Saturday 15 May 2021
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South Africa’s International Arbitration Bill 2016: Trade and Investment Perspective

In March 2017, the South African Cabinet approved the International Arbitration Bill (the Bill) to be introduced in Parliament. The Cabinet first endorsed in April 2016 but suggested a few changes in certain provisions. The Bill will be soon referred to relevant committees, the National Assembly and the National Council of Provinces for approval. Once approved, it will be sent to the President for assent, and shall enter into force on a date proclaimed by the President.The Bill is indicative of the government’s intention to transform and align its international commercial arbitration practice with global standards; increase trade and investment; and position South Africa as an investor- and arbitration-friendly jurisdiction in the region and world. It reflects the government’s aim to increase access to justice through international arbitration for cross-border businesses operating within (and outside) South Africa.The transformation of South Africa’s international commercial arbitration law was long-overdue. In 1998, the South African Law Commission (SALC) recommended, inter alia, the enactment of an international arbitration legislation incorporating theUNCITRAL Model Law on International Commercial Arbitration (Model Law); and the amendment of the Recognition and Enforcement of Foreign Arbitral Awards Act 40 of 1977 (REFAAA). SALC also proposed government accession to the ICSID Convention. Until now, these recommendations have not been implemented.
The Bill, among other things, incorporates, with amendments, the Model Law as the cornerstone of international arbitration in the country. Domestic arbitration will continue to be regulated by the Arbitration Act 42 of 1965. Investor-state disputes will be governed by the Protection of Investment Act 22 of 2015 (PIA). The President is yet to proclaim the date of commencement of PIA.It allows for contracting parties to settle their commercial disputes through conciliation proceedings in accordance with the UNCITRAL Conciliation Rules. This gives parties the flexibility to use conciliation to resolve their dispute in view of the substantial costs often associated with international arbitrations.
The Bill repeals the REFAAA, and provides afresh for the recognition and enforcement of foreign awards. A foreign arbitral award will be binding between the parties to that arbitration, and enforced in the same as any judgment or order of court. However, an award is not recognised and enforced if it is not permissible under South African law, contrary to public policy or was made in bad faith. It may also not be enforced if the party pursuing enforcement of the award lacks capacity to contract; the arbitration is invalid; he or she did not receive the required notice on the appointment of arbitrator or the arbitration proceedings; and the arbitration process was not in accordance with the relevant arbitration agreement.It amends the Protection of Businesses Act 99 of 1978 (PBA) by deleting the words ‘arbitration awards’. This means that the Protection of Businesses Act will no longer be applicable to the enforcement of foreign arbitration awards.The Bill applies to and binds international commercial arbitrations to which public bodies (state departments, national or provincial government, municipality etc.) are party, subject to the provisions of PIA.

*Talkmore Chidede, Researcher at Trade Law Centre (tralac).  This article was first published on the tralac website

Read part two in next week’s edition.

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