Close-Up Mining (Pty) Ltd and Others vs. The Arbitrator, Judge Phillip Boruchowitz and Another

South Africa

31.03.2023

Arbitration

Arbitration Foundation of Southern Africa Rules did not confer a discretionary power upon the Arbitrator to decide whether to adjudicate the defence of repudiation

The second Respondent brought arbitral proceedings against the Appellants. The dispute submitted to arbitration concerned two agreements. In the award, the Arbitrator declined to consider a defence raised by Close-Up Mining to the effect that, the Lutzkie Group had repudiated the agreements. The Arbitrator found that the defence had not been pleaded, and hence fell outside his jurisdiction. Close-Up Mining considered the Arbitrator to have fallen into error. Consequently, Close-Up Mining brought review proceedings in the High Court.

The high Court found that, the disputes raised in the arbitration proceedings were those raised on the pleadings. And since the repudiation defence had not been raised on the pleadings, the Arbitrator had correctly decided that, he lacked the jurisdiction to entertain the defence. The question to be determined in the appeal was whether a party to arbitration proceedings that had failed to plead an issue may nevertheless seek to have the arbitrator decide that issue.

The competence of an arbitrator to decide matters was determined by the arbitration agreement. The arbitration agreement may confine the submission to the issues that have been pleaded. But there was no rule of law that required the parties to confine their agreement in this way. The arbitration agreement can therefore confer a competence upon an arbitrator to decide matters upon an exercise of discretion of the kind recognised in Shill v Milner. All depended upon what the parties had agreed, and the proper interpretation of their agreement.

The arbitration agreement, the parties had agreed, was taken to include the Arbitration Foundation of Southern Africa (AFSA) rules. The AFSA rules did not confer a discretionary power upon the Arbitrator to decide whether to adjudicate the defence of repudiation. If the AFSA rules recognised no such power, then it was common ground that the arbitration agreement did not do so. Consequently, the Arbitrator made no error when he declined to entertain the defence of repudiation. And hence, CloseUp Mining had failed to establish that the Arbitrator committed a gross irregularity. Appeal dismissed.

Tags : Agreement Defence Repudiation

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