company_law_today005012.jpg company_law_today005011.jpg company_law_today005010.jpg company_law_today005009.jpg company_law_today005008.jpg company_law_today005007.jpg
In casu it was argued the decision of the Supreme Court of Appeal case namely North West Government*, where the referral to arbitration regarding a potential dispute entailed contractual formation, implementation, validity, endorceability and rectification of the Agreement. Counsel for the respondent advanced that owing to the respondent's fundamental mistake the entire contract was void ab initio and the arbitration clause fell with it. In the decision of Darwin's Ltd* it was stated that if the dispute pointed to a contract that contained the clause and had been entered into, then arbitration was not an option since it could not function on the view the clause was as void as the contract. Decided from Wayland* was the matter that stated each clause including the arbitraton clause would stand or fall with the main contract should the main contract be void. The respondent further held to the fact that the particular dispute they currently encountered was not foreseeable and therefore could not have been part of the contemplations of the parties. Accordingly, contractual interpretation is well established in South African law that holds as primary importance the intention of the parties and the rational purpose for the agreement. In North East* it was recorded the effects of fraud, after fraud was proven. The ultimate question for the honourable Court to decide was whether the dispute could be determined by an arbitrator and to this end the Court cited the relevant clauses of the instanter signed agreement with clarity - i) any dispute arising..; ii) from the instanter contract..; iii) any matters arising..; iv) pertaining to formation, implementation, validity, enforceability and rectification of the present agreement..; v) irrevocable consent by the parties in the instanter contract..; vi) entitlement to withdrawal prohibited..; vii) the binding nature..; viii) arbitration was severable.
Abitrational severability, Non-validity and tax

Company Law Today

Company Law Expertise

Vide Seabeach Property Investment No 28 v Nunn (18310/18) [2019] ZAWHC 9; * North East Finance (Pty) Ltd v Standard Bank of South Africa 2013 (5) SA 1 (SCA) and, Heyman v Darwin's Ltd [1942] ALL ER 337 (HL) at 334,357B-D and, North West Provincial Government v Tswaing Consulting CC 2007 (4) SA 452 (SCA) and, Wayland v Everite Group. Company Law Today - jurisdictionally, a gifted contract drafter would align with Christies Law of Contract, South Africa (7th Ed., Lexis Nexis 2016) however in a dispute, the party claiming 'non-validity' of contract, if they had received income via the contract, would then need to check amounts they had claimed in tax set-offs regarding so-called non-validity of the contract, the length of tax periods set-offs were claimed and whether they/or the firm had fraudulently misrepresented to the tax department.
The respondent signed a purchase agreement that was drafted with an embedded arbitration clause, for an apartment inclusive of two parking bays and the use of what the respondent believed to be two levels of living space, a downstairs level and a roof terrace area. The roof terrace area she later discovered turned out to be something akin to a public terrace, effectively denying her 'full ownership'. The respondent believed a misrepresentation was made with intention to induce. The applicants denied the alleged misrepresentation and held for the agreement categorisation as 'enforceable' where the respondent classified the contract as 'void ab initio'. The honourable Court cited North East Finance* where the effect fraud had on an arbitration clause by stating 'enforceability' that pertained to either a void or voidable contract; and whether two parties to a contract intended an arbitrator should adjudicate, which might include the question as to validity of contract. In Darwin's Ltd* Lord Porter placed import on whether a given dispute came within the provision of an arbitration clause or was not primarily dependant upon the clause itself, more particularly if the parties foresaw an arising dispute, the further stipulation drafted would specifically address fraud, misrepresentation or concealment. The principle of intention and the purpose for the contract was also discussed.
Briefly summarised
Kindly see CLT comments below regarding a dispute and the party who claims 'non-validity' of a contract..