The fact that the commercial rules of the Arbitration Foundation of South Africa provide for referring such a dispute to the arbitrator cannot be used where the arbitration agreement applying those rules is itself the subject of the dispute.
If the challenge is that the contract is invalid, unenforceable or never came into existence, then it may appear logical that the arbitration clause must fail.
The court applied a principle from German law known as competence-competence. Arbitrators have competence to rule on their own jurisdiction (competence to hear the dispute) if the matter has already been referred to an arbitrator by the parties.
If however one of the parties disputes the existence of the arbitration agreement, it is a matter for the courts.
