The Law and Practice of Arbitration

ASSIGNMENT NUMBER CPA1

THE LAW AND PRACTICE OF ARBITRATION

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 The Law and Practice of Arbitration

QUESTION 1.1

What is an arbitration agreement?

ANSWER 1.1

Arbitration agreement is a written agreement between the parties to resolve the dispute
which is to occur or already occurred, and according to Arbitration Act 42 of 1965,

“Arbitration agreement means a written agreement providing for the reference to

arbitration of any existing dispute or any future dispute relating to a matter
specified in the agreement, whether an arbitrator is named or designated therein
or not”.

Further the Rules of the conduct of Arbitration 6th Edition of The Association of
Arbitrators (Southern Africa) (page 5) referring to the arbitration agreement states:

“Agreement” means the written arbitration agreement entered into between the
parties”.

Freeadvice web site defined the arbitration agreement as:

“An arbitration agreement is a written contract in which two or more parties agree
to settle a dispute outside of court. The arbitration agreement is ordinarily a
clause in a larger contract. ….”.

The definition given by arbitration act 42 of 1965 provides a broad vision of the
arbitration agreement because it clarifies clearly that in depth unseems most rele

Arbitration agreement could be in the form of Arbitration clause in the main

contract providing provision of arbitration to resolve the dispute such as under
FIDIC Conditions of Contract latest edition (1999) clause 20.6 (Arbitration)
provides the provision of solving the dispute through arbitration in case the
dispute is not solved through Dispute Adjudication Board and Amicable

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Settlement. Arbitration Agreement could be a separate detailed agreement too,

detailing the conditions of arbitration agreement such Governing Law, Location of
Arbitration, Initiation of Arbitration Process, Arbitration Procedures, Fees and
Costs, Written Award and the arbitration award will be binding on the party or not
etc. These clauses assist the parties to the arbitration to resolve the dispute
through arbitration. As Sharrok, Robert (477:2001) stated that “An arbitration
agreement does not have to be a separate, self-contained agreement: it may be
part of another agreement, eg. A clause in that agreement. Hence it can be seen
that the arbitration agreement could be with the original agreement and could be
separate from original agreement too.

Based on the above-mentioned definitions of the arbitration agreement, it could

be understand that ……above it was inferred that an arbitration agreement is a
written agreement, ……………..

An arbitration agreement is an agreement

Question 1.2)

Must an arbitration agreement be reduced to writing and signed by the

parties? Discuss with reference to the Act, the Rules and relevant case law.
(10 Marks)

Answer 1.2)

As per Arbitration Act 42 of 1965

As per Arbitration Act 42 of 1965 an

“Arbitration agreement' means a written agreement providing for the reference

to arbitration of any existing dispute or any future dispute relating to a matter

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specified in the agreement, whether an arbitrator is named or designated therein

or not”.

Hence as per arbitration act 42 of 1965 an arbitration agreement must be in

writing, however the Arbitration Act 42 of 1965 does not states that the
agreement should be signed.

Rules of the conduct of Arbitration 6th Edition of The Association of Arbitrators

(Southern Africa) (page 5) referring to the arbitration agreement states:
“Agreement” means the written arbitration agreement entered into between the
parties”.

Here too, we can see that there is indication of a written agreement but it does
not specifically states that the need of that agreement to be signed.

As per clause 1.2 Definition of Rules for the Conduct of Arbitration (6th Edition) of
The Association of Arbitrators (South Africa) an Arbitration Agreement shall be in
writing. However under summary procedure rules it is clearly written that the
agreement should be written and signed.

As Per Case Law

As per the decision given in the case “Fassler, Kamstra & Holmes v Stallion
Group of Companies (Pty) Ltd 1992 (3) SA 825 (W)” it was ruled out that:

“Where a written agreement is to be signed by the parties, the Legislature uses

words clearly indicating the need to achieve that end. The statutory arbitration
provisions in the Transvaal, Natal and Cape or, for that matter, in the present
Arbitration Act, have never used the words 'signed by the parties' in relation to a
written agreement. My view in consequence is that it is not necessary for the
parties to sign the written agreement. It is enough if they have adopted and
acted on it”.

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Further it was noted that the website www.nortonrose.com states that:

“Where a written arbitration agreement exists, arbitrations in South Africa are
governed by the Arbitration Act of 1965 (the Act). The Act is not based on the
UNCITRAL model law. In the absence of a written arbitration agreement,
South African common law applies”.

Butler and Finsen has also supported this statement by stating that:

“Arbitration Act Applied only to a written arbitration agreement. The act does not
require the written arbitration agreement to be signed by the parties, it is
sufficient if they have adopted and acted on the agreement. An oral arbitration
agreement is not invalid but an oral reference to arbitration in terms of an oral
arbitration agreement is regulated by the common law”.

Hence based on above mentioned references, we can see that that arbitration
agreement could be in writing or could be oral. However the arbitration act only
applies to written arbitration agreement the oral arbitration agreement is also a
valid agreement but is regulated by the common law, not by the arbitration act.
Here it is also be noted that Butler and Finsen (page 175) has stated that “even
where the arbitration agreement is in writing, so that the provision of the
Arbitration Act will apply to the ensuring arbitration, the common law is not
excluded. Hence common law is applicable both for written and oral arbitration
agreement.

As far as arbitration agreement need to be signed or not is concern. There is no

requirement of arbitration agreement to be signed under arbitration act and oral
arbitration agreement does not need to be signed.

Rules of the conduct of Arbitration 6th Edition of The Association of Arbitrators

(Southern Africa) if the arbitration agreement does not provides that the
arbitration is to take place with the Small Claim Arbitration Tribunal (SCAT) Rules
and Guidelines of Association of Arbitrators and parties wishes to use SCAT

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rules to settle the dispute, in that case the parties must, by written and signed
agreement, commit themselves thereto

arbitration act 42 of 1965, Rules of the conduct of Arbitration 6th Edition of The
Association of Arbitrators (Southern Africa) and ruling under the case “Fassler,
Kamstra & Holmes v Stallion Group of Companies (Pty) Ltd 1992 (3) SA 825
(W)” it is clear that there is no need of arbitration agreement to be signed, it is
enough if the provision of arbitration agreement have been adopted and acted by
the parties. However it is also important to note that though there is no specific
requirement of the arbitration agreement to be signed, the arbitration agreement
must be in writing.

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