South Africa: Can the Bill of Rights unlock the right to appeal arbitration awards on the merits?

The Bill of Rights is the cornerstone of South Africa’s constitution, which sets out the fundamental rights and freedoms of individuals in South Africa, which the state has a duty to protect and fulfil. Important rights to bear in mind for purposes of this article are:

1. The right to equality, meaning every person in South Africa is equal before the law and cannot be unfairly discriminated against; 
2. The right to just administrative action, meaning everyone has the right to administrative action that is lawful, reasonable and procedurally fair; and 
3. The right of access to courts, meaning everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum.

Every right in the bill of rights is absolute and cannot be limited unless a reasonable and justifiable reason exists to do so.

South African courts play a very limited role in arbitral proceedings. The courts’ powers are limited to the following functions: 

1. Reviewing and/or setting aside arbitral awards where : (i) the arbitrator(s) commit misconduct; (ii) there is a gross irregularity in proceedings;  or (iii) the award is otherwise improperly obtained.
2. Determining questions of law submitted by an arbitrator for the purpose of issuing an award.
3. Granting interim relief.
4. Authorising the submission of evidence by affidavit. 
5. Ordering discovery. 
6. Ordering security for costs.
7. Directing the preservation of property.

Absent from this list is any general power for the courts to hear appeals on the merits of an arbitration award. 

Section 28 of the Arbitration Act 42 of 1965 (the “Act”) provides that “unless the arbitration agreement provides otherwise, an award shall, subject to the provisions of this Act, be final and not subject to appeal and each party to the reference shall abide by and comply with the award in accordance with its terms.”

The default position is, therefore, clear: by agreeing to arbitration the parties generally waive their right to appeal to the courts on the merits and the arbitrator’s decision stands, even if it is wrong.

Therefore, consistent with the position in most significant arbitration centres, the courts have reinforced the principle that their function is to facilitate and supervise, not to second-guess the arbitrator’s findings. 

Despite the Arbitration Act’s default position, on a number of occasions parties have sought to engineer an effective  right of appeal to the High Court. To date, the courts have consistently rejected any such attempts. However, recent case law suggests that the tide may be turning. 

The starting point for the courts’ current approach is the 1974 decision of the High Court of South Africa in Goldschmidt and Another v Folb and Another 1974 (3) SA 778 (T) in which the Court held (inter alia) that:

1. s.28 of the Arbitration Act permits no right of appeal;
2. the only function of the courts in regard to arbitration is to enforce awards, to give an opinion on a question of law in a stated case, or to set aside an award because of some illegality or generally to regulate the proceedings. 

The courts have also confirmed that parties could not create a right of appeal to the courts through their arbitration agreements. In the 1991 case of Blaas v Athanassiou (1) SA 723W, the High Court held that, although the parties had purported to enter into an arbitration agreement that provided that an arbitral award could be referred by either party to the Appellate Division of the Supreme Court of South Africa, such a term did not confer jurisdiction on the Court to hear such matters, with section 28 of the Act permitting no right of appeal to the Court. 

Similarly, in Telecordia Technologies Inc v Telkom SA Ltd (26/05) [2006] ZASCA 112, the Supreme Court of Appeal of South Africa held that:

1. “by necessary implication”, parties agreeing to arbitration waive the right to rely on any further ground of review; and
2. if they wish, parties can agree to extend the default grounds of review but, in that case, they “have to agree on an appeal panel” because they cannot by agreement impose jurisdiction on the court.

That long settled consensus was, however, recently challenged in the 2024 case of Level 7 Restaurant (Pty) Ltd t/a Level 7 v Signature Restaurant Group (Pty) Ltd. 

Similar to the cases mentioned above, the underlying contract between the parties in Level 7 provided that either party “shall be entitled 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”.

However, the claimant relied on the argument that section 28 of the Arbitration Act should be interpreted in light of the Bill of Rights, namely “the right of access to courts, and the contractual autonomy embraced by the constitutional right to freedom, equality and dignity”. On this reading, the Arbitration Act should be construed to allow an arbitration agreement to create a right of appeal to the High Court. The Court, in this case, held that:

1. it could not depart from the decision in Goldschmidt even if it was alleged to be incorrect;
2. section 28 of the Act could not reasonably be interpreted to permit appeals against arbitral awards to the High Court; and
3. in any case, such an interpretation would not better promote the spirit, purport and objects of the Bill of Rights.

Therefore, as anticipated, the High Court ruled that it did not have jurisdiction to hear the appeal, and that clause 19.9 of the agreement was void insofar as it purported to confer power on the High Court to hear a matter over which it had no jurisdiction. 

Importantly, however, the claimant has subsequently been granted leave to appeal to the Supreme Court of Appeal, setting the stage for what could be potential landmark ruling. 

The appeal of Level Seven to the Supreme Court of Appeal promises to be a closely watched arbitration case in South Africa. The Supreme Court of Appeal will need to consider the constitutional rights to an appeal relied upon by Level Seven against entrenched common law principles of arbitration (such as privacy and confidentiality) and pacta sunt servanda (the principle that agreements must be kept). 

A ruling in Level Seven’s favour could potentially transform the role of the South Africa courts in arbitral proceedings. Parties drafting arbitration clauses would need to consider carefully whether their agreements might open the door to court-based appeals, potentially undermining the finality that attracts parties to arbitration. 

Whether this will happen is unconfirmed at the time of writing, but given the Courts’ consistent stance in the past, the likelihood is that the status quo will be preserved, thus ensuring South African law remains consistent with practice in many other jurisdictions. The outcome remains uncertain, but practitioners and parties involved in South African arbitrations would be well advised to monitor this case closely. 

The law governing appeals against arbitration awards in South Africa is, for now, settled. Recent case law has confirmed that the courts will not allow appeals to the courts on the merits of arbitral awards, even where the parties have expressly agreed to such a right.

The Level Seven case is the first case, however, that questions this position in light 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. If the Supreme Court of Appeal accepts that the right of access to courts requires the Arbitration Act to be read as permitting court-based appeals by agreement, the consequences for arbitration practitioners and parties in South Africa would be profound. 

Until the Supreme Court of Appeal delivers its judgment in Level Seven, parties and practitioners should continue to draft and interpret their arbitration agreements on the basis that awards are final and binding, while keeping a close eye on this developing area of case law.