State Information Technology Agency SOC Limited v ELCB Information Services (Pty) Ltd and Another

The State Information Technology Agency SOC Ltd (SITA), an organ of state, concluded two agreements with ELCB Information Services (Pty) Ltd for the development and implementation of information and records management systems for government departments, including SASSA and the Eastern Cape Department of Health. The first agreement (2006) contained an arbitration clause; the second agreement (2007) could not be located in signed form by SITA, although it was implemented and partially paid. Disputes arose over outstanding payments. The matter was referred to arbitration under AFSA rules. SITA failed to deliver a statement of defence, raised a late constitutional challenge alleging non-compliance with s 217 of the Constitution, and sought a postponement. The arbitrator dismissed the challenge, whereupon SITA and its legal representatives withdrew from the arbitration. The arbitrator proceeded in their absence and made an award in favour of ELCB. SITA applied to the High Court to review and set aside the award under s 33 of the Arbitration Act 42 of 1965, alleging gross irregularities. The High Court dismissed the review and made the award an order of court. SITA appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, and the arbitration award remained enforceable as an order of court.

The case reaffirms the narrow scope of judicial review of arbitration awards under s 33 of the Arbitration Act and the principle that arbitrators have the right to be wrong on the merits. It underscores that procedural defaults and strategic withdrawals by parties do not constitute gross irregularities. The judgment also highlights the responsibility of organs of state to litigate responsibly and the court’s willingness to criticise wasteful and negligent conduct in arbitration and litigation.