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[2026] ZAGPJHC 576
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Shell Downstream South Africa (Pty) Ltd v Shell Retailer Council (2023/132537) [2026] ZAGPJHC 576 (26 May 2026)
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IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, JOHANNESBURG)
CASE
NO:
2023/132537
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED.
SIGNATURE
DATE:
In
the matter between:-
SHELL
DOWNSTREAM SOUTH AFRICA (PTY) LTD
Applicant
and
SHELL
RETAILER
COUNCIL
Respondent
IN
RE:
The
matter between:-
SHELL
RETAILER
COUNCIL
Plaintiff
and
SHELL
DOWNSTREAM SOUTH AFRICA (PTY) LTD
Defendant
JUDGMENT
ALLEN
AJ
INTRODUCTION
[1]
This is an opposed interlocutory application for the stay of the
respondent’s main action proceedings pending final
determination
of the disputes by arbitration. The parties did not
agree to the filing of a joint practice note in terms of Directive 1
of 2024
and filed separate unilateral practice notes.
[2]
Applicant sought the following relief:
“
1.
That the main action proceedings brought by the respondent in this
Honourable Court, under the same case number,
be stayed, pending
final determination of the dispute by arbitration.
2.
That the issues in dispute be referred to an arbitration within 15
calendar days from this
order in accordance with the provisions of
the Shell Franchise Agreement.
3.
Costs of suit in the event of opposition.
4.
Further and or alternative relief.”
BACKGROUND
[3]
Respondent issued a summons against applicant on 13
December 2023 predicated on 9 claims which evidently are also the
disputes.
The respondent is a voluntary association, with separate
legal personality and perpetual succession, capable of suing and
being
sued in its own name, and acting with non-profit objectives.
The respondent’s members are licensed fuel retailers in terms
of the Petroleum Products Act, Act 120 of 1977 (“PPA”),
conduct business as franchisees and fuel retailers of the applicant.
Applicant is a subsidiary of Shell PLC and a licensed fuel wholesaler
and franchisor.
[4]
Respondent’s
locus standi
is as set out in
paragraph 8 of the particulars of claim:”
D.
THE PLAINTIFF’S (SRC’S) LOCUS STANDI
8.
SRC is
constitutionally mandated by its members to
pursue and achieve
the
following
aims and objectives:
8.1.
to actively
develop, pursue and promote strategies intended to improve the
qualitative
and quantitative lot of its members in its dealings with Shell;
8.2.
to do all
things necessary, inclusive of mediation and/or the conduct of
arbitration
and/or litigation proceedings, in any forum, in order to promote,
pursue,
and protect the mutual interests and welfare of SRC members,
where
SRC contends such are being unfairly prejudiced by Shell;
8.3.
to promote,
through result driven actions, the interests of SRC members;
8.4.
to do all
things necessary to achieve the aims and objectives of SRC,
including
but not limited to:
8.4.1.
conducting of
legal proceedings in any forum;
8.4.2.
conducting of
proceedings as provided for in the CPA, the PPA, or
any
other legislation, which may have a bearing on the welfare of its
members;
and
8.4.3.
conducting
of arbitration and litigation proceedings against Shell
.”(Own
emphasis)
[5]
Respondent
served a Rule 41A Notice
[1]
in
terms of the Uniform Rules of Court with its summons wherein it
objected to mediation. Applicant filed a reply to the mediation
notice that it did not object to mediation.
[6]
Applicant
filed a notice of intention to defend on 29 January 2024. Applicant
filed a notice in terms of Rule 7(1)
[2]
of the Uniform Rules on even date disputing the authority of the
respondent, respondent’s attorneys of record and thereby
seeking clarity prior to the launching of this application.
Respondent served a reply on 14 February 2024 submitting its
constitution
and resolutions. This reply was filed on 5 April 2024.
[7]
Respondent's constitution and resolutions require closer scrutiny.
The constitution was signed on 14 December 2022 to deal on behalf
of
its members with, amongst other, disputes, legal or arbitration
proceedings in any forum, mediation, the Consumer Protection
Act, Act
68 of 2008 (“CPA”) or any other legislation, arbitration
and/or litigation against applicant. Decision making
consists of an
executive council (“EXCO”) and paid-up members also
having voting rights.
[8]
The “eligible members” passed resolutions mandating the
respondent to, inter alia, address/consider/action all iniquitous
contractual terms in the franchise agreement with applicant through
legal, arbitration or alternative dispute resolution proceedings
in
any forum, mediation and/or negotiation, arbitration and/or
litigation against the applicant. The resolutions were signed by
the
different regions on 3 and 14 February 2021 respectively,
approximately 18 months prior to the signing of the constitution.
In
the papers before me the resolutions made reference to respondent
only and not the constitution or the EXCO. It is questionable
whether
the constitution came into effect prior to these resolutions or
thereafter. No substance was proffered to substantiate
that the
discrepancy was ratified. I am not convinced that the eligible
members’ resolutions will muster closer scrutiny.
[9]
It appears that the respondent only represents those franchisees
included. It is not certain whether all franchisees of applicant
form
part of respondent’s council although, in terms of the
resolutions passed, it is certain which regions were eligible
to pass
a resolution. Respondent’s EXCO, at a meeting on 3 August 2023,
passed a resolution in terms of the constitution
to litigate against
applicant and to appoint the attorneys of record. In the papers
before me it appears that the eligible member
regions authorized
applicant only and the EXCO authorized the attorneys of record.
[10]
I am not convinced that good cause was shown regarding the authority
issue predicated on the construction proffered. To this extent,
it
cannot be said that applicant has taken “other steps” to
bring the case one step closer to finality, as the court
may postpone
the case pending compliance. If, for a moment, it is accepted that
the authority issue is not questionable and for
the sake of taking
the matter forward and in the interests of justice, my conclusions
follow hereinafter.
[11]
Respondent also filed a Rule 7(1) Notice on 14 February 2024
disputing the authority of applicant’s attorneys of record.
Applicant replied thereto on 26 February 2024 by submitting a power
of attorney and on the same day launched this application.
[12]
Respondent
filed a Rule 28 Notice
[3]
on 15
May 2024 wherein it gave notice of its intention to amend its summons
by inserting a new claim 10 dealing with the arbitration
provisions
in terms of the franchise agreement between applicant and its
franchisees. The amendment has not been effected to date.
[13]
Respondent filed a further affidavit to which applicant has not
objected.
DISCUSSION
[14]
The franchise agreement between applicant and its franchisees and
more specifically clause 29 thereof reads as follows:
“
29
ARBITRATION AND CONSENT TO JURISDICTION
29.1
In the event of
any dispute arising between the Parties
in
relation to any matter connected with this Agreement or the Schedules
hereto (including but not limited to the interpretation
of this
Agreement, the enforcement of any provision of this Agreement, the
breach by any Party of any provision of this Agreement,
the validity
of this Agreement or any part thereof, the enforceability of any
provision of this Agreement, or the validity of any
notice given
hereunder), the Parties agree that such dispute
shall be referred
to arbitration by the Parties
.
29.2
The Parties agree that should either of the Parties request the
Controller to refer an alleged unfair
or unreasonable contractual
practice to arbitration under clause 12B of the Petroleum Products
Act and the Controller finds that
the matter be submitted to
arbitration, clause 29.3 and 29.4 shall govern the appointment of the
arbitrator and the applicable
rules.
The jurisdiction of an
arbitrator appointed for purpose of determining whether an alleged
unfair or unreasonable contractual practice
occurred is restricted to
what is contemplated by section 12B (4) of the PPA.
29.3
On referral of a dispute to arbitration, the parties shall within
seven (7) business days thereof appoint
an arbitrator by agreement,
failing agreement the Chairperson of the Law Society of South Africa
(or its successor-in-title) shall
be approached to appoint the
arbitrator.
29.4
Unless otherwise agreed to by the Parties, the arbitration shall be
concluded (i.e. a final arbitral
award rendered by the appointed
arbitrator on the merits) on an expedited basis within a period of
four (4) months from the date
of the appointment of the arbitrator or
such replacement arbitrator. Should an appointed arbitrator refuse to
act or is or becomes
incapable of acting or dies or is removed from
the office or his appointment is terminated, or is set aside by a
court a replacement
arbitrator shall be appointed in the manner
contemplated by clause 29.3 above. The Parties agree that for the
arbitration to be
concluded on an expedited basis, the Parties
together with the appointed arbitrator shall at the first
pre-arbitration meeting
agree to the rules applicable to the
arbitration proceedings.
29.5
The decision of the arbitrator in respect of any dispute referred to
arbitration under this Agreement
or the Schedules thereto shall be
final and binding.
29.6
Notwithstanding the provisions of this clause, Shell may in its sole
discretion at any time if it so
elect, institute legal proceedings
against the Franchisee:
29.6.1 for recovery
of any monies due to it by the Franchisee;
29.6.2 for the
immediate return to it of any Shell Equipment;
29.6.3 for any urgent
relief from a court; and
29.6.4 under this
Agreement or any of the Schedules hereto in any Court and in this
regard the Franchisee hereby consents in terms
of Section 45 of Act
32 of 1944, as amended, to Shell instituting any such legal
proceedings in the Magistrate's Court of any district
having
jurisdiction in respect of the Franchisee by virtue of Section 28(1)
of the said Act."(Own emphasis)
[15]
Paragraph 29 states that referral to arbitration is peremptory. Had
it said “may” a party could exercise its discretion
accordingly. This alternative is not available to respondent but only
to applicant. The franchisees contracted with applicant on
this basis
and it was never an issue until respondent elected to do so in a
proposed amendment of the summons. The summons has
not been amended
to date and is paragraph 29 not in dispute or the subject of court
proceedings wherein a decision is required
affecting the merits of
the application before me. I am therefore bound by the wording of the
franchise agreement and summons as
is.
[16]
In the matter of
Lufuno
Mphaphuli & Associates (Pty) Ltd v Andrews and
Another
(434/06)
[2007] ZASCA 143
;
[2008] 1 All SA 321
(SCA);
2008 (2) SA 448
(SCA);
2008 (7) BCLR 725
(SCA) (22 November 2007)
it
was said in
para 22:”. . . Whenever
two parties agree to refer a matter to a third for decision, and
further agree that his decision is
to be final and binding on them,
then, so long as he arrives at his decision honestly and in good
faith, the two parties are bound
by it….”
[17]
In
Telcordia
Technologies Inc v Telkom SA Ltd
[2006]
ZASCA 112
;
2007
(3) SA 266
(SCA)
para
51, Harms JA made the following pointed remarks: “Last, by
agreeing to arbitration the parties limit interference by
courts to
the ground of procedural irregularities set out in s 33(1) of the
Act. By necessary implication they waive the right
to rely on any
further ground of review, “common law” or otherwise….”
[18]
In
Hos+Med
Medical Aid Scheme v Thebe Ya Bophelo Healthcare Marketing
& Consulting (Pty) Ltd and Others
[2007]
ZASCA 163
;
2008
(2) SA 608
(SCA)
para
30 it was said:”
In
my view it is clear that the only source of an arbitrator’s
power is the arbitration agreement between the parties and
an
arbitrator cannot stray beyond their submission where the parties
have expressly defined and limited the issues, as the parties
have
done in this case to the matters pleaded
…”(Own
emphasis)
[19]
In the further matter of
Lufuno
Mphaphuli & Associates (Pty) Ltd v Nigel Athol Andrews, Bopanang
Construction
2009 (4) SA 529
(CC)
it was
said:”
[216] If we understand s 34 not to be
directly applicable to private arbitration, the effect of a person
choosing private arbitration
for the resolution of a dispute is
not that they have waived their rights under s 34. They have instead
chosen not to exercise
their right under s 34. I do not think,
therefore, that the language of waiver used by both the European
Court of Human Rights
in
Suovaniemi
and
by the Supreme Court of Appeal in
Telcordia
is
apt. Indeed, it may not be apt in relation to constitutional rights
at all, but that is a topic for another day.
[217] Despite the choice
not to proceed before a court or statutory tribunal, the arbitration
proceedings will still be regulated
by law and, as I shall discuss in
a moment, by the Constitution. Those proceedings, however, will
differ from proceedings before
a court, statutory tribunal or forum.
The first difference is that the process must be consensual -
no party may be compelled
into private arbitration. The second
is that the proceedings need not be in public at all. The third is
that the identity of the
arbitrator and the manner of the proceedings
will ordinarily be determined by agreement between the parties. The
party who opts
for arbitration will have chosen these consequences.
[218]
In the light of the foregoing, on a proper construction of s 34 it
should be understood not to apply directly to private arbitrations.
I
differ in this respect, therefore, from the conclusion of Kroon AJ.
This conclusion, however, does not mean that the Constitution
will
have no relevance to private arbitration, as I shall now discuss.
The
relevance of the Constitution to the terms of arbitration agreements
[219] The decision to
refer a dispute to private arbitration is a choice which, as long as
it is voluntarily made, should be respected
by the courts. Parties
are entitled to determine what matters are to be arbitrated, the
identity of the arbitrator, the process
to be followed in the
arbitration, whether there will be an appeal to an arbitral appeal
body and other similar matters.
[220] However, as with
other contracts, should the arbitration agreement contain a provision
that is contrary to public policy in
the light of the values of
the Constitution, the arbitration agreement will be null and
void to that extent (and whether
any valid provisions remain
will depend on the question of severability). In determining
whether a provision is
contra bonos mores
, the spirit,
purport and objects of the Bill of Rights will be of importance.
As stated above, it is not necessary to determine
what role s 34
might play in this analysis.”
[20]
Applicant brought this application in terms of Section 6 of the
Arbitration Act, Act 42 of 1965, which reads as follows:
“
Section 6 –
Stay of legal proceedings where there is an arbitration agreement
(1) If any party to an
arbitration agreement commences any legal proceedings in any court
(including any inferior court) against
any other party to the
agreement in respect of any matter agreed to be referred to
arbitration, any party to such legal proceedings
may at any time
after entering appearance but before delivering any pleadings or
taking any other steps in the proceedings, apply
to that court for a
stay of such proceedings.
(2)
If
on any such
application the court is satisfied that
there is no sufficient
reason
why the dispute should
not be referred to arbitration
in accordance with the agreement,
the court may make an order
staying such proceedings
subject to such terms and conditions as
it may consider just.” (Own emphasis)
[21]
Applicant also relies on Sections 34 and 173 of the Constitution, Act
108 of 1996 (“The Constitution”), which reads
as follows:
“
34.
Access to courts
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.
173. Inherent power
The Constitutional Court,
the Supreme Court of Appeal and the High Court of South Africa each
has the inherent power to protect
and regulate their own process, and
to develop the common law, taking into account the interests of
justice.”
[22]
The franchise agreement states that applicant can elect to litigate
or arbitrate whereas the franchisee shall arbitrate any dispute
between the parties. The franchisees elected to be represented by
respondent. In my view the issuing of respondent's summons appears
to
be premature as respondent had alternative remedies at its disposal.
Respondent's rights are conferred as set out in the franchise
agreements and it cannot have more rights than the franchisees it
represents. In addition, respondent was not a party to the franchise
agreements and when representing the franchisees or a portion of
those franchisees eligible regarding their franchise agreements,
cannot act outside the wording of the franchise agreement which sets
out the relationship between the franchisor and the franchisee.
Applicant, furthermore, is not a member or a party to respondent's
council and is therefore only bound through its franchise agreements.
Respondent's constitution and the February 2021 resolutions make
provision for arbitration and respondent’s mandate is therefore
not inconsistent with the franchise agreements.
[23]
In the papers before me there were attempts to mediate prior to the
issuing of the summons. The contents of those disputes are
not before
me.
[24]
The respondent’s Rule 41A(2)(a) Notice reads as follows: “The
plaintiff opposes the referral of this matter to mediation.
The
plaintiff does so for the following reasons:
“
1.
The plaintiff and defendant’s attempts to resolve the dispute
between the parties have been unsuccessful.
2.
There is no reasonable or realistic prospect of this matter being
resolved by way of mediation.”
[25]
In the
Gauteng Division a revised directive was issued introducing mandatory
mediation effective from 22 April 2025 for mediation
to be conducted
according to the guidelines in the Mediation Protocol for the Gauteng
Division.
[4]
The process is
initiated by the Rule 41A Notice. In this case a subsequent Amplified
Rule 41A Notice is applicable, but not filed.
[26]
The process
was not initiated correctly and the current Rule 41A Notice is
inadequate and constitutes an irregular notice.
[5]
Applicant did not take steps in this regard, but launched this
application.
[27]
Respondent raised two points
in limine
in the answering
affidavit. In the first point
in limine
it is respondent’s
case that applicant has taken “other steps” by filing a
reply in terms of Rule 41A and a Rule
7 Notice instead of launching
its current application. Applicant therefore “no longer
qualifies to apply, and it has abandoned
and/or waived the right to
seek a stay of the SRCs action”.
[28]
Respondent’s Rule 41A Notice is inadequate and irregular and
consequently the reply thereto cannot regularize the notice
and be
considered as another step. An Amplified Rule 41A Notice remains
outstanding. The applicant’s Rule 7 Notice, similarly,
cannot
be considered as another step for the reasons proffered hereinbefore.
[29]
In the second point
in limine
it is respondent's case that
applicant failed to identify any dispute(s) and an identified or
identifiable dispute must exist before
any question of arbitration
can arise. In addition, applicant has failed to set out those
disputes in the proceedings sought to
be stayed and must be properly
formulated in applicants founding papers for reliance on a Section 6
(1) application. In my view
applicant has identified the disputes in
its founding affidavit and upon consideration thereof, are the same
as in respondent’s
summons.
[30]
In the circumstances respondent’s points
in limine
must
fail.
[31]
Respondent should have referred the disputes to arbitration first and
not elected to issue a summons on the assumption that there
is no
reasonable or realistic prospect of the matter being resolved by way
of mediation. Respondent’s authority to represent
certain
members is cloudy. Respondent did not make out a case in its Rule 41A
Notice why there is no prospect of the disputes being
resolved by way
of mediation.
[32]
If, for a moment, it is accepted that applicant did not identify any
disputes and applicant has taken other steps, it does not
negate the
fact that respondent, as representative of the franchisees, is bound
by clause 29 of the franchise agreement.
[33]
In addition, in terms of Rule 41A as well as the Mediation Directive
of this Division should respondent persist by not agreeing
to
arbitration, I can direct that the matter be referred to mediation.
[34]
Respondent
on behalf of its members and duly authorized should have either
instituted/referred the disputes for arbitration in the
name of
either/all the franchisees separately or in a representative capacity
representing fully paid-up eligible members. To protect
the members
identities, respondent proceeded in its name. Predicated on
respondent’s authority and the wording of the particulars
of
claim I come to the conclusion that respondent is a “party”
as defined in Section 1 of the Arbitration Act
[6]
.
[35]
Respondent
elected to litigate in a representative capacity regarding the
disputes the franchisees have with applicant.
[7]
Paragraph 11 of respondent’s particulars of claim reads as
follows:
“
11. In
respect of Shell’s below alleged conduct, and to the extent
necessary and/or required:
11.1.
SRC members are individually reluctant to raise a dispute
,
and/or take Shell to task, regarding Shell's alleged conduct because
they verily and genuinely fear recriminations, victimization
and or
retribution by Shell (see also paragraph 24 below); and/or
11.2.
SRC (and/or its relevant members), and Shell have been unable to
amicably and/or successfully mediate
and/or resolve its/their
concerns, and/or the disputes between them, regarding Shell's conduct
alleged infra; and/or
11.3.
Shell seeks unilaterally to impose, unreasonable terms and conditions
(Rules of Engagements)
on any such engagements and/or mediations;
and/or
11.4.
Endeavours by SRC (and/or its relevant members) to engage and/or
mediate with Shell regarding Shell's
alleged conduct would be an
exercise in futility given the parties' respective unequal bargaining
positions and powers (see topic
F below).” (Own emphasis)
[36]
The
respondent also sued as an authorized person with authority conferred
upon it in terms of Section 4 of the CPA. Respondent also
relies on
Section 38(e) of The Constitution.
[8]
[37]
In paragraph 24 of the particulars of claim respondent also elected
not to disclose the names of the franchisees “in order
to
protect the anonymity and/or identity of the relevant franchisee in
circumstances where SRC’s members (the franchisees)
verily and
genuinely fear recriminations, victimisation, and/or retribution by
Shell because of their (identifiable) participation
in this action”.
It is respondent's case that it be allowed to litigate on behalf of
some unidentified franchisees who voluntarily
contracted with
applicant and having disputes with applicant which disputes should be
resolved by respondent in a representative
capacity without
disclosing the other contracting party's identity. Predicated on
this, the franchise agreement remains a franchise
agreement until
validly cancelled or amended and respondent is bound by the terms
thereof. Respondent is not prevented from referring
the relevant
disputes disclosed to arbitration or mediation for consideration in
accordance with the resolutions and respondent’s
mandate.
[38]
The franchise agreement, clause 25.1, reads as follows: “The
franchisee may not without Shell's prior written consent, cede,
assign, delegate and transfer any of its rights and obligations under
this agreement” and clause 25.2 specifically records
the terms
and conditions under which applicant’s consent in writing to be
given. In the papers before me the consent issue
was not raised. I
accept applicant has no objection to the franchisees’
appointment of the respondent regarding their rights.
[39]
The CPA
also finds application in this matter. A consumer may refer any
dispute in terms of Section 70.
[9]
Respondent is of the view that the relief sought are beyond the
remedial powers of any arbitrator or alternative forum. Respondent
has not proffered any substance to substantiate its view or any
findings by an arbitrator or alternative forum that the disputes
are
not within their jurisdiction and powers.
[40]
Clause 31.3 of the franchise agreement under the heading “Other
CPA Provisions” reads as follows: “Any provision
in this
agreement, which is in conflict with the CPA (including the CPA
regulations) is void to the extent of such a conflict,
in which event
such provision shall be treated as
pro non script
(as though
it had not been written) and shall be deemed to be severed from this
agreement and the remaining provisions and clauses
of this agreement
shall remain of full force and effect.” Respondent has not
taken any steps in this regard.
[41]
Clause 29
of the franchise agreement refers to Section 12B of the PPA which
also finds application.
[10]
Respondent elected to also not make use of this alternative remedy
available, alternatively no substance was proffered that respondent
did make use of this remedy and the outcome thereof.
[42]
In the matter of
Mfoza Service
Station (Pty) Ltd v Engen Petroleum Ltd and Another
(CCT 167/21)
[2023] ZACC 3
;
2023 (4) BCLR 397
(CC);
2023 (6) SA 29
(CC) (1
February 2023)
it was said:”
[32] Section
12B, in general terms, provides that a licensed retailer or
wholesaler in the petroleum products industry may,
upon alleging an
unfair or unreasonable contractual practice by the other party,
request the Controller to submit the matter to
arbitration. The
arbitrator must determine whether the alleged practice is unfair or
unreasonable, and in such event, is obliged
to make an award he or
she deems necessary to correct such practice.
[34]
Section
12B also operates against the backdrop of a contractual relationship
between the parties that is subject to the equitable
standard of
fairness and reasonableness. To that extent, it is a far-reaching
measure that seeks to achieve a necessary and transformative
objective in the petroleum industry, but it is also a measure that
brings with it its own challenges. This Court has in
Business
Zone CC
[11]
said
that there was—
“
no
reason why the specifics of the general standard of fairness and good
faith in the common law of contract should not be given
shape in the
context of petroleum contracts, as is done in the context of labour
or rental housing contracts.
[37] In
sum, the features of the section 12B arbitral system reflects a
mechanism that is limited in its scope and application.
It is
confined to dealing only with contractual practices that are alleged
to be unfair or unreasonable and then to correct those
practices. The
jurisdiction of the High Court is not ousted by section 12B, and what
emerges are parallel systems whose scope and
reach may differ but
share a common adjudicative standard.
[40] Section
12B(4)(a) requires an arbitrator to establish whether the alleged
contractual practices are unfair or unreasonable
and, if so, to
correct such practice by the making of an award.
It
follows that all that an arbitrator is required to do is to make a
determination whether a contractual practice is unfair or
unreasonable. There is no power nor requirement for the arbitrator to
go beyond that and matters of fault, causation, loss, or
damage fall
outside of the enquiry
.
Once an arbitrator has made a determination that a contractual
practice is unfair or unreasonable then the arbitrator has wide
powers but they are confined to correcting the practice. One
must therefore distinguish the limited nature of the determination
that an arbitrator is required to make and the wide powers of redress
following such a determination. The purpose of making the
award is
that it must be
necessary
to correct such practice.
The
arbitration model is a creation of statute and the power of the
arbitrator is derived from the PPA. It is a power that must
be
exercised within its lawful parameters and for the purpose it has
been given
.
[12]
[41] It
must follow that the award may go no further than correcting the
practice. This is the ordinary meaning that the section
must attract,
and it was not in dispute before us that the remedial power of the
arbitrator is limited to being a corrective one.
The meaning of what
it is to “correct a practice” is where the parties part
ways.”
[13]
(Own emphasis)
[43]
The CPA and
PPA are to be read with Section 40 of the Arbitration Act.
[14]
[44]
In my view summons has been issued prematurely, alternatively the
action to be stayed as none of the available alternative remedies
were exhausted, alternatively no substance was proffered why they
could not be exhausted. In addition, no substance was proffered
disclosing the outcome of any of the alternative remedies possibly
exhausted to enable the respondent to proceed with its action
or to
prevent a stay.
[45]
Respondent has not proffered good and sufficient reasons to persuade
me to exercise my discretion to refuse a stay at this stage.
In my
view the possible development of the common law, although not pleaded
by respondent, will not necessarily be excluded through
the referral
of the disputes to arbitration.
[46]
If, for a moment, it is accepted that summons was not issued
prematurely and applicant has not met the requirements to bring this
application in terms of Section 6 of the Arbitration Act, then Clause
29 of the franchise agreement, the CPA, the PPA, Section
6(2) of the
Arbitration Act, my discretion in terms of Rule 41A and my discretion
in terms of the Compulsory Mediation Directive
of this Division makes
it abundantly clear that it is in the interests of justice that the
main action be stayed at this stage.
CONCLUSION
[47]
Consequently, in my view, applicant has made out a case and it is in
the interests of justice that the main action proceedings
brought by
the respondent in this Honourable Court under the same case number be
stayed pending the final determination of the
disputes by arbitration
in accordance with the provisions of the applicant’s franchise
agreement. Costs are to follow the
result.
[48]
In the result the following order is made:
ORDER:
1.
The main action proceedings brought by the respondent in this
Honourable
Court
under the same case number is hereby stayed pending the final
determination of the disputes by arbitration.
2.
The issues in dispute are hereby referred to arbitration within 15
calendar days from the date of this order in accordance with
the
provisions of the applicant’s franchise agreement.
3.
Costs of suit on
scale C.
ALLEN
AJ
ACTING
JUDGE OF THE HIGH COURT,
GAUTENG
DIVISION, JOHANNESBURG
This judgment was
prepared by Acting Judge Allen. It is handed down electronically by
circulation to the parties or their legal
representatives by email,
by uploading to the electronic file of this matter on Caselines, and
by publication of the judgment to
the South African Legal Information
Institute. The date for hand-down is deemed to be 26 May 2026.
HEARD
ON:
13 May 2026
DECIDED
ON:
26 May 2026
For the
Applicant:
Adv H Louw
Instructed
by:
Cliffe
Dekker Hofmeyr Inc
For
the Respondent: Adv G W Amm
SC
Instructed
by:
Lanham-Love
Inc
[1]
“
41A.
Mediation as a dispute resolution mechanism
(1) In this rule—
“
dispute”
means the subject matter of litigation between parties, or an aspect
thereof.
“
mediation”
means a voluntary process entered into by agreement between the
parties to a dispute, in which an impartial and
independent person,
the mediator, assists the parties to either resolve the dispute
between them, or identify issues upon which
agreement can be
reached, or explore areas of compromise, or generate options to
resolve the dispute, or clarify priorities,
by facilitating
discussions between the parties and assisting them in their
negotiations to resolve the dispute.
(2) (a) In every new
action or application proceeding, the plaintiff or applicant
shall,
together with the summons or combined summons
or notice of
motion, serve on each defendant or respondent a notice indicating
whether such plaintiff or applicant agrees to
or opposes referral of
the dispute to mediation.
[Rule 41A(2)(a)
substituted by GNR 6230 in G. 52750 with effect from 4 July 2025.]
(b) A
defendant or
respondent shall
, when delivering a notice of intention to
defend or a notice of intention to oppose, or at any time
thereafter, but not later
than the delivery of a plea or answering
affidavit, serve on each plaintiff or applicant or the plaintiff’s
or applicant’s
attorneys, a notice indicating whether such
defendant or respondent agrees to or opposes referral of the dispute
to mediation”
(Own emphasis)
[2]
“
7.
Power of attorney
(1) Subject to the
provisions of subrules (2) and (3) a power of attorney to act need
not be filed, but the authority of anyone
acting on behalf of a
party may, within 10 days after it has come to the notice of a party
that such person is so acting, or
with the leave of the court on
good cause shown at any time before judgment, be disputed,
whereafter such person may no longer
act unless he satisfied the
court that he is authorised so to act, and to enable him to do so
the court may postpone the hearing
of the action or application.”
[3]
Uniform
Rules of Court
[4]
“2. COURT-ANNEXED
MEDIATION PROTOCOL
2.1
Purpose & Aim
2.1.1.
The purpose of this Protocol is to provide a structured standardised
yet flexible framework for
implementing court-annexed mediation in
the Gauteng Division of the High Court (Gauteng Division), pursuant
to the Mediation
Directive.
2.1.2.
This Protocol aims to:
2.1.2.1.
Ensure compliance with Rule 41A of the Uniform Rules of Court
(Rules).
2.1.2.2.
Promote the efficient administration of justice in the Gauteng
Division whilst also transforming access to justice
and the
availability of the courts to the litigating public.
2.1.2.3.
Promote the use of mediation as an alternative dispute resolution
mechanism to alleviate congestion on the court
rolls.
2.1.2.4.
Enhance access to justice by providing an efficient, cost-effective,
and less adversarial method of resolving disputes.
2.1.2.5.
Foster a culture of cooperation and mutual respect among litigants.
2.2.
Scope of Application
2.2.1.
This Protocol applies to all civil trials in the Gauteng Division,
including but not limited to
commercial disputes, delictual claims,
family disputes and personal injury claims (including, specifically,
all actions where
habitual litigants such as the Road Accident Fund
(RAF) or Gauteng MEC for Health is the defendant).
2.2.2.
A court directing or encouraging the parties to engage in mediation
in a case which is not a trial,
may direct the parties to apply this
Protocol.
2.2.3.
This Protocol applies uniformly to both the Pretoria and
Johannesburg seats of the Gauteng Division.
2.2.4.
Nothing in the Mediation Directive or this Protocol shall detract
from
the right of the parties to refer their dispute to mediation in
accordance with the provisions of Rule
41A, Page | 1
MEDIATION
PROTOCOL FOR THE GAUTENG DIVISION or otherwise by agreement between
them, or from a Judge, or a Case Management Judge
referred to in
Rule 37A, to direct the parties to consider the referral of a
dispute to mediation as contemplated in Rule 41A(3).”
[5]
“4.7. Irregular Notices:
4.7.1
A generic Rule 41A notice delivered by a party (the delinquent
party) to another party (the
aggrieved party), either of its own
volition or in response to the receipt of an Initial Rule 41A Notice
or an Amplified Rule
41A Notice from the aggrieved party, as the
case may be, which simply rejects the referral of the matter to
mediation without
cogent reasons (specifically and directly
applicable to the unique facts of the matter) motivating why:
4.7.1.1.
the matter cannot be resolved, either in full or partially; and
4.7.1.2.
none of the other aspects provided for in terms of Rule 41A
including:
4.7.1.2.1.
the identification and classification of
issues in dispute, and
4.7.1.2.2.
the procedural aspects and timelines to
be applicable to the further
conduct of the matter can be dealt with by way of mediation, is
inadequate and constitutes an irregular
notice (irregular notice).
4.7.2.
An aggrieved party who received such an irregular notice shall be
entitled to proceed in accordance
with the provisions of Rule 30A.
Furthermore, the provisions that relate to delinquent parties, as
set out in paragraph 4.9 below,
shall be applicable and the
aggrieved party shall be entitled to proceed accordingly.”
[6]
1. In this Act, unless the context otherwise indicates-
(i)
"arbitration agreement" means a written agreement
providing for the reference to arbitration of any existing dispute
or any future dispute relating to a matter specified in the
agreement, whether an arbitra tor is named or designated therein
or
not;
(vi)
"party", in relation to an arbitration agreement or a
reference,
means a party to the agreement or reference
, a
successor in title or assign of such a party and
a representative
recognized by law of such a party
, successor in title or
assign”(Own emphasis)
[7]
In the case of
EX-TRTC
United Workers Front and Others v Premier, Eastern Cape Province
2010
(2) SA 114
(ECB)
at
page 124 and 125 it was said:”…
In
effect the rule says this: The common-law procedure of suing each
individual member of an unincorporated association need therefore
not to be followed, the plaintiff being entitled to sue the
unincorporated association by name.' The rule enables
a
plaintiff to successfully sue the members of an association, or, in
the case of a partnership, the individual partners where
he may not
know who they are. What it effectively does is to allow the
individual persons who form the partnership, firm or association
to
sue or be sued in the name the entity usually bears. 'Implicit in at
least the provisions of subrules (1) and (2) is that
the actual
party which trades thus is the actual plaintiff.' To put it
differently, the members of the partnership or association,
as the
case may be, will be regarded as if they had been cited individually
by name.”
[8]
“
38.
Enforcement of rights
Anyone listed in this
section has the right to approach a competent court, alleging that a
right in the Bill of Rights has been
infringed or threatened, and
the court
may
grant appropriate relief, including a
declaration of rights. The persons who
may
approach a court
are -
a…..
e.
an association acting in the interest of its members.”
[9]
“Alternative dispute resolution
70.
(1)
A consumer may seek
to resolve any dispute in respect of
a transaction or agreement with a supplier by referring the matter
to an alternative dispute
resolution agent..
(2)
If an alternative dispute resolution agent concludes that there is
no reasonable probability
of the parties
resolving their
dispute
through the process provided for,
the agent may
terminate the process by notice
to the parties,…”(Own
emphasis)
[10]
“1
2B.
Arbitration
(1)
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
.
(2)
An arbitration contemplated in subsection (1) shall be heard—
(a)
by an arbitrator chosen by the parties concerned; and
(b)
in accordance with the rules agreed between the parties.
(3)
If the parties fail to reach an agreement regarding the arbitrator,
or the applicable rules, within
14 days of receipt of the notice
contemplated in subsection (1)—
(a)
the Controller of Petroleum Products must upon notification of such
failure, appoint a suitable person
to act as arbitrator; and
(b)
the arbitrator must determine the applicable rules.
(4)
An arbitrator contemplated in subsection (2) or (3)—
(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.”(Own
emphasis)
[11]
Business
Zone 1010 CC t/a Emmarentia Convenience Centre v
Engen Petroleum Limited
[2017]
ZACC 2
;
2017 (6) BCLR 773
(CC)
at para 55
[12]
Minister
of Public Works v Haffejee N.O
.
[1996]
ZASCA 17
;
1996
(3) SA 745
(SCA)
at para 11
[13]
See
also
Rissik Street
One Stop CC t/a Rissik Street Engen and
Another v Engen Petroleum Ltd
(CCT
196/21)
[2023] ZACC 4
;
2023 (4) BCLR 425
(CC);
2024 (4) SA 447
(CC)
(1 February 2023)
where it was said:”
[1] Section
12B of the Petroleum Products Act (PPA) was introduced in
recognition of the deep inequality within the
retail fuel industry
and with the objective of transforming that industry.
It
introduced a normative framework of fairness and reasonableness that
would apply to all contracts in the industry. It also
created an
arbitral mechanism to ensure that unfair or unreasonable contractual
practices were capable of being identified and
corrected
.
This case presents compelling evidence of the contours of that
inequality while at the same time representing a searching test
of
the scope and efficacy of the legislative promise that section 12B
heralded.
[72] Such
an outcome would be inimical to bringing about change in power
relations in the fuel industry, to which the PPA
is committed.
Courts must, in the pursuit of these legitimate constitutional
imperatives, interpret the PPA and the contracts
in the industry
through the lens of the transformative commitment that the PPA seeks
to achieve. This, of course,
does not mean that courts are at
liberty to make and impose contracts for the parties in the name of
transformation and beyond
what the parties may have intended for
themselves
. However, section 12B enjoins the parties to look
beyond the written terms of their contracts in recognising the
normative framework
of fairness and reasonableness that the section
introduced as an overarching framework that governs all contracts in
the retail
fuel industry.”(Own emphasis)
[14]
“40. This Act shall apply to every arbitration under any law
passed before or after the commencement of this Act, as if
the
arbitration were pursuant to an arbitration agreement and as if that
other law were an arbitration agreement: Provided that
if that other
law is an Act of Parliament, this Act shall not apply to any such
arbitration in so far as this Act is excluded
by or is inconsistent
with that other law or is inconsistent with the regulations or
procedure authorized or recognized by that
other law.”