2- assignment number cpa1 question 1 to 4

The Law and Practice of Arbitration

ASSIGNMENT NUMBER CPA1

THE LAW AND PRACTICE OF ARBITRATION

1 of 46 Assignment CPA1 of Rakesh Kumar


TABLE OF CONTENTS

QUESTION 1.1 4

ANSWER 1.1 4

QUESTION 1.2 7

ANSWER 1.2 7

QUESTION 2 11

ANSWER 2 11

THE THREE RULES OF NATURAL JUSTICE ARE AS FOLLOWS: 12

1. Hear the Other Side (Audi Alteram Partem) 14

2. No one is fit to be judged in his own cause (Nemo iudex idoneus in propria causa est) 16

3. Justice must be seen to be done 18

CONCLUSION 21

QUESTION 3 23

ANSWER 3 23

1. ACT NO. 11, 2001: SOUTH AFRICAN BOXING ACT, 2001 23

2. ACT NO. 95, 1998: HOUSING CONSUMERS PROTECTION MEASURES ACT, 1998 24

3. ACT NO. 75, 1997: BASIC CONDITIONS OF EMPLOYMENT ACT, 1997 25

4. ACT NO. 63, 2001: UNEMPLOYMENT INSURANCE ACT, 2001 29

5. ACT NO. 102, 1996: NATIONAL SMALL BUSINESS ACT, 1996 30



QUESTION 4 33

ANSWER 4 33

QUALIFICATION OF AN ARBITRATOR 33

Personal Quality 35

Expertise in Professional Field 35

Legal Knowledge 36

MANNER IN WHICH THE ARBITRATOR IS APPOINTED 36

The arbitrator can be appointed in one of the three ways 36

1. Arbitrator appointed by the parties 37

2. Appointment of the arbitrator by a third party or office bearer of an appropriate 39

3. Appointment of Arbitrator by the Court 39

CIRCUMSTANCES UNDER WHICH AN ARBITRATOR’S APPOINTMENT IS TERMINATED 40

QUESTION 5 42

ANSWER 5 (THE LETTER IS ATTACHED SEPARATELY) 42

Assumptions in drafting the letter: 42

BIBLIOGRAPHY 44



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 (1),

“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) (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. ….”.

Hence as per arbitration act, rules for the conduct to arbitration of association

of arbitrators, southern Africa and freeadvice web site, the arbitration is a

written agreement between parties to resolve the dispute. However an

arbitration agreement could be in oral too; however this arbitration agreement

is not regulated by arbitration act 1965, but by common law.

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 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 to be followed, 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) 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 an arbitration agreement in an

agreement in writing or in oral, intended to resolve the present or future

dispute between the parties.



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.

Answer 1.2

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 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) (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 (6 th

Edition) of The Association of Arbitrators (Southern Africa) an Arbitration

Agreement shall be in writing. However if the parties wishes to adopt

Summary Procedure Rules for arbitration, parties can only do this by written

and signed agreement. Hence requirement of arbitration agreement to be

written and/or signed also depends upon the procedure of the arbitration to be

followed.

Here I would like to refer three different statements made in case law, experts

on internet and in book to describe the need of arbitration in writing and

signed or not. They are as follows:

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 at page 4

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”.

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 (38) have 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


http://www.nortonrose.com/


by the arbitration act. Here it is also be noted that Butler and Finsen (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.



Question 2

What are the rules of natural justice and of what importance and significance

are they to arbitration proceedings?

Answer 2

Butler and Finsen (165) stated that:

“Although the courts generally appear to regard the arbitrator as ‘master of

his own procedure’ he must nevertheless conduct the proceedings in

accordance with the rules of natural justice”.

Further they states:

“When an arbitrator has conducted the proceedings in a manner that did not

ensure the fair administration of justice between the parties, the court will

intervene. The arbitrator’s duty to comply with the rules of natural justice

means no more than the duty ‘to act fairly ….. in carrying out the decision

making process. There are three rules in particular which he should always

bear in mind”.

They refer the importance of rules of justice in arbitration proceeding as well

as three rules of justice.



The three rules of Natural Justice are as follows:

1. Hear the Other Side (Audi Alteram Partem)

2. No one is fit to be judged in his own cause (Nemo iudex idoneus in

propria causa est)

3. Justice must be seen to be done

Importance and Significance of rules of natural justice

in Arbitration proceedings

The Article 2 (Supremacy of Constitution) of Constitution of South Africa

states:

“This Constitution is the supreme law of the Republic; law or conduct

inconsistent with it is invalid, and the obligations imposed by it must be

fulfilled”.

This indicates that the law stated in Constitution is supreme and further Article

33 (Just Administrative Action) of Constitution, while inferring to the rules of

natural justice states that:

“(1) Everyone has the right to administrative action that is lawful,

reasonable and procedurally fair. (2) Everyone whose rights have been



adversely affected by administrative action has the right to be given written

reasons. (3)National legislation must be enacted to give effect to these

rights, and must- (a) provide for the review of administrative action by a court

or, where appropriate, an independent and impartial tribunal; (b) impose a

duty on the state to give effect to the rights in subsections (1) and (2); and (c)

promote an efficient administration”.

Hence, it can be seen that the supreme law of the country (South Africa) has

provided utmost important to the rules of natural justice and directs that

everyone has the right to administrative action that is lawful and impartial to

ensure fair decision. Adversely affected person must receive the written

reason, and national legislation should be in line with it, to provide

independent and impartial tribunal to effect to the rights of the people.

This rules of natural justice inferred under section 33 is also applicable to

arbitration proceedings. As aim of the arbitration proceedings is to resolve the

dispute between the parties with fairness, and to achieve this aim, arbitrator

must conduct the proceedings in accordance with rules of natural justice as

guided by the constitution of South Africa, so that decision of award will be

just, otherwise the court will intervene.



1. Hear the Other Side (Audi Alteram Partem)

The Constitution of Republic of South Africa (article 33) provided every citizen

of South Africa right to administrative hearing, which is fundamental to the

fairness of arbitration proceeding. Hence before taking any decision by the

arbitration tribunal, the party must be given opportunity to be heard.

As per Butler and Finsen (165) this rules guides that:

“A party should be fully informed of the evidence and arguments

which have been produced against his case and have a proper

opportunity of presetting his own case to the arbitrator before the

arbitrator takes a decision”.

The arbitrator must inform the parties, what the evidence, documents,

argument and claims are made by one party to other party. During arbitration

proceeding while sending any document to arbitrator, one party should copy

the document to other party, similarly arbitrator while writing to one party must

copy the letter/document to other party. The arbitrator should not

communicate with one party when other party is not present. Following these

procedures, will help all the parties, to be fully informed of the matters in

dispute and arguments presented by parties. Further the arbitrator must

provide sufficient time to parties to present their case and, all the parties of



the dispute, and arbitrator must ensure that one party must here what other

party is stating or claiming, so that other party can counter the statement, and

can produce the evidence to counter the claim, made by the first party.

Here it is very important that the defendant must be told what claimant is

claiming and claimants must be told what is the counterclaim of defendant, so

that accordingly the parties can prepare there defense.

In case of Kollberg v cape town Municipality 1967 (3) SA 472 (A), the court

has stated that:

“If the rules of natural justice are implied, the audi alteram partem rule is

applicable. Non constat , however, that every breach of the principles of

natural justice automatically renders void the decision in question.”.

Hence if the arbitrator during arbitration makes the award without informing

both the parties about the evidence, argument, claim, documents etc

produced by one party against each party or If the arbitrator does not gives an

opportunity to the affected person or entity to present his case or if the award

is not based on reasoning the court will intervene and render the award void.

The arbitration tribunal must provide written notice to finalize the date and

time of arbitration proceeding, convenient to all parties, and if reasonable



reasons provided for change of the date and time, it should be accepted.

Inspect goods and property involved in dispute, if required.

The oral evidence should be recorded, as the parties agree; only in case the

parties do not agree, the arbitrator should direct the way to record the oral

evidence.

Following this rule of natural justice helps arbitrator carryout the proceeding in

transparent manner, gathering all the information that helps better analyzing

evidence and argument presented during arbitration proceeding and

eventually leading to quality award.

2. No one is fit to be judged in his own cause (Nemo iudex

idoneus in propria causa est)

As the heading clearly states that “No one is fit to be judged in his own

cause”, this rules guides that one can not judge himself, that is, if one has got

his interest in the outcome of the arbitration proceeding, he can not be the

arbitrator himself.

In case of Kolleerg v cape town Municipality 1967 (3) SA 472 (A), the court

has stated that:



“it is quite foreign to the concept of arbitration that one of the parties to dispute

should be the arbiter of the dispute – a judge in his own case”.

Hence it can be seen that, in no arbitration proceeding, an arbitrator can

decide if he has interest in the outcome of the arbitration proceeding.

If the arbitrator is not impartial and free from bias during the arbitration

proceeding, the award will also be biased, and in that case, if any party will

come to know that, the arbitrator has got his interest in the arbitration

proceeding then, he may go to court and the court may decide to turn down

the award. Further this will lower down the reputation of the arbitration

proceeding too. Hence it is extremely important, that the arbitrators are

impartial, and work in such a manner that parties have faith in him.

Since the arbitrator must be impartial, hence he must disclose any conflict of

interest in the arbitration proceeding, at the beginning of arbitration

proceeding, and at any time, he comes to know that he is in conflict of

interest, during the arbitration proceeding.

Hence it is very important to have impartial and non-biased arbitration

tribunal.



3. Justice must be seen to be done

This rule, guides the arbitration proceeding, that not only justice is to be done,

but it must be seen to be done. Hence arbitrators must act, in such a way that

all parties have faith in him. During arbitration proceeding, he must act, such

a way that all parties have confidence in him, that he is handling the

proceeding in right way. For example, the communication with one party must

take place in presence of another party, so that other party, if in disagreement

can counter and present his case in support.

Following this rule increases the faith of parties in arbitration proceedings and

hence more reasons to accept the arbitration award (avoid further litigation).

Butler and Finsen (167) stated that

“In practice, arbitrators would be well-advised to remember the advice of

Mustill & Boyd, who suggested that an arbitrator is unlikely to be held to have

acted unfairly, if he observes the following rules: 1) He should endeavour to

act fairly between the parties, eliminating conscious, and so far as he can,

unconscious bias. 2) He should not only be impartial in fact, but should

act in such a way that the parties are confident of that fact. 3) He should

pay careful attention to any evidence or arguments presented by the parties,

and should be seen to be doing so. 4) He should keep the parties fully

informed of what he is doing, and what he proposed to do”.



Hence, the arbitrator must act, in such a way that, his all action should be fair,

and gives impression to the parties, that he is acting fairly, such as not

traveling with one party to inspection site, not having lunch with one party,

without substantive reason not having hearing in absence of one party, hear

both parties equally, do not give argument in support or against of any

argument of any party during proceeding, copy all correspondence to all

parties, if he receives any correspondence from one party, which is not

copied to other party, he must send the copy of that correspondence, to the

party who has not received that correspondence and communicate with one

party only in presence of other party. Following all these provisions will

indicate that the arbitrator is acting fairly and hence will increase faith of the

parties in arbitrator and arbitration proceeding.

The arbitrator must submit the award based on logical reasoning and analysis

of facts. The decision should clearly point out the evidence based on which

the determination of the arbitrator is based. The award must indicate that the

arbitrator has gone through all the evidence provided by all the parties. It

should also indicate that the arbitrator has analyzed the evidence and

argument of all parties in depth, and then came to any conclusion. The logic

and reasoning provided with the award will let the party understand the award

better and clear. This will clarify the issues in mind of the loosing party too,

that why he lost. This way both the parties will feel that justice is being done



by the arbitrator, and hence increase the faith in arbitration proceeding and

award.

During arbitration proceeding the arbitrator may require parties to make

discovery of document, deliver pleadings or statements of claim and defense,

allow inspection of any goods and appoint any a commissioner to take the

evidence. Further arbitration tribunal determines the time and place of the

arbitration proceeding, administer oaths of the parties and witness, examines

the parties and require them to produce all books, documents which may be

required for the trail, examine any person who has been summoned to give

evidence, receive evidence by affidavit, inspect goods and property involved

in dispute. All these works that is the part of the arbitration proceeding could

be vulnerable with respect to providing just and fair result to the parties. The

arbitration tribunal must provide the parties sufficient time to produce their

case with supporting documents, any relevant book for the trail and any

witness. Providing enough information and opportunity to the parties will help

party to present their case properly to the arbitration tribunal, and will give

parties a feeling that arbitrator is giving all opportunity, and is not biased.

Following this rule of justice, creates faith of parties in the arbitration

proceeding and hence high chance of acceptance of award.



Conclusion

These three rules must be observed by the arbitrators during arbitration

proceeding, as following these rules of natural justice will lead to the

decisions based on facts and will be accurate, will provide the confidence of

the parties. Sufficient time for presentation of documentation, calling of

witness and asking for inspection, and recording the matter stated by the

witness as per the agreement, and reasoned decisions based on these facts

will clearly indicate to all, that the decision is not biased, and will improve the

confidence of the parties in the decision. If the rules of natural justice will not

be observed in the arbitration proceeding, aggrieved party may go to court

and the court may refer the matter back to arbitration tribunal to observe the

rules of natural justice or cancel the award.

The adherence of rules of natural justice in arbitration proceeding is extremely

important as it is guided by the supreme law of the country, that is constitution

of republic of south Africa, to follow the rules of natural justice in any action

which has civil consequences. Further if the rules of justice will not be

followed during the arbitration proceeding then the court will intervene and as

stated in case of Kollberg supra, the breach of the principles of natural justice

automatically renders void the decision in question.



Following rules of natural justice in arbitration proceeding, promotes faith and

confidence in the arbitration proceeding, and leads to right, just and fair

decision.



Question 3

List any 5 South African Statutes that reference any form of appropriate

dispute resolution (ADR) and briefly discuss in what manner and/or

under what circumstance(s) ADR is referenced.

Answer 3

The 5 South African statutes that reference any form of appropriate dispute

resolutions (ADR) are as follows:

1. Act No. 11, 2001: South African Boxing Act, 2001;

2. Act No. 95, 1998: Housing Consumers Protection Measures

Act, 1998;

3. Act No. 75.1997: Basic Conditions of Employment Act, 1997;

4. Act No. 63, 2001: Unemployment Insurance Act, 2001;

5. Act No. 102, 1996: National Small Business Act, 1996.

1. Act No. 11, 2001: South African Boxing Act, 2001

One of the objectives of this act is effective resolution of Boxing Dispute.

As per this act, if there is a dispute concerning any matter regulated by or



under this act, any party to dispute may in writing refer the dispute to

Boxing SA, a juristic person and independent body. Further the party who

refers the dispute to Boxing SA must satisfy Boxing SA that a copy of the

referral has been served on all the other parties to the dispute. After this

Boxing SA must attempt to resolve the dispute through conciliation and

must give its ruling in this regard, and make such order as to costs as it

deems fit. If the dispute remains unresolved or the parties do not agree

with the finding of Boxing SA any party may refer the matter to

arbitration. There is no reference of procedures to be followed for

arbitration in this act.

2. Act No. 95, 1998: Housing Consumers Protection

Measures Act, 1998

The objective of the act is:

“To make provision for the protection of housing consumers; and to provide

for the establishment and functions of the National Home Builders

Registration Council; and to provide for matters connected therewith”.

National Home Builders Registration Council (Council) has power to assist

in the resolution of disputes between registered home builders and

housing consumers. The council makes rules prescribing the procedures



for resolution of disputes by conciliation or arbitration or fees for such

conciliation or arbitration by publication in the Gazette. Hence the

alternate dispute resolution method referred here is conciliation or

arbitration.

The Council has got internal complaints procedure for housing consumers

and home builders to review any decision or action of the Councils staff or

its agents. However going through the internal complain procedure of

council, a housing consumer or a home builder may refer:

“(i) any decision or action of the Council, its staff or its agents to the Public

Protector for review in terms of the Public Protector Act, 1994 (Act No. 23 of

1994); or 25

(ii) any decision of the Council to arbitration in terms of the Arbitration Act,

1965 (Act No. 42 of 1965)”.

Here it is clearly stated the arbitration will be as per Arbitration Act 1965

and the procedures of the arbitration will be based on the procedures

published by the council in the Gazette.

3. Act No. 75, 1997: Basic Conditions of

Employment Act, 1997



As per this act, the purpose of this act is as follow:

“2. The purpose of this Act is to advance economic development and social

justice by fulfilling the primary objects of this Act which are—

(a) to give effect to and regulate the right to fair labour practices conferred by

section 23(1) of the Constitution—

(i) by establishing and enforcing basic conditions of employment; and

(ii) by regulating the variation of basic conditions of employment;

(b) to give effect to obligations incurred by the Republic as a member state of

the International Labour Organisation”.

As per chapter five, termination of employment, of this act, if an employee

is terminated/dismissed from his employment, he has right

“to dispute the lawfulness or fairness of the dismissal in terms of Chapter VIII

of the Labour Relations Act, 1995, or any other law”.

The chapter VII of the Labour relation Act 1995 provides the provision that

Commission for Conciliation, Medication and Arbitration (CCMA) will try to

solve the dispute through conciliation and if conciliation fails then

arbitration can start.

In addition if there is a dispute only about the entitlement to severance

pay, the employee may refer the dispute in writing to council or CCMA (if



council has no jurisdiction). While referring the dispute to council or CCMA

the employee should copy the referral to other party to dispute. Then the

council or CCMA will try to resolve the dispute through conciliation. If the

dispute remains unresolved after conciliation, the employee may refer the

dispute to arbitration.

As per section 70 (Limitations) of this act, if the employer is covered by a

collective agreement that provides a provision for the resolution of dispute

through arbitration concerning amount, the labour inspector may not

issue a compliance order for the payment of those amount.

If an employee institutes legal proceedings for unfair dismissal, the Labour

Court or the arbitrator hearing the matter may also determine any claim for

an amount that is owing to that employee in terms of this Act if-

“(a) the claim is referred in compliance with section 191 of the Labour

Relations Act. 1995;

(c) no compliance order has been made and no other legal proceedings have

been instituted to recover the amount.

(3) A dispute concerning any amount that is owing to an employee as a result

of a contravention of this Act may be initiated jointly with a dispute instituted

by that employee over the entitlement to severance pay in terms of section

41(6) (Severance Pay)”.



The clause 41(6) refers the dispute to be resolved through conciliation by

council or CCMA and in case the dispute remains unresolved, the

employee may refer the dispute to arbitration.

Section 70 of this act that is Protection of rights, which states that no one

may influence the employee not to exercise his right bestowed by this act,

however the parties to dispute if willing may settle the dispute by

agreement. Here it can be noted that parties are free to settle the dispute

by agreement.

Section 80 of the act describes in detail the procedure for dispute, if there

any dispute exists about the interpretation of the part of article, that is with

respect to Protection of employees against discrimination; any party to the

dispute may refer the dispute in writing to a council, if the parties to the

dispute fall within the registered scope of that council or to the

Commission for Conciliation Mediation and Arbitration (CCMA), if council

does not have jurisdiction. While referring the dispute to the council or

CCMA the party must provide the copy of the referral to other party too.

The first stage of resolution of dispute will be through conciliation

process carried out either by council or CCMA. If the dispute is not

resolved through conciliation, in second stage any party may refer the

dispute to the labour court for adjudication. Another important provision

made here is that the dispute will be governed by Chapter VII, Part C



(Resolution of dispute under auspices of commission) of Labour Relation

Act, 1995, which provides the provision of conciliation by council or CCMA

and if dispute is unresolved then arbitration.

4. Act No. 63, 2001: Unemployment Insurance Act,

2001

The objective of this act is:

“to establish the Unemployment Insurance Fund; to provide for the payment

from the Fund of unemployment benefits to certain employees, and for the

payment of illness, maternity, adoption and dependant’s benefits related to

the unemployment of such employees; to provide for the establishment of the

Unemployment Insurance Board, the functions of the Board and the

designation of the Unemployment Insurance Commissioner; and to provide

for matters connected therewith”.

If the commissioner suspends the right of a person, who is entitled to the

benefits, such as unemployment benefit, Illness benefit, Maternity

benefits, adoption benefits or death benefits under the Unemployment

Insurance Act, or the personal has any other dispute related to payment or

non-payment of benefits. The person at first instance may refer the

dispute to the appeal committee of the board. The process to be followed



by the appeal committed is not clearly stated. Later if the person is not

satisfied with the decision of the appeal committee, he may refer the

matter for arbitration to the Commission for Conciliation, Mediation and

Arbitration.

In addition, this act states that, the labour inspector can issues a

compliance order to employer on the ground that the employer has not

abided any provision made under section 39(1). The employer may object

the compliance order by refereeing the dispute to Director General for

resolution of the dispute. However the manner in which the Director

General will resolve the dispute is not clear.

Further chapter 6 of this act provides provision of Unemployment

Insurance Board to provide the minister advice and make

recommendation to minister. The constitution of the board provides the

provision of arbitration for settling any dispute concerning the

interpretation and application of constitution of Unemployment Board.

5. Act No. 102, 1996: National Small Business Act,

1996

The purpose of this act is:



“To provide for the establishment of the National Small Business Council

and the Ntsika Enterprise Promotion Agency; and to provide guidelines for

organs of state in order to promote small business in the Republic; and to

provide for matters incidental thereto”.

The National Small Business Council is established as a juristic person.

The function of it, is to represent and promote the interests of small

business, and advise the national, provincial and local spheres of

government, on social and economic policy as stated under Section 3 (1)

(a) (b) of the act.

The constitution of the National Small Business Council provides the

provision of settling the dispute related to interpretation or application of

the constitution of the council through arbitration. Which procedure for

arbitration will be used is not stated here.

The Ntsika Enterprise Promotion Agency is established as a juristic

person. The function of it is to expand, co-ordinate and monitor the

provision of training, advice, Counseling, to provide financial support to

service providers and to consult with any organ of government, the

Council or a service provider in order to facilitate the provision of business

as stated under section 10 of the act.



The constitution of the Ntsika Enterprise Promotion Agency provides the

provision of settling the dispute related to interpretation of the constitution

of the agency through arbitration.

There is no reference of which arbitration procedures to be followed for

the arbitration stated in this act.



Question 4

Set out the qualifications that an arbitrator must possess, the manner in

which an arbitrator is appointed and the circumstances under which an

arbitrator’s appointment is terminated.

Answer 4

Qualification of an Arbitrator

While referring to statement of Voet (22), Association of Arbitrators, Southern

Africa in there study material “The Law and Practice of Arbitration” states that:

“Voet states that an arbitrator must be at least 18 years of age, and must be

sane. No other qualifications appear to be stipulated either in statutory or

common law and the parties are therefore entitled to appoint whosoever they

wish provided he or she meets with these qualifications”.

Hence it can be noted that it all depends on parties to decide the qualification

of the arbitrator.

Arbitration act 1965, section 1 define the arbitration tribunal as:



“arbitration tribunal' means the arbitrator, arbitrators or umpire acting as such

under an arbitration agreement”.

Here, and in whole arbitration act 1965 there is no mentioned of any specific

qualification requirement for the arbitrator. This gives the parties to arbitration

to decide any person they wish to have as an arbitrator. Hence, if the parties

agree, they can hire any person of any social or official status, if the parties

knows the background of the person and believes that he/she will be suitable

as an arbitrator for the concerning dispute. However the parties must decide

the appointment of arbitrator considering any issues related with public

interest.

The parties to the dispute may include the qualification for the arbitrator in the

arbitration agreement, such as the arbitrator should have experience in

construction of water supply project or arbitrator must be member of

association of arbitrators or other similar institution. The parties may provide

restrictions for the arbitrators too, such as the arbitrator should not have

particular nationality (such as in case of Millennium Challenge Corporation

funded project, the arbitrator should not have the nationality of countries

debarred by US Government or UN Security Council Charter VII). Hence in

this particular case the prospective arbitrator must satisfy the requirement

stated in the arbitration agreement.



Personal Quality

The arbitrator must be able to see the issues related to arbitration objectively

and dispassionately, and should not be emotionally involved with the

arbitration proceeding, and with any parties to the arbitration. They should

also possess the quality which enables the arbitrator to control the arbitration

proceeding authoritatively, have wisdom, patience, is polite and be able to

take honest and sound decision. Butler and Finsen (74) while referring the

quality of the arbitrator stated by the chartered Institute of Arbitrator, states

that:

“The ideal arbitrator should have wisdom of Solomon. The patience of Job,

the humility of St. Francis – and the ability to stay awake after lunch”.

This gives an indication that the arbitrator must be hard working too.

Expertise in Professional Field

The arbitrator should be expert in his professional field, and the needs of

expertise require depend upon the need stated in the arbitration agreement

(with reference to nature of dispute), and the way the arbitration hearing is

going to be conducted. On a highly technical issue, where it is expected that

the expert witness is going to be called, there does not seems any



requirement that the arbitrator should also be expert of the same field, basic

knowledge of that filed would suffice. However, where the parties are not

represented legally and technically, the parties may expect that arbitrator

should have both legal and technical qualities. The need of expertise also

depends upon the type and nature of disputes between the parties,

complexity of dispute and amount in dispute. Arbitrator having experience in

arbitration proceedings too will be beneficial to the parties, in sense the

arbitrator will take full advantage of benefits of arbitration proceedings

compare to litigation.

Legal Knowledge

Considering the legal nature of arbitration proceeding, the arbitrator must

have understanding of rules of natural justice and knowledge, understating of

rules of evidence, law of contract, law related to his own particular field of

expertise, principle of law of delict. So that the arbitrator can apply these traits

the best manner he thinks suitable for the proceeding to improve the quality of

the arbitration and faith of the parties in the proceeding.

Manner in which the Arbitrator is appointed

The arbitrator can be appointed in one of the three ways

1. Appointment by the parties



2. Appointment of the arbitrator by a third party or office bearer of an

appropriate.

3. Appointment of the arbitrator by the Courts

1. Arbitrator appointed by the parties

Section 9 of the arbitration act 1965 states that, when arbitration agreement

does not refer anything about the number of arbitrator, then the inference of

this will be a single arbitrator. The parties with agreement may choose some

one, who is an expert in the field of the dispute and known to them and they

have confidence in the person. In some cases the party may agrees at the

beginning of the contract about the arbitrator who should be hired at the

beginning of the contract. In other case the parties may hire arbitrator when

dispute arises. If the arbitrator selected at the time of dispute the parties can

hire the arbitrator who has expertise in the field of particular dispute, but this

will delay the dispute resolution process, as there will be time for hiring the

arbitrator and then the arbitrator will take little more time to understand the

dispute compare to full time arbitrator. However the full time arbitrator will be

costly.

There are cases where the arbitration agreement is silent about how the

arbitrators will be appointed in case of dispute. Here the following could be

the process of appointing:



One party may request the list of proposed arbitrators from another party and

among that list the party who requested the list may choose any one whom

he thinks is the right candidates for the arbitration. In case, other party does

not provide the list, he himself may prepare the list and send it to other party

for selection of arbitrator from that list. In this way the parties may agree on

one of the person in the list as arbitrator.

Other way is that each party may appoint one arbitrator and in case these two

arbitrators do not agree, appoint umpire, but this process will be costly.

Further in case of appointment of Substitute Arbitrator, section (10) (1) of

arbitration act 1965 clearly states in case, arbitrator refuses to act or becomes

incapable of acting or dies or is removed from office or his appointment is

terminated, the party or parties who appointed the arbitrator can appoint

another arbitrator. In case of two or more arbitrator, if one party does not

appoint an arbitrator, other party may provide 7 days notice for appointment

to the party who has not appointed the arbitrator. If the failing party does not

appoint the arbitrator within this notice period, the arbitrator appointed by

other party will work as a sole arbitrator and award of this sole arbitrator will

be binding on both parties.



2. Appointment of the arbitrator by a third party or office

bearer of an appropriate

Though the first choice with the parties is to hire the arbitrator with mutual

consent, frequently they disagree on the name of same person and hence

generally there is provision in the arbitration agreement that if disagreement

arises, a third party such as President of the International Chamber of

Commerce or Chairman of the Association of Arbitrators will appoint the

arbitrator. However before quoting the reference of the office bearer of this

institution, the parties must consult them, that they will be willing to appoint

the arbitrator or not, in case of dispute.

3. Appointment of Arbitrator by the Court

In case the parties does not agree to the appointment of the arbitrator by

mutual consent and procedure for appointment of arbitrator by third party.

Either party may give notice of seven days to other party to appoint an

arbitrator or agree to the arbitrator proposed by him. If other party does not

response, the first party may apply court for appointment of an arbitrator. The

court may instruct one party to appoint arbitrator from a particular profession

designated by the court or provide one list from which the party can choose

the arbitrator.



In case arbitration agreement has not laid down any procedure for

appointment of arbitrator and if all the parties are not in agreement on the

appointment of arbitrator, any of the party may apply court to appoint the

arbitrator.

Circumstances under which an arbitrator’s

appointment is terminated

Section 13 of Arbitration Act 1965 provides the provision of Termination or

setting aside of appointment of arbitrator or umpire. Going through Arbitration

Act, Reference Book, Arbitration Procedures of Association of Southern Africa

and reference module provided by Association of Arbitrator, these seven

circumstances has been identified for termination of appointment of arbitrator:

1. If it is stated in the arbitration agreement that any one party can

terminate the appointment of the arbitrator, any party can terminate the

arbitrator’s appointment. Otherwise mutual consent of the parties is

needed to terminate the arbitrator’s appointment.

2. On application of any party based on good cause, the court may

terminate the appointment of the arbitrator.

3. An arbitrator is hired for resolving the dispute, and on date when

arbitrator has provided the award and settled all issues (in case of

adhoc appointment) arbitrators appointment automatically gets



terminated. However where the arbitrator is hired for full time, the

appointment does not get terminated after the award.

4. The arbitrators are hired for settling the dispute, however during the

arbitration proceeding if the parties settles the dispute by mutual

agreement, the reasons behind the arbitration dies and hence, by

settlement of the dispute before an award is made, the arbitrator’s

appointment get terminated.

5. If the arbitrator does not wish to work as arbitrator due to any reason

and he submits his resignation, by resigning, the arbitrator’s

appointment gets terminated.

6. If the arbitrator dies or any reasons beyond his control due to which he

is not able to perform his service, the arbitrator’s appointment gets

terminated as he will not be able/available to perform the task of

arbitrator.

7. By the failure of the arbitrator to make an award within four months

after the date on which party of entering on the reference or the date

on which arbitrator was called on to act by written notice of any party.

This four month is the duration of arbitration stated in Section (23) (a)

of the arbitration act 1965, however if the arbitration agreement states

different duration than the duration for termination of appointment of

arbitrator will be as per arbitration agreement. This duration may be

extended by the parties, if they wish to do so.



Question 5

Prepare a letter to the parties accepting your appointment as arbitrator.

Included in your letter of acceptance must be your tariff of your fees,

which you must clearly spell out.

Answer 5 (The Letter is attached separately)

Assumptions in drafting the letter:

I have been approached by Millennium Challenge Account Lesotho (MCA-L)

for the appointment of arbitrator. I received a letter from MCA-L, stating that

they are the implementing entity and Employer as per the contract for the

project activity “Contract of Design, Renovation and Expansion to Integrated

Out-Patient Department at 14 Hospitals throughout Lesotho (HS-A-25-10)”.

They have signed the contract with Lesotho Steel Products (Pvt) Ltd. and the

contract is based on conditions of contract of FIDIC Yellow book and there is

a provision of Arbitration by one member in case the dispute is not settled by

the Dispute Adjudication Board. Hence after consultation with other party,

they requested my interest and financial proposal. After requesting details of

project and understating the projects requirement and its stakeholders, I

submitted my CV and proposed fee to MCA-L stating my availability for their

consideration. MCA-L after going through there internal process and

consultation with other party (Lesotho Steel Products (Pty) Ltd.) sent me a



letter of acceptance, stating that my proposal is acceptable to them, and they

are appointing me Arbitrator to the dispute between Millennium Challenge

Authority Lesotho and Lesotho Steel Products (Pty) Ltd. After receipt of MCA-

L letter, I have drafter the letter of acceptance based on the requirement of

assignment.

It was assumed that I am present in Maseru and the arbitration will also take

place in Maseru. Hence, in fee I have not quoted for international

transportation.

The letter to this question is attached separately.



BIBLIOGRAPHY

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Government of South Africa.

Act (2001). Unemployment Insurance Act 63 of 2001. South Africa:


Act (1996). National Small Business Act 102 of 1996. South Africa:


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Anonyms (2011). The Law and Practice of Arbitration. South Africa:

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Butler and Finsen (1993). Arbitration in South Africa Law and Practice. South

Africa: Juta & Co, Ltd

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SA 825 (W)

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

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Sharrock Robert (2001). Business Transactions Law. 5th Edition. South Africa:

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