The Minister of International Relations and Co-operation NO and Another v Neo Thando / Elliot Mobility (Pty) Ltd and Another

DIRCO awarded a tender to Neo Thando / Elliot Mobility (Pty) Ltd in November 2015 for removal, packing and storage of household goods of transferred officials. The parties concluded a Service Level Agreement (SLA) containing an arbitration clause. Goods of officials already abroad were stored by the incumbent service provider, AGS Frasers, which refused to release them to Neo Thando, contending that its existing SLA with DIRCO obliged it to continue storage until officials returned. Neo Thando alleged it suffered damages due to DIRCO’s failure to procure release of the goods. In September 2017, Neo Thando sent a letter of demand claiming damages and expressing a preference for arbitration if DIRCO agreed. Without DIRCO’s consent and before a dispute was agreed upon, Neo Thando approached the Pretoria Bar Council to appoint an arbitrator. Advocate MC Erasmus SC was appointed and proceeded to arbitrate despite DIRCO objecting to jurisdiction. The arbitrator issued an interim award finding he had jurisdiction and a final award holding DIRCO contractually obliged to procure transfer of goods. DIRCO sought review in the High Court, which confirmed the awards. DIRCO then appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The High Court’s order was set aside and replaced with an order declaring that the arbitrator lacked jurisdiction, ordering Neo Thando to repay arbitrator’s fees and legal costs incurred by DIRCO, and setting aside both the interim award dated 23 October 2018 and the final award dated 28 July 2020. Neo Thando was also ordered to pay costs of the application for leave to appeal.

The case clarifies that, notwithstanding the competence-competence principle, an arbitrator’s jurisdiction depends on strict compliance with the arbitration agreement. It affirms that a mere damages demand does not constitute an arbitrable ‘dispute’ and that unilateral referral to arbitration without consent or proper notice is invalid. The judgment reinforces contractual interpretation principles and limits on arbitral jurisdiction under South African law.