NAME OF THE CASE
Old Mutual Investment Group v M and S Driving School and Another
NAME OF THE COURT
CITY AND COUNTRY
Arbitration clause, natural justice, lease agreement
The applicant before the High Court is a landlord and the respondents are tenants, in terms of a written lease agreement, at applicant’s premises at Metro Centre. In terms of Clause 42 of the lease agreement, the applicant gave 6 months notice to the respondents to vacate the premises to pave way for demolitions of the premises and redevelopment of the site. The respondents did not comply with the notice. Consequently, the applicant commenced arbitration proceedings in terms of Clause 41 of the lease agreement. The matter was determined by an arbitrator, who issued an award in favour of the applicant. It is this award that is at the centre of the dispute between the parties before the High Court. The applicant applied in terms of Article 35 of the Model Law that the award be registered. The respondents counter-applied for the setting aside of the award.The applicant contended that once a party has made an application in terms of Article 35, he or she is entitled, as a matter of right to have the award registered unless the respondent shows sufficient cause for the court to decline the same. In order to discharge the onus upon him, the respondent, resisting registration of an arbitral award, should establish one or more of the defences prescribed in Article 36. The applicant submitted that the respondents in casu have failed to sufficiently set out grounds warranting refusal of recognition of the award. The respondents resisted the registration of the award on the basis that the award was against public policy for two main reasons viz;
- Bias on the part of the arbitrator
- That the arbitrator did not make a finding on a fundamental issue of whether the notice to terminate the lease was valid.
- In response to the allegation that the arbitrator was biased,Makoni J noted that no principles of natural justice were offended in this case as there was no sign of bias on the part of the arbitrator. The judge further held that the court should always be reluctant to interfere with an award where the parties have agreed on an arbitration clause and this court will not do so. Thus the court ordered the arbitral award to remain extant.
- The court also held that the notice to terminate the lease was valid and the arbitrator had addressed the issue in the award. The termination clause authorized premature termination if the lease agreement if the landlord wanted to demolish the premises and redevelop the site. The respondents also failed to prove that the applicant was acting in bad faith.