Getting sorted in southern Africa: how to enforce foreign arbitral awards
24 May 2019
Inevitably, there are instances where the unsuccessful party refuses or fails to honour the outcome of the arbitration process. The successful party, armed with an arbitral award in its favour, will seek to enforce the award. However, enforcement may need to take place in a jurisdiction which is foreign to the award creditor, with an unfamiliar enforcement regime and unique obstacles.
To assist foreign investors in navigating this uncertainty and frustration, set out below is a high-level overview of the common challenges in enforcing arbitral awards in southern Africa, with specific reference to enforcement in Botswana, Namibia, Mauritius and South Africa.
The New York Convention and the UNCITRAL Model Law
The legal systems in southern African states differ in many respects. The difficulty in navigating these differences is compounded by the absence of regional harmonisation of laws and policies, and a general tendency toward dynamism in the socio-political landscape may have an impact on the effectiveness of judicial processes and enforcement.
Despite each state’s unique challenges, the adoption of international instruments by African states brings much desired legal certainty.
The majority of African states are signatories to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). Under the New York Convention, contracting states are obliged to recognise and give effect to arbitral processes undertaken through other signatory states. In other words, the New York Convention underpins the use of international commercial arbitration by facilitating the enforcement of foreign arbitral awards.
However, a much smaller number of states have adopted legislation based on the UNCITRAL Model Law on International Commercial Arbitration (UNCITRAL Model Law). The UNCITRAL Model Law provides a framework for the alignment of domestic arbitration laws with international commercial arbitration standards on all aspects of the process, from the arbitration agreement through to enforcement. Adoption of the UNCITAL Model Law helps to improve reliability and predictability when using arbitration to resolve contractual disputes.
In southern Africa, only Namibia and Eswatini (Swaziland) are not signatories to the New York Convention and will not enforce foreign arbitral awards other than in terms of common law and as aligned with domestic arbitral legislation. Conversely, the only states in the region that have adopted the UNCITRAL Model Law (wholly or partially) are South Africa, Mauritius, Zimbabwe and Zambia. Although Botswana has tabled a bill around the adoption of the UNCITRAL Model Law before its Parliament, that bill has yet to be passed.
Enforcement in southern African states
Botswana is a signatory to the New York Convention, but has not yet adopted legislation based on the UNCITRAL Model Law.
In Botswana, the Judgments (International Enforcement) Act [11.04] (the Botswana Act) makes statutory provision for the enforcement of foreign judgments, which includes foreign arbitral awards. To enforce a foreign arbitral award in Botswana, the award creditor must apply to the Botswana High Court for the registration of the foreign award. Such application must be made within six years after the date of the award, or the finalisation of proceedings, if proceedings were subject to appeal.
The Botswana High Court may register the award if it is satisfied that:
- The award is final and binding between the parties.
- The sum of money (excluding taxes, fines and penalties) is payable under the award.
- The provisions of the Botswana Act extend to the state wherein the award was awarded.
- The award is capable of enforcement in the state wherein it was awarded
Once the judgment has been registered, it will be enforced and executed as though it was a judgment of the Botswana High Court.
Registration of the award may be set aside upon application by the award debtor to the Botswana High Court on any of the following grounds:
- The Botswana Act does not apply to the award or it was registered in contravention of the Botswana Act.
- The original forum had no jurisdiction to hear the matter or the matter was, at the time of hearing by the original forum, already been adjudicated by a competent authority and therefore may not be pursued further by the same parties.
- The award debtor did not receive notice of those proceedings in sufficient time to enable it to defend the proceedings and therefore did not appear (this ground may be relied upon even if proper service was effected in accordance with the service laws of the state of the original court).
- The award was obtained by fraud.
- The enforcement of the award would be contrary to public policy.
- The rights under the judgment are not vested in the person applying for registration.
An interesting feature of Botswana law to keep in mind is that the president has the power to order the local courts to refuse to enforce judgments from states which do not appear to enforce Botswana judgments and awards. Such an order could be made at short notice.
Namibia is neither a signatory to the New York Convention, nor has it adopted legislation based on the UNCITRAL Model Law. The enforcement regime in relation to foreign arbitral awards is derived from the common law.
The standard enforcement procedure in Namibia involves bringing an application to the High Court in accordance with the Rules of the High Court of Namibia. The application must be brought within three years of the foreign award being obtained.
An award creditor bringing such an enforcement application will be required to show the following:
- The award must relate to entities based in Namibia or events that took place in Namibia.
- The relief granted in terms of the arbitral award is capable of being enforced and given effect to in Namibia.
- The arbitrator did not exceed his or her powers, per the arbitration agreement between the parties, in making the award.
- The award was obtained validly, in accordance with the laws under which the arbitration was governed.
- The award will not be enforced if the enforcement is contrary to Namibian public policy, if it was obtained fraudulently, or if the defendant was not duly notified of the arbitration proceedings.
The enforcement of foreign arbitral awards in Mauritius is informed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 8 of 2001 (the Mauritian Act), which aligns with the UNCITRAL Model Law and incorporates the New York Convention.
To enforce a foreign arbitral award in Mauritius, the award creditor must apply to the Supreme Court of Mauritius in accordance with the Mauritian Supreme Court Rules 2000. Such applications must be accompanied by the authenticated original award and the original arbitration agreement concluded between the parties (or certified copies). If the documents are not in French or English, translations, certified by an official or sworn translator or by a diplomatic or consular agent, must be included
The Mauritian Act specifies that no limitation or prescription period provided for in the laws of Mauritius shall apply to the recognition and enforcement of an arbitral award. It does not make provision for any time bars within which to bring the application.
An enforcement application may only be rejected in the following instances:
- The parties to the arbitration agreement were incapacitated or the agreement was invalid under the laws of the state under which the award was made.
- The award debtor was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present its case.
- The award deals with aspects not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. Portions of the award that do fall within the scope of the submissions to arbitration may, however, be severable and enforceable.
- The composition of the arbitral authority or the arbitral procedure was not in accordance with the arbitral agreement or with the law of the country where the arbitration took place.
- The award is not yet final and binding between the parties, or has been set aside or suspended by a competent authority in the state wherein the order was made.The subject matter of the dispute is not capable of settlement by way of arbitration in Mauritius or is contrary to public policy.
Once an arbitral award is recognised in Mauritius, it may be enforced and executed as though it was a judgment of the Supreme Court of Mauritius.
Like Mauritius, South Africa is also a signatory to the New York Convention and has codified the UNCITRAL Model Law by way of its International Arbitration Act 15 of 2017 (the South African Act).
An enforcement application under the South African Act requires the award creditor to apply to the South African High Court to have the award made an order of court. Once made an order of court, it can be enforced in the same manner as any local judgment. The enforcement application must be accompanied by the duly authenticated original award and the original arbitration agreement concluded between the parties (or certified copies). Where either the award or agreement is not in one of South Africa’s 11 official languages, sworn translations must be included. As the South African Act is based on the UNCITRAL Model Law, the bases on which the application may be rejected by the South African mirror the bases as outlined under the Mauritian Act above.
This article first appeared on the Practical Law Arbitration Blog on 14 May 2019