THE DISTINCTION BETWEEN THE JURISDICTION OF THE ARBITRAL TRIBUNAL AND THE ADMISSIBILITY OF A CLAIM IN THE LAW OF ENGLAND AND SINGAPORE – IS SUCH A DEVELOPMENT NECESSARY IN SOUTH AFRICAN ARBITRATION LAW?
Introduction
The decision by the Supreme Court of Appeal in Radon Projects (Pty) Ltd v NV Properties (Pty) Ltd 2013 (6) SA 345 (SCA) (Radon) concerned an appeal against a successful application by the employer for a declaratory order that certain claims dealing mainly with requests for extensions of time by the contractor were beyond the jurisdiction of the arbitral tribunal. On appeal, the SCA held that the claims were within the jurisdiction of the arbitral tribunal and upheld the appeal. The SCA made use of the opportunity to confirm the ability of an arbitral tribunal to be the first to rule on its own jurisdiction, although such ruling can be considered afresh by a court and if the tribunal wrongly concludes that it has jurisdiction, an award to that effect will be invalid.[1] The SCA also recognised that even if the employer may have a good defence to the claims, this did not deprive the arbitral tribunal of jurisdiction to consider them.[2] It was unnecessary for the SCA to consider whether the employer’s defence went to the merits of the contractor’s claims or was of a procedural nature.
A recent trend in case law, both in England and in Singapore, is to distinguish between rulings by an arbitral tribunal on its own jurisdiction, which can be considered afresh by the court, and defences relating to the admissibility of the claim. In the latter case the arbitral tribunal is exercising procedural powers, which are only subject to a much more limited form of court review. It is suggested that the employer’s defence against the contractor’s claims in Radon was either concerned with the admissibility of the claim, or possibly concerned a defence on the merits.[3] In either event, the viability of the defence is within the jurisdiction of the arbitral tribunal and should not involve the court.
This contribution was originally intended to be simply a discussion of the recent English judgment in Republic of Sierra Leone v SL Mining Ltd [2021] EWHC 286 (Comm) (Sierra Leone) and whether the distinction which it makes between the jurisdiction of the arbitral tribunal and the admissibility of a claim in the context of multi-tiered dispute resolution clauses should be applied in South African law. However, further research indicated that a more comprehensive discussion of the admissibility of claims in arbitration proceedings was justified. The expanded contribution now attempts to explain the difference between the jurisdiction of the arbitral tribunal and the admissibility of claims, as accepted in England and Singapore. It also briefly considers the types of situation where the issue of the admissibility of a claim can arise. This is important because if the matter concerns admissibility rather than jurisdiction, the scope for court interference with the decision of the arbitral tribunal is significantly less. The contribution will contend that the distinction between admissibility of claims and the jurisdiction of the arbitral tribunal should be recognised by South African arbitration law, without the need for legislation. Nevertheless, appropriate provisions in the rules agreed to by the parties for their arbitration may well facilitate such development.[4]
Selected academic commentary
A feature of both the decision by the English commercial court in Sierra Leone and the relevant decisions of the Court of Appeal in Singapore was the extensive reliance by the judges concerned on academic commentary, which is overwhelmingly in favour of recognising the distinction between the admissibility of claims and the jurisdiction of the arbitral tribunal.[5] A detailed analysis of the academic discussion is beyond the scope of this contribution, but the views of two of the writers referred to are briefly discussed.
The very distinguished arbitration practitioner and commentator, Jan Paulsson, explains the distinction between the tribunal’s jurisdiction and the admissibility of claims as follows:[6]
‘… the nub of the classification problem is whether the success of the objection necessarily negates consent to the forum. Our lodestar takes the form of a question: is the objecting party taking aim at the tribunal or at the claim? …
To understand whether a challenge pertains to jurisdiction or admissibility, one should imagine that it succeeds:
If the reason for such an outcome would be that the claim could not be brought to the particular forum seized, the issue is ordinarily one of jurisdiction and subject to further recourse.
If the reason would be that the claim should not be heard at all (or at least not yet) the issue is ordinarily one of admissibility and the tribunal’s decision is final.’
Regarding the first part of this test, it should be borne in mind that arbitration is based on consent and consent is therefore the lodestone for jurisdiction. For this reason, a challenge based on the existence, scope and validity of the arbitration agreement will invariably concern the arbitral tribunal’s jurisdiction as will questions regarding the validity of the tribunal’s appointment, the claimant’s standing to bring the claim and the question whether a non-signatory respondent is a party to the arbitration agreement.[7]
Whereas the first part of the test is concerned with the jurisdiction of a particular arbitral tribunal, the second part of the test regarding admissibility is concerned with whether it is appropriate for the arbitral tribunal to consider the claim, either then if it is alleged that certain pre-conditions for arbitration that do not affect consent have not yet been met, or ever, if for example it is alleged that the claim has lapsed through prescription.[8] The question of admissibility only arises once it is clear that the arbitral tribunal has jurisdiction.[9]
Paulsson was writing in 2005 at a time when the distinction between an objection to the jurisdiction of the International Court of Justice and the admissibility of an application was already a feature of the Court’s Rules.[10] Nevertheless, by 2015, the distinction was still not made in instruments applying to investment arbitration[11] and the distinction was only made in court decisions on commercial arbitration in England and Singapore even later.
Gary Born is another distinguished academic commentator cited in the Sierra Leone judgment. Understandably, the quoted comments are restricted to pre-conditions for arbitration, which were the focus of the Sierra Leone judgment.[12] In brief, Born concludes that when one is interpreting pre-arbitration conditions in an arbitration agreement, the ‘better approach’ is to presume, in the absence of clear indications to the contrary, that the parties did not intend such requirements to be jurisdictional.[13] Disputes regarding compliance with such requirements must therefore be submitted to the arbitral tribunal for decision. Moreover the tribunal’s decision should be reviewable by courts only according to the normal standards applicable to the setting aside of an award in a private arbitration, as opposed to the position regarding court review of the arbitral tribunal’s jurisdictional decisions where the court must make its own decision on the issue.[14] Born justifies this view by stating that whether there has been compliance with the pre-conditions is a matter of arbitral procedure usually dependent on the interpretation of the applicable rules or arbitration agreement.[15] The remedies for non-compliance necessarily involve procedural matters ‘regarding the timing and conduct of the arbitration’.[16] Furthermore, the parties are presumed to contemplate a ‘one-stop shop’ for resolving their dispute, particularly the procedural aspects.[17]
Recent developments in English Law: The Sierra Leone case
In Sierra Leone, the Republic of Sierra Leone (RSL) challenged an arbitral award on jurisdiction by an ICC arbitral tribunal under section 67 of the English Arbitration Act of 1996. The challenge was opposed by the claimant in the arbitration proceedings, SL Mining Ltd (SL). In its award, the tribunal concluded that it had jurisdiction to decide claims brought by SL arising from a mining licence agreement (the contract) that it had entered into with RSL. The dispute resolution clause in the contract contained a two-stage or two-tiered dispute resolution procedure.
The relevant parts of the dispute resolution clause read as follows:
‘b) The parties shall in good faith endeavour to reach an amicable settlement of all differences of opinion or disputes which may arise between them in respect to the execution performance and interpretation or termination of this Agreement, and in respect of the rights and obligations of the parties deriving therefrom.
c) In the event that the parties shall be unable to reach an amicable settlement within a period of 3 (three) months from a written notice by one party to the other specifying the nature of the dispute and seeking an amicable settlement, either party may submit the matter to *[arbitration under the ICC Arbitration Rules].’[18]
The notice of dispute had been served by SL on 14 July 2019. SL served the request for arbitration on 30 August 2019. RSL contended that the request for arbitration was premature and arbitration could not commence before 14 October 2019, three months from the notice of dispute. This contention was rejected by the arbitral tribunal. Its award on jurisdiction was challenged in court under section 67 of the English Arbitration Act on the basis that the arbitral tribunal had exceeded its substantive jurisdiction.[19] The main question before the court was whether the challenge regarding the alleged prematurity of the request for arbitration was actually concerned with the jurisdiction of the tribunal, thus falling under section 67, or whether the challenge only concerned the admissibility of the claim.
Significantly, the need to distinguish between jurisdiction of the tribunal and the admissibility of the claim was common cause, because only the former falls to be dealt with under section 67. If the issue concerns admissibility of the claim, the court is precluded from interfering with the arbitral tribunal’s decision by section 1(c) of the English Arbitration Act of 1996.[20] In an earlier English case, Emirates Trading Agency Llc v Prime Mineral Exports Private Ltd [2014] EWHC 2104 (Comm) (Emirates), the court accepted that a provision requiring friendly negotiations as a precondition for arbitration was enforceable, but that the issue of whether the precondition was complied with went to the arbitral tribunal’s jurisdiction.[21] The latter aspect of the decision has been the subject of academic criticism on the basis that the question should have been treated as procedural, or even substantive, rather than jurisdictional.[22] However, as the court correctly pointed out in Sierra Leone, the question as to whether the issue was one of admissibility rather than jurisdiction was not raised before the court in Emirates and the matter was dealt with solely as a challenge to the tribunal’s jurisdiction under section 67 of the English Arbitration Act.[23]
In deciding to treat the requirement for amicable settlement and the time period as a matter regarding admissibility and best decided by the arbitral tribunal, the court in Sierra Leone relied on academic commentary, some of which was discussed in the previous section. It also referred to the Singapore cases and the judgment of the US Supreme Court referred to in the next section below in support of its decision.[24] The court further relied in support of its conclusion on the Chartered Institute of Arbitrators’ International Arbitration Practice Guideline on ‘Jurisdictional Challenges’ (CIArb Practice Guideline) (2016) that carefully distinguishes between the jurisdiction of the arbitral tribunal and the admissibility of claims.[25] Finally, the court concluded that even if the matter was jurisdictional, RSL had consented to the service of the request for arbitration on 30 August 2019, thus waiving compliance with the three-month period.[26] Moreover, the court considered that the three-month period was not an absolute bar to the commencement of arbitration proceedings at an earlier stage if it was by then objectively clear that the parties would be unable to reach an amicable settlement by 14 October 2019.[27]
A trilogy of decisions supporting the distinction between jurisdiction and admissibility from Singapore
The three Singapore cases referred to here are helpful not only because they recognise the distinction between the jurisdiction of the arbitral tribunal and the admissibility of claims, but because they illustrate some of the situations in which the distinction is important.
The first decision is the Swissbourgh case that was decided as recently as 27 November 2018. The case arose from an appeal against a judgment of the court of first instance in Singapore setting aside an arbitral award on the application of the Kingdom of Lesotho (Lesotho). The award had been made in an investment arbitration commenced by Swissbourgh and others against Lesotho. The claim was brought because Lesotho had been a party to the shuttering of the Southern African Development Community (SADAC) Tribunal, created under the SADAC Treaty of 1992, so that it was no longer available to non-state parties who had pending claims against Lesotho at the time of the shuttering, while allegedly failing to provide an alternative forum.[28]
In terms of a protocol to the treaty, Swissbourgh would first have to establish that it had exhausted local remedies in the courts of Lesotho, before it would be entitled to commence an international arbitration against Lesotho under the protocol. The Singapore Court of Appeal distinguished between the jurisdiction of the tribunal, which it described as ‘the power of the tribunal to hear the case’ and admissibility, which it described as referring to ‘whether it is appropriate for the tribunal to hear it’.[29]
At this point it is appropriate to refer to the fact that although investment arbitrations between an investor and the host state are based on consent, that consent is typically manifested in a different way to consent in a commercial arbitration, where the arbitration agreement will typically take the form of an arbitration clause in the contract relating to the dispute. In an investment arbitration, the host state typically makes an irrevocable offer to arbitrate disputes with investors from another state in a treaty between the host state and the investor’s home state. In this case, the relevant protocol required investors to exhaust local remedies. The question was whether this was a precondition to consent, which implied that the problem concerned jurisdiction, or whether it was only a precondition to commencing arbitration proceedings, which would have related to the admissibility of the claim.[30] The Court of Appeal noted that although a requirement to exhaust local remedies usually pertains to admissibility, in the particular circumstances the court was satisfied that the requirement constituted a pre-condition for consent and therefore applied to jurisdiction. The court also reasoned that its conclusion found support in the failure by the appellants either on appeal or at first instance to argue that the exhaustion requirement was a question of admissibility.[31] On the facts it appeared that the appellants had a reasonably available and effective Aquilian action in the Lesotho courts, with the result that the appeal on this ground was successful.[32]
The Swissbourgh decision brings to mind the comparable set of facts considered by the US Supreme Court in BG Group plc v Republic of Argentina US12-138 (2014) 572 US 2014 (BG Group), where the majority and the minority were split on the issue of whether or not Argentina had given consent to arbitration. The majority were of the view that local litigation was a procedural precondition for arbitration, and not a condition for consent to arbitration, with the result that under US federal law, the question whether there had been sufficient compliance was primarily a matter for the arbitral tribunal to decide. However, the minority were of the view that submission of the dispute to the local courts was a condition for consent and that determination of the existence of consent to arbitration was a matter for the federal courts.[33] Although the matter is arguable both ways this writer tends to prefer the opinion of the minority.
In BBA the Singapore Court of Appeal again carefully explained the basis for the distinction between the jurisdiction of the arbitral tribunal and the admissibility of a claim.[34] The court applied the ‘tribunal versus claim’ test and concluded that a plea regarding a statutory time bar goes towards admissibility as it attacks the claim. The court stated that it makes no difference whether the applicable statute of limitations or prescription legislation is classified as substantive (extinguishing the claim)[35] or procedural (barring the remedy). The court concluded that statutory time bars could only become a jurisdictional issue if the parties expressly excluded such issues in their arbitration agreement.[36]
In the third of the Singapore cases, BTN v BTP Civil Appeal no 178 of 2019 [2020] SGCA 105 (BTN), the court accepted that a decision by the arbitral tribunal that the appellants’ defence was res judicata concerned the admissibility of the defence and not the jurisdiction of the arbitral tribunal. On a highly simplified version of complex facts, the contracts that directly gave rise to the issue of res judicata concerned the employment contracts that one of the appellants had entered with each of the two respondents, who were individuals. The contracts were to be performed in Malaysia and were subject to Malaysian law, but contained mandatory arbitration clauses providing for arbitration in Singapore.[37]
To reach its conclusion, the court cited the two earlier judgments and Paulsson’s test referred to above.[38] The court concluded that determinations by an arbitral tribunal on issues of res judicata should be treated as concerning admissibility rather than jurisdiction. Moreover, an error by the tribunal as to whether or not the matter was res judicata would not convert the determination into one made without jurisdiction.[39] Furthermore, an award incorporating an erroneous decision of res judicata could not be set aside or refused enforcement on the basis that the award was contrary to public policy.[40] On the particular facts, the appellants could in any event have avoided the problem of res judicata if they had been sufficiently prompt in enforcing the arbitration clause in the employment contract providing for mandatory arbitration in Singapore. However, both the arbitral tribunal and the court noted that the mandatory nature of the arbitration clause was dependent on one of the parties invoking it.[41] The appellants, while concerned about the respondents circumventing the arbitration clause by starting proceedings before the Malaysian Industrial Court (MIC), failed to commence arbitration proceedings before the MIC had concluded that the dismissal was in effect without cause, thereby depriving the appellants of their main defence in the subsequent arbitration. Timely reliance on the arbitration clause by the appellants could have prevented the res judicata situation from arising.
Nevertheless, the case does provide authority for the proposition that res judicata is a matter of admissibility rather than going to the jurisdiction of the tribunal.[42] An arbitral tribunal may be confronted by a defence of res judicata, where the same issue has been decided between the same parties by another arbitral tribunal.[43] On the authority of BTN the second arbitral tribunal’s decision on res judicata is concerned with the admissibility of the defence rather than with its own jurisdiction.
Examples of situations pertaining to the admissibility of claims
Interest in admissibility of claims, as opposed to the arbitral tribunal’s jurisdiction, seems to have arisen primarily in the context of preconditions for arbitration in multi-tiered disputes resolution clauses, as illustrated by the discussion of Sierra Leone above. Whereas it makes sense to treat a condition precedent requiring, e.g., mediation on specified terms before resort may be made to arbitration as going to admissibility of the claim rather than the arbitral tribunal’s jurisdiction, this is not the only situation where such a distinction is desirable.
Time-bar clauses in contracts or statutory limitation periods should also be regarded as affecting the admissibility of a claim rather than the jurisdiction of the tribunal.[44] As illustrated by the BTN case, discussed above, a defence of res judicata or issue estoppel also goes to admissibility rather than jurisdiction.
Nevertheless, as private arbitration depends on the existence of a valid arbitration agreement between the parties, it is submitted that parties could by using clear and specific wording to that effect, turn matters which should normally be treated as pertaining to admissibility into issues pertaining to the arbitral tribunal’s jurisdiction. It is also submitted that issues concerning the scope of a valid arbitration agreement are more properly matters pertaining to jurisdiction rather than admissibility.[45]
The position in South African law post Radon
In Radon, the court of first instance made an order granting the application by the employer for a declaratory order that the arbitrator lacked jurisdiction to determine certain claims referred to arbitration by the contractor. The employer contended that most of these claims had been submitted to the principal agent and rejected and the principal agent had been called on to resolve the resulting disagreement in terms of the dispute resolution clause and did so. As the contractor failed to dispute the claims within the contractual time limit, the principal agent’s decision became final and binding and there was no dispute that could be submitted to arbitration.[46] The SCA held however that revised claims had been submitted to the principal agent after practical completion, which became disputed after the principal agent failed to decide them. A dispute had now arisen regarding the ‘validity’ of these claims, which fell within the jurisdiction of the arbitrator to determine. As a result the appeal succeeded.[47]
In short, it was for the arbitrator to decide on the procedural validity of the revised claims, or in the language used in other jurisdictions referred to above, their admissibility (See Sierra Leone and the Singapore trilogy) or whether the procedural preconditions had been met (BG Group). Only if the arbitrator found the claims to be procedurally admissible, would it be necessary for the arbitrator to decide on the merits of the disputed claims. It is submitted that the SCA in Radon has opened the door for the high court at first instance to make the distinction between the arbitral tribunal’s jurisdiction and the admissibility of claims, thereby restricting the scope for court review in the latter instance.
Provisions in arbitration rules
As yet, provisions in commonly used arbitration rules dealing specifically with admissibility appear very scarce. The LCIA Arbitration Rules of 2020 confer the power on the arbitral tribunal to determine the ‘inadmissibility’ of a claim or defence, but this provision is tucked away in a rule dealing with early determination of claims or defences manifestly outside the tribunal’s jurisdiction or which are manifestly without merit.[48]
Nevertheless, the CIArb Practice Guideline of 2016 in its preamble, provisions and commentary[49] distinguishes in some detail between the jurisdiction of the arbitral tribunal and the admissibility of claims and was cited as support for the court’s conclusion in the Sierra Leone judgment.[50]
The way ahead
It is submitted that the arbitral tribunal needs to be alert to the distinction between a jurisdictional challenge and a challenge based on the admissibility of the claim.[51] Party representatives, in view of the important differences between the two types of challenge explained above, ought to be equally aware of the distinction. There is also the possibility that the attention of the arbitral tribunal and party representatives can be drawn to this distinction by an appropriate provision in the applicable rules.
Before the arbitral tribunal can deal with a challenge to the admissibility of a claim, it needs to be satisfied that it has jurisdiction regarding the dispute. This leads to the question as to whether the arbitral tribunal should raise concerns regarding its jurisdiction on its own initiative. It is suggested that as a matter of good practice, the tribunal should not generally raise such concerns on its own initiative, unless the concern relates to the arbitrability of the dispute.[52] If an issue is not arbitrable, the parties cannot confer jurisdiction on the arbitral tribunal and an award purporting to rule on the matter will be unenforceable. Similar to the position on jurisdiction, the question whether the arbitral tribunal should raise the matter of the admissibility of a claim, in the terminology used in the Sierra Leone judgment, is not a binary question,[53] but one that should be answered with a qualified negative.
Generally, the arbitral tribunal should not raise concerns about admissibility on its own initiative.[54] Nevertheless it is submitted that it would be appropriate to do so if a party raises as a jurisdictional challenge an issue that is properly concerned with the admissibility of the claim. In such circumstances, it is submitted that the arbitral tribunal can legitimately ask the parties that when making their submissions on the ‘jurisdictional’ issue, they should address the question as to whether or not the issue is truly jurisdictional or only relates to the admissibility of the claim.
Finally, it has been suggested that, where feasible, it is good practice for the arbitral tribunal to record, at an early stage, that no party has raised a challenge to its jurisdiction and that it considers its members to have been properly appointed.[55] It is submitted that it is also desirable for the tribunal to record, once the written submissions have been exchanged[56] and again where it is feasible to do so, that no party has challenged the admissibility of any claim. The effect of both statements is to discourage the risk of future challenges on these issues, whether during the arbitration or after the award.
David Butler
Emeritus Professor and Research Fellow
Stellenbosch University
10 May 2021
[1] Radon para 29.
[2] Radon para 23.
[3] See further the brief discussion in the section captioned ‘The position in South African law post Radon’ below.
[4] Compare Zhongji Development Construction Engineering Co Ltd v Kamoto Copper Co SARL 2015 (1) SA 345 (SCA) (Zhongji) paras 44, 52 and 53 where the judge relied on the parties’ choice of the Standard Procedure Rules (6th edition 2009), Rule 12 for the conclusion that an arbitral tribunal was intended by the parties to be the first judge of its own jurisdiction.
[5] Sierra Leone para 14.
[6] J Paulsson “Jurisdiction and Admissibility” (2005) in Global Reflections on International Law, Commerce and Dispute Resolution, Liber Amicorum in honour of Robert Briner (Gerald Aksen et al, eds) (ICC Publishing, 2005) (“Paulsson”) at pp 616 – 617 as quoted in BBA v BAZ [2020] SGCA 53 (BBA) para 77 and Sierra Leone para 14(ii). Paulsson’s formulation is quoted verbatim in the test here as the Sierra Leone judgment at para 18 also contains a somewhat inaccurate and potentially misleading paraphrase.
[7] See BBA 53 para 78 and compare the scope of s 30(1) of the English Arbitration Act of 1996 that was considered in the context of the Sierra Leone case.
[8] See Swissbourgh Diamond Mines (Pty) Ltd v Kingdom of Lesotho [2018] SGCA 81 (Swissbourgh) para 207 and see the discussion below on the various factors that can render claims inadmissible.
[9] See the Chartered Institute of Arbitrators’ International Arbitration Practice Guideline on ‘Jurisdictional Challenges’ (CIArb Practice Guideline) (2016) article 3 and commentary.
[10] See Article 79(1) of the Rules of the international Court of Justice, as quoted in L Gouiffès & M Ordonez ‘Jurisdiction and admissibility: are we any closer to a line in the sand’ (2015) 13 Arbitration International 111.
[11] Gouiffès & Ordonez (n 10 above) 111.
[12] See the discussion below.
[13] See Sierra Leone para 14(i) citing GB Born International commercial arbitration (3rd edition 2021) 1010, which goes into greater depth than the 2nd edition (2015) at 937.
[14] In brief a South African court will usually not interfere with an arbitral award under s 33 unless the procedure, not the result, is unfair (see Bester v Easigas (Pty) Ltd 1993 1 SA 30 (C) pp. 42J to 43C). However, where an award is challenged on the basis of lack of jurisdiction under s 33, the court will decide the issue afresh (see Gutsche Family Investments (Pty) Ltd v Mettle Equity Group (Pty) Ltd 2007 (5) SA 491 (SCA) paras 14 and 15, p. 496A to 496E).
[15] For a South African perspective, see Murray & Roberts Construction (Cape) (Pty) Ltd v Upington Municipality 1984 (1) SA 571 (A) pp. 581F to 582F, where the court held regarding a three-tiered dispute resolution clause, with arbitration being the third tier, that the procedure laid down by the clause as a whole was one of arbitration, for purposes of interrupting the completion of prescription under s 13(1)(f) of the Prescription Act 68 of 1969. By way of analogy, the procedure of a multi-tiered dispute resolution clause as a whole should be interpreted and applied by the arbitral tribunal, with minimal court interference, unless the tribunal’s jurisdiction is challenged.
[16] See e.g. the discussion of Radon below. If the complaint is properly regarded as one of admissibility, and the arbitral tribunal is of the view that pre-conditions for arbitration have yet to be complied with, the arbitral tribunal has jurisdiction and may logically stay the arbitration proceedings until the pre-conditions have been met.
[17] Born, as quoted in para 14(1) of the Sierra Leone judgment. For judicial support for one-stop dispute resolution in South Africa, see Zhongji paras 32 and 59, citing Fiona Trust & Holding Corporation v Privalov [2007] 4 All ER 951 paras 7 and 27.
[18] See Sierra Leone para 3.
[19] The meaning of ‘substantive jurisdiction’ for purposes of s 67 is set out in s 30(1) read with s 82(1).
[20] S 1(c) of the English Arbitration Act provides that in matters governed by Part I of the Act ‘the court should not intervene except as provided by this Part.’ It differs thus form the equivalent provision in the UNCITRAL Model Law as contained in Schedule 1 of the (South African) International Arbitration Act 15 of 2017, namely article 5, in that the word ‘shall’ in the Model Law is replaced with ‘should’.
[21] See the Emirates judgment paras 64 and 73. The conclusion that the provision regarding friendly negotiations was enforceable in English law was reached after an extensive analysis of previous case law. This would not have been an issue in South African law, as the provision for arbitration, if the friendly negotiations were unsuccessful, clearly constituted the required deadlock-breaking mechanism: see Hugo, Kirsten & Kirsten (Pty) Ltd v Collotype Labels (Pty) Ltd (323/2019) [2020] ZASCA 21 (25 March 2020) para 21.
[22] See L Flannery & R Merkin ‘Emirates Trading, good faith, and pre-arbitral ADR clauses: a jurisdictional precondition?’(2015) 31 Arbitration International 102 to 106, particularly 105.
[23] See Sierra Leone para 13.
[24] See Sierra Leone paras 15 and 18.
[25] See Sierra Leone para 19. See further the second last section of this contribution below.
[26] See Sierra Leone paras 27 and 28.
[27] See Sierra Leone paras 34 and 36-38.
[28] See Swissbourgh paras 2 and 3. Further details of the claims against Lesotho regarding the alleged wrongful expropriation of mining leases and deprivation of remedies appear from paras 4 and 5 of the judgment. The background facts are set out in paras 8 to 11. Although the majority of the tribunal found that it did have jurisdiction, the arbitrator nominated by Lesotho, retired Justice PM Nienaber, provided a dissenting opinion disagreeing with this finding, partly on the basis that the appellants had failed to exhaust local remedies as required by the relevant treaty provision (para 46).
[29] See para 207 of the Swissbourgh judgment which was cited by the court with approval in Sierra Leone para 15(ii) and 18, but without referring to the Swissbourgh case by name.
[30] The relevant provision, namely article 28(1) of the protocol read: ‘Disputes between an investor and a State Party concerning an obligation of the latter in relation to an admitted investment of the former, which have not been amicably settled, and after exhausting local remedies shall, after a period of six (6) months from written notification of a claim, be submitted to international arbitration if either party to the dispute so wishes.’
[31] See Swissbourgh paras 205 to 209.
[32] See Swissbourgh para 224.
[33] The litigation was concerned with an arbitration pursuant to article 8 of the Bilateral Investment Treaty between the United Kingdom and Argentina held in Washington DC under the UNCITRAL Arbitration Rules. Argentina sought to challenge the award in favour of BG Group in the US federal courts on the basis that the arbitral tribunal lacked jurisdiction. The judgment was briefly referred to in Sierra Leone para 15(i), but without discussion. Note that the majority in BG Group did not use the term ‘admissibility’ but consistently referred to ‘procedural preconditions’ for the use of arbitration.
[34] See BBA paras 74 to 79, relying particularly on Swissbourgh and Paulsson (n 6 above) 616-617.
[35] As in South Africa: See the Prescription Act 68 of 1969 s 10(1).
[36] See BBA para 80.
[37] See BTN paras 5, 10, 11 and 33.
[38] See BTN paras 68-70.
[39] See BTN para 71.
[40] See BTN para 72.
[41] See BTN para 63. The position in South African law is similar. See Parekh v Shah Jehan Cinemas (Pty) Ltd 1980 (1) SA 305 (D) at p. 305F-G.
[42] On the particular facts, the question of the effect of res judicata had specifically been referred to the tribunal, so there was no basis for arguing that the tribunal lacked jurisdiction. See BTN paras 27 and 33.
[43] See e.g. Associated Electric & Gas Insurance Services Ltd v European Reinsurance Company of Zurich (Bermuda) [2003] UKPC 11 para 20; N Rawding & K Seeger ‘Aegis v. European Re and the confidentiality of arbitration awards’ (2003) 19 Arbitration International 487. Moreover, the first award is admissible in the second arbitration in the interests of justice, despite the confidentiality of arbitration proceedings in English law. See Emmott v Michael Wilson & Partners Ltd [2008] EWCA Civ 184 para 107.
[44] See generally Paulsson as quoted in Sierra Leone para 15(ii) and BTN para 70 and the CIArb Practice Guideline article 3.
[45] Compare the commentary on the CIArb Practice Guideline article 3 at para (d) where it is argued that where the tribunal has to determine the enforceability of a valid arbitration agreement regarding particular disputes, this is a matter of admissibility. This may well be the case concerning the application of preconditions for arbitration or time-bar provisions, but a question regarding the interpretation of the arbitration agreement regarding its scope, i.e. its application to a particular dispute, is rather a matter of jurisdiction. However, arbitration clauses will generally be construed widely, as parties wishing to limit the agreement’s application can easily do so by imposing clearly worded and specific restrictions.
[46] See Radon para 19. The dispute resolution clause is quoted in Radon para 6.
[47] Radon paras 22 and 25.
[48] Article 22(1)(viii) empowers the tribunal ‘to determine that any claim, defence, counterclaim, cross-claim, defence to counterclaim or defence to cross-claim is manifestly outside the jurisdiction of the Arbitral Tribunal, or is inadmissible or manifestly without merit; and where appropriate to issue an order or award to that effect (an “Early Determination”)’ (my emphasis).
[49] See the Preamble paras 6 to 9 and articles 2 and 3, together with their respective commentaries, which carefully distinguish between the tribunal’s jurisdiction and issues pertaining to admissibility.
[50] See Sierra Leone para 19.
[51] See the preamble to the CIArb Practice Guideline para 6.
[52] The normal meaning of ‘arbitrable’ in South African law refers to the question whether the dispute may be referred by agreement to a private arbitrator, as opposed to one which may only be decided by a state court. See the CIArb Practice Guideline article 1.5. See also Airports Company South Africa Ltd v ISO Leisure OR Tambo (Pty) Ltd 2011 4 SA 642 (GSJ) para 22 at p. 649G-H for an example of an arbitrator raising such concerns.
[53] See Sierra Leone paras 9 and 16. Although not necessarily understood in this way by some witnesses before the Zondo Commission, a binary question is one which admits only two answers, typically either yes or no.
[54] See e.g. the Prescription Act 68 of 1969 s 17(1), which states that courts (including arbitral tribunals in the context) should not raise issues regarding extinctive prescription of debts on their own initiative. A defendant may possibly waive its right to rely on the defence.
[55] See the CIArb Practice Guideline’s commentary on article 1, para 3, comment (a).
[56] Compare the Association’s Standard Procedure Rules (2018 edition) articles 20-22 and 24.
