THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable

Case No: 1266/2021

In the matter between:
OCA TESTING AND CERTIFICATION
SOUTH AFRICA (PTY) LTD

APPELLANT

and

KCEC ENGINEERING AND

CONSTRUCTION (PTY) LTD
FIRST RESPONDENT
HONOURABLE JUDGE
N P WILLIS N O

SECOND RESPONDENT

Neutral Citation:
OCA Testing and Certification South Africa (Pty) Ltd v KCEC
Engineering Construction (Pty) Ltd and Another (1226/2021)
[2023] ZASCA 13 (17 February 2023)
Coram:
PETSE AP, MOCUMIE and CARELSE JJA, MJALI and
MASIPA AJJA
Heard:

11 November 2022
Delivered:

17 February 2023
Summary:
Arbitration award – appeal against dismissal of application to set
aside part of award – s 33(1) of the Arbitration Act 42 of 1965 – gross irregularity
committed by arbitrator in making the award with respect to a substantial portion of
the claim – award set aside in part and residue of the claim referred to a new
arbitrator.

ORDER

On appeal from: Gauteng Division of the High Court, Johannesburg (Malindi J
sitting as court of first instance):
1 The appeal is upheld with no order as to costs.
2 The order of the Gauteng Division of the High Court, Johannesburg, is set aside
and in its place is substituted the following order:
‘1
The application to set aside the award insofar as it relates to the amounts
claimed in respect of the second and third agreements succeeds.
The dispute between the parties in relation to the residue of the claim arising
from the second and third agreements is to be submitted to a new arbitrator
to be agreed between the parties within 20 days of this order and, failing
such agreement, to be appointed by the Arbitration Foundation of South
Africa.
No order as to costs is made.’

JUDGMENT

Petse AP (Mocumie and Carelse JJA and Mjali and Masipa AJJA concurring):

Introduction
[1] Does the failure of the arbitrator to deal pertinently with and determine a
substantial portion of a composite claim that arises from two independent
agreements trigger the provisions of s 33(1) of the Arbitration Act 42 of 1965 (the
Act)? If so, does this then render the resultant arbitral award insofar as it relates to
such agreements susceptible to be reviewed and set aside? This is the cardinal
question raised in this appeal.

[2] The appellant, OCA Testing Inspection and Certification South Africa (Pty)
Ltd (OCA Testing), said: ‘Yes’. On the contrary, the first respondent, KCEC

Engineering and Construction (Pty) Ltd, (KCEC Engineering) said: ‘No’. The
Gauteng Division of the High Court, Johannesburg (the high court) agreed with
KCEC Engineering and answered both questions in the negative. It is now the task
of this Court to resolve these contrasting contentions. What follows is how the
dispute arose.

Background
[3] On three different dates, and at the instance of KCEC Engineering, three
written offers were made by OCA Testing to KCEC Engineering to render advisory,
technical and mechanical services for non-destructive test services to the latter’s
plants in the Northern Cape, subject to certain terms and conditions as agreed
between the parties upon acceptance of OCA Testing’s three offers.

[4] After the conclusion of the parties’ three written agreements,1 initially their
contractual relationship seemed to operate smoothly, and various tax invoices
submitted by OCA Testing to KCEC Engineering from time to time were settled
without demur by the latter.

[5] Clause 14 of the parties’ written agreements explicitly provided, amongst
other things, that ‘Any dispute or difference arising out of this Agreement shall be
referred to the arbitration of a person to be agreed upon between the [parties] or,
failing agreement, nominated by the President for the time being of the relevant
Chartered Institute of Arbitration of Spain.’ After running smoothly for some time,
disputes between the parties emerged. The deterioration in the parties’ relations
culminated in KCEC Engineering refusing to settle tax invoices submitted by OCA
Testing.

Litigation history
Arbitration tribunal
[6] With an impasse having arisen and the parties’ best endeavours to break
the logjam having failed to bear fruit, the parties agreed to refer their dispute to

1 The first, second and third agreements were all concluded during June 2017.

arbitration before a retired judge of this Court, Justice N P Willis, who was
appointed by the Arbitration Foundation of South Africa in accordance with the
parties’ agreement. OCA Testing sued KCEC Engineering for payment of
R2 603 729.44 in respect of services allegedly rendered during the period from
25 May 2018 to 25 August 2018. In so doing OCA Testing relied on three
agreements. The aggregate sum claimed comprised three amounts. The amount of
R142 002.46 had its genesis in the first agreement. The amount of R2 355 768.05
in the second agreement and the sum of R276 744.00 in the third agreement. How
these three amounts were computed was not in dispute between the parties.

[7] KCEC Engineering admitted that the services in relation to which the claim
arose were duly provided by OCA Testing. However, KCEC Engineering disputed
liability on various grounds. Briefly stated, it asserted that: (i) the services by OCA
Testing were rendered late, resulting in it suffering damages; (ii) it had overpaid
OCA Testing to the tune of R1 961 770.24 which it sought to recover by way of its
counter-claim; and (iii) it had suffered liquidated damages in the sum of R1
646 220.00 occasioned as a result of OCA Testing’s default in breach of the latter’s
contractual obligation.

[8] In making his award, the arbitrator identified the issues in dispute as follows:
‘(a)
Whether the claimant was obliged to deliver the CoC2 to the Defendant before
payment could be made of the outstanding invoice (identified as ‘POC15’), in terms of the
first agreement;
(b)
Whether the claimant has overcharged the defendant for services rendered in terms
of the second agreement (which would result in the defendant being entitled to a rebate)
by failing to meet, on a daily basis, the estimated daily production rate;
(c)
Whether the defendant is entitled to the delivery of videos prior to payment of any
outstanding invoice in respect of the third agreement;
(d)
Whether the defendant’s claim for damages is time-barred;
(e)
Whether the claimant is responsible for the damages claimed by the defendant.’

2 CoC is an acronym for ‘Certificate of Conformity’.

[9] After an exhaustive analysis of the parties’ pleadings, the evidence
presented by both sides in respect of both the claim and counter-claim as well as
contentions advanced by counsel for the parties, the arbitrator dismissed both the
claim by OCA Testing and the counter-claim by KCEC Engineering. It bears
mentioning that the arbitrator concluded that the claim for payment of the amount
of R142 002.46 in respect of the first agreement had to fail because OCA Testing
had breached that agreement. Significantly, he then proceeded to hold that none of
KCEC Engineering’s two counterclaims was sustainable.

[10] What the arbitrator stated in the course of his award bears emphasis. He
said:
‘The claimant has sought judgment for monies due in terms of its unpaid invoices. The
total amount allegedly owing to the claimant is in the sum of R2 603 729.44. The defence
raised to the payment of the invoices relating to the first agreement was the failure by the
claimant timeously to deliver the CoC to the defendant. The evidence makes it clear that
[the] claimant was indeed in breach of its agreement with the defendant by failing so to
deliver the CoC and, consequently, its claim must fail.’

[11] He then continued:
‘Moreover, it may be pointed out, en passant, that the agreements were obviously not
interlinked in the sense that a failure to pay an outstanding invoice due in terms of the
second agreement and/or the third agreement would have the contractual consequence of
not obliging the claimant to furnish the CoC in terms of the first agreement.’

[12] I pause here to observe that what the arbitrator said in the preceding two
paragraphs is significant. The statements unquestionably demonstrate that the
arbitrator was acutely alive to the fact that OCA Testing’s breach was in relation to
the first agreement only. This is borne out by what the arbitrator said immediately
after making his finding encapsulated in paragraph 10 above. He was at pains to
point out that:
‘. . . the agreements were obviously not interlinked in the sense that a failure to pay an
outstanding invoice due in terms of the second agreement and/or the third agreement
would have the contractual consequence of not obliging the claimant to furnish the CoC in
terms of the first agreement.’ (My emphasis.)
I shall revert to this aspect later.

[13] The arbitrator dismissed KCEC Engineering’s counter-claim for recovery of
the alleged overpayment of R1 961 770.24 on the basis that such a claim was not
based on the condictio indebiti and therefore had to fail. He also made short shrift
of the counter-claim for R1 646 220.00, finding that at the conclusion of the parties’
agreements there was ‘no serious contemplation that [OCA Testing] may be liable
for special damages’.

High Court
[14] A little over a month after the arbitrator’s dismissal of OCA Testing’s claim,
OCA Testing instituted proceedings in the high court for the award to be reviewed
and set aside in terms of s 33(1) of the Arbitration Act 42 of 1965 (the Act) together
with ancillary relief. None of the two respondents entered the fray, with the
consequence that the application was not opposed.

[15] In due course the application served before Malindi J who dismissed it with
no order as to costs. After making reference to both s 32(1) and s 32(2) of the Act,
the learned Judge set out what he considered was central to OCA Testing’s claims.
He proceeded to say:
‘The question that arises therefore is whether the second respondent failed to deal with the
validity of the claims under the second and third agreements. The applicant contends that
although the second respondent correctly identified the dispute between the parties as
relating to three separate agreements, he only considered the merits of the claim for the
invoices relevant to the first agreement when he started: “ . . . relating to the first
agreement was the failure by the claimant timeously to deliver the CoC to the defendant.”’

[16] He then continued:
‘In my view, although the award dismissed the claimant’s claim without traversing the
claims under each agreement the second respondent clearly considers the claimed
globular amount which comprises claims under all three agreements . . .’

[17] Ultimately, the learned Judge concluded that ‘there was no doubt that the
whole claim for R2 603 729.44, inclusive of the claims under the three agreements,
is dismissed, with all claims under each agreement having been separately
considered.’ Thus, the learned Judge reasoned, the arbitrator had fully understood

the nature of the enquiry into the first agreement and, in the result, there was no
basis to set aside paragraph 13 of the award. Subsequently, on 20 October 2021,
the learned Judge granted OCA Testing leave to appeal to this Court.

[18] Before us, as it was in the high court, the basis of OCA Testing’s attack of
the arbitrator’s award, broadly stated, was that the arbitrator ‘could not have arrived
at a conclusion to dismiss the aggregate claim’ (ie totalling R2 603 729.44) with
reference to the first agreement only. This argument was predicated upon seven
broad contentions, namely:
(i) the amount claimed by OCA Testing was, as correctly observed by the arbitrator
himself, an aggregate comprising three distinct claims arising from three different
agreements;
(ii) the arbitrator was cognisant of the fact that the three agreements were not
interlinked;
(iii) the contractual breach established in evidence by KCEC Engineering related to
the first agreement only in respect of a minor portion, ie R142 002.46, of the
aggregate amount;
(iv) the finding by the arbitrator that KCEC Engineering, ‘evidence [made] it clear
that [OCA Testing] was indeed in breach of [the first] agreement with [KCEC
Engineering] by failing to deliver the CoC’ hence its claim must fail;
(v) the words ‘its claim’ must, having regard to the factual matrix and viewed in
context, be a reference to the first agreement which is what the arbitrator was
pertinently dealing with;
(vi) having regard to the fact that KCEC Engineering’s remaining defences – which
would have nullified the total amount as claimed – were rejected by the arbitrator
as devoid of merit, it followed axiomatically that the indebtedness in respect of the
amounts arising from the second and third agreements was established;
(vii) the recognition by the high court that the arbitrator dismissed the claim in its
entirety, ie the whole of the globular amount, ‘without traversing the claims under
each agreement’.

3 Paragraph 1 dismissed OCA Testing’s claim in its entirety.

[19] In these circumstances, so went the argument, the arbitrator committed a
gross irregularity in the conduct of the arbitration proceedings as contemplated in
s 33(1)(b) of the Act. This, in turn, clouded the arbitrator’s mind resulting in him
misconducting himself in relation to his duties as arbitrator as envisaged in
s 33(1)(a) of the Act.

Statutory framework
[20] In pursuit of the relief it sought in the high court, and before us on appeal,
OCA Testing invoked s 33(1) of the Act. To the extent relevant for present
purposes s 33(1), which is headed ‘setting aside of award, provides as follows:
‘(1) Where –
(a) any member of an arbitration tribunal has misconducted himself in relation to his duties
as arbitrator . . .; or
(b) an arbitration tribunal has committed any gross irregularity in the conduct of the
arbitration proceedings or has exceeded his powers; or
(c) . . .;
the court may, on the application of any party to the reference after due notice to the other
party or parties, make an order setting the award aside.’

[21] I consider it convenient at this juncture to deal first with the current state of
the law relating to the considerations that bear on the circumstances in which a
court will come to the aid of a party relying on s 33(1) of the Act. Section 33(1) has
been considered, albeit briefly, in many judgments of this Court and others. Some
of the cases were analysed by Harms JA in Telcordia Technologies Inc v Telkom
SA Ltd4 (Telcordia). In para 72, Harms JA cited a passage from the judgment of
Mason J in Ellis v Morgan; Ellis v Desai5 (Ellis) in which the position was succinctly
stated as follows:
‘But an irregularity in proceedings does not mean an incorrect judgment; it refers not to the
result, but to the methods of a trial, such as, for example, some high-handed or mistaken
action which has prevented the aggrieved party from having his case fully and fairly
determined.’

4 Telcordia Technologies Inc v Telkom SA Ltd [2006] ZASCA 112; 2007 (3) SA 266 (SCA)
(Telcordia).
5 Ellis v Morgan; Ellis v Desai 1909 TS 576 at 581.

[22] In the course of his judgment, Harms JA also referred to Goldfields
Investment Ltd v City Council of Johannesburg6 (Goldfields), stating that an
arbitrator misconceives the nature of the inquiry in instances where he or she fails
to perform his or her mandate. And ‘[b]y misconceiving the nature of the inquiry a
hearing cannot in principle be fair because the body fails to perform its mandate.’7
In Goldfields Schreiner J was forthright when he, with reference to Ellis v Morgan,
said:
‘. . . it is not merely high-handed or arbitrary conduct which is described as a gross
irregularity; behaviour which is perfectly well-intentioned and bona fide, though mistaken,
may come under that description. The crucial question is whether it prevented a fair trial of
the issues. If it did prevent a fair trial of the issues then it will amount to a gross
irregularity.’8

[23] In Palabora Copper (Pty) Ltd v Motlokwa Transport and Construction (Pty)
Ltd9 (Palabora Copper), this Court reiterated that where ‘an arbitrator engages in
the correct enquiry, but errs either on the facts or the law, that is not an irregularity
and is not a basis for setting aside an award.’10 This is in keeping with the abiding
principle that whenever parties elect to resolve their disputes through arbitration
courts must defer to the parties’ choice and not lightly intervene.11

Analysis
[24] I have already dealt with what is at issue in this appeal and how the
arbitrator went about in arbitrating the dispute between the parties. It suffices to
emphasise that there was no dispute about the amounts arising out of the second
and third agreements. And allied to that was the arbitrator’s finding that KCEC
Engineering’s defences to those two agreements are unsustainable. Yet, nowhere

6 Goldfields Investment Ltd v City Council of Johannesburg 1938 TPD 551 at 560-561 (Goldfields).
7 Telcordia para 73.
8 Goldfields at 560.
9 Palabora Copper (Pty) Ltd v Motlokwa Transport and Construction (Pty) Ltd [2008] ZASCA 23;
[2018] 2 All SA 660 (SCA) (Palabora Copper).
10 Ibid para 8.
11 Clark v African Guarantee and Indemnity Co Ltd 1915 CPD 68 at 77; Lufuno Mphaphuli and
Associates (Pty) Ltd v Andrews and Another [2009] ZACC 6; 2009 (4) SA 529 (CC) para 219.

in his award did the arbitrator revert to the question as to what the fate of the
amounts arising from the second and third agreements should be.

[25] In addressing this aspect in its judgment, the high court stated:
‘[T]here is no doubt that the whole claim of R2 603 729.44, inclusive of the claims under
the three agreements, is dismissed, with all claims under each agreement having been
separately considered.’
And that:
‘[B]y addressing the defences to the claims under the second and third agreements, the
[arbitrator] did consider their merits and came to the conclusion that they too are to be
dismissed.’
And, with reference to Palabora Copper, concluded that no irregularity is
committed by an arbitrator who ‘engages in the correct enquiry, but errs on the
facts or the law.’ Consequently, the high court held that there would be no basis for
setting the award aside.

[26] This then raises the question whether the arbitrator engaged in the correct
enquiry in the context of the facts of this case. If this question is answered in the
affirmative, that would be the end of the matter. However, if not, intervention by this
Court would be warranted.

[27] What compounds matters in this case is that the arbitrator found that KCEC
Engineering’s defences in relation to the second and third agreements were devoid
of merit. Insofar as the counter-claim was concerned, it was dismissed. Yet, the
arbitrator inexplicably dismissed the residue of the globular amount claimed when
he had already found that there was nothing standing in the way of an award in
respect of those amounts relating to claims 2 and 3 being made in favour of OCA
Testing. That the arbitrator did not do so manifests a lack of appreciation on his
part of the fact that OCA Testing’s globular claim comprised three components.
This, in my view, is a typical case of an arbitrator having ‘committed [a] gross
irregularity in the conduct of the arbitration proceedings’ as contemplated in
s 33(1)(b) of the Act. Reflecting on the sentiments of Schreiner J in Goldfields, the
crucial question is whether the arbitrator’s conduct prevented a fair trial of the
issues.

[28] That the arbitrator did not determine the fate of the residue of the globular
amount claimed, after having dismissed the claim in respect of the first agreement,
ineluctably leads me to conclude that his approach to the matter ‘prevented a fair
trial of the issues.’ Simply put, the arbitrator was here called upon to decide
whether OCA Testing was entitled to any monies representing amounts flowing
from the second and third agreements. In short, the arbitrator simply did not direct
his mind to the crucial question whether OCA Testing was entitled to the residue of
the globular amount claimed, ie R2 603 729.44 less the amount of R142 002.46 in
respect of the first agreement. Had he dealt with the amounts flowing from the
second and third agreements, his award would have been immune from
impeachment under s 33(1) of the Act even though he may have been wrong on
the facts or the law.

[29] As it emerges from the record, the tenor of the arbitrator’s underlying
reasoning makes it plain that he was alive to the fact that the total amount of
R2 603 729.44 was made up of three components arising from three different
agreements. To illustrate this point, the arbitrator said:
‘[T]he amount of R142 002.46, is claimed by the claimant in respect of the first agreement.
The amount of R2 355 767.05, is claimed in respect of the second agreement. The amount
of R276 744.00, is claimed in respect of the third agreement.’

[30] And having analysed KCEC Engineering’s defence in respect of the sum of
R142 002.46, he concluded, as already mentioned, that OCA Testing had
committed a material breach of the first agreement. Consequently, so the arbitrator
held, OCA Testing was not entitled to payment, and its claim for R142 002.46 fell
to be dismissed.

[31] However, what then followed was that the arbitrator inexplicably dismissed
the claim in its entirety without, for once, engaging in any analysis in regard to the
legitimacy or otherwise of the amounts claimed pursuant to the second and third
agreements. That OCA Testing had elected to claim a composite amount
combining three separate agreements was beyond question and the arbitrator, too,
was cognisant of this fact. Thus, in failing to address the residue of the claim, just
as he had done with the component of the claim flowing from the first agreement,

the arbitrator effectively closed off his mind to the fundamental question that he
was called upon to answer, namely whether OCA Testing’s claim for the residual
amount – that had its genesis in the second and third agreements – was
sustainable. In my view, this omission prevented a fair trial of the totality of the
issues and therefore amounts to a gross irregularity.

[32] In summary therefore, I am satisfied that OCA Testing has established that
there is good cause to remit the dispute to a new arbitrator. As I have already
found, this must be so because the arbitrator in this matter failed to deal with all the
issues that were before him.12 As already indicated, we are here not dealing with a
situation where the arbitrator got it horribly wrong without more, in which event
there would have been no basis to disturb the award. Rather, he simply overlooked
some of the crucial issues that he was required to determine.13 Section 28 of the
Act explicitly provides that absent an agreement between the parties to the
contrary, an award shall, subject to the provisions of the Act, ‘be final and not
subject to appeal and each party to the reference shall abide by and comply with
the award in accordance with its terms.’14 And as Harms JA forcefully put it: ‘[A]n
arbitrator “has the right to be wrong.”’15 Consequently, where an arbitrator errs in
his or her interpretation of the law or analysis of the evidence that would not
constitute gross irregularity or misconduct or exceeding powers as contemplated in
s 33(1) of the Act.16

Should the arbitrator be substituted?
[33] Counsel for OCA Testing urged upon us that in the event of this Court
upholding the appeal, we should review and set the arbitral award aside to the
extent that it dismissed the claim in its entirety. Thereafter, the dispute should be

12 See in this regard South African Forestry Co Ltd v York Timbers Ltd [2004] ZASCA 72; 2003 (1)
SA 331 (SCA) para 14.
13Compare: Kolber and Another v Sourcecom Solutions (Pty) Ltd and Others; Sourcecom
Technology Solutions (Pty) Ltd v Kolber and Another 2001 (2) SA 1097 (C).
14 Section 28 reads: Unless the arbitration agreement provides otherwise, an award, shall, subject
to the provisions of the Act, be final and not subject to appeal and each party to the reference shall
abide by and comply with the award in accordance with its terms.
15 See para 21 above for the full citation.
16 See: Doyle v Shenker and Co Ltd 1915 AD 233 at 236-238; Administrator, South West Africa v
Jooste Lithium Myne (Eiendoms) Bpk 1955 (1) SA 557 (A).

remitted for re-consideration by a new arbitrator. Motivating for the substitution of
the erstwhile arbitrator, counsel argued that given the fundamental irregularity
committed by the arbitrator OCA Testing has lost confidence in him. Therefore, so
the argument went, the interests of justice strongly militate against the remittal of
the matter to the same arbitrator. Rather, they dictate that someone entirely
divorced from the atmosphere of the abortive hearing would be ideally suited to
determine the issues afresh without his or her mind being clouded by the dust of
the previous conflict.

[34] There is much to be said for counsel’s contentions although the proposed
course raises the spectre of a re-hearing of the dispute with its attendant expense.
However, on balance I am persuaded that this is the route to take to ensure that
justice is not only done but also manifestly seen to be done. In any event, s 33(4)
of the Act provides that ‘[i]f the award is set aside the dispute shall, at the request
of either party, be submitted to a new arbitration tribunal constituted in the manner
directed by the court.’ (My emphasis.)

[35] As to how the re-hearing of the dispute is to be conducted, that is a matter
entirely to be determined by the new arbitrator. No doubt his or her approach will
be informed by whatever submissions or representations the parties themselves
may advance. If deemed convenient and practicable, the new arbitrator could, for
example, determine the remaining issues between the parties on the recorded
evidence without relying on the findings of the previous arbitrator, particularly so, if
it is thought that the assessment of the demeanour of the witnesses who testified is
not essential for a proper determination of their credibility. But, ultimately, these are
all issues that fall squarely in the remit of the new arbitrator.

Relief
[36] This brings me now to the form of relief to be granted to OCA Testing in the
light of the conclusion reached above that the arbitrator committed a gross
irregularity. The award comprised two parts, the first part was a dismissal of OCA
Testing’s claim in its entirety. The second was a dismissal of KCEC Engineering’s
counter-claim. The latter part does not feature in this appeal, presumably because
KCEC Engineering accepted the outcome of its counter-claim.

[37] In Polabora Copper this Court was confronted with a situation where only
part of the award was found to be bad. The question then arose as to whether
s 33(1) of the Act solely contemplates the setting aside of an award in its entirety or
also countenances interference with only part of the award that is vulnerable to
impeachment. After surveying various legal sources and seeking guidance from
foreign jurisdictions, this Court concluded that ‘[t]here does not appear to be any
sound reason why an arbitration, that has been properly conducted on certain
issues and properly determined those issues, should be set aside in its entirety,
because of an irregularity in relation to a wholly separate issue.’17

[38] Here the issue is clear-cut. The portion of the arbitrator’s award that has
been impeached by OCA Testing relates to a part of the main claim and does not
affect the counter-claim. The fact that OCA Testing has accepted its fate in relation
to a minor portion of its claim (ie R142 002.46) does not, by parity of reasoning,
detract from this principle. Accordingly, paragraph 1 of the award falls to be set
aside albeit only to the extent that it relates to the amounts arising from the second
and third agreements.

Costs
[39] There remains the issue of costs to address. Counsel for OCA Testing
asked for costs of two counsel in the event that the appeal is upheld. In my view
the appropriate order to grant in relation to costs is that there be no order as to
costs. It goes without saying that where a litigant seeks costs against its adversary
in the event that the application is opposed, there should be no order as to costs
where the adversary has not opposed the application but, instead, elected to
remain supine. This is precisely what happened in this case. In these
circumstances, OCA Testing is not, in the absence of opposition, entitled to costs
both in this Court and the high court.

17 Palabora Copper para 48.

[40] In the result the following order is made:
The appeal is upheld with no order as to costs.
The order of the Gauteng Division of the High Court, Johannesburg, is set
aside and in its place is substituted the following order:
‘1
The application to set aside the award insofar as it relates to the amounts
claimed in respect of the second and third agreements succeeds.
The dispute between the parties in relation to the residue of the claim arising
from the second and third agreements is to be submitted to a new arbitrator
to be agreed between the parties within 20 days of this order and, failing
such agreement to be appointed by the Arbitration Foundation of South
Africa.
No order as to costs is made.’

____________________
X M PETSE
ACTING PRESIDENT
SUPREME COURT OF APPEAL

APPEARANCES

For the appellant:

B L Skinner SC (with I Veerasamy)
Instructed by:

Pather & Pather Attorneys, Durban
Kramer Weihmann Attorneys, Bloemfontein

For the respondents:

No appearance
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:

17 February 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form part of
the judgments of the Supreme Court of Appeal
OCA Testing and Certification South Africa (Pty) Ltd v KCEC Engineering Construction (Pty) Ltd
and Another (1226/2021) [2023] ZASCA 13 (17 February 2023)
Today the Supreme Court of Appeal (SCA) upheld an appeal from the Gauteng Division of the
High Court, Johannesburg (high court). This appeal revolved around arbitration proceedings
between the appellant, OCA Testing and Certification South Africa (OCA Testing), and the
first respondent, KCEC Engineering (KCEC). On three separate occasions, OCA Testing and
KCEC entered into three written agreements in terms of which OCA Testing were to deliver
advisory, technical and mechanical services to KCEC. The business relationship regrettably
broke down after KCEC refused to settle tax invoices submitted by OCA Testing; the parties
agreed to implement arbitration proceedings, as set out in terms of the written agreements.
The second respondent was appointed arbitrator (the arbitrator).
In reliance on the three written agreements, OCA Testing sued KCEC for payment of a
globular amount of R2 603 729.44. The aggregate sum claimed comprised three amounts:
R142 002.46 in terms of the first agreement, R2 355 768.05 in terms of the second and
R276 744.00 in terms of the third. KCEC admitted that the services were provided by OCA
Testing but it disputed liability by asserting that the services were rendered late, resulting in
KCEC suffering damages. Furthermore, KCEC had also overpaid OCA Testing to the tune of
R1 961 770.24, which it sought to reclaim via its counter-claim; and it had suffered liquidated
damages in the sum of R1 646 220.00 occasioned as a result of OCA Testing’s default in
breach of its contractual obligation.
After having analysed the parties’ pleadings, the arbitrator dismissed the claim, basing the
dismissal of the entire matter on the first written agreement, as the arbitrator maintained that
payments due in terms of the second and third agreements would not have resulted in obliging
OCA Testing to perform in terms of the first agreement. KCEC’s counter-claim was also
dismissed as it was not based on the condictio indebiti or that OCA Testing could be liable for
damages in terms of special damages.
The matter proceeded to the high court where it was dismissed. In the high court, the question
was posed whether the second applicant failed to deal with the validity of the claim. The high

court was of the view that the arbitrator had fully understood the nature of the enquiry into the
first agreement and there was, therefore, no reason to set the arbitrator’s finding aside.
Upon appeal, the appellant contended that there could be no way in which the arbitrator could
have arrived at the conclusion to dismiss the aggregate claim with reference to the first
agreement only. The allegation was levelled that the arbitrator committed a gross irregularity
in the conduct of arbitration proceedings as contemplated in s 33(1) of the Arbitration Act 42
of 1965 (the Act), resulting in him misconducting himself in his duties as arbitrator. This Court
accordingly had to determine whether the arbitrator engaged the matter correctly, in the
context of the facts. The Court found that the arbitrator’s finding that KCEC’s defences in
relation to the second and third agreements were devoid of merit. In addition to dismissing the
counter-claim, he inexplicably dismissed the residue of the globular amount claimed when he
had already found that there was nothing that stood in the way of an award in favour of OCA
Testing in respect of the claims in terms of the second and third written agreements. The Court
held that the arbitrator did not do so, manifested a lack of appreciation of the matter, which is
tantamount to have committed a gross irregularity in terms of s 33(1) of the Act.
Furthermore, the Court held that the failure of the arbitrator to deal with the residue of the
globular amount, after having dismissed the claim in respect of the first agreement, indicated
that the matter was not fairly heard. The arbitrator was mandated to decide whether OCA
Testing was entitled to any money flowing from the second and third agreements. The
arbitrator simply did not direct his mind to the crucial question whether OCA Testing was
entitled to the residue of the globular amount claimed, less the amount in respect of the first
agreement. Had he dealt with the amounts flowing from the second and third agreements, his
award would have been immune from impeachment under s 33(1) of the Act. The arbitrator
inexplicably dismissed the claim in its entirety without engaging in any analysis in regard to
the amounts claimed pursuant to the second and third agreements. Thus, in failing to address
the residue of the claim, just as he had done with the component of the claim flowing from the
first agreement, the arbitrator effectively closed off his mind to the fundamental question that
he was called upon to answer. This omission prevented a fair trial of the totality of the issues
and amounted to a gross irregularity. The SCA determined that a new arbitrator ought to be
appointed in order to ensure the issues at hand would be determined afresh.
In the result, the SCA upheld the appeal from the high court and set the order of the high court
aside. In its place, an order was made setting aside the arbitrator’s award insofar as it related
to the amounts claimed in terms of the second and third agreements and that the dispute that
pertained to the residue of the second and third agreements was to be submitted to a new
arbitrator, as agreed upon between the parties.
--------oOo--------