The enforcement of foreign arbitration awards in South Africa – August 2014

South Africa is party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The Convention is given effect to by the Enforcement of Foreign Arbitral Awards Act, 40 of 1977.

Foreign arbitration awards are readily enforced in South Africa under the Act (indeed in some cases more readily than foreign judgments), as long as the following requirements are met:

1. The award must not be contrary to South African public policy;
2. The parties to the arbitration agreement under the foreign law must have had capacity to contract and the agreement must be valid under the foreign law;
3. The defendant must have received notice of the arbitrator’s appointment or of the proceedings and must have been able to present his case;
4. The award must deal with disputes which fall within the reference to arbitration;
5. The constitution of the arbitration tribunal and the proceedings must be in accordance with the relevant arbitration agreement or with the law of the country in which the arbitration took place;
6. The award must be binding on the parties and must not have been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made;
7. The award must not fall foul of the Protection of Businesses Act, 99 of 1978. Section 1(1) read with s1(3) provides that except with the permission of the Minister of Trade and Industry no foreign arbitration award shall be enforced in South Africa if it arises from – “an act or transaction which took place at any time, whether before or after the commencement of [the] Act and is connected with the mining, production, importation, exportation, refinement, possession, use or sale of or ownership [of] any matter or material, of whatever nature, whether within, outside, into or from [South Africa]”.

The wording of the Act is extremely broad and at first blush appears to affect almost every foreign arbitration award. Our courts have fortunately however adopted a narrow approach to the interpretation of the Act and have restricted the requirement for ministerial consent to awards arising from transactions relating to raw materials only. Ministerial consent is readily given for the enforcement of such awards.

The enforcement procedure is by way of motion. The plaintiff wishing to enforce a foreign arbitration award will have to depose to an affidavit dealing with each of the requirements for enforcement.

The Enforcement of Foreign Arbitral Awards Act requires that the original award together with the original arbitration agreement in terms of which the award was made, authenticated by a duly designated official in the award’s country of origin, or certified copies of the award and the agreement must be attached to the application.

It frequently happens that a foreign plaintiff armed with a foreign arbitration award seeks to execute it against assets in South Africa belonging to a foreign defendant. It is important to note that our courts will enforce the award in such a case only where an asset, of any value, belonging to the foreign defendant in South Africa has been attached to establish the jurisdiction of the South African court. In the case of enforcement against a South African entity the court will exercise jurisdiction by virtue of the defendant residing, being registered or conducting its main business within its jurisdiction and no attachment is required.

Published 21 August 2014