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[2020] ZAGPJHC 345
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Ircon International Limited v Tension Overhead Electrification (Pty) Ltd and Others (2020/17743) [2020] ZAGPJHC 345 (18 August 2020)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, JOHANNESBURG
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED
DATE:
18.08.2020
Case
Number:
2020 / 17743
In
the matter between:
IRCON
INTERNATIONAL
LIMITED
Applicant
and
TENSION
OVERHEAD ELECTRIFICATION
(PTY)
LTD
First Respondent
THE
ARBITRATION FOUNDATION OF
SOUTHERN
AFRICA
Second Respondent
NIELS
SCHIERSING N.O.
Third Respondent
JUDGMENT
BHOOLA
AJ:
Introduction
[1]
The Applicant (“Ircon”) seeks an urgent stay of the
arbitration proceedings
set down for 20 and 21 September 2020,
pending the outcome of its application under case number 2020 / 11322
("the jurisdictional
review"). In the jurisdictional
review it seeks to review and set aside the award of the Third
Respondent ("the
Arbitrator") of 19 February 2020. In the
award, the Arbitrator appointed by the Second Respondent ("AFSA"),
dismissed
Ircon’s challenge to the jurisdiction of AFSA and the
Arbitrator to determine a dispute in which
Tension
claims just over R 100 million from Ircon.
The
jurisdictional review is pending and is opposed by the first
respondent ("Tension"). This application is opposed by
Tension.
[2]
It is common cause that the arbitration is governed by the
International Arbitration
Act, 15 of 2017 (“the IAA”),
which incorporates the UNCITRAL Model Law on International Commercial
Arbitration (“the
Model Law”), and the award was made
in
terms of the provisions of Article 34(1), 2(b)(ii) and 5(a)
of the
Model Law.
Urgency
[3]
In urgent proceedings before the merits are dealt with the applicants
need to firstly
satisfy the court that the application warrants
enrolment on the grounds of urgency. In this regard Uniform Rule
6(12) (b) provides:
(b) In every affidavit or petition filed in
support of any application under paragraph (a) of this subrule, the
applicant shall
set forth explicitly the circumstances which he avers
render the matter urgent and the reasons why he claims that he could
not
be afforded substantial redress at a hearing in due course.
[4]
Ircon submits that matter must be heard on the basis of urgency, as
it cannot seek
substantial relief in due course. Tension disputes
urgency, takes issue with the timing of the application, and contends
that the
urgency was manufactured. Having considered the pleadings
and submissions of the parties I am of the view that in the
circumstances
set out below, there are no averments that justify
urgency. In fact there seems to be, as was submitted by Tension, a
practice
of flouting procedure and causing delays in a deliberate
attempt to stave off the arbitration for as long as possible. There
is
also no genuine attempt to submit to arbitration and it seems that
at every stage of the proceedings the applicant used the opportunity
not to co-operate in advancing progress with the arbitration.
[5]
The conduct of Ircon and its attorneys, as set out in the following
summary of events
leading up to this application, in my view
justifies a conclusion that this application is not urgent and should
be struck from
the roll.
Delays
and the approach of Ircon
[6]
On 26 September 2019 Ircon objected to AFSA being the administering
body for the arbitration.
Its position was that the International
Commercial Court in Paris should administer the arbitration. A
timetable was agreed for
the exchange of submissions on jurisdiction
and it was agreed that the Arbitrator would hear the dispute on
whether AFSA was the
correct administering body. Ircon participated
in this process and delivered written submissions, and also
participated in the
hearing on 9 February 2020, where it was
represented by attorneys and counsel.
[7]
On 20 February 2020, the Arbitrator published the jurisdictional
award in which he
found that AFSA was the correct administering body
for the arbitration. It is from this date, for the purposes of
urgency, that
Ircon knew that the arbitration would be administered
by AFSA and heard by the Arbitrator. It took no steps to proceed with
a stay
application.
[8]
On 24 February 2020 Tension's attorneys requested the Arbitrator to
convene the pre-arbitration
meeting to agree the procedural timetable
for the arbitration.
[9]
On 10 March 2020, Ircon’s attorneys said that Ircon had not
provided them with
instructions and they would not be participating
in any further process in relation to the arbitration. This is a
startling position
for Ircon to have adopted. Ircon was aware that
the arbitration would be proceeding, its attorneys had asked for
instructions and
Ircon had simply not provided instructions to its
attorneys. In relation to assessing whether this application is
urgent Tension
submits that by this stage Ircon would have been aware
of the events and decided not to instruct its attorneys and not to
participate
in the arbitration.
[10]
On 12 March 2020, the second pre-arbitration meeting with the
Arbitrator was held and a timetable
for the arbitration was ordered
by the Arbitrator. Ircon's attorneys were advised of the
pre-arbitration meeting but did not attend.
[11]
On 7 May 2020, and in accordance with the procedural timetable set by
the Arbitrator, Tension
filed its statement of claim. The statement
of claim was sent to Ircon’s attorneys.
[12]
Despite having known that the arbitration would proceed, Ircon only
sent an unissued copy of
its application in the jurisdictional review
to Tension’s attorneys on 15 May 2020. This is almost three
months after the
jurisdictional award had been published. No
explanation is forthcoming for this delay. It is also noteworthy that
on 10 March 2020
Ircon’s attorneys said it was not
participating in the arbitration, but then did nothing for months.
The review moreover,
did not incorporate an interdict to stop the
arbitration, which is established practice in this division.
[13]
This led to Tension’s attorneys on 19 May 2020 advising Ircon’s
attorneys that the
review would not stop the time periods set in the
procedural timetable and that it did not stay the arbitration
proceedings. Ircon
was reminded that its Statement of Defence
remained due on 8 June 2020, This was another warning to Ircon that
should have alerted
it to the need to bring this application sooner
but it still took no steps in this regard.
[14]
On 20 May 2020, AFSA sent a letter to Tension’s and Ircon’s
attorneys pointing out
that under Article 16.3 of the Model law the
arbitration may proceed pending the decision of the court on a
review, and invited
submissions from the parties as to whether the
arbitration should be stayed pending the outcome of the
jurisdictional review.
[15]
On 21 May 2020, Tension’s attorneys replied to AFSA and
provided submissions on why the
arbitration should proceed. In its
submission Tension’s attorneys argued that the Arbitrator did
not have the power to grant
a stay of the arbitration. This argument
was advanced on the basis that AFSA Rule 8.2 was applicable to the
arbitration and required
a court to stay the arbitration.
[16]
On 27 May 2020 Ircon’s attorneys replied to AFSA and provided
submissions on the question
of why the arbitration ought to be
stayed. In its submissions Ircon argued that the Arbitrator had the
power to grant a stay of
the arbitration, and that the power was
located in the Model Law. Thus the competence of the arbitrator was
not disputed. Ircon
rejected Tension’s argument that the AFSA
Rules prevented an arbitrator from granting a stay of the
arbitration. However,
for the purposes of urgency the following part
of the letter from Ircon’s attorneys of 27 May 2020 is
relevant:
“
Should
the Arbitrator not be inclined to grant the order [staying the
arbitration], our client's instructions are to bring an application
to court for an order staying the arbitration pending our client's
application. Pending such application our client will
not
participate any further in the arbitration.”
What
this letter puts beyond doubt is that Ircon had already instructed
its attorneys to proceed with this application for a stay
at that
point should the arbitrator's decision not be in their favour.
[17]
Thereafter, the Arbitrator dismissed Ircon's application for a stay
of proceedings and published
his award on 11 June 2020. The
Arbitrator requested Ircon to indicate by no later than 16 June 2020
when it would deliver its Statement
of Defence. Ircon failed to do
so.
[18]
On 18 June 2020 Tension’s attorneys requested the Arbitrator to
convene a further pre-arbitration
meeting to adjust the procedural
timetable in light of Ircon’s non-participation in the
arbitration. It had also proposed
moving the arbitration dates to
September given Ircon's non-participation.
[19]
In response Ircon’s attorneys made it clear in their email of
19 June 2020 that the stay
application would proceed. They said:
“
At
this stage, we hold instructions to bring an application to the High
Court to stay
the
arbitration proceedings which will be served in due course. As such,
we will not be participating in any further case management
meetings
at this stage.”
Their
attitude was clear from this letter but it was a further month before
this application was finally brought.
[20]
On 23 June 2020, Tension’s attorneys sent an email to the
Arbitrator and copied it to Ircon’s
attorneys. In this e-mail
Tension’s attorneys proposed that the hearing dates for the
arbitration be moved to 21 and 22 September
2020. This was proposed
because Ircon had made it clear it would not be participating in the
arbitration and there was no need
for the procedural timetable to
accommodate any steps by it.
[21]
On 2 July a pre-arbitration meeting was held by teleconference and
despite the decision not to
participate in pre-arbitration
proceedings, Ircon's legal representatives joined the meeting.
In
his Procedural
Order
of 9 July 2020, the Arbitrator confirmed that “
[
following]
the discussions at the pre-arbitration meeting, the Tribunal decided
to adopt the amendments proposed by the [Tension]”.
This
refers to the amendment of the dates of arbitration to September.
After communication with Ircon by email thereafter the Arbitrator
recorded that he had decided “
to
maintain the amendments to the Procedural Timetable communicated on 2
July 2020.
This
was confirmed in Procedural Order No. 3 on 17 July 2020. Tension
submits that it was clear that the arbitration would proceed
in
September. However, Ircon’s attorney, who is the deponent to
the replying affidavit said :“
[
the]
Arbitrator made no final determination during the pre-arbitration
meeting as
to
the arbitration proceedings on 21 and 22 September 2020, and invited
lrcon's legal
representatives
to indicate dates they were available in October 2020”
.
[22]
Ircon thus relies on the 17 July 2020 as being the date relevant to
urgency, as they submit that
this was the date when the Arbitrator
made the final determination that the arbitration would proceed on
the September dates. They
say it is therefore not correct, as Tension
avers, that this decision was made on 2 July 2020 otherwise there
would have been no
reason for the arbitrator to send the parties an
email on 5 July 2020 regarding dates in October. It was clear that at
the 2 July
2020 meeting Ircon's attorneys had maintained the view
that they had no intention of proposing dates in October and were
adamant
about the arbitration proceeding in January 2021. Both in the
2 July 2020 meeting and in the email of 4 July 2020 to the Arbitrator
the attorneys persisted with the view that they are only available in
January 2021 and would proceed with this application for
a stay of
the arbitration. In his email of 5 July 2020 the arbitrator makes it
clear that at the meeting on 2 July 2020 he invited
Ircon to propose
dates in October
should they decide to participate in the
arbitration
[own emphasis]. He makes it clear he was informed by
Ircon's counsel that they had no instructions to agree to dates other
than
January 2021. He states that he is using the opportunity to once
again invite them to indicate, before 8 July 2020, dates that they
would be available in October, and should Ircon's counsel be
available in October, he would revisit the procedural timetable. This
makes it clear that the averments are deliberately obscure in the
replying affidavit as there was never any intention to propose
October dates or indeed to participate in the arbitration. Also, the
threat of an urgent stay application was again made but then
finally
acted upon a further three weeks later.
[23]
In addition to the relevance of the above circumstances, Tension
further contends that the circumstances
around the date of issue and
date of service of this application also puts urgency in doubt.
Tension
submits that not only is Ircon’s delay in bringing this
application inexcusable, but the circumstances surrounding
the
institution of this application and its service invite censure. In
this regard it is common cause that the application was
issued by the
Registrar at 9h24 on 22 July 2020, and that prior to this no unissued
or even unsigned copy was sent to Tension’s
attorneys as is the
normal courtesy amongst practitioners and the practice in this
division, more particularly under conditions
of lockdown. The
application was only served on Tension's attorneys by email at 14h35
on 23 July 2020, a day and a half later.
This afforded Tension only
six court days to file an answering affidavit. Ircon did not commit
to a date by when it would deliver
a replying affidavit. It
eventually delivered its replying affidavit at 9h22 on 7 August 2020
– seven days after receiving
Tension’s answering
affidavit.
[24]
Ircon attempts to suggest that its failure to serve the unissued
application sooner was “
nothing more than an oversight
”.
But this, Tension submits, is not true because in the next paragraph
in the replying affidavit Ircon’s attorney says
that Ircon took
a conscious decision to wait for the application to be issued before
serving a copy of Tension, which the attorney
accepts in hindsight
“
was a mistake
”. I agree with Tension's submission
that this explanation is wholly unacceptable. In an urgent
application time is of the
essence and the issue simply cannot be
dispensed with by saying it was an oversight, without further
explanation being forthcoming.
[25]
This point leads me to Tension's submission that this application is
just another step in a long
stream of attempts by Ircon to delay the
arbitration and other proceedings that have been brought against it.
It reinforces the
contention that there is no genuine purpose behind
this application, save to delay the arbitration. If this is correct
then it
is another reason why in the circumstances there is no
urgency.
Conclusion
[26]
In relation to the test for urgency,
Ircon
submits it has acted with reasonable expedition in bringing this
application. It submits that it will not be able to seek
substantial
redress in due course in that,
inter
alia,
the arbitration would have been concluded by the time the review
application is heard in the ordinary course. It advances the
following reasons in its founding affidavit as to why this
application is urgent and it will not be able to obtain substantial
redress in due course:
"77.2
If the arbitration is not stayed pending the outcome of the review
application then Ircon 77.2.1 will be forced to participate
in a
process where there may ultimately be no jurisdiction in respect of
AFSA and the Arbitrator;
77.2.2.
will incur and had already incurred, substantial legal costs in
respect of the arbitration in circumstances where ultimately
neither
AFSA or the Arbitrator have jurisdiction and Ircon will not be able
to recover its costs from Tension;
77.2.3
if not ultimately successful in the arbitration proceedings, would
then be faced with an arbitration award against it that
should not
have been granted against it in the first place by virtue of the lack
of jurisdiction of AFSA and the Arbitrator which
has caused and will
cause substantial prejudice to Ircon."
[27]
It is so that it will incur costs and might be faced with an award
where the arbitrator has no
jurisdiction. However, as was submitted
by Tension, this is a situation contemplated in the Model law as
article 36 (iv) of which
states ;
"(1)
Recognition or enforcement of an arbitral award, irrespective of the
country in which it was made, may be refused only:
(a) at the
request of the party against whom it is invoked, if that party
furnishes to the competent court where recognition or
enforcement is
sought proof that: .....
(iv) the
composition of the arbitral tribunal or the arbitral procedure was
not in accordance with the agreement of the parties,
unless such
agreement was in conflict with a provision of this Law from which the
parties cannot derogate, or, failing such agreement,
was not in
accordance with this Law; ..."
It
thus remains open to Ircon to challenge jurisdiction when attempts
are made to execute the award. This on its own renders this
application wholly unnecessary and premature on Ircon's own
averments.
[28]
The
relief Ircon seeks in this application is a stay of the arbitration
pending its jurisdictional review. Ircon also applied to
the
arbitrator for exactly the same relief that it seeks in this
application. The arbitrator dismissed that application and issued
an
award to this effect. Ircon has not sought to review or challenge the
arbitrator’s award refusing to stay the arbitration,
and that
award is, according to Tension, valid, binding and operative. That
being so, Tension submits, Ircon cannot now, having
failed before the
arbitrator, ask this court to grant relief that it did not get from
the arbitrator. What it is really doing is
“forum shopping”,
and trying to get a decision that suits its purpose. This is not a
genuine reason for urgency.
[29]
It is clear that if Ircon had been genuinely concerned about the
arbitration progressing it ought
to have taken steps to interdict at
the earliest after the jurisdictional decision in February 2020, or
at the very least after
the stay was refused on 11 June 2020 and as
indicated in its attorney's letter of 19 June 2020. Instead it waited
until late July
2020, and then imposed very short time periods on
Tension to deal with this application. This is in circumstances where
Ircon's
attorneys had indicated from 19 June 2020 that they had
instructions to bring this application. The delays in bringing this
application,
based mainly on the decision not to participate in the
arbitration proceedings, do not warrant an urgent hearing and Ircon
is not
precluded from seeking substantial redress in due course.
Order
[30]
In the result, I make the following order:
30.1
The application is struck off the roll.
30.2
The applicant is to pay the costs of the first respondent, including
the costs of two counsel.
U.
BHOOLA
Acting
Judge of the High Court of South Africa
Gauteng
Local Division, Johannesburg
Date
of hearing : Heard by videoconference on 11 August 2020 as per
agreement between the parties in terms of the Judge President's
extended Consolidated Directive of 11 May 2020 extended to 15 August
2020.
Date
of judgment: Judgment handed down electronically by circulation
to the parties’ legal representatives by email
on 18 August
2020.
Appearances:
Counsel
for the Applicant : Adv I Hollander
Instructed
by :
Edelstein,
Farber, Grobler Inc.
Johannesburg
Email
: jeffa@efglaw.co.za, janita@efglaw.co.za, secretary@efglaw.co.za
Counsel
for the First Respondent : Adv I P Green SC with Adv G Herholdt
Instructed
by :
Clyde
& Co. Inc
Sandton
Email
: alan.meyerov@clydeco.com