Keynote Address by the Deputy Minister of Justice and Constitutional Development, the Hon JH Jeffery, MP at the CIArb International Arbitration Conference 2017, titled ‘The Synergy and Divergence between Civil Law and Common Law in International Arbitration’ held at the Hyatt Regency, Johannesburg, 19 July 2017
Prof Dr Nayla Comair-Obeid CIArb President
Mr Fergus Blackie, CIArb South Africa Branch Chair
Dr Gaston Kenfack Djouajni, President of UNCITRAL
H.E. Mr Mamadou Konaté, Minister of Justice and Human Rights of Mali
H.E. Mr Abubakar Malami, SAN Minister of Justice and Attorney-General of the Federation of Nigeria
Mr Antoine Diome, Judicial Agent of the State of Senegal
Mr Christopher Adebayo Ojo, SAN former Attorney General of the Federal Republic of Nigeria
Prof. Githu Muigai, Attorney General of the Republic of Kenya
Judge Joyce Aluoch, Judge of the International Criminal Court and Former Judge of the Court of Appeal of Kenya
Justice William Mweemba, Judge of the High Court of Zambia
Justice Geoffrey Kiryabwire, Justice of the Court of Appeal of Uganda
Justice Charles Kajimanga, Judge of the Supreme Court of Zambia
Members of the legal profession
Members of academia
Ladies and gentlemen
It is a great honour for me to welcome you to South Africa on the behalf of our Government.
Yesterday, the 18th of July, our country celebrated Mandela Day – the 18th of July is the birthday of our late former President Mandela and we commemorate his birthday and his life by persons devoting or volunteering 67 minutes of their time – one minute for every year of Mandela’s public service – to acts of kindness, of giving and helping, and contributing to the greater good.
Also in July – on the 10th - we celebrate the birthday of another great South African, Solomon Kalushi Mahlangu.
During the apartheid era, at the end of 1976 many hundreds of youths had been killed and many more wounded. Mahlangu left South Africa to undergo military training as a soldier of Umkhonto we Sizwe and was then immediately tasked to return to South Africa to assist with student protests being planned to commemorate the 1976 uprising.
In early 1977, he and two other MK soldiers travelled from Angola to Mozambique, from where they infiltrated South Africa.
Successfully evading apartheid security forces, they managed to reach Johannesburg. There, however, they were intercepted by police. An exchange of fire followed in which two civilians were killed.
Mahlangu was taken prisoner and, although he had not fired a shot during the clash with the police, he was charged with murder as part of common purpose. He was found guilty, and sentenced to death.
On 6 April 1979, aged 23, Solomon Kalushi Mahlangu was executed, his spirit unbroken. His last words were:
“My blood will nourish the tree that will bear the fruits of freedom. Tell my people that I love them. They must continue the fight.”
I share this with you, because we paid a heavy price for freedom and justice in our country.
There can only be freedom, dignity and equality where there is an accessible justice system – a justice system that responds to the needs of the people.
This includes a civil justice system which allows parties to have their disputes heard in a speedy and easily accessible way and in a way where both parties feel that they have been heard and treated fairly.
I am honoured that this event - the second of CIArb’s three international arbitration conferences – is taking place in South Africa. The first of the three took place in March 2017 in Dubai, which focused on the synergy and divergence between civil law and common law from the perspective of the Middle East and Asia. I am told the third conference will take place in Paris in December and will focus on Europe and America.
This conference focuses on Africa. Africa has common law, civil law, customary law, religious law and mixed legal systems.
There are many differences. Think, for example, of the differences between the civil law and common law traditions – in other words, inquisitorial versus adversarial, an active judge versus a passive judge, different evidentiary processes and different case management, different ways of drafting pleadings and calling witnesses.
Indeed the sources and styles of civil and common law traditions are very different and the challenge lies in finding common ground.
And that, perhaps, is the one great advantage of arbitration – that it is the common ground.
Because of its flexibility and because of party autonomy and applicable mandatory rules, international arbitration is able to find that neutrality. Practically speaking, at every stage of the international arbitration process, arbitrators are able to find the common ground without having to be constrained by a specific legal system. In addition to the many benefits of arbitration, we also often see further legal harmonization in the areas of international trade law and arbitration.
The strength of arbitration lies in its flexibility. The President of the Lagos Court of Arbitration, Mr Yemi Candide-Johnson, was recently asked if arbitration was also open to a small-scale business disputes settlement? He replied:
“Absolutely. There is no one size that fits all. The very flexibility which is controlled by the parties themselves allows that in terms of costs and time and method. These procedures can be tailored to any type of commercial dispute…”
This doesn’t mean that our courts or our national legal systems have no part to play, nor can one argue that arbitration can be seen as an isolated exercise.
One is reminded of the dictum of Lord Hoffmann’s in the UK’s House of Lords in the matter of West Tankers Inc v. RAS Riunione Adriatica di Sicurta SpA, where he said that -
“But perhaps the most important consideration is the practical reality of arbitration as a method of resolving commercial disputes.
People engaged in commerce choose arbitration in order to be outside the procedures of any national court. They frequently prefer the privacy, informality and absence of any prolongation of the dispute by appeal which arbitration offers. Nor is it only a matter of procedure. The choice of arbitration may affect the substantive rights of the parties…. The principle of autonomy of the parties should allow them these choices.
Of course arbitration cannot be self-sustaining. It needs the support of the courts...”
National courts and national laws must be pro-arbitration and must be supportive of the arbitration process if arbitration is to be successful.
This is something we see in our own country.
For example, in Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews our Constitutional Court stressed that the decision to refer a dispute to private arbitration is a choice which, as long as it is voluntarily made, should be respected by the courts.
Because private arbitration agreements are consensual the court should be slow in exercising its discretion to entertain a dispute where parties have agreed to arbitration. The court held that -
“the values of our Constitution will not necessarily best be served by . . . enhanc[ing] the power of courts to set aside private arbitration awards. . . . If courts are too quick to find fault with the manner in which an arbitration has been conducted . . . the goals of private arbitration may well be defeated.”
And our courts’ support for arbitration is not only limited to arbitration in arena of traditional commercial contracts, but in other areas of the law as well.
In the case of De Lange v Presiding Bishop of the Methodist Church of Southern Africa Ms De Lange was a minister of the Methodist Church. After her announcement of her intended marriage to her same-sex partner the church suspended her as a minister. She referred the matter to arbitration, but the process deadlocked. She then approached the Cape High Court seeking an order to set aside the arbitration agreement in terms of the Arbitration Act. She also contended that she was unfairly discriminated against.
The High Court held that Ms De Lange had not shown good cause to set aside the arbitration agreement. The matter then went to the Supreme Court of Appeal and from there to the Constitutional Court.
In a unanimous judgment the Constitutional Court held that Ms De Lange had not shown good cause to set aside the arbitration agreement.
A court’s discretion to set aside an existing arbitration agreement must be exercised only where a persuasive case has been made out and, said the court, it was neither possible nor desirable for courts to define precisely what circumstances constitute a persuasive case.The court held that -
“Absent infringement of constitutional norms, courts will hesitate to set aside an arbitration agreement untainted by misconduct or irregularity unless a truly compelling reason exists.”
Perhaps one of the best known international cases of a court’s hesitancy to set aside an arbitration clause – perhaps due to the case’s rather entertaining facts – is the McDonalds’ French fries case in the US.
McDonald's was promoting sales by running a game called “Who Wants to be a Millionaire.” Ms. James obtained a game card when she purchased an order of French fries at the drive-thru of a McDonald’s in Franklin, Kentucky.
She believed the game card to be a grand prize winner worth one million dollars, but in the end it wasn’t the winning card. She then proceeded to sue McDonalds and McDonald's filed a motion to compel Ms. James to arbitrate her claims. McDonald’s relied on an arbitration clause contained in the game rules which were referred to on the French fries’ box.
The district court granted McDonald's motion to compel Ms. James to arbitrate her claims and to stay judicial proceedings pending the outcome of arbitration. The Court of Appeals’ Seventh Circuit affirmed the judgment of the district court.
So next time you eat your French fries consider that you might very well, at that moment, be agreeing to arbitration…
And what about national legislation? From the point of developing arbitration legislation it is important to ensure that national legislation is conducive to successful arbitrations.
As you know, South Africa is a party to the New York Convention. In May 1976, South Africa acceded to the Convention without reservation and the Convention has been in force since August 1976.
Furthermore, South Africa enacted the Recognition and Enforcement of Foreign Arbitral Awards Act, 1977 in order to give effect to the principles of the Convention.
The Arbitration Act of 1965 governs arbitration proceedings in South Africa. This Act makes no distinction between domestic and international arbitration and the Act is not based on the UNCITRAL Model Law.
The new International Arbitration Bill emanates from an investigation of the South African Law Reform Commission.
Concerns were raised that the Recognition and Enforcement of Foreign Arbitral Awards Act is not in alignment with international developments, that the Arbitration Act is inadequate for purposes of international arbitration and the South African arbitration law is outdated in many respects and thus needs revision and updating in order to reflect and serve modern commercial needs.
The main thrust of the Bill is the adoption of the UNCITRAL Model Law as the cornerstone of the international arbitration regime in South Africa.
The Model Law is the current international benchmark for arbitration laws as it was developed to address the wide divergence of approaches taken in international arbitration throughout the world and to provide a modern and easily adapted alternative to outdated national regimes.
It is intended for adoption by individual countries and has been adopted by many Commonwealth and other countries, including important trading partners of South Africa, both within SADC and beyond.
Of the 54 members of the African Union, more than half have modern arbitration legislation for international arbitration.
The new Bill comes at an opportune time for our country to opt into the international standard for the resolution of commercial disputes. Not only does it have the potential to attract foreign direct investment, but also to give greater legal protection to South African investments abroad.
Our Bill provides that the Arbitration Act is not applicable to arbitration matters which are subject to the Model Law. The purpose of this exclusion is to provide certainty for foreign users of the Model Law in South Africa so that they will know that they do not have to search outside the enacting legislation for possible discrepancies.
The Bill, subject to the provisions of section 12 of the Promotion and Protection of Investment Act binds public bodies, and applies to any arbitration in terms of an arbitration agreement to which a public body is a party.
Investor-state arbitrations will be regulated under the Protection of Investment Act. The reluctance to permit such arbitrations under the Arbitration Bill must be understood in terms of Government protecting our sovereignty as a nation and our policy space.
Clause 6 of the Bill seeks to give the Model Law the force of law in the Republic. Since the primary goal of the Model Law is to reduce discrepancies between procedural laws affecting international commercial arbitration, it is desirable that the Model Law should be interpreted and applied uniformly.
The Bill also makes provision for the confidentiality of arbitral proceedings where such proceedings are held in private. Where an organ of State is a party to arbitration proceedings, such proceedings must be held in public due to the public interest in the matter.
In terms of clause 16, a foreign arbitral award may be recognised in the Republic as required by the Convention.
Furthermore, a foreign arbitral award must, on application, be made an order of court, and be enforced in the same manner as any judgment or order of court, provided it complies with the provisions of the clauses of the Bill dealing with the recognition and enforcement of foreign arbitral awards.
With regard to the transitional arrangements, the Model Law will apply to all international agreements, irrespective of whether the agreement was entered into before or after the commencement of the Bill.
The Bill is currently going through a public participation process. Our Parliament’s Portfolio Committee on Justice and Correctional Services has extended invitations for written submissions on the Bill and submissions must be received by no later than 28 July. Interested persons may also indicate if they wish to make a verbal presentation. Public hearings on the Bill have been scheduled for the beginning of August and it is hoped that the Bill will finalised in the 4th term of the Committee.
But courts and legislation are not the only factors which play a role in the success of arbitration seats. For arbitration institutions to be accessible it means being speedy, cheaper and keeping up with practical demands.
This is reflected in some of the changes in rules that we’ve seen recently which aim to enhance greater efficiency.
For example, the DIFC-LCIA (Dubai International Financial Centre - London Court of International Arbitration) Arbitration Centre allows the option for users to file requests for arbitration online using a standard electronic form available on DIFC-LCIA’s website and to pay the registration fee electronically. Another important change in the DIFC-LCIA Rules was the addition of an article which provides for the appointment of an emergency arbitrator.
According to an article in the UK Law Society Gazette, a number of other arbitral centres, including SIAC, HKIAC, the Swiss Chambers Arbitration Institution and the ICC have introduced fast-track arbitration procedures to increase efficiency.
The ICC’s new expedited procedure rules automatically apply to arbitrations where the sum in dispute is below $2m, and to higher-value cases on an opt-in basis. Under the new rules, the ICC court will normally appoint a sole arbitrator, even if the arbitration agreement provides for a three-member tribunal.
Awards must also now be made within six months of the case management conference. Under the rules there will be no Terms of Reference and the tribunal will have discretion to decide the case on documents only, with no hearing, no requests to produce documents and no examination of witnesses.
Ladies and gentlemen,
These are but some of the ways that international arbitration is keeping up with the times. It has been said that 2016 has been a record year in the number of arbitrations.
If one looks at recent media and articles, we are seeing increasing numbers of arbitrations and not only in commercial arbitration. For example, a Permanent Court of Arbitration tribunal recently ruled on a sea and land border dispute between Croatia and Slovenia, defining the limits of their territorial waters and granting Slovenia direct access to the international waters beyond.
Closer to home, here in Africa, the Arbitration and Mediation Center of the Mauritius Chamber of Commerce and Industry has recently announced the appointment of Mr. Neil Kaplan as the President of the newly established MARC Court as well as a new MARC governance structure.
In Ghana, The World Bank Group's private lending arm and a fund set up by the Organization of the Petroleum Exporting Countries are appealing a Ghanaian court’s refusal to stay their litigation with a local oil company on the basis of an LCIA arbitration clause.
I want to wish you all the very best for a highly successful conference and very fruitful deliberations.
In light of all these exciting developments on our continent, I think we can convincingly say that international arbitration, both in Africa and worldwide, is alive and well, and growing. I am confident that this conference will further contribute to this growth.I thank you.