Legal Advice

Appeal and Review in South African Litigation

If your business is engaged in litigation, you will likely want to challenge a Court’s decision at some point. Depending on the nature of your challenge, you will have to decide between review and appeal.

A decision is appealed when you want to challenge a Court’s decision on the basis that it is incorrect in fact or law. In other words, the judge or magistrate reached their decision based on incorrect law or based on false or incorrect facts.

To appeal a decision, you will need to make an application for leave to appeal. There must be reasonable prospects that the appeal will succeed, and the matter must be of substantial importance to the parties.

An appeal is heard by a higher Court: A magistrate’s decision is generally referred to the High Court, while a High Court decision is referred to a full bench (3 judges) of the High Court or the Supreme Court of Appeal. The Constitutional Court can, in very specific circumstances, hear an appeal.

A decision is submitted for review to a higher court when the procedure in reaching the decision was incorrect or invalid. Examples of grounds for review include bias or corruption by the judge, gross irregularity of proceedings, a lack of jurisdiction, or admission of inadmissible evidence.

Not every decision can be appealed or reviewed. Whether the decision can be appealed or reviewed I determined by the Uniform Rules of Court and other legislation governing our court procedure.

Consult with your attorney to advise you on next steps and to prepare the necessary documentation if you intend to appeal or review a court’s decision.

How to use mediation to resolve overdue payments without escalating to litigation

As a business owner, dealing with overdue payments can be frustrating. It’s important to resolve these issues swiftly to maintain cash flow and healthy business relationships. While litigation is often seen as the go-to solution, mediation can be an effective and less costly alternative to settle overdue payment disputes.

Mediation is a form of Alternative Dispute Resolution (ADR) that aims to assist parties resolve disputes peacefully and amicably, making it a preferable means to attempt resolving disputes regarding overdue payments as relationships are still preserved in the process. 

A mediator is a neutral third party, who facilitates discussions between the disputing parties to help them reach a mutual agreement to settle the dispute. A mediator does not propose solutions or make decisions and the outcome is non-binding unless it is reduced to writing and signed by the parties.

Mediation is a cost-effective, faster alternative to litigation, saving you time and money by avoiding lengthy court processes and legal fees. It promotes open communication, helping preserve professional relationships with your clients. Additionally, mediation is confidential, protecting your business reputation while resolving disputes.

Initiating mediation between disputing parties
Mediation is an informal process that can be initiated by the parties between themselves or by complying with the terms of a mutual agreement. The parties need not be legally represented, although they can choose to be. There are no specific requirements on how the process should be conducted.   The key steps are agreeing on a mediator, setting a date for the session, and preparing by gathering relevant documents such as invoices, emails, and contracts to support your case.

Within the mediation process of resolving disputes for overdue payments, the parties can explore potential mutually agreeable payment/settlement terms in the aim of reaching an outcome, such as: 
  • Partial payment
  • Full settlement
  • Payment plans over a period of time
  • Any other suitable term

If an agreement is reached, document the terms in a formal settlement agreement. This document will outline the payment plan or any other arrangements agreed upon.

Should the mediation process fail, and the parties do not reach an agreement, the parties may request the mediator to make a recommendation for an appropriate resolution of the dispute. Other dispute mechanisms can still be considered, and litigation still also remains an option, but perhaps as a last resort, as it tends to be more time-consuming and costly. 

When to opt for litigation over ADR in a breach of contract case

When a contract is breached, business owners face a critical decision: resolve the matter through Alternative Dispute Resolution (ADR) or turn to the courts for litigation.  Understanding when litigation is more suitable than ADR can help ensure the best outcome for your business. ADR is made up of other dispute resolution methods outside of going the court route and consist of negotiation, conciliation mediation, and arbitration.

In the majority of cases ADR is typically faster, more cost-effective, provides confidentiality and is less formal than litigation.  A challenge to the effectiveness of ADR is the parties being willing to engage with one another and commit to the process, as well as power imbalances, company culture differences and the complexity of some disputes. 

Litigation is a court process used to resolve disputes between parties, by appearing in a court of law before a judicial officer who makes a decision/judgment based on pre-defined processes. Usually, one party wins the award which is automatically an order of court and may be appealed if the court allows. 

There are situations where litigation might be the better option:
  • Enforcement of Rights: If the other party refuses to cooperate or comply with ADR outcomes, litigation may be necessary to enforce your rights through a binding court order.
  • Complex Legal Issues: Cases involving complex legal questions, fraud, or misconduct often require a judge’s decision, as ADR may lack the legal framework to handle such matters effectively.
  • Precedent or Public Record: If your case involves setting a legal precedent or if you need the dispute to be on public record (e.g. to warn others about the breach), litigation is the way to go.
  • No ADR Clause: Some contracts do not include an ADR clause, making litigation the default option unless both parties agree otherwise.
  • Significant Damages: If the financial or reputational stakes are high, litigation might be worth the time and cost, as courts can offer more robust remedies.

The decision to litigate can be influenced by weighing the costs against the potential outcomes.  Litigation can be expensive and time-consuming, but it provides certainty through enforceable judgments. On the other hand, ADR works best when both parties are willing to negotiate and seek a mutually beneficial solution.

Always review your contract’s dispute resolution clause and consider the nature of the breach. When in doubt, consult a legal expert to weigh your options and choose the path that protects your business’s interests.

Circumstance which are unsuitable for ADR methods:
  • Serious fraud cases 
  • When binding precedent is desired or required which is also in the public interest
  • Disputes of law
  • When there is a deadlock or stalling tactics being used which causes unnecessary delays and costs
  • When parties are not in agreement being non-cooperative to proceedings
  • Complex matters that could have a developmental effect on the law
  • Where there is abuse and an imbalance of power

ADR and litigation each have their place in resolving disputes. ADR is quicker and less formal but relies on both parties cooperating. Litigation is better for complex cases, serious misconduct, or when a binding court order is needed. Consider the nature of the dispute and your contract terms carefully, and consult a legal expert if unsure which path is best for your business.

The legal process for enforcing arbitration awards under the Arbitration Act

As a business owner in South Africa, you may encounter situations where disputes arise with clients, suppliers, or other parties. One option to resolve such disputes outside of the courtroom is arbitration.

Arbitration is the one alternate dispute resolution method where an outcome that is binding can be awarded to the parties, called an arbitration award. The losing party is expected to comply with this award, which could include paying a certain amount of money or fulfilling another obligation. Because the award is binding it can then be enforced. 

The issue of enforcement of an arbitration award arises where one of the parties against whom the award has been issued refuses to comply with the decision of the arbitration tribunal. 

For an arbitral award to be recognised and enforced, the award must: 
  • Comply with requirements of the Arbitration Act;
  • Be made in accordance with an arbitration agreement. 
  • Then an application can be made to the High Court by the successful party in accordance with Section 31 of the Arbitration Act. 

The court does not look into the merits of the dispute, the applicant only has to prove the following: 
•The dispute was submitted for arbitration in terms of the arbitration agreement;
•The arbitrator was appointed; and 
•There was a valid award. 

An order of court must then be made confirming the award as a judgment of the court. Once confirmed, the award can be enforced just like any other court order.  The Sheriff of the Court will assist with enforcing the order by taking steps to recover the amount owed or compel the losing party to comply.

Challenging an award: in accordance with Section 28 of the Arbitration Act, an award will 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’, unless the arbitration agreement states otherwise. It is however common in practice for parties to agree that the award will be subject to appeal. Challenging an award and review proceedings does not stop enforcement proceedings, but it does make it difficult for an enforcement order to be obtained. 

Timeframes: There are no time limits for seeking a recognition and enforcement order, however, the process is said to be fast and effective and can generally be obtained within two to three months. Review proceedings are longer – between twelve and eighteen months – and even longer if leave to appeal to a higher court is granted.

As a business owner, it’s important to understand that arbitration awards are powerful tools for resolving disputes. If you are awarded an arbitration judgment, you can enforce it through the court system, ensuring that the other party complies with the decision. If you need to enforce an arbitration award, it is advisable to seek the assistance of a legal professional to guide you through the process efficiently.

How South African SMMEs can manage international disputes with suppliers or clients

Engagement with international suppliers and clients is becoming more commonplace due to globalisation.  These relationships offer opportunities, but they also carry risks in the form of misunderstandings, unpaid invoices, or breached contracts.

Cross-border disputes can be complex and need fast cross-border solutions. It is important for parties to consider dispute resolution at the beginning of a transaction rather than when a dispute arises so that a tailored process is in place to manage disputes. It is important for parties to include dispute resolution clauses in the agreement, even referring to international disputes. These clauses must also address what jurisdiction’s law will govern the dispute resolution agreement and process.

A proactive Alternative Dispute Resolution (ADR) mechanism worth considering is a dispute board.  A dispute board is a pre-established panel of independent experts formed at the beginning of the transaction to assist parties with the resolution of disputes. The board can provide guidance to parties to prevent disputes, or it can resolve formal disputes that are referred to it. The board can also either make binding decisions or recommendations for parties to consider. This can help parties avoid disputes or resolve them quickly when a fast resolution is of utmost importance.  As the dispute board members are chosen for their expertise, it will ensure that their decisions are practical and aligned to the parties’ needs.

If ADR does not resolve the dispute, the parties typically resort to litigation or arbitration.  An effective and efficient way of resolving cross-border supply chain disputes is by way of international arbitration. It is a neutral platform that can be tailored to the parties’ specific needs and the outcome is a binding award that can be recognised and enforced in most jurisdictions. It’s growing popularity is based on the following key factors: 
  • Enforceability: there is a well-established system for the enforcement of arbitral awards, in the form of the New York Convention signed by 160 countries, including South Africa. This is an international treaty that aims to facilitate the enforcement of arbitral awards across borders and provides clear and simple rules for the enforcement of awards and also limits the possibility of challenging it. South African courts will generally enforce domestic and international arbitration awards, in accordance with the Arbitration Act and the Recognition and Enforcement of Foreign Arbitral Awards Act respectively.
  • Neutrality: international arbitration is a neutral forum, convenient for all parties and is held before independent and impartial arbitrators under transparent rules.
  • Expertise: parties agree to the skills and expertise of the panel
  • Confidentiality: this is a private process which is part of the rules
  • Flexibility: the arbitration process is flexible, and the parties have control over the rules, the process, the scope of the arbitration, and cost allocation. 

Managing international disputes requires preparation and knowledge of your legal options.  By taking proactive steps, an SMME can protect their interests while maintaining strong international business relationships.

If you are unsure where to start, consult a legal expert who understands both South African and international law. Taking these steps now can save your business time, money, and stress later.