Geography of dispute resolution
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.
QUESTIONS OF LAW VS QUESTIONS OF FACT