The South African legislation governing arbitrations is outdated and has failed to keep abreast with the developments of the law internationally. The new International Arbitration Act has been comfortably occupying space on the politicians’ desks, largely as a result of a fundamental misconception that arbitration is a legal process devised by a minority to control commercial disputes in South Africa and that it undermines the South African judiciary.

Furthermore the new Constitution with its Bill of Rights has provided both critics of arbitration and those participants who wish to escape their agreement to arbitrate a bandwagon on which to leap and to argue that arbitration is unconstitutional.

The judgment of the Supreme Court of Appeal (SCA) in Telcordia Technologies Inc v. Telkom SA Ltd 1 provides a welcome reaffirmation that the fundamental principles underlying international arbitration are alive and well in South Africa. Notwithstanding the continued existence of outdated legislation a foundation has been laid for the proper adjudication of international arbitrations in South Africa and a party choosing South Africa as a venue for arbitration will now have confidence that the principles of party autonomy and limited judicial interference will be respected by the courts.

Telcordia and Telkom entered into what was referred to as an integrated agreement in June 1999. It contained an arbitration clause which was independent of the validity of the integrated agreement. The clause provided that “All disputes between the parties that may arise” had to be determined by an arbitrator. This included “disputes relating to interpretation” of the agreement, as well as “disputes of a legal nature”. It further stated that the award would be final and binding. The arbitration had to take place before a single arbitrator in terms of the rules of the International Chamber of Commerce (the ICC). An English barrister was appointed as the arbitrator.