South Africa as an arbitral seat for international commercial arbitration
International commercial arbitration remains a growing economy in the world today. People are now turning to arbitration to ensure adjudication by an expert and to ensure a confidential process where the parties involved can influence the outcome of the arbitrator’s decision. The process may not always be quicker and cheaper as it is presumed to be - nevertheless, its importance continues to grow especially in the international trade sphere. When South Africa emerged from the era of isolation in 1994, it was faced with the fact that many of its laws relevant for the purpose of international trade and investments were outdated and inadequate. An example is in the field of international commercial arbitration. This is a big problem in South Africa. Before a foreign party decides to do business in a country, one of the first questions that will be asked is: what provisions does the country provides for the resolution of international trade disputes. The present answer is not encouraging. The South African Arbitration Act (Arbitration Act or Act) was designed with domestic arbitration in mind and has no provisions at all expressly dealing with international commercial arbitration. The Act is at present characterised by excessive opportunities for parties to involve the court as a tactic to delay the arbitration process. The arbitral tribunals are recognised as having inadequate powers to conduct the arbitration proceedings. In fact, the Arbitration Act is widely perceived by those involved in international commercial arbitration as totally inadequate for the purpose of international commercial arbitration. Today, the standard of a country’s international commercial arbitration legislation is measured by the UNCITRAL Model Law on International Commercial Arbitration of 1985 (UNCITRAL Model Law). The UNCITRAL Model Law can be adopted by a country to regulate international commercial arbitration.6 Many countries choose to adopt the UNCITRAL Model Law, their reasons may vary but some can be traced to out-dated arbitration legislation that needs replacement. The South African Law Commission published the South African Law Commission (SALC) Report 1998 (SALC Report 1998), dealing with the possible application of the UNCITRAL Model Law to international commercial arbitration in South Africa. The SALC Report strongly supported the adoption of the UNCITRAL Model Law, but with only a few adaptations, with a view to make the South African version user-friendly and attractive to foreign parties and lawyers.8 It recommended two arbitration regimes: an International Arbitration Act, dealing only with international commercial arbitration; and the Arbitration Act, dealing only with domestic commercial arbitration. Recently, the government approved the International Arbitration Bill, 2017 (Arbitration Bill or Bill). The central aim of the Bill is to make the UNCITRAL Model Law the corner stone of South Africa’s international commercial arbitration practice, and to make South Africa a regional hub for international commercial arbitration. Butler is of the opinion that the Arbitration Bill cannot make South Africa a preferred seat for international commercial arbitration. According to an international arbitration survey conducted by the Queen Mary University of London in 2016,10 there are a number of factors that influence the choice of seat of international commercial arbitration (legal and non-legal factors). These factors have been investigated in this study. After investigating the prerequisite to become a preferred seat for international commercial arbitration, South Africa’s legal position is compared with Mauritius’s legal position. It is concluded that Mauritius is a good example to follow. It is, however, important to keep in mind South Africa’s own background. A good example to follow from Mauritius is the separation of its domestic arbitration legislation from its international commercial arbitration legislation. This will bring about effectiveness and clarity for the users of the said legislation. It would be a good idea for South Africa to introduce the Arbitration Bill, and emulate Mauritius in improving its arbitration practice.
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