The Arbitration Act and Arbitration Meaning
Arbitration is a contract based form of alternative dispute resolution that takes place outside of court. The Arbitration Act No. 42 of 1965 governs the arbitration process in South Africa. In order for a dispute to be referred for arbitration, both parties must agree to arbitration. Instead of going to court, the dispute will be resolved by one or more arbitrators, also referred to as arbiters or an arbitral tribunal. The arbitral tribunal will decide the dispute at hand, and make an award which the parties must comply with. The parties are typically bound by the award unless provided otherwise by the arbitrator.
The Arbitration Process
A range of disputes may be resolved through arbitration, the most common being commercial and contractual disputes. Status disputes, marital disputes and, marital related disputes may not be resolved by way of arbitration.
Despite arbitration being described as a form of alternative dispute resolution, together with mediation and conciliation, they are not the same. During mediation and conciliation, parties may accept or reject proposed results, whereas parties will be bound by the order made during arbitration proceedings. In addition, arbitration, unlike mediation, does not allow one party to withdraw unilaterally.
Both parties have to be in agreement in order to terminate the arbitration agreement.
Arbitration Process: The Arbitration Act South Africa
In South Africa, arbitrations are governed by the Arbitration Act No. 42 of 1965.
However, once the parties have agreed to arbitrate a dispute, courts are generally hesitant to intervene with the process, and arbitration proceeds autonomously. Nonetheless, the court may at any time, on the application of any party:
- Set aside an arbitration agreement
- Order that any particular dispute referred to in the arbitration agreement shall not be referred to arbitration
- Order that the arbitration agreement shall cease to have effect with reference to any dispute referred
Arbitration Process: The Arbitration Agreement
Arbitration is a consensual process that can only take place if and when both parties agree to it. Normally the parties would have agreed contractually, that is by way of a written agreement to arbitrate any disputes which might arise between them. When a dispute arises, the parties may then arbitrate immediately. If the parties have not agreed in writing to arbitrate immediately a contract can be drafted with an arbitration clause to address the current dispute and for addressing future disputes.
A typical arbitration clause in a written agreement must include:
- A clear definition of which disputes can be arbitrated
- The arbitrator’s jurisdiction and powers
- The rules and procedures that need to be followed during the arbitration
- Who the arbitrator will be and how the arbitrator will be appointed
- The location where the arbitration will be held
- Who will pay the costs of the arbitration
It is advisable to seek legal advice before entering into any agreement that contains an arbitration clause or into an arbitration agreement, as the content of an arbitration agreement will have a substantial impact on the cost and duration of the arbitration process.
A qualified arbitrator can be appointed by the Arbitration Foundation of Southern Africa (AFSA) or the Association of Arbitrators (South Africa) (AASA) or can be agreed to by the parties involved in the dispute. The parties have control over key aspects of the arbitration, such as the relevant legislation which will be applicable, the disputes which will be arbitrated, and the language, and location where the arbitration will take place.
Arbitration Process: Request for Arbitration or Notice to Arbitrate and The Arbitration Hearing
Either party can initiate the arbitration process by sending a request for arbitration, also called a notice to arbitrate, to the other party. The request for arbitration usually provides an outline of the issue in dispute and, where applicable, the name of the applicant’s chosen arbitrator. The other party is given a set amount of time to respond to the notice to arbitrate. Where applicable, the other party will also provide the name of the arbitrator of their choice.
One or more hearings are then held before the actual arbitration is conducted. During the hearings, written submissions from both parties, written statements from witnesses, and other relevant reports may be provided to the arbitrator. The proceedings may then be concluded in as little as a few hours or may take place over several days, weeks, or months.
Arbitration Process: The Arbitration Award and Enforcement of The Arbitration Award
Following the hearing, the arbitrator will provide his decision with respect to the disputes between the parties. The decision that is made by the arbitrator is called an arbitration award or arbitration decision. The arbitration award is legally binding and can be enforced in court.
Arbitration decisions are generally enforceable in most countries, both locally and internationally. To be enforceable, and for execution purposes, an arbitration award must be converted into a court order. To do so, a High Court application will have to be issued in accordance with section 31(1) of the Arbitration Act No. 42 of 1965. When the arbitration award is converted into a court order it carries the same legal weight as a court order. However, the arbitration award alone does not set legal precedent and courts deciding similar issues in the future are not bound to follow it.
The arbitration award as determined by the arbitrator is normally final, and cannot be challenged or appealed. However, the institutional rules of AFSA or AASA or the terms of the arbitration agreement may make provision for circumstances under which an award may be challenged or appealed.
Conclusion: Arbitration Act and Arbitration Process
Arbitration proceedings provide much-needed relief to the strained South African judicial system as an alternative form of dispute resolution that takes place outside of court. Commercial or contractual disputes can successfully be resolved through arbitration. However, there may be times when arbitration is not appropriate, and alternatives need to be pursued.
If you are considering whether or not arbitration is the best course of action for dispute resolution, Alan Levy Attorneys can guide you through the process. Alan Levy Attorneys will provide you with practical and legally sound advice in matters relating to arbitration and dispute resolution.
Keep in mind that this article is a summary only and does not constitute legal advice. If you require legal advice on how to handle your matter, you can contact Alan Levy Attorneys for industry-leading legal assistance.