Case summary written by Snazo Tuswa and checked by Jordan Dias
On 7 August 2019, M Du Plessis (“the Arbitrator”) handed down an award in arbitration proceedings (“Arbitration Award”), between the First, Second, Third Applicants, and the Second to the Eighth Respondents. Subsequent to such arbitration, the Arbitrator ordered compliance as to all participants had to abide. It was also common cause that a settlement agreement was concluded between the parties to guide the implementation of the Arbitration Award (“Settlement Agreement”).
Subsequent to the Arbitration Award, Busamed Health Care (Pty) Ltd and Others (“the Applicants”) participated (partially) to the Arbitration Award insofar as it stated that:
- GPH (the First Defendant in the aforesaid arbitration proceedings) needed to comply with the Consultancy Services Agreement (“CSA”) between GPH, Veraison, Tropical Paradise, Amoricare and Dingaan; and
- the matter is referred to Mazaars (“the Second Respondent”), under clause 184.108.40.206.2 in the Settlement Agreement concluded on 13 December 2017 between inter alia the Applicants and GPH, as well as Tropical Paradise, Veraison, Amoricare and Dingaan.
The Applicants instituted an application to review and set aside the Arbitration Award and sought to declare that:
- the managing services agreement between GPH and JT Ross (Pty) Ltd (“MSA”) had terminated with effect from 29 May 2018;
- the CSA automatically terminated when the MSA was terminated; and
- the Second Respondent shall consider the fact that the MSA and CSA were terminated with effect from 29 May 2018.
The Applicant’s based their challenge under subsection 33(1)(b) of the Arbitration Act 42 of 1965 (“the Act”) which provides that an award may be set aside where “an arbitration tribunal has committed any gross irregularity in the conduct of the arbitration proceedings or has exceeded its powers” and this could only be done within a period of 6 (Six) weeks before the expiry of three years, after the publication of the award. Furthermore, the Applicants applicants contended that the Arbitrator allegedly committed gross irregularities by making findings that were prejudicial to Busamed and Busamed Healthcare, without being parties to the arbitration proceedings or being afforded an opportunity to make representations.
It was argued that the Arbitrator found or assumed that the MSA was still in force as GHP did not plead that it no longer endured. It was further argued that the Arbitrator went beyond his mandate in considering any argument or allegation that the MSA had terminated. After finding that GHP needed to comply with CSA, the Applicant’s main complaint was that the Arbitrator exceeded his powers by referring the matter to Mazaars when it was the parties’ prerogative to do so.
On 22 August 2019, the parties signed an engagement letter appointing Mazaars to perform an independent valuation for the purposes of the Settlement Agreement. This constituted the formal referral of the matter to Mazaars and negated the assertion that the Arbitrator referred the matter himself.
In this matter, the Arbitration Award was handed down on 7 August 2019 and the six-week period expired on 17 September 2019. It was time-barred.
In the case of Venmop 275 (Pty) Ltd & Another vs Cleveland Projects (Pty) Ltd and Another, the applicant had to show good cause for an application to set aside an arbitration award outside the prescribed six-week period. The applicant also had to show that it was unduly prejudiced by the arbitration award.
The Court also considered the common law doctrine of peremption which provides that a party, who acquiesces to a judgment, cannot subsequently seek to challenge the judgment which he has acquiesced to. In applying the abovementioned doctrine to the matter, the Court held that the Applicants, by their own conduct, willingly accepted the Arbitration Award by partially participating with the same. It was further held that failure by the Applicants to bring the application within the prescribed six-week period was an indication that the Applicants had accepted the Arbitration Award.
The Court stated that it will not come to the rescue of a party who initially participated, in terms of the award, by showing an intention to abide by the original finding of the arbitrator and suddenly changes its mind. A party must make up its mind whether it was to abide, or appeal and it must be done within a prescribed period as stipulated in the Act, unless good cause is shown to the court hearing the application for condonation.
The Court concluded that the Arbitrator did not act irregularly and that the Applicants did not provide compelling reasons for extending the period of time referred to in Section 33 (2) of Act. The Arbitration Award was ordered to be made an order of the Court.
The case highlights the importance of bringing an application to set aside an arbitration award within the prescribed time period, as contemplated in section 33 (2) of the Act; failing which, a party will be required to show good cause for the delay and show prospects of success.
The primary issue that the Court had to determine was whether the Applicant had shown good cause for an application to set aside an arbitration award.
Section 33 (1) (b) of the Arbitration Act 42 of 1965, Section 33 (2) of the Arbitration Act 42 of 1965, arbitration, show good cause, doctrine of peremption.