The Supreme Court of Appeal on Wednesday upheld an appeal by a computer software company, which had been involved in a long-standing dispute with Telkom worth billions of rand.
In 2000 Telkom claimed more than R2,6-billion from the United States-based Telcordia Technologies, a Delaware Corporation, in a dispute over the nature of a software contract.
Telcordia responded with a claim for damages — more than R1-billion.
The agreement was for Telcordia to supply Telkom with individualised and specialised software products to address its specific operational needs.
The software systems had to be delivered in phases.
The two phases that formed the core of the eventual dispute and review were ”a voice software release” and ”a non-voice software release”, which Telcordia had to supply to Telkom during 2000.
The total contract value was $51,8-million for the voice software and $34,8-million for the non-voice software.
In terms of the agreement, which led to the review matter, Telkom and Telcordia agreed that all disputes between the parties had to be determined by arbitration.
This also had to take place before a single arbitrator of a nationality other than those of the parties in terms of the rules of the International Chamber of Commerce (the ICC).
The disputes arose from Telcordia’s delivery obligations as interpreted by Telkom in terms of the agreement and the South African company’s subsequent refusal to pay.
The matter went to arbitration and the arbitrator — a British advocate — accepted Telcordia’s interpretation of the contract.
The arbitrator found, amongst other things, that Telkom had repudiated the agreement and that Telcordia had validly accepted the repudiation.
However, Telkom brought an application in the Pretoria High Court for the review of the arbitrator’s award.
Telkom submitted, amongst others, that the arbitrator failed to understand the nature of the evidence in relation to the interpretation of the contract.
The high court not only set aside the award, it also removed the arbitrator and appointed new arbitrators, retired South African judges.
It found that the arbitrator ”had committed gross irregularities in the proceedings in the course of interpreting the contract between the parties”.
On Wednesday the Supreme Court of Appeal (SCA) upheld Telcordia’s appeal against the high court order in favour of Telkom.
The SCA found that the high court re-interpreted the contract and thus dealt with the matter as an appeal and not a review.
The SCA held that it could not be said that the arbitrator had committed any gross irregularities in the arbitration proceedings.
The SCA upheld Telcordia’s appeal and the high court’s ruling was set aside. The Bloemfontein court substituted the high court order by dismissing Telkom’s application — originally in the high court — with costs. — Sapa