AFSA March 2014

@Work

Official Newsletter of The Arbitration Foundation of Southern Africa

DISPUTE RESOLUTION THROUGHOUT AFRICA Adv. Michael Kuper SC

AFSA does valuable work in the administration of domestic arbitrations and mediations and in skills training. That, however, fulfils only a part of AFSA’s mandate. It now needs to show concrete results in extending the framework for dispute resolution throughout Africa. Such an initiative, however, needs a government legislative push to get started, to make South Africa an attractive venue for hosting international arbitrations. Putting your own national house in order, so to speak, is where it all begins. The case, it seems to me, is a compelling one. We stand at the gateway to Africa, our business community invests across the continent, we have the infrastructure, the legal system and the expertise to provide an arbitral and mediation service of international standard. South Africa then is ideally situated, and ideally equipped, to offer an inclusive, bridge-building arbitral system throughout Africa.

We stand at the gateway to Africa, our business community invests across the continent, we have the infrastructure, the legal system and the expertise to provide an arbitral and mediation service of international standard. So, then, what holds us back? Continued on page 2

The Arbitration Foundation of Southern Africa NPC Registration no. 1996/007496/08

Maisels Chambers, 4 Protea Place, Sandton • P O Box 653007, Benmore, 2010 • Docex 143 Randburg Tel: +27 11 320 0600 Fax: +27 11 320 0533 • [email protected] www.arbitration.co.za Branch Offices Cape Town +27 21 426 5006 Durban / Pietermaritzburg +27 31 305 9708 Pretoria / Limpopo +27 12 303 7408

From page 1

DISPUTE RESOLUTION THROUGHOUT AFRICA continued...

First and foremost, the failure to take the elementary but essential legislative steps necessary to offer a welcoming and efficient venue. Dullah Omar, then Minister of Justice, floated a Bill in 1997 but it was never taken further. For years AFSA, and many others, nagged and cajoled, without result. But now, for the first time in 17 years, there is some movement towards resurrecting that Bill and carrying it through. The Law Commission has now revised the 1997 Bill bringing it up to date. Professor Butler, the leading academic expert in the field, has done immensely valuable work in that regard, and the Justice Department indicates that this time round the Bill will go to Cabinet and, hopefully, to Parliament. If so, the Minister of Justice will deserve the thanks of the business and legal communities, not just here but throughout Africa. It is the continent that ultimately stands to benefit; not a single country. Once South Africa has taken its rightful place as an international arbitration centre, it will enable institutions like AFSA and the Association of Arbitrators to direct their energy to creating an arbitral network for Africa, one which offers the continent and, in particular, the continent’s legal and business communities, a shared project of immense promise. What greater contribution can the lawyers and arbitrators and mediators of Africa make to the continent than to create and establish a single standard arbitral and mediation system crossing all borders and constituting the first real step towards a shared jurisprudence! What a contrast that will offer to the present dispensation, in which the legal communities of Africa are strangers to each other and in which the disputes of Africa are resolved in Europe or America.

What greater contribution can the lawyers and arbitrators and mediators of Africa make to the continent than to create and establish a single standard arbitral and mediation system crossing all borders and constituting the first real step towards a shared jurisprudence! The engine of this project, Africa ADR, has been created for the purpose. It has AFSA’s full support and commitment and will also, I hope, enjoy the guidance and co-leadership of the Association of Arbitrators. Africa ADR aims to be inclusive; an African vehicle to serve the cause of dispute resolution throughout Africa. This is the year when, at last, the necessary legislation should allow the arbitral engine to leave the station. Watch this space.

This is the year when, at last, the necessary legislation should allow the arbitral engine to leave the station. Adv. Michael Kuper SC, Chairman of AFSA

2

DISPUTE RESOLUTION MECHANISMS FOR COMPANIES At a function held jointly by the Institute of Directors and the Arbitration Foundation of Southern Africa in Johannesburg in June 2013, Prof. Mervyn King emphasized the importance for directors of companies to know that in South Africa and also globally, civil courts cannot keep pace with commerce. In his opinion he said, a person is not discharging his or her director’s duty of care to the company unless they have adequate dispute resolution mechanisms in place.

In South Africa and also globally, civil courts cannot keep pace with commerce. King III recommends companies have a dispute resolution clause in all their customer, supplier and employment contracts .He said that the AFSA clause had been drafted with great care and that while companies were free to appoint other administrators to resolve their commercial disputes, he had over the last fourteen years seen AFSA grow into “an institution of great credibility and great ability” and was happy to recommend AFSA as the body to administer commercial disputes.

A SAFETY NET

FOR DOING BUSINESS IN AFRICA Prof. Mervyn King and Advocate Michael Kuper SC.

as to the way in which business works in Africa and the difficulties that Africa may face in resolving commercial disputes. Within Africa it is essential that we create an institution with a continental reach, which allows all of the continent to participate.”

What should emerge in Africa is a body of regional arbitrators, who have profound knowledge and insight as to the way in which business works in Africa and the difficulties that Africa may face in resolving commercial disputes.”

Advocate Michael Kuper SC, Chairman of AFSA, alerted the audience to the fact that the South Africa business community has moved into Africa without the safety net of an arbitral system and without any basis upon which it can enforce rights and obligations if it needs to do so. Business is left with two choices, he said. The first choice is to litigate in the courts of those countries in Africa in which it may have business concerns. Alternatively it may look to Europe as the world arbitral institutions such as the International Chamber of Commerce and The London Court of International Arbitration are situated there.

playing field effective, because when a South African business person has a dispute with a Greek business person, and that dispute is heard in London, it is essential that the winner is able to enforce that award, either, as the case may be, in South Africa or in Greece. If the South African courts would not accept or recognise that particular result, then South Africa would not be a worthy player within the international world of commercial arbitration. South Africa in 1977 signed the New York Convention and is such a player, he said.

While Europe, America and other parts of the world are criss crossed with arbitral institutions, none in Africa have a viable reach outside of the countries in which they themselves operate.

But, he pointed out, there are also other requirements. A country must have appropriate legislation as a framework to allow it to become a welcoming destination for international arbitration. Many countries in Africa, unfortunately, are not signatories to the New York Convention, nor do they have the appropriate legislation in place.

To be acceptable in the international arbitration world, which is largely regulated by the United Nations, a country must choose to sign up to the obligations of the New York Convention. It guarantees that its courts will enforce and will recognise arbitration awards made in foreign countries. It makes the

“What is required on the continent of Africa is not an invitation to the great institutions of Europe to come and make their home in Africa and to set up shop in a particular country in Africa. What should emerge in Africa is a body of regional arbitrators, who have profound knowledge and insight

AFSA, he said, has drawn up the plans that would allow any African arbitral institution that would wish to join in creating such an African - wide arbitral institution. It goes under the name Africa ADR. The immediate response from Mozambique, the Congo and from Nigeria was a welcoming response - a united front, a firm belief that Africa should create its own arbitral institution. But in many African countries there are challenges to overcome. It is going to take time to create an arbitral highway between Johannesburg and Nairobi, and Nairobi and Lagos. Our job he said, ”is to create, to establish and to build and to get as far as we can.”

It is going to take time to create an arbitral highway between Johannesburg and Nairobi, and Nairobi and Lagos. Our job he said,” is to create, to establish and to build and to get as far as we can.” Africa ADR is the first step. The rules are in place to deal with cross-border arbitrations, mediations and conciliations and, in cooperation with those African countries that are signatories to the New York Convention and wish to be active players in the world of international arbitration, it will deal with cross border disputes to ensure that those doing business in Africa can enforce their rights and obligations.

3

LADIES TAKE

TOP HONOURS

In April 2013 The AFSA Advanced Certificate in Dispute Resolution was awarded to 30 students of which 11 students passed cum laude. The three top students were Adv. Kiriaki Bailey SC, Adv. Avrille Maier Frawley and Anissia Botha.

Advocate Kiriaki Baily SC, Advocate Avrille Maier-Frawley and Anissia Botha.

Advocate Avrille Maier-Frawley “I decided to do the course as I believe that ADR will become the chosen vehicle for the resolution of disputes in South Africa. The process is highly effective when employed correctly. The lecturers were all excellent and professional, making it a pleasure to learn new concepts. For me mediation was the most valuable and interesting learning experience and Phil Cohen’s teaching style was simply superb, making every moment of the course exciting and invigorating.”

Anissia Botha, Attorney of the High Court “The popularity of Alternative Dispute Resolution (ADR) is on the increase. Litigation and the judicial process is not the only way to resolve disputes between parties. It is in most instances adversarial, while ADR often allows for parties to maintain relationships that continue after the issue in dispute is resolved. ADR mechanisms are

4

increasingly being adopted, both formally and informally, by disputants. This is so because of the increasing caseload of traditional courts, the escalation of costs, a preference for confidentiality and the desire of parties to have greater control over the selection of the individual or individuals who will decide a matter. Given this key trend, I decided to embark on the AFSA course. The course has contributed towards both my professional and personal growth and the learning environment provided an atmosphere which allowed for interaction with other students who have diverse skills and come from fascinating backgrounds with incredible experience in their own field of expertise. This type of learning environment is conducive to personal development and has resulted in lasting friendships.” Details of the course can be obtained from Selina Tshabalala at AFSA on 011 320 0600 or email [email protected].

Prof. André Boraine from the University of Pretoria

Prof. André Boraine, Head of the Department of Procedural Law at the University of Pretoria, had the following to say about this course: “The Advanced Certificate in Dispute Resolution is unique in that it is a partnership between the University of Pretoria through its Skills Advancement Division, Ce@UP, and AFSA, being the indisputable local leader in the field of arbitration and other alternative dispute resolution procedures. The relationship between AFSA and The University of Pretoria was formed in 1998 and over the years many students completed the programme successfully. The course is presented by seasoned practitioners in the field and recently gained international recognition. AFSA graduates with legal qualifications are now eligible to become members of the Chartered Institute of Directors in the UK”.

CORPORATE CHOICES IN INTERNATIONAL ARBITRATION In May 2013 AFSA, in association with PricewaterhouseCoopers (PwC), hosted an event to report on corporate counsel’s experience of and views on international arbitration. Multi-national businesses are important users of international arbitration and Colm Tonge presented the top line findings of a survey sponsored by PwC of what works well and what multi-national businesses say needs improving. The survey is the fifth survey released by the School of International Arbitration, Centre of Commercial Law Studies, Queen Mary University of London and the third survey sponsored by PwC.

The survey attempted to identify differences in perceptions and practices in three major sectors of the economy; energy, construction and financial services. This survey differs from recent ones in two respects. It looks at arbitration from ‘the outside in’, focusing on arbitration as an industry in itself, rather than looking at internal aspects such as procedure or best practice. Secondly the survey attempted to identify differences in perceptions and practices in three major sectors of the economy; energy, construction and financial services. This survey with its sector-specific findings offers a better and more nuanced understanding of a range of the use of arbitration visà-vis other mechanisms, the selection of service providers (including outside counsel and experts), the funding of proceedings and the impact of the economic climate on disputes.

Colm Tonge, partner PwC

Phillemon Mashabane and Advocate Michael Kuper

The survey shows that major corporations, across different industry sectors, continue to affirm the benefits of arbitration to resolve transnational disputes. Corporations are also becoming more sophisticated in procuring international arbitration services. •

Overall, businesses continue to show a preference for using arbitration over litigation for

Kiran Fakir and Brian Abrahams

Continued on page 6

5

From page 5

CORPORATE CHOICES

IN INTERNATIONAL ARBITRATION

continued...

transnational disputes, although concerns remain about the cost of arbitration. •

The survey confirms that arbitration is more popular in some industry sectors than others, most notably in the Energy and Construction sectors.

•

The two most influential factors in selecting outside counsel are personal knowledge of the lawyer being selected and previous experience of the firm/lawyer in contentious proceedings. Rankings of law firms in directories were not regarded as particularly influential.

•

Once a decision to arbitrate has been made, few corporations (11%) withdraw from the proceedings because of funding difficulties.

•

Lack of arbitrator availability was not cited as one of the most important factors when selecting arbitrators. This does not mean that corporations were unconcerned about availability but that, on balance, in-house counsel felt that it is more important to appoint the arbitrator best suited to the case rather than one who could potentially complete the mandate faster. While not satisfied with delays, corporations appreciate that a larger pool of experienced arbitrators will take time to evolve.

It is more important to appoint the arbitrator best suited to the case rather than one who could potentially complete the mandate faster. •

6

The most influential factors in the appointment of arbitrators were the individual’s commercial understanding of the relevant sector; knowledge of the law applicable to the contract; and experience with the arbitral process; technical (non-legal) knowledge and language were also cited but were less influential.

Advocate Michael Kuper SC, Advocate Tony Rubens SC, Advocate Vincent Maleka SC, Advocate Cassie Badenhorst SC.

The findings above should be read in conjunction with the complete survey. For further information please contact Colm Tonge, Partner at PwC Tel: 011 797 4007 Email: colm. [email protected]

MUTUAL RECOGNITION OF ARBITRATORS BY AFSA AND THE CHINA LAW SOCIETY

AFSA and the China Law Society recently agreed that for international and regional disputes involving Chinese /South African interests, a panel of top arbitrators would be established and mutually recognised by both organisations. The nominations from the China Law Society the nominees of the China Law Society have of their experience and qualifications. AFSA in and experienced arbitrators on the AFSA panel African nominees.

have been received by AFSA and provided AFSA with brief outlines turn approached suitably qualified to be included as part of the South

This is an exiting first step in the coordinating efforts to put arbitral structures in place and it is one which AFSA wishes to encourage. The China Law Society has its headquarters in Beijing and has more than 150 000 members with 554 local branches. It is a member of both international and regional organisations such as the International Association of Constitutional Law, International Association of Penal Law, International Association for Legal Philosophy and Social Philosophy and the International Law Association for Asia and the Pacific.

AFSA PRETORIA CELEBRATES

A DECADE OF STEADY GROWTH On 1 March 2014 AFSA Pretoria celebrated ten years of steady growth and development in the city of Jacarandas. Congratulations to all who played a role in the success of AFSA Pretoria - may the next ten years prove to be an even a greater success.

Congratulations to all who played a role in the success of AFSA Pretoria Myrna Gericke, registrar of the Pretoria and Limpopo branches, fondly recalls her appointment as manager of the AFSA branch in Pretoria a decade ago: “In the first year AFSA Pretoria administered all of 12 cases. It has been enormously rewarding to see the growth in the number of disputes referred to AFSA Pretoria since 2004.” The success of AFSA Pretoria, says Myrna, can be ascribed to a team effort. “It always was and still is the team that ensures the success of AFSA Pretoria.” She gratefully acknowledges the positive contribution of her colleague Juanita Bekker, the assistance of the general manager of the Pretoria Bar, Deon Gericke and his helpful staff. She also acknowledges the assistance of the members and convenors of the arbitration committee at the Pretoria Bar with whom she has worked closely since 2004, acting as secretary of this committee. Prominent role players during the past ten years include Pretoria Bar members Ig Bredenkamp SC, Simmy Lebala SC, Leon Dicker and others.

“It always was and still is the team that ensures the success of AFSA Pretoria.” The short training courses on arbitration and mediation, of which 14 have been offered by AFSA Pretoria since 2004, Myrna believes, contributed greatly to the overall success of the branch and to establishing a pool of knowledgeable

and competent AFSA panellists in the region. The facilities for dispute resolution in Pretoria are excellent and conveniently situated in the High Court Chambers in the Pretoria city centre and in Brooklyn in the east of Pretoria. Myrna remains modest about her own contribution, but those who know her speak highly of her many abilities, her professionalism and her commitment. She admits to loving her job. Her vision for the future includes extending AFSA’s arbitration and mediation services to other centres. Myrna has been married to Bennie Gericke for 29 years and they have a son aged 25. Both being art and music lovers, they share the hobby of bargain- hunting for antiques and collectables. Myrna says that she is an avid reader of “anything” in Afrikaans, English and occasionally in German, her most admired South African author being CJ Langenhoven. When her busy schedule permits, she will on occasion stand in as church organist as she is also an accomplished pipe organist.

Myrna Gericke, Registrar of the Pretoria and Limpopo branches.

7

AFRICAN DEVELOPMENT BANK ASSESSES ARBITRAL CENTRES In September 2013 Dr. Werner Jahnel from LALIVE in Zurich, Switzerland, visited AFSA and Africa ADR to assess these centres against the requirement for “international commercial arbitration in a neutral venue”. Dr. Jahnel, mandated by the African Development Bank, was accompanied by Ms Elke Paschl, Chief Legal Counsel at the African Development Bank, to report on centres in Africa in accordance with the African Development Bank’s Procurement Rules. The general legal framework for arbitration proceedings within the country formed part of the assessment. Dr. Jahnel and Ms Paschl expressed an interest in gaining a better understanding of the practical functioning of AFSA and Africa ADR, including the administration of arbitration proceedings, the enforcement of awards, the applicable rules and other relevant issues. Centres in Tunisia, Egypt, Mauritius and Cote d’Ivoire were also assessed.

Dr. Werner Jahnel attending an AFSA Management Committee Meeting

The visitors were also keen on meeting leading arbitrators and persons with knowledge and experience of commercial arbitration in South Africa. They were therefore afforded the opportunity of attending an AFSA Management Meeting and of having discussions with leading figures in the field of commercial arbitration during their visit.

Judge Louis Harms, Advocate Peter Solomon SC, Ms Elke Paschl, Chief Legal Counsel at the African Development Bank and Advocate Michael Kuper SC.

The Arbitration Foundation of Southern Africa NPC

8

Manco: LP Dicker, PM Mtshaulana SC, BE Abrahams, J Witts-Hewinson, S McCafferty, URD Mansingh, PJ Pretorius SC, PMM Lane SC, R Wakefield, S Voigt, P Louw SC, TM Madima SC, S Lebala SC, P Watt, S Hochfeld, L Rose-Innes SC • Directors: MD Kuper SC (chair), RS Hislop