The Department of Justice and Constitutional Development presented the National Council of Provinces proposed amendments to the Protected Disclosures Amendment Bill. Clause 9A was the proposed amendment. The clause deals with excluding civil and criminal liability for protected disclosures. The Open Democracy Advice Centre (ODAC) proposed to the Select Committee on Justice and Security that clause 9A include a provision excluding criminal and civil liability arising from a disclosure about a substantial contravention of any law and not just criminal activity.
ODAC’s submission was accepted by the Select Committee. The definition of “occupational detriment” in clause 1(d)(h) subsequently had to be amended but this is simply consequential to include a cross reference to the exclusion of criminal liability in clause 9A in the definition of “occupational detriment”.
Members raised the clause dealing with false disclosure but the Department explained that the clause regulating false disclosure had no proposed amendments and therefore had stayed the same.
The Committee unanimously adopted the NCOP amendments. Both the DA and ACDP wanted it placed on record that they have numerous objections to the Bill in its current form. The positive vote of both the DA and ACDP related only to the proposed consequential amendment and in no way indicated their support for the other clauses of the Bill.
The Department briefed the Committee on the International Arbitration Bill. The drafting of this Bill occurred following a report by the South African Law Reform Commission (SALRC) that the current Arbitration Act and Recognition and Enforcement of Foreign Arbitral Awards Act are both outdated and not aligned with modern commercial needs regarding international arbitration.
The primary aim of the Bill is to give effect to the United Nations Commission on International Trade Law (UNCITRAL) model law for arbitration. The model law aims to align discrepancies between different countries for the enforcement and procedural rules governing international arbitration. The current law governing international arbitration in South Africa is the Recognition and Enforcement of Foreign Arbitral Awards Act.
The Committee complained about the lack of detail in the presentation. This was not pursued in the meeting. It was requested that a further briefing provide more detail on the Bill, to allow the Committee to properly engage with its content. Additional documentation would have to be provided such as the SALRC Report, the UNICTRAL model law as well as the draft Bill that had been before Parliament some years ago. Both the Department of Trade and Industry (DTI) and Department of International Relations and Co-operation (DIRCO) would have to be consulted as the Bill would impact on both trade and international relations.
The Department replied that both the DTI and DIRCO had been engaged but this was not included in the Memorandum on the Objects of the Bill due to an oversight on the Department’s part.
Members asked what the position would be regarding arbitrations currently been conducted and for arbitration clauses in contracts already concluded. Additional information was requested on the arbitration process between private parties and the state.
The Department explained that arbitration, in terms of previous legislation, would be dealt with according to the transitional arrangements in clause 20. Arbitration between private parties would be private to protect their trade secrets. Arbitration between private parties and the state would be public. This is because the public interest in transparency overrides any concerns of confidentiality which the state may have in keeping such arbitration confidential.
The Committee Chairperson was absent due to bereavement and the Committee elected Ms Pilane-Majeke as acting Chairperson.
Protected Disclosures Amendment Bill: NCOP proposed amendments
Mr Henk du Preez, State Law Advisor, Department of Justice and Constitutional Development, gave the presentation on the proposed amendment to the Bill. It was noted the amendment is of a technical and uncontroversial nature.
The Office of the State Law Advisor had certified the Bill before its introduction to Parliament. Following the State Law Advisor’s certification, clause 9A was inserted into the Bill. Clause 9A deals with the exclusion of civil and criminal liability for protected disclosures. The section in its original form only excluded criminal liability for protected disclosures. The Open Democracy Advice Centre (ODAC), and other interested parties, had made submissions to the NCOP’s Select Committee on Justice and Security arguing for the exclusion of civil and criminal liability for protected disclosures and calling for the removal of Clause 9B on disclosure of false information. Part of ODAC’s submission stated that clause 9A should be extended to exclude civil and criminal liability for protected disclosures which reveal that a substantial contravention of the law has or will take place.
The proposed amendment deals with the definition of “occupational detriment” in clause 1(d)(h) which refers to a protected disclosure as inclusive of information illustrating that a contravention of the law has or will occur:
“being subjected to any civil claim for the alleged breach of a duty of confidentiality or a confidentiality agreement arising out of the disclosure of—
(i) a criminal offence; or
(ii) information which shows or tends to show that a substantial contravention of, or failure to comply with the law has occurred, is occurring or is likely to occur;”
Mr Du Preez noted this is simply a cross reference to the same wording in clause 9A.
A submission was made in the Select Committee on Justice and Security that the proposed amendment is simply a cross-reference to clause 9A. Mr Du Preez stated this was a drafting error on his part. He admitted he should have advised the Select Committee that the cross reference in clause 1(d) should have included an express cross-reference to clause 9A. In effect, the amendment proposed by the NCOP is simply a consequential amendment. The practical consequence is that the definition of “occupational detriment” in clause 1(d) must now be amended to refer to both a criminal offence as well as a failure to comply with any other law generally.
The proposed amendment therefore is consequential and not controversial.
Ms C Pilane-Majeke (ANC), Acting Chairperson, stated their concern was to ensure there would be consequences for false disclosure.
Mr Du Preez replied that false disclosure was also discussed in the Select Committee. The Select Committee however proposed no amendments to that provision. The provision dealing with false disclosure of information therefore currently remains the same as it was when introduced in the National Assembly.
Mr L Mpumlwana (ANC) wanted to clarify that clause 9A and clause 9B were two amendments that that had been proposed by the Select Committee of Justice and Security in the NCOP.
Mr du Preez replied that Clause 9A is an existing provision. Clause 9B was added later by the Portfolio Committee. The proposed amendment arose as the definition of “occupational detriment” in clause 1 only referred to clause 9A and not to 9B as well. To solve that, the Select Committee proposed including the reference to clause 9B in the definition of ‘occupational detriment’ in clause 1. He emphasised that the proposed amendment is merely consequential and will not alter the fundamental substance of the Bill.
Mr B Bongo (ANC) stated the Committee had discussed this provision numerous times. The position of the ANC is that they accept the proposed amendment.
Mr Mpumlwana seconded Mr Bongo’s proposal to support the amendment on behalf of the ANC.
Ms Pilane-Majeke as Acting Chairperson put the NCOP proposed amendment to the vote.
All Members present voted in support of the NCOP proposed amendment.
Adv G Breytenbach (DA) wanted it placed on record that the DA is voting for the proposed amendment only. The DA does not support the Bill in its entirety. The DA’s vote in favour of the amendment should not be interpreted as the party supporting the entirety of the Bill as it currently stands.
Mr S Swart (ACDP) wanted it placed on record that the ACDP shared the same concerns as the DA. The ACDP had voted against the Bill in the National Assembly and wanted that placed on record. The ACDP adopts the same stance as the DA and votes for the NCOP proposed amendment only.
International Arbitration Bill: briefing
Ms Theresa Ross, DoJ&CD State Law Advisor, gave a background to arbitration as a dispute resolution mechanism. Arbitration is a voluntary method of settling commercial and other disputes outside of the formal court process. Arbitration is usually provided for in commercial contracts, where in the event of a dispute the parties will refer their dispute to arbitration and not to the formal court process.
The South African Law Reform Commission (SALRC) conducted research and produced a report on international arbitration. The report set the legislative process in motion, leading to the drafting of the International Arbitration Bill. The primary aim of the Bill is to adopt the United Nations Commission on International Trade Law (UNCITRAL) model law for arbitration. UNCITRAL’s purpose is to facilitate international trade. It was stressed that arbitration is not a competitor or alternative to the normal judicial system. Arbitration rather is complementary to the formal court process.
International arbitration in South Africa is currently governed by the Recognition and Enforcement of Foreign Arbitral Awards Act. That Act aims to give effect to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards known as the New York Convention.
Several concerns have been raised about the current Enforcement of Foreign Arbitral Awards Act. These concerns are inclusive of the fact the Act is not aligned with international developments and requires updating to serve modern commercial needs. Those concerns, amongst others, led to SALRC recommending the adoption of the Model Law in South Africa through the International Arbitration Bill.
The International Arbitration Bill aims to assist international and local business to resolve their disputes through arbitration. The Bill has been subjected to a socio-economic impact assessment.
The presentation then dealt with the contents of the Bill.
Clause 1 defines “arbitration agreement” as meaning an arbitration agreement as defined in article 7 of the model law. Clause 2 deals with interpretation of the bill whilst clause 3 outlines the Bill’s objects. An arbitration will only be an international arbitration if the parties to the agreement, at the time of concluding the agreement, have their place of business in different countries.
Clause 4(1) states the Arbitration Act, which deals with domestic arbitration, is not applicable to the Bill. This promotes certainty as parties will not be required to search for discrepancies between the Bill and the current domestic Arbitration Act when seeking to engage in international arbitration. Clause 4(2) does however provide that section 2 of the Arbitration Act applies to Chapter 3 of the Bill which deals with recognising and enforcing foreign arbitration awards.
Clause 5 states the Bill is subject to section 12 the Promotion and Protection of Investment Act. The Bill will also bind public bodies which have entered arbitration agreements. Clause 8 empowers arbitration tribunals and courts to use UNCITRAL reports and the model law when interpreting Chapter 2 of the Bill. This will give effect to the primary goal of the Bill and the model law, which is to reduce discrepancies between the various procedural laws governing arbitration. Clause 9 provides immunity to arbitrators, arbitral institutions, employees of arbitrators for any act or omission in the discharge of their functions if it is done in good faith.
Clause 11 provides for the confidentiality of arbitration proceedings but where an organ of state is a party to proceedings, the arbitration must be held in public to give effect to the public interest in the matter. Clause 16 allows for foreign arbitration awards to be recognised in the Republic provided the foreign award complies with the provisions of the Bill. Clause 17 states if the foreign award is in a foreign language which is not an official language of the Republic, the court may accept that award as sufficient proof of the foreign award if the court considers it appropriate to do so. Clause 18 provides for circumstances where a court can refuse to enforce a foreign arbitration award. Clause 20 deals with transitional arrangements.
In conclusion, it was emphasised that a primary objective of the Bill is to improve economic growth and development. As the Bill provides an up to date and comprehensive legislative framework to recognise and enforce foreign arbitration awards in South Africa, it is envisaged this will contribute towards enhancing economic growth and investment within the country.
Ms Pilane-Majeke, Acting Chairperson, stated it was important for a future briefing to fully expand on why the current legislation does not give effect to envisaged purposes of the Bill. What does it mean the model law will suit African circumstances? Further expansion was also needed on the point that clause 9 gives immunity to arbitrators when performing their functions, in good faith, for any act or omission. If the Bill overrides, for example, provisions of other legislation criminalising certain behaviour it will become a superior Act. If that is the case it must be scrutinised and examined in greater detail. It would not be necessary to deal with those concerns at the present meeting. The points were raised to alert the Department of what further details and information would be expected in briefing them on the Bill.
Mr Swart agreed with the Acting Chairperson. Additional documentation and reports would also need to be provided to the Committee. The SALRC Report as well as the draft Bill tabled before Parliament some years ago. The SALRC Report recommended the Bill follow the model law as far as possible. Additional information would therefore be required on the differences between the model law and the Bill. Clause 5 states the Act is subject to the Promotion and Protection of Investment Act. That Act would be another necessary document which the Committee would have to consider when scrutinising the Bill. The Promotion and Protection of Investment Act is currently not yet in operation. If that Act is not in operation what would be its current legal position? This a complex issue and greater consultation would need to be conducted with the Department of Trade and Industry (DTI) as well as the Department of International Relations and Co-operation (DIRCO). Whilst the Bill deals with arbitration it also has implications for trade and international affairs which would require input and consultation with those other Departments.
Ms Ross replied to Mr Swart’s questions. Both the DTI and DIRCO had been consulted on the Bill. One clause in the Bill had been of concern to DIRCO. That clause stated that whenever a change to the model law occurred, that change must be incorporated into South Africa’s domestic legislation. DIRCO noted the model law is not a treaty. As the model law does not have treaty status South Africa would not be legally obliged to implement subsequent changes to the model law.
Mr Swart noted that the Department’s Memorandum on the Objects of the Bill only mentioned that consultations with SALRC had occurred. The consultations with DIRCO and DTI should have been included in the Memorandum.
Ms Ross noted the concerns of Mr Swart and the acting Chairperson about the detail in the briefing and the Memorandum to the Bill. An assurance was given that these would be remedied by the Department.
Ms Ross replied to the question regarding immunity in clause 9 of the Bill. Arbitration can be equated with the proceedings in courts of law. The primary difference between arbitrations and normal court proceedings is that arbitrations are voluntary and private whilst court proceedings are largely mandatory and public. Similar legislation does give immunity to court officials and employees such as clerks of the court which are provided with immunity in relation to their work, in their capacity as a clerk, provided it is done in good faith. The same rationale applies to clause 9 of the bill with respect to arbitrators, arbitration institutions and the employees of those institutions. The other relevant legislation would be gathered to illustrate that point to the Committee.
Mr Bongo noted the legislative process of the Bill was still in its early stages. He had questions relating to retrospectivity and the difference between arbitration conducted between private parties and organs of state. Many contracts had already been concluded with arbitration clauses. What effect would the Bill have on those agreements in terms of any potential retrospective application?
Ms Ross replied that any arbitration clause in contracts which had either already been concluded or any arbitration that was proceeding when the Bill is enacted into law, would be dealt with in terms of the transitional arrangements in clause 20 of the Bill. Arbitration between private parties would be conducted in private and would be confidential. The primary purpose of the confidentiality clause is to protect business and trade secrets of private parties. If one of the parties is an organ of state or public body, the arbitration will then be held in public and not in private. This is because the public interest in the matter of ensuring the transparency of public bodies overrides any corresponding concern of keeping arbitration confidential which the state or organs of state may have.
The meeting was adjourned.