Arbitration – SABWiL https://www.sabwil.org.za Igama lamakhosikazi malibongwe Wed, 24 Jul 2024 10:07:39 +0000 en-GB hourly 1 https://www.sabwil.org.za/wp-content/uploads/2022/01/cropped-SABWiL-Logo-512-512-32x32.jpg Arbitration – SABWiL https://www.sabwil.org.za 32 32 Principles of Arbitral Practice – Training Insights https://www.sabwil.org.za/arbitral-insights/ Fri, 17 Nov 2023 07:51:52 +0000 https://www.sabwil.org.za/?p=2060

Herbert Smith Freehills SABWiL Disputes Training #SA3

“Education is the most powerful weapon which you can use to change the world.”

-Nelson Mandela

Herbert Smith Freehills, in collaboration with South African Black Women in Law (SABWiL), hosted a two-day training programme on Arbitral Practice Principles for law students, graduates, and aspirant legal practitioners. Participants included students from various institutions. The aspiring arbitrators were provided with pre-reading materials before the training.

Day 1:    14 October 2023

The training session began with Attorney Candice Grieve, a senior legal associate, welcoming participants and introducing her colleagues, experts in arbitration. The training was divided into five parts, with each expert having twenty minutes to address the learners.  Attorney Candice encouraged questions for clarification.

Part 1 covered the concept of arbitration, highlighting its private nature, use of independent arbitrators, and confidentiality. Arbitration results in an “arbitral award.” Some disputes cannot be arbitrated, like murder cases or divorce.

Differences between litigation and arbitration were discussed, emphasising the confidential nature of arbitration, party-chosen arbitrators, speed, and flexibility. However, arbitration can be more expensive upfront.

Regarding appeal, generally, arbitral awards cannot be appealed, but there are exceptions based on party agreements or institutional rules.

The distinction between International and Domestic Arbitration was explained, with the former having an international element and broader enforcement options.

Two pathways to arbitration were presented: via a pre-agreed clause in a contract or through mutual agreement after a dispute.

Part 2 discussed the regulatory framework, including the arbitration agreement’s form (standalone or within a contract). An arbitration agreement must be in writing and meet essential contract elements. Courts typically support the enforcement of arbitration agreements.

In summary, the training provided insight into the principles of arbitration, its differences from litigation, regulatory aspects, and enforcement of arbitration agreements.

Day 2:    21 October 2023

During the arbitration training hosted by Herbert Smith Freehills in collaboration with South African Black Women in Law (SABWiL), the participants were divided into two groups, each consisting of eleven members. This group activity aimed to provide participants with practical insights into the application of arbitration principles using a fictional case as a learning tool. The case involved the possibility of ABC bringing arbitration proceedings against MedDevice under their Supply Agreement. Participants were tasked with examining the arguments for and against the claim proceeding to arbitration.

To facilitate the discussion, participants were provided with learning materials related to a fictional case. These materials included details of the case, the Supply Agreement, and relevant legal precedents.

Both groups were instructed to analyse the case and evaluate the arguments for and against ABC pursuing arbitration to resolve their dispute with MedDevice. This exercise encouraged trainees to think critically about the benefits and drawbacks of arbitration in the given scenario.

All participants in each group were given the opportunity to actively participate in the discussion. This open dialogue allowed trainees to express their perspectives and engage in constructive discourse regarding the case.

It is worth noting that not all trainees were able to attend both days of the training. However, this did not hinder the success of the group work, as the format allowed for flexibility.

Throughout the group activity, legal and arbitration experts from Herbert Smith Freehills were present to provide guidance and answer any questions the trainees had. Their expertise was invaluable in helping participants navigate the complex legal issues involved in the case. Importantly, the trainers emphasised that there was no definitive right or wrong answer in this learning discussion. Instead, the objective was to encourage critical thinking and the exploration of various perspectives.

The group activity served as an effective learning tool for the learners. It afforded the learners an opportunity to apply the principles of arbitration to a practical case, encouraging in-depth analysis and critical thinking. The presence of legal and arbitration experts ensured that participants had access to guidance and insights from experienced professionals. This exercise exemplified the collaborative and knowledge-sharing nature of the training, emphasizing that the pursuit of understanding and learning is more important than finding a single correct solution in the world of arbitration.

Concluding Remarks

Herbert Smith Freehills in collaboration with South African Black Women in Law (SABWiL) deserves commendable remarks for their exceptional training on the Principles in Arbitral Practice provided to law students. The training showcased exemplary commitment to advancing legal education and empowering the next generation of legal practitioners.

Herbert Smith Freehills and SABWiL’s collaboration in providing training on the Principles in Arbitral Practice has made a significant impact on the legal education landscape. This commitment to diversity, practical learning, and fostering a collaborative learning environment has undoubtedly benefited law students, empowering learners with valuable skills and knowledge for impactful legal careers. This training programme exemplifies dedication to legal excellence and inclusive education by learners and educators alike.

Malibongwe. 

Authored by:

Nombulelo Gumede

SABWiL 5th Deputy President

Lindelwa Cheryl Zulu

SABWiL 5th Secretary-general

]]> Arbitration Practice Principles – #SA2 insights https://www.sabwil.org.za/arbitral-practice-principles/ Fri, 14 Oct 2022 08:06:02 +0000 https://www.sabwil.org.za/?p=1854 Read More »Arbitration Practice Principles – #SA2 insights]]>

Principles of
Arbitral Practice

by SABWiL Alumni Attorney
Sibusiso Nhlapo

I always had a narrow view on Arbitration. For the longest time, I thought Arbitration was merely the sitting down of parties around a table and coming to an agreement which will be binding. I further thought that arbitration was one way for parties to avoid going to court and incurring legal costs. I must admit that I have been proved wrong by the #SA2. Arbitration is deeper, more intensive and mentally demanding. For me, that is exciting.

On 17 September 2022, we learnt about the principles of arbitration. Ms Robyn Khumalo of Herbert Smith Freehills defined arbitration as “a private, non-national system of dispute resolution by an impartial tribunal based on parties’ agreement. The award is final and binding – no appeal on fact or law; limited grounds to set aside or resist enforcement and that it is globally enforceable around the world on a largely common basis”.[1]  

We were taken through the types of arbitration which included the Ad hoc, Ad hoc+, Administered Ad hoc arbitration (Ad hoc ++) and Institutional arbitration. All these types of arbitrations were based on agreements to submit to the arbitration.

Arinda Truter of SchoemanLaw Inc mentions that the parties need to enter into a written agreement agreeing to arbitration.  This agreement [2] should:

  • properly define the dispute to be arbitrated
  • stipulate the powers and jurisdiction of the arbitrator
  • agree who the arbitrator is to be (or how he/she will be appointed, or which organisation will appoint an arbitrator if no agreement can be reached)
  • where the arbitration is to be held
  • the procedures and/or rules to be followed
  • the determination of costs and the assessment thereof
  • whether there is to be an appeal process
  • the confidentiality of the proceedings

We were told to take our litigation hats off when it comes to arbitration. The reason being that litigation and arbitrations are fundamentally different. The primary reasons why parties arbitrate is to enforce against the other side’s assists around the world, for privacy and neutrality.

I learnt that unlike litigation where a court order is only enforceable in the country of issue, arbitration is international and there are multiple laws in international commercial arbitration [3] which include:

  1. The law applicable to the underlying contract or the merits of the case;
  2. The law governing the arbitration agreement;
  3. The law applicable to the procedure;
  4. The law of the seat of the arbitration;
  5. The law of the place where recognition and enforcement is sought; and
  6. The personal law each of the parties to the arbitration.

I learnt an interesting fact. An arbitration awards can be heard in a different country that does not necessarily have jurisdiction. This means that unlike litigation where the court with jurisdiction must be the court where the cause of action arose or where the defendant resides, the common law approach of arbitration is determined by the law chosen by the parties to govern the arbitration agreement or in absence of such express or implied choice, the system of law which the arbitration agreement is mostly closely connected.

 

Where parties failed to specify the governing law of the arbitration agreement, the default position is the seat of the arbitration. However, where the arbitration is governed by the International Arbitration Act 15 of 2017, the seating jurisdiction will determine the applicable procedural law and the courts of that country will have supervisory jurisdiction in respect of the arbitration.

Article 2 (1) of the New York Convention states: “Each Contracting State shall recognise an agreement in writing underwhich the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration”

What can be taken from the above definition is that arbitration must be consensual, there must be capacity, the process must be legal and in the form of writing.

The key concepts of an arbitration agreement are as follows:

  1. Governing law
  2. Submission to arbitration
  3. Set
  4. Institutional rules
  5. Number of arbitrators
  6. Language

In terms of the New York Convention, an award can be generated at the seat which is taken by the award creditor to a different jurisdiction and ask for the award to be enforced under the New York Convention by the enforcing court.

According to Article 5 of the New York Convention, recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent court/authority where the recognition and enforcement is sought, proof that:

  1. Incapacity of the parties or invalidity of the agreement;
  2. Party the award is against was not given proper notice of the appointment of the arbitrator or the arbitral proceedings;
  3. The award goes beyond the scope of submission to arbitration;
  4. Composition of the arbitral authority not in accordance with the agreement;
  5. Award is not yet binding on parties or has been set aside by a competent authority.

The United Nations Commission On International Trade Law (UNCITRAL) Model Law is designed to assist States in reforming and modernizing their laws on arbitral procedure so as to take into account the particular features and needs of international commercial arbitration. It covers all stages of the arbitral process from the arbitration agreement, the composition and jurisdiction of the arbitral tribunal and the extent of court intervention through to the recognition and enforcement of the arbitral award. It reflects worldwide consensus on key aspects of international arbitration practice having been accepted by States of all regions and the different legal or economic systems of the world.[4]

I plan to use this knowledge to encourage more mediation and arbitration processes in the legal matters I deal with daily. Arbitration is not only a cheaper alternative, but also quicker and confidential. The parties choose to disclose their matter to create precedence. Perhaps my biggest criticism of arbitration is that case law is not easily created as the parties remain with the total discretion to make the arbitration award public. Case law has paved a way in the dessert and provides legal practitioners and the general public with guidance in unique circumstances. Of course there are exceptions, but it is unlike litigation where all matters are public and some even reportable.

In conclusion, arbitration is wholly in the hands of the parties. The parties have better control of how the process goes. The parties are able to choose the arbitrators, the language to be used, the country where the matter will be sitting, and the laws applicable. The only thing the parties need is a well drafted and concise arbitration clause in a contract. This is the most important start in most arbitrations.

[1]      Herbert Smith Freehills Principles of Arbitration (17 September 2022) presented by Jonathan Ripley-Evans, Candice Grieve, Johanna Lubuma and Robyn Khumalo

[2]        https://www.polity.org.za/article/arbitration-in-south-africa-2017-05-05#:~:text=Arbitrations%20in%20South%20Africa%20are%20governed%20by%20the,their%20agreement.%20The%20dispute%20is%20heard%20privately%20

[3]      Herbert Smith Freehills Principles of Arbitration (17 September 2022) presented by Jonathan Ripley-Evans, Candice Grieve, Johanna Lubuma and Robyn Khumalo

[4]        https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration

Attorney Sibusiso Nhlapo

Attorney Sibusiso Nhlapo

Attorney Nhlapo is a SABWiL Alumni who joins our fold after participating successfully in our #SS programme led by Luminary Adv. Naseema Adam. Alumnus Sibusiso served with excellence for two terms in the SABWiL National Executive Committee after election. In 2022 Alumnus Attorney Sibusiso participated in the SABWiL Herbert Smith Freehills Arbitration Training Programme 'Principles in Arbitral Practice'. This article is but a glimpse into this fragment of a remarkable journey.

]]> Conflict is inevitable, but combat is optional. https://www.sabwil.org.za/combat-is-optional/ Thu, 13 Jan 2022 10:54:48 +0000 https://www.sabwil.org.za/?p=1475 Read More »Conflict is inevitable, but combat is optional.]]>

“The courts of this country should not be the places where resolution of disputes begins. They should be the places where the disputes end after alternative methods of resolving disputes have been considered and tried.” – Sandra Day O’Connor

 

If I were to sum up the effects of the inaugural #SA1 (SABWiL AFSA mediation and arbitration training) in one word, I would say “empowerment”. I say this because the #SA1 training has broadened my mind greatly, and I feel informed and empowered as a result thereof. The value of the preliminary material that was furnished in preparation for the training was truly effective because it offered motivation and insight for the training, by introducing me to the topic, as well as encouraging me towards the concept of thinking about the content of the training beforehand.

Our mediation training began with Advocate Samantha Martin who took us through Rule 41A of the Uniform Rules of Court and the definition of mediation, the importance of mediation, characteristics of mediation, the rules that govern mediation, what makes a good mediator as well as the process of mediation. She also took us on a guided tour of the mediation facilities at the Arbitration Foundation of Southern Africa (AFSA). The training was such an eye opener for me, to an extent that I feel compelled to share the knowledge that I learned, as well as my overall experience in detail, in this humble written offering.

Mediation is a voluntary process between parties to a dispute in which an impartial and independent mediator, assists the parties by:

• facilitating the resolution of the dispute between them;
• identifying and limiting the issues in dispute as well as exploring potential areas where an amicable compromise may be reached through negotiations;
• facilitating the proceedings and ensuring that communication breakdown between the parties is prevented and
• creating options that will assist in resolving the dispute.

Every new action or application in South African High Courts, must include a notice in which the instituting party either agrees to a referral of the dispute to mediation or opposes such a referral. The opposing party is also required to file a notice in which it indicates whether it agrees or opposes the referral of the dispute to mediation. If the referral to mediation is opposed by either party, reasons must be given. When parties have agreed to mediation, the impact thereof is that the time limits for the filing of further affidavits or pleadings will be suspended.

The parties will be required to comply with the various requirements of mediation such as entering into an agreement to mediate, filing a minute to record the decision to mediate, as well as filing a joint minute that indicates whether a settlement was reached. The mediation must be concluded in thirty days unless extended by a judge. If any issue or issues remain unresolved after the mediation process, the parties may proceed to litigation.

What I found most interesting about mediation is the fact that it is a very essential tool when to comes to life in general. This is because it provides the key life skills that are useful in all areas of our lives, not just in our legal careers. Mediation training teaches about the dynamics of human behaviour and provides the fundamental set of skills that are necessary when dealing with inevitable conflict.

These skills create healthy ways that prevent conflict from escalating further, and thus assists with the preservation of relationships. Another essential element of mediation is that it assists people in making their own decisions when it comes to resolving conflict. This keeps the communication channel between the parties open. This is the ultimate key that leads to the salvation of relationships that could have been damaged beyond repair without the intervention of mediation.

Mediation is often effective when it comes to reducing tensions. It therefore makes sense for the concerned parties to begin with it as a point of departure. This should happen before parties resort to arbitration or litigation since it is a relatively fast and inexpensive means of resolving disputes. In my view, mediation also supports the ongoing access to justice efforts by shifting the justice system to be more client-centred and collaborative.

This line of thinking is supported by the fact that as of 9 March 2020, parties to a dispute are required to consider mediation for every new matter instituted in a High Court of South Africa. Non-compliance with this new rule, could result in a party receiving an “irregular step” notice which could significantly delay the finalisation of a matter, and lead to unnecessary costs. However, recent case law has shown that this rule will take quite some time to be implemented fully in our Courts as the Courts themselves still overlook this rule. In the recent case of M N v S N (10540/16) [2020] ZAWCHC 157 , the Court reiterated that the Rules are there for the Court and not the Court for the Rules and was not prepared to uphold the objection of non-compliance with Rule 41A.

Advocate Christopher Gibson took us through the concept, process and the rules which govern arbitration. The types of disputes that cannot be referred to arbitration, advantages, and disadvantages of arbitration, as well as how arbitration awards are enforced was topical. He presented us with a scenario, for which we had to write heads of arguments for the applicant who sought a review and setting aside of an arbitration award. This was homework that we also had to present in class during training the following week. It was a truly amazing experience and learning how to draft heads of arguments as well as how to present yourself before an arbitrator from seasoned professionals was a welcome and priceless opportunity for me.

Arbitration is governed by the Arbitration Act 42 of 1965 in South Africa or the International Arbitration Act, 15B of 2017 . However, for the Act to be enforceable, the parties must record their agreement in writing to arbitrate any existing dispute or any future dispute relating to a matter specified in their agreement. Where the agreement in question is a sale agreement, the parties may record the above by including an arbitration clause in their contract of sale. What stood out the most for me with regards to arbitration is its advantages when it is compared with litigation.

Arbitration is preferred over courtroom proceedings because :

• It is private, often quicker and delays can be avoided.
• The adjudication itself is flexible and the parties may agree to the mechanism to resolve the dispute, i.e., witnesses that are overseas may be questioned virtually or over video, or certain evidence may be admitted without the need to call witnesses.
• The dispute often requires that the adjudicator has a certain set of skills. For example, a medical dispute is best adjudicated by a person who has knowledge of the medical field as well as a medical degree. Parties may therefore refer a dispute to an expert in the concerned specific field for determination.
• There may be an appeal procedure, but the outcome is binding on the parties and is enforceable.

The disadvantages of arbitration include:

• Costs – This is often outweighed by the fact that the dispute is resolved more quickly.
• Privacy – Privacy is often considered to be one of the advantages of arbitration. However, the privacy of arbitration proceedings can be a disadvantage in circumstances where the reprehensible conduct of one of the parties is protected from public scrutiny. In addition, privacy can result in a lack of transparency, which may be disadvantageous to one of the parties, particularly when there is no appeal against the award.
• Conflict of interest – Arbitrators must be impartial and independent of the parties on appointment and must remain so until the final award has been rendered. However, arbitrators are often appointed from the ranks of practising and retired legal practitioners and conflicts of interest can arise at any point in practice. Challenges based on alleged conflicts of interest can lead to the delay and disruption of arbitration proceedings.

In instances where the impartiality of the arbitrator is questionable, the aggrieved may lodge an application seeking an order to review and for the arbitration award to be set aside. This would be based on the notion that the arbitration proceedings were carried out in a substantially irregular way, as described by section 33 (1) (b) of the Arbitration Act 42 of 1965. In Abrahams and Another v RK Komputer SDN BHD and Others 2009 (4) SA 201 (C) , Gauntlett AJ (as he then was) points out that, according to Ngcobo AJ’s (as he then was) decision in Sidumo v Rustenburg Platinum Mines Ltd & Others [2007] 12 BLLR 1097 (CC) , the review process will necessarily compel the reviewing court to scrutinize the reasons presented for the award.

It was also stated that, when conducting this exercise, the reviewing court must keep in mind that it is examining the reasons not to determine whether the commissioner’s (or arbitrator’s) conclusion is correct, but to determine whether the commissioner (or arbitrator) has committed a gross irregularity in the conduct of the proceedings.

Currently, a large gap exists between people who need access to legal services and those who can afford legal services. Many of the public services that are available, such as legal aid, pro-bono lawyers and law school clinics, only have the resources to serve a very small portion of the needs of individuals with legal problems. Additionally, the income restrictions are so low that often only the very poor are eligible for such services. As a result, many people represent themselves when resolving legal problems, often with little success.

In conclusion, should I someday have the privilege to guide the course of dispute in my legal career, I hope to use this newfound knowledge not only to resolve disputes but to also shape our legal landscape by encouraging society and more especially legal practitioners, to utilise alternative dispute resolutions to make justice accessible to all.

Penned by

President Cleopatra Mahoa

Third SABWiL President , 13 January 2022

Authorities:

Legislation
Arbitration Act No.42 of 1965 
International Arbitration Act No. 15B of 2017

Case Law
Abrahams and Another v RK Komputer SDN BHD and Others 2009 (4) SA 201 (C)
M N v S N (10540/16) [2020] ZAWCHC 157
Sidumo v Rustenburg Platinum Mines Ltd & Others [2007] 12 BLLR 1097 (CC)

Additional sources
Mediation Rule 41A of the High Court
RULES BOARD FOR COURTS OF LAW ACT, 1985 (ACT NO. 107 OF 1985)
Arbitration Act, 1965 – Government Website

President Cleopatra

President Cleopatra Mahoa

South African Black Women in Law Third President

More Arbitration Insights
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