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[2019] ZAWCHC 72
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Pristine Seafoods (Pty) Ltd v Collective Dream Studios (10148/2017) [2019] ZAWCHC 72 (14 June 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
CASE
NO
: 10148/2017
DATE
:
2019.06.06
In
the matter between
PRISTINE
SEAFOODS (PTY)
LTD Plaintiff
and
COLLECTIVE
DREAM STUDIOS (PTY)
LTD Defendant
JUDGMENT
BOZALEK,
J
:
This
action came before me for the determination of the defendant's second
special plea in which it seeks an order that the plaintiff's
claim be
stayed pending a final determination of the dispute by an arbitrator
in terms of clause 13 of certain agreements between
the parties.
Counsel
for the defendant, Mr Wragge, who appeared together with Mr
Elliott, initially indicated that he intended calling no
witnesses
and would merely argue on the basis of certain admitted documents.
Following queries from the Court regarding the
factual basis of any
findings the Court might be required to make, the following agreement
was made between the parties and recorded:
The
documents in the plaintiff's bundle, save for one exception, were:
1. generated on the dates reflected on
the documents;
2. sent and received by the parties
reflected on the documents;
3. are what they
purport to be, without admitting the truth of the contents thereof.
On
the second day, Mr Christophorou, on behalf of the plaintiff, sought
a postponement to consider whether to pursue the issues
by way of a
stated case and whether to call witnesses. Upon the matter's
resumption, he advised that the defendant was not
amenable to a
stated case and that the plaintiff had similarly elected not to call
witnesses. In the result I must determine
the issue on the
basis of the agreed documentation and other documentation to which I
may legitimately have regard. A brief
description of the
circumstances and history of this litigation is appropriate.
In
2015 Afritex Ventures Limited purchased seven marine fishing vessels
in two separate agreements from the defendant. The vessels
were
delivered to Afritex and are now in Mauritius. Save for one
vessel, Afritex paid the full purchase price, some two million
US
Dollars. It refused to pay the balance of the purchase price in
respect of one vessel and avers that the vessels were
delivered in
defective condition.
On
5 June 2017, Afritex ceded and assigned all its rights and
obligations arising out of the agreements to the plaintiff.
On
8 June 2017, the plaintiff issued summons against the defendant
out of this court, seeking deductions in the purchase price
of all
the vessels plus damages, i.e. losses incurred as a result of having
to effect repairs to the vessels. The claims
total some
R23 000 000,00. On 25 July 2017, it obtained default
judgment against the defendant in respect of all
these claims.
When the defendant was apprised of this default judgment it brought
an application for rescission thereof,
which order was finally
granted on 14 May 2018. The dispute between the parties had,
however, originated as far back as February/March
2017.
It
eventually led to the defendant's representative, Mr Halgryn,
sending an e-mail to the plaintiff's representative or director,
Mr
Diamond, if I recall correctly, on 3 March 2017, invoking the
arbitration provisions in the agreements, as well as threatening
provisional sentence proceedings against it. In this context, I
use the term plaintiff interchangeably with that of Afritex,
the
cedent.
No
such dispute was referred to arbitration until 15 February 2018 when
the defendant's attorney wrote to the chair of the Cape
Bar Council,
asking it to appoint an arbitrator. Advocate Darryl Cooke was
duly appointed and convened a meeting of the parties
on 21 May 2018.
At that meeting the plaintiff's legal representative argued that the
arbitration should be stayed, since
it had already launched action in
the High Court. Both parties made submissions to the arbitrator
on the question whether
he had jurisdiction over the dispute.
The arbitrator issued an award entitled "Award in relation to
jurisdiction"
on 19 July 2018 the conclusion of which reads as
follows:
"96. To sum up, I consider
that I should not exercise jurisdiction at this juncture as:
96.1 The dispute before me is
substantially encompassed by the dispute in the High Court action.
96.2 The defendant (plaintiff
herein) has established a reasonably strong case for the
Court to exercise jurisdiction
over all disputes, including the
dispute before me.
96.3 The jurisdictional question
will be addressed by the High Court pursuant to the special plea to
be filed by the claimant.
96.4 In my view it would not be
convenient for me to enter upon the arbitration, decide these
jurisdictional issues, and persist
with the arbitration, in
circumstances where the issues are due to be resolved by the High
Court.
97. My award is, therefore as follows:
1. the arbitration
proceedings are stayed pending the final determination of the
claimant’s special plea to be filed in case
number 10148/2017.
2. Costs will stand
over for later determination."
In
essence the arbitrator made no explicit finding that he had
jurisdiction but left it to this Court to determine the question
through the determination of the defendant's second special plea.
The
relevant parts of that plea read as follows, paragraph 3:
"The
plaintiff's claim arises from an alleged breach on the part of the
defendant of the first agreement… and the second
agreement
described in paragraph 6 of the particulars of claim."
4.
Clause 13 of both the first agreement and the second agreement
provides:
"Arbitration:
13.1. Should any dispute arise out of or in connection with
this agreement or the interpretation thereof,
both while in force and
after its termination, any party shall be entitled to require, by
written notice to the other, that the
dispute be submitted to
arbitration in terms of this clause 13."
Paragraph
6:
"On or about 3
March 2017, alternatively 16 January 2018, the defendant
exercised its right in terms of clause 13 of the
agreements,
requiring, by written notice that the dispute between Afritex and/or
the plaintiff on the one hand, and the defendant
on the other, be
referred to arbitration pursuant to the provisions of clause 13."
Paragraph
7:
"In terms of
clause 13.1 of the agreement, Advocate D Cooke has been appointed by
the chairperson of the Cape Bar Council as
arbitrator."
Paragraph
9:
"The defendant is entitled to a
stay of this action pending the final determination of the dispute by
the arbitrator in terms
of the agreements.
WHEREFORE the
defendant prays that the plaintiff's action be stayed pending the
final determination of the dispute by the arbitrator
in terms of
clause 13 of the first and the second agreements."
The
plaintiff's replication to this plea, as far as it is material, reads
as follows:
"2.1 The plaintiff admits that on
3 March 2017, the defendant exercised its rights in terms of clause
13 of the agreements
and provided Afritex with written notice of its
election to refer the dispute to arbitration.
2.2 However, the plaintiff pleads
further that on a proper construction and interpretation of the
defendant's notice and the relevant
portion thereof… the
defendant exercised its right to refer a dispute to arbitration only
on one issue, namely the condition
in which the vessels were
delivered to Afritex and, in particular, whether same were delivered
in a defective condition or free
of defects. For this reason,
the defendant exercised its rights and election in terms of clause
13.2.3, to seek the appointment
of a suitably qualified person to
determine the subject matter of the dispute, which constituted a
dispute of "primarily a
technical nature", as referred to
in clause 13.2.3 of the agreements, and therefore, proposed the
appointment of a "senior
executive official of SAMSA" to
arbitrate on the matter.
2.3 In terms of
paragraph 2 of the notice, the defendant exercised its election
to proceed on its monetary claim of 30 000
US Dollars, plus
interest, by way of provisional sentence summons. The defendant
is bound by its election."
The
plaintiff also pleads that through an unreasonable delay, the
defendant waived its right to arbitrate/is estopped from doing
so.
But I shall deal more fully with these averments later.
The
issues to be determined by the Court, broadly speaking are:
1. The proper interpretation of the
arbitration clause, clause 13 of the agreements.
2. Whether on that interpretation, the
defendant referred the dispute to arbitration.
3. If so, whether by reason of waiver,
estoppel or for some other reason, defendant has forfeited its
apparent right to have the
dispute arbitrated as opposed to being
determined in the litigation already commenced.
Onus
:
In
argument, the defendant's counsel accepted that as the party relying
on the arbitration clause it bore the onus to allege and
prove the
underlying jurisdictional facts. However, it submitted that
whilst it bore this primary onus, it was the plaintiff
which bore the
burden of establishing countervailing circumstances justifying the
ouster of the arbitrator's jurisdiction in the
arbitration
proceedings. See
Omar v Inhouse Venue Technical Management
(Pty) Limited
2015 (3) SA 146
(WCC) at paragraph 3. I agree
with this approach which must be applied against the general
background of the settled law,
and in this regard I refer to
Omar
's
case at paragraphs 72 and 73, which reads as follows:
"72. . . . . It is settled law,
nevertheless, that the existence of an arbitration clause does not
oust the jurisdiction of
a court since the parties to a contract
cannot exclude the jurisdiction of a court by agreement.
73. Whether or not
an arbitration clause will be enforced by a court and the pending
proceedings stayed is a matter falling within
the discretion of the
court, having regard to the facts and circumstances at hand.
The party relying on an arbitration clause
bears the onus of
persuading the court that the dispute to be referred falls within the
parameters of the arbitration clause and
that the court should
exercise its discretion in its favour."
See
also
Foize Africa (Pty) Limited v Foize
Beheer BV & Others
2013 (3) SA 91
(SCA) paragraph 21.
The
starting point is the arbitration clause, being paragraph 13.1 of the
agreements, the operative part of which I have already
quoted.
The clause goes on to provide:
"13.2 There will be one
arbitrator, who will be, if the question in issue is:
(i) primarily an accounting matter, an
independent chartered accountant.
(ii) primarily a legal matter, a
practising junior member of the Cape Bar with not less than 10 years
standing.
(iii) primarily a technical matter a
suitably qualified person.
(iv) any other matter, a suitably
qualified person.
13.3 The
appointment of the arbitrator will be agreed upon between the parties
to the dispute, but failing agreement between them
within a period of
14 days after the arbitration has been demanded, any of the parties
to the dispute shall be entitled to request
the chairman for the time
being of the Cape Town Bar Council, to make the appointment.
And who, in making his appointment
will have regard to the nature of
the dispute."
What
stands out in the operative part of clause 13 is that either party
may require of the other to submit to arbitration of the
dispute even
though the other party may prefer litigation. All that is
required of a party wishing to exercise its right
to arbitrate its
dispute is to give written notice thereof to the other party.
No reference is made to the time within which
a party is to exercise
such a choice. This leads on to Mr Christophorou's
submission that if one party has already commenced
litigation, it has
effectively removed or trumped the other party's right to have the
dispute arbitrated.
I
disagree with this interpretation of clause 13.1, which I call the
"first out of the blocks" approach. Such an
interpretation requires reading into the clause an implied
qualification to a party's right to arbitrate, to wit "provided
that the other party has not already commenced litigation arising out
of the dispute". It would also give rise to arbitrary
consequences, namely, whoever wished to avoid arbitration could do so
by commencing litigation without warning at the earliest
opportunity. This would considerably weaken what, on the fact
of it, the clause appears to provide for, namely a clear right
to
arbitration. Such an implied term or qualification lacks, in my
view, business efficacy, furthermore. The modern
trend in our
law is to give full effect to agreements to arbitrate.
In
the majority judgment in
Lufuno Mphaphuli & Associations (Pty)
Limited v Andrews
2019 (4) SA 529
(CC), O'Regan, J stated,
inter
alia
, as follows:
"Private
arbitration is widely used both domestically and internationally.
Most jurisdictions in the world permit private
arbitration of
disputes and also provide for the enforcement of arbitration awards
by the ordinary courts… Some of the advantages
of arbitration
lie in its flexibility (as parties can determine the process to be
followed by an arbitrator including the manner
in which evidence will
be received, the exchange of pleadings and the like), its
cost-effectiveness, its privacy and its speed
(particularly as often
no appeal lies from an arbitrator's award or lies only in an
accelerated form to an appellate arbitral body).
In determining
the proper constitutional approach to private arbitration, we need to
bear in mind that litigation for ordinary
courts can be a rigid,
costly and time consuming process, and that is not inconsistent with
our constitutional values to permit
parties to seek a quicker and
cheaper mechanism for the resolution of disputes."
Overall
the court held, having regard to Section 34 of the Constitution and
the question whether it applied to arbitration, that
clause providing
that:
"Everyone has the right to have
any dispute that can be resolved by the application of law decided in
a fair public hearing
before a court or, where appropriate, another
independent and impartial tribunal or forum.”
That
Section 34 must be interpreted on its own language and with integrity
and it cannot be concluded, given the general lack of
fit between
private arbitration and the language of the section, that the section
has direct application to private arbitration."
In
the recent matter of
Riversdale Mining Limited v Du Plessis &
Another
(2017) ZASCA 7
, it was held that when business people
choose to arbitrate their disputes they generally intend that all
their disputes will be
determined by the same tribunal.
Cachalia, JA stated as follows at paragraph 28:
"The basic
principle in the interpretation of arbitration clauses is that they
must be construed liberally to give effect to
the essential purpose
which is to resolve legal disputes arising from commercial
relationships before privately agreed tribunals
instead of through
the courts. When business people choose to arbitrate their
disputes, they generally intend all their disputes
to be determined
by the same tribunal, unless they express their wish to exclude any
issues from the arbitrator's jurisdiction
in clear language.
There is thus a presumption in favour of "one stop arbitration".
I
thus favour an interpretation of clause 13 which permits one party to
require of the other party to submit a dispute to arbitration,
notwithstanding that the other party may have commenced litigation.
Of course, in deciding whether to stay such litigation,
the Court
exercises its discretion and will have regard to,
inter
alia
, whether the party favouring
arbitration, may have waived its right to arbitration or is estopped
from asserting such right or
merely unreasonably delayed in asserting
its right to arbitration. These are issues to which I will
return.
The
next issue is whether the defendant, in fact, exercised its right to
require the dispute to be submitted to arbitration.
The
determination of this issue requires an examination of the relevant
correspondence and the nature of the dispute. On
3 March
2017, Halgryn, on behalf of the defendant, addressed the plaintiff's
predecessor in title as follows:
"2. Be that as
it may, without any admissions being made and purely as a matter of
caution, we hereby demand that you/your
client makes payment within
seven days from receipt hereof, of the arrears now overdue and
payable in the amount of 30 000
dollars plus interest at the
rate of 15.5% per annum from date of expiry of said demand until date
of payment, failing which provisional
sentence summons will be issued
you/your client."
Then
in paragraph 4 he continued:
"It is
absolutely denied these Vessels were delivered to your clients in a
defective condition as now alleged. On the
contrary, you/your
clients examined the vessels on various occasions and these had to be
in the required good order and condition,
in order for the Mauritian
authorities to register them in your client's name."
And
he stated crucially as follows in paragraph 5:
"In terms of
the dispute in paragraph 4 above, and this matter as a whole if or as
applicable and without prejudice to our
right to proceed as per
paragraph 2 above, we hereby demand in terms of para 13 of the
original agreement between us that the matter
proceeds to
arbitration, and request a senior executive official of SAMSA, Cape
Town, as the most suitably qualified person in
terms of clause 13.2.3
to arbitrate this matter, be agreed upon. Failing you/your
client's agreement within 14 days after
this demand, in terms of
clause 13.4, we shall request the Chairman of the Cape Town Bar
Council to appoint an Arbitrator with
due regard to the nature of
this dispute between us and you/your client."
Read
as a whole, it would appear that Mr Halgryn had in mind to refer the
question of the alleged defective condition of the vessels
to
arbitration before a SAMSA official, who would be well qualified to
deal with this technical question. Mr Halgryn
appeared to
recognise, however, that it might not be feasible to proceed with
arbitration of part of the dispute and litigation
of another part,
namely provisional sentence proceedings, in relation to the short
payment of one vessel in the amount of 30 000
dollars.
Hence the somewhat obtuse wording in paragraph 5, beginning with the
words "in terms of the dispute" and
ending with the words
"paragraph 2 above".
This
raises an argument made on behalf of the plaintiff, namely that at
best for defendant, it only referred the narrow technical
dispute to
arbitration and not the claims and counterclaims which the parties
now seek to assert against each other and which have
been pleaded in
the litigation. In my view this argument ignores the
qualification which Mr Halgryn introduced in the
e-mail when he
triggered the arbitration clause in relation to the issue of the
defective state of the vessels. Secondly,
the argument seeks to
hold the defendant to an early formulation of the dispute in
circumstances where later correspondence broaden
its ambit.
The
next relevant item of correspondence was a further e-mail dated 7
April 2017 which again threatens provisional sentence proceedings
but
which takes the matter no further. On July 7, 2017, Mr
Halgryn e-mailed Afritex's manager or director, again referring
to
his intention to pursue arbitration proceedings in South Africa.
Some six months later, the defendant's attorney wrote
to the
plaintiff's attorney and confirmed its invocation of its right to
arbitrate per the 3 March 2017 e-mail and suggested a
number of
members of the Cape Bar as possible appointments as arbitrator.
He cited as justification the fact that "the
dispute between the
parties is primarily a legal matter". He noted that
failing agreement on the choice of arbitrator,
the chair of the Bar
Council would be asked to make the appointment.
This
is, in fact, what happened since there appears to have been no reply
to the aforesaid letter so that on 15 February 2018 the
defendant's
attorney wrote to the chairperson, asking her to appoint an
arbitrator and copying that letter to the plaintiff's attorney.
In the letter the attorney described the dispute and the procedure
followed in the following terms:
"6. A dispute between Afritex and
our client arose in early 2017 over whether the vessels were
delivered by our client to Afritex
in a defective condition.
- - -
8. On 3 March 2017, our client invoked
the provisions of the arbitration clause in the agreements and
demanded that the dispute
between Afritex and our client be referred
to arbitration.
- - -
12. As the dispute between the parties
was primarily a legal matter, clause 13.2.2 of both agreements
requires that a practising
junior member of the Cape Bar of not less
than 10 years standing be appointed as arbitrator.
- - -
14. We mention that
the dispute is commercial in nature and includes aspects of maritime
law."
In
paragraph 2.1 of its replication to the defendant's special plea, the
plaintiff admitted that the defendant exercised its rights
on 3 March
2017 in terms of clause 13 of the agreements and provided Afritex
with written notice of its election to refer a dispute
to
arbitration. It then pleaded as per paras 2.2 and 2.3 which I
have quoted, that it only referred a narrow technical issue
to
arbitration by a senior official of SAMSA and exercised an election
to proceed by way of provisional sentence summons for its
claim for
30 000 dollars.
It
is common cause that the plaintiff commenced no such provisional
sentence proceedings. On the material before me, furthermore,
no case has been made out that the defendant only referred a limited
technical issue to arbitration. Firstly, the 3 March
2017
e-mail was qualified as I have described and not exhaustive of the
defendant's right to refer a dispute to arbitration.
Secondly,
in later correspondence the defendant's attorneys took a broader view
of the dispute and acted on that in his letter
to the chairperson of
the Cape Bar Council. Thirdly, there was no binding election to
pursue provisional sentence proceedings,
merely qualified threats to
do so, which came to nothing.
In
paragraph 2.5, the plaintiff advances further reasons in support of
its prayer for dismissal of the defendant's second special
plea which
reads as follows:
"1. In any event, the defendant
did not take any steps to prosecute the referral to arbitration until
15 February 2017,
constituting an unreasonable and unjustifiable
delay and thereby waived its right to proceed with its dispute by way
of arbitration
proceedings.
2. By 8 June 2017, the plaintiff had
instituted the above action out of the above honourable Court and
thereby exercised its own
right not to refer its dispute, as pleaded
in the particulars of claim, to arbitration as envisaged in clause
13.
3. The defendant
failed to take any steps to procure the stay of the above action
until it filed its special plea dated 9 July 2018."
These
averments relating to delay, waiver and estoppel and require that
further background circumstances be considered which involve
principally the present action which the plaintiff commenced in the
Cape High Court. This was commenced on plus/minus 8 June
2017,
unbeknown to the defendant. Service was effected upon the
defendant by leaving the summons under a stone on a vacant
erf in
Hout Bay. This is according to the official return of service.
Default judgment was taken on 25 July 2017.
The summons
encompass three claims. Claim A sought reductions in the purchase
price of each of the vessels by the cost of repairs
to all seven
vessels, each of which was alleged to have been delivered in a
defective condition. Claims B and C sought damages
as a result
of the vessels being non-operational whilst they were being
repaired. Defendant's counsel estimated, without
contradiction,
that the value of the rescission judgment, which was expressed in
dollars, was of the order of R23 000 000,00.
It
is worth mentioning that a reading of the summons makes it plain that
the defendant's claims cannot be determined without a determination
of whether the vessels were delivered in a defective state or not,
the so-called technical issue which the plaintiff maintains
was the
only dispute referred by the defendant to arbitration. It is
thus plain that the technical issue and the claims for
reductions of
purchase price and damages, and the defendant's claim for short
payment for the Noelle Marie and its further counterclaims
are
indivisible from the so called technical issue. Needless to say
it would hardly be feasible or cost-effective for a court
or
arbitrator to determine part of the overall issue such as that
relating to the condition of the vessels and leave the balance
to
some other forum.
Coming
back to the chronology of the litigation, upon hearing of the default
judgment the defendant brought an application for rescission
thereof
on 15 September 2017 which was initially opposed and finally only
granted on 14 May 2018. Prior to that date the
defendant could
obviously not enter into the main case and, for example, file a
dilatory plea asking that the proceedings be stayed,
which step it
ultimately took on plus/minus 20 September 2018.
Notwithstanding that default judgment was only granted on
15 May
2018, by 15 February 2018, as described earlier, the defendant's
attorney was taking active steps to have an arbitrator
appointed to
determine the dispute.
Apart
therefore, for the delay between 3 March 2017 and when it came to
hear on 9 August 2017, that is according to the application
for
rescission, of the default judgment taken against it by the
plaintiff, there is no question of any unreasonable or unjustifiable
delay on the part of the defendant in pursuing its election to
arbitrate the dispute. I should add that the bundle of
documents
and the court papers suggest further that between March
2017 and a year later when the arbitration was pursued in earnest,
legal
proceedings relating to the vessels were also being heard in
Mauritius.
In
paragraph 2.5.4 and 2.5.5 of the plaintiff's replication to the
defendant's second special plea, the plaintiff pleads
“
In the
circumstances the defendant has waived its right to invoke the
arbitration provisions of clause 13 insofar as the dispute
relating
to the defendant's conditional counterclaim… is concerned and
has waived its right to prosecute its dispute as
delineated in its
written notice dated 3 March 2017, by way of arbitration proceedings,
by virtue of the inordinate and unjustifiable
delay between the
period 3 March 2017 and 15 February 2018.”
It
is trite that a court will not likely find that a party has waived
its rights. This appears from
Borstlap v Spangenberg &
Andere
1974 (3) SA 695
(A), where Corbett, JA stated as follows:
"Dit is
herhaaldelik deur ons howe beklemtoon dat duidelike bewys van 'n
beweerde afstanddoening van regte geverg word, veral
waar op 'n
stilswyende afstanddoening staatgemaak word. Dit moet duidelik
blyk dat die betrokke persoon opgetree het met
behoorlike kennis van
sy regte en dat sy optrede teenstrydig is met die voortbestaan van
sodanige regte of met die bedoeling om
hulle af te dwing. Soos
hoofregter Innes die vereistes in
Laws v
Rutherford
1924 AD 261
op bladsy 263
gestel het:
"The onus is
strictly on the appellant. He must show that the respondent,
with full knowledge of her right, decided to
abandon it, whether
expressly or by conduct plainly inconsistent with an intention to
enforce it. Waiver is a question of fact,
depending on the
circumstances. It is always difficulty, and in this case
especially difficult to establish."
In
my view, having regard to the court record, the correspondence and
other documentation before the Court, and since no evidence
was
placed before the Court by the plaintiff, the latter has not come
close to establishing a waiver of the right to arbitrate
the entire
dispute on the part of the defendant. As far as the defence of
estoppel is concerned, as Mr Wragge pointed
out, it is neither
fully pleaded nor proved by any evidence from the plaintiff.
There is no allegation or averment as to
what representation or
misrepresentation was made by the defendant, that the plaintiff
relied on such representation and how it
was prejudiced thereby.
Finally,
I must deal more fully with the arbitrator's award in the light of
paragraph 3 of the plaintiff's replication to the defendant's
second
special plea, which reads as follows:
"The plaintiff admits that
Advocate Cooke was the appointed person by the Cape Bar Council as
arbitrator, but pleads that the
appointment was premised on an
irregular referral to arbitration by the defendant for the reasons
set out above."
2:
"Notwithstanding the aforegoing,
the plaintiff pleads that the award handed down by the arbitrator,
dated 19 June 2018, is
binding on the parties by virtue of the
following facts and circumstances:
(i) The parties voluntarily attended
an arbitration meeting on 21 May 2018 before the arbitrator.
(ii) The parties advanced arguments to
the arbitrator on the question of,
inter alia
, the compliance
with the prerequisites of the arbitration agreement.
(iii) The parties submitted themselves
to the findings and rulings of the arbitrator and even submitted
written arguments, in support
of their contentions, to the
arbitrator.
(iv)
The parties accepted the arbitrator's award dated 19 June 2018 and
did not review same."
As
I have found, Advocate Cooke's appointment was not premised on an
irregular referral to arbitration. As far as the award
being
binding on the parties, it is difficult to know what point is being
made by this averment. The only point which the
arbitrator
purported to address was whether he had jurisdiction over the
referred dispute. Having regard to his award, the
arbitrator
did not explicitly determine this question. In fact, at
paragraph 81 he stated as follows:
"I, therefore, do not purport to
decide the jurisdictional question. Indeed, I do not think I
would be able to decide
the point without hearing evidence and legal
argument."
Thus,
accepting for argument sake that the arbitrator's award is binding on
the parties, it decided nothing, but merely referred
the
jurisdictional question to this court. To the extent that
paragraph 3 of the replication suggests that the arbitrator's
opinions or musings contained in the body of his award's reasoning or
discussion, some of which were adverse to the defendant,
were binding
on the defendant, this is clearly not the case.
Ultimately
a party to a curial or arbitral process is bound by the award or
order of that party. In the instant case, no adverse
award was
made. In fact, by separating out the second special plea in
these proceedings for early determination, the defendant
has done
exactly what the arbitrator envisaged in his award, namely leaving it
to this court to determine whether the arbitrator
or the court should
exercise jurisdiction over the dispute as a whole. Whereas in
this case the parties agreed to utilise
arbitration to resolve their
disputes, special circumstances must exist before a court will
override that agreement and assume
jurisdiction over the dispute.
For all the reasons I have given, the plaintiff has failed to
establish any such circumstances.
I see no reason why the
existing arbitrator should not proceed to deal with the dispute
referred to him.
In
the result, the defendant's second special plea must be upheld.
As far as costs are concerned, they must follow the result.
This matter necessitated four days of argument over two sessions.
The defendant seeks the costs of the two counsel they engaged.
This was resisted by Mr Christophorou, an attorney with the right of
appearance, who single-handedly and very competently presented
the
plaintiff's case in court. Notwithstanding this fact, the
matter is reasonably weighty and certainly involves claims
which may
eventually exceed approximately R30 000 000,00. In
the circumstances, I consider that the costs of two
counsel are
justified.
The
order made is as follows:
1. The defendant's
second special plea is upheld and the plaintiff's action is stayed
pending the final determination of the dispute
by the arbitrator in
terms of clause 13 of the first and second agreements.
2. The plaintiff is to pay the
defendant's costs in the determination of the said plea, such costs
to include the costs of two counsel.
___________________
BOZALEK,
J
JUDGE
OF THE HIGH COURT
DATE
:
14 JUNE 2019