REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, JOHANNESBURG
CASE NO: 2024-104308
In the matter between:
ENGEN PETROLEUM (PTY) LTD Applicant
And
ANCHOR BUSINESS ENTERPRISES CC
t/a ENGEN WESTERN SERVICE STATION First Respondent
ADV J GAUTSCHI SC N.O. Second Respondent
This judgment was handed down electronically by circulation to the parties’
representatives by email and by uploading the judgment onto CourtOnline/CaseLines.
The date of delivery of the judgment is deemed to be 27 March 2026.
JUDGMENT
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: NO
(3) REVISED: NO
27 March 2026 _________________________
DATE SIGNATURE
2
SOUTHWOOD, AJ
Introduction
[1] This is an application brought by Engen Petroleum (Pty) Ltd ("Engen") in terms
of section 33 of the Arbitration Act, 42 of 1965 ("the Arbitration Act") to review
and set aside an arbitration award made by the second respondent ("the
Arbitrator") on 11 July 2024 and published on 1 August 2024. The second
respondent did not oppose the application.
[2] The arbitration was conducted in terms of section 12B of the Petroleum Products
Act, 120 of 1977 ("the PPA") following a referral by the Controller of Petroleum
Products. The first respondent, Anchor Business Enterprises CC t/a Engen
Western Service Statio n ("Anchor"), alleged that Engen had engaged in unfair
and unreasonable contractual practices by (a) terminating the operating lease
agreement between the parties on 17 October 2022, and (b) refusing to afford
Anchor an opportunity to sell its business.
[3] The Arbitrator found in favour of Anchor, set aside the termination notice, and
directed Engen to afford Anchor an opportunity to sell its business in terms of the
operating lease. Engen now seeks to have that award reviewed and set aside ;
and further seeks to have this court substitute the award with an order dismissing
Anchor's claims ; to award the costs of the arbitration and the costs of this
application to Engen on an attorney and client scale; and to refer the issue of
frivolous and capricious damages to arbitration.
[4] Anchor seeks condonation for the late filing of its answering affidavit. Engen
does not oppose the application. There being no prejudice to Engen, I am
inclined to grant condonation.
Background facts
[5] The relationship between the parties commenced in 2006 when Anchor
purchased the goodwill of an Engen filling station for R1.6 million and began
operating as an Engen retailer. The parties concluded various operating leases
over the years, the most recent being an agreement of lease and operation of
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service station concluded on 11 January 2022 ("the Operating Lease"), which
was to endure until 31 August 2024.
[6] The founding affidavit avers that Clause 4.1 of Schedule 2 obliged Engen to
assist Anchor to establish, administer and grow the business including that
Engen had to deliver all of Anchor’s fuel requirements within 48 hours of Anchor
placing an order with Engen, provided that Anchor obtains an official Engen order
number in respect of such order.
[7] The Operating Lease contained other terms setting the context for the dispute ,
inter alia:
a. clause 5.3 of Schedule 2 permitted Anchor to purchase from other sources
only if Engen was unable to deliver for a period longer than 48 consecutive
hours, and only with Engen's prior written consent;
b. clause 41.1(b) of Schedule 2 entitled Engen to cancel the Operating Lease
forthwith if Anchor breached its exclusivity obligations;
c. Schedule 3 regulated the disposal of the business, recognising that Anchor
had an "entrenched value" in the business and was entitled to realise such
value, subject to Engen's approval of any proposed purchaser.
[8] Between August 2021 and March 2022, Anchor sourced fuel from third -party
suppliers on eleven occasions. The quantities purchased were relatively small
(ranging from approximately 1900 to 6002 litres per transaction).
[9] On 25 August 2022, a meeting was held between the parties where Anchor was
confronted with its third-party purchases. On 17 October 2022, Engen formally
cancelled the Operating Lease by written notice, citing Anchor's breach of clause
41.1(b) of Schedule 2. The notice stated that Anchor could remain in occupation
until such time as Engen required it to vacate.
[10] On 28 February 2023, Anchor approached the Controller of Petroleum Products
in terms of section 12B of the PPA, alleging that Engen had engaged in unfair
and unreasonable contractual practices , namely the cancellation of the lease ,
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and Engen’s threat not to allow Anchor to sell its business . The Controller
referred the matter to arbitration on 21 April 2023.
[11] In its Statement of Claim, Anchor identified two unfair contractual practices: (a)
the termination of the Operating Lease on 17 October 2022, and (b) Engen's
refusal to afford Anchor an opportunity to sell its business. Paragraphs 6.3 and
6.4 of the Statement of Claim expressly stated that these were the only practices
forming the subject matter of the arbitration and that this determined the scope
of the enquiry.
[12] However, in her witness statement and oral evidence, Ms Sikwane (Anchor's sole
member) testified extensively about various other issues, including electricity
challenges, a damaged pipe, contaminated tanks, late billing, zoning certificate
difficulties, and issues relating to another Engen site (Sedibelo) that Anchor had
operated. These issues were not pleaded as unfair contractual practices.
[13] The arbitration hearing took place from 11 to 1 5 March 2024. On 13 May 2024,
oral argument was heard. The Arbitrator published his award on 1 August 2024.
The arbitration award
[14] In his award, the Arbitrator:
a. acknowledged that the only two unfair contractual practices pleaded and
relied upon by Anchor were the termination of the lease and the refusal to
consent to an opportunity to sell the business;
b. nevertheless, considered evidence relating to late deliveries, full or half load
requirements, COVID -19 related evidence, and settlement discussions,
which he regarded as "directly relevant" to the pleaded practices;
c. found that Anchor had established late deliveries, relying on Ms Sikwane's
explanations of the eleven instances of third -party purchases, WhatsApp
messages, probabilities (that small quantities followed by Engen deliveries
suggested stop-gap measures rather than cheaper fuel), and the evidence
of Mr Kuna (Anchor's former area manager);
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d. held that the principle of pacta sunt servanda was not a bar to relief, holding
that section 12B imposes an equitable standard that overrides contractual
terms;
e. held that the PPA is premised on an unequal bargaining position;
f. concluded that Engen's termination of the Operating Lease on 17 October
2022 constituted an unfair and unreasonable contractual practice;
g. found that Engen's refusal to grant Anchor an opportunity to sell the
business was unfair and unreasonable.
[15] The arbitrator made the following award:
a. The termination notice of 17 October 2022 is set aside.
b. Engen is directed to afford Anchor an opportunity to sell its business as
provided for in terms of the 2022 Operating Lease agreement.
c. Engen is ordered to pay the costs of the arbitration.
The review
[16] Engen seeks to review and set aside the award on the following grounds:
a. Terms of reference: The Arbitrator exceeded his powers by considering and
being influenced by "peripheral issues" (late deliveries, load requirements,
COVID-19 relief) that were not pleaded as unfair contractual practices and
fell outside the scope of the reference ; the Arbitrator accepted Ms
Sikwane’s explanation relating to the eleven instances of third-party product
acquisitions; the Arbitrator’s refusal to Engen’s application to introduce late
additional discovery.
b. Pacta sunt servanda: The Arbitrator erred in law by finding that this principle
did not apply, when it should have informed the determination of whether
the practices were unfair.
c. Unequal bargaining power: The Arbitrator erred in finding this relevant
without proper basis, and in any event, this was not a pleaded issue.
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d. Setting aside the termination notice: This decision resulted from errors of
law and the Arbitrator exceeding his powers; further, the Arbitrator failed to
correct the practices that actually imperilled the relationship (late deliveries
and load restrictions), leaving them uncorrected.
e. Opportunity to sell the business: The Arbitrator exceeded his powers by
correcting a consequence rather than a practice; the award is incapable of
implementation as the site has ceased trading and Anchor lacks financial
resources; the Arbitrator failed to consider that the sale provisions in
Schedule 3 contemplate a functional, "wet" site.
Anchor’s opposition
[17] Anchor opposes the application and contends that:
a. The relief sought in paragraphs 2, 3 and 4 of the Notice of Motion is
incompetent. Section 33 of the Arbitration Act does not provide for an order
which substitutes the award with an order by the Court; if an award is set
aside, the dispute must be submitted to a new arbitration tribunal.
b. Engen misconstrues the restricted grounds for review in section 33(1)(b),
which only renders an award reviewable where the arbitrator has committed
a gross irregularity in the conduct of the proceedings or has exceeded his
powers.
c. The Arbitrator made no determination on any peripheral issue; he merely
considered evidence relevant to the pleaded practices. He restricted his
award to the pleaded case and the relief sought.
d. Errors of law or fact do not constitute grounds for review under section
33(1)(b).
e. The Arbitrator did not exceed his powers. Section 12B(4)(a) empowers an
arbitrator to determine whether contractual practices are unfair or
unreasonable and to make such award as he deems necessary to correct
such practice. The Arbitrator confined his awar d to correcting the pleaded
practices.
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f. The application is ill -conceived and should be dismissed with a punitive
costs order.
The Legal framework
Section 33 of the Arbitration Act
[18] Section 33 of the Arbitration Act provides inter alia:
"(1) Where— …
(b) an arbitration tribunal has committed any gross irregularity in the
conduct of the arbitration proceedings or has exceeded its powers; …
the court may, on the application of any party to the reference after due
notice to the other party or parties, make an order setting the award
aside.
(4) If the award is set aside the dispute shall, at the request of either party,
be submitted to a new arbitration tribunal constituted in the manner
directed by the court."
[19] Section 33(4) makes plain that if an award is set aside, the dispute must be
submitted to a new arbitration tribunal. There is no provision for a court to
substitute its own decision for that of the arbitrator.
The meaning of "gross irregularity" and "exceeding powers"
[20] The leading authority on section 33(1)(b) is Telcordia Technologies Inc v Telkom
SA Ltd 1. The S upreme Court of Appeal held that by agreeing to arbitration,
parties limit court interference to the grounds set out in section 33(1). The parties
waive the right to have the merits of their dispute re -litigated or reconsidered. 2
Furthermore, the Act did not permit a review based on a material error of law. 3
[21] The Court in Telcordia explained that "exceeding its powers" means the tribunal
purported to exercise a power it did not have, as distinct from erroneously
1 2007 (3) SA 266 (SCA)
2 Telcordia footnote 1 at para 51
3 Telcordia footnote 1 at para 67
8
exercising a power that it did have. A mere erroneous exercise of a power vested
in the tribunal does not amount to exceeding powers. 4
[22] As for "gross irregularity", the Supreme Court of Appeal endorsed the statement
in Ellis v Morgan; Ellis v Dessai 5 that:
“an irregularity in proceedings does not mean an incorrect judgment; it refers not
to the result, but to the methods of a trial such as, for example, some high-handed
or mistaken action which has prevented the aggrieved party from having his case
fully and fairly determined." The irregularity must be of such a serious nature that
it resulted in the aggrieved party not having its case fully and fairly determined.”
[23] The Supreme Court of Appeal held that “gross irregularity” also encompasses
where a decision -maker misconceives the whole nature of the enquiry or his
duties in connection therewith 6 and any behaviour, though well -intentioned and
bona fide which prevented a fair trial on the issues. 7
[24] In Gutsche Family Investments v Morgan (Pty) Ltd v Mettle Equity Group (Pty)
Ltd8, the Supreme Court of Appeal distilled three principles from three recent
judgments in that court:
a. Errors of law or fact committed by an arbitrator do not in themselves
constitute grounds for review by a court under s33(1)(b). Whether or not we
agree with the conclusions arrived at by the majority of the tribunal on the
various disputes between the parties, is therefore of no consequence.
b. In order to justify a review on the basis of gross irregularity, the irregularity
contended for must have been of such a serious nature that it resulted in
the aggrieved party not having his or her case fully and fairly determined.
c. Arbitrators ... are bound by the pleadings. ... Arbitrators who stray beyond
the pleadings therefore exceed their powers as contemplated by s33(1)(b).
4 Telcordia footnote 1 at para 52
5 1909 TS 576 at 581
6 Telcordia footnote 1 at para 71
7 Telcordia footnote 1 at para 73
8 2012 JDR 0358 (SCA) at para 18
9
[25] In Palabora Copper (Pty) Ltd v Motlokwa Transport & Construction (Pty) Ltd9, the
Supreme Court of Appeal reiterated that where an arbitrator engages in the
correct enquiry but errs on the facts or the law, that is not an irregularity and is
not a basis for setting aside an award.
[26] In Rabinowitz v Levy 10 confirmed that "gross irregularity" required by section
33(1)(b) must relate to the conduct of the proceedings, and not the result or
outcome. If an arbitrator is guilty of conducting an arbitration in some form of
high-handed or arbitrary manner, or dish onestly, that would constitute a gross
irregularity. But a bona fide mistake in respect of the merits, no matter how gross,
will not suffice.
[27] In respect of "exceeding powers", the Court found that:
"A review in terms of s33(1)(b) of the Act will include where an arbitrator has
exceeded his or her powers. The focus is on whether the arbitrator purported to
exercise a power he or she did not have. An erroneous exercise of a power that
the arbitrator has does not amount to a ground for review. As much as an award
going beyond the terms of the arbitrator's reference may result in a successful
review of an award, it is a fallacy to label a wrong interpretation of a contract, a
wrong interpretation or application of South African law, or an incorrect reliance on
inadmissible evidence by the arbitrator, as a transgression of the limits of the
arbitrator's power." 11
Section 12B of the PPA
[28] Section 12B(1) provides:
“The Controller of Petroleum Products may on request by a licensed retailer
alleging an unfair or unreasonable contractual practice by a licensed wholesaler,
or vice versa, require, by notice in writing to the parties concerned, that the parties
submit the matter to arbitration.”
[29] Section 12B(4) of the PPA provides that an arbitrator:
9 2018 (5) SA 462 (SCA) at para 8
10 2024 JDR 0220 (SCA) at para 15
11 Rabinowitz footnote 10 at para 19
10
a. shall determine whether the alleged contractual practices concerned are
unfair or unreasonable and, if so, shall make such award as he or she
deems necessary to correct such practice; and
b. shall determine whether the allegations giving rise to the arbitration were
frivolous or capricious and, if so, shall make such award as he or she deems
necessary to compensate any party affected by such allegations.
[30] I was referred to the following authorities.
[31] The Constitutional Court in Business Zone 1010 CC v Engen Petroleum Ltd 12
dealt with an administrative review of the decisions of the Controller of Petroleum
Products and the Minister of Minerals and Energy in relation to decisions about
whether to refer complaints to arbitration in terms of section 12B of the PPA. The
Court held that section 12B imposes an equitable standard that overrides the
terms of the contract to ensure that fairness and reasonableness prevail. 13
[32] The Court stated, further, that section 12B(4)(a) of the PPA mandates the
arbitrator to enter into and interrogate the merits of the alleged contractual
practice in order to decide the unfairness or unreasonableness thereof. 14
[33] Furthermore, held the Court, e ven a single act of cancellation can amount to a
contractual practice, and the arbitrator's powers can extend to setting aside the
termination and reinstating the contract. 15
[34] In Mfoza Service Station (Pty) Ltd v Engen Petroleum Ltd 16, which dealt with
whether an arbitrator could award damages in terms of section 12B(4)(a) of the
PPA, t he Constitutional Court held that section 12B is a limited arbitral
mechanism dealing with allegedly unfair or unreasonable contractual practices
and their ‘correction’. The award must correct the practice not the consequences
of the practic e. To correct a practice is about restoring the relationship by
identifying the contractual practice that imperilled the relationship and then
12 2017 JDR 2059 (CC)
12 2017 JDR 2059 (CC)
13 Business Zone footnote 12 at para 48
14 Business Zone footnote 12 at para 63
15 Business Zone footnote 12 at para 76
16 2022 (1) SA 317 (CC) at paras 37, 40 to 46, 50 and 78
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making an award that would end the practice in question. It is an intervention
that is forward -looking. Correcting a practice does not extend to the historical
effect of the consequences of that practice as that is not what was required to
correct the practice. An award of compensation that deals with the consequences
of unfair or unreasonable practice will leave the practice uncorrected. This is not
what section 12B had in mind
[35] Crompton Street Motors CC t/a Wallers Garage Service Station v Bright Idea
Projects 66 (Pty) Ltd t/a All Fuels17 dealt with whether a High Court was entitled
to refuse a request to stay legal proceedings in respect of a matter already
referred to arbitration u nder section 12B of the PPA. The Court confirmed that
the arbitral mechanism introduced by section 12B addressed the unequal
bargaining power between wholesalers and retailers prevalent in the petroleum
industry; and, further, that the equitable standard of fairness and reasonableness
prevailed in petroleum contracts. 18
[36] Engen Petroleum Limited v Rissik Street One Stop CC19 dealt with an application
to stay eviction proceedings in the context of a referral to arbitration in terms of
section 12B. The judgment was overturned by the Constitutional Court in Rissik
Street One Stop t/a Rissik Street Engen and Another v Engen Petroleum Ltd20.
[37] Marndre Beleggings CC v The Minister of Energy and two others21 concerned an
administrative review of the Minister’s decision overturning the Controller’s
decision to refer a practice to arbitration in terms of section 12B of the PPA. The
applicant relied, in particular, on paragraph 23 of the judgment which provided
that:
“no arbitrator can force Engen to conclude an operating lease agreement with the
purchaser of the business”,
as providing a practical challenge to the implementation of the award.
17 [2023] ZACC 3
18 Crompton Street Motors footnote 17 at paras 42, 60 and 62
19 2021 JDR 1065 (SCA)
20 2024 (4) SA 447 (CC)
19 2021 JDR 1065 (SCA)
20 2024 (4) SA 447 (CC)
21 Unreported judgment by Potterill J dated 22 March 2018 under case number 51067/15
12
[38] It is pertinent that none of the authorities referred to by the parties deal with a
review of an arbitrator’s award given in terms of section 12B(4) of the PPA.
Evaluation
The relief sought
[39] Before addressing the merits of the review, it is necessary to deal with the relief
sought in paragraphs 2, 3 and 4 of the Notice of Motion.
[40] Prayer 2 seeks an order "[r]eplacing and substituting the award with an award that the
first respondent's claims are dismissed."
[41] Prayer 3 seeks the costs of arbitration as well as the costs of this application on
an attorney and client scale.
[42] Prayer 4 seeks a referral to arbitration relating to the issue of frivolous and
capricious damages.
[43] Section 33 of the Arbitration Act makes no provision for an order as contemplated
by prayer 2 . Section 33(4) expressly provides that if an award is set aside, the
dispute shall be submitted to a new arbitration tribunal. This court has no power
to substitute its own decision for that of the arbitrator. Mr Aucamp, Engen’s
counsel, correctly conceded same in argument , indicating further that if the
award was set aside and the dispute heard before a new arbitration tribunal ,
then, per prayer 4, the issue of damages for a frivolous complaint would be
considered by a new ar bitrator. As I understood the submission, prayer 4 has
no independent existence apart from prayer 1.
[44] In relation to prayer 3, Mr Aucamp referred to the Lease Agreement as the basis
for the attorney and client costs sought. Mr Aucamp did not refer me to any
authority which permitted this court to make a costs award in relation to the
arbitration. Mr Venter, for Anchor, submitted that Engen was not entitled to the
costs of the arbitration. Given that the Arbitration Act does not make provision
for this court to substitute its own order for what is contained in the award, in my
view, this court cannot make a costs order in relation to the arbitration.
13
The grounds for review
[45] I turn now to consider whether Engen has made out a case for the review and
setting aside of the award under section 33(1)(b).
i. The terms of reference ground
[46] Engen's primary complaint is that the Arbitrator exceeded his powers by
considering and being influenced by "peripheral issues" that were not pleaded
as unfair contractual practices and fell outside the scope of the reference. These
include evidence relating to late deliveries, full or half load requirements, COVID-
19 relief, and settlement discussions.
[47] The Arbitrator addressed this complaint directly in his award. In paragraphs 18 -
21, he recorded that Engen's counsel had objected to the admissibility of such
evidence, contending that only two unfair contractual practices had been
pleaded. He recorded, further, that Engen’s counsel did not seek a directive but
wanted its objection recorded and that , consequently, it would not be leading
evidence on or cross -examining in relation to those incidents. The Arbitrator
recorded that Anchor's counsel acknowledged this but submitted that the various
incidents (termed "side issues") were relevant when considering whether the
pleaded contractual practices were unreasonable or unfair.
[48] The Arbitrator then stated:
"21. Having heard the evidence and having considered the submissions of the
parties in their heads of argument and in oral argument, I am of the view that the
so-called 'peripheral issues' which I have regard to are those which are directly
relevant to wei ghing up whether the 17 October 2022 cancellation notice was
unfair or unreasonable and whether the refusal of an opportunity to sell the
business was unfair or unreasonable. More particularly, I shall consider and have
regard to the evidence relating to late delivery and related issues as to full or half
loads, Covid-19 related evidence (including evidence relating to the Covid-19 relief
package) and the evidence on the various settlement discussions, as in my view
package) and the evidence on the various settlement discussions, as in my view
evidence on those issues have a direct be aring on the two pleaded contractual
practices relied upon and are relevant in considering whether those two pleaded
contractual practices are unfair or unreasonable. The evidence which I regard as
14
relevant and which I have taken into account for this purpose [i]s that referred to
in paragraphs 4.2.2, 4.2.6 and 4.2.7 of the claimant’s heads of argument quoted
above and the evidence presented at the hearing relating thereto which includes
the evidence relating to late deliveries and purchasing fuel from third -party
suppliers to avoid ‘standing dry’."
[49] The Arbitrator made no award on any peripheral issue. He expressly confined
his award to the two pleaded practices: setting aside the termination notice and
directing that Anchor be afforded an opportunity to sell its business.
[50] The question is whether an arbitrator exceeds his powers by considering
evidence that is not identified as the unreasonable or unfair practice but is
relevant to the determination as to whether these practices are unreasonable or
unfair.
[51] In my view, he does not. An arbitrator is entitled to consider evidence that sheds
light on the fairness and reasonableness of the pleaded practices. The context
in which a termination occurs, including the parties' history and the surrounding
circumstances, is relevant to assessing whether that termination was unfair or
unreasonable.
[52] This is particularly so in a section 12B arbitration, where the enquiry is into
fairness and reasonableness. As indicated above, the arbitrator is mandated to
"enter into and interrogate the merits of the alleged contractual practice in order to make
a determination into the unfairness or unreasonableness thereof." 22 That interrogation
necessarily involves consideration of the context and background.
[53] The Arbitrator was careful to identify the evidence he regarded as relevant. He
did not stray beyond the pleaded practices in making his award. He did not
determine any peripheral issue or grant any relief beyond that sought in Anchor's
Statement of Claim.
[54] As part of this ground, Engen contends that the Arbitrator should have
approached the determination of the issues by identifying the contractual
approached the determination of the issues by identifying the contractual
practices that imperilled the relationship between the parties , in this case the
22 Business Zone footnote 12 at para 63
15
practices that according to Anchor imperilled the relationship , namely the late
deliveries and/or Engen’s refusal to allow Anchor to acquire lesser loads. Engen
contends that the Arbitrator failed to correct these practices.
[55] If Engen’s ground is to be upheld, then this would mean that an arbitrator decides
what contractual practices are the subject matter of the arbitration instead of the
claimant. This would be inconsistent with section 12B(4)(a) which provides that
an arbitrator “shall determine whether the alleged contractual practices
concerned are unfair or unreasonable”. (my emphasis). This provisions requires
the complainant to determine the subject matter of the arbitration.
[56] As indicated above, Anchor identified the cancellation of the lease and Engen’s
refusal to allow it to sell its business as the unfair or unreasonable contractual
practices which it wished the arbitrator to determine as unfair or unreasonable,
both in its request for referral and in its Statement of Claim. These are the two
practices which the Arbitrator found to be unfair and unreasonable.
[57] Had the Arbitrator found that other practices, not defined in the referral or the
Statement of Claim as the alleged unfair or unreasonable practices, were unfair
or unreasonable and made an award to address these practices, no doubt Engen
would have reviewed the award on the basis that the Arbitrator had exceeded
his mandate.
[58] In the arbitration, Anchor requested the arbitrator to set aside the termination
notice of 17 October 2022 and to direct Engen to afford Anchor with an
opportunity to sell its business as is provided for in terms of the 2022 lease
agreement. That is the award that the Arbitrator gave.
[59] By setting aside the cancellation and directing Engen to afford Anchor an
opportunity to sell its business as provided for in the lease, the Arbitrator directly
addressed the practices which the claimant had identified . This is not a
addressed the practices which the claimant had identified . This is not a
backward-looking award but deals with the narrow relationship which existed
between the parties.
[60] In these circumstances, I am unable to find that the Arbitrator exceeded his
powers. He engaged in the correct enquiry, considered evidence he believed to
16
be relevant to that enquiry, and confined his award to the pleaded practices. Even
if he erred in his assessment of relevance, that would be an error of fact or law
on the merits, not a reviewable irregularity. As the authorities make plain, an
arbitrator has the right to be wrong on the facts and the law.
[61] Accordingly, this ground of review must fail.
ii. The pacta sunt servanda ground
[62] Engen contends that the Arbitrator erred in law by finding that the principle of
pacta sunt servanda did not apply. A reading of the award, however, does not
support this contention.
[63] In paragraphs 28 and 29 of the award, the Arbitrator stated:
"I am in agreement with the submissions made by claimant's counsel in oral
argument in reply that, the statutory position is, as stated in paragraph 48 of the
Business Zone judgment of the Constitutional Court: 'the real significance of
section 12B ... in the equitable standard it imposes. A standard that overrides the
terms of their contract to ensure that fairness and reasonableness prevail.
It also follows that what is relevant is to determine the equitable standard of
fairness and reasonableness, not whether a provision is ‘invalid on account of the
fact that it offends public policy’.”
[64] The Arbitrator did not find that pacta sunt servanda has no application. He
correctly recognised that section 12B imposes an equitable standard that
operates alongside the contractual terms. This is exactly what the Constitutional
Court held in Business Zone.23 The Arbitrator's approach was consistent with the
law.
[65] Engen contends that the Arbitrator erred in not applying pacta sunt servanda and
finding that Engen was justified in its actions.
[66] Such an alleged error is an error on the merits not a procedural irregularity. Such
an error is not reviewable under section 33(1)(b).
23 footnote 13
17
[67] In the premises, this ground of review must fail.
iii. The unequal bargaining power ground
[68] Engen contends that the Arbitrator erred in finding unequal bargaining power
relevant and that no case was made out for such finding.
[69] As indicated above, the Constitutional Court has consistently recognised that one
of the purposes of section 12B is to address unequal relations of power between
licensed wholesalers and retailers.
[70] The Arbitrator's reference to unequal bargaining power was not a finding that
such inequality existed in this specific case; rather, it was a recognition of the
context in which section 12B operates. He stated:
"However, that ignores the fact that the standard Operating Lease as negotiated
with the National Advisory Council is not site -specific and, in any event as
submitted in oral argument by claimant's counsel, the Petroleum Products Act is
premised on an unequal bargaining position."
[71] This was not a finding that determined the outcome. It was an observation about
the legislative context. Even if it were a finding, it would be a finding on the merits,
not a reviewable irregularity.
[72] Accordingly, this ground of review has no merit.
iv. The setting aside of the termination notice
[73] Engen contends that the decision to set aside the termination notice is based on
errors of law alternatively was reached by considering facts that were irrelevant
and/or by disregarding relevant considerations. The decision is also a direct
result of the Arbitrator having exceeded his powers and fail ing to correct the
practices that imperilled the relationship (late deliveries and load restrictions).
[74] Errors of law, taking irrelevant facts into consideration and disregarding relevant
facts are not grounds of review in terms of section 33 of the Arbitration Act.
[75] Insofar as Engen contends that the arbitrator exceeded his mandate, this has
been dealt with above.
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[76] As indicated above, an arbitrator's power to set aside a termination notice was
confirmed by the Constitutional Court in Business Zone.24 The Court held that
even a single act of cancellation could amount to a contractual practice under
section 12B(4)(a) and that the arbitrator's powers could extend to correcting the
practice by setting aside the termination and reinstating the contract, but only
where there is a relationship that remains in existence either in law or in fact.
[77] The Arbitrator expressly considered this requirement. In paragraph 34 of the
award, he noted that in the present case it was common cause that, but for the
termination, the Operating Lease would only expire in August 2024. He
concluded that it was therefor e competent to set aside the termination, which
would have the effect of reinstating the contract until it expired by effluxion of
time.
[78] The Arbitrator's conclusion that the termination was unfair and unreasonable was
based on his assessment of the evidence. He accepted Anchor's version
regarding the circumstances surrounding the third -party purchases and found
that Engen's termination in t hose circumstances was unfair and unreasonable.
This was a finding on the merits. Whether one agrees with it or not is irrelevant
for purposes of this review.
[79] As for the complaint that the Arbitrator failed to correct the practices that
imperilled the relationship (late deliveries and load restrictions), this
misunderstands the nature of the enquiry. The practice complained of was the
termination itself. That is what Anchor sought to have corrected. The underlying
reasons for the breach of the Operating Lease (late deliveries, financial
difficulties) were relevant to assessing whether the termination was unfair or
unreasonable, but they were not themselves the pr actices sought to be
corrected. The Arbitrator did exactly what he was required to do: he determined
whether the pleaded practice (the termination) was unreasonable or unfair and,
whether the pleaded practice (the termination) was unreasonable or unfair and,
finding that it was, made an award to correct it (by setting it aside).
[80] Accordingly, this ground of review must fail.
24 Business Zone footnote 12 at para 76
19
v. The opportunity to sell the business
[81] Engen contends that the Arbitrator exceeded his powers by correcting a
consequence rather than a practice; that the award is incapable of
implementation as the site has ceased trading and Anchor lacks financial
resources; and that the Arbitrator failed to consider that the sale provisions in
Schedule 3 contemplate a functional, "wet" site.
[82] The practice complained of was Engen's refusal to afford Anchor an opportunity
to sell its business. This was pleaded as a separate unreasonable and unfair
contractual practice. The Arbitrator found that this refusal was unfair and
unreasonable, evidenced inter alia by the contents of settlement negotiations and
Engen's notification that Anchor should remain in operation on the site.
[83] The remedy granted (directing Engen to afford Anchor an opportunity to sell its
business in terms of the Operating Lease) is precisely what Anchor sought. It is
a correction of the practice complained of.
[84] Engen's argument that the sale provisions contemplate a functional, "wet" site is
an argument about the interpretation and application of the Operating Lease.
That is a matter for the Arbitrator, not for this court on review. Even if the
Arbitrator erred in his understanding of how the sale provisions would operate,
that would be an error of law or fact on the merits, not a reviewable irregularity.
[85] Insofar as it is contended that the award is unworkable, I was not referred to any
authority which justifies setting aside an award on this basis.
[86] The power to set aside an award is confined to the statutory grounds in section
33 of the Arbitration Act: misconduct by the arbitrator, gross irregularity in the
proceedings, exceeding the arbitrator’s powers or improper procurement of the
award. That carrying out the award may be difficult, impractical or incapable of
performance does not fall within the grounds of review contemplated by section
33 of the Arbitration Act. 25
33 of the Arbitration Act. 25
25 Amalgamated Clothing and Textile Workers Union of SA v Veldspun (Pty) Ltd 1994 (1) SA
162 (A) at 169B -C; Telcordia footnote 12 at para 51; Lufuno Mphaphuli and Associates
(Pty) Ltd v Andrews and Another 2009 (4) SA 529 (CC) at paras 224 and 235
20
[87] In the premises, this ground of review must fail.
vi. Error of law so egregious that it amounts to a denial of a fair trial
[88] This point falls within the ground Terms of Reference in the founding affidavit but
emerged with greater clarity in argument.
[89] Engen’s counsel contended that the Arbitrator failed to apply the trite principles
in Stellenbosch Farmers’ Winery Group Ltd and Another v Martell et Cie and
Others26 in relation to his factual findings dealing with Engen’s alleged late
deliveries and the requirement to order a full or half load. Such failure, it is
contended, constitutes an error of law that is so egregious that it amounts to a
deprivation of a fair hearing.
[90] The parties were ad idem that generally errors of law or fact do not constitute a
basis for review in terms of section 33 of the Arbitration Act.
[91] Neither the papers nor the argument explains why or how the alleged
misapplication of the principles for resolving factual disputes results in a gross
irregularity. Such misapplication would result in an error of fact.
[92] In my view, even if there was such a misapplication, it did not prevent Engen
from receiving a fair hearing.
[93] This, too, is not a ground which falls within the provisions of section 33 of the
Arbitration Act.
vii. Refusal of Engen’s application to admit further late discovery
[94] This point arises in the founding affidavit in the Terms of Reference Ground.
[95] The complaint is that the reasons for the ruling have no merit.
[96] This complaint goes to the merit of this ruling.
26 2003 (1) SA 11 (SCA) at para 5
21
[97] Accordingly, it does not fall within the review grounds contemplated by section
33 of the Arbitration Act and, so, this ground, too, must fail.
Conclusion
[98] Having considered all the grounds of review advanced by Engen, I am satisfied
that none of them establish a basis for review under section 33(1)(b) of the
Arbitration Act.
[99] The Arbitrator conducted the proceedings fairly. Both parties were given a full
opportunity to present their cases. The Arbitrator considered the evidence, made
findings of fact and law, and confined his award to the pleaded practices. He did
not exceed his powers. He did not commit any gross irregularity in the conduct
of the proceedings.
[100] Engen's real complaint is that it disagrees with the outcome. It seeks to re-argue
its case and have this court substitute its view for that of the Arbitrator. This it
cannot do. The limited grounds of review contemplated by section 33 of the
Arbitration Act have not been established.
[101] In the premises, the application must be dismissed.
Costs
[102] Anchor seeks a special costs order on the scale as between attorney and client,
contending that Engen's conduct in launching this application is vexatious and
frivolous, and that Engen simply wants to delay and frustrate the execution of the
arbitral award.
[103] In Boost Sports Africa (Pty) Ltd v South African Breweries (Pty) Ltd 27, the
Supreme Court of Appeal applied the dictum from In re: Alluvial Creek Limited28,
which states that a punitive costs order may be granted where proceedings are
vexatious, meaning they have the effect of being vexatious even if the intent was
27 2015 (5) SA 38 (SCA)
28 1929 CPD 535
22
not that they should be vexatious, where they put the other side to unnecessary
trouble and expense which the other side ought not to bear.
[104] While I have found that Engen's application lacks merit, I am not persuaded that
it was vexatious or frivolous to the extent warranting a punitive costs order.
[105] In the exercise of my discretion, I consider that the appropriate order is that
Engen pay Anchor's costs on the ordinary party and party scale.
Order
[106] In the result, I make the following order:
1. The respondent’s application for condonation for the late filing of its answering
affidavit is granted.
2. The review is dismissed.
3. The applicant is ordered to pay the first respondent's costs of this application,
such costs to include the costs consequent upon the employment of counsel
at scale C.
___________________________
F SOUTHWOOD
ACTING JUDGE OF THE HIGH COURT
GAUTENG DIVISION, JOHANNESBURG
Date of hearing: 4 February 2026
Date of judgment: 27 March 2026
For the Applicant: S Aucamp
instructed by: Mathopo Moshimane Mulangaphuma Inc t/a
DM5 Inc
23
For the First Respondent: JA Venter
instructed by: Des Naidoo & Associates