An arbitration clause, by definition, seeks something other than litigation in a boardroom. Parties choose to arbitrate because they see value in its distinguishing features and wish to capitalise on the flexibility it offers as a means to resolve disputes.
While progress is slow, it is fair to say that South African arbitrators are increasingly comfortable distinguishing arbitral process from its court style counterparts. This trend will accelerate in coming years, mindful of the internationalisation of South Africa’s arbitration framework and the commensurate increase in international caseloads. At the forefront of this surge is the (still relatively new) International Arbitration Act 2017, which exists in parallel to a more outdated domestic arbitration framework.
For the best part of a century, the practice of international arbitration has developed as a fusion of multiple styles of practice, consolidated into its own distinguishable body of norms and processes. This body of norms and processes provides an alternative to court litigation or even litigation-styled arbitration and, for many commercial disputes, it can improve upon established local practices.
International arbitration has a lot to offer the South African market. The South African approach to arbitration is informed almost universally by the local court rules, in particular the Uniform Rules of Court (URC). Those rules have served South Africans well. However, as international arbitration gathers momentum, South African lawyers must understand its features to respond effectively to the choices of clients and the expectations of arbitrators.
These norms include the adoption of formal terms of reference, memorial style pleadings with an emphasis on written argument, evidence-in-chief through written witness statements, simplified rules of evidence, constrained document disclosure, substantial engagement with expert witnesses, and more flexibly ordered hearings.
Contrarily, South African litigants are accustomed to a more technical adversarial (often ambush-style) warfare. The URC equips litigants with a variety of tactical weaponry. These include:
- A set-in-stone exchange of pleadings, with disclosure and witness evidence to follow later irrespective of the complexity of the dispute.
- Scantly detailed pleadings.
- Exceptions and applications to strike out.
- Notices to bar delivery of pleadings and formal proceedings to lift bars.
- Notices, and potentially protracted proceedings to oppose and ventilate amendments to pleadings blanket style discovery obligations.
- Delayed exchange of expert summary reports (as an after-thought shortly before a trial).
- Applications for absolution from the instance.
- Leading of evidence in such a manner that a claimant leads all its evidence before a defendant is afforded an opportunity to respond.
- The enforcement of some of these rules through rule 30A – a provision that gives rise to various interlocutory proceedings in its own right.
This sort of a procedural approach to litigation is in many ways inconsistent with arbitration as an inherently consensual and flexible form of dispute resolution.
To respond to the changing market, South African arbitration practitioners should look to international arbitration procedures for creative ways to improve arbitration over litigation. By way of example, complex disputes in the infrastructure or technology space may need pleadings exchanged simultaneously with witness and expert evidence to ensure a properly articulated case. Similarly, the parties may look to curtailing costs of discovery by agreeing the application of the IBA Rules on the Taking of Evidence in international arbitration. Tribunal appointed experts may be sensible on certain occasions.
Additionally, arbitrators should adopt more innovative means of proactively engaging and directing expert witnesses in advance of an award. Arbitrators are not bound by formal rules of evidence and should seek, where appropriate, to ventilate and resolve disputes outside of the more traditional findings on onus and an outright dismissal of one party’s case.
Nevertheless, risks may present in the nationalisation of international arbitration procedures. An incomplete or fragmented adoption of unfamiliar rules and processes can lead to confusion and the misapplication of international processes in the domestic context. These problems are likely to damage, rather than advance, the interests of clients looking for new or innovative forms of dispute resolution.
With this international body of arbitration precedent now increasingly mature, we are seeing many countries ingesting these practices for local use. South Africa is no different. In the wake of its new arbitration legislation, the time has never been better for South Africa to reinvent its procedural habits, to drive home its efforts in becoming a competitive 21st century international arbitration hub.