NEW INTERNATIONAL ARBITRATION ACT NOW IN FORCE

The year has started with a welcome legislative development in the form of the recently promulgated International Arbitration Act 15 of 2017 (the new Act), which was signed into law on 17 December 2017. A copy of the new Act is accessible here.

From a maritime perspective, it is pleasing to note that the provisions of the new Act do not alter the advantageous position which local bill of lading holders and cargo receivers enjoy in terms of section 3 of the South African Carriage of Goods By Sea Act (SA COGSA).

The new Act regulates international arbitration proceedings in South Africa and the enforcement of foreign arbitral awards locally. The new Act incorporates the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (2006 Revision) and, in so doing, brings South Africa in line with international best practice when it comes to the rules and procedure for conducting an international arbitration within South Africa.

Section 7(2) of the new Act provides that “arbitration may not be excluded solely on the ground that an enactment confers jurisdiction on a court or other tribunal to determine a matter falling within the terms of an arbitration agreement”.

In the maritime context, bills of lading fall within the ambit of the new Act.  As bills of lading frequently include exclusive jurisdiction clauses providing for arbitration in foreign countries, there were initially concerns that the legislation would override section 3 of SA COGSA, which provides a significant exception for South African receivers and holders of bills of lading in respect of cargo shipped to a destination in South Africa. Such receivers are entitled to enforce their claims locally notwithstanding any foreign exclusive jurisdiction clause, thereby avoiding the expense and nuisance of instituting proceedings abroad.

The concern was that, without suitable amendments, the new Act would override the favourable exemption provided by SA COGSA. Happily, this potential issue has been resolved by a simultaneous amendment which has been made to SA COGSA, such that the provisions of section 3 now override and take precedence over the new Act. The result is that local cargo interests should not be adversely affected and receivers and holders of bills of lading may continue to enforce their claims locally for cargo shipped to South Africa.

The new International Arbitration Act is a welcome and much anticipated development in our law serving to encourage the use of South Africa as a chosen arbitration venue for the resolution of international and particularly African maritime-related disputes.

For more information on the new International Arbitration Act, please contact our Shipping and Logistics Practice.