Commercial courts and alternative dispute resolution in South Africa: a possible path to faster dispute resolution

Aslam Moosajee
Edward Nathan Sonnenbergs, Johannesburg
amoosajee@ENSafrica.com

Shenaaz Munga
Edward Nathan Sonnenbergs, Johannesburg
smunga@ENSafrica.com

Olonathando Nxumalo
Edward Nathan Sonnenbergs, Johannesburg
Olnxumalo@ENSafrica.com

In a bulletin published by the Deputy Judge President (DJP) of the Johannesburg High Court, South Africa, regarding lead times for set down dates in the Johannesburg High Court as of 31 August 2024 (‘the bulletin’), the DJP disclosed the crisis faced by the Johannesburg High Court[1] pertaining to long lead times that are continuing to be exacerbated. The lead times, where litigants took steps to apply for a hearing date in August 2024, were:

• for trials that require more than five days, one was likely to end up with a date after 19 July 2027 – a waiting time of just short of three years;
• for unopposed matters, one was likely to get a hearing date after 26 November 2024 – a waiting time of three months (where there is no opposition to a matter); and
• for opposed applications, one was likely to get a date after 26 May 2025 – a waiting time of 11 months.

This cannot be described as ‘swift justice’. There is a desperate need to assist litigants by finding ways to resolve disputes more efficiently. As a solution to minimise these delays, the bulletin encouraged the use of mediation where suitable in a case, and proposed the expansion of arbitrations beyond the commercial sector. A further solution is the use of the Commercial Court in matters concerning commercial disputes.

In South Africa, ‘the Commercial Court aims to promote efficient conduct of litigation in the High Court and resolve disputes quickly, cheaply, fairly and with legal acuity’.[2] A trial matter, an application (where all the evidence is presented in affidavits) and urgent applications can be dealt with in the Commercial Court. The DJP issued a directive which identifies commercial court matters as a substantial case that has as its foundation a broadly commercial transaction or commercial relationship. This includes, but is not limited to, claims arising out of transactions of trade and commerce.

In order for litigants to come before the Commercial Court in South Africa, the matter will be ordinarily instituted in the High Court. Thereafter, a letter must be addressed to the DJP, motivating why the matter should be designated as a Commercial Court matter. When determining whether the case is a commercial case the DJP will consider: ‘the complexity or novelty of law; complexity of fact; value at stake is a minimum of R25 million; and [the] public interest’.[3] If the letter to the DJP results in a matter being designated as a commercial court matter, the DJP will allocate a judge to manage the matter.[4] This judge manages the commercial court matter to conclusion. If a party conducts itself, unjustifiably, in a dilatory manner, that party could face sanctions in the form of adverse costs orders and will be put on terms to deliver information by specified dates.

An alternative to the South African Commercial Court is for litigants to refer their disputes to arbitration. The Arbitration Foundation of Southern Africa (AFSA) is a body that administers many of the arbitrations in South Africa, but parties can also choose other bodies – such as the Association of Arbitrators in South Africa or the International Commercial Court – to administer the arbitrations, which is more common when at least one party to the dispute is not domiciled in South Africa.

Where parties have agreed for their arbitrations to be administered by AFSA, it shall be deemed that they have agreed that arbitrations between them shall be conducted in terms of AFSA’s International Arbitration Rules (‘the Rules’).[5]

The Rules came into force on 1 June 2021 and they ‘align themselves with best international standards for arbitrations which are designed to ensure efficient, flexible and impartial arbitrations’.[6] The Rules also introduced the AFSA International Court, which consist of members from different parts of the world including England, Hong Kong, France, Botswana and South Africa.[7] The AFSA International Court does not decide the merits of the disputes, but supervises the administration of the resolution of disputes by arbitral tribunals.[8]

The AFSA International Court has the powers to, among other things:

‘act as arbitral appointing or confirming authority and to decide any arbitral challenge under the AFSA International Rules for the Conduct of Administered Arbitration, the AFSA International Rules for the Conduct of Unadministered International and Construction Arbitration, any rules or procedures published pursuant to Article C.2, the UNCITRAL Arbitration Rules and in any other case where an agreement provides for arbitral or other alternative dispute resolution appointment, confirmation or challenge decisions by AFSA.’

The decisions of the AFSA International Court are final and binding (unless otherwise directed by the Court), are confidential and do not need to contain reasons.[9]

The creation of a South African Commercial Court and AFSA’s international arbitration rules are in line with international developments.

Internationally, there has been a notable increase in international commercial courts across various jurisdictions. International commercial courts are established by states to settle international disputes, although their jurisdiction may not be strictly confined to cross-border disputes.[10] To achieve internationalisation, some of these courts appoint foreign judges to hear disputes alongside domestic judges.[11] Modern international commercial courts provide more flexible proceedings, similar to arbitrations, when compared to domestic courts.[12]

In South Africa, high courts have introduced rules which compel litigants to consider mediation; they run the risk of adverse costs orders if a litigant has unjustifiably objected to a mediation. Without mediation, the backlogs that currently exist in South African high courts will increase and litigants will wait a very long time for disputes to be finalised through the court system.