Tee Que Trading Services (Pty) Ltd v Oracle Corporation South Africa (Pty) Ltd and Another

In 2004, I-Flex Solutions Limited (India) concluded a licence agreement with Tee Que Trading Services (Pty) Ltd (TQ), granting TQ the right to sub-licence specific software to the South African Post Office (SAPO). A related sub-licence agreement was concluded between TQ and SAPO. Both agreements contained arbitration clauses and governing law clauses specifying international arbitration. In 2005, Oracle Corporation South Africa (Pty) Ltd (Oracle) acquired I-Flex and became successor-in-title. Between 2008 and later, TQ and Oracle concluded three additional agreements: the Oracle Partner Network Agreement (OPNA), the Oracle Licence and Services Agreement (OLSA), and the Oracle Partner Network Full Use Distribution Agreement (FUDA). These agreements dealt with TQ's membership in Oracle's partner network and contained dispute resolution clauses referring disputes to South African courts under South African law. In March 2018, TQ sued Oracle and SAPO in the High Court for R61,603,515 damages for alleged breach of the licence agreements. Oracle applied for a stay of the action pending arbitration, invoking the original arbitration clauses in the licence agreements.

• Whether the arbitration clause and governing law clause in the original licence agreements were rendered inoperative by subsequent agreements containing different dispute resolution clauses
• Whether the subsequent Oracle network membership agreements superseded or varied the arbitration provisions in the licence agreements
• Whether the International Arbitration Act 15 of 2017 and the UNCITRAL Model Law applied to the dispute
• Whether an arbitration between South African entities with a seat in London constitutes international arbitration
• Whether the court had discretion to refuse a stay of action proceedings pending arbitration

The appeal was dismissed with costs, including costs of two counsel. The High Court's order staying the action proceedings pending referral to arbitration was upheld.

An arbitration clause is a self-contained agreement collateral to the main agreement and may only be terminated with the consent of all parties unless it provides otherwise. Subsequent agreements between the same parties regulating different aspects of their business relationship do not automatically supersede or render inoperative arbitration clauses in earlier agreements, particularly where: (a) the agreements contain non-variation clauses requiring written amendment; (b) no formal variation has been effected; (c) the subsequent agreements regulate different subject matter; and (d) the parties' conduct indicates intention to preserve the earlier agreements. Where parties to an arbitration agreement have chosen a foreign seat of arbitration and international arbitration rules (such as ICC rules), the arbitration is international in nature even if all parties are based in South Africa. Under the International Arbitration Act 15 of 2017 and Article 8 of the UNCITRAL Model Law, courts must stay action proceedings and refer parties to arbitration unless the arbitration agreement is null and void, inoperative or incapable of being performed. Parties are free under Article 20 of the Model Law to agree on the juridical seat of arbitration, including a seat outside South Africa.

The Court noted that when parties contract with knowledge of the nature of issues likely to arise and stipulate for arbitration in a particular place, they should be held to that agreement. The Court referenced international precedents from Hong Kong and Albania where arbitration clauses between local companies specifying London as the seat were upheld as international arbitrations, demonstrating consistency with international practice. The Court also observed the absurdity in TQ's argument that clauses from the network membership agreements (to which SAPO was not a party) could be incorporated into the sub-licence agreement without SAPO's consent. The judgment emphasized that the International Arbitration Act and the Model Law incorporated therein constitute South African law, clarifying any potential confusion about their domestic applicability.

This case is significant in South African arbitration law for several reasons: (1) It confirms the autonomy and separability of arbitration clauses from the main contract and from subsequent related contracts. (2) It establishes that parties conducting business in South Africa may validly choose a foreign seat of arbitration, and such agreements will constitute international arbitration even where all parties are South African entities. (3) It affirms South Africa's commitment to the UNCITRAL Model Law approach that courts must respect parties' choice of international arbitration and stay court proceedings unless the arbitration agreement is invalid. (4) It clarifies the application of the International Arbitration Act 15 of 2017 and the incorporation of the UNCITRAL Model Law into South African law. (5) It demonstrates that courts will not easily find that arbitration clauses have been superseded or rendered inoperative by subsequent agreements unless there is clear evidence of variation in accordance with contractual requirements. (6) It reinforces South Africa's pro-arbitration stance in international commercial disputes and compliance with the New York Convention.