No appeals allowed for arbitration awards - High Court rules

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The judgment was handed down by Judge Wilson on 25 September 2024 in the Gauteng High Court. In the matter between Level Seven Restaurant (Pty) Ltd t/a Level 7 and Signature Restaurant Group (Pty) Ltd, the High Court had to consider a fundamental question: Can parties agree to appeal an arbitration award to the High Court?

The back story

A dispute arose from a management agreement which had been concluded between Level 7 and Signature. When the relationship soured, Level 7 purported to terminate the agreement, which was not accepted by Signature. Subsequently, Signature terminated the agreement resulting in Signature claiming from Level 7 damages for repudiating the agreement. The matter went to arbitration as the agreement contained a dispute resolution clause.

Critically, clause 19.9 of the agreement makes provision for either party to "review or appeal the arbitrator's decision, in which case the High Court of South Africa, Gauteng Local Division shall be authorised to determine such review or appeal."

During the arbitration process the arbitrator, Judge Moseneke, made an interlocutory ruling, part of which went against Level 7, who then proceeded with an application to the High Court to appeal the arbitrator’s ruling, the effect of this was to appeal an arbitral award.

The legal issue

The question before the High Court was whether section 28 of the Arbitration Act 42 of 1965 permits parties to agree to an appeal of an arbitral award to the High Court. This provision states that arbitral awards are final and not subject to appeal "unless the arbitration agreement provides otherwise."

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Arguments put forward by Level 7

The judgment refers to Goldschmidt v Folb [1974] and Blaas v Athanassiou [1991] (in which these courts held that section 28 permits no right of appeal from arbitration to the High Court). Moreover, in Telcordia Technologies Inc v Telkom SA Ltd [2007], Harms JA held that parties to an arbitration agreement cannot impose upon a court a jurisdiction it does not already have. These cases shall be referred to as the authorities.

Level 7 argued that:

1. as the authorities were determined before the enactment of the Bill of Rights (which is a chapter within the Constitution Act no 108 of 1996 which deals with human rights), section 28 ought to be reinterpreted to promote the spirit, purport and objects of the Bill of Rights, particularly the right of access to courts, and the contractual autonomy embraced by the constitutional rights to freedom, equality and dignity;
2. section 28 does in fact permit the parties to an arbitration agreement to create a right of appeal to the High Court; and
3. Goldschmidt was wrongly decided, largely because it interpreted section 28 against the misunderstanding of the Roman-Dutch law of arbitration when the English law of arbitration would have supplied the better background against which to determine the meaning of this provision.
4. 
   

The finding

Judge Wilson rejected all of Level 7’s arguments and stated that there is nothing in the spirit, purpose and objects of the Bill of Rights that can make section 28 mean anything other than the “appeal” against an arbitral award to which the parties agreed is an appeal to an umpire or another arbitrator or panel of arbitrators, and not an appeal to the High Court.

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Judge Wilson held that section 28 cannot reasonably be interpreted to allow appeals to the High Court, even if there was an agreement between the parties. The text, context, and purpose of the Arbitration Act all point to a system of private dispute resolution, separate from the courts.

Judge Wilson added that courts lack the inherent jurisdiction to hear appeals from arbitrations; such power would need to be explicitly granted by statute. Allowing appeals to be heard by courts would undermine the core benefits of arbitration: speed, economy, and privacy.

He added that there are no constitutional concerns with this interpretation, as parties choosing arbitration implicitly waive their right to appeal to courts for that dispute.

Conclusion

The court reaffirmed and clarified that section 28 of the Arbitration Act 42 of 1965 does not permit an appeal of an arbitral award to the High Court. The upshot of this is that, if there is an agreement between the parties, then any appeal must go the arbitration route rather than to the High Court. While arbitration is based on party agreement, there are limits to what parties can agree to, especially regarding court involvement. The enactment of the Bill of Rights does not override this principle.

For businesses and individuals opting for arbitration, this judgment highlights the importance of recognising that once an arbitration process has been nominated, the process must be completed at arbitration.