Pristine Seafoods (Pty) Ltd v Collective Dream Studios (Pty) Ltd and Another

The case arose from the sale of five marine fishing vessels under one agreement and two further vessels under a discrete second agreement. The second agreement contained a reservation of ownership clause pending full payment. The purchaser, Afritex (a foreign company), did not pay the full purchase price for the vessel 'Noelle Marie' and alleged latent material mechanical defects and fraudulent non-disclosure by the first respondent's representative. Afritex ceded its rights and obligations to the applicant, a local company, which prevented the first respondent from obtaining security for costs. The applicant obtained a default judgment that was later rescinded. After a special plea, action proceedings were stayed pending arbitration. The second respondent arbitrator returned a leading award in favour of the first respondent (ordering re-delivery of the vessel and monthly payments) and partly in favour of the applicant (a reduction in purchase price for certain actionable defects, with quantum to be determined later). The applicant launched a first review application to set aside or remit the leading award; the award was remitted for reconsideration but not set aside. After the remittal hearing, the arbitrator issued a remittal award and further award confirming a tender on quantum of defects but not altering the leading award substantively. The applicant then launched a second review application seeking to set aside the remittal award, the leading award, and the further award.

• Whether the second review application was barred by the doctrine of res judicata/issue estoppel
• Whether the arbitrator denied the applicant a fair hearing or displayed bias
• Whether alleged errors of fact and law by the arbitrator constituted reviewable irregularities under section 33(1) of the Arbitration Act 42 of 1965
• Whether the remittal award and further award were susceptible to judicial review

1. The applicant's review application was dismissed. 2. The applicant was ordered to re-deliver the 'Noelle Marie' to the first respondent and take all steps to transfer ownership. 3. The applicant was ordered to pay US$15,000 monthly from 1 August 2017 until re-delivery, plus interest at 10.5% per annum from 12 January 2024. 4. The applicant was declared entitled to a reduction in purchase price for specified actionable defects. 5. The first respondent was ordered to pay US$56,400 plus interest as compensation for actionable defects, to be set off against the applicant's monthly payments. 6. The applicant was ordered to pay one-third of the first respondent's arbitration costs and the costs of the review and counter-application on an attorney-and-client scale, including counsel's costs on scale C. 7. Previous arbitration cost orders were confirmed as court orders.

1. The doctrine of issue estoppel precludes re-litigation of the same issues of fact or law that were essential to a prior final decision, and a remittal order that does not set aside the original award leaves it binding, barring a second review on the same grounds. 2. In private arbitration, an error of law or fact does not per se constitute a reviewable irregularity; the threshold for review is whether the procedure followed afforded both parties a fair opportunity to present their case, and an arbitrator 'has the right to be wrong' on the merits.

The court noted that the approach by the applicant's legal team 'leaves much to be desired' and that this approach necessitated the first respondent's employment of senior counsel, justifying an attorney-and-client costs order. However, the court declined to make a de bonis propriis costs order against the attorneys, noting that some points were at least 'arguable' and difficulties arose from the lack of detail in the remittal order. The court also remarked that it could not be suggested 'by any stretch of the imagination' that the applicant was not afforded a fair opportunity to present its case.

This judgment clarifies the application of res judicata and issue estoppel in the context of arbitral awards that have been remitted but not set aside. It reinforces the distinction between appeals and reviews in private arbitration under the Arbitration Act 42 of 1965, confirming that alleged errors of fact and law are not reviewable irregularities unless they result in a denial of a fair hearing. The case also illustrates the finality of arbitral awards and the court's reluctance to permit re-litigation of the same issues through successive review applications.