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South Africa set to enter the international arbitration stage

South Africa set to enter the international arbitration stage

There is an arbitration groundswell in Africa. Thirty three African States are party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and ten African States have adopted the United Nations Commission on International Trade Law (“UNCITRAL”) Model Law on International Commercial Arbitration to form the basis of their arbitration statutes. The seventeen member OHADA organisation has a uniform act on arbitration which applies to all the OHADA member states and which supersedes their domestic arbitration legislation. The OHADA Uniform Act contains many features of the UNCITRAL Model Law. Uniform arbitration laws between states with diverse legal systems and customs are a very attractive feature for foreign investors in Africa. 

It is safe to say that arbitration is fast becoming the preferred dispute resolution mechanism in Africa.

South Africa, however, has outdated arbitration legislation. Its Arbitration Act was passed in 1965. One of its chief deficiencies is the excessive opportunities it allows for parties to approach the court on issues which ought to be dealt with by the arbitrator. This can cause significant delay which defeats the very purpose of arbitration.

The South African Arbitration Act makes no distinction between domestic and international arbitration but applies uniformly to both, notwithstanding their very different features and requirements.

South Africa set to enter the international arbitration stage
Roger Wakefield is a Director at Werksmans Attorneys in South Africa and a member of the Management Committee for LEX Africa.

The South African Law Commission in 1995 recommended legislative reform to bring South Africa’s arbitration laws in line with the UNCITRAL Model Law. It was only in December 2013 however that the Department of Trade & Industry indicated that an International Arbitration Bill, based on the UNCITRAL Model Law, will soon be introduced. This is welcome news for investors scrambling for African assets, and in the case of South Africa for the cross-border disputes that will inevitably arise. The International Arbitration Bill is expected to contain most, if not all, of the provisions of the UNCITRAL Model Law which vests the arbitrator with very wide powers and minimises the opportunities for the parties to seek redress in the courts on issues concerning the conduct of the arbitration, or for matters requiring injunctive relief. Another feature so attractive to foreign investors is the ease with which foreign arbitral awards will be enforced in South Africa under the Model Law.

A positive consequence of the passing of the International Arbitration Act moreover will be an opportunity for South Africa to join the “preferred” list of states regularly appointed as neutral seats in international arbitration in Africa.




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