Beukes vs. Ten Four Consulting and Others

South Africa

17.06.2021

Arbitration

Unless there has been some improper conduct on part of arbitrator, a bona fide mistake either of law or fact made by arbitrator does not constitute misconduct or a gross irregularity

The Appellant and the first and second Respondents (the respondents) concluded a restraint of trade agreement in 2008. In May 2017, the Respondents commenced arbitration proceedings against the Appellant based on an alleged breach of that agreement. The third Respondent, a retired Judge of the High Court (the arbitrator), presided over the proceedings. The arbitrator decided the preliminary point in favour of the Appellant and dismissed the Respondents' claim for damages.

The Respondents then applied to the High Court for an order reviewing and setting aside the arbitration award on the grounds that, the arbitrator had committed a gross irregularity in the conduct of the arbitration proceedings and exceeded his powers as contemplated in Section 33(1)(a) and (b) of the Arbitration Act, 1965. They alleged that, the arbitrator had commenced the arbitration proceedings in their absence; and that they were not granted an opportunity to present evidence on the preliminary point, or to be heard on the question whether their claim for damages should be dismissed. The high court agreed. It concluded that, the arbitrator's actions prevented the Respondents from having their case fully and fairly determined and that he had allowed his decision-making function to be usurped by the Appellant.

The issue in present appeal is whether the arbitrator committed a gross irregularity in the conduct of the arbitration proceedings or exceeded his powers as contemplated in Section 33(1)(a) and (b) of the Arbitration Act, 1965.

The principle of finality of an arbitration award is well-settled. When an arbitrator has given fair consideration to a matter submitted to him or her for decision, unless there has been some wrongful or improper conduct on the part of the arbitrator, a bona fide mistake either of law or fact made by the arbitrator does not constitute misconduct or a gross irregularity as envisaged in Section 33(1)(a) or (b) of the Act.

The Respondents did not even begin to make out a case that the arbitration had commenced in their absence. This most serious allegation was recklessly made. It had no factual foundation, was based on an 'impression' by the Respondents' director, Mr. Theunis Ebersohn, and was pure speculation. The allegation that, the Respondents were treated unfairly was likewise groundless. The parties and their legal representatives were fully aware of the nature and ambit of the preliminary point and the consequences that would follow upon its determination. The appeal was accordingly upheld with costs and the order of the high Court is set aside.

Tags : Review Award Damages

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