Arbitration Case Law








Edited by A St Q Skeen


1.      The summary comprises of cases reported in the South African Law Reports from January 1990 to December 2000
2.      In each category the cases are set out in chronological order and not in order of importance.
3.      This summary is intended only as an introduction to the case law in the period concerned.


South African Transport Services v Wilson NO and Another 1990 (3) SA 333 (W)

Where an arbitration agreement has been based on consensus between the parties, the power and jurisdiction of an arbitrator is likewise consensual. The effect of this is that the arbitration agreement remains in being even if the new agreement (in which it is contained) is terminated for any reason.

Pitt v Pitt 1991 (3) SA863 (W)

The Arbitration Act 42 of 1965 does not allow for the referral to arbitration of disputes relating to property rights of husband and wife during divorce proceedings.

Atteridgeville Town Council and Another v Livanos t/a Livanos Brothers Electrical 1992 (1) 5A296(A)

In this case it was held that the arbitration clause had survived the repudiation of agreements.

Irish and Co (now Irish and Menell Rosenberg INC) v Kritzas 1992 (2) SA 623 (W)

An arbitrator may grant amendments to the applicant's claim after the respondent's withdrawal from further participation in the proceedings and grant any award consequent on such amendment. The power vested in an arbitrator by s 14(1)(a)(ii) of the Arbitration Act 42 of 1965 to allow an amendment of the pleadings had to be and had to remain capable of being exercised after a withdrawal from arbitration.

While the Act gives no indication as to how an arbitration should proceed after the withdrawal of one of the parties, the finality attributed to an award by s 28 of the Act argued forcibly against an award of absolution from the instance.

Fassler v Kamstra and Holmes v Stallion Group of Companies (Pty) Ltd 1992 (3) SA 825 (W)

The definition of 'arbitration agreement' in s 1 of the Arbitration Act 42 of 1965 requires it to be a written agreement. It does not require that the parties must sign the agreement. It is sufficient if they have adopted and acted on it.

Section 1 defines an arbitration agreement as meaning a written agreement providing for the reference to arbitration of an existing dispute relating to a matter specified in the agreement, whether or not an arbitrator is named or designated.

Delfante v Delta Electrical Industries Ltd 1992 (2) SA 221(C)

An arbitration agreement is no automatic bar legal proceedings in respect of disputes covered in the agreement.

Bester v Easigas (Pty) Ltd and Another 1993 (1) SA 30 (C)

The applicant contended that the award had been made more than four months after the arbitrator had entered on the reference (s 23(a) of the Arbitration Act 42 of 1965) it should be set aside. It was argued that the arbitrator only entered on the reference when the hearing of evidence was concluded and that the court was not entitled to extend the four-month period after the award had already been made.

The court held that entering on the reference was an ongoing process which commenced when the parties appeared before the arbitrator for the first time some eight months before final submissions were made and that it was clear from all the circumstances that the applicant had waived any right which he might have had to rely on the award being made more than four months after the arbitrator first entered on the reference. The court further held that it could extend the period of four months after the award had been made.

Wayland v Everite Group Ltd 1993 (3) SA 946 (W)

The arbitration clause must stand or fall with the validity of the contract in which it is incorporated. If there is some justification for the allegation of invalidity the jurisdiction of the arbitrator to proceed is doubtful and reference to arbitration in such circumstances is improper.

Van Ziji v Von Haebler 1993 (3) SA 654 (SE)

Where an arbitrator's award is in fact a nullity the failure by one of the parties to invoke the provisions of s 33 of the Arbitration Act 42 of 1965 to have the award set aside does not prevent that party from resisting an application to have the award made an order of court.

Amalgamated Clothing and Textile Workers Union v Veldspun 1994 (1) SA 162 (A)

Where parties agree to refer a matter to arbitration unless the submission provides otherwise, they implicitly, if not explicitly, abandon the right to litigate in courts of law and accept that they will be finally bound by the decision of the arbitrator.

Altech Data (Pty) Ltd v M B Technologies (Pty) Ltd 1998 (3) SA 748 (W)

In respect of a stay of legal proceeding the onus is on the applicant to satisfy the court that a very strong case exists as to why the dispute should not be referred to arbitration.

Patcor Quarries CC v Issroff and Others 1998 (4) SA 1069 (SE)

An arbitrator performs a judicial rather than an administrative function when adjudicating in arbitration proceedings. Section 28 of the Arbitration Act which prohibits appeals unless the arbitration agreement provides otherwise is not unconstitutional.

Stocks and Stocks (Gauteng) (Pty) Ltd v A and P Electrical CC 1998 (4) SA 266 (W)

Where a subcontract expressly gives a remedy for the breach of its terms to be imported into the agreement, the arbitrator has jurisdiction to deal with the claim of the subcontractor in arbitration between itself and the main contractor.

Telecall (Pty) Ltd v Logan 2000 (2) SA 782 (SCA)

Before there can be reference to arbitration, a dispute which is capable of proper formulation at the -~ time when an arbitrator was to be appointed, has to exist and there cannot be arbitration or the appointment of an arbitrator in the absence of a dispute. Some care must be exercised in the use of the word 'dispute'. If, for example, the word was used in a context which showed or indicated that what was intended was merely an expression of dissatisfaction not founded upon competing contentions, no arbitration can be entered into.


Chelsea West (Pty) Ltd and Another v Roodebloem Investments (Pty) Ltd and Another 1994 (1) SA 827 (C)

In a lease agreement it was provided that after an initial period rental was to be agreed upon by the parties and failing that by an arbitrator. The Lessees applied to have the determination of the arbitrator set aside on the grounds that, by consulting with experts in the absence of the parties the referee misconducted himself in his capacity as arbitrator. The lease agreement provided that the determination by the arbitrator would be deemed to be a determination by an expert and not by an arbitrator.

The court held that, whereas an arbitrator was required to act in a quasi-judicial capacity, a valuer or an expert had a duty, not to hear and determine a dispute, but to decide a question submitted to him by the exercise of an honest judgement and skill without judicial enquiry.

The fact that the referee was described in the lease as an arbitrator did not necessarily reflect the intention that he should not act as a valuer or expert. Provisions in the lease gave the referee an unqualified' discretion. Taken together with the deeming provision the court held that this supported the construction that the parties intended the determination to be made by an expert who was not bound by the rules of arbitration. The application was accordingly dismissed.


Blue Circle Projects (Pty) Ltd v Klerksdorp Municipality 1990 (1) SA 469 (T)

Disputes as to amounts due were eventually referred to a 'mediator' in terms of a clause in the general conditions of the contract. The mediator gave a 'final opinion'. The respondent was dissatisfied with the opinion and required that the matter be referred to arbitration in terms of the contract. The arbitration proceedings were still pending at the time the applicant sought an order directing the respondent to pay the amount determined by the mediator.

The court held that in terms of the general conditions the 'final opinion' of the mediator was not a final award and was subject to revision by the arbitrator and was only final and binding on the parties 'unless and until otherwise ordered in arbitration proceedings…'. The application was dismissed.

OFS Provincial Administration v Ahier and Another 1991 (1) SA 608 (W)

The test for recusal is whether a reasonable litigant would fear that he would not have a fair hearing. See also BTR Industries SA (Pty) Ltd and Others v Metal and Allied Workers Union and Another1992 (3) SA 673 (A) on the reasonable suspicion of bias test.

Blaas v Athanassiou 1991 (1) SA 723 (W)

An award in terms of an arbitration agreement (which has the status of an order of court) becomes prescribed after a period of 30 years.

Interciti Property Referrals CC v Sage Computing (Pty) Ltd and Another 1995 (3) SA 723 (W)

The arbitrator's report on issues submitted for arbitration gave rise to controversy between the parties. The arbitrator wrote a letter clarifying the award. The respondent contended that the award was unenforceable and beyond the arbitrator's jurisdiction. The court held that where more than one interpretation of the award was possible, an interpretation resulting in the award being effective is to be preferred to one making the award meaningless. It was permissible to have regard to the arbitrator's letter and this letter should be afforded full evidential weight.

Frankel Max Pollak Vinderine Inc v Menell Jack Hyman Rosenberg and Co Inc 1996 (3) SA 355(A)

Where an arbitrator has not given any reasons for the orders made in the award the person interpreting the award is initially confined to the language of the orders. If uncertainty emerges from consideration of the language used then recourse may be had to extrinsic circumstances which would include the issues that were submitted to the arbitrator and the evidence placed before him insofar as such evidence throws light on what the issues canvassed were.

Amalgamated Clothing and Textile Workers Union of South Africa v Veldspun (Pty) Ltd 1999 SA 162 (A)

Where parties agree to refer a matter to arbitration, unless the submission provides otherwise, they implicitly (if not explicitly), abandon the right of recourse to courts and accept that they will be finally bound by the decision of the arbitrator.

The basis on which a court will set aside an arbitrator's award is a very narrow one. It is only in cases which fall within the provisions of s 33(1) of the Arbitration Act 42 of 1965 that a court is empowered to intervene. If an arbitrator exceeds his powers in making a determination outside the terms of the submission such a case would fall under s 33(l)(b).

In respect of misconduct it is clear it does not extend to bona fide mistakes made by the arbitrator where on fact or law. It is only where a mistake is so gross or manifest that it would be evidence of misconduct or partiality, that a court might set aside an award. Even a gross mistake would be insufficient to warrant interference unless it establishes mala fides or partiality.


See under appointment of arbitrator the case of Chelsea West (Pty) Ltd and Another v Roodebloem Investments (Pty) Ltd and Another 1994 (1) SA 827 (C)

Wilton v Gatonby and Another 1994 (4) SA 160 (XV)

An arbitrator's award in favour of the applicant occurred where the respondent was in willful default. The applicant alleged that the contract which was the subject of the arbitration had been induced by misrepresentation by the respondent. The application to make the award an order of court was refused because it was clear from the pleadings that the onus of proof rested on the applicant. The arbitrator had made the order without hearing evidence. The court held that as the onus had not shifted the applicant was obliged to put sufficient evidence before the arbitrator for the latter to come to a conclusion on the merits of the relief claimed.


Administrasie van Transvaal v Oosthuizen en 'n Ander 1990 (3) SA 387 (XV)

The rule that interest cannot exceed capital is applicable even where specific provision is made for interest in terms of a contract. It also applies pendente lite except where the debtor in bad faith delays the proceedings. The award of an arbitrator is not a judgment and interest does not recommence after an award.

Petz Products v Commercial Electrical Contractors 1990 (4) SA 196 (C)

In terms of s 2 1(1)(a) of the Arbitration Act 42 of 1965 the power of the court to make orders for security for costs in arbitration proceedings are the same as its powers to make orders for security for courts in an action or matter in the Supreme Court, Where the party from whom security is sought is a company, s 13 of the Companies Act 61 of 1973 applies and it provides that such an order for security for costs can be made only if the company is a plaintiff or applicant in legal proceedings. The two sections quoted above must be read together and have the effect that the court may order a company which is a claimant in arbitration proceedings to furnish security for costs.

Joubert T/A Wilcon v Beacham and Another 1996 (1) SA 500 (C)

An arbitrator is obliged to award costs on the same basis as a court would and the award is liable to be set aside on review if the arbitrator does not exercise his discretion in a judicial manner. The general rule is that the party who achieves substantial success will be entitled to costs unless 'special circumstances' (of which there is no fixed definition) justify a departure from the rule.


Seton Co v Silveroak Industries Ltd 2000 (2) SA 215 (T)

Section 4(l)(a)(ii) of the Recognition and Enforcement of Foreign Arbitral Awards Act 40 of 1977 provides that a court can only refuse to recognise a foreign arbitral award, where, on the face of the award and the arbitration agreement, it was clear that the award was contrary to public policy.

If extraneous evidence was necessary, as in the case of fraud, the court had to consider whether a remedy lay in the jurisdiction where the award was made. If so, it would normally be appropriate to leave the respondent to pursue his remedy in that jurisdiction.


Administrasie van Transvaal v Oosthuizen en 'n Ander 1990 (3) SA 387 (W)

The fact that there are other issues which the arbitrator had to resolve does not deprive the applicant of his right to have the court decide on the proper interpretation of the clause.


Bester v Easigas (Pty) Ltd and Another 1998 (1) SA 30 (C)

The word misconduct connotes moral turpitude or mala fides and does not cover the case where there was a breach of the rules of natural justice. In other words misconduct relates to conduct and not the result of proceedings.

Hyperchemials International v Maybaker Agrichem 1992 (1) SA 89 (W)

Where no dishonesty is imputed there is no misconduct in terms of s 33(1) of the Arbitration Act 42 of 1965.


Edited by A Hyman


1. The summary comprises all the cases reported in the South African Law Reports from 1 January 1966 to 31 December 1984 except for certain cases on particular statutes e.g. expropriation. All cases which refer to the Arbitration Act 42 of 1965, (The Act) which came into effect on 14 April 1965, are included.

2. In each category, the cases are set out in chronological order and not in order of importance.

3. The principles relating to stay of court action and review of awards were considered, not only in the cases included in those categories, but also in certain of the judgments included in other categories.

4. This summary is intended only as an introduction to the case law in the period concerned, it is not a substitute for reference to the full law reports.


Pretoria City Council v Blom 1966(2) SA 139 (T)

The reference in a provincial ordinance to the Arbitration Ordinance 44 of 1904 (T) (the predecessor of the Arbitration Act) is a written submission to arbitration thus excluding the so-called "common law" arbitration.

Van Heerden v Sentrale Kunsmis Korp. (Edms) Bpk 1973(1) SA 17 (A)

A claim for cancellation of a deed of sale by reason of non-performance of an obligation fell within the scope of the arbitration clause in the contract.

Iscor Pension Fund v Balbern Hldgs (Pty) Ltd 1973(4) SA 515(T)

In terms of a lease the lessee had an option to acquire 49% of the equity of the erf a price to be determined by two auditors or an umpire if they should not agree.

Held: This was not an arbitration clause as it did not provide for the reference of any "dispute" as contemplated in the Act.

Sera v De Wet 1974(2) SA 645(T)

A claim by a builder for cancellation of a building contract falls within the scope of Clause 26 of the standard building contract and must be referred to arbitration.

J C Dunbar & Sons (Pty) Ltd v Ellgood Properties (Pty) Ltd 1975(4) SA 455(W)

Under a standard building contract the Architect issued a certificate which omitted amounts claimed by the builder in respect of certain scaffolding. Held: This was a dispute "on the question of a certificate" in terms of Clause 26 and could be arbitrated upon before the completion of the contract.

Ressel v Ressel 1976(1) SA 289(W)

A dispute after divorce as to access to a child was not a fit subject for arbitration despite an agreement between the parties to that effect in the custody agreement.

Stocks Construction (OFS) (Pty) Ltd. v Metter Pignon (Pty) Ltd 1980(1) SA 507(A)

A contract for the dismantling of a crane was typed on a form which had printed conditions on the reverse. These referred to the "sale" of a crane and included an arbitration clause. Held: (Reversing the decision reported at 1978 (4) SA 35(T)). The arbitration clause did not apply to a dispute on the dismantling contract.

Schuldes v Compressor Valves Pension Fund 1980(4) SA 576(W)

A provision in a pension fund rules that disputes on claims were to be decided jointly by the employer and the fund's insurer was held not to be a submission to arbitration subject to the Act.

Cone Textile (Pty) Ltd v Ayres 1980(4) SA 728 (Z AD)

Effect of the definition of "submission" in Zimbabwe Arbitration Act explained. In a dispute regarding the issue of a certificate in a building contract the arbitrator must determine not only that a certificate be issued but also the amount thereof. He cannot delegate this to a Q.S.

Gardens Hotel (Pty) Ltd v Somadel Invests (Pty) Ltd 1981(3) SA 911 (W)

Despite the premature termination, by agreement, of a lease, the arbitration clause still applied in respect of disputes under the lease.

Universiteit van Stellenbosch v J A Louw (Edms) Bpk 1982(3) SA 9(C)

Clause 26 of the standard building contract is wide enough to require that a delictual claim between the parties arising out of the building must be referred to arbitration.

Hellas House (Pty) Ltd v Rikki-Rand (Pty) Ltd 1982(4) SA 709(C)

A tenant was given an option to renew a lease at a rental to be agreed within 60 days after the exercise of the option. Failing agreement, the lessee was to have the right to require that the rental be determined "in accordance with and subject to the Arbitration Act 1965".

Unless this arbitration notice was given within 7 days after the expiry of the 60 days the option was to lapse. The option was duly exercised and in the letter of exercise the tenant's attorney proposed a rental and said, "if no agreement is reached ... our clients desires that the arbitration proceedings prescribed in Clause 4 be activated."

Held : This "early" and "conditional" arbitration notice was effective and the word "desires" called for an arbitration and was not merely notice of an intention to do so.

Richtown Construction Co (Pty) Ltd v Witbank Town Council 1983(2) SA 409(T)

Under a standard civil engineering contract the Engineer issued a certificate showing a debit balance in favour of the employer. Held: This was a "withholding of a certificate" in terms of Clause 69 and could (after prior "mediation") be arbitrated upon before the completion of the works.

Grobbelaar vs De Villiers N O 1984(2) SA 649(C)

Dispute between a co-op and its members as to whether a ruling as to a grape quota was ultra vires the articles. Query whether a dispute as to ultra vires does not oust arbitration as in English law. In any event it was doubtful whether the particular arbitration article was applicable. Stay of action refused.


Allied Mineral Development Corp. (Pty) Ltd v Gemsbok Vlei Kwartsiet (Edms) Bpk 1968 (1) SA 7 (C)

Unless the arbitration clause in an agreement expressly includes a provision that a dispute on the validity of the agreement itself is to be referred to arbitration, such a dispute falls outside the ambit of the arbitration clause.

Where the parties had submitted to arbitration a dispute on validity which was not covered by the arbitration clause the failure of the arbitrator to notice the invalidity of the submission was not "misconduct" justifying the setting aside of the award.

Kathmer Investments (Pty) Ltd v Woolworths (Pty) Ltd 1969(3) SA 18 (C); 1970(2) SA 498(A)

A lease provided for arbitration on disputes.

Following a dispute as to how the rent was to be adjusted, the tenant issued summons claiming the rectification of the lease by the insertion of certain words which were omitted from the document by common mistake.

Reversing the decision of the CPD, the Appellate Division held, in an application for a stay of the court action, that as the dispute was one which arose out of the agreement or which concerned the agreement such dispute fell within an arbitration clause relating to the rights, duties and obligations of the parties and the meaning and interpretation of the agreement. The stay of the court action was therefore granted.

Metallurgical and Commercial Consultants (Pty) Ltd v Metal Sales Co. Ltd. 1971 (2) SA 388 (W)

In opposing an application under 12(2) of the Act for the appointment of an arbitrator, a party asked the Court, under 3(2) of the Act, not to refer the dispute to arbitration on the grounds that, as between the parties, the contract concerned "was not intended to have legal efficacy or validity" and that it was "a mere pretence". The Court held that if the contract was invalid the invalidity extended to the arbitration clause. The Court accordingly ordered new evidence to be heard on the question of invalidity.

Sentrale Kunsmis Korp (Edms) Bpk v Van Heerden 1972(2) SA 729 (W)

The Court held that where a contract was voidable or was avoided because it was induced by fraud or misrepresentation, a dispute under the contract does not fall within the arbitration clause unless the clause specifically says so.


Wilmington (Pty) Ltd v Short and McDonald (Pty) Ltd 1966(4) SA 33 (D)

Section 8 of the Act gives the Court power to extend the time fixed in an arbitration agreement "to commence arbitration proceedings".

A clause in a building contract required the Employer to notify the Contractor within a specified time of objections to a final statement of an account and the Employer had not notified his objection within the time specified.

The Court held that the notice of objection would not have been a step commencing arbitration. It was a contractual step to create a dispute which might or might not go to arbitration. Accordingly Section 8 of the Act did not empower the Court to extend the time for the objection.

Stuart Nixon Estate Agency (Pty) Ltd v Brigadoon (Pty) Ltd 1970(1) SA 97 (N)

An important factor in determining whether an applicant for an extension of time for submission of a dispute to arbitration has shown the "good cause" required by section 38 of the Act, is the likelihood or otherwise that the applicant will succeed in the arbitration.

As there were no reasonable prospects of such success the application was refused.


Stewart v City of Harare (1985(1) SA 34(ZH)

Section 8 of the Zimbabwe Arbitration Act (which is to the same general effect as Section 12 of the South African Act) provides for the appointment of an arbitrator by the Court where the arbitration agreement requires the appointment to be made by agreement between the parties and they cannot reach such agreement.

In the reported cases one party wished to appoint A, a former judge and now a legal practitioner, while the other party wished to appoint B, a legal practitioner.

The Court accepted that it was bound eventually to make an appointment but considered that on the information before it would be "wrong and not merely invidious for the Court to choose between the two nominees". The Judge therefore postponed the matter and required the parties, if they still could not agree, each to submit three names, accompanied by a curriculum vitae in each case.

The judgment distinguished the case of Dipenta Africa Construction (Pty) Ltd v Cape Provincial Administration 1973(1) SA 666(C) where the Court could make an objective assessment of the relative merits of appointing a lawyer or an engineer.

The present case should not be regarded as a diminution of the Court's duty to make the appointment but as a simple instance where the Court required further information before making a judgment.

Diperta Africa Construction (Pty) Ltd v Cape Provincial Administration 1973(1) SA 666 (C)

In a dispute as to whether an advocate or an engineer should be appointed as arbitrator the Court appointed the engineer as the technical issues were substantial.

Sera v De Wet 1974 (2) SA 645 (T)
The blank space in clause 26 of the standard building contract for the insertion of the arbitrator's name had not been filled in. But it was held that the clause was not inoperative because there was an alternative provision for appointment of an arbitrator by the president of the Institute of Arbitrators.


Ladysmith Town Council v Natal Arbitration Board 1974 (1)SA 371 (N)

Granville Estates (Pty) Ltd v Ladysmith Town Council 1974 (3) SA 44(A)

In proceedings in terms of section 11 of the Provincial and Local Authorities Expropriation Ordinance 19/1945 (N), the Arbitration Board has power in terms of Reg 10 under the Ordinance and section 14 of the Arbitration Act to order the delivery of further particulars to the claim. Its failure to do so would cause irrevocable prejudice to the Town Council and that failure justified setting aside the award on review.

Shippel v Morkel 1977(1) SA 429 (C)

Under section 15(2) of the Act the Arbitrator is empowered to proceed with the hearing in the absence of a party who has failed to give a reason for his absence.

Tuesday Industries (Pty) Ltd v Condor Industries (Pty) Ltd 1978(4) SA 379(T)

The Court has jurisdiction to review a ruling by the Arbitrator refusing a postponement and that review can be heard during the arbitration proceedings. Principles to be applied in review summarised.


Administrator Transvaal v Kildruiumy Hldgs, (Pty) Ltd 1978(2) SA 124(T)

To be stated under section 20 the point of law must be (1) real and substantial; (2) clear; (3) important for the proper determination of the case before the arbitrator.

Order directing the Arbitrator to state a case granted (despite the fact that the Arbitrator was a lawyer).

Devland Investment Co. (Pty) Ltd v Administrator, Transvaal 1979(1) SA 321 (T)

Where the Arbitrator formulates a case for the opinion of the Court, the Court has power to re-formulate the issues and to consider other issues arising from those submitted. But it should proceed with caution in so doing.

Midkon (Edms) Bpk v Dept van Gemeenskapontwikkeling 1983(4) SA 78 (T)

The case stated must include all the relevant facts from which the point of law arises as well as the inferences from the facts contended for by the respective parties.

Dorman Long Swan Hunter (Pty) Ltd v Karibib Visserye Ltd 1984(2) SA 462(C)

An application for a point of law to be considered by the Court was made before the Arbitrator had heard evidence as to the proper construction of the contract. It was held to be premature.

Govt of R 5 A v Midkon (Pty) Ltd 1984(3) SA 552(T)

The judgment lays down certain principles governing an application under section 20(1) of the Arbitration Act for the reference of a question of law for the opinion of a court. In summary the points set out in the judgment are:

a. The application must not be a "qualified" one and the applicant cannot ask the arbitrator to refer the matter for an opinion only if the applicant's arguments on the law point are rejected.

b. The question of law must be essential for the determination of the issues and fundamental and difficult.

c. The question must be a question of law "discernable and definable" as such.

d. The issue of whether the arbitrator has legal training or not is generally irrelevant.

e. When all material facts are fully found and the only question is whether they are such as to bring the case within a particular law or legal principle, that question is one of law.


De Villiers v Stadsraad van Pretoria 1968(2) SA 607(T) reversing 1967(4) SA 533 (T)

An arbitration award had included an order on the defendant to pay the costs but did not specify that the costs should include the preparation or qualifying fees of an expert witness.

The case fell under a Transvaal Expropriation Ordinance (64/1903). The Court held that the words "costs of and incidental to any reference" were wide enough to cover the qualifying fees of witnesses and that such fees were recoverable under a general order of costs. The amount would be determined by the Taxing Master.

It is submitted that the phrase "costs in connection with the reference and the award" in Section 35 (1) of the Arbitration Act would be similarly interpreted.

Community Development Board v K 5 L Trust 1973(4) SA 225 (N)

Various rulings as to cases under the Community Development Act 3/1966 set out.

Kathrade v Arbitration Tribunal 1975(2) SA 673 (A)

The AD (in reversing the decision of the CPD - 1974(2) SA 536(C)) in an application for compensation for expropriation, set aside the Arbitrator's award of costs because his discretion as to costs had not been exercised in a judicial manner and had disregarded an accepted principle applicable to costs, namely, that the successful party should ordinarily be awarded the costs.

Rhodesia Escom v Joelson Bros and Bardone (Pty) Ltd 1977(4) SA 639(R)

Where the Arbitrator had adopted the "wrong basis" in awarding costs, the Court remitted the matter to him for reconsideration.

Cape Town Municipality v Yeld 1978(4) SA 802(C)

In an arbitration under section 37 of the Housing Act 4/1966 the Arbitrator cannot allow the costs of two counsel.

Morticello (Pty) Ltd v Edgeton 1982(1) SA 762 (ZS)

Sets out the same principles as in Kathrade (supra).

John Sisk and Son (SA) (Pty) Ltd v Urban Foundation 1985(4) SA 349(N)

In an application for review of that part of an arbitrator's award which concerned the costs of arbitration the Court found that:

·        the applicant (claimant in the arbitration) had been awarded R187 000 on a claim of R404 573;

·        the applicant had, nevertheless, been ordered to pay two-fifths of the arbitrator's fees and was only awarded 57,5% of his own costs and been allowed only the costs of one counsel instead of two.

·        the arbitrator had given no reasons for his award of costs but the Court held that it was not permissible to draw adverse inferences against the defendant on that ground.

·        in his affidavit claiming review the applicant (claimant) had stated that there were no special circumstances justifying a departure from the ordinary practice of awarding full costs to the party which is substantially successful. The defendant did not deny this statement but advanced "the incorrect proposition that an arbitrator is not obliged to follow the ordinary rules relating to costs" even in the absence of "special circumstances".

·        there had been an entirely inadequate and conditional tender by the defendant which should not have affected the costs and the Court could find no other indication of special circumstances. The Court recognised that in terms of Section 35(1) of the Arbitration Act the award of costs is in the discretion of the Arbitrator but that, as stated by Botha J A in Kathrada v Arbitration Tribunal 1975(2) SA 673(A) at 680, "the discretion.... must be exercised judicially upon a consideration of all the relevant facts and in accordance with the relevant provisions.

On the information available to it the Court came to the "inevitable conclusion" that the "arbitrator did not properly apply his mind to the question of costs and that he must have applied an incorrect principle in coming to the conclusion which he came to". (This applied also to the refusal to allow the costs of the second counsel).

The Court accordingly set aside the relevant portions of the arbitrator's award of costs.

It was common cause that it was not competent for the Court to make its own order for costs in substitution for that of the arbitrator, (save in the case of the costs relating to the number of counsel, on which matter the Court ordered that the costs of two counsel be allowed). The matter was therefore remitted to the arbitrator in terms of Section 32(2) of the Arbitration Act to "reconsider his award of costs in the light of the principles stated" in the judgment.

Presumably, the fact that it was common cause between the parties that the Court could not make its own order arose from the lesser requirements of Section 32 of the Act ("Remittal of Award") compared with those of Section 33 ("Setting aside of Award") where the grounds are misconduct, gross irregularity or that the award has been improperly obtained.

It should be noted that in Kathrada's case (supra) the AD (reversing the decision of the CPD) substituted its own order for costs for that of the arbitrators without remittal. The judgment does not specifically refer to Sections 32 or 33 of the Arbitration Act or to any relevant provisions of the Community Development Act 3/1966 under which the arbitration proceeded. Presumably the AD acted in terms of its inherent powers of review or in terms of Section 33 of the Arbitration Act by virtue of Section 40 ("Application of this Act, to arbitrations under special laws") of the Act.

The basis of the AD judgment appears from the passage (at 680) reading "where the award as to costs is vitiated by irregularity or misdirection, or is disquietingly inappropriate, a Court of Law will on review set aside the order.... Failure to consider all the relevant facts or failure to act in accordance with the settled practice and principles upon which costs are generally awarded, is such an irregularity or misdirection".

The two judgments discussed are most significant both in regard to the principles applicable to costs and, generally, as indicating that a Court might find grounds for setting aside an award or remitting it to the arbitrator in the very content of the award itself without specific evidence directed to prove one of the statutory grounds for relief.

John Sisk and Son (SA) (Pty) Ltd v Urban Foundation and Another 1987 (3) SA 190 (N). (The 'Another' was the Arbitrator)

NB: As an introduction to the present judgment it is essential to read the summary of the 1985 judgment supra.

When the question of costs was referred back to the arbitrator in terms of the 1985 judgment, he persisted in his refuse to Award the applicant all its costs, and the applicant, claimant in the arbitration, took the new Award of costs to the Supreme Court on review in the 1987 case. In his affidavit filed in the 1987 case the arbitrator justified his departure from the ordinary rule that the successful party should be granted all his costs by stating that there were "special circumstances".

The 1987 judgment deals with this aspect of the matter in some detail but as the question of "special circumstances" will be canvassed in a Practice Note (presently in preparation), on the Award of costs in arbitrations, this portion of the judgment will not be summarised here.

The Court found that there were no "special circumstances" and that the applicant should have been awarded his full costs.

By consent of the parties, the Court made its own order as to the arbitration costs instead of referring the matter back again to the arbitrator. The Court awarded the claimant his full costs.

With regard to the costs of the second review (1987) the Court found that the failure by the arbitrator to comply with the terms of the 1985 judgment was sufficiently reprehensible to justify an order for costs against him. These costs were therefore ordered jointly and severally against the Urban Foundation and the arbitrator.


Britstown Municipality v Beunderman (Pty) Ltd 1967(3) SA 154(C)

It was held (reversing the decision reported at 1965(3) SA 111(C) that the Court had no power to make an award, which was not a final award, an order of Court. The Court could not (as it might do on appeal) make a "hybrid" order which was partially a finding made by the arbitrator and partially one made by the Court.

SA Evangelisation & Missionary Trust v Gumbi 1975(3) SA 636(D)

The award dealt with all the issues properly submitted for arbitration. The fact that other issues had been referred to did not invalidate the award. Court's discretion in reviewing an award discussed.

Friedman v Mendes 1976(4) SA 734(W)

In an application to have an arbitration award made an order of court, the Court will receive an affidavit by the Arbitrator to elucidate an ambiguity in the award but not to vary, add to or contradict the award.

Benidai Trading Co, Ltd v Gouws & Gouws (Pty) Ltd 1977(3) SA 1020(T)

A foreign arbitration award was made an order of a S.A. court. Principles discussed.

Rhodesia Escom v Joelson Bros & Bardone (Pty) Ltd 1977(4) SA 639(R)

An arbitrator may apply his technical specialised knowledge in making his award.


Elebelle (Pty) Ltd v Szynkarski 1966(1) SA 592(W)

An application was brought for an interdict restraining respondent from acting in breach of a restraint of trade clause in a contract. The Court held that neither the fact that an arbitrator could not grant an interdict or that the issue was a question of law was a good ground for refusing to refer the matter to arbitration in terms of an arbitration clause in the contract. The Court pointed out that if the arbitrator found that the restraint was enforceable and had been contravened, "the obtaining of an interdict from this Court would be a formality".

The court proceedings were therefore stayed and the issue referred to arbitration.

Hasewinkel v Simoes 1966(2) SA 81(W)

A building contract made comprehensive provision for arbitration on disputes.
Nevertheless the Court refused to stay, and proceeded to grant, an application by the owner for the ejectment of the builder against "adequate security" for amounts which the builder claimed. The Court considered this step necessary to "do justice between man and man" as the owner would otherwise lose rentals on houses which were already occupiable.

Lancaster v Wallace N 0 1975(1) SA 844(W)

The Court granted a stay of court proceedings pending arbitration even though the only issue in the arbitration was a question of law which would probably come before the Court in any event - under Section 20 (1) of the Act.

S & R Valente (Pty) Ltd v Benoni Town Council 1975(4) SA 364(W)

The Court refused to stay the plaintiff's action merely because the defendant was raising a counter claim which was subject to arbitration.

Yorigami Maritime Co, Ltd v Nissho-Iwai Co. Ltd. 1977(4) SA 682(C)

Stay of action refused where arbitration in Japan was provided for. However in the cases of;

·        Intercontinental Export Co. (Pty) Ltd. v M V Dien Danielsen 1982(3) SA 534(N), and

·        Polysius (Pty) Ltd v Transvaal Alloys (Pty) Ltd 1983(2) SA 630(W&T)

stay of action was granted on the grounds of a foreign arbitration requirement.

Stocks Construction (OFS) (Pty) Ltd v Metter Pignon (Pty) Ltd 1978(4) SA 35(T)

An application for a stay can be raised by way of a special plea. But see Conress below.

Perekh v Shah Jehan Cinemas (Pty) Ltd 1980(1) SA 301(D)

Order granted under Rule 22(4) of the Rules of Court for postponement of judgment on plaintiff's claim (which was not subject to arbitration) until an arbitration award on a counterclaim had been given and made an order of Court.

Conress (Pty) Ltd v Gallic Construction (Pty) Ltd 1981(3) SA 73(W)

The application for a stay must be made before the applicant has delivered any pleadings after entering an appearance to defence.

Universiteit van Stellenbosch v J A Louw (Edms) Bpk 1983(4) SA 321(A)

The employer under a standard building contract was suing the builder for breach of contract; a sub-contractor in delict and the architect for breach of contract and in delict. As only the claim against the builder was subject to arbitration, stay of action was refused to avoid the necessity for judgments by different tribunals on substantially the same facts.

G K Breed (Bethlehem) (Edms) Bpk v Martin Harris & Seun (OVS) (Edms) Bpk 1984(2) SA 66(0)

Stay of action was ordered with costs of the special plea but application to dismiss the action was refused.

Freightmarine Shipping Ltd v Wainstein & Co (Pty) Ltd 1984 2) SA 425(D)

The "agent" appointed in terms of section 311 of the Merchant Shipping Act 57/1951 was sued with the party who was a party to an arbitration agreement. The "agent" was not.

Held. The agent could not apply for a stay of the action.


Sera v De Wet 1974(2) SA 645(T)

As there were points of law in dispute, credibility would play an important part; there were technical matters which were "easily resoluble by a Court" an application under Section 3 (2) (c) of the Act was granted that the arbitration agreement should not apply to the dispute.


Goldschmidt v Folb 1974(1) SA 576(T)

The submission to arbitration had provided that the award could be taken on "appeal". Held: This did not confer jurisdiction on a court to hear an appeal as distinct from a review.

The "appeal" referred to in section 28 of the Arbitration Act is an appeal to an umpire or to another arbitration tribunal.

Schock N O v Bhettay 1974(4) SA 860 (A)

The arbitrators in an expropriation arbitration had determined compensation at a figure substantially different from a valuation. They refused to give reasons for their award.

The AD (reversing the decision of the lower Court) found that, on the facts, it could not be said that the awards were "such that no reasonable man could have given them" or that they were explicable only on the basis that the arbitrators had not applied their minds to the issues.

The refusal of reasons was only an element to taken into account when there was other prima facie evidence of irregularity.

Application to set aside the award refused.

Tuesday Industries (Pty) Ltd v Condor Industries (Pty) Ltd 1978(4) SA 379(T)

(See under "Procedure" (supra))

RPM Konstruksje (Edms) Bpk v Robinson 1979(3) SA 632(C)

The fact that an arbitrator misdirected himself on the law is not in itself a ground for setting aside his award.


Kollberg v Cape Town Municipality 1967(3) SA 472(A)

The Appellate Division (confirming the decision of the CPD reported at 1966(2) SA 471) held that an Engineer in a construction contract giving a decision on a dispute submitted to him in terms of a clause in the contract was not acting as an arbitrator or quasi-arbitrator. The fact, therefore, that he had not given the Contractor a hearing did not invalidate his decision on the dispute.
The Contractor, who had failed, within the specified time after the Engineer's decision, to require that the matter be referred to arbitration, had lost his right to do so.  


See the judgment in Est Milne v Donohoe Investments (Pty) Ltd 1967(2) SA 359 at 373H


Kannenberg v Gird 1966(4) 173(C)

This judgment should be studied for a discussion of various procedural and functional aspects of the submission to an umpire when two appointed arbitrators disagree.


Laconian Maritime Enterprises Ltd v Agromar Lineas Ltd 1986 (3) SA 509 (D)

Application was made to have an American Arbitration Award made an order of the South African Court in terms of the Enforcement of Foreign Arbitral Awards Act 40/1977 and the respondent raised two defences, namely:

1.    That of "res judicata", contending that the matter had been disposed of by a judgment of the American Court and could not be raised again in South Africa; and

2.    that of prescription contending that the right to apply for the order had become prescribed.

With regard to the "res judicata" defence the respondent relied on the fact that the American Court had given a judgment dismissing an action to have the Award made an order of the Court because the action had become "time barred" in terms of an American statute.

However, the Durban Court held that as the present application had been brought in terms of a South African statute, the facts in issue were different and the American judgment did not support the defence of res judicata.

In dismissing the defence, based on prescription, the judgment holds that as the debtor had not been in South Africa since the debt had become due, prescription had not, In terms of Section 13(1)(d) of the Prescription Act 68/1969, been completed and might thereby be delayed indefinitely.

Cape Town Municipality v Allie 1981(2) SA 1(C) (confirming the decision in l980 (l) SA 265(C))

On an award of capital and costs, payment of interest on the capital interrupted prescription on the whole debt including the costs even though the bill of costs was only taxed later.

Murray & Roberts Construction (Cape) (Pty) Ltd v Upington Municipality 1984(1) SA 571(A)

Prescription is interrupted when a dispute is submitted to the engineer under cl. 69 of the standard civil engineering contract.


Laconian Maritime Enterprises Ltd. v Agromer Liners Ltd 1984(3) SA 237(D)

Section 2 of Enforcement of Foreign Arbitral Awards Act, 40/1977 considered. SA Court has jurisdiction to enforce even where parties are peregrini.


Administrateur Kaap v Asia Konstruksie (Edms) Bpk 1989 (4) SA 458 CC)

Asla had claimed payment under a construction contract with the Administrator for losses occasioned to Asia, as contractor, arising out of unrest in Jugulate. The claim was disputed by the Administrator and, in terms of the contract, the dispute was referred to a mediator for a decision.

The mediator upheld Asia's claim and in terms of the contract the Administrator had 28 days in which to refer the matter to arbitration, but failed to do so and now applied for an extension of time for the purpose.

Section 8 of the Arbitration Act refers only to the court's power to grant an extension of time for pursuing a "claim" and, therefore, did not strictly apply to the present case where the Administrator was not a claimant. However the Court (per Tebbutt J) held that it had an inherent discretion to grant an extension where no other remedy existed and where undue hardship would result.

Tebbutt considered that the following criteria laid down in English case law as to what constituted "undue hardship" should be adopted:

a. The words "undue hardship' should not be construed too narrowly.

b. Undue hardship means excessive hardship and, where the hardship is due to the fault of the claimant, it means hardship the consequences of which are put out of proportion to such a fault.

c. In deciding whether to extend time or not, the Court should look at all the relevant circumstances of the particular case.

d. In particular, the following matters should be considered:

a.       the length of the delay;

b.      the amount at stake;

c.       whether the delay was due to the fault of the claimant or to circumstances outside his control;

d.      if it was due to the fault of the claimant, the degree of such fault;

e.       whether the claimant was misled by the other party;

f.        whether the other party has been prejudiced by the delay, and, if so, the degree of such prejudices.

Applying these criteria to the facts in the case the Court granted the extension of time but, of course, ordered the Administrator to pay both his own and Asia's costs.


Sasko Bpk v Futurus Construction (Pty) Ltd 1988 (4) SA 170 (W)

Sasko and Futurus were engaged in an arbitration on a claim by Futurus for amounts payable to it on construction contract work done for Sasko.

Sasko demanded security for costs and Futurus admitted an obligation to furnish security and proposed the sum of R40 000, but Sasko contended that the sum should be R80 000.

Futurus sought to proceed with the arbitration while the dispute as to security continued and pressed for certain particulars which it had asked for.

Sasko then applied to Court for an order suspending the arbitration until the Registrar of the Court had determined the amount of the security.

The court refused to grant Sasko's application for the suspension holding that:

1. Section 21 of the Arbitration Act gave a Court the same powers of making order on various matters, including security for costs, as it had in relation to "any actions or matters in that Court".

2. A court ordering security for costs to be given would act in terms of Rule 47 of the Supreme Court Rules and, in any event, the parties had agreed that the Supreme Court Rules were to apply.

3. Rule 47 required that the Registrar fix the amount of security and this had not been done.

Both Rule 47 and section 13 of the Companies Act which applies "by necessary implication", give a court a discretion to stay proceedings if an order to furnish security has not been complied with. However, as the Registrar had not fixed the amount of security there was, on the present facts, no breach of an order or of an agreement to furnish security. The Court could not, therefore, stay the proceedings under rule 47 or under section 13 of the Companies Act.

4. As the applicant had taken no effective steps to have the Registrar fix the amount of security, the Court could not exercise a general direction to stay the arbitration.

The application was dismissed with costs.


Benjamin v Sobac SA Building and Construction (Pty) Ltd 1989 (4) SA 940 (C)

It is neither practicable nor desirable to summarise the 40 page judgment within the framework of the present review of case law.

The judgment deals with:

1.      Section 33 of the Arbitration Act giving the Court power to set aside an arbitrator's award on the grounds of misconduct of the arbitrator in relation to his duties, gross irregularity or excess of powers by the Arbitrator in the proceedings or the fact that 'the award has been improperly obtained"; and

2.      Section 32 of the Act empowering the Court to remit an award to the Arbitrator for reconsideration.

The full judgment should be referred to for a discussion of the principles to be applied in the application of these sections.

Benjamin had applied for an order under section 33 to set aside the arbitrator's award and then applied for leave to amend that application to rely on additional evidence and grounds. While the application for leave to amend was under consideration by the judge, a fresh application was made to scrap the Section 33 application entirely and proceed on the same papers with an application for remittal under section 32.

The Court refused this latter application with costs on the grounds that:

1.      The Court should not assist an applicant under one section where his only claim was brought under another section; and

2.      In any event, the grounds advanced for remittal under section 32 were all grounds which would justify a setting aside of the award under section 33 where the tests are more stringent. "The Act cannot be interpreted to permit an application to avoid the stringent test contemplated by section 31(1) so as to achieve the same result by clothing his application as one to remit" per Salikowitz J at page 961.

With regard to the section 33 application, leave was granted to file a supplementary affidavit, but the application to set aside the arbitration award was, ultimately, dismissed with costs.


Within Shaw Properties (Pty) Ltd v Dura Construction Co (SA) (Pty) Ltd 1989 (4) SA 1073 (A)

Dura had completed a building for Withinshaw in terms of a building contract which provided that the Architect issue monthly certificates, a penultimate certificate and a final certificate, certifying the amounts due to the contractor.

The Architect had issued a final certificate for R110 000 but Withinshaw had refused to pay, raising various defences.

The defence which relates to arbitration was that there were disputes between the parties which were required in terms of clause 26 of the building contract (which was in the standard form) to be determined by arbitration.

The Court, however, found that although there were references in the correspondence to disputes as to responsibility for alleged defects in certain waterproofing, no actual dispute had "crystallised"; no "decision" in terms of clause 26 had been given by the Architect who had not been asked to give a decision.

The Court held, therefore, confirming the decision of the Cape Provincial Division, that Dura was entitled to judgment for the amount of the final certificate.

The decision of the court was based on the particular facts of the case, but reinforces the important principle that a payment certificate in a construction contract can be the subject of an irixoediate court action without reference to the arbitration clause.



















































































































































































































































































































































































































































































































































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