In Herholdt v Nedbank Ltd the Supreme Court of Appeal again dealt with the test on review. This follows on the Constitutional Court’s decision in Sidumo that an award may only be reviewed and set aside if it is one that a reasonable decision-maker could not reach, which is known as a results driven approach.
Heroldt dealt with another approach, namely the process driven one. This relates to the ground for the review of an arbitration award that an arbitrator has committed a gross irregularity in the conduct of the arbitration proceedings. Such a gross irregularity can manifest as either a patent irregularity relating to the actual process followed (such as where the commissioner does not allow a witness to be cross questioned) or as a latent irregularity relating to the manner in which the commissioner applied the relevant legal principles to the matter and considered the evidence (for example where the commissioner disregards critical evidence and comes to a questionable conclusion.) The case law after Sidumo, culminating in the Labour Appeal Court decision in Heroldt, has set a very low bar for judicial interference on review in process driven applications. It only requires that the commissioner should have failed to apply his or her mind to certain material facts and does not require such a failure to be serious enough to result in the outcome thereof being unreasonable.
On 5 September 2013 the SCA overturned this line of reasoning in Herholdt. Whilst confirming that an arbitration award would remain reviewable where an arbitrator undertook the enquiry in the wrong manner or where the arbitrator undertook the wrong enquiry, the SCA has rejected the lower threshold of interference established by the LAC. Whilst the demise of the lower threshold for the reviewability of latent irregularities was perhaps inevitable, the reasoning of the SCA may be challenged on the ground that it attempts to extend the results driven principles established by the CC in Sidumo to the process driven principles that underlie the ground of gross irregularity, when the majority of the CC never dealt with that principle in Sidumo.
We may thus expect another round in the on-going saga of the test on review. In the meantime it will become more difficult to succeed with process driven reviews.
Prepared by Hermann Nieuwoudt/Jonathan Jones