A Case in Point – Kiki Bailey – October 2025

In the context of the spirit, purport and objects of the Bill of Rights, is an appeal against an arbitral award to the High Court of South Africa permissible?

1. In the judgment of Level Seven Restaurant (Pty) Ltd t/a Level Seven v Signature Restaurant Group (Pty) Ltd (Signature),^[1] the court, mainly, had to consider whether, taking into account of the spirit, purport and objects of the Bill of Rights, section 28 of the Arbitration Act 42 of 1965 (the Arbitration Act) can reasonably be read to permit an appeal against an arbitral award to the High Court.
2. Section 28 of the Arbitration Act provides that:‘Unless the arbitration agreement provides otherwise, an award shall, subject to the provisions of this Act, be final and not subject to appeal and each party to the reference shall abide by and comply with the award in accordance with its terms.’(Own emphasis).
3. The facts before the court were the following:
   1. A dispute arose between the applicant (Level Seven) and the respondent (Signature) arising out of a management agreement (the contract) concluded between them . The contract permitted the resolution of disputes by way of arbitration.
   2. In terms of the contract, Signature was to manage Level Seven’s restaurant, which, in turn, entailed, among other things, the rendering of various accounting services. According to Level Seven, Signature breached its obligations in terms of the contract and failed to remedy such breach despite notice to do so. In consequence thereof, Level Seven sought cancellation of the contract.^[2]
   3. Signature denied that it was in breach and contended that Level Seven’s cancellation constituted a repudiation of the contract. As such, Signature accepted the alleged repudiation and referred a claim for resultant damages to arbitration.^[3]
   4. Level Seven defended the damages claim and launched a counterclaim against Signature. Signature took an exception to Level Seven’s statement of defence and counterclaim. The basis of Signature’s exception was that no cause of action was disclosed.^[4]
   5. Signature’s exception was upheld by the arbitrator on 3 April 2023, and Level Seven was granted leave to amend its counterclaim by 30 April 2023.^[5]
   6. The contract contained, among other terms, the following relevant ones:
      1. All disputes under the contract which cannot be mediated ‘shall be finally determined in accordance with the Commercial Arbitration Rules of the Arbitration Foundation of South Africa (AFSA) without recourse to the ordinary courts of law, except as explicitly provided for in *[clauses 19.9 and 19.10]’ (clause 19.4 *as rectified);^[6]
      2. either party ‘shall be entitled to review or appeal the arbitrator’s decision, in which case the High Court of South Africa, Gauteng Local Division shall be authorised to determine such review or appeal’ (clause 19.9);^[7] and
      3. the parties’ rights to approach the court for urgent interim relief pending the outcome of any arbitration were preserved (clause 19.10).^[8]
4. Relying on its supposed right to appeal, Level Seven noted an appeal against the arbitrator’s decision under clause 19.9 of the contract.^[9]
5. The application was argued against the background of two cases on the question as to whether or not section 28 of the Arbitration Act creates a right of appeal against an arbitral award to the High Court of South Africa (High Court). The cases in question are:
   1. Goldschmidt and Another v Folb and Another (Goldschmidt),^[10] the court found that section 28 of the Arbitration Act does not permit a right of appeal to the court. It held that it only permits an appeal, by contract between the parties, to an umpire, another arbitrator or to an arbitral panel;^[11] and
   2. Telcordia Technologies Inc v Telkom SA Ltd (Telcordia),^[12] in which the Supreme Court of Appeal held that parties to an arbitration contract cannot, by virtue of such contract, impose jurisdiction on the court.^[13]
6. To counter the abovementioned findings, Level Seven’s case was that section 28 of the Arbitration Act ought to be reinterpreted so as to promote the spirit, purport and objects of the Bill of Rights. Such reinterpretation it argued, should entail an evaluation of the constitutional rights to both access to courts, as well as to contractual autonomy.^[14] It contended that, in so doing, the common law of arbitration would be developed under section 39(2) of the Constitution^[15] to permit such appeals to the High Court where parties agree to such a right.^[16] Level Seven’s final submission was that in the event of the court finding that the right of appeal agreed to in clause 19.9 of the contract did not exist, such right would be rendered nugatory and, as such, the whole arbitration agreement ought to be declared void as the parties would never have submitted to arbitration unless an appeal to the High Court was possible.^[17]
7. The court embarked on a concise analysis of section 28 of the Arbitration Act, as seen against its other provisions, as well as the Bill of Rights and the validity of the contract to arbitrate. Its succinct exposition appears under the captions below.
   

   Section 28 of the Act

8. As per its wording, section 28 does explicitly say to which body/entity a right of appeal lies. Bearing in mind that the process of arbitration arises by virtue of an agreement, the court does not automatically assume jurisdiction simply because the parties agreed to it. Conversely, an arbitrator derives his or her jurisdiction from the parties’ agreed consent to submit their dispute(s) to them, as reinforced by the provisions of the Arbitration Act.
9. In accordance with section 21 of the Superior Courts Act 10 of 2013 (the Superior Courts Act), the High Court has jurisdiction to determine a cause of action recognised by law, and not merely any dispute that may arise between parties who decide to submit to the court’s jurisdiction.^[18] This is echoed in section 34 of the Constitution, which provides that it is only those disputes that are capable of being resolved by the application of the law that are subject to the court’s jurisdiction. Section 21(1) of the Superior Courts Act confers jurisdictional power on the High Court in relation to (among the matters listed): ‘all persons residing or being in, and in relation to all causes arising … within, its area of jurisdiction and all other matters of which it may according to law take cognisance …’ (own emphasis). The High Court’s jurisdiction is thus derived from rules of law, and not from the consensus of parties attempting to assign jurisdictional power to the High Court over their private dispute by agreement. No rule of law empowering the High Court to hear appeals against arbitral awards could be identified during argument.^[19]
   

   The Arbitration Act in general

10. The court found that the provisions of section 28 must be interpreted in its own context, as well as against the purpose of the Arbitration Act as a whole. In establishing a system of private resolution stemming from a contract concluded between parties, the Arbitration Act seeks to preserve the speedy, economical and private resolution of arbitral disputes. Although the supervisory power over arbitral proceedings is bestowed on the courts, the Arbitration Act does not confer jurisdiction on courts to deal with merits of arbitral disputes.^[20]
11. In the absence of dealing with the merits of arbitral disputes, the court set out some instances in which the Arbitration Act empowers it to exercise a supervisory role over arbitrations: ^[21]
    1. Setting aside an arbitral award due to an arbitrator’s misconduct, gross irregularity in the proceedings or if the award has been improperly obtained;
    2. determining questions of law submitted by an arbitrator towards the finalisation of his or her award;
    3. authorising the taking of evidence by way of affidavit;
    4. granting interim relief;
    5. ordering discovery and/or security for costs;
    6. reviewing an award; and
    7. directing the preservation of property.
12. Pertinently, the court emphasised that if it was authorised to play a role in evaluating or adjudicating the merits of an arbitral award, the primary purposes of the Arbitration Act would be undermined – it would result in a private dispute being rendered public, preclude the achievement of finality and give rise to the prospect of further appeals which would unavoidably escalate the cost and expense that the arbitral process otherwise seeks to avoid. In the premises, the court concluded that section 28 cannot reasonably be interpreted to allow an appeal against an arbitral award to the High Court as same would defeat everything else that the Arbitration Act seeks to achieve.^[22]
    

    The Bill of Rights

13. As mentioned above, Level Seven contended that the arbitration agreement ought to be interpreted within the ambit of the constitutional rights to dignity, freedom and equality. It submitted that sequentially this would promote the principle of contractual autonomy, as well as the right of access to courts provided for in section 34 of the Constitution.^[23]
14. In its evaluation of contractual autonomy and the right of access to courts, the court considered the meaning and purposes of the Arbitration Act. In doing so, it referred to the case of Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd In re: Hyundai Motor Distributors (Pty) Ltd v Smit NO^[24]. On the application of the principles expressed in this case, the court held that the Arbitration Act cannot be read so as to allow a right of appeal to the High Court if this would strain its meaning unduly. Furthermore, that if section 28 were to be read as permitting a right of appeal to the High Court, such reading would distort the provisions of section 28 substantially beyond its true meaning and intended purpose.^[25] As to the principle of contractual autonomy, the court stated that for an arbitration agreement to provide for an appeal against an arbitral award to the High Court the necessary empowering legislation to give effect thereto had to exist. Having found that such legislation was lacking, the High Court added there is no recognisable constitutional principle that requires the law to give effect to a contractual election that turns out to have been legally mistaken.^[26] With regard to the right of access to the courts, the court referred to the constitutional case of Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews^[27]. Relying on the principles set out in Lufuno Mphaphuli, the court stated that a submission to arbitration implies a choice not to exercise the right of access to a court in respect of the dispute so submitted and that there can be nothing constitutionally objectionable about holding a party to that choice.^[28]
    

    The validity of the contract

15. As to whether or not a contract can be declared void, it has to be established that the parties agreed, expressly or tacitly, that the validity of same was conditional on the existence of a particular state of affairs of which the parties were mistaken. Conversely, contracts concluded on the basis of a common mistake are not void merely because they would not have been concluded had there been no mistake at all.^[29] The court held that there was no evidence that it was common cause between the parties that the submission to arbitration would become invalid if it transpired that an appeal to the High Court was not competent. The facts before the court indicated that there was no such express term in the contract, and no tacit term to that effect was pleaded either.^[30]
    

    Conclusion

16. Having completed its evaluation of the factual and legal principles as set out above, the court held that it has no jurisdiction to entertain the appeal sought by Level Seven. It found that clause 19.9 of the contract is null and void to the extent that it purports to confer appellate jurisdiction on the court.

ADV K BAILEY SC FAArb (SA)

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