Court says arbitrators must verify AI legal research

The six workers’ unfair-dismissal claim sought reinstatement and back pay.[2] In August 2026, Fakude ruled that SAPO’s business rescue did not prevent the claim from proceeding.[2] The practitioners filed a review application on 2 October to challenge that ruling, then applied urgently to stop the arbitration while the review was pending.[1] The arbitration was scheduled for 15 October 2026.[1] The applicants brought their urgent application on 8 October.[1] The court barred the First and Second Respondents from convening or proceeding with the arbitration.[1]

Fakude cited a purported case for the proposition that business rescue does not suspend labour legislation or remove employees’ statutory dispute-resolution mechanisms.[2] Snyman said the citation referred instead to a judgment concerning immigration and spousal visas.[2] He also said Fakude had not checked whether the cited authority was correct, calling that failure a “fundamental failure of justice.”[2] Snyman’s written reasons were handed down on 23 October 2026.[1] The evidence does not establish that AI generated the citation; the court’s stated guidance concerns how arbitrators should use AI in legal research.[2]

The court summary says the Companies Act’s business-rescue moratorium applies to unfair-dismissal proceedings under the Labour Relations Act.[1] It says CCMA unfair-dismissal arbitration cannot proceed during business rescue without permission from the practitioners or leave from the High Court.[1] Snyman found that SAPO’s practitioners had not been joined as parties to the workers’ dispute, and the court summary described that omission as material and making it incompetent for the arbitrator to continue.[2][1] Snyman ruled Fakude’s decision a nullity and said the court had a duty to intervene in proceedings tainted by illegality.[2] The workers could pursue their claims once SAPO was no longer in business rescue.[2]

Snyman said arbitrators using AI for legal research must check that cited judgments exist and read them to confirm what they decided.[2] That instruction is especially relevant where a legal argument depends on a particular authority: a citation alone does not establish that a judgment supports the proposition attributed to it.[2] Snyman said the practitioners’ review application had substantial prospects of success, while noting that its merits would be addressed in those proceedings.[2] The court made no order as to costs.[1]