Krohne (Pty) Ltd concluded a service contract with the Strategic Fuel Fund Association (SFF) for the design, supply, installation and commissioning of a custody metering system at SFF’s Saldanha oil terminal. Payment was to be made in tranches, with 10% retained pending certification of proper performance. A dispute arose over whether the metering system met the contractual accuracy specification of 0.3%. The dispute was referred to arbitration in terms of the contract. Before the arbitration proceeded, the parties settled by agreeing to refer the technical accuracy question to an independent expert (SGS), whose findings were to be final and binding. This settlement was issued by the arbitrator as an interim arbitral award. SGS issued a final report in September 2019. Krohne contended that the report confirmed compliance with the required accuracy and thus triggered SFF’s obligation to pay the retained amount. SFF disputed that the trigger event had occurred. Krohne applied to the High Court to enforce payment based on the interim award and SGS report. The High Court dismissed the application on the basis that Krohne had no valid cause of action, holding that the interim award conflicted with the Arbitration Act. Krohne appealed to the Supreme Court of Appeal.
The appeal was upheld with costs, including the costs of two counsel. Orders 1 to 4 of the High Court were set aside and replaced with an order dismissing the respondent’s second point in limine with costs. The matter was remitted to the High Court for determination on the merits.
The case clarifies South African arbitration law by confirming that interim arbitral awards, including those recording settlement agreements that make an expert’s determination final and binding, are valid and enforceable under the Arbitration Act. It reinforces party autonomy in arbitration and cautions courts against dismissing enforcement proceedings on misplaced jurisdictional or statutory objections rather than addressing the true contractual and arbitral issues.