Out-Law Guide | 17 Nov 2021 | 12:39 pm | 4 min. read
Sometimes it is necessary for a party who is successfully awarded a judgment in a local or foreign arbitration to enforce their award in South Africa. To enforce the award, the party must approach a High Court in South Africa.
However, while legislative reform in 2017 makes it easier for parties to enforce foreign arbitral awards in South Africa, there are some foreign judgments that the law in South Africa precludes the local enforcement of. Third party funders of litigation in South Africa will especially want to understand when those exceptions apply.
In South Africa, parties can apply to the High Court to have their local arbitral awards recognised and enforced under section 31 of the Arbitration Act of 1965. The need to do this typically arises where the opposing party in arbitration against which the award has been issued refuses to comply with the arbitral tribunal’s decision.
Some of enforcement cases coming before the court will concern awards made in domestic arbitration – the caseload of the Arbitration Foundation of Southern Africa (AFSA) is growing, for example – but in other cases the enforcement requested will concern awards granted by arbitral tribunals seated in other jurisdictions.
This reflects the continued popularity of international arbitration centres such as the International Court of Arbitration, London Court of International Arbitration, the Hong Kong International Arbitration Centre and Singapore International Arbitration Centre, as well as the emergence of other arbitration centres in Africa, such as the Nairobi Centre for International Arbitration in Kenya and the Lagos Chamber of Commerce International Arbitration Centre in Nigeria.
AFSA now has an international arbitration secretariat after the exponential growth in their international caseload. AFSA state that the new International Arbitration Rules, which took effect in June 2021, will provide additional certainty and clarity to businesses trading across borders on the African continent and beyond and continue to make AFSA a highly attractive choice for parties in international arbitration proceedings.
Some of the most noteworthy additions to the new Rules include:
The development of an online filing system and the creation of an AFSA Southern African Development Community (SADC) division with a panel of International commercial arbitrators are a welcomed advancement.
The Association of Arbitrators, however, are yet to introduce a similar offering.
Until 2017, the Recognition of Foreign Arbitral Awards Act of 1977 governed the enforcement of foreign arbitral awards in South Africa. Rights to enforce such awards under the Act were subject to various qualifications. These included:
Under the Protection of Businesses Act of 1978, foreign arbitration awards could not be enforced in South Africa where the subject matter of the award concerned mining, production, importation, exportation, refinement, possession, use or sale of or ownership to any matter or material, of whatever nature, whether within, outside, into or from the Republic, subject to specific exceptions. As we understand it, the purpose of this Act was to protect the state’s mineral rights and its scope was in fact, narrower than the language suggested.
The law in South Africa in relation to the enforcement of foreign arbitral awards was amended with the introduction of the International Arbitration Act of 2017. That Act incorporates the UNCITRAL Model Law on International Commercial Arbitration into South African law and formally promotes and recognises the use of arbitration as a method of resolving international commercial disputes. The Recognition of Foreign Arbitral Awards Act of 1977 was repealed when the new legislation took effect.
The International Arbitration Act of 2017requires that arbitration agreements and foreign arbitral awards are recognised and enforced in South Africa, strengthening the case for parties seeking to enforce arbitral awards in the country. However, there remain some qualifications to rights of enforcement of arbitral awards in South Africa. The Protection of Businesses Act remains in force, although it has been amended so that ‘foreign judgments’ relating to bodily injury arising from the use of or exposure to South Africa’s natural resources are no longer capable of being enforced in South Africa.
In order to enforce a foreign arbitral award in South Africa, a party must produce:
The same grounds for refusal to recognise or enforce a foreign arbitral award as under the Recognition of Foreign Arbitral Awards Act of 1977 apply under the International Arbitration Act of 2017.
South African public bodies are bound by the International Arbitration Act of 2017. However, they remain subject to section 13 of the Protection of Investment Act of 2015 which requires them to first seek to resolve disputes via mediation before pursuing other means of dispute resolution.
South Africa is not only the most advanced markets for third party funding of litigation in Africa, but is also swiftly becoming one of the most reliable African legal system for parties to enforce both local and foreign arbitration awards.
The introduction of the International Arbitration Act of 2017 and the publication of AFSA’s International Arbitration Rules continue to bring South Africa’s legal system in line with the LCIA, the ICC Rules and the UNCITRAL Model Law on International Commercial Arbitration.