Arbitration in

South Africa
Law and Practice

by
David Butler
BComm LLB LLD (Stell) FA Arb

and

Eyvind Finsen
BArch Dip TP (Rand) ARIBA MIA Arch SA FAArb AC!Arh

Juta & Co, Ltd

CAPE TOWN WETTON JOHANNESBURG
 First Published 1993

To Ishbe/ and Margaret

© Juta & Co, Ltd 1993

PO Box 14373, Kenwyn 7790

This book is copyright under the Berne Convention. In terms of the Copyright
Act 98 of 1978 no part of this book may be reproduced or transmitted in any form
or by any means, electronic or mechanical, including photocopying, recording or
by any information storage and retrieval system, without permission in writing
from the Publisher.

This book is out of print, and this photocopy has been made by
the Association of Arbitrators with the written permission of the
copyright holders, to whom a royalty is paid. The notice above
is equally applicable to this photocopy.

ISBN O 7021 2986 0

SET, PRINTED AND BOUND IN THE REPUBLIC OF SOUTH AFRICA

BY THE RUSTICA PRESS (PTY) LTD, NDABENI, CAPE
0231.IX
Foreword

Extensive use is made today of arbitration in the resolution of commercial and

building industry disputes. It is inevitable, I think, that the future will witness
larger recourse to arbitrational techniques as a method of dispute resolution. I
gladly accept the invitation of the co-authors, each a specialist in the field which
is the subject of this work, to add a few words by way of introduction.

While a sound grasp of the principles and practice of the law of arbitration
should form part of the forensic equipment of any practising lawyer, a good
working knowledge of the subject is indispensable to those engaged in a large
number of other occupations such as, for example, architecture, quantity
surveying, engineering, building science and accountancy.

In the education (both undergraduate and post-graduate) of persons in the

above-mentioned occupations, the need for adequate instruction in regard to
the law and practice of arbitration has in the past not always been sufficiently
recognised in this country. It is gratifying to note that since the establishment
of the Association of Arbitrators the tide has turned in South Africa. Through
the provision of suitable training courses and by arranging lectures delivered by
experts in the field of arbitration, the Association makes a significant
contribution towards equipping for the proper discharge of their demanding
functions both those who preside as arbitrators and those who appear before
them. In this connection I should like to pay tribute to the enterprise and
energy displayed by the chairman of the Association, Mr Eyvind Finsen, one of
the two co-authors of this book.

The objects which the authors had in mind in writing this work are stated in
its preface. Those aims have, I consider, been amply realised, and an
enthusiastic reception for the fruits of their labours may confidently be
predicted. In a comprehensive but pleasingly concise exposition of the subject
the relevant legal principles are stated with clarity, and careful attention is
given to the requirements of practice. The result is a textbook of great
theoretical and practical utility which in South African literature on the subject
satisfies a long-felt need.

GG HOEXTER Bloemfontein
Judge of the Appellate Division July 1993

V
Preface

Arbitration is a well-established procedure for the resolution of disputes that

enjoys the approval and support of our law. Nevertheless, perhaps because it
is extra-curial, it tends to be viewed with suspicion and mistrust by many
lawyers, who sec it as having no part in their professional activities.
It is possibly for this reason that there are so few books on the subject by
South African authors, dealing with South African conditions, and that, apart
from one or two recently published introductory books, those few appear to
have been written by lawyers for lawyers. There is almost nothing that offers
practical guidance for the lay arbitrator, who may be a highly qualified
engineer, architect or accountant, but who is unfamiliar with the intricacies of
the law, and who is frequently intimidated by the legal formalities imported
into the arbitration proceedings by the parties' lawyers.
But a practical handbook needs to start from a sound theoretical base and,
in seeking to fill the need for a guidebook for the working arbitrator, we quickly
came to realise the necessity for laying this theoretical base and for examining
the statutory and common law, relevant judgments and contemporary writing
on arbitration and dispute resolution.
The result will, we hope, not only meet the purposes of the practising lay
arbitrator but also assist legal practitioners to appreciate how arbitration differs
from litigation, and how its potential may be realised to achieve the quick and
cost-effective resolution of disputes. We also hope that our discussion of
various controversial topics relating to arbitration, which have hitherto
received little or no attention in South African publications-such as the legal
status of the arbitrator, the possible liability of an arbitrator for negligence, the
consolidation of arbitration proceedings, and the arbitrator as amiable
compositeur, to mention but a few examples-will stimulate further debate and
publications on these issues in a South African context.
Although the legal principles which we discuss are of general application, this
hook has been written from the perspective of arbitration as it is applied in the
construction industry in South Africa. We lw!Ve only attempted a brief
discussion of the use of arbitration for resolving labour disputes, which is a
specialised field on its own.
A work such as this could never be the single-handed effort of an author or,
in our case, the ambidextrous effort of the two of us, and we owe a deep debt
of gratitude to friends and colleagues who helped and advised us in one way or
another. We would particularly like to thank two members of the Faculty of
Law of the University of Stellenbosch, namely Prof Steph van der Merwe, who
vii
viii Arbitration in South Africa: Law and Practice

read an earlier draft of chapter six, and Prof Barney Jordaan, who read an
earlier version of chapter one, and who both made useful suggestions.
David Butler would also like to acknowledge the financial assistance of the
. Centre for Science Development (HRSC, South Africa) towards this research,
enabling him to spend some months in England during 1989. Opinions
expressed and conclusions arrived at are those of the authors and are not
necessarily to be attributed to the Centre for Science Development. He would
also like to thank the Institute of Advanced Legal Studies of the University of
London for access to their library and the Chartered Institute of Arbitrators for
the opportunity to attend an advanced studies weekend organised by the
Institute during March 1989.
We also express our gratitude to Mr Justice G G Hoexter, Honorary
President of the Association of Arbitrators, who contributed the Foreword, our
students, both legal and technical, who brought home to us the need for this
book and to Richard Cooke, Simon Sephton and Lindsay Norman of Juta and
Company, who encouraged us to produce this work, and who, with patience
and understanding, dealt with all the aspects of its production. The drawing on
its cover refers to the old gentleman in the quotation on page 19. His message
is perhaps especially relevant today for persons involved in determining the
procedures to be followed in arbitration.
Last hut not least, our grateful thanks to our respective wives, Jshhel and
Margaret, who accepted this intrusion into our domestic lives with patience and
forbearance, and to whom we dedicate this work.
David Butler and Eyvind Finsen
July 1993
Contents

Page
Foreword by the Hon Mr Justice G.G. Hoextcr.................... v
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v11
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv11
Table of Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxv

CHAPTER I INTRODUCTION
1. 1 Definition of arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 History of arbitration and sources of pn:sent arbitration law.... 4
1.3 Alternatives to arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.3.1 The current trend towards 'alternative dispute resolution' 8
1.3.2 Mediation-type procedures...................... . . . . . . 10
1.3.2.1 Definition and characteristics................. . 10
1.3.2.2 Differences between mediation and arbitration . 12
1.3.2.3 Advantages and disadvantages of mediation.... 14
1.3.3 The mini-trial........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.3.4 !-lybrid forms of arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.4 The advantages and disadvantages of arbitration............... 19
1.4.1 Specialised kuowledge cf the arbitrator . . . . . . . . . . . . . . . . 20
1.4.2 Reduced cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.4.3 Convenience. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.4.4 Saving in time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.4.5 Privacy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.4.6 Flexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1.4.7 Finality.............................................. 22
1.4.8 Informality ............................ ·.............. 22
1.4.9 International commercial disputes . . . . . . . . . . . . . . . . . . . . . 23
1.4.10 Disadvantages of arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . 23
1.5 The role of arbitration organisations. . . . . . . . . . . . . . . . . . . . . . . . . . 24
1.6 The challenge facing arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1. 7 Arbitration in labour disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

CHAPTER 2 THE ARBITRATION AGREEMENT

2.1 Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.1.1 Distinction between an agreement to refer and the
reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
IX
X Arbitration in South Africa: Law and Practice

Page
2.1.2 Writing ............................................. . 38
2.1.3 Dispute ............................................ . 40
2.1.4 Arbitration ......................................... . 41
2.2 Parties to an arbitration agreement........................... 41
2.2.1 Statutory definition of party. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.2.2 Companies as parties to arbitration proceedings . . . . . . . . 42
2.2.3 Effect of death or insolvency of a party. . . . . . . . . . . . . . . . 43
2.3 Arbitration distinguished from valuation and certification . . . . . . 44
2.3. 1 Nat urc of the distinction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4'.'i
2.3.2 Consequences of the distinction . . . . . . . . . . . . . . . . . . . . . . . 47
2.4 Arbitration and quasi-arbitration ..... : . . . . . . . . . . . . . . . . . . . . . . . 50
2.5 Matters not subject to arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
2.5.1 Matters excluded by statute or the common law........ 52
2.5.2 Matters outside the ambit of the arbitration agreement.. 56
2.6 The binding effect of an arbitration agreement . . . . . . . . . . . . . . . . 60
2.6.1 Cancellation of the agreement by consent. . . . . . . . . . . . . . 60
2.6.2 Effect of the agreement on the jurisdiction of the courts. 61
2.6.3 Discretionary power of court to prevent arbitration . . . . . 62
2. 7 Statutory arbitrations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
2.8 Interpleader proceedings relating to an arbitration agreement . . 68

CHAPTER 3 THE ARBITRATOR

3.1 The capacity to act as arbitrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
3.2 Disqualifications from acting as arbitrator.......... . . . . . . . . . . . 71
3.3 The desirable qualities of an arbitrator........ . . . . . . . . . . . . . . . . 73
3.3.1 Personal qualities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
3.3.2 Expertise in professional field . . . . . . . . . . . . . . . . . . . . . . . . . 74
3.3.3 Legal knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
3.3.4 The training of arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
3.4 The selection and appointment of an arbitrator. . . . . . . . . . . . . . . . 79
3.4.1 Arbitrator selected by the p;irties...................... 79
3.4.2 Arbitration agreement provides for selection by a third
party................................................ 80
3.4.3 Arbitration agreement lays down no procedure. . . . . . . . . 82
3.4.4 Appointment of a substitute arbitrator................. 83
3.4.5 Appointment by the court . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
3.4.6 Conveying the offer of appointment . . . . . . . . . . . . . . . . . . . 85
3.5 Acceptance of appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
3.6 The arbitrator's fees......................................... 86
3.6.1 The arbitrator's right to remuneration . . . . . . . . . . . . . . . . . 86
3.6.2 Ensuring the payment of fees . . . . . . . . . . . . . . . . . . . . . . . . . 89
3.7 Difference between an arbitrator and an umpire............... 91
Contents XI

Page
3.8 Legal status of an arbitrator ................................ . 92
3.8.1 The relationship between the arbitrator and the parties . 92
3.8.2 Arbitrator and judge compared ...................... . 95
3. 9 The procedural powers and the duties of an arbitrator ........ . 97
3.10 The liability of arbitrators for negligence ..................... . 100
3.11 Termination of the arbitrator's appointment. ................. . 103
3.12 The arbitrator as respondent ................................ . 106

CHAPTER 4 PROCEDURE PRIOR TO THE HEARING

4.1 Preconditions to entering on the reference ................... . 109
4.1. l There must be an arbitrable dispute .................. . 109
4.1.2 There must be a valid arbitration agreement .......... . 110
4.1.3 Valid appointment .................................. . 110
4.1 .4 Personal disqualifications ............................ . 111
4. 1.5 Preconditions and time-limits ........................ . 111
4.1.6 The court's statutory power to extend a time-limit
imposed by the arbitration agreement ................ . 114
4.2 When can the arbitration commence? ........................ . 119
4.3 The preliminary meeting .................................... . 120
4.4 Agenda for the preliminary meeting ......................... . 121
4.4.1 Confirmation that there is an arbitrable dispute between
the parties .......................................... . 122
4.4.2 Confirmation that there is a valid arbitration agreement. 122
4.4.3 Confirmation of the appointment of the arbitrator ..... . 122
4.4.4 Acceptance of any conditions of appointment ......... . 123
4.4.'.'i Confirmation that the arhilration is not time-barred and
that any preconditions have been met ................ . 123
4.4.6 Definition of the dispute ............................. . 124
4.4.7 Discovery of documents ............................. . 125
4.4.8 Form of hearing .................................... . 125
4.4.9 Representation of the parties ........................ . 126
4.4.10 Use of own expertise by the arbitrator ................ . 126
4.4.11 Expert witnesses .................................... . 127
4.4.12 Date, time and venue for the hearing ................. . 128
4.4.13 Recording of evidence ............................... . 128
4.4.14 Other matters ....................................... . 129
4.4.15 Minutes of the preliminary meeting ................... . 129
4.5 Security for costs ........................................... . 129
4.6 Pre-hearing procedure ...................................... . 132
4.7 Defining the dispute in accordance with the Uniform Rules of the
Supreme Court ............................................ . 133
xii Arbitration in South Africa: Law and Practice

Page
4.8 Defining the dispute in accordance with the 'Rules for the
Conduct of Arbitrations'. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
4.8.1 The introduction of the 'Rules for the Conduct of
Arbitrations'. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
4.8.2 Statement of Issues in accordance with rule 4 . . . . . . . . . . 137
4.8.3 Statement of Claim in accordance with rule 5 . . . . . . . . . . 137
4.8.4 Statement of Defence in accordance with rule 6 . . . . . . . . 138
4.8.5 Claimant's Replication in accordance with rule 7 . . . . . . . 139
4.8.6 Counter-claim in accordance with rules 8, 9 and 10 . . . . . 139
4.9 Defining the dispute in accordance with the Summary Procedure
Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
4.10 Amendment of pleadings.................................... 140
4.11 Discovery of documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
4.12 Pre-hearing conference in accordance with rule 15............. 145
4.12.1 Admissions of facts................................... 147
4.12.2 Examination or inspection of goods . . . . . . . . . . . . . . . . . . . 148
4.12.3 Discovery of documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
4.12.4 Exchange of experts' reports. . . . . . . . . . . . . . . . . . . . . . . . . . 149
4.12.5 Further particulars for trial . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
4.12.6 Production of plans, diagrams, photographs and modds 150
4.12.7 Consolidation of hearings............................. 151
4.12.8 Quantum of damages................................. 153
4.12. 9 Preparation of paginated bundle. . . . . . . . . . . . . . . . . . . . . . . 154
4.12.10 Minutes of the pre-hearing conference . . . . . . . . . . . . . . . . . 155
4.13 Meeting of experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
4.14 Sealed offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
4.15 Dealing with the dilatory party............................... 158

CHAPTER 5 THE HEARING

5.1 Introduction................................................ 164
5.2 The arbitrator and the rules of natural justice . . . . . . . . . . . . . . . . . 165
5.2.1 Audialterampartem.................................. 165
5.2.2 Nemo iudex idoneus in propria causa est . . . . . . . . . . . . . . . 166
5.2.3 Justice must be seen to be done....................... 166
5.3 The arbitrator's role during the hearing....... . . . . . . . . . . . . . . . . 167
5.3.1 The traditional form of hearing . . . . . . . . . . . . . . . . . . . . . . . 167
5.3.2 The inquisitorial system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
5.3.3 How should arbitration hearings be conducted? . . . . . . . . 168
5.3.4 The involvement of the arbitrator in the hearing........ 170
5.3.5 Dealing with an application for a postponement . . . . . . . . 171
5.4 The powers of the arbitrator................................. 172
5.4.1 The sources of the arbitrator's powers . . . . . . . . . . . . . . . . . 172
5.4.2 Powers conferred by the arbitration agreement......... 172
5.4.3 Statutory powers..................................... 173
Contents xiii

Page
5.4.4 Common-law powers................................. 175
5.4.5 Power to determine own jurisdiction................... 176
5.5 Convening the hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
5.6 Representation of the parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
5.7 Formality of the proceedings................................. 179
5.8 Structure of a hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
5.8.1 The opening address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
5.8.2 Evidence of facts..................................... 180
5.8.3 Closing argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
5.9 Witnesses and presentation of evidence....................... 181
5.9.1 Securing the attendance of witnesses................... 181
5.9.2 Who may be a witness................................ 182
5.9.3 Presence of witnesses at the hearing................... 182
5.9.4 Evidence under oath . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
5.9.5 Evidence on commission.............................. 184
5.9.6 Evidence of experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
5.9.7 Recording the proceedings............................ 187
5.9.8 Exhibits............................................. 188
5.9.8.l Documents.................................. 188
5.9.8.2 Photographs, drawings and diagrams . . . . . . . . . . 189
5.9.8.3 Objects .. . .. . .. . .. .. . . .. .. . . .. . .. . . .. . . . . . . . 189
5.9.8.4 Photographs, tape and video-recordings........ 189
5.9.9 Inspections in loco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
5.10 Conduct of a formal hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
5.10.1 Statement of principles............................... 190
5.10.2 Opening the proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
5.10.3 Preliminary points.................................... 191
5 .10 .4 Presenting the case for the claimant . . . . . . . . . . . . . . . . . . . 192
5.10.4.1 Evidence-in-chief of the witness............... 193
5.10.4.2 Cross-examination of the witness . . . . . . . . . . . . . . 193
5.10.4.3 Re-examination of the witness . . . . . . . . . . . . . . . . 194
5.10.4.4 The right of the arbitrator to question a witness. 194
5.10.4.5 Further attendance by the witness . . . . . . . . . . . . . 195
5.10.4.6 Completing the case for the claimant . . . . . . . . . . 195
5.10.5 Presenting the case for the defendant.................. 195
5.10.6 Closing argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
5.11 Alternatives to a formal hearing.............................. 197
5.11.1 Arbitrations without hearings or 'documents-only' arbi-
trations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
5.11.2 'Look-sniff' arbitrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
5.11.3 Summary procedure arbitrations. . . . . . . . . . . . . . . . . . . . . . . 201
5.11.4 Flip-flop, pendulum or baseball hearings............... 202
5.11.5 'Med-arb' and 'arb-med'.............................. 203
5.11.6 Splitting the issues: staged hearings.................... 204
xiv Arbitration in South Africa: Law and Practice

Page
5.12 Reopening the hearing for fresh evidence . . . . . . . . . . . . . . . . . . . . . 205
5 .13 Reference of question of law to court or counsel for opinion . . . 206
5.14 Hearings with more than one arbitrator....................... 211
5.14. l Disadvantages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
5.14.2 Appointment of the umpire........................... 212
5.14.3 Jurisdiction of the umpire............................. 212
5 .15 The confidentiality of arbi~ration proceedings . . . . . . . . . . . . . . . . . 213

CHAPTER 6 EVIDENCE
6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
6.1.1 Definition and functions of the law of evidence. . . . . . . . . 215
6.1.2 The main characteristics of the South African law of
evidence and their historical origins . . . . . . . . . . . . . . . . . . . 216
6.2 Applicability of the ordinary rules of evidence to arbitration.... 219
6.2.1 The traditional view. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
6.2.2 Suggested reformulation of the legal position. . . . . . . . . . . 220
6.2.3 Importance of the rules of evidence for the non-legal
arbitrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222
6.3 Some basic concepts......................................... 223
6.3.1 The difference between evidence and proof . . . . . . . . . . . . 224
6.3.2 Admissibility and weight.............................. 224
6.3.3 Facts in issue and facts relevant to the facts in issue . . . . 225
6.3.4 Direct and circumstantial evidence . . . . . . . . . . . . . . . . . . . . 225
6.3.5 Primary and secondary evidence........ . . . . . . . . . . . . . . . 225
6.4 Admissibility, relevance and exclusionary rules . . . . . . . . . . . . . . . . 226
6.4.1 Admissibility and relevance . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
6.4.2 Exclusionary rules: irrelevant evidence................. 226
6.4.2.1 Similar fact evidence . . . . . . . . . . . . . . . . . . . . . . . . . 226
6.4.2.2 Opinion evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
6.4.2.3 Previous consistent statements . . . . . . . . . . . . . . . . 229
6.4.3 Exclusionary rules: relevant but inadmissible evidence . . 230
6.4.3.1 Hearsay..................................... 230
6.4.3.2 Public policy and privilege . . . . . . . . . . . . . . . . . . . . 233
6.4.4 Dealing with objections to admissibility. . . . . . . . . . . . . . . . 235
6.5 Oral evidence............................................... 237
6.6 Documentary evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
6.7 The arbitrator's role regarding the gathering of evidence....... 240
6.7.1 The calling of witnesses by the arbitrator . . . . . . . . . . . . . . 241
6. 7 .2 The arbitrator's power to limit evidence . . . . . . . . . . . . . . . 241
6.7.3 The recording of evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
6. 7.4 The use by the arbitrator of his own knowledge . . . . . . . . 243
6.7.5 The possible use of a neutral expert or assessor . . . . . . . . 245
Contents xv

Page
6.8 The standard and burden of proof ........................... . 246
6.8.1 The standard of proof ............................... . 246
6.8.2 The burden of proof ................................ . 247
6. 9 Practical advice on the evaluation of evidence ................ . 249
6.10 The arbitrator's duty to apply the rules of substantive law ..... . 251
CHAPTER 7 THE A WARD
7 .1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
7 .2 Period for making and delivering the award . . . . . . . . . . . . . . . . . . . 256
7.2. I Time-limit and its enlargement........................ 256
7.2.2 Consequences of expiry of the time for making the award 259
7.3 Requirements for a valid award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260
7.3.1 Statutory or formal requirements...................... 260
7.3.2 Substantive requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
7.3.2.1 Format and language......................... 261
7.3.2.2 Certainty.................................... 261
7.3.2.3 Final........................................ 262
7.3.2.4 Possible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263
7.3.2.5 Legal . . . . . . . .. . . .. . .. . . . . . . .. . . .. . . .. . . . . . . . 263
7.3.2.6 Intra vires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264
7.4 Award by a tribunal of more than one arbitrator . . . . . . . . . . . . . . 264
7.5 Specific performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
7.6 Legal assistance in preparing the award....................... 266
7. 7 Publication of the award. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267
7.8 The reasoned award......................................... 269
7.9 Legal consequences of an award.............................. 271
7 .10 The enforcement of the award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272
7 .11 Interest on the award. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
7 .12 Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276
7.12.1 The arbitrator's power to award costs ...... ,............ 276
7 .12.2 The basic principle as to liability for costs. . . . . . . . . . . . . . 277
7 .12.3 Components of an award of costs . . . . . . . . . . . . . . . . . . . . . 280
7 .12.4 Sealed offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282
7.12.5 Taxation of costs..................................... 283
7.13 Remitting the award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
7.14 Setting aside the award...................................... 290
7.14.1 Grounds for setting aside the award................... 291
7.14.2 Procedure for and consequences of setting aside........ 295
CHAPTER 8 INTERNATIONAL ARBITRATION
8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
8.1.1 Definition of international arbitration. . . . . . . . . . . . . . . . . . 296
8.1.2 Advantages and disadvantages of international arbitration 297
8.1.3 Contribution of UNCITRAL to international arbitration. 298
8.1.4 Arbitration legislation in southern Africa . . . . . . . . . . . . . . 299
XVI Arbitration in South Africa: Law and Practice

Page
8.2 Types of international arbitration............................. 300
8.2.1 Institutional arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301
8.2.1.1 Criteria for evaluating institutions and their rules 301
8.2.1.2 ICC......................................... 302
8.2.1.3 LCIA....................................... 303
8.2.1.4 ICSID....................................... 303
8.2.1.5 Other institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304
8.2.2 Ad hoc arbitrations and the UNCITRAL and IBA rules 304
8.3 Drafting an international arbitration clause.................... 305
8.3.1 The scope of the arbitration clause . . . . . . . . . . . . . . . . . . . . 305
8.3.2 Institutional or ad hoc arbitration . . . . . . . . . . . . . . . . . . . . . 305
8.3 .3 Place of arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306
8.3.4 Procedural rules applicable to the arbitration........... 306
8.3.5 Composition and appointment of the arbitration tribunal 307
8.3.6 Law applicable to the contract . . . . . . . . . . . . . . . . . . . . . . . . 307
8.3.7 Other matters........................................ 307
8.3.8 Agreement referring existing dispute to arbitration . . . . . 308
8.4 Legal systems applicable to an international arbitration . . . . . . . . 309
8.5 International arbitration in a South African context............ 311
8.5.1 Background to the applicable legislation............... 311
8.5.2 Recognition and enforcement of foreign arbitral agree-
ments............................................... 31 I
8.5.3 Enforcement of foreign arbitral awards . . . . . . . . . . . . . . . . 313
Appendices
Appendix I The Arbitration Act 42 of 1965 . . . . . . . . . . . . . . . . . . . . . . . . 319
Appendix II Recognition and Enforcement of Foreign Arbitral Awards
Act 40 of 1977 . . . . . . . .. . .. . . . . . . .. . . .. . . .. . . . . .. .. .. . .. . . . . . . . . 335
Appendix III The Association of Arbitrators' Rules for the Conduct of
Arbitrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
(i) StanJarJ Procedure Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
(ii) Summary Procedure Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
Appendix IV Standard Arbitration Clauses in the Construction
Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348
Appendix V Particulars of South African Arbitration Institutions . . . . 355
Table of References to Current South African Arbitration Statutes . . 357
General Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361
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Table of Cases XXIX

Page
Midkon (Edms) Bpk v Departement van Gemeenskapsontwikkeling 1983 (4) SA 78 (T) 208
Miller v Kirsten 1917 TPD 489 ........................................ 87, 89, 90, 93
Minster Trust Ltd v Traps Tractors Ltd [1954] 1 WLR 963 . . . . . . . . . . . . . . . . . . . . . . 45
Mkwanazi v Van der Merwe 1970 (1) SA 609 (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Mlamla v Marine and Trade Insurance Co 1978 (1) SA 401 (E) . . . . . . . . . . . . . . . . . . 142
Mnyama v Gxalaba 1990 (1) SA 650 (C) ............................... 232, 233, 240
Monticello (Pvt) Ltd v Edgerton 1982 (1) SA 762 (ZS) .............. 277, 278, 279, 280
Morgan & Ramsay v Cornelius and Hollis (1909) 30 NLR 271 . . . . . . . . . . . . . . . . . . . 277
Morrison v Gerst 1940 NPD 101.............................................. 263
Moscow V/O Exportkhleb v Helmville Ltd (The Jocelyne) [1977) 2 Lloyd's Rep 121 117
Mostert v Scholtz 1926 CPD 215 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Mouton v Smith 1977 (3) SA 1 (A) .......................................... .47, 49
Murray & Roberts Construction (Cape) (Pty) Ltd v Upington Municipality 1984 (I)
SA 571 (A) ............................................................. .41, 51
Mutual Shipping Corporation v Bayshore Shipping Co (The Montan) [1985] 1 Lloyd's
Rep 189 (CA) ..................................................... 269, 288, 289
Naidoo v Estate Mahomed 1951 (1) SA 915 (N) .................... 258, 259, 291, 292
Naidoo v Marine & Trade Insurance Co Ltd 1978 (3) SA 666 (A)................ 235
Neethling v Klopper 1967 (4) SA 459 (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Nieuwoudt v Joubert 1988 (3) SA 84 (SE) .................................. 133, 138
Nkuke v Kindi 1912 CPD 529 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Omega, Louis Brandt et Frere SA v African Textile Distributors 1982 (1) SA 951 (T) 227
Onassis and Calogeropoulos v Vergottis [1968] 2 Lloyd's Rep 403 . . . . . . . . . . . . . . . . 251
Oosthuizen v Stanley 1938 AD 322 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Orange Free State Provincial Administration v Ahier; Parys Municipality v Ahier 1991
(2) SA 608 (W) ....................................... 59,105, 106,107,108, 166
O'Reilly v Mackman [1982) 3 All ER 1124 (HL) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Orion Compania Espanola de Seguros v Belfort Maatschappij Voor Algemene
Verzekgringeen [1962) 2 Lloyd's Rep 257 (QB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
Oxford Shipping Co Ltd v Nippon Yusen Kaisha (The Eastern Saga) [1984) 3 All ER
835 (QB Com Ct) ...................................................... 152, 213
Palacath Ltd v Flanagan [1985] 2 All ER 161 (QB) ............................ .48, 62
Parekh v Shah Jehan Cinemas (Pty) Ltd 1980 (1) SA 301 (D) ................ 61, 63, 64
Pasa Construction (Pty) Ltd v Roofing Guarantee Co (Pty) Ltd (WLD 18 August
1989, unreported (case no 12243/83)) ................ 47, 257, 258, 259, 272, 273, 274
Paul Smith Ltd v H & S International Holding Inc [1991) 2 Lloyd's Rep 127 (QB Com
Ct) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Perlman v Zoutendyk 1934 CPD 151.......................................... 49
Petz Products (Pty) Ltd v Commercial Electrical Contractors (Pty) Ltd 1990 (4) SA
196 (C) ............................................................... 129, 131
Phoenix Timber Co Ltd's Application, Re [1958) 2 QB 1........................ 69
Pillay v Krishna 1946 AD 946 ............................................. 247, 248
Pitt v Pitt 1991 (3) SA 863 (D) . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . . . . . . . . . . . . . . .. . 53
Policansky Bros v Land H Policansky 1935 AD 89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
Polysius (Pty) Ltd v Transvaal Alloys (Pty) Ltd 1983 (2) SA 630 (W) ........ 63, 65, 66,
67,296,311,312
Port Sudan v Chettiar [ 1977) 1 Lloyd's Rep 166 (QB) ........................ 107, 108
Pretoria Cinemas (Pty) Ltd v Kinemas Ltd 1931 TPD 407 . . . . . . . . . . . . . . . . . . . . . . . 85
Pretorius v Santam Versekeringsmaatskappy Bpk 1962 (1) SA 19 (T) . . . . . . . . . . . . . 56
Price SJ & MM Ltd v Milner [1966) 1 WLR 1235..... . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Probert v Baker 1983 (3) SA 229 (D) ...................................... 275, 276
Protea Assurance Co Ltd v Januskiewicz 1989 4 SA 292 (W).................... 130
R v Mouton 1934 TPD 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
xxii Arbitration in South Africa: Law and Practice

Sims J 'The need to train lawyers in arbitration practice' (1987) 137 New Law Journal 540
Slade L-see Rutherford M & Slade L above
Smith ML 'Contractual obligations owed by and to arbitrators: model terms of appointment'
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Spencer J R & Howard MN 'Expert evidence-the neutral expert' (1991) 57 Arbitration·
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Staughton C 'Common law and civil law procedures: which is the more inquisitorial?'
Lecture series on Current problems in arbitration and litigation The Chartered Institute
of Arbitrators London 1988 117-29
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(1983) 48 Arbitration 310-12
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Tackaberry J A 'The conduct of arbitration proceedings under English law· in Lew (ed)
(above) 216-29
Tapper C Cross & Wilkins: Owline of the law of evidence (6 ed Butterworths London 1986)
'The Peacemakers: arbitration and its rationale' (1985) vol 2 no 3 Employment Law 35-6
The Peacemakers III: initiating arbitration' (1986) vol 2 no 5 Employme11t Law 79-81
'The Peacemakers IV: the hearing' (1986) vol 2 no 6 Employment Law 91-2
'The Peacemakers VII: argument and award' (1987) vol 3 no 5 Employment Law 81-2
'The Peacemakers VIII: wrap-up' (1987) vol 3 no 6 Employment Law 97-9
Thomas D R "Commercial arbitration-justice according to law' ( 1983) 2 Ci1,il Justice
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58 Arbitration 124-7
Trollip A T Alternatil,e dispute resolutio11 in a colllemporary South Aji-icw1 co1//1'XI
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Van der Merwe SE 'Die evolusie van die mondelinge karakter en uitsluitingsreels van die
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Van Loggerenberg D E Hofbeheer en partybeheer in die burgerlike litigasieproses: '11
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Arbitration in South Africa: Law and Practice xxiii

Vaughn DA J & Shenton D W 'Arbitration in long-term contracts' 1980 De Rebus 73-5

Veeder V V 'Multi-party disputes: consolidation under English law-The Vimeira-a sad
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Walton A & Vitoria M Russell on the law of arbitration (20 ed Stevens London 1982)
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Town 1990)
Table of Cases

Page
AMP Society Overseas Telecommunication Commission (1972) 2 NSWLR 806. . . . . 46
Adamstcin v Adamstein 1930 CPD 165.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287
Administrasie van Transvaal v Oosthuizcn 1990 (3) SA 387 (W) ........... 209, 210, 276
Administrateur, Kaap v Asia Konstruksie (Edms) Bpk 1989 (4) SA 458 (C) ...... 5, 115,
116, 117,118,255
Administrator, Cape v Ntshwaqela 1990 (1) SA 705 (A)......................... 261
Administrator, Natal v Sibiya 1992 (4) SA 532 (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Administrator, Transvaal v Kildrummy Holdings Ltd 1978 (2) SA 124 (T) ...... 175, 206,
209, 210 252
Administrator, Transvaal v Theletsane 1991 (2) SA 192 (A) . . . . . . . . . . . . . . . . . . . . . 165
Administrator, Transvaal v Traub 1989 (4) SA 731 (A) . . . . . . . . . . . . . . . . . . . . . . . . . 165
Aiden Shipping Co Ltd v Interbulk Ltd; Interbulk Ltd v ICCO International Corn Co
NV (The Vimcira) (No 2) [1985] 2 Lloyd's Rep 377 ........................ 153, 288
Allied Mineral Development Corporation (Pty) Ltd v Gemsbok Vlei Kwartsiet
(Edms) Bpk 1968 (1) SA 7 (C) .......................... 38, 40, 54, 55, 57, 66,294
Andre ct Cic SA v Marine Transocean Ltd (The Spend id Sun) [1981] QB 694 . . . . . 162
Anshell v Horwitz 1916 WLD 65 ................................... 97, 165, 219, 294
Appel v Leo 1947 (4) SA 766 (W) .......................................... 73, 105
Arenson v Casson Beckman Rutley and Co [1976] 1 Lloyd's Rep 179; I 19771 AC
40.'i ................................................................... JOI, 102
/\,ma Carpet House (Johannesburg) (Pty) Ltd v Domestic & Commercial Carpet
Fittings (Pty) Ltd 1977 (3) SA 448 (W)...................................... 22
Atlantic Lines & Navigation Co Inc v Italmare SpA (The Appollon) [198.'i] 1 Lloyd's
Rep .'i97............................................................... 288
Atteridgeville Town Council v Liva nos t/a Liva nos Brothers Electrical 1992 (I) SA '.'96
(A) ........................................................ 7, 58, 59, 83, 84, 85
Austen v Joubert 1910 TS 1095............................................... 278
Baber v Kenwood Manufacturing Co Ltd [ 1978[ I Lloyds Rep 175 . . . . . . . . . . . . . . . 50
Barclays Western Bank v Gunas 1981 (3) SA 91 (D)...................... 205
Basson v I lerman 1904 TS 98 ............................................. 274, 287
Bayer South Africa (Ply) Ltd v Viljocn 1990 (2) SA 647 (A) . . . . . . . . . . . . . . . . . . . . 243
Becker, Shillan & Co and Barry Bros, Re [1921] 1 KB 391 . . . . . . . . . . . . . . . . . . . . . . 277
Bekker v RSA Factors 1983 (4) SA 568 (T) ................................... .49, 50
Benjamin v Sobac South African Building and Construction (Pty) Ltd 1989 (4) SA 940
(C) .................................. 5,141,220,270,285,286,287,288,291,292
Benidai Trading Co Ltd v Gouws & Gouws (Pty) Ltd 1977 (3) SA 1020 (T) ... 7, 47,272,
309, 314
Benson v SA Mutual Life Assurance Society 1986 (1) SA 776 (A)................ 265
Bester v Easigas (Pty) Ltd 1993 (1) SA 30 (C) ............... 5, 36, 257, 258, 259, 270,
291, 292, 293, 294
Bhoola v Bhoola 1945 NPD 109.............................................. 257
Blaas v Athanassiou 1991 (1) SA 723 (W) ............................... 96, 271, 275
Black Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG (1981] 2
Lloyd's Rep 446 (QB Com Ct) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310
Blexen Ltd v G Percy Trentham Ltd [1990] 42 EG 133.......................... 278

XXV
xxvi Arbitration in South Africa: Law and Practice

Page
Blue Circle Projects (Pty) Ltd v Klerksdorp Municipality 1990 (I) SA 469 (T) .... . 14
Botha v Reitz Ko-operatieve Landbouw Vereernging 1924 AD 391 .............. . 47
Breed, GK, (Bethlehem) (Edms) Bpk v Martin Harris & Seuns (OVS) (Edms) Bpk
1984 (2) SA 66 (0) ............................................ 59, 63, 64, 66, 67
Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation
Ltd [1981] AC 909 ......................................... 97, 161, 163,190,219
Burgess v Purchase & Sons (Farms) Ltd [1983] 2 All ER 4 (Ch) . . . . . . . . . . . . . . . . . 50
C & T Products (Pty) Ltd v M H Goldschmidt (Pty) Ltd 1981 (3) SA 619 (C) . . . . . 275
Calderbank v Calderbank [1975] 3 All ER 333 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283
Campbell v Edwards [1976] 1 All ER 785 (CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Cape Town Municipality v Allie NO 1981 (2) SA 1 (C) . . . . . . . . . . . . . . . . . . . . . . . . . 275
Cape Town Municipality v Yeld 1978 (4) SA 802 (C) .................. 67. 68,290,294
Carlisle Place Investments Ltd v Wimpey Construction (UK) Ltd 15 BLR 109 (OB
1980) .............................................. 97, 98, 99,210,219,241.242
Carpcdc v C'hocne NO 1986 (3) SA 445 (0) .......... : . . . . . . . . . . . . . . . . . . . . . . . . 142
Carns-Wilson and Greene, In re (1886) 18 QBD 7.............................. 45
Cerrito v North Eastern Timber Importers Ltd [1952] 1 Lloyd's Rep 330 (QB) .. 264, 265
Christopher Brown Ltd v Genossenschaft Oesterreichischer Waldbestitzer
Holzwirtschaftsbetriebe Registrierte GmbH fl 953] 2 All ER 1039 . . . . . . . . . . . . . . 176
Clark v African Guarantee and Indemnity Co Ltd 1915 CPD 68 ... 60, 188, 252, 271, 293
Collective Investments (Pty) Ltd v Brink 1978 (2) SA 252 (N) . . . . . . . . . . . . . . . . . . . 160
Collins & Co v Brown 1923 NPD 430 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287
Colman v Dunbar 1933 AD 141 ........................................... 287, 288
Comdel Commodities Ltd v Siporex Trade SA [1990] 2 All ER 552 (HL) ....... 117, 118
Cone Textile (Pvt) Ltd v Ayres 1980 (4) SA 728 (ZA) .......................... 37, 38
Conress (Pty) Ltd v Gallic Construction (Pty) Ltd 1981 (3) SA 73 (W) ............ 61, 64
Connocks (SA) Motor Co Ltd v Sentrale Westelike Ko-operatiewc Maatskappy Bpk
1964 (2) SA 47 (T) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
Consolidated Investment & Contracting Co v Saponaria Shipping Co Ltd (The Virgo)
[1978] 2 Lloyd's Rep 167 (CA) .......................................... 117, 119
Coopers (South Africa) (Pty) Ltd v Deutsche Gesellschaft fur Schadlingsbcktimpfung
mbH 1976 (3) SA 352 (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Curators of Church of England v Colley (Re) (1888) 9 NLR 45 . . . . . . . . . . . . . . . . . . 54
Czarnikow v Roth, Schmidt and Company [1922] 2 KB 478 (CA) ......... 211, 253, 255
Davehill (Pty) Ltd v Community Development Board 1988 (I) SA 290 (A)........ 276
Davies v South British Insurance Co (1885) 3 SC 416 . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Dean v Prince [1954] 1 Ch 409; [1954] 1 All ER 749 (CA). . . . . . . . . . . . . . . . . . . . . . . 50
De Jager v The Colonial Government (1894) 15 NLR 311 . . . . . . . . . . . . . . . . . . . . . . . 281
Delfante v Delta Electrical Industries Ltd 1992 (2) SA 221 (C) .............. 63, 64, 281
Delport v Kopjes Irrigation Settlement Management Board 1948 (1) SA 258 (0) ... 27-l, 289
Dickenson & Brown v Fisher's Executors 1915 AD 166 ............... 5, 252, 21,.\, 269,
271, 273, 274, 288, 289, 291, 292, 293
Dipenta Africa Construction (Pty) Ltd v Cape Provincial Administration 1973 (I) SA
666 (C) ................................................................ 85, 244
Donner v Ehrlich 1928 WLD 159 .......................................... 281, 292
Dorman Long Swan Hunter (Pty) Ltd v Karibib Visserye Ltd 1984 (2) SA 462
(C) ................................................................... 208, 209
Douglas v Pim 1903 TH 306 ............................................... 273, 287
DPP v Kilbourne (1973] AC 729 (HL) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
Dublin v Diner 1964 (1) SA 799 (D) ...................................... 45, 49, 50
Dunbar, JC & Sons (Pty) Ltd v Ellgood Properties (Pty) Ltd 1975 (4) SA 455
(W) ............................................................... 60, 119, 120
Table of Cases xxvii

Page
Dutch Reformed Church v Town Council of Cape Town (1898) 15 SC 14 .... 19, 22, 261,
271, 273, 287
East Ham Borough Council v Bernard Sunley and Sons Ltd [1965] 3 All ER 619... 65
Edelstein v Edelstein 1952 (3) SA 1 (A)....................................... 42
Ellison v Bray (1864) 9 LT 730 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266
Enoch and Zaretsky: Bock & Co's Arbitration, Re [1910] 1 KB 327 . . . . . . . . . . . . . . 241
Eyre and Leicester Corporation, Re [1892] 1 QB 136 . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Estate De Wet v De Wet 1924 CPD 341 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
Estate Milne v Donohoe Investments (Pty) Ltd 1967 (2) SA 359 (A) ............. 45, 49
Estate Setzer v Mendelsohn 1948 (3) SA 292 (C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Farmer v Cotton's Trustee 1915 AC 922....................................... 210
Fassler, Kamstra & Holmes v Stallion Group of Companies (Pty) Ltd 1992 (3) SA 825
(W) ......................................................... 5, 10, 38, 273, 291
Federated Insurance Co Ltd v Britz 1981 (4) SA 74 (T) ...................... 184, 185
Fernandes, MM, (Pty) Ltd v Mahomed 1986 (4) SA 383 (W) ............... 51, 70,274
Field v Grahamstown Municipality 1928 EDL 135 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294
Fleming v Johnson and Richardson 1903 TS 319. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
Food Corporation of India v Antclizo Shipping Corporation (The Antclizo) [1988] 2
All ER 513 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Freightmarine Shipping Ltd v S Wainstein & Co (Pty) Ltd 1984 (2) SA 425 (D) .... 42, 64
French Government v 'Tsurushima Marn' [1921] 8 LIL Rep 403 . . . . . . . . . . . . . . . . . 219
Gardens Hotel (Pty) Ltd v Somadel Investments (Pty) Ltd 1981 (3) SA 911 (W) .. 59, 60,
63, 64, 69
Gibson v Van der Walt 1952 (1) SA 262 (A) 270 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264
Gillig v Sonnenberg 1953 (4) SA 675 (T) .................................. 47, 49, 50
Goldschmidt v Folb 1974 (1) SA 576 (T) ..................................... 97, 271
Goldstuck v Mappin and Webb Ltd 1927 TPD 723 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
Gordon Verhoef & Krause (Transvaal) (Pty) Ltd v Pritchard Properties (Pty) Ltd
(WLD 5 August 1986, unreported (case no 22094/85)) ...................... 115,117
Government of the Republic of South Africa v Midkon (Pty) Ltd 1984 (3) SA 552
(T) ................................................... 5, 206, 207, 208, 209, 210
Graaff-Reinet Municipality v Jansen 1917 CPD 604 ................... 82, 91, 212, 294
Grobbelaar v De Villiers 1984 (2) SA 649 (C)............................ . . . . . . 54
Gunter Henck v Andre et Cie SA [1970] 1 Lloyd's Rep 235 . . . . . . . . . . . . . . . . . . . . . 20
Halfdan Grieg & Co A/S v Sterling Coal & Navigation Corporation [1973] 2 All ER
1073 (CA) ............................................................ 209, 210
Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co Ltd
[1992] 1 Lloyd's Rep 81 (QB Com Ct) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Harlin Properties (Pty) Ltd v Rush & Tomkins (SA) (Pty) Ltd 1963 (1) SA 187
(D) ...................................................... 40, 273, 277, 289, 291
Hassim v Incorporated Law Society of Natal 1977 (2) SA 757 (A) . . . . . . . . . . . . . . . . 229
Hawes, Stanbridge & Hedley v Meintjies & Dixon (1858) 3 Searle 62. . . . . . . . . . . . . 267
Bellas House (Pty) Ltd v Rikki-Rand (Pty) Ltd 1982 (4) SA 709 (C) ..... 39, 41, 46, I 18
Hesselmann v Koerner 1922 SWA 40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
Heyman v Darwins Ltd 1942 AC 357; [1942] 1 All ER 337 (HL) 350 ......... 57, 58, 59
Heymann's Estate v Featherstone 1930 EDL 105 ........................... 40, 47, 48
Hickman v Kent or Romney Marsh Sheepbreeders' Association [1915] 1 Ch 881 . . . 43
Hill v Bairstow 1915 WLD 135 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Hiscox v Outhwaite (No 1) [1991] 1 All ER 641 (HL)........................... 313
Hlongwane v Rector, St Francis College 1989 (3) SA 318 (D).................... 232
Hoffman v Meyer 1956 (2) SA 752 (C) ........................ 48, 49, 51, 52, 101, 102
Hollington v F Hewthorn & Co Ltd [1943] KB 587; [1943] 2 All ER 35 . . . . . . . . . . . 229
Hopper, Re [1867] 2 QB 367................................................. 166
xxviii Arbitration in South Africa: Law and Practice

Page
Hyperchemicals International (Pty) Ltd v Maybaker Agrichem (Pty) Ltd 1992 (1) SA
89 (W) .................................................. 107, 108, 270, 292, 293
lbhayi City Council v Yantolo 1991 (3) SA 655 (E)............................. 178
lmprovair (Cape) (Pty) Ltd v Establissements Neu 1983 (2) SA 138 (C)........... 309
Intercontinental Export Company (Pty) Ltd v MV Dien Danielsen 1982 (3) SA 534
(N) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Inter-Continental Finance and Leasing Corporation (Pty) Ltd v Stands 56 and 57
lndustria Ltd 1979 (3) SA 740 (W) .................................. 42, 58, 62. 67
Irish & Co Inc (now Irish & Menell Rosenberg Inc) v Kritzas 1992 (2) SA 623 (W) . . . 132.
160, 161, 162,177,263
lscor Pension Fund v Balbern Holdings (Pty) Ltd 1973 (4) SA 515 (T) . . . . . . . . . . . . 40
Jacobs v Donner 1929 WLD 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281
Johannesburg Municipal Council v D Stewart & Co (1902) Ltd 1909 SC 53 (HL)... 57
John Sisk & Son (SA) (Pty) Ltd v Urban Foundation 1985 (4) SA 349 (N) ..... 107. 277,
278. 285
John Sisk & Son (SA) (Pty) Ltd v Urban Foundation 1987 (3) SA 190 (N) ..... 107. 208,
278, 279. 280
Jones v National Coal Board [1957] 2 QB 55... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
Jordcson & Co v Stora Koppabergs Bergslags Akt [1931] 41 LIL Rep 201 . . . . . . . . 201
Jugoslavenska Oceanska Plovidba v Castle Investment Co Inc [1973] 2 Lloyd's Rep 1
(CA)............................................................. 262
K/S Norjahl A/S v l lyundai Heavy Industries Co Ltd [ 199 I] I Lloyd's Rep 260 (OH) .. 87. 88.
94. 99. 104
K/S Norjahl A/S v l lyundai lleavy Industries Co Ltd I l'J'Jl] I Lloyd's Rep 524 (CA) .. 88. 89.
94. 95. 99, 205
Kali v Incorporated General Insurances Ltd 1976 (2) SA 179 (D) . . . 135
Kamfer v Redhot Haulage (Pty) Ltd 1979 (3) SA 1149 (W)................. 68
Kannenberg v Gird 1966 (4) SA 173 (C) ............... 92, 100. 165. 166,213,287,289
Kathmer Investments (Pty) Ltd v Woolworths (Pty) Ltd 1970 (2) SA 498 (A) ..... 60, M.
65. 66
Kathrada v Arbitration Tribunal 1975 (2) SA 673 (A) ...................... 5, 277. 278
King, The, v Sussex Justices I I 924] I KB 256 . . . . . . . . . . . .......... ! 6(1
King v Thomas McKenna Ltd [1991] 1 All ER 653 (CA) .... 278. 280, 283. 286, 288, 289
Kollberg v Cape Town Municipality 1967 (3) SA 472 (A) ....................... .41. 51
Kortessis v Prudential Assurance Co Ltd 1970 (3) SA 295 (RA).................. 56
Laconian Maritime Enterprises Ltd v Agromar Lineas Ltd 1986 (1) SA 509 (D). . . . 309
Lancaster v Wallace NO 1975 (I) SA 844 (W). .. .. . .. .. .. .. .. .. h5
Landeshut v Koenig (1903) 20 SC 33...................................... 274
Laubscher v National Foods Ltd 1986 (1) SA 553 (Z) . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Lazarus v Goldberg 1920 CPD 154 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Leach v Haringey London Borough Council, The Times, 23 March 1977 . . 21)4
Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd 1985 (I) SA
475 (A) .......................................................... 48, 49, 60, 77
Loudon NO. Ex p,1rtc, In re Drury Construction (Pty) Ltd v Incorporated General
Insurances Ltd 1981 (3) SA 1001 (D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Maccys Consolidated (Pvt) Ltd v TA Holdings Ltd 1987 (I) SA 173 (ZS) ........ .45, 50
Magida v Minister of Police 1987 (1) SA l (A)................................. 130
Maladry v De Koning 1905 TS 528 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273
Malcolm Lyons & Munro v Abro 1991 (3) SA 464 (W) . . . . . . . . . . . . . . . . . . . . . . . . . 281
Mediterranean & Eastern Export Co Ltd v Fortress Fabrics (Manchester) Ltd [1948]
2 All ER 186............................................................. 245
Metallurgical and Commercial Consultants (Pty) Ltd v Metal Sales Co (Pty) Ltd 1971
(2) SA 388 (W) ................................................ 57, 63, 65, 66, 69
Meyerson v Health Beverages (Pty) Ltd 1989 (4) SA 667 (C) . . . . . . . . . . . . . . . . . . . . 185
XXX Arbitration in South Africa: Law and Practice

Page
R v Vilbro 1957 (3) SA 223 (A) ........................................... 227, 228
RPM Konstruksie (Edms) Bpk v Robinson 1979 (3) SA 632 (C) ............... 252, 285
Ranch International Pipelines (Transvaal) (Pty) Ltd v LMG Construction (City) (Pty)
Ltd 1984 (3) SA 861 (W) .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . .. .. .. .. . 266
Raphaely v Stephan 1915 CPD 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Reed v Reed 1909 EDC 244 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. . . . . . . . . . . . . 258
Ressell v Ressell 1976 (1) SA 289 (W) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Rhodesia Electricity Supply Commission v Joelson Brothers and Bardone (Pvt) Ltd
1977 (4) SA 639 (R) ............................................... 245, 277, 279
Rhodesian Railways v Mackintosh 1932 AD 359 ................................ 63. 72
Richardson v Redpath Brown & Co Ltd [ 1944] AC 62 . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Richtown Construction Co (Pty) Ltd v Witbank Town Council 1983 (2) SA 409 (W) 48
Robert Meneely v Joseph Baynes (1884) 5 NLR 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
S v Govazela 1987 (4) SA 297 (0)............................................ 194
S v Khanyapa 1979 (1) SA 824 (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
S v Ne! 1987 (4) SA 950 (W)................................................. 214
S v Rall 1982 (1) SA 828 (A) .............................................. 170, 195
S v Ramgobin 1986 (4) SA 117 N............................................. 189
S v Safatsa 1988 (1) SA 868 (A).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
SA Sentrale Ko-op Graanmaatskappy Bpk v Shifren 1964 (4) SA 760 (A)......... 223
S1ch~ v Gillihrand 1959 (2) SA 233 (W) ...................................... .45. 46
Salisbury Portland Cement Co Ltd v Edw:irds Timber and Lime Industries (Pvt) Ltd
1962 (2) SA 167 (SR) .. . .. .. .. .. .. .. .. .. .. . .. . .. .. .. .. .. .. .. .. .. .. .. .. . .. . 46
Santam Insurance Ltd v Cave t/a The Entertainers and The Record Box I'!86 (2) SA
48 (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Sasko Bpk v Futurus Construction (Pty) Ltd 1988 (4) SA 170 (W) ............. 131, 132
Sasol III (Edms) Bpk v Minister van Wet en Orde 1991 (3) SA 766 (T) . . . . . . . . . . . 234
Schierhout v Union Government (Minister of Justice) 1919 AD 30 . . . . . . . . . . . . . . . 100
Schindler Fire & Security (Pty) Ltd v South African Transport Services (WLD 8
November 1989, unreported (case no 19299/88)) ....................... 279, 280, 281
Schneier and London Ltd v Gluckmann (1) 1925 WLD 42....................... 90
Schoch NO v Bhettay 1974 (4) SA 860 (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
Scholtz v Mostert 1926 CPD 406 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Schuldes v Compressor Valves Pension Fund 1980 (4) SA 576 (W) ........... 40. 41, 51
Scriven Bros v Rhodesian Hides & Produce Co Ltd 1943 AD 393 ............ 57, 58, 66
Sentrale Kunsmis Korporasie (Edms) Bpk v Van Heerden 1972 (2) SA 729 (W) . . . 58
Sera v De Wet 1974 (2) SA 645 (T) ........................ 50, 58, 63, 64, 66, 72, 163
Shippel v Markel 1977 (1) SA 429 (C) ............................. 108, 159, 166, 175
Simross Vintners (Pty) Ltd v Vermeulen 1978 (1) SA 779 (T).................... 160
Sizwe Development v Auditor General, Transkei 1991 (I) SA 291 (Tk) . . . . . . . . . . . 160
Smith v Mouton 1977 (3) SA 9 (W) .......................................... .47, 49
South African Roads Board v Johannesburg City Council 1991 (4) SA l (A) . . . . . . 165
South African Transport Services v Wilson NO 1990 (3) SA 333 (W) ........ .48, 60, 61,
67, 98, 103, 104, 107, 110, 177
South Cape Corporation (Pty) Ltd v Engineering Management Services (Pty) Ltd 1977
(3) SA 534 (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
Southern Life Association v Bannink's Executor 1920 AD 34 ................... .40, 52
Stauffer Chemical Co v Safsan Marketing and Distribution Co (Pty) Ltd 1987 (2) SA
331 (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281
Stein v Otto 1917 WLD 2 ........................................... 40, 45, 46, 281
Stewart v City of Harare 1985 (1) SA 34 (Z)................................... 85
Stocks Const'ruction (OFS) (Pty) Ltd v Metter-Pingon (Pty) Ltd 1'!78 (4) SA 35 (T) 63
Table of Cases xxxi

Page
Stocks Construction (OFS) (Pty) Ltd v Metter-Pingon (Pty) Ltd 1980 (1) SA 507
(A) ..................................................................... 63, 64
Stocks & Stocks (Cape) (Pty) Ltd v Gordon and others NNO 1993 (1) SA 156 (T) 13
Street v Dublin 1961 (2) SA 4 (W) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Stringer and Riley Bros, Re [1901] 1 QB 105 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272
Strutt v Chalmers 1959 (2) SA 536 (D) ..................................... 208, 209
Sunderland Steamship P and I Association v Gatoil International Inc (The Lorenzo
Halcoussi) [l 988] 1 Lloyd's Rep 180 (QB Com Ct) . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Sutcliffe v Thackrah [1974] 1 Lloyd's Rep 318; [1974] AC 727. . . . . . . . . . . . . . . . . . . . 101
Swadif (Pty) Ltd v Dyke 1978 (1) SA 928 (A).................................. 96
Table Bay Harbour Board v Metropolitan and Suburban Railway Company (1892) 9
SC 437 ....................................................... 104, 272, 288, 289
Tayob, Ex parte 1990 (3) SA 715 (T) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
'The Despina R', Services Europe Atlantique Sud (SEAS) v Stockholms Redcriak-
tiebolag Svea (The Folias) [19791 1 Lloyd's Rep 1 (HL) . . . . . . . . . . . . . . . . . . . . . . . 262
Theron v Ring van Wellington van die NG Scndingkerk in SA 1976 (2) SA I (A) . . 206
Thomas Borthwick (Glasgow) Ltd v Faure Fairclough Ltd [1968] 1 Lloyd's Rep 16 292
Total South Africa (Pty) Ltd v Bonaiti Developments (Pty) Ltd 1981 (2) SA 263
(D) ................................................................... .45, 49
Town Council of Cape Town v Cape Government Railways (1903) 20 SC 32. . . . . . . 258
Tramountana Armadora SA v Atlantic Shipping Co SA (1978] 2 All ER 870 (QB) . 269, 283
Transvaal Alloys (Pty) Ltd v Polysius (Pty) Ltd 1983 (2) SA 653 (T) ............ 65, 312
Tritonia Shipping Inc v South Nelson Forest Products Corporation [1966] I Lloyd's
Rep 114................................................................. 85
Tshabalala v President Versekeringsmaatskappy Bpk 1987 (4) SA 72 (T).......... 235
Tuesday Industries (Pty) Ltd v Condor Industries (Pty) Ltd 1978 (4) SA 379 (T) ... 7, 62,
99, 172, 175
Tumahole Bereng v R [1949] AC 253 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
Turkstra v Massyn 1958 (1) SA 623 (T) ....................................... 59, 85
Twentyman v Chisholm 3 Menz 161 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262
Ueckcrman v Martens 1920 TPD 271 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258
Univcrsiteit van Stellenbosch v J A Louw (Edms) Bpk 1982 (3) SA 9 (C) .. 50, 51, 60, 65, 66
Universitcit van Stellenbosch v J A Louw (Edms) Bpk 1983 (4) SA 321 (A) .. .41, 49, 50,
51, 60, 63, 64, 65, 66, 112. 153
Valente, S & R (Pty) Ltd v Bcnoni Town Council 1975 (4) SA 364 (W)........... 64
Van Coppenhagcn v Van Coppcnhagcn 1947 (I) SA 576 (T)........... . . . . . . . . . . 276
Van Heerden v Scntrale Kunsmis Korporasie (Edms) Bpk 1973 (1) SA 17 (A) ..... 5, 6,
58, 63, 94
Van Schalkwyk v Vlok 1914 CPD 999......................................... 295
Vcldspun (Ply) Ltd v Amalgamated Clothing and Textile Workers Union of South
Africa 1990 (4) SA 98 (SE) ............................. 31, 36, 40, 57, 58, 107, 108
Veldspun (Pty) Ltd v Amalgamated Clothing and Textile Workers Union of South
Africa 1992 (3) SA 880 (E) ....................... 31, 36, 55, 58,254,263,291,294
Veritas Shipping Corporation v Anglo-Canadian Cement Ltd (1966] 1 Lloyd's Rep 76 241
West Rand Estates Ltd v New Zealand Insurance Co Ltd 1926 AD 173........... 276
Wilmington (Pty) Ltd v Short & McDonald (Pty) Ltd 1966 (4) SA 33 (D) .. 114, 115, 118
Wilson (Paa]) & Co A/S v Partenreederei Hannah Blumenthal (The Hannah
Blumenthal) (1983] AC 854......................................... 161
Windsor Rural District Council v Ottcrway & Try Ltd (1954] 1 WLR 1494 . . . . . . . . 207
Withinshaw Properties (Pty) Ltd v Dura Construction Co (SA) (Pty) Ltd 1989 (4) SA
1073 (A) ........................................................ 40, 45, 47, 249
Wood v Griffith (1818) All ER 294 (LC Ct); 36 ER 291 ........... _...... . . . . . . . . 261
xxxii Arbitration in South Africa: Law and Practice

Page
Wright v Howson (1888) 4 TLR 386 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Yates v The University of Bophuthatswana (BSC 20 August 1992, unreported (case no
M293/91)) ........................................................ 100, 178, 179
Yorigami Maritime Construction Co Ltd v Nissho-lwai Co Ltd 1977 (4) SA 682
(C) .................................................................... 65, 312
Zambia Steel & Building Supplies Ltd v James Clark & Eaton Ltd [1986] 2 Lloyd's
Rep 225 (CA)... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd (1985) 275 Estates Gazette
1134 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
CHAPTER 1

Introduction

1.1 Definition of arbitration

Arbitration is a procedure whereby the parties to a dispute refer that dispute to
a third party, known as an arbitrator, for a final decision, after the arbitrator
has first impartially received and considered evidence and submissions from the
parties. The reference to the arbitrator takes place pursuant to an agreement
between the parties. The arbitrator, in resolving the dispute, is not an ordinary
court of law but a person chosen by the parties. 1
From the above definition it is possible to identify the following five essential
characteristics of arbitration: 2
First, arbitration is a process for resolving a dispute between the parties
regarding their existing rights. 3 The requirement of a dispute is used to
distinguish arbitration from certain other contractual provisions for referring
matters to a third party, namely valuation and certification. 4 Apart from being
an essential characteristic of arbitration, the existence of a dispute is necessary
to render an arbitration agreement enforceable and to establish the arbitrator's
jurisdiction. 5
Secondly, the reference to arbitration takes place in terms of an enforceable
agreement between the parties. 'The essence of private arbitration ... is that
the power of the [arbitrator] to bind the parties by [his] decision derives from
the consent of the parties themselves, and not from some external source. ' 6 Its
consensual · basis makes arbitration a particularly flexible procedure for
resolving disputes. The parties can adapt the procedure taking into consider-

1 Compare Marshall 1; Jacobs I; Bernstein 9; Du Plessis (l 980) 380.

2 Compare Mentschikoff 699 and Du Plessis (1980) 380, who suggest four essential characteristics,
namely:
(a) arbitration is resorted to only by agreement between the parties to the dispute;
(b) it is a method not of compromising the dispute but of deciding it;
(c) the person deciding the dispute has no formal connection with the courts; and
(d) before the award is known the disputants agree to accept it as final and binding.
Sec further Parris 7-8 who identifies seven essential clements for an arbitration in English law. For a
detailed consideration of the subject. see Mustill & Boyd 30-52, especially 41-8, where seven essential
allrihutcs arc formulated and discussed.
-' Sec Mustill & Boyd 46-8. Compare, however, 31 below regarding labour arbitrations in interest
disputes. See also 40-1 below regarding the concept 'dispute' for purposes of the statutory definition of
an arbitration agreement.
4 See 45 below.
5 Regarding the enforceability of the agreement see 62-7 below. For the jurisdiction of the arbitrator

sec 56-60 and 176-7 below.

6 Mustill & Boyd 43. See, however, 67-8 below regarding 'statutory arbitrations'.

1
2 Arbitration in South Africa: Law and Practice

ation the nature and extent of their particular dispute as well as the amount at
stake. 7
Thirdly, the arbitrator, as the third party who must resolve the dispute, is
appointed by the parties, or by someone designated by them, where they are
unable to agree on the appointment. The person resolving the dispute has no
formal connection with the courts. 8
Fourthly, the arbitration agreement must contemplate that the arbitrator will
determine the rights of the parties in an impartial manner and that he will reach
his decision after receiving and considering evidence and submissions from the
parties by following a procedure which is equally fair to both parties.'' It has
been said in this connection that the arbitrator must decide the dispute ·after
hearing both sides in a judicial manner' . 10 Although the arbitrator must act
impartially, showing equal fairness to both sides, 11 the parties may agree that
the arbitrator should resolve the matter without a hearing.12 Moreover,
although an arbitrator is subject to the so-called 'rules of natural justice', u it is
misleading to say that he must act in a 'judicial manner' because this creates the
impression that he is bound to follow basically the same procedure as a court
of law. It is wrong to regard arbitration as litigation in the private sector or
privatised litigation. 14 We shall see that a tendency to equate arbitration
proceedings with litigation in court has had a seriously detrimental effect on the
arbitral process. 15
Fifthly, the arbitrator's decision in the dispute, known as his award, is final
and the parties agree in advance to be bound by it. It is therefore not subject
to appeal to the courts. 1"
It appears from the above discussion of the essential elements of arbitration
that the parties agree to the resolution of their dispute outside the ordinary
courts by a person of their own choosing, following a procedure which does not

7 See also 22 and 26-9 below. The parties' legal advisers must assist their clients to receive the

benefits of flexibility. The arbitration agreement also has an important effect on the extent of the
arbitrator's procedural powers. Sec 97 below.
" In South Africa it is not customary for a judge to accept appointment as an arbitrator, although
retired judges act in this capacity (sec 70 below). In England, statutory provision is made for judges to
he appointed as arbitrators in certain circumstances (see Mustill & Boyd ch 20). Sec generally 70-X!,
below regarding the appointment of arbitrators.
'' Sec, however, 201 below regarding a so-called 'look-sniff arbitration'. whc:1-e the arbitrator is
entitled to rely exclusively on his own investigations and specialised knowledge to resolw the dispute
and is not required to receive evidence or submissions from the parties. A 'look-sniff arbitration' is more
corn:ctly classilied as a hybrid form of arbitration (sec fkrns1dn 13). 11 is apparently the cus10111 in
England, however, to regard it as arbitration, for the convenience of being able to apply the provisions
of the arbitration statutes.
1" See eg Marshall I; Jacobs I. Walton & Vitoria state that 'arbitrations differ from legal proceedings

proper only in the choice of tribunal'.

11 -Sec Mustill & Boyd 41, 44-5.
12 See 197-201 below-regarding 'documents-only' arbitrations.
13 See 97-9 and 165-7 below.
14 Sec Sims 540; hut compare the text at 219n40 below regarding the view that arbitration has left its

origins in the law of contract and become part of the administration of justice.
1.s Sec 26-CJ below.
"' Sec 22 below.
Introduction 3

necessarily correspond to that of the courts. It would be wrong to conclude

from this that arbitration law has no connection with the courts. To the
contrary, a very important component of arbitration law is the relationship
between arbitration and the courts. The courts have extensive powers by
statute and under the common law to enforce or exclude the operation of an
arbitration agreement and to assist and supervise arbitration proceedings. The
sanction of the court is required to enforce an arbitral award in the absence of
voluntary compliance. 17 The ordinary principles of the law of contract also play
an important part in arbitration law, because the arbitration proceedings take
place pursuant to the arbitration agreement. The arbitration agreement is also
the primary source of the arbitrator's jurisdiction and powers, upon his
accepting appointment in terms of that agreement. 18
Although the parties to an arbitration agreement agree to refer their dispute
to a third party for a binding decision, a contractual provision for the reference
of a dispute to a third party is not necessarily a provision for arbitration. 19 The
third party may be required to assist the parties to resolve the dispute by acting
as mediator or conciliator or as a member of the panel in a 'mini-trial' . 20
Alternatively, although the parties refer the dispute to a third party for a final
decision, he may be intended to act as a 'quasi-arbitrator' or as an 'expert' in
resolving the dispute. 21
Parties to a contract may also provide for the assistance of a third party to
complete their contract or to determine the performance of one party in respect
of matters on which the parties have reached no agreement: in these
circumstances the third party is required to act not as an arbitrator, but as a
valuer or certifier. 22
It is necessary to distinguish arbitration clearly from other forms of
reference to a third party. First, the Arbitration Act23 applies only to
arbitration pursuant lo a written arbitration agreement. 24 Secondly, the
powers of the court in relation to arbitration, whether by statute or under
the common law, are both more comprehensive and more clearly defined
than those pertaining to the other forms of reference mentioned above.
Thirdly, the remedies against the third party will depend on his status and
his relationship to the other parties. The distinction between a reference to
arbitration and other forms of reference and the importance of that
distinction have not always been observed and appreciated in South African
case law and some of the decisions are conflicting or logically inconsistent.
We therefore discuss other forms of third party assistance, either for the
purpose of resolving disputes or where the third party
17
See further 61-2 below.
1
" Sec 56-60, 92-4 and 1J7 below.
19
See also 40-1 below.
20
See 10-19 below.
21
See 50-2 and 62 below.
22
See Parris 9 and 45 below.
23
Act 42 of 1965.
24
See 38-40 below.
4 Arbitration in South Africa: Law and Practice

acts as valuer or certifier, in more detail than would otherwise be merited in a

book on arbitration. 25

1.2 History of arbitration and sources of present arbitration law

Arbitration is undoubtedly one of the oldest methods of settling disputes. Some
writers hold the view that arbitration preceded organised courts of law while
others maintain that courts of law and arbitration developed in parallel. 26
Arbitration is referred to in the Bible27 and references to arbitration occur in
Roman law from the Twelve Tables to Justinian. 28 Arbitration based largely on
Roman law principles played an important role in Roman-Dutch law ,29 and
several of the Roman-Dutch authorities, notably Voet 30 and Huber 31 deal with
the subject in some detail. 32 Neither Roman law nor Roman-Dutch law
contained a developed and complete system of arbitration law. 33 As a result, at
the turn of the century, three of the colonial legislatures in South Africa,
namely the Cape,34 Natal3 5 and Transvaal3 6 adopted arbitration statutes based
on the English Arbitration Act of 1889.37 There was no arbitration legislation
in the Orange Free State before the introduction of the present Arbitration
Act3 8 in 1965. The colonial legislation did not repeal the common law but was
intended to facilitate the reference of a dispute to arbitration and the conduct
of those proceedings and to provide a better and more efficient means of
enforcing arbitral awards. 39
As the English Arbitration Act of 1889 40 formed the basis for the colonial
legislation in South Africa, it is necessary to refer briefly to the background and
certain characteristics of this legislation which have influenced the subsequent

25See 8-19 and 44-52 below.

26See Du Plessis (1980) 377 and compare Mustill 1989 J Int Arb 43-4.
27See Du Plessis (1977) 1; (1980) 377-8. He cites as an example the well-known incident in I Kings 3:
16-28 where King Solomon resolved a dispute between two mothers regarding the parenthood of a
child. Although the parties chose the king to resolve their dispute, it would nevertheless appear that he
acted in his official capacity rather than as a private arbitrator. Zimmermann 527 states that St Paul's
request in 1 Corinthians 6: 1-8 (a passage also referred to by Ginnings ix-x) exhorting Christian
disputants to use Christian arbitrators rather than a heathen judge influenced the development of
arbitration during the post-classical period of Roman law.
28 See Du Plessis (1977) 4. See generally Du Plessis (1977} 8-42 regarding arbitration in Roman Law.
29 See Voet 4.8.1; Du Plessis (1977) 46.
30 At 4.8 .
.ll Al 4.21.
32 Other writers on the subject include Damhouder, F;iber and Wassenaar (sec Du Plessis ( 1977) -17
and Jacobs 2). See generally Du Plessis (1977) 43-80 regarding arbitration in Roman-Dutch Law.
33 Du Plessis (1977) 4.
34 The Arbitrations Act 29 of 1898.
35 The Arbitration Act 24 of 1898.
36 The Arbitration Ordinance 24 of I 904.
37 52 & 53 Viet c 49.
38 Act 42 of 1965.
39 Nkuke v Kindi 1912 CPD 529 at 531-2.
40 The Act consolidated and amplified existing legislation, hut was not a codification. The government

of the day declined to proceed with a bill associated with Lord Bramwell, which would effectively have
codified English arbitration law (see Veeder & Dye 345-7). For a history of judicial supervision of
arbitration proceedings in England see Must ill & Boyd ch 29.
Introduction 5

development of South African arbitration law. The statute coincided with the
culmination of a period of rapid development of English commercial law,
necessitated by the industrial revolution and the rapid expansion of
international trade and assisted by the intellectual ability, learning and business
common sense of the English judges of that period. 41 English arbitration law
differed from the arbitration laws of the European continent inter alia in the
following respects. First, English arbitration was concerned primarily with ad
hoc arbitration as opposed to institutional arbitration. 42 Secondly, English
arbitration was characterised by a much closer relationship between the courts
and the arbitral process. Thirdly, theory and the work of academic writers have
played a much greater role in the development of continental arbitration law.
In contrast, under the English system, answers to problems of arbitration law
have been sought through the courts as and when those problems arose. This
trend may have given English arbitration law a practical slant, but undeniably
the price has been a shortage of 'systematic conceptual study' .4 3 These
characteristics also apply to a greater or lesser extent to the evolution of South
African arbitration law in this century. Although some judgments have made
important contributions to the development of our arbitration law ,44 others
have been characterised by an attempt to find an answer to the case in point,
without a sufficient attempt to identify or analyse the principles involved. 4 -~
The colonial legislation was repealed and replaced by the present Arbitration
Act 46 which commenced on 14 April 1965. 47 Although it has been stated 48 that
this Act was modelled on the English Arbitration Act of 1950, 49 this view is an
over-simplification. The present statute was drafted by a law reform
committee, under the chairmanship of the then Chief Justice, after a review of

41 See Mustill 1989 J Int Arb 46.

42 An ad hoc nrhitration is one conducted under rules of procedure adopted by the parties for
purposes of the particular arbitration. An institutional arbitration is one which is administered by a
specialist arbitral institution under its own rules of procedure. (Redfern & Hunter 13, 53. Sec further
300 below.)
43 Mustill 1989 J Int Arb 47. The book by Mustill & Boyd, since the publication of the first edition in
1982 has done much to remedy this defect and has led to a more principled approach to solving the
problems of English arbitration law by both judges and writers.
44 See eg Van Heerden v Sentrale Kunsmis Korporasii! (Edms) Bpk 1973 (1) SA 17 (A); Dickenson

& Brown v Fisher's Executors 1915 AD 166; Government of the RSA v Midkon (Pty) Ltd 1984 (3) SA
552 (T); Benjamin v Sobac South African Building and Construction (Pty) Ltd 1989 (4) SA 940 (C).
Although the last-mentioned decision has since been criticised in Bester v Easigas (Pty) Ltd 1993 (1) SA
30 (C) 361 (see 292 below), the decisions in the first sentence of this footnote are characterised by a
principled and analytical approach to the point of arbitration law in issue.
· 45 See eg Fassler, Kamstra & Holmes v Stallion Group of Companies (Pty) Ltd 1992 (3) SA 825 (W)
where the fundamental distinction between a mediator and an arbitrator is ignored; Administrateur,
Kaup v Asia Konstruksie (Edms) 1989 (4) SA 458.(C) 470A-F which overlooks the consensual basis of
the arbitrator's jurisdiction; and Kathrada v Arbitration Tribunal 1975 (2) SA 673 (A) 680B-681A,
which in our submis.sion (see 278 below) undermines the finality of an arbitrator's award on costs by
being prepared to in:crfcre where there has been a bona fide error by the arbitrator in arriving at his
decision.
46 Act 42 of 1965 s 42(1).
47 See GG 1084 of 14 April 1965.
48 See Jacobs I.
49 14 Geo 6 c 27.
6 Arbitration in South Africa: Law and Practice

the existing legislation in South Africa and certain other lands. 50 Although at
least one new provision was based on the English Act, 51 in other respects, the
drafters followed a more independent line 52 and certainly succeeded in
producing an arbitration statute which is more logically arranged than the
current English statute. 53 At the time of its commencement, the South African
statute was in some respects in advance of legislation in other jurisdictions. 54
However, after the lapse of more than a quarter of a century and in the light of
the enactment of modern arbitration legislation in many other jurisdictions, 55
the South African statute is now in need of revision.
Partly because of the influence of English legislation 56 on the drafting of the
South African statute and partly because of abundant English authority on
points which may not have been considered by the South African courts, our
courts tend to refer to English case law in the absence of South African
authority. English cases should be used with a degree of caution for two main
reasons. First, as stated above, the purpose of the legislation is to supplement
rather than to replace the common law and there are certain important
differences between the South African common law relating to arbitration and
the English common law.57 Secondly, the wording of the South African
provisions does, on occasion, differ materially from the comparable English
provision58 and these differences in wording must also be taken into account
when applying English decisions.
When applying the South African Act, it is necessary to bear in mind that it
is not a codification of the powers of the courts pertaining to arbitration

50 See the speech of the Minister of Justice in Hansard 16 March 1965 3056. The other lands arc not
specified.
51 Section 7, discussed at 68-9 below, regarding interpleadcr proceedings is based on s 5 of the
En§lish Arbitration Act of 1950 (see Hansard 16 March 1965 3057).
5 For example, s 20, discussed at 206-1 l below, differs materially from s 21 of the English Act, infer
alia in that the South African statute makes no provision for an award in the form of a stated case. This
possibility was originally contained in the colonial legislation (see eg the Arbitrations Act 29 of 1898
(Cape) s 13(h), followings 7(b) of the English Act of 1889, which was rcpcakd and re-enacted as
s 9(l)(b) of the English Arbitration Act 1934 (24 & 25 Geo 5 c 14)). Because of abuse in practice. the
stated case procedure in s 21 of the English Act was repealed by s l (I) of the English Arbitration Act
of 1979 (1979 C 42).
53 For example, whereas the English statute deals with the removal of an arbitrator and the setting
aside of an award in the same section (s 23) while containing a separate provision (s I) on the
irrevocability of an arbitrator's appointment, the South African statute deals comprehensively with the
termination and setting aside of the arbitrator's appointment in a single section, s 13 (see ]()J-1()6
below) and deals with the setting aside of the award in a separate section, s 33 (sec 290 below).
54 According to an expert on Israeli arbitration law, Prof S Ottolenghi, the South African statute was

consulted by the compilers of the current Israeli statute (enacted in 1968) and it was also referred to by
the Law Commission of New South Wales in its report of 1973. It has also serv<:d as the basis for
arbitration statutes in certain other states in Southern Africa (see 300 below).
55 eg France, the Netherlands, the provinces of Canada, the states of Australia and Hong Kong.
56 Either directly through the 1950 Act or indirectly via the colonial legislation referred to above.
57 See eg Van Heerden v Sen/rate Kunsmis Korporasie (Edms) Bpk 1973 (]) SA 17 (A) 29A-H
regarding disputes not capable of arbitration and the discretion of the court to exclude arbitration.
58 Compare eg s 20 of the South African Act with the repealed s 21 of the English Act of 1950 (sec

n 52 above); s 30 of the South African Act with s 17 of the English Act regarding the power of an
arbitrator to correct errors in his award ands 14(1) of the South African Act withs 12(1)-(3) of the
English Act regarding the arbitrator's procedural powers.
Introduction 7

proceedings59 and that the common-law powers of the courts are applied not
only to arbitrations under the common law 60 but also to arbitrations falling
under the Act. 61 When applying the Arbitration Act, it is also necessary to bear
in mind the distinction between its compulsory provisions, 62 which apply to all
arbitrations which fall under the Act, irrespective of the terms of the arbitration
agreement, and those provisions which are merely regulatory. Regulatory
provisions are those which apply only to the extent that the parties have not
made their own arrangement. Many of the Act's provisions are clearly
regulatory and may therefore be excluded or modified in the arbitration
agreement. These regulatory provisions are usually characterised by expres-
sions like 'unless the arbitration agreement otherwise provides'. 63 Certain of
the Act's provisions are 'enabling', in the sense that they enable the parties or
the arbitrator to do things which they could not do under the common law. 64
The Arbitration Act applies to arbitrations pursuant to a written arbitration
agreement. 65 Other legislation may, however, require disputes to be referred to
arbitration under the Act even in the absence of such agreement. 66 Special
legislation applies to certain foreign arbitral awards. As a result of South
Africa's acceptance of the New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards of 1958, legislation to facilitate the
enforcement of foreign arbitral awards was enacted in 1977.1'7
It was stated above that the Arbitration Act is not a codification of
arbitration law and that it contains many regulatory provisions. A perusal of
the Act therefore gives a very incomplete picture of South African arbitration
law and practice. At least in theory, arbitration offers a number of advantages

59 See generally 61-2 below for a summary of the court's powers.

"' See e g Benidai Tradi11/!, Co Ltd v Gvuivs & Gouws ( Pty) Ltd 1977 (3) SA I 020 (T) 10381-1- 1039B.
It should be noted that the question as to whether s 31 of the Arbitration Act was available to enforce
the award was expressly left undecided ( 1040F).
"' Sec e g 63 below regarding the use of a special pka to enforce an arbitration agreement and sec
'foe.wlay /11dmtries (Pty) Ltd v Co11dor /11dustries (Pty) Ud 1978 (4) SA 379 (T) regarding the powers
of a court lo revic·w an inll'!'im procedural ruling by an arbitrator (38211-38411) and lo inlerdkt
proceedings before the arbitrator pcnuing an application to review his decision (3811 I).
''2 The word compulsory has been used rather than 'peremptory' because the latter has a technical
meaning. A peremptory provision in a statute is one which usually needs exact compliance. Anything
less than exact compliance will result in the action in terms of the provision being treated as void. A
directory provision, to the extent that it needs to be complied with at all, needs only substantial
compliance for it to have its full legal effect. Section 12(2) regarding the formalities preceding the
application to court for the appointment of an arbitrator is an example of a provision in the Arbitration
Act where only substantial compliance is required. (See Atteridgeville Town Council v Livanos t!a
Livanos Brothers Electrical 1992 (1) SA 296 (A) 3061-307B, 309E-F.)
63 See eg ss 3(1), 4(1), 5(1), 9, 14(1), 19, 23, and 26-28. Whereas certain other provisions are, by
necessary implication, clearly compulsory (cg s 2 regarding matters not subject to arbitration and
s 32-33 regarding the power of the court to remit or set aside an award, the status of at least one section
is not entirely clear: sec 2!0-11 below regarding the question as to whether s 20 may be excluded hy
agreement.
64 See e gs 16 which empowers the parties to subpoena witnesses to attend the hearing ands 30 which
enables the arbitrator to correct certain errors in his award.
65 See 38 below.

'"' See 67-8 below.

67 The Recognition and Enforcement of Foreign Arbitral Awards Act 40 of 1977. Sec Appendix II

and 313-16 below.

8 Arbitration in South Africa: Law and Practice

compared to litigation in the courts as a means of settling disputes. 68 However,

some of these advantages are often not achieved or fully utilized in practice. w
In recent years there has been growing dissatisfaction with both litigation and
arbitration as methods for resolving disputes. We will therefore first consider
certain other forms of third party involvement in dispute resolution, before
discussing the advantages of arbitration when compared to litigation.

1.3 Alternatives to arbitration

1.3.1 The current trend towards 'alternative dispute resolution'
Increasing unhappiness with litigation as a method of resolving disputes in
recent years has resulted in a growing movement towards developing more
effective alternatives. Dissatisfaction with litigation as a means of resolving
disputes is nothing new: arbitration has been used for centuries. 7" However,
arbitration in the hands of lawyers has often been allowed to become as formal
as court proceedings with the result that a formal arbitration may be as
time-consuming and even more expensive than litigation. 71
The current trend towards experimenting with different ·methods of resolving
disputes is known in the United States of America and in the United Kingdom
as 'alternative dispute resolution'. 72 It is, however, more correct to speak of
Appropriate Dispute Resolution, because in certain circumstances litigation is
the most appropriate way of settling a particular dispute.73 For ADR to work,
parties to a dispute and their legal advisers need to look at disputes in a nc,,·
way. 74 Traditionally, the emphasis has been on a judicial determination of a
dispute by applying legal rules in analysing the historical Lets of that dispute.
The stress has therefore been on substantive legal rights and the apportionment
of blame in relation to past events rather than on the parties' present and future
interests. The new techniques being considered and applied offer more flexible
and faster routes to settlements which better meet the parties' interests. AD R
offers a major opportunity to business and the public sector to save on legal
expenses and the indirect costs of management time and energy expended 011
a dispute resolved by litigation. 75

""Sec 19-23 below.

69 See 26 below.
70 See Sacks 233-4; Voet 4.8.1 and 4 above.
71 See 20-1 and 26-9 below.
72 See O'Connor 109-10 regarding the development of ADR in the USA, where the trend has been

evident since the mid-nineteen seventies.

73 Mackie 3. See 24 below regardir!g instances where litigation is the most appropriate method for
settling disputes. Compare Street 17, who regards ADR as standing for Addi1ional Dispwe Resolwion.
for although a legal system can accommodate additional or subsidiary processes for dispute resolution,
'[n]othing can be alternative to the sovereign authority of the court system'.
74 See further 28 below.
75 See Mackie 3-4.
Introduction 9

The main factors which have led parties to explore alternative methods to
litigation for resolving disputes arc the following:
The first factor is the notoriously high cost of litigation, which has placed a
Supreme Court trial beyond the financial reach of all but a fraction of the
community. 76
The second factor is the time taken before a dispute is resolved by the
Supreme Court. In Johannesburg and ?retoria a period of two years between
the issue of summons and the date of the trial is not unusual.
Thirdly, litigation, particularly if the adversarial7 7 method is used, is a
traumatic experience which can also involve hurtful and unwanted publicity.
Parties may be more alienated from each other at the conclusion of the case
than they were v:hen proceedings were instituted.
Fourthly, Supreme Court proceedings are very formal and the parties have a
largely passive role. A party will often be unable to follow the highly technical
proceedings and argument. In short, the lawyers take o•;er the conduct of the
case and the client pays the bills.
Fifthly, the person adjudicating the dispute may lack specialised knowledge
and expertise which the resolution of the dispute requires. This is an important
reason why mediation and arbitration have been used in preference to litigation
to resolve disputes in the construction industry.
Lastly, adjudication by the court produces a winner/loser situation. Some of
the alternatives presented by ADR (particularly negotiation and mediation-
type procedures) attempt to find a solution which benefits and therefore
satisfies both parties. 78
In the remainder of this section we consider t·;<,o of the main alternatives to
litigation and arbitration for resolving disputes ~y means of third party
involvement, namely mediation c1nd the mini-trial. When choosing hetwecE the
various alternatives, parties to a particular dispute and their legal advisns
could consider the following factors:
(a) the formality. costs and duration of the procedure;
(h) whether the proceedings arc private or open to the public;
(c) the degree of third party involvement in resolving the dispute;
(d) the degree of choice which the parties have as regards the procedure
employed and the outcome of the dispute; and
(e) the amount of coercion involved in the procedure. 79

76 O'Connor 109 states that more than 300 American corporations, including many of the 'Fortune

500' have signed a pledge to use other methods of dispute resolution before resorting to litigation or
arbitration. See too Brand (1991) 1-4.
77 Sec 167-8 and 216-18 below.
78 Sec generally Brand (1991) 1-8. For a more cautious view of the advantages and benefits of ADR,

sec Donaldson 103-4, 106.

79 See Pretorius 1-2 and compare Effron 483-97.
10 Arbitration in South Africa: Law and Practice

1.3.2 Mediation-type procedures

1.3.2. 1 Definition and characteristics
At least one standard form contract in the South African construction industry
has made provision for 'mediation' for several years 80 and the new building
contract now also contains an optional mediation procedure. 81 Although
'mediation' is regularly used in resolving disputes in the construction industry
in South Africa, there is confusion in the minds of many in the industry as to
what mediation involves, and even a tendency to regard it as a sort of informal
arbitration. As we shall see, the two procedures are fundamentally different. 8 2
One of the positive results of the current interest in dispute resolution has been
a number of publications and seminars in which the concept and characteristics
of 'mediation' have been analysed and discussed. It is important to have a
proper theoretical understanding of mediation if one is to realise its full
potential in practice.
For purposes of this chapter, mediation in its widest sense is a voluntary
procedure, whereby a mutually acceptable third party helps to bring the parties
to a dispute to an agreed solution.H.'
There are two basic types of mediation procedure, depending on whether or
not the mediator is expected to recommend a solution if he fails in his attempts
to guide the parties to an agreed solution. Where the mediator is not expected
to make a recommendation, he is termed a mediator in the United States of
America and in labour disputes in South Africa. He is acting as an intermediary
seeking to narrow the field of controversy. In China, he has been described as
'a go-between who wears out 1 000 sandals'. 84 In the United Kingdom and in
the South African construction industry, he would usually be called a
conciliator. 85 Where the third party gives a non-binding opinion at the end of

80 See cl 69(2) of the General Conditions of Contract for Works of Civil Engineering Construction (5

ed 1982) (hereinafter referred to as 'the GCC (1982)') and compare the improved and amplified version
in cl 61(2) of the sixth edition of the contract, published in 1990 (hereinafter referred to as 'the GCC
(1990)').
81 Sec cl 37.2 of Principal Building Agreement (with quantities). The original version of the contract.

which was drawn up by the Joint Building Contract Committee, was completed in 1991 but certain
amendments were made in November 1992. This contract is hereinafter referred to as 'the JBCC
(November 1992)' contract. Regarding cl 37 sec further Finsen (1991) 124-30.
82 See eg Guidelines for mediation under construction contracts of the Association of Arbitrators para

5.1. Compare however Fassler, Kamstra & Holmes v Stallion Group of Companies ( Pty) Ltd 1992 (3 J
SA 825 (W) where the terms 'mediation' and 'arbitration' arc used interchal)gcahly. The third party was
apparently appointed as a mediator (see 826B) although the parties apparently agreed that his opinion
was final and binding and not subject to appeal (826E). Finality is an indication in favour of arbitration.
but it is not conclusive (see 41 below). Although a mediator's opinion is not usually binding, the parties
may agree that it will be (see n 105 below). If, as appears to have been the case, the third party was a
mediator, the Arbitration Act had no application and applicant's counsel should therefore not have tried
to rely on its provisions (inter alia that respondent was out of time by virtue of s 33(2)) in his attempt
to enforce the mediator's opinion.
83 Compare Anstey 249. See generally on the use of mediation in South Africa Anstey 249-307;
Trollip 39-57; Cohen 126-8; Scott-Macnab (1987) 619-22; Scott-Macnab (1989) 211-14.
84 Donaldson 103.
85 Regarding this usage in the UK see eg the Guidelines for Conciliation and Mediation of the
Chartered Institute of Arbitrators; Street 18; but compare O'Connor 111-12.
Introduction 11

the proceedings, he is termed a conciliator in the United States of America and

in labour disputes in South Africa, but a mediator in the United Kingdom and
the South African construction industry. 86 Moreover, the terms of the
mediation clause in certain standard form contracts in the construction industry
may be such that a party, who is dissatisfied with the opinion of the mediator,
has to actively contest that opinion, if he wishes to avoid being bound by it. 8 7
The lack of consensus on terminology is not of any great significance. The
powers of the mediator or conciliator are determined by an agreement between
the parties to the dispute. Therefore, irrespective of the third party's
designation in the agreement, what really matters is that both he and the parties
to the dispute must have a clear understanding of his functions and powers in
terms of their particular agreement.
It has been said that both conciliation and mediation have three fundamental
characteristics:
'In the first place both originate in an agreement between the disputants to call in the
aid of a facilitator to assist in the structuring and conduct of settlement negotiations
which will include, as part of their very essence, private consultations with each
disputant. In the second place the facilitator has no authority to impose a solution on
the disputants as does a judge, arbitrator, or expert appraiser. And in the third place,
the whole process remains at all times entirely flexible and dependent upon the
continuing willingness of the disputants to continue it until such time as either they
themselves agree upon the terms of a settlement or one or other of them terminates
the negotiations; it is, in short, consensus orientated. ' 88
The legislature has now also made provision for a form of 'mediation' in the
Short Process Courts and Mediation in Certain Civil Cases Act. 89 Although
parties to a suit in any court can in principle agree to submit their dispute to
mediation, the Act provides a statutory framework for mediation in disputes
within the jurisdiction of a magistrate's court or short process court. 90 Where
the parties agree to use mediation under the Act, the dispute is referred by the

86 See eg Guidelines for mediation under construction contracts of the Association of Arbitrators
parn 1.
" 7 See eg cl 69(2) of the GCC (1982) and cl 37.3 of the JBCC (November 1992) contract. Under hoth
these contracts. a party is bound by a mediator's opinion unless he takes steps to refer the matter to
arbitration within a certain period. However, in terms of cl 61(2)(!) of the GCC (1990), the mediator's
opinion becomes binding only to the extent the parties decide to accept it. The latter arrangement is
more in accordance with the general understanding of the effect of an opinion by a mediator or
·conciliator. I lowcvcr, even under the former two contracts, the opinion is not an arbitrator's award. It
was not intended that the mediator should be an arbitrator conducting an arbitration in terms of the
Arbitration Acl and the proceedings should not he regarded as an informal arbitration. Sec further n 105
below.
88 Street 18. In similar vein, O'Connor 108 refers to the 'four Cs' for a successful mediation or
conciliation, namely consensus as regards the procedure and the result; continuity in that at least one of
the parties desires a continuing relationship with the other; party control over the procedure allows the
parties to arrive at an interest-based commercial settlement; and the confidentiality of the proceedings.
See also Cohen 126-7.
89 Act 103 of 1991. See generally De Vos (1992) 383-9 regarding the mediation provisions of this Act.

'"' Section 3(I)(a); De Vos (1992) 384.

12 Arbitration in South Africa: Law and Practice

clerk of the court to a mediator appointed under the Act. 91 The mediator is
required to interview the parties and investigate the dispute either with a view
to achieving a settlement or to expediting subsequent court proceedings. 92
Although the mediation proceedingf> have a consensual basis,''·1 the 'mediator's'
statutory powers differ drastically in at least one respect from those usually
conferred on a mediator by agreement. Should a party fail to attend an
interview with the mediator after having duly received notice, the mediator
may issue any order he deems fair: if the party who failed to attend was the
defendant in the court proceedings, he runs the risk that the 'mediator' may
even order 'judgment for the plaintiff'! 94

1.3.2.2 Differences between mediation and arbitration

As stated above, arbitration and mediation are fundamentally different
processes for resolving disputes. The object of arbitration is for the arbitrator
to resolve a dispute between the parties regarding past events in accordance
with their legal rights. The object of the mediator is to facilitate the parties
arriving at an agreed solution to their dispute particularly in a situation where
the parties wish to maintain a cordial relationship in the future. The most
important differences are the following:
Firstly, the mediator may meet and confer with the parties separately (that is
in caucus), 95 whereas the arbitrator must scrupulously avoid even giving the
impression that he may be discussing the dispute with the one party in the
absence of the other. 96 In caucus, one party is able to frankly disclose certain
implications of the dispute to the mediator, which he does not want to be
disclosed to the other party. Therefore, information disclosed to the mediator
in caucus may only be made known to the other party with the former party's
consent. 97
Secondly, the mediator may attempt to guide the parties to a solution based
on their present and future interests as opposed to an arbitrator's award which
is based on the parties' substantive legal rights determined with reference to
what occurred in the past. 98 In short, a settlement produced by mediation may

91 Section 3(1)(a). The appointment and qualifications of mediators are regulated bys 2 (see further
De Vos (1992) 384-5).
92 Section 3(I)(b).
93 Section 3(1)(a); De Vos (1992) 386.
94 Section 3(5). Subject to any rules made under the Act, he may also make any order he deems fit

regarding the costs of mediation proceedings (s 3(6)), which is also foreign to the concept of the
mediator as the facilitator of a negotiated settlement (see the text to n 111 below). The Mediation in
Certain Divorce Matters Act 24 of 1987 also ostensihly provides for mediation in the context of divorce
proceedings, but the true function of the Act is to provide for the appointment of a •family advocate' to
assist the court in protecting the interests of the minor or dependent children of a marriage (s 4( I)). His
function is not that of a mediator (Mowatt 53). See further 53 below.
95 See Street 21, who regards it as not only permissible, but essential, that a mediator should be able
to discuss the dispute freely and privately with each party separately.
% See I 66 below.
97 See Trollip 46.

''" Sec, however, 253-5 bdow regarding the possibility of the arbitrator acting as t1))/i11h/e
compositeur.
Introduction 13

involve a renegotiation of an ex1stmg contract, also with regard to future

obligations. The negotiated settlement may therefore have advantages for both
parties, whereas an arbitrator's award normally results in a win/lose situation.
If there is no negotiated settlement pursuant to the mediation and the mediator
is required to give an opinion, it is preferable that he should base that opinion
on the parties' legal rights. The opinion is then logically able to persuade the
recalcitrant party that he is likely to be on the losing end if the matter goes to
court or arbitration. 99
Thirdly, particularly for purposes of facilitating the disputants arriving at a
negotiated settlement, the mediator needs different or additional abilities to
those of an arbitrator. 100 In essence the mediator requires 'people skills' in
addition to some understanding of the field out of which the dispute has arisen.
The people skills required by a facilitator to settle a dispute by negotiation are
more complex than those required to settle it by adjudication. 101
Fourthly, an arbitrator is not as a matter of law required to give reasons for
his award, unless the arbitration agreement otherwise provides. 102 If a
mediator's opinion is to persuade a recalcitrant party to alter his position, it is
obviously necessary that the conclusions in his opinion be supported by cogent
reasons. io 3
Fifthly, whereas an arbitrator is usually expected to base his award on a
judicial evaluation of the evidence and arguments before him, the extent to
which the mediator is expected to go beyond the parties' submissions to arrive
at his opinion will depend on the terms of the agreement. An indication that he
is to act as an expert implies a professional duty to take his investigations
further than the parties' submissions if necessary. 104
Sixthly, in mediation proceedings, disputants have control over both the
procedure and the outcome, in that the mediator's opinion is not binding. 105

"'' Sec Rouse 102-3. As a mediator's opinion under the GCC (1990) becomes binding only to the
extent to which the parties actively accept it (sec n 87 above), a mediator may still prefer to suggest an
interest based solution which he feels is more likely to be acceptable, after they have reflected on it, to
hoth parties.
""' Sec generally on the abilities required by a mediator Trollip 41, who refers to, inter alia. honesty,
integrity, impartiality, politeness, tact, a sympathetic nature, a commitment to the process and parties,
an cvcn-tcmpcrcdncss, patience, good listening skills. self-confidence and the ability to communicate;
Street 21; Cohen 128 and Anstey 250-9. Obviously. most of the characteristics referred to hy Trollip arc
also desirable for an arbitrator (see 73 below), but with the exception of the first three, they arc less
essential for successful adjudication than for achieving an agreed settlement through mediation.
tot Sec Street 21.
w2 See 269 below.
103 Rouse 102.
w 4 Compare cl 37.2.4 of the JBCC (November 1992) contract with the ADR Centre mediation code
of practice (Trollip Appendix G) cl I 3.
105 See eg cl 61(2)(/J of the GCC (1990), which provides that the mediator's opinion is only binding
on the parties to the extent that it has received their written acceptance. The agreement between the
parties may however contain a different arrangement. See, for example, certain of the contracts referred
to inn 87 above and Stocks & Stocks (Cape) (Ply) Ltd v Gordon and others NNO 1993 (1) SA 156 (T),
where the agreement to submit the dispute to mediation provided that the opinion would become final
and binding unless either party disputed it within a stipulated time by written notice to the other. It was
further provided that the opinion should be given effect to by the parties until overruled in any
subsequent arbitration or litigation. The court was therefore prepared to enforce a mediator's opinion
14 Arbitration in South Africa: Law and Practice

With arbitration, the parties may regulate the procedure in their agreement,
but agree to accept the arbitrator's award as final and binding. 106
Seventhly, no record is usually kept of proceedings before a mediator. 107 An
arbitrator is bound by the Arbitration Act either to record oral evidence, or,
subject to the arbitration agreement and after consultation with the parties, to
direct how oral evidence is to be recorded. 108
Eighthly, although both mediation and arbitration proceedings are
conducted in private, 109 only mediation proceedings are conducted on a
'without prejudice' basis. As a result, the content of those discussions between
the mediator and the parties, being negotiations aimed at settling the dispute,
cannot be disclosed in evidence in subsequent court or arbitration proceedings
without the consent of both parties. 110 The restriction would not, however,
apply to discussions taking place once a settlement had been reached, if there
was subsequently a dispute between the parties regarding the terms of the
settlement.
Lastly, because the aim of mediation is an attempt to bring the parties to a
negotiated settlement, the fees and expenses of the mediator are usually
apportioned equally between the parties, and each party will bear his own
costs, irrespective of the outcome. 111 In arbitration, however, a party who has
achieved substantial success is usually entitled to be awarded costs. 112

1.3.2.3 Advantages and disadvantages of mediation

From the above, it is clear that mediation enjoys certain advantages compared
to arbitration. First it should result in a significantly quicker and less expensive
resolution of the dispute. Secondly, it promotes the possibility of a negotiated
settlement based on the parties' interests, which may be more beneficial as
regards the ongoing commercial relationship between the parties, if maintain-
ing the relationship is important, than an arbitrator's award determining the
parties' legal rights. Thirdly, the parties are not bound by an opinion with
which they are dissatisfied and may take the dispute to arbitration or litigation.
Therefore, a party need not be too concerned by the possibly somewhat
superficial investigation made by a mediator before drawing up his opinion,
where the party knows he is not bound by that opinion.
However, mediation is not without its disadvantages. First, precisely because
it is a consensual procedure, heavily dependent on the co-operation of the
providing for payment of a sum of money, notwithstanding the respondent's declared intention to take
the dispute to court or arbitration. On the wording of the particular agreement, this decision is
preferable to that in Blue Circle Projects (Pty) Ltd v Klerksdorp Municipality 1990 (I) SA 469 (T).
wo See the Arbitration Act 42 of 1965 s 28 and 22 above and 271 below.
107 See Trollip Appendix A (Mediation Agreement) cl 18 and Trollip 43 for the reason for this

provision.
108 Act 42 of 1965 s 17 and see 187 below.
109 See 22 above and 213-14 below regarding the privacy of arbitration proceedings.
1 w See further 234-5 below.
111 See, for example, the GCC (1990) cl 61 (2)(i), but compare cl 37 .2.5 of the JBCC (November I 992)

contract which gives the mediator a discretion to apportion costs.

112 See 277 below.
Introduction 15

parties, it can be abused by one party using delaying tactics. Secondly, where
mediation takes place before discovery and an exchange of experts' reports,
one party may agree to a negotiated settlement without being fully aware of
weaknesses in his opponent's case which this information would have
disclosed. 113 Thirdly, there is a perception that a party who suggests a
negotiated settlement, with or without a mediator, is displaying a lack of
confidence in his own case. Fourthly, a party may accept a mediator's opinion
which is based on an inadequate examination of the matters in dispute and
the available evidence. Fifthly, although a settlement may be achieved during
the mediation process, further disputes may arise when trying to reduce the
settlement to writing, particularly if the parties arc left to draw up the
document with the help of their legal advisers. II4 Sixthly, from the mediator's
point of view, he may become involved as a witness in subsequent litigation
between the parties, particularly if the dispute concerns the exact terms of the
settlement, or if part of the information disclosed or part of the discussions
during mediation arc not protected as being 'without prejudice'. 115 Attempts
have been made in the agreement providing for mediation to protect the
mediator against such involvement. 11<, However, a provision whereby both
parties agree that the mediator is not a compellable witness II7 is probably void
as being contrary to public policy. 118
If mediation is unsuccessful and the parties then agree to take their dispute
to arbitration, the question arises whether they should consider appointing the
same person who acted as mediator as the arbitrator. I19 Opinions differ on the
propriety of such appointment. 120 In principle, the parties arc free to agree to
the appointment, notwithstanding the mediator's previous involvement.
However, at least one party may be reluctant to do so, for example, where he
has disclosed information on a 'without prejudice' basis to the mediator,
possibly in caucus, which is not presented as evidence in the arbitration. The
party may doubt the arbitrator's ability to disregard the information when
making his award. Also, even if the mediator is not required to give an opinion,
where the issues have been debated at length in his presence, it is unlikely that
he will not have formed some sort of opinion on the merits. A party may doubt

113 See O'Connor 113; Trollip Appendix G IV 14.

114 Compare Cohen 128.
115 Compare o·connor 113 and sec Hoffmann & Zeffertt 196-7 and 234-5 below regarding

statements without prejudice. Sec 106-108 below regarding the arbitrator as a party in subsequent court
proceedings.
1 "' Cl 61 (2)('1) of the GCC ( 1990) is a comparatively mild provision in this regard. which has as its

express aim the protection of the confidentiality of the mediation process. See too Cohen 126-7.
117 See Trollip Appendix G cl II 10; Chartered Institute of Arbitrators' Guiddinl'.1 2.4.
118 See, however, O'Connor 113, who regards this question as being unsettled.
119 The situation under discussion differs from 'med-arb' (discussed at 203 below), where the parties

decide before commencement of the mediation that the mediator will act as arbitrator should mediation
fail, and can therefore regulate their conduct in the mediation accordingly.
120 At a conference of the Chartered Institute of Arbitrators in England in 1990, delegates from

England and the Commonwealth firmly rejected the idea, whereas Robert Coulson, president of the
American Association of Arbitrators found the idea acceptable.
16 Arbitration in South Africa: Law and Practice

the arbitrator's ability to approach the arbitration with an entirely open mind
in the light of his previous involvement.
Mediation deserves serious consideration as a means of settling a dispute,
particularly because it is quicker and less expensive than arbitration or
litigation. However, 'no one ever agreed to settle a dispute if they thought that
there was a more profitable alternative, whether that alternative was slogging
it out in the hope of victory or dragging their feet in the hope that the disputes
would go away' . 121 Therefore, the relationship between the parties and the
nature of the dispute may make it clear from the outset that mediation has no
chance of success and that the parties would do better to refer the dispute to
arbitration.
Where disputants are confronted with the imminent threat of an imposed
solution, they are more inclined to concentrate their minds on serious
settlement negotiations. Therefore, reforms to existing court and arbitration
procedures in South Africa to make them quicker and more effective will
actually encourage the use of negotiation and mediation to resolve disputes. 122

1.3.3 The mini-trial

Although several variants arc possible, a mini-trial may be defined as a
voluntary, expedited, and non-judicial process, whereby the lawyers acting for
the parties to a dispute present an abbreviated version of their respective
clients' cases to a panel consisting of a senior executive of each party, and
( optionally) a neutral expert. 123 After the presentation, the executives adjourn
and try to settle the dispute by negotiation, with the assistance of the neutral
expert, if required.
A mini-trial is therefore a hybrid method of dispute resolution, combining
elements of negotiation, mediation and arbitration . 124 It is a voluntary process
and either party may withdraw at any time, without prejudice to that party's
position in pending or subsequent litigation or arbitration proceedings. 125
It is essential that the executive representing each party on the panel should
be drawn from top management. They should be from an organisational level
higher than that where the dispute arose so that their minds will not be
influenced by their own previous involvement in the dispute. It is also essential
that the parties' representatives on the panel have complete authority to settle

121 Donaldson 104.

122 Compare Donaldson 106. See too Luke 12: 58.
123 See Edelman & Carr 9; O'Connor 111; Solove 139; Trollip 61-2.
124 See Solove 139; Edelman & Carr 9 and the text below. Edelman & Carr regard tlie term
'mini-trial' as a misnomer, -as the procedure is a structured negotiation process rather than a judicial
procedure. Compare Van Vuuren 276-7 who regards the mini-trial as a more refined form of the
conference held (under rule 37 of the Supreme Court Rules) by attorneys after close of pleadings in a
Supreme Court action, with a view to curtailing the trial by reaching agreement on the matters referred
to in the rule. (See 145 helow regarding the Ruic 37 conference.)
125 Edelman & Carr 9.
Introduction 17

the dispute. They must also have the necessary technical expertise to
understand the issues in dispute. 126
The mini-trial can be used prior to the commencement of litigation or
arbitration proceedings. In this instance it will still be necessary to define the
issues in dispute clearly and for limited discovery 127 to take place, so that the
lawyers representing the parties can prepare adequately for the hearing. Where
litigation or arbitration proceedings have already commenced, the appropriate
time to consider using the mini-trial procedure is once discovery and inspection
of documents have taken place. 128
Although the presence of a neutral expert 011 the panel is optional and will
add to the costs of the mini-trial, experience has shown that his inclusion 011 the
panel is advisable: 129 The role of the neutral expert during the hearing and
during the subsequent negotiations must be clearly defined in advance by an
agreement between the parties. It may be convenient for him to act as chairman
during the hearing 130 and to give directions on matters like the scheduling and
duration of the hearing and on discovery, where disputes on procedural matters
arise between the parties, 131 The agreement between the parties may provide
for the executives on the panel to call on the expert for advice during their
negotiations and for him to give a reasoned, non-binding opinion, either orally
or in writing, on the factual and legal issues, if the executives are unable to
achieve a negotiated settlement. This opinion should be based on the expert's
assessment of the likely outcome if the dispute is submitted to court or
arbitration. 132 The executives may make a further attempt to reach a negotiated
settlement after receiving the opinion. m The fees and disbursements of the
neutral expert should be shared equally between the parties. 134
The form of the hearing will depend on the agreement between the parties.
One possibility is that each party is represented by a lawyer, who is entitled to
make a speech not taking longer than an agreed time, in which he sets out the
evidence and arguments in support of his client's case. The lawyer who
commenced will have a right of reply . 135 It is possible to have a more elaborate
but still informal hearing, involving oral testimony in narrative form, and
without compliance with the usual rules of evidence. The schedule for the

12 '' Sec Edelman & Carr 9: Solovc 139.

1" Followed by inspection of the disclosed documents. Sec 142 below regarding the meaning of
discovery.
128 Sec O'Connor 111. A possible time to discuss using the mini-trial in these circumstances would be

during the pre-trial conference under rule 37 of the Supreme Court Rules or at the equivalent
pre-hearing conference under rule 15 of the Association of Arbitrators' Standard Procedure Rules
(discussed at 145-55 below).
12 '' O'Connor 111.

JJO Particularly if witnesses arc to be called, he could be allocated an active role questioning witnesses
on behalf of the panel (analogous to an arbitrator proceeding 'inquisitorially' (see 168 and 218 below)).
Alternatively, he could play a passive role as adviser to the other panelists.
DI Compare the American Arbitration Association Mini-Trial Procedures para 6.
132 Compare 13n99 above regarding the opinion of a mediator.
133 See Edelman & Carr 11; American Arbitration Association Mini-Trial Procedures paras 11-13.
1J 4 Edelman & Carr 12; American Arbitration Association Mini-Trial Procedures para 15.
135 See O'Connor 111.
18 Arbitration in South Africa: Law and Practice

hearing must be agreed in advance and strictly adhered to, and if the advantages
of the mini-trial are to be obtained, it will last only a fraction of the time of a
formal trial. 136
Evidence at the hearing, negotiations between the executives, and any
contributions by the neutral expert are confidential and without prejudice and
may not be referred to in subsequent litigation or arbitration proceedings. m
Particularly where a neutral expert is involved, the preparatory phases of a
mini-trial prior to the hearing and the hearing itself are analogous in some
respects to an arbitration. However, as the neutral expert is not an arbitrator
with the task of giving a final award to resolve the dispute, the Arbitration Act,
including the procedural powers of the arbitrator, 138 has no application and the
powers of the neutral are determined solely by the parties' agreement. On
completion of the lawyers' presentation at the hearing, the proceedings take
the form of negotiation between the executives, with the neutral playing the
role of a mediator or conciliator to the extent that he may be required to do so.
The negotiations are non-binding, and until a settlement is agreed, either party
may withdraw at any stage.
Advantages of the mini-trial include the following: first, the confidentiality of
the proceedings; secondly, the time and costs involved will be considerably less
than litigation or formal arbitration; 1 "' thirdly, there is party involvement in the
decision-making; fourthly, a commercial, interest-based result is possible; and
lastly, if the parties fail to reach agreement, the neutral expert (if a lawyer) can
be asked to provide an opinion on the legal position. 140 However, mini-trials
are not without their disadvantages as they involve partial discovery and
considerable preparation by lawyers and are therefore relatively expensive and
time-consuming compared with negotiation and mcdiation. 141
If the advantages of a mini-trial arc to be achieved, it is ncecssary to give
careful attention to the selection of the dispute for which the procedure is used.
First, both parties must arrive at a genuine agreement to use the proeedurc 14 :>
and the amount in dispute must be sufficient to justify the costs involved. As
the decision-makers arc executives, the procedure is more suited to factual
disputes as opposed to disputes on points of law and the factual disputes should

"'' Sec Edelman & Carr JO- I I.

'-' 7 Sec Edelman & Carr 11, 13-14. This aspect should be spelt oul in the parties· agreement ( compare

the American Arbitration Association Mini-Trial Procedures para 14). Sec n 116 above regarding
similar considerations in mediation proceedings.
1'" Act 42 of 1965 s 14. Sec 98 below for these pow<:rs.

'-"' A commercial undertaking must also consider the time and expense occasioned by key
management pcrsoocl being diverted from their prim;,try function~ to attend court sessions and
consull;itions with lawyers.
140 Sec Solovc 139-40; Edelman & Carr 11, 13-14.
141 Sec O'Connor 111.
142 Compare the comments of Mustill (1989 !BL) 161 to the effect that it is doubtful whether
businessmen, except in a small minority of cases, really select arhitrntion as the most appropriate
method for resolving their disputes, after duly considering the merits of the process, especially where a
standard form contract is used.
Introduction 19

preferably not involve substantial factual determinations based on credibil-

ity. 14.1

1.3.4 Hybrid forms of arbitration

Other hybrid or special forms of arbitration, for example 'arb-med', 'med-arb'
and 'look-sniff arbitrations' are discussed elsewhere. 144

1.4 The advantages and disadvantages of arbitration

The advantages traditionally claimed for arbitration over litigation have been
aptly summarised by Voet:
'[I]t is a common thing for arbitrators to he approached with a view to the termination
of a dispute and the avoidance of a formal trial. The [reasons for resorting to
arbitration are the fear] of the too heavy expenses of lawsuits, the din of legal
proceedings, their harassing labours and pernicious delays, and finally the
burdensome and weary waiting on the uncertainty of the law.' 145
However, attempts to avoid the delays and expense of litigation by using
arbitration have not always been successful. Edmund Davies J commenced his
judgment in S J & M M Price Ltd v Milner regarding what he termed the
'disastrous proceedings' 146 of one arbitration as follows:
'Many years ago, a top-hatted old gentleman used to parade outside these Law
Courts carrying a placard which bore the stirring injunction 'Arbitrate-don't
litigate!' I wonder whether the ardour of that old gentleman would not have been
dampened somewhat had he survived long enough to learn something about the
present case. ' 147
A perusal of the reported decisions of the courts on arbitration could produce
a most misleading picture of the effectiveness of arbitration as a means of
settling disputes, as these cases usually deal either with situations where the
parties have been unable to achieve consensus on procedure or instances where
something has in fact or allegedly gone wrong. These cases however represent
only a small proportion of disputes referred to arbitration, a large majority of
which are resolved successfully without resort to the courts. Some of the
advantages of arbitration appear from the factors referred to above 148 which
have led disputants to explore alternative means to litigation for resolving their
disputes. In this section, we examine the advantages and disadvantages of
143 Sec Edelman & Carr 11; Solovc 140.
144 Sec 201 and 203-4 below.
145 See Yoct 4.8. l (Ganc's translation); Dutch Reformed Church v Town Council of Cape Town

(1898) 15 SC 14 at 20.
146 By the time the judgment was delivered, nearly six years had elapsed since the appointment of the

arbitrator to resolve a simple dispute.

147 [1966] I WLR 1235 at 1236. The old man in question is presumably the same person referred to

by Parris viii. See too Parris 20-2 regarding F & A (Building Contractors) Ltd v Lennelric (unreported).
In that instance, the respondent in certain arbitration proceedings delayed the delivery and
implementation of an arbitrator's award for five years until the respondent went into liquidation. The
claimant received no payment for its work and incurred the costs of the arbitration and subsequent legal
expenses.
148 See 9 above.
20 Arbitration in South Africa: Law and Practice

arbitration, particularly when compared to litigation, in more detail. The

extent to which those advantages are actually achieved in practice will depend
on the terms of the arbitration agreement, the attitude of the parties and the
abilities of the arbitrator . 149
The main advantages of arbitration are the following: 150

1.4.1 Specialised knowledge of the arbitrator

Where the dispute relates to complex technical matters, as is often the case in
the construction industry, the parties can drastically reduce the amount of
expert evidence 151 required to qualify a court to resolve that dispute, by using
an arbitrator with specialised knowledge and experience in that field. 152 An
arbitrator with specialised knowledge regarding the matters in dispute may be
able to provide the additional advantage of peer judgment, making his award
more acceptable to the parties. 153

1 .4.2 Reduced cost

Arbitration may be a less expensive means of settling a dispute than litigation,
but this is not necessarily the case. A judge or magistrate is paid by the state,
whereas an arbitrator will usuaHy 154 require remuneration at his normal
professional rates. In addition, it may be necessary to pay for the room where
the arbitration is held and for secretarial and other facilities. 155 If the
proceedings take place under the auspices of an arbitral institution 156 or such
institution is required to appoint an arbitrator, administrative charges are
usually levied. As a result, arbitration will only be less expensive than litigation
if the procedure used is less formal and time-consuming than that of a Supreme
Court trial.

1.4.3 Convenience
Whereas a trial in the Supreme Court will normally take place at the seat of the
court on a date allocated by the registrar, arbitration may take place at a venue
and time convenient for the parties and their advisers. However, because
difficulties may be experienced in finding dates to suit the arbitrator and all
149 Voet 4.8.7 states that parties who knowingly agree to the appointment of a youthful and
inexperienced arbitrator have only themselves to blame if they are prejudiced thereby. Sec too Fin sen
(I 988) 636-8 on the crucial importance of choosing a capable arbitrator.
150 See inter u/ia Marshall 3; Kay 4-5; Jacobs 4; Trollip 24-5; Parris 17-19; Bernstein 3-4.
151 See 186 and 228 below regarding expert evidence.
152 Parris 17; Gunter Hen ck v Andre et Cie SA [1970] I Lloyd's Rep 235 at 238; Finscn ( 1988) 636-7.
See further 74 below. Compare Gorley 343-4 who favours 'a legally trained arbitrator' unless the
dispute is concerned solely with issues of fact.
153 Compare Harris (1992) 155-6; Finsen (1988) 638.
154 Certain trade organisations may, however, offer arbitration at subsidised rates for disputes arising
in the trade or industry concerned (see eg Rutherford & Slade 87-98 regarding the low cost arbitrations
in consumer disputes administered by the Chartered Institute of Arbitrators on behalf of various trade
associations in the United Kingdom).
155 See Gorley 343.
156 See 24-6 and 302-4 below.
Introduction 21

those involved in the arbitration, 157 it is important to arrange a date for the
hearing as soon as possible after the appointment of the arbitrator. Having a
target date to work for provides a strong incentive to the parties and their
advisers to make their preparations expeditiously and to fulfil their pre-hearing
obligations to the other party timeously.

1.4.4 Saving in time

A shortage of courts in relation to the number of cases awaiting hearing is
partly responsible for the lengthy period of time between the institution of legal
proceedings and the trial date. Abuse of pre-trial procedures involves further
delays. Arbitration offers considerable advantages in this regard, if the terms of
the arbitration agreement empower the arbitrator to ensure that there are no
unnecessary delays before the hearing and to arrange for an expedited form of
hearing compared to a Supreme Court trial. The arbitrator must then have the
skill and strength of character to use these powers. The failure to achieve the
advantage of the saving in time offered by arbitration 'tends to reflect on the
arbitrator and not on the arbitration process' . 158

1.4.5 Privacy
Litigation takes place in open court. Both the public and the press have access
to the proceedings. Arbitration proceedings are private and confidential. 159
This advantage will be lost if either party approaches the court regarding some
aspect of the arbitration proceedings. 1w The confidentiality of arbitration is
advantageous if both disputants have an interest in resolving their dispute
privately, without potentially damaging publicity. For example. if a dispute
develops between members of a professional practice, they will probably prefer
to resolve the dispute privately, because any publicity will have a damaging
effect on clients' confidence in the practice. 1'' 1 However, where only one
disputant has an interest in confidentiality, the other party may prefer to use
litigation, in the hope that his opponent's desire to avoid harmful publicity may
offer tactical advantages leading to a negotiated settlement, particularly if the
financially stronger party is the one wishing to avoid publicity .162 The danger
that the privacy of arbitration could be abused by insurance companies has led
to statutory restrictions on the use of arbitration in disputes pertaining to
insurance policies. 163

157 See Gorley 339.

158 See Parris 18.
159 See further 213-14 below.
160 See Harris (1992) 155.
161 Compare Gorley 344 for the view that in practice few civil cases heard in court are mentioned in
the press and that the privacy of arbitration will be an advantage only in isolated and unusual cases.
162 See Trollip 24.
163 See 55-6 below.
22 Arhitration in South Aji-ica: Law and Practice

1.4.6 Flexibility
Because of the consensual basis of arbitration, the arbitrator and the parties
can determine by mutual agreement the procedure to be followed. They can
adapt the procedure taking into account the nature and extent of the issues in
dispute as well as the amount in dispute. By the time a dispute arises, one of the
parties may perceive tactical advantages in delay. Therefore, an agreement to
refer future disputes to arbitration should ideally give the arbitrator sufficient
powers to follow the most appropriate procedure, even where one party is
reluctant to comply. Only if the advantage of flexibility is used by the arbitrator
and the parties' legal advisers will arbitration result in a quicker and less
expensive alternative to litigation, bearing in mind that the parties will usually
have to pay the arbitrator his normal professional remuneration. 164 Arbitration
is also more flexible than litigation as regards representation at the hearing. A
party litigating in court must be represented by a lawyer unless the party
appears in person. Moreover, a company litigating in the Supreme Court must
be represented by an advocate. 165 No such restrictions apply to arbitration
proceedings,w, with the result that in an appropriate case, the parties could
agree that they will be represented by lay advocates with the necessary
specialised knowledge in the relevant field. 167

1.4. 7 Finality
Whereas a judgment of a court may be taken on appeal to a higher court, an
arbitrator's award is final and is not subject to appeal to the courts. 168 The
Supreme Court does, however, have statutory power to set aside or remit an
arbitrator's award in certain circumstances. 169

1.4.8 Informality
Particularly where disputants desire to go on doing business with each other, it
is desirable to resolve their dispute with the minimum of damage to the
relationship between the parties. Providing the arbitration is conducted in an
informal manner, it will usually have a less destructive effect on this
relationship than a formal Supreme Court trial. 170 A more informal procedure

'"" Unless the arbitrator is given adequate powers in !he arbitration agreement to expedite 1hc
proceedings, the preliminary meeting, discussed al 120-1 hclow, is the time when a i:onscious and
concerted effort should be made to use the advantage of flexibility. See too Finsen ( I988) 636 on the
crucial importance of using this advantage.
"'' Sec inter alia Arma Carpet House (Joha1111esb11rg/ (l'ty) Ltd v Domestic & Commercial Ca,1,et
Fillings (Pty) Ltd 1977 (3) SA 448 (W); Meskin 814.
166 See Parris I 9.
167 See 178 below regarding a party's right to representation in a(hitration prnccedings, unless such

right is excluded or qualified by agreement.

168 Dutch Reformed Church v Town Council of Cape Town ( 1898} I 5 SC 1-l at 20-1; Arbitration Act

42 of 1965 s 28. Section 28 does, however, permit an arbitration agreement to provide for an appeal to
another arbitration tribunal (see 271 below).
"''' Sec ss 32 and 33 and 285-95 below.
170 See Parris 19; Trollip 25.
Introduction 23

produces greater party involvement and a more relaxed atmosphere and the
dispute will be resolved more expeditiously. The more active involvement of
the arbitrator in the stage prior to the hearing can also narrow the issues in
dispute and reduce or prevent animosity between the parties.

1.4.9 International commercial disputes

Where the parties to a dispute are from different countries, arbitration will
often be a more attractive method than litigation for resolving the dispute,
particularly if the award will ultimately have to be enforced in a country other
than that in which the proceedings to resolve the dispute take place. 171

1 .4.10 Disadvantages of arbitration

Arbitration is not without its disadvantages compared to litigation. As stated
above, if the arbitration is formally conducted in accordance with the Supreme
Court rules, it will inevitably be more expensive than litigation because of the
arbitrator's fees. A party who is dissatisfied with the arbitrator's award has
more limited remedies to attack the award . 172 Where the same set of facts gives
rise to disputes between several parties, only some of whom are parties to the
same arbitration proceedings, parties cannot be joined to the arbitration
proceedings without their consent and the consent of all the parties to the
arbitration agreement. In other words, there is no provision in South African
law for the compulsory consolidation of arbitration proceedings and the joinder
of parties. Thus, where disputes relating to a construction project arise between
the employer, contractor, sub-contractor and architect administering the
execution of the work, consolidated arbitration proceedings between all the
parties before the same arbitrator would require the consent of all the
parties. 173 It will, therefore, usually be more appropriate to resolve the various
disputes between the parties in a consolidated court action . 174
In certain limited circumstances, a party litigating in court is entitled to legal
aid, whereas legal aid is not available in arbitration proceedings. 175

171 See 297 below.

172 Trollip 26 and see 22 above.
173 There would be three separate contractual relationships in this situation: between the employer

and contractor, between the contractor and subcontractor and between the employer and architect.
Even if all three contracts contained arbitration clauses, the agreement of all the parties would be
required to consolidate the arbitrations and difficult procedural questions may arise. Sec further 151-3
below.
174 Sec Parris 19. The rules dealing with consolidation and joinder are rules 10-13 of the Uniform

Rules of the Supreme Court.

175 See Parris 19-20 regarding the position in England. Legal aid in South Africa is primarily provided

in terms of the Legal Aid Act 22 of 1969 (sec LA WSA vol XIV 'Legal Aid' para 199). Although the Act
by its wording does not restrict legal aid to legal proceedings (see ss 3(d) and SA, both of which refer
to legal aid being rendered to a person in 'any dispute'), in practice the Legal Aid Board decides how
its limited funds should be allocated. It is doubtful whether arbitration qualifies as 'a civil matter' for
which the Board will render assistance under para 13 of the Legal Aid Guide (compare LA WSA vol XIV
para 214). The Association of Arbitrators is holding discussions with the legal aid clinics of certain
24 Arbitration in South Africa: Law and Practice

Finally, the nature of the dispute may be such that it can be more
appropriately resolved by litigation. 176 First, one or both of the parties may
wish to establish a court precedent to obtain clarity and finality on a particular
legal issue, for example, the interpretation of a clause in a standard form
contract. Whereas the decision of the Supreme Court on a point in issue
constitutes a precedent which certain other courts are obliged to follow, 177 the
award of an arbitrator has no such effect. Secondly, public interest may be the
overriding consideration, for example in most criminal mattcrs 178 or in matters
involving human rights. 179 Thirdly, the defendant may be on the verge of
insolvency. In this event the plaintiff may hope to get judgment, probably by
default, quickly, to facilitate proving his claim against the insolvent estate. In
this instance, the defendant may have a defence, but lack the lin:1ncial means
to establish it by defending the claim. Fourthly, the defendant may have no
genuine defence and be resisting the claim only to delay payment. There is
therefore no genuine dispute capable of being resolved by arbitration 1m and the
claimant should institute court proceedings even if the claim arises from a
contract with an arbitration clause.

1.5 The role of arbitration organisations

There are a number of organisations in South Africa 181 which actively promote
the use of arbitration as a means of resolving disputes.
The Association of Arbitrators was formed in J0hannesburg during 1979,
with objectives similar to the Chartered Institute of Arbitrators in the United
Kingdom and the American Association of Arbitrators in the United States of
America. The Association has branches in other centres, including Durban,
Cape Town and East London. Its members are drawn mainly from professions
in the construction industry, but lawyers are becoming more actively involved
in the association. The aims of the association include the following:

universities regarding the possibility of providing arbitrators. without charge, in construcli,,n induslrv
disputes where clients of such clinics arc involved. provided the arbitralion could be used for 1hc training
and evaluation of the arbitrator concerned.
17 '' See generally Mackie 7-8; Rogers & Salem 51-8.
177 In terms of the srnrc decisis rule, a court is bound by the earlier decision of a higher court on ;1 pnint

of law. A court will (ilso follow its own prcviow, dcci~ion unless it i'.'-. satisfied thal 1h1s decision w:IS
wrong. The earlier decisions constitute precedents. The justification for the rule is that it promotes lq!,d
certainty. Only the ratio decidendi (the actual ncason for the conclusion OP 1hc poinl of l:iw) of lhc
previous decision is binding. Obiter dicta. ie remarks on legal issues made in passing which were not
strictly necessary to arrive at the particular legal finding, arc not binding, hut arc at most persuasive. For
example, the court bases its judgment on rule x but states that the same result could have been achieved
by applying rule y. The reference to rule y is obiter. Sec further Du Plessis & Du Plessis 185-7.
ns Compare Scott-Macnab & Khan 122-4 regarding the possibility of decriminalising certain less
serious offences where a criminal prosecution serves no useful purpose.
179 Sec also 52-5 below regarding certain issues which may not be submitted to arbitration.
180 Sec 40 below.
18 ' Sec Appendix V for the addresses and telephone numbers of the organisations referred to in this

section.
Introduction 25

(a) the promotion of arbitration as a method for resolving disputes; 182

(b) the compilation of model rules for the conduct of arbitration proceed-
ings;1x3
( c) the making available of experienced arbitrators and the supervision of the
conduct of members when acting as arbitrators; 184 and
(d) the training of arbitrators. 18'
The Independent Mediation Service of South Africa (JMSSA) is a non-profit
organisation established in 1983 which specialises in mediations and arbitra-
tions in labour disputes, a field where there was a clear need for credible
third-party assistance to resolve disputes. IMSSA has established and trained
panels of mediators and arbitrators for appointment in labour disputes. The
organisation is based in Johannesburg, but has regional offices and panels in
Durban and Cape Town. 186 IMSSA arbitrators and mediators have established
an excellent reputation and the growing demand for their services reflects the
level of acceptance which the organisation enjoys among both labour and
management. IMSSA is now also assisting in training mediators and arbitrators
for resolving community disputes. 187
The Alternative Dispute Resolution Association of South Africa (ADRASA)
is a section 21 company 188 formed by a group of attorneys and advocates to
promote the use of alternative dispute resolution techniques in South Africa
and to train members of the legal profession as mediators and arbitrators. ]ts
membership is also open to non-lawyers. 189
The A DR Centre ( Pty) Ltd is a profe:,sional service organisation, based in
Johannesburg, which provides the physical facilities, documentation and
personnel lo resolve commercial and other disputes by using a variety of
methods, including arbitration. 1''11
Although contracts involving South African shipping interests commonly
contain .irbitration clauses, disputes arising from such contracts arc usually

'"-' To this end, the association arranges seminars. il'dures and other events in the cenln;s whne it has
branches.
'"-' The 1990 cuition of the association"s Rules for the Conduct of Arbitrations, divided into standard
procedure rules and summary procedure rules arc contained in Appendix III and arc discussed in ch 3-5
below.
18° Cl 37.4 of the JBCC (November 1992) contract vests the power to nominate arbitrators in the

chairman of the association where the arbitrator is not named in the contract. Where other forms of
contract vest the power to nominate or appoint arbitrators in another professional body involved in the
construction industry, that power is often exercised after consultation with the chairman of the
Association of Arbitrators. The Association is empowered by cl I I of its constitution to investigate any
written allegation of improper conduct by a member while acting as arbitrator.
'"' Sec cl 4 of the constitution of the association. Regarding the training of arbitrators by lhe
association, sec 78 below.
'"'' Although it docs not have a regional office there, IMSSA also lws regional panels [or the Orange
Free State and Eastern Cape.
187 Sec further Anstey 251-2; Nupcn in Benjamin 146-8.
188 That is a company established under s 21 of the Companies Act 61 or 1973, formerly designated

as 'an incorporated association not for gain·.

189 See further Sutherland 129.
1911 For specimens of documentation used by the centre for expedited and more formal arbitrations,

sec Trollip appendices C-F and H.

26 Arbitration in South Africa: Law and Practice

referred to arbitration in London to obtain the benefits of using the expert

marine arbitrators available there. In order to foster the development of
marine arbitrations in South Africa an organisation called Marine Mediation &
Arbitration Services was established in Durban during 1990.
Some of the organisations which are active in the field of international
arbitration are referred to in a subsequent chapter. 191

1.6 The challenge facing arbitration

Practical experience and a perusal of arbitration literature 192 prove that two of
the main advantages traditionally claimed for arbitration compared to
litigation, namely speed and a reduction of costs, arc often not achieved in
practice, particularly in a formal arbitration where the procedure emulates that
of the supreme court. Disillusionment with arbitration as a means of resolving
disputes is one of the factors responsible for the current interest in alternative
dispute resolution. 193 In this section we examine the reasons which led to
arbitration becoming over-formal, with a resultant increase in the time and
expense in resolving a dispute. It is clear that arbitrators and those who
professionally assist parties in arbitration proceedings cannot afford to be
complacent. We therefore briefly discuss methods of meeting the challenge
facing arbitration in retaining and extending its role in resolving disputes.
It would appear that the more complex nature of many modern commercial
disputes, the need to resolve difficult legal points because of more complex
legislation and regulations and the often large amounts in dispute have led to
a greater involvement by lawyers in commercial arbitration. 194 As arbitration
law and practice were not part of traditional law school curricula, lawyers,
when confronted with involvement in arbitration, have tended to seek refuge in
the safe haven of the Supreme Court Rules as a guide to how arbitrations
should be conducted, thereby sacrificing the flexibility of the arbitration
process. 195 It has also been argued that a new generation of businessmen,
trained with greater emphasis on making money, were more inclined to become
involved in disputes and to contest claims vigorously than their more genteel
predecessors. They were moreover prepared to use a legalistic approach in
their urge to win. 196 A decline in business ethics forced the innocent party to

191See 302-4 below.

192See eg Harris (1992) 154-5; Jones 229.
1" 3 See 8 above.
194 See Harris (1992) 156. Shilston 62 contends that the trend towards greater involvement by lawyers

in commercial arbitrations in England, leading to a more formal procedure akin to court practice,
developed after the Second World War. A perusal of Voet 4.8. I indicates that th<.: tendency to follow
court procedure apparently already existed in the classical period of Roman-Dutch law (sec also
Zimmermann 529-30).
195 See Sims 540. An English solicitor, Reynolds (1988) 86-7, compares the role of some lawyers in

arbitration proceedings to that of a mechanic, who drops a spanner, disguised as the Supreme Court
Rules, into the well-oiled machinery of arbitration, thereby bringing its operation to a grinding halt.
See, however, Gorley 341 for the view that the Supreme Court Rules provide 'the most convenient
basis' for determining the procedure to be followed in an arbitration.
196 See Harris (1992) 156-7.
Introduction 27

resort more frequently to arbitration and litigation. 197 An unscrupulous

defendant involved in arbitration will naturally tend to abuse the process to
postpone the day of reckoning. However, the horrendous costs of a formal
arbitration, conducted along the lines of the Supreme Court Rules, are
predictably causing those contesting disputes to consider the financial
implications more carefully and to ask whether the costs in money, time and
disruption of ordinary business activities justify the results. 198
The aim of arbitration should not be to find a more perfect way of reaching
the right result than litigation in the Supreme Court: a less perfect way will be
acceptable, if it is quicker and cheaper, providing that it is still likely to achieve
the right result. 199 It is, therefore, highly desirable that the procedure to be
followed during a particular arbitration should be tailor-made for the issues in
dispute, as opposed to the arbitration following some fixed pattern, with the
real issues often becoming clear just before or even during the hearing after
many months of laborious preparation. 2rn>
The main causes of avoidable inefficiency in an arbitral process based on the
rules of the Supreme Court stem from what have been called 'the three English
diseases' 201 which have also infected the South African law of procedure, based
as it is on the English adversarial model. 202 The first is the failure of pleadings
to clearly identify and define the real issues in dispute. 203 The second is the
abuse of the discovery process, 204 submerging the proceedings in a mass of
largely irrelevant documents. 205 The third is excessive emphasis on oral
presentation of evidence and argument. 206 The hearing is often unnecessarily
prolonged by presentation of evidence insufficiently relevant to the real issues
in dispute and by ineffectual cross-examination. The arbitrator is traditionally
reluctant to intervene to prevent such abuses lest his action be used as a basis
for a subsequent attempt to set aside his award. 207 A contributory factor to the
sense of frustration with the arbitral process is the failure by the parties and
their representatives, particularly during the stages preceding the hearing, to
'get to grips with the case'. The issues in dispute and matters capable of

l'l7 Sec Michel 219.

'"" Compare Harris (1992) 157.
199 See Jones 229 and compare the criteria suggested by Du Plessis (1987) 22 for evaluating arbitral
procedures, namely 'their practical efficiency in providing machinery for the prompt and reasonably
irre~ensive settlement of disputes and to do justice between the parties'.
2 See Jones 231. Shilston 46 states that '[t]he art of arbitration is geared to designing the appropriate
procedure for solving the instant problem in view·. It follows from both writers that the arbitral
procedure for resolving a particular dispute can properly be finalised only once the true issues in dispute
have been determined.
201 See Park (1984) 183.
202 See further 216 below.
203 See Park (1984) 182-3; Shilston 60, 68-70; Jones 230-1. See further 138 below.
204 For which see 142-5 below.
205 See also Reynolds (1988) 88-9.
206 See Park (1984) 182-3.
207 Compare Harris (1992) 155.
28 Arbitration in South Africa: Law and Practice

agreement could be properly investigated at an earlier stage. 208 One reason for
the absence of a sense of urgency is the lack of effective sanctions to compel
parties and their advisers to take procedural steps timeously. 21 ~J Furthermore,
although lawyers, as officers of the court, have a duty to assist the court to
ensure the proper administration of justice, the existence of this duty is not
always recognised in arbitration proceedings. As a result, lawyers sometimes
take advantage of the relative ignorance and inexperience of a lay arbitrator to
indulge in tactical ploys which they would not dream of using in court. 210
The solutions to the problems referred to above lie with legal practitioners
and arbitrators. The answers suggested here are developed in more detail in
subsequent chapters.
Lawyers, for their part, need to be more flexible:
'They should be prepared to give discovery sooner, agree the real issues in dispute,
agree as much factual evidence as possible, and give their experts early opportunity
of investigating the evidence and meeting the other side's experts on a 'without
prejudice' basis .... Surely it is not beyond the bounds of possibility in many cases
for lawyers on both sides to prepare a concise statement of their case along with the
relevant evidence. ' 211
Attorneys should be able to respond to their clients' needs in a particular
dispute imaginatively, by proposing procedures that will save time and costs but
without sacrificing a client's rights or interests or denying any principles of
justice. 212 For example, they must seriously consider the level of representation
at the hearing. Is it really necessary to brief counsel or could the attorney
appear himself? If the dispute is technical rather than legal, it may be
preferable for a member of another profession to represent the client at the
hearing, after the attorney has assisted with the preparatory work. 213
For the arbitrator's part, it is possible to maintain an impartial and neutral
stance while taking a more active role in the proceedings. Prior to the hearing
an arbitrator must exercise management and communication skills to achieve
the advantages of the flexibility of arbitration. During the hearing there is a
need to utilise procedures which combine the best elements of the adversarial
system with a more interventionist or inquisitorial role for the arbitrator. 214
Arbitrators should be continuously alive to the cost dimension and the need for

208 See Reynolds (1987) 75. Jones 231 points oul that lawyers, often because of pressure of work,

proceed through the early stages of pleadings and discovery mechanically. The investigation of the true
issues and merits is thereby postponed, and chances of an early settlement or using the flexibility of the
arbitration process to determine the most suitahle method of resolving the particular dispute arc lost.
See too Brand (1991) 8-10.
209 See Reynolds (1987) 75. Compare Supreme Court Ruic 26 which provides for barring through

failure to deliver pleadings timeously. Although the Arbitration Act s 15(2) allows an arhitration to
proceed in the absence of a party in default in certain circumstances (see 159 below), an arbitrator has
far weaker coercive powers than a judge to prevent procedural abuses (compare Mustill & Boyd 267).
210 See Shilston 64.
211 Reynolds ( 1987) 75-6.
212 See Reynolds (1988) 90.
2 D See Reynolds (1988) 90-1; Jones 229. Both writers arc solicitors practising in England.
214 Reynolds (1987) 76; Shi ls ton 51, 58-9; Jones 231; Reynolds ( 1988) 88.
Introduction 29

imagination in devising cost-effective procedures. 215 The development of

expedited forms of arbitral procedures show what can be done towards
achieving these aims. 216 These procedures, however, place greater demands on
the arbitrator. To meet them, he requires better training. 217 Ultimately,
interaction between the lawyers acting for the parties and the arbitrator is
required to utilise the flexibility of the arbitral process. 218 The arbitration must
be conducted at the level which the individual case requires and which those
involved are prepared to pay for. 21 9
Whatever the eventual results of the current movement towards alternative
dispute resolution, there arc certain disputes, which, either because of their
nature or because of the attitude of the parties, are not capable of settlement
through negotiation or mediation and require the imposed solution of a judge
or arbitrator. We can predict with some confidence that there are a number of
factors 220 which indicate that arbitration will overcome the problems referred
to above and retain its place alongside litigation as an effective and accepted
method for resolving commercial disputes. These factors are the following:
First, ADR will lead to the development of new techniques or lead to the
revival of techniques used when arbitration was less formal and legalistic.
These techniques can be applied, with or without adaptation, in more complex
arbitrations, thereby saving time and costs.
Secondly, further changes to our law of civil procedure may be anticipated, 221
and it is likely that these will have a positive impact on arbitration procedures.
The arbitration industry will not be able to justify parodying hitherto acceptable
court procedures which are now perceived as obsolescent. 222
Thirdly, the attitudes of lawyers are changing and there is a growing
realisation that they will have to give attention to making their services more
cost-effective, or risk losing clicnts. 223

2 " Sec Shilston 6(1-7, who slates tlwt the arbitrator, once he has bromlly assessed, al preliminary

meetings, the nature of the problem and the parties' respective requirements, should regard cost
containment as a central aspect of his professional function. This requires striking the right balance
between written and oral presentation.
21<, Expedited procedures arc being used successfully in labour arbitrations in South Africa (sec 35
below). Sec also the summary procedure rules of the Association of Arbitrators (in appendix III(ii) and
discussed at 139 and 201 below) and the expedited form of arbitration described in Trollip 37-8.
appendix C.
i 17 Sec Sims 540.
2 rn Compare Reynolds (I 988) 91 with regard to pre-trial conferences between the judge and lawyers

in the Official Referees' courts in England. See also 145-7 below.

219 See Michel 220.
220 See especially the factors identified hy Harris (1992) 157-8.
221 See Erasmus 645-51.
222 Compare. regarding developments in England, Hunter (1987) 337-40 concerning innovations in
the commercial court; Reynolds (1987) 75 concerning the Official Referees' court; Shilston 45. J\n
example in South Africa would be the retention in arbitration proceedings of requests for further
particulars for purposes of pleading after the abolition of this much-abused practice by an amendment
to the Supreme Court Rules in 1988.
223 See, regarding the position in England, Harris (1992) 157, Shilston 73. The seminar on ADR

organised by the Association of Law Societies and the General Council of the Bar in February 1991 and
the formation of ADRASA (sec 25 above) arc evidence of a similar trend in South Africa. Sec also
Brand (1991) 10-14.
30 Arbitration in South Africa: Law and Practice

Fourthly, clients are going to take a more active interest in the conduct of
proceedings and their cost-effectiveness. The arbitration industry must have
regard to the legitimate expectations of its users. When a disputant with no
previous experience of arbitration agrees to take a dispute to arbitration rather
than to court, it is most unlikely that he will anticipate that the procedure will
closely approximate that of the Supreme Court. 224
Fifthly, arbitrators themselves, as a result of better training and the threat of
competition from the providers of other dispute resolution services, will adopt
a more interventionist and active role, both in the stages prior to the hearing
and during the bearing itself. 225 A more interventionist approach by arbitrators
is likely to recei·1e the support of the parties.
Sixthly, training in arbitration and ADR techniques is more readily
available 226 and there is a growing body of literature on the subject.227

1.7 Arbitration in labour disputes

This section is concerned with private labour arbitration, that is arbitration
which takes place pursuant to an arbitration agreement between the parties and
outside the procedural provisions of the Labour Rela-tions Act. 228 Labour
disputes can be classified in two ways, namely with reference to the substance
of the dispute and with reference to the parties to the dispute. When classified
according to substance, the distinction is between 'disputes of right' and
'interest' disputes. Disputes of right (or 'rights disputes') are those arising from
the application or interpretation of existing laws or agreements (whether
individual or collective), for example a dispute relating to the termination of
employment or to an alleged non-compliance with agreed procedures. Interest
(or economic) disputes involve the establishment of fresh rights, for example a
higher wage, and usually arise in the context of collective bargaining. Labour
disputes classified with reference to the parties to the dispute can be divided
into individual and collective disputes. A dispute is individual if it involves a
single employee or a number of employees in their individual capacities or in
relation to their individual contracts of employment. A collective dispute
involves a number of employees collectively. Individual disputes are usually
regarded as involving the application or interpretation of existing rights (that is
disputes of right), whereas collective disputes may be disputes of right (for
224 See Harris (1992) 157-8, Jones 230; Shilston 47-8.
225 Harris (1992) 158: Reynolds (1987) 76.
22'' In addition to the training provided by some of the organisations referred to at 24-5 above, a
number of law faculties in South Africa now offer optional courses in arbitration and alternative dispute
resolution.
227 Overseas, a number of specialist journals on arbitration and international arbitration are

published. Readers are referred to the bibliography for examples of recent publications in South Africa.
228 Act 28 of 1956, as amended. See especially ss 45 and 46 regarding statutory arbitration

proceedings in terms of the Act. In terms of s 40 of the Arbitration Act 42 of 1965, the provisions of that
Act apply to an arbitration under s 45 or 46 of the Labour Relations Act except where the provisions
of the Arbitration Act are inconsistent with those of the Labour Relations Act (sec Van Kerkcn 342-3
and 67 below). For a discussion of the procedural differences between an arbitration under the Labour
Relations Act and one outside its provisions under the Arbitration Act, see Van Kerkcn 345-62.
Introduction 31

example the interpretation of a collective agreement) or interest disputes (for

example, a dispute about a demand for higher wages. Interest dispulL's arc
always collective in nature. 22 '1
The relative importance of private arbitration for the resolution of different
types of labour dispute appears from the results of a survey published in
1989. 230 Of the 263 awards considered, 250 (95 % ) were concerned with rights
disputes and thirteen (5 % ) with interest disputes. Of the rights disputes, the
overwhelming majority (206) were concerned with unfair dismissals. 231 Of the
remainder, eleven were concerned with other disciplinary matters, twelve with
retrenchment in its widest sense 232 and seven with the interpretation of
collective agreements. Seven of the thirteen interest disputes were concerned
with wage disputes. 233 The disputes covered by the survey related mainly to
individual as opposed to collective disputes. 234
Dogmatically, it can he ;1rgued that arbitration is not an appropriate method
for settling interest disputes because the dispute docs not relate to existing
contractual rights. 230 However, to the extent that the arbitrator in an interest
dispute regarding future wages determines the wage after impartially
considering the representations of the parties, he is more properly classified as
an arbitrator than a quasi-valuer. There is also no reason to question the
legality of referring an interest dispute to arbitration_rn, Although only a small

22 '' Conci/imion and arbitration procedures in labour disputes: a comparalil'e sr11d1· 5: Rycroft &

Jordaan 168-71. Disputes in practice arc not always easy lo classify in accordance with the categories
in the text above. The dispute in Veldsp,111 (Pty) Lrd ,. J\malgamarcd Clothing and 'fr.Hile Workl'rs
Union of Sowl, Africa 1990 (4) SA 98 (SE), 1992 (3) SA 880 (E) was a collective dispute and, lo the
extent that the parties had been unable to reach agreement on proposals regarding revised working
conditions ( 1992 (3) SA 880 (E) 883E), it was an interest dispute. To the extent that the award requested
by the union would impact on the existing rights of individual employees, the dispull' ;1lso, al least lo
some extent, appears to have undertones of an individual rights dispute.
2 -'" Sec O'Rq:;1n ( 1989) 557. 5<,0, 568-71.
2·" For a discussion of arbitration in unfair dismissal cases sec O'Reg;1n ( 1991) 111-12, 24.

:::!J:? ic as including retrenchments in the narrow sense and redundancies. In both case~- employees :ire
laid off hy an employer because there is no work for them to do. However, in the first case the lay-offs
arc as a result of a downturn in business activity whereas redundancy result~ in lay-off~ because of a
change in operating methods or the closure of a plant. The redundant employees therefore have little
hope of re-employment by the same employer. Sec O'Regan ( 1991) 35.
2 ·'-' ()'Regan ( 1989) 568. Of the remainder, three related to the delimitation of an appropriate

bargaining unit. one related to the hackc.Jating of wage increases, one to severance pay. one to hon uses
and one to job grading.
"" The results were therefore consistent with an IMSSA survey in 1989 relating lo 308 arbitrations of
which 86 % were concerned with individual disputes and 14 % with collective disputes.
2 ·" Sec I ;1hovc and 4(, below: Mustill &. Boyd 47. The use of economic force (cg strike action) lo

resolve a rights dispute means that there is no objective determination of that dispute on its merits.
Legal rights arc moreover worthless if they can he overridden by economic force. The economic wast;igc
and personal hardship associated with strike action have brought an increasing acceptance of third party
adjudication of disputes regarding the interpretation and application of existing rights. There is however
less willingness lo surn:ndcr the use of economic force as a means of determining future rights (ic in
rcspccl of interest disputes). Sec 'The Peacemakers I' 35.
2 ·"' Sec 52-5 below regarding nrnllcrs not subject to arbitration. Note, moreover, thats 46 of the

Labour Relations Act requires all disputes (including interest disputes) arising in 'essential services' (as
defined ins 46(1)) to be referred to arbitration if the parties to the dispute are unable to resolve it
themselves.
32 Arbitration in South Africa: Law and Practice

minority of the disputes referred to private arbitration are interest disputes,

there are indications that such arbitrations are on the increase. 237
A technique which merits consideration for an arbitration in an interest
dispute, particularly one involving wage levels, is a so-called 'final offer' or
'pendulum' arbitration. The parties agree that the arbitrator must award the
amount proposed by one of the parties and he is therefore not at liberty to
award an amount in between. This technique can encourage a negotiated
settlement because it forces the parties to be more realistic in the positions they
adopt, knowing that the arbitrator must accept the offer he considers to be
more reasonable and he cannot adopt the expedient of awarding an amount in
between. 2 ' 8 A part) to an interest dispute may specifically desire third party
adjudication of th,:t dispute because the former is unwilling to accept
responsibility for the result of a negotiated settlement towards his own
constituency. That party will then be reluctant to use a pendulum arbitration
because he is thereby effectively obliged to accept responsibility for his final
offer submitted to t:1e arbitrator, particularly if that offer is accepted by the
arbitrator for purposes of his award.
Many of the adva;1tages claimed for arbitration in preference to litigation as
a method for settling disputes 2 ' 9 are particularly applicable to arbitration in
labour disputes. First, the saving in time is important, especially in unfair
dismissal cases, where labour relations between the employer and his
employees require the dispute to he settled speedily. /\n informal ;irbitration
can dispose of the matter in a day or two, whereas delays in finalising such
matters in the industrial court 240 or in the conventional courts are notorious.
An employer could also exploit these delays, which may result in members
losing faith in their union. 241 Secondly, the parties can select an arbitrator
because of his specialised knowledge of the parties' requirements and
relationship. In the current South African situation, an arbitrator selected by
the parties is more likely to be acceptable to the union or employee as
adjudicator than a member of a state-appointed court.2 42 Thirdly, the parties,
with assistance from the arbitrator, may agree on a simplified, expedited
procedure, and may also dispense with legal representation. 243 The fourth
advantage is acceptability. Because the procedure is designed by or with the
agreement of the parties and operates with their participation at a level thq
understand, the result is often more acceptable than a judgment by the courts.

237 Sec Nupen in Benjamin 159.

238 Sec Bloch in Benjamin 123, 159.
239 See I 9-23 above.
240 See O'Regan (1993) 5-6.
241 Sec 'The Peacemakers I' 35; Mtwa in Benjamin 145.
242 See 'The Peacemakers I' 35; Mtwa in Benjamin 146; O'Rcgan (1993) 3--4. This argument

regarding adjudicator acceptability is still applicable even where the parties arc unable to agree on the
arbitrator and the appointment is made on their behalf by IMSSA, because of that organisation's
reputation as an independent body not aligned to a particular interest group.
243 See he low for a brief discussion of the forms the expedited procedure can take. The inexpensive

nature of the proceedings means that arbitration can also he usi:d to scttk minor grievances. which
would not justify the prohibitive cost of litigation.
Introduction 33

Moreover, third party adjudication can be used in appropriate circumstances

by management and union officials to resolve a dispute which they cannot
persuade their respective constituencies to settle. 244
On the other hand, arbitration is not without certain disadvantages as a
method of resolving labour disputes. The Arbitration Act applies to all types of
private arbitration, and takes no account of any specialised needs of arbitration
in labour disputes. 245 Difficulties have apparently also been experienced by
unions through employers refusing to implement awards with which they are
dissatisfied. 246 However, although arbitration and collective bargaining with
unions in general were initially greeted with reluctance and suspicion by
conservative managements, there is now a greater acceptance of arbitration in
labour disputes on the part of management, particularly because of
disillusionment with the industrial court and the reluctance to run the risk of
industrial action because of employee sympathy for a dismissed employee.
Private arbitration offers solutions to these problems. 247
One of the biggest challenges facing private labour arbitrations in South
Africa is the need to provide impartial and competent arbitrators. They carry
awesome responsibilities: there is no welfare state to support an employee
when the arbitrator finds for the employer in a dispute regarding an unfair
dismissal. The industrial relations environment in which the arbitrator must
operate is difficult and complex as a result of social and political factors. 248
Regarding the issue of impartiality, perceptions of subconscious bias are
understandable, given the background of most of the arbitrators on the IMSSA
panel. Most are white and few have a working class background. There is a
clear need for more blacks and women on the panel. However, allegations of
actual or perceived bias are not borne out by the available facts. 249 Concerning
the competence of arbitrators, IMSSA regards the training component of its
work as vitally important, both as regards providing initial training before a
person is included on the panel and in the area of ongoing training. However,
there is a need for arbitrators with specialised knowledge about particular
industries if private arbitration is to be more widely used in interest disputes.
To develop a better appreciation of the techniques of arbitration among users
or potential users, IMSSA also runs user courses for unions and employers, in
the hope that the parties can see arbitration as an in-house remedy where they
are in control of the process and feel confident to run the cases themselves. 250

244 Sec generally 'The Peacemakers J' 35-6; Mtwa in Benjamin 145-6; Nupcn in Benjamin 148.
245 See Mtwa in Benjamin 146. See further below regarding the application of the Act to labour
arbitrations.
246 See Mtwa in Benjamin 146, commenting frpm a union perspective.
247 See Pemberton in Benjamin 152, commenting from a management perspectiv<'
248 See Brand in Benjamin 136.
2·"' Sec Brand in Benjamin 137-41, 155-6; Nupcn in Benjamin 149.
2511 See Nupen in Benjamin 147, 159.
34 Arbitration in South Africa: Law and Practice

A private labour arbitration pursuant to a written arbitration agreement is

clearly subject to the Arbitration Act. 251 In some other jurisdictions labour
arbitrations fall outside the provisions of the ordinary arbitration statutes.2s 2
Our arbitration statute is a general statute, drawn up without regard to any
specific requirements of private labour arbitrations. 253 For example, unless the
arbitration agreement provides otherwise, the Act empowers an arbitrator to
order specific performance of any contract in any circumstances in which the
Supreme Court would have power to do so. 254 This implies that an arbitrator
may not order specific performance in circumstances where a court will not do
so. In rights disputes, an arbitrator may, however, wish to make an award
providing for specific performance by either the employer or employee where
the Supreme Court would not do so. 255 In interest disputes, the arbitrator's
award may create contractual rights and duties for the parties, imposing an
obligation to perform those duties. The provision of the Act is admittedly
regulatory and can be excluded in the arbitration agreement. On the wording
of the section, it is, however, more likely that the provision was intended to
allow the parties to limit or exclude the arbitrator's power to order specific
performance as opposed to authorising the parties to empower the arbitrator to
do what a court could not do. It must also be remembered that in the absence
of voluntary compliance, an arbitrator's award can only be enforced with the
sanction of the court. 256 A court is unlikely to sanction an arbitrator's award for
specific performance where a court would not order it, because the court would
thereby in effect be ordering something the court cannot do. This example is
merely intended to demonstrate that in any revision of the Arbitration Act,
special attention must be given to the requirements of private arbitration in
industrial disputes.
Because the Arbitration Act applies to private labour arbitrations, the basic
constraints regarding the procedure to be followed are the same as those
applying to other arbitrations. The powers of the arbitrator are therefore
determined by the arbitration agreement and in so far as the agreement is
silent, the arbitrator may determine the procedure, subject to the Act and the
rules of natural justice. 257 Particularly because of the need for speed in

251 Act 42 of 1965. See s 1 'arbitration agreement' and the long title to the Act; O'Regan (1989)
567n47; 'The Peacemakers VIII' 97; Van Kerkcn 339; Mtwa in Benjamin 146.
252 Regarding the position in Canada, for example, Shier 193 states that the position varies from
province to province. In some provinces the provincial arbitration statute applies, hut in others, the
lahour relations legislation specifically excludes the arbitration statute and contains its own provisions
regarding labour arbitrations.
253 It is mainly hascd on English models (sec ..\-6 above) and in English law a sharp distinction is made
between commercial arbitration and 'arbitration' in industrial disputes, which falls outside the
arbitration statutes (see Gillings 75-7; Parris 1-2).
254 Section 27 read with s 1 'court'.
255 The fact that the industrial court may be prepared to order specific performance under those
circumstances, where the Supreme Court will not do so, is apparently of no assistance to the arbitrator.
Because of the definition of 'court' in s 1 of the Arbitration Act, it is at least doubtful whether the
industrial court qualifies as a 'court' for purposes of s 27.
256 Sec the Arbitration Acts 31 and 272-3 below.
257 Sec 97-8 below.
Introduction 35
arbitrations concerning unfair dismissals and because the factual issues in
dispute are usually relatively simple, considerable success has been achieved in
developing expedited arbitral procedures for these disputes. 258 The emphasis
has been on keeping the process as informal as possible to promote party
acceptability and involvement and to reduce costs. 259
The procedural and substantive powers of the arbitrator and the issues in
dispute must be clearly defined and reduced to writing before the hearing
proper begins. This will normally be done at the initial meeting betwe.en the
arbitrator and the parties or their representatives. The parties may be able to
define the issues in the submission to arbitration but are often unable to agree
the issues or to define them accurately. To avoid the delay and expense
occasioned by an exchange of pleadings in an unfair dismissal case, it may be
appropriate for the arbitrator to assist the parties to define the issues orally by
letting each explain what he considers the issues to be. The arbitrator can then
guide the parties to an effective definition of the real issue in dispute. When an
oral agreement is reached, it must be reduced to writing and signed by the
parties. 260 It is also necessary to clarify the substantive powers of the arbitrator
in making his award. Is his role merely to decide on whether certain misconduct
occurred, or must he also decide what the consequences should be, for example
as regards the reinstatement or compensation of the employee concerned? 261
In terms of IMSSA 's standard terms of reference in unfair dismissal
arbitrations, the parties agree that 'the arbitrator will have the power to decide
upon the procedure which s/he will follow at the hearing of this matter'. 262 lf the
parties are not represented the arbitrator tends to follow an active or
inquisitorial role. Where the parties are represented, the hearing will usually
follow a more adversarial pattern. 263 The presentation of evidence will be
followed by oral argument, because delays in preparing written argument
would unnecessarily prolong the arbitration of a simple dispute. 264
When questions of procedure or the admissibility of evidence arise, labour
arbitrators tend to make their decisions confidently without explicit reference

258 Compare 139 and 201 below regarding expedited arbitrations under the Summary Procedure Rules
of the Association of Arbitrators.
259 See Nupen in Benjamin 147, 155. Regarding the arbitrator's fees, the fee scale prescribed by
IMSSA for its panelists is relatively modest compared to the professional fees usually charged by lawyers
and by professions in the construction industry. The arbitrator, however, has the advantage of knowing
that IMSSA guarantees payment of his fees, which it will recover from the parties in equal shares, unless
otherwise agreed (see Nupen in Benjamin 147, 158).
260 Signature is not required by law but is advisable to protect the arbitrator against subsequent
disputes regarding the issues he was required to decide.
261 See 'The Peacemakers III' 79, 81 and 'The Peacemakers IV' 91. The standard IMSSA terms of
reference until 1992 empowered the arbitrator to decide not only whether the dismissal was fair but also
to make any appropriate award, including reinstatement (see O'Regan (1989) 564). (Compare O'Regan
(1993) 7 regarding the latest terms of reference which require the arbitrator to consider inter a/ia what
sanction was fair in relation to the employee's conduct.)
262 See O'Regan (1989) 564.
263 See 168 and 216-18 below regarding these terms.
264 Sec 'The Peacemakers' IV VII and VIII; Pemberton in Benjamin 155.
36 Arbitration in South Africa: Law and Practice

to external sources. 265 To enable the arbitrator to deliver his award as soon as
possible after the hearing, the arbitrator relies on his own notes of the
proceedings and no tape-recording or transcript of the proceedings is usually
made. 266 In labour arbitrations, it is usual for arbitrators to give written reasons
for their awards. This has enhanced confidence in arbitration, because it has
enabled the parties to understand the principles on which arbitrators rely in
making their awards. 267
As stated above, the Arbitration Act applies to labour arbitrations. In the
few labour arbitration matters to have come before the courts, 268 the judges
concerned have not consciously sought to distinguish private labour arbitra-
tions from other forms of commercial arbitration as regards the legal principles
involved. Nevertheless, private labour arbitrations in South Africa tend to be
conducted by arbitrators specialising in that field, using procedures developed
for the specific requirements of labour arbitrations. The arbitration practice
described in the remainder of this book relates to commercial arbitration in
general, and to the construction industry in particular.

265 See O'Regan (1989) 566-7. She advocates the publication of awards (with the consent of the
parties) as a means of ensuring consistency. In unfair dismissal cases, arbitrators generally place the
burden of proof and the duty to begin adducing evidence on the employer (see O'Regan (1989) 567;
O'Regan (1991) 10).
266 See Brand in Benjamin 157. (Compare 187 below regarding s 17 of the Arbitration Act.) IMSSA
rejuires its arbitrators to deliver their award within 14 days of the conclusion of the hearing.
67 See O'Regan (1993) 6 and compare 269 below regarding the practice in other types of arbitration.
268 See cg Veldspun (Pty) Ltd v Amalgamated Clolhing and Textile Workers Union of South Africa
above; Bester v Easigas (Pty) Ltd 1993 (1) SA 30 (C).
CHAPTER 2

The Arbitration Agreement

2.1 Definition
An arbitration agreement is defined for purposes of the Arbitration Act as 'a
written agreement providing for the reference to arbitration of any existing
dispute or any future dispute relating to a matter specified in the agreement,
whether an arbitrator is named or designated therein or not' . 1
Several aspects of this definition require comment and are discussed in this
section, namely: the distinction between the agreement to refer and the
reference in terms of the agreement, the requirement of a written arbitration
agreement, the requirement of a dispute and the concept 'arbitration'. The
requirement that the dispute must relate to a matter specified in the arbitration
agreement2 and the procedure for the appointment of an arbitrator3 are dealt
with elsewhere.

2.1.1 Distinction between an agreement to refer and the reference

The term 'arbitration agreement' in the present Arbitration Act replaces the
term 'submission' 4 in the previous legislation. The change in terminology
avoids confusion between the agreement to refer a matter to arbitration and the
submission or reference 5 of a particular dispute to the arbitrator in terms of that
agreement. 6 The change in terminology also stresses the consensual basis of
arbitration. 7 Older decisions of the courts, particularly those decided under the
previous legislation, often use 'submission' as meaning the arbitration
agreement itself, which can be confusing. 8 A written submission, that is a
written statement of the matters in dispute which is drawn up by the parties and
submitted to the arbitrator, could nevertheless qualify as an arbitration
agreement for purposes of the present Act, particularly if any existing
1 Act 42 of 1965 s 1 'arbitration agreement'. The definition is substantially similar to that in the

English Arbitration Act of 1950 (14 Geo 6 c 27) s 32.

2 See 56-60 below.

-' Sec 79-85 below.

4 See eg the Arbitrations Act 29 of 1898 (Cape) s 1 of which defined a submission as 'a written

agreement to submit present or future disputes to arbitration, whether an arbitrator is named therein or
not'. The definition was substantially similar to that in the English Arbitration Act 1889 (52 & 53 Viet
C 49) S 1.
5 The term 'reference' also appears frequently in the Act, eg ss 2, 9, 10(2), 11, 12, 14, 15, 19, 20, 21,

23, 31, 32 and 33, but is not defined.

6 See Cone Textile (Pvt) Ltd v Ayres 1980 (4) SA 728 (ZA) 732B-D; McKenzie 160.
7 McKenzie 160. Compare 1 above.
8 See Walton & Vitoria 44. See too Jacobs 29 where the two concepts are not clearly distinguished.

37
38 Arbitration in South Africa: Law and Practice

arbitration agreement between the parties does not cover the dispute referred
to arbitration by means of the written statement. 9

2.1.2 Writing
The Arbitration Act applies only to a written arbitration agreement. 10 The Act
does not require the written arbitration agreement to be signed by the parties; 11
it is sufficient if they have adopted and acted on the written agreement. 12 An
oral arbitration agreement is not invalid but an oral reference to arbitration in
terms of an oral arhitration agreement 13 is regulated by the common law. 14 As
most arbitration agreements in practice, especially in respect of disputes which
are of commercial significance, are in writing, only occasional references are
made in this work to the position under the common law.
Although the Act applies only to a written arbitration agreement, the
reference or submission to arbitration in terms of that agreement is not
required by the Act to be in writing. 15 The parties can therefore expressly or
tacitly enlarge the scope of the submission during the arbitration proceedings as
long as the new matters included in the submission are still covered by the
original arbitration agreement. Where the new matters are not covered by the
original agreement and are not reduced to writing, their inclusion will amount
to an oral or tacit variation of the original arbitration agreement. Usually, if an
agreement is required by law to he in writing in order to be valid, then to
promote certainty, any substantial variation of that agreement must also be in
writing to be valid .16 However, it is submitted that this rule has no application
to the oral or tacit variation of an arbitration agreement because different
policy considerations apply. First, an oral arbitration agreement is valid and
enforceable although it falls outside the ambit of the Act. Secondly, the Act

9 See Allied Mineral Development Corporation ( Pty) Ltd v Gemsbok Vlei Kwartsiel ( Edms) Bpk 1968

(I) SA 7 (C) 15B-C.

w Secs I 'arbitration agreement' and the long title to the Act. Sec further Jacobs 25-6. An arhitral
award made outside the Republic is enforceable by a South African court under the Recognition and
Enforcement of Foreign Arbitral Awards Act 40of 1977 only if that award is made pursuant to a written
arbitration agreement (see s 3(a) and 313 below).
11 Compare the wording of the definition of 'arbitration agreement" in s 1 with that of s 23. Section
23 permits the parties to extend the time for making the award 'by any writing signed by them·. The
difference in wording reinforces the conclusion that the arbitration agreement itself is not required to be
signed to comply with the definition. The definition is clearly distinguishable from legislation requiring
a written agreement signed by the parties as a formality for the validi1y of the agreement, eg s 2(1) of
the Alienation of Land Act 68 of 1981 (see Fassler, Kamslra & Holmes v Stallion Group of Companies
(Ply) Ltd 1992 (3) SA 825 (W) 828G-H). Case law regarding such legislation therefore has no obvious
application to the requirement of writing in the statutory definition of an 'arbitration agreement'. The
requirement of writing not necessarily signed by the parties gives rise to the possibility (discussed below)
of oral or tacit acceptance by one party of a written draft presented by the other.
12 Fassler, Kams/ra & Holmes v Stallion Group of Companies (Pty) Ltd (above) at 8280-1. (On the
facts it would appear that the proceedings were a mediation rather than arbitration, although the report
is not clear on the point.)
13 See 37 above for the distinction between an arbitration agreement and the reference itself.
14 See Jacobs 6; LA WSA vol l 'Arbitration' para 454.
1~ Sec Cone Textile (Pvl) Ltd v Ayres (above) at 732E-F.
16 See eg Nee1hling v Klapper 1967 (4) SA 459 (A).
The Arbitration Agreement 39
contains certain regulatory provisions and gives the court certain powers to
facilitate arbitration proceedings 17 and it would produce an untenable situation
if part of a reference fell under the Act by virtue of a written agreement
whereas part of the reference, because of subsequent oral variations not
reduced to writing, was considered to fall outside the Act and to be subject only
to the common law.
A written arbitration agreement may be constituted by an exchange of
letters. Where a letter contains an offer to submit to arbitration, acceptance of
that offer must be unconditional and unqualified, otherwise there is no proper
acceptance and no binding agreement to go to arbitration . 18 The English courts
have traditionally given a liberal interpretation to the requirement of writing
for purposes of the arbitration legislation. In Zambia Steel & Building Supplies
Ltd v James Clark & Eaton Ltd, 19 for example, a written quotation (being an
invitation to make an offer) was sent by an English merchant to a prospective
purchaser in Zambia. The quotation contained an arbitration clause and a
contract was concluded orally in terms of the quotation. The court held that the
buyers had orally assented to the written terms and there was therefore an
agreement in writing to submit disputes to arbitration. 20 A similarly robust
attitude may be required regarding a situation frequently found in the
construction industry. A contractor invites a. subcontractor to tender on a
portion of the principal contract by merely submitting the relevant portion of
the bills of quantities and without stipulating any contractual terms. The
tenderer in turn submits his price, and the contractor accepts the tender in
writing (often using a standard form for the purpose) and stipulates that his
standard conditions of subcontract shall apply, a copy of which may be
inspected at his offices. These standard conditions contain an arbitration
clause. The subcontractor does not respond orally or in writing but proceeds to
carry out the work. Assuming that the contractor's 'acceptance' of the tender
by imposing further conditions, constitutes a counter-offer, the contractor, to
enforce the arbitration clause under the Act, would have to contend that the
tacit acceptance of written conditions incorporated by reference in a written
counter-offer constitutes an arbitration agreement in writing which is subject to
the Act.
A written agreement may give one party the option to refer a dispute to
arbitration. The written option constitutes an irrevocable offer. It is arguable in
the light of the decision in Zambia Steel & Building Supplies Ltd v James Clark
& Eaton Ltd, discussed above, that an oral acceptance of the offer may be
sufficient to constitute a written arbitration agreement. However, the
agreement containing the option may require it to be exercised in writing. 21 If

17 See 7 above and 61 below.

18 Raphaely v Stephan 1915 CPD 6 at 9.
19 [I 986] 2 Lloyd's Rep 225 (CA).
20 See further Mann ( 1987) 171.
21 See eg He/las House (Pty) Ltd v Rikki-Rand (Pzy) Ltd 1982 (4) SA 709 (C) 710F-H where the
contract required the option to be exercised by a written notice.
40 Arbitration in South Africa: Law and Practice

the option holder does not exercise the option, he cannot later demand
arbitration. 22
A written arbitration agreement, including a joint written submission by the
parties referring a dispute to arbitration, is subject to the usual rules of
interpretation applying to written contracts. Any ambiguity must be resolved
by examining the language of the contract as a whole and extrinsic evidence,
including the conduct of the parties during the hearing, 23 may be resorted to
only if linguistic treatment does not establish the true meaning with sufficient
certainty. 24
A written arbitration agreement, depending on the circumstances, may be
subject to stamp duty. 25 The termination of an arbitration agreement is dealt
with elsewhere. 26

2.1.3 Dispute
The agreement must concern the resolution of a dispute between the parties to
that agreement to qualify as an arbitration agreement. 27 Thus where the parties
have appointed two valuers to value property for purposes of an agreement of
sale or a lease and the valuers are unable to agree on their valuation, their
disagreement is not a dispute for purposes of the definition, but a method of
valuation which has failed. 28
However, there are instances where the agreement may clearly provide for
the reference of a dispute to a third party for a final decision, without the
proceedings qualifying as arbitration. In Schuldes v Compressor Valves Pension
Fund 29 the court used the following guidelines to establish whether or not the

22 See Southern Life Associarion v Bannink's Executor 1920 AD 34 at 38-9. On the facts, however,

the other party did not give the option holder an opportunity to exercise the option, he fore attempting
to resort to litigation.
2' See Allied Mineral Development Corporation (Pty) Ltd v Gemsbok Vlei Kll'artsiet (Edms) Bpk

(above) at 158; Veldspun (Pty) Ltd v Amalgamated Clothing aml Textile Workas U11io11 0JS0111h Africa
1990 (4) SA 98 (SE) 120B-C.
24 Harlin Properties (Pty) Ltd v Rush & Tomkins (SA) (Pty) Ltd 1963 (I) SA 187 (D) 193A-D:
Ve/dspun (Pty) Ltd v Amalgamated Clothing and Textile Workers Union of South Africa (above) at
119B-D.
25 Where, as is often the case, the arbitration agreement is a clause in the main agreement, the liability
for stamp duty will depend on the status of the main agreement. Eg, where an arbitration clause is
contained in a partnership agreement, the agreement will be stamped as a partnership agreement.
Where the arbitration agreement is contained in a separate document, not forming part of anoth~r
agreement, it would appear to be liable for stamp duty as 'an agreement or contract in respect of which
no other duty is specifically provided' (see the Stamp Duties Act 77 of 1968 sch 1 item 2 and compare
Davis (1966) 73). The stamp duty under item 2 is presently R2.
26 See 59 and (regarding s 3(1)) 60 below.
27 In addition to the cases in the next footnote, see Stein v 0110 1917 WLD 2 at 6; Within.shaw
Properties (Pty) Ltd v Dura Construction Co (SA) (Ply) Ltd 1989 (4) SA 1073 (A) 1079D.
28 See Heymann's Esta1e v Featherstone 1930 EDL 105 at 107; /scar Pension Fund v Balbem Holdings
(P1y) Ltd 1973 (4) SA 515 (T) 520G-H, 521D-522A.
2" 1980 (4) SA 576 (W). The case concerned the status of the proceedings referred to in the italicised
portion of the following clause: 'Any dispute which may arise in regard to claims or interpre1ations under
these rules shall be decided jointly by the employer and the society whose joint decision shall be final and
binding. If the employer and the society fail to reach agreement in any dispute ... then the matter shall
be referred to arbitration in accordance with the law then currently in force governing arbitration.'
The Arbitration Agreement 41

proceedings were intended to be arbitration:

(a) the arbitrator should not be a party to the dispute; 30
(b) the fact that the clause provided for a two-stage procedure, with only the
second stage referring to arbitration;
(c) it would be most unlikely that the parties should intend their dispute to be
resolved by two full-scale arbitration hearings;
(d) the finality of the decision is a strong but by no means conclusive indication
in favour of arbitration; and
(e) the nature of the dispute: a clause may contain indications of an intention
that a more complicated dispute should go to arbitration but for a decision
by an expert3 1 where a simple inspection will suffice. 32
The court applied the guidelines and correctly concluded that the first part of
the clause in issue did not provide for arbitration, with the result that the
court's powers under the Arbitration Act to appoint and remove arbitrators
were not available.3 3

2.1.4 Arbitration
The concept 'arbitration' is not defined for purposes of the Act. The concept
therefore bears its usual meaning. 34 Although it is sometimes not easy to
determine whether the parties intended to provide for arbitration or some
other procedure, the fact that the parties to a written agreement indicated that
the procedure should be subject to the provisions of the Arbitration Act would
normally be a conclusive indication that they intended to resort to arbitration. 35

2.2 Parties to an arbitration agreement

Since arbitration has a consensual basis, any party with contractual capacity
may enter into a binding arbitration agreement. 36 A minor cannot as a general

30 See 72 below as to when an arbitrator may have an interest in the dispute.

31 See 50-2 and 62 below for the difference between an arbitrator and a quasi-arbitrator or expert.
32 At 578H-581H. The guidelines were those laid down in Kol/berg v Cape Town Municipality 1967
(3) SA 472 (A) 480E-481G. This case has been convincingly criticised by.Duncan Wallace 821-2, which
criticism has been noted by the Appellate Division (see Universiteit van Stellenbosch v J A Louw (Edms)
Bpk 1983 (4) SA 321 (A) 337B an<l Murray & Roherts Co11structio11 (Cape) (Pty) Ud v Upi11/ito11
Municipality 1984 (I) SA 571 (A) 5828). It is submitted that this criticism relates i11ter a/ia to the court's
surprising conclusion that the engineer was not a quasi-arbitrator. It does not detract from the usefulness
of the guidelines as used in the Schuldes case to distiguish an arbitration from other types of
extra-judicial dispute resolution, including quasi-arhitration, for purposes of deciding whether or not the
Arbitration Act applies .
.u 5828 read with 578E-G. On the facts, guidelines /11/-(c) were against arbitration, whereas /d)-/e)
were of no assistance. The powers of the court are contained in ss 12(2)-(3) and 13(2).
34 See 1-3 above and 44-7 below.
3~ See eg the clause in He/las House (Pty) Ltd v Rikki-Rand (Pty) Ltd (above) 710F-H. The clause
concerned the fixing of a future rental, rather than the extent of existing rights, and although there was
a dispute as to the future rental, were it not for the express mention of arbitration under the Act, there
are other indications which would have supported the conclusion that a valuation was intended (see
generally 45-7 below).
36 LAWSA vol I 'Arbitration' para 459; Jacobs 20.
42 Arbitration in South Africa: Law and Practice

rule enter into a contract without the assistance of his guardian.37 The state may
be a party to an arbitration agreement, in which case it is bound by the
provisions of the Arbitration Act to the same extent as any other party. 38 Three
matters require more detailed comment, namely the statutory definition of a
party, companies as parties to arbitration proceedings and the effect of the
death or insolvency of a party on the arbitration agreement.

2.2.1 Statutory definition of party

For purposes of the Arbitration Act 'party' is defined in relation to an
arbitration agreement or a reference to arbitration as a party to the agreement
or reference, his successor in title or assign and a representative recognised by
law 39 of such a party, successor in title or assign. 40 Where a party is represented
by a legal practitioner in arbitration proceedings, 41 such legal practitioner is not
a representative recognised by law for purposes of the definition, because it is
not intended that the legal practitioner should become a party to the agreement
or reference. It appears that authority to agree to arbitration on a client's
behalf must be specifically conferred on an attorney: a general mandate to
negotiate with the client's adversary does not include a tacit authorisation to
agree to arbitration. 42

2.2.2 Companies as parties to arbitration proceedings

The Companies Act expressly provides that a company may agree to refer and
may refer to arbitration any existing or future difference between itself and any
other person or company. 43 Even without such a provision, there seems no
reason in principle why a company as a juristic person should not use
arbitration to settle disputes in which it becomes involved, subject to any
restrictions on the powers of the directors in the articles to enter into an
arbitration agreement on its behalf. 44 The agent entering into the agreement on

37 Edelstein v Edelstein 1952 (3) SA I (A). The restriction in the repealed colonial legislation on
arbitration without special leave of the court in matters in which minors were interested was not
repeated in the present Act (see 52n116 below).
38 Sees 39, which contains an exception in respect of an arbitration agreement between the state and
the government of a foreign country or any undertaking which is wholly owned and controlled by that
government.
39 A representative recognised by law would presumably include the guardian of a minor. He is there
instead of the minor. An agent appointed under the repealed s 311(1) of the Merchant Shipping Act 57
of 1951 undertook a statutory liability independent of his principal. When the agent was sued on account
of his undertaking, he was therefore not a 'representative recognised by law' of his principal for
purposes of exercising the rights under an arbitration agreement to which his principal was a party (sec
Freight marine Shipping Ltd v S Wainstein & Co ( Pty) Ltd l 984 (2) SA 425 ( D) 428G-430H. (Section 311
was repealed bys 5 of the Carriage of Goods by Sea Act I of 1986.) Sec also Mn20'J below.
411 Section 1 'party'.
41 See 178-9 below regarding a party's right to representation in arbitration proceedings.
42 See Inter-Continental Finance and Leasing Corporation (Pcy) Ltd v Stands 56 and 57 lndustria Ltd
1979 (3) SA 740 (W) 751G-H.
43 Sees 72(1). Section 72 re-enacts verbatim s 102 of the previous Companies Act 46 of 1926.
44 Sec Meskin 110 who submits, correctly in our view, that s 72 is subject to any restrictions in the

company's articles.
The Arbitration Agreement 43

the company's behalf must have the necessary authority. The agreement must
be in writing before it is subject to the Arbitration Act. 4s A company's articles
may provide that disputes between the company and its members in their
capacity as such and between the members inter se are to be resolved by
arbitration. 46 As the articles are deemed to be a contract between the company
and its members and between the members inter se, 41 the provision in the
articles will qualify as an arbitration agreement under the Arbitration Act.
Notwithstanding the provisions of its articles, it appears that a company cannot
refer a dispute as to whether or not an act is ultra vires to arbitration. 48
The Companies Act also provides that companies 'may delegate to the
arbitrator power to settle or determine any matter capable of being lawfully
settled or determined by the companies themselves or by their directors or other
managing body'. 49 It has been suggested that the purpose of this provision is to
enable a company which is a party to arbitration to delegate to the arbitrator its
contractual power to compromise a dispute and to bind the company to an
agreement of compromise negotiated by him.so The reference to 'settlement' in
the provision is strange, bearing in mind that it is the task of the arbitrator
finally to determine the dispute, not to negotiate a compromise, and that in
doing so he is not the agent of the party who appointed him. st The provision
does not appear to be based on English legislation,s2 so it is unlikely that in
referring to settlement the legislature had in mind what has been called a
'London arbitration', whereby each party appoints an arbitrator, who, if they
arc unable to agree on their award, appoint an umpire and then each act as
advocate of the party who appointed them before the umpire.s 3 Regarding the
determination of matters by the arbitrator, it is clear that the converse of the
provision also holds: the company cannot refer to arbitration a matter which it
cannot itself validly determine.s 4

2.2.3 Effect of death or insolvency of a party

The Arbitration Act contains two regulatory provisions dealing with the death
or insolvency of a party to an arbitration agreement, which may therefore be
overridden by a contrary provision in an arbitration agreement. Unless the
agreement otherwise provides, an arbitration agreement or any appointment of
an arbitrator or umpire under it shall not be terminated by the death or

45 See the Arbitration Act s 1 and 38-40 above.

46 See eg Hickman v Kent or Romney Marsh Sheepbreeders' Association (1915) I Ch 881.
47 See the Companies Act s 65(2).
48 See 54 below.
49 Section 72(2), emphasis added.
50 See Meskin 110.
51 See 2 above and 91 below.
52 We have been unable to find a provision corresponding to the sections referred to in n43 above in
either current or repealed English Companies Acts.
53 See Parris 93-4 and Mustill & Boyd ch 19 for this type of arbitration.
54 See 54 below regarding the non-arbitrability of ultra vires acts.
44 Arbitration in South Africa: Law and Practice

sequestration of the estate of any party to it. 55 The same applies if a party which
is a body corporate should be wound up or placed under judicial manage-
ment.56
If a party to a reference dies after a dispute has been referred to arbitration
all proceedings in connection with the reference shall be stayed, subject to any
order the court may make, until the appointment of an executor. The same
occurs, pending the appointment of a replacement, if a person who is party to
an arbitration in a representative capacity57 dies, resigns or is removed from
office. 58 Similarly, if after the dispute has been referred to arbitration the estate
of a party is sequestrated, then the proceedings will be stayed pending the
appointment of a trustee. 59 Also, if an application is made for the winding-up
or placing under judicial management of a body corporate which is a party to
the reference, the provisions of the Companies Act shall apply to the reference
as if it were civil proceedings in a court. 6° For all these purposes, a dispute is
deemed to have been referred to arbitration if any party to the dispute has
served on the other party a written notice requiring him to proceed with the
appointment of an arbitrator, or where the arbitrator is named or designated in
the agreement, requiring the dispute to be referred to the arbitrator
concerned. 61
In all these instances, any period of time fixed by or under the Arbitration
Act which is interrupted by a stay shall be extended by a period equal to the
period of such interruption. 62

2.3 Arbitration distinguished from valuation and certification

It is necessary to distinguish arbitration from valuation and certification,
because the legal consequences of an agreement providing for a valuation or
certificate differ substantially from an agreement providing for a reference to
arbitration. 63

55 Sections 4(1) and 5(1). The position under the common law is different: the death or insolvency of
a party will usually have the effect of terminating the reference (see Voet 4.8.20; Van Kerken 341).
Section 4 does not affect the operation of any rule of law by virtue of which any right of action is
extinguished by the death of any person (s 4(5)).
"' Section 5( I). The winding-up and judicial management of a body corporate arc regulated by ch
XIV and XV of the Companies Act 61 of 1973.
57 Namely an executor, administrator, curator, trustee, liquidator or judicial manager.
58 Section 4(2).
59 Section 5(2) read withs 20(b) of the Insolvency Act 24 of 1936.
6'J Arbitration Acts 5(2). In broad outline, the Companies Act provides that when a court has granted
a winding-up order (as defined ins 1), legal proceedings arc suspended pending the appointment of a
liquidator (s 359(1 )). (At any time after presentation of the application for winding-up and even before
the order is granted. the court may on application stay such legal proceedings (s 358).) A court granting
a provisional judicial management order may stay legal proceedings and prohibit further steps without
leave of the court (s 428(2)).
61 Arbitration Acts 4(3) and 5(3).
62 Sections 4(4) and 5(4).
''·' Sec generally Jacobs 9-14; LAWSA vol 1 paras 461-2. Sec also regarding the position in English
and Australian law McPherson 8.
The Arbitration Agreement 45
2.3.1 Nature of the distinction
Parties to an agreement may provide for the sale of a thing at a value to be
determined by a third party 64 or for premises to be valued by a third party for
purposes of calculating the rental payable under a lease.65 Similarly an
agreement may require a third party to issue a certificate as to the value or
quality of certain work performed by a contractor to enable him to obtain
payment from the employer. 66 The task of distinguishing provisions like these
for valuation or certification from an agreement to arbitrate is complicated by
arbitration being a broad concept, which is not easy to define preciscly.67 Three
main factors may be considered. 68
First, it has often been held that arbitration is a method for resolving disputes
whereas valuation and similar procedures are aimed at preventing disputes
from arising. 69 It has been said of this factor that it is 'neat, but unhelpful
[because in] many instances where the reference undoubtedly constitutes a
valuation, a third person is appointed to fix the value precisely because the
parties foresee that they may be unable to agree; and if in fact they do agree,
it will be the agreement, not the decision of the valuer, which prevents the
dispute arising'. 70
Secondly, in making his valuation, the valuer is not required to hear or
receive submissions from either party and may make his decision using his own
knowledge and observations. Therefore. he does not have a judicial or
quasi-judicial function. 71 This factor is, however, far from conclusive. An
arbitrator may not be required to hear evidence 72 and, for example in quality
arbitrations, may not be expected to hold any form of judicial enquiry, but may
decide the dispute using his own expert knowledge and experience. 73

,,. Sec cg Duh/in v Diner 1964 (I) SA 799 (D).

65 Total South Africa (Pty) Ltd v Bonaiti Developmeuts (l'ty) Ltd 1981 (2) SA 263 (D).
66 Sec cg Withinshaw l'ropenies (Pty) Ltd v Dura Construction Co (SA) (Pty) Ltd 1989 (4) SA 1073

(A).
67 Compare I n3 and 2n9 above.
68 See also McPherson 11-13. Another factor which has been referred to in this context, namely
finality (sec Minster Trust Ltd v Traps Tractors Ltd [ 1954] I WLR 963 at 973) is not particularly helpful,
as the decision of a valuer or certifier may be declared in the contract to be final and binding on the
parties (see cg Maceys Consolidated (Pvt) Ltd v TA Holdings Ltd 1987 (I) SA 173 (ZS) 174D, 179C-D).
69 See eg Heymann's Estate v Featherstone 1930 EDL 105 at 107-8, following In re Carus-Wilson and

Greene (1886) 18 QBD 7 at IO; Stein v 0110 1917 WLD 2 at 6; Sachs v Gillibrand 1959 (2) SA 233 (W)
235G-236B.
7" See Must ill & Boyd 47. who appear to favour the third factor discussed below as the most

satisfactory test. It is implicit in the quoted excerpt that the parties may attempt to reach agreement to
avoid the need for a valuer. If they fail to agree, there is a dispute, but the task of the valuer is still to
perform a valuation. not to resolve the dispute by deciding between the parties' respective contentions.
71 See Voet 4.8.2; Estate Milne v Donohoe lnvestme,its (Pty) Ltd 1967 (2) SA 359 (A) 373H-374A.
Furthermore, if work is to be done to the satisfaction of a named person and that person is entitled to
impose his own standards, as opposed to ensuring that standards laid down in the contract are met. then
that person is a certifier. not an arbitrator. However, where the person has to determine whether
standards laid down in the contract have been met, he could still, depending on the interpretation of the
contract, merely be a certifier. See Minster Trust Ltd v Traps Tractors Ltd above 974.
12 Stein v 0110 1917 WLD 2 at 6. See also para 5.11.1 below regarding 'documents-only' arbitrations.
73 See Mustill & Boyd 48. See also 2n9 above and 201 below.
46 Arbitration in South Africa: Law and Practice

Thirdly, the function of the arbitrator is to determine a dispute in respect of

the rights and liabilities of the parties as they exist at the moment when the
arbitration proceedings commenced, whereas the task of the valuer, certifier
and similar functionaries is the creation of new or enforceable rights. 74 Thus,
parties to a long-term commercial contract may confer on a third party ('a
referee') the power to modify their contract if subsequent to the contract being
entered into there has been a radical change of circumstances beyond the
control of the party asking for the modification, making performance
considerably more onerous for him. In these circumstances the parties do not
intend the referee to act as an arbitrator. 75 Similarly, in relation to industrial
disputes, there can be a valid provision for arbitration in respect of 'rights
disputes' but it is dogmatically unsound to speak of arbitration in respect of
'interest disputes' relating to wages payable in the future, because the
'arbitrator' is being asked to determine future rights. 76 It must be conceded that
this distinction between arbitration and valuation is not always observed in
practice. 77
In the final analysis, although the above guidelines should be of assistance,
each case must be decided on its own facts and the intention of the parties must
be established with reference to the wording of the particular agreement. There
are certainly border-line cases78 and even the use of the word 'arbitrator' is not
decisive. 79
74 See McPherson 13, citing inter a/ia AMP Society Overseas Telecommunication Commission 1972 (2)
NSWLR 806 at 809, 814. See also Mustill & Boyd 47 who conclude their criticism of the first factor
above by stating:
'We suggest that a more useful distinction can be drawn between a reference which is intended to take
place automatically, as part of the agreed mechanism for completing the substantive contract and
bringing it into effect, and one which is held in reserve as a means of working out the legal and factual
implications of an already complete agreement. Thus if goods are sold at a price to be fixed by
valuation, the agreement is incomplete until the valuation has taken place. The parties may forestall
the valuation by reaching a prior agreement; but there must, in every case, be either an agreement or
a valuation. This is not so with an arbitration agreement. The occasion for a dispute, or an agreed
settlement of a dispute may never arise; and in the absence of a dispute the arbitrator has no power
to act.'
75 See Vaughn & Shenton 74 para 10. The title of their article 'Arbitration in long-term contracts' is

therefore misleading.
76 See para 31n235 above.

n See He/las House (Pry) Ltd v Rikki-Rand (Pry) Ltd 1982 (4) SA 709 (C) 710F-H for an example
of an agreement providing for future rental to be determined by arbitration, if the parties were unable
to agree to such rental.
78 See eg Stein v Otto (above) at 4, 6, where the use of the word 'award' had a major role in the court's

decision that the architect was intended to act as an arbitrator.

79 See Sachs v Gillibrand (above) at 235E-236B where it was held that although the word 'arbitrator'

was used, the company's articles envisaged the appointment of a valuer to determine the value of the
shares,' Compare Salisbury Portland Cement Co Ltd v Edwards Timber and Lime Industries (Pvt) Ltd
1962 (2) SA 167 (SR), where the latter company had been ordered by the court in previous litigation to
sell its shares at a price mentioned in the order or at a price determined by arbitration (!69A-C).
Although the purpose of the arbitration was to determine the value of the shares, there was already a
dispute between the parties arising from alleged oppressive conduct (compare the equivalent provision
of the present South African Companies Act s 252(3)) and there was an apparent need for a judicial
enquiry to determine the value of the shares after considering the parties' evidence and representations.
This does therefore seem to have been properly a matter for arbitration, allowing the court to exercise
its powers under the relevant legislation to assist the arbitrator (see further 61 below) and not just a
The Arbitration Agreement 47
Lastly, when distinguishing a valuer or certifier from an arbitrator. it is
necessary to remember that a contract may require a person to perform an
intermediate function, where he is neither a certifier or valuer nor an
arbitrator. He may perhaps best be described as a quasi-arbitrator."' Provisions
of this nature are particularly common in contracts in the construction industry.

2.3.2 Consequences of the distinction

The main reasons making it necessary to distinguish arbitration from valuation
and ccrlilication arc the following:
First. the court has a number of statutory powers to facilitate and supervise
arbitration proceedings.Hi For example, if the parties to a dispute are unable to
agree on an arbitrator, the court may appoint one.H2 If, however, an agreement
of sale provides for the price to be determined by a valuer and the contractual
mechanism for appointing a valuer fails, then the court has no power to appoint
a valuer and the agreement of sale will be unenforceable. 83 Moreover, the
circumstances in which a court will interfere with an arbitrator's award are
defined by statute, 84 whereas the circumstances in which a court will set aside
a valuation must be determined with reference to the common law, a matter
which is discussed below. Both a valuation or certificate and an arbitrator's
award may be enforced at common law by an action based on contract.Ho
However, the court also has a statutory power to enforce an arbitrator's
award. 8"
Secondly, arbitration and valuation differ as regards the enforcement of a
party's right to require and the corresponding duty of the other party to submit
to arbitration or valuation. On the one hand, the court will not order specific
performance against either an arbitrator or a valuer to force him to proceed.87

matter of valuation. Sec. however. Jacobs 11 who adopts the opposite view. The matter in any event
depends on the wording of the court order in the previous proceedings which is not repeated verbatim
in the reported judgment.
"" See 50-2 below.
"' Sec further (11-2 below.
"' Sec the Arbitration Acts 12 and 84 below.
"" See Hewnann's Es1me 1• Fea1hers1one 1930 EDL 105 at 108-9; Gillig I' Sonnenberg 1953 (4) SJ\ 675
(Tl 679C.
"" Sec the Arbitration Act ss 32 and 33 and 285-95 below.
"' Sec regarding the enforcement of a ccrtilicalc Smit/, v M111111111 1977 (3) SJ\ 9 (W) 13 (conlirmcd on
appeal as M11111,;11 1· S111i1!, 1977 (3) SJ\ I (A) 5D-E); Wi1hi11.1·!,m,, l'ropcrlies (l'l,1'} Uri ,. J>11ra
< ·,111.,1mc1i"11 ( '11 (.\',\) (/'11·/ l.1d l'!X'! (•l) SJ\ 1073 (;\) and rq::mliug :m arliitr:itor's award Voci -1.8.23:
//"1/1111· /fri1z K11-11pcra1i,;,,,. l.1111,ll>1111w Vcr,•1•11igi11g 192.J AD 391 al 395-6; l'a.w Co11.1tn1C·fi"11 (/'1.1•} l.t,I
1· U11ofit1g (i11,m1111c,· Co (1'1, r } Lid (WLI) 18 J\u)!usl 1989 unreported (case no 122,1.l/83)) :ind
concerning an in1ernational awanl Bl'llidlli Trndi111i Co Lid v Gollws & GollWS ( Ply) Lid 1977 ( 3) SA
1020 (T) 1039. Sec further 313-16 below regarding !he enforcement of international arbitration awards.
"" Sec !he Arbilration Act s 31 and 272-3 below.
"7 As regards an arbitrator. sec Mustill & Boyd 231. who say that an arbitrator's duty to proceed with
reasonable dispatch will not be enforced by specific performance, because 'ln]othing would be less
conducive to the proper administration of justice than the conduct of a reference by a reluctant
arbitrator'. (It is nevertheless possible to apply for a declaratory order that the dispute is subject to
48 Arbitration in South Africa: Law and Practice

On the other hand, a court has a discretion, both by statute and under the
common law, not to enforce an arbitration agreement, but to resolve the
dispute itself. 88 A court has no similar power in respect of an agreement of
valuation or certification. 89
Thirdly, the remedies of an aggrieved party against an arbitrator differ from
those against a valuer or certifier. A party who considers that he is being
prejudiced by an arbitrator's misconduct may apply to court for his removal 90
or to have his award set aside. 91 The dispute is still subject to a valid arbitration
agreement, and unless both parties agree, a court setting aside the arbitrator's
award does not have the power to resolve the dispute itself.9 2 However, it is at
present at least doubtful whether he may claim damages against the arbitrator
for negligence. 93 Nevertheless, in the case of a valuation or certificate. there is
no doubt that an aggrieved party can recover damages for negligence against a
valuer 94 or certifier95 in an appropriate case as a more effective alternative to
asking the court to exercise its limited powers under the common law to set
aside the valuation or certificate. Where the party seeking to recover damages
for negligence has a contractual relationship with the valuer or certifier, it
seems that his action is contractual rather than delictuaJ. 9 r, It is at present

arbitration in terms of a valid arbitration agreement: sec Ric/11011'n Constmction Co ( Pty) Ltd\' Wit/Junk
Town Council 1983 (2) SA 409 (W) 413A: South African Transport Sen'ices ,, Wilson NO 1990 (3) SA
333 (W) 336E-343I.) Regarding a valuer sec llcy111111111',1· Estutc ,, Fmthl'r.,·ton,, (above) at 10').
88 Sec 62-7 below.

"'' llc.1•1111111n's E,·tutt' v Feuthl'ntonc' (above) at IO'i.

"" Sec the Arbitration Acts 13(2)/uJ and 105 below. Where a sole arbitrator who has entered on the
reference is removed by the court, the court may. subject to the terms of the arbitration agreement and
on application. either appoint a new arbitrator or order that the arbitration agreement shall cease to
have effect in rdation to the dispute referred (s 12(4)). The court's discretionary power ins 12(-l) to
order that the agreement should cease to have effect is narrower than the similar power under s 3(2) in
thats 12(4) is subject to the terms of the arbitration agreement. Sec 63-5 hdow for s 3(2).
'" Sec s 33 and 290-5 below.
'"Secs 33(4) and 295 below. A court terminating an arbitrator's appointment under s 13(2) could. in
an appropriate case. consider a consequential application under s 3(2) (see 63 below) for an order that
the arbitration agreement should cease to have effect in respect of the dispute. The court's power under
s 3(2) may be exercised ·at any time'.
93 Sec 100-3 below.
94 See Jacobs 12. In Pa/acath Ltd v Flanagun [1985] 2 All ER 161 (QB) 166e. the following test was
applied: 'Was [the valuer] obliged to act wholly or in part on the evidence and submissions made hy the
parties? Or was he entitled to act solely on his own expert opinion?' In the latter situation. he docs not
have a quasi-judicial function and is therefore liable to either of the parties who has hecn prejudiced hy
his negligent valuation.
95 See Hoffman v Meyer 1956 (2) SA 752 (C) 759C-D.
% See the majority judgment in Lillicrap, Wassenaar and Partners 1· Pilkini1on Brmhers 1985 (I) SA
475 (A) 501G-H where it was decided that there were no policy considaations requiring the imposition
of delictual liability on a firm of consulting engineers towards their client for the negligent breach of a
contract of professional employment in relation to the planning and construction or a factory. The
principle also applies to negligent misstatements (503G-H) and would therefore apply to a negligent
valuation or certificate fasued pursuant to a contract with the person prejudiced thereby. who is
therefore restricted to a contractual action. (The judgment of the majority excluding delictual liability
and concurrent remedies under these circumstances arguably merits reconsideration: sec the convincing
dissenting judgment of Smuts AJA at 5061-5131.) It is nevertheless submitted that No.flinun v Meyer
above is not affected by the majority judgment in the Lillicrap case. as the former decision appears to
have concerned a contractual remedy (sec 753A-E). A valuer may. however. incur delictual liability
'/11e Arbitration Agreement 49

unclear in our law whether a court which has set aside a valuation is entitled to
save the transaction from nullity by making its own determination. 97
It remains to consider in more detail the circumstances in which a court may
set aside a valuation or certificate. The matter will partly depend on the terms
of the contract requiring the valuation or certificate. Moreover, although a
valuer need not necessarily be an entirely impartial person, he is required to
exercise an honest judgment in making his valuation. A measure of personal
interest is not necessarily incompatible with this requirement. 98 The same
should apply to a certifier. 99 Where the certifier performs his task as agent for
one of the parties. the question as to whether or not his principal is bound by
the certificate must be determined in accordance with the general principles of
the law of agency. 11111 The principal is not bound if there has been fraud or
collusion between the certifier and the other party or where the agent has
exceeded his mandate. However, the principal cannot dispute the validity of a
final certificate as against the other party, merely because he alleges that the
certificate was given negligently or that the certifier exercised his discretion
wrongly.101
At present. it would appear that the grounds on which a valuation may be
attacked in South African law are somewhat wider than those relating to a
certificate. In Bekker v RSA Factors 101 it was held that if a third person is
appointed to determine a purchase price or to make a valuation, he must
exercise the judgment of a reasonable man. If he exercises his judgment in
relation to determining the price or valuation so unreasonably. improperly,
irregularly or wrongly that it would lead to a manifest injustice, then the person
prejudiced thereby is not bound by it but the determination or valuation can be

towards a person with whom he has no contractual 11<'.\'II.I' and who relics on a ncgligcnl valuation where
the valuer had a duty of care towards that person in making his valuation (sec Per/1111111 ,. /.011te11</yk 1934
CPD 151 and sec the Lillicrap case (above) at S00F-G).
97 See Lubbe & Murray 315. In Dubli11 v Diner 1964 (1) SA 799 (D) 805A-B the court left the

question open. In Gillig v So11nenherg above the court accepted that a party cannot require the court to
make a valuation where the valuer declines or is unable to act (679C). Where. however. there is a sale
at a price to he fixed by a named valuer and the court sets the valuation aside at the instance of one
party. the other party has the choice between resiling from the contract or carrying it out at a modified
price found to be the true or fair value (by the court or in some other way). He cannot. however. be
compelled to carry it out at the court's valuation. for the court would then be making a contract for the
parties (683B-F). (Sec also Total Suwh Africa (Pty) (Ltd) v Bonaiti Developments (Pty) Ltd 1981 (2) SA
263 (D) 266G-267D.) Conversely. for the same reason. it appears that the party who attacked the
valuation should also not be required to proceed at the court's valuation without his consent. The result
in both cases would be the failure of the contract. which possibly indicates the need for a restrictive
approach to the question as to when a court should set aside a valuation (see further n 104 below).
'" F:.,·tatc Mi/11<' ,. l>onolwc /,11•c.1·11111•111.1 (f'ty) (/,td/ 1%7 (2) SA 359 (A) 374/\-C. Sec 71-3 and 105
hdow regarding the greater degree of impartiality usually required from an arbitrator.
'''' Sec llof./in1111 ,. /lfrra (above) at 758C-E hut compare U11ivl'J".1itcit l'tlll Stdlmhoscl, ,, .I 1\ /.,11111·
(Ec/111.1) Bpk 1983 (4) SA 321 (A) 337E-F.
11111 Smith v Moll/011 1977 (3) SA 9 (W) 13A-B. On appeal. the judge's analysis was regarded as
'careful and helpful". but it was unnecessary for the Appellate Division to express any further views on
these aspects (sec /1.10111011 v Smith 1977 (3) SA (1) (A) 8G).
101 Smith ,, Moll/011 (above) at 13A-G: Hoffma11 v Meyer (above) at 757F-G. Sec also McKenzie
142-3. If the certificate has been issued negligently, his remedy is to sue the certifier (sec n 95 ahove).
w 1 1983 (4) SA 568 (T) 573E-F.
50 Arbitration in South Africa: Law and Practice

set aside 103 on equitable grounds. 104 Two parties who have agreed to be bound
by a valuation appear to be in a position analogous to that of a principal who
has agreed to be bound by the certificate of his agent. A consistent approach
regarding the enforcement or setting aside of a valuation or certificate
containing a bona fide but obvious error appears desirable. On the one hand,
the parties agreed to be bound by the valuation or certificate. On the other, the
good faith of a party seeking to hold the other to a demonstrably erroneous
valuation or certificate must be open to serious doubt and the question arises
whether that party should be protected by the courts. ws It is to be hoped that
the courts will clarify these issues when the occasion arises.

2.4 Arbitration and quasi-arbitration

A typical provision for a quasi-arbitrator may be found in the arbitration
clauses of both the JBCC (November 1992) contract and its predecessor, the
'white form'. 106 In essence, the arbitration clause of the JBCC (November
1992) contract provides that in the event of a dispute between the employer and
the contractor in respect of any matter arising out the contract, then that

lll.l The court used the word 'reggestcl' (rectified). In the context, the court was 1101. however.
concerned with whether or not the court had the power lo determine the correct value. if ii set the
valuation aside. (Sec further n 97 above.)
IIJ.1 Besides referring to certain old authoritcs like Voci 4.8.2. the court also rdics on Gillig 1·
Sonnenberg above and Dublin v Diner (above) al 8041·1-805A. The Du/Jlin c;1sc (al 80-IF-G) was clcarlv
influenced by an English decision of Denning U in /)can 1· Prince (I 1'15-ll I Ch -IIJ'I -l21i-7; I 1'15-ll I Ail
ER 749 (CA) 758H-759A) to the effect that a courl will interfere if the valuer's figure is so cxtrnvaganily
large or so inadequately small that the only conclusion is that he rnusl have gone wrong somewhere. The
smne judgment is referred to in the Bekker case (al 57311-57-IA). 1lowever. Dean 1• l'ri11c,· is no longer
good ·law~ In Campbell v Edwards IJ976] I All ER 785 (CA) 788C-D Lord Denning MR stated: '·111
former times (when it was thought that the valuer was not liable for negligence) the Courts used to look
for some way of upsetting a valuation which was shown to be wholly erroneous.' As to the present
position. he said: 'It is simply the law of contract. If two persons agree that the price of property should
be fixed by a valuer on whom they agree. and he gives that valuation honestly and in good faith. they
are bound by it. Even if he had made a mistake they arc still bound by it. If there were fraud or
collusion, of course, it would be different. Fraud or collusion unravels cvervthing.' (Sec also !/aher 1·
Kenwood M111wji1c111ring Co Ltd [1978] I Lloyds Rep 175.) In Macey·.1· Cv;1solhlated (Pvt) Ltd v TA
Holdings Ltd 1987 (I) SA 173 (ZS) 180D, Dumbutshena CJ preferred the modern English approach to
that in Bekker's case, but phrased the test slightly wider: 'In the absence of any allegation of fraud or
capriciousness the parties were bound by the valuation'. In support of this conclusion. the court also
took into account that the contract subject to the valuation had already been implemented and that
restoring the status quo ante would be virtually impossible (at 180E-F). Another English decision.
Burgess v Purchase & Sons (Farms) Ltd [ 1983] 2 All ER 4 (Ch) 8-11. draws a distinction between a
'speaking' (reasoned) valuation and one without reasons, holding (at I lb-c) that if the former has been
demonstrably made on a wholly erroneous basis, it may be set aside. See also Parris 76-81.
1110 Sec generally Luhbc 7-25 who argues that the fundamental principle of individual autonomy

which, in conjunction with policy considerations. underlies statements to the effect that public policy
requires the strict enforcement of contracts, needs to be balanced against the public interest in the
preservation of g.ood faith in contractual relationships.
1116 The 'white form' is the popular name for the Agreemem and Schedule of Co11ditio11s of B11ildi11g
Comract (1981/1988 ed). It has now been superseded by the .IBCC Principal Building Agreement
(November 1992) contract. The white form's arbitration clause, cl 26, has formed the arbitration
agreement in several reported decisions on arbitration (including Sera v De Wet 1974 (2) SA 645 (T);
Universileit van S1e/lenhosch v J A Lo11w (Ed111s) Bpk 1982 (3) SA 9 (C). 1'!83 (4) SA :l21 (A)) and is
reproduced in Appendix IV.
The Arbitration Agreement 51

dispute must be determined by the architectJ0 7 by giving a written decision to

both parties. This decision is binding on the parties unless either party is
dissatisfied with it and requires the dispute to go to arbitration. I0 8 It is clear that
the architect in giving his decision during the first stage of the two-stage
procedure is not an arbitrator. J09 However, especially if one bears in mind that
he may possibly only be called on to decide a dispute once he has issued his final
certificate he is clearly more than a certifier. Therefore he has an intermediate
function, that of a quasi-arbitrator. 1JO As a result, the court's statutory powers
regarding arbitrators do not apply to quasi-arbitrators, a consideration which
has sometimes been overlooked by the courts. 111 In appropriate circumstances
the problem can be avoided, if the clause for resolving disputes contains a
number of steps culminating in arbitration. by treating the clause as a whole as
one providing for arbitration. 112

107 The architect administers the execution of the building contract on the employer's behalf.
"'" See cl 37.1 (reproduced in appendix IV), which actually refers to the difference between the
employer and the contractor as a 'disagreement', until either party rejects the architect's decision on the
disagreement. whereupon the disagreement is declared a dispute (see further l 16n46 below for a
discussion of this choice of wording). Cl 26 of the white form also required a dispute between the
employer and the contractor to be referred to the architect, who then gave a written decision to the
contractor. The parties were bound by the decision unless the contractor was dissatisfied with it and
required the dispute to go to arbitration (see further n 115 below). Cl 37 also differs from cl 26 in that
cl 37 interposes an optional mediation procedure between the decision of the architect and arbitration
(see cl 37:2).
109 See especially 40-1 above regarding the guidelines applied in Sc/wides v Compressor Valves

Pension Fund 1980 (4) SA 576 (W). In Universiteit van Stellenbosch vi A Lauw (Edms) Bpk 1983 (4)
SA 321 (A) 337C-D Galgut AJA found it unnecessary to decide whether the architect in cl 26 of the
white form was 'to be regarded as a certifier or quasi-arbitrator'. By implication the judge accepted that
the architect was not an arbitrator. (The court a quo, possibly misled by first defendant's rejoinder (sec
1982 (3) SA 9 (C) 14H), incorrectly refers.to the architect as an arbitrator (see eg at 18B-F).) It is
submitted that Kol/berg v Cape Town Municipality 1967 (3) SA 472 (A), where the court concluded on
a similarly worded clause that the engineer was not a quasi-arbitrator (see at 481 H) is wrongly decided
on this point (see further 4ln32 above regarding Kol/berg's case). .
"" Hoffman v Mever above 758G-H; McKenzie 86. Compare Parris 76. 79 where the term
quasi-arbitrator is used in a wider meaning to include both a valuer and a certifier, but in relation to
older English decisions to the effect that they were not liable for negligence. (See 104 above for the
present position.)
111 See eg MM Fernandes (Pty) Ltd v Mahomed 1986 (4) SA 383 (W)which concerned an application
for the enforcement of an architect's decision under the first stage of cl 26 of the white form (at
385F-386E). Although the court was aware of the distinction between the two stages (see at 391B-F),
it nevertheless erroneously regarded the correct procedure for attacking the architect's decision to be an
application for the setting aside of an arbitrator's award under s 33 of the Arbitration Act. However, in
Schuldes v Compressor Valves Pension Fund above it was correctly decided that the court could not
exercise its power under s 13(2) of the Arbitration Act to set aside the appointment of the
decision-maker at the first stage of a two-stage procedure, because that person was not an arbitrator.
Only the second stage provided for arbitration.
"'Sec Murray & Roberts Construction (Cape) (Pty) Ltd,, Upington Municipality 1984 (I) SA 571
(A), where a clause provided a three-stage procedure for resolving disputes, culminating in arbitration.
The procedure as a whole was taken to be one of arbitration for purposes of the Prescription Act 68 of
1969 s 13(1)(/). Thus the commencement of the first stage was sufficient to subject the claim to a process
of arbitration thereby delaying the completion of prescription (see 582B-G). Similarly in Universiteit
van Stellenbosch vi A Lauw (Edms) Bpk 1983 (4) SA 321 (A) Galgut AJA regarded the anomalous and
embarrassing position in which the architect found himself, making an impartial decision at the first
stage of the process unlikely, as a factor against allowing the contractor's request for the stay of a court
action to enable the dispute to be resolved under the two-stage procedure (340D-E). (See further
52 Arbitration in South Africa: Law and Practice

At present our law appears to accept that a quasi-arbitrator is not liable for
negligence and in this respect he is in a better position than a certifier or valuer.
However, the protection of a quasi-arbitrator against liability for negligence in
our law may merit reconsideration. 113 If the traditional justification for granting
immunity to arbitrators against claims for negligence is accepted, namely that
the arbitrator performs a function analogous to that of a judge, 114 then a
quasi-arbitrator, who is expected to decide a dispute as an expert by making use
of his own knowledge and experience, may be vulnerable to a claim by a party
who has incurred loss through the former's negligent decision. 115

2.5 Matters not subject to arbitration

This section deals with two subjects. First, certain matters may not be referred
to arbitration by reason of statutory restrictions or the common law. Secondly,
in respect of matters where arbitration is permitted, one of the parties m~y
contest the validity of the arbitration agreement or contend that the dispute
falls outside its ambit.

2.5.1 Matters excluded by statute or the common law

In terms of the Arbitration Act arbitration is not permissible in respect of two
matters, namely any matrimonial cause or any matter incidental to any such
cause and any matter relating to status. 116 Thus a clause in a divorce settlement
agreement whereby any dispute concerning the exercise of the mother's access
rights to her minor son should be referred to arbitration is invalid, dealing as it

66n229 below.) This was a justifiably pragmatic approach, bearing in mind that the relevant arbitration
clause only entitled the contractor, not the employer, to require arbitration if he was dissatisfied with the
architect's decision.
tJJ In Hoffman v Meyer (above) at 756A-C the court accepted that a quasi-arbitrator is not liable for
negligence in our law because he is acting in a judicial or quasi-judicial capacity. However, certain
judges and writers in England in recent years have endeavoured to show that this reasoning is specious
(see further 101-3 below).
114 See 100-1 below.
115 Unlike cl 37 of the JBCC (November 1922) contract, "hich allows either party to reject the
architect's decision and to take the dispute to arbitration, cl 26 of the white form only allows
the contractor to require arbitration if he is dissatisfied with the architect's decision at the first stage.
The reason for this rather inequitable provision is seemingly the assumption that any bias on the part
of the architect is likely to be in favour of the employer who appointed him to administer the contract
on the employer's behalf. The employer is thus bound by the architect's decision under cl 26 unless
he is able to have it set aside under the common law (seen 104 above regarding possible grounds). If
he is unable to set aside a negligent decision which has caused him loss, the most appropriate remedy
seems a claim for negligence against the architect acting as quasi-arbitrator. See too Hoffman v Meyer
(above) at 7598 for the view that the class of persons entitled to protection against liability for
negligence should be restricted rather than extended. .
116 Sees 2 which differs materially from its colonial predecessors. For example. the Arbitrations Act
29 of 1898 (Cape) s 7 provided that certain matters could not be submillcd lo arbitration witholll special
leave of the court, namely '(a) Matters relating to status; (b) Matrimonial causes: or (c) Matters in which
minors or other persons under legal disability may be interested.' As item (c) docs not appear in the
present Act, cases like Southern Life Association ,, Ba1111i11k's Exerntor 1920 AD 34 al 45 and Estate
Setzer v Mendelso/111 1948 (3) SA 292 (C) 294-5 com:erning contractual disputes in which minors had an
interest are no longer applicable.
The Arbitration Agreement 53

does with a matter incidental to a matrimonial cause. 117 The intention of the
statute is 'to reserve jealously for the Court ... the right to determine what
was good or what was not good for a child in a matrimonial dispute, whether
the dispute was before or after the divorce' . 118 A dispute arising from divorce
proceedings relating to the proprietary rights of the spouses would also be hit
by the prohibition. The prohibition in the Act also applies to arbitration
pursuant to an oral arbitration agreement. 119
Although both the long and short titles of the Mediation in Certain Divorce
Matters Act 1211 create the impression that the legislature intended the Act to
promote mediation 121 as a method of resolving certain ancillary disputes arising
from divorce. this is not the case. In reality, the Act provides for the
appointment of a family advocate whose task it is to assist the court in
protecting the interests of the children of the marriage, rather than to promote
a settlement acceptable to the parties. Mediation, as described in the previous
chapter. may nevertheless still be used in appropriate circumstances to reach a
settlement of matters arising from pending divorce proceedings. 122
Arbitration in any matter relating to status is not only prohibited by the
Act 123 but is also prohibited by the common law. 124 'Status' is not defined in the
Act. 125 Because of the support of both the legislature and the courts for
arbitration and because of the principle of freedom of contract coupled with the
consensual basis of arbitration, it is submitted that the phrase 'any matter
relating to status' should be restrictively interpreted to minimise its limiting
effect on the use of arbitration. It is obvious that an arbitrator cannot be given
jurisdiction in an arbitration agreement to make an award which will change
the contractual capacity of a party and thereby his status. This is a matter for
the Supreme Court. 126 If the arbitrator's award would involve a finding in

117 Sec Ressel/ 1• Ressel/ 1976 (I) SA 289 (W) 291H. Du Plessis (1977) 322 suggests that this

interpretation of ·any matter incidental 10· a matrimonial cause to include access rights is too wide. It
is submitted that the decision is correct ass 2 is more widely worded than its predecessor in this respect.
Du Plessis' argument that the restrictions on arbitration in respect of minors' contractual rights no
longer apply is not convincing. Resse/l's case rests on the expansion of item (b) of the previous legislation
referred to in the previous footnote, not the deletion of item (c).
118 Ressel/,, Ressel/ (above) at 292A-B.
11 " See Pill v Pill 1991 (3) SA 863 (D) 864H-J. (The statement was obiter because evidence regarding
the alleged oral agreement was inadmissible in terms of the parol evidence rule.) Section 2 prohibits a
reference to arbitration in respect of the matters specified: the prohibition therefore includes arbitration
under the common law, and is not restricted to arbitration in terms of a written arbitration agreement
as defined in s I.
120 Act 24 of 1987.
121 For mediation sec 10-16 above.
122 See Mowatt 47 especially 53 and Burman & Rudolph 251 for a discussion of this Act. Sec also Scott
MacNab & Mowatt 313 re;arding a possible greater role for arbitration and mediation in divorce
mallcrs.
12 ·' Act 42 of 1965 s 2(b).
124 Voet 4.8.10.
125 Compares 16(c) of the Small Claims Courts Act 61 of 1984 which excludes matters 'concerning the

status of a person in respect of his mental capacity' from the jurisdiction of a small claims court.
12 '' See Hansard 16 March 1965 col 3056, where the Minister of Justice is quoted as saying: 'Waar

statusveranderinge aangegaan moet word, kan dit a Ileen deur die Hooggeregshof soos hy saamgestel is
plaasvind en nic by wysc van oorcenkoms of arbitrasic tussen die partye nie.'
54 Arbitration in South Africa: Law and Practice

respect of a matter of status which the parties could not themselves determine
by agreement, then the matter is not capable of arbitration. 127
It has been suggested that office in a voluntary association is possibly a
question of status which is not a fit subject for arbitration. 128 In Grobbelaar v
De Villiers 129 the court, without referring to s 2 or the common law, decided
that a rule of English law whereby an act ultra vires the constitution of a body
corporate was not subject to an arbitration clause in that constitution, could be
applied in our law in appropriate circumstances. On the one hand, a voluntary
association can validly lay down a procedure for the expulsion of members in
its constitution. There seems to be no reason why a member cannot agree to be
bound by an arbitration clause covering all disputes between the association
and its members including the validity of the termination of a member's
membership. This is therefore not a matter of status for purposes of the Act. 130
On the other hand, a company or other body corporate cannot by contract
validly determine whether or not an act is ultra vires, i:n that is beyond the
capacity or powers of the body corporate concerned. It follows that the
question of whether or not the act is ultra vircs is a matter of status, which
cannot be determined by arbitration. 132 However, in the case of an ultra vi res
contract by a company, the question as to whether or not the contract is ultra
vires is likely to arise only in a dispute between the company, its members and
directors. 1' '
Suhject to an exception concerning arbitration in insurance matters dealt
with below, s 2 of the Arbitration Act is currently the only limitation upon the .
permissible scope of arbitration in civil disputes 134 pertaining to private law

127 The position is similar in continental legal systems. See the Netherlands Arhitralion Act I 986 art

1020 and Goldman (1984) 267-8 regarding the position in German and Swiss law. Sec also Ottolcnghi
50 regarding s 3 of the Israeli Arbitration Law of 1968 which states that '[a]n arbitration agreement in
a matter which cannot be the subject of an agreement between the parties is invalid'.
128 Compare Re Curators of Church of Enfila11d I' Colley (1888) 9 NLR 45 at 47.
12'' 1984 (2) SA 649 (C) 656B-C, 657C.
13° Compare Re Curators of Church of England v Colley referred to above, which, it is submitted,

should no longer be followed.

131 As the constitution of a company is deemed to be a contract between the company and its

members (sec the Companies Act 61 of 1973 s 65(2)). the company can amend that contract by passing
a special resolution to extend its capacity (s 55( I)). but only in respect of acts to be performed once the
amendment takes effect.
132 Besides being in accordance with the general principle regarding status elucidated in the text

above. there is direct support for this conclusion ins 72(2) of the Companies Act (see 431149 above). The
position cannot be altered by a widely worded arbitration clause in the articles (see Mcskin 110). The
conclusion reached by the court in Grobbelaar v De Villiers above therefore appears correct, but it can
be reached by applying s 2 of our Arbitration Act and s 72(2) of our Companies Act rather than with
reference to English case law concerning special provisions of entirely different statutes.
133 If the contract is covered bys 36 of the Companies Act, in a dispute with the other contracting

party, neither the company nor the other party may rely on the fact that the contract is ultra vires. The
ultra vires doctrine still, however, applies in a dispute between the company. its members and directors
and to most corporations incorporated under other legislation (see generally regarding s 36 Cilliers &
Bcnadc 174-82).
" 4 Allied Mineral Development Corporation (l'ty) Ltd v Gems/)()k Vlei Kwartsiet I Dims) Bpk 1968 (I)
SA 7 (C) 160.
The Arbitration Agreement 55

rights. 1J 5 Under the common law, arbitration may not be used in a criminal
matter, ur, but arbitration is permissible regarding a civil claim for damages
arising from a criminal act. 137 Arbitration is permitted although the only matter
in dispute is a question of law or an allegation of fraud pertaining to a civil
claim. Both these factors, whether singly or in combination, are, however,
relevant to the court's discretion not to allow a particular dispute to be referred
to arbitration. u 8 It has been said that matters arising out of an illegal contract
may not be referred to arbitration. 139 We submit that the better view is that a
question as to whether or not a contract is void for illegality may be submitted
to arbitration, provided that there is a valid arbitration agreement which is
sufficiently wide to cover the submission. 140 However, if the arbitrator makes
an award which would have the effect of enforcing an illegal contract or which
offends against public policy, the court will set it aside or refuse to enforce it. 141
'But if he makes an award giving effect, even wrongly, to a defence of illegality,
the award is within his jurisdiction and a complete answer to a fresh claim on
the same facts.' 142
The use of arbitration in disputes pertaining to insurance policies is restricted
by the Insurance Act. i 4 J Notwithstanding any contrary provision of the policy
or an agreement relating thereto, the owner of a domestic policy is entitled to
enforce his rights against the insurer in a court of competent jurisdiction in the
Republic. 144 There is, however, an important proviso, namely that the policy
'may validly provide that the amount of any liability under the policy shall be
determined by arbitration in the Republic if the insurer demands that the said
amount be so determined' . 145
There are sound policy reasons for restricting the use of arbitration in
insurance matters. One of the usual advantages of arbitration as opposed to
litigation is privacy or the absence of publicity . 146 However, arbitration out of

m Du Plessis (1977) 323-4. citing Rober/ Meneely v Joseph Baynes (1884) 5 NLR 65. states that
disputes regarding public rights (eg relating to a public road) are not arbitrable. because it would be
contrary to public policy (compare Voct 4.8. IO). An additional reason is that all the persons affected by
the arbitrator"s award would not be parties to the arbitration agreement.
1-'" An express provision in this regard also appeared in the repealed colonial legislation; see eg the
Arbitrations Act 29 of 1898 (Cape) s 7.
'-" Voet 4.8.10; /lalsbury·s Laws of England vol 2 par 603. II has been suggested that mediation anu
arbitration could be used to reduce the load on the criminal courts in certain minor criminal matters (see
Scott Macnab & Khan 103-28).
138 See 65-6 be low.
l-'9 See LA WSA vol I 'Arbitration' para 457; Veldspun (Ply) Lid v Amalgamaled Cloi/1i11g and Tex1ile
Workers Union of Sowh Africa 1992 (3) SA 880 (E) 898G.
1411 Allied Mi11C'ral D<'1•dopm,•n1 Corpora/ion (Ply) Lid v Gemshok Vlei Kwartsiet (Edms) Bpk (above)

at 161-1-17A; Mustill & Boyd 150; compare Veldsp1111 (Pty) Lid v Amalgama1ed C/01hi11g and Textile
Workers Union of Sowl, Africa (above) at 8951-I-8981-1. Sec also 66 below.
141 Mustill & Boyd 150; Veldspun (Ply) Lid v Amalgamated Clolhing and Textile Workers Union of

S0111'1 Africa (above) at 898D-899A.

1· " Mustill & Boyd 150.
1·" Act 27 of 1943.
1•14 Section 63( I), which also provides that South African law shall apply to any qucslion of law arising

from the policy.

145 Section 63( l).
146 See 21 above.
56 Arbitration in South Africa: Law and Practice

court, away from the glare of publicity, may be abused by insurers through a
greater tendency to rely on technical defences to defeat claims. 147 The statutory
restriction on the use of arbitration in respect of the merits of an insurance
claim is therefore justified. However, the interpretation of the restriction.
particularly the proviso, gives rise to several problems. First, it appears that an
arbitration agreement will only be covered by the proviso if it is contained in
the policy and not in a separate agreement, even if it was entered into after the
dispute had arisen. 148 The second problem can be illustrated by an arbitration
clause in the policy which provides that all disputes arising from the policy (that
is including disputes on the merits of the claim) arc to be referred to
arbitration. There are two possible ways of dealing with this clause in respect
of a dispute relating to quantum. Ily stressing the word ·valid' in the proviso it
is possible to argue that the whole clause is invalid because it is inseverable. 149
The better interpretation assumes that the legislature did not intend to deprive
the insured of his common law right to have a dispute with his insurer settled
by arbitration, if he so desires. 150 The statute merely restricts the insurer's
ability to compel arbitration (subject to the exception in the proviso), but the
insured is entitled to arbitrate if he so wishes. I5I Thirdly, if the insured institutes
proceedings before the insurer has exercised his right under the proviso to
demand arbitration, then the latter will not be able to obtain a stay I52 to enable
arbitration to take place: a prior demand is a prerequisite to obtaining a stay.15 1

2.5.2 Matters outside the ambit of the arbitration agreement

A party to a dispute endeavouring to refer the matter to arbitration will have
to show first that there is a valid arbitration agreement and secondly that the
dispute falls within the ambit of that agreement. Problems arc especially likely
to arise in respect of either or both of these issues where the arbitration
agreement consists of a clause in a main contract, 154 which contract is alleged
either to be void ab initio or to be voidable or to have been terminated because
of events occurring subsequent to it being entered into. The situation has been

w See Van Niekerk (1989) 364.

148 Van Nickerk (1989) 361.
14 '' See Gordon & Getz 298-9. This interpretation is referred to in Ex parlc Loudon NO: 111 re J),-w-_\'

Co11slruc1io11 (P1_v) Lid v Incorporated General lnrnrances Lid 1981 (3) SA 1001 (D) 10051-1. but no
comment is made as to its correctness.
15 " See Van Niekerk (1989) 361, citing Davies 1· S0111'1 Brilish /11s11ra11ce Co (1885) 3 SC 416 at 421-2

and Kortessis v Prude111ial Assura11ce Co Lid 1970 (3) SA 295 (RA) 300-1.
151 Van Nickerk (1989) 362.
151 See 63-4 below regarding a stay of court proceedings to enable the dispute to gn to arbitration.

'-'-' Sec Pretorius v Santam Versekeri11gsmamskappy Bpk 1962 (I) SA 19 (T) and Van Nickerk ( 1989)
362-3. Sec also Sall/am Jnrnrance Lid v Cave 1/a The E111erwi11ers and The Record Box 1986 (2) SA 48
(A), which turned on the wording of the policy.
154 In this section the expression 'main contract' is used to describe a contract between parties (eg a

lease or building contract) which contains an arhitration clause as a subordinate part of that contract. as
opposcu to a separate arbitration agreement, not forming part of another contract. which agreement
would usually only be entered into once the dispute had arisen.
 The Arbitration Agreement 57

aggravated by the indiscreet use of words like repudiation . 155 However, a

detailed discussion of this subject is beyond the scope of this work.'"'
If one of the parties alleges that the main contract was void ab initio. for
example because there was no consensus, the dispute as to the validity of the
main contract and hence the arbitration clause must normally 157 first be
determined by the court. 158 If the court finds that the agreement is valid, then
the remaining matters in dispute should be referred to arbitration, unless there
are other factors present which would justify the court in exercising its
discretion to decide these disputes itself. 159 The arbitration clause could,
·, however, be sufficiently widely worded to confer the power upon the arbitrator
to determine the validity of the main contract, 160 or this power could be
conferred upon him by a subsequent agreement entered into after the dispute
arose. 161 A party wishing to contest the validity of the arbitration agreement is

155 Sec cg Lord Shaw in Johlln11eslwrg Municipal Council v D Stewart & Co (1902) Ltd 1909 SC 53

(HL) 56: 'It docs not appear to me to be sound law to permit a person to repudiate a contract and
thereupon specifically to found upon [the arbitration clause] in that contract which he has thus
repudiated.' This statement was rejected in Heyman v Darwins Ltd below. where the various meanings
of 'repudiate' were also clarified. Sec n 166 below as to the correct meaning of repudiation.
15 " See generally Jacobs 39-47; Du Plessis (1977) 338-47; Du Plessis (1978) 3-8; Van Niekcrk (1989)

352-6 and regarding the position in English law Must ill & Boyd 105-21; Samuel 95-109; Svcrnliiv
115-21.
157 In Allied Mineral Development Corporation (Pty) Ltd,, Gemsbok Vlei Kwartsiet ( Edms/ Bpk Jl/68

(I) SA 7 (C) 13A-C. the court doubted whether it is sound to say that the mere allegation that the main
contract is void is sufficient to deprive the arbitrator of his jurisdiction. However. should the arbitration
proceed. it could lead to an anomalous situation because if the arbitrator were to find that the main
agreement containing the arbitration clause was void. he would in effect decide that the arbitration
clause and hence his own jurisdiction never existed (at 13C-D).
158 See Metallurgical and Commercial Consulta111s (Pty) Ltd v Metal Sales Co (Pty) Ltd 1971 (2) SA

388 (W) 389H-390A. where one party alleged that the main contract was a mere pretence and was not
intended to have any legal efficacy; Heyman v Darwins Ltd [1942] AC 357 at 37f [1942] I All ER 337
(HL) 350, cited with approval in Scriven Bros v Rhodesian Hides & ProduceGLtd 1943 AD 393 at
400-1.
159 Sec 65-6 below.
1" 0 Sec e g Van Niekerk (I 989) 354. with reference to a clause providing for the arbitration of all

disputes including one regarding the existence or validity of the main contract. By such wording. the
parties clearly intend the clause to have an existence separate from the main contract. Although Mustill
& Boyd 110 regard the efficacy of such clause as an open question. it was stated in Paul Smith Ltd v
H & S International Holding Inc [1991] 2 Lloyd's Rep 127 (QB Com Ct) 130-1 that the recognition of
this clause would be a logical and sensible step which an English court may be prepared to take when
the need arises. The principle of the separability of the arbitration clause from a void agreement. except
in the case of initial illegality. with the resulting validity of the arbitration clause was also affirmed obiter
in another recent English judgment, namely Harbour Assurance Co (UK) Ltd v Kansa General
International Insurance Co Ltd [1992] I Lloyd's Rep 81 (QB Com Ct) 93, 95. (See further Svcrnl6v
115~2 I.) There appears to be no objection in principle to our courts following a similar approach. In the
Allied Mineral Development case (above) at 14E a dispute as to the validity of the main agreement was.
however. held to fall outside the wording of the arbitration clause, making it unnecessary to decide the
point. At 13G and 14E 'submission' is apparently used in the sense of disputes made subject to
arbitration in terms of the clause. as opposed to a reference or submission to an arbitrator in terms of
the clause.
1"' Sec the Alli<'d Mi11C'ral Dc1•elo1m1<·11t case (above) at 14H-15A. In \leldsJJIIII (/'ty/ Ud ,,
Amlllgamated Clothing and Textile Workers Union of South Africa 1990 (4) SA 98 (SE) 10113-F. the
parties in an agreement subsequent to the arbitration clause in a recognition agreement expressly
required the arbitrator to determine the arbitrability of the introduction of a closed shop. The argument
that they thereby widened his jurisdiction in terms of the clause in the recognition agreement was held
58 Arbitration in South Africa: Law and Practice

entitled to obtain an interdict to stop the allegedly invalid arbitration from

proceeding. 162 An issue may fall within the terms of a valid arbitration
agreement, but a dispute may arise as to whether or not that issue has been
referred to arbitration. There is no difficulty in conferring the power to
determine this dispute on the arbitrator by an appropriately worded arbitration
clause, because if he holds that the dispute has not been referred, he is not
denying his power to make any adjudication at all. 16'
If it is alleged that the main contract is voidable, for example because of a
misrepresentation, the dispute as to the alleged misrepresentation will be
covered by an appropriately worded arbitration clause . 164 Dogmatically, the
effect of an arbitrator's decision that there was misrepresentation is to set aside
a valid contract with retrospective effect, thereby destroying the arbitration
clause and the source of his own authority. Therefore the wording of the clause
must be sufficiently wide to cover such disputes and to indicate an intention that
the clause should have a separate existence. 165
A dispute as to whether a party may rescind the main contract as a
consequence of the other party's repudiation 166 and claim damages will usually
be covered by a typically worded arbitration clause. 167 The effect of rescission
is to terminate the contract as regards future performance but it will not affect

to be not without merit (at 107D-G). (The correctness.of this conclusion is not affected by the judgment
on appeal 1992 (3) SA 880 (E). where the majority held the arbitrator's award to be void for illegality
and not because the arbitrator had exceeded his jurisdiction by going outside the reference.)
162 See Jnrer-Continental Finance and Leasing Corporation (Pry) Ltd v S1ands 56 and 57 l11dus1ria Lui

1979 (3) SA 740 (W) 752H-754C, which convincingly rejected an earlier decision of Hi// 1• Bairstow 1915
WLD 135. .
163 See Mustiil & Boyd I 15.
164 See Heyman v Darwins Ltd (above) at 378 which was quoted with apparent approval in Van

Heerden v Sentrale Kunsmis Korporasie (Edms! Bpk 1973 (!) SA 17 (A) 30B-1-1. The Appellate
Division (at 30H) expressly rejected the decision of !he court " quo (Sen1ra/e Kunsmis Korporasie
( Edms) Bpk v Van Heerden 1972 (2) SA 729 (W) 733A) to the effect that a dispute as to whether or not
the contract is voidable, as having been induced by misrepresentation. is covered by an arbitr.,tion
clause only if it specifically says so. It was, however, unnecessary for the Appellate Division to decide
whether the word 'termination' in the clause was wide enough to cover such situation, because the
representation had been made a term of the contract. The dispute therefore concerned an alleged
breach of contract and fell within the clause as being a 'matter provided for in or arising directly out of
this agreement' (at 28H-29A, 31A-C). See further Du Plessis (1978) 7 regarding this decision.
165 ·[l]t would be a question of construction whether the collateral arbitration clause could be treated

as severable and could be invoked for settling such a dispute' (Hey111ll11 ,, Dan,·ins Ltcl (above) at 378
per Lord Wright).
1"" That is conduct which fairly interpreted exhibits a deliberate and unequivocal intention no longer

to be bound by the contract (sec S1reet 1• Dublin 1961 (2) SA (4) (W) 10: Lubbe & Murray 476). Thi,
is the most common and correct use of repudiation in the law of contract (compare n 155 above).
1" 7 Scriven Bros v Rhodesian Hides & Produce Co Lui 19-13 AD 393 at 401: Sera 1· De Wer 197-1 (2)

SA 645 (T) 648D-E. In the former case Tindall JA held: 'fl is true that a repudiation of a contract by
one party may relieve the other party of the obligation to carry out the other terms of the contract after
the date of the repudiation, but the repudiation docs not destroy the efficacy of the arbitration clause.
The real object of the clause is to provide suitable machinery for the settlement of disputes arising out
of or in relation to the contract, and as that is its object it is reasonable to infer that both parties ..
intended that the clause should operate even after the performance of the contract is al an end.· Sec ahu
//,•1·111//11 1· /)"1wi11s J.ul (above) al 37'!: 1\11aiclgcTitlc· '/'011·11 ( ·"1111d/ 1· l.irnnos //" l.imnos /lm1l1,-rs
Elc;c1rica/ 1992 (!) SA 296 (A) 305B-I.
The Arbitration Agreement 59

the application of the arbitration clause to the already existing consequences of

the contract.
If the parties to the main contract decide to cancel it by means of a
subsequent agreement, the effect of the subsequent agreement on an
arbitration clause in the main contract will depend on the particular
circumstances. If the effect of the subsequent agreement is to bring the main
contract to an end and to treat it as if it never existed, the arbitration clause will
perish with the main contract. 168 If the effect of the subsequent agreement was
not to treat the main contract as if it never existed, but merely to provide for
its premature termination and to define some of the obligations of the parties
as a result of the termination, disputes in regard to or as a result of the
termination of the main contract may still fall to be determined by its
arbitration clause. 169 However, if the validity of the subsequent agreement is in
dispute, putting in issue whether the main contract and the arbitration clause
were ever validly terminated, such dispute will have to be resolved by the
couri.110
Where the validity of the main contract and thereby the validity of the
arhitration clause and the arbitrator's authority have been put in issue, it has
been stated by Mustill & Boyd that although the arbitrator 'can and often
should consider and rule upon [that aspect of the dispute], his ruling does not
bind the parties, and may always be reopened by the Court'. 171 It is tentatively
suggested that this comment could apply to a situation where the arbitrator is
of the view, after due consideration of the parties' respective contentions, that
the one party's objection as to the validity of the clause and the arbitrator's
authority is without foundation and has been made with a view to delay. Under
those circumstances the arbitrator could perhaps decide to proceed and leave it
to the objector to obtain an interdict to stop the arbitration proceedings. 172 If
the objector does not do so hut decides to participate in the arbitration
proceedings, he should make it clear that he docs so under protest and under
reservation of his rights to pursue the objection after the award, otherwise he
may be taken to have consented to the arbitrator's jurisdiction or to have
waived or abandoned his right to object. 173

168 See Heyman v Darwins Ltd (above) at 371; Turkstra v Massyn 1958 (1) SA 623 (T) 625G-H;

Aueridgeville Town Council v Livanos t/a Livww.1· Brothers Electrical (above) at 304F-I.
169 Gardens Hotel (Pty) Ltd v Somadel Investments (Pty) Ltd 1981 (3) SA 911 (W) 916G-917B; GK

Breed (Bethlehem) (Edms) Bpk v Martin Harris & Seuns (OVS) (Edms) Bpk 1984 (2) SA 66 (0) 68D-F.
170 Turkstra v Massyn (above) at 625H-626A. Compare GK Breed (Bethlehem) (Edms) Bpk v Martin

Harris & Seuns (OVS) (Edms) Bpk (above) at 68F-H which concerned a more widely worded
arbitration clause in a situation where it was not contended by either party that the alleged cancellation
agreement put an end to the original contract (including the arbitration clause) retrospectively.
171 See Mustin & Boyd 108-9.
172 Compare Orange Free State Provincial Administration v Ahier 1991 (2) SA 608 (W). See further

n 162 above regarding the power of the court to interdict arbitration proceedings.
173 See further 176-7 below.
60 Arbitration in South Africa: Law and Practice

There is no reason in principle why a claim for rectification of a contract

should not be referred to arbitration: 174 the claim does not seek to attack the
validity of the contract but seeks to ensure that the contract accurately
reproduces the true agreement between the parties. 175 It is a matter of
interpretation as to whether an arbitration clause in the main contract is
sufficiently wide to cover a dispute relating to the rectification of that
contract. 176
If an employer should bring both contractual and delictual claims against the
contractor, it has been held that the delictual claim could be covered by an
arbitration clause in the main contract if there is a sufficiently close connection
between the claim and the dispute. 177

2.6 The binding effect of an arbitration agreement

2.6.1 Cancellation of the agreement by consent
It follows from the consensual nature of arbitration that unless an arbitration
agreement otherwise provides, the agreement may in principle be terminated
only with the consent of all the parties to it. 178 They may, however, provide in
the agreement for it to be terminated in some other way. 179 Where the parties
to a contract containing an arbitration clause agree to terminate that contract
prematurely, it is a matter of interpretation as to whether they intended the
arbitration clause to continue to apply to disputes arising out of that contract,
notwithstanding its termination. 180

174 Sec Clark v African Guarantee and Indemnity Co Ltd 1915 CPD 68 at 76-7, where the arbitration

agreement providing for the submission to arbitration of a claim for rectification of the main contract
was in a separate arbitration agreement drawn up once the dispute had arisen.
175 Mustill & Boyd ll4-15.
176 See Kathmer Investments (Pty) Ltd v Woolworths (Pty) Ltd 1970 (2) SA 498 (A) 501E-504D,

where it was held that a dispute regarding a claim for rectification was a dispute ·,irising out of or
concerning this agreement', the agreement which the parties had in mind being their true agreement (at
503G-H). In JC Dunbar & Sons (Pty) Ltd v El/good Properties (Pty) Ltd 1975 (4) SA 455 (W) 4601-1.
it was apparently common cause that the arbitrator's powers under cl 26 of the white form were wide
enough to include rectification of the contract in an appropriate case.
177 See Universiteit van Stellenbosch v J A Lauw (Edms) Bpk 1982 (3) SA 9 (C) 15E-G. (The

correctness of this conclusion was left open on appeal; see 1983 (4) SA 321 (A) 333C-D.) On the facts
the court a quo was in any event of the view that the claim based on negligence was in reality contractual
(at 15H-!6A). It is also unlikely that a delictual claim by the employer against the contractor would be
recognised as a result of Lil/icrap, Wassenaar and Par1ners v Pilkington Brothers (SA J (l'ty) Ltd 1985 (I)
SA 475 (A); see 48n96 above.
178 See the Arbitration Act 42 of i 965 s 3( 1) and Gardens Hotel ( Pty) Ltd v Somadel Investmems ( Pty)

Ltd 1981 (3) SA 911 (W) 916A and 917B; South African Transport Services v Wilson NO 1990 (3) SA
333 (W) 340G-I. See, however, the text below regarding the power of the court to prevent the
agreement from taking effect.
179 Section 3(1); LAWSA vol I 'Arbitration' para 464.
1" 11 Sec the Gardcns Hotel (Pty) Ltd case (above) at 916A-918C. For the effect of repudiation of a
contract on an arbitration clause contained in it, see 58-9 above.
The Arbitration Agreement 61

2.6.2 Effect of the agreement on the jurisdiction of the courts 181

Although the parties to an arbitration agreement intend their dispute to be
settled outside the courts, 182 the effect of the agreement is ·not to exclude the
jurisdiction of the courts in respect of that dispute. 183 The role of the courts in
arbitration is such that it has even been said that the law of arbitration is
primarily concerned with the relationship between the courts and the arbitral
process. 184 To this extent the law of arbitration is procedural in content.
However, this is not the full picture. The law of arbitration is also concerned
with the rights, powers, duties and relationships flowing from the arbitration
agreement and its second component is thus an application of the law of
contract. 185 The procedural and contractual components also interact: the
courts must decide to what extent they are prepared to enforce contractual
provisions of an arbitration agreement or an award pursuant to that
agreement. 186
The parties are obliged in terms of their arbitration agreement to refer the
dispute to arbitration. The powers of the court in relation to that arbitration
may be classified either with reference to the nature of the relief sought or with
reference to the stage of the arbitral process when the powers may be invoked
and exerciscd. 187 When classified with reference to the nature of the relief
sought, the statutory powers of the court can be classified as powers of
assistance, 188 supervisory powers 189 and powers of recognition and enforce-
ment. J<>o In addition to its statutory powers, a court has various powers under
the common law in relation to arbitration proceedings. In appropriate
circumstances, it may grant a declaratory order 191 and it may also grant an
interdict to prevent an arbitration from proceeding, until the court can

181 The Arbitration Acts I defines 'court' for purposes of the Act as any court of a provincial or local

division of the Supreme Court havin)!. jurisdiction. However. s 16(1)(b/ confers jurisdiction on the clerk
of the magistrate's court having jurisdiction in the area where the arbitration proceedings arc hdd to
issue subpoenas to compel the attendance of witnesses (sec 181 below).
1"" Sec 2 above.

,x., Sec generally rcgardin)!. the effect of an arbitration dausc on lhe court's jurisdiction /'11rekh ,, Shah
Jel1t111 Cinemas (/'ty) Ltd 1980 (I) SA 301 (D) 305F-ll: lntercv11ti11ental Export Company / l'ty) l.ttl v
MV Vien /)a11ielse11 1982 (3) SA 534 (N) 539F-54011; Co11ress (Pty) Ltd,, Gallic Co11.1·1mctio11 (/'ty) l.ttl
1981 (3) SA 73 (W) 75H-76A.
184 See Mustill & Boyd 3. 154: Kerr (1984) 4.

'" 5 Compare Mustill & Boyd 5: Kerr (1984) 4.

186 eg an arbitration clause in an allegedly void contract which purports to give the arbitrator

jurisdiction to determine the validity of the main contract (see 57n160 above). or an arbitration
agreement which empowers the arbitrator to act as amiable compositeur (see 253-5 below).
187 Sec Kerr (1 1)84) 5 who distin)!.uishes between the sta)!.C of getting the process under way. the singe

of intervening while the arbitration is proceeding and the stage of giving or declining to give effect to its
outcome.
1"" Sec cg ss 8. 23 and 38 regarding the court's power to extend certain time limits. s 12 regarding the
court's power to appoint an arbitrator or umpire. s 20 regarding the court's power to give an opinion on
a point of law and s 21 regarding general powers of the court.
189 Sec cg s 13 regarding the removal of an arbitrator by the court and ss 32 and 33 regarding the

court's powers to remit or set aside an arbitrator's award.

1'" 1 Secs 6 regarding its power to enforce the arbitration agreement ands 31 regarding its power to

enforce the award. Compare Kerr (1984) 5; Bernstein 14-15.

" 11 Sec South African Transport Services v Wilson NO 1990 (3) SA 333 (W).
62 Arbitration in South Africa: Law and Practice

determine the validity of those proceedings. 192 The court also has a
common-law power to stay a court action where the dispute is covered by a
valid arbitration agreement. 193 In exceptional circumstances the court may
intervene to review a procedural ruling by the arbitrator while the arbitration
is still in progress. 194 It would be wrong to conclude from the above survey of
the court's powers that South African courts follow an excessively interven-
tionist approach. The former rule of English law whereby a court could
intervene to set aside an award by reason of an error on the face of that award
was never part of South African law . 195 Our courts have also, on the whole,
exercised their powers to prevent a dispute going to arbitration in terms of a
valid arbitration agreement and to set aside an arbitrator"s award with
commendable circumspection. 196
Parties who consider the powers of the court in respect of arbitration
proceedings to be too intrusive, partly because of the delays and additional
costs which court applications may entail, may seek to exclude these powers by
providing that the person appointed in their agreement to resolve disputes
should 'act as an expert and not as an arbitrator'. It is submitted that a
contractual provision which goes further by purporting to exclude the
jurisdiction of the courts in respect of a dispute altogether would be void as
being contrary to public policy.
Where a person is appointed as an expert and not as an arbitrator to resolve
a dispute, unless the agreement provides otherwise, he is not required to
receive evidence and submissions and he may arrive at a decision solely on the
basis of his own expertise and investigations. 1<n Where the expert is not in any
way limited or fettered by submissions from the parties and can rely on his own
judgment and opinion, there is no basis for conferring immunity against a claim
for negligence in giving his independent expert view, 198 unless such liability is
excluded in the agreement appointing him. Where he receives only limited
submissions from the parties and they are not legally represented, a decision by
an expert should be quicker and less expensive than arbitration. On the other
hand, the investigation of the dispute could be less thorough and the expert\
procedural powers less clearly defined and understood. The court's powers of
assistance in arbitration will not be available and the court's powers to
intervene are less clearly defined. 1'19

2.6.3 Discretionary power of court to prevent arbitration

Even if a dispute is covered by a valid arbitration agreement, its submission to

192 See /111er-Con1ine111a/ Finance and Leasing Corporation (Pry) Lid v Stands 56 1111d 57 lnduslria Ltd

1979 (3) SA 740 (W) 752H-754C.

193 See 63 below.
194 Sec Tuesday lnduslries (Ply) Lid v Condor Industries (Pty) Ltd 1978 (4) SA 379 (T).
195 See 293 below.

'"" Sec 64-7 and 290-5 below.

197 Bernstein 11.
'''" Sec Pa/aca1h Lid v Flanagan [1985] 2 All ER 161 (QB) 164a-b. 1661'-h.
''''' Compare 47-52 above .ind sec further Bernstein 11- IJ.
The Arbitration Agreement 63

arbitration is not an absolute requirement. The court may intervene under

certain circumstances to prevent arbitration taking place. A party to the
arbitration agreement may prefer to have the dispute determined by the court.
He may consider several options in an attempt to give effect to his preference.
First. he could attempt to negotiate the termination of the arbitration
agreement. 200 Secondly, he may anticipate his opponent's reliance on the
arbitration agreement by applying to court under s 3(2) of the Arbitration Act
for an order setting aside the agreement or directing that the dispute should not
be referred to arbitration or ordering that the arbitration agreement should
cease to have effect with reference to a dispute referred to arbitration. 201 To
succeed with his application, he will have to show 'good cause'. Thirdly,
particularly if he is of the view that his opponent is unlikely to insist on
arbitration, he may cause a summons to be issued in the usual way and, unless
his opponent objects, the matter will proceed before the court as if there had
been no arbitration agreement. 202 If his opponent does wish to rely on the
arbitration agreement, he will have to use one of two methods to stay the court
case to allow arbitration to proceed. Either he must apply for a stay of the legal
proceedings under s 6 of the Arbitration Act 203 or he must file a special plea 204
requesting a stay under the common law. 205 It must be stressed that the
defendant has a choice of remedies: the provision of a statutory remedy in s 6
was not intended to deprive him of a plea under the common law. 206 A
defendant in court proceedings wishing to rely on s 6 must bring an application
to the court in which the proceedings were instituted at any time after entering
appearance to defend but before delivering any pleadings or taking any other

2011 Sec s 3( I) an<l 60 above.

2111 See cg Metallurgical and Commercial Co11sulta111s ( Pty) Ltd v Metal Sales Co ( Pty) Ltd 1971 (2) SA
388 (W) 391B-3951-J: Sera v De Wet 1974 (2) SA 645 (T).
20 ' See Parekh v Shah Jehan Cinemas (Pty) Ltd (above) at 305G.
2' " See eg Gardens Hotel (Pty) Ltd,, Somadel Investments (Pty) Ltd 1981 (3) SA 911 (W): Po/vsius

(Pty) Ltd v Trans1•aal Alloys (Pty) Ltd 1983 (2) SA 630 (W).
204 Although the special plea has been referred to as 'a plea in bar' (see e g The Rhodesian Railways

v Mackintosh 1932 AD 359 at 367), the effect of the special plea is dilatory. i e to stay the action pending
arbitration. rather than declinatory, ie having the effect of dismissing the action altogether (sec GK
Breed (Bethlehem) (Edms) Bpk v Martin /Jarris & Seuns (OVS) (Edms) Bpk 1984 (2) SA 66 (0)
71H-72B). Furthermore. a party wishing to rely on an arbitration clause in response to a claim cannot
<lo so by way of exception, which would seek to defeat the claim instantly and utterly instead of
obtaining a stay (sec Parekh v Shah Jehan Cinemas (Pty) Ltd (above) at 305D-E, 305H-306A).
205 See cg Van Heerden v Semrale Kunsmis Korporasie (Edms) Bpk 1973 (]) SA 17 (A) 26B:

Universiteit van Stellenbosch v J A Lauw (Edms) Bpk 1983 (4) SA 321 (A) 3291-J.
"'" Sec Swcks Construction (OFS) (Pty) Ltd,, Metter-Pingon (Pty) Ltd 1978 (4) SA 35 (T) 39A-B.
where the court emphasised that the wording of s 6 is permissive rather than obligatory. (Sec too 4
above regarding the purpose of the Arbitration Act in relation to the common law. On appeal. it was
not necessary to decide the point, because the arbitration clause was held to be invalid: sec Stocks
Construction (OFS) (Pty) Ltd v Metter-Pingon (Pty) Ltd 1980 (1) SA 507 (A) 521B read with 51UE-F.)
The continued availability of the special plea was not questioned in the Appellate Division decisions in
n 205 above and was accepted in GK Breed (Bethlehem) (Edms) Bpk v Martin Harris & Seuns (OVS)
(Edms) Bpk (above) at 69F; Del/ante v Delta Electrical Industries Ltd 1992 (2) SA 221 (C) 226F-H:
LA WSA vol I 'Arbitration' para 467 and Jacobs 49. The latter's argument that the special pica should
he abolished by legislation because it only causes confusion is not convincing.
64 Arbitration in South Africa: Law and Practice

steps in the proceedings. 207 A substantive application complying with the

Supreme Court Rules is required: an informal application is not sufficient. 208
The court may stay the proceedings if it is satisfied that there is no sufficient
reason why the dispute should not be referred to arbitration in terms of the
arbitration agreement. Although s 6 states that 'any party to such legal
proceedings' may apply to court for a stay under the section, it has been
decided that this party must also be a party to the arbitration agreement. 209
This decision is in accordance with the consensual basis of arbitration 210 and the
principle of privity of contract: a litigant who is not a party to their arbitration
agreement cannot force his fellow litigants to arbitrate because it might be to
his tactical advantage.
A party bringing an application under s 6 or filing a special plea bears the
onus of showing that there is a dispute 211 and that the dispute falls within the
ambit of a valid arbitration agreement. 212 The party wishing to avoid
arbitration then bears the onus of persuading the court to exercise its discretion
against staying the action. 213 Notwithstanding the difference in wording
between ss 3 and 6, 214 our courts have assumed that the onus borne by the party
seeking to avoid arbitration is the same for purposes of both sections 215 and for

207 Section 6(1). A defendant could still plead on the merits and file a special plea for a stay under the

common law (GK Breed (Bethlehem) (Edms) Bpk v Martin Harris & Seuns (OVS) (Edms) Bpk (above)
at 69E). Entering into a settlement agreement can amount to a further step in the proceedings (see
Conress (Pty) Ltd v Gallic Construction (Pty) Ltd (above) at 76B). A further step is also taken by the
respondent in application proceedings who proceeds directly to argue the merits of the matter (see
De/fante v Delta Electrical Industries Ltd (above) at 227.l-228A).
208 The application must be under rule 6(5)(a) or at least rule 6(11): see De/fame v Ddta Electrical

Industries Ltd (above) at 226G, 226I-227E.

2"'' See Freightmarine Shipping Ltd v S Wainstein & Co (Pty) Ltd 1984 (2) SA 425 {D) 428G-H. See
further 42 above regarding the definition of party in s I of the Act. In the Freightnwrine Shipping case
the non-party was the sole applicant. Compare Gardens Hotel (Pty) Ltd v Somadel Investments (Pty) Ltd
1981 (3) SA 911 (W) 914H-915A, where the first applicant. who was a party to the arbitration
agreement, was supported by two applicants who were non-parties.
210 Compare Mustill & Boyd 146nl.
211 If the claim is undisputed, there is nothing for the arbitrator to determine and the claim would fall

outside the ambit of an arbitration clause dealing with a dispute or difference. See De/Janie v Delta
Electrical Industries Ltd (above) at 227F-I; Parekh v Shah Jehan Cinemas (Pty) Ltd 1980 (1) SA 301 (D)
304E-305B, where it was also accepted that where the claim was undefended, the existence of a
counterclaim would not result in a dispute about the claim. (Where the claim is undisputed, the court
however may be prepared to postpone judgment on the claim, to allow a counterclaim subject to an
arbitration agreement to be decided by arbitration-see the Parekh case at 308F-H; but compare S &
R Valente (Pty) Ltd v Benoni Town Council 1975 (4) SA 364 (W) 366A-B.) Conversely, if a claimant
elects to use arbitration and the defendant, while disputing the claim. makes no a!lempt to defend the
arbitration proceedings, it is still possible for an arbitrator to make an award. notwithstanding the
defendant's default (see the Arbitration Acts 15(2) and 159 below).
212 Sec GK Breed (Bethlehem) (Edms) !Jpk I' Martin Harris & Seuns (OVS) (Edms) Rpk (above) at
69H. In Stocks Construction (OFS) (Pty) Ltd v Meuer-Pingon (Pty) Ltd 1980 (I) SA 507 (A) 52IA-B
a special pica failed because of the invalidity of the arbitration agreement.
213 See Kathmer Investments (Pty) Ltd v Woolworths (Pty) Ltd 1970 (2) SA 498 (A) 504H; Universiteit
van Stellenbosch v J A Louw (Edms) Bpk 1983 (4) SA 321 (A) 333H; GK Breed (Bethlehem) (Edms)
Bpk v Martin Harris & Seuns (OVS) (Edms) Bpk (above) at 70A-B.
214 A person seeking to avoid arbitration under s 3(2) must show 'good cause', whereas s 6(2)

(rephrased positively) requires him to satisfy the court that there is 'sufficient reason why the dispute
should not be referred to arbilralion'.
215 See Sera v De Wet 1974 (2) SA 645 (T) 6508-C.
The Arbitration Agreement 65

purposes of a special plea under the common law. 216 This is a logical
assumption as in all three situations the party is seeking the same object, the
avoidance of arbitration, notwithstanding the different procedure. The person
seeking to avoid arbitration bears an onus 'which is not easily discharged'. In
other words, he must make out a 'very strong case'. 217 There is a logical reason
for this: he is seeking to deprive the other party of the advantages of arbitration
to which the latter is entitled in terms of their arbitration agreement. 218 The fact
that the only matter in dispute is a point of law is not necessarily sufficient by
itself to discharge the onus.2 19
There have been several factors in the reported cases which the courts have
taken into account in exercising their discretion. A number of factors which
individually may be insufficient to exclude arbitration may be weighed
cumulatively to discharge the onus. 220 These factors include 221 the following:
(a) Where all parties to the dispute are not parties to the arbitration
agreement, arbitration may result in a multiplicity of proceedings with the
danger of conflicting decisions and increased costs. 222 This factor will not
be considered if the court is of the view that a party has been joined in the
litigation for tactical reasons aimed at creating a multiplicity of
proceedings or if the issues to be considered by the two tribunals are not
substantially the same. 223 The problem of a multiplicity of proceedings is
also irrelevant if a person with an interest in the dispute who is not a party
to the arbitration agreement agrees to abide by the arbitration findings. 224
(b) If the dispute gives rise to difficult points of law which should more
properly be decided by the court, 225 whereas any technical issues will not

216 Sec Universiteir van Stellenbosch v J A Lauw (Edms) Bpk 1983 (4) SA 321 (A) 333G-334C, where

in a case dealing with a special plea, the court refers to the Kathmer lnvesrments case above which
concerned s 6 and Merallurgirnl and Commercial Consultanrs (Pty) Ltd v Metal Sales Co (Pry) Ltd 1971
(2) SA 388 (W) which concerned s 3(2).
217 See the Metallurgical and Commercial Consultants case (above) at 39JE-H; Polysius (Pty) Ltd v

Transvaal Alloys (Pty) Ltd 1983 (2) SA 630 (W) 640A-B.

21 " Sec Metallurgical and Commercial Consultants (Pty) Ltd v Metal Sales Co (Pty) Ltd (above) at

391E-F; Lancaster v Wallace NO 1975 (I) SA 844 (W) 847A; Polysius (Pty) Ltd v Transvaal Alloys (Pty)
I.Id (:ibovc) at 63 1111.
21 " Sec Lancaster v Wallace NO (above) at 847-8. The court was not deterrred in arriving at this
conclusion by the fact that the 'customary inducements' which senior counsel would require to act as
arbitrator would inevitably add to the costs.
'°" Sec Polysius (Pty) Ltd,, Transvaal Alloys (Pty) Ltd (above) at 641A.
221 See also Jacobs 47.
22 " See the Metallurgical and Commercial Consultants case (above) 393G-394D; Yorigami Maritime
Com/ruction Co Ltd v Niss/w-lwai Co Ltd 1977 (4) SA 682 (C) 693G-694A; Universiteit van
Srellen/Jusc/1 v J A Louw (l::dms) /Jpk 1982 (3) SA 9 (C) 16E-F anti 1983 (4) SA 321 (A) 335G-336D,
3448-C.
m Sec Polysius (Pty) Ltd v Transvaal Alloys (Pty) Ltd (above) at 648A-B; Transvaal Alloys (Pty) Ltd
v Polysius (Pty) Ltd 1983 (2) SA 653 (T) 656F-G.
224 Sec Gardens Hotel (Pty) Ltd v Somadel Investments (Pty) Ltd (above) at 914H-915D concerning

a surety.
225 An important underlying consideration of part of the ratio of the separate judgment of Van
Heerden JA in Universiteit van Stellenbosch v J A Lauw (Edms) Bpk 1983 (4) SA 321 (A) 344A was
possibly the following: the crucial question of law to be considered, namely the correctness of the House
of Lords decision in East Ham Borough Council v Bernard Sunley and Sons Ltd [1965] 3 All ER 619
66 Arbitration in South Africa: Law and Practice

require any special expertise to resolve. 226

(c) If the party seeking to avoid arbitration is able to show a reasonable fear
of bias on the part of the arbitrator, for example because he will be called
on to make findings regarding the integrity of a member of his own
profession, 227 or possibly because the arbitrator has an interest in the
dispute which makes it impossible for him to give an objective decision. 2 2 8
(d) Where compliance with a contractual prerequisite for arbitration could be
seriously prejudicial to the party seeking to avoid arbitration, leaving him
with no adequate remedy. 229
(e) If the party seeking to avoid arbitration faces allegations of fraud against
him in arbitration proceedings, then he is entitled to defend his good name
in court in public, with the right to take an adverse decision on appeal. 23 "
(f) The refusal of one party to an arbitration agreement to submit to
arbitration may also be a factor to be taken into account against that party
if he should subsequently change his mind and apply for the stay of a court
action to enable the dispute to go to arbitration. 231
(g) If there is an allegation by one party, which appears to the court to be not
wholly unfounded, that the contract containing the arbitration clause is
illegal and void. 232
The following factors have been used by the courts to justify exercising their
discretion in favour of allowing arbitration:
(a) The fact that a party contracted to allow his opponent the advantages of
arbitration, in accordance with the maxim pacta servanda sunt. 233

regarding the interpretation of an important clause in the standard building contr,1ct. was of particular
interest to the construction industry in general. It was therefore in the public interest that this matter be
authoratively determined by the court. Sec also Mann (1985) 262-3.
2 2<, Sec Sera v De Wet 1974 (2) SA 645 (T) 654F. On the factual issues, credibility would also play an

important role; credibility being a matter which in the circumstances (as an architect was a key witness)
should rather be dealt with by a court than the arbitrator who would have been another architect.
227 Sec S<'ra v De Wet (above) at 655H-656A.

"'" Sec U11ivcrsiteit 1•a11 Stdlenbo.1Th v /,(11111· 1982 (3) SA 9 (C) 18ll-F, where this faetm wa,
considered but rejected on the facts. As pointed out at 5lnl09 above, the court in any event crreu in
regarding the architect as an arbitrator.
229 It is submitted that this is the true ratio implicit in the decision of-Galgut AJA in Universitei1 I'll/I
Stellenbosch v I A Louw (Edms) Bpk 1983 (4) SA 321 (A) 339E-340H, 342F-G that the architect (who
would not have been acting as an arbitrator) was not in a position to give an unbiased decision in the
first instance. (See also 5111112 above.)
230 See the Metallurgical & Commercial Consultants case (above) al above 393A-F; Sera v De Wet
(above) at 655; compare Scriven Bros v Rhodesian Hides & Produce Co Ltd 1943 AD 393 at 402 which
left open whether this factor is sufficient by itself to enable the person accuseu of fraud to resist
arbitration.
231 See Kmhmer Investments (Pty) Ltd v Woolworths (Pty) Ltd (above) at 504E-F. On the facts this
ground was held to have been abandoned.
232 See the obiter dictum in Allied Mineral Developmenl Corporation (Ply) Ltd v Gemsbok Vlei
Kwartsiet (Edms) Bpk 1968 (1) SA 7 (C) 13B-C. We submit that this factor may properly he taken into
account as an additional consideration where there arc one or more other factors in favour of the dispute
being dcciucu by the court. Where it is the only factor, the court shoulu preferably rule on the
allegation, and if it is unfounded, the dispute should then go to arbitration (se.: 57 above).
~" GK /lrcct! (/Jetl,frl,em) (Et/111.1) I/pk 1· Martin //11rri.1 & S,•11m (O\'SJ I/pk l'J~4 (2) SA <,<, (0)
70E-F; Polysius (Ply) Ltd v Transvaal Alloys (Pty) Lid 1983 (2) SA 630 (W) 641A-B, 646G-H.
The Arbitration Agreement 67

(b) The fact that the alleged disadvantages of arbitration in the particular
circumstances were foreseeable when the parties concluded the arbitration
agreement. 234
(c) The fact that the arbitrator would be able to use his expert knowledge to
dispense with expert evidence which would be necessary to qualify the
court, thereby saving time and costsP5
In short, the court's discretion must be exercised judicially in the light of the
particular facts, bearing in mind that a party trying to avoid arbitration is
seeking to escape his contractual obligations.
It is arguably possible to obtain an interdict against an arbitrator to prevent
him from continuing with the arbitration pending an application under s J for
an order that the arbitration agreement should cease to have effect in relation
to the dispute. 236 In appropriate circumstances, if the arbitrator is of the view
that the court would probably exercise its discretion against arbitration he
could himself direct that the arbitration proceedings be adjourned to enable a
court order to be obtained, with a view to avoiding wasted costs in connection
with the arbitration. 237 Conversely, if he is of the view that there are insufficient
grounds for seeking to avoid arbitration, he should not be deterred from
proceeding with the arbitration, particularly if he considers that the threats of
a court application have an ulterior motive of trying to delay the arbitration
proceedings.

2. 7 Statutory arbitrations
Parties to a dispute are sometimes required by legislation to refer that dispute
to arbitration. In that event the Arbitration Act applies to the arbitration as if
the statute in question was an arbitration agreement, provided that if the
statute is an Act of Parliament, the Arbitration Act shall not apply to the extent
that it is excluded by or inconsistent with the other Act. 238 For example if the
other Act contains provisions as to the scale on which costs are to be awarded
which are inconsistent with the arbitrator's discretion under the Arbitration
Act, the provisions of the former Act must prevail. 239 A mandatory reference
of a dispute to arbitration in terms of another Act is also inconsistent with the
court's discretion under the Arbitration Act to decide that a dispute covered by
a valid arbitration agreement should be adjudicated by the court instead. 2411

234 Polysius (Pty) Ltd v Transvaal Alloys (Ply) Ltd (above) at 651G-H.
~-'-' GK Breed (/3cthlehe111) (l:'d1m) /Jpk 1· Martin 1/arri.1· & Seum (OVS) /3pk (above) at 70ll-71C.
2 -'" The party applying for the interdict is in an analogous position to a party seeking to interdict an

arbitrator from continuing with allegedly invalid proceedings. a possibility recognised in Inter-
Continental Finance and Leasing Corporatio11 (Pty) Ltd v Stands 56 and 57 lndustria Ltd 1979 (3) SA 740
(W) 752H-754C. See 58n162 above.
237 This was the approach adopted by the arbitrator under similar circumstances in South African
Transport Services v Wilson NO 1990 (3) SA 333 (W) 3391-340B when confronted by a challenge to his
jurisdiction.
238 Arbitration Act s 40.
239 Sec Cape Town Mu11icipality v Yeld 1978 (4) SA 802 (C) 804E.
240 See Walton & Vitoria 11-12 and 62-3 above regarding the court's discretion.
68 Arbitration in South Africa: Law and Practice

These provisions in other statutes providing for compulsory arbitration arc

dogmatically objectionable because they undermine the consensual basis of
arbitration, a position which may be aggravated by mandatory statutory
provisions which would never have been included in a negotiated arbitration
agreement. 241

2.8 lnterpleader proceedings relating to an arbitration agreement

Interpleader proceedings in civil litigation may be used by a person who is in
possession of money or other property in respect of which he claims no interest,
but expects to be sued in relation to that property by two or more persons. He
can then deliver an interpleader notice to obtain a ruling from the court as to
who is legally entitled to the property, thereby sparing himself the trouble and
expense of defending an action or actions instituted by the other person(s) to
recover the property. 242 For example B, a contractor, leases certain plant from
A, believing A to be the owner. Subsequently, he is notified by C that C is the
owner of the plant, which was sold to A on credit, and that C remains owner
until the purchase price is paid. C claims that A is in arrears and requires B to
deliver the plant to C forthwith. A denies C's claim and states that he is the
owner of the plant. If both claims, based on the information furnished to B by
A and C respectively, are prima facie valid, B is in the middle ,w if he no longer
has an interest in the plant, having completed the work for which it was leased.
He has no interest in the ownership of the plant, and rather than risk being sued
by A or C or both, he uses interpleader proceedings to have the matter decided
by the court.
Where in any interpleader proceedings it is proved that the claims in question
arc subject to an arbitration agreement to which the claimants244 are parties,
the Arbitration Act provides that the court may order the issues between them
to be determined in accordance with the arbitration agreement.2 45 Although
the court has apparently been given an unfettered discretion, 246 there is English
authority for the view that the discretion should be exercised in a similar way
to the discretion regarding an application to stay court proceedings to enable

241 Compare Cape Town Municipality v Yeld (above) at 803E. 805E-G. On a correct reading of the

statute, which provided for costs 'calculated in accordance with the table of costs in magistrates' courts'.
the parties were not free to agree to costs on a different scale and more appropriate with the magnitude
and complexity of the dispute (as to which sec 802F-1·1), even had they both wished lo do so.
242 See Van Winsen, Eksteen & Cilliers 291. lnterpleader proceedings are regulated by rule 58 of the

Uniform Rules of the Supreme Court.

243 See Kamfer v Redhol Haulage (Pty) Ltd 1979 (3) SA I 149 (W) 1154A-C.
244 'Claimants' in this context apparently refers lo the parties making or expected 10 make adverse

claims against the applicant in the interpleader proceedings (compare Supreme Court Rule 58( I)).
245 Arbitration Act s 7(2). The subsection is based on the English Arbitration Act 1950 s 5 (sec

Hansard 16 March 1965 col 3057). Compare the more comprehensive provision in the Netherlands
Arbitralion Acl of 11!86 (contained in the Code· of Civil Procedure book IV) art 10-15.
24 ° Compares 3(2) ('on good cause shown') ands 6(2) ('surticicnt reason') and 6-ln21-l above.
The Arbitration Agreement 69

the dispute to be referred to arbitration. 247 An important factor will be the

possibility of a multiplicity of proceedings if the dispute between the claimants
is referred to arbitration to which the applicant in the interpleader proceedings
is not a party. 248 An important consideration in the exercise of the court's
discretion will therefore be whether or not the applicant agrees to be bound by
the arbitrator's findings. 249
The court also has the statutory power to order that the dispute between
parties to an arbitration agreement be determined by way of interpleader
proceedings in court for the relief of any party wishing to interplead. 250 This is
the converse of the previous situation. The court is in effect being asked to stop
the arbitration proceedings to allow the issue to be determined by the court.
Once again the danger of a multiplicity of proceedings will be an· important
consideration. The person wishing to interplead is not a party to the arbitration
agreement and the arbitrator's finding will not therefore be binding in separate
proceedings between him and one of the claimants. 251 He could not become a
party to the arbitration agreement without his consent and that of the other
parties. 252

2 ·11 Sec Must ill & Boyd 483 citing Re Phoenix Timber Co Ltd's Application [ I 958] 2 013 L [ I 958J I
Lloyd's Rep 305. The comparison was in respect of s 4(1) of the English Arbitration Act 1950, which
corresponds to s 6 of our Act. (Sec 64-7 above regarding the court's discretion under s 6.) Mustill &
Boyd 483 also suggest that the court could make an order under the English equivalent of ours 7(2) of
its own motion. without an application to that effect by either party. Although s 7(2) of our Act, unlike
s 3(2) and 6, makes no reference to a formal application, it is unlikely that the court would make an
order under s 7(2) of its own motion, as an arbitration agreement does not oust its jurisdiction or
prevent it from hearing a dispute if neither party relies on the arbitration agreement (sec further 63n202
above). The court could, however, arguably consider exercising its power if one of the claimants relies
on the arhitration agreement in his response to the interpleader notice (compare Metallurgical and
Commercial Co11.rnlta11ts (Pty) Ltd,, Metal Sales Co (l'ty) Ltd 1971 (2) SA 388 (W) 39JC-D, where the
court considered an informal application under s 3(2)).
24 " Sec 65 above.
249 Compare Gardens Hotels (Pty) Ltd v Somadel Investments (Pty) Ltd 1981 (3) SA 911 (W)

91411-9151) concerning an application under s 6.

25 " Secs 7(1) which has no equivalent in the English Act. Once again s 7 is silent as to the procedure,
hut it is tentatively suggested that the person wishing to interplead could refer to his intention to rely on
s 7(1) in his interpleader notice (under Supreme Court Rule 58) and in this way bring the matter to the
attention of the court.
251 See n 244 above for the meaning of claimant.
252 Our Act makes no provision for joinder in arbitration proceedings: compare the Netherlands
Arbitration Act art 1045. which allows a third party to ask the arbitrator for leave lo intervene in the
proceedings. In accordance with the consensual basis of arbitration, the arbitrator may only grant the
request with the consent of the other parties and if the third party becomes a party to the arbitration
agreement (art 1045(3)).
CHAPTER 3

The Arbitrator

3.1 The capacity to act as arbitrator

Statutory law imposes no qualifications for holding office as an arbitrator. 1
Under Roman-Dutch law, any sane person above the age of eighteen years,
deliberately chosen by the parties, could act as arbitrator. 2 There was some
difference of opinion as to whether a woman could act as arbitrator. Voet
rejected the position under Roman law and held that a woman could be
appointed, 3 whereas Huber preferred the position under Roman law. 4
Unfortunately, even today, because arbitrators are usually appointed from
male-dominated professions, there is a preponderance of male arbitrators. A
magistrate may be appointed as arbitrator.' In theory, a judge may be
appointed/' but in practice, only retired judges accept appointment. As a
general rule, an arbitrator should not have an interest in the dispute. 7 Under
English law any natural person may be an arbitrator. 8
The parties to the dispute may, however, impose certain qualifications in the
arbitration agreement. The agreement may require, for example, that the
arbitrator be a registered engineer,9 or a member of a certain trade association.
In the United Kingdom, there are many types of standard form contract used
by various trade associations which make provision for arbitration and which

1 The Arbitration Act 1965 s 1 defines the term 'arbitration tribunal' as 'the arbitrator, arbitrators or

umpire acting as such under an arbitration agreement' but docs not indicate what an arbitrator is or what
qualifications he should possess.
2 In the case of minors, the parties had to be aware that the minor was between eighteen and twenty

years of age, otherwise the minimum age for an arbitrator was twenty years (sec Voct 4.8.6-4.8.7;
Huber 4.21.5-4.21.6; Du Plessis (1977) 59-60; McKenzie 169).
3 4.8.6. See further Du Plessis (1977) 60-1.
4 4.21.6, his reasoning being 'for although arbitration is not a public office, it i~ all the same too much

for the bashfulness and modesty of the sex to sit as judges of other people's affairs' (Gane's translation).
5 Moster/ v Schoflz 1926 CPD 215; McKenzie 169.
6 Voet 4.8.8; McKenzie 169. Compare however s I I of the Supreme Court Act 59 of 1959 whereby

a judge cannot, without the consent of the minister of justice, hold any office for prolit or receive
remuneration for any service, apart from his salary and allowances in his capacity as judge.
7 Du Plessis (1977) 353. Sec, however, 72 below.

"Mustill and Boyd 9-10.

'' It is advisable that the precise qualifications required should be expressly stipulated. In MM
Fernandes (Ply) Lid v Mahomed 1986 (4) SA 383 (W) the partii:s named X to perform the functions of
the architect for purposes of their building contract (including those of a 'quasi-arbitrator' under the first
part of cl 26 of the white form (see 51 above). The respondent subsequently sought to attack X's decision
as quasi-arbitrator on the basis that he was not a qualified architect under the Architects' Act 35 of 1970.
The contract did not expressly require X to be qualified to practise in terms of the Act and the court held
that it was unnecessary to imply such a provision to give business efficacy to the contract (386F-H).

70
The Arbitrator 71

lay down that the arbitrator shall be a member of such association. The
agreement may also contain a negative requirement, for example, that the
arbitrator shall not be a lawyer, or shall not reside or work in the same town as
either of the parties . A prospective arbitrator who does not comply with these
requirements is clearly ineligible to accept appointment, and any award made
by him would be objectionable and liable to be set aside. 111

3.2 Disqualifications from acting as arbitrator

The law requires company directors to be persons of honour and integrity. The
Companies Act prohibits an unrehabilitated insolvent, or anyone who has been
sentenced to imprisonment without the option of a fine for a crime involving
fraud, forgery or dishonesty from holding office as a director of a company,
without the consent of the court. 11 The respective registration statutes of
architects, quantity surveyors and professional engineers contain similar
restrictions on the registration of such people. 12 But strangely, the Jaw imposes
no such limitations on the appointment of arbitrators. The absence of any such
restriction in the Arbitration Act is probably due to the law's attitude that
parties entering into an arbitration agreement should basically be free to
appoint whoever they wish as arbitratorY It would seem, therefore, that a
person who is an unrehabilitated insolvent, or who has been sentenced to
imprisonment for fraud, forgery or another offence involving dishonesty. or
who has been removed from an office of trust for misconduct, may accept
appointment as arbitrator as long as that fact was known to the parties to the
arbitration at the time of his appointment. 14 Nevertheless, even where the
parties were aware of the problem, it is arguably in the public interest that their
freedom to appoint an arbitrator should not extend to the appointment of a
person who would appear to be manifestly unsuited for that appointment. 15
There may also be personal circumstances which would indicate to an
arbitrator that it would be improper for him to accept appointment. Any
interest that the arbitrator might have in the outcome of the arbitration would
clearly offend against the fundamental principle that no-one should be judge in
his own cause, 16 and it would be most improper for an arbitrator to accept
appointment in such circumstances. This proposition should not be taken to

w If the parties. in the knowledge that he does not possess such qualifications, proceed to appoint
him, they may subsequently be precluded from applying for his removal under s 13(2) or objecting to
his award on these grounds (sec Jacobs 71).
11 Act 61 of 1973 s 218(1)(dJ; Ex parte Tayob 1990 (3) SA 715 (T).
12 Sec the Architects' Act 35 of 1970 s 19(8) and (9); the Quantity Surveyors' Act 36 of 1970 s 19(8)

and (9); the Engineering Profession of South Africa Act 114 of 1990 s 15.
'-' Compare Voci 4.8.6 and 70 above.
14 If the parties were unaware, when he was appointed, that an arbitrator had previously been guilty

of dishonest or dishonourable conduct in a professional or business relationship, this factor could

arguably constitute 'good cause' for his removal from office by the court under s 13(2) (see Jacobs 71).
See further 105 below regarding 'good cause' in this context.
15 Particularly to the extent that the relationship between the arbitrator and the parties is one of status

(compare 94-5 below).

16 See Voet 4.8.9 and 166 below.
72 Arbitration in South Africa: Law and Practice

unreasonable lengths: an arbitrator who has a few shares in a public company

which is one of the parties to the arbitration is unlikely to derive any
perceptible financial advantage or disadvantage from any award he may make,
and his judgment is consequently unlikely to be swayed by such involvement.
There are other considerations apart from financial interest, which could
serve to influence an arbitrator's judgment. A business or social relationship,
either present or past, or the racial or religious affiliation of a party, might
prejudice an arbitrator either for or against him, and the arbitrator who
strongly denies that he is prejudiced against a particular racial or religious
group may even unwittingly be guilty of displaying bias towards a party of such
group. 11
Once again these grounds for objection sh<1u]d not be taken too far. It would
be unreasonable, for example, for one party to object to the appointment of
any engineer as arbitrator where the other party is an engineer, merely on the
grounds that, being of the same profession, the engineer-arbitrator would tend
to favour the engineer-party. It could equally well be argued that professional
rivalry might cause the arbitrator to deal harshly with a fellow professional. ix
When in doubt, the arbitrator would be well advised to declare such
relationship or attitude to the parties at the preliminary meeting to assess their
reaction. In the words of Mustill & Boyd: 19
'A person who is approached with a request to act, and knows that he has some kind
of relationship with one of the parties, should remember that there is 110 keener sense
of injustice than is felt by someone who has doubts about whether the arbitrator is
doing his honest best. He should also bear in mind that the questilln is not just
whether he really is impartial, but whether a reasonable outsider might consider that
there is a risk that he is not. ... 20 If he considers that the case is on the borderline,
he should disclose the circumstances which may give rise to suspicion; and he will
very often find that no objection is taken to his appointment: candour is always the
best way to prevent misunderstandings.·
Where a party agrees to the appointment of an arbitrator when he was aware
of the arbitrator's interest in the dispute, the court will give effect to the
agreement containing the appointment. 21 The arbitrator is still required to act
impartially, notwithstanding his interest. Therefore, a party who agreed to an

See further Brand in Benjamin 138-9 on subconscious bias.

17
Special circumstances may however be present. In Sera v De Wet 1974 (2) SA 645 (T) 655H-65613.
18

the court refused to allow a dispute to go to arbitration in a case where the arbitrator would in all
probability have been an architect, inter alia because the architect-arbitrator would be required to make
findings regarding the credibility of another architect, who was being accused of fraudulent conduct by
the contractor. The contractor, as a layman, could have a reasonable fear that the architcct-arhitralor
would not give him a fair hearing.
19 At 252.
2" Sec further I05 below regarding the usual test for removing an arbitrator hy the rnurt on the

grounds of possible bias.

21 See The Rhodesian Railways Ltd v Mackimosh 1932 AD 359 at 373. An example of such a situation
would be where the contractor agrees to the engineer who administered the performance of the contract
on behalf of the owner of the works acting as arbitrator. The statemcnt in the Mackintosh case is.
however, clearly ohirer, as the engineer was clearly not an arbitrator buJ a quasi-arbitrator (at 373-4 and
sec 50-1 above).
The Arbitrator 73
appointment despite his knowledge of the arbitrator's connection with the
other party, may subsequently still be able to have the appointment set aside if
he is able to show a probability of bias. 22

3.3 The desirable qualities of an arbitrator

3.3.1 Personal qualities
Closely allied to the quality of impartiality discussed in the previous section, is
the quality of objectivity which may be regarded as a particularly necessary
attribute for an arbitrator.23 The arbitrator must be capable of dissociating
himself from the issues that he has to try. He must be able to view the issues
objectively and dispassionately and not become emotionally involved in them.
The arbitrator who starts to identify himself with one of the parties, who
projects himself into the position of the party and in so doing shares in that
party's worry and anguish at the outcome of the arbitration, will not only give
himself sleepless nights but is likely to have his judgment warped.
This is not to say that the arbitrator should be unsympathetic. Sympathy and
understanding are desirable attributes in an arbitrator, but they should be
exercised even-handedly. A sympathetic approach will often help an emotional
witness to tell his story in a more coherent manner; while an understanding
attitude on the part of an arbitrator will frequently pour oil on troubled waters.
These qualities should not be exercised at the expense of firmness. The
arbitrator should. at the outset. show that he is in command of the situation and
he should maintain complete control at all times. While he should give the
parties reasonable freedom to say what they wish, he must ensure that the
situation never gets out of hand and that he is always able to impose his
authority. 'The perfect judge or arbitrator must possess the quality which
enables him to be effective in controlling or presiding over the proceedings-a
sufficient degree of gravitas or authority, so that he can exercise control
naturally without being pompous, impatient or rude-so that all involved will
not only respect him but also respect the decision he makes. ' 24
The arbitrator should be able to be robust when necessary and to take a
positive line. He must have the courage of his convictions and be able to make
a forthright decision when this is called for and be able to avoid the easy
compromise of seeking a via media between the claims of the opposing parties.
It has been said that '[t]his instinct for compromise, and of a reluctance to hold

22 See Appel v Leo 1947 (4) SA 766 (W) 771 and compare 105 below.
23 Compare Anstey 251, who distinguishes between neutrality and impartiality. Neutrality refers to
the absence of a previous or present relationship between the arbitrator and one of the parties, making
his appointment unacceptable, whereas impartiality refers to the attitude with which the dispute is
approached.
24 See Rokinson (1987) 141-2, who lists (at 137-40) humility, patience (tempered with firmness) and
courtesy as the personal qualities which an arbitrator should possess. He also suggests that the perfect
arbitrator should be articulate and literate.
74 Arbitration in South Africa: Law and Practice

a claim wholly valid or invalid, is perhaps the most serious fault of non-legal
arbitrators' . 25
Wisdom is obviously a desirable quality in an arbitrator. It is a quality that is
not easy to define and difficult to measure, but it can generally be inferred to
be present in those whose advice is frequently sought by their friends and
professional colleagues, and like a good wine, it generally improves with age.
An arbitrator must, of course, have patience. Hearings are often lengthy and
witnesses often take a long time to come to the point. The arbitrator must be
capable of hearing the evidence without any sign of impatience or irritation,
even though there may seem to be an inordinate amount of chaff for so little
wheat.
Sound judgment has been held to be an essential attribute of a judge; equally
so of an arbitrator.
The personal qualities that make a good arbitrator are aptly summed up in
the remarks of a well-known arbitrator speaking at a banquet held by the
Chartered Institute of Arbitrators: 'The ideal arbitrator should have the
wisdom of Solomon, the patience of Job, the humility of St. Francis-and
the ability to stay awake after lunch.'
Personal qualities such as these are not easy to cultivate, but some are
acquired as a result of experience and age, and it is probably true to say that
these qualities are more likely to be present in an older person than in a
younger one.

3.3.2 Expertise in professional field

Arbitrators are usually professional or business persons who are established
and successful in their own particular field and who conduct arbitrations as an
adjunct to their main calling. There is probably insufficient work available in
this country for anyone to consider setting up in practice as a full-time
arbitrator. Even if arbitration work was to proliferate, it would probably be
better for the increased work-load to be handled by a greater number of
arbitrators whose prime means of a livelihood lay in other directions, and who
undertook arbitrations on an ad hoc basis, rather than by full-time arbitrators.
The reason for this is that one of the more important qualifications of an
arbitrator is an expertise in his professional or business field, and this cannot be
maintained if he is to desert this field and become a full-time arbitrator. The
retired person who performs arbitrations as a part-time occupation must, for
this reason, be regarded with some reservation.
Just how superior should an expert be in his particular field? There is no
simple answer to this question; it will depend to some extent on the terms of the
arbitration agreement and on the way in which the hearing will be conducted.
If the hearing is to be conducted along conventional lines in an adversarial
manner, a particularly specialised knowledge on the part of the arbitrator
would probably not be necessary, because on any highly technical issues it is

25 Duncan Wallace 855.

The Arbitrator 75

likely that each side will call expert witnesses. 26 It will then be sufficient if the
arbitrator has a good working knowledge of the subject, and is able to
understand the issues and merits of the respective arguments without it being
necessary for evidence on the basic principles to be led. In such cases the
arbitrator's conduct of the arbitration would be primarily adversarial. But
where the hearing would be likely to take a more inquisitorial form, 27 as when
the parties would not be legally represented, or where, as in the case of
arbitrations on the quality of work or goods, a formal hearing would be
dispensed with, a greater degree of expertise would be required of the
arbitrator, because the parties would not bring expert witnesses in support of
their respective cases but would rely on his own technical knowledge to guide
him towards a correct assessment of the evidence and to a just award.
Parties who contemplate the selection of an arbitrator usually pay great
attention to his expertise in the field of the dispute, and little or no attention to
his expertise in the conduct of arbitrations. Other than in simple quality
arbitrations, where the arbitrator would be required to do no more than
establish whether the disputed workmanship or goods conforms to specification
or sample or not, the importance of expertise in the conduct of arbitrations
cannot be over-emphasised. Arbitration is a highly flexible and adaptable
means of resolving disputes. In the hands of an experienced and competent
arbitrator who is able to adapt procedures to take full advantage of the
potential benefits of arbitration, the advantages over litigation in respect of the
saving of time and money can often be dramatic. But where the arbitrator is
untrained and inexperienced, and weak in his handling of the proceedings, the
resulting arbitration might well turn out to be a compound of the worst features
of both litigation and arbitration.
This argument would seem to suggest that the best arbitrator would be a
person with legal training: an attorney, advocate or retired judge. 28 But it by no
means follows that these legal experts have expertise in the law and practice of
arbitration and such an expert, if appointed as arbitrator, could generally be
expected to steer the proceedings in a direction that resembles Supreme Court
procedures as closely as possible. This is not surprising; they are all thoroughly
familiar with Supreme Court procedures and they would probably have
considerable difficulty in conceiving of any other forms of procedure, let alone
perceiving that such forms of procedure could be superior to the ones they
know best.

3.3.3 Legal knowledge

Opinions differ as to the extent to which the arbitrator ought to be familiar with
the law and legal process. On the one hand there are those who believe that
arbitration is a judicial process and ought to be conducted in a similar manner

26 See 186 below.

27 Sec 168 and 218 below regarding these terms.
28 Compare Gorley 343-4.
76 Arbitration in South Africa: Law and Practice

to a Supreme Court hearing, and the award arrived at on the application of the
relevant legal principles, and in strict accordance with legal precedent. 29
This suggests that the arbitrator, if he is not an attorney, advocate orretired
judge, should nevertheless have a sound knowledge of legal procedure in the
Supreme Court and a fairly extensive knowledge at least of the law of contract,
evidence and delict.
On the other hand there are those 30 who consider that arbitration is an
extra-curial way of resolving disputes, and that it ought not to imitate court
procedure. Proponents of this point of view postulate a much more informal
type of hearing where the rules of evidence are almost completely relaxed. In
some cases they would dispense with a hearing altogether. Furthermore, the
parties may stipulate in the arbitration agreement that the arbitrator is not
obliged to apply the rules of substantive law in arriving at his decision on the
issues in dispute, but is free to make his award on the basis of what he considers
to be just and equitable. 31 It could then be argued that in these circumstances,
an arbitrator has no particular need of knowledge of judicial procedure, nor of
the rules of evidence, nor even, other than at a superficial level, of the
principles of substantive law. 32
It is submitted that even where the arbitrator is authorised to proceed
informally, he will still need at least some knowledge of the rules of evidence
to guide him in deciding which evidence may be regarded as reliable, which
may be suspect and which may be so unreliable that it ought not be considered
at all. He will need the law of contract to assist him in establishing what are the
rights and obligations of the parties arising out of their agreement. He will have
to interpret what the contract is, not what he or they might have liked it to have
been, and he will have to determine what the respective rights and duties of the
parties are, not what it might have been more sensible to arrange. Even where
he is authorised to make an award on the basis of what he considers to be just
and equitable, he is still likely to consider the position according to the rules of
substantive law to establish whether he regards that result as unfair.·13
The arbitrator, we suggest, whatever his background and field of expertise,
must understand the rules of natural justice; he must have some knowledge of
the rules of procedure in judicial tribunals; and it is highly advisable that he has
at least a nodding acquaintance with the rules of the Supreme Court, so that,
if he chooses not to adopt them, he at· 1east knows what it is that he is
rejecting. 34

2 '' Jacobs 114 (as regards procedure) and Walton and Vitoria 218 (as regards substantive law). See

251-3 below regarding the duty of the arbitrator to apply the rules of substantive law.
Jo See eg Parris 91-105.
31 See 253-5 below.
32 See, however, 254-5 below.
33 In international arbitrations, the arbitrator might be asked to give an award based on what is just
and equitable to avoid having to decide which country's rules of substantive law should apply.
J• Compare 132-3 below.
The Arbitrator 77

Although we hold the view that an arbitrator is not obliged to apply the rules
of evidence strictly, unless required to do so by the arbitration agreement, 35 the
arbitrator should nevertheless have an understanding of the principles on which
evidence would be declared inadmissible in the courts. He must know why it is
considered inadmissible and what the dangers are in relying on such evidence.
He must also be able to appreciate the probative value of the evidence put
before him, and be able to analyse it and apply it to the issues that he has to
decide. He must be able to determine where the onus of proof and the
evidential burden Iie. 36
Probably most of the disputes that he will have to dctcnninc will relate
directly or indirectly to the rights and obligations that flow from a contract
between the parties, whether formal or informal. He must therefore be
acquainted with the fundamentals of the law of contract: how a contract is
formed, the concepts of offer and acceptance, breach of contract, when a
cancellation is lawful and when it amounts to repudiation, remedies for breach
of contract, the interpretation of contracts, implied terms and so on.
The arbitrator must also be conversant with the law relating to his own
particular field of expertise. This is not limited to statutory provisions and
common law reflected in court decisions; his knowledge should also embrace
those customs and usages which are so habitually observed in his profession or
trade that they have acquired the force of law. 37
In theory, there is no apparent reason why almost any delictual claim should
not be resolved by arbitration. 18 In practice, many claims based on negligence
which go to arbitration, including most of those relating to allegations of
professional negligence, deal with the negligent performance of duties in terms
of a contract. In such cases, the remedy of the aggrieved party to the contract
is contractual, not delictual.3 9 Nevertheless, delictual claims are referred to
arbitration. 4 " The real possibility that an arbitrator may have to deal with a
dclictual claim warrants a study of the principles of the law of delict, an
understanding of how delictual liability arises, and the manner in which

.1, Sec 220-1 below.

16 See especially 246-51 below.
17 Sec cg Christie ( 1991) I87-94 for a discussion of contractu.il terms implied by trade usage. Sec
further Du Plessis & Du Plessis 183-5 on custom as a source of law .
.ix Sec 55 above.
39 In terms of the majority judgment in Li//icrap, Wassenaar and Farmers v Pilkington Brothers (SA)
(Pty) Ltd 1985 (I) SA 475 (A).
" 0 cg a dclictual claim arising from a road accident. In the construction field, a claim by a member of

the public for damages from injuries sustained while passing a building site as a result of the negligence
of the contractor is also delictual. The owner of building works who wishes to claim damages from a
suhcontractor has no contractual nexus with the subcontractor, and would therefore only be able to
institute a dclictual claim against him.
78 Arbitration in South Africa: Law and Practice

damages are assessed and how such damages differ from damages for breach of
contract.

3.3.4 The training of arbitrators

Traditionally, arbitration has found little or no place in the curricula of law
faculties in this country, although this position is changing. 41 Arbitration
receives slightly better treatment in some of the departments of architecture,
quantity surveying, civil engineering and building science in our universities,
but in undergraduate courses it is not dealt dealt with at more than a superficial
level. Those who study in these departments may undertake a brief module in
the law of contract. The law of delict and the law of evidence will not form part
of their curricula. Accountants will also acquire a basic knowledge of the
principles of the law of contract by virtue of their training in commercial law,
but for the rest, the potential arbitrator from these fields comes totally
untrained for the task, and must seek ways and means of acquiring basic
knowledge and skills. It is, of course, possible to undertake correspondence
courses in law, evidence and delict through the University of South Africa.
Private study of suitable textbooks is also possible, but tends to be
unprogrammed, lacking in direction and suffers from the lack of a mentor who
can deal with problems and offer advice, assistance and encouragement.
Corresrondence courses or distance learning courses in arbitration arc
offered by the Association of Arbitrators in this countryY The original course
covered the law of contract, delict and evidence as well as the law and rracticc
of arbitration. This one-year course of study proved to be remarkably popular.
It has recently been re-structured to provide an initial year of study in the law
of contract and the law and practice of arbitration, intended for those who have
a general interest in arbitration but who do not intend to practise as arbitrators,
followed by a more advanced course in these fields together with the law of
evidence and the law of delict, specifically directed at the training of
arbitrators. 43
An inherent shortcoming of correspondence courses or distance-learning
courses is their inability to provide practical tuition and experience. Efforts by
the Association of Arbitrators to inaugurate a pupillage system, similar to that
arranged by the Chartered Institute of Arbitrators, have met with little success.
The scheme envisages that pupil arbitrators would be assigned to experienced
practising arbitrators to sit with them at hearings and, while they would not
participate in the proceedings, they would watch what goes on and learn
from it.
41 See 30 above.
42 A correspondence course in arbitration is also offered by the College of Estate Management in
Reading, England. The fact that this course deals with English law is an important reason why very few
South Africans have enrolled for and completed this course.
43 Most of the Association's arbitrators are from the construction industry and related professions.

IMSSA provides training in arbitration techniques for persons wishing to be included on its panel, of
arbitrators (see 25 above). As most of its panelists arc qualified lawyers specialising in labour law. they
have a sufficient legal background for the role of arbitrator.
The Arbitrator 79

But even learning by watching is a poor substitute for 'hands-on' training.

The problem of practical training is afflicted with the chicken-and-egg
syndrome. A potential arbitrator will not be appointed to do arbitrations until
he has acquired some experience, and he will not acquire experience until he
has had the opportunity of conducting a few arbitrations. The perfect solution
to the problem is still elusive.

3.4 The selection and appointment of an arbitrator 44

3.4.1 Arbitrator selected by the parties
In the absence of a contrary intention in the arbitration agreement, the
reference is to a single arbitrator. 40 Most references in South Africa arc to a
single arbitrator. 46 It is fundamental to the concept of arbitration that the
parties choose their own arbitrator. Historically this was invariably the practice
and the disputing parties would lay their dispute before an obliging neighbour
or a respected member of the community chosen by themselves. The ability to
choose one's own arbitrator has long been extolled as a particular advantage of
arbitration: the parties can choose someone who is an expert in the field of the
dispute but perhaps even more important, someone who is known to them, and
in whom they have confidence.
This freedom of choice carries with it innate risks. 'Every person must use his
own discretion in the choice of his Judges; 47 and being at liberty to choose
whom he likes best, cannot afterwards object the want of honesty or
understanding to them, or that they have not done him justice. ' 48
It is strange, therefore, that in most standard-form contracts that embody
arbitration agreements, the parties have abdicated their right to choose their
arbitrator and have delegated this function to some third party, usually the
president of one or other of the professional or trade associations. 4 '1
The reason that is usually given for this practice is that the arbitration clause
in a contract is in anticipation of a dispute that has not yet arisen, that at the
time of concluding the contract it is not known whether a designated arbitrator
would be available to arbitrate if and when the need arose, nor whether the
right expert was being chosen for the dispute when it came about. It would be
better, the argument goes, for the choice to be made when the dispute arises,
44 Sec generally Mustill & Boyd 171-92. Note. however, that there arc significant differences in the

wording of the provisions of the South African and English statutes pertaining to the appointment of
arbitrators.
45 Sec the Arbitration Act s 9.
' 11' See 211 below regarding hearings by tribunals comprising more than one arbitrator.
· 11 Bacon is, in fact, referring to arbitrators.
' 18 Bacon's Abridgement (1736). Compare Voci 4.8.7 regarding parties who knowingly appoint a
youthful arbitrator.
4 '' In the construction. industry, in which nearly all the standard forms of contract embody arbitration

clauses, it is only the JBCC contracts that make provision for the parties to nominate an arbitrator at
the time of entering into the contract. Regrettably. most parties do not avail themselves of this
opportunity, do not choose an arbitrator, and allow the default procedure to operate in which the
chairman of the Association of Arbitrators is required to nominate three candidates for appointment
from whom the contractor chooses one to be arhitrator.
80 Arbitration in South Africa: Law and Practice

so that an arbitrator may be chosen who is an expert in the field of the dispute
and who is able and willing to act.
This argument has limited validity and should be weighed against the
disadvantages of being saddled with an arbitrator who has been appointed by
someone else and who may be unknown to the parties, or even worse, who may
be actively disliked and distrusted by one or even both of them.
The argument that the parties will not know what type of expert will be best
suited to handle that dispute, should not be accepted without question. The
contract itself will indicate the general area of expertise. An arbitration clause
in a contract concerned with the sale of wine clearly suggests that the arbitrator
should be an expert in the wine industry. Similarly an arbitration clause in a
building contract suggests that the arbitrator should be a person from that
industry, be he an architect, quantity surveyor or builder. To say that if the
dispute relates to the quality of building work the arbitrator should be an
architect, whereas if it relates to the cost of this work he should be a quantity
surveyor, may be taking the principle too far. Seldom are the issues in a dispute
so clear cut that it can be said that they fall neatly into one field of expertise
only, without overlapping into another. Thus a dispute about the quality of
building work will almost invariably have as its corollary the cost of repairing
defective work. It can probably be safely said that either an architect, quantity
surveyor or builder would be adequately competent to deal with any type of
dispute arising out of the building contract. If he has been chosen for his
training and expertise in arbitration as well, he should be able to deal
competently with most legal issues that are likely to arise in such an arbitration.
Parties who wish to nominate an arbitrator, either for a present or a potential
future dispute, are sometimes at a loss to know who specialises in this sort of
work and who has the necessary qualifications and experience. The Association
of Arbitrators is usually able to advise, and the secretaries of some of the
professional and trade associations often have lists of those of their members
who they consider to be suitable for appointment.
But while it is to be recommended that the parties should appoint an
arbitrator by mutual agreement, it happens not infrequently that they find it
impossible to reach agreement, and must then fall back on some alternative
arrangement, such as one in which they confer on some neutral third party the
power to make the choice on their behalf.

3.4.2 Arbitration agreement provides for selection by a third party

In the construction industry it is only the JBCC contracts which make provision
for the arbitrator to be named by the parties. Where the nominated arbitrator
is unable, or unwilling, to act, there is a default provision that the arbitrator
shall be chosen by the contractor from names proposed at his request by a third
party, the Chairman of the Association of Arbitrators. All the remaining
standard-form contracts used in the construction industry provide that the
arbitrator shall be appointed at the request of one of the parties, by the
president or chairman of one or other of the professional or trade associations,
The Arbitrator 81

and neither party has any say in the appointment. This is not to say that the
parties may not. by mutual agreement, appoint an arbitrator acceptable to both
of them at the time that a dispute arises, but in practice this seldom happens.
If an arbitrator has been nominated or appointed in this manner it is not open
to either of the parties unilaterally to object on the grounds that they do not
like the arbitrator or consider him unsuitable. The grounds on which he is
considered unsuitable can be put to the arbitrator, who might be persuaded
that these arc valid and may refuse to accept the appointment. The arbitrator
ought also to declare any circumstances to the parties which he considers might
in any way give grounds for their dissatisfaction with his appointment. It is
possible that if he should fail to do so and it should later be shown that he
should not have accepted appointment because of a conflict of interests or
similar disability, his appointment could be set aside and he could lose his
entitlement to fees. 50
The question is sometimes raised whether the person who has been asked to
make a nomination ought to enquire whether or not there was a valid
arbitration agreement, whether there was a dispute that fell within the
jurisdiction of the agreement, and whether all pre-requirements had been met.
It is submitted that there is no obligation on anyone who is requested to appoint
an arbitrator, to establish that these conditions have all been met. To do so, it
would be necessary for him to conduct some form of enquiry and perhaps even
a hearing. Clearly he has no authority to do so and such enquiry would be ultra
vires. Nor would any finding be binding on the parties, and a finding made
erroneously, but in good faith, that the request for the appointment of an
arbitrator was premature or inappropriate, and ought not to be acceded to,
would be prejudicial to the party requesting the appointment. The correct
procedure, it is suggested, is for the appointer to proceed to make the
appointment, and for the party who alleges that the arbitration is premature or
inappropriate, to make an appropriate submission to the arbitrator, 51 or even,
in an extreme case, to apply to court to have the proceedings interdicted.
Where a standard-form contract contains an arbitration clause providing that
the office bearer of a particular organisation should nominate an arbitrator,
that organisation has usually been privy to the drafting of the contract and is
happy that its office-bearer should make the nomination. It sometimes
happens, however, that in an agreement that has been specially prepared for a
particular contract, provision has been made for an arbitrator to be appointed
by the office-bearer of an organisation who has not been consulted and who
may have no direct relationship with any of the parties to the contract, and on
this account may decline to do so. This underlines the desirability of preferring
to make a specific nomination of an arbitrator in such contracts and of making
the nominating procedure by a third party a default procedure.
Where the designated appointer fails to make a nomination when so

50 See 71-2 above and 105-6 below.

51 Sec 110 and 123-4 below.
82 Arbitration in South Africa: Law and Practice

requested, it is unlikely that he can be compelled to do so, nor would it be

desirable to try to compel him; a nomination grudgingly made by a reluctant
appointer would be unlikely to inspire much confidence. It would appear that
the parties would be left without remedy, as the statutory powers of a court to
appoint an arbitrator do not appear to apply in the case of failure to appoint by
a designated third party. 52

3.4.3 Arbitration agreement lays down no procedure

Not infrequently contracts which make provision for disputes to he settled by
arbitration are entirely silent as to the manner in which the arbitrator is to be
appointed. Such agreements assume that the parties will agree on the
nomination of an arbitrator, but this agreement is frequently not attained,
because the adversarial attitude that gives rise to the dispute usually extends to
disagreement as to who should resolve the dispute.
There are various approaches which may be tried to break the deadlock. One
party may call upon the other to submit a short list of candidates for
appointment, from whom he may select one. In the event that the other party
docs not comply, he may himself draw up a short list ancl invite the other party
to make a selection from it.
Another approach is for each party to prepare a short list of possible
candidates for appointment, and for these lists to be compared and the
appointment made of he whose name appears on both lists. This arrangement
is likely to work only in a small community where the number of potential
arbitrators is limited, so that the chance is reasonably good that at least one
name will appear on both lists. If more than one name appears on both lists
agreement will need to be reached as to which will be appointed. This difficulty
might be overcome by requiring that each party should rank his candidates in
order of preference. If the lists do not contain a common name, the parties
should acid names to their respective lists until a common name emerges.
Many of the difficulties which have been discussed will fall away where each
party appoints an arbitrator and the arbitrators sit jointly. 51 This of course,
acids to the cost of the arbitration, and if the arbitrators cannot agree and have
need to refer aspects of the dispute to an umpire, 54 the costs will be further
increased.
If the parties cannot agree to the appointment of an arbitrator by any of the
foregoing procedures, or, where each party is required to appoint an arbitrator

52 Sec 84 below.
53 Although very infrequently encountered in this country, this is the usual procedure in international
arbitrations conducted under the Rules of the International Chamber of Commerce. as well as
arbitrations under the Rules of the London Maritime Arbitrators' Association. Contrary to what the
parties to such arbitrations sometimes expect, such arbitrators are not the agents of the parties who
appointed them and have no duty to espouse their respective causes (sec Graaff'.ffrinn Municipality v
Jansen 1917 CPD 604 at 607 and 91 below), but arc required to be totally impartial and, if necessary.
make a finding against the party responsible for their appointment.
54 As provided ins I l(l)(a) of the Arbitration Act.
The Arbitrator 83

and one fails to do so, it is open to one of the parties to apply to court 55 for the
appointment of an arbitrator hy the court itself.
The final way of resolving the problem would be for the parties to request
some appropriate third party to make the appointment on their behalf, as is
done in most standard-form contracts. The disadvantages of an appointment
made by a third party have already been discussed. The advantage, however,
is that the appointment is generally made without serious delay or difficulty.

3.4.4 Appointment of a substitute arbitrator

Where an appointed arbitrator is unavailable in certain circumstances, the Act
empowers the party or parties who appointed him to appoint another arbitrator
in his place. 56 The circumstances in which this statutory power may be exercised
are where the appointed arbitrator refuses to act or is or becomes incapable of
acting or dies, or if he is removed from office or if his appointment is
terminated or set aside.57 The statutory power to appoint a substitute arbitrator
can be excluded in the arbitration agreement.5 8 In Atteridgeville Town Council
v Livanos t/a Livanos Brothers Electrical the arbitration clause provided that
any dispute arising from a contract should be referred to an arbitrator named
in the contract ('X'), without any express provision for substitution. When X
refused to act, the court held that the statutory power to appoint a substitute
arbitrator was available. There were no limiting or qualifying words in the
arbitration clause to reflect an intention that the arbitration agreement should
cease to have effect or to preclude the appointment of a substitute, in the event
of the named arbitrator's refusal or inability to act. Nor could such an intention
be inferred by necessary implication. 59
Where the substitute arbitrator enters the reference after the hearing of
evidence has already commenced, he is authorised by the Act to avail himself
of evidence recorded in the arbitration prior to his appointment. He also has
the discretion to recall any witness who has given evidence for further
examination if he considers it necessary.<>0 In practice, unless a full record is
readily available, it is likely that he will start the hearing of evidence de novo. 61
However, as he is a substitute appointed to continue with a reference began by

55 In terms of s 12(2) of the Arbitration Act.

5" Section 10(1). The provision applies to an arbitrator appointed by a party or parties, as defined in
s I (see 41 above). Therefore, where an arbitrator duly appointed by a third person refuses or is unable
to act, the third person (who falls outside the statutory definition of a party) is apparently not
empowered by s IO( I) to appoint a replacement and would be able to do so only if the arbitration
agreement so provides, whether expressly or by necessary implication. As to whether the court can
appoint an arbitrator in these circumstances, sec 84n66 below.
57 The arbitrator's appointment can be terminated with the consent of all the parties to the reference
(s 13(1)). His appointment can be set aside or he can be removed from office by the court (s 13(2)). Sec
104-5 below.
5" Section I0( I).
5 '' 1992 (I) SA 296 (/\) 306D-I. The arbitration clause is quoted at 3001.

''11 Section 12(6).

''' Compare 187 below.

84 Arbitration in South Africa: Law and Practice

his predecessor, an interim award 62 and even a procedural ruling by the first
arbitrator would stand.
Where the need for a substitution arises because the arbitrator died before
completing the hearing and making an award, his estate would not be liable for
the wasted costs. 63 When parties appoint an elderly arbitrator for an arbitration
that might be lengthy, they would be wise to effect an insurance policy on his
life in order to be able to recover any such wasted costs in the event of his dying
before making an award.

3.4.5 Appointment by the court

Where the parties are unable to agree on the appointment of an arbitrator, or
on a procedure which will lead to the appointment of an arbitrator by some
third person, the Arbitration Act provides a default procedure for the
appointment of an arbitrator by the court. 64 The Act does not give the court a
general power to appoint an arbitrator or to fill a vacancy. An applicant
approaching the court to make an appointment will therefore have to show that
the particular situation is covered by one of the paragraphs in the section. 65 A
difficulty may arise where the parties have conferred in the arbitration
agreement the power to appoint an arbitrator on a third person who fails or
refuses to act, as the Act does not deal specifically with this situation_n<•
Depending on the particular circumstances, the party wishing to apply to
court for the appointment of an arbitrator is required to call on the other party,
by a notice in writing, either to appoint an arbitrator or to agree to the
appointment of an arbitrator proposed by the applicant. If the other party fails
to do so within seven days, the first party may apply to the court for an
arbitrator to be appointed. 67 The notice provisions are directory rather than
peremptory, with the result that substantial compliance ( as opposed to strict
compliance) will suffice. 68
Where a party applies to court to appoint an arbitrator, the better view is that
the court is not obliged to make an appointment but has a discretion whether

''2 Compan: 264 below.

"3 Although the arbitrator has not performed his obligation to the parties by making an award. where
his contract with the parties provided for remuneration for his services on ihc· basis of a cnlain rail' per
hour, his estate should not only be able to retain amounts already paiu hul to claim for any an,ounls
outstanding in respect of services rendered (compare however Mustill & Boyd 2.J-1··.'i).
"·' Section 12.
65 ie ins 12(1), (3) and (4).
'"' The same problem existed in s JO of the English Arbitratinn Act of 1950 which was amended in
1979 (bys 6(4) of the Arbitration Act 1979) by the insertion of:, 10(2) to deal with the problem. Where
the reference is to a single arbitrator, one may possibly argue that on a robust interpretation of the South
African section, s 12( I )(a) applies, because all the parties have been unable to agree on the appointment
of an arbitrator. However, on a stricter interpretation, the vacancy exists because the mechanism which
the parties provided to ensure the appointment of an arbitrator has failed to function. A similar problem
will arise if a third person vested with the power of appointment fails to appoint a substitute arbitrator
when required to do so, because of the restrictive wording of s 12(l)(e}.
07 Section 12(1) (conclusion) and 12(2).

''" See Aueridgel'ille Town Council v Livanos t/a Livanos Brothers Electrical (above) at 309E-F. For
the distinction between directory and peremptory provisions. sec 7n62 above.
The Arbitrator 85
to do so or not. 69 In exercising its discretion, the court will bear in mind that it
should not lightly foist upon the parties to a dispute an arbitrator who is not
desired by one or other of them. 70 If the court has to select an arbitrator, the
court will prefer to choose between nominees from different professions where
it can make a choice using objective criteria, rather than to have to make a
subjective choice between two experienced members of the same profession. 71
Although the wording of the section creates the impression that the court, in
making an appointment, must appoint a particular person, in practice, the
court may order a party to make an appointment from a particular profession
designated by the court, 72 or order the party to choose one person from a list
of names contained in the court order. 73 It may be appropriate for the court to
order that the costs of the application be costs in the arbitration, that is a matter
to be decided by the arbitrator when ultimately awarding costs. 74

3.4.6 Conveying the offer of appointment

It would appear that the offer of appointment need not be conveyed to the
arbitrator in writing, and an oral offer would suffice. The Act in stipulating that the
arbitration agreement must be in writing, 75 does not extend this requirement to the
appointment of the arbitrator. Nevertheless it would obviously be prudent that this
be done, to facilitate proof of a consensual appointment if later required. No
69 See Turkstrn v Massyn 1958 (1) SA 623 (T) 625A-B: Tritonia Shipping Inc v South Nelson Forest
Products Corporation [1966] I Lloyd's Rep I 14 (the decision of the judge of first instance that he had
a discretion to refuse (114) was assumed to be correct on appeal ( 116)); Mustill & Boyd 179; Walton and
Vitoria 139. This conclusion is supported by the wording of the section ('and thereupon the court may
appoint an arbitrator'-our emphasis) and the policy consideration referred to in the text below. In
Stewart v City of Harare 1985 (1) SA 34 (Z) 35B. the court, when interpreting the similar wording of s 8
of !he Zimbabwean Arbitration Act, came to the conclusion that the court was under a duty to appoint
an arbitrator. which it could not ultimately avoid. (The court was relying on an older English authority
Re Eyre and Leicester Corporation [1892] 1 QB 136. which has since been judicially explained (sec
Mustill & Boyd 179114).) The court nevertheless declined to choose between the two lawyers put forward
by the parties, and adjourned the matter so that the parties could either agree on an arbitrator or each
submit three names to the court from which it could make an appointment (at J<iC).
70 Sec Pretoria Cinemas (Pty) Ltd v Ki11emas Ltd 1931 TPD 407 at 410 and compare S1ewart v City of

Harare (above) at 35B-36A.

71 See Stewart v City of Harare (above) at 35C-G where the court was asked to choose between two

lawyers. but as stated above. declined to do so. Compare Dipenta Africa Cons1r11ctio11 ( l't_\') Ltd,. Cape
Provincial Administration 1973 (1) SA 666 (C). Herc the court was basically asked to decide whether a
lawyer or an engineer would be the better qualified arbitrator to resolve the particular dispute and
decided in favour of the latter profession.
72 See Alleridgeville Town Council v Livanos 1/a Livanos Brothers Electrical (above) at 303D, where

the appellants were ordered by the court a quo to appoint a retired judge or senior advocate of their
choice as arbitrator within 14 days of the date of the order. The correctness of this form of order was
not challenged on appeal (at 309F-H).
73 See the Dipenta Africa Construction case (above) at 673B-D. where the court directed one party

to choose an arbitrator from a list of three engineers put forward by the other. The court also
conditionally named one of the three as arbitrator. in the event of the former party failing to make his
choice within a specified period.
74 Sec Pretoria Cinemas (Pty) Ltd v Kinemas Ltd (above) at 411: Stewart v Ci1y of Harare (above) at

36D. See 277 below regarding the arbitrator's discretion to award costs.
75 Section I, which defines an arbitration agreement as a written agreement providing for the

reference of an existing or future dispute to arbitration. whether the arbitrator is named therein or not.
Sec 38 above.
86 Arbitration in South Africa: Law and Practice

particular form is required, and the offer may be conveyed by a letter signed by
both parties, or even by one party on behalf of both.

3.5 Acceptance of appointment

The relationship between an arbitrator and the parties who have appointed him
would appear to have some of the characteristics of a contract. 76 There are
reciprocal rights and obligations that flow from the relationship. The arbitrator
undertakes to hear their dispute and make an award, and they undertake to pay
him for his services.
The normal rules for the formation of a contract apply. There must be an
offer and an acceptance, and the appointment takes effect only when the
offcror is informed of the offeree 's acceptance of the appointment. Usually this
presents no difficulties. The arbitrator will be approached by one of the parties
with a request to accept appointment, and he will usually write to both
accepting. But the acceptance does not have to be in writing, and a verbal
acceptance will be sufficient to constitute the appointment. The acceptance can
even be implied, as when an arbitrator, having been asked to act, requests the
parties to make submissions to him, or to attend the preliminary meeting.
In -accepting appointment, the arbitrator may stipulate certain conditions,
such as acceptance of his tariff of charges and of arrangements to be made to
guarantee payment of these charges, and any conditions he may wish to impose
on the conduct of the arbitration, such as a condition that certain rules or
procedures shall apply. This would not then constitute true acceptance of
appointment such as to bring a contract into existence; it would be necessary
for both parties to accept these conditions to bring this about. This would give
an unwilling party to the arbitration the opportunity to frustrate his
appointment, by objecting to the arbitrator's conditions of appointment. 77
However, subject to the terms of the arbitration agreement, the arbitrator has
the power to determine the procedure and does not therefore require the
acceptance of both parties that particular procedural rules he followed. 7 ~ The
arbitrator's remuneration is discussed in the next section.

3.6 The arbitrator's fees

3.6.1 The arbitrator's right to remuneration
An arbitrator is entitled to be paid a reasonable fee for his services. 79 This was
not always the case. In earlier times, when he was often an 'obliging
neighbour', it was considered that the arbitrator was performing a public

76 But see 92-5 below.

77 If the arbitrator's relationship with the parties was to be construed as one of status, there would
then be no need, it is submitted, for matters such as the scale of his fees to be conditions of appointment.
They would be natural aspects of his status; he would be entitled to charge a reasonable fee.
78 Sec 97 below.

n Davis (1%6) 61; Jambs 151; Mustill & 130yd 2JJ.

The Arbitrator 87
service and ought not to charge for doing so. 80 The current thinking is,
however, that he performs an important commercial function to which he
hrings expert skills to hear and is thus entitled to be appropriately
remunerated. Frequently the arbitrator will be a successful and busy
professional or business person whose time is valuable, and who has a right to
be suitably recompensed for the time devoted to an arbitration. There is,
however, still a school of thought that holds that, while the arbitrator is entitled
to be paid, his charges ought to be modest because he is performing a public
service, and also because the conduct of arbitrations is not his principal means
of earning a living. 81
There is no universally recognised tariff for conducting arbitrations. Some of the
professional associations recommend a scale of fees for those of its members who
conduct arbitrations, as does the Association of Arbitrators, and these recommen-
dations are fairly consistent. In the final instance, however, it is for the arbitrator
to determine what he considers to be an appropriate fee in the circumstances,
having regard to the complexity of the issues, the demands that will be made on his
time, the expert knowledge and experience that he will make available to the
parties, and perhaps even the personal circumstances of the parties.
It is implied that where there has been no prior agreement on the fee to be
charged by the arbitrator he is entitled to a reasonable fee. 82 A cautious
arbitrator would be well advised to secure the agreement of the parties to the
tariff of his fees to avoid any later allegation of overcharging and the possible
reduction of the fee by the taxing master. If there has been no prior agreement
as to the amount of an arbitrator's fees, a party who considers the fees to be
excessive may require that the fees be taxed 83 by the taxing master of the
Supreme Court, 84 and if the party has already paid fees exceeding the amount

"" In England. there is even some nineteenth century authority for the view that the office of
arbitrator is honorary (sec Mustill & Boyd 233; Parris 86). This would appear to be an argument in
favour of holding that the arbitrator's relationship with the parties, at least at that time. was one of
stalus. and not conlrm:lual. 1lowever. lhcre is Soulh African aulhorily lhal an arhilralor may sue· lo
recover his fees on the basis of a contract of mandate (Miller v Kir.1·te11 1917 TPD 489 al 491-see furlher
93 below). Originally. a rnandatary was required to perform his mandate gratuitously. It is only in our
modern law that he has acquired a contractual remedy to sue for remuneration (sec De Wei & Yan Wyk
386; Miller v Kirstl'II 1917 Tl'D 489 at 491).
81 Thus, for example, the various Master Builders' Associations. which lay down fees to he charged

by their members who act as arbitrators in disputes involving other members, set such fees al a fairly
nominal level. The Construction Industry Arbitration Rules of the American Association of Arbitrators
(rule 51) provide that the arbitrator will serve without compensation for the first day unless the parties
otherwise agree. The Commercial Arbitration Rules (rule 51) of the same association anticipate that in
shorter cases. the arbitrator will not receive a fee.
82 Davis ( 1966) 61; Walton & Vitoria 115; Mustill & Boyd 233nl. This may also be inferred from

s 34(1) of the Arbitration Act which makes provision that the fee may be taxed where the parties have
not agreed the amount of the fee.
83 i e assessed.
84 In terms of s 34(1), which also applies to the fees of an umpire. On its wording. the fees must be

agreed with all the parties to the reference to exclude a party's right to have the fees taxed. The wording
of the corresponding provi~ion of the English Arbitration Act 1950, s 19(2), is different. It appears to
envisage that an arbitrator could exclude one party's right to have his fees taxed by agreeing his fees with
that party but not with the other (K/S Norjahl AIS v Hyundai Heavy Industries Co Ltd [1991] I Lloyd's
Rep 260 (OB) 268).
88 Arbitration in South Africa: Law and Practice

so assessed, he will be entitled to recover the difference. 85

While the Act confers this power on the taxing master, he is left without
guidance as to the basis on which to assess an arbitrator's fees. There is no
established tariff for arbitrators' fees, nor, it is submitted, is the taxing master
in a position to evaluate the work done by an arbitrator in making an award and
the time which ought reasonably to be expended in so doing. At best, the taxing
master would have to adopt a fairly arbitrary approach. 86 In practice, it appears
that this provision in the Act is very seldom invoked, possibly because
arbitrators usually take good care to ensure that they have obtained the parties'
acceptance of their tariff of fees before embarking on arbitrations.
Applying the principles pertaining to a contract of mandate, the arbitrator is
entitled to his fee only when he has discharged his mandate and published his
award, unless the parties settle or abandon the dispute, in which case he is
entitled to reasonable recompense for the time that he has spent on the matter. 87
Many arbitrators make arrangements for payments on account of their fees at
intervals during the hearing. This not only ensures a satisfactory cash flow,
particularly when the hearing may be lengthy and protracted, but it also ensures
that if the dispute should be settled or abandoned without a concomitant
arrangement for the payment of the outstanding balance of his fees, he will at
least have received some recompense for the time he will have spent.
It is a not infrequent occurrence that the parties settle their dispute only a few
days before the date on which the hearing is scheduled to start, and sometimes
even on the morning of the first day of the hearing, leaving the arbitrator, who may
have made himself available for a number of clays, or even weeks, with time on his
hands and the sudden demise of a source of fees. If he has a busv profe~sional
practice, he may have other work that he can at once turn to, but it is very likely
that, because of his commitment to the hearing, he has made arrangements for hi.,;
work to be done by others and may even have refused work. This is a situation that
frequently befalls counsel, who have no compunction about charging a
cancellation fee, and it is submitted that an arbitrator is equally entitled to charge
a cancellation fcc. 88 An arbitrator who wishes to recover a cancellation fee should
agree this matter with both parties before accepting appointment. If he waits until
after he has accepted appointment, he will be in an invidious position if only one
of the parties is prepared to agree. 80

85 Davis (1966) 62.

86 The arbitrator is entitled to be heard by the taxing nwstcr (s 34( 1)). The taxing 111astcr's decision
may also be taken on review to the court (s 34(2)).
" 7 Compare Mustill & Boyd 243-4; De Wet & Van Wyk 389.
HH The only hasis on which he could recover such a fee is, however, on the basis or contrncl. public

policy considerations being against the recowry or a cancellation kc on any other basis (sec Musi ill &
Boyd 244).
89 See K!S Norjahl AIS v Hyundai Heavy Industries Co Ltd [1991j I Lloyd's Rep 260 (QB); KIS

Norjahl AIS v Hyundai Heavy Industries Co Ltd [ 1991] Lloyd's Rep 524 (CA). A cancellation fee equal
to 50 % of the fee chargeable for the first five days of the hearing, applicahle where the cancellation was
less than five days before the start of the hearing, would seem to be reasonable in most normal
arbitrations where the arbitrator is a professional man who may have other work to turn to. Compare,
too, the observations of Leggatt LJ in the court of appeal in K!S Norjahl A!S v Hvumlai Heal'y lnd11.1·1ries
The Arbitrator 89

3.6.2 Ensuring the payment of fees

The arbitrator can find himself in a precarious pos1t10n when it comes to
presenting his account for fees. Normally it is the losing party who will be liable
as between the parties, 90 and his feelings of animosity towards an arbitrator who
has made an award that he finds repugnant can only be heightened by being
asked to pay for it. He is likely to prove a very reluctant and recalcitrant payer.
The Arbitration Act provides that an arbitrator is entitled to exercise a lien on
his award until he has been paid his fees. 91 It used to be common practice for the
arbitrator, when he had completed his award, to write to both parties advising
them that the award was ready to be uplifted and that it would be handed to the
first person who applied for it and paid his fee. •i 2 If it was the successful party who
did so, he would have been able to recover his disbursement on the fee from the
other party. This was an arrangement which was satisfactory in most cases, but
it was not without potential difficulties. The applicant's cheque might have been
dishonoured, although this could have been avoided by insisting on a
bank-guaranteed cheque. or even cash. Nor was this proof against the parties
who failed to uplift the award. Nor did it assist the arbitrator to collect his fee
when the parties settled or abandoned the matter. But the principal dil'firnlty is
that the arrangement docs 1101 appear to satisfy the requirement or the
Arbitration Act regarding the publication of the award.'11
Where the parties arc legally represented, the arbitrator can ask the
attorneys. jointly and severally, to guarantee payment of his fees. in the same
way that attorneys guarantee the payment of fees of counsel. Attorneys will
generally be prepared to comply with this request 94 and will see to it that their
clients deposit sufficient funds into their trust accounts to cover the likely fees.
They will, of course. need to be advised of the estim..ited amount of the fees,

Co Ltd (above) at 5.1.1. He regarded as eminently fair a formula whereby the arbitr.itors would hal'e
hcen paid 25 ';; of the IL-cs 101 a /,11-d:iv he:iring hy instalments of one-sixth. one-third :ind 011c-h:ilf ol
the amount, payable n:spcctively two months before. one month bdore, :,ml on the lirst day ol the
hearing.
•m The arbilralor will normally provide in his award thal the loser must pay costs including the
arbitrator's fees (sec 277 and 280 below). This determines liability between the parties themselves and
does not affect the arbitrator's contractual right to recover fees from the successful party (sec Miller,.
Kirsten 1917 TPD 489 at 491, discussed below).
91 Section 34(4). The English common law also gave the arbitrator a lien on his award (sec Mustill &

Boyd 234115; Smith 31 ). In South African law, the recognition of a lien is consistent with the position of
a mandatary (sec De Wet & Van Wyk 388).
92 This practice is still not uncommon in England (Mustill & Boyd 234).

'" Section 25(1) requires that '[t]he award shall be delivered by the arbitration tribunal, the parties or
their representatives being present, or having been summoned to appear'. (There is no corresponding
provision in the English legislation-see 267 below.) The arbitrator is therefore apparently required to
summon both parties to be present at a specified time and place when he delivers his award. If they
attend without having paid his account, he could withhold the award until the account has been paid or
security furnished (s 34(4)).
''4 An attorney acting for a financially weak party will not, however, be prepared to give this
guarantee.
90 Arbitration in South Africa: Law and Practice

and the arbitrator may need to be on his guard, if the arbitration is a lengthy
one, to update this estimate from time to time. There is, however, no special
sanction (apart from suing on the guarantee) against attorneys who do not pay
an arbitrator's fee promptly, as there is in the case of counsel's fees.'>, This
procedure is therefore not without potential difficulties. It could not, of course,
be applied where the parties are not legally represented.
There is no reason in principle why the arbitrator should not require the
parties to pay into his own trust account an amount to cover his anticipated
fees, and to require further amounts to be paid in from time to time, should the
proceedings be protracted and the fees account mount up. Some arbitrators
may have a reluctance to ask for what might appear to be payment in advance
of any work being done, and in such cases one of the professional associations
or a firm of attorneys would probably be prepared to hold the money in trust.
Even this arrangement can be hampered by one party, usually the defendant,
who refuses to co-operate and make payment on the grounds that he is a
reluctant participant, he did not bring about the arbitration proceedings and he
cannot be compelled to make a prepayment. This impasse may be resolved by
the claimant paying the full amount required, most or all of which he will hope
to recover when the award is published.
A bank guarantee or other form of guarantee may also provide the arbitrator
with the necessary protection, provided that he is satisfied that the guarantee
cannot be revoked. As in the case of a cancellation fee, it is advisable for the
arbitrator to obtain the parties' agreement to his right to require security,
before accepting appointment. 96
Where an arbitrator has failed to ensure payment of his fees, he may find
himself obliged to sue 97 the parties. It was held in Miller v Kirsten 98 that the
arbitrator's right to sue is governed by the principles of the contract of
mandate. Therefore, where two parties jointly give a mandate to the arbitrator,
they arc not liable jointly and severally for the arbitrator's fees. Therefore,

9 ' An attorney who has briefed counsel and who faib to settle counsel's account within a certain

period, could find that he has been blacklisted and is in consequence unable to obtain the services of any
counsel who belong to the relevant bar association.
96 See n 89 above. Although it was held in Schneier and London Ltd \' G/uckmann ( I) 1925 WLD 42

at 46-8 that it was not an irregularity for an arbitrator to require security for his fees after accepting
apeointment, it would appear that both parties gave their consent to this right.
7 The normal basis for recovery is contractual. As to whether he can recover on the basis of status,
in the absence of contract, sec 95 below. Where the arbitration agreement provides for two arbitrators,
each party appointing one, the contractual approach would entitle an arbitrator to sue the party who
appointed him, but there would not necessarily be a contractual nexus that would provide grounds for
suing the other. (An umpire appointed by the arbitrators who had no contractual nexus with either party
would be placed in a similar difficult position, unless the arbitrators can be regarded as the agents of the
parties in making the appointment.) An arbitrator appointed by one party may be able to argue, under
South African law, that the arbitration agreement authorising each party to appoint an arbitrator
operates as a stipulatio alteri, giving him by virtue of his accepting appointment under that agreement,
a contractual claim for his fees against the other party.
98 1917 TPD 489 at 491.
The Arbitrator 91

unless the contract provides otherwise, he is entitled to recover only half of his
fees from each party.

3.7 Difference between an arbitrator and an umpire

Occasionally arbitration agreements provide, or the parties decide, that each
party shall nominate an arbitrator and the two arbitrators shall sit together and
jointly try the issues. 99 This, as has been stated earlier, 100 is a way of
overcoming the problem where the parties cannot agree on the appointment of
an arbitrator.
There is abundant authority for the proposition that, even though the
arbitrators are each appointed by opposing parties, they should be non-partisan
and objective in dealing with the issues and ought not to consider themselves as
the agents or advocates of the respective parties who appointed them. I0I
There is a strong possibility that sooner or later there will be a deadlock
between the two arbitrators either as regards a procedural matter or the award
itself and to resolve this the Arbitration Act 102 makes provision for them to
appoint an umpire, whose function it will be to arbitrate on those issues on
which they cannot reach agreement. This power to appoint an umpire may,
however, be excluded in the arbitration agreement. I03 The Act further provides
that if the arbitration agreement makes provision for three arbitrators, the third
being appointed by the other two, then the third arbitrator shall be regarded as
an umpire unless the agreement expresses a contrary intention. 104
The difference between an arbitrator and an umpire has been defined
judicially as follows:
'[T]he essential distinction between an umpire, properly so-called, and a third
arbitrator is whether, when called in, he is vested with the sole power to make the

w Although seldom encountered in domestic arbitrations, this is a very common arrangement in

maritime and international arbitrations, where the custom is for each party to appoint an arbitrator of
his own nationality and so overcome the fear of an arbitrator of another nationality (or even worse. of
the other.party's nationality) who might take an alien view of the party's case.
1011 Sec 82 above.
1111 Graaf/'.l?<'itll'I Municipality v Jansen 1917 CPD 604: Davis (1966) 2, 23; LA WSA vol I 'Arbitration·

para 470112. In certain commodity and shipping disputes in England, the two arbitrators appoint.:d by
th<: parties function as such until they arc unable to agree. The arbitrators then call in an umpire with
juris<.liction to <.lcciuc the case an<.1 each arbitrator hccn111es the advocate of the party who appointeu him
to argue th:1t party's case before the umpire (see generally Mustill & Boyd 258-64; Parris 32, 93-4 who
refers to the procc<.lurc as a 'London arbitration').
1112 Section l l(l)(a).

"" Seeton I1(1)(a).

104 Section l l(l)(b}. The corresponding provision in the English Arbitration Act of 1950, namely

s 9(1), was amended in 1979 (bys 6(2) of the Arbitration Act 1979) to delete this provision. The result
is that in English law. unless the arbitration agreement provides otherwise, the third arbitrator
appointed by the other two will be treated as an arbitrator. not an umpire. and the tribunal may operate
by majority decision (s 9 (as amended); Mustill & Boyd 188).
92 Arbilration in South Africa: Law and Practice

award-in which case he is clearly an umpire-or he merely becomes an additional

member of the arbitration tribunal-in which case he is a third arbitrator.'wo
The Act contains regulatory provisions regarding the powers of the umpire to
the extent these are not modified or excluded in the arbitration agreement. 1"''
From these, it is clear that the umpire acquires powers to act and enter into the
reference only once the arbitrators have disagreed on a point and referred it to
him, 107 and this, of course, may never happen. Although he is entitled to attend
the hearing, he would not be entitled to any fees for such attendance unless the
parties should agree otherwise or unless he is required to resolve some issue by
the arbitrators. 108 If he should attend the hearing, he will not be entitled to
discuss the issues with the arbitrators, nor to participate with them in making
the award. Once the arbitrators have disagreed on a point, however, and have
referred it to the umpire, he becomes seized with that issue, and they lose all
further authority in respect of that issue. 10'1 Once an umpire enters into the
reference, he acquires all the powers of a sole arbitrator. 110
As stated above, 111 the overwhelming majority of arbitration agreements in
South Africa provide for a reference to a single arbitrator. Where the parties
wish to have more than one arbitrator, the question arises whether a reference
to more than one arbitrator is really necessary in view of the increased expense,
and if the parties so resolve, whether the agreement should provide for an
umpire or for a third arbitrator. It has been said in this regard:
'In very large and complicated arbitrations it is greatly preferable to appoint one
arbitrator and for the parties to agree, if it is thought that he should have further
assistance, that he should sit with one or more assessors, or alternatively to appoint
three arbitrators, one to be chairman and to provide for majority decision. Umpires
should only be appointed if a genuine two-stage arbitration is desired in the event of
the first stage leading to disagreement, but it is difficult to believe that this
arrangement could be suitable for the complicated and expensive disputes involved in
building and engineering arbitrations. ' 112

3.8 Legal status of an arbitrator

3.8.1 The relationship between the arbitrator and the parties
Much of the earlier development of arbitration law was concerned with the

"" Sec Kannenberg v Gird 1966 (4) SA 17:l (C) 179A-B. On lhe facts. the person described in the
arbitration agreement as an ·umpire' was in reality a third arbitrator (sec l79B-D). Sec, loo. the
definition of an 'arbitration tribunal' in the Arbitration Acts I as 'the arbitrator. arbitrators or umpire
acting as such under an arbitration agreement' (our emphasis).
' 0 " Section 19. Sec also 212-13 below.
1117 Section IlJ/c/. The umpire may also act if the arbitrators have allowed the pe1iod for making their

award 10 expire.
1"" Section 19(/J).

" 1'' Section l<i(r).

11 " Section 19/d).

111 Sec para 3.4. J. .

112 Duncan Wallace 823. Sec also Kerr ( I 9801 /JL) 177-8. The umpire is likdy I<> he at least as skilled

and experienced as the arbitrators. It seems contrary to common sense to hold the best person in resl'l"ve
in case the other two cannot agree.
The Arbitrator 93
need for effective remedies to enforce the arbitration agreement so that the
parties duly submitted their dispute to arbitration and continued with the
process until they received an award. 113 Even in the present century, at a stage
when the fees charged by arbitrators were modest and arbitrations were
completed relatively quickly, the statutory provisions for removal of an
arbitrator and challenging his award were usually adequate for a party or
parties faced with a dilatory or incompetent arbitrator. In recent years this has
changed. An arbitrator in a complex and lengthy arbitration, where he has
been appointed because of his special expertise, cannot afford to write off
substantial fees in the event of non-payment. Conversely, the statutory
remedies of removal from office 114 in the middle of a complex arbitration or the
right to challenge a wrong award on limited grounds' 15 may no longer be
regarded as suitable remedies by a party who has incurred substantial financial
loss because of the arbitrator's dilatory conduct of the proceedings or his
delivery of an award which is demonstrably wrong on the merits, but which
does not justify it being set aside. Under these circumstances, parties may in
future seek new and improved remedies in the courts, which will make it
necessary for the courts to consider a matter which up to now has been
comparatively neglected, namely the legal basis or bases of the legal
relationship between the arbitrator and the parties. 116
There are three possible theories to explain the relationship between the
arbitrator and the parties. 117 The first is that the relationship is contractual, the
second is that it is based on status and the third is that the relationship combines
elements of status and contract. When the parties or the arbitrator rely on
statutory provisions, it is possible for the court to decide to treat the issue
purely as a matter of interpreting a statute, thereby making it unnecessary to
discuss or apply these theories.
The contractual theory finds some support in both the case law and the
Arbitration Act. In Miller v Kirsten, the court accepted that when two persons
ask a third to arbitrate a dispute between them, a contract of mandate comes
into existence between the disputants and the arbitrator. If nothing is said
about his remuneration there is an implied term that he is entitled to fair
remuneration for his services. 118 The Arbitration Act also envisages that the
arbitrator can enter into an agreement with the parties in respect of his fees. 119
There is support for the contractual theory in certain recent English

'" Sec Mustill & Boyd 219. Although the statement is made of English law. a perusal of
Zimmermann 526-8 and Voet 4.8.22 shows that similar problems existed in Roman law and were still
discussed by the Roman-Dutch writers.
11 ·1 In terms of s 13(2). Sec I04-5 below.
115 Sec 291 below regarding the grounds on which a court may set aside an award under s 33.
11 '' Sec Mustill & Boyd 219-20; Smith 17.
117 Sec generally Mustill & Boyd 220-3; Smith 17-37.
118 1917 TPD 489.
11 '' Section 34(1).
94 Arbitration in South Africa: Law and Practice

decisions. 120 However, the relationship between the arbitrator and the parties
cannot be satisfactorily accommodated by the ordinary rules of the contract of
mandate. For example, although a mandator may sue the mandatary for
damages suffered through the negligent or incompetent performance of the
mandate, 121 no such action has yet been recognised against an arbitrator. 122
The contractual theory would be more convincing if the contract is regarded as
one sui generis . 123 Where the arbitration tribunal consists of more than one
arbitrator, with each party having the right to appoint an arbitrator, the
existence of a contractual relationship between one party and the arbitrator
appointed by the other is not self-evident. 124 One could possibly construe the
arbitration agreement as a variant of the stipulatio a/teri (contract for the
benefit of a third party), with the arbitrator becoming a party on acceptance.
Alternatively the party making the appointment could be regarded as both
principal and agent of the other in making the appointment.
The English courts have made use of implied terms to overcome some of the
difficulties inherent in the contractual approach. This tendency has on at least
one occasion met with disapproval from our courts where an implied term was
used in English decisions instead of the more appropriate yardstick of public
policy . 125 One situation from the arbitrator's point of view which is admirably
dealt with by the contractual theory is the question whether the parties can vary
the arbitration agreement after his appointment to alter his procedural powers
without his consent, as the arbitrator's powers are subject to the arbitration
agreement. 126 If there is a tripartite agreement between the arbitrator and the
parties once he accepts appointment, incorporating the terms of the existing
arbitration agreement, the answer is clearly in the negative.
In terms of the status approach, the arbitrator becomes the holder of an
office and the courts will assert, on grounds of public policy, that certain rights
and duties are conferred on the arbitrator by his assumption of that office . 127 By
way of analogy, one can refer to the position of a company director. He
assumes the office of director by virtue of his appointment. The constitution of
the company is a contract between the company and its members and its
members inter se, 128 but a director is not by virtue of his office a party to the
contract. By analogy, although the arbitrator is appointed pursuant to an

120 See Smith 20-2; K!S Norjarl AIS v Hyundai Heavy Industries Co Ltd (1991] 1 Lloyd's Rep 260 at

266. On appeal two judges seem to have accepted the contractual approach (sec K!S Norjarl AIS 1·
Hyundai Heavy Industries Co Lrd [1991] 1 Lloyd's Rep 524 at 531-2, 535). whereas the third seems to
have preferred a combination of contract and status (see n 131 below).
121 See De Wet & Van Wyk 385.
122 Sec JOI below.
12 ' In modern German law, the arbitrator acts on the basis of a contrnctual relationship .rni g('//eri.1·

between himself and the parties to the dispute (sec Zimmermann 51.J).
12•1 Sec further Mustill & Boyd 221-2 and Smith 24-34 regarding difficulties with the contractual

approach.
m See Van Heerden v Sentra/e Kunsmis Korporasie (Edms) Bpk 1973 (!) SA 17 (A) 29A-H and
compare Smith 22-4.
121' See 97 below.
127 Sec Mustill & Boyd 221.
128 Sec the Companies Act 61 of 1973 s 65(2); Cillicrs & Bcnadc 73-(1.
The Arbitrator 95

arbitration agreement between the parties, he acquires powers and duties by

virtue of his office and independently of any contract between himself and the
parties. The analogy cannot be taken too far, as it is well established that the
director is liable to the company for a breach of either his fiduciary duty or
the duty of care and skill. Supporters of the status theory accept that the rights
and duties flowing from the office of arbitrator can be supplemented or
modified by contract. 129 There is some tenuous support in the Arbitration Act
for the position that the arbitrator is entitled to a reasonable remuneration for
his services by virtue of his office. 130
We submit that the most satisfactory explanation of the relationship between
the arbitrator and the parties is that it is one sui generis involving elements of
both status and contract. 131 This gives the parties and the arbitrator the
freedom to use the consensual basis of arbitration to regulate their relationship
as they think fit, subject to peremptory provisions of the Arbitration Act and
public policy. Where the contract and the Act are silent, the courts will be able
to develop the rules relating to the arbitrator's office with due regard to public
policy and modern commercial requirements.

3.8.2 Arbitrator and judge compared 13 2

It is often considered that an arbitrator is a lay judge, and from that proposition
the rights and duties of an arbitrator are derived by analogy-often
erroneously. m Many of the desirable attributes of an arbitrator1.1 4 arc similar
to those of a judge, but there are some significant differences. A judge is
appointed by the Minister of Justice from the ranks of senior counsel and his
appointment is normally terminated only by retirement, and he is allocated to
a particular case by the Judge President; the arbitrator is appointed by the

,:., See Mustill & Boyd 221 n5.

13 " Sees 34(1) which provides that the arbitrator's fees arc subject to taxation. unless fixed by an
agreement with the parties. In the absence of such agreement the arbitrator is entitled to charge for his
services by virtue of his office. Sec, too, Smith 20 regarding ss 18 and 19 of the English Arbitration Act
of 1950.
131 See the judgment of the Vice-Chancellor in K!S Norjarl AIS v Hy11ndai Heavy lnd11stries Co Ltd

[I 991] l Lloyd's Rep 524 at 536- 7 who after referring to the status approach of Mustill & Boyd at 222-3
said:
'For myself, I find it impossible to divorce the contractual and status considerations: in truth the
arbitrator's rights and duties flow from the conjunction of those two clements .... On appointment.
the arbitrator becomes a third party to [the) arbitration agreement, which becomes a trilateral
contract. ... Under that trilateral contract, the arbitrator undertakes his quasi-judicial functions in
consideration of the parties agreeing to pay him remuneration. By accepting appointment, the
arbitrator assumes the status of a qu,1si-judicial adjudicator, together with all the duties and
disabilities inherent in that status. Among those disabilities is an inability to deal with only one of the
parties to the arbitration, let alone to bargain with one party alone for personal benefit.·
(On the facts, the arbitrators attempted to negotiate a cancellation fee after accepting appointment. One
party was prepared to agree but the other was opposed. The court found that the arbitrators acted
properly in not agreeing a cancellation fee with one party, unless the other party assured them that it
had no objection.)
132 See further Mustill & Boyd 227; Hausmaninger 17-19.
133 Sec Mustill & Boyd 227 and generally Eveleigh 77-98.
134 See 73 above.
96 Arbitration in South Africa: Law and Practice

parties, who generally choose him on the basis of his technical expertise and
experience, rather than his legal knowledge, and his appointment automatically
comes to an end when he makes his award. The judge's employer is the State,
which pays him a salary, and on his retirement a pension, whereas the
arbitrator is employed by the parties who pay his fee for his services in
determining their dispute.
Both must hear the matter referred to their judgment in an impartial
manner: they must hear both sides, and while their judgment must be fair, they
may not go beyond the law or any contractual arrangement between the parties
in doing so. 135 In hearing the case, the judge is bound by rigid procedures,
whereas the arbitrator may, with the agreement of the parties, enjoy very
considerable latitude in the manner in which he conducts the hearing. 11 "
A judge pronounces on the law and applies it to the issues before him. The
extent to which his judgment may create new rights and obligations is a matter
of some difficulty and controversy . 137 The effect of a valid award by an
arbitrator will usually be to create new rights and obligations between the
parties, and it will either dissolve existing rights or bring an end to a dispute as
to whether certain rights existed or not. 138 In the absence of voluntary
compliance, the award can be enforced only with the approval of the court. i:w
An arbitrator has no power to enforce his award. The party wishing to enforce
the award will sue on the award and not on the original contract from which the
dispute arose. Unlike an award, a judgment of the court can be executed
forthwith without a further order of court. Whereas a judgment debt lapses
through prescription only after 30 years, an arbitrator's award will acquire the
status of a judgment debt only once it has been made an order of court. 140 A
judge has certain powers over the parties who appear before him: he can
require them to furnish security for costs in certain circumstances 141 and impose
penalties for contempt of court. An arbitrator can do none of these things. 142
The legal principles embodied in the judgment of a judge constitute a binding
precedent on all courts of equal or lesser standing, whereas an arbitrator's
award is binding only on the parties to the award. On the other hand, an

135 See further 165-6 and 251-3 below for the position of an arbitrator as regards these aspects.
136 See eg 201 and 204 below.
137 Compare the discussions of Swadif (Pty) Ltd v Dyke 1978 (I) SA 928 (A) in Christie (1991) 542-4

and Lubbe & Murray 733-5 respectively.

138 Compare Davis (1966) 49.
139 Section 31 and 272-3 below.
140 The Prescription Act 68 of 1969 s 1 l(a)(ii). Unless it is made an order of court, an arbitrator's

award will prescribe after three years (Prescription Acts 11 (d}, but compare Blaas v Atha11assio11 1991
(I) SA 723 (W) 724C, 725H-726A, discussed at 275 below).
141 See 130 below.
142 Compares 22 which imposes criminal liability for various forms of misconduct in connection with

arbitration proceedings, in an attempt to ensure that the arbitrator's authority is respected. Moreover,
the arbitrator can be authorised by the arbitration agreement to require security for costs (see 13 I
below).
The Arbitrator 97

aggrieved party often has the right to appeal against the judge's judgment,
whereas no appeal lies against an arbitrator's award. 143

3.9 The procedural powers and the duties of an arbitrator

As we have seen, there is some uncertainty regarding the legal basis of the
relationship between the arbitrator and the parties to the arbitration. The legal
principle as to the extent of the arbitrator's procedural powers, however, is
clear.
In a much quoted passage in Bremer Vulkan Schiffbau und Maschinenfabrik
v South India Shipping Corporation Ltd, 144 the English judge, Lord Diplock,
said:
'By appointing a sole arbitrator pursuant to a private arbitration agreement which
does not specify expressly or by reference any particular procedural rules, the parties
make the arbitrator a master of the procedure to be followed in the arbitration. Apart
from a few statutory requirements ... he has a complete discretion to determine how
the arbitration is to be conducted ... so long as the procedure he adopts does not
offend the rules of natural justice. ' 14s
The South African courts have on occasion adopted a similar attitude. For
example in Anshell v Horwitz it was stated: 146
'[I]t seems to me that the arbitrator bas the control of the proceedings before himself,
and unless his conduct of the proceedings is grossly irregular or contrary to natural
justice the Court cannot interfere.'
It is clear from these authorities that the arbitrator may determine the
procedure to be followed in an arbitration subject to three important
qualifications. First, the powers of the arbitrator are subject to the provisions
of the arbitration agreement. 147 Therefore, if the arbitration agreement
provides that the arbitration must be conducted according to rules stated in the
agreement or incorporated by reference, then the arbitrator must conduct the
reference in accordance with those rules. To the extent that the rules are silent
on a particular point, the arbitrator may decide the procedure subject to the
further two qualifications below. The parties could however agree, perhaps on
the advice of the arbitrator, to depart from the procedure provided for in the
arbitration agreement in the light of the particular circumstances. 148 In deciding
the procedure he should follow, the arbitrator will normally consult the parties.
Where he proposes a procedure which is not contrary to the arbitration
agreement, but it is only supported by one of the parties, the arbitrator would

'" Scclion 28 of the Arhilr:ition Act. The parties may indeed contract in the arbitration agreement
for a right of appeal hut this can only he to another arhilration tribunal. They cannot confer such right
on the court (sec Goldschmidt v Foth 1974 (I) SA 576 (T)).
144 [1982] AC 909 at 985.
145 Sec, too, the slightly earlier English decision of Carlisle Place Investments Ltd v Wimpey

Construction (UK) Ltd 15 BLR 109 (QB 1980) 115.

14 " 1916 WLD 65 at 67.
147 See Carlisle Place Investments Ltd v Wimpey Co11structio11 (UK) Ltd (above) at 115-16.
148 See, however, 86 and 94 above as to the extent to which the arbitrator may be able to limit, in his

terms of appointment, the parties· right to adopt procedural variations which he opposes.
98 Arbitration in South Africa: Law and Practice

be entitled to direct that the procedure should be followed, notwithstanding the

opposition of the other party, subject to the further two qualifications below.
Secondly, the power of the arbitrator to determine the procedure to be
followed is subject to the provisions of the Arbitration Act. Section 14(1)
contains a number of procedural powers, which are available unless the
arbitration agreement provides otherwise. The section differs from the
corresponding provision of the English statute, in that it details a number of
specific powers, as opposed to defining the arbitrator's power to conduct the
reference in general terms. 149 In applying his statutory powers, the arbitrator
must consider whether they have been excluded or modified by the parties in
the arbitration agreement. He must also note that certain of the powers may be
exercised only on the application of a party, for example the power to order
discovery or the delivery of pleadings. 15° Certain powers may, however, be
exercised on his own initiative, for example the power to determine the time
and place of the hearing(s) or to inspect property involved in the dispute. 151
One statutory power, unless the arbitration agreement provides otherwise,
namely the power to receive evidence on affidavit, may only be exercised with
the consent of the parties or an order of court. 152 The arbitrator's authority is
derived from his acceptance of his appointment in terms of the arbitration
agreement. 153 Because of their consensual source, the arbitrator's.powers are,
in principle, limited in their application to the parties to that agreement.
Therefore the arbitrator cannot issue a subpoena to compel another person to
attend as witness and this power is conferred by statute on a state official. 154
The court also has certain statutory powers regarding arbitral procedures. 155 To
some extent these overlap with the powers of the arbitrator, for example the
power to order discovery. Others relate to matters where it would be difficult
for the arbitrator to ensure prompt and proper compliance, for example an
order regarding the interim custody or sale of goods or property or the granting
of an interim interdict. Some of these statutory powers of the arbitrator and the
court will be discussed in greater detail in the next two chapters.
Thirdly, the arbitrator must observe the rules of natural justice in his conduct
of the proceedings. In other words, he must act fairly towards both parties in
his conduct of the reference. 156 Where one party believes that he has been
prejudiced by an arbitrator's ruling in a procedural matter, his normal remedy
would be to apply to have the award set aside. Alternatively he could apply to

149 Compares 14(1) (see Appendix I) withs 12(1) of the English Act 1950 which obliges the parties.

subject to the arbitration agreement, to submit to examinati"n by the arbitratM and to produce certain
documents 'and [to] do all other things which during the proceedings on the reference !he arbitrntor or
umpire may require'.
1511 Section 14(l)(aJ.
151 Section 14(l)(h).
152 Section 14(1)(b)(v). Sec further 240 below.
15 ·1 Soulh African Transporl Services v Wilso11 NO 1990 (3) SA 333 (WJ 340('-(j, 3..\113-C.
154 Section I 6(1). See 181 below.
155 Section 21.
156 Carlisle Place Investments Lid v Wimpey Construction (UK) Ltd (above) at 116. See further 165-7

below.
The Arbitrator 99

court to have the arbitrator removed from office. In exceptional cases, a court
may, however, be prepared to review and interfere with a procedural ruling by
an arbitrator while the arbitration is still in progress, where the arbitrator has
exercised his discretion in such a way that there has been a gross irregularity or
a failure of natural justice. 157
An arbitrator who undertakes a reference is under an obligation to both
parties to decide the dispute which has been referred to him. 158 An arbitrator
therefore has three principal duties to the parties in discharging this obligation,
namely (a) the duty to take care, (b) the duty to proceed diligently and (c) the
duty to act impartially. The parties may find. however, that they lack effective
legal remedies in the event of a breach of these duties. 159
Although the arbitrator has a duty to perform his functions as arbitrator with
care, negligence on his part in arriving at a conclusion on the merits of the
dispute will not be a ground for setting aside the award. 160 The question as to
whether a party may sue him for damages because of his negligence is discussed
in a subsequent section. 161
The arbitrator has a statutory duty to use all reasonable dispatch in entering
on and proceeding with the reference and in making an award. 162 Failure to do
so is a ground for his removal by the court. 163 Unless the provision has been
modified or excluded in the arbitration agreement, he is also required by the
Arbitration Act to make his award within four months of entering upon the
reference. Failure to do so will cause his jurisdiction to lapse unless it is
extended by the parties or the court. 164 In a complex arbitration, the
arbitrator's duties may prove to be very time-consuming and, before accepting
appointment, the arbitrator should attempt to assess the demands on his time
which the reference is likely to make, and whether he will be able to meet these
demands. If an arbitrator were for any reason to be unable to complete a
hearing and make an award, it would be necessary for a substitute arbitrator to
be appointed, who would probably commence the hearing de nova, although

157 See Tuesday lnduslries (Ply) Ltd v Condor Industries (Pry) Ltd 1978 (4) SA 379 (T) 382E, 383F-H.
This power exists under the common law. Sec too Carlisle Place lnves/menls Ltd v Wimpey Construction
(UK) Ltd (above) at 115-16 regarding the position in England. In both cases the courts stressed that the
power to interfere would be exercised only in exceptional circumstances.
158 See Carlisle Place Investments Ltd v Wimpey Construction (UK) Ltd (above) at 115.
159 See Mustill & Boyd 224: 'The existence of a moral obligation to perform these duties is
undeniable. The question is whether it is backed by legal sanctions.' The legal nature of the duties also
depends on whether the arbitrator's relationship with the parties is contractual or is one of status (sec
92-5 above).
1'"' See 293 below.
161 See 100-3 below.
162 Arbitration Acts 13(2). Compare the English Arbitration Act 1950 s 13(3) and see KIS Norja/ AIS
v Hyundai Heavy lnduslries Co Ltd (1991] 1 Lloyd's Rep 260 (QB Com Ct) 266. On appeal ([1991] 1
Lloyd's Rep 524 (CA) 535), one cif the judges was of the view that this duty required the arbitrators to
fix a time for a continuous hearing commensurate with a proper and reasonable estimate of the length
of the case. If as a compromise, it is not convenient to the parties to have the hearing in two or more
periods, then other arbitrators would have to be appointed in their place.
163 Arbitration Acts 13(2). See 105 below.
164 See s 23 and 256-60 below.
 Arbitration in South Africa: Law and Practice

he is not obliged to do so. 165 His replacement by a substitute could therefore

involve the parties in substantial additional costs, particularly if they were
represented by counsel. Where the incomplete arbitration were to be halted by
the resignation of the arbitrator, or his removal by the court, or by any other
fault on his part, he could conceivably be held liable to the parties for their
wasted costs. 166
The arbitrator is under a duty to conduct the reference in an impartial
manner. 167 Failure to do so will be a ground for the court either to remove him
from office 168 or to set aside his award . 169
In addition to his three principal duties, discussed above, the arbitrator has
certain additional duties imposed on him by the Act, namely the duty to give
every party to the arbitration written notice of the hearing 170 and the duty
either to keep a record of the proceedings, or to direct how and to what extent
a record should be kept. 171
The appointment of an arbitrator is a personal one. 172 He must, therefore,
exercise his powers and perform his duties personally. He may not delegate his
powers and duties to another person. 173 This principle also applies where the
tribunal consists of more than one arbitrator. 11•1 The arbitrators must normally
act together in conducting the proceedings and making the award, 17 " and
cannot delegate these functions to one of their number, except to the extent
that the Arbitration Act 176 or the arbitration agreement provides otherwise. 177

3.10 The liability of arbitrators for negligence

A judge is immune from suit in his capacity as such: he cannot be held liahk to
165 Secs 12(6) and 83 above.
1"" If his relationship with the parties is seen as being contractual in nature, his misconduct would
arguably constitute breach of contract, and he could in theory he liable for damages. Ir his relationship
is seen to be one of status, another basis must be sought. See further 94-5 above. Where the arbitrator
is removed by the court, the court may award costs of those proceedings against him and may di reel 1ha1
he is not entitled to any remuneration for his services (s 13(3)).
1" 7 See also 165-6 below regarding the rules of natural justice.

"' 8 Section 13(2) and 105 below.

"" 1 Scclion 33 and 292-4 below.

170 Section 15(1) and 177 below.
171 Section 17 and 187 below.

in Even if he is a partner in a professional prac1ice, a member of a close corporation or a director of

a company, he takes on tbe appointment in his personal capacity and not on behalf of the partnership,
corforation or company.
1 3 A lay arbitrator cannot, therefore, delegate the power to decide legal points to a lawyer except in

terms of s 20 of the Act (sec 208 below). See also 245-6 below regarding the possibility of an arbitrato1
being assisted by an expert or assessor. There is, however, no objection to his delegating Jasks of a
purely mechanical nature, such as taking and recording measurements ,ind making calculations, bui he
ought nevertheless to satisfy himself that work which he has delegated in this way has been properly
performed,
174 Sec Kannenberg v Gird 1966 (4) SA 173 (C) 179F-H; Voci 4.8. lh.

m Secs 14(3); Schierhout v Union Govemmelll (Minis/a of Justice) 1919 AD 30 at 44: Ya/es v The
Univasity of !Jophu1/wt.1·w111w (BSC 20 August 1992, unreported (case no M2<J_"\/91 )).
17<, See eg s 14(2) regarding the administration of the oath to witnesses ands 24(2) dealing with the
position where a minority of the arbitrators refuse to sign the award.
177 Where the arbitration tribunal consists of three arbitrators, one of whom is to be chairman, the
arbitration agreement may give the chairman the sole power to decide procedural matters and
interlocutory applications,
The Arbitrator 101

the parties to his judgment for any alleged lack of care or skill in the course of
his judicial duties. 178 The reason for this is public policy: it is considered that he
should be free to carry out his judicial functions as his conscience directs,
without any fear of reprisal from a losing party, who may conceive that an
unsound judgment has caused him prejudice and loss. 179 The losing party is not
left without remedy, however: he may take the judgment on appeal, and if it is
held to be unsound it will be reversed, and an appropriate award of costs will
go a long way to recompense the appellant for his losses.
Until comparatively recently, it was accepted without question that
arbitrators enjoyed the same immunity: we arc not aware of any reported case
in South Africa or a country with an English arbitration law tradition, in which
an aggrieved party succeeded in claiming damages from an arbitrator.
An example of the traditional view is the following statement in Hoffman v
Meyer:
'The principle that a person who in truth docs occupy the position and discharge the
function of an arbitrator or quasi-arbitrator, should not be held liable for negligence
in the discharge of his functions, is one which inherently commends itself. Although
the exact limits of the exemption from liability for negligence have never been
precisely defined, ... it is clear that our law recognises that a person acting in a
judicial nr q1111si-j11dicial capacity is not liable for negligence ... _•rno
The complacency engendered by the traditional attitude was rudely shattered
by a more recent decision of the English House of Lords: Arenson v Casson
Beckman Ru!ley and Co. 181 In an earlier decision, that of Sutcliffe v
Thackrah, 182 which dealt with the liability of an architect who had negligently
issued an over-valued final certificate, the House of Lords confirmed 1K' that an
arbitrator was immune from suit, but held that an architect, when issuing a
certificate, was a valuer, not an arbitrator or even a quasi-arbitrator, because
he did not perform a judicial or quasi-judicial function. Therefore, he did not
enjoy immunity. This decision and the reasoning behind it are entirely in line
with the earlier South African decision of Hoffman v Meyer.
The Arenson case was actually concerned with the liability of auditors for a
negligent share valuation, which they performed as experts, not as arbitrators.
When the case finally went to the House of Lords, the law lords set the cat
among the pigeons by expressing three divergent views on arbitral immunity_ ix-1

17 " As regards other causes of action, Ihe Supreme Court Act 59 of 1959 s 25(1) provides thal no

summons in a civil matter may be issued against a judge without the consent of the courl.
179 For a detailed discussion of the considerations underlying judicial immunity sec Hausmaningcr
1)--1.J. Whereas the doctrine of judicial immunity is accepted in countries with an ( English) common-law

tradition and in South Africa (compare Hoffman ,, M<'rcr 1956 (2) SA 752 (C) 756B-C; it docs not
necessarily apply in civil law jurisdictions (cg Auslria)-scc Hausmaningcr 13-14.
'"" 1956 (2) SA 752 (C) 756A-B.
181 [ I 976] I Lloyd's Rep 179; fJ 977] AC 405. For a discussion of this case and the decision in Sutcliffe

1· Thackrah (sec below) which preceded it, see inter alia Mustill & Boyd 224-6; Marshall 5-8:
Parris 73-6.
182 [1974] l Lloyd's Rep 318; [1974] AC 727.
rn, [1974JAC 727 at 735,744, 754 and 758.
rn 4 Sec Marshall 6-8.
102 Arbitration in South Africa: Law and Practice

The first was the traditional view that a person who is required to perform a
quasi-judicial function by resolving a formulated dispute after receiving and
considering submissions from the parties is immune from suit.
The second view was that of Lord Kilbrandon, who after rejecting the
traditional view, concluded:
'I have come to be of opinion that ... an arbitrator at common law or under the Acts
is indeed a person selected by the parties for his expertise, whether technical or
intellectual, that he pledges skill in the exercise thereof and that if he is negligent in
that exercise he will be liable in damages. ' 185
The third view was the intermediate position adopted by Lord Salmon:
'[A]n expert may be formally appointed as an arbitrator under the Arbitration Acts,
notwithstanding that he is required neither to hear nor read any submissions by the
parties or any evidence and, in fact, has to rely on nothing but his examination of the
goods and his own expertise. He, like the valuer in the present case, has a purely
investigatory role; he is performing no function even remotely resembling the judicial
function save that he finally decides a dispute or diference which has arisen between
the parties ....
I find it difficult to discern any sensible reason, on grounds of public policy or
otherwise, why such an arbitrator with such a limited role, although formally
appointed, should enjoy a judicial immunity which so-called "quasi-arbitrators" in
the position of the respondents certainly do not. ...
The question as to whether there may be circumstances in which a person, even if
he is formally appointed as an arbitrator, may not be accorded immunity does not,
however, arise for decision in the present case, but it may be have to be examined in
the future.' 186
As this was an English decision, and the remarks regarding the liability of
arbitrators were moreover obiter, they are not binding but only persuasive in
this country. Nevertheless, there can be little doubt that the occasion must soon
arise when our courts will have to consider this question, and they will have to
decide whether they are prepared to relinquish the view taken in Hoffman v
Meyer and follow the direction indicated by some of the law lords in the
Arenson case. 187
We suggest that the matter will have to be resolved by the courts 188 with
reference to considerations of public policy . 189 On the one hand the analogy
between a judge and an arbitrator as a so-called 'private judge' cannot be taken
too far. 190 On the other hand, an arbitrator will find it more difficult to act

185 [1977] AC 405 at 431A-B. His rejection of the traditional view was influenced by the hybrid

'look-sniff' form of arbitration (see 2 above and 201 below) where the arbitrator will not ncccssHrily
receive and consider submissions from the parties (at 430H-43IA).
'"6 At 440A-E.
187 If the view is accepted that the relationship between the arbitrator and the parties is a contractual

one, giving rise to conlr.ictual duties of due diligence and care and skill, then liability for brc.ich nf those
duties appears to follow (compare Smith 24).
188 In at least one common-law jurisdiction the matter has now been clarified by legislation. Sec cg

the Commercial Arbitration Act 1984 of the Australian state Victoria, s 51, which excludes liability for
negligence.
189 See generally Mustill & Boyd 226-9; Hausmaninger 14-19, 46-8.
190 Sec 95-7 above; Mustill & Boyd 227-8; Hausmaningcr 17-19.
The Arbitrator 103

impartially between parties of very different financial positions if he knows he

can be sued for alleged negligence. Furthermore, such negligence could only be
established by rehearing the issues determined by the arbitrator, which
undermines the principle of the finality of arbitration proceedings. 191 However,
there are no obvious reasons in favour of protecting an arbitrator against the
financial consequences of failure to properly perform administrative duties. 192
Until the matter is resolved by the courts or by legislation, arbitrators would be
well advised to consider taking out appropriate professional indemnity cover.
It is submitted that, as a matter of public policy, any freedom from suit that
an arbitrator may enjoy in respect of acts of negligence would not extend to acts
of a fraudulent nature. Thus, if an arbitrator were to be removed from office for
a fraudulent act, as distinct from an act of negligence or an unintentional
breach of the rules of natural justice, he might not only be deprived of his
fees, 193 but he will probably be required to bear the costs of the application to
remove him. 194 He could claim no indemnity from liability (contractual or
otherwise) for the losses sustained by the parties in ridding themselves of a
dishonest arbitrator. Similar considerations should apply if an arbitrator's
award is set aside because of fraudulent conduct on his part. 195
To summarise the position, we expect that, when our courts come to consider
this matter, they will hold that the arbitrator is not liable to the parties for want
of skill or care in resolving the dispute and making the award, but may be liable
for fraudulent misconduct that leads to his removal from office or the setting
aside of his award, or for the negligent performance of or negligent failure to
perform administrative duties.

3.11 Termination of the arbitrator's appointment

An arbitrator derives his powers from his acceptance of a reference from the
parties to an arbitration agreement. 196 He thereby undertakes to hear their
dispute and to make an award. When he has completely discharged his duty to
them and made an award which is complete in all respects and disposes of all
the matters in dispute, his powers automatically desert him and he is said to be
functus officio. This termination of his powers is so complete that, if he finds he

191 A party dissatisfied with an arbitrator's performance does have limited statutory remedies. He may
apply to court to have the arbitrator removed from office on good cause shown (s 13(2)) or to have the
award set aside (s 33). However, negligence on the part of the arbitrator is not by itself a gro'und for
setting aside the award (see 292-3 below).
192 e g if the arbitrator undertakes to hire a suitable venue and arrange recording facilities for a certain
dale, but fails to do so. Sec· loo Smith 18 and 33-4, who uses the example of the arhilralor who fails lo
attend a hearing through his own fault by scheduling two matters for the same day. His failure to attend
causes substantial wasted costs to the parties who have hired a venue and stenographers and attended
with their advisers and expert witnesses. Compare Hausmaninger 47-8 who favours liability for grossly
negligent breach of an arbitrator's contractual duties to the parties.
193 Arbitration Act s 13(3). Section 33, dealing with the setting aside of an award, does not confer a
similar statutory discretionary power on the court to deprive the arbitrator of his fees.
194 Compare 106n216 below.
195 But compare n 193 above.
196 See South African Transport Services v Wilson NO 1990 (3) SA 333 (W) 340F.
104 Arbitration in South Africa: Law and Practice

has made a mistake in his award, he has no power to correct it, 197 save for a
clerical mistake or patent error arising from any accidental slip or omission . 198
Unless authorised by the arbitration agreement, one of the parties cannot
unilaterally terminate the arbitrator's appointment, because to do so would be
a breach of the agreement with the other party to submit their dispute to
arbitration and moreover, contrary to the provisions of the Arbitration Act. 199
The arbitrator's appointment can be terminated, however, if both parties
agree to do so. 200 The grounds for this, other than that they had resolved their
dispute, would presumably be that the parties had lost confidence in him or that
he himself has asked to be relieved of his appointment. 201 The arbitrator would
be entitled to his fees for his services to the time of the termination of his
appointment unless this was shown as being due to improper or reprehensible
conduct on his part. On the assumption that the basis for the arbitrator
recovering fees is contractual, it would appear to follow on general principles
that where he had set aside time and refused work in order to be available to
conduct the hearing(s), he might conceivably have a claim for damages in
respect of loss of future earnings. 202 There are indications that the courts would
be reluctant to consider such a claim. 203 Therefore an arbitrator would
probably only be able to recover on the basis of a contractual commitment
fee. 204 Any provision in an arbitration agreement that purported to deny the
parties the right to terminate the appointment of an arbitrator by mutual
agreement would probably be held to be invalid on the grounds that it would

i•n Yoet 4.8.23; Table Bay Harbour Bollr<i v Metropolitlln 1111tl Sulmr/,1111 Rllilwa1• Co111pllll.\' ( 1892) lJ
SC 437 at 438.
198 Section 30 of the Arbitration Act. Sec 272 he low.
1"'' Section 13( I).
21111 Section 13(1); South African Transport Services 1• Wilson NO (above) at 3.J(II-J. 343A-E. Section

13( I) docs not n:quirc the consent of the arbitrat<lr. For Ihc posiiion under the· co1111111Jn law, sec Voci
4.8.21.
201 A further reason might be that they consider his fees t,1 be excessive and they have agreed on a
different arbitrator who will charge less.
202 As part of his duty to mitigate his losses. he would also have to show thaI he was not ahlc to obtain

other work for the relevant period.

203 See KIS Norjarl AIS v Hyundai Heavy Industries Co Lui [ 1991 J I Lloyd's Rep 2(>() (QB) 267.
204 See 88 above. The parties' contractual undertaking would have to he in suflicicnily wide terms to
include a termination of appointment under s 13( I). We submit that the courl may also be prepared to
reduce an excessive contractual commitment fee in appropriate circumstances in terms of the
Conventional Penalties Act IS of 1962. To succeed with a claim for reduclilln under s 3, a pany would
have to show that the excessive contractual commitment fee (11) had become payable as liquidated
damages and (h) in respect of an act or omis,;;or, in n>nllieI wiih a contraeiual ohligaiion (s I (I)). II' the
reason for the arbitrator becoming entitled lo the commitment fee was because one party had needed
the postponement through his failure to prepare timcously for the hearing. he would be in breach of
contract ands 3 would arguably apply. Where the arbitrator has become entitled to the commitment fee
because his services are not required because the dispute has been settled, the parties are not in breach
of their contract with the arbitrator for purposes of s 3. The courts have. however. been prepared on
occasion to construe payments becoming due 1111 the dissolution of a contract on grounds other than
breach of contract as a 'conventional penalty' in this context (see De Wet & Van Wyk 24211228).
The Arbitrator 105

be against public policy to compel parties to submit to the arbitration of

someone in whom neither has trust nor confidence. 205
The court has the power to set aside an arbitrator's 206 appointment or to
remove him from office, on the application of either party, on good cause
shown. 207 The words 'good cause' are not defined in the Act, beyond giving an
example, namely failure on the part of the arbitrator to use all reasonable
dispatch in entering on and proceeding with the reference and making an
award. 208 This example is not, however, intended as exhaustive and the words
'good cause', as normally understood, must be applied in the light of the facts
of each case. 209 Other possible examples of 'good cause' are:
(a) if it appears after the arbitrator's appointment that he does not have the
special qualifications which the parties thought he had ;2111
(b) where he has misconducted the reference to such an extent that it would be
contrary to natural justice to allow him to continue; or
(c) the reasonable fear on the part of one of the parties that the arbitrator will
not act impartially.
Regarding the last-mentioned ground, the court stated in Ahier's case: 211
'An arbitrator will be removed if bias or partiality is proved, but he will also be
removed when right-minded people might consider, not necessarily would consider,
that there exists a possibility of prejudice. The right-minded person is tht.: rt.:asonable
man who is a lay litigant, and the test to be applied is objectivc.' 212
In evaluating the arbitrator's conduct, the lay litigant will not distinguish
between the judicial and administrative functions of the arbitrator, 213 with the
result that the arbitrator must show the same degree of impartiality when
performing administrative functions.

20 ·' The words ·unless a contrary agreement is expressed in the arbitration agrec~cnt' in s 13( 1) arc

not in connict with this statement. The quoted words relate to the possibility of providing for a party
being able to terminate the appointment of an arbitrator unilaterally, without the consent of the other
party.
200 The section also applies to an umpire.
2117 Section 13(2)(a) of the Arbitration Act. Compares 23(1) of the English Arbitration Act 1950,

which empowers the court to remove an arbitrator who has misconducted himself or the proceedings.
2118 Section 13(2)(b). Failure on the part of two arbitrators who are unable to agree to notify the

parties or the umpire of that fact is also good cause for removal under this subparagraph. The English
Arbitration Act 1950 contains a comparable power in s 13(3). See n 217 below. For a discussion of
factors which a court could take into account in deciding to remove an arbitrator for delay see Mustill
&. Boyd 530-2.
'"'' Sec Orang,· 1-i"<'<' Srarr l'rovi11ci11/ /\tl111i11isrmtio11 ,, Ahier; l'arys Municipaliry v Ahier 1991 (2) SA
608 (W) 618H. For older cases dealing with the removal of an arbitrator sec Jacobs 70-2; McKenzie
171-2.
2111 Jacobs 70-1. The position would be different if the parties were aware that the arbitrator lacked
the particular qualification at the time of his appointment.
211 At 619B. See 108n231 regarding the facts of the case.

" 2 Sec also Appel" Leo 1947 (4) SA 766 (W) 775-6. For the test where a party was aware of an
arbitrator's relationship with the other party when he agreed to his appointment see Appel v Leo
(above) at 771 and 73n22 above.
213 Ahier's case (above) at 626E-F.
106 Arbitration in South Africa: Law and Practice

The concept 'good cause' in the South African Act is ostensibly wider than
the term 'misconduct' in the comparable provision of the English Act. 214 We
nevertheless suggest that the following cautionary remarks of Musti!I & Boyd 2I5
should be borne in mind by a South African court when asked to exercise its
discretionary power to remove an arbitrator:
'The fact that the Court is given a wide power to remove the arbitrator in cases of
misconduct does not mean that the power will be freely exercised. The arbitrator may
commit errors-even serious errors-in the course of the reference, and yet remain
perfectly able to carry the arbitration to a successful conclusion once his mistakes
have been pointed out. Justice requires that in such a case the arbitrator should be
left in office, rather than that the parties should suffer the delay and expense of
beginning the arbitration afresh. The remedy is therefore likely to be confined to
those cases where the arbitration simply cannot be allowed to continue with the
particular arbitrator in office-either because he has shown actual or potential bias
or because his conduct has given serious grounds for destroying the confidence of one
or both parties in his ability to conduct the dispute judicially or competently.'
Where the arbitrator's appointment is set aside by the court, he may not only
be held liable for the costs of the application 216 but the court also has a
discretionary statutory power to disallow his fees. 217
The vacancy created by the court's removal of the arbitrator may be filled by
the parties themselves or, if the agreement so provides, by some independent
appointing authority or, where there is no agreement between the parties or
contractual mechanism for effecting an appointment, by the court. 2I8

3.12 The arbitrator as respondent

Situations could arise where the arbitrator finds himself the respondent in legal
proceedings concerning either his appointment, or a procedural ruling which he
has made, or his award. Applications may be made to court by one party to
unseat the arbitrator219 or to interdict him from proceeding, 220 or to remit or
even set aside his award. 221 In such proceedings both the other party to the
arbitration and the arbitrator will usually be cited as respondents. 222 The other
party to the arbitration is entitled to be a party in the court proceedings,

214 See n 207 above.

215 At 530.
21 " Compare.103n194 above.
217 Section 13(3) of the Arbitration Act. Compares 13(3) of the English Arbitration Act 1'!50, which
contains a peremptory provision disallowing the arbitrator's fees when he is removed for delay (sec
Mustill & Boyd 532nl4). Mustill & Boyd (at 231) doubt whether a court would be prepared to aw.ird
damages against an arbitrator for failing to proceed with reasonable dispatch.
218 The Arbitration Act s 12(3) and (4). Where the court removes a sole arbitrator or all the
arbitrators, the court may, on application, alternatively order that the arbitration agreement should
cease to have effect in relation to that dispute (sec s 12(4)(c)).
219 Under s 13(2) of the Arbitration Act. See 105 above.
220 See eg Orange Free State Provincial Administration v Ahier; Parys Municipality v Ahier 1991 (2)
SA 608 (W) 6158.
221 In terms of ss 32 and 33 of the Arbitration Act. See 285-95 below.
222 The arbitrator may be cited as either the first or second respondent: there is no uniform practice
in this regard.
The Arbitrator 107

because its right to have the arbitration pursued to a conclusion and to obtain
an enforceable award is being threatened.
It is submitted that in most instances the appropriate procedure would be for
the arbitrator to decline to defend his position and to advise the court that he
is prepared to abide by its decision. 223 This will throw the onus of defending the
matter on the other respondent, who is likely to have a strong interest in doing
so. The consequence will be that the arbitrator will usually not run the risk of
an award of costs against him. 224 Costs will only be awarded against an
arbitrator or umpire in exceptional circumstances, for example in the case of
fraud by the arbitrator or if he unsuccessfully opposes the relief sought. 225 If the
applicant in the court proceedings should only cite the arbitrator, and not the
other party to the arbitration, as a respondent, we suggest that the arbitrator
should invite the other party, because of his interest, to join the court
proceedings and that the arbitrator should then abide by the judgment of the
court.
From a philosophical point of view, too, it is appropriate that the arbitrator
should not defend an action against himself. He ought to maintain a position of
impartiality and neutrality and ought not to be seen to have any interest in the
arbitration that needs to be defended, or to align himself with one party against
the other. This becomes particularly important where the application is for
remitting the award rather than for setting it aside, because he will need to
continue to officiate with perceived neutrality and impartiality.
A perusal of the papers in the court application may convince the arbitrator,
notwithstanding the desirability of being seen to be neutral and impartial, that
he should assist the court by bringing certain facts to its attention by
means of an affidavit or report. 226 He may even have a professional duty to do

223 Sec cg Ahier".1· case (above) at 618A; South African Transport Services v Wilson NO 1990 (3) SA

333 (W) 336E-F.

224 In John Sisk & Son (SA) (l'ty) Ltd v Urban Foundation 1985 (4) SA 349 (N) an application was
made to the court to review an arbitrator's award of costs. The arbitrator took no part in the court
proceedings and gave the court no indication as t.o the basis on which his award on costs was made (at
35 I C-D). The matter was remitted to the arbitrator so that he could reconsider his award on costs, in
the light of the principles elucidated by the court. The arbitrator's further award of costs was again taken
on review (see John Sisk & Son (SA) (Pty) Ltd v Urban Foundation 1987 (3) SA 190 (N)). The court
held that the arbitrator was guilty of reprehensible conduct because of his failure to comply with the
terms of the previous court order and therefore awarded costs in the second court proceedings against
the arbitrator (at 198C-D). It should be noted, however, that the arbitrator not only filed an affidavit
explaining his award but was represented at the second court application by counsel (at 191B). The case
is therefore not authority for awarding costs against an arbitrator who took no part in court proceedings
and who elected to abide by the judgment of the court (perhaps after lodging a report to assist the court
as discussed in the text below).
225 See Port Sudan v Chelliar [1977] 1 Lloyd's Rep 166 (QB) 179. The court specifically stated that
where the arbitrator gives information to the court or attends or is represented at the hearing merely
with the purpose of assisting the court, he would not be exposed to the risk of an award of costs against
him. See also Walton & Vitoria 445.
226 See Hyperchemicals International (Pty) Ltd v Maybaker Agrichem (Pty) Ltd 1992 (l) SA 89 (W)
92C; Veldspun (Pty) Ltd v Amalgamated Clothing and Textile Workers Union of South Africa 1990 (4)
SA 98 (SE) llOH.
108 Arbitration in South Africa: Law and Practice

so. 227 The arbitrator may decide to go even further and to take a full part in the
proceedings, for example, by filing an affidavit asking for the dismissal of an
application to set aside his award and for an order for his costs of opposition. 2 28
According to the principles of natural justice he is entitled to an opportunity to
reply and explain where his conduct of an arbitration is attacked. 229 He should
nevertheless remember that an award of costs in his favour will usually not
result in the complete reimbursement of his legal costs. 2-111
An arbitrator faced with the prospect of incurring his own legal expenses. or
even the risk of an order of costs against him, as a result of court proceedings
arising in the course of an arbitration, may be tempted to accept or even to seek
an indemnity from one of the parties. The arbitrator would usually be wise to
avoid this expedient, particularly if his task as arbitrator is not yet completed.
By accepting an indemnity from one party and then actively participating in the
court proceedings on the same side, he creates the opportunity for the other to
argue that he has a reasonable fear that the arbitrator's future conduct will be
biased. 231 An arbitrator wishing to protect himself from exposure to legal costs
in connection with arbitration proceedings should rather consider obtaining an
appropriate indemnity from both parties as one of his terms for accepting
appointment. However, as a matter of good practice, we are not in favour of an
arbitrator accepting an indemnity from the parties in respect of legal expenses
incurred through his involvement in legal proceedings as a result of the
reference. The risk of exposure to substantial legal costs is slight where the
arbitration is professionally conducted. Moreover, where the arbitrator
becomes involved in such proceedings, he has an interest in protecting his own
reputation as an arbitrator, with a view to obtaining future appointments.

227 See the Veldspun case (above) at 1101-J regarding the Bar Council ruling which compels an

advocate sitting as arbitrator to bring the matter to the attention of the court, if he is of the opinion that
the affidavits or submissions of a party in review proceedings relating to the arbitration are materially
incorrect or incomplete. He is not, however, obliged to support or oppose the relief sought.
228 See the Hyperchemicals International case (above) at 92A-B. The arbitrator (a senior counsel) was

apgarently represented by three counsel in the matter (at 1028).

29 The Hyperchemicals International case (above) at 92C-D, citing Port Sudan v Cheuiar (above) at

178.
230 In the Hyperchemica/s lmernational case (above) at JOJA-C, the court, having regard to the

applicant's conduct, was prepared to award the arbitrator attorney and client costs but not attorney and
own client costs, in dismissing the application to set aside the award. In Shippel v Markel 1977 (I) SA
429 (C) the arbitrator joined the successful party in arbitration proceedings in opposing an application
to court for the setting aside of the award. Their opposition was successful but the court held (at 437C)
that it was unnecessary for the arbitrator to have been represented by two counsel.
231 Compare Ahier's case (above) at 624A-G. On the facts, the arbitrator was induced hy his
acceptance of a gratuitously offered indemnity to change his mind regarding a procedural ruling.
CHAPTER 4

Procedure Prior to the Hearing

4.1 Preconditions to entering on the reference

Before he enters on the reference, the arbitrator should establish that the
following preconditions have been met:
(a) that there is an arbitrable dispute;
(b) that there is a valid arbitration agreement;
(c) that the arbitrator's appointment has been properly made in accordance
with the provisions of the arbitration agreement;
(d) that there is no valid reason for him to decline appointment; and
(e) that any time-limits and other preconditions have been met.
We will proceed to examine these requirements in greater detail.

4.1 . 1 There must be an arbitrable dispute

It would appear to be stating the obvious to say that there cannot be an
arbitration until there is a dispute capable of being arbitrated. 1 Nevertheless,
arbitrators are sometimes called upon to act by a party whose grievances, when
examined, reveal there is no dispute capable of being arbitrated, although the
grievances may be very real in other respects. Before he does anything else,
therefore, the arbitrator ought to make a preliminary enquiry into the nature of
the grievances of the complainant and satisfy himself that they indeed
constitute a dispute that can be arbitrated.
Very often what is complained about is a breach of contract, and a breach of
contract, per se, is not a dispute and is therefore not arbitrable. When one party
refuses or simply fails to replace or repair defective goods that he has supplied,
or to complete unfinished work, or fails to make payment for what the other
has done, we are dealing with a straightforward case of a party who is failing to
comply with an obligation under the contract-in other words, a case of breach
of contract. If the offender gives a reason for his non-performance which the
other considers to be unreasonable or invalid, then indeed there is a dispute
which can be brought to arbitration. Then the arbitrator, if he considers that
the reasons for non-performance arc invalid, may, in his award, order specific
performance or the payment of damages. But where the offending party
remains silent about his reasons for non-performance, the injured party will not

1 See 1 and 40 above. Section 2 of the Arbitration Act specifics certain matters which, although they

may be disputes, may not be referred to arbitration (see 52-4 above).

109
110 Arbitration in South Africa: Law and Practice

be able to avail himself of arbitration and must seek some other legal remedy,
such as an order of court for specific performance or damages.
As we discussed previously ,2 certain issues may not be submitted to
arbitration, such as matrimonial disputes and questions of status. 3 Other issues
may be excluded by restrictive wording in the arbitration agreement, or by the
nature of the issues in dispute.
A not uncommon situation arises when a contract which contains an
agreement to submit all disputes arising out of the contract to arbitration is
cancelled, or it is alleged that the contract was invalid ab initio, and with it, the
arbitration clause embodied within it, and the question arises: can disputes
arising out of the cancelled or challenged contract be submitted to arbitration?
Has the cancellation of the contract also cancelled the arbitration agreement,
or does the alleged invalidity of the contract render the arbitration agreement
invalid? The arbitrator's jurisdiction to deal with these matters and rule upon
them is discussed elsewhere. 4

4.1.2 There must be a valid arbitration agreement

It would be prudent for an arbitrator, before entering into the reference, to
satisfy himself that there is a valid arbitration agreement. If it is a written
agreement, the provisions of the Arbitration Act will apply, and he will be
afforded all the powers and support of the statute. In the unlikely event that it
is an oral agreement, the Act will not, of course, apply, 'and his powers, such
as they might be, would be derived from the common law.'
Confirmation by both parties at the preliminary meeting that there is a valid
arbitration agreement will probably effectively preclude either from later
alleging that the agreement was indeed defective. But if one of the parties
denies the validity of the purported agreement, the arbitrator will be precluded
from making a decision on the question that will be binding on the parties. 6
Faced with this impasse, he may proceed with the reference, if he considers that
the objection to the validity of the agreement is ill-founded, leaving it to the
objector, if he can, to obtain an interdict from the court to stay the arbitration
proceedings until the validity of the agreement has been determined by the
court. Alternatively, if the arbitrator feels less confident, he can stay the
proceedings or decline to proceed and leave it to the party who avers that there
is a valid agreement to obtain a declaratory order to that effect from the court. 7

4.1.3 Valid appointment

The arbitrator should also establish at the outset that he is the person who is

2 See 52-6 above.

3 Section 2 of the Arbitration Act.
4 See 56-60 above and 176-7 below.
5 See 38 above.
6 See 59 for a discussion on the determination by the arbitrator of his own jurisdiction.
7 See eg Sou1h African Transport Services v Wilson NO 1990 (3) SA 333 (W) 336E, 340B. See further

59 above and 176-7 below.

Procedure Prior to the Hearing 111

named in the arbitration agreement, or, if his appointment has been made by
a third party ,8 that the appointment has been made in terms of the agreement.
There is little room for ambiguity when the agreement gives the personal
name of the arbitrator and still less so when it adds his qualifications. If there
is more than one person with the same name, it will be necessary to consult the
parties as to whom they had intended. There is greater room for uncertainty
when the proposed arbitrator is designated as the office-bearer of a particular
professional body or trade association or is to be nominated or appointed by
such office-bearer where the name of the organisation has not been correctly
quoted or where the title of the principal office-bearer has been misstated.
Once again, it will be necessary to refer to the parties for clarification and in
this instance, they will be less likely to have specifically applied their minds to
the question than in the previous instance and there will be greater room for
disagreement, particularly if it suits the purpose of one of the parties to protract
matters by disagreeing.
The arbitrator may remove possible uncertainty by asking the parties to
confirm, at the preliminary meeting, that they arc satisfied that he has been
correctly appointed. Once again, if one of the parties disagrees, the arbitrator
cannot make a decision on the validity of his appoinment which will bind the
parties. If he is confident that his appointment is valid, he should nevertheless
proceed with the reference. 9

4.1 .4 Personal disqualifications

The arbitrator will also need to establish who the parties are, and whether he
has any business or personal relationship with either of them, or whether there
are any other circumstances in the dispute that would make it improper or
undesirable for him to proceed as arbitrator. Hi

4.1.5 Preconditions and time-limits

The arbitrator must satisfy himself that the parties have complied with any
preconditions for arbitration contained in the arbitration agreement. For
example, the contract may require that the dispute should first be referred to a
quasi-arbitrator or to mediation before it is taken to arbitration. 11 Certain
construction industry contracts may also provide that arbitration may only take
place after the completion or purported completion of the work, or after its
abandonment, subject to any exceptions contained in the contract. 12 The
arbitrator must also satisfy himself that the parties have observed any
time-limits set for compliance with preconditions to arbitration or for
completion of some step for the commencement of the arbitration proceedings.

"Sec 80-2 above regarding appointments by a third party.

9 Sec further 110 above.
"' Sec 71-3 above, where we discuss the circumstances which might make it prudent for him to recuse
himself.
11 See the text below for examples and 50-2 above regarding the term 'quasi-arbitrator'.
12 Sec 119 below.
112 Arbitration in South Africa: Law and Practice

Provisions for the referral of a dispute to a quasi-arbitrator or mediator as a

precondition to arbitration are particularly common in contracts used in the
construction industry. Construction contracts vest considerable powers in the
agent of one of the parties, namely the architect or engineer who administers
the contractor's performance of the contract on behalf of the owner. These
powers may include the power to determine whether work being carried out
under the contract is of an acceptable standard or not, the power to determine
the cost of additional work or the credit to be given for work omitted, the
power to grant additional time for carrying out the contract, thereby alleviating
penalties, and so on. However, the agent may also be given the power to
determine disputes should these arise. 13 The advantage of the last-mentioned
power is that the architect or engineer is probably already aware of the
background to the dispute and is therefore in a position to give a decision
quickly. The inclusion of a provision requiring a determination of the dispute
by such person as a precondition to arbitration is therefore done with a view to
resolving the dispute more expeditiously and with less expense. In giving the
decision, the architect or engineer is acting as a quasi-arbitrator. 14 However,
because of his active prior involvement as agent of the owner in administering
the contract, he might to some extent be regarded as a judge in his own cause Y'
In such cases, the possibility of being able to take the dispute further to
arbitration becomes a valuable safeguard against possible bias (whether
perceived or actual) on the part of the quasi-arbitrator and against the adverse
consequences of a quick decision reached before the decision-maker was in
possession of all relevant information. The precondition requiring the dispute
to be referred to the quasi-arbitrator is usually coupled to a time-limit: in the
interests of finality, the parties arc usually bound by the decision unless the
dissatisfied party formally objects to it within the prescribed time . 16
Regarding time-limits, it is necessary to carefully distinguish between
time-limits applicable to compliance with preconditions and time-limits
applying to some step to commence arbitration proceedings. This distinction is
necessary because the court's statutory power to extend time-limits imposed in
the arbitration agreement only applies to a step to commence arbitration
proceedings and not to time-limits for compliance with preconditions for
arbitration . 17 If the arbitrator is of the opinion that a party has failed to comply
with a time-limit imposed by the arbitration agreement, he should draw the
matter to the attention of the parties, because non-compliance could affect the
validity of the arbitration proceedings. Where non-compliance is the fault of
one party, the other party may be prepared to waive compliance or to grant an

13 See cg cl 37.1 of the JBCC (November 1992) contract. cl 26 of the white form. and cl 61 .1 of the

GCC (1990).
14 See 51 above.
15 Sec for example the position in which the architect found himself in Universiteit ,·an Stel/enhosch
v J A Lauw (Edms) Bpk 1983 (4) SA 321 (A) 339D-340E read with 331H.
16 14 days in the case of cl 37.1 of the JBCC (November 1992) contract and cl 26 of the white form

and 28 days in the case of cl 61(!)(d) of the GCC (1990).

17 See 114-19 below regarding the court's statutory power under s 8 of the Arbitration Act.
Procedure Prior to the Hearing 113

extension of time. The arbitrator may also be empowered by the arbitration

agreement to grant such extension. Where the arbitrator has no such power and
the one party relies on the expiry of the time-limit to bar arbitration, the
arbitrator should leave it to the party in default to either apply to court in an
appropriate case for an extension of time 18 or to apply to court for a declaratory
order to confirm the validity of the arbitration proceedings. 19
Where a decision by a quasi-arbitrator or agent is a precondition to
arbitration, the contract will usually provide that if the quasi-arbitrator or agent
does not give his decision within the prescribed time, the dispute may be
referred to arbitration forthwith. 20 Not infrequently, disputes arising from such
contracts arc referred to arbitration before they have been referred to the
quasi-arbitrator or agent for a decision in terms of the relevant contractual
provisions. In this event the arbitrator ought not to proceed with the reference,
but should draw the parties' attention to the omission. Very often they will
agree mutually to condone it and proceed without further ado.
A claim may also be time-barred through the operation of prescription. The
Prescription Act 21 lays down that a contractual claim is extinguished by
prescription if the creditor fails to enforce his claim within three years of the
date on which the debt became due. 22 However, a debt is not deemed to be due
until the creditor either has knowledge of the identity of the debtor and of the
facts from which the debt arises or could have acquired such knowledge by the
exercise of reasonable carc. 23 A term of the contract may also limit the time
during which one or other of the parties may be liable for a breach of the
contract. 24 Whereas it would be proper for an arbitrator to raise a time-bar
imposed by contract on his own initiative, the Prescription Act precludes a
court from taking notice of prescription of its own motion. 25 As arbitrators are
bound to apply the rules of substantive law ,2" this provision also applies by
necessary implication to arbitrators.

'" Sec 114 below.

1'' Altcrnatiwly. if the arbitrator, having bean.I both parties, is satisfied that the procccdin!!, arc not

timc-harrcd. he could proceed with the arbitration and leave it to the party wishing to rely on the
time-bar to contest in court the validity of the arbitrator's decision to proceed.
20 See cl 37.1 of the JBCC (November 1992) contract (although arbitration may be preceded by

mediation): cl 26 of the white form.

21 Act 68 of 1969.
22 Section 10(1) read withs ll(d) and 12(1). See. however, ss 13 and 14 for certain circumstances

which delay or interrupt prescription.

23 Section 12(3). In construction contracts, latent defects may exist for a considerable number of years

he fore becoming manifest. The effect of s 12(3) is that prescription starts to run in respect of a claim for
a latent defect only once the employer becomes aware of the defect or could have become aware of it
through exercising reasonahle care.
2 ·1 Sec eg cl 1.1.20 of the JBCC (November 1992) contract and cl 16.1. I of the NI\! 1B Building
Contract, both of which limit the liability of the contractor.for latent defects in his work due to materials
or workmanship not being in accordance with the contract. Many building contracts, especially those
devised by contractors themselves, limit the contractor's liability for latent defects to a very brief
period-often only a few months. Caveat subscriptor!
25 See s 17( 1) of the Prescription Act.
26 See 251-3 below.
114 Arbitration in South Africa: Law and Practice

4.1 .6 The court's statutory power to extend a time-limit imposed by the

arbitration agreement
The court's power to extend certain time-limits imposed by the arbitration
agreement is contained in s 8 of the Arbitration Act. 27 The section provides
that where an arbitration agreement to refer future disputes to arbitration
stipulates that any claim to which the agreement applies shall be barred unless
some step to commence arbitration proceedings is taken within a time fixed by
the agreement, and a dispute arises to which the agreement relates, then the
court has a discretion to extend the time-limit concerned to prevent undue
hardship. The court's discretionary power is available, whether the time-limit
has already expired or not. It does not, however, override any statutory
limitations on the time for commencing arbitration proceedings. 28
The need for this provision is clear. An arbitration agreement covering a
particular dispute can usually be used to stay court proceedings in repect of the
dispute so that the matter can go to arbitration. 29 Where the arbitration clause
requires the parties to take the dispute to arbitration within a certain time or
not at all, once the time-limit for commencing arbitration expires the parties
are precluded, in the absence of a statutory provision, from taking the dispute
to either arbitration or the court. 30
Before the court acquires a discretion to extend the time-limit, the applicant
must show that there is a valid arbitration agreement to refer future disputes to
arbitration and that a dispute covered by the agreement has arisen. The section
applies only to time-limits regarding steps to be taken once the dispute has
arisen. 31
The applicant must then show that the time-limit to be extended is one which
relates to 'some step to commence arbitration proceedings'. The legislature
gives no example of what is meant by 'some step'. 32 When read with the
statutory definition of 'arbitration proceedings' 33 it is clear that the step must be
one required for the commencement of the actual proceedings or hearing

27 Section !l is based on s 27 of the English Arbitration Act of 1950 (discussed by Mustill & Boyd at

210-15), although there are some differences in wording.

28 Section 8.
29 See 62-7 above regarding the discretionary powers of the court in this regard.
30 See Walton & Vitoria 66.
31 See Wilmington (Pty) Ltd v Short & McDonald (Pty) Ltd 1966 (4) SA 33 (D) 34D-G. In that case,
the owner was required to notify the contractor of any objections to the contractor's final account within
a specified time of receiving it. Until the objection has been received and rejected by the contractor
there is no dispute. The time-limit for making objections is therefore not capable of extension under s 8.
The making of an objection, moreover, clearly does not qualify us 'some step' to commence arbitration
proceedings (see further below).
32 Compare the wording of the corresponding portion of s 27 of the English Arbitration Act, which
reads 'unless notice to appoint an arbitrator is given or an arbitrator is appointed or some orher srep ro
commence arbitration proceedings is taken within a time fixed by the agreement' (our emphasis).
33 '[A)rbitration proceedings' are defined ins 1 as 'proceedings conducted by an arbitration tribunal
for the settlement by arbitration of a dispute which has been referred to arbitration in terms of an
arbitration agreement'.
Procedure Prior to the Hearing 115

before the arbitrator. 34 It would be too narrow an interpretation to restrict the

expression 'some step' to the service of a statement of claim. 35 It would also
include the giving of notice to appoint an arbitrator, the appointment of an
arbitrator36 or any other step after the dispute has arisen which is necessary for
the commencement of the arbitration proceedings and on which a time-limit
has been imposed in the arbitration agreement, with the barring of the claim as
penalty for non-compliance. -
Problems have arisen as to whether a time-limit for the rejection of a decision
or opinion of a quasi-arbitrator or mediator may be extended under section 8,
where the decision or opinion is a precondition for arbitration and the decision
or opinion becomes binding on the parties unless it is rejected within a certain
period. The question is therefore whether or not the act of rejecting the
decision or opinion is a step for the commencement of arbitration proceedings.
This question was answered in the negative in Gordon Verhoef & Krause
(Transvaal) (Pty) Ltd v Pritchard Properties (Pty) Ltd. 37 It was decided that a
letter rejecting the architect's decision as quasi-arbitrator under the first stage
of the dispute resolution procedure in the white form was not a step to
commence arbitration proceedings, but that delivery of the relevant notice
merely kept the dispute alive by referring it to arbitration. On the wording of
the particular clause, we submit that this conclusion is incorrect. There is a
dispute,3 8 which must first be referred to the architect as a condition precedent
to arbitration. Once the decision is given, the contractor is bound by it unless
the contractor 'disputes the same' within fourteen days. The contractor has
complied with the precondition by getting a decision from the architect. By
rejecting it, he takes the first step to commence arbitration proceedings.
A similar situation arose in Administrateur, Kaap v Asta Konstruksie (Edms)
Bpk. 39 In that case, a dispute had to be referred to a mediator for an opinion
as a precondition to arbitration. If either party was dissatisfied with the
mediator's opinion, that party had to give notice within 28 days so that the
matter could be referred to arbitration, failing which the parties were bound by
the mediator's opinion. The applicant allowed the period to expire and
subsequently applied tci court for an extension. 40 The court was of the opinion
that this period could be extended by the court under s 8. 41 Because the

34 See Gordon Verhoef & Krause (Transvaal) (Pty) Ltd v Pritchard Properties (Pty) Ltd (WLD 5
Aufust 1986, unreported (case no 22094/85)).
3 • Compare Gordon Verhoef & Krause (Transvaal) (Pty) Ltd v Pritchard Properties (Pty) Ltd (above)

at 20.
~• Sec Wilmington (Ply) Ltd v Short & McDonald (Pty) Ltd (above) at 35C-D and n 32 above
rc§arding s 27 of the English Act.
7 Above 20. See Appendix IV for cl 26 of the white form.
38 Compare n 31 above regarding the appreciably different situation in Wilmington (Pty) Ltd v Short
& McDonald (Pty) Ltd above.
39 1989 (4) SA 458 (C).
40 At 463B-C and 4631. The arbitration clause was cl 69 of the GCC (1982). This differs significantly

from cl 61(2)(!) of the latest edition of the GCC (1990), which provides that the mediator's opinion is
binding only to the extent that it is accepted by the parties. The latest version reflects the generally
prevailing view as to the effect of a mediator's opinion (see 13n105 above).
41 At 470C.
116 Arbitration in South Africa: Law and Practice

respondent argued that the section applied only to a claim and not to a
defence, 42 the court chose to use a different basis for its decision. The court was
of the view that it had an inherent jurisdiction to condone non-compliance with
a time-limit, where this was necessary to prevent a clear injustice. 43 By way of
analogy the court referred to its power to condone non-compliance with court
rules. We submit that this is not a true analogy. The jurisdiction of an
arbitration tribunal has its origin in the arbitration agreement and is subject to
any limits placed on it by that agreement. 44 The court has no general power to
vary unambiguous contractual provisions merely because they may operate
unfairly towards one of the parties in certain circumstances.
We therefore prefer the alternative basis previously suggested by the court. 45
On the wording of the particular contract, the rejection of the mediator's
opinion can properly be regarded as a step to commence arbitration
proceedings which is therefore capable of extension by the court under s 8. The
precise distinction between a precondition for arbitration and a step to
commence arbitration proceedings is not always easy to determine and will
depend on the wording of the particular arbitration agreement. 4 " Where the
dispute must first be referred to a quasi-arbitator and then to a mediator as
preconditions for arbitration, with the decision of the quasi-arbitrator
becoming final and binding unless mediation is requested by one of the parties
within a specified period of his receipt of the quasi-arbitrator's decision, 47 the
time-limit for the appointment of a mediator cannot be extended under s 8.
The mediator is not an arbitrator and the court's powers under the Arbitration
Act do not apply to proceedings before the mediator. The notice requesting
mediation is not a step to commence arbitration proceedings.
Having established that the time-limit relates to a step to commence
arbitration proceedings, the applicant under s 8 will then have to satisfy the
court that he will suffer undue hardship unless the period is extended by the

42 Sec the text hclow.

43 At 470D-E. No authority is cited.
44 Sec 97 above.
4 ' Sec n 41 above. Sec further the text at n 58 below.
46 The wording of cl 26 of the white form differs materially from that nf cl 17 of the JBCC (November

1992) contract. Both clauses envisage that the architect will be used at the first stage of the dispute
resolution procedure. Whereas cl 26 refers to a 'dispute or difference' being referred to the architect for
decision, cl 37 envisages any 'disagreement' being referred to the architect. The disagreement is only
deemed a 'dispute' once the architect's decision is rejected by one of the parties. It could therefore be
argued that there is no 'dispute' under cl 37 for purposes of s 8 until the architect's decision has hc:cn
rejected, and, contrary to our interpretation of cl 26 above, the rejection of the decision is therefore not
a step to commence arbitration proceedings after the dispute has arisen, as required bys 8. In our view,
the subtle difference in wording between the two clauses was not intended by the drafters of cl 37 to have
this effect. The original disagreement referred to the architect as quasi-arbitrator is still a dispute for
purposes of s 8. The act of rejecting the architect's decision commits the parties to arbitration unless
they agree to use the voluntary mediation procedure in cl 37.2. (On the wording of cl 37.2.1, mediation
in this instance is not a precondition for arbitration, but an attempt to avoid it.) The rejection of this
decision by either party is therefore the first step to commence arbitration proceedings. The period of
14 days for rejecting the decision is thus capable of being extended hy the court under s 8.
·17 Sec cg cl 6'J of the GCC (1982 edition).
Procedure Prior to the Hearing 117

court. 48 Our courts 49 have used the test laid down in the English case of The
Jucelyne, 50 namely:
'{I) The words "undue hardship" ... should not be construed too narrowly.
(2) Undue hardship means excessive han.lship 51 and where the hardship is due to the
fault of the claimant, it means hardship the consequences of which are put out of
all proportion to such a fault.
(3) In deciding whether to extend time or not, the Court should look at all the
relevant circumstances of the particular case.
(4) In particular, the following matters should be considered:
(a) the length of the delay;
(b) the amount at stake;
(c) whether the delay was due to the fault of the claimant or to circumstances
outside his control;
(d) if it was due to the fault of the claimant, the degree of such fault; 52
(e) whether the claimant was misled by the other party;
(/) whether the other party has been prejudiced by the delay, and, if so. the
degree of such prejudice.'
Once the applicant has established that there is undue hardship, the court has
a discretion as to whether it should grant the application or not. One of the
factors to be taken into account is the applicant's prospects of success in the
arbitration proceedings. 53
The arbitration agreement may confer the power on the arbitrator to extend
time-limits in the agreement relating to steps to commence arbitration
proceedings. Such a provision does not exclude the power of the court under
s 8. 54 However. with a view to saving time and expense, a party would normally

48 See Gordon Verlwef & Krause (Transvaal) (Ply) Lill,, Prilchard Proper1ies (Pty) Ltd (above) at 21,

where it is stressed that the need to show undue hardship is a substantive requirement of s 8. and not
merely a factor to be taken into account in the exercise of the court's discretion.
49 Sec Adminis1ra1eur, Kaap v Asia Konstruksie (Edms) Bpk (above) at 469F-I; Gordon Verhoef &

Krause (Transvaal) (Pty) Ltd v Pri1chard Properties (Ply) Ltd (above) at 21-2.
50 Moscow V/O Exporlkhleh v Helmville Ltd (The Jocelyne) [1977] 2 Lloyd's Rep 121 at 129. Sec also

the factors referred to by Mustill & Boyd 212-14.

51 Compare Conso/idaled Investment & Contracting Co v Saponaria Shipping Co Ltd (The Virgo)

[1978] 2 Lloyd's Rep 167 (CA) 171 per Lane LJ: "'Undue" does not merely mean "excessive"; it means
··undeserved" and "unmerited", and it would be an unmerited hardship on them if they were not able
to gursue the claim as they wish.'
·• In Adminislrateur, Kaap v Asia Konstruksie (Edms) Rpk above, the delay was clearly the fault of
applicant's officials (at 472H-473A). However, the court, having regard to the other factors in the lest,
concluded that if the time-bar was enforced, the hardship would have been out of proportion to the
fault.
53 Gordon Verhoef & Krause (Transvaal) (Ply) Ltd v Pritchard Properties (Pty) Ltd (above) at 24-5.
Sec also Administrateur, Kaap v Asia Konstruksie ( Edms) Bpk (above) at 474A-D; Mus till & Boyd 214,
who add that the court should not attempt to evaluate the merits of the dispute unless they are manifest.
On the one hand, it is not for the court to usurp the function of the arbitrator by resolving the issues in
dispute. On the other hand, there is little point in granting an extension under s 8 if it is clear from the
papers before the court that the applicant will almost certainly fail in the arbitration.
54 Sec Comdel Commodities Ltd v Siporex Trade SA [1990] 2 All ER 552 (HL) 557f-j.
118 Arbitration in South Africa: Law and Practice

first approach the arbitrator for an extension. It will then be necessary to uses 8
only if the arbitrator rules against him. 55
A party can possibly anticipate and avoid the danger of being barred by a
time-bar clause by giving conditional notice of his intention to resort to
arbitration, even before preconditions have been met. In He/las House Ltd v
Rikki-Rand Ltd56 the parties were first required to negotiate rental payable
under a lease during a 60-day period after an option to renew the lease was
exercised. If no agreement was reached during this period, the tenant was
entitled to require the determination of rental to be referred to arbitration,
provided that he gave notice to this effect to the landlord within seven days of
the end of the 60-day period. When exercising the option to renew, the tenant
indicated that it desired the matter to go to arbitration if no agreement on
rental was reached during the 60-day period. Although the clause was designed
to prevent late notice of an intention to resort to arbitration being given, there
was nothing to prevent an earlier conditional notice being given, should
negotiations subsequently fail. The court held that there was a valid notice of
arbitration and it was therefore unnecessary to consider the tenant's application
for an extension of time under s 8.57 Whether conditional notice in advanc~ is
permissible and effective to defeat a time-bar clause will depend on the wording
of the arbitration agreement.
A further difficulty with the wording of s 8 is that it refers to an extension of
time being possible where 'any claim' has become time-barred through failure
to perform some step to commence arbitration proceedings timeously. It has
been contended that the section therefore has no application where a defence
has become time-barred, for example where a party's defence to a claim was
rejected by a quasi-arbitrator or mediator and the party fails to deliver a notice
requiring that the matter be referred to arbitration timeously. 58 On a literal
interpretation of the section, this argument appears to have some merit. 59
However, there seems no obvious reason why the legislature wished to help
only claimants and not defendants against the harsh effect of time-bar clauses.

55 See Comdel Commodities Ltd v Siporex Trade SA (above) at 559h-j. In exercising its discretion
under s 8, the court must make its own assessment. The arbitrator's refusal to grant an extension can be
taken into account by the court in making this assessment only where the arbitrator has furnished
reasons for his refusal (Comdel Commodi1ies Ltd v Siporex Trade SA (above) at 56l d-f}.
56 !982 (4) SA 709 (C).
57 At 7IOF-713B.
58 See the argument of the respondent in Administra/eur, Kaap v Asia Konstruksie (Edms) Bpk
(above) at 470A-B.
59 Compare Administrateur, Kaap v Asia Konstruksie ( Edms) Bpk (above) at 470B; Wilming/011 ( Ply)
Ltd v Short & McDonald (Pty) Ltd (above) at 34H. As stated above (see the text to nn 43-5}, it is in
our view incorrect to hold (as was done in Administrateur, Kaap v Asia Komtruksie (Edms) Bpk (above)
at 470D-E) that the court has an inherent power outside the Arbitration Act to extend time-limits in
arbitration agreements.
Procedure Prior to the Hearing 119

Until the matter can be clarified by legislation, we submit that the courts should
adopt a robust interpretation of the words 'any claim' to include a defence. 60

4.2 When can the arbitration commence?

It is a feature of some construction contracts61 that the arbitration clause
provides that the arbitration shall be held only after the completion, or the
purported completion, of the contract, or after its abandonment, except with
the mutual consent of the parties, or if the dispute relates to an interim
certificate.
The reasons for delaying the arbitration until the contract has been
completed or abandoned, are somewhat obscure and may be questionable. It
may be argued that it would be disruptive to the progress of the works if there
was to be an immediate adjudication of every dispute. 62 This suggests that work
would be suspended on any project that was the subject of a dispute until that
dispute had been arbitrated upon. Alternatively, work would at least be
suspended on the portion of the project related to the dispute. But very often
the dispute relates to work deemed unacceptable by the architect or engineer,
and the alternative would be that the contractor would have to proceed to
remove and redo the disputed work and at the end of the contract to claim the
costs or damages associated with carrying out an instruction which he
considered, possibly quite correctly, had been wrongly given.
This is not a satisfactory situation. Not only is it detrimental to a good
working relationship that the contractor should carry out work under protest,
but it may be economically unsound that he should be compelled to do work
which an arbitrator might afterwards rule was unnecessary. There is a further
difficulty in compelling the contractor to redo condemned work, the quality of
which is disputed, before the arbitration is held, as, in re-executing such work,
he will be compelled to destroy the very evidence upon which he will rely to
prove his case.
Most contracts provide a means of escape: the parties, if they mutually agree,
may take the dispute to immediate arbitration. 63 Even if this proviso was not
contained in the agreement it would be the parties' common-law right to vary,
by mutual agreement, the terms of their contract. This may, however, be
frustrated by the unco-operative attitude of the defendant.
Most construction contracts provide that an arbitration may be held
immediately where the dispute relates to an interim certificate; in other words,
where the contractor alleges that an interim certificate has been undervalued.

60 Some authority for a robust interpretation may be found in The Virgo (above) at 169, where the

court refused to make a distinction between a time-bar clause barring the claim itself and one merely
barring the remedy, in applying s 27 (equivalent to ours 8) of the.English Arbitration Act of 1950. Sec
also Mustill & Boyd 211 who regard the section as applying to 'any claim to have an issue decided by
arbitration' (our emphasis).
61 See eg the white form cl 26. Its successor, the JBBC (November 1992) contract, cl 37.7, has a
different arrangement (see the text to n 66 below).
62 Compare JC Dunbar & Sons (Pty) Ltd v El/good Properties (Pty) Ltd 1975 (4) SA 455 (W) 462E.
63 See e g the white form cl 26.
120 Arbitration in South Africa: Law and Practice

The rationale for dealing with disputes relating to interim certificates

immediately, instead of leaving them to the end of the contract, is that interim
certificates provide for a contractor's cash flow to carry out the contract
works. 64 He cannot be expected to finance a major construction project which
may take several years to complete and regular reasonable interim payments
are essential to keep him going. Interference with such payments can quickly
cause acute financial embarrassment if not financial ruin. In our view, there are
very few disputes arising out of a building contract which could not be turned
into one sounding in money and so brought within the ambit of a dispute on an
interim certificate. 65 Thus a dispute on the quality of work which the architect
has condemned can, as soon as the contractor has executed remedial work and
claimed payment for it on the next certificate, be brought to arbitration.
Virtually every other kind of claim sounding in money can be brought to
arbitration soon after the circumstances have occurred that gave rise to the
claim, by claiming payment under an interim certificate.
The new JBCC building contracts have avoided these difficulties by removing
the restriction on when arbitrations may take place, and so enable the parties
to refer disputes to arbitration as soon as they arise. 66

4.3 The preliminary meeting

The first action of a newly appointed arbitrator, after he has notified the parties
of his acceptance of appointment, will probably be to convene a preliminar.y
meeting with the parties. The purpose of such meeting would be to determine
the procedure and rules to be followed to bring the matter to a hearing. the
form of the hearing itself, the arrangements concerning the date and venue of
the hearing, and so on.
An increasing number of standard-form contracts, particularly in the
construction industry, contain arbitration clauses which provide that the
arbitration shall be conducted in accordance with the Rules for the Conduct of
Arbitrations published by the Association of Arbitrators." 7 These rules have
been designed to enable arbitrations to proceed with the minimum of delay
and cost. Although they follow the basic pattern of the Uniform Rules of
the Supreme Court, which the parties might otherwise tend to use. the
Association's rules provide for a more streamlined and cost-effective
procedure.
Where the arbitration agreement stipulates that the Association's rules are to
be used, it might be thought that, as these rules lay down the procedures to be
followed in preparing for and conducting the arbitration, the calling of a

64 JC Dunbar & Sons (Pty) Ltd v El/good Properties (Pty) Ltd (above) at 463E-I-I regarding the

pur.pose of an interim certificate.

"· Compare counsel's contention in JC Dunbar & Sons (Pty) Ltd,, El/good Properties (Pty) Ltd
(above) at 4648.
"" See Finscn (1991) 129-30 and 207 regarding the JBCC (November 1992) contract cl 37.7 and the
nominatedh;elected subcontract agreement cl 38.7.
67 These rules arc in appendix Ill below.
Procedure Prior to the Hearing 121

preliminary meeting is somewhat unnecessary. We would like to suggest that

the convening of a preliminary meeting in these circumstances could still be
very beneficial. Arbitration is a highly flexible process and although the
arbitration agreement might refer to rules which in general circumstances work
very well, in a particular dispute the process might be considerably facilitated
by adapting or modifying the rulcs,"8 or even abandoning them by mutual
agreement and adopting others. ·
The preliminary meeting is the opportunity for the arbitrator to make early
acquaintance with the parties and their legal representatives, if they arc to be
so represented. to establish his authority and to assume mastery of the
proceedings. If he docs not do so at the earliest opportunity, he may find that
the parties' legal representatives have already agreed procedures between
themselves that do not suit his taste or style. They will probably be much more
at ease with the Rules of the Supreme Court than with the Association of
Arbitrators' Rules and may have decided between themselves that the
proceedings shall be conducted in accordance with the Supreme Court Rules.
The arbitrator may then find that he has to work with rules which he may
consider to be not well-suited to the dispute at hand and with which he is not
particularly familiar.
We recommend therefore that the preliminary meeting should be convened
as early as possible, held in the arbitrator's office and attended by the parties
themselves as well as their legal representatives. The meeting should not be
seen as dealing only with procedural matters: the establishment of dates for the
various stages of pleadings, the elate and venue of the hearing, and so on. It is
the opportunity of involving the parties themselves in deciding how their
dispute may be resolved in the quickest, most convenient and least expensive
manner. For this reason, where either of the parties is a juristic person, the
preliminary meeting should be attended by a senior executive authorised to
make decisions on behalf of that party.

4.4 Agenda for the preliminary meeting

There is no set form for the agenda of the preliminary meeting, and arbitrators
may consider themselves masters of the proceedings and set down whatever
matters seem to them to be appropriate for discussion. The following agenda,
however, suggests the matters that are likely to require discussion:
(a) confirmation that there is an arbitrablc dispute between the parties;
(b) confirmation that there is a valid arbitration agreement;
(c) confirmation of the appointment of the arbitrator;
(d) acceptance of any conditions of appointment;
(e) confirmation that the arbitration is not time-barred and that any
pre-conditions have been met;
([) procedure for defining the dispute;

"" Sec cg 123n77 and 145 below regarding possible modifications to Standard Procedure Rules 25.2
and 12.4 respectively.
122 Arbitration in South Africa: Law and Practice

(g) discovery of documents;

(h) form of hearing;
(i) representation of parties;
(j) use of technical expertise by the arbitrator;
(k) expert witnesses and the exchange of their reports;
(l) date, time and venue of the hearing;
(m) recording of evidence; and
(n) any other matters.
A few of these matters have already been discussed, some will require brief
comment, and others will require discussion in some depth.

4.4.1 Confirmation that there is an arbitrable dispute between the parties

The requirement that there must be a dispute on which to arbitrate has
previously been discussed, 69 and may well have been investigated by the
arbitrator prior to his accepting appointment, and hence prior to the
preliminary meeting. If not, the arbitrator should establish that there is a
dispute that is capable of being arbitrated upon.

4.4.2 Confirmation that there is a valid arbitration agreement

This matter has also been previously discussed,7' 1 and may also have been
established by the arbitrator when invited to accept appointment. It would
nevertheless be prudent, at the preliminary meeting, to require the parties to
confirm that the validity of the agreement is not in issue. If it is in issue, the
arbitrator will be faced with having to decide whether to determine the
question or whether to leave it to the claimant to apply to court for a
declaratory order. 71

4.4.3 Confirmation of the appointment of the arbitrator

If the arbitrator has been designated by name in the arbitration agreement he
should obtain the parties' confirmation that he is the person whom they
intended when they drew up the agreement and that there is no question of
mistaken identity. If, as is much more likely, the arbitration agreement
provided for the appointment of an arbitrator by the office-bearer of a
particular organisation at the request of one of the parties, the arbitrator should
establish that the proper procedures have been followed and that both parties
agree that this is so. If one of the parties alleges that the appointment
procedure has not been correctly followed and that the arbitrator has no
authority to proceed with the reference, he will once again be faced with the

69 At 109 above.
70 At 110 above.
71 See 110 above.
Procedure Prior to the Hearing 123

problem whether or not he ought to rule on the question and in doing so

determine his own jurisdiction. 72
The arbitrator should take this opportunity to disclose any relationship he
may have with either of the parties which might lead the other party to think
that he might be biased, or any other circumstance which might give rise to
doubts about his impartiality. 73 Condonation is easily given at this stage, and
makes it much more difficult to allege bias at a later stage.

4.4.4 Acceptance of any conditions of appointment

The arbitrator should establish that the parties understand and agree to his
tariff of fees. 74 This is also the appropriate time to make proper arrangements
to ensure payment of his fees, by obtaining guarantees, retainers or other
acceptable undertakings. 75 If necessary, the arbitrator and the parties must
agree on the period within which the arbitrator must deliver his award. 76 Even
if this matter is already dealt with in the arbitration agreement, they should
consider whether its provisions are appropriate in the particular circum-
stances. 77 The arbitrator should also obtain the parties' agreement to any other
conditions that he may wish to lay down, such as a condition that the hearing
shall not take place at a particular time when the arbitrator has other
arrangements.

4.4.5 Confirmation that the arbitration is not time-barred and that any
preconditions have been met
If a claim has become time-barred the party's right to proceed with the
arbitration will be blocked unless the time-bar is relaxed by the court. 78
The failure by one or other party to comply with a pre-condition will seldom
be fatal to his right to pursue his claim if the dispute has recently arisen. 79 At

72 See 111 above.

73 See 72 above.
74 See 87 above regarding the need to secure the parties· agreement to the tariff of his fees, to avoid

the risk of the fees subsequently being reduced on taxation in terms of s 34(1) of the Arbitration Act.
75 The methods which the arbitrator may use to ensure payment of his fees are discussed at 89-91

above.
76 If there is no agreement on this issue, the arbitrator is required by s 23 of the Arbitration Act to
make his award within four months of entering on the reference (see 256-7 below).
77 H, for example, the arbitration agreement provides that the Standard Procedure Rules of the
Association of Arbitrators apply, the arbitrator is obliged to deliver his award within three months after
the conclusion of the hearing. In certain circumstances this period could be far too long. However, the
period could be too short if, in a complex matter, the parties agree that they shall first have a period of
six weeks after the typed record of the evidence at the hearing becomes available to submit written
ar~uments to the arbitrator, before he starts preparing his award.
8 See 114-19 above.
79 e g a precondition that the dispute must first be referred to a quasi-arbitrator or mediator. A

problem could arise, however, where the precondition itself is coupled to a time-bar, eg where the party
must take steps for the appointment of a mediator within a certain period, failing which he will be bound
by the decision of the engineer as quasi-arbitrator (compare eg the GCC (1990) cl 61(l)(d)). See
generally 115-16 above.
124 Arbitration in South Africa: Law and Practice

worst, the other party will insist on the performance of the precondition, and
it will be necessary for the proceedings to be adjourned until this has been
done, causing no more than a delay anti possibly wasted costs. A more
reasonable opponent would be prepared to condone the precondition, if this is
no more than a formality, in order than the proceedings shall not be delayed
any longer than necessary.

4.4.6 Definition of the dispute

Any party who must defend himself at a judicial hearing is entitled to know
what case it is that he must meet, so that he may prepare himself adequately to
deal with it. Surprise, as regards the issues in dispute, should have no part in a
judicial hearing. Equally, the claimant should know what parts of his claim the
defendant contests, and what parts are not in dispute, so that he does not waste
time and money in adducing proof of matters which are not in dispute. The
same considerations apply in arbitration proceedings.
It might be thought that each party would be thoroughly aware of the other's
case-they may have been arguing about these matters for some time. But
many disputes arise out of misunderstandings, when neither party listens
properly to what the other is saying. Setting the dispute down in writing helps
to clarify the matter, not only for the other party, but often for oneself!
Furthermore, although the parties may have been arguing about a variety of
matters, when it comes to a serious showdown before an arbitrator, a party may
well decide not to proceed with some of his claims, which, on closer scrutiny,
may appear to be somewhat dubious. Setting the dispute down in writing also
enables the parties to give the arbitrator a clear brief of the issues he is required
to determine.
The dispute will usually be defined by an exchange of pleadings or through
the parties preparing a joint statement. 80 There is a variety of rules of
procedure for defining the dispute, ranging from the Uniform Rules of the
Supreme Court at one end of the spectrum to the Summary Procedure Rules of
the Association of Arbitrators at the other. 81 The choice will to some extent be
dictated by the magnitude and complexity of the issues, the degree of
informality that the parties might wish the proceedings to take, and whether the
parties intend to be legally represented or not. Where the issues are complex
and the claims substantial, and where the parties are legally represented, the
Standard Procedure Rules of the Association of Arbitrators would be
appropriate. The Association's rules, being more concise and direct, are in our
view generally preferable to the Uniform Rules of the Supreme Court in
arbitration proccedings. 82 Where the issues arc relatively simple and the claims
modest, and where the parties arc not represented and it therefore seems likely
that the arbitrator will be required to conduct the hearing along somewhat

Ho See especially 136-9 below.

HJ The differences between these sets of rules in relation to defining th~ issues in dispute appears from
paras 133-40 below.
H2 Sec 133-9 below for a discussion of these rules in relation to pleauin~s.
Procedure Prior to the Hearing 125

inquisitorial lines, the Summary Procedure Rules would probably be

preferable. Where the parties are reasonably sophisticated and capable of
presenting their cases themselves, the Standard Procedure Rules may once
again appear to be appropriate.
Once agreement has been reached at the preliminary meeting on the
procedure that is to be followed to define the issues, the arbitrator should
endeavour to get the parties to agree dates by which the various steps will be
taken. Each code of rules prescribes time-limits within which the various
· activities are to be performed, but these will not always suit the requirements
of the particular case or the convenience of the parties, and may need to be
enlarged or reduced by agreement. The arbitrator should try to be in a position
to incorporate in the minutes of the preliminary meeting 83 a detailed timetable
for the performance of the various steps to bring the matter to a hearing.

4.4. 7 Discovery of documents

If the parties are using the Rules of the Supreme Court, discovery 84 follows the
close of pleadings. If, however, the pleadings are being exchanged in
accordance with the Rules of the Association of Arbitrators, copies of relevant
and favourable documents will have been attached to the respective pleadings.
It is unlikely that further discovery will be necessary unless one of the parties
suspects that there arc one or more documents in the possession of the other
that may be favourable to his case, in which event that party may have to take
steps to obtain additional discovery. To the extent that it is possible and
appropriate to do so at the preliminary meeting, the arbitrator and the parties
may wish to consider modifications to any standard set of rules they have
agreed to follow in relation to discovery to ensure that discovery does not result
in unnecessary delays and expense. 85
The dates for submitting discovery affidavits and furnishing documents
should, if necessary and if possible, be agreed at the preliminary meeting.

4.4.8 Form of hearing

One of the great merits of arbitration is its flexibility and the scope that it gives
for conducting the proceedings in whatever manner is most likely to ensure
speed, convenience and economy, but without adversely affecting the
arbitrator's ability to do justice between the parties. 86 This adaptability features
most prominently in the hearing itself. In a later chapter87 we will consider in
detail some of the different forms the proceedings can take. In the present
context, it is proposed only to deal with the differences as they affect the
preliminary meeting.

"' See 129 below.

84 The process of discovery is described at 142-5 below.
85 See 145 below.
86 Compare Du Plessis (1987) 22.
87 See 197-205 below.
126 Arbitration in South Africa: Law and Practice

In all probability the parties will be unaware that there is any alternative to
the traditional procedure for the presentation of their cases, to which they have
become accustomed in court hearings, or in television dramas and similar
entertainments. For that matter their legal advisers may never have paused to
consider the possibility of presenting the case in any other manner than the
conventional way, or if they have considered the possibility, they may be very
reluctant to forsake the safe and familiar ground for the uncharted waters of
unfamiliar procedures.
If there is to be any departure from conventional procedures it will in all
probability have to be the arbitrator who will initiate the move. He should, very
briefly, outline the alternatives, their advantages and disadvantages, and
attempt to guide the parties towards a rational and appropriate choice. He will,
of course, have to know something of the dispute, and whether the parties
intend to present their cases themselves, or be represented, and so on.
To some extent this question regarding the form of the hearing will interact
with other items on the agenda (for example, the form of pleadings to be
followed) and the arbitrator must be aware, when the question of pleadings is
discussed, that these may have to suit the form of the hearing, and he must be
on his guard not to let the decision on the form of pleadings pre-empt any
decision on the form of the hearing, which is a much more important issue.

4.4.9 Representation of the parties

If the parties are not already represented by their attorneys or other advisers at
the preliminary meeting, the arbitrator should enquire whether it is their
intention to be represented by lawyers or lay advocates at the hearing. 88 This
will make each party aware of the other's intention and avoid the possibility
that one party, believing that his opponent does not intend to be represented,
arrives unrepresented, only to be confronted by an attorney and possibly even
an advocate representing his opponent. The unrepresented party may then
have to request an adjournment in order to engage similar representatives.
If the parties are represented by attorneys at the preliminary meeting, the
arbitrator should, for the same reason, enquire whether they intend to engage
advocates to represent them at the hearing.
This information will also enable the arbitrator to be aware of the sort of
hearing over which he will in due course preside, and to prepare himself
accordingly. He is likely to find that the hearing will tend to take on an
inquisitorial character and that he will be more actively involved in the
examination of witnesses when the parties are not represented than when they
are.

4.4.1 O Use of own technical expertise by the arbitrator

Particularly where the arbitrator is not a lawyer by profession, it would be a
88 Sec 178-9 below regarding a party's right to representation at an arbitration hearing, unless this

right is excluded in the arbitration agreement.

Procedure Prior to the Hearing 127

fairly safe assumption that the arbitrator had been appointed because of his
expert knowledge in the field of the matters in dispute and it would not be
unreasonable to assume that he should use such knowledge in deciding the
issues before him.
However, it would be wrong to assume that the arbitrator necessarily has
unfettered freedom to rely on his knowledge in deciding the matters referred to
him. 89 This question should be ventilated at the preliminary meeting and it
should be clearly established to what extent the parties are agreed that he may
make use of his expert knowledge.

4.4.11 Expet1 witnesses

If the parties propose to call expert witnesses, 90 they must observe any
requirements of the agreed rules of procedure applying to their arbitration.
Both the Uniform Rules of the Supreme Court 91 and the Rules for the Conduct
of Arbitrations92 stipulate that a party intending to call an expert to give
evidence must give timeous notice to the other party and the arbitrator of his
intention to do so. He must also serve on the other party and the arbitrator a
summary of the opinions and the reasons for such opinions, which the expert
intends to give at the hearing.
If the parties agree that the arbitrator may employ fully his expertise and
experience in determining the issues to be placed before him, they will
probably agree that expert witnesses become superfluous, or at least that the
number of expert witnesses may be limited.
Even where the arbitrator is limited in the extent to which he is permitted to
use his expert knowledge, or where the issues touch on technical matters of
which he possesses insufficient expert knowledge, and where expert witnesses
will be necessary, the number of such witnesses may be limited by agreement.
Expert witnesses are usually people at the summit of their respective
professions and would be · justified in charging substantial fees. Their
attendance at consultations, pre-hearing conferences and at the hearing itself
can be very time-consuming. Every effort should therefore be made to reach
agreement on the limitation of the number of expert witnesses that each party
may call. This may be a matter on which the parties, perhaps unaware of the
full nature and extent of each other's case, may be reluctant to commit
themselves at the preliminary meeting. If so, it should be raised again at the
pre-hearing conference. 93 Furthermore, meetings between experts may fill an
important function in reducing the issues in dispute. 94 If it is not practical to

89 The relevant factors in determining the extent to which the arbitrator ought to use his own

knowledge are discussed at 243-5 below.

90 See further 186-7 and 228 below regarding expert evidence.

'" Ruic 35(9).

92 Rule 17.
93 See 149 below.
94 See 155-7 below.
128 Arbitration in South Africa: Law and Practice

agree at the preliminary meeting on meetings between experts being held, this
possibility should likewise be raised at the pre-hearing conference.

4.4.12 Date, time and venue for the hearing

While a great deal will have to be done before the dispute will be ready to be
heard, setting a date for the hearing will impose a time limit and a rigid
programme on the preliminaries. The date may be several months into the
future, but its determination at an early stage will help ensure that everyone
will be available at that time, particularly if the parties intend to engage
advocates, who frequently have bookings many months ahead:,:1

4.4.13 Recording of evidence

The Arbitration Act, 96 in requiring that, if the oral evidence is not recorded by
the arbitration tribunal itself, it shall be recorded in such manner and to such
extent as the parties may agree or the arbitrator may direct, makes the
recording of evidence mandatory, and leaves a discretion only as to the extent
to and method by which it is recorded. 97 Thus a verbatim recording is not
prescribed, and the arbitrator may use his own form of shorthand, or take down
the evidence in summarised form, much as he might make notes at a lecture. In
an extreme case, his notes may be so brief and cryptic as to convey meaning to
himself alone, and would be of limited value to anyone else.
As there is no appeal against the award, 98 the principal reason for a verbatim
record falls away.9 9 Its importance then is to assist the parties and the
arbitrator, during the course of the hearing and subsequently, to recall
precisely what a particular witness may have said. If the hearing is to be a
lengthy one, with one or more postponements, a verbatim record may become
important.
It is often not easy, at the preliminary meeting. to anticipate whether a
verbatim recording may be required at some future time or not. As the expense
of recording and transcribing the proceedings can be substantial. the decision to
do so should not be lightly taken. A satisfactory compromise might be for the
proceedings to be tape-recorded, which is relatively inexpensive, and for only

95 Sec also 20 above and 177 below regarding the arbitrat,Jr's duty to give parties written notice of the
hearing.
96 Section 17.
97 See 187 and 242-3 below.
98 Section 28 of the Arbitration Act. See 271 below.

'N In appeals against judgments of the rnurts, the Appellate Division normally refers only to the
record of the trial and docs not receive other evidence. Although it is conceivable that a court to which
application is made for the remit ta I or setting aside of an arhitrator·s award may need sight of a verbatim
record of the arbitration proceedings, this is not necessarily the case. When an application is made for
the setting aside or rcmittal of an award, the court receives evidence on affidavit, relevant to the grounds
for review, by or on behalf of both parties (rule 6 of the Supreme Court Rule:;-rule (,(5)(g) also allows
limited use of oral evidence in exceptional circumstances). Moreover, the grounds on which an award
may be set aside or remitted ate restricted (see 285-95 below). Because of these factors, the importance
of a full verbatim record of the oral evidence for purposes of a possible review is obviously limited.
Procedure Prior to the Hearing 129

those portions to be transcribed as a party may apply for, possibly at his own
expense.

4.4.14 Other matters

Before concluding the preliminary meeting, the arbitrator, under this agenda
heading, should invite the parties to make any proposal, that may assist in
keeping the proceedings brief, expeditious and cost-effective. It helps to
reinforce the point that arbitration proceedings are not stereotyped versions of
Supreme Court hearings, but are freely adaptable and can take on a character
and form that is appropriate to the particular dispute. It helps to involve the
parties in the process of tailoring the proceedings to suit the purpose in hand.

4.4.15 Minutes of the preliminary meeting

Minutes of the preliminary meeting should be prepared by the arbitrator and
sent to the parties with the request that they confirm their accuracy or offer
such corrections as they consider necessary.

4.5 Security for costs

One of the parties at a preliminary meeting, particularly the defendant, may
request the arbitrator to make an order requiring the other party to furnish
security for the costs of the arbitration. 100 A defendant, who must participate
unwillingly in the arbitration to resist a claim made against him, could be put
to considerable expense, even if his defence is successful. Although the
successful party is usually awarded costs, these costs are subject to taxation
(that is assessment by the arbitrator or the taxing master of the court) 101 and he
will not be able to recover the full amount which he has been compelled to
spend on his defence. Moreover, he may be unable to enforce an order
awarding him his costs if the unsuccessful claimant has no money or is outside
the jurisdiction of the court. w 2
The arbitrator, however, has no power to order one party to give security for
the other's costs, unless that power is conferred on him by the parties in the
arbitration agreement. 103 In the absence of such a provision, the power to order
security for costs is reserved for the court.
The Arbitration Act provides that '[f]or the purposes of and in relation to a
reference under an arbitration agreement, the court shall have the same power
of making orders in respect of. : . security for costs ... as it has [in respect of]

"'" In this context, the term 'costs' refers to the expenses which the party requesting security is likely
to incur through his participation in the arbitration. The entirely different issue as to how the arbitrator
can secure payment of his own fees is discussed at 81-91 above.
101 See further 283-4 below.
102 Mustill & Boyd 335.
103 See Petz Products (Pty) Ltd v Commercial Electrical Contractors (Pty) Ltd 1990 (4) SA 196 (C)

203H-I; Mustill & Boyd 335-6.

130 Arbitration in South Africa: Law and Practice

any action or matter in that court'. 1114 The court in this context is the provincial
or local division of the Supreme Court having jurisdiction_ w 5 Regarding
security for costs, the common law distinguishes between an incola and a
peregrinus. An incola is basically a person who is domiciled or resident within
the area of jurisdiction of the court, providing that the residence is of some
permanent or settled nature. 106 A peregrinus is someone domiciled or resident
outside the court's area of jurisdiction. The practical effect of these definitions
has been qualified by statute. A person residing within the Republic but who is
a plaintiff in civil proceedings in a court whose area of jurisdiction does not
extend to where he resides cannot be required to give security only because he
resides outside the court's area of jurisdiction. 107 A peregrinus, is therefore, a
person who is neither resident nor domiciled in this country. The basic principle
is that an incola plaintiff cannot be compelled to furnish security for costs. 1118
The position of a peregrinus plaintiff was reconsidered by the Appellate
Division in Magida v Minister of Police 109 after a thorough investigation of the
Roman-Dutch authorities. It was held that an incola defendant did not have a
right, as a matter of substantive law, entitling him to security for his costs from
a peregrinus plaintiff as a matter of course. 1I0 The court has a discretion which
must be exercised by having due regard to the particular circumstances of the
case as well as considerations of equity and fairness to both the incola and
peregrinus to decide whether the peregrinus should be compelled to furnish
security or not. There is no justification for requiring the court to exercise its
discretion in favour of a peregrinus only sparingly. 111
Where a juristic person is the plaintiff or applicant 'in any legal proceedings'
the court's power to order security is amplified by statute. If it appears by
credible testimony that a company or other juristic person will be unable to pay
the costs of the defendant or respondent if successful in his defence, the court
may require sufficient security to be given for those costs and may stay all
proceedings until the security is given. 112

104 Section 21(1)(a).

105 Section 1.
106 Protea Assurance Co Ltd v Januskiewicz 1989 (4) SA 292 (W) 294G. See also Cilliers 64, who

points out that the common law has been qualified by subsequent case law.
w 7 The Supreme Court Act 59 of 1959 s 29.
108 See Cilliers 64. See, however, the text below regarding a plaintiff or applicant who is a juristic

person and Cilliers 67-70 as to the circumstances in which a vexatious litigant or an insolvent may be
required to give security.
w9 1987 (]) SA 1 (A).
110 At 12B.
111 At 14E-F. A peregrinus should not on account of his impecuniosity he deprived from prosecuting

his action or compelled to furnish security beyond his means. Although resident outside the court's
jurisdiction, the plaintiff in the Magida case was employed within its jurisdiction and execution of its
judgment was possible in the area where he resided. The plaintiff was therefore absolved from
furnishing security (at 15D-I).
112 See the Companies Act 61 of 1973 s 13; Cilliers & Benadc 556-7. The Close Corporations Act 69
of 1984 s 8 contains a similar provision.
Procedure Prior to the Hearing 131

These are the basic principles which the court is required by the Arbitration
Act to apply in relation to security for costs in arbitration proceedings. 113 The
question whether or not a claimant in arbitration proceedings should be
ordered to furnish security for costs is not one of substantive law but one of
practice or procedure. The court has a discretion to grant an order for security
in the light of the circumstances of the case. 114 Although the Companies Act
refers to 'any legal proceedings' when conferring on the court the power to
order companies as plaintiffs or applicants to furnish security, 115 this provision
must be read with the Arbitration Act. The court therefore has a similar power
to order a company which is a claimant in arbitration proceedings to furnish
security for costs. 116 A company wishing to resist being ordered to furnish
security will normally furnish a copy of its balance sheet so that the court can
see how far its assets exceed its liabilities. 117 The Arbitration Act confers no
express power on the court to stay arbitration proceedings until a company has
provided security, but the ancillary power in the Companies Act to order a stay
of proceedings applies also to arbitration by necessary implication. ll8 An
application for a stay of proceedings is usually premature until the amount of
security has been determined and the company has failed to provide it. 119 If the
amount initially provided as security proves inadequate, the other party may
require additional security, if necessary, with the assistance of the court . 120
The parties may confer on the arbitrator the power to order a party to give
security for costs in the arbitration agreement. 121 In this event, the court's
statutory power does not impair the power vested in the arbitrator. 122 The
extent of the arbitrator's power to order security will depend on the terms of
the agreement. Even where the power is conferred in general terms, we suggest
that the power should be exercised cautiously, with particular regard to the
circumstances in which a court will order security, discussed above. The
question arises as to what an arbitrator can do to ensure compliance with his
order where he directs that security should be provided. The issue as to
whether security should be provided is one of procedure rather than
substantive law. 123 Therefore, where the arbitrator has ordered the claimant in
the arbitration proceedings to furnish security for the defendant's costs, it is

113 Section 2l(l)(a). See Cilliers 63-71 for a more detailed discussion of the relevant principles. The
procedure for obtaining security for costs or a subsequent increase, if the initial amount later appears
inadeqate, is regulated by rule 47 of the Supreme Court Rules.
114 Petz Products (Pty) Ltd v Commercial Electrical Contractors (Pty) Ltd (above) at 204A-B.
115 Act 61 of 1973 s 13.
116 Petz Products (Ply) Ltd v Commercial Electrical Contractors (Pty) Ltd (above) at 204F-205G. The
position in English law is similar (see Mustill & Boyd 336 regarding s 12(6)(a) of the Arbitration Act
1950 read withs 726(1) of the Companies Act 1985).
117 Sec Petz Products (Pty) Ltd v Commercial Electrical Contractors (Pty) Ltd (above) at 206F.
118 Sec Saska Bpk v Fururus Construction (Pty) Ltd 1988 (4) SA 170 (W) 171H-I.
119 See Saska Bpk v Futurus Construction (Pty) Ltd (above) at 174C-D, 176!-J and the order in Petz
Pr.oducts (Pty) Ltd v Commercial Electrical Contractors (Pty) Ltd (above) at 200A-B.
120 Petz Products (Pty) Ltd v Commercial Electrical Contractors (Pty) Ltd (above) at 199!-J, 206H-1.
121 See n 103 above.
122 Section 21(2).
123 See the text at n 110 above.
132 Arbitration in South Africa: Law and Practice

arguable that the arbitrator as master of his procedure 124 has the discretion to
order a stay of the arbitration proceedings until security is duly provided in
terms of his order.

4.6 Pre-hearing procedure

A reference to arbitration falls, broadly speaking, into two parts: the
preliminaries to the hearing and the hearing itself. Those whose knowledge of
judicial procedure is gleaned from television dramas, films, plays and novels
usually have a general idea of the form of a hearing, even though this image
may be glamorised and over-dramatised, but they generally have little or no
awareness of the nature of the pre-hearing procedure, or the relevance of it.
It is a fundamental principle that the party who succeeds in a judicial hearing
must do so on the merits of his case, and not because he has been able to catch
his opponent by surprise at the hearing by raising a significant new issue of
which his opponent had no knowledge or by calling an expert witness
unannounced. In this respect fictional and dramatic presentations of judicial
hearings are often sadly misleading. In real life, each party must be able to
come to the hearing fully aware of the other's case and of the documents on
which he relies, 125 so that he may be properly prepared to prove his case and
disprove his opponent's. Nevertheless, surprises sometimes occur and where a
party is caught unawares in this manner and requires an adjournment in order
to prepare himself to deal with this new turn of events, the court is usually
prepared to grant it.
Clearly, therefore, if the hearing is to proceed quickly and expeditiously
without unplanned adjournments, 126 each party must be fully aware of the case
that he must prove and must be able to prepare his case thoroughly and
meticulously. In order to enable each to be aware what the other's case is, what
is in dispute and what must be proved if he is to win his case, and what need not
be proved because it is not in issue, the Uniform Rules of the Supreme Court
provide standard pre-trial procedures 127 with which the parties, when
conducting litigation in that court, must comply. Although we are of the view
that these rules are not really appropriate for arbitration proceedings, certain
aspects of these rules will be discussed briefly 128 for three reasons. First, these
rules are sometimes adopted in arbitrations, especially where the parties are
legally represented. 129 Secondly, these rules were used as a basis for the Rules
for the Conduct of Arbitrations published by the Association of Arbitrators.
Thirdly, the discussion will help readers not familiar with the Supreme Court

124 See 97 above.

125 See 142-5 below regarding discovery.
126 Compare 204 below regarding a hearing in stages.
127 See eg rules 18-22 on pleading, rule 35 on discovery and rule 37 on the conference between
attorneys aimed at curtailing proceedings.
128 At 133-5 below.
129 See eg Saska Bpk v Futurus Construction (Pty) Ltd 1988 (4) SA 170 (W) 1711-J. Compare Irish
& Co Inc (now Irish & Menel/ Rosenberg Inc) v Kritzas 1992 (2) SA 623 (W) 627D where it was agreed
that only those court rules specified in the agreement would apply.
Procedure Prior to the Hearing 133

Rules to understand the important differences between these rules and those of
the Association of Arbitrators.
There is another important reason why the dispute should be defined clearly
at the outset. The arbitrator's mandate will be to resolve certain matters in
dispute between the parties. In order that he may do this without leaving any
matters unresolved, or alternatively without going beyond the limits of his
jurisdiction, either of which errors renders his award liable to be remitted for
correction or to be set aside, 130 the nature and extent of the dispute will need
to be clearly defined.
It should be remembered that the purpose of the pre-hearing procedures is
to establish what is common cause and what is in dispute. They are not
intended to furnish proof of the issues: that will be done at the hearing itself.

4.7 Defining the dispute in accordance with the Uniform Rules of the
Supreme Court
Pleadings in a civil court consist of the various documents which, before the
start of the trial, are formally exchanged between the parties in accordance with
certain prescribed rules, with the object of identifying clearly the issues in
dispute and to enable the other party to know what case he has to meet. 131 The
pleadings must contain a clear and concise statement of the material facts on
which each party relies in support of his claim and defence respectively, with
sufficient particularity to enable his opponent to reply . 132 The pleadings arc
intended to elicit admissions of as many facts as possible 133 so as to avoid the
necessity of evidence being led on matters which are not in dispute.
The procedure begins with the plaintiff preparing and serving on the
respondent a document known as a summons, in which the defendant is
required within a specified period either to comply with the plaintiff's demands
or formally to defend the case. 134 If the defendant fails to respond to the
summons by defending the action, he runs the risk that the plaintiff can obtain
judgment by default against him in his absence. 135 If the defendant wishes to
defend the action, he must give formal notice of intention to defend within the
specified period . 136
The pleadings comprise the following documents. The plaintiff must
commence either by furnishing particulars of his claim together with his
summons or by lodging a declaration after the defendant has given notice of

" 11 In terms of ss 32 or 33 of the Act. Sec 285-95 below.

'" Sec eg Nieuwoudt v Joubert 1988 (3) SA 84 (SE) 89J. In the Supreme Court, the prescribed rules
are Supreme Court Rules 18, 20 and 22-9.
132 Supreme Court Ruic 18(4). Sec further Van Winsen, Ekstcen & Cilliers ch 13 regarding the

general rules applicable to pleadings.

133 Compare Supreme Court Rules 22(2) and 22(3).
134 See Supreme Court Rule 17.
135 Supreme Court Rule 31(2).
136 Supreme Court Rule 19.
134 Arbitration in South Africa: Law and Practice

intention to defend. 137 Either document must specify the nature of the claim,
the material facts on which he relies, the conclusions of law which he is entitled
to draw from those facts and the relief claimed. 138 No proof is required at this
stage: the plaintiff will have the opportunity at the hearing of leading whatever
admissible evidence he wishes in order to prove those allegations which the
defendant has challenged. The plaintiff must, however, allege all the facts
necessary to substantiate his claim. 139
The defendant, on receipt of the particulars of claim or declaration, and
within a specified time, is required to prepare and submit to the plaintiff a
document known as a plea, containing his defence. In his plea, he is required
to deal with each of the plaintiff's allegations and state \\(hich he admits and
which he denies. 140 Some of the facts will not be contentious. For example, in
a dispute relating to the sale of allegedly defective goods, the defendant will
probably concede to an allegation that the parties entered into a contract of sale
and that certain goods were delivered. However, he will probably deny the
allegation that the goods were defective. He must also clearly and concisely
state any other material facts on which he relies for his defence, and will aver
conclusions of law to be drawn from those facts. The plea will conclude with a
prayer for the judgment which the defendant wishes the court to make; almost
invariably that the court dismiss the plaintiff's claim with costs.
There may be allegations in the plea with which the plaintiff will want to take
issue. It may be, for example, that the defendant has alleged that the goods
which he supplied were not defective but that they failed to give satisfaction
because the plaintiff failed to use them in the manner in which they were
intended to be used. The plaintiff may wish to allege that it was an implied term
of the contract that the plaintiff was to use the goods for the purpose for which
they have proved to be defective. This allegation will be set out in a document
known as a replication, which will be served on the defendant.1 41
There may be further documents constituting the pleadings, particularly if
the defendant advances a counter-claim, in which event he must deliver a claim
in reconvention, together with his plea. 142 The plaintiff will then deliver a plea
to the claim in reconvention. When the parties' claims, counter-claims and
defences have been fully defined in this manner, the pleadings are closed. 143

137 Particulars of claim with the summons are required when the claim is not for a debt or liquidaled
demand. See further Supreme Court Rules 17(2) and 20.
138 Supreme Court Rules 20(2} and 18(4).
139 See further Supreme Court Rule 18(6) and (7) regarding contractual claims and rule 18(10)
regarding a claim for damages.
140 See Supreme Court Rule 22(2), which alternatively also allows the defendant to confess and avoid
certain facts. For example, the defendant may admit that there is a binding contract as alleged by the
plaintiff, but aver that·he is entitled to avoid the contract because of a material misrepresentation on the
part of the plaintiff (see further Van Winsen, Eksteen & Cilliers 320).
141 Supreme Court Rule 25. It is unnecessary to lodge a replication merely to deny allegations in the

plea (rule 25(3)).

142 Supreme Court Rules 24 and 25.
143 Supreme Court Rule 29.
Procedure Prior to the Hearing 135

When a party delivers a pleading or other document, he is required to serve

a copy on the other party and file the original with the registrar of the court. 144
Where the Supreme Court Rules are used in arbitration proceedings, the
arbitrator receives a copy of each pleading when it is served on the other party.
Thus, at the close of pleadings, the court or the arbitrator will have a complete
set of the pleadings.
It follows from what we have said above that the pleadings, when read
together, should, at least in theory, give a clear idea of what the dispute is all
about, and what judgment each party wishes the court or the arbitrator to
make. It should be clear which of the material facts the parties agree upon and
which will therefore not require proof at the hearing. It should also be clear
which facts or allegations are in issue and in respect of which each party will
need to lead evidence if he wishes to prove his case.
While the pleadings are intended to be reasonably concise and need not go
into any unnecessary detail, they should nevertheless contain all salient
allegations of fact necessary to establish the claim or defence. Each party
should also ensure that he disputes every factual statement in the other's
particulars of claim or claim in reconvention with which he disagrees. Failure to
do so will be interpreted as an admission of those facts, 145 to which he will be
held. 146 At the hearing the parties will not be permitted to raise any issues
which have not already been set out in their pleadings. For one party to be
permitted to raise a new issue would defeat the purpose of pleadings; it would
clearly catch his opponent unawares and put him at a disadvantage. 147 It would
probably entitle him to an adjournment to prepare himself to deal with the new
issue and may also entitle him to wasted costs because of the adjournment. A
party wishing to raise a new issue will usually first be required formally to
amend his pleadings and allow his opponent to make appropriate amendments
to his own pleadings in response. 148
These comments on the Uniform Rules of the Supreme Court regarding
pleadings are an over-simplification of the process, but should provide readers
who are unfamiliar with civil procedure with a basic understanding of the
manner in which the dispute is defined. 149

4.8 Defining the dispute in accordance with the 'Rules for the Conduct
of Arbitrations'
4.8.1 The introduction of the 'Rules for the Conduct of Arbitrations'
Until the early 1980s it had been customary, at least in construction industry
144 Supreme Court Rule 1, which defines 'deliver'.
145 Supreme Court Rule 22(3).
146 See Hoffmann & Zeffertt 428-9.
147 As was said in Kali v Incorporated General Insurances Ltd 1976 (2) SA 179 (D) 182A: 'The

purpose of pleading is to clarify the issues between the parties and a pleader cannot be allowed to direct
the attention of the other party to one issue and then, at the trial, attempt to canvass another.'
148 See Supreme Court Rule 28 regarding amendments to pleadings.
149 For a fuller exposition see the standard works on civil procedure in the Supreme Court like Van

Winsen, Eksteen & Cilliers and Nathan & Brink.

136 Arbitration in South Africa: Law and Practice

arbitrations involving substantial claims, and where the parties were repre-
sented by lawyers, for the dispute to be defined with pleadings made in
accordance with the Uniform Rules of the Supreme Court.
This did not always prove to be satisfactory. The Uniform Rules, particularly
in the form current at that time, gave the parties scope for 'tactical pleading', 1so
in which the rules could be manipulated by a party to protract the process of
pleading and so delay the hearing for a considerable time, often to the grave
prejudice of the other party. 151 But in the early 1980s the Association of
Arbitrators, recognising that this and other features of the Uniform Rules did
not always facilitate an early hearing, d~vised and published its own 'Rules for
the Conduct of Arbitrations' . 152 The original version was superseded by a
revised version in 1990. Over the years these rules have achieved general
acceptance within the construction industry and are now normally used for
conducting arbitrations in that field,
The 1990 version in fact comprises two sets of rules, the Standard Procedure
Rules and the Summary Procedure Rules. The Standard Procedure Rules, as
the name implies, are intended to be used for all but relatively simple disputes,
and particularly where the parties are represented by lawyers, claims
consultants or others familiar with arbitration procedure. The Summary
Procedure Rules, on the other hand, have been devised for occasions where the
issues are relatively simple, where the amounts in issue are not great, where
there is a desire to dispose of the matter as quickly as possible, and particularly
where the parties are unrepresented and unfamiliar with conventional
arbitration procedure.
In this section we discuss the alternative procedures provided by the
Standard Procedure Rules for defining the dispute. In the next section we deal
with the procedure for defining the issues in dispute according to the Summary
Procedure Rules. 1s3

4.8.2 Statement of Issues in accordance with rule 4

The Standard Procedure Rules 154 envisage two alternative ways of defining the
dispute. The first alternative is set out in rule 4 which requires the parties

150 See also 138-9 below regardiog tactical abuses relating to pleading.
151 Alternatively, both-parties could fail to observe the time-limits for lodging pleadings. Pressure of
work on the part of their lawyers who are responsible for drafting the pleadings also contribute to the
delays. Prior to the amendment of Supreme Court Rule 21 (with effect from 1 January 1988) by the
abolition of requests for further particulars for purposes of pleading, a party wishing to delay matters
could allege that the other's pleadings were incomplete and would request further particulars, whether
the information was strictly necessary or not. Subsequent requests for 'Further and Better Particulars'
also occurred.
152 For a discussion of these rules see Du Plessis (1982) 608-9; Du Plessis (1987) 22-3 and compare
Gorley 341 for a less positive view. One of their features was the omission of any provision for 'Further
Particulars' for purposes of pleading, several years before the amendment to the Supreme Court Rules
referred to in the previous footnote.
153 See para 4.9 at 139-40 below.
154 In the discussion that follows, references are to the 1990 edition of the Rules.
Procedure Prior to the Hearing 137

jointly to prepare a Statement of Issues and to submit it to the arbitrator. In

this, they shall set out:
(a) details of all relevant matters not in dispute but from which the issues in
dispute arise;
(b) the disputed issues and the averments of each party in relation to those
issues;
(c) the responses of each party to the averments of the other;
(d) the facts and contentions of law on which each party relies; and
(e) the award which each party desires the arbitrator to make.
True copies of all relevant documents are required to be attached to the
Statement of Issues. 155
This document will take the place of and remove the necessity for an
exchange of pleadings. As it is required to be produced within fifteen days 156
from the date of the preliminary meeting, it will be appreciated that this
procedure is intended to bring the dispute to a hearing in a very short time.
Many disputes arise because the normal processes of communication
between the parties have become very difficult or may even have broken down
completely. Neither party listens to what the other is saying and each acquires
an exaggerated and distorted perception of the other's attitude. The
requirement that the parties shall sit down together and and at least attempt to
jointly prepare a Statement of Issues, often goes a long way towards
re-establishing communication and understanding between the parties and may
contribute to the settlement of some, if not all, of the issues without the need
to refer them to arbitration.
It must be admitted that frequently the relationship between the parties has
become so antagonistic that it is impossible for them to sit together at the same
table and draw up a joint statement, even when accompanied by their legal
advisers. In this event, rule 4 provides that the parties shall use the alternative
procedure to define their dispute by exchanging pleadings. 157 But the fact that
an attempt to prepare jointly a Statement of Issues often ends in failure should
not dissuade the parties from making the attempt: there is much to be gained
and very little to be lost from the effort.

4.8.3 Statement of Claim in accordance with rule 5

Rule 5 requires the claimant, within twenty days of the date of the preliminary
meeting, 158 to deliver to the defendant and to the arbitrator his Statement of
Claim in which he sets out:
(a) details of each dispute on which arbitration is sought;

155 Rules 4.1-4.3. See n 159 below regarding the meaning of 'relevant documents'.
156 For purposes of the Standard Procedure Rules, 'day' is defined as any day other than a Saturday,
Sunday or public holiday (rule 1.1). Thus fifteen days in most circumstances will equate to three weeks.
157 In terms of rules 5-10.
158 If the parties have not succeeded, after fifteen days, in producing a Statement of Issues, the

claimant will have to prepare and submit his Statement of Claim within a further five days of the
preliminary meeting, unless the arbitrator grants an extension of time under rule 13.
138 Arbitration in South Africa: Law and Practice

(b) the relief claimed; and

(c) all the facts and contentions of law constituting the claim.
The Statement of Claim must be accompanied by true copies of all relevant
documents. 159 With the exception of the last-mentioned requirement, the
requirements may not appear to differ significantly from those for the plaintiff's
Particulars of Claim in the Supreme Court. 160 The combined effect of the
differences will be discussed in the context of the defendant's Statement of
Defence below.

4.8.4 Statement of Defence in accordance with rule 6

Not later than fifteen days after receiving the Statement of Claim, the
defendant is required to deliver to the claimant and the arbitrator his Statement
of Defence in which he furnishes details of:
(a) his defence stating which contentions of fact or law in the Statement of
Claim he admits and which he denies;
(b) the grounds for every denial or objection; and
(c) all the facts and contentions of law constituting the defence.
The Statement of Defence must be accompanied by all relevant documents,
excluding those delivered with the Statement of Claim.
The process of pleading in the Supreme Court is often marked by delay and
'tactical pleading'. Pleadings are often drafted to reveal as little as possible of
the party's own case 161 or in obscure language in the hope of taking an
opponent by surprise. 162 A defendant may deny certain allegations for tactical
reasons, in the hope that he will thereby compel the plaintiff to call certain
witnesses, who will then be available for cross-examination on other issues.
Defences may be raised which a defendant knows or should know that he has
little hope of sustaining at the trial. The courts are aware of these abuses. 163
Such tactical ploys are also used in arbitration proceedings, particularly when
the Supreme Court Rules are used. 164
The Standard Procedure Rules regarding pleadings try to encourage greater
candour by first requiring a party to plead all the facts and contentions of law
which constitute the claim or defence. In the case of the defendant, a mere
denial is not sufficient: the grounds for every denial must be furnished. The
15 " A 'relevant document' means, in relation to each party, any document of whatsoever nature in his

possession or under his control, whether it be the original or a copy, relating to the dispute referred lo
arbitration, but excluding documents regarding the production of which he may validly claim privilege
(rule 1.5 and see 234 below regarding privilege).
160 See 134 above.
161 See Nieuwoudt v Joubert 1988 (3) SA 84 (SE) 90E.
162 See Park (1984) 182-3 and Jones 230-1. Shilston 68 states that 'the acquired skills of a pleader are

considered to relate more to enhancing the chances of winning, than to communicating clearly to the
arbitral tribunal the nature of the issues to be investigated'.
16 ' See Nieuwoudt v Joubert (above) at 91 C: 'Litigation is not a game where a party may seek tactical

advantages by concealing facts from his opponents and thereby occasioning unnecessary costs'.
164 On a careful reading of Gorley 341, it appears that one of his objections to the Association's Rules

is not so much that they are likely to cause a real injustice, but rather that they limit the opportunities
for some of the tactical games in which lawyers are apt to indulge.
Procedure Prior to the Hearing 139

duty expressly imposed on both parties to append copies of all relevant

documents to their pleadings is however the most significant departure from the
Supreme Court Rules. 165 Not only does this provision have the effect of
exposing all relevant documents at an early stage, 166 thereby ensuring that
discovery procedures at a later stage are usually superfluous, 167 but the duty to
disclose documentary evidence in support of claims and defences, as an
appendage to the pleading in which they are raised, forces parties to be more
cautious in advancing claims and defences which they will not be able to pursue
seriously at the hearing through lack of evidence.

4.8.5 Claimant's Replication in accordance with rule 7

Not later than ten days after receiving the Statement of Defence, the Claimant
may, if necessary, deliver to the defendant and the arbitrator a Replication, in
which he replies to allegations in the Statement of Defence. The Replication
must be accompanied by true copies of all relevant documents other than those
delivered with previous pleadings.
Generally speaking, using the principles applicable to a replication in the
Supreme Court, 168 the claimant need replicate only when he wishes to do more
than merely deny the allegations in the defendant's statement of defence. 169

4.8.6 Counter-claim in accordance with rules 8, 9 and 10

If the defendant has a counter-claim which falls within the jurisdiction of the
arbitrator, he must, at the time of delivery of his Statement of Defence, deliver
details of the counter-claim drawn up in a similar manner to that prescribed for
the claimant's Statement of Claim. 170 The claimant will then be required to
deliver the Claimant's Reply within fifteen days of receipt of the Defendant's
Counter-claim, formulated in a similar manner to the Statement of Defence. 171
Finally, the defendant may, if necessary, reply to the allegations contained in
the Claimant's Reply by means of the Defendant's Replication, delivered to the
claimant and the arbitrator within ten days of receiving the Claimant's
Reply . 172 Each of these pleadings must be accompanied by copies of any
relevant documents which have not been furnished with a previous pleading.

4.9 Defining the dispute in accordance with the Summary Procedure

Rules
In many arbitrations, where the amounts claimed are modest and the issues are
165 Compare Van Winsen, Eksteen & Cilliers 299-300, who state that there is no express or directory

provision in the Supreme Court Rules requiring a party to annex copies of relevant documents to his
pleadings, although this is occasionally done in practice.
""' Sec 239 hclow regarding the effect of Ruic 19 on the evidential status of these documents. The
predecessor of this rule was roundly criticised by Gorley 341, but particularly in the light of rule 12.2,
the rule can cause no prejudice, as long as the parties are aware of its effect.
"'7 Sec 144 below.
"'" See the reference to Supreme Court Rule 25(3) at 134 above.
169 See the example at 134 ahovc.
1711 Rule 8.
171 Rule 9.
172 Rule JO.
140 Arbitration in South Africa: Law and Practice

simple, defining the issues either in accordance with the Standard Procedure
Rules of the Association of Arbitrators or by an exchange of pleadings under
the Uniform Rules of the Supreme Court can be unnecessarily elaborate, costly
and time-consuming. Moreover, in these arbitrations, the parties are usually
not legally represented and may experience great difficulty in understanding
the purpose of pleadings and the manner in which they should be prepared to
serve their purpose effectively.
The Association of Arbitrators therefore published the Summary Procedure
Rules 173 in 1990 to cater for this type of arbitration. These rules provide the
following procedure to define the issues in dispute. The arbitrator convenes a
meeting with the parties. At the meeting, the arbitrator may determine the
issues by conducting an informal inquiry through putting questions to the
parties. In this way he can establish what the claim is, whether there is a
counter-claim and also the defences to the claim and any counter-claim. He
must also establish what the disputed and undisputed facts are on which the
claim and counter-claim are based. He will also receive or arrange to receive
those documents or copies of documents which the parties consider relevant to
the determination of the issues. 174 Other evidence in support of the claims is
not received at this stage. The arbitrator then prepares a minute which, may in
fact, closely resemble the Statement of Issues provided for in the Standard
Procedure Rules 175 and this minute will be confirmed by the signatures of the
arbitrator and the parties. 176

4.10 Amendment of pleadings

A party's statement of claim or defence foreshadows the claim or defence that
he will attempt to prove at the hearing. He will not be permitted in the hearing
to make allegations, or develop a proposition, of which he has not given his
opponent proper notice in the pleadings, because to allow him to do so would
be to permit him to take the other party unawares.
After pleadings have closed and as he prepares for trial however, a party may
find that new developments, fresh information or further consideration cause
him to see his case in a different light. He may therefore wish to formulate his
claim in a different manner, perhaps making different allegations and drawing
different conclusions. The claimant may even wish to amend the amount
claimed. To do so, he will need to amend his pleadings and, under the Standard
Procedure Rules, he may not do so without the consent of the arbitrator. 177

173 See Appendix III(ii).

174 Summary Procedure Rules 2.3, 2.4 and 2.6.
175 See 136-7 above.
176 Summary Procedure Rule 2.5. For a discussion of the subsequent proceedings under the Summary
Procedure Rules, see 201 below and also 35 above regarding a similar expedited procedure in labour
arbitrations.
177 Rule J 1. (Compare Supreme Court Rule 28 regarding amendments to pleadings in the Supreme

Court.) The purpose behin_d requiring the arbitrator's consent is so that he can satisfy himself that the
amendment is really necessary and that time given to the party's opponent to effect consequential
amendments is not inappropriately long.
Procedure Prior to the Hearing 141

What considerations should guide an arbitrator in deciding whether to grant

or withhold his consent? Jn /Jc11ja111i11 ,, Subac South African Building and
Construction (Pry) Ltd the court summarised the factors which a court should
take into account when considering an application to amend pleadings as
follows:
'The Court has a discretion to allow a party to amend his pleadings ... at any time
before judgment. Amendments bona fide sought are generally granted unless the
application to amend will cause prejudice in the sense of an injustice to the other side
in circumstances where the prejudice cannot be eliminated [whether totally or
materially) by a suitable postponement and/or order for costs. The factor which has
shaped the Court's policy regarding amendments is a positive endeavour to
encourage a full and proper ventilation of the real disputes between the parties.
Whilst an amendment remains an indulgence which has always to be justified by the
seeker, it is the prejudice to the opponent that is the touchstone for the grant or
refusal of the application .... Where a proposed amendment will not contribute to
the real issues between the parties being settled by the Court, it is, I think, clear that
an amendment ought not to be granted.'
The court concluded that it would do both parties an injustice if it allowed a
proposed amendment, which would result in a claim which was not viable in
law being incorporated in the pleadings. 178
It is submitted that similar considerations should be applied by arbitrators
when ruling on applications for amendments in arbitration proceedings. The
arbitrator should, however, be careful to ensure that the amendment for which
permission is being sought, is a genuine amendment, and not merely a ploy to
create delays. Where prejudice is likely to be suffered by the other party, the
arbitrator will need to exercise his discretion carefully, but should be slow to
deny a party the right to amend his pleadings, because a party's right to bring
his grievances to a hearing for adjudication is a fundamental onc. 17"
The other party is likely to need to amend his own pleadings in response to
the amended pleadings of the first party. Particularly if it will be necessary to
postpone the hearing because of the amendment, resulting in wasted costs, the
arbitrator may grant an order to the effect that the party requesting the
amendment must bear the other's wasted costs, especially if the need for
the amendment could have been avoided by exercising reasonable foresight.
Alternatively, if he considers the applicant for an amendment not to be at fault,
he could direct that costs occasioned by the amendment will be costs in the
reference and thereby dependent on the result of the arbitration. 180

l7R 1989 (4) SA 940 (C) 957H-958D.

179 Particularly because if he were to attempt to raise the matter again in subsequent proceedings, his
claim could usually be met with the defence of res iudicata, i<t the arbitrator's award has finally disposed
of the issue in dispute between the parties.
180 See generally 277-82 below regarding costs and Mustill & Boyd 401-2 regarding the costs of
interlocutory applications to the arbitrator in arbitration proceedings.
142 Arbitration in South Africa: Law and Practice

4.11 Discovery of documents

An aspect of common-law civil procedure 181 which surprises those who are
familiar only with the civil procedure of civil-law systems 182 is that the former
obliges each party to litigation to reveal to the other the existence of all
documents in his possession or under his control which have any relevance to
the issues, whether these documents are supportive of that party's case or not.
A party is even obliged to reveal the existence of documents which may be fatal
to his own case to the other party.
This is done in Supreme Court litigation after the close of pleadings 183 by a
process known as 'discovery'. In essence, each party is entitled to require his
opponent to draw up and deliver a list of the documents which are or have at
any time been in his possession or under his control, 184 and which are relevant
to the matters in issue. 185 The completeness of the list must be verified on
affidavit and the list of documents is therefore usually contained in a schedule
to the affidavit. 186 These documents may be very tersely described as 'letter
from A to B dated 1 March 1988' or 'minutes of site meeting dated 9 April
1988'.
In a separate schedule to his discovery affidavit, each party is required to list
those documents in his possession or under his control to the production of
which he has a valid objection. 187 The usual basis for such objection will be that
the document is privileged and, in particular, that it is subject to legal

181 i e the law of civil procedure used in most English-speaking countries whose legal system or law of

procedure derives from that of England, including the commonwealth countries.

182 i e the law of procedure used in France, Germany, other European countries and countries
elsewhere in the world whose legal systems are derived from those of continental Europe.
183 In terms of Supreme Court Rule 35(1), a party may require the other to make discovery before the

close of pleadings only with the leave of a judge. In practice, such permission is rarely requested: until
the issues have been defined, it will be difficult to determine exactly which documents must be
discovered.
184 Documents under his control would include documents in possession of his agents in their capacity

as such.
185 South African courts, following English practice, have consistently held that a party is obliged to
discover only those documents which damage his own case or which advance the case of his opponent,
whereas documents which tend only to advance the case of the party making discovery need not be
discovered (see Van Winsen, Eksteen & Cilliers 403; Carpede v Choene NO 1986 (3) SA 445 (0)
452C-D and the authorities cited there). In Carpede v Choene NO, however, the court held that the rule
that a party need not disclose a document which tends only to advance his own case must be qualified
by adding the following proviso, namely 'provided such party docs not intend using such document
during the trial' (4568-D). If he wishes to use a document by putting it to witnesses called by his
opponent during cross-examination for the purpose of contradicting them, in which event the document
will become evidence, he must previously have disclosed the document. If a document has not been
disclosed, it may not be used for any purpose at the trial by the party who failed to disclose it, without
the permission of the court (Supreme Court Rule 35(4)). The court's power to give permission is
discretionary. Once a party is under cross-examination he cannot consult with his own counsel and could
be severely prejudiced by the use of the document at that stage. Therefore, where the failure to disclose
was deliberate or due to grossly culpable remissness, the court will refuse permission for the document
to be used (Carpede v Choene NO 4571-4598; Mlam/a v Marine and Trade Insurance Co 1978 (I) SA
401 (E) 403A-404A).
186 Supreme Court Rule 35(1) and (2) and form 11.
187 Supreme Court Rule 35(2)(b).
Procedure Prior to the Hearing 143

professional privilege. 188 Even where a party is not represented, documents

brought into existence for purposes of the litigation, particularly witnesses'
statements, <lo not have lo be <lisclosc<l. 18"
Each party, on receiving the other's schedules, will examine them and
establish whether there arc any documents listed which he does not already
have in his possession either in the form of the original document or a copy. He
is then entitled to an opportunity for inspecting these documents, except those
which are privileged, and to obtain or make copies at his own cost. 1911
If a party should suspect that the other has in his possession other documents
which have not been disclosed in the discovery affidavit, he may apply to the
Supreme Court for an order compelling the other party to produce such
documents unless they are privileged. 191
Many foreigners view the English and South African system of discovery
with incredulity, requiring, as it does, that they should disclose internal
memoranda drawn up within their organisations, which were regarded as
confidential and not for general disclosure. 192 Nevertheless discovery is an
essential feature of the adversarial system, because it helps to compensate for
the tribunal's lack of inquisitorial powers. 193 The policy considerations
underlying the extent of discovery in English law have been described as
follows:
'Our law ... recognizes that proper mutual discovery in litigation and arbitration is
in the public interest in that it promotes settlements; it reduces [the chances of] a
party being taken by surprise; and enables the Judge to decide the case in the light of
contemporary documentary material which is often more valuable than the oral
testimony. On the other hand, our law recognizes that no sensible civil justice system
can be organized on the basis that time, money and inconvenience [are] irrelevant.
Nevertheless, the scope of discovery ... is wide. It extends to documents having only
a minor or peripheral bearing on the issues, and to documents which may not
constitute evidence but which may fairly lead to an enquiry relevant to the issues. But
a Court may, of course, refuse to order discovery to the extent that the discovery is
not necessary for fairly disposing of the matter, and to the extent that it would be
oppressive to order it.' 194
Notwithstanding the undoubted advantages of discovery, it js capable of
abuse. 195 Particularly in complex matters, where the tasks of drafting the
discovery affidavit and inspection are often entrusted to candidate attorneys

'"" See 234 below.

189 Hoffmann & Zeffertt 267.
°
19 Compare Supreme Court Rule 35(6).
1'' 1 Supreme Court Ruic 35(7). The applicant would first require his opponent either to produce the
documents or state on oath that the documents are not in his possession, in which event he must state
their whereabouts. if known to him (rule 35(3)).
192 See Mustill & Boyd 325; Bernstein 161. In the United States, pre-trial discovery extends much

further to include the oral testimony of the parties and their witnesses.
19 ·1 Mustill & Boyd 324. See further 167-8 and 216-18 below regarding the adversarial system.

,,,., Sec Sunderland Steamship P and I Association v Gatoil lntemational Inc (The Lorenzo Halcoussi)
11988] I Lloyd's Rep 180 (OB Com Cl) 184, per Steyn J.
195 Park (1984) 182-3 identifies discovery as one of the three diseases of English litigation and

arbitration. See also Park (1985) 353 and 27 above.

144 Arbitration in South Africa: Law and Practice

who are insufficiently familiar with the true issues, large quantities of
documents are listed, disclosed and copied although very few of them are of
any real use or interest to either party . 196 Discovery in complex disputes must
be approached intelligently to avoid unnecessary expenditure of time, effort
and money. The system can also cause serious injustice, if only one of the
parties complies with his obligations properly, while the other does not. Where
discovery is used in arbitrations, the arbitrator must make sure that the process
is carried out fairly_ 197
The remarks above about excessive and unfocused discovery in complex
disputes are particularly apposite to the construction industry. In disputes
arising out of construction contracts, the production of discovery schedules for
a discovery affidavit may become a major undertaking. There may be hundreds
of drawings, vast numbers of letters and minutes of meetings, together with
bills of quantities, specifications, quotations, estimates and tender documents
running into many thousands of pages. Strict adherence to the rules of
discovery becomes an almost impossible proposition and the parties usually, by
mutual agreement, follow alternative procedures which are more practical.
The Standard Procedure Rules of the Association of Arbitrators aim at
making full discovery by means of affidavits, as in the Supreme Court,
unnecessary by requiring a party to attach true copies of all relevant documents
to his pleaclings. 198 If a party wishes to use a document which was not attached
to the pleadings, he may do so, provided first, that a copy of the document is
furnished to the other party and the arbitrator at least ten clays before the
hearing and, secondly, that the document is produced at the hearing by a
witness under oath. 199 The implication is that a document not disclosed in this
way or with the pleadings may not be used at the hearing, unless the arbitrator
otherwise directs. 200 A party is hardly likely, however to attach a copy of a
document which is entirely adverse to his own case to his pleadings, nor will he
wish to use it at the hearing. A party who believes that the other party has
documents adverse to the latter's case could apply to the arbitrator for an
order, by virtue of the arbitrator's statutory power to order discovery, 201 that
those documents be disclosed. However, the Standard Procedure Rules go
further. Instead of leaving the question of discovery in the discretion of the
arbitrator, the rules follow the Supreme Court Rules 202 by giving a party the

J9(, Mustill & Boyd 325; Reynolds (1988) 88.

197 Mustill & Boyd 325.
198 Rules 4.2 and 5-10. See 138-9 ahovc. For the evidential status of these doc,11nc111,. sec 239 hdmv.
1'''' Ruic 12.3. Normally, a document annex<.:d to the pleadings is not required to he produced by a

witness (rule 19) unless a party so insists (rule 12.2).

200 He could either shorten the period of notice under rule 13 subject to the imposition of conditions
to protect the interests of the other party, so that the document could be used, or refuse to allow the
document to be used if the considerations referred to in n 185 ahove arc present.
201 Unless the arbitration agreement otherwise provides, s 14(1)(a)(i) of the Arbitration Act gives the

arbitrator a discretionary power on the application of a party to order discovery of documents, subject
to any legal objection, by way of affidavit, and that the documents be produced for inspection.
202 Supreme Court Rule 35(1).
Procedure Prior to the Hearing 145

right, after the close of pleadings, to give notice to the other to deliver a
discovery affidavit. 20 J Parties using the Association's Standard Procedure Rules
can protect themselves against unnecessary requests from their opponent for
full discovery by excluding this provision in their arbitration agreement. The
effect of the exclusion would be to leave discovery in the discretion of the
arbitrator, so that he could, on receipt of a properly motivated application,
direct that such discovery should take place as the circumstances require.
Where discovery is in the discretion of the arbitrator, he is in a position to try
to ensure that it does not cause unnecessary delay or expense. He should
therefore not normally give an order for discovery until the issues have been
defined and he should insist that the applicant and the other party establish
between them the issues on which discovery is really necessary. 204
4.12 Pre-hearing conference in accordance with rule 15
The Standard Procedure Rules of the Association of Arbitrators 205 require the
parties to arrange a pre-hearing conference with the object of reaching
agreement on possible ways of curtailing the duration of the hearing. The
wording of the rule, especially in relation to the specified matters for particular
consideration, is closely modelled on a similar provision with the same object
in rule 37 of the Supreme Court Rules. The aim of both provisions is to provide
for a re-appraisal of all the issues raised on the pleadings to ascertain which are
really material and which can be eliminated as being of insufficient importance,
with a view to shortening the trial or hearing. 206 It is generally conceded that
the conference under rule 37 usually fails to achieve this aim and the rule has
been subjected to criticism by academic writers on the law of civil procedure. 207
Because of the flexibility of arbitration procedures and certain differences
between the standard procedure rules and the Supreme Court Rules, the
pre-hearing conference can be used more effectively in arbitration proceedings.
The reasons given for the ineffectiveness of the rule 37 conference include
the following. The system of pleadings in the courts is applied in practice to
disclose as little information as possible to the other side. 208 Under the
Association of Arbitrators' Standard Procedure Rules, the pleadings are
required to be more informative and must be accompanied by relevant
documents, which should make full discovery procedures unnecessary. 209 This
makes it easier to identify the true issues in dispute and to settle or abandon
others. Secondly, the holding of the rule 37 conference is a pre-requisite for

203 Standard Procedure Rule 12.4. Rule 12.5 deals with the content and delivery of the affidavit.
204 See Park (1985) 356. Mustill & Boyd (325-6) also encourage arbitrators to restrict discovery to a
few clearly defined issues on which the dispute turns, if these can be identified. If a hearing in stages is
envisaged (sec 204 below). they suggest that discovery should he restricted to that relevant to the
particular stage.
20' Rule 15.
20" Compare De Vos (1989) 587.
2117 Sec De Vos (1989) 58.'i-92, especially 587; Van Loggcrenberg (1987) 100-7. especially 10.'i;
Erasmus 650-1.
208 See De Vos (1989) 587-8; Van Loggcrenbcrg (1987) 107.
209 See paras 138 and 144 above.
146 Arbitration in South Africa: Law and Practice

applying to the registrar for a trial date. It is therefore held as soon as possible
after the close of pleadings before parties have received discovery and advice
on evidence. A conference to settle or eliminate certain issues is much more
likely to be fruitful when parties are in an advanced stage of preparation for the
trial and each party is at least aware of the strengths and weaknesses of his own
case. It has therefore been suggested that the pre-hearing conference should be
held at most one month before the hearing. 210 This suggestion can easily be
implemented under the Association's Rules which require merely that the
pre-hearing conference be held 'prior to the commencement of the hearing'.
However, it should be noted that some of the items required to be discussed
have as a subsidiary object the avoidance of unnecessary preparation costs.
Where the date for the hearing is already fixed, a party cannot run the risk of
leaving preparations too late. A meeting held just before the hearing may be
instrumental in shortening the hearing itself by limiting the issues in dispute, 211
but will not bring about a significant saving in the costs of preparation.
The initial pre-trial conference under the Supreme Court Rules must be
attended by the attorneys for the parties212 and in practice this conference may
also be attended by counsel as the persons primarily responsible for protecting
their clients' interests during the trial. m There is no provision for the
involvement of the judge at this stage although the judge is empowered to
summon counsel for the parties to his chambers before the trial proceeds, with
a view to obtaining agreement on matters which may curtail its duration. 214 It
has been suggested that there is a need for greater judicial involvement in the
initial conference, on the application of a party who finds that his opponent is
being obstructive. 215
Rule 15 of the Standard Procedure Rules makes no express provision for the
arbitrator to be involved in the pre-hearing conference. We suggest that it may
be appropriate for the parties to invite the arbitrator to attend so that he can
make proposals regarding ways of curtailing the proceedings and discourage an
unnecessarily technical approach on the part of the parties' legal advisers, if
required. As long as he is careful to be seen to be acting impartially and
even-handedly, his presence at the meeting is not irreconcilable with the
adversarial approach and it is in line with the trend in both England and the
United States for the judge to be more actively involved in pre-trial
procedures. 216 However, the presence of the arbitrator will also effectively

210 See De Vos (1989) 588-9.

211 Compare too 150 below. Certain methods of shortening the hearing. eg an exchange of witnesses'
statements, require considerable preparation. They can only be implemcntct.1 if agn:cd to well in
advance of the hearing.
212 Rule 37(1)(a).
213 De Vos (1989) 591.
214 Rule 37( 4).
215 See De Vos (1989) 590.
216 Compare De Vos (1989) 590. Case-management by judges is becoming more common in the

United States (see Enslen 156-65). In the Official Referees' courts in England, the Official Referee (ie
judge) to whom a particular case has been allocated will also hear all interlocutory applications
Procedure Prior to the Hearing 147

preclude 'without prejudice' discussions 217 aimed at settlement of certain

issues. It may therefore be appropriate for the parties to meet first without the
arbitrator or that he should attend part of the meeting only. If one party feels
that the other is being unreasonable, for example by refusing further discovery
or further particulars needed to prepare for the hearing, the first-mentioned
party can apply to the arbitrator for an order for discovery or further
particulars, as the case may be. The arbitrator, at the commencement of the
hearing, may be of the view that the pre-hearing conference could have been
more productive in finding ways of curtailing the hearing. 218 Although the
Standard Procedure Rules confer no express power on him to convene a
meeting with the parties and their representatives on his own initiative, with a
view to exploring means of curtailing the proceedings, 219 we submit that the
arbitrator, as master of his procedure, 220 is entitled to do so in an appropriate
case.
The Standard Procedure Rules 221 require the following matters to be
discussed at the pre-hearing conference:
(a) the possibility of obtaining admissions of facts;
(b) the examination or inspection of goods;
(c) the discovery of documents;
(d) the exchange of experts' reports, to which we would add the exchange of
witnesses' statements;
(e) the giving of further particulars for trial;
(f) the production of plans, diagrams and photographs;
(g) the consolidation of hearings;
(h) the quantum of damages; and
(i) the preparation of paginated bundle of documents.
Some of these items call for comment:

4.12.1 Admissions of facts

An effort should be made to reach agreement on as many factual issues as
possible, so that it will not be necessary to lead evidence to prove these at the
hearing. In drawing up their pleadings, parties frequently put questions of fact
in issue where there may be only the slightest doubt of their opponent's ability
to prove them, or for tactical reasons. It may be possible to resolve this doubt
at the pre-hearing conference. It often transpires, for example, that when one
party claims payment from the other, the dispute is not about how much should

(regarding pleadings, discovery, the trial date and many of the matters referred to in our Supreme Court
Rule 37(1)) except applications for interim payments (see Newey 10-17). See too Erasmus 650-1 for
the need for a greater involvement by judges in pre-trial procedures in South Africa.
217 See 234 below.
218 From perusing the minutes referred to in rule 15.2 (see 155 below).
219 Compare the judge's power in Supreme Court Rule 37(4) referred to inn 214 above.
220 See 97 above.
221 Rule 15(1).
148 Arbitration in South Africa: Law and Practice

be paid, but about whether there is a liability to pay. 222 At the pre-hearing
conference, the parties should endeavour to reach agreement on the quantum
of the claim, leaving only the question of liability to be proved and arbitrated
upon.
It may also happen that a party who has taken a strong line on a particular
issue in his pleadings may later, in the light of investigations in preparation for
the hearing, be a lot less confident about the point and doubt his chances of
succeeding. It may be expedient to abandon the point, for example by the
defendant conceding one of the contentions raised by the claimant so that it is
no longer necessary for the claimant to prove it. The claimant may have
perceived some weaknesses in his own case and may be prepared to make some
concession in return for that made by the defendant. The scope of the dispute
and hence the duration and cost of the hearing, can be considerably reduced in
this way. Such concessions are not limited to the pre-hearing conference, but
can be made at any time before the hearing and even in the course of the
hearing. Once an admission has been formally made, it will not be necessary for
any party to prove the fact admitted, and it cannot be disproved by the party
who made the admission through producing evidence to the contrary, before
the admission has been formally withdrawn. A request to the arbitrator for
leave to withdraw a formal admission is similar to a request to amend
pleadings, 223 but the party would at least have to explain how the admission
came to be made in the first place, so that the arbitrator may be satisfied that
the request is not in bad faith. 224
The minutes of the pre-hearing conference should record all questions of fact
on which agreement has been reached.

4.12.2 Examination or inspection of goods

In those disputes where the quality of work or goods is the subject of the
dispute, it will probably be necessary for the arbitrator to inspect or examine
such work or goods. 225 It may be possible for this to be clone in the arbitration
court room if the work or goods are small enough to take there, but otherwise
it will be necessary for the arbitrator to inspect the site of the works or visit the
warehouse where the goods are stored. If this is to be the case, arrangements
may need to be made to gain access to the site or the warehouse at times to suit
general convenience. In all probability, the parties will wish to accompany the
arbitrator on the inspection in order to point out any particular features to him
or to enable their expert witnesses to make their own inspections. The
arbitrator should not make such inspection without advising the parties that it

222 See 153-4 below.

223 For which see 140-1 above.
22-1 See generally Hoffmann & Zeffertt 428-30 regarding formal admissions and their withdrawal in
court proceedings.
225 See further 190 and 243 below regarding inspections in locu.
Procedure Prior to the Hearing 149

is his intention to do so, and affording them the opportunity to be present if

they so wish. 226

4.12.3 Discovery of documents

Copies of all relevant documents should have been appended to the respective
statements of claim, defence, counter-claim, and other pleadings, 227 but there
may be other documents which a party requires and which he believes to be in
the possession of or under the control of his opponent. Arrangements may
therefore need to be made for additional or complete discovery. If one of the
parties proves to be unco-operative, the other may need to approach the
arbitrator for an order for discovery. 228

4.12.4 Exchange of experts' reports

The Standard Procedure Rules provide that any party who wishes to call an
expert witness 229 to give evidence at the hearing, must give the arbitrator and
the other party at least fifteen days' notice of his intention to do so, and must
submit to the arbitrator and the other party, at least ten days before the
hearing, a summary of the evidence which that expert witness will give. 230
The purpose of this provision is to prevent the other party being taken by
surprise. He is entitled to know if his opponent is intending to call an expert
witness and what that witness is expected to say, so that he may consult his own
experts about this evidence and, if necessary, make arrangements for them
to attend the hearing to hear the expert evidence and advise him on
cross-examination, and to give evidence in rebuttal. If he intends calling them,
he must give notice to the other side, together with a summary of his own
experts' evidence.
These arrangements should be confirmed at the pre-hearing conference. It
should also be agreed whether summaries of the experts' evidence will suffice,
or whether full reports are required. 231 Arrangements should also be made for
the meeting of experts, 232 where they will usually be required to consider
the preparation of a joint report, setting out points of agreement or dis-
agreement. 233

226 Unless there is at least a tacit agreement that he may inspect the goods or works privately (see 244
below).
227 See 138 and 144 above.
22 " See 144n201 above for the arbitrator's power under s 14(l)(a)(i) of the Arbitration Act, which is
also available where a party has not complied with his obligations under rule 12 of the Standard
Procedure Rules.
229 See also 186 and 228 below.
230 See rule 17. Condonation of non-compliance requires either the consent of all the parties or the
consent of the arbitrator. A similar provision is to be found in Supreme Court Rule 36(9).
231 It is also possible to agree that an expert's report should be regarded as his evidence-in-chief (see
156 below).
232 See 155-7 below.
233 Rule 15.1.4.
150 Arbitration in South Africa: Law and Practice

The Standard Procedure Rules only envisage the exchange of summaries and
reports of expert witnesses in advance of the hearing. 234 There is no reason in
principle, however, why the parties cannot agree to exchange statements of
witnesses of fact before the hearing as well. 235 Yet this procedure, hitherto
hardly ever practised in arbitrations, at least in 'this country, could lead to a
substantial saving of time in the hearing: evidence-in-chief would be almost
entirely dispensed with and cross-examination would be much more effective,
because the opposing counsel would have had time to study the evidence-in-
chief and have prepared his cross-examination accordingly.
This procedure would involve the parties, and especially their attorneys and
counsel, in considerable preparation before the hearing. Therefore, where the
date for the hearing has already been fixed, a proposal at the pre-hearing
conference to exchange witnesses' statements is likely to be adopted only if
there is still sufficient time before the hearing to give proper effect to the
proposal.

4.12.5 Further particulars for trial

While the pleadings should have clarified most of the issues, it may nevertheless
happen that as a party prepares for the hearing, he finds that there are still
some matters that are uncertain, that he does not fully understand the attitude
of his opponent to a particular issue, or that he is unaware of some of the facts
on which his opponent appears to rely. He is therefore entitled to request
'Further Particulars for the Purpose of Trial', in which he specifies the
information or detail that he requires in order to prepare his case. 236 The other
party is required to provide these further particulars within an agreed time.
Such particulars are limited to factual information on allegations, and no proof
of such allegations is required to be given at this stage. As before, copies of the
request and the further particulars themselves should be submitted to the
arbitrator. It should be noted that the questions are intended to clarify what
the allegations of fact are, and not how the other party is going to prove those
allegations. Evidence that may constitute sufficient proof will be led by that
party at the hearing.

4.12.6 Production of plans, diagrams, photographs and models

The parties may agree that, in order to demonstrate a particular point to the
arbitrator, it will be desirable to arrange for plans to be drawn, diagrams to be
prepared, photographs to be taken or models to be made. If any of these things

234 Rules 15.1.4 and 17.2, which correspond to Supreme Court Rules 37(1)(a)(iv) and 36(9)(b).
235 See further 237-8 below.
236 Under Standard Procedure Rule 15.1.5 and Supreme Court Rule 37(1)(a)(v), the parties discuss
the giving of further particulars reasonably necessary for the purposes of the hearing. Rule 21 of the
Supreme Court Rules entitles a party after close of pleadings to request further particulars which are
strictly necessary to enable him to prepare for trial. The court is required to consider on its own initiative
at the conclusion of the trial whether the request was strictly necessary, and may penalise a party
requesting particulars which were not strictly necessary with an adverse costs award.
Procedure Prior to the Hearing 151

are going to be of mutual benefit in the presentation of their respective cases,

the parties would be sensible to agree who should prepare them and mutually
to share the costs until an award of costs is made.

4.12. 7 Consolidation of hearings

The standard procedure rules follow the Rules of the Supreme Court by
requiring parties to consider the possibility of 'the consolidation of hearings' at
the pre-hearing conference. 237 In the context of arbitration proceedings, this is
easier said than done. 238
The need for the consolidation of hearings or the joinder of a third party can
arise in practice, especially in the following situations: 239
First, where one party to an arbitration agreement has two claims arising
from the same set of facts, one against the other party to the arbitration
agreement and one against someone who is not a party. For example, a
building owner wishes to claim damages from a contractor for breach of
contract, where the contract contains an arbitration clause, and to sue his
architect who administered that contract. Irrespective of whether the contract
with the architect contains an arbitration clause, the architect is not a party to
the arbitration agreement in the contract with the contractor. One claim could
be dclictual: the building owner may wish to claim damages for breach of
contract from the main contractor where the claim is subject to an arbitration
agreement and delictual damages from a sub-contractor. In these situations it
is the claimant (building owner) who would benefit by consolidation.
Secondly, where the defendant in arbitration proceedings, if found liable to
the claimant, wishes to claim indemnification from a third person in terms of
another contract. 24° For example, the main contractor, if held liable to the
owner, wishes to be indemnified by the sub-contractor who actually did the
work. In this situation, it is the main contractor, as defendant, who will benefit
from consolidation. Or, where defective goods have been sold and resold, there
is a string or chain of contracts. When the last buyer claims against his seller,
liability for the defects may pass by claims along the chain to the first seller.
The court has the power to consolidate court actions involving different
parties, especially where substantially the same question of fact or law arises for
determination in each action. 241
An arbitrator, however, has no power to consolidate hearings of arbitration

217 Compare Standard Procedure Ruic 15.1.7 with Supreme Court Ruic 37(1)(a)(vii) which refers to

the 'consolidation of trials".

2-' 8 Much has been written about the problems of consolidating arbitration proceedings. Sec infer alia
Mustill & Boyd ch 9; Wetter 2-13; Stipanowich 473-529; Diamond 403-9 and, for a masterly exposition
of the intractability of the problems in the context of legislative solutions, Mustill (1991) 393-402.
2"' See Mustill & Boyd 141. For further situations where consolidation could be required, sec Mustill
(1991) 393-4,
24 " Sec also Diamond 403-4.
241 Supreme Court Rule J 1 read with rule 10. Rule 13 also contains a third-party procedure, whereby

a party to a court action, eg a defendant with a claim for a contribution or indemnification against a third
party. could subsequently compel the third party to join the action as a party.
152 Arbitration in South Africa: Law and Practice

proceedings. Nor does the court. Regarding the position in English Jaw, it was
stated in Oxford Shipping Co Ltd v Nippon Yusen Kaisha (The Eastern
Saga):242
'It seems to me that, as is graven on the heart of any commercial lawyer, arbitrators
in the position of these arbitrators enjoy no power to order concurrent hearings, or
anything of that nature without the consent of the parties. The concept of private
arbitrations derives simply from the fact that the parties have agreed to submit to
arbitration particular disputes arising between them and only between them. It is
implicit in this that strangers shall be excluded from the hearing and conduct of the
arbitration and that neither the tribunal nor any of the parties can insist that the
dispute should be heard or determined concurrently with or even in consonance with
another dispute, however convenient that course may be to the party seeking it and
however closely associated the disputes in question may be.'
Although the above passage refers to English Jaw, we submit that the position
is the same in South Africa. 243 The passage provides two reasons for an
arbitrator not having the power to consolidate arbitration proceedings. First,
the basis of the arbitration proceedings is consensual and another party cannot
be joined in the proceedings without his consent and that of the parties to the
original agreement. 244 Secondly it is an implied or even express term of an
arbitration agreement245 that the proceedings are confidentiaJ246 and that
therefore only the arbitrator, the parties, their representatives and witnesses
are entitled to be present at the hearing, unless the parties agree otherwise . 247
The most important advantage of consolidation is that it avoids the danger of
inconsistent or conflicting decisions regarding the same set of facts or question
of law by different tribunals. For example, a building owner (A) has claims
against his architect (B) and the main contractor (C) arising from the same set
of facts. The claims are heard by two different arbitrators. The arbitrator in the
dispute between A and B decides that A has proved the quantum of his claim,
but that B is not liable because it appears to the first arbitrator that C is
responsible. In the arbitration between A and C, the arbitrator accepts the

242 [1984] 3 All ER 835 (OB Com Ct) 835, 842b-d.

243 In at least one civil-law jurisdiction, the Netherlands, an attempt to solve the problem has been
made by giving the court a statutory power to consolidate arbitration proceedings in certain
circumstances. See the Netherlands Arbitration Act of 1986 article 1046. Article 1045 contains a
procedure for joinder by third parties. One common-law jurisdiction to have enacted legislation to give
the court a statutory power to consolidate arbitration proceedings is Hong Kong (see the Arbitration
Ordinance 22 of 1963 s 6B, which was inserted in 1982).
244 In this instance, the consensual basis of arbitration is underpinned by the doctrine of privity of
contract, whereby the legal consequences of a contract are in principle restricted to those participating
in it as principals and conversely, the parties by their contract cannot impose legal consequences on
outsiders (see Lubbe & Murray 407; Christie (1991) 310-12).
245 See e g Standard Procedure Rule 18; and the precedent of a full arbitration agreement in Trollip

96 (Appendix E cl 13).
246 See Mustill & Boyd 303-304n7; Veeder 311.
247 See too 21 above 213 below.
Procedure Prior to the Hearing 153

quantum of the claim but regards the fault as being that of B, not C. Because
of inconsistent findings, A has lost both arbitrations with costs. 248
Consolidation will also bring a saving of time and expense for the party who
would otherwise have been involved in multiple proceedings. Consolidation
may also give a party the opportunity to cross-examine witnesses and obtain
evidence that he would not otherwise have obtained. However, for the parties
who would not otherwise have been exposed to multiple proceedings,
consolidation will bring increased expense and delays as a result of more
prolonged proceedings through the involvement of more parties and more
issues for decision. 249
Where one party would benefit by the consolidation of proceedings, he could
try to use the court's discretionary power to exclude arbitration so that the
disputes involving all the parties can be heard by the court in a single
consolidated action. 250
There is also the possibility of consolidating arbitration proceedings with the
agreement of all the parties. The arbitration agreement could facilitate this by
empowering the arbitrator to allow other parties to be joined in the arbitration
proceedings with their express consent and for the arbitrator to make a single
final award determining all the disputes between the parties. 251 This possibility
of consolidation or the joinder of a third party could be discussed at the
pre-hearing conference. However, the procedures at the arbitration and the
consequences of consolidation and joinder will have to be carefully consid-
ered252 and a high degree of co-operation from all parties will be required for
the procedures to operate successfully.

4.12.8 Quantum of damages

While initially each party may have categorically denied every aspect of
the other's case in its pleadings, it may be that what is at issue is whether the
claimant is in principle entitled to his damages or not; the amount of the
damages may not really be in issue at all. For example, the claimant may be

248 For a further example of the problems of inconsistent findings of fact in successive arbitration
hearings, see Aiden Shipping Co Ltd v Interbulk Ltd; Interbulk Ltd v !CCO International Corn Co N V
(The Vimeira) (No 2) [1985] 2 Lloyd's Rep 377. The saga of the Vimeira is discussed by Veeder 310-22.
249 See further Mustill (1991) 395; Mustill & Boyd 142-4.
250 As was done in Universiteil van Stellenbosch v J A Lauw (Edms) Bpk 1983 (4) SA 321 (A). Sec
65 above regarding the court's discretionary power to prevent arbitration. As the Recognition and
Enforcement of Foreign Arbitral Awards Act 40 of 1977 has no provision to give effect to article 11(3)
of the New York Convention of 1958 (see 311-12 below), a South African court could exercise this
power even in relation to an international arbitration agreement. (The position in English law is
different. See the English Arbitration Act 1975 s 1(1) and Mustill & Boyd 146n17 and 462-6.)
251 See e g art 13.1 (c) of the LCIA Rules (1985 ed) of the London Court of International Arbitration.
The arbitrator must first hear the views of the parties to the arbitration agreement on the proposed
joinder. South African law has no dogmatic difficulties with such a provision in the arbitration
agreement: it will be construed as a contract for the benefit of a third party (stipulatio alteri). Although
the third party would still have to consent to his joinder, the parties to the original agreement could be
held to their undertakings to allow him to join in the arbitration.
252 See Mustin (1991) 400. See also Mustill (1991) 396-7 for the minimum requirements before
consolidation can be seriously considered in multi-party international commercial disputes.
154 Arbitration in South Africa: Law and Practice

claiming damages from the defendant for the cost of making good defective
work done by him. The defendant in his pleadings will have denied that the
work was defective and will also have denied being indebted to the claimant for
the amount claimed as damages, or any amount at all. The real issue may well
be whether the work is defective or not: they may not disagree on the cost of
putting it right if it is.
At the pre-hearing conference, the parties should discuss and attempt to
agree on the amounts of damages claimed, so that, if the arbitrator should find
the claimant is entitled to damages, there will be no need for either party to
lead evidence on this aspect. Of course, the agreement would be conditional on
the finding and would not be taken as any admission by the defendant that the
claimant's claim is valid in principle. If the arbitrator finds that the work is not
defective, or that it is defective but that the fault does not lie with the
defendant, the question of the amount of damages falls away.

4.12.9 Preparation of paginated bundle

There may be a large number of documents to which the parties intend to refer
in presenting their respective cases. Where the Standard Procedure Rules are
used, most of these documents will have been appended to the joint Statement
of Issues or the pleadings and others will subsequently have been discovered. 253
In arbitrations where copies of relevant documents do not accompany the
pleadings, the documents will be those which have been discovered. It makes
for much more efficient and orderly presentation of evidence if the parties can
agree to consolidate all these documents into a single file, with the documents
serially numbered and indexed. 254 Ideally, at least four copies of this 'bundle'
will be necessary at the hearing: one for the arbitrator, one for each party 255
and one to be available for a witness to refer to while he gives evidence.
Failing the preparation of bundles in this manner, the various documents will
be handed in to the arbitrator during the course of the hearing in a piecemeal
fashion, as and when they are referred to in the evidence. This is unsatisfactory
from the arbitrator's point of view as he must pause to put an identifying mark
on each exhibit as it is received and insert it into a file, and this tends to delay
and disrupt proceedings.
Problems can also arise, where there has been prolific discovery, if the
paginated bundle is not restricted to documents which the parties really intend
using at the hearing, but contains virtually all the discovered documents,
regardless of relevance. In such instances, it becomes necessary later to prepare
a 'working bundle' containing documents which each side is likely to rely on

253 In addition to documents discovered within the technical meaning of this term (see 142 above).
there are also the documents which will be produced at the hearing by a party in terms of rule 12.3.
254 It is also important that the parties are agreed on the evidential status of the documents in the
bundle (see 239 below).
255 Where a party is represented by an attorney and counsel, there will be copies for the attorney and
each counsel.
Procedure Prior to the Hearing 155

and the 'agreed bundle' is simply ignored. This problem is particularly

prevalent in complex arbitrations in England. It has been suggested that where
the pre-hearing conference is attended by the arbitrator, he should 'make clear
his opposition to the deployment of large quantities of waste paper'. In a
particularly bad case, he could subsequently penalise a party for wasted costs
where his attorney has included in the paginated bundle documents which
could not have been relevant on any possible turn of events. 256

4.12.10 Minutes of the pre-hearing conference

The proceedings of the pre-hearing conference, particularly any agreement
reached on particular issues and the answers given to questions raised, should
be recorded in the form of proper minutes and duly confirmed and signed
by both parties. A copy should be submitted to the arbitrator at the
commencement of the hearing. 257 Both parties will be bound by what is stated
in these minutes.258

4.13 Meeting of experts

It is characteristic of expert evidence 259 that although the factual evidence given
by the experts called by the respective parties will probably be consistent, the
conclusions that they draw will certainly differ. The arbitrator may thus find
himself confronted by experts who do not agree and he must perforce make a
choice between them. This sort of problem is generally much more serious in
Supreme Court trials where the judge is presumed not to possess expert
technical knowledge of any kind. 260
The Rules of the Supreme Court require summaries of expert evidence to be
delivered and envisage the possible exchange of more substantial experts'
reports. 261 There is no express provision for experts to meet before the hearing
in an attempt to reach agreement on at least some of the points on which they
appear to lack consensus. 262 However, in practice, a trial judge may exert
pressure on the parties' counsel to ensure that such a meeting takes place by
agreement, with a view to reducing the amount of expert evidence and thereby
the duration and cost of the trial. Such meeting can perform the same function
in arbitration proceedings. Very often, a frank discussion between the experts
results in the narrowing of the field of difference and in some cases they come
to see each other's point of view and, on these matters at least, the dispute is
256 See Mustill & Boyd 327, who point out in fairness to the attorneys that parties should not be
penalised with wasted costs simply because a document in the bundle was not useful at the hearing, for
usefulness is hard to predict. . ,
257 Rule 15.2. Compare Supreme Court Rule 37(3).
258 Compare 148 above regarding formal admissions.
259 For the rules regarding the admissibility of expert evidence see 227-8 below.
260 See 243-4 below regarding the limited sphere of application of the principle of judicial notice.
261 See rules 36(9)(b) and 37(l)(a)(iv).
262 Compare Newey 15n2 regarding the position in the Official Referees' courts in England. Official
Referees previously used to make orders by consent for meetings of experts to be held. Nowadays, an
Official Referee is empowered by the rules of court to order such meetings without the parties' consent.
156 Arbitration in South Africa: Law and Practice

resolved. This is not to say that they are- necessarily expected to make
compromises, or to negotiate a settlement on a give-and-take basis. The main
aim of the meeting is rather to see whether, by sensible discussion, they can
accommodate at least something of each other's point of view. After their
discussion, they are usually required to produce a joint report setting out the
matters on which consensus has been reached and those matters on which they
have failed to agree. 263
This process, particularly in arbitration proceedings, is greatly facilitated
where the experts are required to prepare detailed reports, rather than terse
summaries, which reports are exchanged well before the hearing. Ideally, an
expert's report should be so comprehensive that it can constitute the witness's
complete evidence-in-chief. At the hearing he needs only to confirm that he
stands by the contents of the report before being cross-examined. The report
itself would be taken as read, as everyone, the arbitrator included, would
already have received a copy.264
There are differences of opinion among arbitrators in England as to when is
the most appropriate time for holding a meeting of experts. The one view is
that the experts are more likely to find common ground before they have
committed themselves to their respective positions in their detailed written
reports. 265 However, particularly where the parties are legally represented,
counsel are nervous about letting experts meet before they have prepared their
reports, lest they make concessions too easily. Counsel tend to favour the view
that what is after all a 'without prejudice' meeting of experts should take place
after the reports have been exchanged. 266 At the subsequent meeting, each
expert would be fully aware of the other's point of view and in a position to
discuss their different standpoints fully and constructively. The function of the
experts at the experts' meeting is not that of advocates of the cases of the
respective parties who have engaged them; nor is it to be brokers of settlements
on their behalf. They are not required to espouse their own client's case at all
costs; nor are they required to abandon their previously stated opinions and to
negotiate a compromise of the issues. They are required to act entirely
objectively, as is the case when they are preparing their reports or when giving
oral evidence to assist the arbitrator to resolve the issues in dispute. 267 They are
required to explore the differences in their points of view and to attempt to
reconcile them without abandoning their principles. To the extent that they are
able to find common ground with each other, they diminish the issues in dispute

263 Compare Newey 15n2 regarding the practice in the Official Referees' courts.
264 See also 238 below.
265 It is presumably for this reason that the practice in the Official Referees' courts is for the reports

to be exchanged only after the meeting of experts has been held (see Newey 14 para 21).
266 See 234-5 below regarding the meaning of 'without prejudice' in this context. A party's legal

representatives will also peruse the report before it is presented to the other side and the arbitrator to
establish whether it contains information or opinions prejudicial to their client's case.
267 Compare Bernstein 110-11, who concludes his discussion of the duty of an expert witness to the

arbitration tribunal by saying: 'No greater tribute can be paid to a professional man than to have it said
of him that his evidence will be the same whoever is paying for it.'
Procedure Prior to the Hearing 157

between them, and to the extent that differences remain, the essential points of
difference become highlighted.
At the end of the meeting they should prepare a joint report in which they
state the respects in which they have been able to reach agreement together
with the issues which remain unresolved. 268 They should set out their respective
opinions on the unresolved issues with the reasons for such opinions. 269

4.14 Sealed offer

Although arbitration should usually be less expensive than litigation, it
nevertheless can turn out to be a surprisingly expensive undertaking for the
party who has ultimately to bear the costs, and it is well worth a party's while
to employ a little strategy to reduce his exposure to liability for costs.
The general rule regarding the costs of arbitration proceedings is that the
loser must ultimately bear his own costs and a substantial part of the other
party's costs as well as the arbitrator's fees and disbursements. 270 Moreover, a
claimant is generally the winner if he is awarded more than the defendant was
prepared to pay, even if the award was substantially less than the amount
claimed. 271
However, should the defendant2 72 offer an amount in settlement of the claim
which is rejected by the claimant, the defendant will usually be entitled to costs
from the date of the rejected offer, if it was for more than the amount awarded
by the arbitrator. 273 The best time to make such offer is probably just before the
start of the hearing: at this stage, costs will have been relatively modest, while
the parties will be in a fairly good position to appreciate the strength of their
opponent's case and assess their own chances of success. What amount should
be offered will require very careful judgment: if it is to serve the purpose of
protecting the defendant against liability for costs of the hearing, it should
obviously be higher than the expected amount of the award, yet not so high that
the defendant would feel that the result is a travesty of justice were the claimant
to accept it. 274

268 See Standard Procedure Rule 15.2.

269 Where opinions are unchanged they could simply refer to the portion of the previous report where
their reasons are given. The reasons for the opinion (along with the respective experts' reputation and
experience) are an important factor in helping the arbitrator to decide between the conflicting opinions
(see Hoffmann & Zeffertt 102-3).
27 " See, in general, the discussion on costs at 277-82 below.
271 See further 277-80 below.
272 'Defendant' in this context includes a claimant defending a claim in reconvention.
273 See further 235 and 282-3 below, especially as to the procedure for disclosing the existence of the

offer to· the arbitrator.

274 The offer may have been made as a perfectly genuine offer to settle the dispute at a figure which

the defendant regards as fair to both parties. However, the offer may become necessary purely as a
strategic ploy to protect the defendant against liability for costs, because it has become clear to the
defendant during the course of the dispute that although he is liable to pay something, the claimant's
attitude as to what that amount should be is entirely unreasonable.
158 Arbitration in South Africa: Law and Practice

4.15 Dealing with the dilatory party

The arbitration agreement may lay down which set of rules should govern the
conduct of the arbitration 275 or the parties may agree at the preliminary
meeting that certain rules should apply. In the absence of such agreement, the
Arbitration Act gives the arbitrator powers, on the application of a party, to
order the delivery of pleadings, to allow the amendment of pleadings, to order
discovery and so on, 276 so that the parties can make the necessary preparations
for the hearing. Moreover; unless the arbitration agreement provides
otherwise, the arbitrator may also determine the date of the hearing. 277
Generally, the arbitrator, as master of his procedure, may determine the
procedure to be fol:owed prior to and during the. hearing, subject to the Act,
the arbitration agreement and the rules of natural justice. 278
The question then arises as to what the remedies of a party are if his
opponent fails to comply with either the provisions of the arbitration agreement
or a lawful order of the arbitrator concerning steps to be taken prior to the
hearing. Alternatively, one may ask what the powers of the arbitrator are to
deal effectively with the dilatory party. A situation which regrettably occurs not
infrequently in practice is that the defendant deliberately remains inactive, for
example by not submitting his documents within the prescribed time, with a
view to delaying the proceedings. Not only does this postpone the day of
reckoning, but there is a good chance that a claimant who is desperate for his
money will be prepared to accept a disadvantageous settlement rather than face
the prospect of further frustrating delays. As we shall see, it may also be the
claimant who is causing the delay or refusing to participate in the proceedings.
The powers of the arbitrator to deal with a dilatory party will depend on the
terms of the arbitration agreement, 279 supplemented by the Arbitration Act.
Failure to deliver pleadings timeously in the Supreme Court may lead to the
party in default being barred from delivering those pleadings until the bar has
been removed by the court. 280 Although the Arbitration Act makes no
provision for the barring of a party who has failed to deliver a pleading, it does
authorise the arbitrator to proceed in the absence of a party in certain
circumstances.

275 See eg cl 37.3 of the JBCC (November 1992) contract and cl 6l(3)(b) of the GCC (1990), both of

which adopt the Rules for the Conduct of Arbitrations of the Association of Arbitrators.
276 Section l4(l)(a).
277 Section 14(1)(bJ(i).
278 See 97 above.
279 See eg rule 14 of the Standard Procedure Rules, which provides that after the parties have agreed

to arbitration, the arbitrator may proceed with the arbitration 'notwithstanding any failure, neglect or
refusal of either party to comply with these Rules or to take part or further part in the arbitration'.
280 See Supreme Court Rules 26 and 27 as well as rules 31 (3) and 39(2) regarding the consequences

of barring. Where the arbitration is conducted under the Supreme Court Rules, these provisions would
presumably apply to the arbitration, except that it will be the arbitrator, rather than the court, who is
empowered to remove the bar (compare n 298 below regarding the possibility of an arbitrator granting
absolution in terms of the Supreme Court Rules).
Procedure Prior to the Hearing 159

The arbitrator is required by the Arbitration Act to give every party to the
reference written notice of the time and place of the hearing. 281 An arbitrator
may not usually conduct arbitration proceedings in the absence of one of the
parties, 282 unless the arbitration agreement stipulates otherwise. 283 However,
the Act provides that if any party to the reference fails, after having received
reasonable notice of the time and place of the hearing, to attend the
proceedings without having previously shown to the arbitrator good and
sufficient cause for such failure, the arbitrator may proceed in the absence of
that party. 284 The provision amounts to a statutory exception to the audi
alteram partem rule. 28"
Although he is not obliged to do so, for purposes of invoking this
provision, 286 we submit that as a matter of good practice, the arbitrator should,
when giving notice of the hearing to the parties, draw their attention to his
statutory power to proceed in their absence as well as to any relevant provisions
of the arbitration agreement in this regard. 287 In Shippel v Markel it was
decided that the Act places the responsibility on the party not able to attend the
proceedings to convey the 'cause' of his inability to the arbitrator, who then
acquires a discretion to decide whether the cause is 'good and sufficient' or not.
There is no onus on the arbitrator to seek out the party in •default in order to
ascertain the cause of his inability to attend. 288 It should be noted that on the
facts of Shippel v Markel the arbitrator was aware through a message left with
his receptionist that the party in default did not intend to attend the hearing on
the day in question. 289 We suggest that an arbitrator should not lightly proceed
with the reference merely because one party has failed to arrive on time. He
may have been delayed by a valid reason such as the breakdown of his car or
a road accident. While not obliged to do so, the arbitrator could order a short
adjournment and try to ascertain the cause of the party's non-attendance. This
will avoid the need to repeat part of the hearing, should the party subsequently
appear with a valid reason for his late arrival.
Where the defendant is in default of attending the hearing and the arbitrator
decides to proceed, he will have to receive sufficient evidence and argument,

281 Section 15(1).

282 See Shippel v Markel 1977 (1) SA 429 (C) 434D-E.
283 See eg Standard Procedure Rule 14 referred to in n 279 above, and cl 4 of the arbitration

agreement in the Shippel case (above) at 430H.

284 Section 15(2).
285 See 165 below for this rule.
286 Sec Shippel v Morkel (above) at 435B-435H, 436H.
287 Compare Shippel v Morkel (above) at 43411 (read with 430H). The court interpreted the

contractual provision allowing the arbitrator to proceed in the absence of a party as requiring reasonable
notice to the party of his intention to do so before the power could be invoked. Sec also 177-8 below.
288 Above 435C-435H. On the facts, the party unable to attend left a message to this effect, with
reasons, with the arbitrator's receptionist. The receptionist conveyed the message to the arbitrator, but
without the reasons. The party's attempt to notify the arbitrator was held by the court to be insufficient.
The court also held that even if the arbitrator's conduct was not covered bys 15(2) and was therefore
irregular, the party had acquiesced in it by his participation, without objection, in a subsequent hearing
before the arbitrator (436E-437C).
289 See the previous footnote.
160 Arbitration in South Africa: Law and Practice

whether oral or written, from the claimant and possibly other witnesses in
support of the claimant's claim, before he will be entitled to make an award in
the claimant's favour. 290 It could also happen that the defendant fails to deliver
a statement of defence when required to do so in terms of the arbitration
agreement, but nevertheless arrives for the hearing. The arbitrator cannot
exclude him. 291 It might, however, be prejudicial to the claimant for the
hearing to proceed when the claimant is faced with countering a defence of
which he had no prior notice. The most appropriate course of action would be
to grant a postponement, with the defendant being liable for the wasted costs.
Although much less usual, it can also happen that the claimant is the party in
default. 292 This occurred in Irish & Co Inc (now Irish & Menell Rosenberg Inc)
v Kritzas. 293 The defendant in the arbitration proceedings lodged a plea to the
claim of the claimant in the arbitration proceedings. The plea amounted to a
denial that the claimant was entitled to any relief in respect of his claims. The
plea was accompanied by a counter-claim. After filing a plea to the counter-claim
and making amendments to his pleadings, necessitating more than one
postponement of the hearing, the claimant announced that he was withdrawing
from the proceedings, but without abandoning his claims. 294 The arbitrator
proceeded to allow the defendant to amend his counter-claim. Without hearing
evidence, he then made an award granting absolution from the claimant's claim
and allowing the defendant's countcr-claim.2'1' The defendant in the arbitration
proceedings then applied to have the aw~rcl made an order of court.
The court held that the arbitrator's statutory power to allow an amendment
of the pleadings could still he exercised after the claimant's withdrawal. 2""
However, the court rightly held that the arbitrator had no power to grant

·290 See 246-7 below regarding the standard of proof required.

291 Compare, however, Supreme Court Ruic 39(2) where the arbitration is being conducted under the
Supreme Court Rules.
292 This could be because the claimant has insufficient funds to pay for the professional assistance
necessary to prosecute his claim or because the defendant has answered his claim by lodging a
substantially larger counter-claim.
293 1992 (2) SA 623 (W).
294 At 628C-629E, 633B-C. The court (at 630F-G) refer:cd to the arbitrator as proceeding ex pane
after the claimant withdrew from the proceedings. This is commonly done when the arbitrator continues
with a hearing in the presence of one party only, after the other is in default. It is, however, technically
incorrect. It has been said regarding the meaning of the term 'ex parte application' that 'in our practice
[it] is simply an application of which notice was as a fact not given to the person against whom some relief
is claimed in his absence' (Simross Vintners (Pty) Ltd v Vermeulen 1978 {I) SA 779 (T) 783A-B; Sizwe
Development v Auditor General, Transkei 1991 (1) SA 291 (Tk) 2921-J: see also Collective Investments
(Pty) Ltd v Brink 1978 (2) SA 252 (N) 255F-G). In the context of arbitration proceedings, the arbitrator
is obliged to notify both parties of the hearing. but is authorised bys 15(2) to proceed in the absence of
a party who is in default of attending the hearing.
295 At 629E-6291.
296 At 630G. The arbitrator's power ins 14(l)(aJ(ii) is discretionary and should not be exercised
automatically. On the facts, the amendment was to substitute allegations already contained in the
pleadings for the prayers in the counter-claim, thereby reflecting the true dispute between the parties.
The court correctly found that there is no objection to this. However, we submit that the arbitrator
should exercise his discretion against allowing an amendment which would introduce new matters of
which the party in default has had no notice, unless the matter is drawn to his attention and he is given
the opportunity to participate again in the proceedings.
Procedure Prior to the Hearing 161

absolution. As the effect of absolution is to allow the claimant to institute the

same claim against the defendant again, it operates against the finality
attributed to an arbitral award by the Act. 297 It could not have been in the
contemplation of the parties that the arbitrator should make an award leaving
the disputes unresolved. 298 Under the circumstances, the defendant should
have led evidence and then invited the arbitrator to make an award in his
favour, in respect of both his defence and counter-claim, in the light of the
evidence presented. 299
An issue which has received much attention in England is the question of
whether a claim in arbitration proceedings could be dismissed, not on its
merits, but for want of prosecution on the part of the claimant. The English
High Court has repeatedly exercised this power in respect of court proceedings,
where inordinate and inexcusable delays have created a substantial risk that a
fair trial was no longer possible. 300 However, the House of Lords has held that
neither the arbitrator nor the court have such a power in respect of arbitration
proceedings. 301 Defendants have then attempted to effectively stop the
arbitration proceedings by applying ordinary principles of contract to the
arbitration agreement which gave rise to the proceedings. For example, could
one not argue that the claimant, by his wilful disregard for his obligations under
the arbitration agreement, has repudiated the contract entitling the defendant
to rescind it? Attempts to develop a contractual solution have been hampered
by Lord Diplock's construction of the parties' obligations under the arbitration
agreement in the Bremer Vulkan case. Instead of regarding the arbitration
proceedings as adversarial, imposing a duty on the claimant to use reasonable
dispatch 302 and allowing the defendant simply to await developments, Lord
Diplock held:
'The obligation is, in my view mutual; it obliges each party to co-operate with the
other in taking appropriate steps to keep the procedure in the arbitration moving,
whether he happens to be the claimant or the respondent in the particular dispute. ' 300

297 By s 28 (see at 632B).

298 We submit that ass 28 is subject to the arbitration agreement, the parties could confer the power
to grant absolution on the arbitrator in their agreement. This would arguably be done if the parties
decided to arbitrate under the Supreme Court Rules, including 39(3), which provides for absolution. In
the Irish case, the parties agreed to incorporate only some of the Supreme Court Rules in their
arbitration agreement, excluding rule 39 (see at 627C-D, 631A-B).
299 At 633D-H.

·11111 Sec Mustill (1988) 160. There is no comparable power in the Supreme Court Rules in South
Africa. However, a South African court may be prepared to grant such relief in an appropriate case in
terms of its inherent power to prevent the abuse of its own process.
:io, Sec Bremer Vulkan Schiffbau u11d Maschinenfabrik v South India Shipping Corporation Ltd [ 1981]
AC 909; Wilson (Paa/) & Co AIS I' Partenreederei Hannah Blumenthal (The Hannah Blumentlzal) [1983]
AC 854; Food Corporation of India v Antclizo Shipping Corporation (The Antclizo) [1988] 2 All ER
513. For a discussion of these and other relevant English decisions see Mustill & Boyd 504-13, 516-17.
518-23; Case and Comment (BJD) 293-305.
302 See Case and Comment (BJD) 295-6 regarding the view of the Court of Appeal.
303 At 983.
162 Arbitration in South Africa: Law and Practice

The respondent cannot therefore allege that the arbitration agreement has
been repudiated 304 by the claimant's dilatory conduct. He must approach the
arbitrator and attempt to get the proceedings moving again. 305 The view in
England is that there is a definite need for a statutory power to terminate the
reference or to strike out a claim where the claimant in arbitration proceedings
has delayed his claim to the extent that a fair hearing is no longer possible. It
has been recommended that the legislature should give this power to the
arbitrator rather than to the court. 306
Should the problem of inordinate and inexcusable delay on the part of the
claimant arise ;n South Africa, the matter could be easier to deal with because
of important differences between the South African Arbitration Act and the
English Arbitration statutes. Where s 23 of our Act regarding the time within
which the arbitrator must make his award has not been excluded in the
arbitration agreement, 307 the arbitrator and defendant could deal with the
problem by letting the time for making the award, and thereby the arbitrator's
jurisdiction, expire. 308 If the claimant subsequently applied to court to extend
the time, the court could take his dilatory conduct into account and exercise its
discretion against him.
It appears that the arbitrator has no power to dismiss a claim by reason of an
inordinate and inexcusable delay on the part of the claimant. Although the
effect of an order dismissing the claim would achieve finality in the matter, the
task of the arbitrator is to achieve finality by deciding the dispute after
considering evidence and submissions from the parties.-111'1
We suggest that under South African law, a defendant in arbitration
proceedings faced with a situation where the claimant has delayed his claim to
the extent that a fair hearing is no longer possible, can approach the court with
an application under s 3. This remedy will be particularly appropriate where

304 Because of the special nature of an arbitration agreement, it is unlikely that a party to an
arbitration agreement in South Africa could rely on the other party's repudiation of the agreement to
terminate arbitration proceedings, without the assistance of the court. The effect of s 3 of our
Arbitration Act is that, unless the arbitration agreement provides otherwise, it can he terminated only
with the consent of all the parties or by a court order. See also the text below regarding the use of s 3(2)
in this context.
305 The subsequent response of Lord Denning in the Court of Appeal was 'Who ever heard of a
respondent doing any such thing?' (Andre et Cie SA v Marine Transocean Ltd (The Spendid S1111) [1981]
QB 694 at 701).
306 Sec Mustill (1988) 160-1 regarding the recommendations of the Departmental Advisory
Committee on English Arbitration.
3117 See 256-60 below regarding s 23.
308 The provision on which a time-limit for an arbitrator making his award ins 23 was originally based,
namely the English Arbitration Act 1889 para (c) of the First Schedule (compare the Arbitrations Act
29 of 1898 (Cape) para (d) of the schedule) was repealed in England by the Arbitration Act of 1934
s 21(6) (sec Mustill & Boyd 516n13).
309 Compare Irish & Co Inc (now Irish & Me11ell Rosenberg Inc) v Kritzas (above) at 633H-J. In a
working paper of the sub-committee on arbitration of the Commercial Court Committee of 1 February
1985 para 58(2), it was noted that a working group on the UNCITRAL Model Law regarded it as
unacceptable that an arbitration tribunal appointed by contract to determine a dispute should he
empowered to make a binding award striking out a claim, without any adjudication on the merits.
Procedure Prior to the Hearing 163

the time for making the award has not expired. 310 Section 3(2) gives the court
the discretion at any time, on the application of a party to the arbitration
agreement, on good cause shown to set aside the arbitration agreement or to
order that it should cease to have effect in respect of the particular dispute.31 1
The power has been used prior to the commencement of an arbitration to
prevent the arbitration taking place, so that a dispute could be tried by the
court.3 12 However, the power is available 'at any time' and there is no reason
to restrict 'good cause' to situations which would justify non-enforcement or
setting aside the arbitration agreement by resorting to the principles of the Jaw
of contract. 313 The court can and should intervene to protect the defendant
where to allow the claimant to continue, once a fair hearing is no longer
possible, would be a gross abuse of the arbitral process. 314

310 eg, where the parties have excluded s 23 by providing in their arbitration agreement that the

award will be delivered within a reasonable time of the completion of the hearing and the hearing has
yet to commence.
"' The legislature gave the court this power to avoid hardship arising from an arbitration agrccmcnI
(sec 1/ansard 16 March 1965 col 305(1).
m Sec cg Sera v De Wet 1974 (2) SA 645 (T) and 63 above.
313 Thereby avoiding the difficulties experienced in England as a result of the Bremer Vulka11 case (sec
the text above).
" 4 Support for this view is to be found in Mustill & Boyd 504. Under the English Act of 1950 it is first
necessary for the court to revoke the authority of the arbitrator under s I before it could order that the
arbitration agreement should cease to have effect under s 25(2)(b). Section 3 of the South African
statute does not impose a similar restraint.
CHAPTER 5

The Hearing

5.1 Introduction
Prior to the hearing, the parties define the issues in dispute, either in a joint
statement or through an exchange of pleadings. 1 At the hearing they arc given
the opportunity to prove their respective cases. They lay before the arbitrator
the agreed facts and whatever evidence they may have to prove their respective
versions of the disputed facts. They also submit their reasons why they consider
that the facts justify their respective claims and defences.
Although there is usually a hearing, it is perfectly competent for the parties
to submit their evidence and contentions to the arbitrator in the fo'rm of
documentary evidence and written submissions. 2 In certain circumstances,
where the dispute may concern the quality of work or materials, the parties
may even dispense with both a formal hearing and the opportunity to make any
substantial documentary submissions. In such cases, they are content to allow
the arbitrator to make an inspection of the work or materials and on the basis
of his own expert knowledge to determine whether the allegation that the
material or work is defective ought to be upheld or not. 3 In short, the
procedure followed by the arbitrator to obtain the information he needs to
make his award may therefore consist of a hearing with oral evidence and
submissions, or the receipt of documents, or a personal inspection, or a
combination of two or more of these methods.
The Arbitration Act contains some broad guidelines of a regulatory nature as
to the manner in which the arbitrator is to conduct the proceedings, 4 and which
provisions can be amplified or modified in the arbitration agreement. The
arbitration agreement may direct the arbitrator as to the form the hearing is to
take, 5 or the parties may subsequently agree on the procedure, in which case
the arbitrator would be bound to follow it. In the absence of any specific
agreement, the arbitrator is master of his procedure and may therefore
determine the procedure to be followed, provided he observes the rules of

1 See 133-9 above.

2 Note that the parties are entitled to an oral hearing unless they agree, whether expressly or tacitly,
to dispense with one (see Mustill & Boyd 300-1). See also 197-201 below regarding 'documents-only'
arbitrations.
3 See also 201 below regarding a 'look-sniff' arbitration.
4 See especially s 14(1)(b)(i)-(iv) and (vi).
5 As where the agreement stipulates that the Summary Procedure Rules (contained in Appendix
III(ii)) shall be followed.

164
The Hearing 165

natural justice. 6 In practice, however, difficulties and differences regarding the

basic form of procedure to be followed seldom arise. The form of oral hearing
which is used in England and former British colonies as it has evolved over the
centuries is so commonly used, that arbitrators and parties alike often fail to
consider that there could be any other way of conducting the proceedings. 7

5.2 The arbitrator and the rules of natural justice

Although the courts generally appear to regard the arbitrator as 'master of his
own procedure' he must nevertheless conduct the proceedings in accordance
with the rules of natural justice. 8 Where an arbitrator has conducted the
proceedings in a manner that did not ensure the fair administration of justice
between the parties, the court will intervene. 9 The arbitrator's duty to comply
with the rules of natural justice means no more than the duty 'to act fairly ...
in carrying out [the] decision-making process'. 10 There are three rules in
particular which he should always bear in mind. These are the audi alteram
partem rule, the rule that no one should be a judge in his own cause and the rule
that justice must be seen to be done.

5.2.1 Audi alteram partem

This Latin phrase literally means 'hear the other side'. In the context of
arbitration proceedings it means that a party should be fully informed of the
evidence and arguments which have been produced against his case and have a
proper opportunity of presenting his own case to the arbitrator before the
arbitrator takes a decision. It has been said that the application of the rule has
a two-fold effect. It satisfies the individual's desire to be heard before he is
adversely affected and it provides an opportunity for the decision-maker to
acquire information which may be pertinent to the just and proper exercise of
his power to decide the issue. 11 Failure to observe this rule has resulted in an
arbitrator's award being successfully attacked on several occasions. In Lazarus
v Goldberg, 12 for example, the umpire allowed the proceedings to continue

" See further 97-8 above.

7 Neither the arbitrator nor the parties ought automatically to assume that the conventional form of

hearing is the only way, or the best way, to proceed with the reference. Other forms of procedure should
be considered. See especially 197-202 and 204-5 below.
8 See eg Anshel/ v Horwitz 1916 WLD 65 at 67 and 97 above.

'' Sec Kannenberg v Gird 1966 (4) SA 173 (C) 187D-E and 290-4 below.
w Per Lord Diplock in O'Reilly v Mackman [1982] 3 All ER 1124 (HL) !126j-!127a.
11 Sec South African Roads Board v Johannesburg City Council 1991 (4) SA 1 (A) 13B-C. The rule

is not only applicable in judicial or quasi-judicial proceedings. Its application to certain decisions in the
field of administrative law and to the dismissal of workers in the public sector has recently been
considered in imer alia South African Roads Board v Johannesburg City Council (above); Administrator,
Transvaal v Traub 1989 (4) SA 731 (A) and Administrator, Natal v Sibiya 1992 (4) SA 532 (A). See also
the judgment of Smalberger JA in Administrator, Transvaal v Theletsane 1991 (2) SA 192 (A) 206A-D
regarding the need for flexibility in applying the rule in particular circumstances.
12 1920 CPD 154.
166 Arbitration in South Africa: Law and Practice

while one of the parties was absent. 13 In Kannenberg v Gird14 an arbitrator's

award was based on his own interpretation of a term of the contract from which
the dispute arose, when that interpretation had not been suggested by either
party. The new interpretation which occurred to the arbitrator was a 'dramatic
development'. Under such circumstances, his award was liable to be set aside
unless he had first given the parties (particularly the one adversely affected
thereby) an opportunity to respond. A party can nevertheless waive his right to
rely on the irregularity, especially if he participates in the arbitration, while
aware of the irregularity and without raising any objection. 15

5.2.2 Nemo iudex idoneus in propria causa est

This rule means that no one is fit to be judge in his own cause. An arbitrator
should therefore not accept appointment when he has a personal interest
(whether financial or otherwise) in the outcome of the proceedings. Failure to
disclose his interest could lead to his appointment being set aside. 16 He may act
where he has an interest if both parties, while aware of that interest, consent to
his appointment. 17 If the arbitrator is in any doubt as to his position, he should
disclose his interest to the parties before he begins to act and leave it to the
parties to decide whether he is acceptable to them or not. 18

5.2.3 Justice must be seen to be done

In the words of Lord Hewart: '[J]ustice should not only be done but should
manifestly and undoubtedly be seen to be done. ' 19 The arbitrator's conduct
towards both parties throughout the proceedings must be courteous,
even-handed and free from the slightest suggestion of bias. An arbitrator
should therefore never allow himself to receive an oral communication from
one party without the other being present. If he receives a written
communication, he should ensure that the other party received a copy.
Telephone calls from one of the parties should be discouraged. The arbitrator
would be unwise to lunch with one of the parties, or to travel to the scene of an
inspection in loco in the car of one of the parties, without the other party, or
his representative, being present. 20
13 Compare, however, Shippel v Markel 1977 (l) SA 429 (C) and 159 above regarding the effect of
s 15(2) of the Arbitration Act on such conduct.
14 At 186G-187E.
1~ See Shippe/ v Markel (above) at 436E-437C, Kannenberg v Gird (above) at 183D-E.
16 See 105 above.
17 See 72 above.
18 See 72 and 123 above.
19 In The King v Sussex Justices [1924) 1 KB 256 at 259, quoted in Orange Fra Slate Provincial

Administration v Ahier 1991 (2) SA 608 (W) 619C.

20 While such caution is advisable, in at least one old English case, the court adopted a tolerant
attitude to less cautious conduct. In Re Hopper [1867) 2 QB 367 at 374 the umpire, at the close of the
hearing, accepted lavish hospitality from the claimant, an inn-keeper, and subsequently made an award
substantially in his favour. In reviewing the case, the court expressed strong disapproval of such
conduct, but were not satisfied that the hospitality had been such as to cause the umpire to depart from
a neutral and even-handed approach to the issues.
The Hearing 167

In practice, arbitrators would be well-advised to remember the advice of

Mustill & Boyd, 21 who suggest that an arbitrator is unlikely to be held to have
acted unfairly, if he observes the following rules:
'1 He should endeavour to act fairly between the parties, eliminating conscious,
and so far as he can, unconscious bias.
2 He should not only be impartial in fact, but should act in such a way that the
parties are confident of that fact.
3 He should pay careful attention to any evidence or arguments presented by
the parties, and should be seen to be doing so.
4 He should keep the parties fully informed of what he is doing, and what he
proposes to do.'

5.3 The arbitratror's role during the hearing

5.3.1 The traditional form of hearing
The form of hearing as we presently know it began to crystallise in the Middle
Ages, together with the growth of the jury system. In a civil action each
disputant would come before the court and attempt to demonstrate the validity
of his claim. The jurymen were not renowned for their intellectual prowess;
education was of a low standard and the jurymen were supposed to be the peers
of the litigants, so that men of learning were not particularly selected for this
duty. It would appear that the jury system evolved in England as a replacement
for trial by ordeal in criminal matters and trial by combat in civil disputes. 22
In criminal matters, a 'trial by ordeal' could involve a man accused of theft,
for example, being required to carry a piece of red-hot iron for a certain
distance. If the hot iron blistered his hands, he was judged guilty, but if they
were unmarked, it was believed that supernatural forces, which knew him to be
innocent, had come to his rescue. In civil trials many disputes were decided by
ordeals by combat. The disputants would strap on their armour, mount their
horses and do battle with one another. Again it was believed that the
supernatural powers would come to the aid of the righteous one and ensure that
he won the battle. The human adjudicators were there as spectators, to see fair
play and to award the matter in dispute to the victor.
Even though trial by combat was effectively abolished in 1215, 23 its influence
may still be perceived in civil trial procedures used to this day. The parties in
a court action battle against each other with words and at the end of the day,
the judge (who no longer has a jury to assist him) decides whether the claimant
has overcome the defendant with the force of his words and argument, or not.
If he has, he wins his claim; if not, he fails. The judge must choose between the
parties on the evidence and arguments they present. He is not expected to
establish the truth through his own investigations and he is not even required
to be convinced that the successful party's version is true. To some extent, the
21 At 290. Sec also Marshall 56-7.
22 See generally S Evan der Merwe (I 99 I) 286-98 and the sources to which he refers. Sec also 2 I6- I8
below regarding the historical origins of certain characteristics of our law of evidence.
23 Sec S E van dcr Merwc {I 991) 292-3.
168 Arbitration in South Africa: Law and Practice

trial by combat lives on! 24 This approach can on occasions lead to unsatisfactory
and unjust results. 25

5.3.2 The inquisitorial system

The traditional form of hearing referred to above is that used in all countries
whose law of procedure is derived from that of England. It is a form of
adversarial hearing and the system of procedure is therefore referred to as the
adversarial system. The English system differs significantly from the system
used in most of the countries of western Europe, where the judge has a more
active or interventionist role. For this reason, the continental system is often
referred to as the inquisitorial system, particularly by English lawycrs. 21'
The essence of an adversarial process is that the parties decide to institute
court proceedings and to defend them, as the case may be. The plaintiff will
decide on the nature and amount of the claim which he institutes. The parties
must decide what evidence should be gathered and presented in support of
their respective cases. 27 As stated above, the function of the judge is to decide
between the parti~s on the information they present. Under a truly inquisitorial
system, the court has an investigative role for the purpose of determining the
truth, and may therefore search for the truth on its own motion. The court is
not restricted to the witnesses and evidence presented by the parties. In its
search for the truth it may gather evidence on its own initiative and this power
includes the power to contact and examine potential witnesses. 28
The basis of the present French system of civil procedure was laid by the
Napoleonic Code of Civil Procedure of 1806. 29 It was a product of the French
Revolution and the enlightened views on which it was based caused it to have
a lasting influence on the civil procedure of other European countries. 30 A
characteristic of these systems is that although the court has a more active or
interventionist role in examining the witnesses, it is still for the parties to decide
which witnesses to nominate for examination by the court. 31

5.3.3 How should arbitration hearings be conducted?

There is considerable divergence of opinion on this question. On the one hand,

24 Compare S E van der Merwe (1991) 290-1.

25 Particularly where one party is financially stronger. He can use his financial resources to present his
case more slickly or use tactical ploys to force his financially weaker opponent into a disadvantageous
settlement. If only one party has legal representation and the other is presenting his own case, the latter
will be at a considerable disadvantage.
26 See 218, nn 27, 28 below. From the authorities cited, it appears more correct to regard both the

9
En 1ish and French systems as variants of the adversarial system.
2 See Van Loggerenberg (1987 De Rebus) 343 and the definition of Staughton at 218 n28 below.
28 See Van Loggerenberg (1987 De Rebus) 344.
29 It has since been replaced by the New Code of Civil procedure of 1975.
-'" See De Vos (1988) 377.
-'' Sec Van Loggcrenberg (1987 De Rebus) 344 for the position in German law. On modern French
procedures in civil trials, see generally Beardsley 460-6 and De Vos ( 1988) 377-95. Sec also 218 below.
The Hearing 169

there are those who are mindful of one of the traditional definitions of
arhitration as a determination of a dispute 'after hearing both sides in a judicial
manner ... ' 32 and who argue that 'judicial' means conducting the proceedings
in the manner of a judge, observing all the ritual and formality of the
court-room which are said to ensure impartiality.
On the other hand, there are those who believe that the delays, high costs
and frustrations of litigation in the courts are due to the strict observance of
current judicial procedures and they argue that if arbitration is to be any better
than litigation, the arbitrator must distance himself as far as possible from the
confines of judicial procedures. The arbitrator, they argue, should be free to
play a prominent and interventionist role as opposed to applying the English
adversarial system. 33 Parris seeks authority for this view, by citing the provision
of the English Arbitration Act of 195034 whereby the parties are required to
submit to being examined by (not before) the arbitrator. 35
What frequently guides arbitrators in choosing between these extremes is the
fear that their award may be set aside because they have misconducted the
arbitration or committed a gross procedural irregularity. They need have little
fear. The records contain remarkably few cases of arbitrators who have been
removed from office, or whose awards have been set aside because of the
procedure they have followed at the hearing. Where this has happened, it is
generally because the procedure has involved a breach of one of the rules of
natural justice rather than because of some minor technical or formal
irregularity. 36 Nevertheless an arbitrator who lacks self-confidence and
experience will probably tend towards the formal adversarial approach,
particularly if the parties are represented by l31wyers who feel much more at
ease with the traditional adversarial hearing-and who may have a much
smaller part to play should the arbitrator conduct the hearing along
'inquisitorial' lines.
The answer to the question posed above is that neither extreme is necessarily
either the right or the wrong one: it is a case of horses for courses. If a dispute
involves multiple and complex issues, including abstruse legal principles, and
where the parties are represented by senior counsel, a formal adversarial
approach will be indicated. At the other end of the spectrum, where the parties
are not legally represented and where they are interested in a quick,
no-nonsense hearing, a more 'inquisitorial' or interventionist type of hearing
would be appropriate. There is an almost infinite variety of positions between

32 Jacobs I; Marshall I; our emphasis. The definition is apparently based on that in a previous edition
of Halsbury's Laws of England. Compare the 1991 reissue of vol 2 para 601.
33 See e g Parris 91, 116-17.
34 Section 12(1). Compares 14(l)(b)(iii) of the South African Act.
35 Parris 117. The South African Arbitration Acts 14 also gives the arbitrator fairly extensive powers,
but has no general provision corresponding to s 12(1) of the English Act. Notwithstanding this omission,
the arbitrator can examine the parties and their witnesses and require them to produce documents, but
he has no power to call witnesses himself (see 241 below). Nevertheless, it is submitted that the Act
confers sufficient powers on him to enable him to participate actively in the hearing by examining the
parties and their witnesses 'inquisitorially'.
36 See the cases referred to and discussed at 290-4 below.
170 Arbitration in South Africa: Law and Practice

these extremes that should suit the personality of any arbitrator, the wishes and
needs of the parties and the exigencies of any case.
It is not only because it is the traditional way of conducting a trial that the
oral hearing is almost invariably used in most arbitration proceedings today.
Where the truthfulness and reliability of a witness's evidence have to be
assessed, there is really no more effective way of doing so than to bring the
witness before the arbitrator, have him give oral evidence and submit him to
rigorous cross-examination. 37

5.3.4 The involvement of the arbitrator in the hearing

Assuming that the hearing is to follow the adversarial procedure on the
traditional English model, there is an equally wide divergence of opinion as to
the extent to which the arbitrator should involve himself in the hearing. One
school of thought holds that he should preside over the hearing in an aloof and
distant manner, giving little response to the evidence and arguments placed
before him and generally sitting with a poker face. To show any preference for
the arguments of one side rather than the other, it is argued, is to display an
element of bias.
The other school of thought argues that an arbitrator should not act like a
judge because he is not a judge, 38 he is an arbitrator. They argue that the
arbitrator should feel free to involve himself in the proceedings and assist the
parties as far as he can to keep the proceedings brief, efficient and
cost-effective. They would urge him to interpose questions of his own that
might clarify matters and speecl things up.
They would also urge that he gives a clear indication as soon as possible
whether a particular line of argument impresses him or not, so that, if it is being
unfavourably received, the party may depart from it and try another tack.
Cautiously employed, this may be commendable, but it has the real danger that
the arbitrator may be tempted to pre-empt and pre-judge an issue to the
possible prejudice of one of the parties.
Certainly there could be no harm, however, in an arbitrator indicating to one
of the parties that he has made his point with the evidence that he is leading,
or the argument that he is advancing, and that there is no need to take the
matter further. 39
37 See 193-4 below on cross-examination.
38 This is not necessarily to say that all judges adopt a demeanour of impassiveness; some, in fact.
make it very clear, very quickly, when they think counsel is following a hopeless line of argument. And
some will indicate when they have taken the point that counsel is making, so that he can move on.
However, there are clear limits beyond which a judge should not go when questioning a party or other
witnesses. He must refrain from questioning witnesses in such a way or to such an extent that it may
preclude him from appreciating and adjudicating objectively upon the issues heing fought out hcforc
him by the litigants. He should also refrain from questioning a witness in a way which could intimidate
or disconcert the witness or unduly influence the nature or quality of his replies, thus impairing his
credibility (S v Rall 1982 (J) SA 828 (A) 832C-832G). On appeal in the Rall case, the court held that
the trial judge had descended into the arena to such an extent that his questioning constituted an
irregularity, and had resulted in an incorrect finding on the facts (834D-E).
-' 9 Sec also 241-2 on the arbitrator's power to limit evidence.
The Hearing 171

Nor can there be any harm in an arbitrator, before whom expert evidence is
being led on a particular subject on which he himself is very knowledgeable,
indicating to the party that such evidence appears to be quite unnecessary as he
is fully conversant with the technical issues on which the expert witness is
attempting to instruct him. He would be unwise, however, to do more than
drop a hint that such evidence may be superfluous. To disallow it might possibly
prejudice both parties: it might prejudice the party who is leading it and who
hopes to connect it up with other evidence for some as yet unrevealed purpose.
It might also prejudice the other party where the arbitrator relies on his own
knowledge and opinions which are not disclosed and which that party therefore
cannot challenge. 40
There is a fine shade of difference between conducting the arbitration
vigorously to sustain a good tempo and to avoid wasting time, and descending
into the arena and joining in the fight. This difference should be appreciated by
the arbitrator and observed by him.

5.3.5 Dealing with an application for a postponement

Not all arbitrations are won or lost on the merits of the case alone. A great
many cases which should fail on their merits nevertheless succeed because of
clever strategy. Conversely, many cases that should succeed on their merits
nevertheless fail because of inept handling or because of the superior strategy
of the other party.
One of the most common strategies is that of the employment of delaying
tactics. Frequently the claimant is anxious for a quick decision: he has delayed
coming to arbitration until financial pressures have compelled him to do so, and
now those financial pressures indicate that unless he gets an early favourable
award, insolvency may intervene.
A wily defendant, recognising the situation, will attempt to gain time in the
hope that insolvency will occur before the award and that the arbitration may
be abandoned; 41 or alternatively that a claimant desperate for funds will make
a disadvantageous settlement rather than endure further delays.
The grounds that a defendant in an application for a postponement of the
hearing may use to justify the postponement are many and varied: he wishes to
amend his pleadings, the counsel he has briefed will be unavailable for some
months, an essential witness is overseas on business, his experts have not yet
completed an extensive investigation, and so on.
An arbitrator, faced with an application by the defendant for a postpone-
ment, may entertain doubts that the application is bona fide and may suspect
that it is intended to bring the other party to his knees. In deciding whether or
not to grant the application, he is faced with two conflicting considerations: on
40 See also 244-5 below.
41 While s 5 of the Arbitration Act provides that the insolvency of one of the parties does not
terminate the arbitration agreement (see 43-4 above), in practice, the trustee of the estate of an
insolvent party would probably lack the funds to pursue the reference to its conclusion and would
therefore decide to abandon the arbitration.
172 Arbitration in South Africa: Law and Practice

the one hand, 42 it is generally considered that such application should not be
denied if the likely prejudice to the other party can be cured with an award of
the wasted costs, 43 while on the other is the dictum that justice delayed is justice
denied.
It is easy to accede to the request for a postponement, particularly where
wasted costs are being offered and where there is no more than a suspicion that
granting the application may cause the other party irremediable damage. Faced
with this sort of situation, an arbitrator should guard against being intimidated
by strategy, should consider all the alternatives to the application, and should
grant it only if he is satisfied that to do so will not lead to greater injustice than
to deny it.
The court will usually only interfere with an arbitrator's decision on an
application for a postponement if the objector is able to show !hat there has
been a gross irregularity or a failure of natural justice. 44 Therefore, before
making his decision, the arbitrator should give both parties a full opportunity
to state their views on the matter and he should make it clear that he has duly
considered their arguments. 45
Similar considerations apply when the arbitrator is called on to make other
forms of procedural ruling during the course of the reference. 46

5.4 The powers of the arbitrator

5.4. l The sourc€'s of the arbitrator's powers
The sources of the arbitrator's powers in relation to the hearing are the
arbitration agreement, the Arbitration Act, and the common law. 47

5.4.2 Powers conferred by the arbitration agreement 48

The parties to an arbitration agreement are for the most part free to contract
on whatever terms they wish. Within certain limits, they are therefore at
liberty, in the arbitration agreement, to confer on the arbitrator whatever
powers they would like him to have. These powers are subject to any applicable
statutory restrictions of a compulsory nature. However, as noted above, most
of the provisions of the Arbitration Act are of a regulatory nature and may

42 The situation is to some extent analogous to an application to amend pleadings, discussed at 140-1

above. In both cases it must be asked whether the relief is necessary for the applicant to have a full and
fair opportunity to present his case.
43 It becomes even more difficult for an arbitrator to refuse an application for a postponement if the
applicant tenders wasted costs, for he is now tendering the cure to the usual prejudice in such instances.
For an astute applicant, the offer of wasted co:·ts may be a cheap price to pay for the advantage that he
is seeking.
44 See Tuesday Industries (Pty) Ltd v Condor Industries (Pty) Ltd 1978 (4) SA 379 (T) 383G.
45 In the Tuesday Industries case (above) at 383H-384A, the arbitrator listened to argument for three
hours before giving his decision. The court refused to interfore with his decision.
46 See 175 below for other examples of procedural rulings.
47 See Jacobs 78 and 97-8 above.
48 See 37-41 above regarding the concept 'arhitration agreement'.
The Hearing 173

therefore be modified or excluded by the parties in their arbitration

agreement. 49
It is submitted that the parties are also free to contract out of any
common-law rules that might govern the conduct of the arbitration, unless the
result would be illegal or contrary to public policy. 50
The basic function of an arbitrator under an arbitration agreement is to hear
the dispute and make an award that is final and binding on the parties. 51 The
agreement may confer further powers on him, such as the power to determine
the issues on the basis of his own expert knowledge and experience, 52 and the
power to dispense with a formal hearing and to determine the issues on the
basis of documents only. 53

5.4.3 Statutory powers

The Arbitration Act confers on the arbitrator a number of regulatory powers
regarding the conduct of the hearing, which may therefore be modified or
excluded in the arbitration agreement. He is empowered to determine when
and where the arbitration hearing shall take place. 54 At the hearing, he may
administer oaths to or take the affirmations of the parties and their witnesses, 55
examine the parties"' and their witnesses," 7 inspect any goods or property 58
and, with the consent of the parties or by order of court, he may receive
evidence given by affidavit.·59 On the application of a party, he may appoint a
commissioner to take the evidence of any person either in the republic or
abroad and to forward such evidence to the arbitrator. 60 Under certain
circumstances, he either must refer or acquires a discretion to refer a question
of law to the court or to counsel for an opinion. 61
There are, however, certain powers which the arbitrator does not possess
under the Arbitration Act. In some instances the powers have been conferred
on the courts. The arbitrator cannot issue a subpoena to compel any person to
attend and give evidence at a hearing or to produce documents. A party will
have to procure the issue of a subpoena for these purposes from the clerk of the

•1' 1 Sec 7 above. especially n (13 for examples.

50 A court would not enforce provisions of an arbitration agreement which are contrary to public
policy (eg a clause which requires an arbitrator to follow a procedure which would make it impossible
for him to do justice between the parties) and would probably not enforce an award made pursuant to
those proceedings.
51 Unless the parties provide for a right of appeal to another arbitration tribunal under s 28 (see 271
below).
5 ' Compare 243-5 below.
53 See 197-201 below.
5 ' 1 Section 14(1)(b)(i).
55 Section J4(1)(b)(ii). See 183-4 below.
56 Section 14(1)(b)(iii).
57 Section 14(1 )(b}(iv).
5" Section 14(1)(b)(vi).
59 Section 14(1)(b)(v). See 240 below.
60 Section 14(l)(a)(iv). See 184-6 below.
61 Section 20. See 206-11 below.
174 Arbitration in South Africa: Law and Practice

magistrate's court. 62 The arbitrator cannot require a party to give security for
the amount in dispute, nor, unless the power is conferred on him in the
arbitration agreement, can he require a party to give security for costs/'3 The
Arbitration Act does, however, confer the power to order security for costs64
or for the amount in dispute on the Supreme Court. 65 Similarly, it is the court,
and not the arbitrator, which can grant an interim interdict66 or order the
substituted service of notices. 67 The arbitrator cannot enforce compliance with
an award. If necessary, the successful party will have to invoke the assistance
of the court. 68 The Arbitration Act provides criminal sanctions against persons
who disrupt the arbitral process by, for example, failing to attend when
required to do so or by giving false evidence. 69 These penalties can be imposed
only by the court, not by the arbitrator. Neither the arbitrator nor the court has
the power to consolidate arbitration proceedings, but such a power could be
conferred on the arbitrator in the arbitration agreement. 70
The arbitrator has no inherent power to call witnesses of his own choosing,7 1
nor to make independent investigations72 but the parties may, and sometimes
do, confer on him the power to do these things. The arbitrator should also not
make a finding on the basis of his own specialised knowledge or experience
unless there is an express or tacit term to this effect in the arbitration
agreement. 73
Although the arbitrator will usually make his award after the conclusion of
the hearing, he is also empowered to make an interim award on some aspect of
a dispute before the hearing of evidence and argument on the other matters in
dispute has been completed.74 An interim award could also comprise an order
for specific performance. 75
The arbitrator's statutory power to make an interim award must be
distinguished from his power to make a procedural ruiing in the course of the
hearing. The most common form of interim award is one which determines
some matter in dispute, leaving other matters in issue to be determined by a
later award. 76 For example, the arbitrator could be asked to make an interim

62 See s 16 and 181 below.

63 See para 4.5 above.
64 Section·2l(l)(a) read withs 1 'court'.
65 Section 21(1)(g).
66 Section 21(1)(/).
67 Section 21(1)(h).
68 Section 31. See 272-3 below.
69 Section 22.
70 See 151-3 above.
71 See 241 below.
72 Compare 168 above regarding the characteristics of an adversarial process.
73 Including an agreement between the parties and the arbitrator regarding the terms of his

apf,ointment. See further 244 below.

4 Section 26, which applies unless excluded in the arbitration agreement. See also 204 below.
75 Section 27, read withs 1 'award'. See also 265-6 below.
76 Compare the Report on Arbitration LRC 55 of the Law Reform Commission of British Columbia

46, where, in addition, two other forms of interim award are referred to, namely an order relating to the
enjoyment or management, pending a final award, of the subject-matter of the dispute, and an order to
The Hearing 175

award on the issue of the defendant's liability, leaving the quantum of the claim
to be determined by a later award, if necessary. An interim award deals with an
issue involving the merits of the dispute and is final in respect of the issue thus
decided. 77 A procedural ruling concerns the arbitral process to be followed in
determining the dispute. Procedural rulings deal with matters like the
admissibility of evidence, the amendment of pleadings, an application for a
postponement, the interpretation of rules of procedure applying to the
proceedings by virtue of the arbitration agreement and an application by one
party that the arbitrator refer a question of law to the court for an opinion. 78
A court will only interfere with a procedural ruling by an arbitrator during
the course of the reference in exceptional circumstances. 79 A party who feels
aggrieved by an arbitrator's procedural ruling will therefore usually have to
wait until the arbitrator makes an award and then try to use the alleged
procedural irregularity as a ground to attack the award. 80 The party should,
however, make it clear to the other party and the arbitrator, when the
procedural ruling is made, that he reserves the right subsequently to attack the
award on this ground. Otherwise he runs the risk that, by his further
participation in the arbitration, he may be held to have acquiesced to the
irregularity or to have waived his right to object. 81

5.4.4 Common-law powers

Where the arbitration agreement is oral, the provisions of the Arbitration Act
will not apply, 82 and the arbitration will proceed in accordance with the
common law. However, even where the arbitration agreement is in writing, so
that the provisions of the Arbitration Act will apply to the ensuing arbitration,
the common law is not cxcluded. 83
Nevertheless, in an arbitration subject to the Arbitration Act, the
arbitrator's powers regarding the hearing will be determined in practice by the
Act and the arbitration agreement and it is most unlikely that the arbitrator or
the parties will find it necessary to refer to Roman-Dutch authorities in this

make a payment in part satisfaction of a larger claim to be quantified by the final award. An arbitrator
in South Africa would be unwise to make an interim award in either of these forms, unless the terms of
reference clearly incorporated the power to do so.
77 Section 28 read with s I 'award'.
78 Sec 207 below. Where the arbitrator rejects an application made to him by a party under s 20, it

would appear that such party could then apply to court under s 20 for an order directing the arbitrator
to refer the question of law to the court. thereby in effect overruling the arbitrator\ procedural ruling.
(Compare Administrator. Transvaal v Kildrwnmy Hu/dings Ltd 1978 (2) SA 124 (T). where the
arbitrator having rcjeclcd an application under s 20 (at Ll2I I- LlJi\), agreed not to make an award
pending the outcome of an application under s 20 to the court (at 125H).) Here. the court is exercising
a statutory power. as opposed to its common-law power to interfere with a procedural ruling referred
to below.
79 Sec Tuesday Industries (Pty) Ltd v Condor Industries (Pty) Ltd 1978 (4) SA 379 (T) 383F-384E.

where the court declined to interfere with an arbitrator's refusal to grant a postponement.
80 Sec 285-95 below regarding the power of the court to remit or set aside an award.
81 See Shippel I' Markel 1977 (1) SA 429 (C) 436E-G.
82 Secs 1 'arbitration agreement' ,md 38 above.
83 Sec 4- 7 above.
176 Arbitration in South Africa: Law and Practice

regard. They may, however, find it necessary to refer to case-law in which the
Act has been interpreted.

5.4.5 Power to determine own jurisdiction

An arbitrator should, either on the application of a party or on his own
initiative, consider the extent of his own jurisdiction in regard to matters like
the validity of the contract incorporating the arbitration agreement and
whether a particular issue in dispute is covered by the arbitration agreement. 84
Any decision in this regard will not usually bind the parties. 85
One situation which could arise is that a party contests the validity of the
main contract containing a clause referring all disputes arising out of the
contract to arbitration. 86 Devlin J explained the resultant situation thus:
'The arbitrators cannot determine their own jurisdiction. The question which arises
is: What is the position if the dispute embraced not merely the question whether the
contract was validly made or not, which would be in excess of the jurisdiction of the
arbitrators to determine, but also other questions which they could properly
determine? I think that the answer to that question becomes clear if one bears in
mind the fundamental principles which govern the acts of arbitrators in these matters.
It is clear that at the beginning of any arbitration one side or the other may challenge
the jurisdiction of the arbitrator. It is not the law that arbitrators, if their jurisdiction
is challenged or questioned, are bound immediately to cease to act, and to refuse to
act, until their jurisdiction has been determined by some court which has power to
determine it finally. Nor is it the law that they are bound to go on without
investigating the merits of the challenge and determine the matter in dispute leaving
the question of their jurisdiction to be held over until it is determined by some court
which has power to determine it. They might then be merely wasting their time and
everybody else's. They are not obliged to take either of those courses. They are
entitled to enquire into the merits of the issue whether they have jurisdiction or not,
not for the purpose of reaching any conclusion which will be binding on the parties,
because that they cannot do, but for the purpose of satisfying themselves, as a
preliminary matter, whether they ought to go on with the arbitration or not. ...
They are entitled, in short, to make their own enquiries in order to determine their
own course of action, but the result of that enquiry has no effect whatsoever on the
rights of the parties. That is plain, I think, from the burden that is put on a plaintiff
who is suing on an award. He is obliged to prove not only the making of the award
but that the arbitrators had jurisdiction to make the award. ' 87

84 The arbitrator should consider these matters on accepting appointment and at the preliminary

meeting (see eg 110 and 122 above). See further Mustill & Boyd 574-5 who suggest that he should
restrict investigations made on his own initiative to the more obvious objections, leaving objections of
a more abstruse nature to be raised by the parties.
"' Mustill & Boyd 571. A party may apply to have an award set aside where the arllilrator has
exceeded his powers (s 33(1)(b), which would include exceeding his jurisdiction (see 294 below)).
86 Compare 57n160 above regarding a clause which is sufficiently widely worded to enable an

arbitrator to determine the validity of the main contract.

87 Chri.1·1opher Brown Ltd v Ge11os.1·e11.1·c/,aji Oesterreichisrher Wa/dhcstitza 1/olzwirtschafishertrieh,,

/?egi.1·1ria1,, (,,,11os.1·e11srl111ft mil Re.1"rlm111k1,·r llaft1111g [1953[ 2 !\II ER 1039 at I0-121l-G. Sec l(Cncrally
Mu,till & Boyd ch 34 for H i.liscussion of 111ethods of dealing wilh dispules on !he arhi1atrn \ Jlll'isdic1ion.
The Hearing 177

Thus if, at the start of an arbitration, one of the parties alleges that the contract
which contains the arbitration agreement is void and that the arbitrator has no
jurisdiction, the arbitrator may investigate the allegation, and if he is
reasonably satisfied that it is not well-founded and that, in his opinion, he
clearly has jurisdiction, he may proceed with the reference. Obviously, the
claimant must also be prepared to proceed, knowing that he does so at risk, and
that he may receive a favourable award which he will subsequently be unable
to enforce should the court find that the arbitrator lacked jurisdiction. 88
If the arbitrator is uncertain as to whether he has jurisdiction, however, he
should decline to proceed with the arbitration and leave it to one of the parties
to apply to court for a declaratory order. 89 This is an eminently safe approach
to the problem, but, of course, entails delay which might prejudice the claimant
and favour a defendant who is playing for time.
If the arbitrator proceeds with the reference in the face of an objection that
he lacks jurisdiction, the defendant might attempt to enforce his objection by
himself seeking an interdict prohibiting the arbitrator from proceeding with the
arbitration.
The arbitrator's jurisdiction regarding other types of disputes relating to
contracts containing an arbitration clause has been discussed in a previous
section. '10

5.5 Convening the hearing

The arbitrator is required to give written notice to each party of the date, time
and venue of the hearing. 91 The period of notice must be reasonable. 92 What is
reasonable will depend on the circumstances. 93 The arbitrator should ensure
that he gives notice precisely as prescribed by the Act. He should not rely on
his secretary to telephone the parties with the necessary information, nor leave
it to one of the parties to inform the other. If, for example, he incorporates the
notice in the minutes of the preliminary meeting, he should ensure that he does
so in a way that makes it perfectly clear that this is the notice referred to in the
Act and he should ensure that a copy of the minutes is sent to each party as
soon as possible after the meeting.
The reason for this meticulous approach is that, if one of the parties fails to
attend a hearing after having received reasonable notice, and without having
furnished the arbitrator with an adequate excuse, the arbitrator will be able to
exercise his statutory power to proceed with the arbitration and to make an

'' S-:~ 273-4 and 294 helow.

" 9 Sec South African Transport Services v Wilson NO 1990 (3) SA 333 (W) 336E.
90 Sec para 2.5.2 at 56-60 above.
91 Section 15(1) of the Arbitration Act.
92 Section 15(2); Irish & Co Inc (now Irish & Mene/1 Rosenberg Inc) v Kritzas 1992 (2) SA 623 (W)

631G.
93 It would appear that it is within the arbitrator's discretion to decide what a reasonahle period would
be (compares 14( I )(b)(i)). If a party agrees to a definite date for the hearing at the preliminary meeting,
it will be difficult to argue subsequently that the notice was unreasonable.
178 Arbitration in South Africa: Law and Practice

award in the absence of that party .94 If the successful party is unable to enforce
an award given in default of the other's attendance because of the arbitrator's
failure to give proper notice of the hearing, the arbitrator possibly runs the risk
of being held responsible for the wasted costs of the abortive proceedings. 9s

5.6 Representation of the parties

A party who arrives at a hearing prepared to present his case himself and
expecting his opponent to do likewise, only to be confronted by an attorney and
possibly also an advocate, will find himself at a great disadvantage. He will
probably need to apply, possibly at considerable cost, for a postponement to
enable himself to engage similar legal representation. Although the Arbitration
Act is silent on the point, it would appear that a party to arbitration
proceedings is entitled to legal representation or to the assistance of a person
with other appropriate qualifications or experience in presenting his case, 96
unless the arbitration agreement provides otherwise.97 An arbitration tribunal
should therefore be very slow to refuse an application for a postponement to
enable a party to obtain proper representation, where the party has been taken
by surprise, or where the lawyer engaged to represent the party is unexpectedly
unavailable through illness or other good cause.
Whether or not the parties to an arbitration ought in practice to be legally
represented is one of the thorniest issues in arbitration. There is a school of
thought which holds that the whole purpose of arbitration is to settle disputes
without the procedures and complexities of the courts imported by lawyers into
the proceedings. 98 It is argued that arbitration is intended to be an alternative
to litigation, not a replica of it, and that the presence of attorneys and
advocates, unless the arbitrator is very firm, may rapidly cause the proceedings
to turn into a carbon copy of a Supreme Court hearing with similar delays, high
costs and other disadvantages, without any of its advantages.
On the other hand, there are those who believe that the orderly presentation
of evidence and argument at an arbitration requires specialist skills and
experience, and they believe that the inhibiting influence that attorneys and
counsel sometimes bring to the proceedings is to be preferred to the confusion
and disorder that often prevail when inexperienced parties attempt to conduct
their own cases.
It is the right of a party to present his case in whatever manner he wishes, and
he should be free to engage whatever assistance he believes may be necessary

94 Section 15(2). See 159 above.

95 Because of the arbitrator's failure to perform an administrative duty with the necessary care (sec
103 above).
""In an arbitration concerning a technical dispute, where the arbitrator is technically qualified. there
is no logical reason to restrict the right to representation to legal representation.
•n See Jacobs 113-14. As regards a party's right to legal representation before tribunals generally sec
Yates v University of Bophuthatswana (BSC 20 August 1992, unreported (case no M293/91)) at 47, 57
and compare !bhayi City Council v Yantolo 1991 (3) SA 655 (E) 673E-G.
98 Sec also 26-8 above.
The Hearing 179

to give the best possible chance of succeeding. 99 Parties may mutually agree to
limit their right in this regard and to proceed to a hearing with legal
representation limited to attorneys only, or even without legal representation
at all, but still to permit representation by lay advocates such as quantity
surveyors, engineers or claims consultants. 100 This limitation on representation
may also be a term of an agreement in a contract to refer future disputes to
arbitration. The arbitrator may have strong and well-founded views on the
subject and, having been informed of the general nature of the dispute and
having made a preliminary assessment of the parties and their ability to handle
the proceedings unassisted, would be fully entitled to express his views on the
most appropriate form of representation, or on there being no representation
at all, and to attempt to persuade the parties to his way of thinking. But he has
no power to order that the parties appear before him unrepresented, and he
would be seriously at fault if he gave a ruling which purported to deprive the
parties of the right to appropriate representation.
In hearings where the parties are not represented, and elect to present their
cases themselves, the arbitrator will need to take a firm hand and will probably
need to act to some extent in an inquisitorial or interventionist manner in order
to impose and maintain some semblance of order and discipline. The parties
will rarely have had sufficient experience of such hearings that they are able to
marsh all their evidence and argument in a proper and coherent manner, and
almost invariably they will need guidance from the arbitrator in the
presentation of their respective cases.

5.7 Formality of the proceedings

Arbitration hearings are usually much less formal than court hearings. The
venue is not a court-room, designed and equipped to project the dignity and
authority of the law, but often a committee-room or boardroom. Sometimes,
where the dispute concerns building work in a dwelling-house, the venue will
be the dining-room of the house itself.
The parties or their representatives are usually permitted to remain seated
while addressing the arbitrator. Dress may be less formal than in a court:
counsel will not wear their gowns and in hot weather, the arbitrator will
probably allow the participants to remove their jackets. Smoking is sometimes
permitted. This degree of informality tends to place everyone at their ease,
avoids the antagonism that often characterises court hearings and may assist a
party to be more tolerant of the other's point of view. The arbitrator should,
however, beware of excessive informality which could undermine his authority

99Compare Yates v University of Bophuthatswana above regarding the right to legal representation.
100Compare rule 6.5 of the Summary Procedure Rules (see Appendix III(ii)) where even
representation by a technically qualified lay advocate is permitted only if the arbitrator considers such
representation to be reasonably necessary.
180 Arbitration in South Africa: Law and Practice

and the discipline which he may need to irnpose to retain control of the
proceedings.

5.8 Structure of a hearing

The oral presentation of a party's case may be divided into three stages,
namely, the opening address, evidence of facts and the closing argument.

5.8.1 The opening address

In his opening address the claimant's counsel or other representative will
summarise the events that took place which subsequently brought about the
claim and he will briefly outline the nature of the claim. This may turn out to
be no more than a wordy repetition of the pleadings and may indicate that
counsel suspects that the arbitrator has not yet read the pleadings and other
documents submitted to him before the hearing. wi The arbitrator could correct
this wrong impression by asking counsel if he has anything to say that has not
already been conveyed in the pleadings. This will probably have the desired
effect of halting the flow and causing counsel to call his first witness. Opening
addresses are now less frequently encountered than in the past.

5.8.2 Evidence of facts

The claimant's claim will depend on the occurrence of certain events, or
possibly the non-occurrence of certain events, or on the existence of certain
circumstances or other facts, and the manner in which these have affected his
rights. The pleadings will have revealed which of these alleged facts are
accepted by the defendant and which do not therefore need to be proved, and
which facts are disputed. In order to prove his version of the disputed facts, the
claimant will have to provide evidence to support it. The defendant will need
to produce evidence which will tend to show that his version is correct and to
rebut the claimant's version.

5.8.3 Closing argument

When all the evidence has been put before the arbitrator, he should be able to
reach a conclusion regarding the facts. The purpose of argument is to assist him
in making this decision. The parties' representatives will comment on their own
and the other party's evidence and will advance reasons why one version is to
be accepted and the other to be disbelieved. The argument will then go on to
persuade the arbitrator what c()pclusions of law he should draw from the facts

101 The custom of counsel reading documents is said to havi: originated in the days when civil trials

were heard hy juries and when few jurymen were literate, so that all the documents relevant to the trial
had to be read aloud to the jury.
The Hearing 181

he has accepted as having been proved, and how he should logically come to
the decision which is being sought of him.

5.9 Witnesses and presentation of evidence

5.9.1 Securing the attendance of witnesses
Each party is responsible for arranging for the attendance at the hearing of the
witnesses who he considers will be able to give evidence favourable to his case.
The party or his advisers will probably have interviewed potential witnesses
before the hearing. 102 They will know what each will be able to contribute, and
perhaps more importantly, how convincing his testimony is likely to be to the
arbitrator.
The number of witnesses called is seldom a factor contributing to the success
of a case. Where credibility is an issue, two witnesses saying the same thing are
better than one. But that is not to say that ten are better than two. If two
witnesses corroborating each other are sufficient to persuade the arbitrator,
additional witnesses on that point will contribute nothing further to the proof
of the claim. It is better to select one's witnesses carefully and rely on the
evidence of one or two of unquestionable probity than on a larger number of
rather questionable characters.
Although witnesses are usually prepared to co-operate by attending the
hearing, it can happen that a party requires a person to give evidence on his
behalf or to produce a document in his possession to the arbitrator, but that
person is unwilling to do so. The Arbitration Act therefore enables a party to
have a subpoena issued by the clerk of the magistrate's court, which has
jurisdiction in the area where the arbitration is being held, to compel the
attendance of a witness or to compel him to produce books, documents or other
things, which he could be compelled to produce to a court, to the arbitrator. 103
As the arbitrator is a 'private judge' who derives his powers from the
arbitration agreement these powers are obviously insufficient to enable him to
compel persons who are not parties to the agreement to attend the proceedings.
A person who has been subpoenaed as a witness or to produce a document and
who fails to do so without good cause commits an offence. 104 Where an
arbitration is conducted under the common law, it would appear that a witness
cannot be compelled to attend the proceedings. 105
A witness who is reluctant to appear is likely to give evidence that is less than
satisfactory. Therefore he should be compelled to attend only if it is considered
better to run the risk of unsatisfactory evidence rather than to have no evidence
at all.
102 The purpose of the interviews is to establish what they will say freely and voluntarily; it is not to
school them into saying what would be favourable to the case of the party calling them.
103 Section 16. A subpoena to produce books, documents or other things is referred to as a subpoena

duces tecum. Section 16(3) makes special provision for the service of a subpoena on a witness serving a
gaol sentence.
104 Section 22(1).
105 See Jacobs 116.
182 Arbitration in South Africa: Law and Practice

A11 arbitrator has no power to call a witness without the consent of both
parties. 106

5.9.2 Who may be a witness

The general rule is that all persons are competent and compellable 107 to give
evidence in civil proceedings. 108 Young children are competent witnesses if
they understand the duty to speak the truth and have sufficient intelligence to
distinguish between truth and falsehood. They can give evidence under oath if
they understand the meaning and religious sanction of an oath. The youth and
immaturity of a witness arc factors to be taken into account when assessing the
weight of his testimony . 109
A mentally disordered or intoxicated person is not a competent witness while
deprived of the proper use of his reason. 110 A person who is blind, deaf or
dumb may, despite his disabilities, be a competent witness, provided he can
communicate satisfactorily with the arbitrator. A deaf and dumb person may,
if necessary, communicate with the arbitrator through the medium of an
interpreter. 111 Where the witness is unable to give evidence in a language
understood by the arbitrator, it will be necessary for him to give his evidence
through an interpreter. 112 Any person acting as interpreter should be a sworn
interpreter, or if not, he should satisfy the arbitrator of his ability to interpret
accurately and swear an oath that he will do so to the best of his ability. m
A person who fails to answer fully and to the best of his knowledge and belief
any question lawfully put to him in arbitration proceedings is guilty of an
offence, as is a person who knowingly gives false evidence under oath or on
affirmation . 114

5.9.3 Presence of witnesses at the hearing

Witnesses in court trials are normally required to wait outside the court-room
until they are called to give evidence, the reason for this being that their
evidence might otherwise be influenced by what they may previously have

""' See 241 below.

107 ie they can be subpoenaed and required to enter the witness-box. A witness, although
compellable, may be able to refuse to answer certain questions on the basis of privilege (sec 234 below).
For restrictions on compellability of certain witnesses such as foreign heads of state and diplomats sec
Hoffmann & Zeffertt 388; SE van der Merwe (1983) 318.
108 See the Civil Proceedings Evidence Act 25 of 1965 s 8; Hoffmann & Zeffertt 371; S E van der

Merwe (1983) 308-9.

11 ''' Sec Hoffmann & Zeffcrtt 375-7; SE van der Mcrwc (1983) 309-10.
11 " SE van der Merwe (1983) 31().
111 S E van der Merwc (1983) 3 IO.
112 The official languages in a civil court arc Afrikaans and English. It is submitted that it would be

competent for the arbitrator to conduct the proceedings, or any part of the proceedings, in any other
language provided that the parties and the witnesses concerned were proficient in that language. The
award, to be enforced by a South African court, would have to be in one of the official languages.
in Sec Hoffmann & Zeffertt 440-1.
114 Section 22(l)(d) and (2) of the Arbitration Act.
The Hearing 183

heard in court.us This rule tends to be less rigorously applied in arbitration

hearings and the presence of witnesses is sometimes tolerated in the room
before they have given evidence. We suggest, however, that as a matter of good
practice, arbitrators should follow the court rule. If not, before permitting
witnesses to be present prior to giving evidence, the arbitrator should at least
first establish that the parties have no objection.
The above rule does not apply to expert witnesses 116 who are generally
required to be present at the hearing when any evidence may be given about
the matter on which they themselves will be required to give expert evidence.
By listening to the evidence they arc able to evaluate it. This places them in a
better position to give a considered opinion when called to testify. They are
also able, if necessary, to advise the party who calls them on the implications
of the evidence and to recommend any steps that may need to be taken to
counteract it.
In arbitrations regarding construction contracts, the architect or engineer
who administered the contract on behalf of the building owner is invariably
permitted to attend the arbitration hearing throughout. This is not necessarily
because he may be regarded as an expert witness-he may not be called to
express any expert opinion at all-but because as the agent of the owner during
the construction, he is probably far better informed than the owner on the
various matters relating to the dispute. He therefore enjoys the same privilege
as the owner, of being present at all times.
The parties themselves, even though they will be witnesses, are entitled to be
present at the hearing at all times. 117 Because of this, they ought to give their
evidence before any of their witnesses do, to enhance the credibility of their
testimony. The same rule should apply to the architect or engineer in
construction arbitrations.
While the witness is undergoing cross-examination, he is incommunicado and
may not discuss any aspect of the case with the party who called him, or the
legal representative 118 of that party, during any adjournment.

5.9.4 Evidence under oath

Oral evidence, particularly in more formal arbitration proceedings, is almost
invariably given under oath. The Arbitration Act 119 empowers the arbitrator to
administer oaths to those giving evidence. In the normal form of the oath, the
arbitrator asks the witness: 'Do you swear that the evidence you shall give in
this hearing shall be the truth, the whole truth, and nothing but the truth, so
115 Compare S Evan der Merwe (1983) 320, 407-8.
11 " Compare S E van der Merwe ( 1983) 106. Sec generally 186 and 228 below regarding expert
witnesses.
117 This is one of the minimum requirements for a fair hearing (see Mustill & Boyd 304). The privacy

of arbitration proceedings, however. restricts other persons from attending except for the purpose of
conducting the reference or giving evidence. See also 213-14 below.
118 Where the party is represented by a lay advocate, the rule should apply to the lay advocate as well.
119 Section 14(1)(b)(ii). Where the arbitration tribunal comprises more than one member, the tribunal

should designate one of their members to undertake this function (s 14(2)).

184 Arbitration in South Africa: Law and Practice

help you God?' to which the witness, standing and with his right hand raised,
should reply: 'So help me God'. 120
Before administering the oath the arbitrator should ask the witness if he has
any objection to giving evidence under oath and if he regards the oath as
binding on his conscience. If the answer is yes to the first question, or no to the
second question, the arbitrator should ask the witness to take the affirmation
instead. The form of affirmation is: 'Do you solemnly promise that the evidence
you shall give in this hearing shall be the truth, the whole truth and nothing but
the truth?' to which the required answer is: 'I do'. In former times the taking
of an oath had religious and even superstitious connotations and the oath-taker
feared that if he broke his oath some awful fate would befall him. In today's
cynical world, that fear is much less persuasive. 121 Possibly more persuasive is
the consideration that knowingly giving false evidence while under oath, or
after having made an affirmation, in arbitration proceedings is regarded as
perjury and may be dealt with accordingly .122 An arbitrator, however, has no
power to punish a witness who commits perjury. This is the functipn of the
courts, in the unlikely event of the party adversely affected laying a charge
leading to a criminal prosecution.

5.9.5 Evidence on commission

The Arbitration Act empowers an arbitrator to appoint a commissioner to take
the evidence of any person in the republic or abroad who is unable to be
present at the hearing. This power may be exercised on the application of a
party, and may be excluded in the arbitration agreement. The commissioner
should take the evidence and forward it to the arbitrator in the same way as if
he were a commissioner appointed by the court. 123 In effect, the witness
appears and is examined before the commissioner instead of appearing before
the arbitrator. The Act also confers a similar power on the court to appoint a
commissioner . 124
Particularly in the case of a foreign witness, a court in sanctioning evidence
on commission will work on the principle that it is better to have the evidence
on commission than to do without it. 125 In court proceedings an applicant for
evidence on commission must show that the taking of evidence in this way is

120 Sometimes arbitrators require a witness to place his hand on a Bible, although this is not strictly

necessary. Jewish witnesses when taking the oath may cover their heads (compare Hoffmann & Zeffertt
441). Arbitrators may encounter more picturesque forms of oath-taking. It is said that the traditional
form of Chinese oath-taking involves the witness breaking a plate and declaring that if he fails to tell the
truth his soul will be broken as the plate is broken. The ritual slaughter of a cockerel accompanies the
oath of members of certain Polynesian tribes.
121 Compare SE van der Merwe (1991) 285.
122 Arbitration Act s 22(2).
123 Section 14(1)(a)(iv).
124 Section 21(1)(cJ. The court's power does not derogate from the corresponding power of the
arbitrator (s 21(2)).
125 See Federated Insurance Co Ltd v Britz 1981 (4) SA 74 (T) 75C; Hoffmann & Zeffertt 438.
The Hearing 185

convenient or necessary for the purposes of justice. 126 A court would be obliged
to use a similar test regarding an application in relation to arbitration
proceedings 127 and an arbitrator, who receives an application to appoint a
commissioner, would do well to abide by the principles applied by the courts.
The applicant must show that the evidence is material and permission may be
given for evidence on commission to be received even on contentious factual
issues. 128 The possible prejudice or injustice to the other party must also be
considered. 129 Theoretically, even the evidence of a party in the arbitration
could be taken on commission abroad_ Do The court is most reluctant to
sanction a commission if the party in question is the plaintiff. 131
Evidence on commission in court proceedings is taken orally before the
commissioner in the presence of the parties and their representatives. The
witness is subject to cross-examination and re-examination in the usual way.
The court may, however, direct that the commissioner's examination be
conducted in the form of intcrrogatories. 132 The commissioner is not required
to decide on the admissibility of the evidence: this is a matter for the court. 131
The record of the evidence on commission is usually tendered to the court by
the party applying for the commission, but that party is not obliged to submit
the evidence .1-' 4
Parties to an arbitration wishing to reduce the expense of taking evidence on
commission from a witness overseas could agree to the evidence being taken in
the form of intcrrogatorics.1.1-' A list of questions for the witness is drawn up by
the parties and submitted to the arbitrator for approval, who could add further
questions to the list. 136 The commissioner must then put the questions to the
witness and note his replies and it is unnecessary for the parties to be
represented at the commission. Obvious disadvantages of evidence on
commission are that the arbitrator who must evaluate the evidence docs not
have the benefit of observing the witness while the evidence is given and he

126 Supreme Court Ruic 38(3). The convenience referred to is not only that of the applicant but

includes that of the other party and the court (Meyerson,, Health Beverages (Pty) Ltd 1989 (4) SA 667
(C) 675J-676A).
127 Section 21(1) of the Arbitration Act.
12 " Federated Insurance Co Ltd v Britz (above) at 75D, 77G.

,n Federated Insurance Co Ltd v Britz (above) at 76H. In this case, because the other party was
impecunious, the court ordered the applicant to disburse the costs of the other party being represented
by an English lawyer at a commission in England, but added that such costs would ultimately follow the
result of the arbitration (at 7611-78G).
"" The arbitrator's power ins 14(1)(a)(iv) relates to the evidence of 'any person'.
n, Sec Meyerson ,, Health Beverages (Pty) Ltd (above) at 6780-E. The reason for this is that the
plaintiff selected the forum for resolving the dispute.
m Supreme Court Ruic 38(5).
m Supreme Court Ruic 38(6).
134 See Van Winsen, Eksteen & Cillicrs 439.
135 It is not clear that the arbitrator could order that the commission should take this form without the
consent of the parties, in that the relevant provision, s 14(l)(aJ(iv) (unlike s 14(1)(a)(i) regarding
discovery), makes no express reference to interrogatories.
rn, Compare Hoffmann & Zcffertt 439.
186 Arbitration in South Africa: Law and Practice

does not have the opportunity of putting questions to the witness to clarify
aspects of the testimony which are unclear.

5.9.6 Evidence of experts

It is fundamental to the adversarial process discussed above that the judge
should determine the factual issues solely on the evidence presented by the
parties, unless the facts in question are so well known that he may take judicial
notice of them. 137 It follows that where there are technical matters in dispute,
the judge is expected to disregard any personal specialised knowledge he may
have regarding those issues and make his decision solely on the evidence
presented. In any matter involving a technical issue, each side will call experts
to give evidence, not only of the facts as observed by each expert, but on the
conclusions drawn by him from such facts. While there will probably be a
measure of agreement on the facts, the conclusions drawn by opposing experts
will probably differ. This is only to be expected, because each side will only call
as witnesses experts who are able to support that party's case. The evaluation
of conflicting expert testimony by a judge is discussed in a subsequent
section. JJH
An arbitrator with specialised knowledge and experience regarding technical
issues in dispute will have a much easier task than a judge without such
knowledge in evaluating the evidence and conclusions of expert witnesses called
by the parties and there is no objection to his using his knowledge for that
purpose. 139 The question whether an arbitrator ought to be restricted in making
further use of his specialist knowledge, either to supplement the expert
evidence produced by the parties or to make such evidence unnecessary, should
be raised and settled at the preliminary meeting. 140 If it is decided that he may
make full use of his expertise, there would be no need for any opinion evidence
from experts, because he would be free to form his own opinion. On the other
hand, if he were to be as restricted as a judge, there would be as great a need
of expert evidence as there would be in a civil trial. The most likely
arrangement is to allow him to make limited use of his expertise: he would be
permitted to use it to evaluate the evidence of expert witnesses, but he would
not be free to form and adopt an independent opinion of his own on the
technical issue. Nevertheless, the expert evidence led before him would be
more limited than that in a civil trial. The experts would still express opinions
and their reasons for those opinions, but they would not need to give evidence

117 Sec 168 above and 243-4 below.

138 Sec 228 below.
13 " See 244-5 below.
,.m Experts called by the parties are subject to cross-examination and their opinions can be tested and
rebutted by other evidence. If an arbitrator relies on his own specialised knowledge to reach conclusions
independently of the evidence adduced by the parties. he could be described as the only expert in the
room not subject to cross-examination. Sec further 243-5 below.
The Hearing 187

on the basic principles on which these reasons have been based, because it has
been conceded that the arbitrator is fully acquainted with these principles. 141

5.9.7 Recording the proceedings

The Arbitration Act places a duty on the arbitrator to see that the oral evidence
of witnesses is recorded. He may elect to record it himself. If this is impractical,
the parties may agree on the manner and extent to which it should be recorded.
Failing such agreement, the arbitrator must decide the matter, after
consultation with the parties. 142
In a Supreme Court trial, the entire proceedings are mechanically recorded
and then transcribed. This is necessary because the judgment may be taken on
appeal. If so, the Appellate Division will not rehear the case. It will refer to the
official record of the proceedings and on that basis decide whether the finding
was erroneous and ought to be reversed or varied. 143
But there is no appeal to the courts on an arbitrator's award and so this
reason falls away. It is true that an application may be made to court for the
award to be remitted or set aside, but this is a fairly infrequent occurrence and
the grounds for a successful setting aside will not often depend on the
availability of a full record of the proceedings.
Where the arbitration tribunal consists of an even number of arbitrators, the
possibility exists that one or more issues may need to be referred to an
umpire. 144 The umpire will probably not have heard the evidence. 145 In that
event, the umpire will gain his knowledge of the oral evidence from the record
of the proceedings before the arbitrators, unless the parties require him to
rehear the evidence or unless he decides to recall a witness for further
examination. 146 Therefore, where the arbitration could entail the involvement
of an umpire, it would usually be expedient to arrange for the proceedings to
be mechanically recorded.
The other reason for recording the proceedings and transcribing the record
is that the transcript assists the parties and their representatives to remember
what has previously been said at the hearing. This is hardly necessary where the
hearing is short, but becomes very desirable when the hearing is protracted and
may be adjourned from time to time.
The cost of recording evidence and producing a transcript is high and a
practical compromise might be for the proceedings merely to be tape-recorded,
which is the less expensive part of the procedure, and for the parties to arrange

1· 11 Sl'l' also 228 and 2~-1- 5 below.

1•12 Section 17.
1•1 ' When hearing an appeal. the court will not normally receive mklitional evitlcnce. although it has

the power to do so. Under s 22(a) of the Supreme Court Act 59 of 1959 it may either hear the additional
evidence itself or remit the matter to the lower court for that purpose.
144 Compare ss 11(l)(a), 14(4) and 19(c) of the Arbitration Act.
145 Although s 19(a) of the Arbitration Act permits the umpire to sit with the arbitrators and hear the
evidence, s 19(b} disentitles him to any fee unless the parties have requested him to attend or unless he
is required to intervene in the event of the arbitrators disagreeing.
146 Section I 9(d).
188 Arbitration in South Africa: Law and Practice

for the transcription of only such parts of the record as they or the arbitrator
may require.
Most arbitrators make notes of the evidence as it is given. This helps to focus
the mind on what is being said, and provides a useful summary of the evidence,
even when a verbatim transcript is available. Where the proceedings are being
mechanically recorded and transcribed, the arbitrator would be entitled to
regard his notes as his private property and he would probably be entitled to
refuse to show them to either party. However, where the evidence is not being
otherwise recorded, the peremptory tone of s 17 of the Arbitration Act
suggests that his notes become the official record and he could not then refuse
to make them available to the parties 147 or to the court. 148

5.9.8 Exhibits
5.9.8.1 Documents
Documents tendered by the parties will form part of the cvidentiary material in
support of their respective claims. In court hearings the original documents
must be handed in except where these are unavailable, but in arbitrations this
rule is generally relaxed and copies arc frequently accepted. In court, such
documents must in principle be handed in by a witness who testifies to their
authenticity, 149 while in arbitrations it is often the practice to accept that such
documents arc authentic unless this is challenged by one of the parties. 150
When a document is handed in while a witness is giving evidence, the
arbitrator, on receiving it, must give it an identifying mark or serial number.
Where there is a large number of documents, he will probably need to place
them in a file to avoid their getting out of order. Unless a copy has been
prepared for him, the other party will want to inspect the document. Later, the
document may need to be withdrawn from the file to be shown to a subsequent
witness. This process is disorganised, disruptive and unsatisfactory. A far better
procedure is for the parties to assemble all the documents which they intend to
use at the hearing into a file, colloquially referred to as a 'bundle', in which the
documents arc properly numbered and indexed. 151 This file is furnished to the
arbitrator before or at the commencement of the hearing. Duplicate copies of

147 Both parties would normally require the record after the award has been made, in the event of one

party taking the award on review to the courts, with the other wishing to oppose the application. Even
during the hearing the notes could have a r6le as the official record. For example, the arbitrator could
possibly read back the relevant part of his notes during the course of the proceedings, if a dispute arose
as to what a witness had actually said.
14 " Sec Clark v African G11i1r/J11/ee and /11dc111niry Co Ltd 1915 CPD 68 at 79, where the court (relying

on the predecessor of s 17, namely item (k) of the schedule to the Arbitrations Act 29 of 1898 (Cape))
held that it would be perfectly proper for an arbitrator to make his notes available at the request of the
court. See also Jacobs 113.
149 Sec, however, Supreme Court Rule 35(10), which entitles a party to call on his opponent to

dispense with proof of authenticity of specified documents. If the opponent requires their authenticity
to be proved, he may be held liable for the resultant costs.
150 See cg rule I 9 of the Standard Rules for the Conduct of Arbitrations and 239 below.
151 Sec also 154-5 ahovc.
The Hearing 189

the file are made for each of the parties and for reference by the witness giving
evidence.

5.9.8.2 Photographs, drawings and diagrams

These items are, strictly speaking, also documents. Where practical, they
should be dealt with in exactly the same way as other documents and included
in the bundle referred to in the previous section.

5.9.8.3 Objects
A party may wish to tender some object as an exhibit in his case. for examrle,
a particular garment or a piece of borer-infested timber. The arbitrator must
mark each such exhibit with an identifying symbol or serial number. The
retention of such exhibits in an orderly fashion and their safe-keeping for the
duration of a protracted hearing sometimes create considerable problems.

5.9.8.4 Photographs, tape and video-recordings

Photographs and films of places, or things which are difficult to produce in
court, are frequently exhibited to courts. Photographs are also used to enable
witnesses to identify persons. 152 These photographs and films are real
evidence. 153 In court proceedings it appears that such items must be
authenticated as true representations of the objects and persons which they
purport to represent, before they are admissible in evidence. 154 This could be
done by asking a witness whether he recognised a person or scene in the
photograph. It is not necessary to call the photographer if authenticity can be
established in another way. 155
As arbitrators are not in our view bound by the strict rules of evidence unless
the arbitration agreement otherwise provides, 156 an arbitrator would be
entitled to take a less stringent view regarding the admissibility of photographs,
tape and video-recordings. He should however view or listen to such evidence
in the presence of the parties and note any comments they may have on
authenticity. If these comments and other factors raise significant doubts in the

152 In certain cases, where the person who appears in a photograph or video-recording appears as a

witness at the hearing, evidence of identification will not be necessary, as the arbitrator will be able to
make the identification for himself.
153 Sec Hoffmann & Zeffertt 406. 'Real evidence consists of things which are examined by the court

as means of proof' (lloffmann & Zdkrll 4(J.I).

15 "1 Sec Hoffmann & Zcffcrtt 407, citing S v Ram1;obi11 198(, (4) SA l 17 (NJ 125G-J. They rcg.ird this

approach as the best protection against the abuse of such forms of evidence. which arc easy lo
manipulate by improper editing which is difficult to detect. Sound recordings are more difficult to verify
than video-recordings because there is no visual link with what is being transmitted (the Ramgobin c.isc
at 136C). See further Hoffmann & Zeffertt 406-12 for a discussion of conflicting decisions on this
subject.
155 Where the Standard Procedure Rules are used, a photograph furnished with a pleading is a

document (see rule 1.5) to which rule 19 would apply.

156 See 220-1 below.
190 Arbitration in South Africa: Law and Practice

mind of the arbitrator as to the genuineness of the evidence, such doubts must
have a profound effect on the weight to be attached to it.

5.9.9 Inspections in loco

Some objects which a party may wish to introduce as exhibits may be too large
to bring to the arbitration room, and it may be necessary to take the arbitrator
to view them on an inspection in loco. The need for such an inspection will most
frequently arise in relation to portions of a building or other construction work,
the scene of an accident, or a large piece of machinery.
The inspection need not necessarily take place at any particular stage in the
proceedings, but may be arranged at a time to suit all concerned, although it
should not be undertaken at so late a stage that the parties do not have
adequate opportunity to produce evidence or arguments to explain or
contradict the impressions that the arbitrator may have formed at the
inspection . 157
While it is permissible for the arbitrator to make the inspection on his own, iss
it is customary for both parties to accompany him; moreover, it would be
irregular for only one party to do so. 159 The ways in which observations at an
inspection in loco may be recorded are discussed in a subsequent section. 1" 0

5.10 Conduct of a formal hearing

5.10.1 Statement of principles
There is no prescribed form for an arbitration hearing, and the arbitrator ·is,
subject to any prior agreement between the parties, free to determine how best
he would like the hearing to proceed, as long as the procedure he adopts docs
not offend the rules of natural justice .161
Mustill & Boyd summarise the minimum rules with which a full oral hearing
should comply as follows:
'1 Each party must have notice that the hearing is to take place.
2 Each party must have a reasonable opportunity to be present at the hearing
together with his advisers and witnesses.
3 Each party must have the opportunity to be present throughout the
hearing. 162
4 Each party must have a reasonable opportunity to present evidence and
argument in support of his case.
5 Each party must have a reasonable opportunity to test his opponent's case by

157 Compare Go/dstuck v Moppin and w1,bb Ltd 1927 T?D 723 at 733-4.
158 Compare R v Mouton 1934 TPD IOI at 102.
159 Tumahole Bereng v R (1949] AC 253 at 272-4.
160 See para 6. 7 .3 at 243 below.
161 Lord Diplock in Bremer Vulkan Schifjbau um/ Maschinenfabrik v South India Shipping
Corporation Ltd [1981] AC 909 at 985 and 97 above. The rules of natural justice arc discussed at 165-7
above.
162 Subject to the arbitrator's power under s 15(2) of the Arbitration Act to proceed in the absence

of a party under certain circumstances (see 159 above).

The Hearing 191

cross-examining his witnesses, presenting rebutting evidence and addressing

oral argument.
7 The hearing must, unless the contrary is expressly agreed, be the occasion on
which the parties present the whole of their evidence and argument.' 163
Provided the arbitrator observes these guidelines and the rules of natural
justice, a court is most unlikely to interfere with the arbitrator's conduct of the
reference merely because he has not observed precisely the conventional
procedures of a civil trial in the Supreme Court. 164 Rules incorporated in the
arbitration agreement may also make it unnecessary for the arbitrator to
observe all the guideliries set out above: for example, if the rules provide for
oral argument to be replaced by written submissions unless the arbitrator
requests supplementary oral argument on specified points.
Where the arbitration is not governed by a set of rules spelling out the
arbitrator's powers positively, arbitrators in practice have tended to adopt a
negative approach by avoiding procedures which might possibly invite the
courts to intervene, whether by removing the arbitrator from office 165 or by
setting aside the award. 166 _ In so doing, many arbitrators have failed to
appreciate the robust view generally taken by the courts regarding the latitude
that arbitrators ought to have in the conduct of hearings, 167 and have
consequently adopted an unnecessarily timid and unadventurous approach.
In the following discussion we will deal with the conduct of a typical
conventional hearing in which the parties are represented by legal or technical
representatives. We will subsequently explore some of the less conventional,
relatively untried variations which, appropriately employed, could lead to
substantial economies in time and cost. 168

5.10.2 Opening the proceedings

The arbitrator will open the proceedings and establish whether the parties and
their representatives are present. If one of them is not present after having
received due notice, he will need to decide whether to proceed in the absence
of that party or to adjourn the hearing until a later date. 169
If he has not already met the parties and their representatives, they should
introduce themselves to him.

5.10.3 Preliminary points

Before inviting the claimant to open his case, the arbitrator should enquire of
the parties whether either of them has any preliminary submissions to make, or
if there are any preliminary points to be taken. The matters that might be raised

H,3 Mustill & Boyd 302.

1"" Sec further 292-4 below.
"' 5 In terms of s 13(2) of the Arbitration Act. See 105 above.
1''" In terms of s 33 of the Arhitration Act.
167 See 97-9 above and 292-4 below.
168 See especially 197-202. and 204-5 below.
169 See 159-161 above for a discussion on the problem of the party who fails to attend the hearing.
192 Arbitration in South Africa: Law and Practice

could be of minor consequence: a request for clarification of the hours of sitting

or for an early afternoon adjournment to permit one of the parties to attend to
urgent business. Matters of a more serious nature might be raised on which the
continuation or even the very existence of the arbitration might depend . 170
There might, for example, be an application for an adjournment sine die on the
grounds that an application is being made to court for an order for the
provisional winding-up of one of the parties, 171 or an application for an
adjournment for a certain period to allow a party to amend his pleadings or
even a belated challenge of the arbitrator's jurisdiction. 172
The arbitrator will need to deal with such matters at once before proceeding
with the hearing. I le should therefore ask the applicant 10 motivall' his
application fully and, if necessary, to lead evidence in support of it. He should
then invite the other party to respond. If the other party concurs with the
application, the matter is taken out of the arbitrator's hands and he must grant
the application. If, however, the other party opposes it, he should be allowed
the opportunity to give full reasons for his opposition and also, if necessary, to
lead evidence. The applicant should then be given the opportunity of replying
to the objections raised.
The arbitrator should then give his ruling. If he feels that he needs time to
consider the issues carefully, he should adjourn the hearing for as long as he
may need. If he decides to adjourn the hearing and give his ruling at a later
date, he should, when he is ready to make his ruling, summon the parties to
him and give the ruling to them jointly, very much in the way prescribed in the
Act for the delivery of an award. m

5.10.4 Presenting the case for the claimant

If no preliminary matters were raised or after they have been disposed of, the
arbitrator should invite the claimant to open his case. Counsel for the claimant
may begin by making a brief statement about the circumstances of the case and
the issues that will be put before the arbitrator. 174
It is usually the claimant who begins, but this is not an invariable rule. l n
appropriate circumstances it will be necessary or preferable that the defendant
begins, as, for example, when his defence takes the form of a special plea. rn

170 These applications arc often referred to as applications in /imine-literally 'on the threshold', and

as they could have a fundamental effect on the hearing if successful, they must be dc,dt with before the
hearing proceeds.
171 In terms of s 5(2) of the Arbitration Act, the proceedings arc suspended on the granting hy the
court of a provisional winding-up order until a liquidator has been appointed (sec 44 above).
172 Compare 176-7 above.
173 Ins 25(1) of the Arhitration Act (sec 267 below). Sec also 171-2 above regarding applications for

a postponement and 174-5 above for the distinction between a procedural ruling and an interim award.
174 See I 80 above.
175 If, for example, the defendant admits the claimant's case but avers that there are other

circumstances which extinguish his indehtcdness to the claimant (cg hy pleading prescription), the
claimant has nothing to prove. Only once the defendant has led evidence in support of his special pica,
is it necessary for the claimant to lead evidence in rebuttal (sec further 248 below).
The Hearing 193

5. 10.4. 1 Evidence-in-chief of the witness

In a civil trial in court, where the claimant has the duty to lead evidence first,
the first witness would normally be the claimant himself, or in disputes arising
out of construction contracts, where he may have been represented by an
architect or engineer, then the architect or engineer. 176 But in arbitrations this
practice is not always rigidly adhered to and the claimant's representative will
often call some other witness if it is more convenient to do so.
The claimant's representative will put a series of questions to the witness, the
answers to which are intended to lay the facts before the arbitrator, or at least
that witness's particular version of the facts. Leading questions, which suggest
the tenor of the answer required, are usually not allowed during cvidence-in-
chief except in respect of non-contentious matters. 177 Before he closes his
examination-in-chief of this witness, claimant's representative should be
satisfied that he has obtained all the information that he needs, as he may not
be permitted to recall the witness at a later stage for further questioning.

5. 10.4.2 Cross-examination of the witness

When the examination-in-chief has been completed, defendant's representative
will be given the opportunity to cross-examine the witness. 178 This he will do by
putting a series of questions to the witness to test the reliability of his
evidence-in-chief. They may test his powers of observation or his memory of
the events about which he gave evidence, and will seek to reveal inconsistencies
in his evidence. Cross-examination, if successful, may go to show that, alihough
the witness may have believed that his evidence-in-chief was truthful, it is
doubtful either that he observed accurately at the time or that he subsequently
recalled the events correctly. Cross-examination seldom exposes a witness as a
liar, because most witnesses endeavour to be truthful, but it may reveal that he
is mistaken or confused. Cross-examination has been described as 'the greatest
legal engine ever invented for the discovery of truth' . 179
Cross-examiners are usually allowed a wide degree of latitude in their
questions. Leading questions are permitted. The cross-examiner is usually
allowed to put questions that may seem irrelevant provided that the relevancy
is later established. This permits the cross-examiner to put questions to the
witness on topics that were not mentioned in the examination-in-chief but
which may tend to cast a different light on the witness's previous evidence and
on the claimant's case, and may lay the foundation for the defence. If the
defendant later wishes to lead evidence to contradict claimant's witness, the
relevant matters should be put to the witness so that he can comment.
Similarly, if the arbitrator is to be asked to disbelieve a witness, the witness
should be cross-examined on the matters which allegedly make his evidence
176 Sec 183 above for the reason for this practice.
177 Sec further Hoffmann & Zeffcrtt 444-6.
178 For a more detailed discussion sec inter alia Hoffmann & Zcffertt 455-69.
179 Wigmore, quoted by Hoffmann & Zcffcrtt 456. They have a more sceptical view of its efficacy. Sec

also 2161116 below.

194 Arbitration in South Africa: Law and Practice

unworthy of credence. 180 Where the defendant is unrepresented, it is advisable

for the arbitrator to draw this rule about putting these matters to the witness to
the attention of the defendant, so that claimant and his witnesses get a full
opportunity to deal with matters on which the defendant will later seek to
contradict them. 181 The arbitrator could do this by asking the defendant
whether he agrees with a statement by a witness regarding a material issue.
It is a rule of practice in litigation that while a witness is undergoing
cross-examination, he is incommunicado. He may not discuss any aspect of the
case with the party who called him, or the legal representative or lay advocate
of that party, or any other person, during any adjournment, without the
consent of the court. The reason for this rule is that if others have access to him,
they can prompt him on how to deal with matters put to him in
cross-examination. It has therefore been suggested that this rule should also he
observed in arbitrations. 182

5.10.4.3 Re-examination of the witness

On completion of cross-examination, the claimant's representative will be
permitted to re-examine the witness, but only on the matters raised in
cross-examination . 183 Where the claimant's representative considers that the
witness may have made damaging admissions when under cross-examination,
he may wish to put questions which will elicit answers that may modify such
admissions or correct any unintended false impressions. He may not raise any
fresh issues, except by leave of the arbitrator. When considering whether or not
to permit questions that open new issues, the arbitrator should bear in mind
that the claimant's representative had ample opportunity to put all the
questions that he wished to the witness during examination-in-chief and if he
failed to do so, the arbitrator should not be over-hasty in granting him
dispensation. On the other hand, the cross-examination may well have led to
the case taking an unexpected turn. The claimant's representative should not
be penalised for not having anticipated this by asking questions which at the
time might have seemed irrelevant. In the final analysis, the arbitrator should
be indulgent to a party who has to deal with the unexpected but should be much
less lenient to one who has not prepared his case carefully and who now seeks
to remedy his oversight.
If the arbitrator permits the claimant's representative to put questions on
fresh matters under re-examination, he should permit the defendant's
representative to cross-examine the witness on this fresh evidence. Once again,
the claimant's representative would be permitted to re-examine the witness,
but only on the matters raised under the new cross-examination.

5. 10.4.4 The right of the arbitrator to question a witness

The arbitrator is also permitted to put questions to the witness at any time.
1"" Compare Hoffmann & Zeffertt 461.
181 Compare S v Govazela 1987 (4) SA 297 (0) 2981-300B.
182 See Bernstein 181.
183 See Hoffmann & Zeffertt 469.
The Hearing 195

However, as a matter of policy, he should generally withhold his questions until

the re-examination has been completed. By interrupting the representative of
either party in order to put his own questions, the arbitrator might well be
inadvertently sabotaging a carefully planned line of questioning. At best, such
interruptions can be very disruptive. There are two exceptions. First, the
arbitrator may put a question to clarify a point that is unclear to him. Secondly,
if the arbitrator considers that counsel is making very heavy weather with a line
of questioning, he may feel that he can clarify matters with one or two carefully
chosen questions of his own. This applies particularly where the questioning
has to do with a technical matter which is somewhat beyond the comprehension
of counsel but well understood by the arbitrator.
In putting questions to the witness, the arbitrator should be careful to see
that they are framed in a level factual manner and that he does not indulge in
any form of cross-examination. 184 If he questions the witness after the close of
re-examination, he should ask counsel on both sides whether they wish to
question the witness on any of the matters to which his questions referred. Such
questions must be limited to amplifying or correcting any of the answers given
by the witness to the abitrator's questions, or to any impressions to be gained
from such answers.

5.10.4.5 Further attendance by the witness

It is generally not necessary for the witness to remain in attendance at the
hearing after he has completed his evidence and, after securing the
confirmation of the representatives of both parties that they have no further
need of the witness, the arbitrator may inform the witness that he is free to go.
Although it is seldom necessary, the arbitrator may allow either party to recall
a witness, or even recall the witness himself, for further questioning. 185

5. 10.4. 6 Completing the case for the claimant

After his first witness has left the witness-stand, claimant's representative will
call his remaining witnesses in turn and each will be examined, cross-examined
and re-examined until all have been heard, whereupon counsel will announce
that he closes his case. He should be careful, however, to satisfy himself that
the witnesses have covered all material aspects of the claimant's case and that
there are no further witnesses that he might wish to call, as the arbitrator will
not lightly grant him the indulgence to call a fresh witness after he has closed
his case.

5.10.5 Presenting the case tor the defendant

It will now be the turn of defendant's representative to put his case and he will
184 He must be seen to maintain an impartial position. His intervention is in the interests of justice and
the purpose of the questions is to elicit or elucidate the truth more fully in respect of relevant aspects
of the case (S v Ra/11982 (1) SA 828 (A) 831C).
185 Compare Hoffmann & Zeffertt 475; Van der Merwe (1983) 325.
196 Arbitration in South Africa: Law and Practice

do so by calling a series of witnesses to give evidence to support the arguments

that he will presently make opposing the claimant's case.
It may not always be necessary to call evidence for the defence. In
exceptional circumstances, defendant's representative may contend that the
claimant has so utterly failed to make out a case for his claim that there is no
need to present evidence in defence; prima facie there is no case to answer, 186
and he will apply for the case to be dismissed, possibly advancing reasons why
the evidence led by the claimant fails to establish the claimant's case.
But in nearly all instances, the defendant will require evidence to support his
allegations and the defence will proceed to call witnesses in much the same
manner as did the claimant, with the same process of examination-in-chief,
cross-examination and re-examination. When all his witnesses have been heard
in this manner, defendant's representative will announce that he has no further
witnesses and will close his case.

5.10.6 Closing argument

When both sides have finished leading their evidence, claimant's representative
will present the argument in favour of claimant's case. This may happen
immediately after the defendent has closed his case, but where the issues are
complicated and the evidence lengthy, the respective representatives may need
a few days to prepare their arguments in an orderly form.
Particularly where the parties are legally represented, the arbitrator would
be entitled to ask the representatives to prepare heads of argument. This is a
document setting out a brief summary of the representative's argument
together with the references he will make to relevant cases and judgments. In
his oral submissions, the representative will enlarge and expound on each of the
points. This document can be of great assistance to the arbitrator in reducing
the extent to which he may need to take notes, or perhaps eliminate the need
altogether, thereby enabling him to give all his attention to listening to the
argument.
Once again, it is the claimant's representative who begins. He may remind
the arbitrator what it is he has to prove, that is, what matters are in issue, and
he will then review the evidence given by the various witnesses, commenting on
its admissibility, relevance and cogency, and advancing arguments why the
evidence of his own witnesses should be accepted and why conflicting evidence
for the other side should be rejected. He will then go on to indicate the
inferences and conclusions that should be drawn from the facts and how these
logically support the claim. In commenting on the law, he will refer to passages
from various authoritative textbooks and quote from decided cases. If the
arbitrator is not a lawyer and does not have ready access to a law library, the
representative should, as a matter of courtesy, furnish the arbitrator with
copies of the passages in the textbooks in question and of the relevant portions

186 See also 248 below.

The Hearing 197
of the judgments, and if he does not do so of his own initiative, the arbitrator
is entitled to ask for them.
When claimant's representative has completed his argument, it will be the
turn of defendant's representative. His argument will take a similar form but he
will go on to deal with the arguments raised by the claimant's representative,
and will show, if he can, that his opponent's reasoning is fallacious, that he has
drawn invalid conclusions from the evidence, that he has misinterpreted the
legal authorities which he quoted, or that there are other and better authorities
for a contrary point of view.
Finally, it will be the turn of claimant's representative to reply, but he will be
limited to dealing with the arguments raised by defendant's representative.
When claimant's representative concludes his reply, the arbitrator will, as a
matter of courtesy, ask each party if he has anything further to say. If not, he
will declare that the hearing is concluded. He will then adjourn the proceedings
to consider and prepare his award. The time within which the award must be
made and the form of the award are discussed in a subsequent chapter. 187

5.11 Alternatives to a formal hearing

5.11.1 Arbitrations without hearings or 'documents-only' arbitrations
In appropriate cases, considerable savings in time and expense can be achieved
by authorising the arbitrator to dispense with a hearing and to decide the
dispute 'on documents only'. The method will be most appropriate where there
is little or no dispute on the basic facts and where the dispute relates to the
conclusions to be drawn from the facts, the interpretation of a contract, or the
application of rules of substantive law to the facts. Even where there is a
dispute regarding the material facts, the circumstances may be such that oral
testimony can add little of value to what can be ascertained from documents
drawn up al the time the events in issue took place. In other instances,
however, where the factual issues in dispute are complex and the credibility of
witnesses will play an important role, the most effective way of ensuring that
justice is done will be by way of an oral hearing. 18B
Documents-only arbitrations have been used successfully for many years in
maritime disputes and to a lesser extent in other types of commercial disputes.
The technique is now being used increasingly in England to provide an
inexpensive method of resolving consumer disputes. Documents-only arbitra-
tions have been less popular in relation to disputes in the construction industry,
probably because of the complex factual issues which arise from these disputes.
There is nevertheless much to be said for giving greater consideration to the
possibility of a basic documents-only approach in this field, supplemented by an
inspection and perhaps a restricted hearing with limited and clearly defined
objectives; particularly if the amounts in dispute are relatively modest. 189
187 See 256-64 below.
188 Compare Harris (1984) 223.
189 See Harris (1984) 223 and Rutherford 96.
198 Arbitration in South Africa: Law and Practice

In English law it is generally accepted that the parties to an arbitration are

entitled to a hearing unless they enter an irrevocable agreement to waive that
right. 190 It would appear that the position is similar in South Africa. 191 In the
absence of a contrary provision in the arbitration agreement, the decision
whether or not there should be a hearing must be made by the parties. 192 The
arbitrator can suggest that a hearing is unnecessary, but if the parties want one
they are entitled to it. Conversely, the arbitrator may inform the parties that
the matter is in his view not capable of being properly resolved without a
hearing, but if the parties are set on a documents-only procedure, they cannot
be forced to have a hearing.
In this section, we will consider the advantages of documents-only
arbitrations, the practical problems which may occur and how a documents-
only arbitration should be conducted.
The principal advantages of a documents-only arbitration are the following:
( a) By dispensing with a hearing, the arbitration will obviously be cheaper,
which is an important consideration if the amount in dispute is small. 193
Costs are also saved by restricting the role of lawyers to providing advice
on the contents of the written case to be submitted to the arbitrator and to
assistance with drafting the submissions. 194
(b) One of the principal causes of delay in arbitrations is the difficulty of fixing
a hearing date which is convenient for the arbitrator, the parties and their
legal and technical advisers. This problem does not arise with a
documents-only arbitration. 195
( c) As there is usually no formal discovery, documentation can be kept to a
minimum. 196
(d) Because all the evidence and submissions are available in writing, the
arbitrator can consider and reconsider all the material submitted to him at
his convenience. An important point cannot be lost because of incomplete
or indecipherable notes. 197

190 See Bernstein 228 and Mustill & Boyd 300-1, who suggest that although at one time an express
agreement was required, the courts may now be prepared to recognise a tacit agreement to this effect.
Compare Rutherford 96 and Harris (1984) 222 for the view that in the absence of an express agreement
to dispense with an oral hearing, either party can insist on a hearing right up to the time when the award
is made. In the light of this uncertainty, parties in practice would he well advised to follow the approach
of the Standard Procedure Rules of the Association of Arbitrators, rule 20, which requires a written
agreement between the parties to dispense with an oral hearing.
191 Certainly s 15(1) of the Arbitration Act proceeds from the assumption that there will be a hearing.
The arbitrator is required to notify the parties of the time when and the place where the arbitration
proceedings will be held and each party is entitled to be present 'and to be heard at such proceedings'.
Compare also s l4(l)(b)(i) and (iii).
192 Compare rule 3 of the Summary Procedure Rules of the Association of Arbitrators, which gives
the arbitrator the discretion to dispense with a hearing on the application of one of the parties.
193 See Harris (1984) 221.
194 See Harris (1984) 222; Rutherford 97 and Bernstein 228.
195 See Harris (1984) 222 and Rutherford 96.
196 See Harris (1984) 222. Compare rule 22 of the Standard Procedure Rules, which empowers the
arbitrator to make his award on the pleadings and the documents annexed to the pleadings.
197 See Harris (1984) 222 and Rutherford 97.
The Hearing 199

(e) Once the parties and their experts have helped to gather the evidence, they
are able to continue with their usual work, without the time-wasting and
trauma often occasioned by attending a hearing. 198
(f) Except in cases involving complex factual disputes and issues of credibility,
oral evidence will add little to contemporaneous documents, written
statements by witnesses of facts and experts' reports. Contemporaneous
letters, photographs and other documents are much more reliable than
recollections in the form of oral evidence months or years after the
event. 199 Often very little is achieved by the lengthy cross-examination of
an expert witness. 200
(g) Finally, preparing for a documents-only arbitration concentrates the minds
of the parties and helps them to identify clearly the true issues. This could
assist them in reaching a settlement on several of those issues, or even of
the entire dispute.
The main cause of problems in a documents-only arbitration is probably that
the very informality of the procedure can give rise to misunderstandings
between the parties and also between the parties and the arbitrator as to the
procedure which is being followed. It is the task of the arbitrator to prevent
misunderstandings arising by ensuring that the parties know exactly what is
expected of them. 201 These misunderstandings may relate to the order and form
in which statements and documents are to be exchanged and the extent to
which the ordinary rules of evidence are to apply.
The problem may arise that the arbitrator, after reading the documents
submitted, considers that there is further material in existence which might
assist him to reach a just decision. The arbitrator may, however, be given a
discretionary power in the arbitration agreement or procedural rules to call for
further evidence if he deems it necessary. 202 It can also happen that a party, in
his written arguments, fails to refer to a vital clause in a lengthy contract
furnished to the arbitrator which could decide the dispute in his favour. 203 The
arbitrator could elect to deal with this problem by writing to both parties asking
them to comment on the clause, in which event the party who will benefit by the
clause will probably respond by taking the point, rendering his opponent's case
hopeless. The opponent has nevertheless been given the opportunity to draw
the arbitrator's attention to any other provision or factor which might
neutralise the clause. 204 The arbitrator may also be confronted with a situation

198 See Rutherford 97.

199 See also 249-50 below on the evaluation of evidence.
200 Sec Harris (1984) 223 and Rutherford 93-4.
201 See Mustill & Boyd 301; Rutherford 93 and Bernstein 225.

wo Sec Rutherford 91 and Bernstein 222. This power should be exercised with circumspection and
only where the arbitrator considers the missing material to be e~sential, bearing in mind that the delay
in obtaining the information defeats one of the aims of documents-only arbitrations, namely the swift
resolution of the dispute.
203 Sec Harris 223; Rutherford 93.
204 See Harris 223, who suggests that the arbitrator will be less inclined to bring the clause to the

parties' attention if they have legal representation. The arbitrator may decide that the lawyers have
chosen their arguments and that he will simply ignore matters which they have overlooked.
 200 Arbitration in South Africa: Law and Practice

where the defendant has agreed to a documents-zonly arbitration, but then

omits to furnish documents containing his defence by the agreed date and fails
to respond to a written reminder. 205 Assuming that the arbitrator is entitled to
proceed under these circumstances, 206 the arbitrator will still hav~ to be
satisfied that the documentary evidence and arguments submitted by the
claimant establish his case on a balance of probabilities, before making an
award in his favour. 201
The basic principle of natural justice for purposes of a documents-only
arbitration is that each party should have an adequate opportunity to present
his case to the arbitrator and a proper chance to comment on the case presented
by his opponent. 208 The basic procedure which will normally be followed
involves the claimant submitting a written statement of case supported by
copies of the documents on which he relies to the arbitrator and to the other
~ party. The other party will then submit his written reply supported by those
documents which he considers relevant. The claimant then has an opportunity
to reply to the respondent's case. 209 This procedure is basically similar to that
suggested in the Standard Procedure Rules for a documents-only arbitration. 210
It is also advisable that the parties should agree in writing on the period within
which the arbitrator must deliver his award. 211
It i~ preferable that an arbitrator in a documents-only arbitration should give
reasons for his award, either as part of the award or in a separate document.
Preparing reasons helps the arbitrator to discipline his own thoughts and to
check the cogency of his findings. 212 Moreover, in this type of arbitration,
where the award will be his main or only communication to the parties, a
reasoned award will help to satisfy them that he has applied his mind properly
and will enhance the credibility of the procedure. Besides summarising briefly
the findings of fact and law, the arbitrator should expressly refer to any
procedural problems (including any relating to the admissibility of evidence)
and how these were dealt with. Where there have been allegations in the
documents submitted regarding the integrity or good faith of a party, in fairness

205 See Rutherford 93.

206 There may be a provision to this effect in the arbitration agreement (compare rule 14 of the
Standard Procedure Rules). On its wording, s 15(2) of the Arbitration Act (see 159 above) applies to
an arbitration where there is a hearing, but a court may possibly be prepared to uphold the application
of its principle to a documents-only arbitration in an appropriate case.
207 For further difficulties which could arise in documents-only arbitrations, see Bernstein 225-8.
208 See Slade 90-1 and compare Mustill & Boyd 299.
209 See Harris (1984) 221.
210 See rule 22. This is particularly so, if the decision to dispense with the oral hearing was taken

before the exchange of pleadings commenced. If the decision is taken only after the pleadings have
closed, the parties may want the opportunity to amplify their pleadings and to furnish written argument
in support of their respective cases.
211 This should preferably be done in their written agreement tcf dispense with a hearing. See 257
below concerning the application of s 23 of the Arbitration Act regarding the period for making an
award to a documents-only arbitration.
212 See also 269 below.
The Hearing 201

to both parties, the arbitrator should express briefly any findings on this
point,213

5.11.2 'Look-sniff' arbitrations

This is not really a true form of arbitration but a hybrid type of arbitration 214
without a hearing in which the arbitrator, using his own expertise and
experience, and without hearing evidence, decides on a dispute regarding
quality. This type of arbitration is particularly common in London and arises
out of contracts for the sale of goods. The dispute might, for example, concern
alleged defects in a consignment of coffee beans. The defendant, resisting
payment for the goods, might allege that they are inferior, not in accordance
with the specification or approved sample, and unusable. The arbitrator, who
has been chosen by the parties because of his lifelong experience of the coffee
bean trade, might be requested by the parties to inspect the beans in question 215
and to rule whether or not they are defective as alleged. There would probably
be no need for evidence because this would be the only issue. All that the
arbitrator would need to do would be to inspect the beans and, as an expert,
determine their quality. He would probably do so by literally looking and
sniffing at the beans, hence the somewhat frivolous title given to this form of
arbitration. 216 This type of arbitration would appear to be little used in this
country. 217

5.11.3 Summary procedure arbitrations

The Summary Procedure Rules for arbitrations, published by the Association
of Arbitrators, 218 were devised to provide for the quick and e_conomical
resolution of disputes where the amounts involved are relatively modest and do
not justify elaborate pleadings and hearings. But there is no intrinsic reason

2 u See Rutherford 92 and Bernstein 228-30.

214 Sec 2n9 above.
215 Many standard-form contracts issued by British trade associations for use by their members
stipulate that disputes regarding the quality of goods shall be determined by arbitration, and provide
that the arbitrator shall not be obliged to hear evidence but shall make his award on the basis of his
expertise and own judgment. See further Bernstein 210-11.
216 That an arbitrator may decide a dispute as to quality of goods merely by inspecting the goods and
relying on his knowledge and judgment was confirmed in Wright v Howson (1888) 4 TLR. 386 and
Jordeson & Co v Stora Koppabergs Bergslags Akt [1931] 41 LIL Rep 201 at 204. See also Mus till & Boyd
360-1.
217 There is nevertheless great scope for it, especially in building contracts where the quality of work
or materials is in issue, contracts for all manner of repairs, contracts for the supply of materials, and so
on. The parties should nevertheless decide at the outset whether they wish the person they appoint to
resolve their dispute to act as an arbitrator under the Arbitration Act, with the remedies provided by
the Act if they are dissatisfied with his decision, or as an expert, who is not an arbitrator and who
therefore falls outside the Act (compare 62 above).
218 See Appendix III(ii).
 202 Arbitration in South Africa: Law and Practice

why they should not also be employed in instances where the issues are more
complex and the claims are for substantial sums of money. 219
Those portions of the Summary Procedure Rules that relate to the definition
of the issues have already been discussed. 220 The portions that relate to the
hearing require the arbitrator to play an active part in the proceedings: unless
otherwise agreed, the parties may not be represented by a practising attorney
or advocate, nor, unless considered necessary by the arbitrator, by a technically
qualified representative such as an architect or an engineer. 221 The clear
implication is that the parties shall present their cases themselves and submit
themselves and their witnesses to be questioned by the arbitrator, who is given
wide powers to make his own investigations and to use his own expertise in
resolving the issues. 222 The hearing becomes arbitrator-dominated rather than
advocate-dominated, and in the hands of a capable and experienced arbitrator,
has the potential of being highly cost-effective. But it behoves the parties who
have the courage to adopt this option to be particularly careful in their selection
of an arbitrator.

5.11.4 Flip-flop, pendulum or baseball hearings

In this type of arbitration the arbitrator must, in terms of the arbitration
agreement, award either the amount demanded by the claimant or the amount
(if any) conceded by the defendant: he cannot opt for an amount somewhere in
between. In the United States of America, the method has been extensively
used to arbitrate disputes arising when a professional baseball player negotiates
his fee for the coming season. The system discourages either party from making
an extreme demand, because a party doing so would run the risk that the
arbitrator would tend to favour the other's more reasonable request. Thus each
party is compelled to take the most modest position he can afford, and a
settlement is consequently often possible without the need of the arbitrator's
intervention.
This type of procedure is appropriate for a variety of disputes where the issue
is how much should be awarded: wage claims, 223 rent reviews, assessment of
damages for breach of contract, claims for additional payment in construction
contracts, and for determining the market value of goods or services. Even
where it does not lead to a settlement, the relatively modest nature of the
opposing claims, and the realisation that they are genuine and not inflated, often
makes it possible for the parties to forego the legal big guns that would probably
be brought into action to defeat excessive demands or unreasonable rejections,
· and the proceedings are consequently usually quick and inexpensive.

219 The principles embodied in the Summary Rules have much in common with those of the

inquisitorial practises used in the civil law countries for the determination of civil and commercial
disputes.
22 " See 139 above.
221 See rule 6.
222 See rule 5.
223 See also 32 above.
The Hearing 203

5.11.5 'Med-arb' and 'arb-med'

In the first-named process, the parties to the dispute call in the assistance of a
third person, who initially attempts, as a mediator, to help them reach a
mutually acceptable settlement of their dispute. This he does by discussing their
dispute with each party, not necessarily in the presence of the other, and
exploring with them options which each might find acceptable, while working
towards a solution to be reached by the parties themselves. 224 If they agree to
a solution, the dispute is resolved, 225 but if it becomes apparent that agreement
cannot be reached, he abandons his role as mediator and proceeds, as an
arbitrator, to call for pleadings or a statement of issues and to hear the dispute
in a formal manner.
This procedure has come under much criticism, principally on the grounds
that the arbitrator, in his role as mediator, has been involved in settlement
discussions held without prejudice and has probably discussed the issues with
one party in the absence of the other. Therefore, for him to proceed as
arbitrator under these circumstances would transgress the rules of natural
justice. 226
In order to overcome this criticism, while retaining the perceived advantages
of the procedure, the process of 'arb-med' has been devised, in which the
arbitrator conducts the arbitration hearing in the normal manner, but having
prepared his award, he puts it on one side and acts as a mediator in trying to
assist the parties to settle their differences. If a settlement is reached, the
dispute is at an end, and the award is discarded, but if the parties cannot agree,
he publishes his award.
It seems unlikely that 'arb-med' would be any more economical in terms of
time and money than a conventional arbitration. The principal advantage
would appear to be that, if a settlement is achieved, it would be more
acceptable to both parties than would an arbitration award, with which the
loser would certainly be dissatisfied, and which may also fail to satisfy the
winner entirely.

224 He should not express any opinion of his own about the issues, unlike a mediation in the
construction industry where a mediator is usually expected to state his opinion on the issues in dispute
(see 10-11 above), which the parties are free to accept or reject.
225 A formal agreement of settlement would normally be drawn up.
226 Compare 15 above. This view is by no means universally held. In the USA, where this type of
procedure is very popular, the parties are considered, by adopting it, to have voluntarily waived their
right to object on the grounds referred to in the text. The fact that they are aware from the outset that
the mediator could subsequently act as arbitrator, may also make them more circumspect both in what
they disclose to him and in their conduct during the mediation phase.
204 Arbitration in South Africa: Law and Practice

5.11 .6 Splitting the issues: staged hearings

Subject to the terms of the arbitration agreement, the arbitrator has the
authority to make an interim award at any time. 227 This power can be
beneficially used, for example, where the dispute turns around two issues, one
of which is dependent upon the other so that if the decision on the first issue
goes one way, it will establish the basis of the second issue, whereas if it goes
the other way the second issue will fall away altogether. 228 For example, the
claimant, who has undertaken to perform certain work for the defendant for an
agreed price, claims an additional payment for what he alleges was additional
work. The defendant, however, denies that the work was additional to the
agreement and, moreover, disputes the price claimed for it.
Normally, and p:uticularly in the courts, both issues would be heard
together, and a single judgment or award given in respect of both. 229 However,
following the procedure contemplated by s 26 of the Arbitration Act, the
arbitration could proceed in two stages. The arbitrator could hear evidence and
make an interim award on the issue whether the work was additional to the
agreement or not. If he were to find that it was, he would then proceed to hear
evidence and determine the next issue, namely the amount to be paid for such
additional work. But if he were to find that it was not, that would be the end
of the matter, there would be no need for him to proceed any further, and his
award would become the final award. In this way, and depending on which way
the first issue is decided, a substantial saving in time and cost might be
achieved.
An arbitrator, when giving an interim award, should make clear what issues
he is determining in the award: 230 an interim award is final in respect of the
matters which it determines, and any subsequent award cannot reverse or
modify in any way what has been decided in the interim award. 231
The arbitration proceedings could also be split into logical stages on a
different basis. Steyn 232 refers to an arbitration in England where the tribunal
consisted of three senior counsel. Counsel for the parties estimated that the
hearing would last at least three months. The arbitrators decided that this was
far too long and that drastic measures were called for. After the close of
pleadings, by which stage the issues were defined, they summoned both sides to
a preliminary meeting. After discussing the procedure to be followed with the
parties they gave directions for limited discovery by a certain date. The
evidence-in-chief of witnesses of facts and experts was to be given on affidavit

227 Section 26 of the Arbitration Act and 174 above.

228 See also Mustin & Boyd 371-2 for a more detailed discussion of this use of interim awards. Where
the award on the first issue makes it unnecessary to decide the second and disposes of the entire dispute,
including liability for costs, it will be a final award.
229 See, however, Supreme Court Rule 33( 4 ), which empowers the court to try issues separately
where it would be convenient to do so.
230 Leach v Haringey London Borough Council, The Times, 23 March 1977.
231 At least where 'interim award' bears its usual meaning (see the text at 174n76 above).
232 Steyn (1983) 31 l.
The Hearing 205
and affidavits were to be exchanged by a certain date. 233 Thereafter, the parties
had to indicate the points on which they wished to cross-examine. At a further
preliminary meeting, the arbitrators indicated that each party would have one
week of oral hearings for cross-examination of the other party's witnesses.
After this, written heads of argument were to be presented, followed by a
further week of oral argument. By these methods the oral hearing was reduced
to three weeks. The arbitrators adapted the traditional adversarial hearing by
making greater use of written evidence and divided the oral part of the
proceedings into logical phases instead of using a single hearing. 234 The
procedure did not contravene the rules of natural justice because each party
was given an adequate opportunity to put his own case and to test that of his
opponent. At the hearing, the arbitrators did not proceed inquisitorially. The
example shows how arbitrators, by taking the initiative in adapting traditional
procedures, can achieve a significant saving in time and eosts. 235

5.12 Reopening the hearing for fresh evidence

At any time after he closes his case but before the arbitrator makes his award,
a party can apply to the arbitrator to reopen his case to produce fresh
evidence. 23 (\ In considering the application, the arbitrator should USC the
guidelines employed by a court when considering an application to reopen
made before the court has given judgment. The guidelines include the
following: (a) the reason why the evidence was not led timeously; (b) the
degree of materiality of the evidence; (c) the stage which the proceedings have
reached; 237 and (d) the balance between prejudice to the applicant if the
application is refused and prejudice to the other party if it is granted. If the
latter's witnesses arc still available to give evidence in rebuttal, any financial
prejudice he may suffer can be cured by an order as to costs. 238
The arbitrator should usually hold a brief procedural hearing to afford the
applicant the opportunity of motivating fully his application and the other party
the opportunity of presenting argument why the application should be rejected.

n, Note that unless the arbitration agreement provides otherwise, an arbitrator in South Africa may
receive evidence on affidavit only with the consent of the parties or if the court so orders (s 14(1 )(b )(v)).
n, As the phases were chosen to enable the issues to be tried effectively, rather than to suit the
personal convenience of the arbitrators, it is submitted that the criticism of Stuart-Smith LJ in KIS
Norjarl AIS v Hyundai Heavy Industries Co Ltd (1991] 1 Lloyd's Rep 524 (CA) 535 against dividing an
arbitration hearing into phases has no application.
235 See Steyn (1983) 311-12.
236 Once the arbitrator has made and delivered his award, he is June/us officio (ie he has discharged

his office). He therefore no longer has the power to consider the application. A party wishing to tender
fresh evidence after the award will have to apply to court under s 32 of the Arbitration Act for an order
for rcmittal (see further 287-8 below).
237 An application to reopen after the party has closed his own case but while the other party is still
leading evidence will be more easily granted than one after argument has been concluded, because of
the principle of finality.
238 See Oosthuizen v Stanley 1938 AD 322 at 333; Mkwanazi v Van der Merwe 1970 (1) SA 609 (A)
616; Barclays Western Bank v Gunas 1981 (3) SA 91 (D) 96G-97C; Hoffmann & Zeffertt 475-8.
Compare 287-8 below regarding the factors which a court will take into account when considering an
application for remittal.
206 Arbitration in South Africa: Law and Practice

If the arbitrator accedes to the application he should allow cross-examination

and re-examination of the witness concerned in the usual way.

5.13 Reference of question of law to court or counsel for opinion

The Act empowers or requires the arbitrator in certain circumstances to refer
a question of law, which has arisen in the course of the reference, to the court
or to an advocate for an opinion. This opinion is final and binding on the parties
and the arbitrator and not subject to appeal. 239 On receipt of the opinion, the
arbitrator will apply the findings in the opinion on the point of law to the facts
in issue and arrive at his award.
The statutory provision conflicts to some extent with the principle that it is
the function of the arbitrator to decide finally the matters referred to him. It has
been said that the purpose of giving the court the power of deciding a question
of law arising during a reference is to ensure that the arbitrator applies the law
of the land and not his own private notion of justice in making his award. 240 The
South African courts also adopt the view that the aim of the legislature in
providing for a question of law to be referred to the court is so that the court
maintains the final say regarding legal issues in arbitration proceedings,
particularly in respect of fundamental and difficult questions of law. 241 The
purpose of providing for a reference to counsel was to cater for the situation
where an arbitrator without legal training has some difficulty, which a legally
trained arbitrator may not have, in relation to a point of law arising in the
course of an arbitration on which he needs guidance. 242 The disadvantage of the
section, as applied at present, is that it can be exploited by an unscrupulous
party to delay the final outcome of the arbitration. 243
The present provision in the South African Act, s 20, has its origin in English
legislation 244 but it differs in several important respects from the subsequently
repealed equivalent provision in the English Arbitration Act of 1950, namely
s 21. The principal differences are the following: 245

239 Section 20(1) and (2).

240 See Kerr (1980 MLR) 45, with reference to the corresponding provision of the English Arbitration
Act 1950, s 21. This section was repealed in 1979.
241 See Administrator, Transvaal v Kildrummy Holdings (Pry) Ltd 1978 (2) SA 124 (T) 128H-130D
where the court relied on Theron v Ring van Wellington van die NG Sendingkerk in SA 1976 (2) SA 1
(A) 22B-23C. However, our courts will not generally set aside an arbitrator's award because of a
mistake of law relating to the merits of the dispute, unless that mistake is so gross as to amount to
evidence of misconduct (see 293 below).
242 See the Kildrummy Holdings case (above) at 128H.
24 J Sec Kerr (1980 MLR) 45.
244 The English Arbitration Act 1950 s 21 and the English Arbitration Act 1889 s 19. The latter dealt
only with a 'consultative case' (explained below) whereas the former combined the consultative case
with a provision (contained ins 7(b) of the 1889 Act) for referring the award itself in the form of a stated
case, so that the court could dispose of certain legal issues. A provision similar to s 7(b) of the 1889 Act
was contained in the colonial legislation (see eg the Arbitrations Act 29 of 1898 (Cape) s 13(b)), but the
provision for an award as a stated case was not repeated in the present Act.
245 See also the Kildrummy Holdings case (above) at 127G-H; Government of the Republic of South

Africa v Midkon (Pry) Ltd 1984 (3) SA 552 (T) 562H-I.

The Hearing 207

First, the English prov1s1on applied to two distinct situations, the

'consultative case' and the award 246 in the form of a stated case. In the former
situation, the arbitrator will refer a point of law to the court and having
received the opinion of the court will apply it to the particular facts and make
his award. 247 In the latter situation, the arbitrator makes his findings on the
factual issues and gives an award referring the legal issues to the court. He has
thereby completed his task and when the court has decided the point of law, the
court must apply the law to the facts to dispose of the dispute. 248
Secondly, in terms of the English provision, the arbitrator could apparently
exercise his powers on his own initiative, 249 whereas an arbitrator in South
Africa cannot. 250
Thirdly, the South African section provides for the question of law to be
referred to an advocate, as an alternative to a reference to the court. The
English section contemplated only a reference to the court.
Fourthly, whereas the opinion of the court or advocate is final and not
subject to appeal, the decision of an English court under the repealed s 21 was
subject to appeal. This fourth difference, together with the possibility of
referring the question of law to counsel, means that the South African
provision is inherently likely to cause less delay than the repealed provision of
the English Act. 251
The arbitrator is compelled to refer a question of law to the court or counsel
if the parties so agree, or if the court, on the application of a party to the
reference so directs. If only one party applies to the arbitrator to refer the
question of law, he has a discretion whether to do so or not. 252 However, as we
shall see below, where the party applies for the question of law to be referred
to court, the arbitrator's discretion is very limited. The situation could arise
where an arbitrator, especially one without legal training, is confronted by a
question of law which causes him considerable difficulty and neither party
applies for it to be referred to court or counsel. On the wording of the section,
the arbitrator cannot refer the question to court or to counsel under s 20 on his

246 Including an interim award.

247 Or ruling on a procedural issue, if the question of law was, for example, concerned with the
admissibility of certain evidence.
248 See the quotation from Duncan Wallace 865 in Government of the Republic of South Africa v

Midkon (Pty) Ltd (above) at 563A-C.

249 The court would not assist him, however, if it did not consider the questions of law to be

sufficiently material (Windsor Rural District Council v Ouerway & Try Ltd [1954] 1 WLR 1494 at 1497 .
.250 See the text below regarding the extent of the arbitrator's discretion. The contrary opinion in
Davis (1966) 40 is not supported by the wording of the section.
251 An award in the form of a stated case had two main disadvantages. First, the procedure could be
abused to delay the final outcome of the arbitration. Secondly, it gave the court the final say, which
discouraged disputants from using London as a venue for international arbitrations. These two factors
led to the repeal of s 21 bys 1(1) of the Arbitration Act of 1979 (see Kerr (1980 M LR) 46-7). The award
in the form of a stated case was thereby abolished. Section 2 of the 1979 Act retains the possibility of
a consultative case, as defined above, but the conditions for its use are much more stringent than those
under the previous legislation. The right to use s 2 may be excluded by an. exclusion agreement under
s 3.
252 Section 20(1 ).
208 Arbitration in South Africa: Law ;/ Practice

own initiative. 253 The arbitrator could deal with this situation by drawing his
difficulty to the attention of both parties and suggest that the section should be
used. It could then happen that neither party responds by applying to him to
use the section. Indeed, they could indicate that they are confident that he can
deal with the point. Under those circumstances, the arbitrator could, in
principle, take the advice of a lawyer on the legal issue in point, provided that
the decision is that of the arbitrator and not of the lawyer. 254 It is nevertheless
still advisable that the parties should be made aware of the arbitrator's
intention to seek legal advice on the question and that, in appropriate cases,
they should be informed of the advice and invited to comment. The arbitrator
should also take care that the factual basis on which the lawyer is asked to give
advice is accurate. 255 It must nevertheless be stressed that the status of the
lawyer's legal advice differs from that of an advocate's opinion under s 20. In
the latter case the arbitrator is bound by the opinion and the decision on the
point of law has been taken for him. His function is restricted to applying it to
the facts. In the former case the lawyer furnishes advice to assist the arbitrator
in making his own decision on the legal point.
On the wording of s 20, the question of law can be referred to the court or
counsel at any stage before the arbitrator makes his final award. However, a
question of law cannot exist independently from the facts. To state a case on a
point of law, the arbitrator must therefore first set out all the primary facts as
fully as possible. He should also set out the inferences which the parties seek to
draw from those facts. Before the arbitrator has made the necessary findings of
fact, the reference of a point of law to the court is usually premature. 256 The
reason for this is that the court under s 20 does not give opinions based on
assumptions as to facts or on academic questions. 257 The situation can arise,
however, where 'the arbitrator and the parties cannot sensibly approach the
investigation of the facts without knowing, in the light of the answer to the
question, what facts are really material'. 258
As stated above, if only one party applies to him for a question of law to be
referred to the court or counsel, the arbitrator has a discretion whether to refer
the question or not. Because of the interest of the court in retaining some

253 See Government of the Republic of South Africa v Midkon (l'ty) Ltd (above) at 5591.
254 Mustill & Boyd 360; but compare John Sisk & Son (SA) (Pty) Ltd v Urban Foundation 1987 (3)
SA 190 (N) I 98B-C, where the propriety of taking legal advice without the knowledge and consent of
the parties was referred to but not decided. See also 100 above regarding the principle that the arbitrator
may not delegate his powers and duties.
255 See Mustill & Boyd 360; Bernstein 50, 172.
256 See Midkon (Edms) Bpk v Departeme/11 van Gemeemkapsontwikke/ing 1983 (4) SA 78 (T)
84A-C, 86A-B; Dorman Long Swan Hunter (Pty) Ltd v Karihib Visserye Ltd 1984 (2) SA 462 (C)
474E-G. See also the comment regarding Stru/1 v Chalmers 1959 (2) SA 536 (D) inn 262 below.
257 Dorman Long Swan Hunter (Pty) Ltd v Karibih Visserye Ltd (above) at 478D.
258 Mustin & Boyd 621, regarding s 2 of the English Arbitration Act referred to in n 251 above. By
way of illustration, in a dispute arising from a written contract, one party may wish to refer to an oral
agreement which he contends is admissible in evidence under an exception to the parol evidence rule.
The other party denies that the exception is applicable. Until this legal point has been determined, there
would be no point in the arbitrator listening to extensive and conflicting evidence of witnesses to
establish the terms of the alleged oral agreement.
The Hearing 209
control over the law applied by arbitrators, our courts are of the view that the
arbitrator ought to refer the question of law to the court when a party so
requests, if the question meets certain criteria, unless there is clear evidence
that the section is being abused. 2s 9
The criteria used by our courts 260 are those formulated by Lord Denning in
the English case of Halfdan Grieg & Co AIS v Sterling Coal & Navigation
Corporation, 261 namely:
'The point of law should be real and substantial and such as to be open to serious
argument and appropriate for decision by a court of law ... as distinct from a point
of law which is dependent on the special expertise of the arbitrator or umpire ....
The point of law should be clear cut and capable of being accurately stated as a point
of law-as distinct from the dressing up of a matter of fact as if it were a point of law.
The point of law should be of such importance that the resolution of it is necessary
for the proper determination of a case-as distinct from a side issue of little
importance.'
If the question of law complies with these three criteria, the arbitrator should
refer the question of law to the court. 262 It follows that the arbitrator's
discretion is usually restricted to determining whether or not the question of
law complies with these criteria. The situation is no different when the
arbitrator is an experienced senior counsel, otherwise 'the Court should have
the invidious task of evaluating the legal competence or otherwise of a
lawyer-arbitrator'. 263 Regarding the application of Lord Denning's criteria, it
may be asked: When will a question of law be 'dependent on the special
expertise of the arbitrator' and therefore more appropriately decided by him
than the court? The question has arisen in connection with the interpretation of
contracts. The interpretation of a contract is a question of law. Generally,
unless the construction of the contract or document turns on the trade or
customary meaning of the terms used in a particular branch of commerce or
industry (for example the construction industry or shipping), the court is better
qualified to decide the question than an arbitrator. 264 It has been said that
before the question would be more suited to a decision by the arbitrator, there
would first have to be some ambiguity in the wording of the contract, making
it necessary to go beyond the document and to refer to surrounding

25 ' 1Sec the facts of Govcm111c111 of the Rcpuhlic of South Africa v Midkon (Pty) Ltd discussed bdow.
2 "" Sec cg Administrator, Transvaal v Kildrummy Holdings (Pty) Ltd (above) at 1271-1-128/\;
Govcm11ll'nl of the Rcpuhlic of South Africa v Midkon (Ply) Ltd (above) at 559J-560E; Administrasic
van Transvaal 1• Oosthuizen 1990 (3) SA 387 (W) 391J-3921.
2''' [ 1973) 2 All ER 1073 (CA) 1077c-c.
2 " 2 The Halfdan Grief? case (above) at J077f; the Kildrummy Holdings case (above) at 128A-B. The

need to identify the point of law properly and to isoh,tc it from the factual issues which the arbitrator
must decide was stressed in Strull v Chalmers (above) at 539A-B:
'[W)hat the applicant seeks is in effect an order that almost the whole of the subject matter of the
reference be stated for the opinion of the Court. That would be defeating the object of the
arbitration ... .'
263 The Kildrummy Holdings case (above) at !30D.
264 See Dorman Long Swan Hunter (l'ty) Ltd v Karihih Visserye Ltd (above) at 472B; the Halfdan
Grieg case (above) at 1083D-E.
210 Arbitration in South Africa: Law and Practice

circumstances. 265 We suggest that the fact ·that a term or words were
customarily used by a trade or profession in a way different to their ordinary
dictionary meaning, would be sufficient to create this ambiguity. A question of
procedure or evidence could qualify as an appropriate question of law under
s 20. 266 The test usually applied to determine whether or not an issue is a
question of law is the test of Lord Parker in Farmer v Cotton's Trustee, 267
namely:
'When all the material facts are fully found and the only question is whether the facts
are such as to bring the case within the provisions properly construed of some
statutory enactment, the question is one of law. ' 268
In an arbitration of average complexity where the parties are legally
represented, it will obviously require no great ingenuity to find at least one
question of law which complies with Lord Denning's criteria. The section is
therefore open to abuse and an arbitrator would be justified in refusing an
application by a party to refer a question of law to the court, if it was clear,
objectively speaking, that the application was not bona fide and purely for the
purposes of delay. 269 An arbitrator should, however, take this step only with
great circumspection. Should his decision afterwards be overruled by the court,
then, because it involved a finding that a party was not bona fide, it could be
used subsequently by that party in an attempt to attack the arbitrator's award,
on the basis that the arbitrator had shown himself not to be impartial.
There is still uncertainty on the question whether s 20 of the South African
Arbitration Act can be excluded by agreement. 270 On the one hand, unlike
many provisions of the Arbitration Act, there is no express indication th.at the
section is merely of a regulatory nature. 271 Furthermore, prior to the repeal of
the English s 21 by the Arbitration Act of 1979, such exclusion agreements
were always treated in England as void, as being contrary to public policy. The

265 Administrasie van Transvaal v Oosthuizen (ahove) at 3931-J.

266 This was assumed by the court in Carlisle Place Investments Ltd v Wimpey Construction (UK) Ltd
15 BLR 109 (QB 1980) 116.
267 [1915) AC 922, used in the Kildrummy Holdings case (above) at 131A and Government of the
Republic of South Africa v Midkon (Ply) Ltd (above) at 560H-J.
268 To the extent that the test refers only to statutory enactments, and makes no reference to other
rules of law, it is obviously too narrow.
269 Compare the Ha/fdan Grieg case (above) at 1078b: 'In all cases where the arbitrator or umpire is
of opinion that the application is not raised bona fide, hut for some ulterior motive, he should, of course,
refuse it'. In Government of the Republic of South Africa v Midkon (Pty) Ltd above, the court upheld
an arbitrator's rejection of the government's application to refer questions of law to the court on the
following facts. The contractor (Midkon) initially wanted to take the dispute to court, but the
government insisted on arbitration, arguing i,uer alia that the dispute would not give rise to any difficult
questions of law (at 561A-G). In addition the application was in qualified form, requiring only those
questions which the arbitrator would decide against the government to he referred. The court held that
a qualified request of this nature has no place in the context of a consultative case envisaged hy s 20 (al
563H). Finally, the government submitted that there were approximately 30 questions of Jaw which
merited referral, out of which the court found that possibly one complied with Lord Denning's criteria
(at 561A-I).
270 See Butler (1988) 28.
271 Compare 7 above.
The Hearing 211

leading case, Czarnikow v Roth, Schmidt and Company, 272 dealt with an
exclusion clause in a standard form contract, where the arbitration agreement
and the putative exclusion agreement were entered into before the dispute
arose and before the potential for any dispute giving rise to important points of
law was really known. This factor possibly influenced the decision. On the
other hand, arbitration has a consensual basis. The question may therefore be
asked whether an exclusion agreement, which is entered into by the parties
only after the dispute has arisen, at a stage when the issues in dispute are
already known, must necessarily be regarded as contrary to public policy. As
stated above, when one of the parties wishes to have a question of law referred
to the court, the arbitrator has a very limited discretion to refuse the
application, even if it is opposed by the other party. The section has therefore
been abused to delay the arbitral process, in instances where the arbitrator was
an experienced senior counsel, well able in the opinion of the other party's
counsel to deal with the legal point in question. It is therefore the practice of
certain advocates in the Cape, when accepting appointment as arbitrator, to
persuade the parties to agree to excludes 20. Particularly where the issues are
already known, we suggest that there is nothing objectionable in this practice.

5.14 Hearings with more than one arbitrator

In South Africa the general practice is to use a sole arbitrator. The Arbitration
Act moreover stipulates that the reference shall be to a single arbitrator, unless
a contrary intention is expressed in the arbitration agrecmcnt.m It is very
uncommon to find an arbitration agreement which provides for each party to
appoint an arbitrator and that the two arbitrators shall together hear the
dispute and make a joint award. This form is much more commonly
encountered in England. 274 Where the dispute covers a wide range of issues, it
does make possible the use of a multi-disciplinary arbitral tribunal, avoiding the
complications which arise where a sole arbitrator is assisted by assessors. 275

5.14.1 Disadvantages
The reference of a dispute to two arbitrators, one to be appointed by each
party, would appear to have several potential disadvantages. The first is
expense: the parties will have to pay the fees of two arbitrators instead of only
one, and possibly those of an umpire as well. Secondly, there may be fears
about the impartiality of such arbitrators, who may perhaps consider that they
owe an allegiance to the party who appointed them. This is not so. 'An

272 [1922] 2 KB 478 (CA).

273 Section 9.
274 See Mustill & Boyd 8-9 and Parris 93-4. In the event of the arbitrators being unable to agree on
their award, there is also a practice in England whereby the dispute is then referred to an umpire, and
the arbitrators will each appear before the umpire as the advocate of the party who appointed him. The
practice is now less common because of the change in the English arbitration legislation referred to in
n 280 below.
275 See 246 below.
212 Arbitration in South Africa: Law and Practice

arbitrator is appointed, not as the agent of the· party who has nominated him,
but as a judge who should act impartially and should have no personal interest
in the matter in dispute.' 276 Finally, the arbitrators may fail to agree. The
Arbitration Act takes care of this by providing that, in the event of the
arbitrators disagreeing, the issue shall be referred to an umpire, appointed by
the arbitrators or the court.211

5.14.2 Appointment of the umpire

The Arbitration Act provides that if the parties have appointed an even
number of arbirrators, then, unless the arbitration agreement provides
otherwise, the arbitrators may at any time appoint an umpire to decide any
difference between them. 278 If they fail to do so, the court, on the application
of any party to the arbitration agreement, has the power to make such
appointment. 279 If the arbitration agreement provides for a reference to three
arbitrators, of whom one is to be appointed by the other two, then, unless some
other intention is expressed in the arbitration agreement, the provision shall be
construed as providing for the appointment of an umpire by the other two
arbitrators. 280

5.14.3 Jurisdiction of the umpire

The umpire has no jurisdiction unless or until the arbitrators are unable to
agree on any matter281 and refer it to him for adjudication, or if they have failed
to make an award within the time allowed for that task. 282 Until that time, he
has no power or authority to give any ruling or decision. He may attend
the arbitration hearing but is not entitled to any fees for this attendance unless
the parties have requested him to attend, or unless he is called upon by the
arbitrators to make a decision regarding procedure or an interlocutory
question, or is required to enter on the reference and to give an award. 283

276 Graaff-Reinet Municipality v Jansen 1917 CPD 604 at 607.

277 Sections 14(3) and 18 of the Arbitration Act. For the appointment of an umpire by the arbitrators
or the court see ss 11 and 12.
278 Section ll(l)(a).
279 Section 12(1)(cJ and (2).
280 Section ll(l)(b). Section 9 of the English Arbitration Act of 1950 contained a similar provision
prior to its amendment bys 6(2) of the Arbitration Act of 1979. In England, a contractual provision in
the form discussed in the text now takes effect as a reference to a tribunal of three arbitrators (see
Mustill & Boyd 188). Prior to its amendment, s 9 encouraged the practice referred to in n 274 above.
281 This disagreement may be on one of the issues referred to them for arbitration, or it may be on
a procedural or interlocutory question.
282 Section 19(c) of the Arbitration Act. Where they are unable to agree on their award, s 19(c)
envisages that the arbitrators will refer the matter to the umpire in writing. (Regarding the question as
to whether they should refer all the issues or only the issue on which they have disagreed, see 264-5
below.) Where they cannot agree on a procedural or interlocutory matter, an informal reference to the
umrire will apparently suffice (s 18).
2 3 Section 19(a) and (b).
The Hearing 213

But once the arbitrators have advised him that they cannot agree on a
matter, their jurisdiction in respect of that matter lapses and the umpire takes
over as if he were a sole arbitrator. 284
An umpire entering into the reference may make his decision based on the
record of the evidence 285 given to the arbitrators, unless he is required by the
parties to hear evidence, and may, if he deems it necessary,: recall for further
examination any person who has given evidence. 286 As the disagreement
between the arbitrators on the substantive issues in dispute is likely to arise
only after the hearing, when they are attempting to make their award, the
umpire will not have heard the witnesses giving evidence, uriless he elected or
was requested to be present during the hearing. He may therefore be under
some disability when attempting to assess the credibility of witnesses. There
would seem to be a strong case for the umpire to be present throughout the
hearing, even though he may never be called upon to act. If he is not, the
record of the proceedings ought to be verbatim in order to afford him an
adequate basis on which to determine any issue referred to him. It must
nevertheless be stressed that when the umpire attends the hearing, he is only
doing so to qualify himself to give an award should the need arise. Until he is
called on to act in the event of the arbitrators disagreeing, he is not even a
member of the arbitration tribunal, still less the chairman. His role is more akin
to that of an observer, although there can be no objection to his putting
questions to witnesses to a limited extent, to clarify aspects of evidence which
are not clear to him. 287

5.15 The confidentiality of arbitration proceedings

One of the much-vaunted advantages of arbitration is that the proceedings are
held in private, 288 whereas court proceedings arc usually open to the public. 289
There is no statutory basis for the privacy and confidentiality of arbitration
proceedings. 290 The arbitration agreement may expressly provide that the
proceedings and the award are private and confidential, 291 but even in the
absence of an express provision to this effect, such a term will be implied. 292
284 Section 19(d).
285 See 187 above.
286 Sections 19(d) and 12(6). He cannot call for evidence from anyone who has not already given

evidence. An arbitrator (and likewise an umpire) has no power, of his own accord, to call a witness to
give evidence (see 241 below).
287 See the text above regarding the umpire's jurisdiction and 91-2 above and Kannenberg v Gird

1966 (4) SA 173 (C) 179A-C regarding the distinction between an umpire and a third arbitrator.
288 Compare 21 above.
289 See eg s 16 of the Supreme Court Act 59 of 1959.
290 In other words, there is no provision in the Arbitration Act or another statute which lays down that
the proceedings are not open to the general public.
291 See eg The Standard Procedure Rules rule 26; Trollip 87, 96.
292 'The concept of private arbitrations derives simply from the fact that the parties have agreed to
submit to arbitration particular disputes arising between them and only between them. It is implicit in
this that strangers shall be excluded from the hearing and conduct of the arbitration ... .' (See Oxford
Shipping Co Ltd v Nippon Yusen Kaisha (The Eastern Saga) (1984) 3 All ER 835 (QB Com Ct) 842c;
Mustill & Boyd 303-4.)
214 Arbitration in South Africa: Law and Practice

One party may therefore not disclose information about the arbitration to an
outsider293 without the consent of the other party to the arbitration, except for
purposes of court proceedings arising from the arbitration. The arbitrator is
also bound to respect and uphold the confidentiality of the proceedings, either
by virtue of a contract between him and the parties regarding his conditions of
appointment, 294 or because of the fiduciary duty to the parties arising from his
appointment to the office of arbitrator. 295 The privacy of arbitration
proceedings is ar obstacle to the consolidation of arbitrations involving
different parties. 296
Witnesses in arbitration proceedings, who are not parties, are not bound by
the arbitration agreement. It would therefore appear that a witness, who does
not have a fiduciary relationship as the agent or employee of the party who
called him, may not be obliged to uphold the confidentiality of the proceedings.
If a transcript of the proceedings is obtained without the consent of the parties,
it would seem that it could still be used in other court or arbitration
proceedings, 297 even where the copy of the transcript was improperly
obtained. 298 It therefore appears that the confidentiality of arbitration
proceedings is by no means absolute.

293 Including a journalist seeking a report for publication.

294 See Trollip 107 for an example of such a provision.
295 See 93-5 above. As in the case of the parties, the restriction does not apply to court proceedings
arising from the arbitration. Compare 187-8 above regarding the arbitrator's notes and see 269n91
below regarding 'confidential reasons' not forming part of the award.
296 See 152 above.
297 eg for purposes of cross-examining an expert witness, who gave evidence in the arbitration, in
subsequent proceedings between different parties.
298 In principle, relevant evidence remains admissible, even if it was illegally obtained (S v Ne/ 1987
(4) SA 950 (W) 953E-H; Hoffmann & Zeffertt 279).
CHAPTER 6

Evidence

6.1 Introduction
It occasionally happens that the only dispute which an arbitrator is require.d to
resolve when making his award concerns questions of law. However, the
overwhelming majority of disputes referred to arbitration require the arbitrator
to determine factual issues which are in dispute. Moreover, it has been said that
most cases turn largely, if not entirely, on the facts. 1 The arbitrator must arrive
at his findings on the facts in dispute by receiving and considering evidence.
In the previous two chapters, the procedural steps preceding the hearing and
the various types of procedure which may be used at the hearing itself were
discussed. This chapter concerns evidence. In this paragraph we give a
definition of the law of evidence and outline its functions. This is followed by
a brief discussion of the main characteristics of the South African law of
evidence and their historical origins. This is necessary to promote an
understanding of the reasons for the rules of evidence discussed in this chapter.
In the next paragraph we consider the extent to which arbitrators in South
Africa are bound, as a matter of law, to apply the ordinary rules of evidence
and, where an arbitrator is not so bound, the extent to which he ought to take
cognisance of the basic principles of the law of evidence as a matter of good
practice. The succeeding paragraphs attempt to explain certain basic terms and
principles of the law of evidence for the benefit of non-lawyers, with special
reference to their application in arbitration proceedings. It is suggested that
readers with little or no knowledge of the law of evidence should read these
paragraphs2 before reading paragraph 6.2. The chapter then deals with the
evaluation of evidence by considering the standard of proof required and by
giving practical advice on the evaluation of evidence. 3 In conclusion, we deal
with the arbitrator's duty to apply the rules of substantive law to his findings on
the facts in order to reach his decision on the merits. 4

6.1.1 Definition and functions of the law of evidence

The rights and duties of parties to a dispute are determined by the substantive
law, for example the law of contract. These rights and duties are enforced by
the ordinary courts by means of the law of procedure or adjective law. The law
1 See Bingham I.
2 Paras 6.3-6.7 at 223-45 below.
3 See 246-51 below.
4 See 251-3 below.

215
216 Arbitration in South Africa: Law and Practice

of procedure in its widest sense includes the law of evidence. 5 The law of
evidence is not easy to define, 6 nor is it always possible to clearly distinguish
between rules of substantive law and rules of evidence. 7 For purposes of this
chapter, the law of evidence may be defined as that branch of the law which
determines how facts may be proved in a court of law and what facts may not
be proved there. 8 The functions of the law of evidence are therefore to
determine what facts are legally receivable or admissible, 9 the manner in which
evidence should or may be adduced 10 and the rules which the adjudicator must
apply to evaluate that evidence. 11

6.1.2 The main characteristics of the South African law of evidence and their
historical origins
The South African law of evidence has the English law of evidence as its
common law.12 The three main characteristics of the English law of evidence in
the context of an adversarial procedure 13 are the following. First, the English
law of evidence places particular emphasis on the oral presentation of
evidence. 14 Although there are historical reasons for this preference, 15 there
are a number of arguments which can be advanced in an attempt to justify
dogmatically this preference for oral as opposed to written evidence. The main
argument is that cross-examination of a witness giving oral evidence is regarded
as the most effective method of testing the truthfulness and accuracy of that
evidence. 16 Ancillary arguments have also been raised. First, observing the
demeanour of a witness while he is giving evidence may be of assistance to the
adjudicator in evaluating the credibility of that witness. It must however be
emphasised that demeanour may be a dubious aid in assessing credibility,
particularly when used by an inexperienced adjudicator.17 Secondly, the fact
that the witness must give his evidence under oath in open court impresses the
solemnity of the occasion on the mind of the witness. 18 Thirdly, the delivery of

5 See SE van der Merwe (1983) 3-4.

6 See Hoffmann & Zeffertt 4-6.
7 See 223 below.
8 See Tapper I.
9 See 226-35 below.
10 See 237-46 below.
11 SE van der Merwe (1983) 4; Tapper 1-2. Regarding the evaluation of evidence, sec 246-51 below.
12 SE van der Merwe (1991) 281; Hoffmann & Zeffertt 6-17.
13 See para 5.3.1 above.
14 S Evan der Merwe (1991) 281.
15 See the text below.
16 See De Vos (1988) 226, who refers to Wigmore's well-known description of cross-examination as
'the greatest legal engine ever invented for the discovery of truth', a description which Hoffmann &
Zeffertt 456 appear to regard, correctly it is submitted, as exaggerated. See also S E van der Merwc
(1991) 283-4.
17 See 250 below.
18 This argument has, however, been greeted with scepticism: see SE van der Merwe (1991) 285 and

Bingham 15, who quotes the 'gloomy view' of Eggleston 196: 'In fact, I do not think that many people
feel any sense of wrongdoing when they swear falsely, so long as they can persuade themselves that they
are doing it in a good cause'.
Evidence 217
oral evidence in court under the supervision of the adjudicator can be used to
keep control of the relevance of, the evidenc.e, whereas written evidence
prepared without such control may contain irrelevancies and ambiguities.'19
There is also the fear that written statements of witnesses can be abused
through the fabrication of evidence, whereas oral answers to questions,
particularly unexpected questions· under cross-examination, are regarded as
promoting the discovery of the truth. 20
The traditional preference for oral as opposed to documentary evidence in
the English law of evidence arose as follows. A form of trial by ordeal, known
as 'trial by battle', based on a belief that Divine Providence would give victory
to the right, was introduced in England_after the Norman conquest in 1066. In
essence, trial by battle symbolised a confrontati~p by two opponents in front of
a passive and neutral umpire. Trial by battle has therefore been claimed by
.some as the ancestor of the present adversarial trial procedure, with verbal
confrontation (in the form of cross-examination) having been substituted for
physical confrontation. 21 Today, the right to cross-examine witnesses is seen as
an integral and fundamental part of a fair trial in countries whose law of
procedure and evidence is derived from the English common law. 22
The second important characteristic of the English law of evidence is that it
comprises_ a strict system of evidence with exclusionary rules. These
exclusionary rules have their origin in the development of the jury system in
England and its allotted role of resolving factual issues, 23 The exclusionary
rules were designed to guard against the danger of a jury of laymen attributing
the same weight to doubtful evidence as that given to direct evidence of a
truthful witness. Two of these exclusionary rules also promoted evidence being
furnished orally. 24 The third important characteristic of the adversarial model
as developed in England and received in South Africa, is party control over the
presentation of evidence: it is the parties, rather than the judge or jury, who,
subject to the exclusionary rules, decide which information should be
submitted to the triers of fact to enable them to reach their decision. 25

19 See SE van der Merwe (1991) 285 and the sources he refers to but compare Staughton 121, who
refers to the manifest inefficiency of the English adversarial hearing in allowing counsel to proceed with
evidence and argument on matters which the judge has already decided in his own mind are unimportant
or irrelevant.
20 See further SE van der Merwe (1991) 283-6 and the sources he refers to.
21 The traditional adversarial format of English procedure is based on 'the principle that truth and
justice are born of the clash of warring parties before an independent and uninformed tribunal' (see
Bingham 24). . ·
22 See SE van der Merwe (1991) 290-1, 302; De Vos (1988) 226. See also SE van der Merwe (1991)
286-90 for a discussion of earlier forms of trial by ordeal and judicium Dei.
23 See SE van der Merwe (1991) 298-9; De Vos (1988) 228-9. The jury system also contributed to
the traditional emphasis on the direct oral presentation of evidence (see De Vos (1988) 228).
24 S E van der Merwe (1991) 298-300. These rules .are the rule excluding previous consistent

statements (see 229 below) and the hearsay rule (see 230 below).
25 See SE van der Merwe (1991) 302.
218 Arbitration in South Africa: Law and Practice

The trial procedures of continental Europe adopt, on the whole, a different

approach. 26 This resulted, particularly in the past, in a tendency on the part of
English lawyers to describe the continental procedures as inquisitorial rather
than adversarial. 27 It is more correct to regard both the English and continental
procedures as variants of the adversarial system. 28 In continental systems, 29
there is a far greater emphasis on using documentary evidence than on the oral
presentation of evidence at a single hearing. In France, if a witness should give
oral evidence (usually at a preliminary hearing) there is no cross-examination.
Because of the absence of a jury in civil trials, there was no need for
exclusionary rules to determine the admissibility of evidence. 30 Although
French judges theoretically have greater powers to play a more active role in
the proceedings than their English counterparts, these powers are not used in
practice to gather evidence and in this sense there is party control over the
evidence on which the court must make its factual findings. Great reliance is
placed on documentary evidence and the documents which a party uses will
have been seen in advance by his opponent. 31 In England, the judge is not
usually involved before the trial which normally consists of a single hearing. On
the continent, however, the trial comprises a number of stages in which the
court, or a member of the court, is involved. This allows the court to play a
greater managerial role, thereby ensuring that the matter is completed more
quickly and with less expense for the parties. 32 It must be noted that there has
recently developed an increasing tendency in arbitration practice, particularly
in the field of international commercial arbitration, to use a blend of English
and continental procedures, also with regard to how evidence is prepared and
presented. 33

26 See S Evan der Merwe (1991) 292-3 who traces the difference of approach back to the Fourth

Lateran Council of 1215 which, by effectively prohibiting clergy participation in trial by ordeal in the
secular courts, created an urgent need to find a suitable replacement for trial by ordeal on both sides of
the English Channel.
27 See eg the remarks of Reymond 130. Note too his comment (at 131-2) that each continental state
has its own law of procedure and that to speak of a continental law of procedure is an
over-simplification.
28 See eg Reymond 134-5; De Vos (1988) 393-4; Beardsley 460-6; Van Loggerenberg (1987 De
Rebus) 344. Staughton 118 states:
'[T]he essence of adversarial procedure is that the judge listens to the evidence and arguments of the
parties, and decides between them; he does not make his own inquiries as to the facts, or adopt
conclusions of fact not proposed by either party; nor does he propose or adopt arguments or
conclusions of law differing from those which the parties put forward. By contrast, where the
procedure is inquisitorial the judge can and does exercise all those functions'.
On this definition the sudden death or pendulum arbitration (see 32 above and 202 below) is the closest
to a pure adversarial procedure. Van Loggerenberg adds that in a true inquisitorial procedure great
stress is placed on the interests of the state as opposed to the interests of the parties.
29 See generally the articles of Reymond, De Vos (1988) and Beardsley referred to in the previous
footnote.
30 See SE van der Merwe (1991) 296n94.
31 See Beardsley 466-7, 475; De Vos (1988) 393.
32 See Reymond 146-7; De Vos (1988) 384.
33 See Reymond 147 and 304-5 below.
Evidence 219
6.2 Applicability of the ordinary rules of evidence to arbitration
6.2.1 The traditional view
The view traditionally adopted by writers on the law of arbitration in both
South Africa34 and England 35 is that an arbitrator is required, as a matter of·
law, to apply the ordinary rules of evidence. It has been suggested that the
authorities relied on for this traditional rule are somewhat ancient. 36 The rule
is also difficult to reconcile with modern English authorities, who emphasise the
arbitrator as the master of his own procedure. 37 Where the arbitration
agreement is silent, the traditional rule is difficult to reconcile dogmatically
with the consensual basis of arbitration by virtue of its being an implied term of
the arbitration agreement. 38 By implying such a term, three of the advantages
of arbitration as opposed to litigation, namely speed, cost-effectiveness and
flexibility, are being undermined. 39 However, one may possibly attempt to
justify the traditional rule dogmatically by regarding arbitration as a form of
dispute resolution which has left its origins in the law of contract and become
part of the administration of justice. 40
The traditional rule is subject to three important exceptions which greatly
reduce its practical significance. 41 First, because of the consensual basis of
arbitration, the parties may agree, either in the arbitration agreement or in the
reference itself, that the arbitrator need not follow the strict rules of evidence
as long as he is still able to do justice between the parties. This agreement may
be express or implied. An agreement to exclude the formal rules will be
implied, 42 for example, if the arbitration clause provides that the arbitrators

34 See Jacobs 80; Davis (1966) 32. The position was apparently the same under the (Roman-Dutch)

common law (see Voet 4.8.1).

35 See Mustill & Boyd 352; Walton & -Vitoria 273; Marshall 67-8; Steyn (1987) 433. Compare,
however, Buxton 229-34 who challenges the correctness of the traditional view. He favours the
introduction of legislation to expressly exclude the rules of evidence in arbitration proceedings, unless
the parties agree otherwise.
36 See Hunter (1985) 101. Jacobs 80n14, 15 relies mainly on old English authorities. The only South
African case cited, namely Scholtz v Mostert 1926 CPD 406 at 409 is to the effect that a court will not
easily interfere where an arbitrator makes a bona fide mistake regarding the admissibility of evidence.
37 See Tackaberry in Lew 216, 218 and Bernstein 159, citing inter alia Carlisle Place Investments Ltd
v Wimpey Construction (UK) Ltd (1980) 15 BLR 109 at 116; Bremer Vulkan Schiffbau und
Maschinenfabrik v South India Shipping Corporation Ltd (1981) AC 909 at 985. See too Anshell v
Horwitz 1916 WLD 65 at 67.
38 Compare Steyn (1987) 433 who regards the origin of the traditional rule as 'a historic assumption,
implied in the arbitration agreement, that arbitrations are and must be conducted in accordance with the
rules applying in the Sovereign's courts'.
39 See 20-2 as to these advantages.
40 See Lionnet 70-1; Fischer-Zernin & Junker 24. In this regard it is significant that in countries with
a codified legal system, arbitration is usually part of the code of civil procedure (see e g the French New
Code of Civil Procedure book iv; the Dutch Code of Civil Procedure book iv; the Quebec Code of Civil
Procedure title 13A). See also Garita 1642 regarding a similar tradition in Latin America.
41 See Mustill & Boyd 353; Butler (1988) 25.
42 Mustill & Boyd 353 state that it is less clear that an agreement to relax the strict rules of evidence
will be implied from the way in which the parties conduct the reference. A party wishing to rely on his
opponent's conduct during the reference as opposed to a prior implied agreement would be more likely
to rely on the second exception to the traditional rule discussed below.
220 Arbitration in South Africa: Law and Practice

should be commercial men 43 or where the arbitrator is enjoined by the

arbitration agreement to conduct the arbitration informally. 44 The rules of
evidence do not apply to a 'look-sniff' arbitration, 45 because of the nature of
those proceedings. Thus, where parties either expressly or by implication4 6
agree to a 'look-sniff' arbitration, they agree, by implication at least, to
dispense with the rules of evidence.
Secondly, compliance with the strict rules of evidence may be rendered
unnecessary because of estoppel or waiver. If the conduct of party A leads the
other party (B) to believe that A will not insist on strict compliance with the
rules of evidence, and B abstains from procuring formal evidence, A will be
estopped from subsequently requiring formal proof at the hearing. 47 It is also
clear that the right to object to the admission of inadmissible evidence, or to
another irregularity regarding the rules of evidence, may be waived. For
example, if the arbitrator admits evidence which is technically inadmissible at
the instance of one party, and the other, being aware of the evidence's
inadmissibility, fails to object, the court will not readily set aside an award if an
objection to the evidence is only made after the award's publication. 48
Thirdly, the courts will be unlikely to intervene and set aside an arbitrator's
award because of a failure to observe the rules of evidence, unless the breach
is fundamental to the arbitrator's decision or amounts to a breach of the rules
of natural justice, 49 for example if the arbitrator bases his award on evidence
received from one party, without giving the other party the opportunity of
considering and dealing with that evidence. 50
6.2.2 Suggested reformulation of the legal position
Particularly the first and third exceptions to the traditional rule discussed
above, namely the readiness of the courts to imply an agreement to exclude
strict compliance with the rules of evidence and their reluctance to interfere
where the rules are not complied with unless there has been a breach of the
rules of natural justice, suggest a need to reformulate the traditional rule in a
way which will reflect modern practice more accurately. 51 It is submitted that
unless the arbitration agreement provides otherwise, whether expressly or by

43 See French Government v 'Tsurushima Maru' (1921) 8 LIL Rep 403 at 404.
44 See Benjamin v Sobac South African Building and Construction (Pty) Ltd 1989 (4) SA 940 (C)
964J-965A.
45 See 201 above and 244 below.
46 For example, by agreeing to arbitration under the auspices of an organisation which uses this type
of procedure or if the 'look-sniff' procedure is customarily used where disputes regarding a particular
commodity are referred to arbitration.
47 See Mustill & Boyd 353; Butler (1988) 25. It appears that B will not have to show fault on the part
of A where A's representation consisted of an intentional act, but that negligence may have to be shown
in the case of unintentional conduct (see generally LA WSA vol IX 'Estoppel by Representation'
paras 381-5; Hoffmann & Zeffertt 359; Connocks (SA) Motor Co Ltd v Sentrale Westelike
Ko-operatiewe Maatskappy Bpk 1964 (2) SA 47 (T) 51.
48 See Mustill & Boyd 353; Hesselmann v Koerner 1922 SWA 40 at 43; Jacobs 81.
49 See 165-7 above for the rules of natural justice.
50 See Mustill & Boyd 353; Rokison in Lew 96; Tackaberry in Lew 218; Butler (1988) 25.
51 See also Steyn (1987) 433 where a similar view is expressed.
Evidence 221

implication, an arbitrator is not as a matter of law obliged to comply with the

formal rules of evidence, as long as the procedure which he follows complies
with the rules of natural justice by being fair to both parties. We suggest that
this formulation of the rule will accommodate satisfactorily most of the South
African cases in which awards have been set aside for misconduct arising from
non-compliance with rules of evidence. 52 It also appears to be in accordance
with the position in the United States. 53
There is a possible argument against our suggested reformulation in the
wording of the Arbitration Act. Subject to the terms of the arbitration
agreement, the arbitrator is empowered to examine witnesses (including the
parties, if they give evidence) 'subject to any legal objection'. 54 This provision
could possibly be interpreted to mean that the arbitrator must conduct his
examination of witnesses in compliance with the strict rules of evidence,
excluding any inadmissible evidence, unless the arbitration agreement provides
otherwise. However, in practice, where parties are represented by lawyers at the
hearing the examination of witnesses will be done by the lawyers and not by the
arbitrator, who will have a mainly passive role. Moreover, as stated above,
the courts will not interfere because of non-compliance with the rules of
evidence, whether generally or in a specific respect, unless such non-compliance
has resulted in the parties not being treated fairly. The Act can therefore be
interpreted and applied in a way which does not conflict with our suggested
reformulation. If the traditional rule, although not observed in practice, is
allowed to linger on, it could be used, or indeed abused, by a disappointed party
as the basis for court proceedings to delay compliance with the award. 55
When exercising his discretion as to the procedure to be followed in resolving
a particular dispute and the extent to which that procedure requires observance
of the formal rules of evidence, the arbitrator should have regard to the nature
and complexity of the dispute and the amounts involved. He must also have
regard to his regulatory discretionary powers in the Arbitration Act. 56
Moreover, because of the consensual basis of arbitration, the arbitrator is
bound by any provisions in the arbitration agreement as to the procedure to be
followed, including the degree to which the law of evidence is to be observed,
even if the arbitrator regards the agreed procedure as unnecessarily
time-consuming and expensive. 57 Furthermore, the arbitrator should be careful

52 See eg the cases referred to in LAWSA vol I 'Arbitration' para 485.

53 See Craig, Park & Paulsson para 23.03, citing Domke para 24.02.
54 Section 14{1)(b){iii) and (iv). The English Arbitration Act 1950 s 12(1) contains a similar provision

as did the colonial predecessors of the 1965 Act (see e g the schedule to the Arbitrations Act 29 of 1898
(Ca;,e) para (g)).
5 See Steyn (1987) 433 and compare 270n101 below for recent unsuccessful attempts by disgruntled
parties to avoid compliance with awards.
56 Section 14(1). See 173 above.
57 See Tackaberry (in Lew) 219. Parris 115 rejects the view that the arbitrator is bound by the
procedural provisions of the arbitration agreement on the ground that he is not a party to that
agreement. However, in our view, whether one regards the relationship between the arbitrator and the
parties as contractual, or as being based on status, or as being sui generis (see 92-5 above), his powers
are still subject to any limitations imposed by the arbitration agreement (see 97 above).
222 Arbitration in South Africa: Law and Practice

to avoid taking either party by surprise. He should inform the parties in

advance of the procedure which he intends to follow and consider any
objections which they may raise. 58 The question as to how an arbitrator should
deal with an objection to the admissibility of specific evidence in the course of
a hearing is discussed in a subsequent section. 59
It remains to consider the applicability of the Civil Proceedings Evidence Act
of 196560 in arbitration proceedings. According to its long title, the principal
purpose of the Act is to state the law of evidence in regard to civil
proceedings. 61 The Act also contains a residuary provision in terms of which the
law of evidence which was in force in respect of civil proceedings on 30 May
1961, continues to apply in any case not provided for by the Act or any other
law. 62 The Act does not define 'civil proceedings'. If one adopts the traditional
approach that the law of evidence applies to arbitration proceedings, unless
excluded by the arbitration agreement, then it is necessary to give 'civil
proceedings' for purposes of the Act an extended meaning to include
arbitration, because it would be untenable in principle to subject arbitration to
a more conservative system of evidence than that which applies in the courts.
In terms of our suggested reformulation of the traditional rule, however, the
law of evidence does not apply to arbitration proceedings unless the arbitration
agreement otherwise provides. It follows that the term 'civil proceedings' for
purposes of the Civil Proceedings Evidence Act may be given its ord~nary
meaning which would exclude arbitration. The Act would then apply to
arbitration proceedings only when the parties agree that the law of evidence
should apply.

6.2.3 Importance of the rules of evidence for the non-legal arbitrator

If the suggestion made in the previous paragraph, namely that an arbitrator is
not usually obliged to apply the formal rules of evidence, is correct, it may then
be asked whether it is necessary for the arbitrator without formal legal training
to have any knowledge of the rules of evidence. It is submitted that he should
have a working knowledge of the basic principles of evidence for the following
reasons. First, some of the exclusionary rules rendering certain evidence
inadmissible should more properly be concerned with the weight to be
attributed to that evidence. 63 An arbitrator who is aware that such evidence is
normally inadmissible in a court of law will be more likely to treat the evidence
with proper caution when assessing the weight which should be attributed to it.

58 Tackaberry (in Lew) 219, 229.

59 See 235 below.
60 Act 25 of 1965.
61 Besides reforming and restating certain rules of evidence in civil proceedings, the purpose of the
Act was to remove an historical anachronism whereby decisions of English courts constituted binding
precedents for courts in South Africa (see Hoffmann & Zeffertt 11-15).
62 Section 42. A more recent statute inlplementing inlportant reforms, particularly in respect of the

hearsay rule, is the Law of Evidence Amendment Act 45 of 1988.

63 See eg 230n117 below regarding the traditional justification for the exclusion of hearsay evidence
on the basis that a jury would be unable to assess its weight properly.
Evidence 223

Secondly, the law of evidence should reflect the characteristics which the
community attribute to a fair trial. 64 Therefore, an arbitrator with a knowledge
of the basic principles of evidence will be less likely to use a procedure which
is fundamentally unfair and offends against the rules of natural justice. Thirdly,
the legal rules regarding the standard and onus of proof may on occasion be of
immense assistance to an arbitrator where he is faced with the task of
evaluating a mass of conflicting evidence. 65
Although in our view an arbitrator is not obliged to comply strictly with the
rules of evidence, he should apply the rules of substantive law in making his
award. 66 However, as noted above, it is not always possible to distinguish
clearly between rules of evidence and rules of substantive law. An arbitrator
must be aware of this problem, because if he decides to treat the rule in
question as one of evidence, one of the parties could be denied his contractual
or other substantive rights. 67 For example, if parties have reduced their
agreement to writing, evidence of an oral collateral agreement which
contradicts the written agreement is inadmissible in terms of the parol evidence
rule, which should more accurately be regarded as a rule of substantive law. 68
If the arbitrator admits evidence of the collateral agreement and bases his
award on that agreement to the exclusion of the written agreement, one of the
parties has, effectively, been denied his substantive rights. A similar situation
arises where parties incorporate a term in their written contract that no
variations of the contract will be valid unless reduced to writing and signed by
the parties. As the law presently stands, the parties are bound by the clause
because public policy requires that contracts which parties have freely entered
into should be enforced. 69 Once again, should an arbitrator admit and act on
evidence of a later oral variation of the written agreement, he is denying one of
the parties his substantive rights. Admission of and reliance on such evidence
by an arbitrator would usually be appropriate only if the arbitration agreement
contains an 'equity clause'. 70

6.3 Some basic concepts

In the following sections we discuss some of the most important rules regarding
the reception and evaluation of evidence, mainly for the benefit of non-lawyers.

64 See SE van der Merwe (1991) 306.

65 See 246-9 and 25In251 below.
66 See 251-3 below.
67 For a more detailed discussion see Butler (1988) 26.
68 The rule is also known as the integration rule because it has the effect of integrating all the scattered

parts of the formation of a contract into an ·integral documentary unity. See generally regarding the
parol evidence rule in the context of the law of evidence Hoffmann & Zeffertt 4, 293-318.
69 See SA Sentrale Ko-op Graanmaatskappy Bpk v Shifren 1964 (4) SA 760 (A) 767. The dogmatic

correctness of the decision has been criticised (see LA WSA vol V 'Contract' para 160) on the basis that
the parties should theoretically be able to alter an entrenched non-variation clause deriving its force
from their mutual declaration of intent by a later mutual expression of intention, even by implication,
by acting in concert contrary to the non-variation clause.
70 See 253-5 below regarding the possible use and effect of a clause in an arbitration agreement

authorising the arbitrator to decide as amiable compositeur.

224 Arbitration in South Africa: Law and Practice

Before doing so, however, we will first try to explain some of the basic terms
and concepts of the law of evidence which are often referred to in the textbooks
and case-law and which are not specifically discussed elsewhere in this chapter.

6.3.1 The difference between evidence and proof

The terms 'proof' and 'evidence' are not synonymous. A fact is proved when
there are adequate grounds for the adjudicator to accept the existence of the
fact. 71 Proof is furnished by probative material, of which evidence is the most
important, but not the only form. 72 Evidence of a fact is not yet proof of that
fact: the adjudicator must first evaluate the evidence and decide whether or not
the fact has been proved.13
Evidence may be defined as all the information submitted to the adjudicator
to enable him to establish the facts in issue. It may consist of oral testimony,
documents or objects presented to the adjudicator for inspection. 74 Evidence
should be distinguished from argument, which is 'merely persuasive comment
made by the parties or their legal representatives [to the adjudicator] with
regard to questions of fact or law' .75
Particularly in legislation, the terms 'conclusive proof' and 'prima facie
proof' are occasionally used. 'Conclusive proof' entails that rebuttal is no
longer possible. 'Prima facie proof' of a fact usually means that the fact will be
accepted as proved unless further cogent evidence to the contrary is provided.
Occasionally the term 'prima facie evidence' is used as a synonym for 'prima
facie proof', but this usage is incorrect: the evidence in question consititutes
prima facie proof, and may be accepted as proof in the absence of evidence in
rebuttal.76

6.3.2 Admissibility and weight

Only admissible evidence may be considered by a court when making its factual
findings. 77
'Evidence is said to be admissible, or receivable, if it may be received by the court for
the purpose of proving facts before the court, when judged by the law of evidence. ' 78

71 See Schmidt 2; SE van der Merwe (1983) 33. See 276-7 below as to the standard of proof required.
72 See Schmidt 3; SE van der Merwe (1983) 31. Where a judge or arbitrator takes 'judicial notice' of
a fact (see 243-4 below), no evidence of that fact is required, but it forms part of the probative material
to be considered by the adjudicator.
73 S E van der Merwe (1983) 33.
74 See Schmidt 3; SE van der Merwe (1983) 31.
75 SE van der Merwe (1983) 31: See also 180-1 above.
76 S E van der Merwe (1983) 33. Bilingual legislation has added to the confusion. In s 64(2) of the
Companies Act, the expression 'afdoende bewys', regarding the evidential value of a company's
certificate of incorporation is translated as 'conclusive evidence' and in s 94 'prima facie-bev,1ys'
regarding the evidential value of a share certificate is translated as 'prima facie evidence'. In both cases,
it would be more correct to use 'proof' as a translation for 'bewys'.
77 See 226 below.
78 Murphy 13.
Evidence 225

Admissible evidence may be received, but its weight will depend upon a
qualitative assessment of its probative value in relation to the facts in issue. Its
persuasive value in relation to the facts will depend upon the view taken by the
adjudicator as to its truthfulness, reliability and cogency. At one end of the
scale, evidence may have hardly any weight and at the other, it could be so
weighty as to be almost conclusive on its own. 79

6.3.3 Facts in issue and facts relevant to the facts in issue

The facts in issue (facta probanda) 80 are those facts placed in issue by the
pleadings: they are therefore those facts which a party must prove in order to
succeed. The facts in issue are usually determined by the rules of substantive
law applicable to the cause of action or defence, as the case may be.
The facts relevant to the facts in issue (facta probantia) 81 are those facts
which tend to prove or disprove the facts in issue. The facts relevant to the facts
in issue will normally be determined by the law of evidence. 82

6.3.4 Direct and circumstantial evidence

'Direct evidence is evidence which requires no mental process on the part of the
[adjudi~ator] in order to draw the conclusion sought by the proponent of the
evidence, other than acceptance of the evidence itself. Circumstantial evidence is
evidence from which the desired conclusion may be drawn, but which requires the
[adjudicator] not only to accept the evidence presented, but also to draw an inference
from it. For example, if D is charged with robbery of a bank, and is seen by W
running from the bank clutching a wad of banknotes, W's evidence is direct evidence
that D was running away from the bank, and circumstantial evidence that D
committed the robbery. To arrive at the latter conclusion, the [adjudicator] must
draw certain inferences from the facts perceived by W. This example shows that
circumstantial evidence is not necessarily inferior to direct evidence, if the inference
required is obvious and compelling. ' 83

6.3.5 Primary and secondary evidence

Primary evidence is that which from its nature either indicates that it is the best
available or does not suggest that better evidence may be available. Secondary
evidence suggests, by its nature, that better evidence is available. These
concepts are today usually referred to in the context of documents: an original
document is primary evidence whereas a copy is secondary evidence. 84

79 See Murphy 14; SE van der Merwe (1983) 33-5. See also 249-51 below regarding the evaluation
of evidence.
80 Singular factum probandum.
81 Singular factum probans.
82 See SE van der Merwe (1983) 29-30: Schmidt 5, 361-2; Murphy 7-8. See also 226 below regarding
the concept 'relevant evidence'.
83 Murphy 5. See also Hoffmann & Zeffertt 588-9.
84 See Schmidt 4-5; SE van der Merwe (1983) 36-7.
226 Arbitration in South Africa: Law and Practice

6.4 Admissibility, relevance and exclusionary rules

6.4.1 Admissibility and relevance
Evidence presented by a party in a court of law has to be admissible before the
court can consider that evidence when making its factual findings. To be
admissible, evidence must be relevant. Irrelevant evidence is therefore
inadmissible. 85 Irrelevant evidence can cloud the real issues and lead to an
unnecessary prolongation of the trial. 86 However, not all relevant evidence is
admissible. Before discussing this statement it is first necessary to define
'relevant evidence'. Relevant evidence is 'evidence which makes the matter
which requires proof more or less probable'. 87 Applying this definition,
evidence may be relevant:
'(a) as constituting a fact in issue;
(b) as evidence from which the existence (or non-existence) of a fact in issue may
properly be drawn;
(c) as a requisite to the admissibility of other evidence; and
(d) as regards the reliability of other evidence and the credibility of witnesses. ' 88
The law of evidence as applied in South Africa is a system characterised by
exclusionary rules. 89 Some of these exclusionary rules may be justified on the
basis that the evidence concerned is insufficiently relevant, having regard to the
other disadvantages associated with such evidence. In other instances,
however, an exclusionary rule, for example the hearsay rule, can operate to
exclude relevant evidence. 90

6.4.2 Exclusionary rules: irrelevant evidence

In this section we consider examples of the exclusionary rules which can be
justified on the basis that the evidence concerned is insufficiently relevant.

6.4.2. 1 Similar fact evidence

Similar fact evidence may be described loosely as conduct of a party on an
occasion or occasions other than the one in dispute, which is substantially
similar to the conduct of that party on an occasion forming the subject of the
dispute. 91 For example A, the owner of certain works, claims damages in
arbitration proceedings from B, a contractor, for breach of contract arising
from B's negligent performance of certain building work. A has heard that B
had on a previous occasion to pay substantial damages to C because of badly
85 See SE van der Merwe (1983) 53; Hoffmann & Zeffertt 21; Civil Proceedings Evidence Act 25 of

1965 s 2.
86 See S E van der Merwe (1983) 15.
87 The second of two alternative definitions suggested by Lord Simon in DPP_ v Kilbourne [1973] AC

729 (HL) 729, 756. The other definition he suggested was: 'Evidence is relevant if it is logically probative
or disprobative of some matter which requires proof.'
88 LA WSA vol IX 'Evidence' para 399.
89 See 217 above.
90 Hoffmann & Zeffertt 26.
91 Compare SE van der Merwe (1983) 67.
Evidence 227

executed building work. This fact will usually be inadmissible in a dispute

between A and B because it is insufficiently relevant, bearing in mind the
disadvantages attached to the receipt of the evidence. These include (a) the
raising of collateral issues, the proof and counterproof of which will take a
disproportionate amount of time; (b) the evidence might be unduly prejudicial
to B (especially if the circumstances, despite similarities, are materially
different in important respects); and (c) the creation of side issues which will
unduly distract the arbitrator regarding his findings of fact. 92 ·
Normally, the fact that B performed defective work for C would not justify
the inference that his work for A was negligently performed on this occasion,
unless it was first satisfactorily established that the circumstances were really
similar. 93 The courts will therefore admit similar fact evidence in civil cases if
it is logically probative, that is 'if it is logically relevant in determining the
matter which is in issue, provided that it is not oppressive or unfair to the other
side and that the other side had fair notice of it and is able to deal with it' .94 If,
therefore, in the above example it was in issue whether B should reasonably
have been aware of certain dangers regarding the use of a particular building
technique and taken appropriate precautions, the fact that it was the failure to
take these precautions when using the same building technique under similar
circumstances which resulted in his liability to C may become sufficiently
relevant to offset the disadvantages of similar fact evidence referred to above. 95

6.4.2.2 Opinion evidence

As a general rule, a witness should restrict his evidence to facts which he has
observed as opposed to an opinion derived from those facts. Two reasons are
advanced in the textbooks and case law for excluding opinion evidence. The
traditional reason is that a witness expressing an opinion usurps the function of
the court: it is for the court to decide what inferences should be drawn from the
facts. One difficulty with this approach is that there is no really satisfactory
distinction between facts and inferences: what appears to be a plain statement
of fact may involve several inferences. Another objection is that the court is not
bound by the witness's opinion. The better reason for excluding opinion
evidence is on the ground of irrelevance. An opinion is therefore relevant and
admissible if it can assist the court or arbitrator. 96
There are basically two situations where opinion evidence is admissible on
account of its relevance. First, the opinion of a lay witness may be received on

92 See further SE van der Merwe (1983) 68; LAWSA vol IX 'Evidence' para 419 and generally
rerrding similar fact evidence Hoffmann & Zeffertt 52-82.
3 Compare Laubscher v National Foods Ltd 1986 (1) SA 553 (ZHC) 554-5 discussed by Hoffmann

& Zeffertt 53.

94 See Omega, Louis Brandt et Frere SA v African Textile Distributors 1982 (1) SA 951 (T) 955H.
95 If A intends to call the engineer who acted for C as an expert, B will be warned in advance when
he receives notice that the expert is to be called with a summary of his evidence.
96 See Hoffmann & Zeffertt 81-5 following R v Vi/bro 1957 (3) SA 223 (A); SE van der Merwe (1983)

paras 8.1-8.4.
228 Arbitration in South Africa: Law and Practice

matters within the competence and experience of people generally. 97 Secondly,

expert opinion evidence is admissible to prove matters or issues of specialised
knowledge. 98 If a trial involves technical issues beyond the knowledge and the
experience of any reasonable court, it becomes necessary for the parties to call
experts as witnesses to explain the technicalities to the judge. In such cases it
is competent, and often desirable, that these witnesses should express opinions,
with the reasons for their opinions. Whenever possible, the reasons should
include the facts on which the opinion is based. 'Proper evaluation of the
opinion can only be undertaken if the process of reasoning which led to the
conclusion, including the premises from which the reasoning proceeds, are
disclosed by the expert. ' 99 Often each party will call expert witnesses to give
evidence and opinions on the technical aspects of the case, and these opinions
may be in conflict with one another, so that the judge is put to evaluating the
respective opinions, and deciding which opinion to prefer. To enable him to do
this, he must understand the evidence of both experts and form a reasoned
basis for his preference. 100 The problem of evaluating conflicting expert
evidence is, however, more easily solved by an arbitrator with specialist
knowledge in the relevant field.
Hoffmann & Zeffertt 101 endeavour to summarise the receipt of relevant
opinion evidence by a court by means of four propositions:
'(a) There is no general rule that a witness can never state his opinion upon a matter
which the court will have to decide.
(b) If the court is unable to decide an ultimate issue without the assistance of
someone qualified to give his opinion on it, then it must necessarily be
instructed, as it were, by expert opinion.
(c) There are some ultimate issues upon which a witness's opinion will always be
[superfluous] and inadmissible ... [for example] on the legal or general merits
of the case .... 102 ·
(d) Subject to (c) above, where the court is able to reach some sort of independent
conclusion, but the opinion of an expert (or a knowledgeable layman ... ) would
be 'of great assistance to the court' in reaching it, the opinion is relevant and the
court is entitled to receive it.'

97 Both Hoffmann & Zeffertt 112-13 and SE van der Merwe (1983) 106-7 point out that in many
instances it may be extremely difficult or even impossible for a lay witness to testify on the point without
expressing an opinion, eg the identity of persons or things, the speed of vehicles or the state of the
weather.
98 See further S Evan der Merwe (1983) paras 8.4-8.6.
99 See Coopers (South Africa) (Pty) Ltd v Deutsche Gesellschaft Fur Schiidlingsbekampfung mbH

1976 (3) SA 352 (A) 3710-H. The failure or inability to give proper reasons usually only affects the
weight to be attached to the opinion rather than its admissibility. Hoffmann & Zeffertt 103 submit,
however, that the failure or inability to give reasons could be such that the opinion has no weight,
rendering it irrelevant and therefore inadmissible.
100 See Bingham 19. Both Bingham and Hoffmann & Zeffertt 103 have reservations about using the
relative qualifications and experience of the witnesses as a means of choosing between two experts with
conflicting opinions.
101 Hoffmann & Zeffertt 90.
102 The witness's opinion on such issues is inadmissible under both the traditional approach, as
usurping the function of the court, and under what Hoffmann & Zeffertt 91 term the Vi/bro approach
(see n 96 above) as being insufficiently relevant.
Evidence 229
The extent to which an arbitrator may use his own knowledge and experience
in lieu of evidence is discussed in a subsequent paragraph. 103
A further problem relating to opinion evidence which could conceivably arise
in arbitration proceedings is the rule in Hollington v Hewthorn. 104 In terms of
this rule a conviction in a criminal court is not admissible in subsequent civil
proceedings as evidence that the accused committed the offence of which he
has been convicted. 105 Although the case was concerned with the admissibility
of a criminal conviction in subsequent civil proceedings, its ratio decidendi 106
would also apply to a civil judgment in subsequent civil proceedings between
different parties. 107 For example, in an action between the owner and
contractor, a finding of negligence on the part of the owner's architect could be
made. By applying the principle of Hollington v Hewthorn, that finding would
be inadmissible opinion evidence in subsequent proceedings between the
owner and the architect. The rule in Hollington v Hewthorn has been much
criticised. 108 It is therefore suggested that an arbitrator confronted by a party
attempting to rely on Hollington v Hewthorn would be justified in adopting a
robust approach by regarding the finding of the court as evidence and prima
facie proof of the fact in issue, which would allow the affected party to produce
evidence in rebuttal. 109

6.4.2.3 Previous consistent statements

It is a general rule under the common law that a witness is not allowed to testify
that on a previous occasion he made a statement consistent with his evidence in
court. The rule applies to a previous statement whether it was oral or in writing.
Such statement is usually irrelevant because of the cumulative effect of several
factors. First, it has limited probative force and cannot be used to corroborate
the testimony because of the rule against self-corroboration. 110 Repetition is
not corroboration. Secondly, there is the danger of easy fabrication. Thirdly, in
the ordinary course of events one would expect the witness's testimony to be
consistent with what he said about the topic or incident on previous occasions.

103 See 243-5 below.

104 Hollington v F Hewthorn & Co Ltd [1943] KB 587, [1943] 2 All ER 35.
105 See Hoffmann & Zeffertt 93; SE van der Merwe (1983) para 8.7.
106 i e the actual reason for the conclusion of law.
107 See Hoffmann & Zeffertt 94. If the matter was between the same parties, they would be bound

by that finding on the basis of res iudicata.

108 See Hoffmann & Zeffertt 94. Its correctness has also been questioned by the Appellate Division
in S v Khanyapa 1979 (1) SA 824 (A) 840C. Moreover, one possible justification based on the hearsay
rule has fallen away as a result of the statutory reform of the hearsay rule (discussed at 230-3 below).
109 There is support for this view in the use of a criminal conviction in disciplinary proceedings against
attorneys (see Hassim v Incorporated Law Society of Natal 1977 (2) SA 757 (A) 769G-H; Hoffmann &
Zeffertt 96-7). In Hassim 's case, the court held that an application for striking an attorney off the role
was not 'civil proceedings' for purposes of s 42 of the Civil Proceedings Evidence Act 25 of 1965, with
the result that the rule in Hollington v Hewthorn did not apply. We submit that this argument is also
valid for arbitration proceedings (see 220-2 above).
110 See S E van der Merwe (1983) 396 regarding this rule.
230 Arbitration in South Africa: Law and Practice

Finally, the proof of such statements could be very time-consuming in relation

to their evidential value. 111
In the context of arbitration proceedings, the most important exceptions to
the rule against referring to previous consistent statements are the following.
First, if it is specifically alleged that the witness's testimony is a recent
fabrication, he can rebut this suggestion by showing that he has made an earlier
written or oral statement consistent with his testimony. The prior statement is
admitted, not to corroborate the evidence, but to show that it was not
concocted at a later date. 112 Secondly, a witness's earlier statement may in
certain circumstances be used to refresh his memory while he is giving oral
testimony .113 The document is not evidence except in so far as it is adopted in
the witness's oral testimony. Even if it is handed in as a convenient record of
his evidence, it has no independent evidential value because of the prohibition
against proof of previous consistent statements. 114

6.4.3 Exclusionary rules: relevant but inadmissible evidence

In this section we discuss examples of exclusionary rules which can have the
effect of relevant evidence being excluded as inadmissible.

6.4.3. 1 Hearsay
The legal position regarding hearsay evidence was altered by legislation in
1988. To understand the effect of the changes, it is necessary to refer briefly to
the position under the common law. Hearsay evidence under the common law
referred to evidence of statements made by persons not called as witnesses in
the proceedings, which evidence was tendered for the purpose of proving the
truth of such statements. 115 At common law, hearsay evidence was inadmissi-
ble, subject to certain exceptions. 116 The common historical explanation for the
inadmissibility of hearsay evidence is that a jury could not be relied on to assess
its weight properly . 117 The most acceptable modern justification for the
exclusion of hearsay evidence is that it is unreliable because it cannot be tested
by cross-examination. 118 The maker of the original statement may have been
deliberately lying; he may have been mistaken through deficiencies in his
powers of observation or memory and the statement may have been

1" See SE van der Merwe (1983) 109-11.

112 See SE van der Merwe (1983) 112-13; Hoffmann & Zeffertt 121-2.
113 See S E van der Merwe (1983) 328-35; Hoffmann & Zeffertt 446-51.
114 See Hoffmann & Zeffertt 450-}. However, if there are inconsistencies between the document and
the oral testimony, this could be usea to cast doubt on the witness's credibility.
115 See Estate De Wet v De Wet 1924 CPD 341 at 343; SE van der Merwe (1983) 160.
116 See Hoffmann & Zeffertt 632-48 and S E van der Merwe (1983) ch 14 for the common-law
exceptions. See n 140 below for examples of statutory exceptions.
11 See Hoffmann & Zeffertt 125.
118 See 216-17 above and S E van der Merwe (1991) 300, 302 as to the principle of orality as a
characteristic of the English adversarial system, with the resultant stress on the right to test evidence by
cross-examination as a pre-requisite for a fair hearing.
Evidence 231

misunderstood by the person giving evidence about it. 119 As a matter of logic,
it can be argued that in proceedings before an experienced judge or arbitrator,
the factors referred to above regarding the reliability of hearsay evidence are
matters which should affect the weight to be attached to that evidence rather
than its admissibility as such. Nevertheless, in 1988 the legislature, while
redefining hearsay evidence, chose to treat it as inadmissible, subject to certain
exceptions contained in the legislation.
Hearsay evidence is now regulated by s 3 of the Law of Evidence
Amendment Act. 120 Hearsay evidence is now defined as 'evidence, whether
oral or in writing, the probative value of which depends upon the credibility of
any person other than the person giving such evidence' .121 Traditionally,
evidence was regarded as hearsay only if an assertion of a non-witness was used
to prove the truth of what was asserted. The purpose for which the evidence is
used is not an element of the statutory definition. In terms of the statutory
definition, evidence is hearsay if its probative value depends upon the
credibility of a non-witness. 122 'Depends upon' in the context of the definition
appears to mean that the probative force of the evidence must be controlled or
governed by the credibility of a non-witness even if it does not rest exclusively
upon it. 123 The definition clearly applies riot only to evidence given orally, but
also to evidence by affidavit. 124 Communications by conduct (that is gestures by
a non-witness conveying a certain meaning) referred to by a witness in the
course of his evidence, apparently fall outside the statutory definition of
hearsay evidence because they are not evidence 'whether oral or in writing'.
Implied assertions of verbal conduct (that is when it is sought to draw an
inference by giving an implied meaning to words used by a non-witness) will be
hearsay if its probative force depends on the credibility of a person other than
the witness. 125
Evidence qualifying as hearsay in terms of the statutory definition is in
principle inadmissible 126 unless it falls under one of the following three
exceptions:
First, hearsay evidence is admissible if the party against whom it is to be
adduced agrees to its admission as evidence at the proceedings. 127 It is not clear
whether an express agreement is required or whether tacit agreement through

119 See Hoffmann & Zeffertt 125; SE van der Merwe (1983) para 13.3.3; but compare Schutte 496n3
who stresses that it is the possible unreliability of hearsay evidence which justifies its exclusion. Not all
hearsay evidence is unreliable: the problem is that the reliability of hearsay evidence is in general
difficult to assess.
120 Act 45 of 1988.
121 Section 3(4).
122 Hoffmann & Zeffertt 127; De Vos (1989) 232-3.
123 Hoffmann & Zeffertt 127 and see the example discussed by Schutte 499. .
124 See 239-40 below regarding the admissibility of evidence on affidavit in arbitration proceedings.
125 See Hoffmann & Zeffertt 128, but compare Schmidt 448-9, De Vos (1989) 233 and Schutte 500-1
for the view that assertions by conduct will fall within the statutory definition, if the probative value
de~nds on the actor's conduct.
26 See, however, the qualification in the text to n 140 below.
127 Act 45 of 1988 s 3(1)(aJ.
232 Arbitration in South Africa: Law and Practice

the failure of a party to object to the evidence is sufficient. It is submitted that

an arbitrator in formal ar~itration proceedings should not infer agreement from
the conduct of a party who does not have legal representation. In such instances
it is preferable for the arbitrator to consider the applicability of the third
exception discussed below. 12s
Secondly, hearsay evidence is admissible if the person on whose credibility
the probative value of the evidence depends, testifies in the proceedings. A
court or arbitrator may admit the evidence on condition that the person testifies
and should disregard the evidence if the condition is not met.1 29 As an
arbitrator usually has no power to call a witness on his own motion,13° the
arbitrator could use this exception in appropriate circumstances to put pressure
on a party to call a witness whose testimony is seen as potentially important by
the arbitrator.
Thirdly, a court or arbitrator may admit hearsay evidence if the adjudicator
is of the opinion that such evidence should be admitted in the interests of
justice, having regard to the factors specified in the section. 131 These factors are
the nature of the proceedings, 132 the nature of the evidence, the purpose for
which it is tendered, 133 its probative value, the reason why the evidence is not
given by the person on whose credibility its probative value depends, prejudice
to the other party ,134 and any other factor which should in the opinion of the
adjudicator be taken into account. 135 It is most unlikely that in any given
situation all these factors will operate in the same direction and the adjudicator
will have to weigh the relevant factors against each other. 136 Once the
adjudicator decides to exercise his discretion by admitting the hearsay evidence
because it has sufficient probative value to qualify for admission, he will then
have to analyse it to see whether it has sufficient cogency to warrant its
acceptance . 137
The statutory prov1s10n regarding the admission of hearsay evidence is
subject to two further qualifications. First, the three statutory exceptions
discussed above do not make hearsay admissible if that evidence is excluded by

128 See Hoffmann & Zeffertt 130.

129 Section 3(1)(b) read withs 3(3).
130 See 241 below.
131 Sees 3(1)(c).
132 Because arbitration proceedings should be less formal than litigation in court, the arbitrator should
be more ready to exercise his discretion in favour of admitting the evidence.
133 If the evidence is fundamental to a claim or defence, as opposed to relating to a subordinate issue.
this will be a consideration against admission (see Hlongwane v Rector, St Francis College 1989 (3) SA
318 (D) 324E-F).
134 Hearsay evidence which is against the opposing party is not on that account alone prejudicial. The
party on whose behalf it is tendered must obtain some unfair advantage, for example if he seeks to avoid
calling as witness the person on whose credibility the evidence depends, when tl;iat person is available
and could be called, in a desire to avoid the latter being cross-examined (see Mnyama v Gxalaba 1990
(1) SA 650 (C) 6530-F).
135 Bearing in mind the justification for excluding hearsay evidence (see n 118 above), Schutte 502

suftests that the reliability or unreliability of the evidence is one such factor.
See Hlongwane's case (above) at 324-7, especially 327A.
137 See Mnyama v Gxalaba (above) at 6531-J.
Evidence 233

another rule of evidence. 138 For example, the rule excluding previous
consistent statements still applies. 139 Secondly, s 3(1) is 'subject to the
provisions of any other law' ('wet' in the Afrikaans text). Therefore while it is
accepted that the existing statutory exceptions 140 to the hearsay rule remain in
force, the common-law exceptions have been superseded bys 3. 141

6.4.3.2 Public policy and privilege

Relevant evidence may be classified as inadmissible because its admission
would be against public policy or the national interest (sometimes referred to
as 'state privilege') or because a particular individual is entitled to claim private
privilege. In the former case, although it is generally in the public interest that
relevant evidence should be disclosed to further the administration of justice
and a fair trial, this interest can be outweighed by other considerations of public
policy or national security. In the case of private privilege, the general interest
in disclosure is outweighed by a particular individual's interest in keeping the
information private. 142
There are important differences between state privilege and private privilege
as regards their operation in practice. Private privilege may only be claimed by
a particular party or witness and that person may waive the privilege. Evidence
apparently subject to state privilege could in principle be admitted only if the
responsible minister signified that there was no objection. A court could and
should exclude evidence subject to state privilege on its own motion. Where
documents are subject to state privilege, their contents cannot be proved by
secondary means. In the case of a document subject to private privilege, for
example legal professional privilege, secondary evidence of its contents is
admissible. Thus if a copy of the document falls into the hands of the other
party, he can use that copy in evidence, even if the copy has been improperly
obtained.143 Although in our view an arbitrator is not usually bound to apply
the strict rules of evidence, 144 failure to uphold a legitimate claim of private
privilege or to observe the rule concerning 'without prejudice' communications
will lead to his award being set aside, if it can be shown that the failure resulted
in a party being treated unfairly.

(a) State privilege

Examples of matters which it may be against public policy to disclose include
138 See s 3(2).
139 De Vos (1989) 235. See 229 above regarding this rule.
140 See eg the Civil Proceedings Evidence Act 25 of 1%5 part VI and the Computer Evidence Act 57
of 1983.
141 See Hoffmann & Zeffertt 130; De Vos (1989) 235. While accepting that the common-law

exceptions had been made obsolete bys 3, the court nevertheless held in Mnyama v Gxalaba (above)
at 653A-C that they were not necessarily irrelevant. The fact that evidence had traditionally been
admitted under a common-law exception was a factor (not necessarily conclusive on its own) which the
court could take into account under s 3(1)(c)(vii) when exercising its discretion.
142 See Murphy 292; Bernstein 162, but compare n 150 below regarding legal professional privilege.
143 See generally Murphy 292-7; SE van der Merwe (1983) 148; Hoffmann & Zeffertt 273.
144 See 220-1 especially n 54 above, also with regard to the meaning of 'lawful objection' in
s 14(1)(b)(iii) and (iv) of the Arbitration Act.
234 Arbitration in South Africa: Law and Practice

the conduct of diplomacy, the investigation of crime, the formulation of high

government policy and sometimes the proper functioning of the public
service. 145 The inadmissibility of matters affecting national security is regulated
by statute. 146

(b) The privilege against self-incrimination

A witness, including a party, is not compelled to answer a question if there is
a real risk that the answer might expose him to a criminal charge. The privilege
against self-incrimination is that of the witness. He cannot decline to give
evidence at all, but must claim the privilege in respect of the particular
question .147

(c) Legal professional privilege

It is generally accepted that the rules regarding legal professional privilege in
ordinary litigation also apply to arbitration proceedings. 148 Communications
between the parties and their legal advisers for the purpose of obtaining legal
advice are therefore privileged in arbitration proceedings, subject to the same
rules and qualifications as in civil litigation. 149 The privilege is that of the client
and must be claimed by the client. The lawyer requires the client's consent to
disclose the communication. The rule against non-disclosure is not merely a
rule of evidence, but is based on the policy that confidentiality is necessary for
the proper functioning of the legal system and not only for the proper conduct
of particular litigation. 15° Communications between the parties and any other
consultants are not privileged. 151 However, certain communications about legal
proceedings between a lawyer acting for a party, or the client, and a third party
or an agent of the client are privileged if they were made after litigation was
contemplated and if they were made for the purpose of being placed before the
lawyer to enable him to advise his client. 152 It is submitted that a party is also
entitled to this privilege in arbitration proceedings.

(d) Statements made 'without prejudice'

Statements which are made 'without prejudice' in the course of bona fide
145 See Hoffmann & Zeffertt 268.
146 See the Internal Security Act 74 of 1982 s 66(1). Evidence is inadmissible if an affidavit by a
minister is produced to the effect that in his opinion the admission of the evidence would be prejudicial
to the security of the state (see further Hoffmann & Zeffertt 269-73). It is submitted that the provision
should in principle apply to arbitration proceedings, although it is by no means obvious that an
arbitrator (even where the arbitration agreement falls under the Arbitration Act) is a 'body or
institution established by or under any law' for purposes of s 66(1).
147 See generally Hoffmann & Zeffertt 237-43.
148 See eg Bernstein 162.
149 For which see eg Hoffmann & Zeffertt 247-67; SE van der Merwe (1983) 133-6.
150 See Hoffmann & Zeffertt 247-8, citing S v Safatsa 1988 (1) SA 868 (A) at 886. See also Sasol III
(Edms) Bpk v Minister van Wet en Orde 1991 (3) SA 766 (T) 783C-785G where the rule is regarded as
one of substantive law. The Sasol III case is discussed by Kriegler 613-18.
151 See S E van der Merwe (1983) 135.
152 See Hoffmann & Zeffertt 259.
Evidence 235

negotiations for the settlement of a dispute cannot be disclosed in evidence

without the consent of both parties. Although such statements are often
referred to as being privileged, both the reason for their general exclusion and
the requirement for their exceptional admission differ from those relating to
legal professional privilege. Moreover, in contrast to communications subject
to legal professional privilege, secondary evidence of a 'without prejudice'
communication is also inadmissible. 153 'Without prejudice' communications are
usually inadmissible because public policy requires that parties to disputes
should be encouraged to avoid litigation and its attendant disadvantages by
resolving their differences amicably in full and frank discussions without fear
that, if the negotiations fail, any admissions made during the discussions will be
used against them in the ensuing litigation. 154 'Without prejudice' communica-
tions are therefore admissible only with the consent of both parties. The reason
for the inadmissibility of 'without prejudice' communications obviously also
applies to arbitration proceedings. In deciding whether the rule applies to a
particular communication, it must be established whether or not the
communication was part of genuine settlement negotiations: the use or
omission of the label 'without prejudice' is naturally not decisive. 155
A 'without prejudice' communication in the sense discussed above is
inadmissible for all purposes and cannot therefore be relied on regarding an
appropriate order on costs once the other matters in dispute have been
determined. 156 In arbitration proceedings, a party can, however, make a
'sealed offer', that is an offer of settlement to the other party with the intention
that the terms of this offer should be revealed to the arbitrator, but only once
he has made his award on the other issues. If the offer was not less favourable
to his opponent than the award itself, the party making the offer is usually
entitled to costs. 157 The sealed offer is therefore in effect 'without prejudice
save as to costs'.

6.4.4 Dealing with objections to admissibility

From our discussion of the rules concerning the inadmissibility of evidence, it
appears that there are three main reasons for regarding evidence as
inadmissible, namely irrelevance, public policy and because it was felt that the
adjudicator of fact (originally a jury) was not able to assess the weight of the
evidence properly. 158 The arbitrator should bear these reasons in mind when
dealing with questions of admissibility, whether on his own initiative or because
of an objection raised by one of the parties or their legal representatives.

153 See Hoffmann & Zeffertt 196-7.

154 See Naidoo v Marine & Trade Insurance Co Ltd 1978 (3) SA 666 (A) 677C.
155 See Hoffmann & Zeffertt 197.
156 See Tshabalala v President Versekeringsmaatskappy Bpk 1987 (4) SA 72 (T) 76A; Hoffmann &
Zeffertt 196-7.
157 The 'sealed offer' fulfils the same function as an offer of settlement under rule 34 of the Supreme
Court Rules in litigation. See further 282-3 below.
158 See 230 above for the traditional reason for excluding hearsay evidence.
236 Arbitration in South Africa: Law and Practice

Where the problem is irrelevance 159 or public policy, the arbitrator should be
prepared to exclude the evidence, either in response to an objection, or on his
own initiative. This applies particularly where the policy in favour of exclusion
is state privilege or because the evidence is protected as being part of
negotiations conducted 'without prejudice'. Particularly in the case of legal
professional privilege, or where the objection is more logically to the weight of
the evidence rather than its admissibility, an arbitrator may feel less inclined to
intervene on his own initiative, when the party who could object to the
admission of the evidence, as the one who would be prejudiced, is legally
represented. If, as in the case of hearsay, the problem is logically weight rather
than admissibility, he could well be inclined to admit the evidence, for what it
is worth, while adding that its weight will be carefully considered. He should
normally not rule on a question regarding the admissibility of evidence, which
he has raised on his own initiative, without first asking both parties to
comment.
Objections to the admissibility of evidence in arbitration proceedings will
usually occur only where one or both of the parties have legal representation.
If the arbitrator is not a qualified lawyer, he can be placed in a difficult position
if he is pressed to decide questions of admissibility during the course of a
witness's oral testimony. As a matter of good practice, lawyers should not
abuse the fact that they are appearing before an arbitrator instead of a judge.
They should therefore neither attempt departures from the rules of evidence
which are highly prejudicial to their opponent nor raise highly technical
objections to evidence tendered by the other party. A good arbitrator will not
allow himself to be intimidated by this sort of tactical ploy.
The following methods may possibly be considered by an arbitrator for
dealing with objections to the admissibility of evidence. 160 Besides giving the
objector an opportunity to argue his objection, the arbitrator should always
give the objector's opponent the chance to furnish reasons in support of the
admissibility of the evidence, unless he is of the view that the objection is
clearly unfounded. Allowing both parties to state their views assists the
arbitrator to make a considered ruling and indicates his impartiality. The
arbitrator could also require the objector and his opponent to make written
submissions. Reducing their submissions to writing may well persuade either
the objector or his opponent to abandon the point. To avoid wasting time, the
arbitrator could also let the matter stand over and ask for the written
submissions to be prepared out of sitting hours. Another possible approach is
to admit the evidence provisionally, pending a final decision on its
admissibility, perhaps after receiving further submissions. If the objection will
result in further witnesses being called, the arbitrator could point out that he
may order the objector to bear the costs, if the evidence of the extra witnesses
has no significant effect on the outcome of the arbitration. As a last resort, the

159 See also 241-2 below.

160 See further Bernstein 170--2.
Evidence 237
question of admissibility, being one of law, could be referred to counsel or to
court for an opinion. 161

6.5 Oral evidence

In formal arbitration proceedings, where the parties are legally represented, it
is customary to follow the same basic procedure as in a civil trial. The method
of giving oral testimony at the hearing and the procedure for summoning a
witness to appear before the arbitrator have already been discussed. 162
Particularly where the parties are not legally represented, the arbitration
agreement may give the arbitrator the discretion to proceed informally .163 In
such instances the arbitrator will assume a more active role in questioning the
parties and their witnesses, while being careful to preserve his impartiality.
Although it may not be necessary to follow the same order of procedure as at
a formal hearing, 164 he must ensure that the proceedings are conducted in an
orderly fashion and explain the procedure which he intends following to the
parties. 165 The arbitrator's power to require testimony to be delivered under
oath is discretionary .166 Whether or not testimony should be under oath 167 at an
informal hearing is a matter he could discuss with the parties.
The hearing is normally the most expensive part of arbitration proceedings.
Oral testimony in the form of question and answer, including lengthy
cross-examination, will usually comprise the greater part of the hearing. For
the arbitration to be cost-effective it is necessary for the arbitrator and the
parties to consider methods of reducing oral testimony and making greater use
of documentary evidence, particularly if the matters in dispute are complex.
The arbitrator's powers may be restricted by the arbitration agreement and
certain limitations are imposed by the Act. 168 Even where the arbitrator's
powers are limited he should use the preliminary meeting and any pre-trial
conference to make suggestions for curtailing the hearing. 169
One method which can be considered is exchanging written summaries of the
evidence of witnesses of fact prior to the hearing. This is not a radical
suggestion. It is customary for a party wishing to call an expert to furnish his
opponent with a summary of that evidence.17° Moreover, the rules of certain

161 Under s 20 of the Arbitration Act. See 206-11 above.

162 See 181-4 and 192-5 above.
163 See rule 4 of the Summary Procedure Rules of the Association of Arbitrators.
164 For example, it may be appropriate for him to question the parties simultaneously on a particular
issue.
165 Or their lay representatives permitted by rule 6 of the Summary Procedure Ru/es.
166 See Summary Procedure Rule 4; s 14(1)(b)(ii) of the Arbitration Act 42 of 1965.
167 Differing views on the value of testimony under oath have been expressed (see 216 above).
168 See eg 239-40 below regarding the restrictions in s 14(1)(b)(v) on the receipt of evidence on
affidavit.
169 See 120-1 and 145-7 above.
170 See 149 above.
238 Arbitration in South Africa: Law and Practice

English courts now provide for such a procedure,rn so it cannot be dismissed

as irreconcilable with the English adversarial system. It has been suggested that
if statements of witnesses of fact are to be exchanged well in advance of the
hearing, it is necessary for the issues in dispute to have been clearly identified
and for a proper working bundle of documents to have been agreed.m It is also
necessary to decide whether the exchange should take place simultaneously or
consecutively. Although the arbitrator should receive the statements in
advance of the hearing so that he can study them, it is advisable that there
should be a delay between the statement being delivered to the opposing party
and the furnishing of a copy to the arbitrator so that the opposing party can
object to material being seen by the arbitrator, for example, if it refers to a
'without prejudice' discussion. 173 The degree of detail required in witnesses'
statements must be agreed (for example, full or skeleton). A party should not
be limited to evidence in the exchanged statements but if much factual evidence
is omitted the arbitrator may suspect its cogency or the bona fides of the
responsible party unless there is a good reason for its omission. If a person
whose statement is exchanged is called as a witness and confirms its contents,
its status will be the same as oral testimony. 174 The witness will then be subject
to cross-examination in the usual way. 175 If the witness is not called, the
admissibility of the statement should be considered under the statutory
exceptions to the hearsay rule, 176 unless the party whose opponent produced
the statement agrees that the witness need not be called. In short, the exchange
of statements means that the time spent on evidence-in-chief can be drastically
reduced and it can help to ensure that cross-examination is restricted to matters
which are really in dispute.
It is customary in arbitration proceedings to require that a party wishing to
call an expert witness must serve notice of his intention on his opponent and
furnish his opponent with a summary of the expert's opinions and his reasons
for them before the hearing. 177 It is also advisable for the parties to agree that
the statement should be furnished in advance to the arbitrator so that he can
read it before the hearing. 178 The evidence-in-chief of the expert's oral
testimony can then be restricted to briefly confirming the written statement and
amplifying it where necessary, thereby saving time at the hearing.

171 eg the rules applying in the commercial court and the Official Referees' courts (see Hunter (1987)
338; Newey 21). Hunter considers that the rule effectively abolishes 'trial by ambush'. See also
Griffiths 168-9.
172 Bernstein 173-4. See also 154 above.
173 Bernstein 174. See 234-5 above regarding 'without prejudice' discussions.
174 It should nevertheless be treated with a degree of caution in that it may· have been drafted in
answer to leading questions. ·
175 Bernstein 174-5. See also Steyn (1983) 310.
176 See 231-2 above.
177 See e g rule 17 of the Standard Procedure Rules of the Association of Arbitrators and compare rule
36(9J of the Uniform Rules of the Supreme Court. See 149 above for the reason for this requirement.
17 As is required by Standard Procedure Rule 17 .2.
Evidence 239

6.6 Documentary evidence

If arbitration is to achieve the object of providing a quicker, more cost-effective
alternative to litigation, greater use must be made of documentary as opposed
to oral testimony. Methods by which the arbitrator and the parties may
maximise the use of documentary evidence in a way which is fair to both parties
have been discussed above. 179 We have also discussed the proper role of
discovery as a means of obtaining documentary evidence under the control of
the opposing party180 and the preparation of the bundle of documents to be
used at the hearing. 181 In this paragraph we discuss certain problems relating to
the use of documentary evidence in arbitration proceedings.
When parties agree on the composition of a bundle of documents to be used
at the hearing, they must ensure that they are clear as to the effect of that
agreement on the need to establish the authenticity of the documents and on
the admissibility of their contents as evidence. 182 For example rule 19 of the
Standard Procedure Rules of the Association of Arbitrators 183 provides as
follows:
'Any document delivered with the Pleadings shall be admitted as evidence without
the necessity for its identification or verification by any witness but either party shall
be entitled to lead evidence on the origin, accuracy, meaning or relevance of the
document.'
The general rule is that a party wishing to produce a document must prove its
authenticity, usually by leading evidence of the maker, signatory or a person
who witnessed its signing. 184 Rule 19 dispenses with the need to comply with
the general rule, because the parties agree to the documents being used without
a witness having to identify or verify them. However, another rule qualifies rule
19 by giving either party the right to deliver a written notice requiring his
opponent to produce a specified document (induding on~ delivered with the
pleadings) at the hearing by a witness under oath. 185 By agreeing to the
admission of the documents as evidence, it is presumably intended that
the documents are to regarded as admissible evidence of their contents. It is,
however, open to either party to seek to minimise the weight which should be
given to such evidence, by leading evidence on the accuracy, meaning or
relevance of the document in question. If that evidence is cogent, the evidence
in the document will carry little weight, particularly if its maker is readily
available and could easily be called as a witness.
Another problem concerns the admissibility of evidence on affidavit and the
179 See 149-50 and 237 above.
180 See 144-5 above.
181 See 154 above.
182 See Mustill & Boyd 354-5.
183 See Appendix III(i).
184 See S E van der Merwe (1983) 279 citing Po/icansky Bros v L and H Policansky 1935 AD 89.
185 Standard Procedure Rules rule 12.2. Rule 19, read with rule 12.2, requires the person wishing to
contest the authenticity of a document to take the initiative and demand authenticity to be proved. In
contrast, under rule 35(10) of the Uniform Rules of the Supreme Court, the onus is on the party wishing
to use the document to give notice to his opponent to admit its authenticity to save the former from
calling the witness.
240 Arbitration in South Africa: Law and Practice

evidential value of that evidence. The arbitrator's power to admit evidence on

affidavit is restricted by the Arbitration Act. Unless the arbitration agreement
otherwise provides, he has the power to receive evidence on affidavit only with
the consent of the parties or on an order of court, 186 a provision which appears
to be unnecessarily restrictive. A further difficulty is that evidence on affidavit
could fall within the statutory definition of hearsay evidence discussed above. 1s7
For example A, in an affidavit, purports to quote a statement made to him by
B, and no oral evidence or affidavit by B is provided to verify the quotation.
The statutory provision on hearsay is subject to 'the provisions of any other
law', which would include the Arbitration Act. However, where the parties
have agreed to admit evidence on affidavit under the Arbitration Act, the
arbitrator should still consider whether the parties by their agreement intended
to admit hearsay statements in such affidavits, as opposed to facts within the
deponent's personal knowledge. In other words, an agreement by the parties
that evidence-in-chief should be given on affidavit, rather than orally, is not
necessarily an agreement to admit normally inadmissible hearsay evidence such
as A's quotation of B's statement in the example above. Therefore, in the
absence of an express or implied provision permitting the admission of hearsay
evidence in the arbitration agreement, hearsay statements in an affidavit
received under the Arbitration Act should normally be regarded as admissible
evid~nce by the arbitrator only if one of the exceptions in s 3(1) of the Law of
Evidence Amendment Act applies. 188 Where the maker of the affidavit is not
available for cross-examination in arbitration proceedings, the cogency of
hearsay evidence in that affidavit is limited, unless it is supported by other
evidence, because the accuracy of the deponent's recollection cannot be tested.
There is much truth in the remark that '[w]hen the evidence is ... on affidavit
one is really looking at the draftsman's interpretation of the interpretation
which the witness puts upon the words of the person whose speech [the witness]
is reporting' . 189

6.7 The arbitrator's role regarding the gathering of evidence

It was stated above 190 that one of the important characteristics of the law of
evidence and the adversarial procedure as applied in South Africa is party
control over the presentation of evidence to the adjudicator. In this paragraph
we assess the effect of this characteristic on the arbitrator's powers to gather
and to restrict admissible evidence and on the use by the arbitrator of his own

186 Act 42 of 1965 s 14(1)(b)(v). Assuming that this provision is enabling rather than proscriptive, the
arbitrator could receive evidence on affidavit if authorised to do so by another Act, eg in the
circumstances described bys 22 of the Civil Proceedings Evidence Act 25 of 1965.
187 See 231 above regarding s 3(4) of the Law of Evidence Amendment Act 45 of 1988.
188 Act 45 of 1988. See 231 above for these exceptions.
189 See Mnyama v Gxalaba 1990 (1) SA 650 (C) 654E.
190 See 217n25 above.
Evidence 241

knowledge. The arbitr~tor's discretion to allow a party to reopen his case for
the purpose of submitting fresh evidence out of time is discussed elsewhere. 191

6.7.1 The calling of witnesses by the arbitrator

Subject to the arbitration agreement, the arbitrator has the statutory power to
examine a witness who has been summoned to give evidence. It is for a party
to procure a subpoena for a witness and the arbitrator has no such power under
the Arbitration Act. 192 Consistent with the principle of party control over the
presentation of evidence, the English courts have held that an arbitrator has no
power to call a witness, including an expert, against the will of either of the
parties 193 and if he does so it will amount to misconduct. 194

6.7.2 The arbitrator's power to limit evidence

On the one hand, the parties traditionally control the evidence submitted to the
arbitrator, which implies that they may submit any admissible evidence. On the
other hand, one of the advantages claimed for arbitration is that it can be less
expensive than litigation and, as a result, one of the objects of the preliminary
meeting is to ensure that the procedures used in presenting evidence are
cost-effective. 195 Obviously an arbitrator could and should intervene during a
hearing to curtail repetitive cross-examination, which is not resulting in any
new evidence nor succeeding in testing the cogency of evidence already
presented. However, in appropriate circumstances, it may be proper for the
arbitrator to go further and to restrict the evidence which parties wish to lead
on certain aspects of a dispute. Such circumstances arose in Carlisle Place
Investments Ltd v Wimpey Construction (UK) Ltd. 196 As we are not suggesting
that the arbitrator's power to restrict evidence is one which should be lightly
exercised, the case is discussed in some detail.
The contractor constructed two office blocks which had 83 roofs and a
dispute arose as to whether the contractor was liable for defects in the roofs.
The arbitrator was an experienced architect. The parties were aware that if
191 See 205 above.
192 Section 16. See 181 above.
193 If the arbitrator expresses a desire to the parties to call a particular witness or even asks for their
consent, a party may object privately but may be unwilling to express that objection or to withhold
consent, out of fear that the arbitrator will draw a negative inference. Silence on the part of the parties
thus does not necessarily indicate concurrence with the arbitrator's suggestion. Therefore, unless the
arbitrator is empowered by the arbitration agreement to call witnesses (see eg 245-6n215 below), if he
believes a witness can give important evidence, it seems preferable that he should issue an invitation to
both parties for one of them to call the witness and take no further action if neither responds.
194 See eg Re Enoch and Zaretsky: Bock & Co's Arbitration (1910) 1 KB 327; Veritas Shipping
Corporation v Anglo-Canadian Cement Ltd (1966) 1 Lloyd's Rep 76; Jacobs 72; Parris 118-19. Because
South African courts have tended to construe the term 'misconduct' more restrictively than their English
counterparts (see 292 below), it may be necessary in this country to attack the arbitrator's action as a
gross irregularity in the conduct of the proceedings in terms of s 33(1)(b). His action could presumably
also amount to 'good cause' for his removal from office under s 13(2) (as to which see 105 above).
195 See 20 and 120-1 above.
196 (1980) 15 BLR 109. See also Parris 128.
242 Arbitration in South Africa: Law and Practice

evidence was led regarding the defects in each individual roof the whole
arbitration, particularly costs, could get totally out of control. Attempts by
correspondence to achieve the restriction of evidence failed. The contractor
then asked the arbitrator to rule that there should be a selection of only eight
roofs with reference to which the issues of liability and quantum would be
determined. This application was opposed by the owner. Having heard both
parties, the arbitrator ruled that the issue of liability be determined by
reference to a number of roofs, not to exceed 25, to be selected by the parties.
He also provided that if the parties were unable to agree on the selection and,
by implication, wished to raise issues concerning additional defects in another
roof, then either party could apply for a further ruling. The owner then wished
the question of law, as to whether the arbitrator had the power or ought
properly to issue a ruling limiting the reception of otherwise admissible
evidence in this way, to be referred to court. 197 The owner's application was
rejected by the court. The court noted that the· arbitrator is under a duty to
resolve a dispute referred to him in accordance with the rules contained in the
submission. Where, as in this case, the submission is silent, the arbitrator is the
master of his own procedure. On the facts stated above and bearing in mind
the expertise of the arbitrator and the danger of escalating costs, the court held
that it could not be said that the arbitrator was refusing to decide the case
submitted to him nor that he was refusing to allow either party a fair
opportunity to present and prove its case. The court continued:
'Nor do I see how it can be said that he is acting unfairly. I know of no requirement
that an arbitrator must allow each party to call all the evidence which he wishes to
call _'198
Unless the parties have expressly or by implication agreed that they will not call
expert witnesses, we submit that an arbitrator cannot deny a party the right to
call an expert, on the grounds that the arbitrator has the necessary expertise
and knowledge and that the use of another expert will add unnecessarily to the
duration and costs of the arbitration. Were the arbitrator to do so, a court may
well find that the party concerned had been denied a fair opportunity to present
and prove his case.

6.7.3 The recording of evidence

The Arbitration Act places a duty on the arbitrator to see that oral evidence is
recorded. He may record it himself, or the parties may agree how it should be
recorded. Failing such agreement, the arbitrator has a discretion to decide how
the evidence should be recorded, but this discretion must be exercised after
consultation with the parties. 199
Subject to the terms of the arbitration agreement, the arbitrator has a
197 (1980) 15 BLR 112-15. The owner applied to court under the since repealed s 21 of the English
Arbitration Act of 1950, which can be compared to s 20 of the South African Act ( discussed at 206-11
above).
198 At 115-16.
199 Act 42 of 1965 s 17. See further 187 above.
Evidence 243

discretionary power to inspect any goods or property involved in the

reference. 200 Unless the arbitration agreement (whether expressly or by
implication) otherwise provides, the arbitrator should hold the inspection in the
presence of both parties, their legal representatives, if any, and, where
appropriate, witnesses.
In a more formal arbitration, where the parties are legally represented and
make use of expert witnesses,2° 1 it is important that the arbitrator and the
parties should have a clear mutual understanding on how evidence gathered by
means of an on-site inspection (inspection in loco) is to be recorded. In a recent
court case there was a difference of opinion between the trial judge and an
expert witness on what was observed during a crop-spraying test at an on-site
inspection. The Appellate Division · observed that there are two proper
methods for recording the observations of the court at an inspection. One
method is for a statement to be framed by the court and intimated to the parties
who should then be given an opportunity of agreeing with it or challenging it,
and, if they wish, of leading evidence to correct it. Alternatively, the court may
obtain the necessary statement from a witness, who is called or recalled after
the inspection has been made. The parties are allowed to examine the witness
in the usual way. 202 Whichever one of these methods is used the object is the
same, namely to get a record of what is accepted by the parties and the court
as having been observed at the inspection. It is submitted that other methods
could also be considered at an arbitration, for example, the parties, their legal
advisers or experts, as the case may be, could submit an agreed statement of
what was observed at the inspection to the arbitrator. If this statement conflicts
with the arbitrator's observations or contains what he regards as an important
omission, he should bring the matter to the attention of the parties and invite
them to comment.

6.7.4 The use by the arbitrator of his own knowledge

Pursuant to the principle of party control and the neutral and passive role of the
judge, the facts of a case should usually be determined solely on the basis of
evidence presented by the parties. The two most important instances where it
is unnecessary for a party to lead evidence are where a fact has been formally
admitted by his opponent and in the case of 'judicial notice' .203 Under the
process of judicial notice a judicial officer may accept the truth of certain facts
which are known to him, without evidence being led to prove those facts. The
facts must, however, be so well known 204 or so easily ascertainable from a
source of indisputable authority 205 that evidence to prove them would be

200 Section 14(1)(b)(vi).

201 As opposed to an informal arbitration where it is accepted that the arbitrator may rely exclusively·
on his own observations without conveying information on what he observed to the parties.
202 See Bayer South Africa (Pty) Ltd v Viljoen 1990 (2) SA 647 (A) 659I-660A.
203 See SE van der Merwe (1983) 347-8; Hoffmann & Zeffertt 415.
204 eg that there are seven days in a week.
205 eg by consulting a standard calendar or a map issued under reliable authority.
244 Arbitration in South Africa: Law and Practice

completely unnecessary or even absurd. The result of requiring formal

evidence of such facts would result in an unnecessary prolongation of trials. 206
One of the advantages claimed for arbitration compared to litigation is that
the arbitrator may be selected because he has special knowledge and expertise
in relation to the issues in dispute. 207 However, the extent to which he may take
'judicial notice' of matters of which he has this special knowledge and expertise
will depend on a number of factors, including the provisions of the arbitration
agreement, the nature of the arbitration proceedings, the qualifications of the
arbitrator and the purpose for which the knowledge and expertise are used.
If an arbitrator has been appointed for his special skill and experience in
assessing the quality of a certain type of goods (sometimes referred to as a
'look-sniff' arbitration), 208 it is quite acceptable for the arbitrator to examine
the goods privately and to rely on that examination to make his award, without
reference to the parties and without receiving evidence. In such instances there
is at least a tacit agreement between the parties, perhaps based on a custom in
that trade, that the arbitrator should proceed in this way. 209
Where there is to be a hearing, or at least written submissions by the parties
to the arbitrator in support of their respective cases, the parties may stipulate
expressly or by implication in the arbitration agreement (or in the submission)
to what extent and for what purposes the arbitrator may use his special
knowledge and expertise. 210 If they do not do so, the arbitrator should clarify
the matter at the preliminary meeting or even during the course of the hearing.
In the words of Mustill & Boyd: 211
'As a matter of general principle, an arbitrator should not rely on his own knowledge
of facts relating to the issues before him without telling the parties that he proposes
to do so and giving them an opportunity to comment on it or call rebutting
evidence .... There is always, however, the overriding consideration that neither
party should be taken by surprise; if the arbitrator is in any doubt as to whether the
parties could reasonably expect him to be in possession of the knowledge which he is
about to act upon or if he proposes to reject uncontroverted expert evidence, or to
decide the case on a point which has not been canvassed during the reference, he
should tell them what he proposes to do and invite their comments.'
It is submitted that arbitrators in South Africa would do well to follow this
advice. Certain aspects require amplification.
Where an arbitrator has been appointed because of his technical qualifica-
tions and expertise, there can be no objection in his using his knowledge and

206 See S E van der Merwe (1983) 348-9; Hoffmann & Zeffertt 416-25.
2JJ7 See 20 and 74 above.
2JJB See 201 above.
209 See too Mustill & Boyd 361.
210 In Dipenta Africa Construction (Pry) Ltd v Cape Provincial Administration 1973 (1) SA 666 (C)
669A-D the court was prepared to accept that where parties agree to appoint an engineer arbitrator with
the necessary expertise, it may be possible to infer that he should use his expertise to decide disputed
issues of a technical nature, without necessarily having to hear evidence on those points. The inference was
not necessarily applicable on the facts of the case, however, where the court was being asked to appoint
an engineer arbitrator against the wishes of one of the parties, who wanted an advocate to be appointed.
211 At 360-1.
Evidence 245

expertise (particularly in respect of matters generally known to a person with

such qualifications) to evaluate the evidence presented by the parties. The
reason for using a technically qualified arbitrator is to dispense with the need of
leading expert evidence to qualify the adjudicator to evaluate evidence and to
make inferences from facts. Where the arbitrator's qualifications and
experience indicate that he should reject uncontroverted evidence on a
fundamental issue or that the parties and their witnesses have overlooked a
vital point he should, in the interests of a fair trial, mention the difficulty and
invite comment. 212 It seems that the arbitrator should have greater latitude in
using his knowledge and experience to supplement the evidence presented
when his own knowledge relates to a matter which is generally known by
persons with his qualifications and experience, or if the matter concerns a
subordinate issue in the proceedings. However, where he proposes to use his
own knowledge and experience to supplement evidence on a fundamental issue
or to reject uncontroverted evidence on that issue, it would be in the interests
of a fair trial to disclose his intention to the parties so that they can react. 213
If the arbitrator in a dispute relating to a commercial contract is a lawyer, as
opposed to an arbitrator appointed because of his technical qualifications and
experience, the arbitrator's powers regarding judicial notice will be much
narrower.. For example, he could not come to a conclusion on the quantum of
damages without having evidence before him, unless he was clearly authorised
to do so by the arbitration agreement or submission. 214

6.7.5 The possible use of a neutral expert or assessor

Where the arbitrator does not possess the necessary expertise to gather or
evaluate evidence regarding technical matters in dispute, he could be
authorised by the arbitration agreement to appoint an expert or assessor to
assist him. In such event the parties and arbitrator should ensure that they
clearly understand what the role of the expert or assessor is to be. One
possibility is that the arbitrator should be empowered to appoint an expert to
investigate a particular matter (that is to gather evidence and to form an

212 Compare, however, Rhodesia Electricity Supply Commission v Joelson Brothers and Bardone
(Pvt) Ltd 1977 (4) SA 639 (R) 645D.
213 Some support for the above view is found in Zermalt Holdings SA v Nu-Life Upholstery Repairs
Ltd (1985) 275 Estates Gazette 1134 at 1138, quoted by Bernstein 120. Bingham J held:
'[T]he rules of natural justice do require, even in an arbitration conducted by an expert, that matters
which are likely to form the subject of [the] decision, in so far as they are specific matters, should be
exposed for the comments and submissions of the parties .... If [the arbitrator] feels that the proper
approach is one that has not been explored or advanced in evidence or submission then again it is his
duty to give the parties a chance to comment. If he is to any extent relying on his own personal
experience in a specific way then that again is something he should mention so that it can be explored.'
Compare, however, the more liberal and general approach in Rhodesia Electricity Supply Commission
v Joelson Brothers and Bardone (Pvt) Ltd (above) at 645B-D.
214 Mediterranean & Eastern Export Co Ltd v Fortress Fabrics (Manchester) Ltd [1948] 2 All ER 186
at 187; Bernstein 173.
246 Arbitration in South Africa: Law and Practice

opinion) and then report to the arbitrator. 215 The expert's report should be
made available to the parties for their perusal and they should usually be given
the opportunity to cross-examine him at the hearing. If a party disagrees with
the expert's findings or conclusions he could also call an expert witness in
rebuttal. 216
A further possibility is for the arbitrator to make use of an assessor to help
him evaluate evidence in a field requiring expertise not possessed by the
arbitrator. This assessor could fulfil one of two functions. The assessor could
merely assist the arbitrator in elucidating complex technical issues to save the
time and expense of explaining these matters to the arbitrator by means of
questions and answers put to experts during the hearing. The assessor assists
the arbitrator in understanding the effect and meaning of technical evidence. If
present at the hearing he could suggest questions to the arbitrator to put to
witnesses. However, where this approach is followed, the responsibility of
arriving at a conclusion is that of the arbitrator alone. 217 Alternatively, by way
of analogy to the role of assessors in criminal trials in South Africa, 218 the
arbitrator and assessor(s) could together participate in deciding the factual
issues, with an assessor possibly being restricted to findings of fact relating to
his special area of expertise. Dogmatically, the first alternative is preferable. It
is the function of the arbitrator to resolve finally the matters referred to him: he
may. consult others 219 but must ultimately make his own decision. He cannot
delegate this responsibility and therefore he cannot share it with a person who
is not an arbitrator. Where the second alternative is used, the assessor may in
reality be an arbitrator, although his function is limited to part of the
submission only. Because of the consensual basis of arbitration, the parties
could nevertheless provide that the assessor, although participating in decisions
on certain matters, is not to be regarded -as an arbitrator. If so, they should
make their intention clear to avoid problems with the application of certain
provisions of the Arbitration Act. 220

6.8 The standard and burden of proof

6.8.1 The standard of proof

At the conclusion of the hearing, the arbitrator will, more often than not, be
faced with a situation where the parties' respective versions as to what actually
happened conflict and the evidence presented on behalf of each party, when
215 See e g Parris 119 regarding the provision to this effect in article 27 of the UNCITRAL Arbitration
Rules. (See 304 below regarding these rules.) This technique is regularly used in litigation in Europe
(see De Vos (1988) 382-3, 388-91 and compare Beardsley 480-5).
216 See further Bingham (1985) 24-5 and the conflicting views of Spencer & Howard 185-93 on the
advantages and dangers of the use of neutral experts.
217 See Bingham 25, citing inter alia Richardson v Redpath Brown & Co Ltd [1944] AC 62 at 70.
218 Sees 145 of the Criminal Procedure Act 51 of 1977.
219 See Mustill & Boyd 359.
220 See eg s 14(3) and (4) as to the manner of arbitrators reaching decisions, s 24 regarding the formal
requirements for an award, and the provisions regarding the powers of the court relating to arbitrators.
 Evidence 247

considered individually, contains inherent contradictions. Which 'facts' must

the arbitrator accept as sufficiently proved for purposes of his award? To the
scientist, a 'fact' is 'something that has really occurred or is the case'. 221
Moreover, the object of the judge has been defined as being 'above all ... to
find out the truth, and to do justice according to the law'. 222 In his efforts to do
. justice, a judge would prefer to express his considered judgment as to what in
truth occurred. 223 However, for practical reasons the law is satisfied with a
lower standard. In civil proceedings it is sufficient if the party who has the duty
or burden of proving a particular fact 224 is able to establish that fact on a
preponderance of probabilities: it is sufficient if the judge can say 'I think it is
more probable than not'. The claim does not have to be proved 'beyond
reasonable doubt'-that is the standard of proof required in criminal trials. 225
As a matter of law, established practice and practical common sense, the
arbitrator should usually apply the same standard of proof which the courts
apply in civil proceedings. Were he to apply a higher standard, for example the
standard of proof in criminal proceedings, his action would arguably constitute
a gross irregularity in the conduct of the arbitration proceedings, 226 rendering
his award liable to being set aside by the courts. Furthermore, should
arbitrators generally require a higher standard of proof than the courts in civil
proceedings, arbitration would become less attractive than litigation to
claimants as a means of settling disputes.

6.8.2 The burden of proof

The general rule is that he who asserts must prove. 227 The claimant in an
arbitration must usually prove his claim in accordance with the standard of
proof in civil proceedings, and if he fails to do so, his claim must fail.
In a complex dispute, comprising several claims and counterclaims and
where a number of alternative defences have been raised to some or all of the
claims, and where each claim and defence give rise to a number of disputes of
fact, the general rule stated above may not be so easy to apply. If the arbitrator
turns to textbooks on the law of evidence for guidance, 228 he will usually be
confronted by a discussion of two technical terms, namely: (a) the onus or
burden of proof and (b) the evidential burden. It is necessary to distinguish
carefully between these two terms.
The onus or burden of proof ('bewyslas') determines which party will lose if
insufficient acceptable evidence is presented to the arbitrator to enable him to

221 The Shorter Oxford English Dictionary.

222 Jones v National Coal Board [1957] 2 .QB 55 at 63-4 per Denning LJ.
223 Bingham 2 asserts that the judge will usually be able to do this in most substantial cases and that

few such cases actually tum on the burden of proof discussed below.
224 See the next section as to which party bears this duty.
225 See generally Hoffmann & Zeffertt 524-8.
226 On the basis that the claimant, as the person required to establish his case, had not been treated

fairlr See further 294 below.

22 See SE van der Merwe (1983) 425 citing Pi/lay v Krishna 1946 AD 946 at 951.
228 See eg Hoffmann & Zeffertt ch 20; Schmidt ch 2.
248 Arbitration in South Africa: Law and Practice

make a finding on a particular factual point in dispute. 229 The general rule for
determining the onus or burden of proof is that he who asserts must prove.
Therefore the onus of proof is usually borne by the claimant, unless the
defendant, instead of merely denying allegations, raises a special defence, 23 0 in
which case the defendant bears the onus of proving his special defence. The
onus of proof is fixed by the pleadings and never changes during the course of
the hearing. 231
The onus of proof must be distinguished from the evidential burden or burden
of rebutta/2 32 ('weerleggingslas') which-arises as soon as sufficient evidence has
been led to create the risk that the other party may fail if he leads no evidence
on an issue, especially where the first party has made out a prima facie case in
his favour. (A prima facie case means that the party who first adduced evidence
has led sufficient evidence upon which a reasonable adjudicator might233 find in
his favour if no contrary evidence is led on that point. 234 ) This evidential
burden may shift several times from one party to the other during the hearing.
It may also be used by the arbitrator to establish who has the duty to begin to
lead evidence on a particular issue. 235
Schmidt236 uses a chess match as an analogy to distinguish the two concepts.
The rules provide that the champion will retain his title should the match be
tied at the end of the required number of games. The challenger therefore
bears the onus or burden of proof throughout the match. The evidential burden
is borne by the contestant who will lose if the match stops after a particular
game and may move from player to player on several occasions during the
course of the match.
The following practical example may also serve to distinguish the two
concepts. A contractor claims in arbitration proceedings the balance of the
amount allegedly owing for duly constructing certain works in terms of a
contract with the owner. The defendant (owner) denies that the work has been
properly completed and alleges as a special defence that even if it has, the
contractor's right to recover payment has lapsed through prescription. The
contractor has the burden of proof to establish his claim and if he succeeds, the

229 See Schmidt 23.

230 Usually a defence involves a denial of the facts alleged or conclusions of law advanced by the
claimant in his statement of claim. In the case of a special defence, however. the defendant may even
admit the facts alleged but aver that additional circumstances enable him to avoid the legal
consequences of those facts. See eg the special defence of prescription in the practical example below.
231 Pi/lay v Krishna (above) at 951-3. In labour arbitrations concerning unfair dismissals, arbitrators
usually place the burden of proof on the employer to show that the dismissal is fair (see O'Regan (1989)
56'fl,
2 Suggested by Schmidt 26 as a t"ranslation of 'weerleggingslas' and being a shortened form of 'the

burden of adducing evidence in rebuttal' used in South Cape Corporation (Pty) Ltd v Engineering
Management Services (Pty) Ltd 1977 (3) SA 534 (A) 5488-C.
233 Not 'ought to'.
234 See SE van der Merwe (1983) 429-30. See further Hoffmann & Zeffertt 596-7 and SE van der

Merwe ( 1983) 33 for the difference between a prima facie case or prima facie evidence in this sense and
prima facie proof.
235 SE van der Merwe (1983) 426-7.
236 At 24n5.
Evidence 249

defendant will bear the burden of proof to establish his special defence. The
evidential burden in respect of the contractor's claim will shift from the
claimant to the defendant as soon as the claimant adduces sufficient evidence
on which the arbitrator might (not should) find in his favour (that is by the
claimant establishing a prima facie case). He could do this by producing a final
certificate by the architect for the amount claimed. 237 The evidential burden
will shift to the defendant, who could then adduce evidence of latent defects
which were discovered after the issue of the certificate. If this contention is
correct, the defendant is not bound by the certificate in the arbitration
proceedings in that he can require the arbitrator to consider whether the
alleged defects have been proved. 238 The evidential burden would then shift
back to the claimant to adduce evidence to establish either that the defects did
not exist or that he was not legally liable for the defects.

6.9 Practical advice on the evaluation of evidence

There are three characteristic features of the role of a judge or arbitrator in
evaluating evidence which emphasise the gravity of the task. First, he is always
presented with conflicting versions of the events in question: otherwise there
would be no dispute of fact for him to resolve. Secondly, his determination of
the factu_al issues is subject to procedural and evidential restraints. Thirdly,
although this is less relevant if the parties are large companies or government
agencies, his determination has a direct practical effect on people's lives, with
important consequences for their pockets and reputations. 239 A further
iIPportant consideration in arbitration proceedings is that the factual findings of
an arbitrator, unlike those of a judge, are final and not subject to appeal. 240
This factor should increase rather than diminish the arbitrator's sense of
responsibility.
Experienced judges241 have suggested the following procedure for evaluating
evidence and the credibility of oral witnesses:
First, the arbitrator should start with what is common ground, that is the
undisputed facts which both parties accept.242 Secondly, he should add to these
the facts which, although not accepted by both parties, are shown to be
incontrovertible. Notwithstanding the traditional and exaggerated preference
of the English evidential system for oral evidence, 243 the sources of these facts

237 See eg Withinshaw Properties (Pry) Ltd v Dura Construction Co (SA) (Pry) Ltd 1989 4 SA 1073
(A) 10758-C.
238 Compare eg the JBCC (November 1992) contract clauses 25.5 and 25.6.
239 See Bingham 2-3.
240 See 271 below regarding the finality of an award and 285-95 below regarding the limited grounds
on which it can be attacked. However, a judge's findings of fact are not easy to dislodge on appeal (see
Bingham 1, 7).
241 See also on the evaluation of evidence Hoffmann & Zeffertt 588-611; SE van der Merwe (1983)
ch 28; Nicholas 32-4.
242 See Bingham 3 and the much-quoted view of MacKenna JO, adopted by Lord Devlin in The Judge

63.
243 See Mears 1441.
250 Arbitration in South Africa: Law and Practice

will usually be documents made before the dispute arose and evidence
independent of human recollection, for example evidence pointed out to an
arbitrator at an on-site inspection. The reliability of conflicting oral evidence
can be assessed against the facts established by the first two steps. 244
The next step is to assess the credibility of oral witnesses. This involves an
assessment of both the truth and reliability of oral evidence. The following
factors have been suggested as the most important in determining whether a
witness is telling the truth:
(a) the consistency of the witness's evidence with the agreed or incontrovert-
ible evidence;
(b) the internal consistency of the witness's evidence: if it contains internal
contradictions it is then necessary to decide which parts to reject; and
(c) consistency with other witnesses or with what the witness has said on other
occasions. 245
Although trial judges in the past apparently placed much reliance on
demeanour as a means of testing the honesty of witnesses, the present trend is
to distrust this method. 246 Demeanour may be defined as the conduct, manner,
bearing, behaviour, delivery and vocal inflexion of a witness when giving
evidence, that is any characteristic which does not appear from the transcript of
his evidence. 247 The following is a well-known summary of the problems
associated with deductions from demeanour:
'[A witness] speaks hesitantly. Is that the mark of a cautious man, whose statements
are for that reason to be respected, or is he taking time to fabricate? Is the emphatic
witness putting on an act to deceive me, or is he speaking from the fullness of his
heart, knowing that he is right? Is he likely to be more truthful if he looks me straight
in the face than if he casts his eyes on the ground, perhaps from shyness or a natural
timidity?' 248
There are three further factors in assessing the importance to be attached to
demeanour. First, although the ability to tell a coherent and plausible story is
very likely to impress any tribunal of fact, that ability is also the hallmark of the
confidence trickster. Secondly, hardened lawyers tend to overlook the
unnerving effect of giving evidence for the first time on a witness, although this
factor may be less important in arbitration proceedings if the arbitrator
succeeds in creating a relaxed atmosphere during the hearing. Thirdly, the
difficulty of making accurate deductions from demeanour is accentuated if the
witness has a different nationality, race or culture to that of the judge or

244 See Bingham 3; MacKenna 10 in Devlin 63. .

245 The factors are a combination of those suggested by Bingham (1985) 4-5 and Eggleston 192-3
quoted by Mears 1444. They refer to two other factors, namely the 'credit' of the witness (a discussion
of which is not practical in the context of this chapter) and demeanour, which is discussed below.
246 See Bingham 7-9; SE van der Merwe (1991) 284-5; Nicholas 36-7.
247 Bingham 7.
248 MacKenna 10, quoted by Devlin 63 and Bingham 8.
Evidence 251

arbitrator, particularly if the former is giving evidence in a second or third

language or through an interpreter. 249
A more important test than demeanour in evaluating the credibility of
witnesses is probability: that is where one thing may be regarded, in the general
course of events, as being more likely to have happened than another. An
arbitrator with experience in the relevant field will be more able to assess these
probabilities than a judge without such experience. The arbitrator must
nevertheless bear in mind that the improbable account may nevertheless be the
true one. 250 If the arbitrator is unable to decide which party's version is more
probable, then he should decide against the party who bears the onus of proof
on that issue. 251
Even if a witness is not being untruthful, his evidence may nevertheless be
unreliable. 252 The tests for distinguishing a reliable witness from a truthful but
unreliable witness are basically the same as those discussed above for
determining truthfulness. An arbitrator furnishing a reasoned award should
also be extremely cautious about labelling a witness as a liar unless it is
absolutely necessary for purposes of the award. 253 In brief, three causes of
unreliable evidence from honest witnesses are:
(a) insufficient opportunity to properly observe an incident which happened in
a very short space of time;
(b) loss of recollection, particularly if the oral evidence is given a long time
after the event occurred; and
(c) what has been termed 'wishful thinking' or 'the human capacity for
honestly believing something which bears no relation to what really
happened'. 254

6.10 The arbitrator's duty to apply the rules of substantive law

In making his award, the arbitrator is under a duty to apply the rules of
substantive law. 255 In other words he must reach his decision by applying the
rules of substantive law to his findings on the facts. There is no express
provision to this effect in the Arbitration Act, but support for this view may be
implied from at least one provision of the Act and from the case law. It also
receives support from the common law 256 and other legal systems. 257 However,
249 See Bingham 10.
250 See generally Bingham 12-15; Nicholas 42-4. See also on probability the dissenting speech of
Lord Pearce in Onassis and Calogeropoulos v Vergottis (1968] 2 Lloyd's Rep 403 at 431-2.
251 MacKenna 10 quoted by Bingham 13. See 247-8 above regarding the onus of proof.
252 See Nicholas 38-42.
253 A person knowingly giving false evidence under oath or solemn affirmation to an arbitration
tribunal commits a criminal offence (see the Arbitration Act 42 of 1965 s 22(2)).
254 See Bingham 16-18; Browne 6. Compare Nicholas 41 who states that a witness's ability to recall
accurately while giving oral testimony will depend, inter alia, on the type of questions put, the way in
which they are worded and who is asking them. In the witness's desire to assist, the line between
accurate recall and unconscious fabrication is easily crossed.
255 'Substantive Jaw' in this context refers to the legal rules concerning the merits of the dispute as
op£osed to the law applying to the arbitral procedure.
6 See eg Voet 4.8.2 with reference to an 'arbiter'.
252 Arbitration in South Africa: Law and Practice

because of the finality of an arbitrator's award, the parties to an arbitration may

not have an effective remedy should the arbitrator not understand and apply
the rules of substantive law correctly when making his award.
An indication that the legislature assumes that the arbitrator will apply the
rules of substantive law in making his award may be found in s 20 of the Act,
which allows the arbitrator in certain circumstances to submit a question of law
to the court for a binding opinion. 258 The purpose of this provision is to enable
the court to retain some degree of control over the rules of substantive law
applied by arbitrators in arbitration proceedings. 259 Moreover, although our
courts have not been prepared to interfere with an arbitrator's award where he
is alleged to have made a bona fide error in applying the rules of substantive
law, 260 the position would be different if it could be shown that he had wilfully
ignored the rules of substantive law and the submissions of the parties in this
regard entirely when making his award. 261
On the assumption that the relationship between the parties and the
arbitrator has a contractual basis, 262 there is a strong logical argument in
support of the arbitrator's duty to apply the rules of substantive law. 263 By their
contract, the parties have agreed that their substantive rights should be
governed by South African law. By their arbitration agreement they have
agreed that a dispute regarding these rights should be resolved by arbitration.
They then enter into a contract with the arbitrator whereby he undertakes to
decide upon their rights. Logically these rights should be determined according
to South African law. Moreover, several policy considerations have been
suggested in support of the rule. It may be regarded as the price demanded in
consideration for the judicial enforcement of arbitration agreements, judicial
support for the arbitration process and the judicial enforcement of arbitration
awards. 264 There is also the danger that if arbitrators were freed from the
257 For the arbitrator's duty under English law to apply the rules of substantive law. see Mustill &
Boyd 68-71 especially 70n6; Thomas 167-71. For this duty in other legal systems see the legislation
referred to in n 268 below.
258 See 206 above.
259 Compare Administrator, Transvaal v Kildrummy Holdings (Pry) Ltd 1978 (2) SA 124 (T) 129A.
260 See Dickenson & Brown v Fisher's Executors 1915 AD 166 at 176; Clark v African Guarantee &
Indemnity Co Ltd 1915 CPD 68 at 78-9. The attitude of our courts regarding such errors follows
logically from the rule that an arbitrator"s award is final and not subject to appeal (see Dickemon &
Brown v Fisher's Executors (above) at 174). However, in RPM Konstruksie (Edms) Bpk v Robinson
1979 (3) SA 632 (C) 635H, the court, when rejecting an application for the setting aside of an award,
held that in interpreting an arbitrator's award, there is no assumption that an arbitrator knows and
applies the principles of our law. This statement must be seen in its context. It was in answer to counsel's
contention that the only way the arbitrator could have reached a certain conclusion was by applying a
particular rule of law. The court also correctly pointed out that even if the arbitrator had made an error
of law, such error was, by itself, no ground for setting aside the award (at 636A). Properly interpreted.
the decision is not authority for the view that an arbitrator, when making his award, is not obliged to
ap!!;'y the rules of substantive law to the merits of the dispute.
1 Compare Dickenson & Brown v Fisher's Executors (above) at 176. For purposes of setting aside
the award by the court under s 33(1), it would appear that such behaviour would constitute 'misconduct'
particularly if it could be shown that the arbitrator had acted in bad faith. See further 292-3 below.
262 See 93-4 above.
263 See Mustill & Boyd 69.
264 See Thomas 172.
Evidence 253

harness of substantive law and at least some judicial superv1s1on of their

application of it, the rules applied by arbitrators could differ substantially from
the ordinary principles of substantive law applied by the courts. This would
increase uncertainty among users of arbitration regarding likely awards and
could particularly prejudice commercially weaker parties who have little
bargaining power when confronted with a standard form contract with an
arbitration clause. 265
Particularly in the context of international arbitrations, the parties may
stipulate that their substantive rights should ·be determined by a system of law
which differs from that of the land where the arbitration is held. This choice
should then be respected by the arbitrator. 266 It follows, particularly in the
context of an international arbitration held in South Africa, that the arbitrator
is not necessarily obliged to apply South African law to the merits of the
dispute, but some other law designated by the parties. It remains to consider
whether South African law should recognise a provision in the arbitration
agreement, whether in the context of an international or a domestic arbitration,
whereby the parties indicate that the arbitrator is not required to apply the
rules of substantive law strictly but may decide the dispute as an amiable
compositeur267 or ex aequo et bono. In many jurisdictions, this matter is now
regulated by legislation. 268

265 See further Thomas 172-4, who relies especially on certain dicta in Czamiko11· ,, Roth, Schmidr

and Company [1922] 2 KB 478 (CA). However. the same writer (at 181) regards these arguments as
unconvincing for purposes of elevating the general rule obliging the arbitrator to apply substantive law
into an immutable principle. For example. although the danger of arbitrary awards exists. it is unlikely
that a separate and different system of law applied by arbitrators is likely to develop alongside the law
apf,lied by the courts, because of the privacy of arbitration proceedings and the resultant awards.
66 See Mustill & Boyd 71; Thomas 170-1.
267 The concept 'amiable composition' has been judicially defined for purposes of modern French law

as follows:
'In conferring on the Tribunal the power of amiable composition, the parties have manifested their
wish to see their dispute decided not by the application of the rules of law alone but also to obtain an
equitable and acceptable solution by an adaptation, if appropriate, of the law to the totality ... of the
factual circumstances governing the relations of the parties' (see Christie (1992) 264 ).
For the history of amiable composition see inrer alia Christie (1992) 263; Zimmermann 528-30;
Rubino-Sammartano 7-9. Initially, his role was that of a conciliator, making suggestions to bring the
parties to a settlement. Rubino-Sammartano still attributes this meaning to the term in modern law, and
endeavours to distinguish it from the power to decide ex aequo el bona, namely a discretionary power
conferred on the arbitrator to mitigate strict Jaw in arriving at his decision. The term 'amiable
composireur' is, however, used in the French arbitration legislation referred to in the next footnote as
an arbitrator with the power to decide, as opposed to a conciliator who is able to suggest. In this section
we use the term 'amiable composireur' as it is used in modern French law.
268 Concerning international arbitrations, see eg the French New Code of Civil Procedure book JV art

1497 and the UNCITRAL Model Law art 28(3). In domestic arbitrations, the French Code art 1474
requires the arbitrator to apply substantive law, unless the parties have authorised him in the arbitration
agreement to decide as amiable compositeur. The Dutch Arbitration Act of 1986 (Code of Civil
Procedure book IV art 1054(1) and (3)) contains a similar provision which applies to both domestic and
international arbitrations. For the position in German law see Zimmermann 530 and for European
jurisdictions generally see Rubino-Sammartano 10-11. Such provisions now also occur in the statutes of
at least one common-law jurisdiction, namely Australia. For example, s 22 of the Commercial
Arbitration Act 1984 (Victoria), intended for domestic arbitration, provides that the arbitrator must
254 Arbitration in South Africa: Law and Practice

Space does not permit anything approaching a detailed discussion of the

extent to which the South African courts should recognise a clause in an
arbitration agreement permitting the arbitrator to decide as amiable composi-
teur269 and the meaning that they should attach to the clause. 270 Part of the
problem is that the wider the meaning the court attaches to the clause, the more
it may undermine the parties' substantive agreement by declining to give effect
to their substantive legal rights. 271 We nevertheless submit that the courts (and
an arbitrator in making the award which is the subject-matter of the court
proceedings) can give a pragmatic interpretation to the clause to achieve a
satisfactory result.
The clause must still be interpreted subject to considerations of public policy,
because the courts will not enforce an award which is contrary to public
policy. 272 Furthermore, the courts will not enforce an illegal award. 27 3
Therefore, if the arbitrator attempts to apply the clause in a way which would
result in an illegal award or if he makes an award in South Africa which ignores
the peremptory provisions of a South African statute, it is unlikely that the
court would be prepared to enforce it. 274
It is also obvious that the arbitrator cannot merely ignore the substantive
provisions of the contract which also contains a clause entitling him to decide
as anJ,iable compositeur. 275 The most practical application of the clause would
be to allow him to moderate the contract by not enforcing or wholly enforcing
an obligation which would produce an inequitable result, but without rewriting

determine the issues according to law unless he is authorised by the parties in writing to determine any
question 'by reference to considerations of general justice and fairness'. From the marginal note it is
clear that this is a reference to a decision as amiable compositeur or ex aequo et bona.
269 Examples of possible clauses include the following. The clause may simply provide that he is
'authorised to decide as amiable compositeur' or that 'in reaching his decision he shall not be obliged to
follow the strict rules of law' or that 'he may determine any question by reference to considerations of
general justice and fairness'. The first and third examples follow the wording of the French and
Victorian legislation respectively. They show that even in a country with a statutory provision for
amiable composition, it will still be necessary for the courts to interpret the wording of the statute to
decide the extent to which it authorises the arbitrator to depart from the strict rules of substantive law
in making his award.
270 See further, to mention only a few examples of the abundant literature on the topic, Mustill &
Boyd 74-86; Christie (1992) 259-66; Rubino-Sammartano 5-16; Thomas 166-83; and, particularly as
regards the possibility of the parties freeing the arbitrator from the rules of private law in the
international context, Mann (1986) 241-61.
271 See Mustill & Boyd 76-7, who suggest that there are at least seven possible interpretations of the
clause which will require consideration. See also Mustill & Boyd 83-5 regarding the effect of the
interpretation of the clause on the substantive agreement.
272 See Veldspun (Pty) Ltd v Amalgamated Clothing and Textile Workers Union of South Africa 1992
(3) SA 880 (E) 906B-C. Similarly, in French law, an action is provided for the annulment of an
arbitrator's award, including one given by an arbitrator as amiable compositeur, if the arbitrator violates
a rule of public policy (see the New Code of Civil Procedure art 1484(6); Christie (1992) 265).
273 See Veldspun (Pty) Ltd v Amalgamated Clothing and Textile Workers Union of South Africa above
8941-J, 898D-J.
274 Compare Mustill & Boyd 78.
275 See Mustill & Boyd 79. The Dutch Arbitration Act (art 1054(4)) also requires an amiable
compositeur to take into account any applicable trade usages.
Evidence 255

the contract to impose new obligations on the parties. 276 A departure from the
parties' substantive rights should also be supported by objective reasons.m It
is interesting that arbitration legislation which empowers the parties to
authorise the arbitrator to act as amiable compositeur usually also requires all
arbitrators to furnish reasoned awards. 278 The imposition of an obligation to
give reasons could be an important protection against the abuse of a power to
decide as amiable compositeur. 279
It is clear from the above that a provision for amiable composition in an
arbitration agreement is by no means a licence to impose the 'home-made law
of the particular arbitrator'. 280 An arbitrator who is authorised to decide as
amiable compositeur should start by establishing the legal position by applying
the rules of substantive law to the contract. If he regards the result as fair, it is
unnecessary to go further. If, however, he considers that the result of applying
the rules of substantive law strictly would produce a substantial injustice, he
may depart from the rules or the contract to the extent necessary to achieve
justice between the parties, but subject to the restrictions discussed above.
There have been suggestions that the time is ripe to sanction an amiable
composition clause in an arbitration agreement in English law, but that until
the courts have clarified the position, the incorporation of such a clause into the
arbitration agreement cannot be recommended. 281 Although the acceptance of
such clauses in South Africa can also be justified with reference to the civil law
origins o{ Roman-Dutch law, their use requires similar caution until their
interpretation and effect have been considered by our courts.

276 See Christie (1992) 265 regarding the position in French law. He states that the power to

moderate, although limited to non-essential clauses of the contract, should not be exercised timidly, and
may be used to reduce contractual penalties, reduce or share profits, and reduce the amount of a
contractual credit. A possible application in the context of the South African construction industry could
arise where the contract provides that in certain circumstances which have delayed the completion of the
works, the contractor has the right to claim an extension of time for completion if he presents the claim
within a stipulated time, failing which he would lose any right to the extension and would become liable
to pay penalties for late completion. Where a contractor was late in submitting an otherwise valid claim
for an extension of time, an arbitrator who considered that the time-bar would be unreasonably harsh
on the contractor, might refuse to enforce it. (Compare our criticism of Administrateur, Kaap v Asia
Konstruksie (Edms) Bpk 1989 (4) SA 458 (C) 470D-E at 116 above, where we submit that a court has
no power in law to extend a contractual time-limit, merely because it considers that the time-limit will
operate unfairly in the particular circumstances.) See also Thomas 182 for examples of where the power
to decide as amiable compositeur could be useful in English law.
277 See Christie (1992) 265 regarding the position in French law.
278 See the French New Code of Civil Procedure art 1471; the Dutch Arbitration Act art 1057(4)(e);

the Commercial Arbitration Act (Victoria) s 29(1)(c).

279 See Thpmas 182-3 for the need to provide protection against awards 'born of tyrannical

arbitrariness and blind stupidity'. .

280 See Christie (1992) with reference to the judgment of Bankes LJ in Czarnikow v Roth, Schmidt

and Company (above) at 484.

281 See especially Christie (1992) 262-3, 266. Thomas 180-3 also supports the recognition of such
clauses in principle, particularly in the context of international arbitrations in England. He suggests (at
182) that the policy against recognition is based on an 'adherence to the [erroneous] belief that beyond
justice according to law there is nothing other than injustice'.
CHAPTER 7

The Award

7.1 Introduction
The award is the consummation of the arbitration proceedings. The arbitrator
has heard each party's version of the facts in dispute and his arguments why his
case ought to be upheld and that of his opponent dismissed. The arbitrator
must now reconcile the conflicting allegations of fact and resolve the differing
points of view and so decide the issues before him. He must then convey his
decision to the parties in writing by means of a document known as an award.
Having made and published his award, he will have completed his arbitral
duties. The powers vested in him will be exhausted and he said to be functus
officio. 1
The manner in which the arbitrator should approach the evidence has been
discussed above. 2 Faced with a tempestuous sea of conflicting evidence and
opposing arguments, he might be tempted, like Ulysses, to steer a middle
course between the two extremes of Scylla on the one side and Charybdis on
the other. 3 But the tendency of inexperienced arbitrators to seek a result along
some via media between the two extremes is open to trenchant criticism. An
award that seeks to split the difference between the parties is seldom just and
is even less likely to be satisfactory to the parties. An arbitrator should not fear
to take a robust approach and should grasp the issues firmly and make an award
strongly in favour of one of the parties where this is indicated. 4 A positive
attitude will be admired by at least one of the parties, a weak one by neither.

7.2 Period for making and delivering the award

7.2.1 Time-limit and its enlargement
Unless the arbitration agreement provides otherwise, the Arbitration Act
requires the arbitrator to make his award within four months of entering on the
reference, or within four months of being called on to act by notice in writing

1 That is, he has discharged his office. Section 30 of the Arbitration Act contains ;r statutory exception
by empowering the arbitrator to correct slips (see 272 below).
2 See 246-51 above.
3 This he cannot do in a 'flip-flop' or pendulum arbitration: he must take the one extreme or the other.

See 202 above.

4 Compare Duncan Wallace 855, who regards the instinct for compromise-the reluctance to hold a

claim wholly valid or invalid-as 'perhaps the most serious fault of non-legal arbitrators'.

256
The Award 257

from either party, whichever is the earlier date. 5 The term 'entering on the
reference' has been judicially construed as meaning that the proceedings have
reached the stage of the arbitrator 'enquiring judicially into the case' or
'hearing the case' or 'beginning to hear the parties'. 6 In other words the
arbitrator enters on the reference when he begins enquiring into the dispute for
the purpose of resolving it. In our view, the arbitrator does not enter into the
reference merely by performing administrative functions at a preliminary
meeting. 7 The concept 'entering on the reference' is less easy to interpret in the
context of a documents-only arbitration. Using the analogy of a hearing, it
would appear that the arbitrator enters on the reference when he receives the
first of the written submissions from a party, which is the equivalent of the first
party tendering evidence at an oral hearing. 8
The alternative date from which the four-month period runs is the date on
which the arbitrator was called on to act by a written notice from any party to
the reference. It appears that this notice could be effectively given only once
the arbitrator has been validly appointed and has accepted the appointment.
The notice could be used in practice where the commencement of the
arbitration proceedings is being delayed because one party refuses to
co-operate by agreeing a date for the start of the hearing. Under those
circumstances the other party could give written notice to the arbitrator to act
by fixing a date for the hearing under s 15(1) and to proceed with the reference
on that date. In this event, the four-month period would start from the date on
which notice was given to the arbitrator and not the date of commencement of
the hearing. 9
For many arbitrations, the period of four months is far too short. No doubt
when the Act was promulgated in 1965, arbitrations generally tended to be
much simpler than many today and the parties were frequently not formally
5 Section 23(a). Where the dispute has been referred to an umpire, he is required to make his award

within three months of entering on the reference, or within three months of being called on to act by
notice in writing from either party, whichever is the earlier date.
6 See Bhoo/a v Bhoola 1945 NPD 109 at 113-14. The definition of entering into the reference as

'[beginning] judicially to enquire into the case' was approved in Bester v Easigas (Pty) Ltd 1993 (1) SA
30 (C) 33F and is to be preferred to the fourth alternative suggested in the Bhoola case 114, namely that
of 'having the parties before him'. Seen 7 below.
7 For this reason the definition 'having the parties before him' in the previous footnote is

unacceptable. The statement in Bester v Easigas (Pry) Ltd (above) at 33G-H that the arbitrator entered
into the reference when the parties appeared before him for the first time is not inconsistent with our
view, as it would appear that the hearing proper started on that occasion. See also Pasa Construction
(Pty) Ltd v Roofing Guarantee Co (Pry) Ltd (WLD 18 August 1989, unreported (case no 12243/83))
where the four-month period for purposes of s 23(a) was calculated from the date on which evidence was
first received. The arbitrator may, however, arguably enter on the reference before the start of the
formal hearing if he takes an active role at the preliminary meeting or a pre-trial conference (equivalent
to case management by a judge) by, for example, persuading the parties to settle or eliminate certain
issues or by limiting discovery, in the light of submissions or information received regarding the true
issues in dispute.
8 This appears preferable to the alternative possibility that he enters on the reference only once all the
submissions have been received. Compare Bester v Easigas (Pty) Ltd (above) at 33E-F where the court
rejected the contention that the arbitrator enters on the reference only once the hearing of evidence has
been completed.
9 Section 23(a).
258 Arbitration in South Africa: Law and Practice

represented. Under those circumstances, it was a realistic time-limit. Jo But in

major arbitrations today where substantial amounts may be in issue and where
the parties are almost invariably formally represented, often by counsel, and
where postponements are frequently encountered, the four-month period may
have elapsed long before the hearing has reached its conclusion.
The Act 11 provides that the time may be extended by the parties by a written
agreement to this effect signed by both of them. 12 It therefore appears that the
parties themselves may validly extend the arbitrator's jurisdiction only by
complying with the statutory formalities and that an informal agreement
between the parties or an informal waiver by one party is insufficient for this
purpose. 13 However, it is clear that the fact that a party has continued to
participate voluntarily in the proceedings after the time-limit has expired will
be an important consideration if the court is asked to exercise its statutory
power to extend the time for making the award. This power may be exercised
by the court 'on good cause shown', whether the time for making the award has
expired or not.1 4
Although this statutory power of the court is contained in a proviso to a
provision regarding a statutory time-limit for making an award, we submit that
this power may also be used by the court to extend a time-limit imposed by the
parties for the making of an award in their arbitration agreement. 15
The court's power is discretionary and may be exercised 'on good cause
shown'. The term 'good cause' would include situations where delays occurred
despite the best efforts of the parties to adhere to the time-limit, and also where
the applicant for an extension has been powerless to avoid a delay caused by

10 The period of four months is one month longer than that in the colonial legislation which the

present Act repealed (see e g para (d) of the schedule to the Arbitrations Act 29 of 1898 (Cape)).
11 Section 23. The colonial arbitration legislation (see e g the schedule to the Arbitrations Act 29 of

1898 (Cape) para (d) followed the English Arbitration Act of 1889 sch 1 para (c). which allowed the
arbitrator to enlarge the time for making the award. A statutory time-limit aimed at ensuring that an
arbitrator conducted the proceedings and made his award expeditiously was pointless if the arbitrator
could extend that period (see the Law Reform Commission of British Columbia Report on Arbitration
LRC 55 of 1982 at 44), with the result that the statutory time-limit for making an award was repealed
in England by the Arbitration Act of 1934 s 21(6) and sch 3. Section 13(1) of the English Act of 1950
now authorises an arbitrator to make an award 'at any time' subject to the arbitration agreement and
the court's power under s 13(3) to remove an arbitrator who fails to proceed with 'all reasonable
dispatch'.
12 The wording of s 23 suggests that if the time for making the award has expired, the parties have no
power to extend the time as has the court. However, s 19(c) clearly envisages that the parties may
validly extend the period for making the award even after it has expired.
13 See Pasa Construction (Pty) Ltd v Roofing Guarantee Co (Pty) Ltd (above) at 12, but compare
Bester v Easigas (Pty) Ltd (above) at 33H. By imposing formal requirements the legislature arguably
overruled such cases as Town Council of Cape Town v Cape Government Railways (1903) 20 SC 32;
Reed v Reed 1909 EDC 244 at 251 and Naidoo v Estate Mahomed 1951 (1) SA 915 (N) 920H and
approved the obiter dictum in Ueckerman v Martens 1920 TPD 271 at 272 that a written agreement was
re?uired.
4 Section 23.
15 The court is empowered to extend the time for making 'any award' ('enige toekenning'). The
court's power in the colonial legislation to extend the period for making an award was contained in a
separate section and was in general terms (see eg the Arbitrations Act 29 of 1898 (Cape) s 15). Section
13(2) of the English Arbitration Act of 1950 also gives the court the power to extend contractual
time-limits for making an award.
The Award 259

the other party. Where the party seeking an extension of time from the court
had previously wilfully delayed the arbitration proceedings, the court may still
be prepared to grant an extension, because to refuse the application would
oblige the parties to start de novo with arbitration proceedings to resolve their
dispute. 16 Where a party has continued to participate in the arbitration
proceedings after the time for making the award has expired without giving any
indication of his intention to rely on this point, and with the apparent intention
that the arbitrator should give an award, the court will not let that party use the
fact that the time-limit has expired to escape liability when the award goes
against him. 17
Arbitration proceedings are sometimes very lengthy, particularly where
complex issues are involved, and it would be prudent for the parties in such
instances to exclude the provisions of s 23 by providing in their arbitration
agreement that the arbitrator is to make his award within a stipulated time after
the conclusion of the hearing. 18

7.2.2 Consequences of the expiry of the time for making the award
The Act is silent on the consequences of the expiry of the time for making the
award 19 before an award has been made. There can be little doubt, however,
that the effect of the period expiring is that the reference to arbitration lapses,
the arbitrator ceases to hold office, and neither party would be bound by any
award which the arbitrator might purport to make thereafter. 20 As it is the
reference which lapses rather than the arbitration agreement, the dispute is still
subject to a binding arbitration agreement and the parties would be bound to
commence the arbitration de novo unless they decide or the court directs that
the arbitration agreement should cease to have effect. 21 Where there is more
than one arbitrator, and the time for making the award expires, the arbitrators
automatically cease to hold office and the umpire, if one has already been
appointed, forthwith enters on the reference, unless the parties advise the
umpire that they intend to grant an extension of time or to apply to court for
such extension. 22

16 See the text to n21 below.

17 See Bester v Easigas (Pty) Ltd (above) at 34H-I; Naidoo v Estate Mahomed (above) at 922C;
compare Pasa Construction (Pty) Ltd v Roofing Guarantee Co (Pry) Ltd (above) at 12.
18 See eg rule 25.2 of the Standard Procedure Rules. From the parties' point of view, it is preferable
to fix a definite period for making the award, as opposed to a clause providing that the award shall be
made within a reasonable time after the conclusion of the hearing. In the case of a documents-only
arbitration, the period should run from the.date of the arbitrator receiving the last submissions. Where
the parties have contracted out of s 23 and given the arbitrator a certain period after the conclusion of
the hearing to make his award, they would still be able to rid themselves of an arbitrator who was
delaying the commencement and conduct of the hearing by means of an agreement under s 13(1) or an
apRiication to court under s 13(2) (see 105 above).
9 Whether this be the original four-month period or the time as enlarged by the parties or the court.
20 See Pasa Construction (Pty) Ltd v Roofing Guarantee Co (Pry) Ltd (above) at 11.
21 See s 3 of the Arbitration Act.
22 Section 19(c) of the Act. Subject to the terms of the arbitration agreement, the umpire has three
months within which to make his award, subject to the same provisions for extending the time.
260 Arbitration in South Africa: Law and Practice

The principle that the reference lapses on the expiry of the statutory period
for making the award is subject to an important qualification: it is still possible
for either the parties or the court to revive the reference and the arbitrator's
jurisdiction retrospectively .23 It is submitted that the purpose of the legislature,
in framings 23 of the Act, was not to penalise parties who have been somewhat
dilatory in proceeding with their arbitration and who have heedlessly allowed
time to run out, 24 but rather to encourage arbitrators to proceed expeditiously,
particularly as regards the production of the award, and to provide the parties
with an alternative mechanism for the removal of an arbitrator 25 who has been
the author of the delays. 26
7.3 Requirements for a valid award
The Arbitration Act lays down certain formal requirements for an award made
in terms of the Act. The Act contains no provisions regarding the contents or
substance of an award on the merits of a dispute. 27 However, if the award is to
be enforced by the court, 28 there are certain substantive requirements with
which its contents must comply.
7.3.1 Statutory or formal requirements
The award must be in writing and signed by all the members of the arbitration
tribunal.2 9 This apparently presupposes that the award is the unanimous
decision of all of them. The award is not invalidated, however, if a minority of
the members of the arbitration tribunal disagree with the decision of the
majority and refuse to sign the award, but such refusal should be mentioned in
the award. 30 There is no requirement that the signatures need be witnessed.
The arbitrator must ensure that he makes his award within the period
prescribed by the Act or the arbitration agreement or within any extended
period allowed by the parties or the court. 31 The award must be published in
the prescribed manner. 32
The award is not required to carry a revenue stamp. 33

23 Section 23 read with s 19(c) (see 258 above).

24 Otherwise the elaborate provisions in s 23 for the parties or the court to extend the period for
making the award, even retrospectively. would be unnecessary.
25 Compare the procedure for the removal of an arbitrator in s 13(2) of the Arbitration Act and
105 above.
26 It must be inferred that, if the reference is commenced anew, it would be before a different

arbitrator. Although the time could expire through an oversight on the part of both parties, they will not
both deliberately allow the time to run out without themselves renewing it, unless they wish to rid
themselves of a dilatory or incompetent arbitrator.
r, Compares 35(1) of the Arbitration Act regarding the components of an award of costs.
28 Whether under s 31 or as an or'1er for the performance of a contractual obligation. Sec 272-3
below.
29 Section 24(1).
30 Section 24(2). See further 264 below regarding decisions by tribunals comprising more than one
arbitrator.
31 See s 23 and 256-8 above.
32 Section 25 of the Act, which is apparently peremptory. See also 267 below.
33 Item 4 of sch 1 to Stamp Duties Act 77 of 1968, which required every deed of submission and every
arbitration award to be stamped, was deleted bys 15(1) of the Revenue Laws Amendment Act 88 of
1970.
The Award 261

7.3.2 Substantive requirements

7.3.2. 1 Format and language
The arbitrator is not obliged to couch the award in any particular form or to use
legal phraseology and terminology, and may use whatever form and language
best suit him to convey his decision. He should endeavour to be clear, explicit
and unambiguous. Where any uncertainty or ambiguity may exist, the court, on
hearing an application to have the award made an order of court, will tend to
adopt the interpretation which renders the award certain and final, rather than
one which renders it a nullity. 34
It must be remembered, however, that if the court is to enforce the award,
it will be reluctant to look beyond the award itself to determine the validity of
the award. 35 Of necessity, it will refer to the arbitration agreement, but
everything else that it will need to know in order to establish the validity of the
arbitrator's award ought to be apparent from the wording of the award itself.
Thus, if the arbitrator is not named in the arbitration agreement, he should
state in the award .how he came to be appointed. He should relate the award to
the arbitration agreement and, if the agreement does not recite the disputes
that he is required to determine, he should set out a brief summary of the
disputes which he was required to arbitrate in terms of the reference. He should
then go on to state clearly his finding on each matter referred to him for
decision. For the rest, he should ensure that his award is certain, final, possible,
lawful, and intra vires. 36

7.3.2.2 Certainty
It must be clear from the award who must do what. For example, an award of
money should be expressed in the form of an order directing one party to pay
a specified sum to the other. Nevertheless, an award would not be bad for
uncertainty if the exact amount was not specified as long as the award stipulated
clearly how the amount was to be computed. 37 However, in Dutch Reformed
Church v Town Council of Cape Town, 38 the award provided, inter a/ia, for the
payment of the fees to which an architect was 'legally entititled to' in
connection with certain plans for buildings which the claimant in the arbitration
34 Wood v Griffith (1818) All ER 294 (LC Ct), 36 ER 291; Jacobs 123.
35 Compare Administrator, Cape v Ntshwaqela 1990 (!) SA 705 (A) 715G, where Nicholas AJA stated
regarding the interpretation of a judgment:
'As in the case of any document, [a] judgment or order and the Court's reasons for giving it must be
read as a whole in order to ascertain its intention. If on such a reading, the meaning of the judgment
or order is clear and unambiguous, no extrinsic fact or evidence is admissible to contradict, vary,
qualify, or supplement it. Indeed, in such a case not even the Court that gave the judgment or order
can be asked to state what its subjective intention was in giving it. But if any uncertainty does emerge,
the extrinsic circumstances surrounding or leading up to the Court's granting the judgment or order
may be investigated and regarded in order to clarify it.'
36 Compare Du Plessis (1977) 410-14, who lists finality, certainty, possibility and intra vires as the
substantive requirements for an award; Mustill & Boyd 384-8; Walton & Vitoria 304.
37 e g if the award states that damages are to be paid at a stated rate on a stated quantity of goods. See
Mustill & Boyd 386 who doubt whether this principle extends beyond mere arithmetic.
38 (1898) 15 SC 14 at 19.
262 Arbitration in South Africa: Law and Practice

had intended to erect on land subsequently expropriated by the respondent,

without giving any other indication as to how the amount of the fees should be
determined. The failure to fix the amount of compensation in respect of the
architect's fees does not render the entire award invalid. Under these
circumstances a court will, on application, be prepared to remit the award back
to the arbitrator to render certain that portion which is vague and uncertain. 39
Arbitrators in England are empowered to make an award in a foreign
currency in appropriate circumstances. 40 In our view, arbitrators in South
Africa have a similar power. 41
Where the award is for the payment of a sum of money, the money will be
due and payable from the date of the award, 42 unless a contrary intention is
expressed in the award. Where one party is directed by the award to perform
a certain task, for example to remedy specified defects in certain building work,
the time-limit within which the work must be done should also be stated. But
if no time-limit is stated, it will be taken that performance must be rendered
within a reasonable time. 43

7.3.2.3 Final
The award must be final in the sense that it must deal with all the matters
submitted to the arbitrator and leave no matter unsettled. 44 It must therefore
be complete. 45 There is a partial exception in the case of an interim award.
While an interim award does not deal with all the matters referred to the
arbitrator, it must deal with all the matters which the parties have agreed shall
be the subject of the interim award, and is final and binding in respect of those
matters.
Where the award is incomplete, the courts may be prepared to either enforce
the remainder of the award or remit the award back to the arbitrator so that he
can finalise the matter which is incomplete. 46 Where the award refers a matter
which the arbitrator was required to decide to future and further proof, the
award will be defective for lack of finality.47 Therefore, although an arbitrator
can make an award for specific performance, where an arbitrator has been

39 At 22.
40 See Jugoslavenska Oceanska Plovidba v Castle Investment Co Inc [I 973] 2 Lloyd's Rep I (CA); 'The
Despina R', Services Europe At/antique Sud (SEAS) v Stockholms Rederiaktiebolag Svea ('The Folias)
[1979] 1 Lloyd's Rep 1 (HL). When such award will be appropriate will depend on the rules of
substantive law and the terms of the reference (see Must ill & Boyd 389nl4 ).
41 See also Jacobs 86.
42 See s 29 of the Arbitration Act, which provides that if an award is for the payment of money, the
sum awarded carries interest as from the date of the award at the same rate as a judgment debt, unless
the award provides otherwise.
43 Compare Mustill & Boyd 389. In terms of the English rules of court, the time within which the work

must be done must be specified in the award to render it enforceable by the court. .See further 265 below
for awards of specific performance.
44 Davis (1966) 46; Du Plessis (1977) 411.
45 Although Mustill & Boyd 384-7 treat completeness and finality as separate substantive

re~iremeots for an award, they concede (at 38702) that the two are almost indistinguishable.
See 273nl27 below.
47 Twentyman v Chisholm 3 Menz 161 at 169; Davis (1966) 46.
The Award 263

asked to decide whether certain work is defective and to what extent, it would
not be competent to order the contractor to rectify the work to the extent that
a specified architect regards the work as defective. 48
It is not competent for an arbitrator to make an award of absolution from the
instance where a party has Jed insufficient evidence to justify an award in his
favour. The effect of absolution from the instance is that the claimant can raise
the same issues again in whatever forum may be available. The arbitration has
thus failed in its purpose of resolving the dispute between the parties. An award
of absolution is therefore defective for Jack of finality and will not be made an
order of court. 49
To be complete, an award should include an order as to costs and it may be
remitted to the arbitrator if it makes no provision with regard to costs. 50

7.3.2.4 Possible
The award must be capable of being carried out. An award which requires a
party to do something which is physically impossible, such as to deliver specific
goods which have been destroyed, 51 is obviously incapable of enforcement. Nor
can an award require one party to rectify defects in a building which is under
the ownership and control of a third party who is not a party to the arbitration
proceedin~s. 52

7.3.2.5 Legal
The court will not enforce an award where the required action is illegal or
contrary to public policy, for example where a party is required to perform an
act which is illegal in terms of labour Jegislation 53 .or contrary to public policy. 54
The courts will also not enforce an award that has the effect of liquidating a
gambling debt. 55

48 In this case the award not only Jacks finality, but the arbitrator is also purporting to delegate the
power to resolve part of the dispute, which he may not do. See further Walton & Vitoria 311-12, who
distinguish in this regard between judicial and ministerial acts. An example of the latter is the taxing of
costs. The arbitrator must award costs (see 276-7 below), but having done so he can leave the amount
to be taiced or assessed at some future date by himself or the taxing master of the court (see 284 below).
For awards involving specific performance see 265 below.
49 See Irish & Co Inc (now Irish & Mene/1 Rosenberg Inc) v Kritzas 1992 (2) SA 623 (W) 633D-634C.
so See 277 below.
si This would be a circumstance which would presumably justify the remittal of the award to the
arbitrator so that he can award damages in lieu of the award for specific performance.
s2 See Du Plessis (1977) 166, 413.
53 See Veldspun (Pry) Ltd v Amalgamated Clothing and Textile Workers Union of South Africa 1992
(3) SA 880 (E) 894H-J with regard to s 18 and 19 of the Basic Conditions of Employment Act 3 of 1983.
54 See the Veldspun case (above) at 8981-J.
55 Some forms of gambling are prohibited by statute (see the Gambling Act No 51 of 1965) and a
transaction in breach of the statutory provisions would be illegal and void, with the result that an
arbitrator's award to enforce a debt arising from the transaction would also be void for illegality
(compare Morrison v Gerst 1940 NPD 101). Gambling or wagering not prohibited by statute is not illegal
but gambling debts are unenforceable in the courts to signify the courts' disapproval of such transactions
(see generally Christie (1991) 448-53). The courts would not enforce an arbitrator's award for the
264 Arbitration in South Africa: Law and Practice

7.3.2.6 Intra vires

The award must be within the jurisdiction of the arbitrator: he must not give a
decision on matters which are either not covered by the arbitration agreement
or which have not been referred to him for decision. 56

7.4 Award by a tribunal of more than one arbitrator

The Arbitration Act provides that where there are two arbitrators, they have to
be unanimous in their decision; where there are more than two arbitrators,
decisions do not have to be unanimous and in the absence of unanimity a
majority decision will suffice. 57 If all the arbitrators, or a majority of them,
cannot agree on their award, the award must not be the average of what each
is prepared to award or the smallest figure. There can be no award by the
arbitrators, and the dispute must be referred to an umpire, unless the
arbitration agreement provides otherwise. 58 Where a majority of arbitrators are
in agreement, an arbitrator who holds a dissenting viewpoint is free to state in
the award that he does not concur with his fellow arbitrators and is even free
to state his own point of view. This will, of course, have no binding effect. He
may also refuse to sign the award and his failure to do so will not render the
award invalid, provided that the other arbitrators indicate his refusal to sign. 59
Where there is an even number of arbitrators, and a difference of opinion
occurs so that they are evenly divided causing a deadlock, an umpire must be
appointed to decide the unresolved issues unless the arbitration agreement
otherwise provides. 60
It would appear that where a deadlock occurs between an equal number of
arbitrators, those arbitrators are unable to fulfil their duty finally to resolve the
dispute, with the result that all matters in issue should, in principle, be referred
to the umpire, unless the arbitration agreement provides otherwise. 61 Thus,
unless authorised by the agreement, it follows that the arbitrators are not
entitled to make an award on the issues on which they can agree and refer the
balance to the umpire. A party could waive his right to have all the matters in
dispute decided by the umpire where the arbitrators are deadlocked on some

payment of unenforceable gambling debts because this would merely be a device by the winner to
enforce payment of the gambling debts indirectly (compare Gibson v Van der Walt 1952 (!) SA 262 (A)
270).
56 Dickenson & Brown v Fisher's Executors 1915 AD 166 at 175.
57 Section 14(3) of the Arbitration Act. It is significant that the provision refers to a 'decision' rather
than to an award. 'Decision' is a wider concept and would include not only a decision on the issues in
di~ute (an award) but also a ruling on a procedural matter.
8 Section 14(4). The provision re-enacts s 12 of the Arbitrations Act 28 of 1898 (Cape). Under the

common law the position was different. Where the arbitrators or a majority of them could not agree on
the amount, the lesser amount was regarded as being included in the greater, with the result that all were
taken as agreeing that the least amount should be awarded (Voet 4.8.19).
59 Section 24(2).
60 Sections 11(1)(a) and 19(c). The agreement could give the chairman of the tribunal a casting vote.
61 See Cerrito v North Eastern Timber Importers Ltd [1952] I Lloyd's Rep 330 (QB) 332;
Jacobs 110-11.
The Award 265
issues but agreed on others. 62 Where the arbitrators have made a valid interim
award in respect of some issues before the deadlock on the other issues arises,
both the parties and the umpire will be bound by the interim award and the
umpire may not reopen the matters dealt with in the award. The umpire would
also be bound by procedural rulings made by the arbitrators. It has been
suggested that if this be the case, then, where the arbitrators are agreed that a
particular defence must fail but cannot agree on other issues, the umpire should
logically be bound by that agreement, 63 particularly if the arbitrators proceed,
once the disagreement arises, to make an interim award on the issues on which
they are agreed before calling in the umpire. A practical objection to this
approach is that they could thereby place the umpire in the invidious position
of having to try to resolve the remaining issues on what he may regard as a false
premise contained in the interim award. Alternatively, he may adopt an
approach which makes the interim award irrelevant. 64

7.5 Specific performance

Unless the arbitration agreement provides otherwise, an arbitrator may order
specific performance of any contract in any circumstances in which the Supreme
Court would have the power to do so. 65 In ·the context of arbitration
proceedings, an order for specific performance is usually understood as an
order to perform a specified act in pursuance of a contractual obligation. 66 In
South African law a plaintiff has a right to claim specific performance as
opposed to being restricted to a claim for damages in lieu of specific
performance. The only qualification to this rule is the court has a discretion to
grant or refuse an order for specific performance. This discretion must be
exercised judicially upon a consideration of all relevant facts and no rules can
be prescribed to regulate the exercise of the court's discretion. The court must
exercise its discretion in a way which will prevent injustice or undue hardship
for the defendant and in accordance with legal and public policy. 67
The courts are not usually inclined to grant specific perfotmance in respect

62 Jacobs 111.
63 Orion Compania Espanola de Seguros v Belfort Maatscliappij Voor Algemene Verzekgringeen
(1962] 2 Lloyd's Rep 257 (QB) 267, where the court followed the judgment in the Cerrito case above
with reluctance. The wording of s 14(4) is not necessarily against this interpretation. It provides that
when the arbitrators cannot agree on their award, 'the matter' must be referred to the umpire. 'Matter'
could be restrictively interpreted as referring only to the matter on which they are unable to agree, as
op,f?sed to the entire dispute between the parties.
Compare Mustill & Boyd 372 who suggest that joint arbitrators should be particularly hesitant
about making an interim award, because if .they later disagree on another issue, 'the dispute must be
decided by the umpire, who may take a view of the case which means that the preliminary issue is not
decisive of the dispute whichever way it is resolved, or possibly even irrelevant'.
65 See the Arbitration Act s 27.
66 Compare Christie (1991) 616. See generally regarding specific performance Christie (1991) 616-27.
67 See Benson v SA Mutual Life Assurance Society 1986 (1) SA 776 (A) 782H-783E. In England
specific performance is a more limited remedy developed by courts of equity and in the Benson case, the
Appellate Division criticised a tendency to apply English decisions on specific performance in South
Africa with insufficient regard to the fundamental differences between English and South African Jaw
concerning specific performance.
266 Arbitration in South Africa: Law and Practice

of contracts for personal services of a continuing nature, because of the

personal relationship involved and because the court is not equipped to provide
the constant supervision necessary to prevent disputes arising as to whether the
services were being adequately performed, and to adjudicate such disputes
when they arise. 68 The difficulty of determining and defining precisely what the
obligation entails and the problem of supervision have been used to justify a
reluctance to order specific performance in the case of the completion of
building contracts or the rectification of defects in buildings. 69 These difficulties
have been referred to as grossly over-emphasised in a situation where either the
owner or the contractor is claiming specific performance while the other party
is in default. 70 Nevertheless, the arbitrator has a discretion in these matters and
may consider it preferable to err on the side of prudence by awarding damages
in lieu of specific performance where the efficacy of an order for specific
performance is open to serious doubt or where the order could result in a
serious hardship or injustice to the other party.

7.6 Legal assistance in preparing the award

Some non-legal arbitrators, fearing that they do not possess the skill to set out
their awards in a form and language that will satisfy the formal and substantive
requirements set out above, particularly if the parties require a reasoned
award, sometimes seek legal assistance with the preparation of their awards.
There can be no objection in principle where such assistance is restricted to
the drafting of the award, by ensuring that it contains no vagueness or
ambiguity. 71 It would also appear that the arbitrator may take legal advice on
legal issues in the reference provided that the award contains the arbitrator's
own decision and not that of the lawyer. 72 In practice, however, it is difficult to
ensure that the arbitrator is not unduly influenced by such assistance when
carrying out the decision-making process. Moreover, not only should there be
no outside influence on his decision, but there should be no grounds for fearing·
that such influence has occurred. 73
It is probably considerations like these which led Mustill & Boyd 74 and

68 See Christie (1991) 623.

69 See Christie (1991) 625; Ranch International Pipelines (Transvaal) (Pty) Ltd v LMG Construction
(City) (Pty) Ltd 1984 (3) SA 861 (W) 880G-H.
70 See the Ranch International Pipelines case (above) at 880H-881F. Where the owner is in default,
the order for specific performance takes the form of an interdict to prevent the owner from interfering
with the contractor's performance of the work.
71 See Mustill & Boyd 360.
72 Mustill & Boyd 360, who also note that care should be taken to ensure that the facts laid before the

lawyer are full and accurate. See also Jacobs 90, citing Ellison v Bray (1864) 9 LT 730 and 208 above.
On the same reasoning, a legally qualified arbitrator could seek the advice of a technically qualified
person in evaluating the evidence, providing the arbitrator makes his own decision (see Jacobs 90).
73 Such influence could possibly result in a court finding that there had been a gross procedural

irregularity or that the award had been improperly obtained, causing the court to set it set aside under
s 33 (see 294 below).
74 At 360.
The Award 267
Jacobs 75 to suggest that an arbitrator should not seek legal advice without first
securing the consent of the parties to the arbitration.
It is submitted that the parties, in choosing a particular arbitrator, do so in
the knowledge that there are skills which he either does not possess, or which
he may possess to only a limited extent. They therefore do not, and should not,
expect from that arbitrator the skills of a lawyer, when they have chosen him
for his skills in some technical field. As long as he couches his award in
language that is clear and brooks no misunderstanding, they can have no cause
for complaint. We therefore suggest that an experienced arbitrator who is not
a lawyer should generally have both the ability and the confidence to prepare
and draft his award without the need to resort to legal advice.

7. 7 Publication of the award

The Arbitration Act requires the arbitrator to deliver the award in the presence
of the parties or their representatives, having summoned them to attend upon
him at an appointed time and place. 76 The provision contemplates that the
arbitrator will call on the parties to attend at his office, or some other
appropriate venue, where he will deliver the award to them. He may first read
out his award to them, or merely hand each a copy. If one party fails to attend,
it appears that the arbitrator can discharge his duty to deliver the award by
handing a copy to the one who does attend.
No similar provision was contained in the colonial ,predecessors of the
present Arbitration Act 77 or in current or previous English legislation. 78 The
requirement of delivering the award in the presence of the parties finds some
support in the common law, 79 but as early as 1858, it was stated that it was the
universal practice in the Cape Colony not to require the presence of the parties
at the delivery of the award. 80
Prior to the commencement of the present Act, it became a common practice
for an arbitrator to advise the parties, when he had completed his award, that
it could be uplifted by the first party applying at his office to do so and paying
his fee. The arbitrator thus exercised his lien on his award 81 and, if the award
was duly collected, ensured payment of his fee. 82 If the party who uplifted his
award was the successful party and was therefore awarded costs, he would be

75 At 89-90.
76 Section 25(1) of the Arbitration Act.
77 See 4 above for this legislation.
78 During the second reading debate on the Arbitration Bill, the Minister of Justice said that the
requirement to deliver the award in this way confirms a rule of practice applying to all judicial and
quasi-judicial proceedings (see Hansard 16 March 1965 col 3059).
79 See Voet 4.8.15. .
80 See Hawes, Stanbridge & Hedley v Meinljies & Dixon (1858) 3 Searle 62 at 74; Jacobs 94. Mustill
& Boyd 383 state that under English law, the publication of the award to the parties is not necessary for
its validity unless the arbitration agreement otherwise requires, and that old English cases on the subject
of fiublication and delivery are now regarded as obsolete.
1 See the Arbitration Acts 34(4).
82 This procedure for ensuring payment is not always effective (see 89 above).
268 Arbitration in South Africa: Law and Practice

entitled to recover the amount disbursed on the· arbitrator's fee from the other
party.
The simplicity and the usual efficacy of this procedure in ensuring that the
arbitrator receives his fee still appeals to many arbitrators, who are sometimes
tempted to persuade the parties to contract out of the provisions of the Act
regarding delivery and publication and to agree to this procedure instead. But
it is open to serious doubt that the parties are free to do so: the wording of this
particular section is couched in imperative terms, with no express provision for
alternative procedures in the arbitration agreement. 83
The Act further stipulates that '[t]he award shall be deemed to have been
published to the parties on the date on which it was so delivered'. 84 The main
function of the requirement to deliver the award in the prescribed manner is to
fix the start of the six-week period within which steps for the remittal or setting
aside of the award must usually be initiated. 85 A party who is unable to
establish the date of 'publication' of the award with certainty would be unable
to show that his application for remittal or setting aside was made within the
stipulated period. 86
Section 23 of the Act imposes a time-limit for 'making' the award as opposed
to 'delivering' or 'publishing' it. It is therefore arguable that the arbitrator
makes his award when he reduces it to writing and signs it, although it has not
yet been delivered. It would nevertheless be advisable for him to ensure that
the date on which he requires the parties to appear to receive the award is
within the time-limit imposed by the Act or the arbitration agreement. If
neither party appears on the stipulated date to collect the award, the arbitrator
is unable to deliver it or publish it as required by the Act. If the stipulated date
was within the time-limit for making the award, it seems preferable to regard
the award as having been timeously made, so that it will not be invalid because
the arbitrator was unable to deliver it before his jurisdiction expired through
lapse of time, 87 through the fault of the parties to allow formal delivery as
required by the Act. ss

83 This section, unlike many others in the Act, does not contain the phrase 'unless the arbitration
agreement otherwise provides'. Section 25(1) can easily be reconciled with the arbitrator's statutory lien
on the award ins 34(4). When summoning them to appear in terms of s 25(1), he can simply draw their
attention to his lien and his intention to enforce it.
84 Section 25(2) of the Arbitration Act.
85 See ss 32 and 33. Section 31 regarding the enforcement of the award does not expressly require that
the award must first be formally published or delivered as required by the Act although such an intention
must presumably be implied. Where the arbitrator used a different method of delivering the award, like
stating that it could be collected from his offices by the first party paying his fees, it is submitted that the
court should regard s 25(1) as directory, so that failure to comply strictly with s 25(1) would not
invalidate the award.
86 The party could however deal with this difficulty by asking the court to use its power under s 38 to

extend the time, in so far as this may be necessary.

87 See 259 above on the effect of the expiry of the time-limit on the arbitrator's jurisdiction.
88 The court would in any event be able to come to the rescue of the parties and the arbitrator by

retrospectively validating the award under s 23, if failure to publish the award within the stipulated
period results in its invalidity.
The Award 269

7 .8 The reasoned award

Contrary to the position in several other jurisidictions,89 neither the Arbitration
Act nor the common law90 requires an arbitrator to give reasons for his
decisions. He is quite entitled to make an award whereby the one party shall
pay the other party a certain sum of money, without furnishing any reason or
justification whatsoever.
In England, the practice of giving unreasoned awards arose 91 because of a
rule of law whereby an award which contained an error on its face could be
remitted or set aside. This rule was abolished in England in 197992 and never·
applied in South Africa. 93 Nevertheless, the custom of giving unreasoned
awards has been followed by many arbitrators in South Africa.
Whether or not an arbitrator should furnish reasons is an issue which has
been debated over many years. Those who oppose giving reasons quote an
eminent English judge during the eighteenth century, Lord Mansfield, who is
said to have given adjudicators the following advice:
'Consider what you think justice requires and decide accordingly. But never give your
reasons: for your judgment will probably be right but your reasons will certainly be
wrong.' 94 -:. · 0

Another judge is reputed to have said that it is better to furnish no reasons

and be thought a fool, than to furnish reasons and prove the point.
These rather cynical comments are countered by those who argue that the
parties have a right to the reasons for the decision. It has been said:
'The making of an award is, or should be, a rational process. Formulating and
recording the reasons tends to accentuate its rationality. Furthermore, unsuccessful
parties will often, and not unreasonably, wish to know why they have been
unsuccessful. ' 95
It is argued in favour of giving reasons that the act of putting one's arguments
down on paper in clear language, following a properly constructed and logically ·
worked out argument, is a wonderful discipline and helps to focus the mind on
the essential issues. An arbitrator who performs this exercise may well find that

89 In terms of the French New Code of Civil Procedure articles 1471 and 1480, for example, an
unreasoned award is invalid. In terms of the Dutch Arbitration Act of 1986 art 1057(4)(e), subject to two
exceptions, the furnishing ofreasons is compulsory, and failure to do so is a ground for setting aside the
award (art 1065(1)(d)).
90 See Schoch NO v Bhettay 1974 (4) SA 860 (A) 865D-E; Jacobs 128.
91 Alternatively, arbitrators furnished 'confidential reasons' in a document not forming part of the
award, to prevent the reasons being used as a basis for attacking the award. See Mutual Shipping
Corporation v Bayshore Shipping Co (The Montan) [1985] 1 Lloyd's Rep 189 (CA) 191, where it was
nevertheless held (at 192, 198) that the court could still look at the reasons if circumstances so required.
92 Bys 1(1) of the Arbitration Act of 1979. An English court may now order an arbitrator to furnish
reasons for purposes of the limited right of appeal to the court on a point of law, created by the 1979
Act (see s 1(5)).
93 See Dickenson & Brown v Fisher's Executors 1915 AD 180 at 180-1.
94 As quoted by Harmer 163.
95 Para 26 of the report of the English Commercial Court (Cmnd 7284 of 1978), which preceded the
1979 Act, quoted in Mutual Shipping Corporation v Bayshore Shipping Co (The Moman) (above) at 191.
See also Tramounrana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870 (QB) at 872h.
270 Arbitration in South Africa: Law and Practice

he will arrive at a conclusion that is significantly different from the view that he
had intuitively taken when he started preparing his award.
The furnishing of reasons also acts as a safeguard against arbitrariness,
private notions of what the law should be, or the irrational splitting of the
difference between the parties. A further advantage in giving reasons is that, if
the situation that gave rise to the dispute is likely to recur in the future, the
reasons may help the parties to avoid or overcome the difficulty on the next
occasion. 96
If an arbitrator decides to furnish a reasoned award, how detailed ought his
reasons to be? There seems to be general agreement that a reasoned award
need not be as detailed as a Supreme Court judgment and, in particular, the
arbitrator should not be expected to review relevant legal decisions. 97
It is suggested 98 that a reasoned award should commence with a succinct
statement of what the case is all about, followed by a summary of the
non-contentious background events. The arbitrator should then go on to
identify the various crucial issues, and to summarise briefly the evidence on
each. He should indicate which evidence he accepts and which he rejects, and
the reasons for preferring certain evidence to other. He should then deal with
the arguments of the parties and his response to the arguments, indicating, with
reasons, why some arguments find favour with him and why others are
rejected. Then, based on the evidence that he accepts and the arguments that
he finds persuasive, he should draw his own conclusions and show how he
arrives at his decision. He ought to state the principles of law on which he
arrives at his decision, but he is not expected to give a learned discourse on the
Jaw on any particular point, nor to quote case law to support his interpretation
of the law. 99
Arbitration awards are final and there is no appeal. They can only be
remitted or set aside under very limited circumstances. 100 There has
nevertheless recently been a tendency for dissatisfied parties to attempt, albeit
unsuccessfully, to have the awards remitted or set aside on grounds that
amount to a disguised appeal. 101 The opportunity for a party to do so can be
very considerably reduced by the arbitrator furnishing cogent reasons in
sufficient detail to show that he has duly considered the evidence and
arguments submitted in deciding the issues referred to him, and that he has not

96 However, while the reasons may indicate how the arbitrator, or possibly another arbitrator, may

look on a similar situation in the future, the award is not binding on anyone other than the parties to
it. Moreover, as the arbitration proceedings, including the award, are confidential, outsiders are not
entitled to access to the award without the consent of both parties.
97 This remark is made in respect of the non-legal arbitrator. A lawyer-arbitrator might well revel in

the opportunity to produce an erudite analysis of the relevant case law.

98 Compare Bernstein 131-2; Harmer 164, 165-6.
99 Particularly as a mistake of law is not a ground for an award to be set aside or remitted (see 293
below).
100 See 285-95 below.
101 Examples among recent reported cases are Benjamin v Sobac South African Building and
Construction (Pty) Ltd 1989 (4) SA 940 (C); Hyperchemicals International (Pty) Ltd v Maybaker
Agrichem (Pty) Ltd 1992 (1) SA 89 (W) and Bester v Easigas (Pty) Ltd 1993 (1) SA 30 (C).
The Award 271

exceeded his jurisdiction by making findings on matters not in issue to reach

conclusions on those which were. Provided he has properly applied his mind,
the courts will be most reluctant to upset his award, even if he has come to a
conclusion which differs significantly from that which the court might have
reached. rnz
It would seem, therefore, that there is a strong case to be made for furnishing
reasons with awards and the practice of doing so is growing. It is a practice that
we strongly endorse.

7.9 Legal consequences of an awardJ0 3

The most important legal consequence of a valid final award is that it brings the
dispute between the parties to an irrevocable end: the arbitrator's decision is
finaJ1 04 and there is no appeal to the courts.rns For better or worse, the parties
must live with the award, 106 unless their arbitration agreement provides for a
right of appeal to another arbitration tribunal.!0 7 The issues determined by the
arbitrator become res iudicatal08 and neither party may reopen those issues in
a fresh arbitration or court action.
The effect of a valid award by an arbitrator will usually be to create new
rights and obligations between the parties, 109 and it will either dissolve existing
rights or bring an end to a dispute as to whether certain rights existed or not. 110
It has been said that when an arbitrator makes a valid final award his
authority and powers come to an end. 111 According to Parris, 112 his powers end
so abruptly and so completely that he has no power to correct the award he has
just written and signed (except in terms of his statutory power to correct clerical

102 See Dickenson and Brown I' Fisher's Executors 1915 AD 166 at 176; Clark v Africarl Guarantee and
Indemnity Co Ltd 1915 CPD 68 at 77-8.
103 See Mustill & Boyd ch 27 for a more detailed discussion.
104 Section 28 of the Arbitration Act. The mandement van reductie referred to by Voet 4.8.25 and
4.8.31-4.8.32. which in effect provided a right of appeal against an arbitrator's award to the courts. was
never applied in the Cape and has lapsed through disuse (see Dutch Reformed Church v Town Council
of Cape Town (1898) 15 SC 14 at 20-1).
105 The position in England is different. The Arbitration Act of 1979 s 1(2) created a limited right of
appeal to the High Court against an award on a question of law. The right of appeal may be excluded
by the parties in an exclusion agreement in terms of s 3.
106 Subject to the court's limited statutory powers to remit or set aside the award (see 285-95 below).
107 Section 28 of the Arbitration Act, as interpreted in Goldschmidt v Folb 1974 (1) SA 576 (T)
576G-577D. The phrase '[u]nless the arbitration agreement provides otherwise' refers to the possibility
of a contractual right of appeal to another arbitration tribunal and the parties cannot create a right of
appeal to the court. Compare Blaas v Athanassiou 1991 (1) SA 723 (W) 274C-I, where the parties
unsuccessfully attempted to incorporate a rjght of appeal to the appellate division in their arbitration
agreement.
108 An abbreviation of the maxim res iudicata ius facit inter partes (a suit adjudged is binding on the
parties).
109 Where the arbitrator has awarded damages for breach of contract and the damages have not been
paid, the successful party's remedy is to bring an action for the enforcement of the award rather than
a further claim under the contract for the same breach (see Mustill & Boyd 410).
110 See 96 above and Mustill & Boyd 409-10.
111 Mustill & Boyd 404.
112 176 and compare Mustill & Boyd 404n8.
272 Arbitration in South Africa: Law and Practice

mistakes, which is discussed below) and if he tears up the award and makes a
fresh one, the second award is invalid.
This would appear to be a rather extreme view, and it is at least arguable that
the arbitrator retains control over his award, and is free to correct it or even
destroy it and re-write it, until he delivers it to the parties. The South African
Arbitration Act imposes certain formalities for the delivery or publication of
the award to the partiesl1 3 and it would appear that it is only on publication of
his award that the arbitrator becomes functus officio. Thereafter, under the
common law, an arbitrator has no power to correct an error in his award, even
if he admits the mistake.u 4 However, the Arbitration Act empowers him to
correct 'any clerical mistake or any patent error arising from any accidental slip
or omission' . 115 The arbitrator's power to correct slips is less extensive than the
corresponding power in the English legislation in that it is restricted to patent
errors. 116 Therefore, when the award does not reflect the arbitrator's true
intention because of an error which is not evident from the award, or contains
an ambiguity, it will be necessary to remit the award to the arbitrator. 117

7 .10 The enforcement of the award

The arbitrator has no power to compel the parties to comply with the terms of
his award. If the losing party does not comply voluntarily with the award, the
successful party will have to seek the assistance of the court to enforce it.
Where the award complies with the Arbitration Act,us the successful party will
have a choice of remedies to enforce it.
The first possibility is to apply to court under the common law 119 for an order
to enforce the losing party's contractual obligation to comply with the award. 120
113 See 267-8 above.
114 Voet 4.8.23; Table Bay Harbour Board v Metropolitan and Suburban Railway Company (1892) 9
SC 437 at 438. The court could. however, remit the matter to the arbitrator to correct an admitted
mistake where the written award did not reflect what the arbitrator intended to convey (see 288 below).
In Re Stringer and Riley Bros [1901) 1 QB 105, the umpire made an award without seeing the
submission. On being told that he had not dealt with certain disputes in the submission. he made a new
award. It was held that, having made the first award, he became functus officio, and that his second
award was invalid. The matter was remitted to him to consider the issues he had not dealt with (see also
Walton & Vitoria 393).
115 Section 30. See 274 below regarding the court's similar power under s 31(2), when dealing with an

application to have an award made an order of court.

116 See the Arbitration Act 1950 s 17, which is a re-enactment of the Arbitration Act 1889 s 17(c). The

word 'patent' did not appear in the colonial legislation either (see eg the Arbitrations Act 29 of 1898
(Cape) s 13(c)). See also Davis (1966) 50. Compare Mustin & Boyd 406-7 regarding the application of
the wider wording of the English Act.
117 In terms of s 32(1) or (2). An arithmetical error not apparent from the award is neither a clerical
mistake nor a patent error and would "therefore have to be corrected by remittal. See 288 below.
118 See 260 above. The award must also be pursuant to an arbitration agreement as defined in s 1 of

the Act (see 38 above).

119 An award in an arbitration under the common law can only be enforced in this way.
120 In Pasa Construction (Pty) Ltd v Roofing Guarantee Co (Pty) Ltd (WLD 18 August 1989,
unreported (case no 12243/83)) it was accepted that the applicant was in substance seeking an order for
specific performance of a contractual obligation to honour an arbitrator's award. In Benidai Trading Co
Ltd v Gouws & Gouws (Pty) Ltd 1977 (3) SA 1020 (T) 1038H an arbitrators' award made in London was
enforced against a South African company as a contractual obligation. In view of this common-law
The Award 273
The second possibility is for the successful party to apply under the Arbitration
Act to the division of the Supreme Court with jurisdiction to have the award
made an order of court, whereupon it may be enforced in the same way as any
judgment. 121 The successful party will therefore be able to have a writ of
execution issued by the registrar of the court. The deputy sheriff will then
execute the writ by attaching the judgment debtor's property which will be sold
in execution to liquidate the judgment debt. 122
The application procedure under the Arbitration Act is designed as a quick
remedy for the enforcement of the award. The court will not usually consider
the merits of the dispute submitted to the arbitrator. The applicant will have to
prove that there was a valid arbitration agreement covering the dispute, that
the arbitrator was duly appointed and that there was a valid award in terms of
the reference. 123 In making the award an order of court the court in effect
adopts the arbitrator's decision as if it were its own.
The unsuccessful party in the arbitration proceedings may wish to oppose the
application to enforce the award. It would appear that the procedure that he
should adopt will depend on the ground on which he wishes to contest the
award. In this regard, it is necessary to distinguish between an award which is
void from the outset and one which is voidable. In the former case, the
unsuccessful party is contending that there never was a valid award. In the
latter case.there is a valid award which is enforceable until the award is set aside
or remitted to the arbitrator by the court. 124
Where the party against whom the award has been given contends that it is
invalid, he can adopt a passive approach: he can wait until his opponent applies
to court to enforce the award and then raise the defence that the award is void
as a reason for the court to refuse enforcement. 125 There are several grounds on
which the respondent could allege that the award is invalid and incapable of
enforcement: the arbitrator may have exceeded his jurisdiction, 126 the
arbitrator may have failed to decide all the matters referred to him, 127 the

remedy as well as the possibility of enforcement under s 2 of the Recognition and Enforcement of
Foreign Arbitral Awards Act 40 of 1977 (see 313 below), the court found it unnecessary to decide
whether s 31 of the Arbitration Act could also be used to enforce a foreign arbitral award (at 1040E-F).
See also Jacobs 132-5 for a discussion of some of the earlier cases on the enforcement of arbitral
awards.
121 Section 31(1) and (3) read withs 1 'court'.
122 See Supreme Court Rule 45.
123 Mustill & Boyd 418. See 260-4 above regarding the criteria for a valid award.
124 See Mustill & Boyd 546-7.
125 See Mustill & Boyd 546.
126 See Dickenson & Brown v Fisher's Executors 1915 AD 166 at 175; Fassler, Kamstra & Holmes v
Stallion Group of Companies (Pty) Ltd 1992 (3) SA 825 (W) 829B-C. In Maladry v De Koning 1905 TS
528 at 532-3 the court was prepared to treat the invalid portion as severable from the rest and to enforce
the remainder. ·
127 See Pasa Construction (Pty) Ltd v Roofing Guarantee Co (Pty) Ltd (above) at 15; Harlin Properties
(Pty) Ltd v Rush & Tomkins (SA) (Pty) Ltd 1963 (1) SA 187 (D) 196D. In some cases the courts have
not treated the whole award as invalid: they have either enforced the remainder of the award (Dutch
Reformed Church v Town Council of Cape Town (1898) 15 SC 14 at 22, 26; Douglas v Pim 1903 TH 306
274 Arbitration in South Africa: Law and Practice

award may have been made out oftime, 128 it may be illegal or contrary to public
policy, or there may be some other defect in the form or substance of the award
which is serious enough to make it incapable of enforcement. 129 The fact that
the court may disagree with the conclusion reached by the arbitrator on the law
or the facts is not in itself a ground for refusing to enforce the award.BO
Where the party against whom an award has been given contends that the
arbitrator has been guilty of misconduct, or committed a gross irregularity in
the conduct of the proceedings or that the award has been improperly obtained,
there is a valid award until it has been set aside by the court. The party cannot
merely adopt a passive approach. He must actively take steps to have the award
set aside by applying to court for an order to that effect within six weeks of the
publication of the award, 131 or, if his opponent should apply to court within this
period for the enforcement of the award, by bringing a counter-application for
it to be set aside. 132 A party who objects to an award on the basis that it is
invalid because the arbitrator has exceeded his powers may also decide to apply
to court for an order confirming the invalidity of the award, 133 instead of
waiting to see if his opponent will attempt to enforce it. A party who is
dissatisfied with certain aspects of an award may also take the initiative and
apply to court for the award to be remitted to the arbitrator so that the defects
can be rectified.13 4
In ~aking the award an order of court, the court has the power to correct any
clerical mistake or any patent error arising from any accidental slip or
omission. 135 This would include correcting the total amount awarded where the
various individual items awarded by the arbitrator do not add up to the stated
total. Similarly, where the arbitrator has inadvertently transposed the names of
the parties, the court has the power to correct the error if the arbitrator's true
intention is obvious. The purpose of this provision is to enable the court to give
effect to the clear intention of the arbitrator where the award, because of an

at 310; Basson v Herman 1904 TS 98 at JOO), or referred the uncertain portion back to the arbitrator for
him to render a further and final award (see Delport i· Kopjes Irrigation Settlement Management Board
1948 (1) SA 258 (0) 269, 271-2). See Butler (1990) 264.
128 See Pasa Construction (Pty) Ltd v Roofing Guarantee Co (Pty) Ltd (above) at 11. The party
seeking to enforce the award may however ask the court to extend the time even after it has expired,
and if this request is successful, the award will be validated retrospectively (see the Arbitration Acts 23
and 260 above).
129 See Mustill & Boyd 546 and 260-4 above.
130 See Landeshut v Koenig (1903) 20 SC 33 at 34; Dickenson & Brown v Fisher's Executors (above)

at 176.
131 Section 33(2). Where the award is attacked on the basis of corruption, the six-week period is
calculated from the date when the corruption was discovered. The court may extend the six-week
period, even if it has expired (s 38).
132 MM Fernandes (Pry) Ltd v Mahomed 1986 (4) SA 383 (W) 3881-3898. The latter procedure was
followed by the unsuccessful party in Dickenson & Brown v Fisher's Executors above. See also Mustill
& Boyd 547. The court may stay enforcement of the award, if it considers that circumstances so require,
pending its decision on whether or not the award should be set aside (s 33(3)).
133 Section 33(1 )(b).
134 Under s 32(2). See 287-9 below regarding the grounds for remittal.
135 Section 31(2). See also 272 above regarding the similar power given to the arbitrator by s 30 to

correct such errors.

The Award 275

error or omission, fails to do so. The court does not have the power to change
the intended effect of the award in any way.
Once the award has been made an order of court, it becomes a judgment
debt which prescribes after thirty years. 136 Until it is made an order of court, it
appears that a party's right to enforce the award would ordinarily prescribe
within three years from the publication of the award. 137 However, in Blaas v
Athanassiou, the arbitration agreement provided that between the parties, the
arbitrator's award should be deemed to be and should be treated as a judgment
of the Supreme Court. 138 The court held that the effect of this provision was
that the parties had thereby contracted out of the right to rely on prescription
for thirty years. It was therefore possible to have the arbitrator's award made
an order of court, even though more than three years had elapsed since the
publication of the award. 13 9

7.11 Interest on the award

It is necessary to distinguish between interest on a claim up to the date of the
award and interest on the award itself. The arbitrator may award interest
accruing before his award only if there has been a claim for it and if the claimant
is entitled to interest. 140
A creditor is entitled to interest on a claim only if the debtor is in mora, that
is where there has been a wrongful delay or default in making payment. In this
regard, it is necessary to distinguish between mora in re and mora ex persona.
Mora in re arises from the transaction itself and there is no need for a prior
demand by the creditor, for example where the date for payment is fixed in the
contract. In the case of mora ex persona the debtor must be placed in mora and
this occurs once there has been due demand for payment and the debtor has
failed to respond. 141 The onus is on the creditor to prove that due demand was
made, failing which he will be able to claim interest only from the date of
submitting his claim to arbitration. 142 Furthermore, interest is recoverable on a
claim prior to the date of the award only if it relates to a liquidated amount, 143
with the result that interest is not normally recoverable on a claim for damages

136 See the Prescription Act 68 of 1969 s ll(a)(ii).

137 Cape Town Municipality v Allie NO 1981 (2) SA 1 (C) 4H; Prescription Act s ll(d). The
completion of prescription, may, of course be interrupted or delayed by one of the grounds referred to
in the Prescription Act ss 13-15.
138 1991 (1) SA 723 (W) 724B-C.
139 7251-J.
140 See Hyman 1.
141 See C & T Products (Pty) Ltd v M H Goldschmidt (Pty) Ltd 1981 (3) SA 619 (C) 631G-H.
142 See Hyman 2.
143 'The amount of the claim [must be] capable of prompt and ready ascertainment and of speedy and
easy proof; and the Court is not required to enquire into any facts or to exercise an independent
judgment on any aspect such as the reasonableness of the amount.' See Probert v Baker 1983 (3) SA 229
(D) 237A.
276 Arbitration in South Africa: Law and Practice

prior to the date of the award. 144 Thus a claim for damages will usually carry
interest only from the date on which the amount has been determined by the
arbitrator, no matter how long before the date of his award the claim was
instituted. Where the rate of interest is not fixed by agreement, the statutory
rate will apply. 145 It is a rule of the common law that the amount of interest
accumulated cannot exceed the capital sum, 146 but where the rule applies,
interest starts to run again from the date of judgment. 147
The Arbitration Act provides that where an award is for the payment of a
sum of money, that amount shall bear interest from the date of the award at the
same rate as a judgment debt. unless the award provides otherwise .148 The
award will therefore bear interest even if the arbitrator makes no provision for
it and it is not necessary to stipulate the rate in the award.

7.12 Costs
7.12.1 The arbitrator's power to award costs
It lies beyond the scope of this book to deal with the intricacies of the law of
costs, and we intend to do no more than to state the basic principles pertaining
to the costs of arbitration proceedings. 149
Unless the arbitration agreement stipulates otherwise, 150 the arbitrator is
required to make provision in his award for the payment of the costs of the
reference and of the award. While the wording of s 35(1) of the Arbitration Act
suggests that the arbitrator may award costs but is not obliged to do so, 151
s 35(2) obliges an arbitrator to award costs if one of the parties so requires. The

144 See West Rand Estates Lid 1· Nev.· Zealand Insurance Co Ltd 1926 AD 173 at 195. A claim for

damages could be for a liquidated amount if the amount is ascertainable according to the test in the
previous footnote. and it is only claimant's entitlement which is in issue (see Probert v Baker (above) at
236H-237B; Hyman 2).
w In terms of s 1(1) of the Prescribed Rate of Interest Act 55 of 1975. The rate may be changed from
time to time by the minister (s 1(2)). in which event it is the rate applicable at the time interest started
to run which is recoverable, notwithstanding the change in rate (see s 1(1) and Davehi/1 (Pty) Ltd v
Community Development Board I 988 (I) SA 290 (A) 3001. 3018 ).
146 Van Coppenhagen v Van Coppenhagen 1947 (I) SA 576 (T) 581-2; Administrasie van Transvaal

v Oosthuizen 1990 (3) SA 387 (W) 396H-397E.

147 Administrasie van Transmal v Oos1huizen (above) at 3971-J. The court held that in the context of

arbitration proceedings 'judgment' bears its ordinary meaning, with the result that interest starts to run
again only once the award is made an order of court. Section 29 of the Arbitration Act, to which the
court did not refer, does not necessarilv affect the position, as it provides only that the award will bear
interest at the same rate as a judgment debt and not that an award must be equated with a judgment debt
as regards the payment of interest on it.
148 Section 29 of the Arbitration Act and compares 2 of the Prescribed Rate of Interest Act regarding

interest on judgment debts. The prescribed rate is the rate determined by the minister from time to time
under that Act.
149 For a detailed discussion of the law of costs, the reader is referred to the works by Cilliers and

Jacobs & Ehlers. For costs in arbitration proceedings, see also Pemberton 627-30.
150 It is competent for the parties to agree how the costs are to be borne, for example that each party
shall pay his own costs, once the dispute has arisen. However, s 35(6) of the Arbitration Act renders
void any provision in an arbitration agreement to refer future disputes to arbitration, whereby any party
or parties shall in any event be required to pay his or their own costs or any part thereof.
151 The relevant wording is 'the award of costs ... shall be in the discretion of the arbitration tribunal.
which shall, if it awards costs .. .'.
The Award 277

subsection provides that if no direction as to costs or the scale on which costs

are to be taxed has been given in the award, any party may, within fourteen
days of the date of publication of the award, apply to the arbitrator for an order
as to costs. The arbitrator is then required, after hearing any party who may
desire to be heard, to amend the award by adding an appropriate award on
costs. Moreover, the parties' statements of claim or defence will almost
invariably contain a request for an order as to costs, and failure to deal with
costs renders the award incomplete. 152 In that event, either party may avail
himself of the right contained in s 35(2) to require the arbitrator to make an
order as to costs. Alternatively, the matter could be remitted to the arbitrator
to enable him to make an award on costs. 153
An arbitrator might decide that each party ought to bear his own costs, 154
and consider that it would not then be necessary to make any order as to costs,
because the desired result would be the natural consequence of his silence on
this point. However, lest either party apply for an award on costs, or seek to
remit the award back to him to deal with costs, he should in his award
specifically direct that each party is to bear his own costs.

7.12.2 The basic principle as to liability for costs

The basic principle in awarding costs is that a party who is substantially
successful is entitled to be awarded costs in the absence of special
circumstances. 155
Although the Arbitration Act gives the arbitrator a discretion regarding his
award of costs, it is not an absolute or unqualified discretion, but one which
must be exercised judicially and in accordance with recognised principles. 156 If
the arbitrator does not exercise his discretion correctly the court will intervene
and remit or set aside the award of costs. 157 In Kathrada v Arbitration Tribunal,

152 Walton & Vitoria 341, citing Re Becker, Shi/Ian & Co and Barry Bros [1921] 1 KB 391 at 394-5,
398-9. state: 'Where an arbitrator has power to deal with costs, he must do so, or his award will be bad
as failing to deal with all the matters referred.' (See also Davis (1966) 46.) It may then be remitted by
the court to the arbitrator for the matter to be dealt with. See also Jacobs 154 citing Morgan and Ramsay
v Cornelius and Hollis (1909) 30 NLR 271.
153 In terms of s 32. See the references in the previous footnote.
154 Lay arbitrators are often prone to award costs in this manner. However, it is very seldom that the

circumstances justify a departure from the general rule that the winner is entitled to his costs. See
para 7.12.2 below as to who is the winner.
155 Kathrada v Arbitration Tribunal 1975 (2) SA 673 (A) 680C; John Sisk & Son (SA) (Pry) Ltd v

Urban Foundation 1985 (4) SA 349 (N) 357D-F; Jacobs 154. The reason for this rule was explained by
Innes O in Fleming v Johnson and Richardson 1903 TS 319 at 325 as follows: 'It is a sound rule that
where a plaintiff is compelled to come to Court and recovers a substantial sum which he would not have
recovered had he not come to Court. then he should be awarded his costs.'
156 Kathrada v Arbitration Tribunal (above) at 678E; Harlin Properties (Pty) Ltd v Rush & Tomkins

(SA) (Pty) Ltd 1963 (1) SA 187 (D) 198A-B. .

157 The position is the same in England (see Mustill & Boyd 395-6, but note the qualification inn 160
below) and in Zimbabwe (see Rhodesia Electricity Supply Commission v Joelson Brothers and Bardone
(Pvt) Ltd 1977 (4) SA 639 (R) 645E-646E; Monticello (Pvt) Ltd v Edgerton 1982 (!) SA 762 (ZSC)
765G-H). South African cases where arbitrators' costs awards have been remitted or set aside for failure
by the arbitrator to exercise his discretion regarding costs correctly include Harlin Properties ( Pty) Ltd
v Rush & Tomkins (SA) (Pty) Ltd above; Kathrada v Arbitration Tribunal above; and John Sisk & Son
278 Arbitration in South Africa: Law and Practice

it was stated:
'As between the parties it is in essence a matter of fairness to both sides. Where there
has therefore been an improper exercise of that discretion, i.e., where the award as
to costs is vitiated by irregularity or misdirection, or is disquietingly inappropriate, a
Court of law will on review set aside the order. ... Failure to consider all the
relevant facts or failure to act in accordance with the settled practice and principles
upon which costs are generally awarded, is such vitiating irregularity or mis-
direction' . 158
The basis on which the courts are prepared to review an arbitrator's award of
costs differs from that in respect of his award on the merits, where the South
African courts have consistently refused to set aside an award because of a
mistake of law .159 There can be no objection to the requirement that an
arbitrator should apply the usual principles in making an award of costs,
because the requirement promotes legal certainty. However, where the
arbitrator makes a bona fide mistake of law, the principle of finality normally
outweighs giving the parties to arbitration a remedy to have that mistake
corrected. 160
The simplicity of the basic principle that the successful party is entitled to
costs is clouded, particularly for the lay arbitrator, by the problem of deciding
who is the successful party. There can be no difficulty where either the claimant
or th~ defendant has been wholly successful, but what of the situation where
the claimant is awarded half the amount of his claim? In such a situation, the
court would normally hold that he has still obtained substantially more than he
would otherwise have obtained and therefore he is entitled to costs. 161
Where the claimant advances a number of claims, 162 many arbitrators
consider that the claimant should be awarded the costs of establishing his

(SA) (Pty) Ltd v Urban Foundation 1985 (4) SA 349 (N) and 1987 (3) SA 190 (N). In the first Sisk case.
the arbitrator's award of costs was remitted back to the arbitrator. When the arbitrator failed to apply
the principles correctly a second time. the court set aside the award and awarded the costs of the second
court application against the unsuccessful party and the arbitrator jointly and severally. to signify the
court's disapproval of the arbitrator's reprehensible conduct in failing to follow the guidelines given by
the court on the first occasion. For a discussion of the case, see Pemberton 629-30.
158 At 680H-681A. In Monticello (Pvt) Ltd v Edgerton (above) at 766C, the court said that the test
is the same as in a situation where the exercise of a judicial discretion by a court is under review:
therefore, the court will not interfere if another arbitrator, directing himself properly and taking the
proger considerations into account, might reasonably have made the same order.
1. 9 See 293 below.
160 See King v Thomas McKenna Ltd [1991) 1 All ER 653 (CA) 665a-b. At 663j the court questioned
the logic of making an exception in the case of costs, but pointed out at 664a (citing Blexen Ltd v G Percy
Trentham Ltd [1990) 42 EG 133) that the position may have changed in England following the
Arbitration Act of 1979. In the Blexen case it was held that a reasoned award of costs could be
challenged only by way of an appeal under the 1979 Act. There is also older South African authority
where the court was not prepared to interfere with an arbitration tribunal's award of costs where it
appeared that the tribunal had duly considered the issue of costs but may have made a mistake of Jaw
(see Austen v Joubert 1910 TS 1095 at 1096-7).
161 In Kathrada v Arbitration Tribunal above, the claimant claimed R92 444, the defendant tendered
R34 650 and the tribunal awarded R43 500. As this amount was substantially in excess of the
defendant's tender, claimant was substantially successful and entitled to costs.
162 As is frequently the case where a contractor, in a construction industry dispute, disputes the final
account, and alleges that a number of separate items have been undervalued or disallowed.
The Award 279

successful claims, and be liable for the defendant's costs of defeating the
others. 163 But this is not the practice followed by the courts, who are concerned
not with who won the various bouts that made up the contest but with who won
the contest itself. 164
'It is in the nature of itemised building disputes ... that the arbitrator is concerned
with a host of individual claims and complaints, some large and others small in
monetary terms; the fact that a claimant fails on a single item, albeit representing
nearly half his total claim, is no ground by itself to conclude that he has not been
substantially successful. One must look to the overall picture. ' 165
This principle must not be taken to extremes. In Schindler Fire & Security ( Pty)
Ltd v Souih African Transport Services,1 66 the arbitrator awarded the claimant
only R7 185,98 out of a claim of R181 616,75 and awarded costs against it.
When an application was made to court for the award to be set aside, the court
declined to interfere with the arbitrator's decision. The arbitrator, in his award,
had given full reasons for his award of costs, leaving the court in no doubt that
he had applied his mind to the question and exercised his discretion in a judicial
manner. 167
Before there are special circumstances which justify depriving a successful
party of a portion of his costs, there must be reprehensible conduct on the part
of the successful party in relation to the arbitration proceedings, that is conduct
worthy o(censure. 168 The claimant's persistence with a grossly exaggerated or
untenable claim, in a manner which unnecessarily lengthens the proceedings
and adds to the costs, may constitute special circumstances. 169 The failure by a
party in litigation reasonably to limit or curtail costs may be treated as a special
circumstance. In view of the object of arbitration in promoting the quick and
cost-effective resolution of disputes, this factor should be of special sigpiificance
in relation to the costs of arbitration proceedings. Wasting time, by a f'ailure of
both parties to appreciate the true issues will not, however, constitute special

163 Apart from the legal objections to this approach, it is impractical: it will be very difficult, if not
impossible, to separate the costs of the successful claims from the costs of the unsuccessful ones, or even
the costs of a successful claim from the costs of a successful counter-claim.
164 The position might be compared with players in a tennis match. P wins the match whether he wins
three sets to love or three sets to two.
165 Monticello (Pvt) Ltd v Edgerton (above) at 768H. Although the claimant failed with a claim for
$3 240, it nevertheless succeeded in recovering $3 177 out of claims totalling $6 910, whereas
defendant's counter-claims for alleged defects were almost totally rejected.
166 WLD 8 November 1989, unreported (case no 19299/88).
167 The court (at 19) regarded the facts as unique. The arbitrator made an interim award in favour of
SATS whereby the applicant was compelled to recalculate its claim on the correct basis. It was only at
a late stage that the recalculations revealed the claims justifying the award of approximately R 7 000.
The arbitrator was steeped in the facts and it was clear from his reasoned awards that he brought an
intelligent and informed mind to bear on the issues (at 20-1). The court therefore accepted his finding
that SA TS was the successful party and entitled to costs.
168 See John Sisk & Son (SA) (Pty) Ltd v Urban Foundation 1987 (3) SA 190 (N) 196D. The
reprehensible conduct must relate to the party's conduct in the arbitration as opposed to his conduct in
relation to the execution of the contract (see Rhodesia Electricity Supply Commission v Joelson Brothers
and Bardone (Pvt) Ltd (above) at 646C).
169 Defendant may, however, counter such conduct by a reasonable tender.
280 Arbitration in South Africa: Law and Practice

circumstances.17° Failure by a successful party on an issue or issues on which a

large amount of time was spent may amount to special circumstances, justifying
the apportionment of costs, possibly on the basis of the time spent on the
various issues. 171
Notwithstanding the custom of making awards without furnishing reasons, 172
it is desirable that an arbitrator who deprives the successful party of his costs by
reason of special circumstances should state those reasons in his award if he is
to avoid or at least reduce the risk of having his award remitted or set aside. 173
An arbitrator should also usually not make a special award on costs, which
departs from the general rule, without first giving the parties the opportunity of
addressing him on the subject of special circumstances.

7.12.3 Components of an award of costs

Section 35(1) of the Arbitration Act, in empowering the arbitrator to award
costs, distinguishes between the costs in connection with the reference and the
costs of the award. The costs of the award comprise the arbitrator's fees and
expenses, and, where applicable, the cost of hiring the venue and the cost of
providing a transcript of the proceedings for the arbitrator. The costs of the
reference are the costs properly incurred by the party in whose favour costs are
awarded in preparing and presenting his case, excluding the costs of the award.
There is no difference between the two concepts as regards the way in which
the arbitrator must exercise his discretion or the court's power to review an
award of costs. 174
Costs of the reference may be awarded either as between party and party or
as between attorney and client. Party-and-party costs do not include all the
successful party's costs, but are only those costs which appear to the taxing
master to have been necessary to attain justice or to defend the party's rights. 175

170 John Sisk & Son (SA) (Pry) Lrd v Urban Foundation (above) at 196H.
17 ' Mustill & Boyd 397; Schindler Fire & Security (Pry) Ltd v Souzh African Transport Services (above)
at 24.
172 See 269--70 above.
173 See Monticello (Pvt) Ltd v Edger/On (above) at 767E-F; King v Thomas McKenna Ltd (above) at
664e. The fact that the arbitrator furnished cogent reasons was an important factor in persuading the
court to uphold the arbitrator's designation of the successful party in the Schindler case above.
Conversely, had the arbitrator furnished reasons for his costs award in the John Sisk case from the
outset, the court might have left his award intact on the basis that he had properly applied his mind in
accordance with the relevant principles, even though the court itself would have awarded costs
differently.
174 See Mustill & Boyd 400.
175 See Van Winsen, Eksteen & Cilliers 476-7; Davis (1966) 63. A party's costs are the expenses
incurred by a party in preparing for and conducting his case at the arbitration hearing, and consist
principally of the fees of his attorney and his counsel and fees paid to expert witnesse5. As between party
and party, only a relatively nominal allowance will be made for costs incurred for consultations prior to
the preparation of the statement of claim or statement of defence. The taxing master may also disallow
a portion of the amounts charged for consultations and other attendances after this date to the extent
that he considers that they were excessive or not strictly necessary. The party is not entitled to any fee
or recompense for his own time spent on the proceedings, even though he may be a professional person
accustomed to charging for his time and may have spent considerable time on the matter.
The Award 281

Attorney-and-client costs go further than party-and-party costs; they are all the
costs reasonably incurred from the time when it became necessary for the party
to seek legal advice about the dispute. 176 Costs are almost always awarded on
a party-and-party basis and very seldom on an attorney-and-client scale, which
is reserved for instances where the party against whom the order of costs is
made has disrupted the arbitration proceedings, has been rude and abusive to
the arbitrator, or has advanced a case that is vexatious, frivolous, or wholly
without merit. Such an award of costs is made to express the arbitrator's
particular disapproval of the conduct of the ·party, and is somewhat punitive in
nature.
The arbitrator should, in awarding costs, state whether they are party-and-
party costs or attorney-and-client costs. He should also state whether they are
on the Supreme Court scale or the magistrate's court scale. In the absence of
any agreement between the parties as to the scale, he should award costs on the
magistrate's court scale if the amount of the award falls within the jurisdiction
of the magistrate's court, 177 unless the complexity of the issues or other special
circumstances justify an award on the Supreme Court scale. 178 Where the
amount of the award exceeds the jurisdiction of the magistrate's court, the
Supreme Court scale is applicable. Where a party was represented by two
counsel, the arbitrator must decide whether the matter was of sufficient
complexity to justify the employment of two counsel. He should also remember
that the costs of two counsel are not recoverable between party and party
without a specific order to that effect. The qualifying fees of witnesses will only
be allowed on taxation if the award so provides. 179 Where the party is not

176 There is a further distinction between attorney-and-client costs and costs as between attorney and
own client. Although attorney-and-client costs are awarded against a party to express the adjudicator's
disapproval of that party's conduct, the costs will still be taxed on the basis that they are being paid by
the opposing litigant, rather than by the party who incurred those costs. A bill of costs on the scale as
between attorney and own client is taxed on the basis that the client is paying (see Malcolm Lyons &
Munro v Abra 1991 (3) SA 464 (W) 469D-E) and therefore gives an even fuller measure of recovery to
a party receiving such an order against his opponent, when the court wishes to express extreme
disapproval of the opponent's conduct (Delfanre v Delta ElectNcal Industries Ltd 1992 (2) SA 221 (C)
233F-G). It is not clear whether the expression 'costs between attorney and client' in s 35(1) was
intended to include an award of costs 'as between attorney and own client" and an arbitrator should
therefore be wary of making such an order unless authorised by the arbitration agreement.
177 At present R20 000, except in respect of a claim on a liquid document or mortgage bond, where

the amount is R50 000 (the Magistrates' Courts Act 32 of 1944 s 28 read with GN R1260 of 30 May
1991).
178 See Jacobs 154, although the authority referred to, namely Stein v Otto 1917 WLD 2 at 7, Jacobs
v Donner 1929 WLD 26 at 31 and Donner v Ehrlich 1928 WLD 159 at 161-2 actually dealt with the costs
of having the award made an order of court, whereas the fourth case De Jager v The Colonial
Government (1894) 15 NLR 311 concerns tbe remittal of an award to the arbitrators to deal with the
costs.
179 The arbitrator must consider whether the payment of the qualifying fees was reasonably necessary.
The failure to call the witness is only one of the factors to be considered. Although this would generally
justify the inference that the fees were not necessary, the position would be different if it became
unnecessary to call him because the other party conceded a point at a late stage (Stauffer Chemical Co
v Safsan Marketing and Distribution Co (Pty) Ltd 1987 (2) SA 331 (A) 354). In-house employees who
have assisted with the preparation of a party's claim will not usually be regarded as experts in respect
of whom qualifying fees are recoverable (see the Schindler case (above) at 21-4).
282 Arbitration in South Africa: Law and Practice

legally represented, but is represented by a claims consultant as a lay advocate,

it is submitted that the fees of such person should in principle be recoverable in
arbitration proceedings as between party and party .1so
The arbitrator may disallow costs which he considers have been unreason-
ably incurred, for example, where senior and junior counsel represented a
party, when in the arbitrator's opinion junior counsel would have sufficed, or
where an excessive number of expert witnesses were called, or where a party
has unnecessarily protracted the proceedings, or where there has been
dishonesty or other serious misconduct on the part of the successful party in
relation to the proceedings. 181

7.12.4 Sealed offer

The prospect that, even if the claimant is awarded only part of what he claims,
he will be awarded costs can be daunting for a defendant who believes that he
has a justifiable defence but will have to bear the costs unless he can defeat the
claimant's claim.
In court proceedings, there is a procedure that comes to his rescue: he can
make a written offer of settlement 'without prejudice' 182 and convey it to the
plaintiff. If the offer is not accepted, it will be retained by the registrar
separately from the file with the other papers of the case and will only be
brought to the attention of the court as being relevant to costs after judgment
has been given. 183 If the amount eventually awarded to the plaintiff is greater
than the offer, he is awarded costs, because he was justified in rejecting the
offer and continuing with the litigation, but if the amount awarded is equal to
or less than the offer, costs subsequent to the offer are usually awarded against
him, even though judgment was in his favour, because he would have done
better to have accepted the offer instead of continuing the litigation with all its
costs.
In arbitration proceedings, unless the arbitration is conducted under the
auspices of an institution which is prepared to perform the function, there is no
person equivalent to the registrar who can retain the offer without disclosing
the fact that it has been made to the arbitrator. The problem can be dealt with
180 Subject to reduction by taxation as with other items. Where the party is legally represented, the
claims consultant's fee would arguably not be recoverable as between party and party, unless he is an
expert witness, for otherwise he is largely duplicating the function of the legal representative.
181 A court may on occasion award costs de bonis propriis against a litigant acting in a representative
capacity (eg a trustee of a trust or a guardian of a minor) or the legal representative of a party, if the
court is of the view that the person's conduct in respect of the proceedings has been vexatious, negligent
or ma/a fide. Although not personalty involved in the litigation, that person is required to pay the costs
out of his own pocket. Although s 35(1) of the Arbitration Act empowers an arbitrator to award costs
as between attorney and client, it does not expressly authorise him to award costs. de bonis propriis. As
both are somewhat punitive in nature, it is arguable that by making express provision for the one, the
legislature by implication intended that the arbitrator should have no power under the Act to award the
other an'd that he therefore cannot award costs de bonis propriis in terms of the Act.
182 In the context, the offer is 'without prejudice save as to costs'. See the text below.
183 See Supreme Court Rule 34(1), (2), (10) and (11). A party who discloses the existence of the offer
to the court prior to judgment shall be liable to have costs given against him, even if he is successful in
the action (rule 34(13)).
The Award 283

in one of two ways. One possibility is to give the arbitrator a sealed offer,
inviting him to open and consider it only after he has made his award on the
substantive issues. The alternative is to invite the arbitrator to make an interim
award on the substantive issues and then to hold a further hearing on costs
when the existence of the offer and its terms will be disclosed to the arbitrator
for the first time. The first alternative avoids the expense of a further hearing,
but is appropriate only if there is no reason to believe that the arbitrator might
be embarrassed in, for example, assessing a claim for damages where he knows
that some offer has been made, even if he is unaware of the amount. The
second alternative involves the need for and the costs of a further hearing. The
further hearing can be justified independently of the existence of an offer if
there are complex arguments on costs, the need for which will depend on the
arbitrator's decision on the merits. Therefore, no arbitrator should assume that
an offer has been made simply because he is asked to postpone an award on
costs until after his decision on the substantive claim(s). 184 Parties' reluctance
to use the first approach by revealing the existence of the sealed offer (as
opposed to its amount) to the arbitrator can be overcome if the arbitrator takes
the initiative by asking the parties to hand him a sealed envelope to be opened
once he has made his award on the substantive issues. The contents of the
envelope will reveal whether an offer has been made at all and, if so, its
amountY!5
An offer by the defendant to protect himself from an adverse costs award 186
may best be described as an offer 'without prejudice save as to costs' 187 and
must be distinguished on the one hand, from an open offer which may be
disclosed to the arbitrator at any stage in the proceedings and on the other
hand, from a 'without prejudice' offer in its usual meaning, which is privileged
and may not be disclosed to the arbitrator at any stage, even for purposes of the
award of costs, without the consent of both parties. 188 The result of making an
offer 'without prejudice save as to costs' is that the defendant will usually be
entitled to costs from the date on which the offer was made, unless the claimant
has achieved more by continuing with the arbitration than he would have done
by accepting the offer. 189

7.12.5 Taxation of costs

A party who is awarded party-and-party costs will rarely recover all that he is
184 See King v Thomas McKenna Ltd [1991) 1 All ER 653 (CA) 66lj-662b.
185 See Tramountana Armadora SA v Atlantic Shipping Co SA [1978) 2 All ER 870 (QB) 876f-g; King
v Thomas McKenna Ltd (above) at 662c-d.
186 The tactical considerations regarding the timing and the amount of the offer are discussed in
157 above.
187 See Bernstein 73. In England it is sometimes referred to as a Calderbank offer, from the case of
Calderbank v Calderbank [1975) 3 All ER 333, where the use of the procedure was first approved in
connection with a dispute on matrimonial property rights.
188 See Tramountana Armadora SA v Atlantic Shipping Co SA (above) at 876; Calderbank v
Calderbank (above) at 342c-d. See also 234-5 above.
189 See further Tramountana Armadora SA v Atlantic Shipping Co SA (above) at 877g-878b; Mustill
& Boyd 397; Bernstein 138.
284 Arbitration in South Africa: Law and Practice

obliged to pay his attorney and counsel. Costs are usually awarded and taxed
in accordance with a tariff which is frequently substantially lower than the
actual charges of the attorney and advocate. 190
After judgment has been given in court or an arbitrator has published his
award, unless the attorneys for the parties are able to agree the amount which
the successful party will receive from his opponent in respect of costs, the
attorney for the successful party will draw up a bill of costs, which is a detailed
statement of all the reimbursable costs incurred in the matter. This will be
submitted to the taxing master of the court for taxing, a process of assessment
in which he scrutinises the charges and disallows or reduces the charges for
items which he regards as excessive in relation to the scale on which the bill is
being taxed. The attorneys for both parties are entitled to appear before the
taxing master and make representations.
Legal costs incurred in arbitrations may either be taxed by the taxing master
in this way or it is competent for the arbitrator to do so. 191 If the arbitrator has
awarded costs but does not immediately tax and settle them, then, unless the
arbitration agreement otherwise provides, 'the taxing master of the court may
tax them' . 192 The use of the word 'may' appears to indicate that the taxing
master has a discretion as to whether he will tax the costs or not, with the result
that. the taxing master of at least one division of the court has, on occasion,
refused to tax a bill of costs relating to arbitration proceedings .193 In that event,
if the parties are unable to agree the amount of the costs, the arbitrator will
have little option but to tax the costs, for until the amount of the costs has been
fixed by agreement or taxation, the dispute referred to arbitration has not been
completely resolved.
An arbitrator who is not a lawyer may experience some difficulty with the
taxing of the fees of the lawyers, and for this reason would rather leave the
matter to the taxing master. But the taxing master is usually ill-equipped to
tax the fees of non-legal representatives in arbitrations, and particularly
where the arbitrator is from the same profession, such fees should be
determined by the arbitrator and stipulated in his award of costs. A lay
arbitrator who is to tax the fees and disbursements of lawyers should ask the
parties to agree either to his taxing these items as a 'commercial person', 194 or

190 A helpful analogy is the tariff on which medical aid schemes reimburse their members for their
medical expenses, which is usually substantially lower than the expenses they have actually incurred.
191 Section 35(1) of the Arbitration Act.
192 Section 35(3), our emphasis. The taxing master is the taxing master of the Supreme Court (see s 1
'court').
193 The court can, however, direct the taxing master to tax the costs when making the award an order
of court (see s 35(4)) and in this instance he cannot refuse. The court may also·review any taxation of
costs by the taxing master (s 35(5)).
194 This method was suggested by a former chairman· of the Chartered Institute of Arbitrators, Ian
Menzies, at a seminar near Oxford in March 1989. It implies that the arbitrator will assess the charges
and disbursements to the best of his ability, using his commercial experience and his insight into the
work which preparing and presenting the case required, rather than by attempting to apply the tariffs
for attorneys' professional fees in the way a taxing master is able to do.
The Award 285

that he should be entitled to make use ofexpert assistance. 195

The Act also obliges the taxing master of the court, if a party to the reference
so requires, to tax the arbitrator's own fees if they have not been fixed by
agreement between the parties. 196 As arbitrators are generally loath to embark
on any arbitration without prior agreement on their fees, 197 this provision is
very seldom invoked.

7.13 Remitting the award 198

A party who is dissatisfied with an arbitrator's award has two active remedies
with which to attack it, namely remittal and setting aside. 199 It has not always
been appreciated that remittal and setting aside are alternative and distinct
remedies. 200 In the case of remittal, the matter is referred back to the same
arbitrator so that he can remedy some defect in his award. Herein lies the
essential difference between remittal and setting aside. It has been said that
remittal is 'an alternative to setting aside where the defect or problem can be
cleared up merely by getting the arbitrator to put it right rather than by the
sledgehammer device of setting it aside, which sends the parties back to square
one'. 201 In the case of setting aside, the award is set aside, but the parties'
dispute is still subject to a binding arbitration agreement. Therefore, the
Arbitration Act provides that if an award is set aside, the dispute must, at the
request of either party, be submitted to a new arbitration tribunal constituted
in the manner directed by the court 202 and the court has no discretion to refuse
this request. 203 Remittal will not be an appropriate alternative to setting aside
if there is reason to believe that the arbitrator is incompetent or will not be fair
and impartial in making a fresh award. 204
On the publication of his final award, the arbitrator is functus officio and he
has no further powers, except his limited statutory power to correct slips. 205 His
powers can be restored to him to a limited extent through the process of

195 See Bernstein 144. The person could be a retired taxing master or a lawyer. Bearing in mind the
restrictions on the arbitrator delegating his functions (see 246 above) and the potential problems of an
arbitrator taking informal legal advice (see 266 above) the parties and the arbitrator should be in
agreement as to the precise function and extent of the assistance.
196 Section 34(1) of the Arbitration Act.
197 Compare 87 above.
198 See generally Butler (1990) 255-63 regarding remittal in South African law.
199 Compare Mustill & Boyd 547. See 273-4 above for passive remedies or defences when the other
pa~ tries to enforce the award.
See eg RPM Konstruksie (Edms) Bpk 1• Robinson 1979 (3) SA 632 (C) 634B; John Sisk & Son
(SA) (Pry) Ltd v Urban Foundation 1985 (4) SA 349 (N) 3511, 359E-G. There have also been instances
of both remedies being granted at once in respect of the whole award in England (see Mustill & Boyd
564J- See further Butler (1990) 257-8.
2 1 Kay 56. See also Mustill & Boyd 565.
202 Section 33(4).
203 Benjamin v Sobac South African Building and Construction (Pry) Ltd 1989 (4) SA 940 (C)
961J-962A.
204 See the text below.
205 See the Arbitration Act s 30 and 272 above.
286 Arbitration in South Africa: Law and Practice

remittal, which may take place either by an agreement between the parties or
by an order of court.
The Act 206 allows the parties, within six weeks of the publication of the
award, to remit any matter which was referred to arbitration to the arbitrator
for his reconsideration and for the making of a further or fresh award, or for
such other purpose as the parties may specify. The parties could, for example,
ask him to clear up an ambiguity in his award or to rectify the published award
to reflect his original intention. Although this procedure permits the parties to
remit the award to the arbitrator to correct an admitted mistake which does not
appear from the award, 207 it is unlikely that this will occur in practice, as the
correction of a mistake will almost invariably favour one party at the expense
of the other. The party who would be prejudiced by the correction is unlikely
to agree to remittal, with the result that the other party will have to apply to
court. Remittal by agreement, with the request for a further award, would be
appropriate if the arbitrator has omitted to deal with a matter referred to him
for his decision, such as the issue of costs. But a new matter, not previously
referred to him, may not be put to him through remittal and would have to be
dealt with as a fresh submission of a dispute to arbitration.
The remittal by the parties to the arbitrator must be in writing and signed by
both parties. The document must specify what the arbitrator is required to
reconsider or the other purpose of the remittal. 208 The arbitrator must dispose
of the matter remitted within three months of the date of the document, unless
the document otherwise provides. 209
Where there is no agreement to remit, the party wishing to remit the award
may apply to court for the court itself to remit the award to the arbitrator. 210
The application must be made within six weeks of the publication of the award,
or within such extended period as the court may allow, on good cause shown. 211
Due notice of the application must be given to the other party. The applicant
must show 'good cause' for a matter to be remitted to the arbitrator.
The wording of the provision conferring the court's power of remittal differs
materially from that of its colonial predecessors. 212 The most important
differences are that a court may no longer remit an award on its own initiative,
but only on the application of a party. Thus, where a party applies only for the
setting aside of the award, it is no longer competent for the court to remit the
award instead, if the court considers remittal to be more appropriate under

206 In terms of s 32(1) of the Arbitration Act.

w 7 A patent error in the award may be corrected by the arbitrator on his own initiative under s 30 (see
272 above).
ws Section 32(1).
209 Section 32(3).
210 In terms of s 32(2).
211 Section 32(2) read with s 38.
212 See the Benjamin case (above) at 9581; Butler (1990) 256-7. For the history and scope of the
court's power to remit an award in England, presently contained ins 22 of the Arbitration Act of 1950,
see Mustill & Boyd 548-9; King v Thomas McKenna Ltd (1991) 1 All ER 653 (CA) 656d-66ld.
The Award 287
the particular circumstances. 213 A party wishing to keep his options open
should therefore apply for remittal and setting aside, in the alternative.
Secondly, the applicant for remittal must show 'good cause' whereas the
colonial legislation did not qualify the court's power in this way. Thirdly,
although the previous legislation allowed the court to remit matters 'from time
to time', and thus before the arbitrator gave his award, it appears that the
court's statutory power of remittal may now only be exercised once the
arbitrator has published his award. 214
The Act does not specify what constitutes good cause for remittal. The
grounds on which the courts will remit an award in South African law may be
summarised as follows: 215
First, one of the statutory grounds for setting aside an award 216 will, in
appropriate circumstances, justify the remittal of the award. 217 The test for
'good cause' is then no less stringent than would be required to justify the
setting aside of the award. 218 However, the situation may be such that where a
ground for setting aside is proved, remittal may be entirely inappropriate, for
example, where the arbitrator has committed a gross procedural irregularity of
such a nature that the parties should not be required to place their dispute
before him again. 219 Where the procedural irregularity would still justify setting
aside, but is of a less serious nature so that there is no reason to doubt the
integrity -0r competence of the arbitrator, remittal would be the more
appropriate remedy. 220 As we explained above, on the wording of the present
Act, the court can remit an award on a ground justifying setting aside only if the
applicant applied for remittal.
Secondly, an award may be remitted where additional evidence has been
discovered after the publication of the award. 221 In exercising its discretion, the
court will follow the guidelines 222 used when deciding whether or not a litigant
213 See the Benjamin case (above) at 959E-I. Kannenberg v Gird 1966 (4) SA 173 (C) 187H-188D was
decided on the different wording of s 16(1) of the Arbitrations Act 29 of 1898 (Cape). Conversely, the
court cannot set aside the award when the applicant only applies for remittal.
214 The fact that s 33(2) requires the application to be brought within six weeks after the publication
of the award, seems to imply that the party cannot apply to court before the award has been published
(see Butler (1990) 256. It was suggested in the Benjamin case (above) at 9591 that a court should now
look to the Act to determine the extent of its jurisdiction to remit, rather than to the common law. (For
the court's common-law power of remittal see Douglas v Pim 1903 TH 306 at 310; Basson v Herman
1904 TS 98 at 100; the Benjamin case (above) at 959J-960E and Du Plessis (1977) 426.)
215 See Butler (1990) 259-63 for a fuller discussion of these grounds.
216 Sees 33(1) and 291 below.
217 Compare Jacobs 146; Du Plessis (1977) 427.
218 See the Benjamin case above 961C-D.
219 See the Benjamin case above 9611-J. :me court cites as an example Adamstein v Adamstein 1930
CPD 165 at 169, where the arbitrator heard the one party in the absence of the other and formed very
decided views on the matters in dispute.
220 See Du Plessis (1977) 430, citing Collins & Co v Brown 1923 NPD 430. In this case, the arbitrator
heard oral evidence from both parties, but then made his finding on only one of many points in issue on
documentary evidence submitted by one party without the knowledge of the other. The integrity of the
arbitrator was not in doubt.
221 See Dutch Reformed Church v Town Council of Cape Town (1898) 15 SC 14 at p and the
Benjamin case (above) at 963B.
222 The guidelines were formulated in Colman v Dunbar 1933 AD 141 at 161-2.
288 Arbitration in South Africa: Law and Practice

should be allowed to lead further evidence out of time in court proceedings,

subject to one important qualification. 223 The first guideline is the principle of
finality, whereby an issue raised and decided should not normally be reopened.
The factor of finality is particularly relevant in arbitration proceedings. 224
Secondly, the applicant must show that he could not by the exercise of
reasonable diligence have adduced the evidence in time. Thirdly, the evidence
must be material, weighty and practically conclusive. Finally, the prejudice to
the other party must be considered. 225 The important qualification is that
whereas the inadmissibility of the new evidence in terms of the rules of
evidence would almost certainly doom the application in court proceedings, it
may not be an important factor in an arbitration where the arbitrator is not
required to comply strictly with those rules. 226
Thirdly, the award may be remitted where the arbitrator admits to having
made a mistake. Such a power is needed because both the arbitrator's statutory
power to correct slips and the court's power to correct errors when making an
award an order of court, are limited to the correction of 'patent errors' .227 It can
happen that the arbitrator makes an arithmetical error228 or accidently
transposes the parties229 in reasons not forming part of the award, which error
has a significant effect on the contents of his award. If he admits the mistake, 230
preferably on affidavit, the court should be able to remit the matter to him so
that he can make a fresh award. 231 Remittal should only be used in respect of
mistakes which result in the award not reflecting the arbitrator's original
intention, and not where he has subsequently changed his mind. In the words
of Mustill & Boyd:
'Justice requires that accidental errors and omissions should not be allowed to result
in a miscarriage of justice. But finality requires that the award should not be remitted

223 See the Benjamin case (above) at 963E.

224 See the Benjamin case (above) at 963I-J, 964B-C; Aiden Shipping Co Ltd v /nterbulk Ltd,
/nterbu/k Ltd v JCCO International Corn Co NV (the Vimeira) (No 2) [1985] (2) Lloyd's Rep 377 at 399.
225 See the Benjamin case (above) at 964C-D. The other party will be prejudiced if he cannot bring
back his own witnesses to respond to the fresh evidence (Colman v Dunbar 1933 AD 141 at 162).
226 See the Benjamin case (above) at 964G-I; Mustill & Boyd 562.
227 See ss 30 and 31 and 272 and 274 above.
228 It would seem that an arithmetical error falls outside the concept of a 'clerical mistake·

('skryffout') in ss 30 and 31 of the Act.

229 In Mutual Shipping Corporation v Bayshore Shipping Co (the Montan) [1985] 1 Lloyd's Rep 189
(CA) 190, the arbitrator transposed the words 'charterers' and 'owners' at one point, causing him to
base his award on figures submitted by the owners, instead of those of the charterers, which he intended
to adopt.
230 It seems preferable to restrict remittal to admitted mistakes (see Atlantic Lines & Navigation Co
Inc v /ta/mare SpA (the Appal/on)' (1985] 1 Lloyd's Rep 597 at 609; Mustill & Boyd 559nll), but
compare Mutual Shipping Corporation v Bayshore Shipping Co (the Montan) (above) at 193, 197 where
it was decided obiter that the rule is not an invariable one. To prevent remittal being used as a form of
appeal where arbitrators might have had second thoughts, the court should be informed of the nature
of the arbitrator's mistake before sanctioning remittal. Where the mistake does not appear from the
award, the arbitrator can provide the best evidence.
231 See Atlantic Lines & Navigation Co Inc v /ta/mare SpA (the Appal/on) (above) at 608-9; Mutual
Shipping Corporation v Bayshore Shipping Co (the Montan) (above) at 197; Mustill & Boyd 560-1;
Table Bay Harbour Board v Metropolitan & Suburban Railway Company (1892) 9 SC 437 at 439.
The Award 289
simply because the arbitrator has had second thoughts about the way in which he has
exercised his judgment on issues of fact or law.' 232
However, there is an exception in the case of an award of costs. Here, the
courts will remit the award where an arbitrator has made a mistake by
departing from the usual rules when exercising his discretion as to costs. 233
Fourthly, failure to decide all matters referred to the arbitrator or an
ambiguity in the award may be a ground for remittjng the matter to the
arbitrator. 234 Where the arbitrator has failed to decide all the matters referred
to him, loss of confidence by one party in the arbitrator will not necessarily by
itself be a sufficient ground for refusing remittal, unless there is reason to
believe that the arbitrator is incompetent, or that he will not be fair or impartial
in making a fresh award.23s
The English courts are also prepared to remit an award where there has been
a procedural mishap, in circumstances which probably fall outside the grounds
for setting aside the award. The statutory power to remit may thus be exercised
in any case 'where, notwithstanding that the arbitrators have acted with
complete propriety, due to mishap or misunderstanding some aspect of the
dispute which has been the subject of the reference has not been considered
and adjudicated upon as fully as or in a manner which the parties were entitled
to expect and it would be inequitable to allow any award to take effect without
some further consideration by the arbitrator.' This remedy only applies where
there has been a deviation from the route which the reference should have
taken towards the award and not in cases where the route was correct but the
result, through a mistake of fact or law, is not that which the court would have
reached. 236

232 At 160, citing Mutual Shipping Corporation v Bayshore Shipping Co (the Montan) (above) at 192.
See also Dickenson & Brown v Fisher's Executors 1915 AD 166 at 181; King v Thomas McKenna Ltd
(1991] 1 All ER 653 (CA) 660b, 661a--c. Compare, however, Table Bay Harbour Board v Metropolitan
and Suburban Railway Company (above) at 439 (where De Villiers CJ, citing no authority, stated that
if an arbitrator admits a mistake of law or of fact and is prepared to review his own decision, the court
woul<;l refer the matter back to him) and Du Plessis (1977) 429.
233 See 277-8 above.
234 See Du Plessis (1977) 427; Delport v Kopjes Irrigation Settlement Management Board 1948 (1) SA
258 (0) 271-2. In view of the trend in the case law to define 'misconduct', as a ground for setting aside,
narrowly to exclude 'technical' or 'legal' misconduct (see 292 below) a bona fide omission to decide all
the issues would probably not be misconduct (compare Butler (1990) 266n109). Therefore, this is a
seJ?:rate ground for remittal not covered by the first category mentioned above.
5 Harlin Properties (Pty) Ltd v Rush & Tomkins (SA) (Pty) Ltd 1963 (1) SA 187 (D) 199E-F;

Kannenberg v Gird 1966 (4) SA 173 (C) 188A-B.

236 King v Thomas McKenna Ltd (above) at 660j-661a per Donaldson MR. On the facts, an
inexperienced counsel did not want to disclose to the arbitrator that a 'sealed offer' had or might have
been made by her client in case that information should influence the arbitrator. She wished that the
question of costs should stand over until after the award on the merits. Instead of stating this directly,
she raised the matter obliquely in connection with a discussion on the costs of an amendment to the
pleadings (at 666a-b). Her intention was not understood by the arbitrator, who ultimately awarded an
amount of less than the sealed offer (of which the arbitrator was unaware) plus costs to the other party.
On the information known to the arbitrator, the costs award was correct. By then, costs were in excess
of the amount awarded, resulting in a grave injustice to the party who made the offer and who would
have been entitled to costs if the sealed offer had been disclosed in the usual way after the award on the
merits.
290 Arbitration in South Africa: Law and Practice

It is sometimes said that the court will remit an award to the arbitrator where
he has exceeded his powers and made an award on matters not referred to him
by the arbitration agreement. The better view is, however, that the court will
refuse to include in any order made in terms of s 31(1) to enforce the award any
portion of it which is invalid because the arbitrator has exceeded his
jurisdiction.
It is submitted that if the portion of the award remitted to the arbitrator is
severable from the remainder, the unsuccessful party will not necessarily be
excused from compliance with the rest of the award until the arbitrator has
dealt with the matter remitted to him, and the court may, on application of the
other party, make the remainder of the award an order of court to compel
performance. 237
Where a matter is remitted to the arbitrator by the court, he is required to
dispose of it within three months of the date of order, unless the order
otherwise provides. 238 The Act does not specify how the arbitrator is to convey
to the parties his decision on the matter remitted to him. It is submitted that he
must follow the usual procedure laid down in the Act for the publication of an
award. 239
If the arbitrator has died since making his award, it will be remitted to a new
arbitrator appointed by the parties themselves if the remittal is pursuant to an
agreement between them, 240 or by the court, if the court has remitted the
award. 241 However, the Act makes no express provision for the appointment by
the parties or the court of a substitute arbitrator where the original arbitrator
is unable to deal with the matter remitted to him for any reason other than his
death, for example a serious illness or prolonged absence overseas. This
omission emphasises that remittal is a remedy directed at having a defect in the
award remedied by the arbitrator who made it.

7.14 Setting aside the award

The second active remedy which a dissatisfied party can use to attack an award
is an application to court to have the award set aside. The distinction between
setting aside and remittal was discussed above. 242

237 In terms of s 31. A party may voluntarily comply with one part while attacking another. In Cape

Town Municipality v Yeld 1978 (4) SA 802 (C) the municipality voluntarily complied with the award on
the merits immediately after the award was published, but then applied to court for part of the award
on costs to be set aside.
238 Section 32(3).
239 See s 25 and 267 above.
240 In terms of s 32(1).
241 In terms of s 32(2). Sees 32(4).
242 See 285 above.
The Award 291

7 .14.1 Grounds for setting aside the award

The Arbitration Act provides the following four grounds on which an award
may be set aside: 243
(a) where any member of an arbitration tribunal has misconducted himself in
relation to his duties as arbitrator or umpire;
(b) where an arbitration tribunal has committed any gross irregularity in the
conduct of the arbitration proceedings;
(c) where an arbitration tribunal has exceeded its powers; and
(d) where an award has been improperly obtained.
Only two of these grounds, namely (a) and (d) existed in the colonial
legislation,244 although ground (c) was available under the common law .24 5 The
grounds overlap to a considerable extent: for example, an award which has
been 'improperly obtained' will include one where the arbitrator has
misconducted himself or has been guilty of a gross irregularity in his conduct of
the proceedings. 246 However, the ground that the award has been improperly
obtained is wider than the other two in that it includes misconduct by a party
or a witness. 247 The courts have held that the grounds for setting aside the
award are limited to the statutory grounds set out above. 248 Du Plessis 249 adds
a fifth ground for setting aside, namely in the case of an invalid award. It is of
course not really logical to speak of the setting aside of an award which is
invalid 250 because of a formal defect or for lack of certainty or finality. 251 Where
the award is invalid for illegality or as being contrary to public policy it is
arguable that the arbitrator has exceeded his powers 252 and that the award may
be 'set aside' on that ground. Where a party wishes the court to confirm that an
award is invalid, it would be more logical for that party to apply for a
declaratory order to the effect that the award is invalid, 253 rather than to apply
to court for the invalid award to be set aside.
243 Section 33(1).
244 See the Arbitrations Act 29 of 1898 (Cape) s 17(2); the Arbitration Act 24 of 1898 (Natal) s 18;
the Arbitration Ordinance 24 of 1904 (Transvaal) s 16(2); Naidoo v Estate Mohomed 1951 (1) SA 915
(N) 919H-920A; Harlin Properties (Pty) Ltd v Rush & Tomkins (SA) (Pty) Ltd 1963 (1) SA 187 (D)
192G-H; Davis (1966) 55-6.
245 See Dickenson & Brown v Fisher's Executors 1915 AD 166 at 175; Harlin Properties (Pty) Ltd v
Rush & Tomkins (SA) (Pty) Ltd (above) at 192G-H, 195F.
246 See Jacobs 145; compare Bester v Easigas (Pty) Ltd 1993 (1) SA 30 (C) 38B-D.
247 See 294-5 below.
248 Dickenson & Brown v Fisher's Executors (above) at 174-5; Benjamin v Sobac South African
Building and Construction (Pty) Ltd 1989 (4) SA 940 (C) 9591.
249 Du Plessis (1977) 417,424.
250 See also Fassler, Kamstra & Holmes v Stallion Group of Companies (Pty) Ltd 1992 (3) SA 825 (W)
829A-C where the court draws attention to the anomaly that would arise if a party contending that an
award was void ab initio was required to bring an application for setting it aside within six weeks of the
puIBorted publication of the void award.
1 See 260-4 above for the requirements for a valid award.
252 See Veldspun (Pty) Ltd v Amalgamated Clothing and Textile Workers Union of South Africa 1992
(3) SA 880 (E) 8941-J, 898D-899A; Bester v Easigas (Pty) Ltd (above) at 42B-D.
253 See Mus till & Boyd 547, 568-9 regarding a declaratory order as an alternative to setting aside. The
Supreme Court is empowered to make declaratory orders bys 19(1)(a)(iii) of the Supreme Court Act
59 of 1959.
292 Arbitration in South Africa: Law and Practice

'Misconduct' was a ground for setting aside an arbitrator's award in the

colonial legislation and is also a ground for setting aside in the English
Arbitration Act. The English Act empowers the court to set aside the award
where 'an arbitrator or umpire has misconducted himself or the proceedings, or
an arbitration or award has been improperly procured. 254 The South African
legislation defines misconduct more narrowly by restricting it to where the
arbitrator has misconducted himself, but the present Act now includes a gross
irregularity by the arbitrator in conducting the proceedings as a separate
ground.
In England, there has been a tendency on the part of the courts to distinguish
misconduct involving moral turpitude from 'legal' or 'technical' misconduct
involving only a procedural irregularity. 255 South African writers have similarly
distinguished between actual misconduct and legal misconduct256 and there is
some support for this distinction in the case law. 257 However, on the whole our
courts have tended to interpret 'misconduct' more narrowly. In the leading case
of Dickenson & Brown v Fisher's Executors 258 it was held that 'misconduct' is
used in its ordinary sense and that an arbitrator can only be said to have
misconducted himself if there has been 'some wrongful or improper conduct'
on his part. In Bester v Easigas (Pty) Ltd259 it was said that to succeed on the
basis of misconduct, the applicant for setting aside would have to show 'that
thei:e was some improper, ma/a fide conduct on the part of the [arbitrator] in
relation to his duties as arbitrator'. In two recent cases, the notion that
'misconduct' should be widely interpreted to include 'legal' or 'technical'
misconduct has been emphatically rejected. 260 Therefore, where an arbitrator
has committed a serious procedural error in his conduct of the proceedings,
with the result that one or both parties have not been fairly treated, but without
any dishonesty or other act or omission involving moral turpitude on the part
254 Section 23(2). Because misconduct is construed in English law to include conduct which is not
morally blameworthy, the italicised words were added to the English arbitration legislation in 1934 in an
attempt to make its wording less abrasive, in deference to arbitrators' sensitivities (see Butler (1990)
265)-
2 5 Mustill & Boyd 552. It has been said that this distinction serves no useful purpose. As the term
'misconduct' is understood in English law, all allegations of misconduct imply that the arbitrator has
failed in his duty to the parties and most imply that the arbitrator has failed to act fairly or to be seen
to act fairly, even if he has no intention to be unfair and was unaware that his conduct could be perceived
as being unfair. There is nothing technical in such a breach of duty. (See Mustill & Boyd 252 citing,
Thomas Borihwick (Glasgow) Ltd v Faure Fairclough Ltd [1968] 1 Lloyd's Rep 16 at 29. See also Butler
(1990) 265-6.)
256 See inter alia Jacobs 138-41; Davis (1966) 56-7; Du Plessis (1977) 418-20.
257 See the Benjamin (above) at 971B-D; Naidoo v Estate Mahomed (above) at 920, where a bona fide
procedural error of hearing evidence from one party in the absence of the other was classified as
improper and misconduct. The case was decided under the colonial legislation and today such conduct
could be attacked as a gross irregularity under s 33(l)(b).
258 At 176.
259 At 38F. In Donner v Ehrlich 1928 WLD 159 at 160-1 misconduct was interpreted to mean
dishonesty or mala fide conduct on the part of the arbitrator. See further the cases referred to in
HY.JJ,grchemicals International (Pry) Ltd v Maybaker Agrichem (Pty) Ltd 1992 (1) SA 89 (W) 95H-98B.
See Hyperchemicals International (Pty) Ltd v Maybaker Agrichem (Pty) Ltd (above) at 100B;
Bester v Easigas (Pty) Ltd (above) at 36I-J, where Brand AJ declined to follow the Benjamin case
(above) at 971B-D.
The Award 293

of the arbitrator, the applicant for setting aside should use the ground that a
gross irregularity has been committed. 261
Our courts have consistently taken the view that a bona fide mistake by the
arbitrator in reaching his conclusion on the merits of the dispute, whether on
the law or the facts, and irrespective of whether the mistake appears from the
award or not, is not a basis for setting aside an award as misconduct or some
other ground. In the leading case of Dickenson & Brown v Fisher's Executors,
Solomon JA stated:
'Now if the word misconduct is to be construed in its ordinary sense it seems to me
impossible to hold that a bona fide mistake either of law or of fact made by an
arbitrator can be characterised as misconduct, any more than a Judge can be said to
have misconducted himself if he has given an erroneous decision on a point of
law. . . . But in ordinary circumstances where an arbitrator has given fair
consideration to the matter which has been submitted to him for decision, I think it
would be impossible to hold that he had been guilty of misconduct merely because he
made a bona fide mistake either of law or of fact. ' 262
In Clark v African Guarantee and Indemnity Co Ltd, Gardiner J, considering
an allegation that the umpire had made an award on an insufficiency of
evidence, said:
'If the arbitrator has taken evidence and has fairly considered it, the Court will not
set aside.the conclusion he has come to upon that evidence, because he has drawn
inferences which, though possible, are not acceptable to the Court. ' 263
In Hyperchemicals International (Pty) Ltd v Maybaker Agrichem International
(Pty) Ltd, Preiss J said:
'Mistake, no matter how gross, is not misconduct; at most, gross mistake may provide
evidence of misconduct in the sense that it may be so gross or manifest that it could
not have been made without misconduct on the part of the arbitrator. In such a case
a Court might be justified in drawing an inference of misconduct. The award would
then be set aside, not for mistake, but for misconduct.' 264
The rule of English law, until its repeal in 1979,265 whereby an award could be
set aside by reason of an error of fact or law on the face of the award, has never
formed part of South African law. 266 However, as discussed above, a court will
interfere with an arbitrator's award of costs if fails to apply correctly the
principles used by the courts, whether the mistake appears on the face of the

261 See the text below at 294.

262 At 176.
263 1915 CPD 68 at 78. Earlier in the same passage, the court indicated that it might be prepared to
interfere if 'the lack of evidence established a total want of that judicial capacity which is required even
of an ordinary fair-minded layman appointed to adjudicate by the parties to a dispute'. The phrase 'a
total want of judicial capacity' has been used subsequently in unsuccessful attempts to attack awards. In
Bester v Easigas (Pty) Ltd (above) at 38E-F it was dismissed as a somewhat meaningless phrase for
purposes of establishing misconduct. In Hyperchemicals International (Pty) Ltd v Maybaker Agrichem
(Pty) Ltd (above) at lOlC-D the court regarded the use of the phrase as extravagant and vexatious and
consequently awarded attorney-and-client costs against the unsuccessful applicant for setting aside.
264 At lOOB-C. See also Dickenson & Brown v Fisher's Executors (above) at 176.
265 Bys 1(1) of the Arbitration Act 1979.
266 See Dickenson & Brown v Fisher's Executors (above) at 177-81 especially 180.
294 Arbitration in South Africa: Law and Practice

award or not. 267 The court will also interfere with an award if the arbitrator
makes a mistake of law, which results in a party being required to do something
which is illegal or in the award being contrary to public policy. 268
Before a court will set aside an arbitrator's award on the basis that the
arbitrator has committed a gross irregularity in the conduct of the proceedings,
the irregularity must have been of such a serious nature that it resulted in the
aggrieved party not having his case fully and fairly determined. 269 In a case
decided before the present Act, Field v Grahamstown Municipality, 270 an
award was set aside because the arbitration tribunal gave one of the parties no
opportunity to call evidence, and received evidence in his absence. The
arbitrators were completely bona fide, and the errors occurred through a
misunderstanding between the tribunal and the parties regarding the procedure
to be followed. Under the present Act, this situation should be dealt with as a
gross procedural irregularity rather than misconduct.
An arbitration tribunal exceeds its powers for purposes of s 33(1)(b) if, for
example, it decides on a matter outside the reference, 271 or if it exceeds its
powers in terms of the special legislation pursuant to which the arbitration
takes place. 272 .
An award may be improperly obtained as a result of misconduct on the part
of the arbitrator or because of the conduct of a party or witness or a
co~bination of these factors. Bribery of the arbitrator is clear ground for the
award to be set aside. 273 By accepting the bribe, the arbitrator is guilty of
misconduct but the award will usually also have been improperly obtained. 274
An award based on deliberately false evidence by a party or his witnesses,

267 See 277-8 above.

268 See Veldspun (Pry) Ltd v Amalgamated Clothing and Textile Workers Union of South Africa 1992
(3) SA 880 (E) 8941-J, 898D-899A; Bester v Easigas (Pry) Ltd (above) at 42B-D. Although the judges
in the Veldspun case construed it as a situation where the illegality resulted in the arbitrator exceeding
his powers, the illegality was caused by the arbitrator not appreciating the legal effect of his award. ie
a mistake of law.
269 Bester v Easigas (Pty) Ltd (above) at 43B-C. See also Anshel/ v Horwitz 1916 WLD 65 at 67.
Compare the Benjamin case above at 971C-D regarding the test for 'technical' misconduct. On the
wording of s 33(1) of the South African statute, 'technical' misconduct in English law should, in the light
of Bester v Easigas (Pry) Ltd (above) at 36G-37C, rather be classified as a gross irregularity in the
conduct of the proceedings.
270 1928 EDL 135 at 143.
271 Allied Mineral Development Corporation (Pry) Ltd v Gemsbok Vlei Kwartsiet (Edms) Bpk 1968 (1)
SA 7 (C) 130.
272 See Cape Town Municpality v Yeld 1978 (4) SA 802 (C). The arbitration was conducted under the
since-repealed provisions of s 37 of the Housing Act 4 of 1966. This Act (read with s 40 of the
Arbitration Act) imposed restrictions on the arbitrators' powers under s 35(1) of the Arbitration Act to
award costs, which were exceeded by the arbitrators in making their award.
273 Graaff-Reinet Municipality v Jansen 1917 CPD 604 at 606.
274 See Bester v Easigas (Pty) Ltd (above) at 38C-D. Where only the arbitrator is dishonest, without
the complicity of another party, the court preferred to regard the matter as involving misconduct only,
rather than one where the award is improperly obtained. This seems to impose an unnecessary limitation
on the ordinary meaning of the phrase 'where an award has been improperly obtained'. However, if the
bribe did not actually influence the award it was arguably not improperly obtained, but the arbitrator
would still be guilty of misconduct and his award should still be set aside: the acceptance of the bribe
destroys all confidence which the other party may have had in the impartiality and fairness of the
arbitrator.
The Award 295

without the arbitrator being aware that it was false, would not amount to
misconduct by the arbitrator. But the award has been improperly obtained,
provided that the false·evidence was material and influenced the arbitrator in
his decision. 275

7 .14.2 Procedure for and consequences of setting aside

An application for the setting aside of an award must be made within six weeks
of the publication of the award 276 with the proviso that where the ground for the
application is corruption, the application must be made not later than six weeks
after the discovery of the corruption, and in any case not later than three years
after the date on which the award was published. 277 Due notice of any
application to have the award set aside must be given to the other party or
parties. 278
The effect of the setting aside of the award is that everything that has
happened since the arbitrator entered into the reference is nullified. His
jurisdiction ceased on the publication of his award and is not revived by its
setting aside. But the arbitration agreement itself is not affected, and its
provisions remain binding on the parties, unless by mutual agreement or by
order of court279 it is terminated or set aside. The dispute must, on the
application of either party, be submitted to a new arbitration tribunal
constituted in the manner directed by the court. 280 But where the pleadings and
discovery made for the first arbitration have not been tainted by the
circumstances that led to the setting aside of the award, the parties could agree,
or in the absence of agreement, the new arbitrator could direct that the
pleadings should be reused in the new reference and that discovery need not be
repeated. 281

215 Van Schalkwyk v Vlok 1914 CPD 999 at 1000.

276 The court may extend this period under s 38 of the Arbitration Act on good cause shown, even
after it has expired.
277 Section 33(2).
278 Section 33( 1).
279 Pursuant to an application in terms of s 3(2) of the Act.
280 Section 33(4).
281 Depending on the circumstances which led to the setting aside of the award, a party may also have
difficulty in retracting an admission, such as the admission of liability on certain aspects of the claim,
which was made in the previous arbitration proceedings, for purposes of the reconstituted arbitration
proceedings. The same applies to an agreement to admit evidence that might otherwise be inadmissible,
or the waiver of a right to object that certain preconditions to the reference have not been met.
CHAPTER 8

International Arbitration

8.1 Introduction
8.1.1 Definition of international arbitration
This chapter is concerned with international arbitration. The term 'interna-
tional' is used to indicate the difference between arbitrations which are purely
national or domestic and those which in some way transcend national
boundaries, thereby assuming an international or transnational character. 1
Two main criteria, either alone or in conjunction, are used, particularly by
those drafting arbitration statutes, in defining the term 'international' in this
context. The first involves the nature of the dispute, so that an arbitration is
treated as international if it 'involves the interests of international trade' 2 or if
the .dispute has an international character, for example, if the place of
arbitration is outside the state in which the parties have their places of business
or if the place where the contractual obligation is to be performed is in a state
foreign to the parties. 3 The second focuses attention on the parties, their
nationality or habitual place of residence or, if the party is a body corporate or
juristic person, the seat of its central control and management. 4 Thus, although
the parties in Polysius (Pty) Ltd v Transvaal Alloys (Pty) Ltd5 were both
incorporated in South Africa, they were both subsidiaries of German
corporations and included an arbitration clause in their agreeement providing
for arbitration in Switzerland under the auspices of the International Chamber
of Commerce. The place of arbitration gave the arbitration an international
connection. 6 Moreover, as the two companies were subsidiaries of German
corporations, the seat of their management and control was arguably in
Germany but the machinery which was the subject of the contract had to be
installed in South Africa. The UNCITRAL Model Law combines the two
criteria and either is sufficient to render the arbitration international. 7 In short,

1 See Redfern & Hunter 14.

2 See Redfern & Hunter 15 and the definition in art 1492 of the New French Code of Civil Procedure
of 1981.
3 See the UNCITRAL Model Law art l(3)(b) and Redfern & Hunter 19.
4 See Redfern & Hunter 17-18 and the Swiss Private International Law Act of 1987 ch 12 art 176(1);

the Netherlands Arbitration Act of 1986 art 1035(4) and 1073(2) (but compare art 1074(1)); and the
English Arbitration Act of 1975 s 1(4).
5 1983 (2) SA 630 (W).
6 At least for purposes of enforcing the award in South Africa. See Act 40 of 1977 s 1 'foreign arbitral
award' and 313 below.
7 See art 1(3); Redfern & Hunter 19.
International Arbitration 297
an arbitration will be international if it involves parties from different countries
or if it involves an international dispute. However, as there is no universally
accepted definition, if the question arises as to whether or not a particular
dispute is international, the answer will depend on the provisions of the
relevant national law. 8_ Therefore, the enforceability of an arbitration award,
which was signed and published in England, in South Africa will depend in the
first instance on the South African law of international arbitration. 9
It is customary to speak of international commercial arbitration, rather than
just international arbitration. The distinction is necessary because in certain
civil-law countries commercial contracts may be governed by a different code to
that applying to other obligations. It is also possible that the law of a country
will only permit disputes arising from commercial contracts to be referred to
arbitration. 10 Therefore, although the term 'commercial' usually has a wide
meaning so as to cover matters arising from all relationships of a commercial
nature, whether contractual or not, 11 it may be necessary to refer to the
relevant national law to establish its meaning in particular circumstances. 12
International commercial arbitration is a specialised branch of arbitration, a
detailed discussion of which is beyond the scope of this book. This chapter is
intended to provide a basic introduction to the subject for those South African
readers who have little knowledge of it and to furnish references for further
reading for those requiring a more detailed knowledge. It also deals with the
recognition of foreign arbitration agreements and the enforcement of foreign
arbitral awards by South African courts. 13

8.1.2 Advantages and disadvantages of international arbitration

It has been said that honesty demands that one must recognise that
international arbitration is usually chosen by the parties not so much because
they like it but because there is no realistic alternative. 14 There is no
international court to deal with international commercial disputes, with the
result that a disputant must choose between using a national court or
international arbitration. In the words of Redfern & Hunter: 15
'A claimant who decides to take court proceedings will (in the absence of any agreed
submission to the jurisdiction of a particular court) usually be obliged to have
recourse to the courts of the defendant's home country, place of business or
residence, with which the claimant is likely to be unfamiliar. To the claimant, this
court will be foreign in the full sense of that word-in nature, character and origin.
8 See Redfern & Hunter 19-20.
9 Compare Van Niekerk (1990) 118. For the enforcement of foreign arbitral awards in South Africa
see 313-16 below.
10 See Redfern & Hunter 20 and compare the New York Convention art 1(3), whereby a state when

ratifying or acceding to the Convention may declare that it will apply the Convention only to
relationships which are considered to be commercial under its Jaw.
11 See the footnote to art 1(1) of the UNCITRAL Model Law and Redfern & Hunter 21.
12 See Redfern & Hunter 22.
13 See 311-16 below.
14 See Bernstein 335.
15 At 25-6.
298 Arbitration in South Africa: Law and Practice

The claimant will not be able to brief lawyers of his own nationality, with whom he
is accustomed to deal, but instead will have to use the services of local lawvers. He
may well find that the language of the court is not that of the contract: so that
essential documents and evidence will have to be translated-with all the attendant
costs, delay and opportunities for misunderstanding to which that can give rise.
Finally, he may find that the court is unaccustomed to international commercial
transactions and that its law and practice are inadequate. When viewed against this
background, the prospect of bringing a claim arising out of an international business
transaction before a foreign court is not appealing.
If one of the parties to the contract is a state or state entity, the prospect is likely
to be even less attractive. The private party will be reluctant to have its dispute
submjtted to the courts of the state party.'
Thus, unless the dispute can be settled by negotiation, mediation or
conciliation, international arbitration is preferable to litigation, notwithstand-
ing the increased costs and delays which will be the inevitable result of a
tribunal of three arbitrators, sitting in a neutral venue. Moreover, unless the
rules governing the arbitration have been carefully chosen, a reluctant
defendant will have ample opportunity to aggravate the delays, particularly in
relation to the appointment of the tribunal. 16

8.1.3 Contribution of UNCITRAL to international arbitration

The ·united Nations Commission on International Trade Law (UNCITRAL)
was established in 1966 pursuant to a resolution of the General Assembly to
serve as a specialised body dealing with international trade law. In December
1985 the General Assembly reaffirmed the mandate of UNCITRAL 'as the
core legal body within the United Nations system in the field of international
trade law, to co-ordinate legal activities in this field in order to avoid
duplication of effort and to promote efficiency, consistency and coherence in
the unification and harmonisation of international trade law' .17 Its first major
achievement in the field of dispute resolution was the adoption of the
UNCITRAL Arbitration Rules in 1976. 18 These were followed by the
UNCITRAL Conciliation Rules in 1980. 19
Its third major contribution was the UNCITRAL Model Law on Interna-
tional Commercial Arbitration. 20 UNCITRAL asked its Secretariat to prepare
a preliminary draft on a model law in 1979. The final draft was adopted by
UNCITRAL in June 1985, and approved by the General Assembly of the
United Nations during December 1985. It was decided that a Model Law was
16 See Kerr (1980 JBL) 176 and compare 302(d) below.
17 As quoted in The New Zealand Law Commission Arbitration NZLC R20 of 1991 at 71.
18 See Herrmann 537-8 and 304 below.
19 See Herrmann 538-9. They were intended to provide a viable alternative to adversarial
proceedings in the form of a highly flexible and informal procedure for the amicable settlement of
commercial disputes. The procedure results in a recommended settlement which is not binding until
accepted by both parties and the process can continue only as long as both parties co-operate.
°
2 For the text of the Model Law, see Redfern & Hunter 798-810 (appendix 21) or Mustill & Boyd
730-42 (appendix 3). The Model Law is discussed by, inter alia, Herrmann 537-65; Redfern & Hunter
508-27 and The New Zealand Law Commission Arbitration NZLC R20 of 1991 at 72-5.
International Arbitration 299

more likely to lead to a realistic degree of harmonisation in practice than the

less flexible approach of a convention or uniform law. 21 The policy objectives
underlying the Model Law were: first, the liberalisation of international
arbitration by limiting the role of national courts and emphasising the
consensual basis of arbitration by allowing the parties the freedom to decide
how their disputes should be resolved; secondly, the establishment of a defined
core of mandatory provisions to ensure fairness and due process; thirdly, to
provide a framework for conducting an international commercial arbitration,
so that if the parties were unable to agree on procedural matters, the
arbitration could still be completed; and finally, the incorporation of provisions
to aid the enforcement of awards and to clarify certain controversial practical
issues. 22 It must be emphasised that the Model Law is intended for
international arbitration and is less comprehensive than most national statutes
dealing with domestic or non-international arbitration. 23

8.1.4 Arbitration legislation in southern Africa

The former British colonies of southern Africa all have arbitration statutes
based directly or indirectly on English arbitration legislation. The Zimbabwean
Arbitration Act 24 was originally enacted in colonial times as Act 8 of 1928, but
it has undergone minor amendments as recently as 1985 and 1992 in respect of
arbitration agreements relating to matters under the land acquisition
legislation. Arbitration legislation on the English model was enacted in
Swaziland by Act 24 of 1904. Although the Botswanan Arbitration Act took
effect during 195925 and was therefore subsequent to the English Arbitration
Act of 1950, its layout follows that of the Zimbabwean and Swaziland statutes,
rather than the current English statute. However, the details of the
Zimbabwean, Swaziland and Botswanan statutes differ in certain respects. 26
Botswana enacted legislation for the enforcement of foreign arbitral awards
during 1971, 27 implementing the New York Convention in advance of both the
United Kingdom and South Africa. 28

21 See Redfern & Hunter 509.

22 See Redfern & Hunter 509. By early 1991, the Model Law had been adopted by, among other
jurisdictions, Australia, Canada (at both federal and provincial level), Hong Kong, certain states of the
United States of America (including California and Texas), Nigeria and Scotland. Its adoption has been
rejected in England but recommended in New Zealand (see the New Zealand Law Commission
Arbitration NZLC R20 of 1991 at 75-81).
23 Compare the Nigerian legislation referred to below, which is based on the Model Law and the

UNCITRAL Arbitration Rules.

24 See Title IV Administration of Justice, ch 12 Arbitration.
25 The Arbitration Act of 1959 promulgated by Proc 75 of 1959 with effect from 27 November 1959

(Statutes of Botswana ch 06:01).

26 Compare eg s 31 of the Zimbabwean statute, s 26 of the Swaziland statute and s 30 of the
Botswanan Act regarding the reference of a question of Jaw by the arbitrator to the court for an opinion.
27 The Recognition and Enforcement of Foreign Arbitral Awards Act 49 of 1971 with effect from
31 December 1971 (Statutes of Botswana ch 06:02).
28 Legislation to give effect to the New York Convention in the United Kingdom was enacted by the

Arbitration Act 1975. South Africa acceded to the Convention in 1976 and enacted legislation for the
enforcement of foreign arbitral awards in 1977 (see 311 below).
300 Arbitration in South Africa: Law and Practice

The Arbitration Act of Lesotho, Act 12 of 1980, commenced on 1 October

1981. 29 The wording of its provisions is virtually identical to the South African
Arbitration Act of 1965, although the numbering of the sections differs.3o
Lesotho also enacted legislation in 1974 to implement the Washington
Convention for the settlement of investment disputes between states and
nationals of other states. 31 The South African Arbitration Act of 1965 applied
to Namibia prior to independence 32 and continues to apply after independence.
At least one former British colony in Africa, Nigeria, has recently adopted
revised arbitration legislation, not based on the English model, to replace
outdated legislation. The new Nigerian legislation, the Arbitration and
Conciliation Act 11 of 198833 is based on the UNCITRAL Model Law and the
UNCITRAL Arbitration and Conciliation Rules. 34

8.2 Types of international arbitration

It is customary in the field of international arbitration to distinguish between
institutional arbitration and ad hoc arbitration. 35 An institutional arbitration is
one which is administered by a specialist arbitral institution under its own
rules. 36 Usually the institution will undertake all the administrative arrange-
ments for the arbitration and there will be no direct communications between
the arbitration tribunal aP.d the parties until the hearing, because the parties
will direct all communications relating to the appointment of arbitrators and
the stages preceding the hearing to the arbitral institution itself. In the case of
a semi-administered arbitration, however, the institution will appoint the
arbitration tribunal and then leave it to the tribunal to communicate with the
parties to make further arrangements for the hearing. Semi-administered
arbitraticns occur mainly in the context of domestic or non-international
disputes.
An ad hoc arbitration is conducted under rules of procedure which are
adopted for the particular arbitration, usually once the dispute has arisen. 37
Parties using an ad hoc arbitration must make their own arrangements for
administrative support and the appointment of the tribunal. Unless the ad hoc
arbitration takes place pursuant to an arbitration clause which designates the
29 See Legal Notice 57 of 1981.
30 This is because s 1 of the Lesotho statute deals with the short title and commencement date,
whereas the short title to the South African statute is contained in s 43.
31 The Arbitration (International Investments Disputes) Act 23 of 1974 which commenced on
14 March 1975. See 303 below regarding ICSID arbitrations.
32 Sees 41 read withs 1 'territory'.
33 For a discussion of the Act, see Ezejiofor 82-103.
34 See 298-9 above regarding the Model Law and the UNCITRAL Rules.
35 See Redfern & Hunter 13 for a discussion of the distinction. Regarding the relative advantages and
disadvantages of the two alternatives, see 305-6 below.
36 Certain arbitral institutions may nevertheless be prepared to administer an arbitration where the
parties elect to follow another set of rules, eg the LCIA will administer an arbitration where the parties
elect to use the UNCITRAL Rules instead of its own rules (see Aaron (1990) 640).
37 See Redfern & Hunter 13. Compare Bernstein 344-6, who, at 344, defines an ad hoc arbitration
as 'one conducted pursuant to an agreement which does not refer to an institution charged with setting
up the arbitral tribunal and administering the proceedings, but is rather intended to be self-executing'.
International Arbitration 301

procedural rules to be followed, these rules will have to be agreed once the
dispute has arisen. Some of the most important examples of ad hoc
international arbitrations in practice are those involving a state or state agency
as a party.

8.2.1 Institutional arbitration

8.2. 1. 1 Criteria for evaluating institutions and their rules
Four criteria have been suggested for evaluating arbitral institutions. 38 First,
one must consider the way in which the institution is structured and the
functions it performs. Usually, the institution will be structured so that it
consists of a 'court' and a secretariat. The secretariat will perform administra-
tive functions, whereas the 'court' will perform those tasks which require the
exercising of a discretion and a balancing of conflicting interests of the parties.
The most important functions of the arbitral institution are usually performed
prior to the appointment of the arbitration tribunal and after it has made its
award. It must confirm that there is, prima facie, an arbitrable dispute covered
by a binding arbitration agreement. It must deal with the appointment of the
arbitration tribunal and determine the place of the arbitration if the parties
have not done so and if this function is conferred on the institution rather than
the tribunal. It should ensure that the tribunal makes its award timeously,
notify the parties of it, and if necessary, assist in its enforcement. It should also
provide suitable machinery for ensuring that the arbitrators' fees are paid. 39
Secondly, one must consider the institution's procedure for the selection of
arbitrators which it may be called upon to appoint. Thirdly, one must
investigate the degree to which the institution supervises arbitrators, if at all.
For example, the ICC requires the arbitrators to draw up and submit the terms
of reference to the 'court' for scrutiny before the arbitration commences. They
must also submit a draft award to the 'court' for scrutiny before signing the
award. 4°Fourthly, it is necessary to consider the scale of administrative charges
and arbitrators' fees and the requirements concerning the payment of a deposit
in advance. 41
Various sets of criteria have been suggested for evaluating arbitral rules. 42
Before adopting a set of rules, it is moreover advisable to ensure that they are
compatible with the law of the place where the arbitration is to be held. The
most important criteria include the following:

38 See Aaron (1991) 308.

39 See Aaron (1991) 309-10.
40 See Aaron (1991) 308, 317-18; ICC Rules of Arbitration and Conciliation, articles 13 and 21.
41 See Aaron (1991) 308. A major difference between the ICC and the LCIA is that the ICC's charges
and arbitrators' fees are determined in the first instance with reference to the amount in dispute,
whereas in LCIA arbitrations, the fees and administrative charges are determined by the number of
hours spent on the matter by the arbitrators and secretariat respectively (see Aaron (1991) 322-3). For
a comparison between the ICC and the LCIA as arbitral institutions, see Aaron (1991) 309-23, and for
a broader comparison incorporating other institutions as well, see Rowe 26-31.
42 Compare eg Von Mehren 108 and Aaron (1991) 308.
302 Arbitration in South Africa: Law and Practice

(a) To what extent do the rules provide for the tribunal to grant ancillary
relief, particularly as regards the preservation of property, until the award
is made? 43
(b) Do the rules have well-defined standards and procedures for dealing with
challenges to arbitrators, to the extent that the matter is not dealt with
adequately by the law of the place where the arbitration is held? It is
obviously desirable and indeed necessary to ensure the independence and
impartiality of the arbitration tribunal from the outset. 44
(c) The rules must provide a procedure for defining the dispute, for obtaining
access to evidence 45 and for the conduct of the hearing, which is acceptable
to both the common-law and civil-law traditions. 46
( d) International arbitration offers considerable scope for a defendant who is
intent on delaying an award which he realizes will probably be
unfavourable. Devices include delay in performing a procedural step such
as the nomination of an arbitrator or filing a defence, challenging an
arbitrator appointed by the other party or the arbitral institution and
nominating an arbitrator who is likely to be challenged by the other party.
The rules must therefore contain adequate curbs on dilatory tactics. 47
( e) Particularly in the international context, it is advisable that the arbitrators
should be required to furnish reasons for their award, unless the parties
agree that no reasons need be furnished. 48
(f) If a dispute arising from the contract containing the arbitration clause is
likely to occur in conjunction with related disputes between other parties
concerning the same facts or points of law, one should consider whether
the rules make any provision for the consolidation49 of arbitration
proceedings. 50

8.2.1.2 ICC
The International Court of Arbitration of the International Chamber of
Commerce (ICC) was established in 1923 and is the leading international
institution for commercial arbitration both in terms of the volume of cases

43 See Von Mehren 108-9; Aaron (1991) 522-3.

44 See Von Mehren 109.
45 The rules should empower the tribunal to order disclosure of certain documents, without plunging
the arbitration into the excesses of discovery associated with litigation under the common-Jaw tradition
(see Von Mehren 110-11 and compare 143 above).
46 See Aaron (1991) 308 and Von Mehren 108. See further 168 and 216-18 above regarding
common-law and civil-law trial procedures.
47 See Aaron (1991) 308, 515-20. The LCIA Rules of 1985 make a comprehensive effort to curb every

kind of dilatory tactic (see Aaron (1991) 515; Bernstein 341). ·

48 See Von Mehren 108, 111-12 and compare 269 above.
49 See 151-3 above.
50 See Aaron (1991) 308,523. Article 13(1)(c) of the LCIA Rules allows the arbitrator under certain

conditions to permit other parties to join the arbitration proceedings with their express consent. For a
comparison of some of the more widely used arbitral rules see Aaron (1991) 503-23; Blessing 8-75; Von
Mehren 106-13; Rowe 28-9.
International Arbitration 303

handled and the significance of the disputes involved. 51 Although it is based in

Paris, only one-third of ICC arbitrations are actually heard in that city. Other
centres used for ICC arbitrations include Geneva and London. 52 It is the
institution most commonly resorted to by South African draftsmen, but in the
light of information now available, 53 a person drafting the arbitration clause
should at least be aware of the alternatives, as regards both institutions and
rules, and consider whether an institutional arbitration or an ad hoc arbitration
is more appropriate, and if the institutional route is chosen, which institution
should be used. 54

8.2. 1.3 LC/A

Originally known as the London Chamber of Arbitration, the organisation now
called the London Court of International Arbitration (LCIA) was founded in
1892 and is one of the oldest arbitration institutions still functioning. 55 Its
case-load is about one-tenth of that of the ICC, but particularly as a result of
the favourable impact made by its revised rules of 1985, it would appear that
the number of contracts making provision for LCIA arbitration is increasing.
Its 'Court of Arbitration' comprises twenty-six members of whom only five
come from the United Kingdom. The main function of this court is to appoint
arbitral tr_ibunals and to resolve disputes under the LCIA Rules which do not
fall to be dealt with by the arbitration tribunals, for example, those dealing with
apppintments or challenges. These disputes are normally heard by a division of
three members of the court, with the result that they are usually dealt with in
a matter of days. Although the LCIA is based in London, an LCIA arbitration
may be conducted anywhere in the world under any system of substantive law.
Like the ICC Rules, the LCIA Rules allow the parties to decide on the venue
of the arbitration and to determine their own rules of procedure.

8.2. 1.4 /CSID

The International Centre for the Settlement of Investment Disputes (ICSID)
was established in 1966 and is associated with the World Bank and deals with
the settlement of international investment disputes between states which are
parties to the Washington Convention56 and investors. 57 The Centre is based in

51 See Bernstein 337-40; Aaron (1990) 637-8, (1991) 310-12. It receives 300-400 cases per year.
52 During the period 1980-1982, 39 countries served as venues for ICC arbitrations (see Bernstein
337)-
5 See the sources referred to in nn 41 and 50 above.
54 See Aaron (1991) 307.
55 See further Kerr (1992) 317-20; Bernstein 340-2; Aaron (1990) 638, (1991) 312-13.
56 Convention on the Settlement of Investment Disputes between States and Nationals of other States

of 14 October 1966. Over 80 states have ratified the convention (see Bernstein 342). Among these are
38 African countries, including Botswana, Lesotho, Malawi, Swaziland and Zambia (see Agyemang
177n2).
57 See further Bernstein 342-4; Delaume in Lew 23-39 and regarding ICSID arbitration and African
states Agyemang 173-89. For the relevance of the ICSID in relation to disputes arising from
international construction contracts, see Nathan 193-200.
304 Arbitration in South Africa: Law and Practice

Washington, but to date, Paris has been the most popular venue for ICSID
arbitrations. Although the ICSID has handled only a small number of disputes
since its inception, its importance cannot be assessed only on the basis of the
number of disputes submitted to arbitration under its rules. The existence of
the ICSID has encouraged investment, particularly in developing states, and
the fact that an effective method for the imposed resolution of an investment
dispute subject to an ICSID arbitration agreement exists, encourages parties to
settle investment disputes through negotiation.

8.2. 1.5 Other institutions

In addition to the organisations referred to above, other important institutions
in the context of international commercial arbitration include the American
Arbitration Association, with its headquarters in New York and the
Arbitration Institute of the Stockholm Chamber of Commerce in Sweden. The
Swiss Arbitration Association promotes the use of Switzerland as an arbitration
venue, but does not provide a set of rules or administrative facilities.
However,the chambers of commerce of the major Swiss cities will provide
administrative support. 58

8.2.2 Ad hoc arbitrations and the UNCITRAL and /BA rules

Parties to an ad hoc arbitration are faced with the need to provide their own set
of procedural rules. Their task has been made easier by the fact that there are
now sets of rules available which were specifically drawn up for an ad hoc
international arbitration. The most important of these are the UNCITRAL
Arbitration Rules. 59 Because they were prepared with the input of lawyers
from around the world, they are perceived as being more acceptable to parties
from developing countries than those drawn up by institutions based in
Western countries. It has nevertheless been said that one would be
hard-pressed to find a distinction of an ideological or cultural nature when
comparing these rules with, say, the ICC Rules. 60
Notwithstanding the increasing popularity of the UNCITRAL Rules, it has
been argued that they do not deal with contentious points of detail regarding
the procedure to be followed, particularly as regards the reception of evidence,
both oral and written. 61 In recent years a practice has developed among
international lawyers involved in arbitration to select the best features and to
reject the worst features of both the common-law adversarial and the civil-law
'inquisitorial' or interventionist approaches. As a result there is greater reliance
on written, as opposed to oral evidence, and some provision is also made for

58See Aaron (1990) 638-9; Rowe 26-7; Redfern & Hunter 13.
59See further 298 above. See also Von Mehren 107, 113 regarding the 'Rules and Commentary for
Non-Administered Arbitration of International Disputes' of the Centre for Public Resources Inc of New
York, which rules were published in 1992 as an alternative to the UNCITRAL Rules.
60 Bernstein 345.
61 See Shenton in Lew 189.
International Arbitration 305

the disclosure of documents. 62 The problems regarding the presentation of

evidence were addressed by the International Bar Council, which in 1983
formulated 'Supplementary Rules governing the presentation and reception of
evidence in International Commercial Arbitration'. As their title suggests, the
rules were intended to supplement rather than to replace other existing sets of
rules. They can be adopted together with institutional rules or the UNCITRAL
Rules, and even if they are not formally adopted, they indicate ways in which
time and money can be saved. 63

8.3 Drafting an international arbitration clause

A person drafting an arbitration clause in an international commercial
agreement will need to consider the following aspects: 64

8.3.1 The scope of the arbitration clause

It is necessary to consider which of the disputes that could possibly arise in
relation to the contract containing the arbitration clause should be referred to
arbitration and whether certain disputes should perhaps be reserved for the
courts. For example, it may be decided to submit only technical matters
relating to the parties' performance of their obligations to arbitration and to
leave matters of legal interpretation to the courts. 65 The danger of this
approach is that it may result in a multiplicity of proceedings and disputes in
both forums as to which issue belongs in which forum. 66 The arbitration clause
must also commit the parties to refer their dispute to arbitration in unequivocal
terms. 67

8.3.2 Institutional or ad hoc arbitration

The parties need to decide whether or not their arbitration will be conducted
under the auspices of an arbitral institution. Parties who choose an institutional
arbitration get the benefits of a set of tested procedural rules, administrative
support and assistance in appointing an independent and impartial tribunal.
From the arbitrator's point of view, the institution will usually provide a
mechanism for the collection and payment of his fees. Parties who choose an ad
hoc arbitration must make their own arrangements for administrative support
and the appointment of the tribunal, but will be able to keep closer control over
procedural and administrative aspects and their costs. They could also still use
62 Redfern & Hunter 67.
63 Redfern & Hunter 67. For a discussion of certain aspects of the rules, see Shenton in Lew 188-94.
The rules appear in Redfern & Hunter 704-7, appendix 13.
64 See further Redfern & Hunter 160-71; Ball in Lew 297-312; Aaron (1990) 640-63. See also Davis
(1991) 365-88 for an instructive discussion of some problems which have arisen from drafting errors in
practice.
65 See Redfern & Hunter 160-1; Ball in Lew 300.
66 See Ball in Lew 300.
67 See Ball 299 and compare Davis (1991) 367-8 for a clause providing that '[a]ny dispute ... may

be referred to arbitration' instead of that '[a]ny dispute ... shall be referred to arbitration'.
306 Arbitration in South Africa: Law and Practice

one of the standard sets of procedural rules (particularly the UNCITRAL

Arbitration Rules). 68

8.3.3 Place of arbitration

The question as to where the arbitration is to take place is too important to be
left for later agreement or a decision by the arbitrators and should be stipulated
in the arbitration clause. The place must be accessible and convenient and offer
the necessary infrastructure as regards the physical facilities and secretarial and
administrative support. Although holding the· arbitration close to the place of
contract performance will usually mean that witnesses and other sources of
evidence are readily available, there may be a preference for a neutral venue. 69
However, the most important factor regarding the choice of the place of the
arbitration is that it will normally determine the curial law, that is the law
governing the arbitration proceedings. 70 The curial law governs inter a!ia the
validity of the arbitration agreement, 71 the manner in which the arbitration
must be conducted and the procedural powers of the arbitrator, the supportive
powers of the court to facilitate the conduct of the reference, the validity of the
award, 72 and the grounds on which the award may be set aside. 73

8.3.4 Procedural rules applicable to the arbitration

Although the arbitration statute of the place where the arbitration is held will
usually govern the procedure to be followed at the arbitration, many of its
provisions will be regulatory, leaving the parties free to make their own
arrangements. Even where the parties choose an institutional arbitration, the
use of its rules may not be obligatory. Where its rules are used, they will usually
give the parties, or failing their agreement, the tribunal, considerable freedom
to determine the procedure which should be followed. 74 Therefore, if the
parties are concerned about particular procedural aspects, they should try to
reach agreement at an early stage. Where the contract is entered into between
parties whose countries have different traditions regarding the law of
evidence,75 they could consider adopting the International Bar Association's

68 See Ball in Lew 300-1; Aaron (1991) 306-7; Von Mehren 105-7.
69 See Ball in Lew 304.
70 See Ball in Lew 304; Mustill & Boyd 62, 64-5. For a survey of some of the main arbitration centres,

see Aaron (1991) 93-117.

71 Compare para 8.5.3 below regarding s 4(1)(b)(i) of the Recognition and Enforcement of Foreign
Arbitral Awards Act 40 of 1977, which apparently requires the arbitration agreement to be valid under
both the Jaw to which the parties have subjected it and the law of the country in which the award is
made.
72 Section 4(1)(b)(v) provides a defence against an application for the enforcement of an award which
is not yet binding in the country where it was made. This would apparently include a putative award
which did not comply with the local requirements for a valid award.
73 Compare Ball in Lew 304; Mustill & Boyd 62; Von Mehren 108.
74 See eg the LCIA Rules article 5; the ICC Rules of Arbitration article 11, which allow the parties
or the tribunal to arrange matters on which the rules are silent; Aaron (1990) 653; Ball in Lew 301.
75 See further 168 and 216-18 above.
International Arbitration 307
Supplementary Rules of Evidence, which are a convenient blend of the civil
and common-law systems. 76

8.3.5 Composition and appointment of the arbitration tribunal

It is first necessary to consider the number of arbitrators. Obviously, a sole
arbitrator will reduce delay and expense, but in international arbitrations,
unless the amount in dispute is small, it is more usual to provide for a tribunal
of three arbitrators, one to be appointed by each party, and a third to be
appointed either by the other two or by the institution administering the
arbitration. In some jurisdictions, the tribunal must consist of an uneven
number of arbitrators. It is also necessary to provide for a procedure to fill
vacancies. It is sometimes provided that when an arbitrator appointed by a
party resigns without the consent of the other members of the tribunal, the
vacancy must be filled by the administering institution. This is done to prevent
a party from seeking a tactical advantage by pressuring his nominated
arbitrator to resign. It may also be expedient to remove and replace an
arbitrator, if necessary with the assistance of the court, where the unavailability
of one member of the tribunal for more than, say, six months, will
unreasonably delay the proceedings. 77

8.3.6 Law applicable to the contract

It is desirable to designate the system of substantive law, which must be applied
by the arbitrators to the contract, in the arbitration agreement. If the matter is
left to the tribunal once the dispute has arisen, they may find that solutions
provided by the law of the place of the arbitration and the institutional rules are
unsatisfactory or inconsistent. It may happen that the parties are not able to
agree on a choice when entering into the contract, for example, the law of the
place where the contract is to be performed. They may then either resort to a
neutral system of law with which neither party is sufficiently familiar, or
empower the tribunal to decide ex aequo et bono78 or provide that the tribunal
is to apply the lex mercatoria, that is customary rules of international trade. 79

8.3.7 Other matters6°

One matter which merits consideration is the language in . which the
proceedings will be held, particularly if the contract containing the arbitration
clause is in two languages. Preferably, the proceedings should be conducted as
far as possible in one language, specified in the arbitration clause and the choice
will be relevant when selecting legal representatives and the third arbitrator. 81

76 Aaron (1990) 657. See 304-5 above.

77 See Redfern & Hunter 161-3; Aaron (1990) 657-9; Ball in Lew 306-7.
78 See further 253-5 above regarding such clauses.
79 See Aaron (1990) 659-61; Ball in Lew 309-11. On the possible meanings and application of the lex
mercatoria in the context of international arbitration, see intera/ia Goldman in Lew 113-25; Redfern &
Hunter 117-21; Rivkin 67-84; Van Niekerk (1990) 141-7.
80 See further Redfern & Hunter 165-7.
81 See Ball in Lew 307-8; Aaron (1990) 661.
308 Arbitration in South Africa: Law and Practice

It is also necessary to make provision for the situation where one party
refuses to comply with his obligations in terms of the arbitration agreement and
the reference, so that the proceedings can be continued in his absence, unless
this matter is adequately covered by the arbitration legislation of the place
where the arbitration is to be held or the institutional or other procedural rules
adopted in the arbitration clause. 82 It is therefore necessary to ensure that the
tribunal can be established even if a party fails to co-operate and that the
tribunal may still proceed with the reference in the absence of a party and make
a valid award.
It is advisable to consider the remedies available to take the award on review
or appeal to the courts in the land where the arbitration takes place. The parties
may wish to limit these remedies in so far as this is legally permissible and the
clause should provide accordingly. 83 If a dispute arising from the contract is
likely to occur in conjunction with related disputes between other parties
concerning the same facts or points of law, the parties may wish to incorporate
a provision for the consolidation of arbitration proceedings arising from·
different arbitration agreements into one arbitration before the same
tribunal. 84

8.3.8 Agreement referring existing dispute to arbitration

An arbitration clause provides for the reference of a dispute which may arise in
the future to arbitration. It may, however, be necessary for the parties to an
existing dispute and their advisers to draft an agreement referring that dispute
to arbitration. This task will be complicated by the fact that there is now a
hostile element in the parties' relationship because a dispute has arisen.
Moreover, whereas both parties want their dispute resolved economically and
in private by arbitration, the claimant will usually want a speedy decision, while
the defendant may perceive advantage in delay. These factors may delay the
process of drafting the agreement. Although the agreement referring an
existing dispute to arbitration will contain the same basic elements as an
arbitration clause, some of these matters will be dealt with in more detail for
two reasons. First, the parties are aware of the nature of the dispute and can
therefore tailor the procedure to make it more efficient. Secondly, they are at
this stage better informed about the dispute than the tribunal and may
therefore wish to determine the pre-hearing procedure and to limit the
tribunal's procedural powers with a view to curtailing unnecessary expense. 85

82 See Redfern & Hunter 165; Aaron (1990) 655-6. Compare 158-63 above regarding the position in

South African law.

83 See Aaron (1990) 661-2. If the arbitration is to be held in England, it'would be advisable to
incorporate an exclusion agreement in terms of s 3 of the Arbitration Act of 1979 regarding the right of
apfieal to the court on a point of law.
See Aaron (1990) 662-3. For consolidation see further 151-3 above.
85 See Redfern & Hunter 169-70. See also their list of points at 171 to be considered in drafting the

agreement.
International Arbitration 309
8.4 Legal systems applicable to an international arbitration
Theoretically, even a comparatively simple international commercial arbitra-
tion may involve as many as four different legal systems. In this regard, one can
distinguish between:
(a) the proper law of the main. agreement, that is the substantive law
applicable to the merits of the dispute;
(b) the proper law of the arbitration agreement, that is the law governing the
obligation of the parties to submit the dispute to arbitration;
(c) the proper law of the reference, that is the law regulating the individual
reference to arbitration; and
(d) the curial law, that is the law governing the conduct of the arbitration
process. 86
It has been said that it is scarcely conceivable that a situation will arise in
practice in which the court or an arbitrator will have to consider four different
systems oflaw at the same time. Furthermore (b), (c) and (d) above will usually
involve the law of the same country. 87
Under South African law, in accordance with the principle of party
autonomy, the parties are generally free to choose a system of substantive law
to govern their contract. 88 Where the parties have not expressly or by
implication chosen a system of substantive law to govern the contract, the court
or arbitrator will have to determine the system. Traditionally, this has been
done by determining a fictional presumed intention, but more recently there is
some judicial support for selecting the system with which the contract has its
closest and most real connection. 89 The fact that the parties chose London as
the place of the arbitration would not, by itself, justify the inference that the
parties chose English law as the proper law of the contract. 90 To avoid any
problems in this regard, it is clearly desirable that the parties should expressly
stipulate the choice of law to govern the contract in the contract itse!f. 91
The proper law of the arbitration agreement will govern the validity, effect
and interpretation of that agreement. 92 Although the proper law of the
arbitration agreement will usually be the same as tha.t applying to the contract,
this will not necessarily be the case, particularly if the arbitration agreement is
entered into only once the dispute relating to the contract has arisen. Where an
86 See Mustill & Boyd 61; Van Niekerk (1990) 120--,l; Redfern & Hunter 1. For a more detailed

discussion of the subject see Redfern & Hunter 70-128; Van Niekerk (1990) 120-50; Mustill & Boyd
60-8.
87 Mustill & Boyd 61.
88 See Laconian Maritime Enterprises Ltd v Agromar Lineas Ltd 1986 (3) SA 509 (D) 525F-G; Van
Niekerk (1990) 123.
89 See Van Niekerk (1990) 124; Jmprovair (Cape) (Pty) Ltd v Establissements Neu 1983 (2) SA 138 (C)
147B; Laconian Maritime Enterprises Ltd v Agromar Lineas Ltd (above) at 5251-527A.
90 /Jenidai Trading Co Ltd v Gouws & Gouws (Pty) Ltd 1977 (3) SA 1020 (T) 1034B; Van Niekerk

(1990) 127. The selection of London as the place of arbitration would, however, be a strong if not
conclusive pointer that they ought to have chosen English law (see Laconian Maritime Enterprises Ltd
v Agromar Lineas Ltd (above) at 529G-H).
91 See Van Niekerk (1990) 128.
92 See Van Niekerk (1990) 121-2.
310 Arbitration in South Africa: Law and Practice

arbitration agreement to refer future disputes to arbitration is a clause in the

main contract, a different system of law could apply to the arbitration clause
only if it is capable of having a separate existence from the main contract. 9 3
There appears to be no objection in principle to our courts recognising the
separability of the arbitration clause from the main contract. 94
It has been suggested that the original agreement to refer future disputes to
arbitration gives rise to another contract, every time a dispute is actually
referred to arbitration. In terms of this theory, there are therefore two sets of
contractual relations which govern the arbitration of disputes arising from a
substantive contract.
'First there is the contract to submit future disputes to arbitration. This comes into
existence at the same time as the substantive agreement of which it forms part. Prima
facie it will run for the full duration of the substantive agreement, and will then
survive for as long as any disputes remain unresolved. Second, there are one or more
individual sets of bilateral contractual obligations which are called into existence as
and when one party asserts against the other a claim falling within the scope of the
initial promise to arbitrate, which they have not been able to settle. For brevity I will
refer to these sets of relationships as the 'continuous agreement' and the 'individual
agreements'. ' 95
It has been said that it is unlikely that this theory will be accepted by a South
African court. 96 However, whether or not a reference to arbitration of a dispute
in terms of an arbitration clause providing for the reference of future disputes
to arbitration will always result in the creation of an 'individual agreement'
distinct from the 'continuous agreement', this will happen in certain
circumstances, for example where the parties and arbitrator enter into a
tripartite agreement pertaining to the reference and the issues which the
arbitrator is required to resolve. 97 Where _this later agreement is terminated,
possibly as a result of a court order, this event will not affect the efficacy of the
'continuous agreement' as regards the obligation of the parties to refer
subsequent disputes to arbitration. 9 s
The curial law will govern the procedural rules under which the reference is
to be conducted, the procedural powers of the arbitrator and the powers of the
court to support and supervise the reference. 99 Many of its provisions regarding
the conduct of the reference and the powers of the arbitrator will usually be
regulatory, enabling the parties to make their own arrangements, if they so
desire. However, the curial law may not allow the powers of the court to be
excluded or limited by the parties in the arbitration agreement. In practice, it

93 See Van Niekerk (1990) 129.

94 See 57n160 above; compare Van Niekerk (1990) 129-30.
95 See Black Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1981] 2 Lloyd's
Rep 446 (QB Com Ct) 455.
96 See Van Niekerk (1990) 134.
97 Compare 94 above.
98 Compare the Arbitration Act 42 of 1965 ss 3(2)(cJ and 12(4)(cJ, which empower the court to
terminate the reference of a particular dispute to arbitration, while leaving the 'continuous agreement'
in respect of future disputes intact.
99 See Van Niekerk (1990) 122.
International Arbitration 311

seems advisable to provide that the curial law should be the law of the place
where the arbitration is held. In Polysius (Pty) Ltd v Transvaal Alloys (Pty)
Ltd, the arbitration clause provided for arbitration in Switzerland but required
South African law of procedure to be applied. 100 It was pointed out that a South
African court would have no control over how the tribunal applied that law,
because the tribunal was beyond the jurisdiction of the court. 101 Moreover, if
the parties applied to a Swiss court for assistance, that court may be inclined to
apply its own curial law .102
The question as to whether the parties. may subject their contract to a
transnational proper law, such as the lex mercatoria, has not yet been
considered by our courts. 103 Similarly, they have not yet had to consider
whether the parties can apply a transnational curial law to the arbitration
proceedings, as opposed to a national system. 104

8.5 International arbitration in a South African context

8.5.1 Background to the applicable legislation
The Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (The New York Convention) was drawn up under the auspices of the
United Nations and adopted on 10 June 1958 in New York. 105 The New York
Convention has been described as the most important international treaty
relating to international commercial arbitration. 106 By the end of·1990, more
than eighty countries had ratified or acceded to the Convention. 107 South
Africa acceded to the Convention with effect from 1 August 1976, 108 and
subsequently enacted the Recognition and Enforcement of Foreign Arbitral
Awards Act 40 of 1977. 109

8.5.2 Recognition and enforcement of foreign arbitral agreements

Although the title of the New York Convention refers only to the recognition
of foreign arbitral awards, the Convention deals also with the recognition and

100 1983 (2) SA 630 (W) 6398-C.

101 If the failure to apply South African Jaw of procedure resulted in a flagrant breach of the rules of
natural justice, a South African court could, however, arguably refuse to enforce the award, on the basis
that to enforce an award obtained in that way would be contrary to public policy (see the Recognition
and Enforcement of Foreign Arbitral Awards Act 40 of 1977 s 4(1)(a)(ii)).
102 At 652O-H. For a more detailed discussion of the curial Jaw, see Van Niekerk (1990) 134-41.
103 Compare 253-5 above regarding the effect of a clause authorising an arbitrator to decide the

dispute ex aequo et bona or as an amiable compositeur.

104 See Van Niekerk (1990) 141-9 for a discussion of these issues.
105 For the background to the convention, see Redfern & Hunter 62-4; Kahn 567.
106 Redfern & Hunter 63. See also Mustill (1989 J Int Arb) 49; Redfern & Hunter 457.
107 Redfern & Hunter 63. At 813-18 they provide a list of countries which have ratified or acceded
to the treaty. These countries include Botswana and Lesotho.
108 See Hansard 18 March 1977 col 3834; Kahn 566-7. The full text of the Convention was published
in GN 1028 in Government Gazette 5160 of 18 June 1976 at 11-12, with certain clerical errors being
corrected by GN 1189 in Government Gazette 5208 of 9 July 1976 at 9.
109 Act 40 of 1977 which commenced on 13 April 1977 (see Government Gazette 5504 of 13 April
1977). For a discussion of the Act's provisions see Kahn 570-3.
312 Arbitration in South Africa: Law and Practice

indirect enforcement of arbitration agreements. 110 Where there is an

arbitration agreement subject to the Convention, and court proceedings
between th~ parties to the agreement are brought in a court of a contracting
state regarding a dispute which is subject to the agreement, then the court must
stay the court proceedings at the request of one of the parties, so that the
dispute can go to arbitration, unless the court finds that the arbitration
agreement 'is null and void, inoperative or incapable of being performed' . 111
Unless one of these grounds exists, the court is obliged to stay the court
proceedings, and has no discretion in-this regard. 112
Although South Africa acceded to the Convention without reservation 113 and
although the legislature was aware of the part of the Convention dealing with
the recognition of arbitration agreements, 114 the Recognition and Enforcement
of Foreign Arbitral Awards Act does not provide for a compulsory stay of court
proceedings in respect of disputes arising from agreements subject to the
Convention unless one of the above-mentioned grounds is proved. The Act is
concerned solely with the enforcement of 'foreign arbitral awards', as defined,
and the concept 'arbitration agreement' is not even defined for purposes of the
Act. According to ordinary principles of South African law, a court has a
discretion whether or not to stay court proceedings subject to a valid arbitration
agreement and is not obliged to do so. 115 It would therefore appear that the
legislature was remiss in not making express provision for this part of the
country's commitments in terms of the Convention. As a result, the court has
assumed on at least one occasion that it is not bound by this part of the
Convention. 116 In the particular case, the court nevertheless exercised its
discretion in favour of allowing the arbitration to continue. 117

110 See art IL Redfern & Hunter 458.

111 Article II(3). The English legislation to give effect to the Convention, namely the Arbitration Act
of 1975, s 1(1) follows this wording. but adds an additional ground for refusing a stay. namely: 'that
there is not in fact any dispute between the parties with regard to the matter agreed to be referred'. See
further Mustill & Boyd 462-6 for a discussion of these grounds.
112 Mustill & Boyd 462.
113 The full text of the Convention, including article II, was also published in the Government Notices

referred to in n 108 above.

114 See Hansard 18 March 1977 col 3835.
115 This discretion exists both in terms of s 6(2) of the Arbitration Act 42 of 1965 and under the

common law (see 63 above).

116 See Polysius (Pry) Ltd v Transvaal Alloys (Pry) Ltd 1983 (2) SA 630 (W) 646H-647B. This aspect

was not mentioned in the judgment on appeal (see Trann•aal Alloys v Polysius (Pry) Ltd 1983 (2) SA
653 (T)).
117 See Polysius (Pry) Ltd v Transvaal Alloys (Pry) Ltd (above) at 646G-H, 647B, where the court,
in considering the factor of convenience, held that the compelling reasons required for refusing a stay
could not be found by a general oomparison of the advantages and disadvantages of international
arbitration and litigation. The court's decision to stay the court proceedings so that arbitration could
take place was upheld on appeal. See, however, Yorigami Maritime Construction Co Ltd v Nissho-lwai
Co Ltd 1977 (4) SA 682 (C) 692H-694D which involved court proceedings concerning a shipping
accident off Cape Town, between two Japanese companies, who had an arbitration agreement providing
for arbitration in Japan under Japanese law. The court held that bearing in mind that the witnesses and
experts would mainly come from Cape Town and because of the danger of a multiplicity of proceedings
and the danger of conflicting decisions (a ground which the respondent failed to establish in the Polysius
case), the court should exercise its discretion against arbitration.
International Arbitration 313

8.5.3 Enforcement of foreign arbitral awards

A person wishing to enforce a foreign arbitral award must apply to a provincial
or local division of the Supreme Court. 118 The application must be
accompanied by the original award and the original arbitration agreement, 119
duly authenticated, 120 and if either document is not in one of the official
languages, it must be accompanied by a duly authenticated sworn translation
into one of the official languages. 121
A 'foreign arbitral award' is defined as (a) an arbitral award 'made outside
the Republic'; or (b) an arbitral award the enforcement of which is not
permissible in terms of the Arbitration Act, 122 'but is not in conflict with the
provisions of this Act' .123 Category (b) has no equivalent in the corresponding
provision of the English Arbitration Act, 124 but presumably refers to the
category of 'arbitral awards not considered as domestic awards in the State
where their recognition and enforcement are sought' .125 The interpretation of
category (a) is also not free from difficulty. It could happen that an arbitration
takes place in South Africa between two South African parties pursuant to an
arbitration agreement signed in this country, but after the conclusion of the
hearing the arbitrator makes (that is prepares and signs) his award while
spending a few days in Botswana. It has been argued that 'made' in the
definition _should not be given its usual meaning, but should mean 'made in an
arbitration where a foreign element intrudes' . 126 The difficulty with this
approach is that the definition was enacted to give effect to the New York
Convention, which provides that it shall apply to the recognition and
enforcement of arbitral awards 'made in the territory of a State other than the
State where the recognition and enforcement of such awards are sought'.
Therefore, in the above example, the award is made in Botswana and would
apparently have to be enforced as a foreign arbitral award. 127 It could also

118 Sees 3 of the Recognition and Enforcement of Foreign Arbitral Awards Act 40 of 1977 read with

s 1 'court'.
119 In both cases, a certified copy will also suffice (s 3(a)(ii)). The certified copy must be authenticated

in the same way as an original document (s 1 'certified copy').

120 ie authenticated in terms of Supreme Court Rule 63.
121 Section 3(a) and (b).
122 Act 42 of 1965.
123 Act 40 of 1977 s 1.
124 See the Arbitration Act of 1975, s 7(1) 'Convention award'.
125 New York Convention art I(l). We agree with Jacobs 164 that category (b) could not have been
intended to refer to an award made in South Africa under the common law (because the arbitration
agreement was not in writing), so that it could be enforced as a foreign award.
126 See Jacobs 126. Alternatively, it has been suggested that an award should be regarded as being
made at the curial seat of the arbitration, irrespective of where it is signed. See the sources referred to
by Timmons 126. . .
127 See Hiscox v Outhwaite (No 1) [1991] 1 All ER 641 (HL) 646f-647f, discussed by Timmons 124-6.
The arbitration took place in London but the award was signed in Paris by the arbitrator and then
delivered in London. Lord Oliver, in interpreting the definition of 'Convention award' in s 7 of the
English Arbitration Act, held that an award is made when and where it is perfected, and an award is
perfected when it is signed. Where the arbitration is held in South Africa under the Arbitration Act 42
of 1965, but the award is signed in another country, but then published in South Africa (as required by
314 Arbitration in South Africa: Law and Practice

probably be enforced under the common law as a contractual undertaking.128

The court may postpone the hearing of an application for the enforcement of
an award if it is proved to the satisfaction of the court that an application for the
setting aside or suspension of the award has been made to a competent
authority of the country in which, or under the law of which, the award was
made. On the application of the party seeking to enforce the award, the court
may, however, require the other party to give suitable security as a condition
for granting the postponement. 129
Defences against the application for the enforcement of the award may be
divided into two groups. First, the court may, on its own initiative, 130 refuse to
grant the application if the court finds that (a) a reference to arbitration is not
permissible in South Africa in respect of the subject-matter of the dispute, 131 or
(b) the enforcement of the award would be contrary to public policy in South
Africa. 132 It has been suggested that 'public policy' in the context should be
narrowly construed and confined to the violation of some fundamental
principle of justice or good morals, such as fraud by the successful party. 133
The second group of defences must be raised and proved by the party against
whom the enforcement of the award is sought. These defences are as follows: 134
(a) if the parties to the arbitration agreement concerned had, under the law
_applicable to them, 135 no capacity to contract, or if the agreement 'is
invalid under the law to which the parties have subjected it or of the
country in which the award was made'; 136 or

s 25), it may be possible to argue that it was made in this country. The award must, however, be
published by the arbitrator, who would apparently have to be present when the award is delivered and
he could not delegate this task to another person.
128 See Benidai Trading Co Ltd v Gouws & Gouws (Pry) Ltd 1977 (3) SA 1020 (T) 1038H. For a
discussion of the case see Kahn 568-70.
129 Section 4(2) of Act 40 of 1977.
130 The power of the court to refuse the application for enforcement on the grounds ins 4(l)(a) on
its own initiative, even if the matter is not raised by the respondent, must be implied on policy grounds
and because the other defences ins 4(l)(b) are prefaced by the requirement that they must be proved
by the party opposing enforcement.
131 See s 2 of the Arbitration Act 42 of 1965 and para 2.5 above.
132 Sees 4(1)(a) of Act 40 of 1977 which corresponds to art V(2) of the New York Convention.
133 See Kahn 570-1.
134 Sees 4(l)(b) of Act 40 of 1970.
135 Kahn 571 suggests that our courts would probably hold that a party has capacity to contract if he
has such capacity either according to the Jaw of his domicile or the Jaw of the place where the contract
was concluded or (possibly) the system of Jaw with which the contract has its closest and most real
connection.
136 Section 4(l)(b)(i) is wider than the corresponding art V(l)(a) of the New .York Convention. The
former allows the validity of the arbitration agreement to be attacked on either one of two alternative
grounds, namely: (a) invalidity under the Jaw to which the parties have subjected it, or
(b) invalidity under the Jaw of the country in which the award was made. Article V(l)(a) only allows the
validity of the arbitration agreement to be attacked under the Jaw of the country where the award was
made if the parties have not subjected their agreement to a designated legal system, with the result that
only one basis for attack may be considered in any given case. See further Kahn 571-2.
International Arbitration 315

(b) if the party did not receive the required notice of the appointment of the
arbitrator or of the arbitration proceedings or was otherwise not able to
present his case; 137 or
(c) if the award deals with a dispute outside the provisions of the reference to
arbitration or contains decisions on matters beyond the scope of the
reference; 138 or
(d) the constitution of the arbitration tribunal or the arbitration proceedings
were not in accordance with 'the relevant arbitration agreement or with
the law of the country in which the arbitration took place'; 139 or
(e) 'the award has not yet become binding on the parties, 140 or has been set
aside 141 or suspended by a competent authority of the country in which, or
under the law of which, the award was made'.
Unless one of the defences referred to above is successfully established, the
foreign arbitral award may be made an order of court. 142 The award may then
be enforced in the same manner as a judgment of the court. 143 Where the award
provides for the payment of an amount in a foreign currency, the award shall
be made an order of court as if it were an award for payment of the equivalent
amount in local currency at the exchange rate prevailing at the date of the

137 These procedural irregularities, amounting as they do to breaches of the rules of natural justice.
would in any event render the award liable to be set aside or remitted in many jurisdictions. The
advantage of this defence is that the respondent can raise it when an attempt is made to enforce the
award in South Africa, instead of instituting proceedings to have the award set aside in the land where
it was made. Compare 274 above where it is suggested that a party against whom an application for
enforcement of a valid but voidable award is brought under s 31 of the Arbitration Act must bring an
apElication or counter-application to have the award set aside.
38 Where the invalid portions of the award are severable from the rest, the court can grant an order
to enforce the remainder (s 4(1)(b)(iii) of Act 40 of 1977).
139 Once again, s 4(1)(b)(iv) is wider than the corresponding art V(l)(d) of the New York

Convention. in that the latter allows the composition of the tribunal or the arbitral procedure to be
attacked under the law of the country where the arbitration took place only to the extent that these
matters are not dealt with in the arbitration agreement (see Kahn 573). To the extent that provisions
regarding the composition of the tribunal and arbitral procedure in the arbitration legislation in the land
where the arbitration took place are regulatory rather than mandatory, this difference between our Act
and the Convention will not be important in practice.
140 It would appear that because a putative award, which does not comply with the requirements for
a valid award in terms of the law of the place where the award is made, would not be binding on the
parties until the defects were remedied, its enforcement could possibly be opposed under this defence.
Furthermore, although the effect of a valid arbitration award is that it is final and binding. the award
may be subject to a right of appeal to a higher arbitral tribunal in terms of the parties' procedural rules,
or in certain jurisdictions (eg England in terms of s 1(2) of the Arbitration Act of 1979) to a statutory
right of appeal to the courts on a question of law. A South African court may, in the context of
s 4(1)(b)(v) of Act 40 of 1977, decide that the award is not yet 'binding' until the time for exercising the
right of appeal has expired (compare Kahn 573). However, the court's power to uphold the defence is
discretionary ('A court may refuse' at the start of s 4(1)) and the court may therefore decline to uphold
the defence in the absence of proof that the respondent has initiated appeal proceedings (compare
s 4(2)).
141 As pointed out in n 137 above, the party against whom enforcement of an award is sought will be
able to deal with some procedural irregularities by raising them as a defence to the application.
However, irregularities not referred to in s 4(1 )(b), e g bias on the part of the tribunal, will have to be
dealt with by bringing an application to set aside the award in the land where it was made.
142_Section 2(1) of Act 40 of 1977.
143 Section 2(3).
316 Arbitration in South Africa: Law and Practice

award. 144 The effect of this provision appears to be that a devaluation of the
local currency against the foreign currency between the date of the award and
the date of the order for enforcement will benefit the party against whom
enforcement of the award is sought, whereas if the local currency has
appreciated against the foreign currency in the same period, this will benefit the
party enforcing the award.

144 Section 2(2).

Appendices
Appendix I

ARBITRATION ACT 42 OF 1965

To provide for the settlement of disputes by arbitration tribunals in terms
of written arbitration agreements and for the enforcement of the awards
of such arbitration tribunals.

DEFINITIONS (s 1)
1 Definitions
In this Act, unless the context otherwise indicates-
'arbitration agreement' means a written agreement providing for the
reference to arbitration of any existing dispute or any future dispute relating to
a matter specified in the agreement, whether an arbitrator is named or
designated therein or not;
'arbitration proceedings' means proceedings conducted by an arbitration
tribunal for the settlement by arbitration of a dispute which has been referred
to arbitration in terms of an arbitration agreement;
'arbitration tribunal' means the arbitrator, arbitrators or umpire acting as
such under an arbitration agreement;
'award' includes an interim award;
'court' means any court of a provincial or local division of the Supreme Court
of South Africa having jurisdiction;
'party', in relation to an arbitration agreement or a reference, means a party
to the agreement or reference, a successor in title or assign of such a party and
a representative recognized by law of such a party, successor in title or assign;
'territory' means the territory of South-West Africa including that portion of
the territory known as the 'Rehoboth Gebiet' and defined in the First Schedule
to Proclamation 28 of 1923 of that territory, and the Eastern Caprivi Zipfel
referred to in subsection (3) of section three of the South-West Africa Affairs
Amendment Act, 1951 (Act 55 of 1951).

MATTERS NOT SUBJECT TO ARBITRATION (s 2)

2 Matters not subject to arbitration
A reference to arbitration shall not be permissible in respect of-
(a) any matrimonial cause or any matter incidental to any such cause; or
(b) any matter relating to status.
319
320 Arbitration in South Africa: Law and Practice

EFFECT OF ARBITRATION AGRE.EMENTS (ss 3-8)

3 Binding effect of arbitration agreement and power of court in relation

thereto
(1) Unless the agreement otherwise provides, an arbitration agreement shall
not be capable of being terminated except by consent of all the parties thereto.
(2) The court may at any time on the application of any party to an
arbitration agreement, on good cause shown-
(a) set aside the arbitration agreement; or
(b) order that any particular dispute referred to in the arbitration agreement
shall not be referred to arbitration; or
(c) order that the arbitration agreement shall cease to have effect with
reference to any dispute referred.

4 Death or removal from office of party to an arbitration agreement

(1) Unless the agreement otherwise provides, an arbitration agreement or
any appointment of an arbitrator or umpire thereunder shall not be terminated
by the death of any party thereto.
(2) If any party to a reference under an arbitration agreement dies or vacates
or is removed from his office after any dispute has been referred to arbitration,
all steps and proceedings in connection with the reference shall be stayed,
subject to any order that the court may make, until an executor or other proper
representative has been appointed in the estate of the party who has died or, as
the case may be, until an executor, administrator, curator, trustee, liquidator
or judicial manager has, where necessary, been appointed in the place of an
executor, administrator, curator, trustee, liquidator or judicial manager who in
his capacity as ~uch was a party to the reference and who has died or has
vacated or has been removed from his office.
(3) For the purposes of subsection (2) a dispute shall be deemed to have been
referred to arbitration if any party to the dispute has served on the other party
or parties thereto a written notice requiring him or them to appoint or to agree
to the appointment of an arbitrator or, where the arbitrator is named or
designated in the arbitration agreement, requiring the dispute to be referred to
the arbitrator so named or designated.
(4) Any period of time fixed by or under this Act which is interrupted by any
stay resulting from the operation of subsection (2), shall be extended by a
period equal to the period of such interruption.
(5) Nothing in this section contained shall affect the operation of any law or
rule of law by virtue of which any right of action is extinguished by the death
of any person.

5 Insolvency or winding-up of a party to an arbitration agreement

(1) Unless the agreement otherwise provides, an arbitration agreement or
any appointment of an arbitrator or umpire thereunder shall not be terminated
Appendices 321

by the sequestration of the estate of any party thereto, or, if such party be a
corporate body, by the winding-up of the corporate body or the placing of the
corporate body under judicial management.
(2) If the estate of any party to an arbitration agreement is sequestrated or
if, in the case of a corporate body which is a party to such an agreement, a
petition for the winding-up of the corporate body or for placing the corporate
body under judicial management is presented or an order for winding-up the
corporate body or for placing the corporate body under judicial management is
made, the provisions of any law relating to the sequestration of insolvent
estates or, as the case may be, any law relating to the winding-up or judicial
management of the corporate body concerned, shall apply in the same manner
as if a reference of a dispute to arbitration under the arbitration agreement
were an action or proceeding or civil proceedings or legal proceedings or civil
legal proceedings within the meaning of any such law.
(3) For the purposes of the application of the laws referred to in subsection (2).
(a) a reference of a dispute to arbitration shall be deemed to be an action or
proceeding or civil proceedings or legal proceedings or civil legal
proceedings by or against any person or corporate body instituted or
pending in any court of law having jurisdiction if any party to the dispute
has served on the other party or parties thereto a written notice requiring
him or them to appoint or to agree to the appointment of an arbitrator, or,
where the arbitrator is named or designated in the arbitration agreement,
requiring the dispute to be referred to the arbitrator so named or
designated; and
(b) a reference of a dispute to arbitration shall be deemed to be an action or
proceeding which is being or is about to be instituted against a corporate
body, if any party to the dispute is taking steps t(\ serve or is about to serve
on the corporate body a written aotice such as is referred to in paragraph
(a).
(4) Any period of time fixed by or under this Act which is interrupted by any
stay, suspension or restraint resulting from the application of any law referred
to in subsection (2), shall be extended by a period equal to the period of such
interruption.

6 Stay of legal proceedings where there Is an arbitration agreement

(1) If any party to an arbitration agreement commences any legal
proceedings in any court (including any inferior court) against any other party
to the agreement in respect of any matter agreed to be referred to arbitration,
'any party to such legal proceedings may at any time after entering appearance
but before delivering any pleadings or taking any other steps in the
proceedings, apply to that court for a stay of such proceedings.
(2) If on any such application the court is satisfied that there is no sufficient
reason why the dispute should not be referred to arbitration in accordance with
the agreement, the court may make an on;ler staying such proceedings subject
to such terms and conditions as it may consider just.
322 Arbitration in South Africa: Law and Practice

7 Power of court to order that dispute be determined by interpleader

proceedings or that interpleader issues be determined by arbitration
(1) The court may order that the dispute between parties to an arbitration
agreement be determined by way of interpleader proceedings for the relief of
any person desiring so to interplead.
(2) Where in any interpleader proceedings it is proved that the claims in
question are matters to which an arbitration agreement, to which the claimants
are parties, relates, the court may order that the issues between the claimants
be determined in accordance with the arbitration agreement.

8 Power of court to extend time fixed in arbitration agreement for

commencing arbitration proceedings
Where an arbitration agreement to refer future disputes to arbitration
provides that any claim to which the agreement applies shall be barred unless
some step to commence arbitration proceedings is taken within a time fixed by
the agreement, and a dispute arises to which the agreement applies, the court,
if it is of the opinion that in the circumstances of the case undue hardship would
otherwise be caused, may extend the time for such period as it considers
proper, whether the time so fixed has expired or not, on such terms and
conditions as it may consider just but subject to the provisions of any law
limiting the time for commencing arbitration proceedings.

ARBITRATORS AND UMPIRES (ss 9-13)

9 Reference to a single arbitrator

Unless a contrary intention is expressed in the arbitration agreement, the
reference shall be to a single arbitrator.

1O Power of parties to appoint arbitrators to fill vacancies

(1) Where an appointed arbitrator refuses to act or is or becomes incapable
of acting or dies or is removed from office or his appointment is terminated, or
is set aside, and a contrary intention is not expressed in the arbitration
agreement, the party or parties who appointed him may appoint another
arbitrator in his place.
(2) Where an arbitration agreement provides that the reference.shall be to
two or more arbitrators, one to be appointed by each party, and any party fails
to appoint an arbitrator in terms of the agreement, or by way of substitution in
the circumstances described in subsection (1), then, unless the arbitration
agreement expresses a contrary intention, the other party, having appointed an
arbitrator, or the other parties each having appointed an arbitrator, may serve
the party in default with a written notice requiring him to appoint an arbitrator
within seven days after receipt of the notice.
Appendices 323

(3) If the party in default does not appoint an arbitrator within the period
referred to in the notice served upon him in terms of subsection (2), the other
party who has appointed an arbitrator or the other parties who have each
appointed an arbitrator may appoint that arbitrator or those arbitrators, as the
case may be, to act as sole arbitrator or arbitrators in the reference, and his or
their award shall be binding on all parties as if he or they had been appointed
by consent of all parties: Provided that the court may, on the application of the
party in default, on good cause shown, set aside such appointment and grant
the party in default an extension of time to appoint an arbitrator.

11 Power of parties or arbitrators to appoint umpire and to fill vacancy

(1) If an arbitration agreement provides for a reference-
(a) to an even number of arbitrators, then, unless a contrary intention is
expressed therein, the arbitrators may at any time appoint an umpire; or
(b) to three arbitrators, of whom one is to be appointed by the other two, such
agreement shall, unless a contrary intention is expressed therein, be
construed as providing for the appointment of an umpire by the other two
arbitrators immediately after they are themselves appointed.
(2) Where an appointed umpire refuses to act or is or becomes incapable of
acting or dies or is removed from office or his appointment is terminated, or is
set aside, and a contrary intention is not expressed in the arbitration
agreement, the parties or arbitrators who appointed him may appoint another
umpire in his place.

12 Power of court to appoint an arbitrator or umpire

(1) Where-
(a) in terms of an arbitration agreement or this Act the reference shall be to
a single arbitrator and all the parties to the reference do not, after a
dispute has arisen, agree in the appointment of an arbitrator; or
(b) an arbitration agreement provides that the reference shall be to an even
number of arbitrators and the parties to the reference or the arbitrators are
at liberty to appoint an umpire and do not appoint him in any case where
such appointment is necessary for the decision of the matters in dispute or
the due conduct of the arbitration, or where the parties or such arbitrators
are required to appoint an umpire and do not appoint him; or
(c) where an arbitration agreement provides that the reference shall be to two
or more arbitrators one to be appointed by each party, and any party fails
to appoint an arbitrator in terms of the agreement or by way of substitution
in the circumstances described in subsection (1) of section ten; or
(d) an arbitration agreement provides that the reference shall be to three
arbitrators one of whom is to be appointed (whether as arbitrator or as
umpire) by the parties to the reference or by the other two arbitrators and
such arbitrator or umpire has not been appointed; or
324 Arbitration in South Africa: Law and Practice

(e) an appointed arbitrator or umpire refuses to act or is or becomes incapable

of acting or dies, or is removed from office or his appointment is
terminated or is set aside and the party or parties to the reference or
arbitrators who made the appointment are at liberty to appoint another
arbitrator or umpire to fill the vacancy and do not appoint him in any case
where such appointment is necessary for the decision of the matters in
dispute or the due conduct of the arbitration, or where the party or parties
or arbitrators who made the appointment is or are required to appoint
another arbitrator or umpire to fill such vacancy and does or do not
appoint him; or
(f) more than one arbitrator has to be appointed and the parties to the
reference do not, after a dispute has arisen, agree in the appointment of
arbitrators so far as the arbitration agreement may require such
agreement,
any party to the reference may serve the other party or parties or the
arbitrators, as the case may be, with a written notice requiring him or them to
appoint or if agreement be necessary, to agree in the appointment of an
arbitrator or arbitrators or umpire.
(2) If the appointment referred to in the notice served under subsection (1)
is not made or agreed to, as the case may be, within seven days after the service
of the notice, the party who gave the notice, may upon notice to the other party
or parties or the arbitrators, as the case may be, apply to the court to make the
necessary appointment, and thereupon the court may appoint an arbitrator or
arbitrators or umpire.
(3) Where an arbitrator (not being a sole arbitrator) or two or more
arbitrators (not being all the arbitrators) or an umpire who has or have not
entered on the reference is or are removed by the court or his or their
appointment or appointments is or are set aside by the court, and the
arbitration agreement does not provide otherwise, the court may, on the
application of any party to the reference, appoint an arbitrator or arbitrators or
umpire to act in the place of the arbitrator, arbitrators or umpire so removed
or whose appointment or appointments has or have been so set aside.
(4) Where a sole arbitrator or all the arbitrators or an umpire who has or
have entered on the reference is or are removed by the court, or his or their
appointment or appointments is or are set aside by the court and the arbitration
agreement does not provide otherwise, the court may, on the application of any
party to the reference, either-
(a) appoint an arbitrator or arbitrators or an umpire to act in the place of the
arbitrator, arbitrators or umpire so removed or whose appointment or
appointments has or have been so set aside; or
(b) appoint a sole arbitrator to act in the place of the sole arbitrator or all the
arbitrators or umpire so removed or whose appointment or appointments
has or have been so set aside; or
(c) order that the arbitration agreement shall cease to have effect with respect
to the dispute referred.
Appendices 325

(5) An arbitrator or umpire appointed by the court shall have the like power
to act in the reference and make an award as if he had been appointed in
accordance with the terms of the arbitration agreement.
(6) An arbitrator or umpire appointed in the circumstances described in
subsection (1) of section ten or subsection (2) of section eleven or subsection
(2), (3) or (4) of this section or an arbitrator appointed after the court has
granted an extension of time to do so in the circumstances described in
subsection (3) of section ten, may avail himself of the evidence recorded in the
arbitration proceedings before his appointment and may, if he think fit, recall
for further examination any person who has given such evidence.

13 Termination or setting aside of appointment of arbitrator or umpire

(1) Subject to the provisions of subsection (2), the appointment of an
arbitrator or umpire, unless a contrary intention is expressed in the arbitration
agreement, shall not be capable of being terminated except by consent of all the
parties to the reference.
(2)(a) The court may at any time on the application of any party to the
reference, on good cause shown, set aside the appointment of an arbitrator or
umpire or remove him from office.
(b) For the purposes of this subsection, the expression 'good cause', includes
failure on 'the part of the arbitrator or umpire to use all reasonable dispatch in
entering on and proceeding with the reference and making an award or, in a
case where two arbitrators are unable to agree, in giving notice of that fact to
the parties or to the umpire.
(3) Where the appointment of an arbitrator or umpire is so set aside, or
where an arbitrator or umpire is so removed from office, the court may, apart
from any order for costs which may be awarded against such arbitrator or
umpire personally, order that such arbitrator or umpire shall not be entitled to
any remuneration for his services.

PROVISIONS AS TO ARBITRATION PROCEEDINGS (ss 14-22)

14 Powers of arbitration tribunal and manner of arriving at decisions

where the arbitration tribunal consists of two or more arbitrators
(1) An arbitration tribunal may-
(a) on the application of any party to a reference, unless the arbitration
agreement otherwise provides-
(i) require any party to the reference, subject to any legal objection, to
make discovery of documents by way of affidavit or by answering
interrogatories on oath and to produce such documents for inspection;
(ii) require the parties to the reference to deliver pleadings or statements
of claim and defence or require any party to give particulars of his
claim or counterclaim, and allow any party to amend his pleadings or
statements of claim or defence;
326 Arbitration in South Africa: Law and Practice

(iii) require any party to the reference to allow inspection of any goods or
property involved in the reference, which is in his possession or under
his control; and
(iv) appoint a commissioner to take the evidence of any person in the
Republic or in the territory or abroad and to forward such evidence to
the tribunal in the same way as if he were a commissioner appointed
by the court;
(b) unless the arbitration agreement otherwise provides-
(i) from time to time determine the time when and the place where the
arbitration proceedings shall be held or be proceeded with;
(ii) administer oaths to, or take the affirmations of, the parties and
witnesses appearing to give evidence;
(iii) subject to any legal objection, examine the parties appearing to give
evidence in relation to the matters in dispute and require them to
produce before the tribunal all books, documents or things within
their possession or power which may be required or called for and the
production of which could be compelled on the trial of an action;
(iv) subject to any legal objection, examine any person who has been
summoned to give evidence and require the production of any book,
document or thing which such person has been summoned to produce;
.(v) with the consent of the parties or on an order of court, receive
evidence given by affidavit; and
(vi) inspect any goods or property involved in the reference.
(2) Where an arbitration tribunal consists of two or more arbitrators, any
oath or affirmation may be administered by any member of the tribunal
designated by it for the purpose.
(3) Where an arbitration tribunal consists of two arbitrators, their unanimous
decision, and where it consists of more than two arbitrators, the decision of the
majority of the arbitrators, shall be the decision of the arbitration tribunal.
(4) Where the arbitrators, or a majority of them, do not agree in their award,
their decision shall not be taken to be either the least amount or least right of
relief awarded by them, or the average of what has been awarded by them, but
the matter shall thereupon become referable to the umpire, unless the
arbitration agreement otherwise provides.

15 Notice of proceedings to parties

(1) An arbitration tribunal shall give to every party to the reference, written
notice of the time when and place where the arbitration proceedings will be
held, and every such party shall be entitled to be present personally or by
representative and to be heard at such proceedings.
(2) If any party to the reference at any time fails, after having received
reasonable notice of the time when and place where the arbitration proceedings
will be held, to attend such proceedings without having shown previously to the
arbitration tribunal good and sufficient cause for such failure, the arbitration
tribunal may proceed in the absence of such party.
Appendices 327
16 Summoning of witnesses
(1) The issue of a summons to compel any person to attend before an
arbitration tribunal to give evidence and to produce books, documents or
things to an arbitration tribunal, may be procured by any party to a reference
in the same manner and subject to the same conditions as if the reference were
a civil action pending in the court having jurisdiction in the area in which the
arbitration proceedings are being or are about to be held: Provided that-
(a) no person shall be compelled by such a summons to produce any book,
document or thing the production of which would not be compellable on
trial of an action; and
(b) the clerk of the magistrate's court having jurisdiction in the said area, may
issue such summons upon payment of the same fees as are chargeable for
the issue of a subpoena in a civil case pending in the magistrate's court.
(2) Any summons issued out of any court in terms of subsection (1) shall be
served in the same manner as a subpoena issued out of that court in a civil
action pending in that court. ·
(3) The provisions of subsections (3) and (4) of section eighty-seven of the
Prisons Act, 1959 (Act 8 of 1959), relating to the service of a subpoena upon
any prisoner to give evidence in civil proceedings in any court, shall mutatis
mutandis apply with reference to the service of a summons upon any prisoner
required to give evidence before an arbitration tribunal as if the proceedings
before such tribunal were civil proceedings pending in a court.
(4) On the application of any party to a reference, the court may order the
process of the court to issue to compel the attendance of a witness before the
arbitration tribunal or may order any prisoner to be brought before such
arbitration tribunal for examination.

17 Recording of evidence
If not recorded by the arbitration tribunal itself, the oral evidence of
witnesses shall be recorded in such manner and to such extent as the parties to
the reference may agree or, failing such agreement, as the arbitration tribunal
may from time to time direct after consultation with the parties.

18 Reference of particular points to umpire

Where the arbitrators or a majority of them are unable to agree as to any
matter of procedure, or any interlocutory question, they may refer that matter
or question forthwith to the umpire for decision.

19 Powers of umpire
Unless the arbitration agreement otherwise provides-
(a) the umpire may sit together with the arbitrators and hear the evidence
given from time to time and may then and there decide any matter of
procedure or any interlocutory question upon which the arbitrators
disagree and which is referred by them to him for decision;
328 Arbitration in South Africa: Law and Practice

(b) an umpire shall not be entitled to any remuneration from the parties in
respect of his attendance at any arbitration proceedings conducted by the
arbitrators unless the parties have requested him so to attend or unless he
is called upon to decide any matter of procedure or any interlocutory
question at the request of the arbitrators or is required to enter on the
reference and to give an award;
(c) if the arbitrators have by notice in writing advised the parties to the
reference, or the umpire, that they are unable to agree, or if the arbitrators
have allowed the time or extended time for making their award to expire
without making an award, and the parties have not advised the umpire that
they intend to grant an extension or further extension of the said period or
to apply to the court therefor, the umpire shall forthwith enter on the
reference in lieu of the arbitrators;
(d) an umpire who enters on a reference as provided in paragraph (c), shall
have the same powers as if he had been appointed as sole arbitrator, and
may for that purpose unless he is required by the parties to hear the
evidence of the parties and their witnesses, or, whenever he is called upon
by the arbitrators to decide any matter of procedure or any interlocutory
question, act upon the evidence recorded in the proceedings before the
arbitrators, and may, if he thinks fit, recall for further examination any
person who has given such evidence.

20 Statement of case for opinion of court or counsel during arbitration

proceedings
(1) An arbitration tribunal may, on the application of any party to the
reference and shall, if the court, on the application of any such party, so directs,
or if the parties to the reference so agree, at any stage before making a final
award state any question of law arising in the course of the reference in the
form of a special case for the opinion of the court or for the opinion of counsel.
(2) An opinion referred to in subsection (1) shall be final and not subject to
appeal and shall be binding on the arbitration tribunal and on the parties to the
reference.

21 General powers of the court

(1) For the purposes of and in relation to a reference under an arbitration
agreement, the court shall have the same power of making orders in respect
of-
(a) security for costs;
(b) discovery of documents and interrogatories;
(c) the examination of any witness before a commissioner in the Republic or
in the territory or abroad and the issue of a commission or a request for
such examination;
(d) the giving of evidence by affidavit;
Appendices 329

(e) the inspection or the interim custody or the preservation or the sale of
goods or property;
(f) an interim interd~ct or similar relief;
(g) securing the amount in dispute in the reference;
(h) substituted service of notices required by this Act or of summonses; and
(i) the appointment of a receiver,
as it has for the purposes of and in relation to any action or matter in that court.
(2) The provisions of subsection (1) shall not be construed so as to derogate
from any power which may be vested in an arbitration tribunal of making
orders with reference to any of the matters referred to in the said sub-
section.
(3) Notwithstanding anything to the contrary in the arbitration agreement,
the court may at any time, on the application of any party to the reference,
order that the umpire shall enter upon the reference in lieu of the arbitrators in
all respects as if he were a sole arbitrator.

22 Offences
(1) Any person who-
(a) without good cause, fails to appear in answer to a summons to give
evidence before an arbitration tribunal; or
(b) having so appeared, fails to remain in attendance until excused from
further attendance by the arbitration tribunal; or
(c) upon being required by an arbitration tribunal to be sworn or to affirm as
a witness, refuses to do so; or
(d) refuses to answer fully and to the best of his knowledge and belief any
question lawfully put to him during any arbitration proceedings; or
(e) without good cause, fails to produce before an arbitration tribunal any
book, document or thing specified in a summons requiring him so to
produce it; or
(f) while arbitration proceedings are in progress, wilfully insults any arbitrator
or umpire conducting such proceedings, or wilfully interrupts such
proceedings or otherwise misbehaves himself in the place where such
proceedings are being conducted,
shall be guilty of an offence and liable on conviction to a fine not exceeding one
hundred rand or to imprisonment for a period not exceeding three months:
Provided that in connection with the interrogation of any such person or the
production of any such book, document or thing the law relating to privilege as
applicable to a witness subpoenaed to give evidence or to produce any book,
document or thing before a court of law shall apply.
(2) Any person who, having been sworn or having made an affirmation,
knowingly gives false evidence before an arbitration tribunal, shall be guilty of
an offence and liable on conviction to the penalties prescribed by law for
perjury.
330 Arbitration in South Africa: Law and Practice

PROVISIONS AS TO AWARDS (ss 23-33)

23 Time for making award

The arbitration tribunal shall, unless the arbitration agreement otherwise
provides, make its award-
(a) in the case of an award by an arbitrator or arbitrators, within four months
after the date on which such arbitrator or arbitrators entered on the
reference or the date on which such arbitrator was or such arbitrators were
called on to act by notice in writing from any party to the reference,
whichever date be the earlier date; and
(b) in the case of an award by an umpire, within three months after the date
on which such umpire entered on the reference or the date on which such
umpire was called on to act by notice in writing from any party to the
reference, whichever date be the earlier date,
or in either case on or before any later date to which the parties by any writing
signed by them may from time to time extend the time for making the award:
Provided that the court may, on good cause shown, from time to time extend
the time for making any award, whether that time has expired or not.

24 Award to be in writing
(1) The award shall be in writing and shall be signed by all the members of
the arbitration tribunal.
(2) If a minority of the members of the arbitration tribunal refuse to sign the
award, such refusal shall be mentioned in the award but shall not invalidate it.

25 Publication of award
(1) The award shall be delivered by the arbitration tribunal, the parties or
their representatives being present or having been summoned to appear.
(2) The award shall be deemed to have been published to the parties on the
date on which it was so delivered.

26 Interim award
Unless the arbitration agreement provides otherwise, an arbitration tribunal
may make an interim award at any time within the period allowed for making
an award.

27 Specific performance
Unless the arbitration agreement provides otherwise, an arbitration tribunal
may order specific performance of any contract in any circumstances in which
the court would have power to do so.

28 Award to be binding
Unless the arbitration agreement provides otherwise, an award shall, subject
Appendices 331

to the provisions of this Act, be final and not subject to appeal and each party
to the reference shall abide by and comply with the award in accordance with
its terms.

29 Interest on amount awarded

Where an award orders the payment of a sum of money, such sum shall,
unless the award provides otherwise, carry interest as from the date of the
award and at the same rate as a judgment debt.

30 Power of arbitration tribunal to correct errors in award

An arbitration tribunal may correct in any award any clerical mistake or any
patent error arising from any accidental slip or omission.

31 Award may be made an order of court

(1) An award may, on the application to a court of competent jurisdiction by
any party to the reference after due notice to the other party or parties, be
made an order of court.
(2) The court to which application is so made, may, before making the award
an order of court, correct in the award any clerical mistake or any patent error
arising from any accidental slip or omission.
(3) An award which has been made an order of court may be enforced in the
same manner as any judgment or order to the same effect.

32 Remittal of award
(1) The parties to a reference may within six weeks after the publication of
the award to them, by any writing signed by them remit any matter which was
referred to arbitration, to the arbitration tribunal for reconsideration and for
the making of a further award or a fresh award or for such other purpose as the
parties may specify in the said writing.
(2) The court may, on the application of any party to the reference after due
notice to the other party or parties made within six weeks after the publication
of the award to the parties, on good cause shown, remit any matter which was
referred to arbitration, to the arbitration tribunal for reconsideration and for
the making of a further award or a fresh award or for such other purpose as the
court may direct.
(3) When a matter is remitted under subsection (1) or (2) the arbitration
tribunal shall, unless the writing signed by the parties or the order of remittal
otherwise directs, dispose of such matter within three months after the date of
the said writing or order.
(4) Where in any case referred to in subsection (1) or (2) the arbitrator has
died after making his award, the award may be remitted to a new arbitrator
appointed, in the case of a remittal under subsection (1), by the parties or, in
the case of a remittal under subsection (2), by the court.
332 Arbitration in South Africa: Law and Practice

33 Setting aside of award

(1) Where-
(a) any member of an arbitration tribunal has misconducted himself in relation
to his duties as arbitrator or umpire; or
(b) an arbitration tribunal has committed any gross irregularity in the conduct
of the arbitration proceedings or has exceeded its powers; or
(c) an award has been improperly obtained,
the court may, on the application of any party to the reference after due notice
to the other party or parties, make an order setting the award aside.
(2) An application pursuant to this section shall be made within six weeks
after the publication of the award to the parties: Provided that when the setting
aside of the award is requested on the grounds of corruption, such application
shall be made within six weeks after the discovery of the corruption and in any
case not later than three years after the date on which the award was so
published.
(3) The court may, if it considers that the circumstances so require, stay
enforcement of the award pending its decision.
(4) If the award is set aside the dispute shall, at the request of either party,
be submitted to a new arbitration tribunal constituted in the manner directed
by the court.

REMUNERATION OF ARBITRATORS AND UMPIRE AND COSTS

(ss 34-36)

34 Remuneration of arbitrators and umpire

(1) Where the fees of the arbitrator or arbitrators or umpire have not been
fixed by an agreement between him or them and the parties to the reference,
any party to the reference may, notwithstanding that such fees may already
have been paid by the parties, or any of them, require such fees to be taxed,
and thereupon such fees shall be taxed by the taxing master of the court.
(2) Any taxation of fees under this section may be reviewed by the court in
the same manner as a taxation of costs.
(3) The arbitrator or arbitrators or umpire shall be entitled to appear and be
heard at any taxation or review of taxation under this section.
(4) The arbitrator or arbitrators or an umpire may withhold his or their
award pending payment of his or their fees and of any expenses incurred by him
or them in connection with the arbitration with the consent of the parties, or
pending the giving of security for the payment thereof.

35 Costs of arbitration proceedings

(1) Unless the arbitration agreement otherwise provides, the award of costs
in connection with the reference and award shall be in the discretion of the
arbitration tribunal, which shall, if it awards costs, give directions as to the scale
. Appendices 333

on which such costs are to be taxed and may direct to and by whom and in what
manner such costs or any part thereof shall be paid and may tax or settle the
amount of such costs or any part thereof, and may award costs as between
attorney and client.
(2) If no provision is made in an award with regard to costs, or if no directions
have been given therein as to the scale on which such costs shall be taxed, any
party to the reference may within fourteen days of the publication of the award,
make application to the arbitration tribunal for an order directing by and to
whom such costs shall be paid or giving directions as to the scale on which such
costs shall be taxed, and thereupon the arbitration tribunal shall, after hearing
any party who may desire to be heard, amend the award by adding thereto such
directions as it may think proper with regard to the payment of costs or the
scale on which such costs shall be taxed.
(3) If the arbitration tribunal has no discretion as to costs or if the arbitration
tribunal has such a discretion and has directed any party to pay costs but does
not forthwith tax or settle such costs, or if the. arbitrators or a majority of them
cannot agree in their taxation, then, unless the agreement otherwise provides,
the taxing master of the court may tax them.
(4) If an arbitration tribunal has directed any party to pay costs but has not
taxed or settled such costs, then, unless the arbitration agreement provides
otherwise, the court may, on making the award an order of court, order the
costs to be taxed by the taxing master of the court and, if the arbitration
tribunal has given no directions as to the scale on which such costs shall be
taxed, fix the scale of such taxation.
(5)Any taxation of costs by the taxing master of the court may be reviewed
by the court.
(6) Any provision contained in an arbitration agreement to refer future
disputes to arbitration to the effect that any party or the parties thereto shall in
any event pay his or their own costs or any part thereof, shall be void.

36 Costs of legal proceedings

An order made or opinion given by the court under this Act may be made or
given on such terms as to costs, including costs against an arbitrator or umpire,
as the court considers just.

MISCELLANEOUS PROVISIONS (ss 37-43)

37 Service of notices
Unless the arbitration agreement provides otherwise, any notice required by
any provision of this Act to be served on any person, may be served either-
(a) by delivering it to the person on whom it is to be served; or
(b) by leaving it at the usual or last known place of residence of that person in
the Republic or the territory; or
334 Arbitration in South Africa: Law and Practice

(c) by sending it by post to that person at his usual or last known place of
residence in the Republic or the territory; or
(d) in any other manner authorized by the court.

38 Extension of periods fixed by or under this Act

The court may, on good cause shown, extend any period of time fixed by or
under this Act, whether such period has expired or not.

39 This Act binds the State

This Act shall apply to any arbitration in terms of an arbitration agreement
to which the State is a party, other than an arbitration in terms of an arbitration
agreement between the State and the Government of a foreign country or any
undertaking which is wholly owned and controlled by such a Government.

40 Application of this Act to arbitrations under special laws

This Act shall apply to every arbitration under any law passed before or after
the commencement of this Act, as if the arbitration were pursuant to an
arbitration agreement and as if that other law were an arbitration agreement:
Provided that if that other law is an Act of Parliament, this Act shall not apply
to any such arbitration in so far as this Act is excluded by or is inconsistent with
that other law or is inconsistent with the regulations or procedure authorized or
recognized by that other law.

41 Application to South-West Africa

This Act and any amendment thereof shall apply also in the territory.

42 Repeal of laws
(1) The Arbitrations Act, 1898 (Act 29 of 1898), of the Cape of Good Hope,
the Arbitration Act, 1898 (Act 24 of 1898), of Natal, the Arbitration
Ordinance, 1904 (Ordinance 24 of 1904), of the Transvaal, and the Arbitration
Proclamation (Proclamation 3 of 1926), of South-West Africa, are hereby
repealed.
(2) Any arbitration, enquiry or trial commenced prior to the commencement
of this Act in terms of any law repealed by subsection (1) shall be proceeded
with in all respects as if such repeal had not been effected.
(3) Any arbitration commenced after the commencement of this Act under
any arbitration agreement entered into before such commencement, shall be
dealt with under this Act in all respects as if such agreement had been entered
into after such commencement.

43 Short title
This Act shall be called the Arbitration Act, 1965.
Appendix II

RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL

AWARDS ACT 40 OF 1977
To provide for the recognition and enforcement of foreign arbitral awards
and for matters connected therewith.

1 Definitions
In this Act, unless the context otherwise indicates-
'certified copy' means a copy authenticated in the manner in which foreign
documents may be authenticated to enable them to be produced in any court;
'court' means a court of a provincial or local division of the Supreme Court
of South Africa;
'foreign arbitral award' means an arbitral award-
(a) made outside the Republic; or
(b) the enforcement of which is not permissible in terms of the Arbitration
Act, 1965 (Act 42 of 1965), but is not in conflict with the provisions of this
Act.

2 Foreign arbitral award may be made order of court and enforced as

such
(1) Any foreign arbitral award may, subject to the provisions of sections 3
and 4, be made an order of court by any court.
(2) Where any amount payable in terms of such award is expressed in a
currency other than the currency of the Republic, the award shall be made an
order of court as if it were an award for such amount in the currency of the
Republic as, on the basis of the rate of exchange prevailing at the date of the
award, is equivalent to the amount so payable.
(3) Any such award which has under subsection (1) been made an order of
court, may be enforced in the same manner as any judgment or order to the
same effect.

3 Application for award to be made order of court

Application for an order of court mentioned in section 2(1) shall be made to
any court and shall-
(a) be accompanied by-
(i) the original foreign arbitral award concerned and the original
arbitration agreement in terms of which that award was made,
335
336 Arbitration in South Africa: Law and Practice

authenticated in the manner in which foreign documents may be

authenticated to enable them to be produced in any court; or
(ii) a certified copy of that award and of that agreement; and
(b) if that award or agreement is in any language other than one of the official
languages of the Republic, be accompanied by a sworn translation thereof
into one of such official languages, authenticated in the manner in which
foreign documents may be authenticated to enable them to be produced in
any court.

4 When order of court may be refused

(1) A court may refuse to grant an application for an order of court in terms
of section 3 if-
(a) the court finds that-
(i) a reference to arbitration is not permissible in the Republic in respect
of the subject-matter of the dispute concerned; or
(ii) enforcement of the award concerned would be contrary to public
policy in the Republic; or
(b) the party against whom the enforcement of the award concerned is sought,
proves to the satisfaction of the court that-
(i) the parties to the arbitration agreement concerned had, under the law
applicable to them, no capacity to contract, or that the said agreement
is invalid under the law to which the parties have subjected it or of the
country in which the award was made; or
(ii) he did not receive the required notice of the appointment of the
arbitrator or of the arbitration proceedings concerned or was
otherwise not able to present his case; or
(iii) the award deals with a dispute not contemplated by or falling within
the provisions of the relevant reference to arbitration, or that it
contains decisions on matters beyond the scope of the reference to
arbitration: Provided that if the decisions on matters referred to
arbitration can be separated from those on matters not so referred,
that part of the award which contains decisions on matters referred to
arbitration may be made an order of court under section 2(1); or
(iv) the constitution of the arbitration tribunal concerned was or the
arbitration proceedings concerned were not in accordance with the
relevant arbitration agreement or with the law of the country in which
the arbitration took place; or
(v) the award has not yet become binding on the parties, or h::is been set
aside or suspended by a competent authority of the country in which,
or under the law of which, the award was made.
(2) If, on an application in terms of section 3, the court is satisfied that an
application for the setting aside or suspension of the award has been made to
a competent authority of the country in which, or under the law of which, the
award was made, the court may in its discretion postpone the hearing of the
said application in terms of section 3, to such date as it may determine, and may
Appendices 337

thereupon, on the application of the party seeking to enforce the award, order
the party against whom the enforcement is sought, to give suitable and specified
security.

5 Short title
This Act shall be called the Recognition and Enforcement of Foreign
Arbitral Awards Act, 1977.
Appendix III

RULES FOR THE CONDUCT OF ARBITRATIONS

(Published by the Association of Arbitrators: 1990 edition)

(i) STANDARD PROCEDURE RULES

The Standard Procedure Rules shall apply to the conduct of arbitrations unless
the parties agree in writing to adopt the Summary Procedure Rules.

1. DEFINITIONS
in these rules:
1.1 'Day' means any day other than a Saturday, Sunday or public holiday;
1.2 'Rules' means these arbitration rules;
1.3 'Claimant' means the party to the arbitration who claims relief against the
.other party, provided that if each party claims relief against the other,
'claimant' shall mean the party who first referred the dispute to
arbitration;
1.4 'Defendant' means the party to the arbitration other than the claimant;
1.5 'Relevant Document' means, in relation to each party, any document of
whatsoever nature in his possession or under his control, whether an
original or a copy, relating to the dispute which has been referred to
arbitration, including all such plans, diagrams and photographs, but
excluding documents which by reason of privilege he has a valid objection
to produce at the arbitration;
1.6 'Pleadings' means the Statement of Issues, Statement of Claim,
Statement of Defence, Claimant's Replication, Defendant's Counter-
claim, Claimant's Reply, Defendant's Replication and any other similar
statements permitted by the arbitrator; and
1. 7 where appropriate, words importing the singular shall include the plural
and words importing the masculine shall include the feminine and the
neuter.

2. ARBITRATION ACT
Save as varied herein, the provision of the Arbitration Act (Act No. 42 of 1965)
shall apply.

3. PRELIMINARY MEETING
On the reference of a dispute to the arbitrator he may convene a preliminary
meeting with the parties for the purpose of:
-:n~
Appendices 339

3.1 confirming that the dispute falls within the ambit of the arbitration
agreement and is ready for arbitration;
3.2 recording the acceptance by the arbitrator of his appointment and any
conditions attached thereto;
3.3 arranging for the delivery of Pleadings as provided in Rule 4 or Rules 5
to 10;
3.4 determining the date and venue of the hearing, and times and duration of
sessions;
3.5 determining the manner and extent of recording evidence; and
3.6 dealing with any other matters or proposals that might facilitate the
arbitration.
If no preliminary meeting is held the arbitrator shall determine the
commencement date for the pleadings.

4. STATEMENT OF ISSUES
Not later than 15 days after the preliminary· meeting the parties shall jointly
prepare and submit to the arbitrator a Statement of Issues containing details of:
4.1 relevant matters which are not in dispute;
4.2 the disputed issues in which the averments of each are set out, the
responses of each to the averments of the other, the facts and contentions
of law on which each party relies together with true copies of all the
relevant documents; and
4.3 the award which each party desires the arbitrator to make.
Provided that if the parties are unable jointly to prepare a Statement of Issues,
they shall deliver Pleadings as provided in Rules 5 to 10.

5. STATEMENT OF CLAIM
If the parties been unable to prepare a Statement of Issues, the Claimant shall
not later than 20 days after the preliminary meeting deliver to the arbitrator
and the Defendant details of:
5.1 each dispute on which arbitration is sought;
5.2 the relief claimed; and
5.3 all the facts and the contentions of law constituting the claim;
together with true copies of all relevant documents, all of which details and
copies are hereinafter referred to as the 'Statement of Claim'.

6. STATEMENT OF DEFENCE
Not later than 15 days after the receipt by the Defendant of the Statement of
Claim, the Defendant shall deliver to the arbitrator and to the Claimant details
of:
6.1 his defence stating which contentions of fact or law in the Statement of
Claim are admitted and which are denied;
6.2 the grounds for every denial or objection; and
6.3 all the facts and contentions of law constituting the defence;
340 Arbitration in South Africa: Law and Practice

together with true copies of all relevant documents other than those delivered
in terms of Rule 5, all of which details and copies are hereinafter referred to as .
the 'Statement of Defence'.

7. CLAIMANT'S REPLICATION
Not later than 10 days after the receipt by the Claimant of the Statement of
Defence, the Claimant may, if necessary, deliver to the arbitrator and the
Defendant a replication in respect of any allegations made in the Statement of
Defence together with true copies of all relevant documents other than those
delivered with any previous Pleading, all of which details and copies are
hereinafter referred to as 'Claimant's Replication'.

8. DEFENDANT'S COUNTER-CLAIM
At the time of delivery of the Statement of Defence, the Defendant may deliver
counter-claims, alleged to fall within the arbitration agreement, to the arbitrator
and to the Claimant, setting forth mutatis mutandis details of the matters referred
to in terms of Rule 5, together with true copies of all relevant documents other
than those delivered with any previous Pleading, all of which details and copies are
hereinafter referred to as the 'Defendant's Counter-claim'.

9. .CLAIMANT'S REPLY
Not later than 15 days after the receipt by the Claimant of the Defendant's
Counter-claim, the Claimant shall deliver to the arbitrator and to the
Defendant details of:
9.1 his reply stating which contentions of fact or law in the Defendant's
Counter-claim are admitted and which are denied;
9.2 the grounds for every denial or objection; and
9.3 all the facts and contentions of law constituting the defence to the
Counter-claim;
together with true copies of all relevant documents other than those delivered
with any previous Pleading, all of which details and copies are hereinafter
referred to as the 'Claimant's Reply'.

10. DEFENDANT'S REPLICATION

Not later than 10 days after the receipt by the Defendant of the Claimant's
Reply, the Defendant may, if necessary, deliver to the arbitrator and the
Claimant a replication in respect of any allegations made in the Claimant's
Reply together with true copies of all relevant documents other than those
delivered with any previous Pleading, all of which details and copies are
hereinafter referred to as 'Defendant's Replication'.

11. NO AMENDMENTS OF PLEADINGS

The parties shall not amend the Pleadings or deliver any additional statements,
except by leave of the arbitrator.
Appendices 341

12. INSPECTION, PRODUCTION OF DOCUMENTS AND DISCOVERY

AFFIDAVIT
12.1 Each party shall on written notice from the other party:
12.1.1 allow the other party to inspect and, at his own expense, to make
copies of all relevant documents whether delivered with the
Pleadings or not; and
12.1.2 produce at the arbitration hearing any relevant document not
delivered with the Pleadings.
12.2 Either party shall be entitled, on written notice to the other party
delivered not later than 10 days before the commencement of the
arbitration hearing, to require that any relevant document whether
delivered with the Pleadings or not or to be produced in terms of Rule
12.1.2, shall, notwithstanding the provisions of Rule 19, be produced at
the arbitration hearing by a witness under oath.
12.3 Either party shall be entitled to produce at the arbitration hearing, any
relevant document not delivered with the Pleadings provided that:
12.3.1 the party shall have delivered, by not later than 10 days before the
arbitration hearing, written notice to the arbitrator and to the
other party of the intention so to produce which notice shall be
accompanied by a true copy of such document; and
12.3-.2 such document shall be produced at the arbitration hearing by a
witness under oath.
12.4 Either party shall be entitled by written notice to the other party, given
not earlier than the date of delivery of the last of the Pleadings, to require
the other party to deliver a discovery affidavit.
12.5 Within 10 days after receipt of the notice referred to in Rule 12.4 the
recipient shall deliver to the other party an affidavit, duly sworn by him
or on his behalf;
12.5.1 detailing in respect of relevant documents not delivered with any
of the Pleadings:
12.5.1.1 those in his possession or in the possession of any person
on his behalf; and
12.5.1.2 those which were previously in such possession but are no
longer so, specifying the date of and the reason for the
termination of such possession; or
12.5.2 recording that there were or are no relevant documents to which
paragraph 12.5.1 applies.

13. TIME LIMITS

The time limits stated in these Rules shall not be extended or shortened except
by leave of the arbitrator.

14. PROCEEDINGS ON DEFAULT

After the parties have agreed to arbitration the arbitrator may proceed with the
342 Arbitration in South Africa: Law and Practice

arbitration, notwithstanding any failure, neglect or refusal of either party to

comply with these Rules or to take part or further part in the arbitration.

15. PRE-HEARING CONFERENCE

15.1 Prior to the commencement of the hearing the parties shall arrange a
pre-hearing conference with the object of reaching agreement on possible
ways of curtailing the duration of the hearing and in particular on all or
any of the following matters:
15.1.1 the possibility of obtaining admissions of facts;
15.1.2 the holding of any inspection or examination;
15.1.3 the making of any discovery of documents;
15.1.4 the exchange between parties of the reports of experts and the
preparation of a joint report by the experts setting out points of
agreement and disagreement;
15.1.5 the giving of any further particulars reasonably required for the
purposes of the hearing;
15.1.6 the production of plans, diagrams, photographs, models and the
like to be used at the hearing;
15.1.7 the consolidation of hearings;
15.1.8 the quantum of damages; and
· 15.1.9 the preparation and handing in at the hearing of copies of
correspondence and other documents in the form of a paginated
bundle with copies for the arbitrator and both parties.
15.2 At the conclusion of such conference the parties shall draw up and sign a
minute of the matters on which they have agreed and this shall be handed
in at the commencement of the hearing.

16. PRIOR HEARING OF POINT OF LAW OR FACT

The arbitrator shall, if both parties so agree, or may, if he so decides, on the
application of either party, determine any specified issue of law or fact before
other issues in the arbitration are determined to which provision the following
conditions shall apply:
16.1.1 the hearing of the said specified issue shall proceed and be conducted
subject to conditions agreed by the parties or prescribed by the
arbitrator; and
16.1.2 the arbitrator shall make an award on the specified issue which award
shall be an interim award if there are other issues remaining to be
determined.

17. EVIDENCE OF EXPERT WITNESSES

No party shall, save with the leave of the arbitrator or the consent of all parties
to the hearing, be entitled to call as a witness any person to give evidence as an
expert upon any matter upon which the evidence of expert witnesses may be
received unless he shall
Appendices 343

17.1 not less than 15 days before the hearing, have delivered notice of his
intention so to do, and
17.2 not less than 10 days before the hearing, have delivered a summary of
such expert's opinions and his reasons therefor to the arbitrator and other
party.

18. HEARING TO BE IN CAMERA

Unless the parties agree otherwise, the hearing of the arbitration shall be held
in camera.

19. DOCUMENTS AS EVIDENCE

Any document delivered with the Pleadings shall be admitted as evidence
without the necessity for its identification or verification by any witness but
either party shall be entitled to lead evidence on the origin, accuracy, meaning
or relevance of the document.

20. PAYMENT OF ADMITTED AMOUNT

The Defendant, in respect of the claim, or the Claimant, in respect of the
counter-cla:im, shall be entitled, at any time before the delivery of the
arbitrator's award, to pay to the other party an amount of money which he
admits to be owing by him, to which provisions the following conditions shall
apply:
20.1 the payment shall be by cash or currently dated cheque and, if by cheque,
shall be effective when the cheque is paid on due presentation;
20.2 the payment shall be accompanied by a written notice specifying:
20.2.1 the claim or counter-claim, or part thereof, on which the payment
is made; and
20.2.2 any tender which the party makes in respect of costs; and
20.3 a copy of the said notice shall be forthwith delivered to the arbitrator who
shall take the payment and any tender of costs into account in making his
award.

21. OFFER OF SETTLEMENT

The Defendant, in respect of the claim, or the Claimant, in respect of the
counter-claim, shall be entitled, at any time before the delivery of the
arbitrator's award, to tender payment of a specific amount of money without
admission of liability and as an offer of settlement, to which provision the
following conditions shall apply:
21.1 the tender shall be in the form of a written notice specifying:
21.1.1 the claim or counter-claim, or part thereof, in respect of which the
tender is made; and
21.1.2 any tender which the party makes in respect of costs;
344 Arbitration in South Africa: Law and Practice

21.2 the recipient of the tender shall be entitled by written notice delivered
within 10 days after his receipt of the tender notice to accept the tender,
failing which notice he shall be deemed to have rejected the tender;
21.3 on receipt of a notice in terms of paragraph 21.2 the tenderer shall:
21.3.1 within 3 days pay the amount tendered to the other party and
failing such payment the recipient of the tender shall be entitled to
apply for an award or interim award ordering the payment to be
made; and
21.3.2 after such payment, deliver to the arbitrator copies of the notices
referred to in paragraphs 21.1 and 21.2 together with a written
statement that the payment referred to has been made;
21.4 if he received the notices and statement referred to in paragraphs 21.1,
21.2 and 21.3, the arbitrator shall take the facts therein recorded into
account in making his award; and
21.5 if the tender of settlement is not accepted the fact of the tender and its
non-acceptance shall not be made known to the arbitrator until he has
announced his decision on all the issues in the arbitration other than
costs, whereupon the said facts shall be made known to him, and shall be
taken into account by him in his award of costs, provided that if the
arbitrator shall have made an award of costs before becoming aware of
the tender and its non-acceptance the tenderer shall be entitled to have
the award reopened and reconsidered in respect of the costs.

22. AWARD WITHOUT ORAL HEARING

Where the parties so agree and notify the arbitrator in writing, the arbitrator
may make his award without an oral hearing after consideration of the
Pleadings.

23. AWARD OF COSTS

Disbursements made by a successful party to his representative shall be
recoverable by way of an award of costs on a scale to be agreed between the
parties, or if not so agreed to be determined by the arbitrator who may in his
sole discretion, direct that such costs shall be taxed in accordance with section
35 of the Arbitration Act. If the arbitrator directs that the costs be taxed by the
taxing master of the court and the taxing master refuses or is unable to tax such
costs then the matter shall revert to the arbitrator who shall make an award of
such costs as he deems reasonable in the circumstances.

24. DISPUTE ON RULES

Any dispute about the meaning or effect of any of these Rules shall be
determined by the arbitrator who shall further have power to give directions,
not inconsistent with the Rules, on the manner and time in which the Rules
shall be carried into effect.
Appendices 345

25. DELIVERY OF AWARD

25.1 The award shall be in writing and delivered by the arbitrator, the parties
or their representatives being present or having been summoned to
appear.
25.2 The arbitrator shall deliver his award within three months after the
conclusion of the hearing, or the submission of the last document to the
arbitrator in the event that there is no hearing. To the extent that this may
be later than four months after entering on the reference, the time for
making the award shall be deemed to be extended by the parties in terms
of section 23 of the Arbitration Act.

26. PUBLICATION
Save to the extent necessary for the purposes of the arbitration or for any court
proceedings relating thereto, neither party shall disclose or make available to
any other person any information concernin~ the arbitration or the award.

(ii) SUMMARY PROCEDURE RULES

1. If the parties to a dispute so agree in writing, the dispute shall be
determined by arbitration in accordance with the following summary
procedure, and save as varied herein, the provisions of the Arbitration Act
(Act 42 of 1965) shall apply to the arbitration.
2. The arbitrator shall, at such meeting or meetings with parties as he deems
necessary:
2.1 confirm that the dispute falls within the ambit of the arbitration
agreement and is ready for arbitration;
2.2 record the acceptance by the arbitrator of his appointment and any
conditions attaching thereto;
2.3 ascertain the claims and counter-claims and defences thereto which the
parties make or raise against each other;
2.4 ascertain the facts on which the parties agree and those on which they
disagree;
2.5 record in writing signed by himself and the parties the matters referred
to in Rules 2.3 and 2.4, which matters are herein called 'the issues'; and
2.6 receive from the parties such documents or copies of documents as they
consider relevant to the determination of the issues. ·
3. If the parties so agree, or if the arbitrator, on the application of either party,
so determines, the arbitrator shall make his award without receiving oral
evidence or affidavits after consideration of the issues and the documents or
copies thereof referred to in Rule 2 and inspection of any property or thing
to the extent that the arbitrator deems recessary.
4. If the provisions of Rule 3 shall not have been applied the arbitrator shall,
as he deems fit, follow formal or informal procedure and receive evidence
or submissions, orally or in writing, sworn or unsworn, at joint meetings
with the parties, or, if the parties so agree, by the interchange of written
346 Arbitration in South Africa: Law and Practice

statements or submissions, between the parties with copies to the arbitrator,

provided that each party shall be given reasonable opportunities of
presenting evidence or submissions and of responding to those of the other
party.
5. The arbitrator shall have the power to:
5.1 depart from any statutory or common-law rules of evidence to the
extent that he deems reasonable provided that the rules of natural
justice shall be observed:
5.2 put questions himself to the parties or their witnesses on any matter
relevant to the issues;
5 .3 make such enquiries as he considers necessary or expedient provided
that he shall inform the parties of all matters ascertained as the result
of such enquiries;
5.4 grant to the parties such opportunity as he deems reasonable of making
amendments to the issues or to any statement or submission;
5.5 inspect any property or thing to the extent that he deems necessary;
5.6 proceed with the arbitration in the absence of a party who does not
comply with any of the provisions hereof or attend any meeting in
terms hereof provided that such non-compliance or non-attendance is
persisted in despite the expiry of such notice to the defaulting party
concerned as the arbitrator deems reasonable;
5.7 rely, in his award, on his own expert knowledge or experi_ence in any
field;
5 .8 make such interim awards before his final award as he deems
necessary; and
5.9 propose to the parties compromise settlements or agreements in
disposal of the whole or portion of the issues and give effect in his
award to any settlements or agreements reached between the parties.
6. Unless the parties otherwise agree in writing neither of them shall be
entitled to be represented in the arbitration except by:
6.1 the party himself, if a natural person, or a partner in the case of a
partnership;
6.2 a director in the case of a company;
6.3 a member in the case of a close corporation;
6.4 a bona fide full-time employee or officer of the party concerned; and
6.5 such technically qualified person, other than a practising lawyer, as the
arbitrator considers to be reasonably necessary for the presentation of
the case of the party concerned, including without limiting the
generality of the aforegoing, any Professional Engineer, Architect or
Quantity Surveyor in the case of a dispute on a construction contract.
7. Save to the extent necessary for the purposes of the arbitration or for any
court proceedings relating thereto, neither party shall disclose or make
available to any other person any information concerning the arbitration or
the award.

8. DELIVERY OF AWARD
8.1 The award shall be in writing and delivered by the arbitrator, the parties
Appendices 347

or their representatives being present or having been summoned to

appear.
8.2 The arbitrator shall deliver his award within three months after the
conclusion of the hearing, or the submission of the last document to the
arbitrator in the event that there is no hearing. To the extent that this may
be later than four months after entering on the reference, the time for
making the award shall be deemed to be extended by the parties in terms
of section 23 of the Arbitration Act.
Appendix IV

Standard Arbitration Clauses in the Construction Industry

1 General Conditions of Contract for Works of Civil Engineering

Construction (6 ed 1990) (cited as 'GCC 1990')

'Settlement of disputes
61.(l)(a) The Contractor shall have the right to dispute any ruling given or
deemed to have been given by the Engineer in terms of Clause 51 or
Clause 60;
Provided that, unless the Contractor shall, within 42 days after his receipt
of a ruling or after a ruling shall have been deemed to have been given,
give written notice (hereinafter referred to as a "Dispute Notice") to the
Engineer, referring to this Clause, disputing the validity or correctness of
the whole or a specified part of the ruling, he shall have no further right to
dispute that ruling or the part thereof not disputed in the said notice.
(b) All further references herein to a ruling shall relate to the ruling, or part
thereof, specified in the Dispute Notice, as varied or added to by
agreement between the Contractor and the Engineer or by the Engineer's
decision in terms of paragraph (c) or by the Mediator's opinion to the
extent that it has become binding in terms of Sub-Clause (2)(f).
(c) The Engineer
(i) shall, before giving his decision on the dispute, consult the Employer
thereon and give the Contractor a reasonable opportunity to present
written or oral submissions thereon;
(ii) shall deliver his decision in writing to the Employer and to the
Contractor;
(iii) may give his decision at any time after his receipt of the Dispute
Notice but shall do so by not later than 42 days after his receipt of a
further written notice from the Contractor requiring him to do so,
failing which, he shall be deemed to have given a decision affirming,
without amendment, the ruling concerned.
(d) Unless either the Employer or the Contractor, hereinafter referred to as
"the parties", shall, within 28 days after his receipt of notice of the
decision in terms of paragraph (c)(ii) or after the decision is deemed to
have been given in terms of paragraph (c)(iii), have given notice in writing
to the Engineer, with a copy to the other party, disputing the Engineer's
decision or a specific part thereof, he shall have no further right to dispute
any part of the ruling not specified in his said notice.
~.1R
Appendices 349

(e) If either party shall have given notice in compliance with paragraph (d),
the dispute shall be referred immediately to mediation in terms of
Sub-Clause (2).
(f) Notwithstanding that the Contractor may, in respect of a ruling, have
given a Dispute Notice, the ruling shall be of full force and carried into
effect unless and until otherwise agreed by both parties in terms of
Sub-Clause (2)(f) or as determined in an arbitration award or a court
judgment.

Mediation
(2)(a) The mediation referred to in Sub-Clause (l)(e) shall be conducted by
a Mediator selected by agreement between the parties or, failing such
agreement within 7 days after a written request by either party for such
agreement, nominated on the application of either party by the President for
the time being of the South African Institution of Civil Engineers.
(b) Neither party shall be entitled to be represented at any hearing before or
at any meeting or in any discussion with the Mediator except by
(i) the party himself, if a natural person,
(ii) a partner in the case of a partnership,
(iii) an executive director in the case of a company,
(iv) a member in the case of a close corporation,
(v) the Engineer,
(vi) a bona fide employee of the party concerned,
(vii) a professional engineer appointed for the purpose by the party
concerned.
Such limitation shall not be construed as preventing any person from giving
evidence as a witness.
(c) The Mediator shall, as he deems fit, follow formal or informal procedure
and receive evidence or submissions orally or in writing, sworn or
unsworn, at joint meetings with the parties or separately or from any
person whom he considers can assist in the formulation of his opinion;
Provided that
(i) each party shall be given reasonable opportunities of presenting
evidence or submissions and of responding to evidence or submissions
of the other party, and
(ii) each party shall be given full details of any evidence or submissions
received by the Mediator from the other party or any other person
otherwise than at a meeting where both parties are present or
represented.
(d) The Mediator shall have the power to propose to the parties compromise
settlements of or agreements in disposal of the whole or portion of the
dispute.
(e) The Mediator shall, as soon as reasonably practical, give to each of the
parties his written opinion on the dispute, setting out the facts and the
provisions of the Contract on which the opinion is based and recording
350 Arbitration in South Africa: Law and Practice

the details of any agreement reached between the parties during the
mediation.
(f) The Mediator's opinion shall become binding on the parties only to the
extent correctly recorded as being agreed by the parties in the Mediator's
written opinion or otherwise as recorded in writing by both parties
subsequent to the receipt of the Mediator's opinion.
(g) The dispute on any matter still unresolved after the application of the
provisions of paragraph (f) shall be resolved by arbitration or court
proceedings, whichever is applicable in terms of the Contract.
(h) Save for reference to any portion of the Mediator's opinion which has
become binding in terms of paragraph (f), no reference shall be made by
or on behalf of either party, in any proceedings subsequent to mediation,
to the Mediator's opinion, or to the fact that any particular evidence was
given, or to any submission, statement or admission made in the course of
the mediation.
(i) Irrespective of the nature of the Mediator's opinion,
(i) each party shall bear his own costs arising from the mediation, and
(ii) the parties shall in equal shares pay the Mediator the amount of his
expenses and the amount of his fee based on a scale of fees as agreed
between the Mediator and the parties before the commencement of
the mediation.

Arbitration
(3) If the Contract provides for determination of disputes by arbitration and
if a dispute is still unresolved as provided in Sub-Clause (2)(g) or the dispute is
one to which Sub-Clause (6) refers,
(a) the matter shall be referred to a single Arbitrator to be agreed on between
the parties or, failing such agreement within 28 days after delivery to the
parties of the Mediator's opinion, nominated on the application of either
party by the President for the time being of the South African Institution
of Civil Engineers, and any such reference shall be deemed to be a
submission to the arbitration of a single arbitrator in terms of the
Arbitration Act (Act No 42 of 1965, as amended), or any legislation passed
in substitution therefor;
(b) in the absence of any other agreed procedure, the arbitration shall take
place in accordance with the Rules for the Conduct of Arbitrations issued
by the Association or Arbitrators which are current at the time of the
arbitration;
(c) the Arbitrator shall, in his award, set out the facts and the provisions of the
Contract on which his award is based.

Reference to Court
(4) If the Contract does not provide for the determination of disputes by
arbitration and if a dispute is still unresolved as provided in Sub-Clause (2)(g)
Appendices 351

or the dispute is one described in Sub-Clause (6), the dispute shall be

determined by Court proceedings.

Common Provisions
(5)(a) Nothing herein contained shall deprive the Contractor of the right to
institute immediate Court proceedings in respect of failure by the Employer to
pay the amount of a payment certificate on its due date or to refund any amount
of retention money on its due date for refund.
(b) No ruling or decision given by the Engineer in accordance with the
provisions of the Contract shall disqualify him from being called as a
witness and giving evidence before the Arbitrator or the Court on any
matter whatsoever relevant to the dispute concerned.
(c) The Arbitrator and the Court shall have full power to open up, review and
revise any ruling, decision, order, instruction, certificate or valuation of
the Engineer relevant to the matter in dispute and neither party shall be
limited in such proceedings before such Arbitrator or Court to the
evidence or arguments put before the Engineer for the purpose of
obtaining his decision as referred to in Sub-Clause (1).
(d) The following provisions shall apply in respect of the appointment of a
mediator or arbitrator in terms of this Clause:
(i) if, for any reason, the person appointed fails to assume or to continue
in the office concerned, the provisions of this Clause shall apply
mutatis mutandis in the appointment of a successor, and
(ii) in making his nomination in terms of Sub-Clause (2)(a) or Sub-Clause
(3)(a), the President for the time being of the South African
Institution of Civil Engineers shall, at his own discretion, act in
consultation with the Presidents for the time being of the South
African Association of Consulting Engineers and the South African
Federation of Civil Engineering Contractors, and
(iii) if the President required to make a nomination in terms of this Clause
shall have a direct or indirect interest in the subject matter of the
dispute, the nomination shall be made by the next senior officer of the
body concerned who has no such interest.

Special disputes
(6) Notwithstanding anything elsewhere provided in this Clause, any dispute
between the Contractor and the Employer
(a) not relating to a ruling, decision, order, instruction or certificate by the
Engineer (other than the one issued in terms of Clause 58(1)), or
(b) relating to a certificate issued by the Engineer in terms of Clause 58(1), or
(c) arising after the completion of the Contract or, if a Defects Liability Period
is provided, after the termination of that period, or
(d) relating to a Suretyship or guarantee to be provided or any insurance to be
352 Arbitration in South Africa: Law and Practice

effected by the Contractor or an indemnity given or to be given by either

party to the other,
shall be determined, without the application of the provisions of Sub-Clauses
(1) and (2), by arbitration or Court proceedings, whichever is applicable in
terms of the Contract, and which may be initiated by either party, in which
event the provisions of Sub-Clauses (3), (4) and (5) shall apply mutatis
mutandis.

Continuing validity of clause 61

(7) This Clause is a separate, divisible agreement from the rest of the
Contract and shall remain valid and applicable notwithstanding that the Works
may have been completed or that the rest of the Contract may be void or
voidable or may have been cancelled for any reason.'

.
2 Joint Building Contract Committee: Principal Building Agreement
with Quantities (cited as 'JBCC (November 1992) contract')

'DISPUTE
37.0 SETTLEMENT OF DISPUTES
37.1 Should any disagreement between the employer or his agents on the one
hand and the contractor on the other arise out of this agreement the
architect shall determine such disagreement by a written decision given to
the employer and the contractor within fourteen (14) days of a written
request so to do.
Such decision shall be final and binding on the parties, unless either party
within fourteen (14) days of receipt thereof disputes the same by notice to
the other party and to the architect in which case the disagreement shall
be deemed a dispute.
Should the architect fail to give a written decision within the said period
of fourteen (14) days, then either party may give notice to the other party
that such disagreement be declared a dispute.
37 .2 A dispute may in the first instance be decided by mediation as follows:
37 .2 .1 Should the parties be unable to agree in writing within fourteen
(14) days of the date on which the dispute is declared upon the use
of mediation as a means of settling the dispute, or upon the person
to be appointed by them as mediator, the dispute shall be resolved
by the submission thereof to arbitration.
37.2.2 Should both parties agree upon mediation, such dispute shall be
referred within a further period of fourteen (14) days for opinion
to a mediator mutually selected by the parties. The parties shall
not be entitled to be represented at such mediation by a practising
advocate or attorney.
Appendices 353

37 .2.3 The parties shall within fourteen (14) days of the appointment of
the mediator or such other period as the mediator considers
reasonable submit written representation to him. Thereafter the
mediator shall give his opinion in writing on the matter and
furnish the employer and the contractor each with a copy thereof,
provided that the mediator may, in his disc~etion, convene a
hearing of the parties and their witnesses, or may hold discussions
with either or both parties, before giving his opinion, with the
objective of reconciling the opposing views.
37.2.4 In giving this opinion in writing the mediator shall be deemed to
be acting as an expert and not as arbitrator with the proviso that
no claim for damages shall be made against him at the instance of
either party for any want of care, skill or diligence in the exercise
of his duties.
37 .2.5 The cost of the mediation and the apportionment thereof shall be
determined by the mediator.
37.3 The opinion of the mediator shall be binding on the parties unless either
party disputes the opinion of the mediator in writing to the other party
within thirty (30) days of the furnishing to them by the mediator of his
opinion, in which event the dispute shall be resolved by the submission
thereof to arbitration.
Where the dispute is submitted to arbitration, the arbitration shall be
held in terms of the Arbitration Act and shall be conducted in accordance
with the current Rules for the Conduct of Arbitrations published by the
Association of Arbitrators and shall be heard by a sole arbitrator unless
otherwise agreed by the parties.
37.4 The arbitrator shall be the persor. named in the schedule. Should no person
be named or should the person named be unwilling or unable to act then
the arbitrator shall be chosen by the contractor from a panel of three (3)
persons nominated by the chairman of the Association of Arbitrators at the
written request of either party within seven (7) days of receip,t of notice
advising the names of the said panel. Failing this the chairman shall appoint
the arbitrator.
37.5 In the arbitration the rights of the parties shall not be prejudiced in any
manner whatsoever by anything said or done at the mediation or by the
opinion of the mediator.
37.6 The arbitrator shall have power to open up, review and revise any
certificate, opinion, decision, requisition or notice relating to all matters
in dispute submitted to him and to determine all such matters in the same
manner as if no such certificate, opinion, decision, requisition or notice
had been issued.
37. 7 Reference to either mediation or to arbitration shall not relieve either
party from any liability for the due and timeous performance of his
obligations in terms of this agreement.
354 Arbitration in South Africa: Law and Practice

37 .8 The validity of clause 37 shall not be affected by the cancellation of this

agreement in terms of clauses 33 to 36.'

3 Agreement and Schedule of Conditions of Building Contract (Contract

incorporating Bills of Quantities, 1981/1988 edition (cited as 'the white
form').)

'Arbitration
26. If any dispute or difference shall arise between the Employer or the
Architect on his behalf, and the Contractor, either during the progress or after
completion of the Works or after the determination of the employment of the
Contractor under this contract, abandonment or breach of the contract, as to
the construction of the contract, or as to any matter or thing arising thereunder,
or as to the withholding by the Architect of any certificate to which the
Contractor may claim to be entitled, then the Architect shall determine such
dispute or difference by a written decision given to the Contractor. The said
decision shall be final and binding on the parties, unless the Contractor within
fourteen days of the receipt thereof by written notice to the Architect disputes
the same, in which case or in case the Architect for fourteen days after a written
request to him by the Employer or the Contractor fails to give a decision as
aforesaid, such dispute or difference shall be and is hereby referred to the
arbitration and final decision of the person named in the attached schedule or,
in the event of his death or unwillingness or inability to act, or if no person is
named therein, an arbitrator selected by the Contractor from two persons
nominated on the request of either party by the President-in-Chief for the time
being of the Institute of South African Architects, and the award of such
arbitrator shall be final and binding on the parties. Such reference, except on
the question of certificate or question arising under clause 3 or 4 of the articles
of agreement, shall not be opened until after the completion or alleged
completion of the Works, unless with the written consent.of the Architect and
the Contractor.
The arbitrator shall have power to open up, review and revise any certificate,
opinion, decision, requisition or notice, and to determine all matters in dispute
which shall be submitted to him, and of which notice shall have been given as
aforesaid, in the same manner as if no such certificate, opinion, decision,
requisition or notice had been given. Upon every or any such reference, the
costs of and incidental to the reference and award shall be in the discretion of
the arbitrator, who may determine the amount thereof, or direct the same to be
taxed as between attorney and client or as between party and party and shall
direct by whom and to whom and in what manner the same shall be borne and
paid.'
Appendix V

Particulars of South African Arbitration Institutions

(a) Association of Arbitrators

Secretary: Diana Lister and Associates
Tel: 011-483 3071
Fax: 011-483 3072
PO Box 95194
Grant Park 2051.
(b) Independent Mediation Service of South Africa (IMSSA)
National Director: Charles Nupen
Tel: 011-482 2390
Fax: 011-726 2540
PO Box 91082
Auckland Park 2006.
(c) ADRASA
Executive Director: Linda Macun
Tel: 011-484 1763
Fax: 011-484 3169
PO Box 11467
Johannesburg 2000.
(d) ADR Centre (Pty) Ltd
Co-ordinator: Margie Lewis
Tel: 011-832 2636
Fax: 011-834 6701
PO Box 61771
Marshalltown 2107.
(e) Marine Mediation and Arbitration Services
Director: Capt Roy Martin
Tel: 031-301 5475
Fax: 031-305 2381
PO Box 598
Durban 4000.

355
Table of References
to Current South African Arbitration Statutes

Arbitration Act 42 of 1965

s1 34, 37, 38,42, 61, 64, 70, 92,130,174,175,272,273,284
s2 7, 37, 52, 53, 54, 109, 110, 314
s3 162,163,259
s 3(1) 7, 60, 63
s 3(2) 48, 63, 64, 65, 68, 69,162,163,295,310
s4 44
s 4(1) 7, 44
s 4(2) 44
s 4(3) 44
s 4(4) 44
s 4(5) 44
s5 171
s 5(1) 7, 44
s 5(2) 44, 192
s 5(3) 44
s 5(4) 44
s6 61, 63, 65, 69
s 6(1) 64
s 6(2) 64, 68, 312
s7 6, 69
s 7(1) 69
s 7(2) 68, 69
s8 61, 112, 114-19
s9 7, 37, 79, 211
s 10(1) 83
s 10(2) 37
s 11 37,212
s 11(1) 82, 91,187,212,264
s 12 37, 61, 84, 212
s 12(1) 84,212
s 12(2) 7, 41, 83, 84, 212
s 12(3) 41, 84, 106
s 12(4) 48, 84, 106, 310
s 12(6) 83,100,213
s 13 6, 61
s 13(1) 83,104,259
s 13(2) 41, 48, 51, 71, 83, 93, 99, 100, 103, 105, 106, 191, 241, 259, 260
s 13(3) 100, 103, 106
s 14 18, 37, 169
s 14(1) 6, 7,98, 158,221
s 14(1)(a)(i) 144, 149, 185
s 14(1)(a)(ii) 160
s 14(1)(a)(iv) 173, 184, 185
357
358 Arbitration in South Africa: Law and Practice

Arbitration Act 42 of 1965

s 14(1)(b)(i) 158, 164, 173, 177, 198
s 14(1)(b)(ii) 164, 173, 183, 237
s 14(1)(b)(iii) 164, 169, 173, 198, 221, 233
s 14(1)(b)(iv) 164, 173, 221, 233
s 14(1)(bJ(v) 98,173,205,237,240
s 14(1)(b)(vi) 164, 173, 243
s 14(2) 100, 183
s 14(3) 100, 212, 246, 264
s 14(4) 187, 246, 264, 265
s 15 37
s 15(1) 100,159,177,198,257
s 15(2) 28, 64, 159, 160, 166, 177, 178, 190, 200
s 16 7, 174, 181
s 16(1) 61, 98
s 16(3) 181
s 17 14, 36,100,128,187,188,242
s 18 212
s 19 7, 37, 92
s 19(a) 187, 212
s 19(b) 92, 187, 212
s 19(c) 92,187,212,258,259,260,264
s 19(d) 92,187,213
s 20 6, 7,37, 61,100,173,175,206,207,208,210,211,242
s 20(1) 206,207
s 20(2) 206
s 21 37, 61, 98
s 21(1) 185
s 21(1)(a) 130,131,174
s 21(1)(c) 184
s 21(1)(!) 174
s 21(1)(g) 174
s 21(1)(h) 174
s 21(2) 131, 184
s 22 96,174
s 22(1) 181
s 22(1)(d) 182
s 22(2) 182, 184, 251
s 23 7, 37, 38, 51, 99,123,162,163,200,257,258,259,260,268,274
s 24 246
s 24(1) 260
s 24(2) 100, 260, 264
s 25 260,290,314
s 25(1) 89, 192,267,268
s 25(2) 268
s 26 7, 174, 204
s 27 7, 34, 174, 265 •
s 28 7, 14, 22, 97, 128, 161, 173, 175, 271
s 29 262, 276
s 30 6, 7,104,256,272,285,286,288
s 31 7, 34, 37, 47,61,96, 174,260,268,273,288,290,315
s 31(1) 273, 290
s 31(2) 272,274
s 31(3) 273
Arbitration in South Africa: Law and Practice 359

Arbitration Act 42 of 1965

s 32 7, 22, 37, 47, 61, 106,133,205,268,277
s 32(1) 272, 286, 290
s 32(2) 272, 274, 286, 290
s 32(3) 286,290
s 32(4) 290
s 33 6, 7, 22, 37, 47, 48, 51, 61, 93, 100, 103, 106, 133,191,266,268
s 33(1) 252, 287, 291, 295
s 33(l)(b) 176,241,274,292,294
s 33(2) 10, 274, 287, 295
s 33(3) 274
s 33(4) 48,285,295
s 34(1) 87, 88, 93, 95,123,285
s 34(2) 88
s 34(4) 89, 267, 268
s 35(1) 260,276,280,282,284,294
s 35(2) 276, 277
s 35(3) 284
s 35(4) 284
s 35(5) 284
s 35(6) 276
s 38 61,268,274,286,295
s 39 42
s 40 30, 67, 294
s 41 300
s 42(1) 5

Recognition and Enforcement of Foreign Arbitral Awards Act 40 of 1977

s1 296, 313
s2 273
s 2(1) 315
s 2(2) 315, 316
s 2(3) 315
s3 38, 313
s 4(1) 314
s 4(1)(a)(ii) 311
s 4(1)(b)(i) 306, 314
s 4(1)(b)(iii) 315
s 4(1)(b)(iv) 315
s 4(1)(b)(v) 306, 315
s 4(2) 314
General Index

ABSOLUTION 160-1
ADR-see ALTERNATIVE DISPUTE RESOLUTION
ADRASA 25, 29
ADR CENTRE (PTY) LTD 25
ALTERNATIVE DISPUTE RESOLUTION
ADR techniques 29, 30
definition 8
factors favouring 9
relevant considerations 9
AMIABLE COMPOSITEUR 223, 253-5
APPEAL271
APPLICATION IN LIM/NE 192
APPOINTMENT OF ARBITRATOR
acceptance of 86, 123
by court 82, 84-5, 106
by parties 79-80, 106
by third party 80-2, 83, 106, 111
disqualifications from 71-3, 111
formalities 85-6
no procedure in agreement 82-3
of substitute arbitrator 83-4, 106
personal nature of 100
reference to single arbitrator 79, 211
termination by agreement 104
termination by court 105
termination of 6, 73, 100, 103-6
time-limit for 115
unilateral termination 104
validity of 110-11, 122-3
ARBITRATION-see also INTERNATIONAL ARBITRATION
ad hoc 300-1, 305-6
advantages of 19-23, 26, 32, 219, 297-8
commencement of, in building dispute 119-20
commercial 297
common law 4, 6, 38
confidentiality of 21, 55-6, 213-14
consensual basis of 1, 219
definition 1, 31, 41
disadvantages of 23-4, 33, 298
distinguished from certification 1, 3, 44-50
distinguished from mediation 10, 12-14
distinguished from valuation 1, 3, 31, 44-50
domestic 296
essential characteristics 1-2,
factors favouring 29-30
361
362 Arbitration in South Africa: Law and Practice

ARBITRATION (continued)
flexibility of 1, 22, 121, 219
history' of 4-6
influence of English law 4-6
informality of 22
in criminal matters 55
in insurance matters 21, 55-6
in labour disputes 30-6
in matrimonial cause 52-3
institutional 300, 301, 305
London 43, 91
look-sniff 2, 102, 201, 220, 244
matters not subject to 52-6, 110
on documents only-see DOCUMENTS-ONLY ARBITRATION
preconditions for 111-13, 119-20, 123-4
semi-administered 300
statutory 67-8
training in 26
using Supreme Court Rules 26-7, 132-5
ARBITRATION AGREEMENT
application of Act to 40
as clause in void contract 56-7, 66, 110
as clause in voidable contract 58
court's power to enforce 63-5, 114, 311-12
death of party to 43-4
definition 37
delay in compliance with 158-63
distinguished from reference 37
effect of, on court's jurisdiction 61
for international arbitration 305-8
insolvency of party to 43-4, 171, 192
interpretation of 40
involving minor 52
matters outside 56-60, 110,
on claim for rectification 60
parties to 41-3
recognition of foreign 311-12
regarding delictual claim 55, 60
regarding repudiation of contract 57, 58
stamp duty 40
termination of, by agreement 59, 60, 63, 162
validity of 110, 122
variation of 38-9, 119
writing 37, 38-40
ARBITRATION LEGISLATION
application to labour disputes 33, 34
characteristics of 4-6
compulsory provision in 7
colonial 4
directory provision in 7, 84
enabling provision in 7
for foreign arbitral awards 7, 299-300, 311
Arbitration in South Africa: Law and Practice 363

ARBITRATION LEGISLATION (continued)

not codification 7
peremptory provision in 7
purpose of 4
regulatory provision in 7
ARBITRATION ORGANISATIONS 24-6, 301-4
ARBITRATION PROCEEDINGS-see also HEARING
commencement of 119-20
confidentiality of 21, 55-6, 213-14
court's power to prevent 62-7, 162-3, 312
dealing with dilatory party 158-63
defects in 26-7
delay by claimant 161-3
expedited 35, 139-40, 201-2
hearing-see HEARING
in labour disputes 35
pre-hearing conference-see PRE-HEARING CONFERENCE
record of 36, 128-9, 187-8, 198, 214, 243
sanctions for disrupting 174
statutory definition of 114
time-limit for commencing-see TIME-LIMIT
ARBITRATION TRIBUNAL-see also ARBITRATOR
administration of oaths by 183
award by 264- 5
basis for jurisdiction of 116
for international arbitration 307
single arbitrator as 79, 92, 211
three arbitrators as 91-2
two arbitrators as 82, 91, 211
umpire as 91-2
ARBITRATOR
acting as mediator 15-16
application of law of evidence by 219-22
appointment of-see APPOINTMENT OF ARBITRATOR
as master of own procedure 97, 219
as respondent 106-8
bias 105,
capacity to act as 70-1
compared to judge 95-6
death of 84, 290
delegation by 100, 208, 246, 263
disqualifications 71-3
distinguished from umpire 91-2
duties of 99-100
duty to apply substantive Jaw 76, 223, 251-3
evaluation of evidence by 245, 246, 249-51
exceeding jurisdiction by 273, 294
in labour disputes 33
judge as 70
legal knowledge of 75-8
legal status of 92-5, 221
liability for costs 107-8
liability for fraud 103
364 Arbitration in South Africa: Law and Practice

ARBITRATOR (continued)
liability for negligence 99, 100-3
magistrate as 70
management skills 28-9
minor as 70
misconduct by 291-3
mistake when making award by 293-4
personal qualities of 73-4
powers of-see ARBITRATOR'S POWERS
procedural ruling by 84, 265
relationship with parties 86, 90, 92-5, 221
removal of 6, 99
remuneration 20, 35, 86-91, 104, 106
seeking legal advice by 208, 266-7
specialised knowledge of 20, 74-5
substitute 83-4
training of 24, 25, 28, 30, 33, 78-9
use of own knowledge by 45, 67, 243-5
ARBITRATOR'S POWERS
at common law 175-6
conferred by arbitration agreement 34, 172-3, 221
procedural powers of 97-9, 173-4
sources of 172
statutory 173-4, 221
to -appoint expert 245-6, 285
to award costs 276-7
to correct slips 104, 272
to decide point of law 66, 208
to grant absolution 160-1
to grant amendment of pleadings 140-1, 160-1
to grant postponement 171-2
to limit evidence 171, 241-2
to make interim award 174-5, 204, 264-5
to order consolidation 151-2, 153
to order security for costs 129, 131-2, 174
to proceed in absence of party 159-60
to question witness 194-5, 221
to receive evidence on affidavit 240
to refer question of law to court or counsel 206-11
to reopen hearing 205-6
to rule on admissibility of evidence 235-7
to rule on own jurisdiction 59, 176-7
to tax costs 129, 284
ARB-MED 203
ASSOCIATION OF ARBITRATORS 24-5, 78,136
AWARD
appeal against 271
arbitrator's lien on 89,267,268
arbitrator's power to correct slips 104, 271, 272
as stated case 6, 207
by more than one arbitrator 264-5
by umpire 212-13, 264-5
certainty of 261-2
Arbitration in South Africa: Law and Practice 365

AWARD (continued)
compared to judgment 96-7
confidential reasons for 214, 269
definition of 256
delivery of 267-8
effect of 96, 271
enforcement of 272-5
error on face of 269, 293-4
ex aequo et bono 253-5
finality of 2, 22, 41, 262-3, 270, 271
foreign-see FOREIGN ARBITRAL A WARD
formal requirements for 260
format of 261, 270
for specific performance-see SPECIFIC PERFORMANCE
illegality, concerning 55, 254, 263, 274, 294
improperly obtained 291, 294-5
in foreign currency 262, 315-16
interest on 275-6
interim 62, 174-5, 204, 264-5
intra vires 264
invalidity of 273-4
legal assistance in preparing 266-7
on basis of what is just and equitable 76, 223, 253-5
place of making 313
publication of 267-8
reasons for 13, 36,200,255, 269-71, 278,280
remittal of-see REMITIAL OF A WARD
requirements for valid 260-4
setting aside of-see SETTING ASIDE OF AWARD
signature of 260, 264
statutory requirements for 260, 313
time for making 162-3, 256-60, 268, 290
void 273
voidable 273
CALDERBANK OFFER 283
CERTIFICATION
definition 45
distinguished from arbitration 1, 3, 44-50
enforcement of 47
functions of certifier 45-6
liability of certifier 48
powers of court regarding 47
setting aside of certificate 48-50
CHARTERED INSTITUTE OF ARBITRATORS 24, 78
COMPANY
as party to arbitration proceedings 42-3
judicial management of 44
representation of 22
security for costs by 130
ultra vires act by 54
winding-up of 44, 192
CONCILIATION 10-11
CONSOLIDATION OF PROCEEDINGS 23, 151-3, 214,308
366 Arbitration in South Africa: Law and Practice

COSTS
agreement regarding 276
arbitrator's indemnity for 108
arbitrator's li~bility for 107-8, 178
arbitrator's power to award 276-7
as between attorney and own client 281
attorney-and-client 280-1
awarded against arbitrator 107
de bonis propriis 282
effect of sealed offer on 157, 282-3
of award 280
of counsel 281
of reference 280
party-and-party 280
principles for awarding 277-80
qualifying fees 281
scale of 281
security for 129-32, 174
special circumstances 279
substantial success 277-9
taxation of-see TAXATION
wasted 172
CROSS-EXAMINATION
effectiveness of 193, 216
ineffectual 27
party under 142
right to use 217
use of documents for 142
witness under 183, 193-4
COURT
declaratory order by 61, 110
interdict by 58, 59, 61-2, 67, 110
managerial role of 146-7, 218
Official Referees'-see OFFICIAL REFEREE
powers of-see COURT'S POWERS
review of arbitrator's procedural ruling by 62, 175
statutory definition 34
COURT'S POWERS
in relation to arbitration proceedings 3, 61-2
in relation to expert's decision 62
statutory procedural powers of 174
to correct errors in award 274
to determine question of law 206-11
to enforce award 272-5, 313-16
to extend time-limit 114-19, 255, 258-9, 260, 268, 286, 295
to interfere with procedural ruling 62, 175
to order security for costs 129-31, 174
to prevent arbitration 62-7, 162-3, 312
to remit award-see REMITTAL OF AWARD
to set aside award-see SETTING ASIDE OF A WARD
to stay court proceedings 56, 63-5, 312
Arbitration in South Africa: Law and Practice 367

DISCOVERY
arbitrator's power to order 144-5
on agenda at pre-hearing conference 149
on agenda at preliminary meeting 125
problems with 27, 143--4
procedure for 142
purpose of 142-3
reducing need for 139
time for 145
under Standard Procedure Rules 144
DISPUTE
collective dispute 30, 31
defining issues in 124-5, 133, 135, 136-7, 139-40, 164
dispute of right 30
individual dispute 30, 31
interest dispute 30, 31, 46
prerequisite for arbitration 1, 24, 40-1, 45, 109-10, 116, 122
rights dispute 30, 31, 34, 46
DOCUMENTS
copies of with pleadings 138, 139, 140, 144
discovery of-see DISCOVERY
evidential status of 139, 239
in continental trial 218
inspection of 143,
photographs 189
preparation of paginated bundle 154-5, 188-9
privileged 142, 233-4
production of, at hearing 150-1, 188-9, 239-40
DOCUMENTS-ONLY ARBITRATION 164, 197-201, 257
EQUITY CLAUSE-see AMIABLE COMPOSITEUR
EVIDENCE-see also LAW OF EVIDENCE, PROOF
admissibility of 224, 226, 235-6
admissions of fact, formal 134, 147-8
arbitrator's notes of 187-8
burden of proof 36
circumstantial 225
cross-examination-see CROSS-EXAMINATION
definition of 224
direct 225
distinguished from proof 224
evaluation of 216, 228, 249-51
evidence-in-chief 193
evidential burden 248
exchange of witnesses' statements 149-50, 155-6, 237-8
exhibits 188-90
evidential burden 248
facts in issue 225
facts relevant to facts in issue 225
gathering of, by arbitrator 240, 242-3
hearsay 230-3, 240
objections to admissibility of 235-7
on affidavit 205, 239-40
on affirmation 184
368 Arbitration in South Africa: Law and Practice

EVIDENCE (continued)
on commission 184-6
opinion 227-8
oral-see ORAL EVIDENCE
out of time 205, 287-8,
previous consistent statements 229-30, 233
primary 225
recording of 128-9, 187-8, 243
re-examination 194
relevance of 226
secondary
similar fact 226-7
under oath 183-4, 216, 237
weight of 222, 225
EX PART£ PROCEEDINGS 160
EXPERT
admissibility of evidence of 228
assistance of arbitrator by 245-6
as witness 127-8, 149, 186-7, 228
attendance at hearing 183
dispute resolution by 62, 201
distinguished from arbitrator 3, 62
evaluation of evidence of 228
in mini-trial 18
liability for negligence 52
meetings of 149, 155-7
qualifying fees of 280, 281
reports of 149-50, 155-6, 237-8
FACTUM PROBANDUM 225
FACTUM PROBANS 225
FINAL OFFER ARBITRATION-see PENDULUM ARBITRATION
FOREIGN ARBITRAL AWARD
defences against enforcement of 314-5
definition of 313
enforcement of 7, 313-16
in foreign currency 315-16
legislation for 7, 299-300, 311
FUNCTUS OFFICIO 103, 205, 256, 272, 285
GCC (1982) 10
GCC (1990)10
HEARING-see also ARBITRATION PROCEEDINGS
adversarial process 168, 170, 216-18, 238, 240, 304
alternatives to formal 197-205
closing argument 181-2, 196-7
date of 21, 128
excessive length of 27, 237
expedited 35, 201-2, 204-5
form of 125-6, 164-5, 167
further particulars for 150
guidelines for 190-1
in absence of party 159-61
inquisitorial process 168, 218, 304
Arbitration in South Africa: Law and Practice 369
HEARING (continued)
in stages 204-5, 218
notice of 159, 177-8
opening address 181, 192
opening the proceedings 191
parties' right to 198
postponement of 141, 160, 171-2
preliminary points at 191-2
preparing for 132
presenting claimant's case 192-5
presenting defendant's case 195-6
reopening of 205-6
structure of 180-1
venue for 128
ICC 301, 302-3
ICSID 303-4
IMSSA 25,32, 33, 35, 78
INSPECTION IN LOCO 148-9, 190, 243
INSURANCE DISPUTES 21, 55-6
INTERDICT 58, 59, 61-62, 67
INTEREST DISPUTE 30, 31, 46
INTERNATIONAL ARBITRATION-see also ARBITRATION, FOREIGN
ARBITRAL A WARD
~dvantages 297-8
agreement for 305-8
arbitral tribunal for 307
commercial 297
curial law for 306, 309, 310, 311
definition 296-7
disadvantages 298
institutions for 301-5
language for 307
legal systems applicable to 307, 309-11
place of 306
rules for 298,300, 301-2, 303-5, 306-7
types of 300-5
INTERPLEADER PROCEEDINGS 68-9
JBCC (NOVEMBER 1992) CONTRACT 10
LAW OF EVIDENCE-see also EVIDENCE
application of, in arbitration proceedings 219-22
characteristics of 216-18
definition 215-16
distinguished from substantive law 224
exclusionary rules 217, 218, 222, 226
functions of 216
statutory provisions 222, 229, 231, 233
strict system 217
LAWYERS
attitude towards arbitration 26, 28
negative tactics by 27-8
officers of court, as 28
representation of parties by 178
use of court mies by 129, 138
370 Arbitration in South Africa: Law and Practice

LCIA 301, 303

LEGAL AID 23
LEGISLATION-see ARBITRATION LEGISLATION
LEX MERCATORIA 307,311
LITIGATION
involvement of mediator in 15
involvement of arbitrator in 106-8
matters best suited for 24
MARINE MEDIATION & ARBITRATION SERVICES 26
MED-ARB 203
MEDIATION
advantages of 14
as precondition for arbitration 112, 115-16
characteristics of 11
costs of 14
definition 10
disadvantages of 14-15
distinguished from arbitration 10, 12-14
mediator as witness 15
mediator's opinion 10, 13
statutory mediation 11-12, 53,
MINI-TRIAL
advantages of 18-19
definition 16
disadvantages of 18
neutral expert in 17
procedure 16-18
MINOR
as arbitrator 70
as party to arbitration 52
MULTIPLICITY OF PROCEEDINGS 65, 69
NATURAL JUSTICE, RULES OF
arbitrator's duty to apply 97, 98-9, 164-5, 169
audi alteram partem 159, 165-6
in documents-only arbitration 200
justice must be seen to be done 166
meaning of 165
nemo iudex idoneus in propria causa est 166
relating to conduct of hearing 190-1
NEGLIGENCE
of arbitrator 99, 100-3
of certifier 48, 101
of quasi-arbitrator 101-2
of valuer 48, 101
NEW YORK CONVENTION 299,311
OBITER DICTUM 24
OFFICIAL REFEREE 29, 146, 155, 156
ORAL EVIDENCE
evaluation of 249-51
importance of 216-17
in continental trial 218
reduction of 237-8, 239
Arbitration in South Africa: Law and Practice 371

PAROL EVIDENCE RULE 223

PENDULUM ARBITRATION 32, 203-3, 256
PLEADINGS
amendment of 135, 140-1, 160
close of 134
contents of 134, 135, 137
counter-claim 134, 139
declaration 133, 134
in expedited arbitration 35, 139-40
particulars of claim 133, 134
plea, 134
problems with 27, 136, 138
purpose of 124-5, 133, 135, 138-9
replication 134, 139
service of 135
statement of claim 137-8
statement of defence 138-9
statement of issues 136-7
summons 133
under Supreme Court Rules 133
PRECEDENT 24
PRE-HEARING CONFERENCE
agenda for 147
arbitrator:s presence at 146-7
date for 146
minutes of 155
purpose of 145-6
under Standard Procedure Rules 145-7
under Supreme Court Rules 145-6
PRELIMINARY MEETING
agenda for 121-2
minutes of 129
purpose of 120-1, 237
PRESCRIPTION 51, 96, 113, 192, 275
PRIVILEGE 142-3, 233-4
PROOF
burden of 36, 247-9
distinguished from evidence 224
evidential burden 248-9
onus of 223, 247-9
prima f acie 224
standard of 223, 246-7
QUANTUM OF DAMAGES 153-4, 175
QUASI-ARBITRATOR
decision by, as precondition for arbitration 112, 113, 115-16
distinguished from arbitrator 3, 51
distinguished from certifier 51
distinguished from valuer 47
liability for negligence 52, 101
powers of court regarding 51
RATIO DECJDENDI 24, 229
372 Arbitration in South Africa: Law and Practice

REFERENCE
components of 132
definition 37
entering on 257
pre-conditions to entering on 109-19, 123-4
REFERENCE OF QUESTION OF LAW
abuse of 210, 211
arbitrator's discretion 207-10
consultative case 207
exclusion by agreement 210-11
purpose 206, 252
stated case 207
time for 208
to counsel 206
to court 206-10 .
REMITTAL OF A WARD
application to court for 286
by parties 286
distinguished from setting aside 285
for purpose of awarding costs 277
grounds for 287-9
of award of costs 277
not available for new issue 286
purpose of 285
to -correct slip 288
to hear additional evidence 287-8
to rectify incomplete award 289
to remedy procedural mishap 289
where arbitrator has died 290
REPRESENTATION OF PARTIES
by lawyer 178
by lay advocate 22, 179
of company 22
on agenda at preliminary meeting 126
party's right to representation 178-9
RES IVDICATA 141,229,271
RIGHTS DISPUTE 30, 31, 34, 46
RULES FOR THE CONDUCT OF ARBITRATIONS
compared to Supreme Court Rules 120-1, 136
defining issues under 124-5, 136-40
purpose of pleadings under 138-9
regarding discovery 144
Standard Procedure Rules 136
Summary Procedure Rules 136
SEALED OFFER 157-8, 282-3, 289
SETTING ASIDE OF AWARD
application to court for 274, 286, 295
award of costs 277-8
bona fide error not ground for 293-4
consequences of 295
distinguished from remittal 285
for misconduct 169, 252, 274, 291, 292-3, 294
for procedural irregularity 169, 247, 274, 291, 292, 294
Arbitration in South Africa: Law and Practice 373

SETTING ASIDE OF AWARD (continued)

grounds for 291-5
invalid award 291
procedure for 295
where arbitrator exceeds powers 274, 291, 294
where award improperly obtained 291, 294-5
SPECIAL PLEA 63-5
SPECIFIC PERFORMANCE 34, 262-3, 265-6
STATUS
definition of 53-4
not matter for arbitration 52, 53-4
of arbitrator 93, 94-5
SUBMISSION 37
SUBPOENA 181
SUBSTANTIVE LAW
application of, by amiable compositeur 254-5
arbitrator's duty to apply 251-3
distinguished from law of evidence 223
function of 215
TAXATION
by arbitrator 129, 284
by taxing master 129, 284
definition 129, 284
effect of 283-4
of arbitrator's fees 87-8, 285
of costs 283-5
TIME-LIMIT
anticipating time-bar clause 118
arbitrator's power to extend 113, 117-18, 255
court's power to extend 114-19, 255, 258-9, 260, 268, 286, 295
expiry of, causing undue hardship 116-17
for appointment of arbitrator 115
for commencing arbitration proceedings 111, 112-13, 123
for compliance with precondition 112-13
for making award 162-3, 256-60, 268, 290
UMPIRE
appointment of 91-2, 212
attendance at hearing by 212-13
award by 212-13
distinguished from arbitrator 91-2, 213
entering on reference by 257, 264-5
powers of 92, 212-13
UNCITRAL MODEL LAW 162, 296, 298-9, 300
VALUATION
definition of 45
distinguished from arbitration 1, 3, 31, 44-50
enforcement of 47
functions of valuer 45-6
powers of court regarding 47
setting aside of 48-50
WASHINGTON CONVENTION 300,303
WHITE FORM 50
374 Arbitration in South Africa: Law and Practice

'WITHOUT PREJUDICE' 14,18, 147, 234-5, 282-3

WITNESS
arbitrator's power to call 182, 232, 241
compellability of 182
competency of 182
credibility of 216, 249-51
cross-examination of 183, 193-4
demeanour of 216, 250-1
evidence-in-chief of 193
exchange of statements of 149-50, 155-6, 237-8
expert witness-see EXPERT
presence at hearing 182-3, 195
questioning of by arbitrator 194-5, 221
re-examination of 194
securiug attendance of 181