Arbitration over commercial disputes

Commercial disputes are common and vary in nature and complexity. In simple terms a commercial dispute refers to disagreements over commercial arrangements or contracts.

THIS is usually over business arrangements or transactions. There is usually an underlying commercial arrangement meant to result in an exchange or transfer of value.

Examples of commercial disputes

Common disputes may include disagreements over the following: ◆Investments agreements including shareholding and dividends, joint ventures and profit share, partnerships and profit share, loan agreements and interest, and many others.

◆ Sale and purchase agreements such as

over immovable or movable properties. ◆ Lease agreements including tenure, rentals, subletting, termination or renewal.

◆ Supply contracts. ◆ Service contracts.

Resolution of commercial disputes

Ordinarily commercial disputes may be resolved through the following: ◆ Mediation.

◆ Arbitration.

◆ Litigation

Arbitration over commercial disputes

Section 4 of the Arbitration Act (Chapter 7:15), (“the Arbitration Act” or “the Act”) defines what may be arbitrated.

According to section 4 (1), subject to this section, any dispute which the parties have agreed to submit to arbitration may be determined by arbitration.

In terms of section 4(2) the following matters shall not be capable of determination by arbitration:

◆ An agreement that is contrary to public

policy.

◆ A dispute which, in terms of any law,

may not be determined by arbitration. ◆ a criminal case.

◆ A matrimonial cause or a matter relating to status, unless the High Court gives leave for it to be determined by arbitration.

◆ A matter affecting the interests of a minor or an individual under a legal disability, unless the High Court gives leave for it to be determined by arbitration.

◆ A matter concerning a consumer contract as defined in the Consumer Contracts Act (Chapter 8:03), unless the consumer has by separate agreement agreed thereto.

According to section 4(3) the fact that an enactment confers jurisdiction on a court or other tribunal to determine any matter shall not, on that ground alone, be construed as preventing the matter from being determined by arbitration.

Arbitration agreement

For a dispute to be referred for determination through arbitration there has to be an arbitration agreement between the parties.

— Definition and form of arbitration agreement, in the Arbitration Act deals with arbitration agreement.

In the Article an “arbitration agreement” is defined as an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

The arbitration agreement shall be in writing. An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication, which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another.

The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract.

Further articles on commercial arbitration

Subject to space availability I promise to write more articles on commercial arbitration.

Conclusion

Reference of commercial disputes for determination through arbitration is used widely. It is less adversarial and may be quick in resolving such matters.

Disclaimer

This simplified article is for general information purposes only and does not constitute the writer’s professional advice.

Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), MBA(EBS, Heriot- Watt, UK) is the Managing Partner of Hofisi Partners Commercial Attorneys, chartered accountant, insolvency practitioner, registered tax accountant and advises on deal and transactions./He has extensive experience from industry and commerce and is a former World Bank staffer in the Resource Management Unit. He writes in his personal capacity. He can be contacted on +263 772 246 900 or gohofisi@gmail.com