Remo Ventures (Pty) Ltd v Cecile Van Zyl and Others

The parties concluded a Sale of Shares Agreement (SoS) in April 2017 for the sale of shares at a price of R50 million, subject to suspensive conditions, including the cession of a life insurance policy and payment milestones. The suspensive conditions were not fulfilled by the effective date, causing the SoS agreement to lapse and become void ab initio. Unaware of this, the parties continued to perform under the agreement. In February 2019, they concluded an arbitration agreement purporting to amend the arbitration clause in the SoS and appointed a private arbitrator. Arbitration proceedings followed and an award was issued. The appellants later contended that because the SoS agreement was void, the arbitration agreement and the award were also nullities.

The appeal was upheld with costs. The high court’s order was set aside and replaced with an order declaring the arbitration agreement, the appointment of the arbitrator, and the arbitration proceedings and award to be nullities, with costs awarded against certain respondents.

The case reaffirms South African law on the effect of non-fulfilment of suspensive conditions and clarifies that arbitration agreements embedded in or dependent upon void contracts generally fall with the principal contract. It is significant for commercial and arbitration practice, emphasising careful drafting and the limits of severability and autonomy of arbitration agreements in South African law.