SOUTH AFRICA Law and Practice Contributed by: Jonathan Ripley-Evans, Fiorella Noriega Del Valle, Kyle Melville and SooBin Park, Herbert Smith Freehills Kramer
10.2 Types of Remedies Arbitral tribunals in South Africa have a broad dis - cretion when awarding remedies, but there are some limitations. These limitations are not explicitly set out in the IAA, but arise in the context of a risk that the award may be set aside, or of the South African courts refusing to enforce the award. The IAA provides specific circumstances when an award may be set aside, or where enforcement may be refused, which highlights the limits of the arbitra - tor’s power to hand down certain awards – namely, as follows. • A tribunal cannot make an award that conflicts with the public policy of South Africa. A typical example of this is punitive or exemplary damages, as such awards are not recognised under South African law. • A tribunal cannot make an award where the subject matter of the dispute is not capable of settlement by arbitration. For example, an arbitrator cannot make an award placing a company in liquidation or imposing a criminal sanction. • A tribunal cannot make an award that is outside the scope of the dispute that has been referred to it. Tribunals can order specific performance, rectification and injunctions, provided such remedies: • are within the scope of the arbitration agreement; • are within the scope of the dispute referred to them; • do not conflict with South African public policy; and • do not fall outside the scope of an arbitrable dis - pute under South African law. 10.3 Recovering Interest and Legal Costs Recovery of Interest Arbitral tribunals in South Africa can award interest. The rate and the period for which interest is awarded will depend on the agreement of the parties, the appli - cable law, or the tribunal’s discretion if no specific agreement exists.
The South African default position is set out in the Prescribed Rate of Interest Act of 1975, which states that, if the rate at which the interest is to be calculated is not governed by any other law, agreement, trade custom or in any other manner, such interest shall be calculated as follows. • At the South African “repurchase rate” plus 3.5% (currently 10.75%). • Interest shall commence on the following dates: (a) in the case of a liquidated debt – on the date that the debt becomes due; or (b) in the case of an unliquidated debt – on the date on which the creditor sends a demand, or takes steps to initiate arbitration proceedings, whichever is the earlier. Unless agreed otherwise, “simple interest” is gener - Legal costs are not governed by the IAA; however, they are generally awarded in South Africa based on the principle that costs follow the event (the losing party pays the legal costs of the winning party). None - theless, this is dependent on the agreement of the parties, or on the rules of the chosen arbitral institu - tion. The general position adopted in court proceedings and agreed in domestic arbitrations is that the costs awarded are the “taxed” costs of the parties’ legal representatives (which are based on a “tariff” pub - lished in the rules of the High Court), the arbitrator’s fees, experts’ fees, fees and disbursements payable to the arbitration institution, and similar fees and dis- bursements. ally utilised. Legal Costs The “tariff” does not reflect the actual legal costs incurred by the parties and therefore the winning par - ty does not always recover their full legal spending. Although agreeing to apply this tariff means that the winning party may not be made “whole”, it does miti - gate the potential liability of the losing party. However, there is no reason why the parties need to agree to apply the “tariff” and they are entitled to agree that costs will be awarded in the award, at the
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