Project topics and materials
Get Complete Project Material File(s) Now! »
THE INVESTIGATION OF ARBITRATION BY THE SALRC
The new democratic South Africa, born in 1994, brought with it a Constitution745 that is supreme.746 The Arbitration Act, 1965, like all South African legislation, must withstand Constitutional muster. This Act is both outdated and inadequate to satisfy the needs of either international or domestic arbitration.747 In the last few decades, the business community and jurists in South Africa have persistently called for legislative reform of arbitration law in South Africa.748 The robust support for, and use of, arbitration globally as a dispute resolution mechanism has necessitated an adjustment of arbitration practice in South Africa to align it with international norms and standards. It was hoped that the cries for reform would cause the SALRC to intensify its efforts to incorporate international best practice into the South African law, an element that is currently sadly lacking.749
The SALRC‘s investigations confirmed the inadequacy of prevailing arbitration legislation in South Africa to cater for the demands of modern private arbitration. To address the obvious shortcomings of the South African arbitration law two reports were produced.750 The focus of the first of these two reports was the need for legislation to regulate international arbitration in South Africa in the wake of the country emerging from an extended period of isolation in 1994 into an environment for which existing international trade and investment laws were both outdated and inadequate.751
The Arbitration Act, 1965 was an example of legislation in the commercial sector, which had completely failed to keep pace with the changing needs of the business world. The SALRC recognised that the Act was designed for domestic application and that it lacked any provisions dealing expressly with international arbitration.752 The SALRC also recognised the importance of arbitration as a successful international dispute resolution mechanism in resolving international trade disputes.753 It ascribed this success to the New York Convention, which facilitates enforcement of foreign arbitral awards in States parties in a more effective manner than the manner in which foreign judgements are enforced.754
The SALRC also directed attention towards domestic private arbitration which was the subject of the second report issued. This second report was completed in 2001 and followed an intensive investigation into the status of domestic arbitration law in South Africa. Unsurprisingly, the SALRC found the current Arbitration Act, 1965 to be inadequate, ineffective and inefficient.755 The SALRC acknowledged the English law roots of the Arbitration Act, 1965756 and noted with dismay that despite amendment and updating of the English law, the South African legislation had failed to keep pace with that development.757
The SALRC identified three alternative options for reform of the current South African Arbitration Act in this regard: The first was that the existing legislation should be modified without affecting the fundamental provisions of the Act;758 Secondly, South Africa could follow the example of some other states and adopt UNCITRAL Model Law for both domestic and international arbitration.759 However, the SALRC suggested that a third option should be adopted, namely a new statute should be drafted ―… combining the best features of the Model Law and the English Arbitration Act of 1996, while retaining certain provisions of the Act which have worked well in practice‖.760 This last suggestion was recommended by the SALRC as the most favourable option. The SALRC acknowledged that arbitration no longer provides the benefits, which were traditionally associated with it.761
The entire chapter 8 of the report focused on consumer arbitration agreements. In its report on the SALRC draft Bill for domestic arbitration, it acknowledged that the Act did not offer adequate protection to consumers. The concern raised by the report regarding lack of express provisions aimed at protecting consumer is valid and deserves support. Regrettably, the report dilutes the seriousness of this aspect by pointing at section 3(2) and 6 of the Act as providing a protection to consumers. The framework of the current Arbitration Act is not consumer friendly and it is important to appreciate the need to develop the Act to be sensitive to the rights of the consumers. The report identifies true consent as the foundation of party autonomy, which is the fundamental principle of arbitration law.
THE DISTINCTION BETWEEN DOMESTIC AND INTERNATIONAL PRIVATE ARBITRATION
Private arbitration, both internationally and domestically, is premised on the same principles and shares the same purpose. There are however, a few special characteristics that differentiate international from domestic private arbitration. Paulsson has the following to say regarding the distinction between international and domestic private arbitration:806
―The fundamental problem that distinguishes international from domestic cases is the multiplicity of potentially competent jurisdictions. Since there is no obligatory ‗World Court of International Commerce‘ parties must voluntarily accept a neutral forum created by means of a contractual stipulation. If such contractual stipulations are not respected from country to country, there would be chaos. Everyone would sue his adversary in his own favourite court. There would be inconsistent judgments, and those judgments would be difficult to enforce anywhere but in the country where they were rendered. The system would degenerate. Settlement of disputes under international contracts would no longer be secure. International commerce would suffer because serious companies would consider international contracts to be a matter of high risk, to be avoided or to be priced at a premium to compensate for the risk.‖
International private arbitration is a self-governing process, independent of national laws.807 Its hybrid nature, as illustrated by Redfern and Hunter, should be borne in mind: 808
―International commercial arbitration is a hybrid. It begins as a private agreement between the parties. It continues by way of private proceedings, in which the wishes of the parties are of great importance. Yet it ends with an award which has binding legal force and effect and which, on appropriate conditions, the courts of most countries of the world will recognise and enforce. The private process has a public effect, implemented with the support of the public authorities of each state and expressed through its national law.‖
There are other unique circumstances that set international arbitration apart from either domestic arbitration or litigation. Likewise, the practices, procedures and the resources used distinguish international arbitration from litigation or domestic arbitration.809 The differences result from the unique mixture of civil and common law traditions reflected in international commercial arbitrations, which require practitioners to be more cautious.810
Caution must be exercised to avoid copying procedures followed in domestic courts or arbitrations, which might result in the practitioner losing an opportunity to secure a favourable decision for the client.811 Furthermore, international commercial arbitration is a private dispute resolution mechanism that lacks official precedents or rigid rules, unlike litigation that is formal and has clear rules and procedures.812
The complexity of legal processes in international commercial arbitrations forces business people to engage the services of lawyers to protect their interests and explains the presence of lawyers from different jurisdictions with different legal backgrounds.813 These lawyers are presented with the challenge of navigating through the ―intricate network of jurisdictional options and potentially applicable provisions of law‖, while guarding against issues that can arise when advocates and arbitrators come from different legal backgrounds.814 Despite the different legal backgrounds of the advocates and arbitrators involved in an international arbitration, international arbitration awards all require the intervention of the relevant domestic court for validation and enforcement.
According to UNCITRAL Model Law and the New York Convention, courts may intervene in the international commercial arbitration process at four possible points: a) Prior to the establishment of a tribunal where one party challenges the validity of the arbitration agreement;815 at the same stage if a party to the dispute requires urgent protection which cannot be delayed until the establishment of a tribunal;816 (b) at commencement of the arbitration if there is a challenge to the appointment of the arbitrators. In such cases, the court may assist by appointing arbitrators;817 (c) during the arbitration when interlocutory orders, which arbitrators are not empowered to make, are needed;818 and (d) during the enforcement stage.819 The purpose of the court‘s intervention at this stage is to legitimise the award thereby justifying the use of state resources to enforce compliance with the award. The court seeks to give the arbitral award some teeth. International arbitration policies are premised on two basic interests, namely, preservation of the finality of arbitral awards and maintaining a just system.820 This can be achieved by keeping the intervention of the court in arbitration processes to a minimal and available instruments must be constantly updated to avoid being rendered redundant due to evolution of international commerce.
CHAPTER 1: INTRODUCTION
1.1 INTRODUCTION
1.2 TYPES OF ARBITRATION
1.3 RESEARCH QUESTIONS
1.4 RATIONALE / MOTIVATION
1.5 METHODOLOGY / APPROACH
1.6 OUTLINE
1.7 CONCLUSION
CHAPTER 2: HISTORICAL BACKGROUND
2.1 INTRODUCTION
2.2 ARBITRATION IN SOUTH AFRICA PRIOR TO ENGLISH INFLUENCE
2.3 THE ORIGINS OF ENGLISH ARBITRATION LAW
2.4 THE ORIGINS OF ARBITRATION LAW IN INDIA
2.5 THE ORIGINS OF ARBITRATION LAW IN THE USA
2.6 THE ORIGINS OF SPANISH ARBITRATION LAW
2.7 THE ORIGINS OF INTERNATIONAL ARBITRATION LAW
2.8 CONCLUSION
CHAPTER 3: SOUTH AFRICAN LAW OF ARBITRATION, INCLUDING A CONSTITUTIONAL PERSPECTIVE
3.1 INTRODUCTION
3.2 CRITICAL ANALYSIS OF THE SOUTH AFRICAN ARBITRATION LAW
3.3 ARBITRATION AND PUBLIC POLICY
3.4 CONSTITUTIONALITY OF ARBITRATION IN SOUTH AFRICAN LAW
3.5 THE EROSION OF THE BENEFITS OF ARBITRATION IN SOUTH AFRICA
3.6 THE INVESTIGATION OF ARBITRATION BY THE SALRC
3.7 CONCLUSION
CHAPTER 4 INTERNATIONAL ARBITRATION
4.1 INTRODUCTION
4.2 THE DISTINCTION BETWEEN DOMESTIC AND INTERNATIONAL PRIVATE ARBITRATION
4.3 THE EVOLUTION OF INTERNATIONAL COMMERCIAL ARBITRATION
4.4 INTERNATIONAL APPLICATION OF COMMERCIAL ARBITRATION
4.5 CONCLUSION
CHAPTER 5: ARBITRATION IN FOREIGN JURISDICTIONS
5.1 INTRODUCTION
5.2 ARBITRATION IN ENGLISH LAW
5.3 ARBITRATION LAW IN INDIA
5.4 USA ARBITRATION LAW: THE PRACTICAL SIDE
5.5 ARBITRATION AS A DISPUTE RESOLUTION MECHANISM IN SPAIN
5.6 CONCLUSION
CHAPTER 6 CONCLUSION AND RECOMMENDATIONS
6.1 INTRODUCTION
6.2 BRIEF OVERVIEW OF THE RESEARCH
6.3 LESSONS LEARNED FROM IDENTIFIED JURISDICTIONS
6.4 CONCLUSION
6.5 RECOMMENDATIONS
BIBLIOGRAPHY
