Last week in commercial law: gold stars, missed emails, and something about admiralty law

Superway Construction appoints Cape Metal Windows as a subcontractor. Their agreement has a dispute resolution clause that requires mediation then adjudication. Cape Metal Windows goes straight to adjudication. Superway Construction objects, but the adjudicator presses on. Western Cape Division: the dispute resolution clause makes mediation an “indispensable jurisdictional gateway”, so the adjudicator’s determination is unenforceable [your summarist notes that while this conclusion is defensible as a matter of interpretation, it goes against the weight of opinion, at least at the international arbitration cocktail parties, that multi-tiered dispute resolution clauses go to admissibility, not jurisdiction, and your summarist also does not quite understand the need for the detour through legislative proposals for compulsory mediation and the right to equality and access to courts—a gold star for the alert reader asking themselves why mediation is a “forum” under section 34 of the Constitution if arbitration is not].

In more adjudication news, an adjudicator misses an email from one of the parties with its submissions about the value of works. After the party points out the error, the adjudicator considers the submissions and amends—and doubles—the award. The other party argues that it only has to pay the original amount because the adjudicator was functus. The parties’ contract incorporates industry-standard dispute resolution rules that let an adjudicator correct a decision “to remove any clerical mistake, error or ambiguity”. Western Cape Division: the adjudicator made an “error” when he overlooked the email, so he has the power to correct the award, and in any event functus does not apply with the same force to adjudicators as it does to arbitrators and judges.

Excitement on the high seas! Or in Richards Bay. Iron Pasha, a company incorporated in the Marshall Islands, charters a ship, The Argentina, to Hengdeli, a Hong Kong company. The relationship between Iron Pasha and Hengdeli reaches choppy waters. Iron Pasha cancels the charter. Hengdeli argues that the cancellation is unlawful and sues Iron Pasha in arbitration in London. Hengdeli worries that Iron Pasha has no assets to satisfy an arbitration award—the Marshall Islands known for coconuts and sandy beaches not companies with transparent, asset-rich balance sheets. Hengdeli spies another ship, The Haralambos, on its way to Richards Bay. A different company, Nero Oil, owns The Haralambos. Hengdeli alleges that The Haralambos is something admiralty lawyers call an associated ship, which, through some dark arts of admiralty law, allows Hengdeli to send the sheriff [on a rubber duck, your summarist presumes] to arrest The Haralambos [dedicated readers should consult the Admiralty Jurisdiction Regulation Act]. Hengdeli gets an ex parte arrest order [and, your summarist presumes, the confused crew of The Haralambos get some well-deserved shore leave in Richards Bay]. KwaZulu-Natal Division, Durban reconsiders and sets aside the ex parte order, holding that The Haralambos is not an associated ship. SCA: The Haralambos is an associated ship for various reasons, including that Nero Oil and Iron Pasha are ultimately controlled by the same people [your summarist nods knowingly in admiralty law].

A commissioner of a s.418 inquiry of one of the Bosasa companies, Bosasa Youth Development Centres, summons Mr Ngonyama to appear at the inquiry. Mr Ngonyama’s company, Thundercats [no relation, for readers old enough to remember], has a pending claim against Bosasa Youth Development Centres. Mr Ngonyama asks the High Court to set aside* the summons because, so he argues, the liquidators are abusing the inquiry as a dress rehearsal for cross-examining Mr Ngonyama in Thundercats’s claim [*attentive readers will note that your summarist did not say “asks the High Court to review and set aside…” because your summarist’s unpopular opinion is that it makes no sense to ask a court to review something: the court already does that when you ask it to set something aside!]. Gauteng Division, Johannesburg: summoning Mr Ngonyama serves a proper purpose and it’s not abusive just because Mr Ngonyama’s appearance at the inquiry might help the liquidators as they prepare to take on Thundercats.

Plaintiff sues defendant for breach of a lease. Defendant denies the breach, counterclaims, and files a third party notice. In the third party notice, defendant claims damages against the third party (in the same amount as its counterclaim against the plaintiff) and asks, in the alternative, for a “contribution or indemnification”. Third party excepts. Western Cape Division: no cause of action against the third party and exception upheld because Rule 13 doesn’t allow a defendant to claim a monetary amount from a third party, because pleading a “contribution or indemnification” is too vague, and because a defendant cannot claim a contribution or indemnification against a third party in delict if the plaintiff’s claim against the defendant is contractual (and, in any event, there’s no such thing as a delictual claim to an indemnity and the defendant and third party are not joint wrongdoers so no contribution arises).

A nail salon employs a nail technician. Her employment contract has a restraint (for one year and a radius of 50km). She resigns and goes to work for a nearby competitor. Salon sues. Gauteng Division, Johannesburg: you form a close bond with who does your mani and pedis, so there’s a protectable interest and the restraint is not unreasonable, but 50km is a bit much, so you can have 20km.

Micor gets an ex parte rule nisi perfecting a notarial bond against Bearing Services. Bearing Services opposes its confirmation. Meanwhile two others, Bearing Services East Rand and CGI Bearings, intervene, arguing that they own some of the stuff Micor attached when executing its bond [your summarist laments the alphabet soup of unnecessary abbreviations and laments not being told what anyone actually does or sells]. Gauteng Division, Johannesburg: shame on you, Micor, for not making full disclosure during the ex parte hearing, but the rule nisi is not discharged because Micor has a strong case against Bearing Services, so it is extended until next year and in the meantime the sheriff can, in the first instance, decide who owns whatever Micor, Bearing Services East Rand, and CGI Bearings are fighting about.

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