The impact of the International Arbitration Act on the choice of South Africa as a seat for international commercial arbitration

Abstract: The recently enacted International Arbitration Act 15 of 2017 has made necessary changes to international commercial arbitration law in South Africa in order to increase international commercial arbitration in the state by aligning the law with the international standard of laws and practices. Currently, London, Singapore and Switzerland are amongst the most popular arbitral seats around the world. These seats were amongst the top ten popular seats in 2015 and 2010 as well. It is predicted that the status quo of these popular seats is unlikely to be changed in the near future. This research paper, through the use of the comparative research method, compares the legal and non-legal positions in England, Switzerland, and Singapore as some of the most popular arbitral seats, with South Africa to determine whether the legal reforms are sufficient to make the state a regional arbitration center and a popular arbitration seat globally. Arbitral seats are ordinarily chosen by contractual parties if they have a legal infrastructure that ensures efficient arbitration. Whether the national arbitration law of a seat is based on the Model Law and is arbitration-friendly are important considerations to parties. Given the new Act, it could be argued that South Africa is on its way to becoming more popular amongst contractual parties, especially since the state is a signatory to the New York Convention. It is furthermore necessary to take into account the fact that the general reputation of the seat is currently the most important factor considered by parties when selecting their preferred arbitral seats. However, the reputation of a seat is built over time thus a shift in parties’ perceptions regarding South Africa as a major international arbitration centre will be just as slow. Additionally, empirical evidence shows that foreign arbitration practitioners perceive African arbitration practitioners as lacking in expertise and experience. This is a major reason why there is an under-representation of African arbitration practitioners in international arbitration. This perception is also a reason why parties to international commercial contracts are reluctant to choose African countries to be their arbitral seats. For these reasons it is necessary to investigate the relevant factors in and possible steps South Africa could take to ensure its success in the endeavor to becoming an attractive arbitration hub.LL.M. (International Commercial Law