Hos+Med Medical Aid Scheme v Thebe Ya Bophelo Healthcare Marketing & Consulting (Pty) Ltd

Hos+Med Medical Aid Scheme (Hosmed), a registered medical aid scheme, contracted with Thebe Ya Bophelo Healthcare Marketing & Consulting (Pty) Ltd (Thebe), an accredited broker, to introduce members and provide ongoing services in return for fees. Following amendments to regulations under the Medical Schemes Act in 2000, the parties believed that fees for ongoing services were impermissible and amended their agreement in 2001 to remove such fees. After further regulatory amendments in 2003 again permitted such fees, a new agreement reinstated them. In 2003, Thebe claimed fees for the 2001–2003 period, which Hosmed disputed. The dispute was referred to arbitration. The arbitrator found Hosmed liable. On appeal, the arbitration appeal tribunal upheld liability but held that the 2001 amendments were valid due to unanimous shareholder assent, rendering Thebe’s claim unenforceable. Thebe successfully applied to the High Court to set aside the appeal tribunal’s award under s 33 of the Arbitration Act. Hosmed appealed to the Supreme Court of Appeal.

The appeal was dismissed. The order of the High Court setting aside the arbitration appeal tribunal’s award under s 33 of the Arbitration Act was confirmed. The dispute was to be referred to a newly constituted arbitration appeal tribunal in terms of s 33(4) of the Act.

The case is a leading authority on the limits of arbitral jurisdiction in South African law. It affirms that arbitrators and arbitration appeal tribunals are strictly bound by the arbitration agreement and the pleaded issues, and may not decide unpleaded matters. It clarifies the distinction between an erroneous exercise of an existing power and the exercise of a power not conferred, the latter justifying judicial intervention under the Arbitration Act.