SOUTH AFRICA Law and Practice Contributed by: Jonathan Ripley-Evans, Fiorella Noriega Del Valle, Kyle Melville and SooBin Park, Herbert Smith Freehills Kramer
Industrial Development Corporation of South Africa Limited and Another v Kalagadi Manganese (Pty) Ltd (661/2024) [2025] ZASCA 70 (30 May 2025) In Kalagadi , the SCA reaffirmed South Africa’s pro- arbitration stance by holding that courts must enforce international arbitration agreements under the IAA, even where parties fail to invoke it. The SCA empha - sised that arbitration clauses are binding, judicial intervention is limited, and public entities are equally bound by arbitration agreements. It also emphasised the critical difference between the discretionary lan - guage of the Arbitration Act (which only governs domestic arbitrations in South Africa) and the man - datory provisions of the IAA. It held that courts must refer disputes to arbitration under Article 8 (1) of the IAA unless a narrow exception applies. As can be seen from the above, South African courts are supportive of enforcing arbitration agreements, provided they meet the legal requirements and do not contravene public policy. This support extends to both domestic and international arbitration agree - ments, reflecting a consistent judicial approach aimed at upholding arbitration as a legitimate and effective means of dispute resolution. 3.4 Validity In South Africa, an arbitration clause may be consid - ered valid and enforceable even if the main contract in which it is contained is found to be invalid. This principle is grounded in the doctrine of separability, which treats the arbitration agreement as distinct and independent from the main contract. The case of Lukoil Marine Lubricants DMCC v Natal Energy Resources and Commodities (Pty) Ltd [2023] ZAKZPHC illustrates this principle. In Lukoil , the court held that allegations that the main agreement in ques - tion was invalid did not also call into question the parties’ arbitration agreement (which was contained within the main agreement).
law, which may be inferred from factors such as the place where the contract was concluded or where it is to be performed. If no express or tacit choice is evident, the courts will then determine the governing law with which the arbitration agreement has the closest and most real connection. This involves considering various factual links, such as the seat of arbitration, the language of the arbitration and the institutional rules chosen by the parties. The approach aligns with Article 28 of the UNCITRAL Model Law, incorporated into South Afri - can law through the IAA, which provides that in the absence of agreement the tribunal shall apply the law determined by applicable conflict-of-laws rules. The Approach to Enforcement of Arbitration Agreements South African courts generally uphold arbitration agreements, honouring the parties’ autonomy and the principle of separability. The South African courts have consistently demon - strated a pro-arbitration stance, referring matters to arbitration when a valid arbitration agreement exists, and enforcing arbitral awards. This is consistent both with the statutory framework under the IAA and with common law principles that have been developed by the courts over the years. By way of example, the South African courts have showcased their pro-arbitration stance in the follow - ing cases, where party autonomy was emphasised and judicial intervention was avoided. Tee Que In Tee Que (see above), the SCA decisively limited its own discretion in disputes where the contracts con - tained international arbitration clauses. It mandated that, unless an arbitration agreement is void or inap - plicable, court litigation must be stayed in favour of arbitration. This case reinforced the autonomy of arbi - tration agreements and streamlined the enforcement process.
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