What do you know about the South African International Arbitration Act No. 15 of 2017? The Act which sailed through the National Council of Provinces in November 2017 and was assented to by the President on December 19th commenced December 20th. The Act regulates international arbitration proceedings and the enforcement of foreign arbitral awards and has some important ramifications for those conducting commercial international arbitrations in South Africa.
As the saying goes, what you don’t know about statutes like this that create new norms could seriously hurt you and your business in South Africa. Although the Act has commenced, it is subject to any transitional provisions (s 20), staggered dates for the coming into force of the Act, and/or clarification from Parliament regarding its coming into force.
According to Baker McKenzie, the International Arbitration Act incorporates the South African Law Reform Commission’s recommendations to incorporate the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration. The Act incorporates the 2006 Revision of the Model Law, with certain changes in the body of the Act, which has been adopted by numerous countries and is seen as the gold standard for international and domestic arbitration.
The incorporation of the UNCITRAL Model Law allows for the recognition and enforcement of foreign arbitral award provisions by giving effect to the New York Convention within its ambit – currently, these provisions are contained in a separate Act which is to be repealed (namely, the Recognition and Enforcement of Foreign Arbitral Awards Act, 1977).
The incorporation of the UNCITRAL Model Law also means that a public interest ‘veto’ by the South African Government over the recognition and enforcement of foreign arbitration awards, with certain exceptions, is excluded. In addition, the Model Law provides that international commercial arbitrations with public bodies will be possible (to the extent not excluded by the Protection of Investment Act, 2014 – a date for this Act’s commencement has not been proclaimed).
Investor-state arbitrations, however, will be regulated by a special regime under the Protection of Investment Act, which provides for the settlement of investment disputes by (state-to-state) arbitration, but only after domestic remedies have been exhausted.
Through the implementation of the International Arbitration Act, the South African Government hopes to promote South Africa as a hub for regional arbitrations, with its attendant skills development and revenue opportunities. It is partly in response to other African jurisdictions gaining popularity as arbitration and investment destinations, such as Mauritius and Kenya.
Whether South Africa does become an attractive international arbitration destination remains to be seen, however, moves from the Arbitration Foundation of Southern Africa in establishing “AFSA International” and the establishment of the China-Africa Joint Arbitration Center show that enthusiasm for international arbitration is on the rise.
Credits: Baker McKenzie