SOUTH AFRICA Trends and Developments Contributed by: Jonathan Ripley-Evans, Fiorella Noriega Del Valle, Veronica Connolly and Kyle Melville, Herbert Smith Freehills Kramer
Looking Ahead: South Africa’s Arbitral Trajectory South Africa’s posture towards investor-state arbitra - tion may remain measured, but the broader trajectory of its arbitration framework is one of considered and sustained progress. Through legislative modernisa - tion, the development of institutional capacity and the cultivation of a judiciary demonstrably receptive to international arbitration norms, the country has assembled the foundational elements of a mature and credible arbitral environment. As investment flows into Africa and commercial activ - ity across the continent continues to deepen and diversify, the case for resolving African disputes within Africa has grown correspondingly stronger. The con - siderable costs historically associated with arbitrating in distant foreign seats, combined with the increas - ing sophistication of African arbitral institutions, have given meaningful impetus to a gradual reorientation towards localised dispute resolution. South Africa’s legislative reforms, institutional evo - lution and judicial development collectively make a compelling case for its candidacy as the continent’s pre-eminent arbitral centre. Challenges undoubtedly remain, but the seriousness of purpose with which progress has been pursued suggests that South Africa is actively and credibly assuming that role.
are equally empowered to determine such disputes, or whether Section 163 claims are properly the exclusive preserve of the courts, remains an unresolved ques - tion of considerable practical significance. The position as it currently stands is shaped princi - pally by the decision in Peel v Harmon J & C Engineer- ing ( Pty ) Ltd and Others 2013 (2) SA 331, handed down under South Africa’s Arbitration Act of 1965, which importantly only governs domestic arbitrations. The court in Peel affirmed that South African courts retain jurisdiction over Section 163 claims notwithstanding the existence of an arbitration agreement. This finding has since given rise to a pattern of conduct in which parties seek to circumvent agreed arbitral mecha - nisms by characterising their disputes as “oppression claims” within the scope of Section 163. The IAA however stands as a key development in this area, because it obliges courts to stay proceedings in favour of arbitration where a valid international arbitra- tion agreement is in place – an obligation not found in the domestic Arbitration Act under which Peel was decided. Whether that obligation will be construed to extend to Section 163 shareholder disputes remains to be determined. Until the courts revisit the principles established in Peel and consider their application in the context of the IAA, the interaction between Sec - tion 163 and arbitration agreements will continue to generate uncertainty.
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