South Africa

Part I: what can be enforced?

1. What counts as an arbitral “award” that can be enforced?

• a final award
• an interim award (measure)
• awards by consent

2. Formal requirements that an award needs to conform with to be enforceable

An arbitral “award” must comply with the requirements of the Arbitration Act No. 42 1965 (Arbitration Act). Procedurally, the award must:

• be in writing and signed by all members of the arbitration tribunal
• be made within the period allowed for within the arbitration agreement, unless otherwise agreed upon
• be delivered by the arbitration tribunal, the parties or their representatives being present or having been summonsed to appear

Substantively, the award should be certain, final, possible, lawful, and intra vires. For enforceability and execution of the award, it must be converted into a court order by way of a High Court application in terms of Arbitration Act s31(1).

3. Orders on interim measures: enforceability

In terms of interim measures, Arbitration Act s26 provides: “Unless the arbitration agreement provides otherwise, an arbitration tribunal may make an interim award at any time within the period allowed for making an award.”

Courts enforce interim measures when such measures are issued by arbitrators. Interim measures can include, inter alia: security for costs; discovery of documents and interrogatories; provision of evidence by affidavit; and interim interdicts or similar relief.

a. Domestic awards

Orders for security for costs, discovery of documents, evidence by affidavit, and interim interdicts.

b. International commercial arbitration awards

Interim measures granted by international arbitrators are enforceable under the International Arbitration Act No. 15 2017 (IAA) subject to satisfying the requirements of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (1985).

4. Emergency awards: enforceability

a. Domestic awards

Domestic emergency awards are enforceable provided that they meet the same criteria as interim measures.

b. International commercial arbitration awards

Emergency international commercial awards are enforceable under the IAA.

Part II: resisting enforcement

5 a. How are awards set aside?

According to Arbitration Act s33, an award is set aside where:

(a) any member of an arbitration tribunal has misconducted himself in relation to his duties as arbitrator or umpire; or (b) an arbitration tribunal has committed any gross irregularity in the conduct of the arbitration proceedings or has exceeded its powers; or (c) an award has been improperly obtained, the court may, on the application of any party to the reference after due notice to the other party or parties, make an order setting the award aside.

Effectively, where an arbitrator is found not to have been independent, neutral, or impartial, the award can be set aside by the court where review proceedings are instituted by the aggrieved party.

In this regard, the application in respect of section 33 must be made within six weeks after the award was issued to the parties and must be finalised within three months (unless the parties have agreed otherwise). If such application is made on the basis or ground of corruption (or an offence set out in Chapter 2 of the Prevention and Combating of Corrupt Activities Act No. 12 2004), it should be done within six weeks after such conduct was discovered and cannot be made later than three years after the date that the award was published.

In summary, the grounds for setting aside the award are:

• misconduct
• gross irregularity
• arbitrators exceeding their powers
• the award being obtained improperly

b. Can enforcement be resisted if the respondent has not formally applied to set aside the award?

Per IAA s18, parties may only defend the enforcement of an arbitral award where they can satisfy one of the following:

• A party to the arbitration agreement had no capacity to contract under the law applicable to that party.
• The arbitration agreement is invalid under the law to which the parties have subjected it, or where the parties have not subjected it to any law, the arbitration agreement is invalid under the law of the country in which the award was made.
• The party did not receive the required notice regarding the appointment of the arbitrator or of the arbitration proceedings or was otherwise not able to present their case.
• The award deals with a dispute not contemplated by, or not falling within the terms of, the reference to arbitration, or contains decisions on matters beyond the scope of the reference to arbitration.
• The constitution of the arbitration tribunal or the arbitration procedure was not in accordance with the relevant arbitration agreement or, if the agreement does not provide for such matters, with the law of the country in which the arbitration took place.
• The award is not yet binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made.

Separately, a court may also refuse to recognise an arbitration award itself where:

• A reference to arbitration or the subject matter of the dispute is not permissible under the law of the Republic of South Africa.
• The recognition or enforcement of the award is contrary to the public policy of the Republic of South Africa.

c. Can non-parties seek annulment?

Arbitration Act ss32 and 33 are clear in that only parties to the reference to arbitration may seek to remit an arbitration award.

Moreover, IAA s18 is clear in that only the person against whom an arbitration award is granted may look to satisfy to the court that such order should not be recognised.

d. Grounds to seek setting aside

• Misconduct by the arbitrator.
• Gross irregularities in the conduct of arbitration proceedings.
• The arbitrator has exceeded their powers.
• An award has been improperly obtained.

See answer to question II(5)(a).

e. Timelines to seek setting aside

The application must be made within six weeks of the award being issued. Review proceedings generally take between 12 and 18 months to complete.

f. Grounds to resist enforcement

See answer to question II(5)(b).

g. Which court to go to for setting aside?

Review proceedings instituted by the aggrieved party are initiated through an application to the High Court of South Africa.

h. Formal requirements before court can grant setting aside

An arbitration award can be set aside through the mechanisms of a review application brought under the provisions of Arbitration Act s33(1). In this regard:

• The review must be brought within six weeks of the award being made.
• The review must be brought before the correct court having jurisdiction over the matter.
• The applicant must prove that: the arbitrator misconducted itself; an arbitration tribunal has committed a gross irregularity in the conduct of the arbitration proceedings; an arbitrator has exceeded its powers; or an award has been improperly obtained.

i. Do courts grant stay on enforcement as an interim measure?

The courts may stay the enforcement of the award while awaiting the decision, such as a party’s intention to file a review application.

j. What is the appellate mechanism against the decision of the court of first instance?

Where there is an appeal from the arbitration tribunal, such appeal must originate from an agreement between the parties. An appeal cannot take place absent such an agreement between the parties. In the event that the award is subject to a review application, that application can take 6 to 12 months to be determined in the High Court.

An appeal may be filed against the High Court’s review decision. This will be done either to a full bench of three judges of the High Court or the Supreme Court of Appeal, where that leave to appeal is granted. Moreover, the Constitutional Court also has jurisdiction to consider an application to review and award where there is a constitutional issue, or it concerns the interests of justice.

Part III: enforcing foreign awards

6. New York Convention applicability

The Recognition and Enforcement of Foreign Arbitral Awards Act 1997, as well as the IAA, was enacted to give effect to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (New York Convention). As a result, South Africa is a member of the New York Convention.

7. Timelines for enforcement

The IAA provides that a foreign arbitral award may be made by an order of court. Once made an order of court, the successful party may enforce the arbitral award as it would an ordinary South African judgment.

The IAA does not provide for any specific periods within which a foreign arbitral award must be enforced. In this regard, however, the time period provided for in South Africa’s Prescription Act No. 68 1969 (Prescription Act) would be applicable. Specifically, where the foreign arbitral award gives rise to a new cause of action, such cause of action must be enforced within a period of three years as per Prescription Act s11(d).

8. Which court to go to? Relation with location of assets?

The applicant will have to show that the court has jurisdiction, which is usually determined with reference to a company’s principal place of business or the location of the asset. The applicant will be able to attach the respondent’s assets in South Africa to found jurisdiction. IAA ss14 and 16 further allow for an application for the recognition of a foreign arbitral award to any division of the High Court of South Africa. However, if the applicant is aware of the location of the asset, attaching same to found jurisdiction will be the preferable approach.

9. Can non-parties resist enforcement?

Once the foreign arbitral award is made an order of court, a party may not resist enforcement thereof without first applying to the court to set aside the recognition of the arbitral award as an “order of court”.

10. Compelling disclosure of local assets? How to identify assets available for enforcement?

There are several ways in which a party can assess whether there are local assets which can be enforced against, including:

• conventional asset tracing techniques
• the appointment of a private investigator
• issuing of subpoenas
• discovery proceedings and further discovery procedures
• insolvency law mechanisms such as section 417 enquiries

11. Are third-party funded awards enforceable?

Yes, third-party funded awards are enforceable. Legislation does not regulate third-party funded awards; they are governed by case law precedent.

The Supreme Court of Appeal’s decision in PricewaterhouseCoopers Inc and Others v National Potato Co-operative Ltd ruled that it is not against public policy when a third party funds a litigating party in exchange for a portion of the proceeds if the litigating party wins the case subject to a bona fide claim.

Thereafter, third-party funding was addressed in De Bruyn v Steinhoff International Holdings NV and Others. In this regard, the High Court established that for a third-party arrangement to be valid:

• It should be necessary to provide access to justice.
• It should be fair and reasonable to protect the interests of the defendant.
• It must not be excessive for the risks that the litigation assumes.
• It must not interfere with the lawyers’ duty to act in the client’s best interests.
• The party who is funded by the third-party funder must not lose the ability to give instructions and control the litigation for their best interests.

Additionally, the High Court established that the funder retains the right to terminate the third-party funding arrangement if the dispute falls short of success. However, this termination must be based on independent advice obtained from the funded party’s representatives.

Moreover, Article 27 of the International Arbitration Rules (Rules), published by the Arbitration Foundation of Southern Africa (AFSA), which came into effect on 1 June 2021, refer to a “third-party funder” as “any natural or legal person who is not a party to the arbitration and is not a Party Representative, but who enters into an agreement either with a party, an affiliate of that party, or a Party Representative in order to provide material or financial support for all or part of the cost of the arbitration, where such support is provided through a donation, or grant, or in exchange for remuneration or reimbursement wholly or partially dependent on the outcome of the arbitration”.

Notably, when a third-party funding agreement is entered into, the funded party must disclose the following to the arbitral tribunal and the Secretariat:

• the existence of the third-party funded agreement
• the third-party funder’s identity

12. What interim reliefs are available pending enforcement of awards? Which one of those reliefs are granted ex parte?

IAA Sch 1 Article 17A provides that the following interim measures may be ordered by an arbitral tribunal:

• maintaining or restoring the status quo pending determination of the dispute
• taking action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself
• preserving assets out of which a subsequent award may be satisfied
• preserving evidence that may be relevant and material to the resolution of the dispute
• providing security for costs

13. Formal requirements for enforcement application: what documents need to be filed in court?

According to IAA s17, a party seeking the recognition or enforcement of a foreign arbitral award must provide:

• the original award
• the original arbitration agreement authenticated in a manner in which foreign documents must be authenticated for purposes of filing at the court
• a certified copy of both the award and the agreement

And:

• Where the above documents are not in English, a sworn translation of the arbitration agreement or arbitral award by a sworn translator of the High Court must be produced and must be authenticated in a manner in which foreign documents must be authenticated for production in court.
• The arbitration agreement must be valid under the relevant foreign law and the parties to the arbitration agreement must have had capacity to contract.
• The award must not go against public policy in South Africa.
• The defendant was given notice of the arbitration proceedings and was provided a chance to present its case.
• The proceedings with the arbitration tribunal’s constitution must align with the arbitration agreement or the law of the country in which the arbitration was held.
• The award is final and binding on the parties to the agreement (in other words, the award was not set aside by a competent court of the country where the award was published).

14. Enforcing awards that have been annulled/set aside at other courts. Enforcing when an annulment application is pending at a foreign court

Once the foreign arbitral award is made an order of court, a party may not resist enforcement thereof without first applying to the court to set aside the recognition of the arbitral award as an “order of court”.

15. Once application for enforcement is allowed, how does the actual enforcement against assets work?

Once the arbitral award is made an order of court, it shall be enforced as a normal order of court. In this regard, where the debtor defaults in respect of a court order, the enforcing party may apply to court for the attachment of the debtor’s assets. Parties may make use of conventional asset-tracing techniques, including asset investigations on public records and discovery proceedings to identify assets capable of being attached.

16. What is the procedure for repatriation of sums awarded after obtaining an order for enforcement?

All cross-border foreign exchange transactions are subject to the Exchange Control Regulations promulgated in Currency and Exchanges Act 1933 s9. Funds obtained through enforcement proceedings can be repatriated internationally, subject to the requirements of the above regulations.

17. Do courts grant orders for security for costs?

Yes.

18. Exchange control regulations: do they affect payments to foreign award holders?

Yes, exchange control approval will have to be obtained for cross-border remittances.

19. Enforcing awards from non-New York Convention places

This is the same as above, ie, approaching the High Court. The IAA is a statute of South African law which gives effect to the New York Convention. It is, however, binding law regardless of whether the other party is a party to the New York Convention or not.

20. Enforcing against sovereigns

Section 10 of the Foreign States Immunities Act No. 87 1981 (Foreign States Immunities Act) provides that:

(1) A foreign state which has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, shall not be immune from the jurisdiction of the courts of the Republic in any proceedings which relate to the arbitration.

(2) Subsection (1) shall not apply if –

(a) the arbitration agreement provides that the proceedings shall be brought in the courts of the foreign state; or

(b) the parties to the arbitration agreement are [foreign] states.

Read with Foreign States Immunities Act s14(3), the property of a foreign state shall not be capable of attachment for the enforcement of a judgment or arbitration award unless such property is used, or intended to be used, for commercial purposes.

21. Appellate mechanism available?

The IAA does not provide mechanisms for an appeal process. In this regard, consideration should be given to the law governing the jurisdiction in which the award was granted, which may very well allow for a party to approach a competent court for a review or setting aside of the award.

An application to enforce a foreign arbitral award in South Africa may be opposed and will be subject to the ordinary appeals process of the South African courts. An application for leave to appeal an order of the High Court may be granted for such an appeal to be heard by a full bench of the High Court or the Supreme Court of Appeal. The apex court in South Africa is the Constitutional Court, which may, in certain circumstances, hear appeals from the Supreme Court of Appeal.

Part IV: enforcing domestic awards

22. Timelines for enforcement

The enforcement of domestic awards follows a similar process. However, it is done under the Arbitration Act and not the IAA. Section 31 of the Arbitration Act does not prescribe a specified amount of time. It would, however, be preferable that these proceedings be brought within a reasonable time. Having a High Court judgment mitigates certain risks such as prescription.

23. Which court to go to? Relation with location of assets?

When enforcing domestic awards, the ordinary High Court rules of jurisdiction will apply and the applicant must ensure that they approach the correct court. Jurisdiction is founded on a company’s principal place of business; alternatively, jurisdiction can be founded on the whole case of action arising out of the geographical jurisdiction of the court.

24. Compelling disclosure of local assets? How to identify assets available for enforcement?

Some methods of asset identification include:

• conventional asset tracing techniques
• appointment of private investigator
• issuing of subpoenas
• discovery proceedings and further discovery procedures (when the court orders disclosure of assets, methods include court orders, asset-tracing investigations, and subpoenas
• insolvency law mechanisms such as section 417 enquiries

25. Are third-party funded awards enforceable?

Yes, third-party funded awards are enforceable. Legislation does not regulate third-party funded awards; they are governed by case law precedent.

The Supreme Court of Appeal’s decision in PricewaterhouseCoopers Inc and Others v National Potato Co-operative Ltd ruled that it is not against public policy when a third party funds a litigating party in exchange for a portion of the proceeds if the litigating party wins the case subject to a bona fide claim.

Thereafter, third-party funding was addressed in De Bruyn v Steinhoff International Holdings NV and Others. In this regard, the High Court established that for a third-party arrangement to be valid:

• It should be necessary to provide access to justice.
• It should be fair and reasonable to protect the interests of the defendant.
• It must not be excessive for the risks that the litigation assumes.
• It must not interfere with the lawyers’ duty to act in the client’s best interests.
• The party who is funded by the third-party funder must not lose the ability to give instructions and control the litigation for their best interests.

Additionally, the High Court established that the funder retains the right to terminate the third-party funding arrangement if the dispute falls short of success. However, this termination must be based on independent advice obtained from the funded party’s representatives.

Moreover, Article 27 of the Rules published by AFSA refers to a “third-party funder” as “any natural or legal person who is not a party to the arbitration and is not a Party Representative, but who enters into an agreement either with a party, an affiliate of that party, or a Party Representative in order to provide material or financial support for all or part of the cost of the arbitration, where such support is provided through a donation, or grant, or in exchange for remuneration or reimbursement wholly or partially dependent on the outcome of the arbitration”.

Notably, when a third-party funding agreement is entered into, the funded party must disclose the following to the arbitral tribunal and the Secretariat:

• the existence of the third-party funded agreement
• the third-party funder’s identity

26. What interim reliefs are available pending enforcement of awards? Which of those reliefs are granted ex parte?

Arbitration Act s21, read with s26, envisages the following interim relief:

• the inspection, interim custody, preservation, or sale of goods or property
• an interim interdict or similar relief
• securing the amount in dispute in the reference

27. Formal requirements for enforcement application: what documents need to be filed in court?

Parties need to file a notice of motion and founding affidavit with the applicable High Court.

28. If filing for enforcement is allowed, how does the actual enforcement against assets work? What are the remedies available for tracing assets during enforcement proceedings including for assets disposed of by fraud?

Once an arbitral award is made an order of court, it has the same standing and effect as a judgment of the High Court. In this regard, parties can prepare warrants of execution which the sheriff of the court will enforce. The effect of a warrant of execution depends on the relief granted and it can either be used to force specific performance or claim a judgment debt.

29. Do courts grant orders for security for costs?

Yes. According to Arbitration Act s21(1) and in terms of general powers of the court, for purposes of and in relation to a reference under an arbitration agreement, the court shall have the same power of making orders in respect of security for costs.

30. Appellate mechanism available?

As per Arbitration Act s28, unless agreed otherwise in the arbitration agreement, an award shall be “final and binding and not subject to an appeal and each party to the reference shall abide by and comply with the award in accordance with its terms”. It is, however, common practice for parties to the arbitration agreement to agree that an award can be subject to appeal (this is often agreed in terms of the AFSA rules where an appeal will then be heard by an AFSA appeal tribunal).

Where there is an appeal from the arbitration tribunal, such appeal is to originate from an agreement between the parties. An appeal cannot take place absent such an agreement between the parties. In the event that the award is subject to a review application, it can take 6 to 12 months to be determined in the High Court.

An appeal may be filed against the High Court’s review decision. This will be done either to a full bench of three judges of the High Court or to the Supreme Court of Appeal, where that leave to appeal is granted. The Constitutional Court also has jurisdiction to consider an application to review and award where there is a constitutional issue, or it concerns the interests of justice.