BDE Constructions v Basfour 3581 (Pty) Ltd (11690/11) [2012] ZAKZPHC 55; 2013 (5) SA 160 (KZP) (31 August 2012)

BDE Constructions v Basfour 3581 (Pty) Ltd (11690/11) [2012] ZAKZPHC 55; 2013 (5) SA 160 (KZP) (31 August 2012)

The court held that the respondent, by not seeking to enforce the arbitration agreement and electing not to apply for a stay, waived its right to rely on the applicant's alleged breach of the arbitration agreement. The doctrine of election and waiver applies, and once the respondent made its election, it was bound by it and could not later challenge the applicant's conduct. The applicant is therefore entitled to seek a stay of the proceedings and is not obliged to withdraw them before referring the dispute to arbitration. The costs of the application are best reserved for determination by the arbitrator, who will be better placed to assess the reasonableness of the applicant's conduct...

Citation
[2012] ZAKZPHC 55
Parties
Applicant: BDE Construction; Respondent: Basfour 3581 (Pty) Limited
Court
Kwazulu-Natal High Court, Pietermaritzburg
Jurisdiction
South Africa
Judgment Date
31 August 2012
Case Number
11690/11
Procedural Posture
Stay Application / Application for Stay of Proceedings Pending Arbitration
Outcome
Application stayed pending arbitration. Costs reserved for determination by the arbitrator.
Judges
Swain
Legal Topics
Arbitration Agreement, Stay of Proceedings, Waiver and Election, Costs Reservation
Civil Procedure Commercial and Corporate Arbitration Agreement Stay of Proceedings Waiver and Election Costs Reservation

Case Brief

Summary, issues, holding and outcome

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Parties

BDE Construction

Applicant

Basfour 3581 (Pty) Limited

Respondent

Procedural Posture

Stay Application / Application for Stay of Proceedings Pending Arbitration

Legal Issues

  1. 1 Whether the applicant is entitled to a stay of proceedings pending arbitration.
  2. 2 Whether the applicant must withdraw the litigation before referring the dispute to arbitration.
  3. 3 Whether the respondent's failure to enforce the arbitration agreement constitutes a waiver or election.

Ratio Decidendi

The court held that the respondent, by not seeking to enforce the arbitration agreement and electing not to apply for a stay, waived its right to rely on the applicant's alleged breach of the arbitration agreement. The doctrine of election and waiver applies, and once the respondent made its election, it was bound by it and could not later challenge the applicant's conduct. The applicant is therefore entitled to seek a stay of the proceedings and is not obliged to withdraw them before referring the dispute to arbitration. The costs of the application are best reserved for determination by the arbitrator, who will be better placed to assess the reasonableness of the applicant's conduct...

Court Disposition

Application stayed pending arbitration. Costs reserved for determination by the arbitrator.

Orders

  • The application is stayed pending the outcome of the arbitration proceedings.
  • The dispute between the applicant and respondent is to be determined by arbitration by Advocate Troskie SC at a time and place agreed upon by the parties and the arbitrator, or as determined by the arbitrator.