Ge­og­ra­phy of dis­pute res­o­lu­tion

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for­eign lit­i­ga­tion or ar­bi­tra­tion may be pur­sued. The court has dis­cre­tion whether or not to en­force the for­eign ju­ris­dic­tion or ar­bi­tra­tion clause and stay lo­cal pro­ceed­ings.

While there is no ex­act sci­ence to de­ter­mine when a South African court should ex­er­cise its dis­cre­tion, be­sides the par­tic­u­lar facts sen­si­tive to each case, a num­ber of fac­tors should be con­sid­ered:

The de­ci­sion not to en­force the clause should only be made where there is a very strong case why the par­ties should not be bound by their agree­ment;

Whether for­eign law ap­plies and, if so, whether it dif­fers ma­te­ri­ally from lo­cal law;

The coun­tries that the par­ties are con­nected to and the close­ness of that con­nec­tion;

Whether there would prob­a­bly not be a fair hear­ing in the for­eign coun­try be­cause of po­lit­i­cal, racial, re­li­gious or other rea­sons;

Whether the de­fen­dants gen­uinely de­sire pro­ceed­ings in the for­eign coun­try, or are only seek­ing pro­ce­dural ad­van­tages;

Higher costs of lit­i­gat­ing or ar­bi­trat­ing in a for­eign fo­rum; and

The in­con­ve­nience of an ar­bi­tra­tion where the dis­pute in­volves ques­tions of law and not ques­tions of fact.

It is de­sir­able, if pos­si­ble, to avoid a mul­ti­plic­ity of ac­tions in dif­fer­ent fo­rums so as to avoid the pos­si­ble com­pli­ca­tion of con­flict­ing de­ci­sions and wasted costs and time. Where only some of the par­ties are bound by the ar­bi­tra­tion clause, this proves to be an im­por­tant con­sid­er­a­tion. In the Foize case this was an im­por­tant fac­tor be­cause only two re­spon­dents were bound by the con­tract whilst the ap­pel­lant’s claims against the re­main­ing re­spon­dents were eas­ily de­ter­minable in a South African high court. Fur­ther­more, it makes lit­tle sense to run two in­de­pen­dent pro­ceed­ings when the fac­tual ma­trix and wit­nesses in each pro­ceed­ing will be the same.

There are no hard and fast rules in de­ter­min­ing when a court should ex­er­cise its dis­cre­tion. The sanc­tity of con­tracts re­mains one of the more im­por­tant con­sid­er­a­tions against over­rid­ing the ju­ris­dic­tion clause. The court is likely to over­ride the con­tract con­cluded be­tween par­ties only when there is a strong case to be made why the par­ties should not be held to the con­tract. The facts and fac­tors listed above will aid the court in de­ter­min­ing the strength of the ar­gu­ment in favour of set­ting the con­tract aside.

The re­spon­dents had not raised the is­sue of the for­eign ju­ris­dic­tion and ar­bi­tra­tion clause in the pa­pers be­fore the high court and had not sub­mit­ted any sup­port­ing af­fi­davits high­light­ing the rel­e­vant cir­cum­stances. As a re­sult the ap­peal court held that there was in­suf­fi­cient in­for­ma­tion for the court to make a fi­nal de­ci­sion as to whether it should up­hold the clause in ques­tion. The ap­peal thus suc­ceeded and the ap­peal court granted the ap­pel­lant the in­terim relief sought, in­clud­ing an in­terim in­ter­dict.

Pic­ture: THINKSTOCK

QUES­TIONS OF LAW VS QUES­TIONS OF FACT

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