International Arbitration Act to strengthen SA's trade and investment

CAPE TOWN - The International Arbitration Act is expected to pull foreign investors and international businesses towards SA as they always opt for the more familiar route of arbitration based on rules known to them for solving business issues - a law firm Norton Rose Fulbright said.

This Act, which came into force with effect from December 20, 2017, originates from the Ministry of Justice and Correctional Services.

It was first referred to the Portfolio Committee on Justice & Constitutional Affairs. The Bill was then, was tabled in the National Assembly on 21 April 2017. After being passed by both the National Assembly and the National Council of Provinces and submitted to President Jacob Zuma for assent on 6 December 2017.

According to Patrick Bracher, the director, at Norton Rose Fulbright, "Various international businesses prefer to have the same dispute resolution mechanisms in all agreements across the board, instead of being exposed to local courts in each jurisdiction in which it does business. International commercial arbitration allows for this to happen by including an arbitration clause in all agreements".

Bracher added that international businesses and foreign investors are often cautious about litigating in foreign, unknown regions with complex court procedures, and unfamiliar law.

He said this Act also presents an opportunity for South Africa to get its own international arbitration centre where international commercial disputes can be resolved.

This will provide a cost-effective alternative for disputes in Africa than the traditional arbitration centres in Paris, London, and New York City. "A South African city could attract significant business and income if it is chosen as the venue for international arbitration. For a city or a country to attract this opportunity, it is important to have familiar arbitration rules and enforcement proceedings," he added.

This Act also incorporates the UNCITRAL Model Law on International Commercial Arbitration as well as the UNCITRAL Conciliation Rules. The Model Law and Conciliation Rules are familiar to most international parties and legislation based on the Model Law which has been adopted in 78 countries.

Therefore, by incorporating this into South African law, it provides some comfort to international businesses that are unfamiliar with the country's laws and court practices. This bill will eliminate uncertainty and give much-needed reassurance to foreign investors.

In November 2015, the South African National Assembly approved the Promotion and Protection of Investment Bill.

This bill is believed to have been approved to protect foreign investment.


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