TOOLS OF THE TRADE – Adv K Bailey SC’s ‘REFUSAL TO ENFORCE AN AWARD IF WRONG’ – October 2021

TOOLS OF THE TRADE – OCTOBER 2021

WILL A COURT REFUSE TO ENFORCE AN ARBITRATOR’S AWARD
IF IT CONSIDERS IT WRONG?

  1. In terms of section 31 (1) of the Arbitration Act 42 of 1965 (the Act), the arbitrator’s award in a domestic arbitration may be made an order of court. This subsection reads:

‘An award may, on the application to a court of competent jurisdiction by any party to the reference after due notice to the other party or parties, be made an order of court.’

  1. In terms of subsection (3) of section 31 of the Act, an award which has been made an order of court may be enforced in the same manner as any judgment.
  2. The wording of section 31 (1) of the Act indicates that a court has the discretion to refuse to make an award an order of court. In this article, the court’s powers in terms of section 31 (1) of the Act will be considered in light of the judgment delivered by Brand J (as he still was then), in the case of Kolber and Another v Sourcecom Solutions (Pty) Ltd and Others:  Sourcecom Technology Solutions (Pty) Ltd v Kolber and Another, 2001 (2) SA 1097 (CPD) (Kolber).
  3. The court heard two separate applications simultaneously. In the first application, an order was sought in terms of section 31 (1) of the Act to have the arbitrator’s arbitration award made an order of court.  In the second application, the unsuccessful party in the arbitral proceedings claimed an order for the award to be set aside in terms of section 33 (1) of the Act, alternatively for an order that certain matters be remitted to the arbitrator in terms of section 32 (2) of the Act.
  4. The court considered the second application first. The order for setting aside or the remittal of the award in the second application was refused.[1]  The court found that the arbitrator did not exceed his powers, that he did not misconduct himself, and that no good cause was shown for remittal.
  5. In considering whether the arbitrator’s award should be remitted, Brand J referred with approval[2] to a dictum by Gardiner J, in Clark v African Warranty and Indemnity Co Ltd, 1915 CPD 68 (Clark).
  6. In Clark it was held:[3]

‘The court will always be most reluctant to interfere with the award of an arbitrator.   The parties have chosen to go to arbitration instead of resorting to the courts of the land, they have specially selected the personnel of their tribunal and they have agreed that the award of that tribunal shall be final and binding.’

  1. The remaining question was whether the arbitrator’s award should be made an order of court in terms of section 31 (1) of the Act.
  2. It was argued that the function of the court was not simply to rubberstamp an arbitrator’s award. It was contended that the court has a discretion to refuse an application in terms of section 31 (1) if the court finds the award to be wrong.  It was submitted that to do otherwise would be giving judicial recognition to what the court knows to be wrong.[4]
  3. Brand J noted that no authority was cited for the propositions made. The learned judge referred to a passage in D Butler and E Finsen, Arbitration in South Africa: Law and Practice at page 273.[5]  The passage reads as follows:

‘The unsuccessful party in the arbitration proceedings may wish to oppose the application to enforce the award. It would appear that the procedure that he should adopt would depend on the ground on which he wishes to contest the award.  In this regard, it is necessary to distinguish between an award which is void from the outset and one which is voidable.  In the former case, the unsuccessful party is contending that there never was a valid award.  In the latter case there is a valid award which is enforceable until the award is set aside or remitted to the arbitrator by the court.’

  1. Brand J held that, apart from the authority, this result is also dictated by logic. He stated:

‘If the unsuccessful party in the arbitration is unable to have the award set aside or remitted while at the same time the successful party is unable to enforce the award in his favour, the result will be deadlock.’[6]

In the event, the court made the arbitrator’s award an order of court.

  1. The learned judge also cautioned that a party to arbitration proceedings should not be permitted to take the arbitration on appeal under the guise of a remittal in terms of section 32 (2) of the Act.[7] For the same reason, and in the interests of finality, a party should therefore not be allowed to successfully oppose an application to enforce an award in terms of section 31 (1) of the Act because he does not agree with the arbitrator.  That would in effect also amount to an appeal which is not permissible.
  2. In conclusion, the legal position is that the court will enforce an arbitral award, notwithstanding that it may be wrong in fact or in law, provided that it is a valid award. The fact that the court may disagree with the arbitrator’s findings, is not in itself a reason for refusing to enforce the award in terms of section 31 (1) of the Act.[8]

ADV K BAILEY SC FA Arb (SA)

Member of the Johannesburg Bar

Sandton

19 September 2021

[1]       Kolber, paras [44] and [68].
[2]       Kolber, para [60].
[3]      Clark, p. 77.
[4]       Kolber, para [70].
[5]       Kolber, para [71].
[6]       Kolber, para [72].
[7]       Kolber, para [61].
[8]       Dickenson & Brown v Fisher’s Executive, 1915 AD 166 at 176.

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