Dispute resolution relief imminent for the African continent

On 21 April 2017, the International Arbitration Bill (the Bill) was tabled in the South African Parliament for discussion. The Bill is intended to incorporate the Model Law of the United Nations Commission on International Trade Law (UNCITRAL) as the cornerstone of the international arbitration regime in South Africa. The UNCITRAL Model Law was developed to address the wide divergent approaches taken in international arbitration throughout the world, and to provide a modern and easily adapted alternative to outdated national regimes.

The promulgation of the Bill is highly desired by various corporate entities and legal professionals involved in this area of dispute resolution. Currently, the very outdated Arbitration Act 42 of 1965 is applicable to South African arbitration agreements and awards, while the rest of the world is operating on a more efficient arbitration standard.  

The key aspects of the Bill are: 

  • In terms of section 7 of the Bill, any international commercial dispute that the parties have agreed to submit to arbitration under an arbitration agreement, and which relates to a matter that the parties are entitled to dispose of by agreement, may be determined by arbitration, unless such a dispute is not capable of determination by arbitration under any law of the Republic or the arbitration agreement is contrary to the public policy of the Republic.
  • Subject to section 12 of Promotion and Protection of Investment Act 2015, the Bill binds public bodies and applies to any arbitration in terms of an arbitration agreement to which a public body is a party.
  • The Bill makes provisions for dispute resolution in accordance with the UNCITRAL Conciliation Rules, providing the parties with flexibility and limiting the incurrence of unnecessary costs that are usually associated with international arbitrations. 
  • It adopts and incorporates the Recognition and Enforcement of Foreign Arbitral Awards Act 40 of 1977 (REFAA), providing that a foreign arbitral award is binding between the parties and is capable of being enforced by way of application to court, to have the award made an order. The applicability of the REFAA will be repealed in its entirety once the Bill comes into effect as legislation.

The Bill will become most beneficial when parties, during the negotiation stage, agree that any arbitration must be administered by the China-Africa Joint Arbitration Centre (CAJAC). As China is one of the largest sources of investment into Africa, there became an increasing need for a mechanism to resolve disputes between nationals, legal entities and authorities of China and Africa. 

CAJAC holds a seat in both Shanghai and Johannesburg. In Johannesburg, the Arbitration Foundation of Southern Africa Rules are applicable. Currently, only one matter has been referred to CAJAC, the seat being in Shanghai. Once the Bill is promulgated, arbitrations administered by CAJAC will be subjected to the Bill.

The Bill, together with CAJAC, will provide commercial and legal certainty to foreign investors, African and Chinese nationals, and legal bodies, especially now in times of instability. The promulgation of the Bill aims to increase African cross-border transactions and provide comfort and security to those entities looking to invest in Africa. 

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