By Shane Dwyer, Partner in the International Transport, Trade and Energy department, Shepstone & Wylie
S ignificant changes to international arbitrations are in the pipeline following the approval in April by the South African cabinet of the draft International Arbitration Bill (“the Bill”) for submission to Parliament. If passed, the Act will govern all international arbitrations (whether commercial or investment related) seated in South Africa and currently regulated by the provisions of the 51-year-old Arbitration Act, No. 42 of 1965 (“Arbitration Act”). The most fundamental change is that South African law will now distinguish between the law governing international arbitrations, through the incorporation of the UNCITRAL Model Law on International Commercial Arbitration as amended (the Model Law) and as adopted by the UN Commission on International Trade Law, as part of the Act and domestic arbitrations. The latter will continue to be regulated by the Arbitration Act. So, nearly 60 years after the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (“the New York Convention”) saw the light of day in the United Nations Assembly, it is finally to be given proper effect in South Africa. If the Bill becomes an Act of Parliament, it will provide for: 1. The incorporation of the Model Law on International Commercial Arbitration (as adopted by UNCITRAL) into South African law; 2. The recognition and enforcement of Foreign Arbitral Awards in accordance with the New York Convention (which will be Schedule 2 to the Act and thus incorporated into the legislation); 3. A conciliation process in accordance with the UNCITRAL Conciliation Rules, also a schedule to the Bill, (although it will not be compulsory for conciliation or mediation to be followed or adopted by the parties); and 4. The repeal of the 1977 Act. The Bill does not provide for the repeal or amendment of the Arbitration Act 1965 itself and it will still have effect where the dispute referred to arbitration is purely domestic and without an international commercial element. There was at least one objection to the introduction of the Bill in its published form, which came from the Maritime Law Association of South Africa. The objection related to foreign arbitration clauses in contracts of carriage and bills of lading. Under the Carriage of Goods by Sea Act (“COGSA”), a cargo claimant in South Africa where the cargo is carried into the Republic, is not bound by a foreign arbitration clause. The cargo claimant can bring its claim against the carrier before a South African court rather than be forced to litigate in a foreign jurisdiction chosen by the carrier in the bill of lading. The MLA submitted that, if carried into law, the Bill should exclude claims covered by the provision of the COGSA. It remains to be seen if Parliament will heed this plea. INSERT and IMAGE The most fundamental change is that South African law will now distinguish between the law governing international arbitrations. – Shane Dwyer
