— A Brief Overview of the SCA’s Landmark Ruling
In Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA), the Supreme Court of Appeal reaffirmed the limited role courts play in reviewing arbitral awards. The dispute concerned a multimillion-dollar telecommunications software contract. When performance disputes arose, Telkom referred the matter to arbitration. The arbitrator ruled in favour of Telcordia, prompting Telkom to approach the High Court to set the award aside on grounds of gross irregularity and excess of powers under section 33(1)(b) of the Arbitration Act 42 of 1965.
The High Court found in Telkom’s favour. On appeal, however, the SCA decisively overturned that ruling. In a unanimous judgment by Harms JA, the Court emphasised that judicial interference in arbitration is tightly circumscribed and does not extend to errors of law or fact made within the arbitrator’s mandate.
The Court held:
“The words ‘gross irregularity’ in the conduct of the proceedings do not refer to the result of the proceedings, but to the method of conducting them. It is not permissible to scrutinise the arbitrator’s reasoning process and conclude that a gross irregularity has occurred because he or she came to the wrong conclusion.” (Para [85])
And further:
“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… 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.” (Para [86])
The SCA reiterated that arbitration is a private process born of contract, not public law, and thus does not trigger constitutional administrative justice provisions. This judgment preserves the integrity and autonomy of arbitration, underscoring that parties who choose to arbitrate must abide by the outcome, save for procedural misconduct or excess of jurisdiction.
Ultimately, Telcordia is a decisive endorsement of the finality of arbitral awards and a caution against treating review as disguised appeal.