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IN THE HIGH COURT OF SOUTH AFRICA

KWAZULU-NATAL LOCAL DIVISION, DURBAN

CASE NO. D2834/2020

In the matter between:

DELTA BEVERAGES (PRIVATE) LIMITED                                                  First Applicant

SCHWEPPES ZIMBABWE LIMITED                                                      Second Applicant

and

BLAKEY INVESTMENTS (PTY) LTD                                                       First Respondent

PAMMENTER C.J, N.O.                                                                      Second Respondent

HOLLIS N.D, N.O.                                                                                   Third Respondent

ASSOCIATION OF ARBITRATORS

(SOUTHERN AFRICA) NPC                                                                 Fourth Respondent

ORDER

 

The application is dismissed with costs of two counsel, such costs to be paid by the applicants jointly and severally, the one paying the other to be absolved.

JUDGMENT

CHETTY J :

[1] This is an application for the stay of arbitration proceedings instituted by the first respondent (’Blakey’) against the first (‘Delta’) and second applicants (‘SZL’). The latter two companies are part of the global AB InBev group of companies, with their registered offices in Harare, Zimbabwe. Blakey has its registered offices in Durban. The second and third respondents are the arbitrators seized with the pending arbitrations, with the matter concerning SZL scheduled to commence on 1 September 2020. The temporary stay of the arbitral proceedings is sought pending the finalisation of legal proceedings in the High Court of Zimbabwe that the supply agreement entered into with Blakey be declared void, alternatively voidable or unenforceable. It is these agreements, which contain a referral to arbitration, which Delta and SZL seek to set aside as void and unenforceable. At the time when these proceedings were instituted, the applicants contemplated instituting the Zimbabwean proceedings within a month after obtaining the order sought in this application. That approach would have rightly brought criticism against the applicants. The applicants, since the launching of this application, have in fact instituted the Zimbabwean proceedings in May 2020, in two separate actions against Blakey. No relief is sought against the remaining respondents in those actions or in this application.

[2] I point out at the outset that the applicants issued their application papers on 8 May 2020. I am advised that during April 2020 unsigned sets of the application papers were sent to the respondents. These papers could not be issued at the time because of the COVID-19 lockdown. After issuing of the papers, Blakey delivered its answering affidavit on 9 June 2020 and the applicants delivered their replying affidavit on 26 June 2020. During this period, the applicants also managed to institute their Zimbabwean proceedings after succeeding to persuade the High Court in Zimbabwe to grant them leave to serve their papers via edictal citation. The arbitration against SZL is set to proceed from 1 to 4 September 2020 before the third respondent, while the Delta arbitration is set to follow sometime in October 2020 before the third respondent.

[3] The applicant approached the Judge President for the granting of a preferential date for hearing in light of the looming arbitrations. The matter was assigned to me as the parties were desirous of conducting a virtual hearing. The earliest, mutually convenient date was 21 August 2020. This judgment is therefore delivered under strict time constraints and deals crisply with the kernel issue – whether the applicants have made out a case for a stay of the arbitration proceedings pending the finalisation of the Zimbabwean litigation. The applicant bears the onus of satisfying the traditional test for the granting of interim relief, being a prima facie right, a reasonable apprehension of harm, the balance of convenience and the absence of an alternative remedy (Setlogelo v Setlogelo 1914 AD 221 at 227), although Blakey contends that the applicants must establish a clear right as the relief that it sought is final in effect. Both Mr Chohan SC, who appeared with Ms Thobela-Mkhulusi and Ms Milovanovic-Bitter for the applicants, and Mr Pillay SC, who appeared with Ms Lushaba for Blakey, were in agreement that the relief sought was discretionary and that I would have to be persuaded that it would be in the interests of justice to pause both scheduled arbitrations.

[4] Counsel raised several interesting, but peripheral arguments pertaining to the applicability of the International Arbitration Act 15 of 2017 (the IAA) and the UNCITRAL Model Law on International Commercial Arbitration (1985) (amended in 2006) to the present dispute. For reasons which are apparent from what is set out below, these arguments were not determinative of the issue before me.

[5] The facts of the matter are largely common cause. The CEO of Blakey, Mr Panday, first started doing business with the applicants in 2002 at the time when he was employed as a marketing manager with a plastic manufacturing company. He eventually went out on his own and established Blakey. He has been doing business with the applicants for almost 15 years, although they contend it was for a lesser period. Nothing turns on that. Essentially the applicants contracted with Blakey to supply flexible packaging materials made from plastic based on an ad hoc arrangement, for which there was no need to subject such an agreement to the Zimbabwean foreign exchange control regulations. Over the course of time and due to a national shortage of raw materials in South Africa, Blakey entered into discussions with the applicants, who were represented by Ms Cynthia Malaba, for the purposes of concluding an agreement that committed the applicants to purchase minimum bulk quantities of materials, agreeing on fixed pricing of the product and for the applicants to provide ‘forecasting’ to Blakey of the minimum quantity that it would be require to supply. According to Blakey, it was oblivious of any need for such an agreement to comply with exchange control regulations, particularly as the parties had had a fairly long business relationship. Eventually in May 2018, SZL concluded an agreement with Blakey for the supply of raw materials and the supply of flexible wrapping.

[6] Following an internal audit in 2019 at Delta, they discovered the existence of the supply agreement between themselves and Blakey, which the aforementioned Ms Malaba had apparently concluded without the approval and oversight by various other departments within Delta, including the legal department and the company secretary, particularly where the company was significantly exposed. According to Delta, prior to this audit, they were under the impression that Blakey was an ad hoc supplier of goods. Ms Malaba was to be subjected to a disciplinary enquiry by Delta, but left employment before this could commence. Delta now contends that the agreement signed with Blakey is unenforceable against it as it contained terms that are ‘unusually oppressive’ in nature, for example allowing Blakey to amend the standard price for the supply of goods for any reason. It was submitted by Delta that even if the goods were of a defective quality, it would be precluded from not paying for these based on the terms of the agreement. The agreement also bound Delta to make ‘forecasts’ of minimum quantities of material that they intended to order, which were binding on it. The agreement furthermore made Blakey the exclusive supplier of materials to Delta, which exclusivity triggers the application of Zimbabwean foreign exchange control regulations as Delta was contracting with a foreign entity.

[7] As a result of what it describes as a ‘commercially oppressive contract’, Delta refused to accept further deliveries of goods from Blakey and contested the basis on which the supply agreement was concluded.

[8] The contract between Delta and Blakey provided in clause 21 of the supply agreement for a referral of all disputes emanating from the contract to arbitration. The position adopted by Delta is that if the supply agreement is susceptible to being set aside as being void ab initio, then it must follow that any arbitration provided for in the contract, cannot proceed on the basis of the tainted main agreement. The legal position is that if an agreement is void ab initio then all the consequential clauses thereto fail with it. In North West Provincial Government & another v Tswaing Consulting CC & others 2007 (4) SA 452 (SCA) para 13, Cameron JA held that an arbitration clause which is ‘embedded in a fraud-tainted agreement’ cannot stand, and ‘the agreement purporting to give effect to it is stillborn’. Blakey refused to accept the contention by Delta and proceeded to refer the matter to arbitration under the auspices of the fourth respondent.

[9] It is not in dispute that Delta was not in agreement with the appointment of the arbitrator but once appointed, it participated in the pre-arbitration conference, and unequivocally set out its position that it was participating in the process in order to protect its interests, that it did not acquiesce to the process, and that it would seek the right to challenge the validity of the agreement in court. A perusal of the minutes of the pre-arbitration conference confirms Delta’s position. Delta proceeded to deliver a statement of defence, in which it raised three special pleas contending that the agreement fails to comply with Zimbabwean Exchange Control Regulations of 1996 and that the agreement is unenforceable as it is contra boni mores. In so far as the latter contention, Delta relies on the onerous terms which Ms Malaba imposed on the company, including a term which made Blakey the exclusive supplier of packaging products to Delta. They contend that no reasonable business person, acting in the interests of Delta, would have agreed to such terms.

[10] Delta contends that on a proper interpretation of clause 21, it is not severable from the remainder of the agreement and does not survive the illegality which taints the main agreement. This, as appears below, is disputed by Blakey.

[11] With regard to the SZL agreement, it is contended that this too fails to comply with the Zimbabwean exchange control regulations and that Blakey had allegedly failed a supply assessment conducted by Coca-Cola South Africa (‘CCSA’). As the CCSA is part of the AB InBev global group of companies, Blakey would have been precluded from doing business with SZL. It is further contended that Blakey misrepresented to SZL that the rates at which it would be supplied materials was similar to that provided to Delta when in reality Blakey charged SZL at a significantly higher rate. As in the Delta arbitration, SZL has also challenged the validity of the arbitration but nonetheless participated in the pre-arbitration conference in order to ensure the protection of its interests.

[12] Both applicants contended that the stay of the arbitral proceedings should be granted on the basis that the High Court of Zimbabwe is the forum conveniens on the basis that both agreements require performance in Zimbabwe, clothing the Zimbabwean courts with jurisdiction. They further contend that a number of witnesses are Zimbabwean nationals who can only be subpoenaed in Zimbabwe, particularly Ms Malaba who is a Zimbabwean citizen. The applicants further submit that it is proper that the Zimbabwean courts pronounce on the validity of the supply agreements in as much as they would require an application of Zimbabwean law, specifically in respect of the interpretation of exchange control regulations and of Zimbabwean competition law, and whether Zimbabwean courts would compel the applicants to be bound by an agreement which is contra boni mores. The applicants rely on Multi-Links Telecommunications Ltd v Africa Prepaid Services Nigeria Ltd 2014 (3) SA 265 (GP) para 18 where Fabricius J quoted the following from Forsyth Private International Law 5ed (2012) at 188 regarding forum conveniens :

‘“The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, ie in which the case may be tried more suitably, for the interests of all the parties and the ends of justice. . . . if the court is satisfied that there is another available forum which is prima facie the appropriate forum for the trial of the action, the burden will then shift to the plaintiff to show that there are special circumstances by reason of which justice requires that the trial should nevertheless take place in this country. . . . Since the question is whether there exists some other forum which is clearly more appropriate for the trial of the action, the court will look first to see what factors there are which point in the direction of another forum. . . . and these will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction . . . and the places where the parties respectively reside or carry on the business. If the court concludes at that stage that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay. . . . If however the court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. . . .”’

[13] In light of the above factual situation, the applicants contend that they have satisfied the requirements for a clear right, alternatively a prima facie right to be allowed to approach the Zimbabwean courts to determine the validity of the supply agreements in light of the contraventions referred to. In so far as the apprehension of harm is concerned, the applicants contend that they run the risk of dual arbitration proceedings, only for the Zimbabwean courts to declare at a later stage that the agreements are void and unenforceable. Should the arbitrations proceed without a pronouncement by the Zimbabwean courts on its validity, and should Blakey succeed thereat, Blakey could then seek to enforce the award in Zimbabwe on the basis of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), which requires courts to give effect to arbitration awards made in contracting countries. If that were the case, Blakey would be entitled to enforce the award in Zimbabwe, without the Zimbabwean courts being able to exercise the discretion as to the enforcement thereof.

[14] I am not persuaded by this line of argument. Where a court is faced with an application to make an arbitration award an order of court, it must apply its mind to the issue of the lawfulness of the award. This precise issue was considered by the Constitutional Court in Cool Ideas 1186 CC v Hubbard & another [2014] ZACC 16; 2014 (4) SA 474 (CC) where Majiedt AJ, writing for the majority at para 59, considered whether ‘making an arbitration award an order of court is permissible in circumstances where to do so would be to sanction a clear statutory prohibition’. Far from abandoning any form of enquiry, the court in Cool Ideas recognised that a court could refuse to make an award an order of court on grounds of public policy, including that the enforcement of such an award would be in violation of a statutory prohibition. As a matter of interest, the court in Cool Ideas para 61 was also asked to consider the provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards referred to above, as well as the provisions of the Model Law on International Commercial Arbitration. I have no doubt that even if an arbitration award were to be made in favour of Blakey, if it sought to enforce those awards in Zimbabwe, the Zimbabwean courts would not simply rubberstamp the decision of the arbitrators, particularly if to do so would condone a contravention of that country’s laws. That however is a risk that Blakey must take by insisting that the arbitrations proceed, regardless of Delta’s and SZL’s contentions that the Zimbabwean courts should first pronounce on the validity of the agreements.

[15] In so far as the contention that the applicants have no other available remedy but to seek a stay of the two arbitral proceedings, the applicants submit that the arbitrators do not have the power to determine their own jurisdiction. They further contend that despite this issue being squarely before the arbitrators as part of a special plea, an interdict should nonetheless be granted. The applicants rely on Inter-Continental Finance and Leasing Corporation (Pty) Ltd v Stands 56 and 57 Industria Ltd & another 1979 (3) SA 740 (W) at 754B-C,  where the court was faced with an application to interdict arbitration proceedings, and held as follows : 

‘. . .it appears to me, with respect, that it is unrealistic and inconvenient to expect a party who contends that impending arbitration proceedings will be invalid, to take part in such proceedings under protest, or otherwise to await the conclusion and then, if the result is against him, to oppose the award being made an order of Court. Every consideration of convenience and justice, it seems to me, points to the desirability of allowing such a party to seek an order preventing the allegedly futile proceedings before they are commenced. Moreover, as a matter of law, the probability of harm or injury seems to me to be present in the form of wasted and, to some extent at least, irrecoverable, costs incurred in relation to the abortive proceedings if they are ultimately established to have been such. In my view, therefore, the applicant is entitled to an order in terms of its main prayer.’

[16] Before dealing with Blakey’s response to the application, it is necessary to record that despite the applicants contending that the supply agreements should be declared invalid and unenforceable, both parties have acted pursuant to the agreements, in fact with the applicants receiving goods over a number of years, without any demur on their part or the expression of any concern that the agreements contravened their exchange control regulations. As Blakey says in its heads of argument ‘everything was hunky dory until the debts fell due’. It is common cause that the supply agreements specifically make provision in clause 20 for the appointment of an arbitrator in the event of a dispute arising between the parties. The agreement further provides that the arbitration will be conducted in ‘accordance with the rules of the Association of Arbitrators (Southern Africa) or its successor current at the date of the dispute arising’. Closer scrutiny of the agreements reflects that the parties agreed in clause 21 that the agreement ‘is governed by and must be interpreted and construed in accordance with the laws of the Republic of South Africa’. This is contrary to the assertion by the applicants that the agreement must be determined with reference to Zimbabwean law. The point emphasised by Blakey is that once the parties have agreed to be bound by a contract, our courts have shown deference to respecting the choices parties made as to the mechanisms chosen for the resolution of disputes, even in international commercial transactions. See Zhongji Development Construction Engineering Co Ltd v Kamoto Copper Company SARL [2014] ZASCA 160; 2015 (1) SA 345 (SCA) para 29 where the SCA noted that:

‘[29] The majority judgment in the Constitutional Court, delivered by O’Regan ADCJ in Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews and another makes it plain that our law of arbitration is not only consistent with, but also in full harmony with, prevailing international best practice in the field.’ (Footnotes omitted.)

The court in Zhongji para 32 made reference to Fiona Trust Holding Corp & others v Privalov & others [2007] EWCA Civ 20; [2007] Bus LR where Longmore LJ, delivering the court’s unanimous judgment, said the following:

‘As it seems to us any jurisdiction or arbitration clause in an international commercial contract should be liberally construed. The words “arising out of” should cover “every dispute except a dispute as to whether there was ever a contract at all”.’

[17] This statement is pertinent, as the point emphasised by Mr Pillay is that the applicants do not contend that there was no agreement to refer disputes to arbitration. On that score, it must be accepted, that an agreement existed, but as Mr Chohan stressed throughout, the applicants do not dispute that the parties agreed to refer matters to arbitration. They simply take issue with the legality of the agreement. In that context, what is said in Fiona Trust paras 19 and 38 in my view, assumes a greater significance in determining the issue before me. The court said the following in para 19:

‘[19] One of the reasons given in the cases for a liberal construction of an arbitration clause is the presumption in favour of one-stop arbitration. It is not to be expected that any commercial man would knowingly create a system which required that the court should first decide whether the contract should be rectified or avoided or rescinded (as the case might be) and then, if the contract is held to be valid, required the arbitrator to resolve the issues that have arisen. . . .’

And further at para 38:

‘. . . If there is a contest about whether an arbitration agreement had come into existence at all, the court would have a discretion as to whether to determine that issue itself but that will not be the case where there is an overall contract which is said for some reason to be invalid eg for illegality, misrepresentation or bribery and the arbitration agreement is merely part of that overall contract. In these circumstances it is not necessary to explore further the various options canvassed by Judge Humphrey Lloyd since we do not consider that the judge had the discretion which he thought he had.’

Mr Pillay emphasised that the decision in Inter-Continental Finance (supra) is distinguishable from the present matter, as in that case the court found that there was no agreement which bound the parties to have their dispute resolved by arbitration. In the present matter, there is an agreement to submit to arbitration. The point of departure is the contention of the applicants that the referral to arbitration is tainted by the alleged unlawfulness of the main agreement. Mr Pillay submitted that North West Provincial Government (supra) is distinguishable because the applicants do not allege fraud against Blakey anywhere in their papers, which he conceded would be sufficient to invalidate the agreements. See Namasthethu Electrical (Pty) Ltd v City of Cape Town & another [2020] ZASCA 74. In any event, it was submitted that article 16 the International Arbitration Act provides for separability, which as I understood the concept means that the invalidity of the main agreement does not necessarily entail the invalidity of the arbitration agreement; and that the arbitration agreement must be treated as a distinct agreement.  In other words, even if the main agreement is tainted as alleged, this does not prevent the arbitration from proceeding. Mr Chohan was obliged to file heads to deal with this issue as it only emerged in Blakey’s heads. However, in light of the conclusion I reach, it is not necessary for me to make any finding as to whether the IAA rather than the Arbitration Act 42 of 1965 applies.

[18] During the course of the hearing, I enquired from Mr Chohan why the applicants had waited until mid-2020 to institute an action in the Zimbabwean courts, despite them being aware as early as October 2019 that Blakey was not amenable to a stay of the arbitration proceedings. Their attorneys held instructions as at October 2019 to bring a stay application. Mr Chohan submitted that it would have made no difference whether the Zimbabwean action was launched earlier. To that extent, Mr Chohan, in fairness, submitted that he could provide no explanation why the applicants had waited for the conclusion of their investigations before deciding to embark on a plan of action. The founding papers suggest that the applicants adopted a ‘cautious approach’ and that they did not act rashly. Their failure to act promptly has resulted, to some extent, in this matter being heard on a similar footing to an urgent application. I mention this to the extent that Blakey submits that the application for a stay is nothing more than a delaying tactic to avoid an order being made against the applicants for payment of considerable amounts. Blakey filed its statements of claim on 20 and 31 January 2020 respectively. The claim against Delta is for approximately R150 million and the claim against SZL for approximately R250 million. Despite the significant amounts involved, the applicants only instituted their action in Zimbabwe during June 2020. In my view, the applicants appear to have dragged their heels in launching the Zimbabwean proceedings, but seek to rely on this pending action as the main ground for their stay application. 

[19] To the extent that the applicants complain that Ms Malaba compromised the interests of the applicants when she concluded a ‘suspicious’ agreement with Blakey, the latter is entitled to raise the issue of estoppel on the grounds that Ms Malaba represented to Blakey that she had the necessary authority to enter into the supply agreements. In this regard, Blakey relies on section 20(7) of the Companies Act 71 of 2008, and the common law position as set out in Royal British Bank v Turquand (1856) 6 E&B 327[1856] EngR 470; ; 119 ER 886 at 888, which position was stated as follows by Lord Hatherley in Mahony v East Holyford Mining Co Ltd (1875) LR 7 HL 869 at 894:

‘. . .when there are persons conducting the affairs of the company in a manner which appears to be perfectly consonant with the articles of association, then those so dealing with them, externally, are not to be affected by any irregularities which may take place in the internal management of the company.’

[20] Although Mr Chohan stressed that this court is not being asked to make a determination as to whether Ms Malaba acted with the requisite authority, it is one of the factors that this court must take into account in determining whether the applicants have a reasonable prospect of success in persuading the Zimbabwean courts of the agreement being contra boni mores. They rely on the conduct of Ms Malaba in order to make this argument. The applicants must make out a case that they are entitled to final relief in the main case in Zimbabwe in order to establish a prima facie right entitling them to an interim interdict in this court. This presupposes that I am entitled to do a preliminary assessment of the merits of the applicants’ main case. This is also linked to the balance of convenience. As Holmes J in Olympic Passenger Service (Pty) Ltd v Ramlagan 1957 (2) SA 382 (D) at 383C–F held:

‘It thus appears that where the applicant's right is clear, and the other requisites are present, no difficulty presents itself about granting an interdict. At the other end of the scale, where his prospects of ultimate success are nil, obviously the Court will refuse an interdict. Between those two extremes fall the intermediate cases in which, on the papers as a whole, the applicants' prospects of ultimate success may range all the way from strong to weak. The expression 'prima facie established though open to some doubt' seems to me a brilliantly apt classification of these cases. In such cases, upon proof of a well grounded apprehension of irreparable harm, and there being no adequate ordinary remedy, the Court may grant an interdict - it has a discretion, to be exercised judicially upon a consideration of all the facts. Usually this will resolve itself into a nice consideration of the prospects of success and the balance of convenience - the stronger the prospects of success, the less need for such balance to favour the applicant: the weaker the prospects of success, the greater the need for the balance of convenience to favour him. I need hardly add that by balance of convenience is meant the prejudice to the applicant if the interdict be refused, weighed against the prejudice to the respondent if it be granted.’

[21] As to the issue of prejudice which the applicants will suffer if the stay of the arbitral proceedings is not granted, the applicants reiterate the same argument that they would be obliged to participate in two arbitration proceedings, which are based on agreements which may yet be found to be unlawful and invalid or unenforceable by a Zimbabwean court. Moreover, the costs that would be incurred in the arbitrations, should the Zimbabwean courts find in their favour, cannot be recovered. Inasmuch as Blakey’s claim is a monetary claim, it is submitted that no prejudice would be occasioned as interest would in any event attach to any award made in favour of Blakey. I am not persuaded by this argument in as much as it may be used to avoid any monetary claim which is contested. Blakey has a right to have its dispute expeditiously resolved. It is for that reason, as counsel submitted, that they expressly agreed to have all disputes resolved through arbitration as opposed to the courts. This is an important consideration when parties have agreed to a speedy dispute resolution mechanism, which is now sought to be derailed by one party. In any event, I am not persuaded by the submission that the applicants would be ‘forced’ to participate in the arbitration agreement. They, after all, entered into an agreement, in respect of which there was performance, and they receive goods pursuant thereto. Now that a dispute has arisen, they take issue with the validity of the agreement.

[22] In so far as the contention that the applicants have no other alternative remedy, it bears noting that all of the arguments raised in respect of the invalidity of the supply agreements are squarely before the arbitrators. The applicants have no reason to believe that those special pleas have been pre-judged. It may well transpire that the special plea raised on behalf of the applicants could be upheld. That could spell the end of Blakey’s case. I am therefore not persuaded that the applicants have no other alternative remedy. In any event, the proceedings in the Zimbabwean court are not intended to offer a ‘one-stop shop’ similar to arbitration. As I understood Mr Chohan’s submissions, should the Zimbabwean courts dismiss the action and uphold the validity of the main agreement, the matter would have to return to arbitration, after a significant delay to Blakey. On the other hand, the arbitration scheduled for 1 September 2020 will consider the special pleas, including the issue of jurisdiction, and if those preliminary objections are dismissed, the arbitration will then enquire into the merits of the dispute. In Vedanta Resources Holdings Ltd v ZCCM Investments Holdings PLC & another [2019] JOL 45353 (GJ) para 54 the court held that:

‘[54] If a party to an arbitration agreement seeks to litigate a dispute to which the agreement relates in a court outside the country of the seat of arbitration, namely Johannesburg, his opposing party may seek an injunction to restrain him from bringing or continuing that suit. This principle emerges from the UK Supreme Court's decision in AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC, [2013] UKSC 35 (12 June 20130, [2014] 1 All ER 335, in which the court observed that an agreement to arbitrate disputes has 'positive and negative aspects'. Not only do parties to such an agreement undertake to seek relief in arbitration in whatever forum the agreement prescribes, the negative (often silent) aspect of the agreement means that the parties undertake the concomitant (negative) obligation not to seek relief in any other forum.’ (My underlining.)

[23] In the final analysis, I am not satisfied that the applicants have made out a case for interdictory relief to stay the pending arbitrations. There is no impediment to the applicants participating in the arbitrations. In any event, much of the arguments which they have placed before me will be advanced before the arbitrator on 1 September 2020 for a determination of the special pleas. I can hardly think that the applicants will not be prepared to proceed. The importance of forging ahead with the arbitrations is underscored by the observation by Ponnan JA in MV Iran Dastghayb Islamic Republic of Iran Shipping Lines v Terra-Marine SA 2010 (6) SA 493 (SCA) para 35:

‘[35] Courts should generally be slow to encroach upon a decision to refer a dispute to private arbitration, for to do so would be to disregard the principle of party autonomy. That ought to apply with greater force in a situation such as this, for as Wallis points out:

“However, there seems to be no escape from the conclusion, however unsatisfactory, that by bringing an action in rem against an associated ship a claimant can defeat the provisions of both an arbitration clause and an exclusive jurisdiction clause in the contract underlying the claim.”

Were that to be so, as indeed it must be on that analysis, a cynical litigant could with impunity circumvent the terms of a bargain that the other party to it may have thought had been earnestly struck. . . .’ (Footnotes omitted.)

[24] As to costs, both sides were represented by senior and junior counsel. The issues were fairly complex. I am satisfied that costs should follow the result.

[25] I make the following order:

The application is dismissed with costs of two counsel, such costs to be paid by the applicants jointly and severally, the one paying the other to be absolved.

 

____________
M R CHETTY

 

 

 

Appearances

For the applicant: M A CHOHAN SC (J THOBELA-MKHULISI and A MILOVANOVIC-BITTER)

Instructed by: Bowman Gilfillan (Johannesburg)

Ref: R Shein/ K Chisaka/ T Ndlovu

Email: Richard.shein@bowmanslaw.com; Kabwela.chiskaka@bownmanslaw.com Tinyiko.ndlovu@bowmanslaw.com

For the Respondent: I PILLAY SC (S B R LUSHABA)

Instructed by: Cox Yeats Attorneys (Durban)

Ref: P Barnard/ C Pretorius

Email: pbarnard@coxyeats.co.za and cpretorius@coxyeats.co.za

Date reserved: 21 August 2020

Date of Judgment: 31 August 2020

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