Bidoli v Bidoli & another

Three brothers, Guido Bidoli (appellant), Fabrizio Bidoli (represented by his wife Barbara as executrix, first respondent), and Romolo Bidoli (second respondent), conducted business together with their father in various joint and separate enterprises from 1960, including through partnerships and companies in South Africa, Namibia and Italy. They did not keep accurate records of profit distribution. Since 1971 they sent moneys to their late father in Italy which financed construction of a block of flats in Rome completed in 1984 and registered in the three brothers' names. An adjoining vacant land was also acquired and registered jointly in their names. In 2000 the block of flats was sold and proceeds deposited in a joint bank account in Rome. Disputes arose amongst the brothers and in 2007 they concluded an arbitration agreement appointing Advocate Joe van der Westhuizen SC as arbitrator to determine all disputes. The hearing commenced on 3 December 2007. On 7 December 2007 the parties reached a settlement outside the hearing. On 10 December 2007 Romolo contacted the case manager expressing dissatisfaction with the settlement, claiming he signed it by mistake and felt the calculations were wrong. The arbitrator re-opened proceedings but ruled he would adopt the settlement agreement for his award, allowing Romolo to raise objections when the award was brought to court for confirmation. The arbitrator issued an award on 10 December 2007 recording the settlement terms. In February 2008 Guido applied to the Western Cape High Court for the arbitral award to be made an order of court under section 31 of the Arbitration Act 42 of 1965. Romolo opposed, seeking to have the award set aside as void ab initio.

• Whether an arbitrator has power at common law to record a settlement reached by the parties in the form of an agreed award
• Whether an arbitral award merely recording a settlement agreement reached by parties is a valid arbitral award capable of being made an order of court under section 31 of the Arbitration Act 42 of 1965
• Whether the arbitrator's mandate terminated automatically upon the parties reaching a settlement
• Whether the high court can make an order affecting property located outside its territorial jurisdiction

The appeal was upheld with costs. The order of the Western Cape High Court was set aside and replaced with an order that: (1) the applicant's application succeeds with costs; (2) the arbitrator's award published on 10 December 2007 is made an order of court in the terms set out (concerning the Rome property remaining in equal undivided shares, and the division of funds in the Banca Intesa account according to the agreed ratios); (3) the second respondent's counter application is dismissed with costs.

At South African common law, parties to a valid arbitration are entitled to agree that their settlement be recorded by the arbitrator in the form of an agreed award which can be made an order of court under section 31 of the Arbitration Act 42 of 1965, even though that Act does not expressly provide for agreed awards. Where there is a formulated dispute at the time the arbitrator is appointed and valid arbitration proceedings have commenced, the arbitrator's mandate does not automatically terminate upon the parties reaching a settlement, particularly where the parties have agreed that the arbitrator should issue an award recording the settlement terms. The principle in Voet and Parekh v Shah Jehan Cinemas - that there can be no arbitration without a dispute - applies at the inception of arbitration, not to situations where parties settle during the course of valid proceedings and agree to have those terms recorded in an award. Arbitration flows from the consent of parties who are free to modify their arrangements by further agreement, including agreeing to have a settlement recorded as an arbitral award.

The court made observations regarding the state of South African arbitration law, noting that many developed and developing countries have adopted the UNCITRAL Model Law for domestic and international arbitrations. The court expressed the view that it was 'lamentable' that a decade after the South African Law Commission's 2001 recommendation for new arbitration legislation (Project 94 Report on Domestic Arbitration), which proposed a Draft Arbitration Bill combining features of the UNCITRAL Model Law and the English Arbitration Act 1996, the recommendations had not been acted upon. The court referenced proposed section 44 of that Draft Bill which would have expressly provided for awards on agreed terms. The court also noted that various international tribunal rules (including ICC Rules Article 26 and LCIA Rules Article 26.8) and the Association of Arbitrators - Southern Africa Rules (Rule 37) expressly provide for settlements to be recorded in awards. The court observed that arbitrators have a considerable variety of forms from which to choose the type of award best suited to circumstances, including the power to make declaratory awards, citing the broad power in section 48(3) of the English Arbitration Act 1996.

This case establishes important principles regarding arbitration law in South Africa, particularly concerning agreed awards. Despite the Arbitration Act 42 of 1965 not containing express provision for agreed awards (unlike modern arbitration statutes), the SCA confirmed that parties to a valid arbitration are not precluded from agreeing to have their settlement recorded in the form of an arbitral award which can then be made an order of court under section 31. The judgment recognizes the fundamental principle that arbitration is consensual and parties are free to regulate their relationship and modify their arrangements by agreement. The decision clarifies that an arbitrator's mandate does not automatically terminate upon settlement reached during valid proceedings, particularly where parties have agreed that an award should be issued. The case also highlights the need for South Africa to modernize its arbitration legislation - the court noted it was 'lamentable' that the South African Law Commission's 2001 recommendations for a new arbitration statute (incorporating UNCITRAL Model Law provisions and features from the English Arbitration Act 1996) had not been implemented a decade later. The judgment demonstrates how South African courts will interpret arbitration law purposively to give effect to party autonomy while recognizing international arbitration practice.