Remo Ventures & Others vs. Cecil van Zyl and Others - (26 Jan 2024)

Non-fulfilment of the suspensive conditions renders the contract void ab initio

Arbitration

Present is an appeal against the judgment and order of the Gauteng Division of the high court, sitting as a court of first instance. The matter concerns the validity of an arbitration agreement to which it related. The arbitration agreement purported to amend an arbitration clause contained in the Sale of Shares Agreement in circumstances where that agreement was void, where, unbeknown to the parties the Sale of Shares Agreement had already lapsed. Arbitration proceedings were conducted in terms of the arbitration agreement and an award was issued. The appeal is with leave of the court a quo.

The issue before the SCA was whether, despite the suspensive condition, the SoS agreement could be interpreted in such a manner as to allow for the existence of the arbitration agreement.

It is clear that, the SoS agreement ought to be treated as having never existed as it lapsed upon the non-fulfilment of the suspensive condition. The whole SoS agreement was moored in the understanding and purpose of the ‘suite of interrelated and interdependent ancillary contracts to give effect to the broad transaction and structure of one business contract.’ As such, any reliance placed on any provision in the lapsed contract is without basis and cannot stand on the simple basis that, in law ‘non-fulfilment of the suspensive conditions renders the contract void ab initio.’

In the absence of any ambiguity in the meaning of the words used in the SoS agreement read with the arbitration agreement, the factual matrix (or context) in which the agreement was concluded, present Court is satisfied that the arbitration agreement did not substitute the SoS agreement in terms of clause 4.2 thereof to revive the SoS Agreement. The SoS agreement also did not survive after the effective date which had come and gone without the fulfilment of the suspensive condition. It therefore follows that the arbitration agreement is a nullity as a result of the SoS agreement being a nullity. The order of the high court is set aside. Appeal is upheld.

Tags : CLAUSE AGREEMENT VALIDITY