Arbitration in South Africa

Arbitration is one of the dispute resolution mechanisms used as an alternative to resolving disputes through the court system. Litigation through the courts is often beleaguered with an oversupply of disputes to be expressed, and a shortage of resources to deal with the volume of such disputes within timeframes that provide businesses with a platform for prompt hearing and resolution.

Whether arbitration as an alternate dispute resolution mechanism remains advantageous to parties who elect to agree to arbitration in South Africa in the context of changes in international legislation is a matter for debate.

There are also four Acts of Parliament that govern the above mentioned types of Intellectual Property:

Brief Background to Arbitration

Arbitrations in South Africa are governed by the Arbitration Act 42 of 1965 (“the Arbitration Act”). In order 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. The Arbitration Act makes no distinction between domestic and international arbitrations.

The globalisation of international trade and increased cross‑border commercial disputes and the preference to resolve such disputes by arbitration, led in 1985 to the recommendations of the United Nations Commission on International Trade Law being adopted by many countries. Of the approximately 135 countries that have adopted the ‘UNCITRAL Model Law’, African countries that have ratified or allowed to the Model Law through domestic legislation include Egypt, Kenya, Nigeria, Tunisia, Zambia and Zimbabwe.

Status of Arbitration in South Africa

The South African Law Commission (now the South African Law Reform Commission) first proposed South Africa’s recommended response to the UNCITRAL Model Law over 15 years ago and presented a draft bill for international arbitration. In May 2001, the Law Commission proposed a new statute for domestic arbitration.

Despite extensive support for the implementation of the Law Commission’s recommendations, Government is yet to implement changes to the Arbitration Act. As such, South Africa remains behind the rest of the world (including African countries like Mauritius) and fails to form itself as an international arbitration centre. In such circumstances, parties looking to have disputes internationally arbitrated generally choose to arbitrate such disputes in other jurisdictions.

The current Arbitration Act does not specify default rules regarding procedure, permits an unruly party the opportunity to try and delay the arbitral proceedings by exploiting the provisions that permit court intervention in such proceedings, which may lead to costly and frustrating delays.

The recommendations of the Law Commission seek to address these issues by increased powers of the arbitrator aimed at speeding up the process and making it more cost effective, which is in line with international practice.

Although the Arbitration Act has certain flaws and is outdated, the advantages of the determination of commercial disputes is accepted and recognised by legal practitioners and the business community of South Africa, which is evidenced by the rapid growth of arbitration as a forum for dispute resolution.

In our experience in both domestic and international arbitrations, governed by an agreement that addresses the issues highlighted above, we have found arbitration to be a cost effective, expeditious and preferred mechanism in resolving commercial disputes. Brian Blignant Attorneys bases its services on its knowledge and experience in the particular legal field. This knowledge, together with the legal principles and business realism gained from years of practice is being successfully applied in practice and places Brian Blignant Attorneys in the position to appropriately scope the clients' requirements and build a cost effective solution for them. The firm generates options with a view to achieve favourable business results and provides monthly reports to clients.

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