THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 065/2021

In the matter between:

TEE QUE TRADING SERVICES (PTY) LTD
APPELLANT

and

ORACLE CORPORATION SOUTH
AFRICA (PTY) LTD                                                    FIRST  RESPONDENT

SOUTH AFRICAN POST OFFICE                      SECOND RESPONDENT

Neutral citation: Tee Que Trading Services (Pty) Ltd v Oracle Corporation
South Africa (Pty) Ltd and Another (case no 065/2021) [2022]
ZASCA 68 (17 May 2022)
Coram:
DAMBUZA, MOCUMIE and DLODLO JJA, MEYER and
SMITH AJJA
Heard:

28 February 2022
Delivered:
17 May 2022
Summary:
Contract law – arbitration and governing law clauses in
licence agreements – whether subsequent contracts replaced or rendered clauses
inoperative – no variation of the licence agreements – subsequent contracts
regulating different aspects of business – arbitration clause and governing law
clause not invalid.

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Verster AJ
sitting as court of first instance):
The appeal is dismissed with costs including the costs of two counsel.

JUDGMENT

Dambuza JA (Mocumie and Dlodlo JJA, Meyer and Smith AJJA
concurring)
Introduction
[1] The issue in this appeal is whether an arbitration clause and a governing
law clause in a licence agreement concluded between the appellant, Tee Que
Trading Services (Pty) Ltd (TQ), and the first respondent, Oracle Corporation
South Africa (Pty) Ltd (Oracle), were rendered inoperative by three agreements
which were later concluded by the same parties. Allied to that is the question
whether similar clauses in a related sub-licence agreement between TQ and the
South African Post Office (SAPO) were replaced by the dispute resolution
clauses in the three agreements concluded between TQ and Oracle. The Gauteng
Division of the High Court, Pretoria (high court), per Verster AJ, held that the
clauses in the earlier licence and sub-licence agreements remained valid and
ordered a stay of the action proceedings instituted by TQ against Oracle and
SAPO, pending referral of the dispute between these parties to arbitration. This
appeal, with the leave of this Court, is against that order of the high court.

Background
[2] During 2004 I-Flex Solutions Limited (I-Flex), a company based in India,
concluded a written licence agreement with TQ in terms of which it granted to
TQ a non-exclusive, personal, non-transferable, royalty free and intangible right
to sub-licence a specific software system to the second respondent, SAPO. A
related sub-licence agreement concluded between TQ and SAPO authorised TQ
to ‘. . . grant to the Bank [SAPO] and the Bank [to] accept the non-exclusive,
personal, non-transferable, royalty-free and intangible right [the Sub-licence] to
[u]se the Software System’ for its own business purposes.

[3] Both the licence and sub-licence agreements (collectively referred to as the
licence agreements) contained arbitration and governing laws clauses in terms of
which disputes between the parties thereto would be referred to arbitration. The
licence agreement stipulated that any dispute between I-Flex and TQ would be
referred to international arbitration in London, England to be determined in terms
of the laws of England. The sub-licence agreement provided that any dispute
between TQ and SAPO would be determined in South Africa, according to South
African laws, and the rules of arbitration of the International Chamber of
Commerce (ICC)1 would be applicable.2

1 The International Chamber of Commerce is an international arbitration institution. Its rules are used around the
world to resolve disputes.
2 Clauses 25 and 26 of the licence agreement provided:
‘25. ARBITRATION
All disputes, controversies and differences of opinion arising out of or in connection with this contract or for the
breach hereof which cannot be settled amicably by the parties hereto, shall be settled by arbitration according to
the then applicable rules of arbitration of the International Chamber of Commerce (ICC). The place of arbitration
shall be London, England.
26. GOVERNING LAWS
This agreement shall be construed and enforced in accordance with the laws of England without regard to its
principles of conflict of laws. The parties agree that the jurisdiction and venue of any action with respect to this
agreement shall be in a court of competent subject matter jurisdiction located in London, England and each of the
parties hereby agrees to submit itself to the exclusive jurisdiction and venue of such court for the purpose of any
such action.’
Clauses 25 and 26 of the sub-licence agreement were in identical terms, save for stipulating that the rules
applicable to the arbitration would be the rules of arbitration of the International Chamber of Commerce (ICC),
that the place of arbitration would be South Africa and that the governing laws would be South African laws.

[4] Both agreements had a non-variation clause in terms of which each written
agreement constituted the entire agreement. No variation thereof would be
binding unless it was incorporated in a revised schedule to the agreement and
signed by the respective parties.

[5] In 2005 Oracle acquired the I-Flex business and became the latter’s
successor in tittle in respect of the licence agreement. In addition to the existing
licence agreement, TQ was required by Oracle to assume membership of the
Oracle Partner Network so that the relationship that it (TQ) had with I-Flex could
be extended to Oracle and also that TQ could distribute Oracle’s other programs,
services and equipment. The membership was renewable annually. For that
purpose TQ and Oracle concluded an agreement termed the ‘Oracle Partner
Network Agreement’ (OPNA or OPN agreement).

[6] TQ first became a member of the Oracle network in 2008. Over time, and
in line with the Oracle network membership requirement, two more agreements
were concluded between TQ and Oracle. These were:  the Oracle Licence and
Services Agreement (OLSA) and the Oracle Partner Network Full Use
Distribution Agreement (FUDA). Each of these additional agreements (the
OPNA, OLSA and FUDA) stipulated that disputes relating thereto would be
determined by South African courts, in accordance with South African laws.

The dispute
[7] In March 2018 TQ instituted a civil claim against Oracle and SAPO in the
high court for damages in the amount of R61 603 515.00 for breach of the licence
agreements. It alleged that contrary to the terms of the licence agreements, Oracle
and SAPO had negotiated and contracted directly with each other, that they had
‘purported’ to transfer licences from TQ to SAPO, that Oracle issued additional
licences and sold additional modules of the I-Flex software system to SAPO, and

that Oracle and SAPO had concluded a software maintenance agreement to the
exclusion of TQ.

[8] In response to the summons, Oracle brought an application for a stay of the
action pending referral of the dispute to arbitration. It invoked the provisions of
clauses 25 and 26 of the licence agreements and pleaded that the dispute had to
be referred to international arbitration under the auspices of the ICC. Oracle also
pleaded that the South African Arbitration Act 42 of 1965 was not applicable to
the licence agreements.

[9] An alternative contention by Oracle was that even if the high court were to
find that domestic arbitration was envisaged, it was entitled to a stay of the
pending action, pending referral of the dispute in accordance with s 6 of the
domestic Arbitration Act.3 And even if the court were to determine that the
licence agreements provided for a choice of arbitration court, the parties thereto
had chosen the courts of London, England, so it was contended.

[10] Notwithstanding its concession that the dispute related to the licence
agreements, TQ insisted that the dispute resolution mechanism specified in the
Oracle network membership agreements was the applicable dispute resolution
mechanism. It contended that the business relationship between the parties was
governed by the network membership agreements. Without those agreements the
licence agreements were impracticable, because execution of the software
maintenance obligations were dependant on its membership in the Oracle

3 Section 6 provides the following: ‘(1) If any party to an arbitration agreement commences any legal proceedings
in any court (including any inferior court) against any other party to the agreement in respect of any matter agreed
to be referred to arbitration, any party to such legal proceedings may at any time after entering appearance but
before delivering any pleadings or taking any other steps in the proceedings, apply to that court for a stay of such
proceedings.
(2) If on any such application the court is satisfied that there is no sufficient reason why the dispute should not be
referred to arbitration in accordance with the agreement, the court may make an order staying such proceedings
subject to such terms and conditions as it may consider just.’

network. The gist of this argument was that the network membership agreements
and the dispute resolution clauses therein superseded clauses 25 and 26 of the
licence agreements. It was also asserted that referral of the dispute to international
arbitration would not be in the interests of any of the parties as they were all based
in South Africa and the cause of action arose within the Republic.

[11] In granting the order of stay of the action, the high court rejected TQ’s
contentions. The high court found that the provisions of the United Nations
Commission on International Trade Law (UNCITRAL) Model Law on
International Commercial Arbitration of 1985 (Model Law), which forms part of
the International Arbitration Act 15 of 2017 (IAA), applied to the licence
agreements. Further, in terms of Article 8 of the Model Law4, on a proper
interpretation of the licence agreements, the court was compelled to order a stay
of the action proceedings pending referral of the dispute to arbitration. The court
held that unlike with the provisions of the domestic Arbitration Act, under the
IAA the court had no discretion.

On appeal
[12] In this Court both TQ and Oracle repeated more or less the same
submissions they had made in the high court. At the heart of the submissions
made on behalf of TQ was that the dispute was not an international commercial
dispute because I-Flex was no longer party to the licence agreements and the
entities involved were based in South Africa.

4 Article 8 of the Model Law provides that:
‘(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall,
if a party so requests not later than when submitting his or her ﬁrst statement on the substance of the dispute, stay
those proceedings and refer the parties to arbitration unless it ﬁnds that the agreement is null and void, inoperative
or incapable of being performed.
(2) Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may
nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court.’

[13] The submission on behalf Oracle was that the issues raised in TQ’s cause
of action were governed exclusively by the licence agreements. The network
membership agreements which governed other aspects of the parties’ relationship
could not supersede the arbitration dispute resolution mechanism stipulated in the
licence agreements.

The agreements
[14] Five contracts require close consideration in this appeal – the two licence
agreements and the three Oracle network membership agreements.   Each of these
regulates a specific aspect of the parties’ business relationship. The licence
agreement laid the ground for TQ to acquire the specified rights to the I-Flex
software in anticipation of the sub-licence agreement between TQ and SAPO.
Clause 2.1 of the licence agreement provided that:
‘2.1The Company [I-Flex] grants to the Licencee [TQ] and the Licencee hereby accepts the
non-exclusive, personal, non-transferable, royalty-free and intangible right (the Licence’) as
further described in this section to sub-licence the Software System to the Bank [SAPO] as
follows:
a. To directly sub-licence the Software System to the Bank for its own internal business
purposes.
b. The payment of the full licence fees and all other charges, as stated herein below, to the
Company shall entitle the Licencee to grant the sub-licence permitting the installation
and use of the Software System to the Bank in South Africa to the extent stated in
Schedule 1.
c. Prior to the delivery of the Software System to the Bank, the licencee shall enter into a
binding Sub-Licence Agreement in the form in Schedule 4, in the event that there is
any change, modification or alteration in the form of the Sub-Licence Agreement which
imposes on the Licencee any obligation or liability which is additional to those stated
or envisaged under this Agreement then such additional obligations or liability shall not
be binding on the Company.
d. The use of the Software System by the Bank shall be solely on and in conjunction with
the Equipment and software tools as described in Schedule (1) and (2) hereto for the

processing of its own data, for its own internal business purposes at the Support and
Production Location during the Term of this Agreement subject to the terms and
conditions herein contained.’

[15] In terms of Clause 2.1 of the sub-licence agreement TQ granted to SAPO
the rights of use of the Software System together with certain specified
equipment.

[16] The complementary relationship between the licence agreements is
illustrated in Clause 5 of the sub-licence agreement in terms of which TQ, I-Flex
and SAPO agreed on a project plan for installation of the software system onto
SAPO’s work premises. SAPO had to pay to TQ the sub-lease fee, customisation
fee and on-site charges as specified in Schedule 1 to the sub-licence agreement.

[17] The period of the licence agreements was ‘perpetual’, subject to
termination by either party as provided in the agreements. Any variation of the
agreements had to be incorporated in a revised schedule thereto. A party could
terminate the licence agreement on 30 days written notice to the other party.

[18] The arbitration clause specified in Clause 25 of the licence agreements was
repeated in Clause 11 of both licence agreements as follows:
‘In the event of any disputes between the parties, the matter will be resolved through arbitration
identified in clause 25 and 26.’

[19] The OPN agreement(s) were concluded between TQ and Oracle only.
SAPO was not party thereto. In terms thereof TQ had to apply for membership of
the OPN. On acceptance of its application for membership of the Oracle
Partnership Network, TQ would be allocated and enrolled to one of country
specific partner levels - silver, gold, platinum or diamond. On payment of
membership fees, TQ would be able to access ‘partner level benefits’, subject to

maintenance of certain criteria applicable to the particular membership level it
was admitted to. The partner level benefits entailed use of technology and
application programs which could be downloaded electronically, together with
access to technical support, and use of Oracle consulting methodologies and
engagement material for the programs, and other additional Oracle resources.

[20] The OLSA regulated TQ’s limited right(s) to use the programs made
available to it on acceptance to the network. For example, removal, modification,
and reverse engineering of the programs was prohibited. Warranties and
disclaimers by Oracle, and ‘exclusive remedies’ available to members were set
out in this agreement.

[21] TQ’s rights to distribute programs, hardware learning credits and other
services to end users were regulated by the FUDA. In terms thereof members
were authorised to use Oracle’s trademarks and copyrights in terms of guidelines
set out in Oracle’s Third Party Usage Guidelines.

The law
[22] An arbitration agreement is interpreted according to the established
principles governing the interpretation of legal documents.5 It is a self-contained
agreement collateral to the main agreement to which it relates.6 It may only be
terminated with the consent of all parties, unless it provides otherwise.7

5 In KPMG Chartered Accountants (SA) v Securefin Limited and Another (644/07) [2009] ZASCA 7; 2009 (4) SA
399 (SCA); [2009] 2 All SA 523 (SCA); Natal Joint Municipal Pension Fund v Endumeni Municipality ZASCA
13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA).
6 2 Lawsa 3 ed para 90.
7 2 Lawsa 3 ed para 93. This position in this country is entrenched by the provisions of  s  the Arbitration Act 42
of 1965.

Discussion
Were the arbitration and governing law clauses superseded by the dispute
resolution clauses in the network membership agreements?
[23] At first TQ pleaded that the dispute resolution clauses provided for in the
network membership agreements had superseded clauses 25 and 26 of the licence
agreements. This meant that the dispute resolution clauses in the network
membership agreements had to be imported onto the licence agreements. There
was no explanation as to how or why some clauses of the licence agreements
remained valid and others not. Nevertheless, this contention later changed to the
effect that the arbitration and governing law clauses became inoperative on
conclusion of the network membership agreements.

[24] Whatever the ultimate contention by TQ in this regard was, its express
reliance on the licence and sub-licence agreements is pertinent. The absurdity in
TQ’s arguments was this: on the case pleaded by it, clauses in the network
membership agreements, to which SAPO was not party, would be incorporated
into the sub-licence agreement without any consent from SAPO. Further, no
regard was paid to the intention of the parties as expressed in the agreements.

[25] In terms of the licence agreements, the arbitration and governing law
clauses would only terminate if the parties or one of them invoked the provisions
of the termination clause. Apart from regulating termination for breach, Clause
15, in both agreements, regulated termination of the licence agreements as
follows:
‘The licencee [Bank] may terminate this Agreement after full payment of the Total Licence
[Sub-licence] Fees with 30 days written prior notice to the Company [TQ] of the Licencee’s
[Bank’s] intent to terminate. However such termination shall not entitle the Licencee [Bank]
to a refund of any part of the Total Licencee [Sub-licence] Fee nor shall such termination
prevent the Company [TQ] from recovering any balance outstanding.’

[26] No variation of the licence agreement was ever effected in terms of this
clause. And nothing in the wording of the network membership agreements
indicates that TQ and Oracle intended to terminate the licence agreements or any
clause therein. Instead, as stated, each of the agreements regulated different
aspects of the business relationship between TQ and Oracle. It is also relevant
that in the summons TQ pleaded that the three network membership agreements
were concluded with the intention of granting TQ the right to distribute ‘other
Oracle products in addition to the [TQ’s] rights acquired in terms of the Licence
agreement’. (emphasis supplied)

[27] While the licence agreements granted and regulated specified rights
between TQ, Oracle and SAPO in relation to the I-Flex Software, the OPN
agreement regulated membership to the business relationship between TQ and
Oracle based on TQ’s membership of the Oracle network and as regulated by the
three later agreements.

[28] A further relevant consideration is that in the summons TQ pleaded that
prior to signing the network membership agreements it was assured by Oracle
that its rights under the licence agreements would not be negatively affected by
the new contracts because the later agreements would ‘only apply to all new
Oracle Technology Licence’. The parties were therefore alive to the real or
perceived impact of the network membership agreement on the licence
agreements and they agreed that the licence agreements remained in place. Their
alleged discussions are consistent with the terms of all the contracts between
them. The contention by TQ that the later agreements rendered clauses 25 and 26
in the licence agreements inoperative is therefore contrived.

Did the IAA and Model Law apply to the dispute?
[29] The IAA was enacted in South Africa with the specific objective, amongst
others, to domesticate the Model law as adopted by the UNICTRAL in 1985.8
The Model Law reflects worldwide consensus on key aspects of international
arbitration practice. Section 3 of the IAA sets out the objectives of that Act as to:
‘(a) facilitate the use of arbitration as a method of resolving international commercial disputes;
(b) adopt the Model Law for use in international commercial disputes;
(c) facilitate the recognition and enforcement of certain arbitration agreements and arbitral
awards; and
(d) give effect to the obligations of the Republic under the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (1958), the text of which is set out in Schedule 3 to
this Act, subject to the provisions of the Constitution.’

[30] The Model Law appears in Schedule 1 to the IAA. In terms of Article 1(1)
thereof its provisions apply to international commercial arbitration, subject to any
agreement in force between the Republic and any other State or States. Article
1(2) however provides that the provisions of the Model Law apply only if the
juridical seat of arbitration is in the Republic, except in relation to Articles 8, 9,
17H, 17I, 17J, 35 and 36 thereof.  In terms of Article 1(3) an arbitration is
international if:
‘(a) the parties to the arbitration have, at the time of the conclusion of that [arbitration]
agreement, their places of business in different States; or
(b) one of the following places is situated outside the State in which the parties have their places
of business;

(i) the place of arbitration if determined in, or pursuant to, the arbitration agreement;

(ii) any place where a substantial part of the obligations of the commercial relationship

is to be performed or the place with which the subject-matter of the dispute is most

closely connected; or
(c) the parties have expressly agreed that the subject matter of the arbitration agreement relates
to more than one country.’

8 PAA Ramsden The Law of Arbitration – South African and International Arbitration 2nd ed (2018) at 21.

[31] It was submitted on behalf of TQ that on a proper interpretation of Article
1of the Model law, Article 1(3) thereof was inapplicable to the dispute because
its application was excluded under Article 1(2). This argument was intended to
provide a basis for this Court to ignore the definition of international arbitration
set out in Article 1(3). It was also contended that the dispute was not an
international dispute because all the parties thereto are South African entities, and
the dispute arose in South Africa.

[32] The submission that the Model Law is excluded from application in the
dispute between the parties is misguided. It is necessary to highlight that the IAA
and the Model Law, as incorporated therein, is South African law. It is in this
context that Article 1(2) becomes relevant. The only sensible interpretation of
Article 1(2) is that if the juridical seat of the arbitration is in the territory of South
Africa, the provisions of the IAA and the Model law apply.

[33] In this case, in the licence agreement, the parties opted to settle their
disputes through international commercial arbitration. They specified the
juridical seat of their arbitration as London, England. They also specified that the
disputes between them would be settled by arbitration ‘according to the then
applicable rules of arbitration of the International Chamber of Commerce (ICC)’.
Both the specified juridical seat and the applicable rules rendered the arbitration
an international arbitration.

[34] In relation to the parties to the dispute being South African entities, there
is no bar to parties who conduct business in the Republic choosing a place of
arbitration that is situated outside the Republic. Under Article 20 of the Model
Law, parties are free to agree on the juridical seat of arbitration.9 In Polysius (Pty)

9 Article 20 states that: ‘(1) The parties are free to agree on the juridical seat of arbitration. Failing such agreement,
the juridical seat of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of
the case, including the convenience of the parties.’

Ltd v Transvaal Alloys (Pty) Ltd10 where an objection similar to that raised by
TQ, Slomowitz J remarked that: ‘When the parties contracted, they were fully
alive to the nature of the issues that were likely to arise . . . With this in mind,
they stipulated for an arbitration in Switzerland and should be held to it’.
Similarly in this case, when TQ and Oracle extended the terms of the original
contract between TQ and I-Flex, they were alive to the location of their businesses
and opted retain the arbitration and governing law clauses.

[35] This conclusion is consistent with the approach to interpretation of similar
international arbitration agreements elsewhere in the world. In Orbitel Mobile
Communications Limited v Novatel Communications (Far East) Limited11, an
agreement between Hong Kong companies that London would be the place of
arbitration, the arbitration was held to be international. Similarly, in Marko Tel &
Hes Kablo Albania v ZTE Albania Sh pk Albania12 an arbitration clause between
Albanian companies that arbitration was to take place in London, was upheld.

Discretion to refuse stay of action proceedings
[36] The Model Law reflects the international approach to international
commercial arbitration agreements that, unless an arbitration agreement is null
and void, inoperable or incapable of being performed, courts are obliged to stay
action proceedings pending referral to arbitration. In this case, the arbitration and
governing law agreements between Oracle, TQ and SAPO remain valid and
operative.

10 Polysius (Pty) Ltd v Transvaal Alloys (Pty) Ltd and Another; Transvaal Alloys (Pty) Ltd v Polysius (Pty) Ltd
1983 (2) SA 630 (W) at 651G-H.
11 Orbitel Mobile Communications Limited v Novatel Communications (Far East) Limited (case number:
HCA9014/1995) High Court (Hong Kong) (16 February 1996).
12 Marko Tel & Hes Kablo Albania v ZTE Albania Sh pk Albania Supreme Court 11243-01441-2013 (06 June
2013), CLOUT case 1459.

[37] Furthermore, a consequence of South Africa having ratified the
Convention on Recognition and Enforcement of Foreign Arbitral Awards of 1958
(the NYC) is that the provisions of the Convention are included in Schedule 3 of
the IAA. In Article II the schedule sets out the text of the NYC as follows:
‘Each Contracting State shall recognize an agreement in writing under which the parties
undertake to submit to arbitration all or any differences which have arisen or which may arise
between them in respect of a deﬁned relationship, whether contractual or not, concerning a
subject matter capable of settlement by arbitration.’
No valid basis has been established for interference with the arbitration
agreements in this case.

[38] Consequently, the appeal is dismissed with costs including the costs of two
counsel.

________________

N DAMBUZA

JUDGE OF APPEAL

Appearances:

For appellant:

RB Mphela with N Ngwenya
Instructed by:

Nicholas Ngwenya Inc, Centurion

SMO Seobe Attorneys Inc, Bloemfontein

For 1st respondent:

HWS Martin with D Bernstein
Instructed by:

Baker McKenzie Attorneys, Sandton

McIntyre van der Post, Bloemfontein

THE SUPREME COURT OF APPEAL OFSOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED

FROM

The Registrar, Supreme Court of Appeal

DATE

17 May 2022

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form part
of the judgment.

Tee Que Trading Services (Pty) Ltd v Oracle Corporation South Africa (Pty) Ltd
and Another (case no 065/2021) [2022] ZASCA 68 (17 May 2022)

MEDIA STATEMENT

Today the Supreme Court of Appeal dismissed an appeal against an order granted by the
Gauteng Division of the High Court, Pretoria, in terms of which a stay of the action proceedings
instituted by Tee Que Trading Services (Pty) Ltd (TQ) against Oracle Corporation South Africa
(Pty) Ltd (Oracle) and the South African Post Office (SAPO), pending referral of the dispute
between these parties to arbitration, was ordered.

The matter relates to a written contract concluded during 2004 between I-Flex Solutions
Limited, a company based in India and Tee Que Trading (TQ). In terms of the contract I-Flex
granted to TQ a right to sub-licence a specific software system to the South African Post Office.
A related sub-licence agreement concluded between TQ and SAPO authorised TQ to grant to
SAPO a right to use the software system for its own business purposes. Both these licence
agreements contained arbitration and governing laws clauses in terms of which disputes
between the parties would be referred to arbitration. The licence agreement stipulated that
disputes between I-Flex and TQ would be referred to international arbitration in London,
England to be determined in terms of the laws of England. The sub-licence agreement provided
that disputes between TQ and SAPO would be determined in South Africa, according to South

African laws, and the rules of arbitration of the International Chamber of Commerce would be
applicable. Both agreements had a non-variation clause in terms of which each written
agreement constituted the entire agreement. No variation thereof would be binding unless it
was incorporated in a revised schedule to the agreement and signed by the respective parties.

After acquiring the I-Flex business in 2005, and in addition to the existing licence agreement,
Oracle required TQ to assume membership of the Oracle Partner Network so that the
relationship that TQ had with I-Flex could be extended to Oracle and also that TQ could
distribute Oracle’s other programs, services and equipment. Three network membership
agreements were concluded for this purpose which stipulated that disputes relating thereto
would be determined by South African courts, in accordance with South African laws.

In 2018 TQ instituted a civil claim against Oracle and SAPO in the high court for breach of the
licence agreements. In response, Oracle brought an application for a stay of the action pending
referral of the dispute to arbitration. It invoked the provisions of the arbitration and governing
laws clauses of the licence agreements and contended that the dispute had to be referred to
international arbitration. Notwithstanding its concession that the dispute related to the licence
agreements, TQ insisted that the network membership agreements and the dispute resolution
clauses therein superseded the arbitration and governing law clauses of the licence agreements.
TQ argued that without those agreements the licence agreements were impracticable, because
execution of the software maintenance obligations were dependant on its membership in the
Oracle network. It further argued that the arbitration licence agreements were not international
as the parties to the dispute were South African entities and the dispute arose within the
Republic.

The high court found that the provisions of the United Nations Commission on International
Trade Law (UNCITRAL) Model Law on International Commercial Arbitration of 1985 (Model
Law), which forms part of the International Arbitration Act 15 of 2017, applied to the licence
agreements. It further held that the Model Law as incorporated into the International
Arbitration Act, unlike the domestic Arbitration Act 42 of 1965, compelled the court to order
a stay of the action proceedings pending referral of the dispute to arbitration.

In dismissing the appeal by TQ, the SCA rejected their argument that the network membership
agreements had superseded arbitration and governing law clauses of the licence agreements.

The Court held that an arbitration agreement is interpreted according to the established
principles governing the interpretation of legal documents and that it may only be terminated
with the consent of all parties, unless it provides otherwise. The SCA found that there was no
explanation provided as to how or why some clauses of the licence agreements remained valid
and others not. It further found that no variation of the licence agreement was ever effected by
TQ and Oracle and that nothing in the wording of the network membership agreements
indicated that they intended to terminate the licence agreements or any clause therein. Instead
each of the agreements regulated different aspects of the business relationship between TQ and
Oracle. Furthermore, the SCA found that the International Arbitration Act and the Model Law,
as incorporated therein, is South African law. It rejected TQ’s argument that Article 1(2) of the
Model Law, which stipulates that the Model Law apply only if the juridical seat of arbitration
is in the Republic, excludes its application in this case. The Court held that the only sensible
interpretation of Article 1(2) is that if the juridical seat of the arbitration is in the territory of
South Africa, the provisions of the Model law apply. Under the International Arbitration Act
and the Model Law, there is no bar to parties who conduct business in the Republic choosing
a place of arbitration that is situated outside the Republic. The court concluded that no valid
basis has been established for interference with the arbitration agreements in this case.
--- ends --