by the parties. In essence, arbitrators were chosen by, or on behalf of the parties who may also determine the procedure to be followed by the arbitrators.

Next, we were taught to great length about the various types of international arbitration. International arbitration can be distinguished between institutional arbitration and ad hoc arbitration. An institutional arbitration process is administered by a special arbitral institution and its own rules. The arbitration institution is charged with performing all the administrative arrangements for the arbitration except the direct communications between the arbitration tribunal and the parties until the hearing of the dispute, however, parties have discretionary powers to the appointment of arbitrators and the stages preceding the hearing by the arbitral institution.[2] Ad hoc arbitrations are conducted in terms of the roles of procedure that are adopted for the particular arbitration. Parties to an ad hoc arbitration process are charged with making their administrative arrangements and appointments of a tribunal, unless the parties’ contract contains an arbitration clause that stipulates the procedural rules to be adhered to.

We learned about the differences between arbitration and litigation. Litigation refers to a legal process through which one party takes legal action against another in order to resolve a dispute between parties in court. Arbitration refers to an alternative dispute resolution method through which a legal dispute is settled outside of court. In order for a legal dispute to be resolved by way of arbitration the parties must have agreed to include an arbitration clause prior to the dispute arising. Even in the absence of arbitration clause between parties, the may nevertheless, consensually conclude that the dispute is of such a nature that it would best be resolved by arbitration. An arbitration clause is a clause in a commercial contract where parties to a contract have agreed to resolve their legal disputes through an arbitration process.

We learned that South Africa promulgated the Arbitration Act 42 of 1965 (Arbitration Act) to govern over arbitration proceedings. Section 2 of the Arbitration Act only provides that the following matters shall not be subjected to arbitration: any matrimonial cause or any matter incidental to any such cause or matter relating to status. The South African Law Commission recommended the compulsory application of the Model Law adopted by the United Nations Commission on International Trade Law (UNCITRAL), still not promulgated by parliament. Article 1 of the Model Law demands a ‘wide interpretation’ so as to cover matters arising from all relationships of a commercial nature, whether contractual or not.[3] Importantly, The Model Law provides that in instances where the parties have not included in their arbitration clause rules of procedure or cover a particular dispute, the Model Law provides a set of rules so that the dispute may be resolved through arbitration.

In addition to the Model Law, South Africa ratified and acceded to the New York Convention(the Convention), the most important treaty relating to international commercial arbitration. The Convention governs over only foreign arbitral awards. The convention also deals with the recognition and indirect enforcement of arbitration agreements. When arbitration is subject to the convention, court proceedings between disputing parties are brought in a court of a contracting state regarding a dispute which is subject to the agreement, the court is expected to stay court proceedings at the request of one of the parties, so that dispute be referred to arbitration, unless the arbitration agreement is found to be ‘null and void’, inoperative or incapable of being performed’. In the Delfante v Delta Electrical Industries Ltd case, the court found that an arbitration agreement is not an automatic bar to legal proceedings in respect of disputes covered by the agreement. It is the responsibility of the defendant in the dispute seeking to invoke the arbitration clause to file a special plea or raise it as a defence on an affidavit.[4]

To conclude, arbitration processes are less formal than court proceedings. This means these arbitral proceedings tend to be less time consuming than litigations. Arbitration processes are also far more flexible than court proceedings. Parties can better tailor the arbitration process to better suit their specific needs. Arbitration processes are more private in nature than court proceedings. Arbitral awards and disputes being arbitrated are not required to publicise the arbitration nor the results of arbitration processes. Arbitration processes are known for being less costly to conduct than court processes. Parties will not incur the usual legal costs associated with litigation.

I enjoyed the lessons and most importantly the conversations with my fellow participants. Ubuntu.

References:

[1] Gary B.Born, ‘International Commercial Arbitration’ (2nd ed, Kluwer Law International, 2014) 1.

[2] Schulze, C.  International Commercial Arbitration: An Overview Sabinet African Journals, Vol 46 No 2, 45 – 59.

[3] UN General Assembly, Report of the international Law Commission, 23 July 1999, A/54/10, available at: https://www.refworld.org/docid/3ae6af970.html [accessed 13 November 2023].

[4] Delfante v Delta Electrical Industries Ltd 1992 (2) SA 221.