International businesses are naturally attracted to certainty and predictability, especially in the wake of recent market uncertainty brought upon by the Brexit referendum. In light of this it is now an opportune time for South Africa to opt into the international standard for the resolution of commercial disputes. This is where the International Arbitration Bill (“Bill”) comes into play.
The Bill intends to provide for the incorporation of the Model Law on International Commercial Arbitration, developed by the United Nations Commission on International Trade Law (“UNCITRAL”), into South African law and to provide anew for the recognition and enforcement of foreign arbitral awards.
The objects of the Bill include, amongst others, to facilitate the use of arbitration as a method of resolving international commercial disputes, to adopt the Model Law for use in international commercial disputes, and to facilitate the recognition and enforcement of certain arbitration agreements and arbitral awards.
The Bill will cover any international commercial dispute 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, unless such a dispute is not capable of determination by arbitration under any law in South Africa, or the arbitration agreement is contrary to the public policy of South Africa. In addition thereto, an arbitration may not be excluded solely on the ground that an enactment confers jurisdiction on a court or other tribunal to determine a matter falling within the terms of an arbitration agreement.
Under the Bill any party seeking the recognition or enforcement of a foreign arbitral award must produce the original award and the original arbitration agreement in terms of which an award was made, authenticated in a manner in which foreign documents must be authenticated to enable them to be produced in any court, as well as a certified copy of that award and of that agreement.
A court may only refuse to recognise or enforce a foreign arbitral award if the court finds that a reference to arbitration of the subject matter of the dispute is not permissible under the law of South Africa, or the recognition or enforcement of the award is contrary to the public policy of South Africa.
The Bill is indicative of South Africa’s intention to transform and align its international commercial arbitration practice with global standards on the resolution of commercial disputes, to increase trade and investment, and position South Africa as an investor and arbitration-friendly jurisdiction throughout the world.
The Bill will furthermore showcase to the international investment and business community that South Africa is a safe place to operate, and that disputes will be heard properly and dealt with in a manner consistent with international best practice. This legislation will also reduce avenues for delays and infractions of process that create procedural uncertainty, which is problematic for investors.
In conclusion, the Bill has the potential to attract foreign direct investment, as well as give greater legal protection to South African investments abroad and create a flourishing investment destination in South Africa.