The International Arbitration Act
ON POLICYMAKERS’ DESKS
The International Arbitration Act
For decades, South African parties to international construction contracts have often been faced with trying to negotiate the seat of their arbitration, with the other party insisting on it being held in an expensive jurisdiction( for South Africans), such as Switzerland or the United Kingdom. This may be about to change. The International Arbitration Act( the‘ Act’) was signed into law and published on 20 December 2017. Section 6 of the Act incorporates the Model Law on International Arbitration(‘ Model Law’) into South African law, to facilitate the resolution of international arbitrations. The enactment of the Model Law brings South Africa in line with 74 foreign jurisdictions. The Act is applicable to“ any international commercial disputes 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”. The Act sets out when an arbitration is to be considered international as follows:
• The parties to an arbitration agreement have, at the time of the conclusion of that agreement, their business in different States; or
• One of the following places is situated outside the State in which the parties have their places of business: 1. the place of arbitration if determined in or pursuant to the arbitration agreement; or 2. any place where a substantial part of the obligations of the commercial relationship is to be performed; or 3. the place with which the subject matter of the dispute is most closely connected.
• The parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country.
The Arbitration Act of 1965 is no longer applicable to arbitrations covered by the Act. Section 2 of the Arbitration Act, however, is still applicable when it comes to enforcement and recognition of arbitration awards. This is the section that states that matrimonial matters or matters relating to status may not be referred to arbitration. The parts of the Model Law that are applicable are set out in Schedule 1. Parties must ensure that they consider this schedule when conducting international arbitrations, as it sets out the rules in respect of the conduct of international arbitration proceedings( for example, how parties are to appoint arbitrators; jurisdiction of the tribunal; power of the tribunal to order interim measures; provision of security; statements of claim and defence; form and contents of the award; and grounds for refusing to enforce an award). The Act incorporates the UNCITRAL Rules on Conciliation but does not incorporate the UNCITRAL Rules on Arbitration, the parties being free to agree on their own rules. Should the parties fail to agree, the tribunal may conduct the arbitration in a manner it considers appropriate. The Act provides for the recognition and enforcement of foreign arbitral awards, subject to certain exclusions set out in section 18. The enforcement of an award made in South Africa would of course be subject to the laws of the country in which the award is enforced. The Act not only provides the legislative framework for the settling of disputes locally by parties engaged in international contracts, but also provide a basis for international parties to settle their dispute in South Africa, since it is not a requirement that one of the parties is South African. The Act is a welcome development in our law and provides the critical legal framework for parties engaged in international transactions to resolve their disputes, and enforce international awards, locally.
Source: MDA Construction and Technology Attorneys amicuspublico. com
The enforcement of an award made in South Africa would of course be subject to the laws of the country in which the award is enforced.
4- CEC March 2018