Can the High Court hear an Arbitration Appeal?

Judge Wilson from the Johannesburg High Court recently addressed a party’s right to appeal an arbitration decision. According to Section 28 of the Arbitration Act 42 of 1965, arbitration decisions are final and not subject to appeal unless specified in an arbitration agreement. In this case, the court considered whether S28 can be interpreted to allow appeals to the High Court if the spirit and objectives of the Bill of Rights are considered.

The case involved Level 7 Restaurant (Pty) Ltd and Signature Restaurant Group (Pty) Ltd*. The parties concluded a management agreement with Signature responsible for managing Level 7’s restaurant. Level 7 was dissatisfied with the services and cancelled the agreement in December 2021. Signature viewed this cancellation as a repudiation and sought damages in arbitration.

During the arbitration, the arbitrator upheld one of Signature’s exceptions, which Level 7 then appealed to the court.

Rectifying Errors in the Agreement

This was complicated by a cross-referencing error in the agreement (the bane of many a lawyer’s existence!). Both Signature and Level 7 had differing views to which clause the cross reference applied.  Level 7 said the cross reference was to a clause that allowed appeals to the court. And Signature said it was to a clause allowing urgent interim relief from the court pending the arbitration outcome. The judge held the agreement had to be rectified to refer to both clauses, reflecting the parties’ common intention.

The Arbitration Act and the Bill of Rights

Level 7 argued that S28 must be reinterpreted to promote the spirit, purport and objects of the Bill of Rights, especially the right to access courts and contractual freedom in the Constitution. However, Wilson said that there was nothing in the Constitution that required the law to uphold a contractual choice that was later found to be a legal error. He emphasised that the objectives of the Bill of Rights did not support an interpretation of S28 that would allow appeals to the High Court and maintained that appeals should be made to another arbitrator. This invalidated any clause appealing an arbitrator’s decision to a court.

The court concluded that there was no indication the parties intended for the arbitration to be invalidated if the appeal to the High Court was invalid. Wilson reaffirmed that by agreeing to arbitration, parties effectively waived their right to appeal the arbitrator’s decision, regardless of the correctness of any decision. Accordingly, the arbitrator’s decision was deemed final and binding.

Our take on this

The judgment shows us that neither the Act nor the Constitution allows for the High Court to intervene in arbitration decisions. The only appeal rights available are those explicitly created by agreement and then too only to an arbitral tribunal and not a court. The court’s role is to facilitate arbitration and not to assess the merits of arbitration decisions.

As an aside, the agreement to appeal an arbitration agreement can only occur if it’s included in the agreement at the signature date. If not, both parties will have to agree to an appeal process at the start of a dispute – unlikely in most cases.

Article by Nikita Lalla and Mbalenhle Simelane

^{*Level 7 Restaurant (Pty) Ltd t/a Level 7 v Signature Restaurant Group (Pty) Ltd (2023/051229) [2024] ZAGPJHC 944 (25 September 2024)}