Telcordia Technologies Inc v Telkom SA Ltd

JurisdictionSouth Africa

Telcordia Technologies Inc v Telkom SA Ltd
2007 (3) SA 266 (SCA)

2007 (3) SA p266


Citation

2007 (3) SA 266 (SCA)

Case No

26/05

Court

Supreme Court of Appeal

Judge

Harms JA, Conradie JA, Cloete JA, Lewis JA and Ponnan JA

Heard

October 30, 2006 and October 31, 2006

Judgment

November 22, 2006

Counsel

W H Trengove SC, D M Fine SC and A E Franklin SC (with them J P V McNally and K H Shozi) for the appellant.
C H J Badenhorst SC and G J Marcus SC (with them D B Spitz and S Budlender) for the respondent.

Flynote : Sleutelwoorde B

Arbitration — Award — Review of — Grounds for setting aside.

Arbitration — Arbitration Act 42 of 1965 — Appeal against decision to review and set aside C award given in private arbitration proceedings — Whether alleged errors of law committed by arbitrator can found review under s 33(1) of Act — Circumstances in which refusal by arbitrator to state case for opinion of court under s 20 constituting gross irregularity in conduct of proceedings — Whether arbitrator exceeding powers — Whether Court a D quo correctly exercising discretion in appointment of new arbitration tribunal.

Arbitration — Arbitration Act 42 of 1965 — Statement of case to Court in terms of s 20(1) for opinion during arbitration proceedings — Party's 'right' to state case — Statement of case being matter for discretion of arbitrator — Party to arbitration E proceedings having no 'right' to state case for opinion of court.

Arbitration — Award — Review of — Grounds for setting aside — Material error of law — Parties agreeing to arbitration — Parties thereby limiting interference by courts to procedural irregularities set out in s 33(1) of Act — Accordingly, award not reviewable on ground of material error of law.

Arbitration — Award — Review F of — Proper approach of Court on review — Court not to misconceive its function and treat review as appeal — Court not to enquire into correctness of award but to confine itself to examining correctness of procedure adopted in arriving at award.

Arbitration — Award — Setting aside of — Arbitrator exceeding powers in conduct of arbitration proceedings in terms of Arbitration Act 42 of 1965, s 33(1)(b) — What constitutes — Whether arbitrator mandated with interpretation of agreement exceeding powers in incorrectly G interpreting agreement, in determining applicable law, or in determining admissibility of evidence.

Arbitration — Award — Setting aside of — Gross irregularity by arbitrator in conduct of arbitration proceedings — Arbitration Act 42 of 1965, H s 33(1)(b) — Such ground of review envisaging gross irregularity in 'conduct', and not 'result' or outcome, of proceedings — Qualification being that 'gross irregularity' committed where decision-maker misconceiving whole nature of enquiry or duties in connection therewith — Misconception of nature of enquiry — What constitutes — Whether mistaken interpretation of agreement by arbitrator mandated with interpretation thereof amounting to misconception of nature of enquiry. I

Headnote : Kopnota

The parties had entered into a so-called Integrated Agreement in terms of which the appellant, Telcordia, was to provide the respondent, Telkom, with a state-of-the-art telecommunications system. A dispute arose as to Telcordia's delivery obligations of certain highly specialised software under the J

2007 (3) SA p267

agreement, which hinged on the parties' respective interpretations of the agreement. The A dispute was referred to arbitration and the arbitrator ultimately accepted Telcordia's interpretation of the agreement.

Telkom then proceeded to launch an application in the High Court for the review and setting aside of the arbitrator's award on the grounds that:

(1)

in incorrectly interpreting the Integrated Agreement, the arbitrator had committed a material error so fundamental that he had misconceived the nature of the enquiry and his duties; and B

(2)

by denying Telkom the opportunity to apply to court under s 20 of the Arbitration Act 42 of 1965 for an order compelling him to state legal questions for the decision by the court, the arbitrator had committed a gross irregularity and acted irrationally.

Telkom relied on: (i) the common-law ground of review of awards tainted by material error of law; and (ii) review in terms of C s 33(1)(b) of the Act, on the ground of the arbitrator's having committed a gross irregularity in the proceedings or having exceeded his powers by misconceiving the whole nature of the enquiry and his duties in connection therewith.

The High Court upheld the application on the latter ground and reviewed and set aside the arbitrator's award. On appeal, D

Review for material error of law

Held, that, by agreeing to arbitration, the parties had limited the grounds of interference in their contract by the courts to the procedural irregularities set out in s 33(1) of the Act. By necessary implication, they had waived the right to rely on any further grounds of review, whether at common law or otherwise. (Paragraph [51] at 292A - B.) E

Held, further, that the Act did not allow for review on the ground of material error of law and Telkom could accordingly not avail itself of this ground of review. (Paragraph [67] at 297C.)

'Gross irregularity'

Held, that the general principle was that an irregularity related to the conduct of the proceedings rather than to the merits. F Aqualification to that general principle was that a 'gross irregularity' was committed where the decision-maker misconceived the whole nature of the enquiry, ie he misconceived his mandate, or his duties in connection therewith. (Paragraphs [71] and [72] - [73] at 297I - 298A and 298C - E.)

Held, further, that, in the present case, the arbitrator's mandate included interpreting the Integrated Agreement. An arbitrator G was always entitled to be wrong on the merits and a wrong interpretation of the agreement did not amount to a misconception of the nature of the enquiry and therefore to an irregularity. (Paragraph [85] at 301J - 302C.)

Held, further, that a wrong interpretation of the agreement also did not entail the arbitrator's exceeding his powers. The power given to him was to, rightly or wrongly, interpret the agreement; H determine the applicable law; and determine what evidence was admissible. Errors of this kind had nothing to do with his exceeding his powers but were errors committed by him within the scope of his mandate. (Paragraph [86] at 302D - 303B.)

Held, further, that, on the evidence, the arbitrator had clearly understood his duties and consciously used the powers he had according to his terms of reference. (Paragraphs [90] - [93] at I 303G - 304E.)

Held, further, that the Court a quo had erred in treating the review application as an appeal: instead of considering whether the gross irregularities alleged had been committed, it had re-interpreted the agreement, coming to a conclusion different to that of the arbitrator and, on that basis, had found that the arbitrator failed to apply his mind, and misconceived the whole nature of J

2007 (3) SA p268

the enquiry and his duties in connection therewith, ie he was found to have committed an irregularity, and simultaneously to have A exceeded his powers. (Paragraph [99] at 305H - 306C.)

Held, further, that the Court a quo had misconceived its function in the additional respect that it dealt with the review as an appeal in the broad sense, taking into account facts that had not been before the arbitrator. (Paragraph [109] at 308E.) B

Section 20 of the Act

Held, that Telkom had no 'right' to approach the Court and the arbitrator had not infringed any such right when he declined, on Telkom's application, to state a case for the opinion of the court. (Paragraph [156] at 320B.)

Appeal upheld. Order of the Court a quo set aside and replaced with one dismissing the application. (Paragraphs [157] and [158] at 320C - E.) C

Cases Considered

Annotations

Reported cases

Southern African cases D

Administrator, South West Africa v Jooste Lithium Myne (Eiendoms) Bpk 1955 (1) SA 557 (A): referred to

Administrator, Transvaal v Kildrummy Holdings (Pty) Ltd and Another 1978 (2) SA 124 (T): referred to

Amalgamated Clothing and Textile Workers Union of South Africa v Veldspun (Pty) Ltd 1994 (1) SA 162 (A): E referred to

Bester v Easigas (Pty) Ltd and Another 1993 (1) SA 30 (C): referred to

Briscoe v Deans 1989 (1) SA 100 (W): referred to

Brisley v Drotsky 2002 (4) SA 1 (SCA) (2002 (12) BCLR 1229; [2002] 3 All SA 363): applied

Crystal Springs Aerated Water Co v Kan [1902] TH 21 at 27: compared

Datacolor International (Pty) Ltd v Intamarket (Pty) Ltd 2001 (2) SA 284 (SCA) ([2001] 1 All SA 581): F referred to

Dickenson & Brown v Fisher's Executors 1915 AD 166: applied

Dorman Long Swan Hunter (Pty) Ltd v Karibib Visserye Ltd 1984 (2) SA 462 (C): compared

Doyle v Shenker & Co Ltd 1915 AD 233: applied

Du Toit v Minister of Transport 2006 (1) SA 297 (CC) (2005 (11) BCLR 1053): referred to G

Dutch Reformed Church v Town Council of Cape Town (1898) 15 SC 14: referred to

Ellis v Morgan; Ellis v Dessai 1909 TS 576: referred to

Gentiruco AG v Firestone SA (Pty) Ltd 1972 (1) SA 589 (A): compared

Goldfields Investment Ltd v City Council of Johannesburg 1938 TPD 551: applied H

Government of the Republic of South Africa v Midkon (Pty) Ltd and Another 1984 (3) SA 552 (T): referred to

H A Millard & Son (Pty) Ltd v Enzenhofer 1968 (1) SA 330 (T): referred to

Hira and Another v Booysen and Another 1992 (4) SA 69 (A): referred to

Hyperchemicals International (Pty) Ltd and Another v Maybaker Agrichem (Pty) Ltd and Another 1992 (1) SA 89 (W): I referred to

Johnston v Leal 1980 (3) SA 927 (A): referred to

Kannenberg v Gird 1966 (4) SA 173 (C): referred to

Lamprecht and Another v McNeillie 1994 (3)...

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92 practice notes
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    • South Africa
    • Invalid date
    ...v Government of the Republic of South Africa and Others 1999 (2) SA 279 (T): referred to Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) (2007 (5) BCLR 503; [2007] 2 All SA 243): dictum at 298 – 299 Thint (Pty) Ltd v National Director of Public Prosecutions and Others; Zuma......
  • Hubbard v Cool Ideas 1186 CC
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    • Invalid date
    ...consideredTaljaard v TL Botha Properties 2008 (6) SA 207 (SCA): dictum in para [8]appliedTelcordiaTechnologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) (2007 (5)BCLR 503; [2007] 2 All SA 243): dictum in para [4] considered113HUBBARD v COOL IDEAS2013 (5) SA 112 SCAABCDEFGHIJ© Juta and Compa......
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    • Stellenbosch Law Review No. , May 2019
    • 27 May 2019
    ...4 SA 1 (SCA) paras 11-34, overru ling Miller NNO v Da nnecker 2001 1 SA 928 (C).207 See Telcordia Technolog ies Inc v Telkom SA Ltd 2007 3 SA 266 (SCA) par a 12; Klub Lekkerrus/Libertas v Troye Villa (Pty) Ltd [2011] 3 All SA 597 (SCA) para 26; Yarram Trading CC t/a Tiju ana Spur v Absa Ban......
  • Die Integrasiereël in die Suid-Afrikaanse Kontraktereg
    • South Africa
    • Stellenbosch Law Review No. , September 2019
    • 16 August 2019
    ...rikaanse sake van Philm att (Pty) Lt d v Mosselban k Development s CC 1996 2 SA 15 (HHA) en Telcordia Technol ogies Inc v Telkom SA Ltd 20 07 3 SA 266 (H HA) word die b egrip “parol evidence rule” en die beg rip “integratio n rule” as sinonieme aa ngewend Hierdie ter minologie is ook onder ......
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83 cases
  • Venmop 275 (Pty) Ltd and Another v Cleverlad Projects (Pty) Ltd and Another
    • South Africa
    • Invalid date
    ...v Government of the Republic of South Africa and Others 1999 (2) SA 279 (T): referred to Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) (2007 (5) BCLR 503; [2007] 2 All SA 243): dictum at 298 – 299 Thint (Pty) Ltd v National Director of Public Prosecutions and Others; Zuma......
  • Hubbard v Cool Ideas 1186 CC
    • South Africa
    • Invalid date
    ...consideredTaljaard v TL Botha Properties 2008 (6) SA 207 (SCA): dictum in para [8]appliedTelcordiaTechnologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) (2007 (5)BCLR 503; [2007] 2 All SA 243): dictum in para [4] considered113HUBBARD v COOL IDEAS2013 (5) SA 112 SCAABCDEFGHIJ© Juta and Compa......
  • Sidumo and Another v Rustenburg Platinum Mines Ltd and Others
    • South Africa
    • Invalid date
    ...and Arbitration and Others (1998) 19 ILJ 903 (LC) ([1998] 6 BLLR 622): considered I Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) (2007 (5) BCLR 503): considered Total Support Management (Pty) Ltd and Another v Diversified Health Systems (SA) (Pty) Ltd and Another 2002 (4......
  • Helen Suzman Foundation v Judicial Service Commission
    • South Africa
    • Invalid date
    ...Parkway Consortium v City of Cape Town and Others [2014] 4 All SA 497 (WCC): referred to Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) (2007 (5) BCLR 503; [2007] 2 All SA 243; [2006] ZASCA 112): referred Tulip Diamonds FZE v Minister of Justice and Constitutional Developm......
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2 firm's commentaries
  • Review Of An Arbitrator's Award Based On 'Gross Irregularity' Or 'Exceeding Of Powers'
    • South Africa
    • Mondaq Southafrica
    • 28 February 2022
    ...therefore did not amount to gross irregularity or exceeding of authority. Footnotes 1. Telcordia Technologies Inc v Telkom SA Limited 2007 (3) SA 266 (SCA), para 2.Eskom Holdings Limited v The Joint Venture of Edison Jehamo (Pty) Ltd and KEC International Limited and Others (case no 177/202......
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    • Mondaq Southafrica
    • 28 February 2022
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7 books & journal articles
  • Die Integrasiereël in die Suid-Afrikaanse Kontraktereg
    • South Africa
    • Stellenbosch Law Review No. , September 2019
    • 16 August 2019
    ...rikaanse sake van Philm att (Pty) Lt d v Mosselban k Development s CC 1996 2 SA 15 (HHA) en Telcordia Technol ogies Inc v Telkom SA Ltd 20 07 3 SA 266 (H HA) word die b egrip “parol evidence rule” en die beg rip “integratio n rule” as sinonieme aa ngewend Hierdie ter minologie is ook onder ......
  • Giving Practical Effect to Good Faith in the Law of Contract
    • South Africa
    • Stellenbosch Law Review No. , May 2019
    • 27 May 2019
    ...4 SA 1 (SCA) paras 11-34, overru ling Miller NNO v Da nnecker 2001 1 SA 928 (C).207 See Telcordia Technolog ies Inc v Telkom SA Ltd 2007 3 SA 266 (SCA) par a 12; Klub Lekkerrus/Libertas v Troye Villa (Pty) Ltd [2011] 3 All SA 597 (SCA) para 26; Yarram Trading CC t/a Tiju ana Spur v Absa Ban......
  • Judicial Review of Arbitration Awards
    • South Africa
    • Stellenbosch Law Review No. , August 2019
    • 16 August 2019
    ...to the pleadings.4438 See La mprecth v McNeillie 1994 3 SA 665 (A) 668; Telcordi a Technolo gies Incorporated Comp any v Telkom SA Ltd 2007 3 SA 266 (SCA) para s 66-6739 2008 2 SA 608 (SCA)40 See for example Robin son v Randfontein Estate s GM Co Ltd 1925 AD 173; Shill v Miln er 1937 AD 101......
  • Remedies, repentance and the doctrine of election in South African contract law
    • South Africa
    • Acta Juridica No. , December 2019
    • 24 December 2019
    ...(n 7) 337–8; Kerr (n 7) 705.21 See Tillett v Wilcox 1941 AD 100 at 108.22 See eg Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) para 166. © Juta and Company (Pty) 66 PRIVATE LAW IN A CHANGING WORLDthe other party that the contract is continuing, this will be taken as an e......
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92 provisions
  • Venmop 275 (Pty) Ltd and Another v Cleverlad Projects (Pty) Ltd and Another
    • South Africa
    • Invalid date
    ...v Government of the Republic of South Africa and Others 1999 (2) SA 279 (T): referred to Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) (2007 (5) BCLR 503; [2007] 2 All SA 243): dictum at 298 – 299 Thint (Pty) Ltd v National Director of Public Prosecutions and Others; Zuma......
  • Hubbard v Cool Ideas 1186 CC
    • South Africa
    • Invalid date
    ...consideredTaljaard v TL Botha Properties 2008 (6) SA 207 (SCA): dictum in para [8]appliedTelcordiaTechnologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) (2007 (5)BCLR 503; [2007] 2 All SA 243): dictum in para [4] considered113HUBBARD v COOL IDEAS2013 (5) SA 112 SCAABCDEFGHIJ© Juta and Compa......
  • Giving Practical Effect to Good Faith in the Law of Contract
    • South Africa
    • Stellenbosch Law Review No. , May 2019
    • 27 May 2019
    ...4 SA 1 (SCA) paras 11-34, overru ling Miller NNO v Da nnecker 2001 1 SA 928 (C).207 See Telcordia Technolog ies Inc v Telkom SA Ltd 2007 3 SA 266 (SCA) par a 12; Klub Lekkerrus/Libertas v Troye Villa (Pty) Ltd [2011] 3 All SA 597 (SCA) para 26; Yarram Trading CC t/a Tiju ana Spur v Absa Ban......
  • Die Integrasiereël in die Suid-Afrikaanse Kontraktereg
    • South Africa
    • Stellenbosch Law Review No. , September 2019
    • 16 August 2019
    ...rikaanse sake van Philm att (Pty) Lt d v Mosselban k Development s CC 1996 2 SA 15 (HHA) en Telcordia Technol ogies Inc v Telkom SA Ltd 20 07 3 SA 266 (H HA) word die b egrip “parol evidence rule” en die beg rip “integratio n rule” as sinonieme aa ngewend Hierdie ter minologie is ook onder ......
  • Request a trial to view additional results

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