Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews and Another (CCT 97/07) [2009] ZACC 6; 2009 (4) SA 529 (CC) ; 2009 (6) BCLR 527 (CC) (20 March 2009)

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Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews and Another (CCT 97/07) [2009] ZACC 6; 2009 (4) SA 529 (CC) ; 2009 (6) BCLR 527 (CC) (20 March 2009)

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CONSTITUTIONAL COURT OF
SOUTH AFRICA
Case CCT 97/07
[2009] ZACC 6
LUFUNO MPHAPHULI &
ASSOCIATES (PTY) LTD
Applicant
versus
NIGEL ATHOL ANDREWS
First Respondent
BOPANANG CONSTRUCTION CC
Second Respondent
Heard on : 13 May 2008
Decided on : 20 March 2009
JUDGMENT
KROON AJ:
Introduction
This
is an application for leave to appeal to this Court against a
decision of the Supreme Court of Appeal
1
upholding a judgment of the High Court in Pretoria.
2
In terms of the latter judgment an application by the second
respondent to have an arbitrator’s award made an order of court

was granted, and an application by the applicant for the review and
setting aside of the award was dismissed.
Factual
Background
The
applicant, Lufuno Mphaphuli & Associates (Pty) Ltd (Mphaphuli),
conducts business at Polokwane, Limpopo as an electrical

infrastructure contractor. The first respondent, Mr Andrews (the
arbitrator), is a quantity surveyor and project manager in

Johannesburg. The second respondent, Bopanang Construction CC
(Bopanang), carries on business at Witbank, Mpumulanga.
Mphaphuli
was the main contractor on a project of Eskom (the national
electricity supplier) for the electrification of certain
rural
villages in Limpopo. On 16 May 2002 Mphaphuli and Bopanang
concluded a written contract in terms of which the latter
was
engaged as a subcontractor to undertake certain of the work
entailed in the project. On 16 January 2003, prior to completion

of the work assigned to it, Bopanang vacated the site. Another
entity, AA Electrical Ltd, was engaged to complete the work,
and
also to do certain remedial work. Disputes arose between the
parties concerning the execution by Bopanang of the work
undertaken
by it, and whether either party was liable to make payment to the
other.
During
April 2003 Bopanang issued summons out of the High Court claiming
payment from Mphaphuli in the sum of R656 934,44 in
respect of the
work done by it (less payments on account). Bopanang also launched
an urgent application for a temporary interdict
preventing Eskom
from paying out certain moneys to Mphaphuli. These proceedings
were settled on the basis that an interim
interdict would issue and
the dispute between the parties referred to arbitration.
At
a preliminary meeting on 21 July 2003 Mphaphuli and Bopanang agreed
to appoint the arbitrator to undertake the arbitration
and to
exchange pleadings. On 1 August 2003 Bopanang submitted its
statement of claim in which it claimed payment of the said
amount
of R656 934,44 (together with interest on the component amounts
thereof from various dates), made up as reflected in
the invoices
annexed to the statement of claim. Attached to and forming part of
the statement of claim were the papers filed
by Bopanang in the
High Court in the application referred to in paragraph 4 above. In
those papers Bopanang had confirmed
on oath that the invoices
constituted an accurate record of the work it had done.
Mphaphuli
filed its statement of defence (alleging, inter alia, repudiation
of the agreement by Bopanang) together with a counterclaim
for
moneys allegedly overpaid to Bopanang. Bopanang filed a reply to
Mphaphuli’s statement of defence and a plea to the
counterclaim.
A meeting was held between the parties and the arbitrator on 7
October 2003. The arbitrator was furnished with
copies of all the
pleadings that had been filed.
On
16 October 2003 the parties finalised the terms of the reference to
arbitration in a written agreement. Its relevant terms
were as
follows:
“
ARBITRATION AGREEMENT
Whereas [Bopanang] instituted
an arbitration action against [Mphaphuli] in terms whereof
[Bopanang] claimed payment of an amount
of R656 934,44; interest on
the amount of R143 395,53 at 0.5% per week from 6 October 2002;
interest on the amount of R208 937,54
at 0.5% per week from 21 April
2003; interest on the amount of R304 601,37 at 0.5% per week from 21
April 2003 and costs of suit;
And whereas [Mphaphuli] opposed
the action and inter alia claimed payment of whatever amount appears
to have been overpaid by
[Mphaphuli] to [Bopanang];
And whereas the parties have
reached an agreement regarding the finalisation of the arbitration
proceedings and the mandate to
be given to the Arbitrator, Mr Nigel
Andrews;
Now therefore the parties agree
as follows:
PURPOSE OF ARBITRATION
The purpose of the arbitration
is to determine whether payment is due in terms of the contract
concluded between the parties,
and if it is determined that payment
is in fact due, the extent of such payment due, having regard to the
scope of the agreement;
any agreed amendments or instructions for
amendments thereto by [Mphaphuli] or ESKOM; the value of the work
that has been done
by [Bopanang]; the effect of any defects, if any,
and the rectification thereof; any and all payments made to
[Bopanang]. Therefore
a final assessment of moneys reasonably due
by any one of the parties to the other needs to be made by the
arbitrator.
AWARD OF ARBITRATOR IS FINAL
AND BINDING
The final award made by the
arbitrator as described in clause 1 above shall be final and binding
on the parties.
PAYMENT TO BE MADE IN TERMS OF
AWARD OF ARBITRATOR
Any payment to be made by any
of the parties in terms of the award made by the arbitrator shall be
due and payable to the other
party within 21 calendar days of the
date of the written award made by the arbitrator.
PROVISION OF DOCUMENTATION
The parties record that the
arbitrator has already been provided with a bundle of documentation
forming part of [Bopanang’s]
Particulars of Claim. In addition
hereto, each party shall be entitled to submit such documentation as
it may deem necessary
to the arbitrator by not later than 10 October
2003 [sic].
REQUEST FOR ADDITIONAL
DOCUMENTATION
The arbitrator shall be
entitled to require from any of the parties to make such further
documentation available as he may require.
The parties shall
provide such requested documentation within 3 (three) days from such
written request of the arbitrator.
LIASON WITH ESKOM
The arbitrator shall be
entitled to liaise with ESKOM’s duly authorised representatives,
and to request any documentation with
regard to this project from
ESKOM, who is hereby authorised by both parties to make such
documentation available.
INSPECTION AND MEASUREMENT
The arbitrator shall commence
with the inspection and measurement of the work done on site on or
about 27 October 2003. Each
party shall provide their reasonable
cooperation with the aim of completing the process as speedily as
possible, and shall appoint
representatives to attend the physical
inspection and measurement.
. . . .
10. FULL AGREEMENT
This agreement constitutes the
full and complete agreement reached between the parties and no
variation, amendment, alteration,
addition or omission shall be
valid and binding on the parties unless reduced to writing and
signed by all the parties or their
duly authorised representatives.”
The
arbitrator published his award on 23 August 2004. In terms thereof
Mphaphuli was liable to Bopanang in the sum of R339
998, 82, with
interest thereon as from 6 October 2002.
High
Court proceedings
On
receipt of the award Mphaphuli’s then attorney addressed a letter
to the arbitrator stating that certain aspects of the
award would
require clarification and proposing a round table discussion
thereanent. The response of the arbitrator was that
the
arbitration agreement did not provide for such a process. On 16
September 2004 Mphaphuli’s attorney advised Bopanang’s
attorney
that instructions had been received to take the matter on review to
the High Court. Attempts by Mphaphuli to secure
Bopanang’s
agreement for the remittal of the matter to the arbitrator were
unsuccessful.
When
no application for review was forthcoming, Bopanang, on 18 October
2004, applied to the High Court in terms of
section 31(1)
of the
Arbitration Act 42 of 1965
3
(Arbitration Act) for the award to be made an order of court and
for judgment in its favour in the sum of R339 998, 83, plus

interest.
The
application was opposed by Mphaphuli, which filed its answering
affidavit on 13 December 2004. At the same time it launched
a
separate application in terms of
section 32(2)
of the
Arbitration
Act,
4
seeking
relief in the form of an order—
reviewing and setting aside
the award; and
remitting the matter to the
arbitrator for a review of the award having regard to the issues
raised in the founding affidavit.
Both
the arbitrator and Bopanang were cited as respondents in this
application.
On
7 March 2005 the arbitrator lodged his reasons and what purported
to be the record in the arbitration proceedings with the
Registrar,
in accordance with High Court
Rule 53(1)(b).
5
anc" HREF="#sdfootnote5sym">
5
The document filed with the Registrar reads as follows:
“
FIRST RESPONDENT’S REASONS
IN TERMS OF
RULE 53(1)(b).
TAKE NOTICE that First
Respondent hereby furnishes his reasons, as set out in the following
documents:
First Respondent’s
decision dated 23 August 2004, annexed to Applicant’s
Founding Affidavit as Annexure ‘L4’;
Letter by First
Respondent to Niland and Pretorius Inc. dated 18 October
2004, annexed to Applicant’s Founding
Affidavit as Annexure
‘L8’; and
Preliminary site
measurements dated 23 August 2004 attached hereto as Annexure
‘NA1’.
TAKE NOTICE further that First
Respondent does not wish to supplement such reasons at this time.”
Mphaphuli’s
Pretoria attorney sought instructions from its Polokwane attorney
regarding the site measurements included in
the record and the
possible supplementation or amendment of the founding affidavit and
amendment of the notice of motion.
The response was that the
measurements were referred to Mphaphuli but that the latter did not
consider that they took the matter
any further; accordingly, the
matter should be enrolled as soon as possible. The Pretoria
attorney thereupon advised Bopanang’s
attorney that Mphaphuli did
not wish to amend, add to or vary the terms of its notice of motion
in terms of
Rule 53(4)
,
6
anc" HREF="#sdfootnote6sym">
6
and the filing of the opposing affidavits was called for. This was
done by both the arbitrator and Bopanang on 18 May 2005.
On
5 August 2005 Mphaphuli, having engaged new attorneys, filed an
amended notice of motion supported by an affidavit styled
a
supplementary founding affidavit. The substantive relief sought
was—
an order reviewing and setting
aside the award;
a declarator that Bopanang was
indebted to Mphaphuli in certain stated sums, together with an
order that the award be substituted
with an order that Bopanang pay
the said sums; and
as an alternative to (ii), an
order remitting the matter to the arbitrator to review his award
having regard to the issues raised
in the original founding
affidavit and the supplementary founding affidavit.
There
was also a prayer for condonation of the late bringing of the
initial application and for the late filing of the amended
notice
of motion and the supplementary founding affidavit.
7
Both
the arbitrator and Bopanang filed further answering affidavits in
response to the supplementary founding affidavit of Mphaphuli.
The
latter in turn filed affidavits in reply thereto. It also filed
affidavits in reply to the first answering affidavits
of the
arbitrator and Bopanang (filed in response to the original founding
affidavit of Mphaphuli). Mphaphuli’s reply to
the further
answering affidavit of the arbitrator elicited a rejoinder
affidavit from the latter.
On
18 January 2006 Mphaphuli filed a further amended notice of motion
in which the third (alternative) prayer, referred to in
paragraph
14 above, was substituted with a prayer for an order referring the
dispute between the parties for trial, alternatively,
for the
hearing of oral evidence. A further prayer was added, for an order
that the six week period stipulated in
section 32(2)
8
anc" HREF="#sdfootnote8sym">
8
be extended to provide for the admission of Mphaphuli’s original
founding affidavit, as supplemented by its supplementary
founding
affidavit.
The
two applications were heard together by the High Court. In the
result, the Court granted Bopanang the relief it sought
and
dismissed Mphaphuli’s application on the merits. In the course
of its judgment the High Court recorded its dismissal
of
Mphaphuli’s applications for condonation on the grounds both of
an absence of a proper explanation for the delay and,
more
particularly, of a lack of merit in the cause of action invoked by
Mphaphuli. (It may be noted that, as the High Court
itself
commented, the refusal of condonation had the result that there was
in fact no application by Mphaphuli before it.
The correct order
would have been that the application be struck from the roll, not
its dismissal. Be that as it may.)
The
Supreme Court of Appeal proceedings
The
Supreme Court of Appeal upheld the High Court’s decision not to
grant condonation to Mphaphuli. While commenting that
that should
have been the end of the matter, the Court went on to give
consideration to aspects relating to the merits. On
that score,
too, it found against Mphaphuli. It accordingly dismissed the
appeal against the High Court judgment.
Condonation
in this Court
Mphaphuli’s
application for leave to appeal was filed one day late (although it
was served timeously on the respondents).
The reason for the late
filing was unexpected pressing business exigencies on the last day
for filing, resulting in the unavailability
of the deponent to the
affidavit in support of the application until late during that day.
A proper case for condonation has
been made out.
The
arbitrator and Bopanang also seek condonation for the late filing
of their answering affidavits. In each case this was
occasioned in
the main by the intervention of the annual holiday season and the
consequent unavailability of counsel. The
grant of condonation is
not opposed by Mphaphuli. A proper case for condonation has been
made out.
The
application for leave to appeal
This
Court only has jurisdiction to hear a matter if it is a
constitutional matter or if it raises an issue connected with a

decision on a constitutional matter.
9
That, however, is not decisive.
10
In addition, it must be shown that it is in the interests of
justice that the application be granted.
11
Whether it is in the interests of justice for leave to appeal to
be granted is based on a careful weighing up of all relevant

factors, including the interests of the public and the prospects of
success.
12
Constitutional
matter
On
behalf of Mphaphuli it was argued that, having regard to the
judgments of both the High Court and the Supreme Court of Appeal,

the application for leave to appeal raises a series of
constitutional issues regarding the relationship between
arbitrations,
the courts and the Constitution. In particular, it
was contended that three main issues arise:
To what extent are the courts
entitled and required to exercise some control over arbitration
awards before adopting them as
their own and making them orders of
court?
By concluding an arbitration
agreement, can parties be taken to have waived fundamental aspects
of their right to a fair hearing
in terms of section 34 of the
Constitution,
13
and if so, under what circumstances?
What is the correct approach
to the grounds of review set out in
section 33(1)
of the
Arbitration Act,
14
when
that section is properly interpreted in the light of the right
to a fair hearing contained in section 34 of the Constitution?
It
was stressed that the three aspects bear on Mphaphuli’s right to
a fair and impartial hearing in terms of the
Arbitration Act read
with section 34 of the Constitution.
Other
than providing that a constitutional matter includes any issue
involving the interpretation, protection or enforcement
of the
Constitution,
15
the Constitution itself does not define what a constitutional
matter is. The decision whether a constitutional matter is at

issue or whether an issue is connected with a decision on a
constitutional matter reposes in this Court.
16
In
my view a number of constitutional matters are at issue. First,
the case involves the interpretation of section 34 of the

Constitution and its application to arbitrations held in terms of
the
Arbitration Act. Allied
thereto is the question of the correct
approach to the grounds of review set out in
section 33(1)
of the
Arbitration Act properly
interpreted in the light of the right to a
fair and impartial hearing guaranteed in section 34 of the
Constitution. Relevant
to these questions is an application of the
provisions of section 39(2) of the Constitution.
17
Second, the question arises whether, and to what extent, the
parties, by entering into an arbitration agreement, are to be
taken
to have waived the constitutional right (entrenched in the Bill of
Rights) to a fair and impartial hearing. Third, the
role of the
courts in confirming or setting aside arbitration awards involves
the administration of justice, and that too is
a constitutional
issue. As was said in the early case of
Burns & Co v Burne
18
(where an arbitrator’s award was sought to be assailed on grounds
similar to those invoked by Mphaphuli in the present matter):
“.
. . the matter is not one affecting only the parties to this
particular dispute, but it concerns the administration of
justice
generally.”
That
the administration of justice is concerned is borne out by the
following considerations:
Arbitration awards made orders
of court may be enforced in the same manner as any judgment or
order to the same effect, including
execution by state mechanisms.
Arbitrators have no powers to
enforce their awards and the effectiveness of the private process
therefore rests on the binding,
even coercive, powers the state
entrusts to its courts.
State execution of court
orders, an integral part of the resolution of disputes between
parties, and which is antithetical to
self-help, is an important
facet of the rule of law,
19
a core constitutional precept.
Because
the courts are requested to adopt, support and trigger the
enforcement of arbitration awards, it is permissible for,
and
incumbent on, them to ensure that arbitration awards meet certain
standards to prevent injustice.
20
In
Telcordia Technologies Inc v Telkom SA Ltd
21
the Supreme Court of Appeal stressed the need, when courts have to
consider the confirmation or setting aside of arbitral awards,
for
adherence to the principle of party autonomy, which requires a high
degree of deference to arbitral decisions and minimises
the scope
for intervention by the courts. The decision of the Supreme Court
of Appeal in the present matter was informed by
this principle.
22
Resolving, for the purposes of the present case, the tension
between this principle and the duty of the courts to ensure,
before
ordering that an arbitration award be enforced by the state, that
the award was obtained in a manner that was procedurally
fair, as
required by section 34 of the Constitution,
23
is the key constitutional issue that arises in this case.
Two
further issues require mention. First, the question whether the
arbitrator acted as an arbitrator or a valuer, is an issue

connected with the constitutional matters referred to above.
Second, to the extent that the refusal by the High Court and
the
Supreme Court of Appeal to grant Mphaphuli condonation is to be
ascribed to a failure properly to consider constitutional

imperatives, a constitutional issue is involved. At the very
least, the question is an issue connected with the constitutional

matters referred to above.
Interests
of justice
The
matter is of obvious importance to the parties. However, it has
implications that go substantially beyond the narrow interests
of
the parties. As already recorded, the matter also concerns the
administration of justice generally; and it does so in an
area that
is extremely important in the commercial world: recourse to
arbitration proceedings to resolve disputes is extensive
and is
increasing. Moreover, important constitutional issues arise,
including the extent to which an agreement such as that
with which
this matter is concerned can be read as amounting to a waiver of a
constitutional right (the right to a fair and
impartial hearing) in
respect of which this Court has the benefit of the recent judgment
of the Supreme Court of Appeal in
Telcordia
24
together with the judgment of the same court in the present matter.
It may be noted that while Mphaphuli did not in explicit
language
advert to a constitutional issue in the High Court or the Supreme
Court of Appeal, the aspects invoked by it, by their
nature, raised
the constitutional issues referred to.
25
As
will appear below, Mphaphuli has reasonable prospects of success in
the appeal.
I
conclude accordingly that it is in the interests of justice to
grant leave to appeal.
Condonation
in the High Court
The
judgment of the High Court recorded that three applications by
Mphaphuli for condonation required to be considered:
condonation of the late filing
of Mphaphuli’s replies to the answering affidavits of the
arbitrator and Bopanang filed in
response to Mphaphuli’s initial
founding affidavit;
condonation of the late filing
of Mphaphuli’s supplementary founding affidavit;
condonation of the late filing
of the initial founding affidavit in view of the provisions of the
Arbitration Act.
As
already recorded, condonation was refused on the grounds both of an
absence of a proper explanation for the late filing and
of the lack
of merits in Mphaphuli’s case. The former inquiry also embraced
a consideration of the nature of the contents
of the documents in
question. At this stage only the first inquiry will be addressed.
The merits will be considered separately
at a later stage.
However, it may be recorded that, as will appear below, the merits
of Mphaphuli’s case also favoured the
grant of condonation.
It
is necessary briefly to list what complaints were raised in the two
founding affidavits. Reference will, however, only be
made to
aspects that are relevant for purposes of this judgment.
In
the initial affidavit, Mphaphuli alleged that the arbitrator had
awarded Bopanang amounts for work not done by it, nor even
claimed
by it, and amounts in excess of those claimed by it, and had not
made allowance for remedial work done by AA Electrical.
In
the supplementary affidavit, Mphaphuli alleged that the arbitrator
failed to perform his mandate in a number of respects,
that he
committed manifest material errors, that he failed to afford
Mphaphuli a fair hearing, and that he was biased or at
least that
his conduct gave rise to a reasonable perception of bias. On this
score Mphaphuli, in the first place, in substance
repeated the
allegations referred to in the preceding paragraph, giving details
in amplification thereof, including the alleged
non-adherence by
the arbitrator to the pleadings and the terms of the agreement
between the parties, and the award by him of
interest on the total
amount of the capital sum awarded as from 6 October 2002 while, at
best, only the sum of approximately
R140 000,00 was owing on that
date. In addition, Mphaphuli invoked the fact that, as the record
of the arbitration proceedings
revealed, the arbitrator had held
three “secret” meetings with the representatives of Bopanang
without the knowledge and
attendance of Mphaphuli as well as the
fact, also revealed by the record, that correspondence having a
material bearing on
the dispute between the parties (to which
Mphaphuli had not been made privy, and in which certain allegedly
false and misleading
information had been imparted by Bopanang) had
passed between the arbitrator and Bopanang. In the result, the
arbitrator had
also misconducted himself or committed gross
irregularities in the conduct of the arbitration and/or had
exceeded his powers.
Apart
from the contents of the various affidavits filed by Mphaphuli, a
further aspect dealt with in the judgment of the High
Court was the
fact that after the arbitrator had notified the parties that the
record had been lodged with the Registrar, Mphaphuli’s
then
attorney advised Bopanang’s attorney that Mphaphuli did not
intend to amend its notice of motion. The Court noted that
there
was no indication that either Mphaphuli or its attorney had
demanded sight of the record. The Court further commented
that
Mphaphuli was in any event in possession of all the documents
contained in the record. The Court then recorded its finding
that
Mphaphuli had through its attorney taken a considered and informed
decision not to amend its notice of motion.
This
approach cannot be endorsed. First, the record filed by the
arbitrator with the Registrar was wholly deficient, and what
was
filed was not of any assistance to Mphaphuli in respect of the
supplementation of its initial founding affidavit. Second,
the
comment that Mphaphuli was in any event in possession of all the
documents contained in the record (or which should have
been
contained in the record) constituted a misdirection on the part of
the Court: specifically, Mphaphuli was not in possession
of the
documents which revealed the material additional aspects adverted
to in paragraph 37 above. Third, Mphaphuli recorded
that it had
not been consulted by the attorney in respect of the question of
amending its notice of motion, and the attorney
in question
confirmed that he had had no mandate on that score and that he had
acted in ignorance. It is not necessary to
consider the question
whether Mphaphuli was bound by the actions of its attorney. The
communication by the attorney to his
counterpart did not constitute
a waiver of the right to amend the notice of motion and to
supplement the grounds relied upon
for the relief sought in the
sense that the issue could not thereafter be revisited (nor did the
High Court suggest otherwise).
For
purposes of the present judgment it is necessary only to consider
the applications for condonation of the late filing of
the initial
founding affidavit and of the supplementary founding affidavit.
In
its papers Mphaphuli set out comprehensive explanations of the
delays in question. Save in one respect, to be referred to
below,
the High Court judgment did not advert to these explanations.
Instead, the High Court focused its attention on the
substantive
contents of the affidavits and its interpretation thereof (an
aspect to which I revert later). The basis of the
finding that
there was no proper explanation for the delays does not appear from
the judgment.
In
sum, the explanation tendered by Mphaphuli for the late filing of
the supplementary affidavit was as follows:
On 8 June 2005 an employee of
Mphaphuli’s current attorneys attended at the office of the
Registrar. On inspection of the
court file it was discovered that
it only contained the pleadings in the matter, but no record.
Enquiries of members of the
Registrar’s staff elicited the answer
that despite a search for the record, it could not be located.
Mphaphuli’s attorneys then
contacted the arbitrator’s attorneys in order to procure a copy
of the record. Agreement between
the attorneys was reached that
upon receipt of such copy from the arbitrator, the Registrar would
be deemed to have made the
record available to Mphaphuli for the
purpose of
Rule 53(3).
26
anc" HREF="#sdfootnote26sym">
26
The record was collected and received by Mphaphuli on 18 July
2005. (The supplementary affidavit was filed on 5 August 2005,

some four days beyond the 10 day period prescribed in
Rule 53(4).
It should be noted further that it was this record that revealed
the additional aspects of the meetings and correspondence
referred
to in paragraph 37 above.)
The arbitration record was
voluminous, extending to more than 400 pages. Supplementation of
Mphaphuli’s papers required close
scrutiny of the record and a
comparison thereof with other relevant documentation. The process
was extremely time consuming
and it was not feasible for it to be
completed within 10 days.
No prejudice to the other
parties resulted from the late filing.
Mphaphuli would, however, be
unjustly prejudiced if denied the opportunity of amplifying its
case on the basis of the contents
of the record.
The
only comments in the High Court judgment bearing on this
explanation are that there was no indication that Mphaphuli or
its
attorney had demanded sight of the record filed with the Registrar,
that Mphaphuli through its attorney took a considered
decision not
to amend its notice of motion or to supplement its founding
affidavit and that it was only when a new set of attorneys
appeared
on the scene that Mphaphuli relied on the “so-called
unavailability of the record to now amend its papers and to

practically bring a new case before court.”
The
comments are unpersuasive. On the other hand the explanation
furnished by Mphaphuli adequately explains the delay in question.
The
High Court held that with the supplementary founding affidavit
Mphaphuli was in fact bringing a completely new application
on
completely different grounds from those relied on in the initial
founding affidavit. That is, of course, so (subject thereto
that
allegations made earlier, and amplified in the later affidavit,
were incorporated in support of the new application).
But what the
High Court appears to have overlooked is that
the new case was
dictated by what the record of the arbitration proceedings
revealed
. I deal further with this aspect when considering the
judgment of the Supreme Court of Appeal. Suffice it to say at this

stage that in the circumstances the raising of the new case was
justified, and it constituted no reason to refuse condonation.
In
adopting a contrary view the High Court erred. In doing so it
failed, as will be shown below, to consider the true nature
of the
case presented by Mphaphuli: In short, it viewed Mphaphuli’s case
as an attempt in effect to appeal against the award
of the
arbitrator in that it also engaged aspects that otherwise had a
bearing on the merits of the award and it failed to
recognise that
what Mphaphuli invoked was the fundamental right to a fair hearing,
although it did recognise that alleged bias
on the part of the
arbitrator was relied upon. (The manner in which the High Court
dealt with the last aspect is referred
to below.)
27
The
High Court further commented that Mphaphuli’s two affidavits in
reply to the answering affidavits of the arbitrator and
Bopanang in
response to the supplementary founding affidavit, again sought to
make out a new case and further and more detailed
grounds of review
were put forward. In this regard, however, the High Court
substantially misread the affidavits and misdirected
itself. In
the main the affidavits, first, answered the allegations by the
arbitrator and Bopanang and, second, restated and
amplified
allegations it had already made, without raising new matter. In
limited respects new matter was raised, but this
was of a
relatively minor nature.
In
sum, the explanation tendered by Mphaphuli for the late filing of
the initial founding affidavit was as follows:
The affidavit was filed
approximately 14 weeks after publication of the award, and was
accordingly some eight weeks out of time.
The dispute arose in January
2003 and was referred to arbitration during October 2003. The
arbitration award was published
in August 2004. In this context,
so it was contended, the further delay of some two months in
bringing the review application
was not an unduly long period.
The fundamental basis of the
review application was the schedule prepared by Mphaphuli and
annexed to the founding affidavit
marked “L7”. The preparation
of the schedule entailed an enormous amount of work, requiring
inter alia a comparison of
Bopanang’s invoices and supporting
documentation containing the quantities of the supply and
installation of material claimed
by it, with the quantities awarded
by the arbitrator. The exigencies of Mphaphuli’s normal business
activities also hampered
the preparation of the schedule, which
required to be completed to enable Mphaphuli’s attorneys to
proceed with the review
application.
The attorneys made bona fide
attempts to resolve the matter and thus obviate the necessity of
bringing the review application.
Communications were addressed to
the arbitrator and Bopanang on 13 and 14 October 2004 in which
Mphaphuli’s objections to
the award were made known. Mphaphuli
could not, however, secure agreement that the reference be remitted
to the arbitrator
in terms of
section 32(1)
of the
Arbitration
Act.
28
Mphaphuli
conducts business in
Polokwane, a considerable distance from Pretoria, and difficulties
in communication with its attorneys
contributed to the time taken
to prepare and finalise the papers.
No prejudice suffered by
Bopanang weighed against the grant of condonation.
(It
may be repeated that the review application included a prayer for
the remittal of the matter to the arbitrator, relief for
which
section 32(2)
of the
Arbitration Act makes
provision.)
29
As
already recorded, the High Court did not advert to the above
explanation. In my judgement, an adequate explanation for the

delay in question was furnished. In so finding I have not lost
sight of the fact that, already in its own application and
in its
response to Mphaphuli’s initial founding affidavit, Bopanang
raised the issue of an absence of an application for
an extension
of time, and that same was only sought when the supplementary
affidavit was filed.
In
Giddey NO v JC Barnard and Partners
30
this Court had occasion to deal with the question of the
exercise of a discretion by the High Court in terms of the
provisions
of
Rule 47(3)
, which empowers a court to require a
litigant to furnish security for the costs of its opponent in the
litigation in question.
It was noted, inter alia, that for courts
to function fairly, they must have rules that regulate their
proceedings; these
rules often require parties to take certain
steps on pain of being prevented from proceeding with a claim or a
defence; to
that extent they constitute a limitation of the right
to access to court; in the absence of a constitutional challenge to
a
particular rule having that effect a litigant’s only complaint
can be that the Rule was not properly applied by the court; very

often the interpretation and application of the Rule will require a
consideration of the provisions of the Constitution, as
section
39(2) of the Constitution instructs;
31
a court that fails adequately to consider the relevant
constitutional provisions will not have properly applied the rules
at all.
32
Where
the exercise of a discretion in the application of a rule
contemplates that the court may choose from a range of options,
it
is a discretion in the strict sense.
33
The ordinary approach on appeal to the exercise of such a
discretion is that the appellate court will not consider whether

the decision reached by the court of first instance was correct,
but will only interfere in limited circumstances; for example,
if
it is shown that the discretion has not been exercised judicially
or has been exercised based on a wrong appreciation of
the facts or
wrong principles of law.
34
The
issue of condonation in the present case required the exercise of a
discretion in the strict sense. In the light of what
has been set
out earlier (and leaving aside considerations relating to the
merits) the refusal of the High Court to grant the
condonation
sought was vitiated by misdirection, did not constitute a judicial
exercise of discretion and resulted in an impermissible
and
unconstitutional denial of Mphaphuli’s right of access to court.
The refusal accordingly falls to be reversed.
Condonation
in the Supreme Court of Appeal
The
Supreme Court of Appeal stated as follows:
“
The grounds for any review,
as well as the facts and circumstances upon which a litigant wishes
to rely, have to be set out in
its founding affidavit amplified
insofar as may be necessary by a supplementary affidavit after the
receipt of the record from
the presiding officer, obviously based on
the new information that has since become available.
35
The original founding affidavit filed by Lufuno comprised ten pages
excluding annexures. Lufuno abused its right to amplify
in this
case by filing a supplementary affidavit of 80 pages in which it
raised all manner of new allegations.
The only new information that
emerged from the record of the arbitration proceedings filed by
Andrews in terms of rule 53(1)(b)
was what Lufuno described as
evidence of three ‘secret meetings’ between Andrews and
Bopanang’s representative. That new
information could hardly
justify the lengthy supplementary affidavit that had been filed,
ostensibly in terms of rule 53(4).
Leaving aside for the moment the
secret meetings to which I will return, Lufuno sought in effect to
make out a completely new
case in its supplementary affidavit. That
plainly was not authorised by rule 53 or by any other principle of
our law. In those
circumstances, it seems to me, the court below
can hardly be faulted for having exercised its judicial discretion
against Lufuno
under s 38 of the Act. It has not been suggested
that the discretion was exercised capriciously or upon a wrong
principle or
upon any other ground justifying interference by a
court of appeal. That, one would have thought, would have been the
end of
the matter”.
36
(Footnotes amended.)
In
a number of respects these comments cannot be endorsed. The first
and fundamental aspect is that there can, in my view,
be no
objection in principle to a new case being made out in terms of
Rule 53(4)
where the record in question provides justification
therefor
.
37
Second,
neither the use of the word “abused” nor the comment “all
manner of new allegations” was justified. Prolix
in certain
respects the affidavit may have been, but that is another matter,
and an analysis of the affidavit (which, incidentally,
also
embraced the grounds for the applications for condonation) does not
reveal that any material allegation therein was not
germane to the
case being put forward. As stated above, Mphaphuli was entitled to
raise the allegations in terms of Rule 53(4),
and it was also
entitled to incorporate and amplify previously registered
complaints, insofar as they were relevant, in support
of the new
case made out in the supplementary affidavit.
Third,
evidence of the three meetings was not the only new information
disclosed by the record. In addition, evidence of correspondence

between the arbitrator and Bopanang, to which Mphaphuli was not
made privy, was also revealed. The Supreme Court of Appeal
made no
reference thereto. (Nor for that matter did the High Court.)
The
Supreme Court of Appeal approached the question of condonation on a
restricted basis: in essence what it held (wrongly)
to be an
impermissible attempt by Mphaphuli to make out a new case in its
supplementary affidavit. No consideration was given
to the
explanation of Mphaphuli for the delay, nor to constitutional
imperatives.
In
my view, therefore, while the Supreme Court of Appeal did go on to
consider aspects relating to Mphaphuli’s complaints
on the merits
of its case (an aspect to which I revert later), its endorsement of
the High Court’s refusal of condonation
cannot be supported.
Certain
aspects arising out of the judgments of the High Court and the
Supreme Court of Appeal
It
is unnecessary to consider in any detail the comments of the High
Court concerning Mphaphuli’s not having been entitled
in effect
to appeal against the arbitrator’s award, which comments were
valid (and in fact the High Court recorded that Mphaphuli
abandoned
any relief which would have fallen under the rubric of an appeal).
That is not the case that Mphaphuli asks this
Court to consider.
Two
observations require to be made, however, concerning the High
Court’s apparent interpretation of the arbitrator’s mandate.

First, as will be shown later, it was not simply, as the High Court
judgment suggests, a matter of inspection and re-measurement.

Second, the statement by the Court, said to be based on what the
arbitrator had alleged, that after the re-measurement the
parties
reached agreement as to the work actually done by Bopanang, must be
viewed against a reading of the arbitrator’s
affidavits in their
entirety. While there are statements in his affidavits to the
effect that the re-measurement would be
conclusive as the parties
had reached agreement on the work done by Bopanang and that was the
work measured, he in fact elsewhere
made it clear that after the
re-measurement (on which he said there was agreement) he was still
required to embark on a determination
of what part of the work
re-measured had actually been done by Bopanang (on which there was
not agreement). An earlier comment
by the arbitrator had recorded
that on the correspondence a “huge factual dispute” had arisen
as to what remedial work
had been done by AA Electrical and what
work had actually been done by Bopanang, and it was imperative that
he resolve that
dispute as well.
Similarly,
certain comments by the Supreme Court of Appeal concerning the
nature of Mphaphuli’s case appear to have been misplaced.

Paragraph 14 of the judgment reads, in part, as follows:
“
The legal principles
applicable to an enquiry of this kind were recently set out by Harms
JA on behalf of this court.
38
Applying those principles to the facts of this case, which I have
set out in some detail in this judgment, illustrates, to my
mind,
that Lufuno fundamentally misconceived the nature of its relief.
Moreover, Lufuno’s founding papers assumed, erroneously
so – as
was subsequently conceded by it – that the private arbitration
process was an administrative one, which had to be
lawful,
reasonable and procedurally fair.
39
That fundamental misapprehension permeated its founding
application, which as I shall presently show, it subsequently sought

in its supplementary papers, to remedy. The parties clearly
intended Andrews to have exclusive authority to decide whatever

questions were submitted to him and that each was precluded by
virtue of the provisions of clause 2 of the arbitration agreement

from appealing against his decision. The parties had accordingly
waived the right to have the merits of their dispute re-litigated
or
reconsidered.”
40
(Footnotes added.)
The
first observation to be made is that, on the basis set out in
paragraphs 15 and 16 of the judgment,
41
the Supreme Court of Appeal held that Mphaphuli’s “attempt”
to remedy what was referred to as its “fundamental
misapprehension”
was unsuccessful in that the “attempt”
sought, impermissibly, to make out a new case in its later papers.
I have already
shown
42
that that approach was fundamentally flawed. The second
observation is that the case that Mphaphuli seeks this Court to

consider does not entail a re-litigation or reconsideration of the
merits of the dispute.
Mphaphuli’s
submission is in essence that it did not receive a fair hearing
from the arbitrator and that at least a reasonable
perception of
bias on the part of the arbitrator arose. The submission is not
only founded on the three meetings referred
to earlier, the only
aspect adverted to by both the High Court and the Supreme Court of
Appeal; it is also based on the correspondence
between the
arbitrator and Bopanang to which Mphaphuli was not made privy, as
well as on aspects of the award made in favour
of Bopanang by the
arbitrator.
Despite
the conclusion reached by the Supreme Court of Appeal on the issue
of condonation it went on to consider certain issues
relating to
the merits.
The
Court held
43
that Mphaphuli could only challenge the award by invoking the
statutory provisions contained in
section 33(1)
of the
Arbitration
Act,
44
“as
any further ground of review, either at common law or
otherwise, had by necessary implication been waived by it.” In
this
regard it followed the approach in
Telcordia
.
45
In
Telcordia
the Supreme Court of Appeal held inter alia that—
private arbitrations would, as
a starting point, fall within the ambit of section 34 of the
Constitution;
46
the rights contained in the
section “may be waived unless the waiver is contrary to some
other constitutional principle or
otherwise contra bonos mores;”
47
by agreeing to arbitration,
parties waive their rights
pro tanto
; they usually waive the
right to a public hearing;
48
by agreeing to arbitration the
parties to a dispute necessarily agree that the fairness of the
hearing will be determined by
the provisions of the
Arbitration Act
and
nothing else;
49
and
by agreeing to arbitration the
parties limit interference by the courts to the grounds of
procedural irregularities set out
in
section 33(1)
of the Act, and,
by necessary implication, they waive the right to rely on any
further ground of review, “common law” or
otherwise.
50
After
an earlier comment that Mphaphuli, relying primarily on the “secret
meetings”, alleged that the arbitrator exhibited
conscious bias
in favour of Bopanang,
51
the judgment of the Supreme Court of Appeal proceeded as follows:
“
Were an arbitrator to
discuss the merits of the matter with one of the parties to the
exclusion of the other that, ordinarily
at any rate, would
constitute a serious irregularity, which may without more warrant
the award being set aside.
52
But, against the backdrop of the arbitration agreement and the
context of the arbitrator’s mandate, those meetings were quite

innocuous and had no effect whatsoever on Andrews. To describe them
as ‘secret meetings’, as Lufuno does, is to give them
a sinister
connotation that is wholly unwarranted. The purpose of those
meetings was simply to verify certain figures and to
clarify the use
of certain items. That fell within the parameters of Andrews’
mandate. That being so, even if he had been
wrong those would have
been errors of the kind committed within the scope of his mandate.
53
Proof that Andrews misconducted
himself in relation to his duties or committed a gross irregularity
in the conduct of the arbitration
is a prerequisite for the setting
aside of the award. An error of fact or law, or both, even a gross
error, would not per se
justify the setting aside of the award.
54
It followed that Lufuno had to go further than that. For, as
Smalberger ADP put it:
‘
A gross or manifest mistake
is not per se misconduct. At best it provides evidence of
misconduct . . . which, taken alone or
in conjunction with other
considerations, will ultimately have to be sufficiently compelling
to justify an inference (as the
most likely inference) of what has
variously been described as “wrongful and improper conduct” . .
. “dishonesty” and
“
mala fides
or partiality” . . .
and “moral turpitude”.’
55
Lufuno asserted bias. It was
for it to establish a reasonable apprehension of bias.
56
The threshold for a finding of real or perceived bias is high.
57
The bias complained of was, according to Lufuno, grounded in the
relationship between Andrews and Bopanang. Why Andrews would
have
shown an inclination to favour the one party to the dispute does not
emerge on the papers. The three ‘secret meetings’,
as I have
just illustrated, were not only innocuous but also occurred within
the scope of Andrews’ mandate. The proceedings,
on any yardstick,
were thus not infected by them. No other overt act is relied upon
in support of the proposition that the proceedings
were contaminated
and that the award is therefore susceptible to attack. Simply put,
there are no reasonable grounds to think
that Andrews might have
been biased. It must follow that the award, on this score, is
immune from interference.”
58
(Footnotes amended.)
I
revert later to consider the validity of certain comments in these
paragraphs.
One
of counsel’s main attacks on the approach of the Supreme Court of
Appeal related to the fundamental question whether parties,
by
referring their dispute to arbitration, waive their rights to
invoke any grounds of review beyond those provided for in
section
33(1)
of the
Arbitration Act. More
specifically, the question is
whether the parties agree that the fairness of the hearing will be
determined solely by the provisions
of the Act and are precluded
from invoking the provisions of section 34 of the Constitution,
which enshrines the right to a
fair and impartial hearing.
A
preliminary question is whether section 34 of the Constitution
applies to private arbitrations. In
Total Support
59
the Supreme Court of Appeal commented that while at first blush
it may seem that the fairness requirements of section 34 do apply

to consensual or private arbitrations, closer analysis may lead to
a different conclusion. The Court further noted that—
“
[i]t is a moot point whether
the words ‘another independent and impartial tribunal or forum’
in their contextual setting apply
to private proceedings before an
arbitrator or whether they must be restricted to statutorily
established adjudicatory institutions.”
60
The
context referred to was the fact, as it was stated to be, that the
word “fair” in the section qualifies “public hearing”,
and
it was noted that parties to a private arbitration may by agreement
exclude any form of public hearing. However, the further
comment
was that the ambit and application of the section had not been
fully argued and its proper interpretation had therefore
to be left
open.
However,
in my view, the word “fair” qualifies any “hearing” and not
only a “public hearing”, and the circumstance
that the parties
may waive the right to a public hearing (a proposition that was not
disputed by counsel for Mphaphuli and
in
Telcordia
it was
stated that that was the usual position)
61
does not appear to be a reason why it should be questioned whether
private arbitrations are subject to the provisions of the
section,
specifically the fairness requirements set out therein.
As
already recorded,
62
in
Telcordia
the Supreme Court of Appeal took the view that
section 34 was applicable to arbitrations, which, it noted, was in
accordance
with the approach in the European Court of Human Rights,
as per the decision in
Suovaniemi v Finland
.
63
The conclusion in
Telcordia
commends itself for acceptance.
As counsel for Mphaphuli argued, the right provided for in section
34 is plainly capable of
application in the private sphere, and it
would be extraordinary if in deciding whether or not to make an
arbitration award
an order of court a judicial officer could turn a
blind eye to a lack of fairness on the basis that section 34 was
not of application.
It
is not clear why in
Telcordia
the Supreme Court of Appeal
held that by agreeing to arbitration parties to a dispute
necessarily agree that the fairness of
the hearing will be
determined by the provisions of the
Arbitration Act and
nothing
else, or that they limit interference by the courts to the grounds
of procedural irregularities set out in
section 33(1)
of the Act
and by necessary implication waive the right to rely on any further
ground of review. It is so, as was commented
in
Total Support
,
64
that even if the fairness requirement of section 34 of the
Constitution applies to private arbitrations there is nothing which

precludes the parties themselves from defining what is fair. I
have difficulty, however, with the comment following thereon,
that
the fairness requirement is satisfied where parties who resort to
arbitration agree to forego a right of appeal and accept
that the
well-known and well-established principles governing arbitration
will apply and that therefore viewing the
Arbitration Act t
hrough
the prism of the Bill of Rights does not justify any departure from
those principles (if the comment is to be interpreted
as offering
support for the approach adopted in
Telcordia
).
The
principle of party autonomy, stressed in
Telcordia
, which
requires a high degree of deference to arbitral decisions, and
which implicitly informed the approach of the Supreme
Court of
Appeal in the present matter, is not a weighty consideration
against a conclusion that the fairness requirement of
section 34
is
of application to arbitrations.
Telcordia
itself, and the
authorities it referred to in emphasising the principle,
65
were matters which concerned errors of fact or law to which the
well-known and well-established principles governing arbitrations

do apply. Procedural irregularities giving rise to unfairness are,
however, a horse of a different colour.
In
my view, there is no reason why the fairness requirement of section
34 of the Constitution cannot co-exist with the requirements

imported by the provisions of
section 33(1)
of the
Arbitration Act.
On
the contrary, there is every reason why co-existence should be
accepted: the fairness requirement in
section 34
is part of a
fundamental constitutional right incorporated into the Bill of
Rights and it is properly to be engrafted onto
the principles
applicable to arbitrations.
This
conclusion is in accordance with the principle that in interpreting
any legislation the courts are enjoined to promote
the spirit,
purport and objects of the Bill of Rights,
66
including the right to a fair and impartial hearing guaranteed by
section 34.
67
anc" HREF="#sdfootnote67sym">
67
Reference
may also be had to the South African Law Reform Commission Report
on Domestic Arbitration,
68
in which recommendations were made concerning the contents of a
proposed new
Arbitration Act.
In
paragraphs 1.03 – 05 the
Report records the following:
the objective of a
domestic arbitration is to obtain the fair resolution of
disputes by an independent arbitral tribunal
without
unnecessary delay or expense;
the second objective
should be the promotion of party autonomy (arbitration being a
consensual process in that the
primary source of the
arbitrator’s jurisdiction is the arbitration agreement
between the parties);
the third objective
should be balanced powers for the courts: court support for
the arbitral process is essential,
the price thereof being
supervisory powers for the court to ensure due process.
In the summary of the
Commission’s recommendations it is stated:
“
True to the principle of
party autonomy the tribunal’s statutory powers can be excluded or
modified by the parties in their
arbitration agreement. They are
also subject to the tribunal’s statutory duty to conduct the
proceedings in a fair and impartial
manner.”
In
Sidumo and Another v Rustenburg Platinum Mines Ltd and Others
,
69
a case dealing with statutory arbitrations under the Labour
Relations Act
70
(the LRA), Ngcobo J made comments to the following effect. In
order to give effect to the intention that, as far as possible,

arbitration awards would be final and only interfered with in very
limited circumstances, the drafters of the LRA, in section

145(2)(a) thereof, chose to provide for narrow grounds of review
similar to those provided for in
section 33(1)
of the
Arbitration
Act, and
did so aware of the jurisprudence under the latter Act.
71
But they were equally aware that in construing the provisions of
section 145(2)(a)
, in particular the ambit of the grounds of review
in the section, the Labour Courts would have regard inter alia to
the right
to fair labour practices guaranteed to everyone in terms
of section 23 of the Constitution and the interpretative injunction
contained in section 39(2) of the Constitution.
72
The crucial inquiry (in assessing irregularities) is whether the
conduct of the decision-maker complained of prevented a fair
trial
of issues.
73
The requirements of fairness in the conduct of arbitration
proceedings are consistent with the LRA and the Constitution:
section 138(1) of the LRA enjoins the commissioner to determine the
dispute fairly; section 34 of the Constitution enshrines
the right
of everyone to, inter alia, a fair hearing. The right to a fair
hearing before a tribunal lies at the heart of the
rule of law, and
a fair hearing before a tribunal is a pre-requisite for an order
against an individual, and this is fundamental
to a just and
credible legal order.
74
Similarly,
O’Regan J stated that it was beyond doubt that the functions
performed by a commissioner in an arbitration under
the LRA clearly
fall within the terms of section 34 of the Constitution.
75
In my judgement, private arbitrations are, as a starting point,
not to be subjected to a lower standard of procedural fairness
–
once an arbitration award is made an order of court the legal
effect thereof is identical to that of an arbitration award
under
the LRA.
I
conclude therefore that the mere fact of a submission to
arbitration does not import a waiver of the fairness requirement.

This conclusion finds support in
Suovaniemi
.
76
In
the above discussion I have assumed that the constitutional right
to a fair hearing may validly be waived.
77
The
conclusion reached in paragraph 79 above is in accordance with
common law principles regarding waiver of rights. Waiver
is first
and foremost a matter of intention; the test to determine intention
to waive is objective, the alleged intention being
judged by its
outward manifestations adjudicated from the perspective of the
other party, as a reasonable person.
78
Our courts take cognisance of the fact that persons do not as a
rule lightly abandon their rights.
79
Waiver is not presumed; it must be alleged and proved; not only
must the acts allegedly constituting the wavier be shown to
have
occurred, but it must also appear clearly and unequivocally from
those facts or otherwise that there was an intention
to waive.
80
The onus is strictly on the party asserting waiver; it must be
shown that the other party with full knowledge of the right
decided
to abandon it, whether expressly or by conduct plainly inconsistent
with the intention to enforce it. Waiver is a
question of fact and
is difficult to establish.
81
What
should be emphasised is that, as will appear from the authorities
referred to below, the fairness rights invoked by Mphaphuli
lie at
the core of a legitimate arbitration and it would require extremely
strong evidence for a conclusion to be sustained
that Mphaphuli
waived such rights. Yet, neither the arbitrator nor Bopanang
alleged, let alone proved, that there had been
a waiver of rights
sufficient to allow the arbitrator to engage with Bopanang in the
absence of Mphaphuli.
Arbitrator
or valuer
It
was argued on behalf of Bopanang in the Supreme Court of Appeal
(and in this Court too, albeit without vigour), that in this
matter
an arbitration
stricto sensu
was not intended, that in fact
the arbitrator acted as a valuer and not as an arbitrator whose
position was governed by the
provisions of the
Arbitration Act.
Accordingly
, the arbitrator had not been required to act in a
quasi-judicial capacity in the discharge of his duties, but had
merely to
exercise an honest judgement.
82
While commenting that it seemed that the parties intended the
Arbitration Act to
apply to their dispute, the Supreme Court of
Appeal found it unnecessary to decide the issue whether the
arbitrator had in
fact been a valuer, on the basis that this would
not have affected its decision on the merits.
83
Suffice it to say that, while elements of the functions of a
valuer might have been embraced in the arbitrator’s mandate
(and
while it is understandable that the parties preferred to appoint
someone who had expertise in the field covering their
dispute), it
is clear on a conspectus of all the circumstances that the
arbitrator was required to act and in fact acted as
an arbitrator
(hence, Bopanang’s application in terms of
section 31
of the
Arbitration Act for
the award to be made an order of court). He
was accordingly obliged to act in a quasi-judicial capacity.
84
The
arbitrator’s duty to act in a quasi-judicial capacity
A
review of cases dealing with arbitrations reveals that the courts
have emphasised the requirement of procedural fairness in
the
conduct of arbitral proceedings, where an arbitrator acts in a
quasi-judicial capacity. It will be sufficient to consider
some of
these cases to illustrate the point. Needless to say of course
that what they say must be understood in the context
in which the
issue arose.
In
Lazarus v Goldberg and Another
85
the following passage appears:
“
According to the practice of
the Roman-Dutch law, a submission to arbitration (Verblyf) was
always subject to the
conditio tacita
that the arbitrator
should proceed according to law and justice. Although our modern
practice has somewhat departed from that
of the Roman-Dutch law, in
regard to the procedure for setting aside an award, the above
principle, which has been well expressed
by Cloete J, still exists
at the present day. In
Croll qq. Kerr v. Brehm (2 Searle
at
p. 229), that learned Judge says:
‘
Nothing is more clearly laid
down in the textbooks than that arbitrators are judges in deciding
the matters submitted to them,
and that they ought to follow those
broad rules laid down for judicial investigation; and no rule is
more clear than that they
should not proceed to examine parties or
witnesses in the presence only of one party, that nothing may be
done
inaudita altera parte
– so as to give the opposite
party the opportunity of answering or rebutting such evidence.’
A similar view was taken by
Bell and Watermeyer JJ, in the same case, which is one quite in
point in the present instance, and
must be considered as a leading
authority on the subject. This principle has always been strictly
observed by the Court, even
although, as put by Watermeyer J in
Croll’s
case, ‘substantial justice has been done between
the parties’, as appears from
MacDonald & Co v Gordon &
Co
(1 R 251) and subsequent cases, as well as from the passage
from Russell on Arbitration (7
th
ed. p. 191), cited at
the Bar.”
86
Citing
a series of earlier cases, South African and English, the decisions
in
Shippel v Morkel and Another
87
and
Chelsea West
88
followed suit. In the former case Van Winsen J is reported as
follows:
“
Voet
, 4.8.1., states
that ‘there is a great correspondence between arbitrations and
judicial proceedings’ and that ‘there is
the same sequence of
proceeding and proof’ as in judicial proceedings (
Gane’s
trans., vol. 1, p. 737);
Van Leeuwen
, bk. 5. ch. 94
(
Kotzé
trans.), says that arbitrators are required to
‘pronounce an award according to the requirements of law and
custom’. Our
Courts have accepted that in deciding upon matters
submitted to them arbitrators are required to follow, at any rate in
broad
outline, the precepts which govern the procedure employed in
the course of judicial proceedings . . . . This would also appear

to be the position in England . . . .
The similarity between
proceedings in Court and before an arbitrator are also apparent from
the terms of the
Arbitration Act, 42 of 1965
.
It can thus be said with
confidence that it is well established by the cases in our Courts
that the procedural rules applicable
in an arbitration require that
the proceedings should not be conducted in the absence of one of the
parties. This appears from
numerous cases in the South African
Courts . . . .
Save in certain types of
arbitration, the same principle has been applied by the English
Courts . . . .
As Mr. Marais for second
respondent rightly points out this rule can be modified were the
parties to agree that the arbitrator
be permitted to hear evidence
in the absence of one of the parties. He submits that by clause 4
of the submission to arbitration
the arbitrator may proceed ex parte
‘in the event of either party failing after reasonable notice to .
. . attend the hearing’.
If it could have been said that
evidence has been received before the arbitrator in the absence of
one party under the circumstances
contemplated by clause 4 then that
would have afforded protection to such proceedings.”
89
In
the latter case Seligson AJ expressed himself as follows:
“
The position of an
arbitrator in the true sense is very different [from that of a
valuer]. He acts in a quasi-judicial capacity
and must conduct
himself accordingly. Whilst not obliged to observe the precision
and forms of a court of law, the arbitrator
must proceed in such a
manner ‘. . . as to ensure a fair administration of justice
between the parties’ . . . . This includes
the duty to afford the
parties a proper hearing. Inherent therein is that the arbitrator
must not examine parties or witnesses
or conduct a hearing in the
absence of one or either of the parties. If he does so he commits
an irregularity which will result
in his award being set aside.
This rule has been established in a long line of cases . . .
‘
Courts of law jealously
guard the rights of a person to be present at and heard at
proceedings to which he is a party, and will
only tolerate a
departure from the rule which recognises this right in very special
circumstances.’”
90
In
Burns & Co
91
the following passage appears:
“
Amongst the rules governing
the administration of justice there is the elementary one which is
stated in “Russell on Awards”,
8
th
Ed. 134, in the
following language:
‘
Except in the few cases
where it is unavoidable, as where the arbitrator is justified in
proceeding ex parte, both sides must
be heard, and each in the
presence of the other. However immaterial the arbitrator may deem a
point to be, he should be very
careful not to examine a party or a
witness upon it, except in the presence of the opponent. If he err
in this respect he exposes
himself to the gravest censure, and the
smallest irregularity is often fatal to the award.’
Nor does it matter whether the
arbitrator was influenced by it. Lord ELDON, L.C. in
Walker v.
Forbisher
,
6 Ves., 70
, in setting aside an award, on the ground
that evidence had been improperly admitted, although the arbitrator
swore that the
evidence had no effect on his award, said that no
Court should permit an arbitrator to decide so delicate a matter as
to whether
a witness examined in the absence of one of the parties
had an influence on him or not; and in
Drew v. Drew
,
2 Macq,
1
Lord CRANWORTH said that the principles of universal justice
required that the person who is to be prejudiced by the evidence
ought to be present to hear it taken; and that an arbitrator
entirely misconceived his duty who took upon himself to hear
evidence
behind the back of the party interested in controverting
it.
It has been decided by a long
string of cases that infringement of that rule by an arbitrator is
misconduct within the meaning
of
section 18
of our Arbitration Act,
24 of 1898. That being the principle of law which we are bound to
apply”.
92
In
the result the arbitrator’s award was declared abortive on the
grounds that the arbitrator took evidence in the absence
of one of
the parties and that he had received a communication from one of
the parties bearing on the merits of the matter.
On the latter
score the judgment included the following comment:
“
That may or may not have
influenced the arbitrator in changing the view which he had
expressed in the afternoon that an allowance
should be made for this
particular work. He says that it did not. But, as was said by Lord
ELDON it is not permissible to say
whether it did or not. That
letter never came to the knowledge of the respondent until the award
was made.”
93
A
similar approach was adopted in
Sapiero and Another v Lipschitz
and Others
,
94
as appears from the following passage:
“
It is also a question
whether the whole award is not bad on the ground of irregularity.
Although it is true that an arbitration
is usually regarded as a
somewhat informal procedure still there are certain legal principles
which govern that procedure. One
of these principles is that no
evidence must be given or produced before the arbitrator or the
umpire in the absence of any one
of the parties. It is common cause
in this case that a certain letter was placed before Mr. Potgieter
[the arbitrator] and that
he read it. That letter was undoubtedly
placed before Mr. Potgieter by Mr. Hotz with the object of
influencing him. Mr. Potgieter
very properly returned the letter to
Mr. Hotz and said that he would take no notice of it but would
decide the matter independently
of the letter. The Court cannot
now, however, go into the question as to whether Mr. Potgieter was
influenced by the letter
or not. I hold that the mere production
and reading of that letter in the absence of the respondents
constitute good ground
for them to object to the award being made a
rule of court.”
95
In
Naidoo v Estate Mahomed and Others
96
it was said, with reference to
Burns & Co
, that where an
arbitrator hears evidence from one party in the absence of the
opponent such action—
“
offends against the
fundamental principles of justice, and although he may not
appreciate in himself that he was doing an injustice,
he in fact
commits an injustice towards the other party to the submission, and
his action would . . . be improper although not
necessarily
dishonest.”
97
Even
an agreement in the reference to arbitration that the arbitrator
may take evidence without both parties being present does
not
dispense with the duty to observe the prescripts of natural
justice. The headnote in
Landmark Construction (Pvt) Ltd v
Tselentis
98
reads as follows:
“
The parties had agreed to
submit a dispute arising from a building contract to an arbitrator
and it was agreed that further evidence
would be taken without the
presence of both parties at its taking. It appeared that the
arbitrator had taken such evidence but
had not apprised the
respondent of the fact nor the contents of such evidence. In an
application to have the award made an order
of Court and a
counter-application to have it set aside,
Held,
that, in deciding
to receive further evidence, the arbitrator had to observe the
requirements of natural justice, i.e. the need
to apprise the
parties of the content of the evidence so as to afford them a
suitable opportunity for rebutting it or otherwise
dealing with it,
remained undisturbed.
Held
, accordingly, that
the application should be dismissed and the counter-application
should be granted.”
The
principle that nothing must be done in the absence of any of the
parties to the arbitration is nicely encapsulated in the
following
passage by McKenzie:
99
“
The rule that nothing must
be done
inaudita altera parte
has been strictly applied.
Courts have refused to uphold awards in the following circumstances:
where a party was given no opportunity
of presenting his case, or
was absent during the hearing, or during the giving of certain
evidence; where a party was absent
from a meeting with the
arbitrators at which no new matter was introduced; and where one
party was absent when another put a
letter before the arbitrator who
read it and handed it back with the remark that he would take no
notice of it in reaching his
decision. In one case where the
parties had agreed that evidence could be taken without both parties
being present, an award
was nevertheless set aside on the grounds
that where such evidence was taken the other party should have been
apprised of the
fact and given an opportunity to rebut such
evidence. Where, however, a party was absent at a meeting of
arbitrators at which
the latter were not exercising any discretion
or any judicial functions, but were merely calculating certain
figures upon an
agreed basis, it was held that there was no
irregularity in the proceedings.”
100
The
same approach, in a criminal context, was taken by the Supreme
Court of Appeal in
Roberts
,
101
and in this Court in
S v Jaipal
102
where the following comment was made:
“
As stated above, contact
between judicial officers and one party to the trial in the absence
of the other does not accord with
the ideals and imperatives of
independent courts that function impartially and free from
interference.”
103
The
common law principles applicable to arbitrations set out above are,
in my judgement, not at odds with the Constitution;
rather, the
converse. It is to be emphasised that notwithstanding the
parallels drawn between arbitrations and court proceedings
in the
authorities referred to, it is not suggested, nor does this
judgment in any way do so, that the same level of procedural

fairness required in court proceedings is to be required in
arbitration proceedings. It is accepted that the concept of

fairness in arbitrations is context-related.
The
arbitration agreement
104
in the present matter provided for the arbitrator to receive such
documentation as either party wished to place before him,
by a date
preceding the commencement of the arbitration hearing, to require
the parties to make available such further documentation
as he
stipulated and to liaise with Eskom’s representatives and request
Eskom to furnish him with such documentation as he
required. Those
provisions did not, however, entitle him to disregard the
audi
alteram partem
rule.
Facts relating to the
meetings and correspondence
Two
preliminary observations may be made. First, in their written
submissions counsel for Mphaphuli echoed its stance in describing

the meetings and correspondence in question as “secret”.
(During argument counsel preferred the less emotive and neutral

epithet of “ex parte” when referring to the meetings and the
correspondence.) This approach flowed from the fact that
Mphaphuli
only became aware of the meetings and the correspondence after
receipt of the arbitration record. Had the review
proceedings not
been instituted, Mphaphuli would not have come to know thereof.
Second, it is unnecessary in this judgment
to give consideration to
the first of the three meetings in question: counsel did not press
reliance thereon during argument.
The
two meetings
It
is common cause that the arbitrator held two further ex parte
meetings with Bopanang, in the absence of Mphaphuli, at which

matters relating to the arbitration were discussed, namely on 2
June 2004 and on 29 July 2004 (the latter meeting being shortly

before the arbitrator published his award on 23 August 2004).
The
deponent to Mphaphuli’s supplementary founding affidavit in the
High Court states, inter alia, as follows: Mphaphuli has
no idea
what was discussed by the arbitrator and Bopanang at the meetings,
other than what was stated by the arbitrator in
his chronology. No
notes of the contents of the meetings or the nature of the
discussions were ever furnished to it. It presumed,
however, that
Bopanang furnished the arbitrator with comments.
In
its supplementary answering affidavit in the High Court, Bopanang
stated, in respect of the meeting of 2 June 2004, inter
alia, as
follows: On 29 April 2004 the arbitrator sent a query to both
parties indicating that it was not clear to him where
particular
items were to be installed as it was unclear from the drawings as
to their intended usage. (It may be interposed
here that in
response to the query Mphaphuli, on 26 May 2004, furnished the
arbitrator with a list of estimates of items which
had been
installed, but not measured; the list was copied by the arbitrator
to Bopanang.) The arbitrator had clearly become
confused when he
could not find the relevant items specified in the schedule of
quantities with reference to the drawings.
Bopanang pointed out
“the aforegoing” to the arbitrator during a telephonic
conversation, but he found it difficult to
follow the explanation.
Bopanang then volunteered to visit the arbitrator at his office as
it would be easier to furnish an
explanation
inter praesentes
.
That visit took place and the explanation was given. For that
purpose Bopanang furnished the arbitrator with an explanatory

sketch. The arbitrator recorded the explanation. Quantities were
not addressed at the meeting as the items had already been

measured. All that Bopanang did was to explain the “practical
realities” – why the particular items were there although
same
could not be related to the drawings. The technical aspects
addressed were only for a better understanding by the arbitrator
of
the matters in question and in no way affected the quantities. As
the items had already been measured the discussion did
not concern
the merits of the award, but only served to enlighten the
arbitrator to a better understanding of the measurements
already
done and agreed to between the parties. The discussion, which was
not of long duration, did not at all affect the
ultimate award.
Mphaphuli, knowing full well that the relevant items had already
been measured, only had itself to blame
if it elected not to point
out to the arbitrator what the position was and to respond on the
aspects of the technical issues
in question.
In
respect of the meeting of 29 July 2004 Bopanang stated inter alia
as follows: On 23 July 2004 Bopanang’s attorney addressed
a
letter to the arbitrator inquiring about the progress in the
matter. The arbitrator’s written response, dated 26 July
2004,
recorded that he had arranged a meeting with “Gerhard”
(Bopanang’s representative) on 29 July 2004 “
to resolve the
final outstanding issues
” (my emphasis), and that the
adjudication would follow shortly thereafter. These developments
were to be seen against the
background of the arbitrator’s
earlier request, on 9 July 2004, to both parties “to confirm
certain outstanding queries”.
Bopanang responded by way of
certain handwritten notes on the documentation received from the
arbitrator. The arbitrator
experienced difficulty in securing a
response from Mphaphuli and therefore had “difficulties
pertaining to the technical
aspects”. The quantities were
already established by way of re-measurement and deductions
therefrom and agreed to by the
parties. A telephonic conversation
between Bopanang and the arbitrator brought the latter’s apparent
confusion to the fore.
It was apparent that the arbitrator did not
understand the structures and the materials used, as measured.
Again, it proved
difficult to furnish an explanation over the
telephone and Bopanang then tendered its “technical explanation”
to the arbitrator
at his offices on 29 July 2004. The meeting
lasted a maximum of thirty minutes and did not canvas the
quantities already measured
and agreed to on site, but only
why
the particular items had to be installed. The discussion had
nothing to do with the merits or the ambit of the arbitrator’s

mandate, but only served “to enlighten him to a better
understanding of
the issues involved
” (my emphasis). The
ultimate award was not affected, the measurements having already
been done.
In
his supplementary answering affidavit in the High Court the
arbitrator confirmed the statements of Bopanang and intimated
that
he did not wish to comment further on Mphaphuli’s averments, save
that he added that the purpose of the meetings was
“simply to
calculate certain figures, and to clarify the use of certain items
by the parties”. He averred further that
at no stage during the
meetings was he expected to “exercise a judicial function or
discretion”.
The
arbitrator acknowledged, however, that when he arranged the meeting
of 29 July 2004 with Bopanang:
“
I was during that period
busy consolidating and finalising the results of our inspection and
measurements with the aim of making
the award. In this process, I
picked up further crucial queries relating to the fundamental method
of determining the total
length of the cables . . . which I
immediately forwarded to the parties under cover of a letter dated
27 July 2004.”
He
further stated:
“
After receipt of the above
information [i.e. the responses from the parties to his queries,
including what was conveyed to him
orally by Bopanang], I was in a
position to determine what work had been done by the Second
Respondent and what amount (if any)
Applicant owed it. I
accordingly sat down and, after due consideration of all the facts
placed before me, I firstly consolidated
the results of our
inspections and measurements on a single spreadsheet. Thereafter
and on the basis of the figures contained
therein, I completed the
award.”
In
response to the supplementary answering affidavits the deponent to
Mphaphuli’s replying affidavits pointed out, inter alia,
that
there were contradictions in the explanations proffered by Bopanang
and the arbitrator and he registered a non-acceptance
of the
explanations. More importantly, the deponent placed on record that
“the clarification of the use of certain items”
related to
allegations of fact which were still in dispute between the parties
and were material to the dispute between them.
A further averment
was that the second meeting had resulted in the arbitrator
rejecting certain of Mphaphuli’s submissions
in respect of
Bopanang’s claims and that “misconceptions” revealed in the
arbitrator’s findings could have been avoided
had he liaised with
Eskom. Bopanang’s reply thereto was that Mphaphuli was
impermissibly seeking to have his opinions preferred
to those of
the arbitrator. The response missed the point, that procedural
unfairness was the subject of the complaint. In
this regard it
bears repetition that in its supplementary founding affidavit
Mphaphuli averred, and it was not denied, that
Bopanang’s
comments to the arbitrator were at no stage communicated to it,
Mphaphuli.
It
is apposite to add further that, by contrast, all discussions which
the arbitrator had with Mphaphuli were held in the presence
of
Bopanang. This was pertinently alleged by Mphaphuli in its
supplementary founding affidavit, and was not placed in dispute
by
either the arbitrator or Bopanang.
The
correspondence
The
first aspect requiring mention is that in its first answering
affidavit Bopanang pertinently alleged that the arbitrator
had
“requested further information and/or documentation from both
parties
always
with copies thereof and replies sent to the
other party.” (My emphasis.)
In
its supplementary founding affidavit Mphaphuli confirmed that the
record disclosed that all of its written comments in response
to
the arbitrator’s various queries were copied to Bopanang or its
attorneys. Initially, all correspondence from Bopanang
to the
arbitrator was similarly copied to Mphaphuli. (In my judgement,
this procedure speaks volumes of the intention of the
parties when
concluding the arbitration agreement.) However, the arbitrator
subsequently failed to adhere to the policy of
copying
communications received from Bopanang to Mphaphuli. Specifically,
reference was made to three letters. Included was
a letter dated
12 December 2003, addressed by Bopanang to the arbitrator in
response to a request for submissions on various
aspects. Therein
Bopanang criticised the contents of a fault report by Eskom dated
13 March 2003 and claims for remedial work
made by AA Electrical.
Counsel offered no submissions in respect of this letter, however,
and focused on the two letters referred
to below.
The
first was a letter dated 24 February 2004, addressed by Bopanang’s
attorneys to the arbitrator in which comments were
furnished on,
inter alia, certain claims registered by AA Electrical and certain
transformer areas. It was correctly contended
that these issues
were closely connected to the arbitrator’s assessment of amounts
due. The arbitrator stated that the failure
to favour Mphaphuli
with a copy of the letter was the result of a bona fide oversight
on his part.
The
second was a letter dated 19 July 2004, addressed by Bopanang to
the arbitrator. It had been preceded by a letter dated
9 July
2004, addressed by the arbitrator to both parties in which a
detailed list of queries was set out. Bopanang’s letter
of 9
July 2004 to the arbitrator furnished detailed answers to and
comments on the arbitrator’s queries.
The
queries raised by the arbitrator were substantive and technical in
nature. They related, inter alia, to
the following aspects:
the occurrence of strain
assemblies;
whether a terminal assembly
would occur at each pole, other than where it would be an
intermediate assembly;
whether Bopanang supplied
Delta structures for the remaining transformers supplied by other
entities.
It
was Mphaphuli’s averment that Bopanang’s comments to the
arbitrator contained numerous material misrepresentations and

allegations some of which were false or misleading, and all of
which significantly influenced the arbitrator’s award. Had

Bopanang’s comments been made available to it, Mphaphuli would
have been able to point out to the arbitrator where the comments

were false and/or misleading.
By
contrast, so Mphaphuli further averred, its comments on the query
letter of the arbitrator, which were furnished on 16 August
2004,
were copied to Bopanang’s attorneys. This averment was not
placed in dispute.
In
its supplementary answering affidavit Bopanang registered the
complaint that it was not afforded the opportunity of responding
to
Mphaphuli’s comments in that, in forwarding same to Bopanang, the
arbitrator stated that no further submissions would
be allowed
unless specifically requested. It is clear, however, that no such
request was made. If it had been, it would have
had to be granted.
Bopanang tendered no further response to the allegations of
Mphaphuli set out above. In particular, it
did not deny that its
letter contained numerous material representations, or that some of
them were false or misleading, or
that they all significantly
influenced the arbitrator’s award.
As
with the first letter, the arbitrator ascribed his omission to
forward a copy of Bopanang’s response to his list of queries
to
Mphaphuli to a bona fide oversight on his part.
The
further response of the arbitrator to Mphaphuli’s allegations
proceeded as follows. He was not aware of any false and/or

misleading allegations in Bopanang’s comments, and in the absence
of specific allegations on that score, he was unable to
comment on
the materiality or otherwise of his omission to copy Bopanang’s
comments to Mphaphuli. The arbitrator did not
deny that the letter
contained representations that were material to his award.
In
its replying affidavit Mphaphuli indicated various allegedly
incorrect statements in Bopanang’s reply to the arbitrator’s

queries. Counsel highlighted three aspects. I briefly note each
in turn, together with the arbitrator’s response thereto

(contained in the rejoinder affidavit filed by the arbitrator in
the High Court). The reason I do so will appear later.
The
first related to terminal assemblies and Mphaphuli indicated that
on this score Bopanang’s comments were incorrect in
certain
respects. The arbitrator’s response was, however, that his award
was in fact in accordance with Mphaphuli’s objections.
Mphaphuli’s
second objection was that Bopanang did not, as claimed, supply any
Delta structures for transformers supplied
by other contractors (as
had in fact earlier been conveyed by Mphaphuli to the arbitrator on
26 May 2004). It was pointed
out that Delta structures are
installed only where a particular type of transformer is involved,
and there were only three
such transformers in the whole project.
It was further stated that in terms of the arbitrator’s award
there were no transformers
installed in eight of the 19 transformer
zones, yet the arbitrator awarded 19 Delta structures with
transformers despite the
fact that Bopanang only claimed 14.
The
arbitrator responded as follows: In his letter of 9 July 2004 he
had specifically asked whether Bopanang had supplied the
Delta
structures for the main transformers supplied by other contractors.
The response of Bopanang was unequivocal and affirmative.

Mphaphuli did not answer the question, and from its silence the
arbitrator inferred that the contractor had indeed supplied
these
Delta structures. He found it difficult to understand how
Mphaphuli could say that Bopanang had supplied no Delta structures:

the price list initially contained a quantity of 19, which implied
one Delta structure per transformer zone; the transformers
were
physically measured on site and the number (of Delta structures)
included in the award was therefore correct.
It
may be noted
en passant
that this response of the
arbitrator, contained in his rejoinder affidavit, was not in
accordance with his response in his
initial answering affidavit.
Although this latter response referred also to the letter of 9 July
2004, it appears that the
arbitrator’s comments therein related
to the replies he received to an earlier letter of 29 April 2004.
The comments read
as follows:
“
I specifically requested the
parties in my letters dated 29 April 2004 and 9 July 2004 to inform
me what the estimated quantities
thereof were and also to indicate
who installed the Delta structures for the remaining transformers.
In its reply, [the reference
is to the letter of 26 May 2004
referred to in paragraph 118 above], Applicant [Mphaphuli] indicated
that none of these items
were used. I did not receive a specific
response from Second Respondent [Bopanang]. However, I rejected
Applicant’s response
for the simple reason that the pricing list
makes it clear that all transformers had to be installed on Delta
structures. Second
respondent installed 19 transformers and for
that reason I allowed for a corresponding number of Delta
structures.” (Footnotes
omitted.)
The
third objection related to the quantity of strain assemblies. The
complaint was that the arbitrator should have ascertained
the
correct state of affairs from Eskom’s specifications and
drawings.
The
arbitrator’s response was that the Eskom drawings did not form
part of the record as same had never been placed before
him. He
emphasised that what was on site was physically measured and his
award was based on those results.
The
arbitrator’s mandate in respect of amounts to be awarded to
Bopanang
It
will be remembered that when the parties reached agreement that
their dispute be referred to arbitration they further agreed
to
exchange pleadings. Pursuant thereto Bopanang submitted its
statement of claim in which it claimed payment of the sum of
R656
934,44 (together with interest on the component amounts thereof
from various dates), made up as reflected in the invoices
annexed
to the statement of claim. Incorporated in the statement of claim
were the papers filed by Bopanang in the High Court
in its
application for an interdict against Eskom, which included an
affidavit by Bopanang’s representative verifying that
the
invoices constituted an accurate record of the work it had done.
Further pleadings were filed by both parties. At the
meeting with
the arbitrator on 7 October 2003 he was furnished with copies of
all the pleadings that had been filed.
105
It
is a fair inference that the above history was the genesis of the
contents of the preamble to the arbitration agreement,
106
which recorded the details of Bopanang’s claim as set out in its
statement of claim.
It
is common cause that the arbitrator, in making his award, failed to
adhere to the pleadings and that, in the first place,
he in fact
awarded Bopanang a series of amounts in excess of what it had
claimed. Involved were some nine items in respect
of which, in
each case, the arbitrator’s award substantially exceeded the
amounts claimed by Bopanang. In the result, the
award embraced a
total of R352 007,50 in respect of the nine items as against a
total of R91 100,00 claimed by Bopanang.
In
the second place the arbitrator ruled that the total amount of R339
998,83 awarded was “subject to interest at 0.5% per
week from 6
October 2002, when the payment was originally due”. This was not
in accordance with the relief sought in Bopanang’s
statement of
claim, referred to in the preamble to the arbitration agreement,
which sought interest on the amount of R143 395,53
from 6 October
2002 and interest on the balance of its claim only from 21 April
2003.
From
the outset of the review proceedings Mphaphuli adopted the stance
that in terms of the arbitrator’s mandate any amounts
to be
awarded to Bopanang would be limited to those claimed by it. In
its initial founding affidavit it stated that the arbitrator
was
expected to verify the work allegedly done by Bopanang, as well as
the costs invoiced therefor; he was not expected to
award any costs
for work not carried out or at prices higher than those provided
for in the price list or for work never claimed
by Bopanang.
In
its supplementary founding affidavit in the High Court, Mphaphuli
persisted with the stance that the arbitrator was obliged
to have
regard to the pleadings of the parties and the supporting documents
attached thereto, which had been furnished to him.
It stressed
that Bopanang had at no stage sought to amend its pleadings to
increase the amount claimed. Yet, so it was contended,
the
arbitrator failed to have regard to the pleadings, which were not
even mentioned in his award. Accordingly, he had failed
to perform
his mandate and had exceeded his powers. It was further stressed
that the fact that the arbitrator could not award
Bopanang higher
quantities than those claimed by it was so obvious that neither
party thought it necessary to remind the arbitrator
thereof.
It
is also important to note that from the outset and on the basis of
Mphaphuli’s founding papers, both Bopanang and the arbitrator,
as
appears from their answering affidavits, understood that one of
Mphaphuli’s grounds of review was that the arbitrator
exceeded
his powers by failing to have regard to the pleadings and invoices.
Bopanang’s
response to Mphaphuli’s averments was in essence that Mphaphuli
had misconstrued the arbitration agreement and
submitted that in
terms of clause 1 thereof
107
the arbitrator had to determine the value of the work done as
determined by inspection and measurement by him as provided for
in
clause 7, with the co-operation of the parties; in other words that
the arbitrator was not bound by the claim and invoices
submitted by
Bopanang.
In
answer to Mphaphuli’s allegations in its initial affidavit set
out above, the arbitrator initially stated that, having
studied the
documentation handed to him (which at that stage essentially
comprised only the pleadings of both parties), he
realised that he
would not be in a position to determine if any payment was in fact
due in terms of the contract unless the
quantities were re-measured
on site. The parties therefore agreed, at his instance, that his
mandate be extended to include
the physical measurement of the work
done on site. This was formalised in the arbitration agreement
concluded by the parties.
108
It was therefore envisaged that his adjudication should be based
on a re-measurement of the work executed, to be done in
co-operation with the parties.
I
have already in another context recorded that the arbitrator made
it clear that after the re-measurement (on which he said
there was
agreement) he was still required to embark on a determination of
what part of the work re-measured had actually been
done by
Bopanang (on which there was not agreement).
109
His
further response to Mphaphuli’s allegations set out above was in
consonance with this stance. He agreed that he had been
obliged to
verify the work done by Bopanang. However, so he said, it was at
all times understood that Bopanang was to be compensated
for work
it had actually done, irrespective of what was reflected in its
invoices, i.e. it was never the understanding that
it would be
bound by the invoices and would therefore not be able to claim for
work it had done but had failed to invoice or
had incorrectly
invoiced. The invoices had had no other function than to serve as
a basis for interim payments claimed by
Bopanang during the
currency of the agreement. That the parties had not understood his
mandate to be restricted as contended
for by Mphaphuli was borne
out by the fact that neither party ever submitted that Bopanang
would not be entitled to compensation
for work actually done, but
not included in an existing invoice.
He
further sought to emphasise that it would not have made any sense
to limit Bopanang’s claim, irrespective of the amount
of work
done, to only that amount which it had in fact claimed. Otherwise
the re-measurement exercise would have been a waste
of time and
resources if the sole purpose was only to “reduce” Bopanang’s
claim. It was inconceivable that Bopanang
would have agreed to the
arbitration under such conditions as it would have had nothing
further to gain.
In
his answer to Mphaphuli’s supplementary founding affidavit,
however, the arbitrator stated as follows:
“
I respectfully agree that on
a strict reading of the arbitration agreement, I was obliged to take
into account the pleadings exchanged
by the parties, and all
supporting documents attached thereto.
However, as I have repeatedly
indicated above, the parties (as they were entitled to do)
restricted my mandate during the arbitration
process to the physical
re-measurement of the work that had been done, and a determination
of what was reasonably due by any
of the parties to the other on the
basis of such re-measurement.”
To
that he later added the following:
“
I categorically deny that it
was at any stage contemplated that I could not award higher
quantities than those claimed by [Bopanang]
in its invoices and
other documentation. The intention was, at all relevant times, that
the result of the physical re-measurement
would be conclusive.”
In
his rejoinder affidavit the arbitrator made it clear that it was
his contention that during the arbitration process the parties

reached agreement that the result of the physical re-measurement
would be conclusive. He then for the first time added that
the
agreement was also that the quantities and figures stated in the
invoices submitted by Bopanang had to be ignored.
As
regards the award in respect of interest the arbitrator explained
that he had to “make an equitable decision as far as
interest was
concerned”, that it was “not possible to determine on what date
[Bopanang] became entitled to payment in respect
of any particular
work it had done” and that “in view of this practical
difficulty” he simply decided to take the date
6 October 2002
(which was in fact the earliest date possible) as the starting
point for the running of interest on
all
the amounts.
The
findings of the High Court and the Supreme Court of Appeal
I
have already noted
110
that for all practical purposes the High Court failed to consider
whether the award was made following on unfair procedural

irregularities. It did not consider or even mention the
constitutional right to a fair hearing. Instead, it insisted on
viewing the review application before it as an impermissible
attempt in effect to appeal against the arbitration award because

it also engaged on aspects which otherwise had a bearing on the
merits of the award.
After
noting that the allegation of bias was founded on the meetings
referred to earlier, the High Court briefly analysed what
it
considered were the relevant facts relating to the meetings and on
the basis of that analysis it concluded that there was
no merit in
the submission that the arbitrator was biased in favour of
Bopanang.
In
respect of the second meeting the High Court contented itself with
the following observations. The arbitrator requested
the parties
on 29 April 2004 to supply him with certain information. Bopanang
made oral submissions. Mphaphuli replied in
writing. Both parties
were therefore afforded the opportunity to be heard. They,
however, chose to supply the arbitrator
with the required
information in their own way. In respect of the third meeting, the
comments of the High Court were restricted
to the following. This
meeting too was the result of the parties responding to a query
raised by the arbitrator. Again, Bopanang
replied in writing and
made oral submissions, and Mphaphuli only furnished a written
reply. It was significant, however, that
the arbitrator decided
the question raised in the third meeting in favour of Mphaphuli.
It
would seem that it was the High Court’s view that the
circumstance that both parties were given an opportunity of being

heard was all that was required of the arbitrator, and sufficient
to dispose of the issue of bias (the only issue that the
Court was
considering at that stage).
What
the High Court overlooked, however, was that whatever Mphaphuli had
communicated to the arbitrator was copied to Bopanang,
but on the
other hand Mphaphuli was not made privy to the “oral submissions”
made by Bopanang to the arbitrator on either
of the occasions in
question. The High Court failed, and in so doing misdirected
itself, to consider the fact that the two
ex parte meetings
constituted a material infraction of the arbitrator’s
quasi-judicial duties (which in respect of the last
meeting, was
not undone by the decision reached by the arbitrator) laid down in
the authorities referred to earlier
111
and the impact it had on the fairness of the arbitration
proceedings. The remarks made below concerning the comments of the

Supreme Court of Appeal on the third meeting are also relevant
here.
112
The
Supreme Court of Appeal’s approach to the meetings is set out in
paragraphs 18 and 19 of its judgment.
113
I deal below with certain factual issues arising out of the
comments made in these paragraphs. At this stage attention will
be
given to certain legal aspects. I have already found that section
34 of the Constitution finds application in arbitration
proceedings
and that Mphaphuli did not waive its right to a fair hearing to
which it was entitled in terms of the section.
The approach of the
Supreme Court of Appeal, as reflected in the stated paragraphs,
does not take account of that right (and
it may be pointed out in
this regard that the inference referred to in the quotation from
Total Support
in paragraph 19 of the judgment of the Supreme
Court of Appeal, relating to an arbitrator’s state of mind, is
not a requisite
for a court to hold that the precepts relating to
procedural fairness were not adhered to). This approach was due to
its finding
that Mphaphuli was restricted to invoking the grounds
of review set out in section 33(1) of the Arbitration Act.
The
Supreme Court of Appeal categorised the meetings as “innocuous”.
114
The categorisation is flawed, for reasons of fact and law.
The
Supreme Court of Appeal’s comment that “[t]he purpose of those
meetings was simply to verify certain figures and to
clarify the
use of certain items” was based on one of the arbitrator’s
averments, recorded in paragraph 102 above. However,
also recorded
is the arbitrator’s confirmation of the statements made by
Bopanang. The latter’s explanations
115
demonstrate that the meetings did not have the restricted purpose
found by the Court, but were about substantive issues that
were
related to the issues to be determined by the arbitrator –
notwithstanding Bopanang’s claim that the discussions did
not
concern the merits of the award or affect the ultimate award. This
is made the clearer by the arbitrator’s own further
comments
116
and Mphaphuli’s response thereto.
117
The arbitrator held repeated telephone discussions and meetings
with one party on relevant issues. His final meeting with
the
party was arranged in formal fashion, on three days’ notice, but
without notice to the other side. It took place at
a time where,
on his own version, he was finalising his results and had found it
necessary to raise further “crucial queries”.
The purpose of
the 29 July 2004 meeting was to “resolve the final outstanding
issues” ahead of his decision which was
to follow shortly
thereafter. “Innocuous” was in the circumstances a wholly
inappropriate epithet.
The
Supreme Court of Appeal opined that the meetings were innocuous
“against the backdrop of the arbitration agreement and
the
context of the arbitrator’s mandate” and that the purpose of
the meeting, as found by it, “fell within the parameters
of [the
arbitrator’s] mandate.”
118
(Seemingly, it is implied that all rights in terms of section 34
of the Constitution were waived by Mphaphuli.)
This
approach cannot be supported. As counsel for Mphaphuli argued,
there is no factual basis for the conclusion that the arbitration

agreement or the arbitrator’s mandate permitted him to hold
meetings with Bopanang in the absence of Mphaphuli. No explicit
or
implicit provision to that effect is contained in the arbitration
agreement and, indeed, as shown below, neither the arbitrator
nor
Bopanang contended otherwise. On the contrary, clause 7 of the
agreement provided expressly that “[e]ach party . . .
shall
appoint representatives to attend the physical inspection and
measurement [by the arbitrator].” As counsel further
pointed
out, as a matter of fact, both parties took their right (and
obligation) to be present at the inspection and measurement

seriously. Bopanang recorded that both parties were represented at
each site inspection and measurement held in terms of the

arbitration agreement. In substance, the arbitrator confirmed this
statement. In these circumstances counsel validly argued
that once
it is clear that the parties had a right and duty to be present at
a physical inspection and measurement, it is inconceivable
that it
was their intention that following on the conclusion of the
inspection and measurement, the arbitrator would be allowed
to have
discussions thereanent and about the arbitration with one party
without the other being present.
In
fact, in its supplementary founding affidavit in the High Court,
Mphaphuli states, directly contrary to the finding of the
Supreme
Court of Appeal, as follows:
“
The arbitration agreement
did not mandate the Arbitrator to conduct meetings with the parties
for the purposes of gathering evidence
and in particular did not
mandate the Arbitrator to convene such meetings with only one of the
parties. Had [Mphaphuli’s]
attorneys not obtained the arbitration
record, [it] would never have known that these meetings took place.
Such meetings were not
authorised by the arbitration agreement.”
(Mphaphuli
added that the meetings also “go to bias”, an aspect to which I
revert later.)
Neither
Bopanang nor the arbitrator takes issue with the above averments of
Mphaphuli. Instead, in substance they seek to suggest
only that
the meetings did not affect the ultimate outcome of the arbitration
(a stance, as will be shown below, which is impermissible
in law).
The
finding is inescapable that what occurred amounted to a material
procedural irregularity, resulting in unfairness sufficient,
in
terms of the authorities referred to earlier, to vitiate the
arbitrator’s award and warrant its setting aside by this
Court.
119
In reaching a contrary decision, the High Court and the Supreme
Court of Appeal failed to interpret the Arbitration Act in

accordance with the Constitution.
For
the sake of completeness, it may be added that the considerations
discussed above at the same time vitiated the arbitrator’s
award
on the basis that the arbitrator misconducted himself in relation
to his duties as arbitrator and/or that he committed
a gross
irregularity in the conduct of the arbitration proceedings and/or
that the award was improperly obtained, as envisaged
in section
33(1) of the Arbitration Act.
120
However,
even were the epithet “innocuous” to be apt, that would, as a
matter of law, not avail against Mphaphuli’s claim.
Counsel for
Mphaphuli accepted that in the case of some irregularities
resulting in unfairness it may be permissible and necessary
to look
at the nature of the prejudice flowing therefrom. That issue, they
argued, did not arise
in casu
where the nature of the
infraction resulted in a failure of justice per se. I agree.
Again, the authorities referred to earlier
121
(and those referred to below) have made clear that where a party is
wrongly denied a hearing, where an ex parte meeting is
held by the
arbitrator with one of the parties and aspects bearing on or
relating to the merits of the dispute between the
parties are the
subject of discussion, the result is a fundamental infraction of
the requirements of fairness. It matters
not, and the court does
not enquire into, what the party denied its lawful opportunity
would have said or whether, on the face
of it, justice was done
between the parties, or whether or not the arbitrator was
influenced by what was said at the meeting.
Neither the arbitrator
nor the other party is entitled to proffer such latter
propositions. The Supreme Court of Appeal accordingly
misdirected
itself in making the comment, and relying thereon, that the
meetings “had no effect whatsoever on [the arbitrator]”.
Courts
should not lightly assume that the right to be heard has no
application. As Goldstone J put it in
Traube and Others v
Administrator, Transvaal, and Others
122
(a matter involving an administrative decision):
“
As I understand the law, if
a person is wrongly denied a hearing in a case where he should have
been given one, no matter how
strong the case against him, the
denial of the hearing is a fatal irregularity. In
General
Medical Council v Spackman
1943 AC 627
at 664-5 Lord Wright
said:
‘
If the principles of natural
justice are violated in respect of any decision, it is, indeed,
immaterial whether the same decision
would have been arrived at in
the absence of the departure from the essential principles of
justice. The decision must be declared
to be no decision.’”
123
In
Administrator, Transvaal, and Others v Zenzile and Others
124
a similar approach was adopted:
“
It is trite, furthermore,
that the fact that an errant employee may have little or nothing to
urge in his own defence is a factor
alien to the inquiry whether he
is entitled to a prior hearing. Wade
Administrative Law
6 ed
puts the matter thus at 533-4:
‘
Procedural objections are
often raised by unmeritorious parties. Judges may then be tempted
to refuse relief on the ground that
a fair hearing could have made
no difference to the result. But in principle it is vital that the
procedure and the merits should
be kept strictly apart, since
otherwise the merits may be prejudged unfairly.’
The learned author goes on to
cite the well-known dictum of Megarry J in
John v Rees
[1970]
Ch 345
at 402:
‘
As everybody who has
anything to do with the law well knows, the path of the law is
strewn with examples of open and shut cases
which, somehow, were
not; of unanswerable charges which, in the event, were completely
answered; of inexplicable conduct which
was fully explained; of
fixed and unalterable determinations that, by discussion, suffered a
change.’”
125
The
comments in paragraphs 150 and 151 above are of application.
As
noted before,
126
neither the High Court nor the Supreme Court of Appeal canvassed
the ex parte correspondence. This omission is inexplicable.
The
authorities referred to earlier
127
reflect that the same principles applicable to ex parte meetings
between an arbitrator and one of the parties apply
mutatis
mutandis
to ex parte correspondence between an arbitrator and
one of the parties. Counsel for Mphaphuli accepted, correctly,
that under
appropriate circumstances the question of materiality
may have to be considered in relation to ex parte correspondence,
depending
on the nature thereof.
It
is not in dispute that the letter of 19 July 2004 canvassed aspects
that were material to the issues between the parties.
The
resolution of the factual disputes between Mphaphuli and the
arbitrator adverted to in paragraphs 116 to 122 above is not,
and
cannot be, the subject of this judgment. They do, however,
underscore the materiality of the contents of the letter.
The
important aspect is that on a material issue the arbitrator, on his
own showing, received (and acted on) representations
made to him by
Bopanang, without Mphaphuli being afforded an opportunity of
responding thereto.
It
should be stated that the provisions of clause 5 of the arbitration
agreement
128
are of no assistance to the arbitrator or Bopanang. The fact that
the arbitrator was entitled to require any of the parties
to make
such documentation available as he may have required, did not
entitle him to disregard the prescripts of natural justice.
In
terms of the authorities cited earlier,
129
he nevertheless incurred the obligation to refer Bopanang’s ex
parte correspondence to Mphaphuli.
The
fact that the two letters in question were not sent by the
arbitrator to Mphaphuli because of a “bona fide oversight”
is
not a relevant consideration. As was explained in
Rose v
Johannesburg Local Road Transportation Board
:
130
“
The fact that they or any of
them [the members of the board] acted from excellent motives and
feelings will not avail them if
they have acted contrary to a
well-settled principle of law in circumstances which may seem to
affect the justice of their decision.”
131
Again,
the comments in paragraphs 150 and 151 above are of application.
Neither
the High Court nor the Supreme Court of Appeal adverted pertinently
to the issue whether the arbitrator, in making any
award in favour
of Bopanang, was bound by Bopanang’s pleadings, which detailed
its claim as substantiated by the invoices
incorporated in its
statement of claim, or to the matter of amounts awarded which were
in excess of those claimed. The High
Court’s relevant comments
were that Mphaphuli’s papers reflected an impermissible attempt
in effect to appeal against the
award of the arbitrator. The
Supreme Court of Appeal commented that by submitting their dispute
to arbitration the parties
had waived their right to have the
merits of their dispute re-litigated or reconsidered, and that an
error of fact or law,
even a gross error, would not per se justify
the setting aside of the award – it would at best be evidence of
misconduct.
In
the remarks that follow I do not lose sight of the circumstance
that it is often the case that arbitration is resorted to
in order,
inter alia, to avoid the niceties of pleading. However, I conclude
that in fact the arbitrator was bound by the
pleadings. The
reasons for this conclusion follow.
It
should immediately be emphasised, first, that the preamble to the
arbitration agreement
132
states in terms what claim Bopanang was pursuing, as instituted by
it. Second, as clause 4 of the arbitration agreement recorded,
the
arbitrator was placed in possession of Bopanang’s pleadings,
which incorporated the invoices. Third, clause 10 of the

arbitration agreement precluded any variation thereof unless same
was reduced to writing and signed by, or on behalf of, the
parties.
Further,
I do not lose sight of the fact that clause 1 of the agreement
records that the purpose of the arbitration was to determine

whether payment was due in terms of the contract between the
parties, and if so, the extent thereof, and that a final assessment

of moneys reasonably due by either party to the other was required
to be made by the arbitrator. The fact remains that the
claim of
Bopanang was placed on record and, as would be the position in
ordinary civil litigation, that was the claim which
Mphaphuli came
to the arbitration to meet.
As
was stated in
Interbulk Ltd v Aidan Shipping Co Ltd, The
“Vimiera”
:
133
“
The essential function of an
arbitrator, indeed a judge, is to resolve the issues raised by the
parties. The pleadings record
what those issues are thought to be
and, at the conclusion of the evidence, it should be apparent what
issues still remain alive
issues. If an arbitrator believes that
the parties or their experts have missed the real point – a
dangerous assumption to
make, particularly where, as in this case,
the parties were represented by very experienced counsel and
solicitors – then it
is not only a matter of obvious prudence, but
the arbitrator is obliged, in common fairness or, as it is sometimes
described,
as a matter of material justice to put the point to them
so that they have an opportunity of dealing with it.”
134
The
arbitrator’s initial response to Mphaphuli’s averments
135
does not support his stance that he considered that he was entitled
to ignore the pleadings or the invoices. Rather, on his
own
version, the agreement he refers to was simply that his mandate
“was extended” to include the physical measurement,
not that
this would be the full extent of his mandate. However, he did
later allege
136
that the common understanding was that Bopanang was to be
compensated for work actually done by it, irrespective of what was

reflected in its invoices. The comment may be made, however, that
the basis on which the arbitrator sought to found this common

understanding, namely that neither party ever suggested otherwise,
is unpersuasive. An absence of contrary comment by either
party
would carry more weight in respect of a stance that Bopanang was
bound by its pleadings. Moreover, as pointed out below,
the
arbitrator later changed tack, no longer relying on an
understanding, but in fact alleging an actual agreement.
Two
further averments in the arbitrator’s initial response do not
bear scrutiny. First, the contention (not raised by Bopanang)
that
the invoices, previously sent by Bopanang to Mphaphuli, had solely
served as a basis for interim payments during the currency
of the
agreement, may be based on the arbitrator’s interpretation of the
contract between the parties. Nevertheless, it
bears emphasis that
the selfsame invoices were incorporated in Bopanang’s statement
of claim.
Second,
the arbitrator’s comment that it would be a waste of time if the
sole purpose of the re-measurement would be to reduce
Bopanang’s
claim and that Bopanang would have had nothing to gain from the
arbitration,
137
need only to be stated to be rejected. The very dispute between
the parties was whether Bopanang had done the work it claimed
for.
Re-measurement would have contributed to the resolution of that
issue,
but it could only have done so on the basis of the
existing pleadings and invoices
. The gain that would have
accrued to Bopanang was obvious: to the extent that the
re-measurement, and the arbitrator’s determination
of what
portion of the work re-measured was done by Bopanang, established
Bopanang’s existing claims, it would have been
successful.
The
arbitrator’s stance in his further answering affidavit and his
rejoinder affidavit
138
was somewhat different to his initial response. He acknowledged
that on a strict reading of the arbitration agreement he
was
obliged to take into account the pleadings exchanged by the parties
and all supporting documents attached thereto
(to which the
preamble to the arbitration agreement and clause 4 thereof made
reference). But he contended that during the
arbitration process
the parties reached a further agreement and restricted his mandate
to the physical re-measurement, the
results of which would be
conclusive, and that the invoices had to be ignored.
However,
in the first place, this contention, which in itself embraced
contradictions and inconsistencies, did not square with
his other
averment that after the re-measurement he was still required to
embark on a determination of what portion of the
work re-measured
had been done by Bopanang. This point was emphasised by Mphaphuli,
which stated that the purpose of the inspections
and measurements
was to establish empirically what work had been done on site
whereafter it had to be determined, in the light
of the contract
between the parties, which entity did what work and what
compensation was due to Bopanang. Second, the arbitrator
did not
see fit to explain how or when it was that the further agreement
was reached. Third, any such further agreement would
have been
invalid in the light of the non-variation provision in clause 10 of
the arbitration agreement. Fourth, even if there
had been such a
further agreement (to the effect that the result of the physical
measurement would be conclusive and eclipse
the invoices), it would
not have applied to at least some of the nine items referred to in
paragraph 125 above, in that these
items were not
measured
by the arbitrator, but the quantities thereof were the result of
inferences based on assumptions by the arbitrator that the
items
would have been associated with other items that he did measure.
The
arbitrator’s explanation
139
for the award of interest made by him does not constitute
justification for his failure to adhere to the pleadings.
The
circumstance that the arbitrator regarded himself as unconstrained
by the pleadings and the invoices, notwithstanding that
they gave
rise to the dispute, not only had the result that he exceeded his
powers in terms of section 33(1)(b) of the Arbitration
Act,
140
but also constituted a gross irregularity in the conduct of the
proceedings in terms of the same section. It consequently

adversely affected Mphaphuli’s right to a fair hearing in terms
of section 34 of the Constitution.
This
is made clear by the decision in
Goldfields Investment Ltd and
Another v City Council of Johannesburg and Another
.
141
The case concerned a review of the decision of a valuation court,
but the principles adverted to apply equally to arbitrations.

Schreiner J commented as follows.
142
For cognisance to be taken of irregularities there is no need that
there be intentional arbitrariness of conduct or any conscious

denial of justice. It is not only high-handed or arbitrary conduct
which is described as a gross irregularity – behaviour
which is
perfectly well-intentioned and bona fide, though mistaken, may come
under that description. The crucial question
is whether it
prevented a fair trial of the issues – if it did, it will amount
to a gross irregularity. A mere mistake of
law relating to the
merits will not constitute a gross irregularity, but if the mistake
leads to the tribunal’s not merely
missing or misunderstanding a
point of law on the merits, but to its misconceiving the whole
nature of the inquiry, or of its
duty in connection therewith, then
it is in accordance with the ordinary use of language to say that
the losing party has not
had a fair trial.
These
remarks find operation in the present case and the arbitrator,
owing to his erroneous view of, and misconstruing, his
functions in
respect of the application of the pleadings and invoices to the
matters that he had to decide, failed to deal
with them in the
manner contemplated by the arbitration agreement.
143
The resultant gross irregularity constituted sufficient unfairness
to vitiate his award.
Again,
the comments in paragraphs 150 and 151 are of application.
Bias
Counsel
correctly did not persist in a contention of actual bias on the
part of the arbitrator and confined their argument to
the
contention that there was a reasonable apprehension of bias on the
arbitrator’s part. Counsel further accepted that
Mphaphuli bore
the onus of establishing the existence of such apprehension and
that the test is an objective one. In
Van Rooyen
,
144
this Court stated the following:
“
That the appearance or
perception of independence plays an important role in evaluating
whether courts are sufficiently independent
cannot be doubted. The
reasons for this are made clear by the Canadian jurisprudence on the
subject, particularly in
Valente v The Queen
. . . .
The jurisprudence of the
European Court of Human Rights also supports the principle that
appearances must be considered when dealing
with the independence of
courts. When considering the issue of appearances or perceptions,
attention must be paid to the fact
that the test is an objective
one. Canadian courts have held in testing for a lack of
impartiality:
‘
the apprehension of bias
must be a reasonable one, held by reasonable and right-minded
persons, applying themselves to the question
and obtaining thereon
the required information. In the words of the Court of Appeal . . .
that test is ‘what would an informed
person, viewing the matter
realistically and practically – and having thought the matter
through – conclude’.”
145
(Footnote omitted.)
In
Jaipal
, the Court cited this dictum with approval in the
context of criminal proceedings.
146
The
threshold for a finding of perceived bias is high. In
South
African Commercial Catering
147
this Court discussed the apparent double requirement of
reasonableness posed in
SARFU
,
148
that is a reasonable person and a reasonable apprehension, and
stated:
“
[T]he two-fold emphasis does
serve to underscore the weight of the burden resting on a person
alleging judicial bias or its appearance.
As Cory J stated in a
related context on behalf of the Supreme Court of Canada:
‘
Regardless of the precise
words used to describe the test, the object of the different
formulations is to emphasise that the threshold
for a finding of
real or perceived bias is high. It is a finding that must be
carefully considered since it calls into question
an element of
judicial integrity.’”
149
(Footnote omitted.)
The
comments are of equal application where a quasi-judicial capacity is
involved.
It
matters not, however (as I accept was the position
in casu
),
that the arbitrator’s intentions were good or that he bona fide
thought that he was acting within the terms of his mandate
or was
unconscious of any apprehension of bias that might arise from his
conduct.
150
For
their contention of a reasonable apprehension of bias, counsel
placed reliance on the meetings, the correspondence and the
award
of amounts in excess of those claimed by Bopanang and reflected in
its pleadings and invoices.
As
already recorded,
151
both the High Court and the Supreme Court of Appeal addressed the
issue of bias only with reference to the ex parte meetings,
and the
latter Court commented that no other overt act was invoked to found
the contention of a reasonable apprehension of
bias. That
restricted approach was incorrect and misdirected. Further, the
comment by the Supreme Court of Appeal that no
reason emerges from
the papers as to why the arbitrator would have shown an inclination
to favour one party, was misplaced.
A desire to favour one party
does not require to be proved.
In
my judgement, the factors invoked by Mphaphuli, viewed objectively,
both separately but more particularly cumulatively, must
result in
a finding that a reasonable apprehension of bias has been
demonstrated: a reasonable person in Mphaphuli’s position
would
reasonably apprehend that he/she had been the victim of bias,
albeit unintentional, and that he/she had not received
a fair
hearing.
Where
a reasonable apprehension of bias is demonstrated, the court does
not enter the debate whether there was actual influence
and it is
at pains not to measure the degree of the bias apprehended. In
BTR
Industries South Africa (Pty) Ltd and Others v Metal and Allied
Workers’ Union and Another
152
(a case involving what was considered to be a quasi-judicial
tribunal, the Industrial Court) the following passage appears:
“
Provided the suspicion of
partiality is one which might reasonably be entertained by a lay
litigant a reviewing Court cannot,
so I consider, be called upon to
measure in a nice balance the precise extent of the apparent risk.
If suspicion is reasonably
apprehended, then that is an end to the
matter.”
153
Again,
the comments in paragraphs 150 and 151 above are of application.
Conclusion
In
the light of the findings set out in this judgment, it is my view
that Mphaphuli is entitled to the relief it seeks from
this Court,
and I would have granted Mphaphuli that relief with appropriate
ancillary orders. However, this is a minority
judgment and accordingly no order is made.
Jafta
AJ and Nkabinde J concur in the judgment of Kroon AJ.
O’REGAN ADCJ:
I
have had the opportunity of reading the judgment prepared in this
matter by my colleague, Kroon AJ. Unfortunately I cannot
concur in
it. In my view, although leave to appeal should be granted, the
appeal should be dismissed. As will appear from
the reasons that
follow, there are two differences between my approach and that of
Kroon AJ. First, in my view, section 34
of the Constitution does
not apply to private arbitration although I do hold that it is an
implied term of every arbitration
agreement that it be procedurally
fair. Secondly, it is my view that the arbitration agreement at
issue in this case, properly
construed, required the arbitrator to
adopt an informal, investigative method of proceeding and not a
formal, adversarial one.
As
Kroon AJ explains in his judgment, the applicant, Lufuno Mphaphuli
& Associates (Pty) Ltd (Mphaphuli) is an electrical

infrastructure contractor who was awarded a contract by Eskom (the
national electricity supplier) for the electrification of
certain
rural villages in Limpopo Province. In May 2002, Mphaphuli entered
into a subcontract with the second respondent,
Bopanang
Construction CC (Bopanang). In January 2003, Bopanang vacated the
site early without completing its work on the ground
that Mphaphuli
had failed to pay moneys owing to it. Another contractor, AA
Electrical, was then employed by Mphaphuli to
complete the work and
to undertake remedial work on the work performed by Bopanang.
In
April 2003, Bopanang issued summons in the High Court in Pretoria
against Mphaphuli seeking payment of R656 934,44 from Mphaphuli
for
work it had done but for which it had not been paid. Bopanang also
sought to interdict the client, Eskom, from paying
Mphaphuli
further. Bopanang and Mphaphuli then agreed that such an interim
interdict should issue and that the dispute concerning
the amount
claimed by Bopanang should be referred to arbitration.
Pursuant
to this agreement, Bopanang prepared a statement of claim and
Mphaphuli a statement of defence, as well as a counterclaim.
Mr
Nigel Andrews, the first respondent, was appointed as arbitrator on
21 July 2003, which appointment was confirmed when
the arbitration
agreement was signed on 16 October 2003. Mr Andrews was furnished
with copies of all the pleadings.
The
arbitration process then followed. It is described in some detail
later in this judgment. On 23 August 2004, Mr Andrews
published
his award in terms of which he found Mphaphuli to be liable to
Bopanang in an amount of R339 998,83 and he ordered
that interest
be paid on that amount from 6 October 2002. Mphaphuli did not make
payment in terms of the award, and, on 18
October 2004, Bopanang
approached the High Court for the award to be made an order of
court. Mphaphuli opposed this application
and launched a separate
application to set aside the arbitration award and to have the
matter remitted to the arbitrator.
1
Mphaphuli was unsuccessful in both the High Court and subsequently
the Supreme Court of Appeal.
2
It now seeks leave to appeal to this Court.
There
are several issues that arise. A preliminary issue is that
Mphaphuli’s application for condonation for the late filing
of
its founding affidavit and its supplementary founding affidavit was
refused by the High Court, and this decision was upheld
by the
Supreme Court of Appeal. Kroon AJ concludes that both the High
Court and the Supreme Court of Appeal misdirected themselves
in
this regard. Given the conclusion I reach on the merits, it is not
necessary for me to traverse this issue at all and I
refrain from
doing so.
Turning
then to the issues in the case before us. Mphaphuli identifies the
following three constitutional issues: to what extent
are courts
entitled to exercise supervision over arbitral proceedings; whether
parties waive their constitutional rights in
terms of section 34 of
the Constitution when they agree to refer a dispute to private
arbitration; and what the correct approach
is to the grounds of
review set out in section 33 of the Arbitration Act 42 of 1965 (the
Arbitration Act). I
think it may be more logical and helpful to
pose the constitutional questions in the following manner: (a) does
section 34
of the Constitution apply to private arbitrations? (b)
what, if any, is the relevance of the Constitution to the terms of
private
arbitration agreements? and (c) what, if any, is the
relevance of the Constitution to the judicial scrutiny of
arbitration
awards?
Private
Arbitration
In
approaching these questions, it is important to start with an
understanding of the nature of private arbitration. Private

arbitration is a process built on consent in that parties agree
that their disputes will be settled by an arbitrator. It was
aptly
described by Smalberger ADP in
Total Support Management (Pty)
Ltd and Another v Diversified Health Systems (SA)(Pty) Ltd and
Another
3
as follows:
“
The hallmark of arbitration
is that it is an adjudication, flowing from the consent of the
parties to the arbitration agreement,
who define the powers of
adjudication, and are equally free to modify or withdraw that power
at any time by way of further agreement.”
4
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. With the growth of global commerce,

international commercial arbitration has increased significantly in
recent decades. This growth has been fostered, in part,
by the
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (the New York Convention)
5
which provides for the enforcement of arbitration awards in
contracting states and which has had a profound effect on
arbitration
law in many jurisdictions.
6
It has also been served by the adoption of the Model Law on
International Commercial Arbitration (the UNCITRAL Model Law)
by
the United Nations Commission on International Trade Law in 1985,
which was amended in 2006 and which has been adopted in
many
jurisdictions.
7
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).
8
In determining the proper constitutional approach to private
arbitration, we need to bear in mind that litigation before
ordinary courts can be a rigid, costly and time-consuming process
and that it is not inconsistent with our constitutional values
to
permit parties to seek a quicker and cheaper mechanism for the
resolution of disputes.
The
twin hallmarks of private arbitration are thus that it is based on
consent and that it is private, i.e. a non-state process.
It must
accordingly be distinguished from arbitration proceedings before
the Commission for Conciliation, Mediation and Arbitration
(CCMA)
in terms of the
Labour Relations Act 66 of 1995
which are neither
consensual, in that respondents do not have a choice as to whether
to participate in the proceedings, nor
private. Given these
differences, the considerations which underlie the analysis of the
review of such proceedings are not
directly applicable to private
arbitrations.
9
Does
section 34
apply to private arbitration?
The
first question that arises then is whether section 34 of the
Constitution applies to private arbitration. Section 34 provides

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.”
In
Chief Lesapo v North West Agricultural Bank and Another
,
10
Mokgoro J on behalf of a unanimous Court reflected on section 34 as
follows:
“
An important purpose of
section 34 is to guarantee the protection of the judicial process to
persons who have disputes that can
be resolved by law.”
11
This
comment makes clear that the primary purpose of section 34 is to
ensure that the state provides courts or, where appropriate,
other
tribunals, to determine disputes that arise between citizens. A
similar understanding of the section was expressed by
Langa CJ in
President of the Republic of South Africa and Another v
Modderklip Boerdery (Pty) Ltd
12
where he reasoned:
“
The first aspect that flows
from the rule of law is the obligation of the State to provide the
necessary mechanisms for citizens
to resolve disputes that arise
between them. This obligation has its corollary in the right or
entitlement of every person to
have access to courts or other
independent forums
provided by the State
for the settlement
of such disputes. Thus section 34 of the Constitution provides as
follows . . . .”
13
(My emphasis.)
On
a straightforward reading, the section provides that everyone has
the right to have disputes that are susceptible to legal

determination decided in a fair, public hearing by a court or by
another independent or impartial tribunal. Quite clearly,
when
parties decide to refer a dispute to be determined by an
arbitrator, they are not seeking to have the dispute determined
by
a court. They are seeking to have it determined by an arbitrator
of their own choice. The question that then arises is
whether an
arbitrator is “another independent and impartial tribunal or
forum” as contemplated in the section. It seems
to be beyond
doubt that these words apply to other tribunals established by law
such as the CCMA.
14
Such tribunals must also conduct “fair, public hearings” as
provided for in section 34. The more difficult question,
however,
is whether these words apply to private dispute mechanisms
established by parties by consent.
In
Total Support Management
,
15
the Court grappled with the question as follows:
“
It is a moot point whether
the words ‘another independent and impartial tribunal or forum’
in their contextual setting apply
to private proceedings before an
arbitrator or whether they must be restricted to statutorily
established adjudicatory institutions.
The word ‘fair’
qualifies ‘public hearing’ and the phrase ‘fair, public
hearing’ relates not only to proceedings
before a court but also
before ‘another independent and impartial tribunal or forum’.
In a private arbitration the parties
may by agreement exclude any
form of public hearing – the need for anonymity or secrecy may
well underlie the decision to resort
to arbitration. The proper
interpretation of s 34 may also involve the vexed question whether
there may be a waiver of a constitutional
right.”
16
In
Telcordia Technologies Inc v Telkom SA Ltd
,
17
Harms JA concluded that “[o]n balance” the provisions of
section 34 would apply to private arbitration. Kroon AJ in his

judgment in this matter finds that this conclusion “commends
itself for acceptance” and his judgment proceeds on the basis

that section 34, and particularly the requirement of “fairness”
within it, applies to private arbitration.
18
In
reaching his conclusion, Harms JA relied on the jurisprudence of
the European Court of Human Rights which has held that Article
6 of
the European Convention on Human Rights is applicable to private
arbitration.
19
The text of Article 6(1) is, of course, somewhat different to the
text of section 34. Article 6(1) provides that:
“
In the determination of his
civil rights and obligations or of any criminal charge against him,
everyone is entitled to a fair
and public hearing within a
reasonable time by an independent and impartial tribunal established
by law. Judgment shall be pronounced
publicly but the press and
public may be excluded from all or part of the trial in the
interests of morals, public order or national
security in a
democratic society, where the interests of juveniles or the
protection of the private life of the parties so require,
or to the
extent strictly necessary in the opinion of the court in special
circumstances where publicity would prejudice the
interests of
justice.”
In
Suovaniemi and Others v Finland
,
20
the applicants to the European Court of Human Rights complained
that their right to a fair hearing in terms of Article 6(1) had

been violated since the Finnish courts had upheld an arbitral award
which the applicants alleged had been made by an arbitrator
lacking
impartiality. One of the arbitrators who had made the award had
previously acted as counsel to one of the parties.
They also
objected to the manner in which the second of the three arbitrators
had conducted the proceedings. The Court held
that a voluntary
waiver of court proceedings in favour of arbitration is in
principle acceptable.
21
However, the Court continued:
“
Even so, such a waiver
should not necessarily be considered to amount to a waiver of all
the rights under Article 6. As indicated
by the cases cited in the
previous paragraph, an unequivocal waiver of Convention rights is
valid only insofar as such waiver
is ‘permissible’. Waiver may
be permissible with regard to certain rights but not with regard to
certain others. A distinction
may have to be made even between
different rights guaranteed by Article 6. Thus, in the light of the
case-law it is clear that
the right to a public hearing can be
validly waived even in court proceedings (see, Eur.Court H.R.,
HÃ¥kansson and Sturesson
v. Sweden judgment of 21 February 1990,
Series A no. 171, pp. 20-21, §§ 66-67). The same applies,
a
fortiori
, to arbitration proceedings, one of the very purposes
of which is often to avoid publicity. On the other hand, the
question
whether the fundamental right to an impartial judge can be
waived at all was left open in the Pfeifer and Plankl v. Austria
case,
as in any case in the circumstances of that case there was no
unequivocal waiver.”
The
European Court then went on to consider whether the fact that the
parties had known before proceeding to arbitration that
one of the
arbitrators had previously acted as legal counsel to one of the
parties constituted an impermissible waiver. The
Court reasoned as
follows:
“
In the present case and
insofar as concerns arbitrator M., the Court considers that the
waiver made during the arbitration proceedings
was unequivocal . . .
.
The Court considers that the
Contracting States enjoy considerable discretion in regulating the
question on which grounds an arbitral
award should be quashed, since
the quashing of an already rendered award will often mean that a
long and costly arbitral procedure
will become useless and that
considerable work and expense must be invested in new proceedings .
. . . In view of this the finding
of the Finnish court based on
Finnish law that by approving M. as an arbitrator despite the doubt,
of which the applicants were
aware, about his objective impartiality
within the meaning of the relevant Finnish legislation does not
appear arbitrary or unreasonable.
. . . The Court furthermore notes
that in the proceedings before the national courts the applicants
had ample opportunity to
advance their arguments, inter alia,
concerning the circumstances in which the waiver took place during
the arbitration proceedings.
Without having to decide whether a
similar wavier would be valid in the context of purely judicial
proceedings the Court comes
to the conclusion that in the
circumstances of the present case concerning arbitral proceedings
the applicants’ waiver of their
right to an impartial judge should
be regarded as effective for Convention purposes.”
22
The
conclusion of the European Court was thus that, given that the
applicants had known that one of the arbitrators had acted
as legal
counsel for one of the other parties prior to the arbitration, and
given that Finnish law provided that such knowledge
gave rise to a
valid waiver, the applicants had effectively waived their right to
impartiality in the arbitration proceedings
in terms of the
Convention, and concomitantly their right to object on that ground.
The precise relationship between private
arbitration and Article 6
remains difficult and is an issue increasingly drawing the
attention of commentators.
23
Harms
JA relied on
Suovaniemi
in
Telcordia.
Having found
that section 34 did apply to private arbitration, like the judges
in
Suovaniemi,
he then employed the concept of waiver
.
He reasoned as follows:
“
The rights contained in s 34
(as the ECHR accepted) may be waived unless the waiver is contrary
to some other constitutional principle
or otherwise
contra bonos
mores.
Parties to a private dispute may, for instance,
compromise their dispute and thereby forego all their rights under
section 34.
By agreeing to arbitration, parties waive their rights
pro tanto.
They usually waive the right to a public hearing.
They may even waive their right to an independent tribunal.
Counsel gave the
example of two children who ask a parent to
arbitrate their commercial dispute.”
24
(Footnotes omitted.)
The
Court then held that parties who agree to refer a dispute to
arbitration “necessarily agree that the fairness of the hearing

will be determined” by the provisions of the
Arbitration Act
only
, that they waive the right to an appeal (unless they agree to
an arbitral appeal panel), and that they limit the interference
by
courts to the procedural irregularities set out in
section 33(1)
of
the
Arbitration Act.
25
I
find it difficult to reconcile the latter portion of the reasoning
with the former portion. It seems to me that if one accepts
that
parties to an arbitration have waived their rights under
section 34
in such a manner that the fairness of the hearing will be
determined only by reference to the
Arbitration Act, and
that
interference by courts with arbitration shall be limited to the
irregularities spelt out in
section 33(1)
of the
Arbitration Act,
it
cannot be said that
section 34
has any direct application to
private arbitration at all. The thrust of the reasoning seems to
me to be that when parties
enter a private arbitration agreement,
as long as that agreement is not contra bonos mores, they waive the
rights that they
would otherwise enjoy under
section 34.
However,
we still need to consider whether
section 34
does indeed apply
directly to private arbitration.
As
it is clear that a private arbitrator is not a court, the question
posed by Smalberger ADP in
Total Support Management
remains.
When
section 34
refers to another independent and impartial
tribunal, does it include private arbitration? If it does not,
then
section 34
can have no application to private arbitration. In
answering this question, one needs to read
section 34
closely to
see if its structure and purpose extend to private arbitration. It
is clear that the section provides a right to
have disputes
resolved (a) by the application of law in (b) a fair (c) public
hearing before (d) a court or (e) where appropriate
an independent
and impartial tribunal. Properly read, an independent and
impartial tribunal (if appropriate) must hold fair,
public hearings
when it resolves disputes by the application of law. It is not
possible textually to detach the requirement
of fairness from the
requirement of being in public: both requirements apply to
proceedings before courts and independent and
impartial tribunals.
Underlying
this right, as this Court has held, is the rule of law and the
positive obligation upon the state to provide courts
and, where
appropriate, other fora for the resolution of disputes.
26
Private arbitrators are, of course, not provided by the state but
are private agents employed by parties for the resolution
of
disputes.
In
considering whether private arbitration fits into the framework of
section 34
, we have to acknowledge that private arbitration, as
conventionally understood, is ordinarily not held in public. It
is, as
its name implies, a private process. Nor can it ordinarily
be said that arbitrators have to be independent in the full sense

that courts and tribunals must be. As the
Suovaniemi
case
suggests, parties can knowingly consent to an arbitrator who may
not be entirely independent.
27
Accordingly, it is not clear that arbitrators can accurately be
described as “independent . . . tribunals”. As private

arbitration proceedings do not, and, if international practice is
to be accepted, should not require public hearings, and similarly

if private arbitrators need not, as long as parties knowingly
accept this, always be “independent”, then the language of
section 34
does not seem to fit our conception of private
arbitration.
The
only strong reason to read private arbitration to fall within the
meaning of
section 34
is the requirement imposed by that section
that the hearing be “fair” and, indeed, it seems to be on that
basis that Kroon
AJ concludes that
section 34
does apply to private
arbitration. However, I am not persuaded that it is appropriate to
understand the section to relate
to private arbitration, which
otherwise does not fit the language of the section, simply because
it might be seen to be desirable
to require arbitration proceedings
to be fair. The section must be interpreted on its own language
and with integrity, and
I cannot conclude, given the general lack
of fit between private arbitration and the language of the section,
that the section
has direct application to private arbitration.
28
In
concluding that
section 34
does not have direct application to
private arbitration, I do not finally consider what indirect
application it may have, if
any. Indirect application of rights in
the Bill of Rights operates generally through section 39(2) of the
Constitution which
requires courts when interpreting statutes or
developing the common law or customary law to promote the “spirit,
purport
and objects” of the Constitution. No argument was
addressed to us on this issue but, mindful of the role courts have
in
giving effect to arbitration agreements, it seems to me that
section 34 may have some relevance to the interpretation of
legislation
or the development of the common law.
If
we understand section 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 section 34. They have instead chosen not to
exercise
their right under section 34.
29
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,
30
but that is a topic for another day.
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.
In
the light of the foregoing, on a proper construction of section 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
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.
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,
31
the arbitration agreement will be null and void to that extent
32
(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.
33
As stated above, it is not necessary to determine what role
section 34 might play in this analysis.
At
Roman-Dutch law, it was always accepted that a submission to
arbitration was subject to an implied condition that the arbitrator

should proceed fairly
34
or, as it is sometimes described, according to law and justice.
35
The recognition of such an implied condition fits snugly with
modern constitutional values. In interpreting an arbitration

agreement, it should ordinarily be accepted that when parties
submit to arbitration, they submit to a process they intend should

be fair.
36
Fairness is one of the core values of our constitutional order:
the requirement of fairness is imposed on administrative
decision-makers by section 33 of the Constitution; on courts by
sections 34 and 35 of the Constitution; in respect of labour

practices by section 23 of the Constitution; and in relation to
discrimination by section 9 of the Constitution. The arbitration

agreement should thus be interpreted, unless its terms expressly
suggest otherwise, on the basis that the parties intended
the
arbitration proceedings to be conducted fairly. Indeed, it may
well be that an arbitration agreement that provides expressly
for a
procedure that is unfair will be contra bonos mores.
The
contractual obligation of fairness accords with the approach of
recent legislation regulating arbitration in other jurisdictions.

Most notably, perhaps, it accords with section 33 of the United
Kingdom Arbitration Act, 1996 which provides that arbitrators
have
a general duty to act “fairly and impartially . . . giving each
party a reasonable opportunity of putting his case and
dealing with
that of his opponent”.
37
This is a general duty that may not be varied by agreement between
the parties. In a similar vein, Article 18 of the UNCITRAL
Model
Law provides –
“
The parties shall be treated
with equality and each party shall be given a full opportunity of
presenting his case”.
Of
course, as this Court has said on other occasions, what constitutes
fairness in any proceedings will depend firmly on context.
38
Lawyers, in particular, have a habit of equating fairness with the
proceedings provided for in the Uniform Rules of Court.
Were this
approach to be adopted, the value of arbitration as a speedy and
cost-effective process would be undermined. It
is now well
recognised in jurisdictions around the world that arbitrations may
be conducted according to procedures determined
by the parties. As
such the proceedings may be adversarial or investigative,
39
and may dispense with pleadings, with oral evidence, and even oral
argument.
The
relevance of the Constitution to the judicial scrutiny of
arbitration awards
The
final question that arises for consideration before turning to the
facts of this case is the extent to which the judiciary
may
scrutinise arbitration awards. This is a matter which is regulated
by section 33(1) of the Arbitration Act. This section
provides
relatively narrow grounds for setting aside an arbitration award as
follows:
“
Where—
any member of an arbitration
tribunal has misconducted himself in relation to his duties as
arbitrator or umpire; or
an arbitration tribunal has
committed any gross irregularity in the conduct of the arbitration
proceedings or has exceeded its
powers; or
an award has been improperly
obtained,
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.”
The
basis upon which a court may set aside an arbitration award is a
difficult issue which has been the subject of much debate.
40
It should be noted that one of the important questions of modern
arbitration law around the world is the extent to which courts
may
supervise arbitration awards. Both the New York Convention and the
UNCITRAL Model Law limit the scope for intervention
to a narrow
range of complaints.
In
approaching this question, it should be borne in mind that
arbitration awards are given effect by the ordinary courts. So
if
a party refuses to obey an award, the law provides for the
enforcement of the award by the ordinary courts. Indeed, this
is
the very purpose of the New York Convention which provides for the
recognition and enforcement of arbitration awards in
member
jurisdictions even where the arbitration has taken place in another
jurisdiction. The New York Convention provides
only narrow grounds
for a court to refuse to give effect to an award. Article V of the
Convention provides as follows:
“
1. Recognition and
enforcement of the award may be refused, at the request of the party
against whom it is invoked, only if that
party furnishes to the
competent authority where the recognition and enforcement is sought,
proof that:
The parties to the agreement .
. . were, under the law applicable to them, under some incapacity,
or the said agreement is not
valid . . . ; or
The party against whom the
award is invoked was not given proper notice of the appointment of
the arbitrator or of the arbitration
proceedings or was otherwise
unable to present his case; or
The award deals with a
difference not contemplated by or not falling within the terms of
the submission to arbitration, or it
contains decisions on matters
beyond the scope of the submission to arbitration . . . ; or
The composition of the
arbitral authority or the arbitral procedure was not in accordance
with the agreement of the parties
. . . ; or
The award has not yet become
binding on the parties, or has been set aside or suspended by a
competent authority . . . .
2. Recognition and enforcement
of an arbitral award may also be refused if the competent authority
in the country where recognition
and enforcement is sought finds
that:
The subject matter of the
difference is not capable of settlement by arbitration under the
law of that country; or
The recognition or enforcement
of the award would be contrary to the public policy of that
country.”
Article
34(2) of the UNCITRAL Model Law provides the grounds for setting
aside an arbitral award by a court. Its terms are
modelled on the
provisions of Article V of the New York Convention, so that the
international regulation of arbitration sets
the same standards for
refusing to make an award an order of court as it does for setting
aside the award. This has been described
as “a pleasing
symmetry”.
41
A
somewhat different approach to the courts’ powers of intervention
is provided in the United Kingdom Arbitration Act, 1996.
Section
68 provides that a court may set aside an arbitration award on the
grounds of serious irregularity if the court considers
the
irregularity “has caused or will cause substantial injustice to
the applicant”. The grounds of serious irregularity
listed
include a failure to comply with the section 33 duty to act fairly;
failure to conduct the proceedings in accordance
with the procedure
agreed by the parties; and failure by the tribunal to deal with all
the issues that were put to it. This
approach thus requires both a
serious procedural irregularity and a showing of substantive
injustice. The explanation given
for this section by the
Departmental Advisory Committee on Arbitration Law in their
Report
on the Arbitration Bill and Supplementary Report on the Arbitration
Act 1996
included the following comments:
“
[Serious] irregularities
stand on a different footing [from complaints concerning lack of
jurisdiction]. Here we consider that
it is appropriate, indeed
essential, that these have to pass the test of causing ‘substantial
injustice’ before the court
can act. The court does not have a
general supervisory jurisdiction over arbitrations. . . . The test
of ‘substantial injustice’
is intended to be applied by way of
support for the arbitral process, not by way of interference with
that process. Thus it
is only in those cases where it can be said
that what has happened is so far removed from what could reasonably
be expected of
the arbitral process that we would expect the court
to take action.”
42
In
considering the question of the powers of the courts to set aside
arbitration awards, the South African Law Reform Commission,
in its
report on “Domestic Arbitration”, noted the following:
“
One of the most
controversial issues of arbitration law reform concerns the powers
of the court in relation to arbitration. It
is accepted that court
support for the arbitral process, particularly as regards the
enforcement of arbitration agreements and
arbitral awards, is
essential. It is also accepted that courts are entitled to certain
supervisory powers as the price for their
powers of assistance. A
court cannot be expected to enforce an arbitral award which has been
obtained as a result of an arbitral
procedure which was
fundamentally unfair and which has substantially prejudiced the
losing party.”
43
(Footnotes omitted.)
The
report then notes that a difficult balance needs to be achieved
between affording the courts appropriate powers to scrutinise

arbitration awards and not empowering unscrupulous parties to use
the courts to undermine the purpose of arbitration: the speedy

resolution of disputes.
44
The
authors of the report continue:
“
The drafters of the Model
Law were well aware of this problem and gave careful attention to
it. It is generally accepted that
they achieved the right balance
regarding the extent of the courts’ powers and the time in the
arbitration proceedings when
they may be exercised. Even in
England, which has traditionally been regarded as a jurisdiction
where the courts have enjoyed
excessive powers in the context of
arbitration, there has been a clear and continuing trend since 1979
to curtail the powers
of the courts.”
45
For
these reasons, the Commission concludes by recommending that the
powers conferred upon the courts to set aside an arbitration
award
should be modelled on the powers contained in the Model Law, in
preference to the provisions of section 33(1) of the Arbitration

Act.
46
In addition, it also proposes, in section 52(5) of its draft Bill,
that an award in conflict with public policy (one of the
Model Law
grounds for setting aside an arbitration award) includes—
“
(a) an award made in breach
of the tribunal’s duty under section 28 such as to cause
substantial injustice to the applicant;
or
(b) an award induced or
affected by fraud or corruption.”
47
(Footnote omitted.)
This
approach is in effect a hybrid between the Model Law and the United
Kingdom Arbitration Act, 1996. The section 28 duty
mentioned in
section 52(5)(a) is the general duty of the arbitrator to act
fairly (the equivalent of section 33 of the United
Kingdom
Arbitration Act),
48
so the effect of section 52(5)(a) is that an award can be set aside
when a failure to act fairly causes substantial injustice.
I
set out the approach of the Model Law, as well as the United
Kingdom approach and the debate in the South African Law Reform

Commission, as I consider it to be important background in
considering how one should properly and constitutionally interpret

section 33(1) of the Arbitration Act insofar as private arbitration
is concerned. Kroon AJ in his judgment concerning the
proper
approach to the interpretation of section 33(1) of the Arbitration
Act relies on the minority judgment of Ngcobo J in
this Court in
Sidumo v Rustenburg Platinum Mines Ltd
.
49
In that case, the Court was
concerned with a statutory arbitration before the CCMA in terms of
the
Labour Relations Act 66 of 1995
.
Section 145(2)
of the
Labour
Relations Act sets
out the grounds upon which an award made by the
CCMA can be set aside by a court in terms nearly identical to those
contained
in section 33(1) of the Arbitration Act. In his
reasoning, stating that the jurisprudence on section 33(1) provided
a useful
starting point for an analysis of section 145(2), Ngcobo J
nevertheless emphasised the need not to overlook the differences in

context between the two statutes. In this regard, he emphasised
the importance of the fact that a CCMA commissioner “performs
a
public function and exercises public power”.
50
The
difference identified by Ngcobo J is indeed important, for it seems
to me that the considerations set out in the preceding
paragraphs
which urge a court to be slow to set aside private arbitration
awards are not directly applicable to the award of
a statutory
tribunal performing an important public power and protecting a
constitutional right (the right to fair labour practices).
51
To that extent, therefore, I do not think that the reasoning in
Sidumo
can, without more, be of great assistance in
determining the proper constitutional approach to the
interpretation of section
33 of the Arbitration Act in the context
of private arbitration.
To
return then to the question of the proper interpretation of section
33(1) of the Arbitration Act in the light of the Constitution.

Given the approach not only in the United Kingdom (an open and
democratic society within the contemplation of section 39(2)
of our
Constitution), but also the international law approach as evinced
in the New York Convention (to which South Africa
is a party) and
the UNCITRAL Model Law, it seems to me that the values of our
Constitution will not necessarily best be served
by interpreting
section 33(1) in a manner that enhances the power of courts to set
aside private arbitration awards. Indeed,
the contrary seems to be
the case. The international and comparative law considered in this
judgment suggests that courts
should be careful not to undermine
the achievement of the goals of private arbitration by enlarging
their powers of scrutiny
imprudently. Section 33(1) provides three
grounds for setting aside an arbitration award: misconduct by an
arbitrator; gross
irregularity in the conduct of the proceedings;
and the fact that an award has been improperly obtained. In my
view, and in
the light of the reasoning in the previous paragraphs,
the Constitution would require a court to construe these grounds
reasonably
strictly in relation to private arbitration.
The
final question that arises is what the approach of a court should
be to the question of fairness. First, we must recognise
that
fairness in arbitration proceedings should not be equated with the
process established in the Uniform Rules of Court for
the conduct
of proceedings before our courts. Secondly, there is no reason why
an investigative procedure should not be pursued
as long as it is
pursued fairly.
52
The international conventions make clear that the manner of
proceeding in arbitration is to be determined by agreement between

the parties and, in default of that, by the arbitrator. Thirdly,
the process to be followed should be discerned in the first
place
from the terms of the arbitration agreement itself. Courts should
be respectful of the intentions of the parties in
relation to
procedure. In so doing, they should bear in mind the purposes of
private arbitration which include the fast and
cost-effective
resolution of disputes. If courts are too quick to find fault with
the manner in which an arbitration has been
conducted, and too
willing to conclude that the faulty procedure is unfair or
constitutes a gross irregularity within the meaning
of section
33(1), the goals of private arbitration may well be defeated.
Should
the court grant the application for leave to appeal?
After
this somewhat lengthy introduction on the law and private
arbitration, I turn now to consider whether this case raises
a
constitutional issue within the jurisdiction of the Court and one
which it is in the interests of justice to hear. At the
outset I
should say that ordinarily the question whether a particular
arbitration award should be set aside, turning as it
must on the
precise terms of the arbitration agreement which regulated it, will
not raise a constitutional issue of sufficient
substance to warrant
being entertained by this Court.
This
case, however, being the first such challenge to be considered by
this Court, is different. The Court has had to consider
the
relationship between private arbitration and the Constitution, the
proper scope of section 34 of the Constitution and the
approach to
the interpretation of section 33(1) of the Arbitration Act in the
light of the Constitution. All these are constitutional
matters of
substance falling within the jurisdiction of this Court and which,
given the need to provide guidance in this regard,
it is in the
interests of justice for this Court to entertain. The application
of these principles to the facts of this case,
even if arguably not
concerning a constitutional issue itself, concerns a matter
connected to a decision on a constitutional
issue which it is in
the interests of justice to decide. In so doing, we will avoid the
piecemeal determination of the case
and provide an application of
the principles set out above which will hopefully elucidate those
principles in a helpful manner.
I would therefore grant the
application for leave to appeal.
Should
the arbitration award be set aside?
Mphaphuli
argues that the arbitration award be set aside because, first, the
arbitrator held what it terms three “secret”
meetings with
Bopanang during the course of the arbitration. Secondly, Mphaphuli
points to the fact that not all correspondence
between Bopanang and
the arbitrator was furnished to Mphaphuli; and thirdly, Mphaphuli
submits that the arbitrator committed
a gross irregularity by
“effectively ignoring the pleadings filed before him” and
awarding amounts in excess of what had
been claimed and invoiced.
Before turning to consider these complaints in detail, it will be
helpful to give some further
background to the arbitration.
The
arbitration process
As
set out in the introductory paragraphs of this judgment, the
arbitration agreement was entered into between the parties once

litigation had been initiated by Bopanang to recover moneys it
alleged Mphaphuli owed it in terms of a contract in which Bopanang

had been appointed as a sub-contractor by Mphaphuli to electrify
certain rural villages in Limpopo Province. In July 2003,

Mphaphuli and Bopanang held a pre-arbitration meeting at which they
agreed that Mr Andrews, a quantity surveyor, would be appointed
as
arbitrator. The note of this agreement reflected that Mr Andrews
was appointed in the light of his qualifications and experience.

The parties further agreed that Mr Andrews would be furnished with
Bopanang’s particulars of claim, together with a list
of
documents upon which it relied. Further, Mphaphuli was to lodge
its plea and counterclaim (if any) and its list of documents
by a
certain date, which would then be followed by Bopanang’s reply
and plea to the counterclaim (if any).
According
to the arbitrator, once he had received this documentation he
realised that he could not determine what, if anything,
was due by
Mphaphuli to Bopanang from the invoices alone and he concluded that
he needed to re-measure the quantities on site.
When the
arbitration commenced on 6 October 2003, he informed the parties of
this and the parties agreed that the matter would
have to be
postponed, and the mandate of the arbitrator extended to include
physical re-measurement on site. Thereafter, a
further arbitration
agreement reflecting this agreement was signed on 16 October 2003.
Clause
1 of this agreement was titled “Purpose of Arbitration”. It
provided as follows:
“
The purpose of the
arbitration is to determine whether payment is due in terms of the
contract concluded between the parties,
and if it is determined that
payment is in fact due, the extent of such payment due, having
regard to the scope of the agreement;
any agreed amendments or
instructions for amendments thereto by the Defendant or ESKOM; the
value of the work that has been done
by the Plaintiff; the effect of
any defects, if any, and the rectification thereof; any and all
payments made to the Plaintiff.
Therefore a final assessment of the
moneys reasonably due by any one of the parties to the other needs
to be made by the arbitrator.”
The
clear purpose of the arbitration was therefore to determine what, if
anything, was owed by Mphaphuli to Bopanang.
In
relation to the procedure to be followed, the agreement provided in
clause 4 that—
“
The parties record that the
arbitrator has already been provided with a bundle of documentation
forming part of the Plaintiff’s
Particulars of Claim. In addition
hereto, each party shall be entitled to submit such documentation as
it may deem necessary
to the arbitrator by not later than 10 October
2003 [sic].”
Clause
5 provided that the arbitrator “shall be entitled to require from
any of the parties to make such further documentation
available as
he may require”. It further stated that the parties would
furnish the documentation to the arbitrator within
three days of
his request. Clause 6 provided that the arbitrator could liaise
with representatives of Eskom and request Eskom
to furnish any
relevant documentation. Neither clause 5 nor 6 expressly stated
that the documentation received by the arbitrator
would be
furnished to the parties. Clause 10 of the agreement stipulated
that the terms of the agreement were the full agreement
between the
parties and were not to be varied save in writing.
Clause
7 of the agreement provides that the arbitrator would commence the
“inspection and measurement of the work” on site
on 27 October
2003. It specifically added that each party should appoint
representatives to attend the inspection and measurement.
I
should pause here to note that the agreement makes no express
provision for formal adversarial adjudicative proceedings at
all in
which evidence would be led or legal argument submitted. Both
Mphaphuli and Bopanang accept this. The agreement provided
only
for the furnishing of documents to the arbitrator by the parties
and Eskom (with a power for the arbitrator to request
further
documents should he consider it necessary) and for a re-measurement
process to take place on site. It was only in
relation to the
re-measurement process that the agreement stipulated that parties
would appoint representatives. It is again
worth noting that the
representatives appointed were not lawyers.
The
date for the inspection was delayed till 12 and 13 November 2003.
In his affidavit, the arbitrator describes, in a largely
undisputed
version, what happened on those days as follows:
“
Tatjane is a rural area
situated in a remote and mountainous part of Limpopo province. It
is a large area (totalling approximately
20-30 km
2
) and
for most of it, inaccessible to vehicles. Since it became clear to
all of us that the inspection and measurements would
have had to be
done on foot, it was decided after consultation with the parties,
that we split into two teams. Each team would
comprise of
representatives of both parties and would be tasked physically to
re-measure all work done by Second Respondent.
In the evening, we
would then get together and combine the results of both teams. The
first team comprised of myself, Mr Lufuno
Mphaphuli . . . and Mr
Shawem Kigole who represented the Second Respondent. The second
team comprised of Mr Gerhard Esterhuizen
(who represented the Second
Respondent) and one Moses (who represented the Applicant).”
Rain
washed out most of the efforts at measurement on 12 November 2003
and the teams agreed to meet again on 1 December 2003.
In the
meanwhile, the arbitrator consolidated the results of the
inspection and forwarded them to the parties. The arbitrator
notes
that the equipment installed by Bopanang was physically counted and
measured. He emphasises that work installed by other
contractors
was not measured. The arbitrator further states that on 1 and 2
December 2003, the remainder of the area was inspected
and
re-measured. He notes that it became clear during the inspection
process that Bopanang had to supply electricity to considerably

more informal dwellings than had originally been estimated by
Mphaphuli and that many of the dwellings in the area were new.
It
was also accepted, says the arbitrator, that Bopanang was entitled
to be compensated for these additional installations.
He also
noted that the mountainous nature of the area had resulted in the
need to re-route some of the electricity cables.
By 18 December
2003, the arbitrator had completed a schedule reflecting the
results of the inspection and re-measurement process
which he sent
to the parties for their comment.
A
flurry of correspondence occurred in the early months of 2004 when
the parties wrote to the arbitrator setting out various
concerns.
From this correspondence and from his work on the measurements, the
arbitrator recounts that it became clear that
some measurements had
been omitted and also that there was a significant factual dispute
between the parties as to the remedial
work that had been
undertaken by AA Electrical. He accordingly suggested a further
meeting on site with representatives of
AA Electrical to resolve
this dispute and to complete the omitted measurements. The meeting
took place on 24 March 2004.
The arbitrator once again
consolidated the results of the re-measurement and inspection of 24
March and forwarded it to the
parties.
At
this stage, I should note that Mphaphuli now objects to the
procedure followed by the arbitrator on the basis that once the

arbitrator had done the measurements, he should again have referred
to the invoices and claims of the second respondent to
limit the
amount due to the amount claimed by Bopanang. The arbitrator
rebuts this argument on the basis that he had advised
the parties
that a determination on the invoices would be impossible and that
inspection and re-measurement were required.
He states that once
the parties had agreed on re-measurement, it would have made no
sense to seek to do that in the light
of the invoices. I shall
return to this issue in a moment.
On
29 April 2004, the arbitrator wrote to the parties identifying
certain outstanding issues upon which he needed guidance.

Mphaphuli responded to this request in writing, but Bopanang felt
that it could not explain its responses in writing. Accordingly,
a
meeting was held between the arbitrator and a representative of
Bopanang on 2 June 2004 where Bopanang’s clarification
was
provided to the arbitrator. This was the second of the so-called
secret meetings. According to the arbitrator, the result
of this
meeting was that the arbitrator wrote to the parties on 9 July 2004
in which he asked both parties to comment on the
tentative
conclusions he had drawn in the light of the meeting of 2 June
2004.
Bopanang
responded to this letter with a series of cryptic yes-or-no answers
pencilled onto the faxed copy of the original letter.
A copy of
this response was not sent to Mphaphuli. However, the same
questions had been put to Mphaphuli who did not respond

immediately. Finally, after being reminded to do so by the
arbitrator in writing on 6 August 2004, Mphaphuli, on 16 August

2004, furnished its responses to the queries of 9 July. It did not
respond to all the queries raised by the arbitrator but
where it
did not respond, the arbitrator accepted that Mphaphuli did not
disagree with his (the arbitrator’s) tentative proposed

conclusion.
One
final issue needs to be described here. When the arbitrator
received Bopanang’s cryptic responses to his letter of 9
July
2004, the answer in relation to one issue was unclear to the
arbitrator. That issue related to a proposed revision of
prices.
The arbitrator held a further meeting with Bopanang, in the absence
of Mphaphuli, on 29 July 2004 to discuss this
issue. This was the
third so-called secret meeting and is discussed in greater detail
below. After that meeting, the arbitrator
rejected Bopanang’s
proposal that revised prices should be awarded, and held in favour
of Mphaphuli that Bopanang was not
entitled to the revised prices
as they had never been agreed in writing – the original contract
required amendments to be
in writing.
The
proper interpretation of the arbitration agreement
Construed
in its context, it seems to me that this arbitration agreement
contemplated that the arbitrator would adopt an informal,

investigative method of proceeding. The factors are the following.
First, the arbitrator is a quantity surveyor, expressly
stated to
have been appointed because of his expertise and experience. This
fact suggests that the parties understood the
process to be
primarily a quantitative exercise which would require the accurate
measurement of work done by Bopanang to determine
the indebtedness
of Mphaphuli.
Secondly,
the terms of the arbitration agreement itself contemplate that the
purpose of the arbitration was to determine—
“
whether payment is due in
terms of the contract concluded between the parties, and if it is .
. . due, the extent of such payment
due, having regard to the scope
of the agreement; any agreed amendments or instructions for
amendments thereto by the Defendant
or ESKOM; the value of the work
that has been done”.
It
concluded by stating that “a final assessment of moneys
reasonably due by any one of the parties to the other needs to
be
made by the arbitrator”. Again, this emphasises that the
function of the arbitrator was primarily quantitative.
Thirdly,
the agreement contemplates that “each party shall be entitled to
submit such documentation as it may deem necessary
to the
arbitrator”. There is no express provision for the exchange of
documentation between the parties. Similarly, the
arbitrator is
entitled to request documentation from the parties without an
express provision for an exchange of the documentation.
Fourthly,
the arbitrator was authorised to liaise with Eskom directly which
was in turn authorised to furnish the arbitrator
with any
documentation he required. Again, the agreement does not stipulate
that such documentation would be furnished to
the parties.
Fifthly, there is only one express provision that requires the
presence of the parties and that is at the re-measurement
process
itself. Sixthly, the agreement makes no provision at all for the
leading of oral evidence or the submission of oral
argument.
I
am strengthened in my conclusion that an informal, investigative
process was envisioned by the process that was in fact adopted
as I
have described it above. That process was one where the arbitrator
received evidence, prepared a schedule of quantities
based on the
evidence he received, gave both parties a copy of the schedule or a
letter setting out his concerns and gave each
an opportunity to
comment. A revised schedule containing the re-measured quantities
was circulated to the parties at least
three times during the
arbitration: on 17 November 2003, 18 December 2003 and at the end
of March 2004 (after the meeting with
AA Electrical). In addition,
the arbitrator wrote to the parties at least three times asking for
their comments on preliminary
conclusions he had reached: on 18
December 2003, 25 February 2004 and on 9 July 2004. Neither of the
parties complained about
the procedure followed to the arbitrator
during the proceedings, and one can only assume that this was the
process the parties
had contemplated.
I
conclude therefore that on a proper interpretation of this
arbitration agreement, the parties intended the arbitrator to
follow an informal, investigative process and one in which no oral
evidence would be led. The procedure was by and large aimed
at the
determination of facts and in particular the amount owed by
Mphaphuli to Bopanang, if anything. No provision was accordingly

made for legal argument. The question that now arises is whether
the conduct complained of by Mphaphuli constitutes a gross

irregularity within the meaning of section 33(1) of the Arbitration
Act in the light of this understanding of the arbitration

agreement. I shall deal with each of the three complaints
separately. Before doing so, I wish to deal briefly with the cases

cited by Kroon AJ concerning the need for both parties to be
present at all stages during arbitration proceedings.
Kroon
AJ relies on
Lazarus v Goldberg and Another
53
which cites Cloete J in
Croll
qq. Kerr v Brehm
to state that “no rule is more clear than that they [arbitrators]
should not proceed to examine parties or witnesses in the
presence
only of one party, that nothing may be done
inaudita altera
parte
”. This rule is clearly correct in the context of an
adversarial process. It is not clear to me, however, that it is
applicable
to investigative proceedings of the sort under
examination here. Can it be said that it is unfair to one party
for an arbitrator
to obtain information, to form a preliminary view
on the basis of that information and then to give both sides an
opportunity
to rebut that preliminary view? I do not think so.
Another
case relied upon by Kroon AJ is
Shippel v Morkel and Another
54
in which Van Winsen J relied on a passage from Voet and concluded
that
“
our Courts have accepted
that in deciding upon matters submitted to them arbitrators are
required to follow, at any rate in broad
outline, the precepts which
govern the procedure employed in the course of judicial
proceedings.”
55
In
my view, this conclusion is incorrect. There is nothing in the
Arbitration Act which excludes investigative proceedings,
as I have
reasoned above, and judges should be cautious not to interpret
section 33(1) of the Act so as to require arbitrators
to proceed as
if they were courts of law. Such an interpretation would undermine
the purposes of arbitration which are to
provide flexible and
affordable alternatives to judicial dispute resolution. Van Winsen
J’s conclusion that “it is well
established . . . that the
procedural rules applicable in an arbitration require that the
proceedings should not be conducted
in the absence of one of the
parties” seems to me (particularly given the previous dictum) to
assume that the proceedings
must be adversarial. That is an
assumption that should not be made.
It
is not necessary to deal with each and every one of the authorities
cited by Kroon AJ. Suffice it to say that, in the light
of modern
arbitration practice and procedure, courts should be careful not to
require arbitrators to proceed in an adversarial
fashion. To the
extent that these authorities stipulate requirements of fairness
relevant to adversarial proceedings, they
cannot be faulted. To
the extent, however, that they suggest that investigative
procedures may not be followed by arbitrators,
they cannot be
accepted. This does not mean that anything goes in an
investigative process. The requirement of fairness obtains
there,
as it does in adversarial proceedings. Its content is simply
different. In each case, the question will be whether
the
procedure followed afforded both parties a fair opportunity to
present their case.
The
“secret” meetings
The three “secret”
meetings Mphaphuli refers to were held on 17 March 2004, 2 June
2004 and 29 July 2004. According to
Bopanang, all that happened at
the first meeting was that the arbitrator and a representative of
Bopanang agreed to a date
for a site meeting to discuss the extent
of the remedial work conducted by AA Electrical. The meeting took
place following
a letter by Bopanang to the arbitrator enquiring
about progress. Following the meeting of 17 March, the arbitrator
immediately
wrote to Mphaphuli to advise it of the date set for the
site meeting, being 24 March.
In
assessing whether this meeting constituted a gross irregularity, it
should be added that it is clear from the record that
there were a
number of occasions on which the arbitrator contacted one or other
party to arrange a meeting or some similar
administrative
arrangement.
56
It is clear from the record that the process was an informal one
and that neither party objected to this during the arbitration.
It
is also clear that nothing that happened on 17 March 2004 prevented
Mphaphuli from presenting its case to the arbitrator
within the
framework of the arbitration procedure adopted. Given that the
proceedings followed were informal and investigative
and based on a
methodology whereby the arbitrator repeatedly placed his
preliminary views before the parties and gave them
an opportunity
to respond, the meeting of 17 March 2004 does not constitute a
gross irregularity, if it constitutes an irregularity
at all.
The
second meeting took place on 2 June 2004.
57
That meeting was held because Bopanang found it hard to respond in
writing to the queries sent by the arbitrator to both parties
on 29
April 2004. In the meeting, Bopanang’s representative explained
to the arbitrator the way in which certain equipment
had been
installed. On the arbitrator’s version, the result of this
meeting was that the arbitrator wrote a letter on 9
July 2004 to
both parties setting out his initial and tentative conclusions on
some of the equipment issues and asked both
parties to respond.
Both parties did eventually respond.
It
may have been unwise for the arbitrator to meet alone with a
representative of Bopanang. The question that arises in this

instance is whether it was unfair in the sense that it denied
Mphaphuli an opportunity fairly to state its case. Mphaphuli
was
given an opportunity to respond to the explanations given by
Bopanang to the arbitrator, in that the arbitrator formulated
the
issues and sent them to both parties requesting confirmation. This
followed the process that had been adopted throughout
the
arbitration. The arbitrator reached preliminary conclusions and
then gave the parties an opportunity to comment thereon.
At times,
by consent, those conclusions were reached in the absence of one or
other of the parties. As noted above, for example,
the site
inspection on 24 March 2004 had gone ahead in the absence of Mr
Mphaphuli as he chose to attend another meeting.
It is to be
assumed that he was willing to do this because he understood that
the arbitrator would give him an opportunity
to comment on the
results of the inspection. This the arbitrator did in due course.
Given
the nature of the proceedings agreed upon, and particularly the
fact (consistent with the conduct of the arbitration throughout)

that the arbitrator set out the preliminary conclusions he had
reached arising from this meeting and gave both parties an
opportunity to comment thereon, it cannot be said that the meeting
prevented Mphaphuli from presenting its case fairly to the

arbitrator. It was indeed given an opportunity to do so. I cannot
conclude therefore that the second meeting constituted
a gross
irregularity.
The
third meeting took place on 29 July 2004. In this meeting, the
representative of Bopanang sought to persuade the arbitrator
to
award certain revised prices. According to the arbitrator, he
decided after consideration that these revised prices were
not
payable by Mphaphuli and ruled in its favour in this regard. I
should add here (though it is not an issue upon which Mphaphuli

relies) that Bopanang’s version of this meeting is less crisp.
It is clear from its version too that it related to the
arbitrator’s desire to get clarity in relation to the cryptic
responses Bopanang had given to his queries of 9 July 2004,
but it
suggests that the discussion may have ranged more broadly than the
question of revised prices.
Again
this meeting should not have been held alone with the
representative of Bopanang. Yet, at the time, the arbitrator was

having difficulty contacting Mphaphuli at all which had still not
responded to the letter of 9 July. When it did finally respond
to
the letter of 9 July, it appears to have agreed with many of the
preliminary conclusions reached by the arbitrator in that
it did
not dispute them and instead mainly raised issues relating to
quantities in the re-measurement schedule. Finally, on
the
arbitrator’s version, the result of the meeting favoured
Mphaphuli. In all these circumstances, it does not seem to
me that
this meeting should be found to constitute a gross irregularity in
the context of this arbitration sufficient to warrant
the award
being set aside.
Failure
to disclose all correspondence
The
second irregularity to which Mphaphuli points is the failure by the
arbitrator to ensure that all correspondence received
from Bopanang
was forwarded to Mphaphuli. The arbitrator states that, to the
extent that this happened, it was an oversight
in his office, and
that the vast majority of the correspondence received was
circulated to both parties.
Mphaphuli
points to three letters in this regard (though in written and oral
argument only the second and third letters were
raised). The first
letter was a letter sent by Bopanang to the arbitrator on 12
December 2003 raising a report by Eskom and
the remedial works done
by AA Electrical. Whatever impact this letter may have had, if
any, on the arbitrator’s conclusions,
Mphaphuli would have had an
opportunity to respond given that the arbitrator furnished it with
his tentative conclusions in
a schedule of measurements at least
twice after the letter was received. Although it may well have
been a regrettable oversight
not to have forwarded the letter to
Mphaphuli, it cannot be said that the failure to do so constituted
an irregularity so material
as to require this Court to set aside
the arbitration award.
The
second letter was a letter of 24 February 2004 in which Bopanang
wrote to the arbitrator furnishing comments on the claims
of AA
Electrical. This letter was one of a flurry of letters between the
parties and the arbitrator at that time. The arbitrator
generally
forwarded letters of one party to the other, but in this case he
admits the letter was not forwarded due to an oversight.
However,
it is also clear that this flurry of letters made plain to the
arbitrator that there was a serious dispute of fact
between the
parties concerning the work done by AA Electrical. As a result,
the arbitrator called a further site meeting to
be attended by both
parties and AA Electrical to resolve this factual dispute.
58
After that meeting the arbitrator reworked his measurements and
sent them to the parties again at the end of March.
Accordingly,
although it may have been unfortunate that the arbitrator failed to
provide Mphaphuli with a copy of Bopanang’s
letter of 24 February
2004, it cannot be said that this undermined Mphaphuli’s ability
fairly to make its case. It was given
a full opportunity on 24
March 2004 to assist in the determination of the dispute concerning
what work had been done by AA
Electrical, and again once the
revised measurements were sent to it at the end of March. The
failure to provide Mphaphuli
with a copy of the letter of 24
February, therefore, cannot be said to have amounted to a serious
irregularity which would
warrant setting aside the arbitration.
The
third letter to which Mphaphuli points in this regard is a letter
from Bopanang to the arbitrator dated 19 July 2004. This
letter is
the cryptic response to the arbitrator’s letter of 9 July 2004
described above at paragraph 64. It will be recalled
that the
arbitrator had given the parties a list of preliminary conclusions
upon which he wanted their comment before finalising
his award. It
is clear that both parties were given an opportunity to respond to
this preliminary set of conclusions. Although
there is no doubt
that it would have been desirable as a matter of practice for the
arbitrator to have furnished a copy of
Bopanang’s letter of 19
July to the applicant, I am not persuaded that anything turns on
this at all. The process adopted
is quite clear. The arbitrator
made preliminary findings and asked each party for comment. This
is a classic investigative
process. Mphaphuli was given a fair
opportunity to make out its own case. There is no suggestion that
the arbitrator contemplated
an adversarial exchange between the
parties on his preliminary conclusions. He simply asked each party
whether the approach
he adopted was correct or not.
Each
party then had an opportunity to persuade the arbitrator that his
preliminary conclusions were wrong. In respect of several
of the
preliminary conclusions he had suggested in his letter of 9 July
2004, the arbitrator ruled in favour of Mphaphuli.
Moreover,
Bopanang’s responses were cryptic as has been described. By and
large, they were yes-or-no answers. In my view,
there is not much
that Mphaphuli could have said to rebut these simple yes’s or
no’s beyond what it said in its own response
to the very same
queries. I conclude on this point too that Mphaphuli has not
established a gross irregularity in this regard.
Ignoring
the pleadings/arbitral mandate
The
final argument made by Mphaphuli is that the arbitrator, in
pursuing a full re-measurement of the work undertaken by Bopanang,

ignored the pleadings and thus misconstrued his mandate. This
complaint goes to the question of the proper construction of
the
arbitration agreement. In this regard, I disagree with my
colleague Kroon AJ. In my view, it is clear from the record
that
it was the arbitrator’s view that it was impossible to determine
on the basis of the invoices alone what money if any
was owing to
Bopanang. The arbitrator told the parties this and suggested that
a fair process would be to conduct a re-measurement
on site to
identify what work Bopanang had in fact undertaken.
It
was further his view that once that re-measurement had been
undertaken he would deduct from the re-measurement the amount

Mphaphuli had paid Bopanang. The arbitrator states that it was not
the intention of the parties that the amounts owing would
be
limited to the amounts originally claimed by Bopanang or as
stipulated in the contract. In asserting this, the arbitrator

points to the fact that it became apparent during the site
inspection that far more dwellings needed to be electrified than

had originally been provided for in the contract, and that the
parties agreed that Bopanang was entitled to remuneration for
work
actually done. This Mphaphuli now disputes.
During
the arbitration, it must have been clear to Mphaphuli from the
measurements repeatedly sent to it by the arbitrator that
this is
how the arbitrator construed his task. The arbitration agreement
properly construed did not require both the re-measurement
and
determination of what was due on the basis of the re-measurement,
and also the determination of what was due on the invoices
and, in
the light of the invoiced amounts, somehow curtailing the amount
found to be due on the re-measurement. Such an approach
was
inconsistent with the agreement that a re-measurement was
necessary, and that it would form the basis of a new schedule

setting out the amounts Bopanang was entitled to in terms of the
price schedule in the contract. Mphaphuli participated fully
in
this process. What is more, it was afforded at least three
opportunities during the proceedings to dispute the re-measured

quantities when the arbitrator furnished his preliminary
re-measurements. One can only conclude that Mphaphuli did not

dispute this manner of proceeding because its understanding of the
arbitration agreement was precisely the understanding proffered
by
the arbitrator – the arbitration was to be based on the
re-measured quantities and not on the invoiced amounts.
I
conclude in this regard that the arbitrator correctly understood
his mandate and that Mphaphuli’s complaint in this respect
must
fail. Counsel for the applicant did not press the argument
relating to bias on the part of the arbitrator in either written
or
oral argument. Given the conclusion I have reached, there is no
basis for concluding that the manner in which the arbitrator

conducted himself gave rise to a reasonable perception of bias. No
more need be said on this score.
Costs
Mphaphuli
has raised a constitutional issue in this Court. The respondents
were brought to this Court to answer that argument.
They did not
rely on any constitutional right of their own but disputed the
constitutional argument made by the applicant.
Properly construed,
therefore, this is private litigation relating to a commercial
matter and the applicant has lost. In
my view, it should pay the
costs, including those consequent upon the employment of two
counsel.
Order
For
the reasons set out above, I make the following order:
The application for leave to
appeal is granted.
The appeal is dismissed.
The applicant is ordered to
pay the costs of both respondents in this Court, such costs to
include the costs of two counsel.
Langa
CJ, Mokgoro J, Van der Westhuizen J and Yacoob J concur in the
judgment of O’Regan ADCJ.
59
NGCOBO J:
I
have read the judgments prepared by my colleagues O’Regan ADCJ
and Kroon AJ. They both agree that the application for leave
to
appeal raises a constitutional matter and that it is in the
interests of justice to grant leave to appeal. However, they
reach
different outcomes. I accept that the contentions advanced by
Mphaphuli raise a constitutional matter. However, I am
unable to
agree with my colleagues that it is in the interests of justice to
grant leave to appeal. In my view, the application
falls to be
dismissed with costs. And for reasons set out in this judgment, I
do not therefore express any view on the constitutional
matter that
Mphaphuli raises in this Court.
The
facts are set out in the judgments of my colleagues. I do not
propose to repeat them in this judgment except to the extent

necessary for this judgment.
Suffice
it to say that this litigation that has its genesis in a
subcontract entered into between Mphaphuli and Bopanang on
16 May
2002. A dispute that ensued between Mphaphuli and Bopanang over
payment and execution of the agreement led to Bopanang
vacating the
subcontracted site during January 2003. High Court litigation
ensued. This culminated in an arbitration agreement
signed by the
parties on 16 October 2003. The arbitrator published his award on
23 August 2004. He found Mphaphuli liable
to Bopanang in an amount
of R339 998.83 together with interest on that amount calculated
from 6 October 2002. The attempt
by Mphaphuli to have the award
reviewed and set aside failed in the High Court in Pretoria. An
appeal to the Supreme Court
of Appeal suffered the same fate.
Hence this application for leave to appeal.
In
its application for leave to appeal to this Court, Mphaphuli
alleged that the crisp question on which it seeks the ruling
of
this Court is whether or not, in behaving irregularly, the
arbitrator compromised one of its constitutional rights. The

constitutional right implicated was said to be the right of access
to court, which is enshrined in section 34 of the Constitution.
In
its written argument, it contended that the issue which lies at the
heart of its application for leave to appeal is the
relationship
between arbitrations, the courts and the Constitution.
It
submitted that the application raises in particular:
To what extent are the
courts entitled and required to exercise some control over
arbitration awards before adopting them
as their own and making
them orders of court?
Does the mere conclusion of
an arbitration agreement mean that the parties had undertaken to
waive fundamental aspects of
their right to a fair hearing in
terms of section 34 of the Constitution, and, if so, under what
circumstances?
What is the correct approach
to the grounds of review set out in
section 33
of the
Arbitration
Act 42 of 1965
when that section is properly interpreted in the
light of the right to a fair hearing contained in section 34 of
the Constitution?
These
contentions by Mphaphuli no doubt raise a constitutional matter.
But these issues are being raised for the first time
in this Court.
They were neither raised in the High Court nor in the Supreme
Court of Appeal. And these are the kind of issues
that, on
Mphaphuli’s version, arise from the manner in which the
arbitrator conducted himself. They are, therefore, issues
which
were always there and did not arise subsequent to the decisions of
the High Court or of the Supreme Court of Appeal.
The question is
whether it is in the interests of justice to grant leave to appeal
in these circumstances. It is instructive
to trace Mphaphuli’s
cause of action as it developed in a series of affidavits filed by
it in the High Court.
The
cause of action relied upon by Mphaphuli in its founding affidavit
of 10 December 2004 was based on administrative action.
It alleged
that the arbitration process constitutes administrative action and
should therefore be lawful, reasonable and procedurally
fair as
required by section 33(1) of the Constitution. In support of this
cause of action, Mphaphuli alleged that the arbitrator
had awarded
Bopanang costs for work that was neither performed nor claimed for
by Bopanang. In its opposing affidavit, dated
12 May 2005,
Bopanang raised among others, two points. The first was that the
arbitration process does not constitute administrative
action, and
that the provisions of section 33(1) of the Constitution do not
apply. The other point was that none of the grounds
of review set
out in the founding affidavit amounts to those envisaged in
section
33(1)(a)
-(c) of the
Arbitration Act.
1
>
In
a supplementary founding affidavit, dated 3 August 2005, filed
ostensibly to deal with matters raised in the record filed
by the
arbitrator, Mphaphuli conceded that the private arbitration process
does not constitute administrative action. It now
alleged that the
process should be more accurately described “as a judicial or
quasi-judicial process.” In amplification
of this, Mphaphuli
alleged that the arbitrator failed to perform his mandate, he was
biased in favour of Bopanang and there
were manifest errors in the
award. In response, Bopanang alleged that the arbitrator followed
a transparent process which
was fair to both parties and that he
had applied his mind consistently with his mandate.
In
its four further replying affidavits filed between 3 October and 22
December 2005, Mphaphuli stood by its allegations that
the
arbitrator failed to perform his mandate and that there were
manifest errors in the award. In particular, in its replying

affidavit, dated 22 December 2005, to Bopanang’s first answering
affidavit, Mphaphuli stated that it had been advised that
in the
initial application for review, it had erroneously invoked section
33 of the Constitution. Mphaphuli claimed that this
was due to its
ignorance of the law and the fact that it relied upon its legal
representatives.
Now
I have referred to these affidavits filed on behalf of Mphaphuli in
order to show that despite modifying its cause of action
as the
litigation progressed, Mphaphuli did not raise any of the
constitutional issues that it now seeks to raise. Nor did
it raise
these issues in its 15-page application for leave to appeal to the
Supreme Court of Appeal. These issues were not
raised in the
Supreme Court of Appeal either. Any doubt on this score is
immediately removed by an affidavit filed by Mphaphuli’s
attorney
in this Court in support of the application for condonation.
In
that affidavit, the attorney tells us that:
“
At the outset I must confess
that although I have been a practising attorney specialising in
litigation for nearly 13 years, I
have not ever dealt with a
constitutional matter before this one. In addition, senior and
junior counsel who appeared on behalf
of the Applicant before the
Supreme Court of Appeal are also highly experienced in litigation,
but have not previously appeared
before the Constitutional Court.
Accordingly I deemed it necessary and received an instruction from
the Applicant, to brief
a new counsel with specialist experience in
constitutional matters. Initially the brief to new counsel was to
consider whether
there were reasonable prospects of success with an
appeal to the Constitutional Court. In other words, was there a
constitutional
issue which was implicated in the matter?
”
Mphaphuli
itself confirms that the constitutional issues are being raised for
the first time in this Court. In dealing with
the interests of
justice, it acknowledges the reluctance of this Court “to hear
matters concerning constitutional issues
that have not first been
ventilated in other courts.” It goes on to say, however, that
“[w]hilst it is true that the constitutional
issue was not
couched as crisply as it has been in these papers, the same or
similar issues were nevertheless raised (albeit
more obliquely) in
the Supreme Court of Appeal.” But Mphaphuli goes on to admit
that “the point remains that the constitutional
argument was
never articulated the way it has been done here and was therefore
not adequately ventilated in the judgment of
the . . . Supreme
Court of Appeal.”
It
is patently clear from these statements that the constitutional
issue was raised as an after thought in order to get the
ear of
this Court.
The
Supreme Court of Appeal and the High Courts have jurisdiction to
hear constitutional matters. The Constitution contemplates
that
this Court will ordinarily sit as a final court of appeal on
constitutional matters except in those instances where it
has
original jurisdiction or where direct access to it is appropriate
in the interests of justice. A litigant who intends
to raise a
constitutional issue must, therefore, do so in the court of first
instance. Parties should not, in an attempt to
appeal further from
the Supreme Court of Appeal, raise, for the first time in this
Court, a constitutional issue. This practice
deprives both the
High Court and the Supreme Court of Appeal the opportunity to
consider constitutional matters. But more
importantly, it deprives
this Court of the views of both the High Court and the Supreme
Court of Appeal on the issue. In
Carmichele
,
2
we held that:
“
There is an obligation on
litigants to raise constitutional arguments in litigation at the
earliest reasonable opportunity in
order to ensure that our
jurisprudence under the Constitution develops as reliably and
harmoniously as possible. In the result
this Court has not had the
benefit of any assistance from either court on either stage of the
inquiry referred to above.”
3
This
Court has, on many occasions, indicated that it is undesirable to
determine constitutional questions as the court of first
and last
instance.
4
This is even more so in a matter such as this which concerns the
interpretation and the application of a private arbitration

agreement. In
S v Bierman
,
5
we said the following concerning the failure to raise a
constitutional issue in the lower courts:
“
The applicant’s failure to
raise the constitutional issues concerning the admissibility of the
Rev Bothma’s evidence in her
application to the Supreme Court of
Appeal inhibits her ability to raise them now in this Court. As a
result of that failure,
this Court has not had the benefit of that
Court’s consideration of these issues which relate directly to
established principles
of the common law and to the application of
such principles. The applicant’s failure to raise the
constitutional issues upon
which her application to this Court is
based in the Supreme Court of Appeal may well have been sufficient
of itself to mean that
her application to this Court should have
been refused”.
6
It
is no answer for Mphaphuli to suggest that this Court has the
benefit of the judgment of the Supreme Court of Appeal in
Telcordia
7
on the constitutional issues raised together with the judgment
of the Supreme Court of Appeal in the present matter. In the

present matter, the Supreme Court of Appeal did not consider the
role of section 34 in private arbitrations nor did it consider
any
of the questions now raised by Mphaphuli in its application for
leave to appeal. That judgment is therefore of no benefit
to this
Court on the issues that Mphaphuli seeks to raise.
In
Telcordia
, the Supreme Court of Appeal did not consider any
of the questions that Mphaphuli is inviting us to consider in its
intended
appeal. What the Supreme Court of Appeal considered in
that case is whether section 34 was applicable to private
arbitration
and held that it was.
8
It is true, the court held, that “there is nothing to prevent
parties from defining . . . what is fair for the purposes
of their
dispute.”
9
It also held, relying on the approach of the European Court of
Human Rights, that the rights contained in section 34 may be
waived
unless the waiver is contrary to some other constitutional
principle or is otherwise contra bonos mores.
10
But it also held that by agreeing to arbitration, the parties
“necessarily agree that the fairness of the hearing will be

determined by the provisions of the [Arbitration] Act”.
11
This case therefore does not help us to resolve the issues that
Mphaphuli seeks to raise in its intended appeal.
What
must be stressed here is the role of this Court and that of the
Supreme Court of Appeal. This Court is not just another
court to
which an appeal from the Supreme Court of Appeal lies. This Court
has a special role to play in the context of our
judicial system.
It is the highest court, not in all matters, but in constitutional
matters only. It follows from this that
its appellate jurisdiction
is limited to appeals against decisions on constitutional matters.
This means that the appellate
jurisdiction of this Court may be
invoked only in respect of a constitutional matter that has been
raised and considered by
the lower courts. As we have recently
held, albeit in a different context, “the jurisprudence of this
Court is greatly enriched
by being able to draw on considered
opinion of other courts.”
12
Apart
from this, the Constitution carves out our jurisdiction from that
of the Supreme Court of Appeal. The Supreme Court of
Appeal is
“the highest court of appeal except in constitutional matters”.
13
By constituting the Supreme Court of Appeal as the final court of
appeal in “non-constitutional” matters, the Constitution
seeks
to achieve finality in litigation. If parties were to be allowed
to raise a constitutional matter for the first time
in this Court,
this would not only undermine the role of the Supreme Court of
Appeal, but it would also undermine the principle
of finality in
litigation.
For
these reasons, this Court should be very reluctant to entertain a
constitutional matter that could have been, but was not,
raised in
the High Court or the Supreme Court of Appeal. This does not mean
that this Court would never entertain a constitutional
issue that
is raised for the first time in the appeal before it. There may
be circumstances where the interests of justice
may well require
this Court to entertain a constitutional issue raised for the first
time in an appeal before it. However,
such circumstances “would
. . . be rare and . . . would have to be exceptional.”
14
The
applicant has not demonstrated the existence of exceptional
circumstances.
There
are two further considerations which militate against granting
leave to appeal. The first relates to the prospects of
success.
As
is clear from the arbitration agreement, the parties could not
agree on the value of the work performed by Bopanang. To
this
extent they agreed on arbitration and defined as one of the
purposes of the arbitration to “determine the value of the
work
that has been done by [Bopanang]” (Clause 1 of the arbitration
agreement). With this purpose in mind, they looked for
an
arbitrator with skills in evaluating work done. They agreed on Mr
Andrews, a practising quantity surveyor and a project
manager from
Johannesburg. In order to enable the arbitrator to carry out his
mandate effectively, they gave him the power
“to require from any
of the parties to make such further documentation available as he
may require” (Clause 5); they authorised
him “to liaise with
ESKOM . . . and to request any documentation” from Eskom (Clause
6); and, in turn, they authorised
Eskom to make available to him
any documentation that he required (Clause 6). Perhaps more
importantly, they gave the arbitrator
the power to inspect and
measure work done on the site (Clause 7). And, as O’Regan ADCJ
finds, neither clause 5 nor 6 expressly
stated that the
documentation received by the arbitrator would be made available to
the parties.
This
was an investigative arbitration where the arbitrator had to play
an active role in identifying and requesting information
that was
required for the purposes of carrying out his mandate. I therefore
agree with the High Court that Mphaphuli misconceived
the nature of
the proceedings before the arbitrator. This was not a formal
hearing where evidence was to be led and the arbitrator
was obliged
to receive submissions from the parties. The arbitrator had to
inspect and re-measure the work done. The arbitrator’s

qualification bears this out.
And
for the reasons advanced by O’Regan ADCJ, I agree that the
arbitration agreement contemplated that the arbitrator would
adopt
an informal, investigative method of arbitration as opposed to a
formal, adversarial one.
My
colleague O’Regan ADCJ has analysed the facts and reached
conclusions on the nature of the arbitration process involved
here,
the “secret” meetings, the failure to disclose all
correspondence and the alleged ignoring of pleadings or arbitral

mandate. I find her analysis and conclusions persuasive. However,
in the view I take of the matter, it is sufficient for
me to say
that her analysis and conclusions amply demonstrate that Mphaphuli
has no prospects of success in the intended appeal.
The
other consideration relates to the ultimate dispute between the
parties. The judgments by my colleagues amply demonstrate
that
this case is essentially about the proper meaning and application
of an arbitration agreement between the parties. Reduced
to its
essence, this case is therefore about whether or not the
arbitrator’s award draws its essence from the arbitration

agreement. As is apparent from what I have said above, the purpose
of raising the constitutional issues was merely to get
the
opportunity of a further appeal. This, in my view, cannot be
countenanced.
For
all these reasons, I consider that it is not in the interests of
justice to grant leave to appeal. The application therefore
falls
to be dismissed with costs including the costs of two counsel.
Counsel for the applicant:
Advocate
G Marcus SC and Advocate S Budlender instructed by Knowles
Hussain Lindsay Inc.
Counsel
for the first respondent:
Advocate
BC Stoop instructed by Barnard Inc.
Counsel
for the second respondent:
Advocate
F du Toit SC instructed by Schulz Lewis Inc.
1
Lufuno Mphaphuli & Associates (Pty) Ltd v
Andrews and Another
[2007] ZASCA 143
;
2008 (2) SA 448
(SCA);
2008 (7) BCLR 725
(SCA).
2
Bopanang Construction CC v Lufuno Mphaphuli &
Associates (Pty) Ltd;
Lufuno Mphaphuli &
Associates (Pty) Ltd v Andrews and Another
,
Case Nos
27225/04 and 33188/2004
,
North Gauteng High Court, Pretoria, 22 February 2006, unreported.
3
Sections 31(1) and (3) provide as follows:
“
(1) An award may, on the application to a court of
competent jurisdiction by any party to the reference after due
notice to the
other party or parties, be made an order of court.
. . . .
(3) An award which has been made an order of court may
be enforced in the same manner as any judgment or order to the same
effect.”
4
Section 32(2) provides as follows:
“
The
court may, on the application of any party to the reference after
due notice to the other party or parties made within six
weeks after
the publication of the award to the parties, on good cause shown,
remit any matter which was referred to arbitration,
to the
arbitration tribunal for reconsideration and for the making of a
further award or a fresh award or for such other purpose
as the
court may direct.”
5
The Rule required the arbitrator to lodge the
record, together with such reasons as he may wish to furnish, with
the Registrar
within 15 days after receipt of the notice of motion,
and to notify the applicant that he had done so.
6
The Rule provides as follows:
“
The applicant may within 10 days after the Registrar
has made the record available to him, by delivery of a notice and
accompanying
affidavit, amend, add to or vary the terms of his
notice of motion and supplement the supporting affidavit.”
7
As recorded in n 4 above, an application in terms
of section 32(2) for the remittal of a matter to the arbitrator is
required
to be brought within six weeks of the publication of the
award. Similarly, section 33(2) provides that an application for
the
setting aside of an award on any of the grounds set out in
section 33(1) must be brought within six weeks of the publication of

the award. (The full text of section 33(1) is reproduced in n 14
below.)
Section 38
of the
Arbitration Act provides
as
follows:
“
The
court may, on good cause shown, extend any period of time fixed by
or under this Act, whether such period has expired or not.”
8
Above n 4.
9
Section 167(3)(b) of the Constitution. See
Phillips
and Others v National Director of Public Prosecutions
[2005] ZACC 15
;
2006 (1) SA 505
(CC);
2006 (2) BCLR 274
(CC) at para
30;
S v Boesak
[2000] ZACC 25
;
2001 (1) SA 912
(CC);
2001 (1) BCLR 36
(CC) at para
11.
10
S v Shaik and Others
[2007] ZACC 19
;
2008 (2) SA 208
(CC);
2007 (12) BCLR 1360
(CC) at
para 15;
Magajane v Chairperson, North
West Gambling Board
and
Others
[2006] ZACC 8
;
2006 (5) SA 250
(CC);
2006 (10) BCLR 1133
(CC) at para 29;
National
Education Health and Allied Workers Union v University of Cape Town
and Others
[2002] ZACC 27
;
2003 (3) SA
1
(CC);
2003 (2) BCLR 154
(CC) at para 25.
11
See in this regard
Armbruster
and Another v Minister of Finance and Others
[2007] ZACC 17
;
2007 (6) SA 550
(CC);
2007 (12) BCLR 1283
(CC) at
para 24;
Radio Pretoria v Chairperson,
Independent Communications Authority of South Africa, and Another
[2004] ZACC 24
;
2005 (4) SA 319
(CC);
2005 (3) BCLR 231
(CC) at para
19.
12
See the cases cited
above in n 9.
13
Section 34 reads as follows:
“
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.”
14
Section 33(1) provides as follows:
“
Where—
(a) any member of an arbitration tribunal has
misconducted himself in relation to his duties as arbitrator or
umpire; or
(b) an arbitration tribunal has committed any gross
irregularity in the conduct of the arbitration proceedings or has
exceeded
its powers; or
(c) an award has been improperly obtained,
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.”
15
Section 167(7) of the Constitution.
16
Section 167(3)(c) of the Constitution.
17
The provisions of section 39(2) are quoted in
full in n 31 below.
18
1922 NPD 461
at 462.
19
President of the Republic of South Africa and
Another v Modderklip Boerdery (Pty) Ltd (Agri SA and Others, Amici
Curiae)
[2005] ZACC 5
;
2005 (5) SA 3
(CC);
2005 (8) BCLR 786
(CC) at paras 39-43.
20
South African Law Reform Commission Project 94 “Domestic
Arbitration”
Report: May 2001
at para
2.16;
Redfern and Hunter
Law and Practice of International
Commercial Arbitration
4ed (Sweet & Maxwell, London 2004) at
65-6;
Kerr “Arbitration and the Courts – The
UNCITRAL Model Law”
(1984) 50
Arbitration
3
at 4-5;
London Export Corporation Ltd
v Jubilee Coffee Roasting Co. Ltd
[1958] 1 WLR 271
at 278.
21
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA);
2007 (5)
BCLR 503
(SCA) at para 4.
22
Above n 1 at para 14.
23
Above n 13. The question of the applicability of
section 34 to the present matter is considered below [69]-[78].
24
Above n 21.
25
Cf
Bato Star Fishing
(Pty) Ltd v Minister of Environmental Affairs and Tourism and Others
[2004] ZACC 15
;
2004 (4) SA 490
(CC);
2004 (7) BCLR 687
(CC)
at para 27 which dealt pertinently with the provisions of the
Promotion of Administrative Justice Act 3 of 2000
.
26
Rule 53(3)
provides inter alia that the Registrar
shall make available to the applicant the record despatched to him
upon such terms as
the Registrar thinks appropriate to ensure its
safety.
27
Below at [138]-[142].
28
Section 32(1)
makes provision for the parties to
remit by written agreement any matter which was referred to
arbitration, to the arbitrator
for reconsideration.
29
Above n 4.
30
[2006] ZACC 13
;
2007 (5) SA 525
(CC);
2007 (2)
BCLR 125
(CC).
31
Section 39(2) of the Constitution provides as
follows: “When interpreting any legislation, and when developing
the common law
or customary law, every court, tribunal or forum must
promote the spirit, purport and objects of the Bill of Rights.”
32
Above n 30 at para 16.
33
Id at paras 19-23.
34
Id.
35
Reference was made to
Telcordia
above n 21.
36
Lufuno Mphaphuli
above n 1 at paras 15-6.
37
Cf
Pieters v Administrateur, Suidwes-Afrika en ’n Ander
1972 (2) SA 220
(SWA);
Muller
and Another v The Master and Others
1991 (2) SA 217
(N) at 220D-E. See also
Telcordia
above
n 21 at para 32, which reads as follows:
“
The
grounds for any review as well as the facts and circumstances upon
which the applicant wishes to rely have to be set out in
the
founding affidavit. These may be amplified in a supplementary
founding affidavit after receipt of the record from the presiding

officer, obviously based on the new information which has become
available.” (Footnote omitted.)
38
Reference was made to
Telcordia
above n 21.
39
Reference was made to
Total
Support Management (Pty) Ltd v Diversified Health Systems (SA) Pty
Ltd
[2002] ZASCA 14
;
2002 (4) SA 661
(SCA) at para 25.
40
The reference was to
Telcordia
above n 21 at para 50.
41
The paragraphs are quoted in [52] above.
42
See [53]-[57] above.
43
Above n 1 at para 14.
44
The provisions of section 33(1) are set out in
full in n 14 above.
45
Above n 21 at paras 50-1.
46
Id at
para 47. The provisions of section 34 are
set out in n 13 above.
47
Above n 21 at para 48.
48
Id.
49
Id at para 50.
50
Id at para 51.
51
Lufuno Mphaphuli
above n 1 at
para 16.
52
Reference was made to
S
v Roberts
1999 (4) SA 915
(SCA) at
para 23, which reads, in part, as follows:
“
That
justice publicly be seen to be done necessitates, as an elementary
requirement to avoid the appearance that justice is being

administered in secret, that the presiding judicial officer should
have no communication whatever with either party except in
the
presence of the other:
R v Maharaj
1960 (4) SA 256
(N) at 258B-C. That is so fundamentally important
that the discussion between the magistrate and the prosecutor in the
instant
case warranted on its own, without anything more, the
setting aside of the sentence. Had such a discussion occurred
before conviction
in this matter there can be no question but that
the conviction would have been fatally irregular:
S
v Seedat
1971 (1) SA 789
(N) at 792F.”
53
Reference was made to
Telcordia
above n 21 at para 86 which reads as follows:
“
Likewise,
it is a fallacy to label a wrong interpretation of a contract, a
wrong perception or application of South African law,
or an
incorrect reliance on inadmissible evidence by the arbitrator as a
transgression of the limits of his power. The power
given to the
arbitrator was to interpret the agreement, rightly or wrongly; to
determine the applicable law, rightly or wrongly;
and to determine
what evidence was admissible, rightly or wrongly. Errors of the
kind mentioned have nothing to do with him
exceeding his powers;
they are errors committed within the scope of his mandate. To
illustrate, an arbitrator in a ‘normal’
local arbitration has to
apply South African law but if he errs in his understanding or
application of local law the parties
have to live with it. If such
an error amounted to a transgression of his powers it would mean
that all errors of law are reviewable,
which is absurd.”
(Footnote omitted.)
54
Reference was made to
Total
Support
above n 39 at para 35.
55
The quotation is from
Total
Support
above n 39 at para 21.
56
Reference was made to
S
v Basson
[2004] ZACC 13
;
2007 (3) SA
582
(CC);
2005 (12) BCLR 1192
(CC) at para 30.
57
Reference was made to
South African Commercial Catering and
Allied Workers Union and Others v Irvin & Johnson Ltd (Seafoods
Division Fish Processing)
[2000] ZACC 10
;
2000 (3) SA 705
(CC);
2000 (8) BCLR 886
(CC) at para 15.
58
Above n 1 at paras 18-20.
59
Above n 39 at paras 27-8.
60
Id at para 27.
61
Telcordia
above
n 21 at para 48.
62
Above at [65(a)].
63
ECHR Case No. 31737/96 (23 February 1999), cited
in
Telcordia
above n 21 at para 47.
64
Above n 39 at para 28.
65
Above n 21 at para 4.
66
Section 39(2) of the Constitution, quoted above
at n 31.
67
See, for example,
Investigating
Directorate: Serious Economic Offences and Others v Hyundai Motor
Distributors (Pty) Ltd and Others: In re Hyundai
Motor Distributors
(Pty) Ltd and Others v Smit NO and Others
[2000] ZACC 12
;
2001 (1) SA 545
(CC);
2000 (10) BCLR 1079
(CC) at
paras 22-6.
68
South African Law Reform Commission Project 94 “Domestic
Arbitration”
Report: May 2001
.
69
[2007] ZACC 22
;
2008 (2) SA 24
(CC);
2008 (2) BCLR 158
(CC).
70
66 of 1995.
71
Sidumo
above n
69 at para 245.
72
Id at para 246.
73
Id at para 265.
74
Suovaniemi
above n 63.
See too the
similar comments in
De Beer NO v
North-Central Local Council and South-Central Local Council and
Others (Umhlatuzana Civic Association Intervening)
[2001] ZACC 9
;
2002 (1) SA 429
(CC);
2001 (11) BCLR 1109
(CC) at
para 11, and
President of the Republic
of South Africa and Others v South African Rugby Football Union and
Others (SARFU)
[1998] ZACC 21
;
1999
(4) SA 147
(CC);
1999 (2) BCLR 175
(CC) at para 35.
75
Sidumo
above n
69 at para 124.
76
Above n 63. This case concerned an arbitration
and the applicability of Article 6(1) of the European Convention for
the Protection
of Human Rights and Fundamental Freedoms, which
provides: “In the determination of his civil rights and
obligations . . . everyone
is entitled to a fair . . . hearing . . .
by an independent and impartial tribunal”.
At page 5 of the decision the following
statement appears:
“
There
is no doubt that a voluntary waiver of court proceedings in favour
of arbitration is in principle acceptable from the point
of view of
Article 6 . . . Even so such a waiver should not necessarily be
considered to be a waiver of all rights under Article
6.”
In the result, it was held, on the facts, that there
had been an enforceable waiver of the right to challenge the award
on the
basis of the alleged lack of impartiality of one of the
arbitrators.
77
See the discussion on the permissibility of the waiver of certain
constitutional rights in
Mohamed and Another v President of the
Republic of South Africa and Others (Society for the Abolition of
the Death Penalty in
South Africa and Another Intervening)
[2001] ZACC 18
;
2001 (3) SA 893
(CC);
2001 (7) BCLR 685
(CC) at
paras 61-8.
78
Road Accident Fund v Mothupi
[2000] ZASCA 27
;
2000 (4) SA 38
(SCA) at paras 15-7.
79
Financial Mail (Pty) Ltd and Others v Sage
Holdings Ltd and Another
[1993] ZASCA
3
;
1993 (2) SA 451
(A) at 469.
80
Pretorius v Greyling
1947 (1) SA 171
(W) at 177;
Mothupi
above n 78 at para 19.
81
Laws v Rutherford
1924
AD 261
at 263. See too
Mahomed
above n 77 at paras 62 and 64;
Mothupi
above n 78 at para 19.
82
See
Estate Milne v
Donohoe Investments (Pty) Ltd and Others
1967 (2) SA 359
(A) at 373H-374C; and
Chelsea
West (Pty) Ltd and Another v Roodebloem Investments (Pty) Ltd and
Another
1994 (1) SA 837
(C) at 843E.
83
Above n 1 at para 22.
84
See the comprehensive discussion of the different
approaches required of arbitrators and valuers in
Chelsea
West
, above n 82. I revert later to
consider specific aspects arising out of the approach required of an
arbitrator.
85
1920 CPD 154.
86
Id at 157.
87
1977 (1) SA 429 (C).
88
Above n 82.
89
Above n 87 a
t 434A-G.
90
Above n 82 at 845F-G.
91
Above n 18.
92
Id
at 462-3.
93
Id at 464.
94
1920 CPD 483.
95
Id
at 486.
96
1951 (1) SA 915
(N).
97
Id at 920.
98
1972 (1) SA 435
(R).
99
The Law of Building and Engineering Contracts
and Arbitration
5ed (Juta: Cape Town,
1994).
100
Id
at 188-9.
101
Above n 52.
102
[2005] ZACC 1
;
2005 (4) SA 581
(CC);
2005 (5)
BCLR 423
(CC).
103
Id at para 46. See too
SARFU
above n 77 at para 35 which reads as follows:
“
A
cornerstone of any fair and just legal system is the impartial
adjudication of disputes which come before the courts and other

tribunals. This applies, of course, to both criminal and civil
cases as well as to quasi-judicial and administrative proceedings.

Nothing is more likely to impair confidence in such proceedings,
whether on the part of litigants or the general public, than
actual
bias or the appearance of bias in the official or officials who have
the power to adjudicate on disputes.”
104
Quoted above at [7], clauses 4, 5 and 6.
105
Above
[5]-[7]
106
Quoted
above at [7].
107
Above at [7].
108
Above at [7], clause 7.
109
Above at [59].
110
Above at [38]-[48].
111
Above at [84]-[94].
112
Below at [145]-[146].
113
Above n 1. See also
above at [66].
114
Above n 1 at para 18.
115
Above [100]-[101].
116
Above [103].
117
Above [104].
118
Above n 1 at para 18.
119
Above at [84]-[94].
See further the
comments in [153]
et seq
below.
120
Above n 14.
121
Above [84]-[94].
122
1989 (1) SA 397
(W).
123
Id at 403D-E.
124
1991 (1) SA 21
(A).
125
Id at
37C-F. See too the quotation from
Roberts
,
above n 52;
Masetlha v President of the
Republic of South Africa and Another
[2007] ZACC 20
;
2008 (1) SA 566
(CC);
2008 (1) BCLR 1
(CC) at para
204; and
Zondi v MEC for Traditional
and Local Government Affairs and Others
[2005] ZACC 18
;
2005 (3) SA 589
(CC);
2005 (4) BCLR 347
(CC) at para
112.
126
Above at [55] and [62].
127
Above at [84]-[94].
128
Quoted
above at [7].
129
Above [84]-[94], specifically,
Landmark
Construction
, above n 97.
130
1947 (4) SA 272
(W).
131
Id at 289.
132
Above at [7].
133
[1984] 2 Lloyd’s Rep 66.
134
Id at 76.
135
See a
bove at [131].
136
See above at [133].
137
Above at [134].
138
Above at [135] and [136].
139
Above at [137].
140
Above n 14. See
Hos+Med
Medical Aid Scheme v Thebe Ya Bophelo Healthcare Marketing &
Consulting (Pty) Ltd and Others
[2007]
ZASCA 163
;
2008 (2) SA 608
(SCA) at paras 28-30.
141
1938 TPD 551.
The decision was endorsed by the
Supreme Court of Appeal in
Telcordia
,
above n 21, in the context of the
Arbitration Act.
142
Goldfields
Investment
above
n 141 at 560-1.
143
Hos+Med
above n
140.
144
Van Rooyen and Others v The State and Others (General Council of
the Bar of South Africa Intervening)
[2002] ZACC 8
;
2002 (5) SA
246
(CC);
2002 (8) BCLR 810
(CC).
145
Id at paras 32-3.
146
Above n 102 at para 15.
147
Above n 57.
148
Above n 74 at para 45. See too
Roberts
above n 52 at para 32.
149
Above n 57 at para 15.
150
Naidoo
above n
96 and
Goldfields Investment
above n 141. Cf
Sidumo
above n 69 at para 264 where Ngcobo J commented that for a gross
irregularity to be found it is not necessary to find “intentional

arbitrariness of conduct or any conscious denial of justice.”
151
Above at [66], [139] and [156].
152
[1992] ZASCA 85
;
1992 (3) SA 673
(A). Cf
James
v Magistrate, Wynberg and Others
1995
(1) SA 1
(C).
153
Id
at 694J-695A.
1
Bopanang’s application was launched in the High
Court in Pretoria under case number 27225/04. Mphaphuli’s
separate application
was launched in the same court under case
number 33188/2004. The applications were consolidated and decided
together –
Bopanang Construction CC v
Lufuno Mphaphuli & Associates (Pty) Ltd;
Lufuno
Mphaphuli and Associates (Pty) Ltd v Andrews and Another
,
Case Nos.
27225/04 and 33188/2004
,
North Gauteng High Court, Pretoria, 22 February 2006, unreported.
2
Lufuno Mphaphuli & Associates (Pty) Ltd v
Andrews and Another
[2007] ZASCA 143
;
2008 (2) SA 448
(SCA);
2008 (7) BCLR 725
(SCA).
3
[2002] ZASCA 14
;
2002 (4) SA 661
(SCA).
4
Id at para 25.
5
The New York Convention was entered into in June 1958 in New York.
It now has 144 signatories see
http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html

(accessed on 16 March 2009). South Africa has ratified the
Convention and brought it into force by enacting the Recognition
and
Enforcement of Foreign Arbitral Awards Act 40 of 1977 (although the
Act has been criticised by the South African Law Reform
Commission –
see South African Law Reform Commission Project 94 “Arbitration:
An International
Arbitration Act for
South Africa”
Report: July
1998
at paras 3.13-3.15). The Convention has been described as
the “most effective instance of international legislation in the
entire history of commercial law” (Mustill “Arbitration: History
and Background” (1989) 6(2)
Journal of International
Arbitration
43
at 49 quoted in the South African Law
Reform Commission
Report: July 1998
, op cit, at para 3.3).
6
See Sutton, Gill and Gearing
Russell on Arbitration
23ed
(Sweet & Maxwell, London 2007) at 21.
7
For a discussion in the South African context see Christie
“Arbitration: Party Autonomy or Curial Intervention II:
International
Commercial Arbitrations”
(1994) 111
South African
Law Journal
360
; and Turley “The proposed rationalisation of
South African arbitration law” (1999) 2
Tydskrif vir die
Suid-Afrikaanse Reg
235.
8
For a fuller discussion, see Redfern and Hunter
Law and Practice
of International Commercial Arbitration
4ed (Sweet &
Maxwell, London 2004) at 22-35.
9
See
Sidumo and Another v Rustenberg Platinum Mines Ltd and Others
[2007] ZACC 22
;
2008 (2) SA 24
(CC);
2008 (2) BCLR 158
(CC) at
paras 258-60. See
also
Total Support Management
above
n 3 at para 26, and see further discussion below at [211]-[218].
10
[1999] ZACC 16
;
2000 (1) SA 409
(CC);
1999 (12) BCLR 1420
(CC).
11
Id at para 13.
12
President of the Republic of South Africa and Another v
Modderklip Boerdery (Pty) Ltd
(Agri SA and Others,
Amici
Curiae)
[2005] ZACC 5; 2005 (5) SA 3 (CC); 2005 (8) BCLR 786
(CC).
13
Id at para 39. See also the remarks of Ngcobo J in
Zondi v MEC
for Traditional and Local Government Affairs and Others
[2005]
ZACC 18
;
2005 (3) SA 589
(CC);
2005 (4) BCLR 347
(CC) at
paras 60-3.
14
Established in terms of
section 112
of the
Labour Relations Act 66
of 1995
. See
Sidumo
above n 9 at paras 123-4 and 207-9 and
see the further discussion below at [233]-[235].
15
Above n 3.
16
At para 27.
17
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA);
2007 (5) BCLR 503
(SCA) at
para 47.
18
Above at [71] and [73]-[74].
19
Telcordia
a
bove n 17 at paras 47-8.
20
ECHR Case No 31737/96 (23 February 1999).
21
Id at 5 and relying on
Bramelid and Malmstrőm v Sweden
ECHR
Case Nos. 8588/79 and 8589/79 (12 December 1982).
22
Id at 5-6.
23
See, for example, the full discussion of the relationship between
Article 6 and arbitration in Liebscher
The Healthy Award –
Challenge in International Commercial Arbitration
(Kluwer Law
International, The Hague 2003) at 61-80 and the authorities cited
therein.
24
Telcordia
above n 17 at para 48.
25
Id at paras 50-1.
26
See
Chief Lesapo
above n 10 at paras 13 and 22;
Modderklip
above n 12 at para 39; and
Zondi
above n 13 at paras
60-3.
27
See also the remarks by Harms JA in
Telcordia
above n 17
quoted above at [209].
28
No argument was addressed to us on the question of whether an
arbitrator appointed by the parties would himself or herself

directly bear obligations under section 34 of the Constitution
within the contemplation of section 8(2) of the Constitution. It

seems to me that for the reasons given in this judgment, the answer
to that question is probably “no”. However, I refrain
from
firmly deciding the matter given that no argument was addressed to
this Court in this regard.
29
For a discussion of the difference between waiver and a choice not
to exercise a constitutional right, see
Mohamed and Another v
President of the RSA and Another (Society for the Abolition of the
Death Penalty in South Africa and Another
Intervening)
[2001]
ZACC 18
;
2001 (3) SA 893
(CC);
2001 (7) BCLR 685
(CC) at para 61, n
55. Some constitutional rights inhere in the individual and do not
fall to be exercised and may, arguably,
therefore never be waived
(see the authorities in
Mohamed
,
op cit). The
question is a difficult one and need not be further elaborated here.
30
See the interesting discussion by Woolman “Category mistakes and
the waiver of constitutional rights: A response to Deeksha
Bhana on
Barkhuizen
”
(2008) 125
South African Law Journal
10.
31
See the reasoning of Cameron JA in
Brisley v Drotsky
[2002]
ZASCA 35
;
2002 (4) SA 1
(SCA);
2002 (12) BCLR 1229
(SCA) at para 91,
cited with approval in
Afrox Healthcare Bpk v Strydom
[2002]
ZASCA 73
;
2002 (6) SA 21
(SCA) at para 18; and also
Barkhuizen v
Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC);
2007 (7) BCLR 691
(CC) at para 59 (per Ngcobo J).
32
See the similar but not identical reasoning in
Telcordia
above n 17 at para 48.
33
See section 39(2) of the Constitution and the authorities cited
above at n 31.
34
Voet
Commentary on the Pandects
4.8.26: “since every approval of an award still to be made by an
arbitrator rests on this implied condition that the arbitrator
shall
have given a fair decision”. See Gane (tr)
The
Selective Voet, Being the Commentary on the Pandects
Vol
1 (Butterworth and Co (Africa) Ltd, Durban 1955) 760.
Although
the Latin word used in Voet is “
tacita”,
I think this is,
in modern usage, best translated as “implied” rather than
“tacit”. The distinction in our modern law
was nicely explained
by Corbett AJA in
Alfred
McAlpine and Son (Pty) Ltd v Transvaal Provincial Administration
1974 (3) SA 506
(A) 532G-H as follows:
“
The
implied term . . . is essentially a standardised one, amounting to a
rule of law which the Court will apply unless validly
excluded by
the contract itself. While it may have originated partly in the
contractual intention, often other factors, such
as legal policy,
will have contributed to its creation. The tacit term, on the other
hand, is a provision which must be found,
if it is to be found at
all, in the unexpressed intention of the parties. Factors which
might fail to exclude an implied term
might nevertheless negative
the inference of a tacit term.”
35
See
Lazarus v Goldberg and Another
1920 CPD 154
at 157.
36
See in this regard section 1 of the United Kingdom Arbitration Act,
1996 which provides as follows:
“
The
provisions of this Part are founded on the following principles, and
shall be construed accordingly—
the object of arbitration is to obtain the fair
resolution of disputes by an impartial tribunal without unnecessary
delay or
expense;
the
parties should be free to agree how their disputes are resolved,
subject only to such safeguards as are necessary in the
public
interest”.
37
In this regard see also the Report of the South African Law Reform
Commission Project 94 “Domestic Arbitration”
Report: May 2001
which, in its draft Bill, proposes a similar provision to the
provision in the United Kingdom Arbitration Act. They propose
a
general principles clause in section 2 of the Bill which would
provide that “the object of arbitration is to obtain the fair

resolution of disputes”. See also the proposed section 28(1)
which establishes a general duty of fairness similar to that

contained in section 33 of the United Kingdom Arbitration Act.
38
Premier, Mpumalanga, and Another v Executive Committee,
Association of State-Aided Schools, Eastern Transvaal
[1998]
ZACC 20
;
1999 (2) SA 91
(CC);
1999 (2) BCLR 151
(CC) at para 39.
39
So, for example, section 34(1) of the United Kingdom Arbitration
Act, 1996, provides that the tribunal may decide all procedural
and
evidential matters, subject to the agreement between the parties.
Procedural and evidential matters are defined in section
34(2)(g) to
include “whether and to what extent the tribunal should itself
take the initiative in ascertaining the facts and
the law.” I
have opted to use the term “investigative” to describe a manner
of proceeding in which the arbitrator, rather
than the parties,
takes the initiative in ascertaining the relevant facts and law. I
could perhaps have used the term “inquisitorial”,
but have
avoided it, preferring “investigative” which suggests
immediately that what the arbitrator must do is investigate,
in
contrast to adversarial proceedings in which the contending parties
lead evidence and proffer argument before the arbitrator.
40
See Christie “Arbitration: Party Autonomy or Curial Intervention
III: Domestic Arbitrations”
(1994) 111
South African Law
Journal
552.
41
Redfern and Hunter above n 8 at 412.
42
See Sutton, Gill and Gearing above n 6 Appendix 2 at 693.
43
South African Law Reform Commission
Report: May 2001
above n
37 at para 2.16.
44
Id at para 2.20.
45
Id at para 2.21.
46
Id at para 2.22.
47
Id at 157.
48
See [41] above.
49
Above n 9.
50
Id at para 260.
51
Section 23(1) of the Constitution.
52
In this regard, see section 34(2)(g) of the United Kingdom
Arbitration Act, 1996, and Article 19(2) of the UNCITRAL Model Law

which provides that in the absence of agreement between the parties,
“the arbitral tribunal may . . . conduct the arbitration
in such
manner as it considers appropriate.” This right is subject, of
course, to the parties being treated equally in terms
of Article 18
of the UNCITRAL Model Law.
53
1920 CPD 154
,
cited above at [86] of Kroon
AJ’s judgment.
54
1977 (1) SA 429
(C).
55
Id at 34.
56
So, for example, on 16 October 2003, Mphaphuli’s representative
contacted the arbitrator to inform him that the revised arbitration

agreement had been signed and to suggest a site meeting with
representatives on 27 October 2003. Again at the site meeting of
24
March 2004, Mr Mphaphuli declined to accompany the arbitrator on a
site inspection saying he had to attend another meeting.
57
It is discussed above at [251].
58
See [249] above.
59
Although Madala J sat in the case, ill health
prevented him from participating in the judgment.
1
Section 33(1) of the Arbitration Act provides:
“
Where—
(a) any
member of an arbitration tribunal has misconducted himself in
relation to his duties as arbitrator or umpire; or
(b) an
arbitration tribunal has committed any gross irregularity in the
conduct of the arbitration proceedings or has exceeded
its powers;
or
(c) an award has been improperly obtained,
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.”
2
Carmichele v Minister of Safety and Security
(Centre for
Applied Legal Studies Intervening)
[2001] ZACC 22
;
2001 (4) SA
938
(CC);
2001 (10) BCLR 995
(CC).
3
Id at para 41.
4
Campus Law Clinic, University of
KwaZulu-Natal v Standard Bank of South Africa Ltd and Another
[2006] ZACC 5
;
2006 (6) SA
103
(CC);
2006 (6) BCLR 669
(CC) at para
26 and the cases cited therein.
5
[2002] ZACC 7
;
2002 (5) SA 243
(CC);
2002 (10) BCLR 1078
(CC).
6
Id at para 8.
7
Telcordia
Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007 (3)
SA
266
(SCA);
[2007] 2 All SA 243
(SCA);
2007 (5) BCLR 503
(SCA).
8
Id at para 47.
9
Id.
10
Id at para 48.
11
Id at para 50.
12
The AParty and Another v Minister for Home
Affairs and Others
[2009] ZACC 4
at
para 56.
13
Section 168(3) of the Constitution.
14
Phillips and Others v National Director of
Public Prosecutions
[2005] ZACC 15
;
2006 (1) SA 505
(CC);
2006 (2) BCLR 274
(CC) at para 44.