The provision for a default award in arbitration proceedings, is contained in s 15(2) of the Arbitration Act 42 of 1965. This section provides for the arbitration tribunal to proceed if a party fails, after having received reasonable notice of the time and place where the arbitration will be held, to attend such proceedings. The other proviso is that the tribunal may proceed if the defaulting party has previously not shown good and sufficient reason for its failure to attend.

Absence of proper notice results in a default award, issued in the absence of a party, to be fatally flawed (see Vidavsky v Body Corporate of Sunhill Villas 2005 (5) SA 200 (SCA) at para 14). Such an award is a nullity for all practical purposes. In the Vidavsky matter, notice of the arbitration proceedings, commencing on the 27 March 2003, was sent by registered post to the chairperson of the body corporate. His wife collected it on the afternoon of 27 March 2003 and then handed it to him. The arbitration proceedings proceeded on the morning of the 27 March 2003 in the absence of the chairperson and a default award was issued. The High Court held that insufficient notice was given to the defaulting party.

Presently parties to an arbitration invariably agreed to communicate and serve statements and documents by means of e-mail. The agreement in this regard is either contained in the written agreement to arbitrate, or in the absence of such an agreement, in the minutes of the initial pre-arbitration meeting. The status of an e-mail (being a data message) is that acknowledgment of receipt thereof is not necessary to give legal effect thereto (see s 26(2) of the Electronic Communications and Transactions Act 25 of 2002). An acknowledgment of receipt may be given by any communication by the addressee, whether automated or otherwise, or any conduct of the addressee, sufficient to indicate to the originator that the data message has been received. A read receipt of the e-mail would probably be sufficient.

The question that comes to mind is whether it is necessary to lead evidence to obtain a default award, as s 15(2) of the Arbitration Act does not contain such a requirement. In the matter of Wilton v Gatonby and Another 1994 (4) SA 160 (W), the court held that the onus of proof rests on the claimant, which does not shift because of defendant’s default. He or she must put sufficient evidence before the arbitrator for a conclusion on the merits in order to obtain a default award. In the absence of such evidence, the award is a nullity (see Wilton at 167).

South Africa’s International Arbitration Act 15 of 2017, contains provisions for default awards, that differ from those contained in the domestic Arbitration Act of 1965. The purpose of the International Arbitration Act is of course to ‘facilitate the use of arbitration as a method of resolving international commercial disputes’ (s 3(a)). Article 25 of the UNCITRAL Model Law on International Commercial Arbitration, which is incorporated in International Arbitration Act, by means of s 6 of the latter, provides as follows:

‘Unless otherwise agreed by the parties, if, without showing sufficient cause:

…

(b) the respondent fails to communicate his [or her] statement of defence … , the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations;

(c) any party [failing] to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award on the evidence before it.’

In view of the above provisions, it would be interesting to see whether the domestic courts would specifically regard the absence of a statement of defence and/or failure to produce documentary evidence (despite attendance at the proceedings), as sufficient grounds to issue a default award. To put it in practical terms, will a court exclude a respondent from the proceedings and proceed to a default award, even if the respondent attends these proceedings, but fails to produce a statement of defence and/or documentary evidence at the hearing?

Ignatius Bredenkamp SC BCom Law (Stell) LLB (Unisa) is a legal practitioner at the Pretoria Society of Advocates at the Groenkloof Chambers.

This article was first published in De Rebus in 2023 (Oct) DR 13.