SOUTH AFRICA Law and Practice Contributed by: Jonathan Ripley-Evans, Fiorella Noriega Del Valle, Kyle Melville and SooBin Park, Herbert Smith Freehills Kramer
Arbitral awards in South African-seated arbitrations
Foreign Awards Subject to Ongoing Set-Aside Proceedings The IAA states that, if an application for the setting- aside or suspension of an award has been made to a competent authority at the seat, the South African court may, if it considers it appropriate: • adjourn its decision on the enforcement of the award; and • on the application of the party claiming enforce - ment of the award, order the other party to provide suitable security. South African courts will not enforce an arbitral award that has been set aside by the courts at the seat of arbitration. Awards Subject to Ongoing Set-Aside Proceedings at the Seat When an award is subject to ongoing set-aside pro - ceedings at the seat of arbitration, South African courts may suspend the enforcement proceedings pending the resolution of those proceedings. There has not been any case law around this point, but this approach would avoid conflicting judgments and respect the authority of the courts at the seat of arbi - tration. State and State Entity Immunity In South Africa, the Foreign States Immunities Act, 1981 (FSIA) provides foreign states with general immunity from the jurisdiction of South African courts. However, Section 10 of the FSIA states that, if a for - eign state has agreed in writing to submit a dispute to arbitration, it shall not be immune from the jurisdiction of the courts of South Africa in any proceedings which relate to arbitration . 12.3 Approach of the Courts General Approach of the South African Courts to the Recognition and Enforcement of Arbitral Awards Foreign arbitral awards As mentioned previously, the IAA states that a foreign arbitral award must be recognised and enforced in South Africa, except as expressly provided for in the IAA. The grounds provided for in the IAA accord with the grounds set out in the New York Convention.
The IAA also states that arbitral awards in international arbitrations which are seated in South Africa must be recognised, except as provided for in the IAA. Those grounds for refusal essentially mirror the grounds for refusing to recognise a foreign arbitral award. The IAA has reduced the scope for challenging awards for tactical reasons. For example, in early 2023, the SCA in Snowy Owl Properties 284 (Pty) Ltd v Mziki Share Block Limited found that, although it is contrary to public policy to enforce an arbitral award that is at odds with legislation, the force of the prohibition must be weighed against the important goals of private arbitration. The Court’s ultimate decision to enforce the award reflected the concern that, if such a defence is only raised after the arbitrator has handed down their award, this “self-evidently” erodes the utility of arbitration as an expeditious, out-of-court means of finally resolving the dispute. Another example was the case of GFE MIR Alloys and Minerals SA (Pty) Ltd v Momoco International Limited . In 2023, the High Court rejected a request for leave to appeal against an order enforcing an arbitral award and ordered that the award should be enforced pend - ing any future appeals the losing party may wish to lodge, in order to avoid delays (under South African law, further appeals generally suspend the enforce - ment of court orders). The court emphasised that public policy considerations support the general rule that arbitration awards should be enforced by South African courts. Refusal of Foreign Arbitral Awards on Public Policy Grounds While the South African courts are supportive of arbi - tration, they will refuse enforcement on public policy grounds if the award is fundamentally offensive to the country’s notions of justice and morality. As can be seen from Snowy Owl and Momoco , this standard is applied narrowly to ensure that only awards that egregiously violate public policy are refused at the enforcement stage. Grounds for refusal include fraud, corruption, serious procedural irregularities
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