This is a dangerous practice, particularly prevalent within the construction and insurance industries, with many hidden consequences to the parties.

The purpose of this brief paper is to highlight potential issues for consideration:

1. 1. Is arbitration, as opposed to litigation, the most appropriate dispute resolution process? Depending upon the jurisdiction, the waiting time for a court date in one jurisdiction/country may be significantly less than in another; rendering arbitration a more favourable alternative in the former but not the latter;


2. 2. Is the nature of the dispute likely to be a purely legal dispute or is there a prospect that the nature of the dispute may be of a technical nature requiring the appointment of a duly qualified individual to arbitrate rather a legally trained individuals;


3. 3. Is there a contractual mechanism in place creating consensus-seeking alternatives (such as amicable settlement and/or mediation) before adjudicative processes like arbitration litigation and, if so, is the utilisation of such mechanisms peremptory?


4. 4. Is it clear from the contract when the referral to arbitration occurs? – This is relevant to issues of prescription; when and how is prescription interrupted.


5. 5. Is the contract of a national or international flavour giving rise to considerations of enforceability? - In South Africa, different legislation is applicable to the enforcement of a domestic award as opposed to a foreign one; the determination as to what constitutes a foreign award is not as straightforward as it would seem. It is the seat of the arbitration, and not the nationality of the parties nor where the arbitration physically took place, that is the determinative factor.


6. 6. What is the procedural law applicable to the arbitration process? - This can, and often is, different to the substantive law applicable to the contract. The parties may also select a system of rules, such as the ICC rules or the UNCITRAL rules to regulate the arbitration proceedings but the law of the seat of arbitration may determine interim procedural issues.


7. 7. Where is the seat of the arbitration - the legal jurisdiction in which the arbitration is tried. It should be noted that the seat of the arbitration and the place of the arbitration are not necessarily one and the same place. It is the national legal system at the seat of the arbitration that has jurisdiction to adjudge the validity and scope of the arbitration agreement, regulate the arbitral procedure and determine the ultimate validity of the award. A decision to hold the arbitration hearing in a particular country does not move the seat of the arbitration there, nor does it necessarily bring the arbitration under the jurisdiction of that country's courts. This can give rise to practical difficulties as various court applications in relation to the arbitration process may need to be brought in the court having jurisdiction in the chosen seat; having potentially massive time and cost implications. Generally the seat of the arbitration is chosen by the parties, however, if not, it can be determined by an arbitration tribunal or a court; the place of the hearing will be a factor, but not the decisive one, considered in making such determination.


8. 8. Is the country in which the award has to be enforced a signatory to the New York Convention and, furthermore, has it enacted legislation which enables parties to enforce foreign arbitration awards?