An evaluation of international commercial arbitration theory and practice in South Africa

Abstract

In South Africa, the international arbitration regime is regulated under the International Arbitration Act 15 of 2017. Previously, all arbitrations taking place in South Africa were regulated under the Arbitration Act 42 of 1965 and there was no distinction or separation between international, national and (non)-commercial arbitration proceedings prior to the adoption of the International Arbitration Act 15 of 2017. The Arbitration Act 42 of 1965 was the only legislative piece regulating arbitrations in South Africa until 2017. Since the enactment of the International Arbitration Act 15 of 2017, there is now a dual arbitration system in South Africa, with the International Arbitration Act 15 of 2017 regulating international arbitrations and the Arbitration Act 42 of 1965 regulating domestic arbitrations. The promulgation of the International Arbitration Act 15 of 2017 has significantly changed the South African international arbitration landscape and aligned South Africa’s international arbitration regime with internationally accepted standards and practices.

This dissertation aims to explain the distinct interpretation of the nature of international commercial arbitration by juxtaposing different theories of international commercial arbitration in order to determine the theories that succinctly encapsulate the South African international commercial arbitration framework. It is evident from reading the literature relating to the arbitration discourse that a theory of arbitration generally accepted as describing the South African international commercial arbitration system in a succinct and nuanced manner is yet to be determined. In this regard, four theories are discussed in order to determine the theories that succinctly encapsulate the South African international commercial arbitration system, namely: the jurisdictional theory; the contractual theory; the party autonomy and delocalisation theory; and the hybrid theory. The evaluation of each of these theories is canvassed by considering the disposition of international commercial arbitration and its interconnection with national laws, the disposition and purview of the powers of an arbitrator in international commercial arbitration and the status of arbitration awards under each theory in respect of the enforceability of international commercial arbitration awards. In this dissertation, the hybrid theory is identified as the theory that encapsulates the South African international commercial arbitration system in a succinct and nuanced manner.

Furthermore, this dissertation identifies limitations in South Africa’s international commercial arbitration framework, and proposes a number of key factors that South Africa needs to address in order to position itself as a leader of international commercial arbitration. In this regard, the following selected factors are assessed in order to present steps that South Africa should undertake in its endeavor to become a leading seat of international commercial arbitration: the international commercial arbitration law regime in South Africa; political stability; trade and investment; technology and infrastructure; increased monitoring / “grey listing” by the Financial Action Task Force; and the South African tax obligations. A deficiency in South Africa is the fact that it has an ailing economic, socio-political and compliance status and this dissertation proposes that the South African government should address these concerns in order to attract more business institutions in the country and strengthen its international commercial arbitration economy.