South Africa


Key points
Arbitration in South Africa is governed by the Arbitration Act 42 of 1965 (the Act). The Act does not distinguish between domestic and international arbitration and is not based on the UNCITRAL model law. In 1998, a South African Law Commission report on international commercial arbitration proposed various reforms including a draft arbitration bill based on the UNCITRAL model law; this has not been implemented. South Africa acceded to the New York Convention without reservation in 1976. The South African courts are supportive and the Supreme Court of Appeal has affirmed the international principle that judicial intervention when reviewing international commercial arbitration awards is to be minimised (Telecordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA)). The Supreme Court of Appeal has affirmed the principle of party autonomy in arbitration proceedings, holding that the courts will defer to domestic awards except where there are clear procedural irregularities. South Africa is not a party to the ICSID Convention. Confidentiality The Act does not provide for confidentiality of either proceedings or award. Parties are advised to make provision for confidentiality in their arbitration clause. For a model confidentiality clause, see the Arbitration section on drafting arbitration clauses.

02  South Africa  August 2011  Arbitration in Africa

The Arbitration Foundation of Southern Africa (AFSA) See the Arbitration section for best practice in drafting arbitration Commission for Arbitration Foundation of South Africa Africa Model arbitration clause The parties agree to submit any disputes or difference between them arising out of this contract to conciliation and arbitration as provided by the UNCITRAL Arbitration Rules in respect of which the Arbitration Foundation of Southern Africa will act as the appointing Association of Arbitrators www.arbitrators.arbitration. Weblinks Africa ADR Arbitration in Africa  August 2011  South Africa 03 . Mediation and Arbitration www.africaadr.

Africa 1 What arbitration bodies are there within the jurisdiction? There are four main arbitration bodies in South Africa: the Arbitration Foundation of South Africa (AFSA). and the recently formed Africa ADR (AADR). notably the London Court of International Arbitration. is an independent dispute resolution body created to address the shift in labour relations from the previously highly adversarial model 04  South Africa  August 2011  Arbitration in Africa . and to make arbitration and alternative dispute resolution more effective. It provides a one-stop service. Association of Arbitrators The AOA was formed in 1979 with the following aims: to promote arbitration as a means of resolving disputes. Mediation and Arbitration The CCMA. The Alternative Dispute Resolution Association of South Africa (ADRASA) is a wholly owned subsidiary of AFSA. the Association of Arbitrators (AOA). Mediation and Arbitration (CCMA). The Association has concluded cooperation agreements with a number of arbitration institutes elsewhere in the world. to provide a body of experienced arbitrators and alternative dispute resolution specialists. the Commission for Conciliation. to help arbitrators and alternative dispute resolution specialists work efficiently. with facilities for arbitrations and mediations. Commission for Conciliation. established through the Labour Relations Act 66 of 1995. Arbitration Foundation of South Africa AFSA was founded in 1996 and is a joint venture between business organisations and the legal and accounting professions. a fully administered dispute resolution service (including panels of experts) and a choice of rules depending on the size and complexity of the matter.

The CCMA promotes effective dispute resolution and collective bargaining in the labour sector. mediation or conciliation. and is it based on the UNCITRAL model law? Arbitration in South Africa is governed by the Arbitration Act 42 of 1965 (the Act). do not apply to CCMA arbitrations. The CCMA has compulsory jurisdiction to arbitrate specific labour disputes falling under the Labour Relations Act. Africa lacked a dispute resolution authority with a continental reach. Up until then. being consent and privacy. 2 Is there an Arbitration Act governing arbitration proceedings. providing comprehensive administration services for tribunals engaged in the resolution of regional and international disputes through arbitration. and for the enforcement of the awards of these tribunals. This provides for the determination of disputes by arbitral tribunals through written arbitration agreements. Where compulsory jurisdiction exists.South Africa to one promoting greater cooperation. and may also arbitrate disputes between parties who have consented to the jurisdiction of the CCMA and which fall within the jurisdiction of the Labour Court. and social justice. Arbitration in Africa  August 2011  South Africa 05 . the twin hallmarks of private arbitration. industrial harmony. Africa ADR AADR was established in 2009 in keeping with the global trend to establish regional arbitral authorities which catered to regional needs. AADR is a non-profit. The Act applies to all domestic and international arbitration proceedings in South Africa (where the South African court would have jurisdiction were it not for the written arbitration agreement). neutral and independent dispute resolution administration authority.

International arbitration proceedings are also not based on the UNCITRAL model law. it submitted a further report on domestic arbitration in 2001. In 1998. No distinction is drawn between domestic and international arbitration proceedings. In these circumstances. the South African Law Commission (now the South African Law Reform Commission) (the Commission) submitted a report on its investigation into international commercial arbitration. and the recording of evidence. The Act contains provisions dealing with issues such as the powers of arbitrators. despite widespread support for the Commission’s recommendations from the legal and business communities. The Commission formulated draft Bills for discussion. 3 What are the available rules? In ad hoc domestic arbitrations. 06  South Africa  August 2011  Arbitration in Africa . the government has yet to implement these. The Commission recommended that the UNCITRAL model law compulsorily apply to all international commercial arbitration in South Africa. However.Africa The Act prohibits any reference to arbitration for matrimonial or status issues. there are no statutory laws or rules governing the procedure of arbitration. Both reports proposed extensive changes to bring South Africa up to date with best practice in arbitration. the summoning of witnesses. the production of documents. The procedure is usually set by the arbitral tribunal. rules of procedure are adopted specifically for the purposes of the arbitration. and that all South African legislation on international arbitration be embodied in a new international arbitration act. It is widely accepted that the Act is out-dated and in need of reform. the giving of oral evidence.

in the case of AFSA. especially where the pleadings in the action have closed. Under the AFSA rules and the AADR rules. its rules of procedure must be followed. and the arbitrators are obliged then to apply those rules. determined as a percentage of the amount in dispute. the parties can agree the procedural rules to be applied. in the case of arbitrations before the CCMA. In domestic arbitrations. Where the arbitration involves foreign parties. However. This deposit.South Africa parties often choose to apply the rules of the High Court of South Africa. is. If the arbitration is administered by a particular institution. due to practitioners’ familiarity with those rules. the rules of the London Court of International Arbitration and the rules of the International Chamber of Commerce are popular choices. the parties are also liable to pay the tribunal administration advances on fees and administration costs. This is particularly useful where the agreed reference to arbitration is a conversion from existing High Court proceedings. it is usual (not mandatory) to apply the rules of that institution. Under the AADR rules. and the disputants have decided on arbitration but not agreed a formal dispute resolution mechanism. which is non-refundable. Arbitration in Africa  August 2011  South Africa 07 . Under the AADR rules. In some quarters. Each of the South African arbitration institutions has its own set of rules. the uncertainty on fees and costs payable under the AADR rules is seen as an impediment against selection of the AADR as tribunal of choice. the claimant has to pay a substantial “first fee”/”registration fee” as a deposit to commence the arbitration. the registration fee is based on a schedule that is not published but is available from the tribunal administration (the Institute). Many parties baulk at the extensive first fees payable under AFSA and opt for ad hoc arbitration with an agreed set of rules.

another party may apply to the court for a declaratory order as to the validity of the contract and the jurisdiction of the arbitrator. parties more often agreeing between themselves particular ad hoc procedures suitable for the particular dispute. supervision and intervention – in relation to the dispute and the arbitration. This would include the situation where the arbitrator has exceeded their jurisdiction. However. an award made in an arbitration conducted in terms of the Act is final and binding on the parties and not subject to any appeal. Under the Act. these are seldom used. 08  South Africa  August 2011  Arbitration in Africa . Unless the parties stipulate to the contrary in the arbitration agreement. the jurisdiction and competence of the tribunal may be addressed by the court in the following circumstances: • Where a party contests the validity of the contract containing the arbitration agreement and alleges the arbitrator has no jurisdiction. An arbitrator is permitted to rule on the question of their own jurisdiction. Under the Act. In practice. • If the arbitrator proceeds with the arbitration in the face of objection from a party not under the arbitrator’s jurisdiction. during and after the proceedings. that party may seek to enforce the objection by applying to court for an interdict preventing the arbitration from proceeding. a party may apply to have an award set aside where the arbitrator has exceeded their powers. 4 What supervision is there of arbitrators and their awards? Arbitration agreements may not exclude the jurisdiction of the South African courts. before. the courts retain certain powers – of assistance. less intricate disputes. and the arbitrator declines to proceed with the arbitration.Africa AFSA also has a set of expedited rules for smaller. and provision is made for the mechanism by which any appeal process is to be undertaken.

and to ignore it would be a “gross irregularity” perhaps even misconduct on the part of the tribunal. The question of what constitutes “good cause” is dealt with below. the handing down of a final award by an arbitrator in the face of a pending application to the court for an opinion on the law has been held not to constitute misconduct. its application may be opposed by the unsuccessful party on the ground that the arbitrator lacked jurisdiction. This may happen at any time before a final award is made. the court may. if the parties agree. the parties may send any matter that was referred to arbitration back to the tribunal for reconsideration.) • Should the tribunal exceed its powers. Under the Act. The court may also send any matter back to the tribunal upon the application of any party. or the court so directs on the application of any party. on the application of any party. make an order setting aside the award. would be open to question. Within six weeks following publication of the award.South Africa • If the successful party applies to court for an order enforcing the arbitrator’s award. However. The opinion is final and binding on the tribunal and the parties. (The prospects of success. any question of law arising in the course of the arbitration proceedings may be referred to the court or to counsel as a special case for an opinion on the law. Arbitration in Africa  August 2011  South Africa 09 . in the absence of an earlier attempt to obtain an interdict. provided the application is brought within six weeks of the publication of the award and that the applicant shows “good cause” for such remission.

Where there is a conflict between a procedure ordered by the arbitrators and any provision of the Act. Under the Act. unless otherwise stated in the arbitration agreement. Under the South African Constitution. there shall be a single arbitrator. every person has a right to a fair public hearing (section 34). The Act also has various mechanisms to deal with the following circumstances which may prevent a smooth start to the tribunal: • The arbitration agreement provides for two or more arbitrators – one for each party – and a party fails to appoint its arbitrator. Whether an arbitration institution retains supervisory powers over the proceedings and the award depends on the rules of that institution. a party may apply to court to have the issue determined by the court. 10  South Africa  August 2011  Arbitration in Africa . 5 How quickly can a tribunal be set up? The time taken to set up a tribunal depends on the mechanism agreed by the parties in their arbitration agreement. but because they had chosen not to exercise them by virtue of their agreement that disputes were to be determined privately (Lufuno Mphaphuli & Associates v Andrews and Another 2009 (4) SA 529 (CC)).Africa Arbitrators may have regard of public policy in reaching certain decisions. The South African Constitutional Court has held – in the context of an allegation that the informal and investigative procedure adopted by the arbitrator in certain proceedings violated this right – that these rights do not apply to private arbitrations – not because the parties had waived these rights.

Arbitration in Africa  August 2011  South Africa 11 . • The agreement provides for an even number of arbitrators. each appointed by the parties concerned. or the tribunal itself in certain circumstances. Such obstruction and delay can be avoided with the inclusion of a well-crafted and comprehensive dispute resolution clause in the original agreement. The various institutional arbitral rules give specific time periods in which a tribunal can be established and stipulate various avenues of relief. to make sure the arbitration is established successfully.South Africa • An appointed arbitrator either refuses to act or becomes incapacitated. • The appointment of an umpire or third arbitrator causes disagreement among the already appointed arbitrators. and the arbitrators choose to appoint an umpire or a third arbitrator. if these deadlines are not met. as well as consequences. • The parties (or arbitrators) cannot agree on the appointment of a replacement arbitrator. An uncooperative party may compel an opponent to resort to the courts. and is then removed from office or has their appointment terminated or set aside. • The agreement provides for a single arbitrator and the parties cannot agree on the appointment – the court can then appoint an arbitrator.

The Act and the private arbitration rules provide mechanisms for the appointment of an arbitrator where a party refuses to participate in establishing the tribunal. Under the Act. It will then be for the party initiating the court proceedings to show “good cause” why arbitration will not suffice as a method for resolving the dispute. In considering the arguments. a party’s refusal to participate may result in an award by default against them. Where a party wishes to prevent a dispute from being determined by way of arbitration. In the absence of agreement. any other party may approach the court to stay those proceedings.Africa 6 What happens if one party refuses to participate in the process? An arbitration agreement is binding and cannot be terminated save with the consent of all the parties involved. 12  South Africa  August 2011  Arbitration in Africa . 7 What interim measures are available? The tribunal can order interim measures of protection only where the agreement provides for this or where the parties agree to confer this power on the tribunal when discussing procedural rules. the tribunal has no power to order security for a claim or costs. a tribunal may proceed in the absence of a party if that party has received reasonable notice of the time and place of the hearing and has failed to show “good cause” as to its non attendance (section 15). the court will be mindful of the principles reaffirmed in the Telecordia Technologies case and the reticence of the courts to interfere with party autonomy. Where a party institutes court proceedings despite an agreement for the mandatory arbitration of disputes. that party must apply to court for an order and is obliged to show “good cause” why the dispute should not be referred to arbitration. or to compel the attendance of any witness at the hearing. Once the tribunal has been established.

disclosure. either within South Africa or abroad • the production of evidence by affidavit • the inspection. Similar provisions exist under the High Court rules. Under the Act any party may secure the attendance of witnesses at the hearing. there are mechanisms available to deal with security for costs. Under the Act the court can also order: • security for costs • the disclosure of documents and the provision of interrogatories • the examination of witnesses on commission. Under the AFSA rules and the AADR rules. preservation or sale of any property involved in the proceedings • the appointment of a receiver • certain injunctive relief. There is. inspections. just as in ordinary civil proceedings.South Africa The tribunal can require disclosure of documents and direct the inspection of any goods or thing involved in the dispute – unless the arbitration agreement states otherwise (the Act. and interim and conservancy measures. however. section 14(1)). AADR or the High Court. Arbitration in Africa  August 2011  South Africa 13 . no provision for obtaining security for the amount in dispute under AFSA. securing the attendance of witnesses.

Africa 8 What right is there to challenge the appointment of an arbitrator? Unless the arbitration agreement provides otherwise. “Good cause”. the appointment of an arbitrator cannot be terminated except in the limited circumstances provided for in the Act or in the applicable arbitration rules. or cover the situation where two arbitrators are unable to agree (the Act. Arbitration Act Under the Act. AFSA rules An arbitrator is obliged to disclose to the Secretariat any facts or circumstances that might give rise to reasonable doubt concerning the arbitrator’s independence and impartiality in the eyes of the parties. although not defined under the Act. Case law would suggest that a matter of some importance in considering the question of “good cause” is that of likely prejudice to the other party. section 13(2)(b)). must include the failure by the arbitrator to either proceed with the arbitration or to make an award with “all reasonable dispatch”. or where the parties consent to termination. 14  South Africa  August 2011  Arbitration in Africa . any party may at any time apply for the termination of an arbitrator’s appointment if they can show good cause for that arbitrator to be removed. In the context of an arbitration – where the South African Constitutional Court and the Supreme Court of Appeal have reaffirmed the primacy of party autonomy – it is likely that “good cause” will have to be highly persuasive. The question of what constitutes “good cause” when challenging the appointment of an arbitrator has never been decided in the South African courts.

decides that there are insufficient grounds for not appointing an arbitrator or for removing them. in its sole discretion. AADR rules A party may challenge the appointment of an arbitrator at any time if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence (article 12). a detailed process is followed under the auspices of a committee convened by the Chairman of the AOA. If the Secretariat. As with judicial officers in ordinary civil proceedings. mental or other disability. arbitrators are obliged to withdraw if. AOA rules On appointment by the Association of Arbitrators. The arbitrator must declare any facts or circumstances which may raise such doubts in the eyes of the parties. the prospective arbitrator is obliged to sign a declaration that there are no grounds known to them likely to give rise to doubts as to their independence and impartiality. the Secretariat is obliged to inform the parties and afford them adequate opportunity to make submissions and comments. Arbitration in Africa  August 2011  South Africa 15 . due to physical. If the committee decides the arbitrator is to be replaced. the committee can either reopen the nomination process or appoint a new arbitrator itself. and the parties are not able to agree on a replacement. In that event. it must notify the parties and the arbitrator accordingly. The parties are entitled to challenge the appointment of the arbitrator within five days of receipt of this declaration. they become incapable of performing their duties properly.South Africa In the event the arbitrator discloses any such facts or circumstances.

The agreement may limit the appeal to a specific type with a time limit and certain procedural rules. agree on the right to appeal the award. section 28).Africa The challenge must be made in writing. AADR will decide the challenge and. The parties can. if so. In the absence of a voluntary withdrawal by the arbitrator or any agreement between the parties. the Arbitration Act will apply to all matters of independence or impartiality. High Court rules There is no specific rule under the High Court that deals with withdrawal of the presiding officer. however. that decision will be final. Some institutional arbitration rules allow the parties to carry the matter to an appeal hearing. subject to applicable law. unless the agreement provides otherwise (the Act. The parties can choose to have the right to appeal the arbitrator’s decision. Failure to do so within the stipulated time is deemed to constitute an irrevocable waiver of the right to make the challenge. are there any time limits to be aware of or unusual provisions? The finality of arbitration awards is entrenched in South African law as a principle of common law and by statute. within 15 days of the party becoming aware of the circumstances concerned. A reply to any challenge must be made within 15 days of receipt of the challenge. 16  South Africa  August 2011  Arbitration in Africa . setting out the full facts of the case. The award is final and not subject to appeal. 9 Can a party appeal the arbitrator’s decision and. and an appeal panel may be provided by the institution. Where the parties have agreed that High Court rules will govern the proceedings.

High Court rules There is no automatic right of appeal – leave of the court is required to appeal an adverse judgment to a higher court. justified and necessary for the proper understanding and implementation of the award. where the parties have agreed to apply the High Court rules. within 10 days of publication of the award. to the arbitrator and to the Chair of the AOA – of its intention to refer the award to an appeal tribunal. The request for an opinion and any request for corrections must be made within 30 days of delivery of the award. give written notice – to the other party. Either party may then. notice of any appeal must be delivered within seven calendar days of the publication of the interim award or final award. parties may appeal. Notice of any cross-appeal must be delivered within seven calendar days of the delivery of notification of appeal. in its opinion. Accordingly. there is no appeal procedure and the award is final and binding. in domestic arbitrations before a single arbitrator. the request is reasonable. Arbitration in Africa  August 2011  South Africa 17 . provided there is a written and signed agreement. there is a process whereby the award can be corrected. AADR rules Under the AADR rules. this is usually set out in the arbitration agreement. There is also a mechanism for the correction of the award. and the tribunal can be requested to give an interpretation of the award. However. if the parties wish to provide for an appeal mechanism. AOA rules Under the AOA rules.South Africa AFSA rules Under the AFSA rules. This applies unless the parties have agreed otherwise in writing. The tribunal will do so if. where the parties have agreed a right of appeal.

A “foreign arbitral award” is defined as any arbitral award made outside South Africa and can therefore include both New York Convention awards and non-Convention awards. all documents must be properly authenticated. to afford the respondent an opportunity to oppose the application and show the court any reasons. The applicant is entitled to file replying papers in response to any answer given by the respondent. to have the award made an order of court. This procedure derives from the Recognition and Enforcement of Foreign Arbitral Awards Act 40 of 1977 (Foreign Arbitral Awards Act). an arbitration award be enforceable in South Africa and. 18  South Africa  August 2011  Arbitration in Africa . also duly authenticated.Africa 10 Is South Africa a party to the New York Convention? Yes. what is the procedure? A party seeking to enforce a foreign arbitral award may apply to the relevant division of the High Court of South Africa having jurisdiction over the respondent party. Notice of the application must be given to the other party. The application must be accompanied by the original. why the award should not be made an order of court. In 1976 South Africa acceded to the Convention without reservation and in 1977 enacted legislation to give effect to this ratification. If the award is made in a language other than one of the 11 official languages of South Africa. of both the arbitral award and the arbitration agreement. 11 Will if so. must be attached to the application. under the Foreign Arbitral Awards Act. or certified copies. a sworn translation of the award into one of those languages.

the respondent must prove one of the following: • the parties had no capacity to conclude the arbitration agreement •  the arbitration agreement is invalid under the law governing the agreement or of the country in which the award was made • the respondent did not receive the required notice of appointment of the arbitrator or of the arbitration proceedings or was otherwise not able to present its case • the award deals with a dispute not contemplated by or falling within the provisions of the relevant reference to arbitration. the validity of the proceedings. If opposition to the application is anticipated. or under the law of which. Should the tribunal or the courts of the seat of the arbitration have dealt with any of these objections.South Africa For the court to refuse to make the award an order of court. the applicant should foreshadow each of these possible objections in its founding papers. the appropriate determination should also be included. or contains decisions beyond the scope of that reference • the tribunal was not constituted or proceedings conducted in accordance with the arbitration agreement or in accordance with the law of the country in which the arbitration took place • the award is not yet binding on the parties. or has been set aside or suspended by a competent authority of the country in which. the scope of the award and the absence of any order setting aside or suspending the award. providing sufficient evidence on the validity of the arbitration agreement. Arbitration in Africa  August 2011  South Africa 19 . the award was made.

A favourable costs award does not result in full indemnity. However. the court will be guided by the principles reaffirmed by the Supreme Court of Appeal in the Telecordia Technologies case. and full papers are filed. an applicant should be able to obtain the requisite order within two months. As a rule of thumb. costs are awarded to the party that is substantially successful. recoverable costs are determined by way of a tariff (based on the Supreme Court Act) and are assessed by the Taxing Master of the High Court having jurisdiction over the seat of the arbitration (“party-and-party costs”). and the cost of doing so should be reasonably modest. While practitioners will charge their clients according to agreed rates (“attorney-own client costs”). In those circumstances. In deciding the matter. in the event the application is opposed. 20  South Africa  August 2011  Arbitration in Africa . Where more than one advocate is engaged. 12 What are the likely costs of the arbitration? The tribunal is vested with a wide discretion regarding the award of costs. Usually. much depending on the particular division of the High Court in which the application must be brought. parties can expect to pay the same costs as for a short trial action. successful parties can expect to recover approximately 50 per cent of their actual costs of arbitration. it could take up to a year before the matter is argued and a judgment given.Africa In the event the application is not opposed. Recoverable costs would include tribunal fees and expenses. the successful party will be able to recover the costs of two or more counsel only where the tribunal expressly orders this. expert and witness fees and expenses (provided these are “qualified” as part of the award) and the costs of counsel employed.

the parties may agree that the tribunal has the power to award interest on costs. and transcriber. Where an award is silent on costs. arbitration venue. the referring party cannot compel arbitration and must instead resort to the courts. However. a party may apply to the tribunal for an appropriate order. or silent on a particular aspect on costs. Arbitration in Africa  August 2011  South Africa 21 . Ordinarily. A number of the arbitration institutions charge significant administration fees and require substantial deposits (see Question 3). This order must be made within 14 days of publication of the award. the split clause usually takes the form of a permissive rather than a prescriptive reference of disputes to arbitration – that a party “may” refer a dispute to arbitration. 13 Are split clauses valid and enforceable? Split clauses allow one or more parties to elect arbitration or litigation after the dispute arises. If the dispute resolution clause in the agreement affords the aggrieved party the right to choose the method of determination – either by way of arbitration or by way of court action – the South African court is likely to respect the parties’ original agreement and enforce that notwithstanding opposition by the respondent. no interest accrues on costs. In South Africa.South Africa Usually the parties agree to share the costs of the tribunal. Usually. Where another party to the dispute does not consent to arbitration. on the basis that the unsuccessful party will reimburse the successful party its share. the unsuccessful party is ordered to pay these.

it would be foolhardy for parties to agree to have complex issues determined by way of a summary procedure. Often disputes may arise on operational issues where full arbitration or court proceedings are too cumbersome and time consuming. but simply provides for resolution of disputes either through court action or through arbitration. and summary rules on expedited arbitration may be more appropriate. where operational issues are determined through an expedited procedure. On the other hand. to ensure that the right kind of issue is dealt with through the most appropriate. it is quite possible for a party to assert that the clause is too vague and therefore unenforceable. The South African courts have not yet decided this issue. expeditious and cost-effective procedure. If arbitration in South Africa is contemplated. it is preferable to avoid uncertainty through the parties including in their original agreement a comprehensive dispute resolution mechanism that anticipates all eventualities as far as possible. This might result in a hybrid mechanism.Africa Where the dispute resolution mechanism does not afford any such right. Parties would probably be better advised to craft a dispute resolution mechanism bespoke to their particular situation and agreement. n 22  South Africa  August 2011  Arbitration in Africa . and complex issues determined through a more comprehensive process.

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