There are two major forms of commercial dispute resolution in South Africa: litigation and arbitration.
The court system comprises a hierarchy of courts, with each level in the hierarchy having a specified jurisdiction.
The lower courts are called Magistrates' Courts, which generally have jurisdiction in civil cases where the amount in dispute is less than ZAR100,000. Magistrates are officials of the Department of Justice and are appointed by an independent body, the Magistrates' Commission.
The superior courts are called High Courts. There are a number of provincial and local divisions of the High Courts. Judges, appointed by the Judicial Services Commission (an independent body), are usually chosen from the ranks of practising senior advocates, attorneys or academics, and they enjoy a high degree of autonomy and independence. The High Court has original jurisdiction in respect of civil matters, and has appellate jurisdiction in respect of matters originally heard in the Magistrate's Court and matters heard by single judges in the High Court.
The highest court in South Africa for non-constitutional matters is the Supreme Court of Appeal. It has appellate jurisdiction only. The Constitutional Court has jurisdiction throughout South Africa as a court of final instance over all matters relating to the interpretation, protection and enforcement of the provisions of the Constitution. Most constitutional disputes are first heard by a High Court. However, some constitutional matters fall exclusively within the jurisdiction of the Constitutional Court.
Once a decision has been made to embark on litigation, it is necessary to choose between trial (action) and motion (application) proceedings.
Action is commenced by the issue of summons. The parties are required to file formal pleadings setting out the facts and legal bases upon which they rely for their claim or defence. The summons is the first such document.
Motion proceedings differ from actions in that, generally, no oral evidence is heard by the court (although there are circumstances in which matters may be referred for the hearing of oral evidence). The evidence is placed before the court in the form of affidavits. Motion proceedings are commenced by way of a notice of motion, accompanied by a founding affidavit setting out the facts on which the claim is based, with all supporting documentation being annexed to the affidavit.
Procedurally, the South African legal system is strongly influenced by English law, although there is no jury system in either civil or criminal proceedings. There is also a strong English influence in corporate and commercial law. The legal profession is similarly divided. Attorneys (solicitors) generally practise in partnerships, whereas advocates (barristers) practise as members of the Bar in the major commercial centres.
Arbitration is an increasingly popular form of dispute resolution in South Africa. Arbitration clauses are found in most commercial agreements, and this has resulted in an increasing number of commercial disputes being submitted to arbitration. Local arbitration organisations are active. Arbitrators are usually appointed from the Bar or from the ranks of retired judges.
The popularity of arbitration has given rise to sensitivity in certain judicial and political quarters. This sensitivity arises from the view, in certain quarters, that arbitration is inimical to judicial transformation in South Africa. There is a perception that certain members of the legal profession see arbitration as a form of 'privatised litigation' enabling them and their corporate clients to avoid courts that increasingly comprise black judicial officers. Fortunately, this perception has changed in recent years and arbitration now enjoys the full support of the two highest courts: the Supreme Court of Appeal and the Constitutional Court. It is widely expected that the increasing popularity of arbitration as a method of commercial dispute resolution will soon result in the implementation of the long-awaited reform and modernisation of South African arbitration law.
South Africa has ratified the New York Convention, without reservation. The Recognition and Enforcement of Foreign Arbitral Awards Act 1977 was enacted to give effect to the New York Convention.