COMPLAINTS AND DISPUTES RESOLUTION PROCEDURES FOR PIPED GAS INDUSTRY

Transcription

1 COMPLAITS AD DISPUTES RESOLUTIO PROCEDURES FOR PIPED GAS IDUSTR ovember 2011

2 TABLE OF COTETS Item Contents 1. BACKGROUD 1.1 Introduction 1.2 Definitions: Complaint, dispute, dispute resolution, mediation and arbitration 1.3 Purpose of these Procedures 1.4 Conclusion 2. THE IVESTIGATIO AD DISPUTE RESOLUTIO SCOPES FOR PIPED GAS MATTERS 2.1 Investigations into applications for review of licence conditions 2.2 Investigations into customer complaints 2.3 Investigations into contractual disputes 2.4 Own-initiative Investigations 2.5 Dispute Resolution scope 3. THE IVESTIGATIO METHODS, TECHIQUES AD PROCESS 3.1 Investigation methods and techniques Investigative Interviewing Method Investigative Identification Method 3.2 The Investigation Process Investigation of customer complaints Investigation of contractual disputes Own-initiative investigations Section 21(2)(c) investigations 3.3 The effect of investigations 4. THE DISPUTE RESOLUTIO PROCESS 4.1 Recognized dispute resolution methods under the Gas Act 4.2 Mediation Pre-mediation process activities Stages of the Mediation Process Outcome of the Mediation Process and its effect Page

3 4.3 Arbitration Pre-arbitration process activities Stages of the Arbitration Process The Arbitration Award and its effect SUMMAR 51 Schedule 1: FIRAC Analysis Method Schedule 2: The PEACE Model of Interviewing Annexure 1: Checklist for Investigations into Customer Complaints Annexure 2: Checklist for Investigations into Contractual Disputes Annexure 3: Checklist for Own-Initiative Investigations Annexure 4: Checklist for Section 21(2)(c) Investigations Annexure 5: Checklist for Mediation Process of Dispute Resolution Annexure 6: Checklist for Arbitration Process of Dispute Resolution

4 1. BACKGROUD 1.1 Introduction The piped gas industry is regulated in terms of the Gas Act o. 48 of 2001 ( Gas Act ), which was signed into law on 12 February 2002 and came into force on 01 st ovember 2005 when the ational Energy Regulator ( ERSA ) established under section 3 of the ational Energy Regulator Act o. 40 of 2004 ( ERSA Act ) as a juristic person for single regulation of three separate energy industries including the piped gas industry also came into office. Amongst other things, section 15 of the ERSA Act repealed section 3 of the Gas Act which had established the Gas Regulator as a juristic person to enforce the Gas Act and substituted the definition of the Gas Regulator as referred to in the Gas Act to mean ERSA. Accordingly, ERSA is, amongst other things, entrusted with the overall enforcement of the Gas Act. In light of the above and in relation to investigations and resolution of piped gas disputes, ERSA derives: a general statutory mandate to, appropriately and in accordance with the Gas Act, undertake investigations and inquiries into the activities of licensees from section 4(1)(a) of the ERSA Act read with section 4(d) of the Gas Act; a specific statutory mandate to conduct investigations into applications for review of licence conditions and customer complaints from section 21(2)(c) and section 31 of the Gas Act, respectively; a specific statutory mandate to conduct own-initiative investigation into the activities of licensees from rule 18(3) of the Rules made in terms of section 34(3) of the Gas Act, 2001 ( Gas Act Rules ); and 4

5 1.1.4 the power to, with the approval of disputants, resolve piped gas disputes from section 30 of the Gas Act. 1.2 Definitions: Complaint, Dispute, Dispute Resolution, Mediation and Arbitration The Gas Act makes reference to the investigation of complaints and resolution of disputes, but does not define the terms complaint and dispute. Consequently, one cannot always easily comprehend when either of the two exists or when a complaint converts into a dispute. This could unnecessarily result in perpetually ongoing investigations when the matter could be easily concluded by way of dispute resolution processes (especially arbitration). By the same token, neither the term mediation nor arbitration is defined in the Gas Act. This is also likely to cause challenges in that how does one decide on an appropriate dispute resolution method to use if they have no idea what each method means or entails? For purposes of this document and in line with the literal/plain meaning rule read with the golden rule of statutory interpretation that where the statute does not define a particular term, such term should be given its plain, ordinary and literal meaning 1 except where the literal interpretation is likely to lead to an irrational result; 2 these undefined terms are defined as follows on the basis of their plain, ordinary and literal meaning as determined from dictionaries, as well as on the 1 In Venter v R 1907 TS 910, it was stated that the most important rule of statutory interpretation is to ascertain the intention of the legislature. It was highlighted that this is done by taking the language of the instrument or the relevant portion thereof as a whole and, where the words are clear and unambiguous, give them their ordinary meaning. 2 In Grey v Pearson (1857) 6 HL Cas 61, 106 Lord Wensleydale said: In construing statutes and all written instruments, the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid that absurdity or inconsistency, but not farther. 5

6 basis of the context within which ERSA is required to undertake investigations and empowered to resolve disputes: Dispute means disagreement between licensees or between licensees and their customers concerning the trading of gas or the rendering of gas services Complaint means an expression of dissatisfaction by any relevant 5 customer concerning the supply of gas by licensee or concerning any discrimination contemplated in section 22(1) of the Gas Act, including dissatisfaction relating to a breach of contract between a licensee and any customer other than an eligible customer Dispute resolution refers to either a voluntary mediation process aimed at bringing the parties to a dispute ( disputants ) together with the view to help them: a. define and identify their differences, 3 In Transvaal Consolidated Land & Exploration Co Ltd v Johannesburg City Council 1972 (1) SA 88 (W) at 94F G, Margo J stated: Dictionary definitions serve to mark out the scope of the meanings available for a word, but the task remains of ascertaining the particular meaning and sense of the language intended in the context of the statute under consideration. 4 Applying the rule in Transvaal Consolidated Land & Exploration Co Ltd v Johannesburg City Council to ascertain the meaning of dispute within the context of the Gas Act, regard has been had to the wording in section 30(1)(a) which provides for mediation or arbitration form of dispute resolution in matters concerning the trading of gas or the rendering of services. 5 This expression is aimed at qualifying the opening term in section 31(1)(a) and (b), namely customers which is construed as referring to a customer as particularly defined in section 1 of the Act; and the opening expression any customer in section 31(1)(c) which could either be a reference to the customer as defined in the Act, an eligible customer as defined in the Act, or any other customer as may be defined in other sources but only insofar as such definition would relate to the purchase of gas or gas related services. ote should be taken that this interpretation of the expression any customer is influenced by the eiusdem generis rule of statutory interpretation which suggests that where a provision of a law lists a specific class of persons or things or makes reference to a class of words which have a particular meaning and thereafter makes a general reference, the general words should be interpreted as applying to the class of persons, things or activities of the same general nature or kind as those enumerated in the list. 6 Applying the same rule as in the definition of dispute above, the provisions of section 31(1) and (2) read with section 22(1) have been summarized to come up with a concise definition for the word complaint. With regard to the last part of this definition, it should be noted that section 31(2) only excludes the investigation of disputes concerning a breach of contract between a licensee and an eligible customer. By implication, therefore, investigations into disputes concerning a breach of contract between a licensee and any other type of customer may be investigated. 6

7 b. communicate and negotiate effectively through openly exchanging information and ideas aimed at enabling them to reach an agreement that is beneficial to all parties in one way or the other, and c. explore all possible solutions; or a voluntary arbitration process aimed at: d. bringing the disputants together to afford them a fair opportunity to present their facts and adduce supporting evidence, e. analyzing all facts and evidence with the view to identifying all issues in dispute, f. considering the applicable rule of law and applying same to the facts, and g. rendering a binding decision based on the conclusion formulated from the application of law to the facts Mediation is a process whereby ERSA or a person appointed by it in terms of section 30(2)(a) helps the disputants define their difference and reach a solution through neutrally guided and facilitated discussions where all parties involved are given an opportunity to openly discuss all issues and explore possible solutions within the reasonable limits of governing prescripts. This means that the mediator may guide the parties towards reaching a legally recognized solution, even though he or she may not impose it Arbitration refers to a process whereby ERSA or a person appointed by it in terms of section 30(2)(a) grants a hearing to all disputants, considers all facts and evidence presented, and decides on an appropriate resolution which is binding on all parties involved. 7

8 1.3 Purpose of these Procedures To provide the consolidated practical guidelines for the types of matters and disputes that ERSA is permitted to investigate and resolve, as well as guidelines as to applicable law and legally recognized investigation and dispute resolution methods that may be used to afford the parties to the conflict or dispute an early best possible outcome that: a. eliminates the possibilities of them incurring avoidable costs; and b. also helps them sustain good business relations. 1.4 Conclusion It is common cause that, as a creature of statute, ERSA cannot conduct an investigation, mediation or arbitration that falls outside its statutory mandate as, in so doing, it would be acting outside its powers. Likewise ERSA cannot decline to investigate a matter that technically qualifies as this might open it up to unnecessary public criticism that it does not deliver on the mandate. It is therefore important to avoid any of these possible eventualities through a thorough understanding of what ERSA s scope to investigate and resolve disputes entails. With dispute resolution, however, ERSA has discretion to decide whether or not to mediate or arbitrate. 2. THE IVESTIGATIO AD DISPUTE RESOLUTIO SCOPES FOR PIPED GAS MATTERS 2.1 Investigations into applications for review of licence conditions In terms of section 21(2)(c) of the Gas Act, ERSA must conduct an investigation whenever an application for review is received in respect of a licence condition it has imposed under section 21(1). 8

9 2.2 Investigations into customer complaints In terms of section 31(1)(a) and 31(1)(b) of the Gas Act, ERSA must investigate complaints relating to the supply of gas and complaints relating to unreasonable or excessive prices or tariffs imposed by licensees where such complaints originate from customers as defined in the Gas Act (namely, from existing purchasers of gas as a product for consumption or existing purchasers of gas supply services). In terms of section 31(1)(c), ERSA must investigate complaints relating to unreasonable differences regarding the supply of gas by licensees or complaints relating to unreasonable differences regarding the supply of gas services by licensees where such complaints are from any customer who is either a current or a potential buyer or user of the gas or gas services of a particular licensee required to be investigated Complaints from a customer relating to the supply of gas These would entail, amongst others, such matters or issues as: (i) (ii) (iii) (iv) the licensee has either stopped, failed, refused or is unable to sell and/or deliver gas to a customer; the licensee has, either for a specified or unspecified period, suspended the supply of gas to its customer without any or reasonable explanation; the licensee has not started operating a gas facility with which its customer is concerned within a time period fixed under its licence conditions or in its gas supply agreement; the licensee has, in contravention of a licence condition imposed by ERSA, either failed, refused or neglected to maintain its gas facility in a fully operative condition, with the result that this has tampered or is tampering with its obligation to supply its customer with gas; or 9

10 (v) the licensee has failed, refused or neglected to repair or alter any distribution pipe within its licensed area of supply with the result that this has tampered or is tampering with its obligation to supply its customer with gas Complaints from a customer relating to unreasonable prices or tariffs imposed by a licensee These would entail such matters or issues as: (i) the licensee is charging the customer a price or tariff higher than the prices or tariffs charged to other customers in similar circumstances for reasons other than objectively justifiable and identifiable differences enumerated in section 22 of the Gas Act, even if such price or tariff does not necessarily exceed the maximum price or actual tariff approved by ERSA Complaints from a customer relating to excessive prices or tariffs imposed by a licensee These would entail such matters or issues as: (i) (ii) the licensee is charging the customer a transmission or storage tariff in excess of transmission or storage tariffs approved by ERSA in terms of section 4(h) irrespective of whether or not same is being applied to other customers; or the licensee is charging its customer a price in excess of the maximum price approved by ERSA in terms of section 21(1)(p) irrespective of whether or not same is being applied to other customers. 7 In terms of clauses 9 14 read with clause 17 of Schedule One to the Agreement concerning the Mozambican Gas Pipeline between the Government of the Republic of South Africa ( RSA ) and Sasol Limited ( SASOL ), this is not applicable to SASOL until 10 years after First Gas. 10

11 2.2.4 Complaints from any customer relating to unreasonable differences regarding the supply of gas These would be matters entailing such issues as: (i) (ii) (iii) refusal of third party access to uncommitted capacity in transmission pipeline for reasons other than those provided for in regulation 6(3) of the Piped Gas Regulations; 8 suspected inflation of the cost of supply (tariffs or prices) that does not match the tariffs or prices chargeable to other customers and which would therefore cause this new or prospective customer undue financial hardships in terms of using a particular facility; or suspension or termination of the supply of gas to one or some amongst a number of customers consuming from the same facility without just cause Complaints from any customer relating to unreasonable differences regarding the supply of gas services These would be matters entailing such issues as: (i) (ii) (iii) the licensee is granting more favourable conditions to its related undertakings than to other customers or classes of customers in relation to third party access to uncommitted capacity in transmission pipelines; the licensee is discriminating against customers or prospective customers in respect of any of the matters enumerated in regulation 6(6) of the Piped Gas Regulations; or the trading licensee has, contrary to an imposed licence condition, if any, provided an advisory service with regard to the safe and 8 Piped Gas Regulations, Government otice R. 321, Gazette o , 20 April

12 efficient use, handling and storage of gas to some but not all customers. 2.3 Investigations into contractual disputes Section 31(2) prohibits ERSA from investigating a contractual dispute between a licensee and an eligible customer, as defined in the Act. By implication, therefore, ERSA may investigate a contractual dispute between the licensee and any other customer who is not necessarily an eligible customer. 2.4 Own-initiative investigations Rule 18(3) of the Gas Act Rules empowers ERSA to, in accordance with the regulations made in terms of the Promotion of Administrative Justice Act read with the Gas Act Rules, also initiate and conduct investigation into activities of licensees over and above reacting to causes of investigation brought forth by other parties under section 21 and 31. ERSA has an unlimited scope as to the type of matters that may be investigated in this regard. 2.5 Dispute resolution scope Section 30(1)(a) of the Gas Act allows resolution of disputes by way of mediation or arbitration only in respect of matters concerning the trading of gas or the rendering of services Matters concerning the trading of gas These would be the same matters as those listed in paragraphs to above Matters concerning the rendering of services These would be the same matters as those listed in paragraphs and above or instances where the trading licensee has, contrary to a licence condition imposed by ERSA, not provided an advisory service with regard to the safe and efficient use, handling and storage of gas to its customer. 12

13 3. THE IVESTIGATIO METHODS, TECHIQUES AD PROCESS 3.1 Investigation methods and techniques Section 4(d) of the Gas Act requires ERSA to, as appropriate in accordance with the Gas Act, conduct investigations and inquiries into the activities of licensees. In this section, the expression as appropriate reconciles well with a range of methods and techniques that may be used in carrying out a piped gas investigation; whilst the expression in accordance with this Act reconciles suitably with the types of matters that ERSA is required to investigate in terms of the Gas Act as outlined in paragraph 2 above. A range of investigation methods and techniques recognized under the Gas Act and Gas Act Rules includes: Investigative Interviewing Method This method includes such techniques as: a. Investigation meetings or direct contact interviews with parties concerned and all witnesses (It is always advisable to interview a person aggrieved by the issue to be investigated and his/her witnesses first as they are often a major source of information and therefore a good starting point) b. Summoning of witnesses to give evidence or produce documents in their possession (This technique is mostly important where there is little or no information at all to support the investigation) c. Written inquiries 13

14 (This entails such actions as informing the licensee concerned of the complaint and inviting their written response in terms of rule 18(1) and (2) of the Gas Act Rules) Investigative Identification Method This method would include such techniques as: a. Site inspections and enquiries as provided for under section 29 of the Gas Act read with rule 19 of the Gas Act Rules The decision on the appropriate method and technique to use and when to use it, depends on the circumstances of each case, but the following factors are important to consider: The nature of the matter being investigated; Whether the allegations forming the subject of the complaint have occurred in the past or are current; Whether there is sufficient documentary proof and/or witnesses to provide evidentiary support to the allegations; and The seriousness of allegations. Then one should consider whether if a particular method and technique were used to carry out an investigation, would such method and technique result in an effective investigation that would eventually yield a successful prosecution if the investigation were to be later used in the court proceedings? 3.2 The Investigation Process Investigation of customer complaints The overall investigation process as governed in terms of the Gas Act and the Gas Act Rules can be summarized as follows: 14

15 PRE-IVESTIGATIO ACTIVITIES (dispute resolution function) Step 1 ACKOWLEDGEMET OF RECEIPT (Within first 7 working days) a. Acknowledge receipt of complaint b. Advise complainant that they will be notified in due course if their complaint is considered valid, substantive and justifiable and can therefore be accepted for consideration Step 2 VALIDIT AD ADEQUAC ASSESSMET OF RECEIVED COMPLAIT (Within further 14 working days) [For a complaint to be accepted for consideration, it has to be valid, substantive and justifiable] Validity a. In the case of a written complaint, ensure it is submitted on a duly completed form Annexure H delivered by hand or registered post or electronic mail to the addresses indicated in rule 17 and within the period of validity of the licence concerned in terms of section 31(3). b. In the case of a telephonic complaint, ensure that a transcript of the complaint lodged with ERSA on within the period of validity of a licence concerned is substantiated by an affidavit confirming the complaint details. Therefore, where no affidavit has yet been filed, arrange with the complainant for the signing and filing of one. [section 31(3) read with rule 17(1), (2)(b) and (4)] c. Establish if the complaint is: 15

16 (i) from a customer, as defined in the Gas Act, if it relates to the supply of gas or to unreasonable or excessive prices or tariffs imposed by a licensee [section 31(1)(a) and (b)]; or (ii) from any customer including the customer as defined in the Act, an eligible customer as defined in the Act, or a current or potential buyer or user of the concerned licensee s gas or gas services, if it relates to unreasonable differences regarding the supply of gas or gas services by a licensee [section 31(1)(c)]. d. Ensure that the complaint does not relate to issues of breach of contract between a licensee and an eligible customer [section 31(2)]. Substance and Justifiability a. In the case of a written complaint, it must be accompanied by supporting information and a description of efforts made to resolve a dispute before lodging a complaint with ERSA [section 31(3) read with rule 17(2)]. b. In the case of a telephonic complaint, a transcript of the complaint as further supplemented by the complainant s affidavit should contain supporting information and a description of efforts made to resolve a dispute before lodging a complaint with ERSA [section 31(3) read with rule 17(2)]. Step 3 FEEDBACK TO COMPLAIAT (Within 2 working days of determining validity and adequacy of complaint) a. Advise complainant whether or not their complaint is accepted as valid, adequate and substantial. 16

17 Step 4 REQUEST FOR COFIDETIAL TREATMET OF IFORMATIO (Concurrent with steps 1 to 3 and within 30 days of receipt of complaint) a. Determine if the complainant has requested for confidential treatment of information contained in the complaint. b. If confidential treatment is requested: (i) Determine if the request is submitted on a duly completed prescribed form Annexure A, clearly indicating and highlighting the information that the complainant considers to be confidential. If the request is on prescribed form Annexure A: submit it to the Regulatory Executive Committee ( REC ) for consideration and decision. Thereafter, advise complainant of ERSA s decision on their confidentiality request within 30 days from receipt of request. [rule 4(5)] If the request is not on prescribed form Annexure A: Advise complainant that its request does not conform to rule 4(2) and can therefore not be processed until such time as the conforming request is received since ERSA does not accept general claims of confidentiality of entire documents. Thereafter, submit the subsequent conforming request to REC for consideration and advise complainant of the decision within 30 days from date of receipt of the conforming request. 17

18 c. If no confidential treatment is requested: (i) Deal with the complaint as non-confidential. [Instruction o.6 of form Annexure A as prescribed by rule 4(2)(a)] Step 5 DEVELOPMET OF A PROJECT IITIATIO REPORT AD IVESTIGATIO PLA (Within a further 14 working days) a. Compile an initiation report and investigation plan to serve at the next Piped Gas Subcommittee ( PGS ) sitting. PRELIMIAR IVESTIGATIO (dispute resolution function) Step 6 IFORMATIO GATHERIG (Within 45 days of concluding a Validity and Adequacy Assessment or of a Decision on Confidentiality Request) a. Provide a licensee who is the subject of the complaint with the copy of the non-confidential version of the complaint, with a direction to submit their substantiated written response within 30 days from date of receipt [rule 18(1) and (2)]. b. Simultaneously provide another copy of the complaint to Gas Pricing and Tariffs department ( GPT ) for preliminary analysis of data relating to allegations concerning unreasonable or excessive prices or tariffs, if any. 18

19 Step 7 AALSIS OF LICESEE S RESPOSE (Within 30 days of receipt) a. Forward a copy to GPT for completion of financial analysis, if any; and b. Using a FIRAC analysis method 9, analyze both the licensee s response and GPT s financial analysis for purposes of ascertaining the ideal investigation method and techniques to be followed. c. Formulate a preliminary report of investigation findings providing a clear factual and legal basis for the decision intended to be taken on the matter, for approval by PGS and ER, which also makes recommendations: (i) as to the appropriate action to be taken (i.e. whether or not to conduct a fully-fledged investigation, or even the appropriate remedial action to be taken); and (ii) that the letter of findings be issued in terms of section 3(2)(b) of Promotion of Administrative Justice Act o. 3 of 2000 ( PAJA ) to the licensee concerned, complainant and/or any other readily identifiable person whose rights or legitimate expectations might be materially and adversely affected by the proposed appropriate action adequately explaining the nature of the proposed action; giving a clear statement of the proposed action; adequately explaining the reasons for and purpose of the proposed action, as well as notifying such person of their right to request reasons in terms of section 5 of PAJA; 9 Refer to attached Schedule 1 19

20 calling upon such person to submit duly sworn written representations within at least 14 days in terms of rule 15(3), 15(4) and 15(5) of the Gas Act Rules or giving such person a reasonable time to make representations thereon in any convenient form of their choice in accordance with section 3(2)(b)(ii) of PAJA: Provided that if such person chooses to make an oral representation, such representation should follow the PEACE model of interviewing contemplated in Step 8(a)(ii) below; and notifying such person that the Energy Regulator will also publish a call for duly sworn written submission of relevant views, facts and evidence for the period of not less than 14 days on its website and on its public notice board as required by rule 15(1), 15(2), 15(4) and 15(5) of the Gas Act Rules; or (iii) as to any of the following procedurally fair procedures, spelt out in section 4 of PAJA as read with rule 16 of the Gas Act Rules, that the Energy Regulator must follow prior to handing down a final decision on the matter where the proposed appropriate action might materially and adversely affect the rights of the public at large a public inquiry contemplated in section 4(2) of PAJA, the procedure of which must also include a public hearing as arranged in terms of 16(2) of the Gas Act Rules; a notice and comment procedure contemplated in section 4(3) of PAJA read with Chapter 2 of the Regulations on Fair Administrative Procedures ( PAJA Regulations ) 10 ; or both a public inquiry and the notice and comment procedure. 10 Regulations on Fair Administrative Procedures published in Government otice o. R.1022 of 31 July 2002 (Government Gazette o ) 20

21 FULL-FLEDGED IVESTIGATIO (dispute resolution function) Step 8 COMMUICATIO OF PRELIMIAR IVESTIGATIO FIDIGS AD COLLATIO OF FURTHER EVIDECE (Within 60 days of approved preliminary report) a. Implement the approved preliminary findings and proposed decision, in accordance with relevant provisions of section 10 of the ational Energy Regulator Act, as follows: (i) Where the preliminary investigation outcome dispels the allegations or suggests no need for further investigation advise the licensee, complainant and any other persons whose rights and/or legitimate expectations might be materially and adversely affected by such decision not to pursue an investigation; avail the non-confidential part of the decision and reasons to the public; and close the investigation; (ii) Where the preliminary investigation outcome confirms the allegations and suggests that the licensee still has a case to answer issue a letter of findings in accordance with Step 7(c)(ii) above; or follow any of the procedurally fair procedures set out in Step 7(c)(iii) above as seems most appropriate in the circumstances; and/or 21

22 Using the PEACE model of interviewing 11, conduct necessary further interviews with complainant, licensee and summon any witnesses still reasonably believed to be in possession of some useful information or evidence for purposes of securing as much accurate and reliable information and evidence as possible to either confirm or dispel the allegations under investigation. Step 9 AALSIS OF FURTHER EVIDECE AD COCLUSIO OF IVESTIGATIO (Within 60 days of collating all further evidence) a. Analyse all written representations, written comments, and any other further information or evidence gathered. b. Compile a final investigation report recommending a clearly explained appropriate action based on reasons, facts and evidence; a draft decision; draft reasons for decision and submit same to the PGS and ER for necessary approvals. c. Implement the decision, in accordance with the relevant provisions of section 10 of the ational Energy Regulator Act, as follows: (i) Where the investigation has proved no case against the licensee Communicate the final decision to both the complainant and licensee; avail the non-confidential part of the decision and reasons to the public; 11 Refer to attached Schedule 2 22

23 and close the investigation. (ii) Where the investigation has proved a case against the licensee Advise both complainant and licensee of the final decision clearly setting out the recommended appropriate remedy in terms of the Gas Act, which might entail the imposition of remedial measures in terms of section 26 or section 24(1)(c) or (d), as the case may be; avail the non-confidential part of the decision and reasons to the public; and close the investigation Investigations of contractual disputes As a result of ease that generally comes with securing relevant information and evidence in contractual disputes, the investigation process of such matters would generally entail the same investigation steps as Step 1 up to either sub-step (c)(i) or (c)(ii) of Step 7 of the process for investigations of customer complaints Own-initiative investigations PRE-IVESTIGATIO ACTIVITIES (Department concerned) Step 1 IDETIF A ACTIVIT TO BE IVESTIGATED a. Identify a licensee s activity to be investigated or inquired into. 23

24 Step 2 DEVELOP A PROJECT IITIATIO REPORT AD IVESTIGATIO PLA (Within 14 working days of identifying the activity to be investigated) a. Compile an initiation report and investigation plan. PRELIMIAR IVESTIGATIO (Department concerned) Step 3 IFORMATIO GATHERIG (Within working days of the Initiation Report and Investigation Plan) a. Depending on the circumstances of each matter or activity being investigated: (i) (ii) (iii) (iv) Make written enquiries to the licensee concerned; Conduct interviews with the licensee and/or their witnesses; Summon any witnesses believed to be in possession of valuable information pertaining to the matter or activity under investigation; and/or Conduct an inspection at any site relating to the activity under investigation or inquiry. Step 4 AALSIS OF IFORMATIO / EVIDECE GATHERED (Within 30 days of information gathering) a. Analyse information using the FIRAC analysis method. 24

25 b. Formulate a preliminary report of investigation findings providing a clear factual and legal basis for the decision intended to be taken on the matter, for approval by PGS and ER, which also makes recommendations: (i) as to the appropriate action to be taken (i.e. whether or not to conduct a fully-fledged investigation, or even the appropriate remedial action to be taken); and (ii) that the letter of findings be issued in terms of section 3(2)(b) of PAJA to the licensee concerned and/or any other readily identifiable person whose rights or legitimate expectations might be materially and adversely affected by the proposed appropriate action adequately explaining the nature of the proposed action; giving a clear statement of the proposed action; adequately explaining the reasons for and purpose of the proposed action, as well as notifying such person of their right to request reasons in terms of section 5 of PAJA; calling upon such person to submit duly sworn written representations within at least 14 days in terms of rule 15(3), 15(4) and 15(5) of the Gas Act Rules or giving such person a reasonable time to make representations thereon in any convenient form of their choice in accordance with section 3(2)(b)(ii) of PAJA: Provided that if such person chooses to make an oral representation, such representation should follow the PEACE model of interviewing contemplated in Step 8(a)(ii) above; and notifying such person that the Energy Regulator will also publish a call for duly sworn written submission of relevant views, facts and evidence for the period of not less than 14 days on its website and on its public notice board as required by rule 15(1), 15(2), 15(4) and 15(5) of the Gas Act Rules; or 25

26 (iii) as to any of the following procedurally fair procedures, spelt out in section 4 of PAJA as read with rule 16 of the Gas Act Rules, that the Energy Regulator must follow prior to handing down a final decision on the matter where the proposed appropriate action might materially and adversely affect the rights of the public at large a public inquiry contemplated in section 4(2) of PAJA, the procedure of which must also include a public hearing as arranged in terms of 16(2) of the Gas Act Rules; a notice and comment procedure contemplated in section 4(3) of PAJA read with Chapter 2 of the PAJA Regulations; or both a public inquiry and the notice and comment procedure. FULL-FLEDGED IVESTIGATIO (Department concerned) Step 5 COMMUICATIO OF PRELIMIAR IVESTIGATIO FIDIGS AD COLLATIO OF FURTHER EVIDECE (Within 60 days of approved preliminary report) a. Implement the approved preliminary findings in accordance with relevant provisions of section 10 of the ational Energy Regulator Act as follows: (i) Where the preliminary investigation outcome suggests no need for further investigation advise the licensee and any other persons whose rights and/or legitimate expectations might be materially and 26

27 adversely affected by the decision not to pursue an investigation; avail the non-confidential part of the decision and reasons to the public; and close the investigation. (ii) Where the preliminary investigation outcome suggests a need for a further investigation issue a letter of findings in accordance with Step 4(b)(ii) above; or follow any of the procedurally fair procedures set out in Step 4(b)(iii) above as seems most appropriate in the circumstances; and/or Using the PEACE model of interviewing, conduct necessary further interviews with the licensee and summon any witnesses still reasonable believed to be in possession of some useful information or evidence relating to the activity or matter under investigation. Step 6 AALSIS OF FURTHER EVIDECE AD COCLUSIO OF IVESTIGATIO (Within 60 days of collating all further evidence) a. Analyse all written representations, written comments, and any other further information or evidence gathered. b. Compile a final investigation report recommending a clearly explained appropriate action based on reasons, facts and evidence; a draft decision; draft reasons for decision; and submit same to PGS and ER for necessary approvals. 27

28 d. Implement the final decision, in accordance with the relevant provisions of section 10 of the ational Energy Regulator Act, as follows: (i) Where the investigation has proved no case against the licensee Communicate the final decision and reasons to both the licensee and any other persons whose rights and/or legitimate expectations might be materially and adversely affected by such decision; avail the non-confidential part of the decision and reasons to the public; and close the investigation. (ii) Where the investigation has proved a case against the licensee Advise licensee of the final decision clearly setting out the recommended appropriate remedy in terms of the Gas Act, which might entail the imposition of remedial measures in terms of section 26 or section 24(1)(c) or (d), as the case may be; avail the non-confidential part of the decision and reasons to the public; and close the investigation Section 21(2)(c) investigations PRE-IVESTIGATIO ACTIVITIES Step 1 ACKOWLEDGE RECEIPT (Within first 7 working days) a. Acknowledge receipt of application. 28

29 Step 2 ASSESS COMPLETEESS OF APPLICATIO (Within a further 7 working days) a. Assess whether the application contains all information required in terms of regulation 8(2) of the Piped Gas Regulations. b. Where necessary, interview the applicant to obtain additional information in support of the application. Step 3 PROJECT IITIATIO REPORT AD IVESTIGATIO PLA (Within another 7 working days) a. Compile an initiation report and investigation plan. IVESTIGATIO Step 4 IFORMATIO GATHERIG (Within 30 working days of approval of Project Initiation Report and Investigation Plan) a. Where the applicant is someone else other than the concerned licensee, advise such licensee of the received application for review of a licence condition and provide them with a copy of the non-confidential version of such application. b. If necessary, conduct a site inspection to acquire all relevant information pertaining to the licence condition concerned. c. Alternatively, conduct interviews with complainant and/or licensee using the PEACE model of interviewing and/or summon any witness reasonably 29

30 believed to be in possession of useful information relating to the application or the licence condition complained of. d. Where the applicant had, in terms of regulation 8(2)(j) of the Piped Gas Regulations, expressed an intention to make oral presentation to ERSA, arrange a public hearing in terms of rule 16(2) of the Gas Act Rules. Step 5 AALZE IFORMATIO/ EVIDECE GATHERED (Within 30 working days of all information gathering) a. Analyze all gathered information. b. Consider all received representations, if any; compile an investigation report with clear recommendations as to the appropriate action based on reasons, facts and evidence; and compile a draft decision and draft reasons for decision. c. Submit the investigation report, draft decision and draft reasons for decision to the PGS and the ER for necessary approvals. d. Implement the approved decision as follows: (i) Where the investigation outcome is that the licence condition in question should remain advise the aggrieved applicant and/or the licensee, as the case may be, of the conclusion of the investigation, the decision taken and the reasons therefor; as well as publish such decision and reasons on the ERSA website. (ii) Where the investigation outcome is that the licence condition concerned should be reviewed advise the aggrieved applicant and/or the licensee, as the case may be, of the decision taken and the reasons therefor; 30

31 publish such decision and reasons on the ERSA website; and implement the decision accordingly by way of variation, suspension, removal of or addition to the licence condition as the case may be. 3.3 The effect of investigation It is apparent from the usage of the term may in the provisions of the Gas Act, which are most likely to be the implications of an investigation finding against the licensee or on which the recommended remedial action is most likely to be based, that the whole purpose of complaints resolution is not to punish but rather to correct the situation with as little fuss and effort as possible. And so is the purpose of voluntary dispute resolution, as can be deduced from its origins and scope. othing in the Act therefore prevents the parties from, during the course of investigation, deciding to enter into alternative dispute resolution negotiations contemplated in section 30 and therefore request ERSA to suspend the investigation pending the outcome of such negotiations. However, the parties might still decide to have the investigation run its full course before they may start considering any alternative dispute resolution method. In such instances, the investigation would indeed be pursued until the very final stage where findings will be recorded and remedial action recommended. Conversely, not all investigation findings and recommendations become accepted and meet the desired implementation by persons to whom they apply in just about the same way as not all disagreements end in resolution, which explains why dispute resolution therefore comes in either the judicial form or extra-judicial form. In the event that the licensee fails, neglects or refuses to implement the recommended remedial action within the specified period for any reason, the matter may be pursued further as to invoke the most coercive statutory compliance mechanisms possible. But if such failure, neglect or refusal is due to 31

32 different interpretation that the licensee holds as to the facts or law applicable to such facts or as to both such facts and the law, this would forthwith qualify the matter as a dispute for which both parties may approve of ERSA acting as a mediator or arbitrator in terms of section 30 provided that the matter concerns the trading of gas or the rendering of gas services. 4. THE DISPUTE RESOLUTIO PROCESS 4.1 Recognized dispute resolution methods under the Gas Act Section 30 of the Gas Act only recognizes two methods of dispute resolution, namely mediation and arbitration. Mediation is a dispute resolution process that affords the disputants an opportunity to communicate more effectively with each other through giving each disputant a fair opportunity to present their version whilst the other disputant listens, as well as through both parties exploring innovative and mutually satisfactory solutions to their problem. On account of this flexible nature of the mediation process, there is therefore no national legislation enacted to provide wholly for the settlement of disputes by mediation as this would tamper with this flexibility. To ensure the protection of documents and any other communications exchanged between the disputing parties during the mediation process they should always be encouraged to sign, prior to the commencement of the mediation session, a confidentiality agreement which will acknowledge the confidentiality as an integral element of the mediation process as was the case in Italy as far back as 2004 when mediation was still new and generally unregulated by legislators Alessanndra Sgubini, Mara Prieditis & Andrea Marighetto Arbitration, Mediation and Conciliation: Differences and Similarities from an International and Italian Business Perspective, p /02/18 32

33 This document therefore only covers the mediation process to the extent provided for under section 30 of the Gas Act read with regulation 14 of the Piped Gas Regulations. 13 To enhance the discussion on the mediation process however, this document also alludes to the steps involved in a typical mediation process in a little more detail than that contained in regulation 14. Accordingly, it also sets out the guidelines on ideal factors to be considered by a mediator in preparing for mediation. Arbitration, on the other hand, is a dispute resolution process that affords disputants an opportunity to hear each other s versions out and to be heard by a third party who then considers all facts and evidence presented and decides on an appropriate resolution which is binding on all parties involved. Other than the provisions of section 30 of the Gas Act and regulation 15 of the Piped Gas Regulations, the arbitration proceedings are also governed by the Arbitration Act o. 42 of 1965 ( Arbitration Act ) which was, in terms of its long title, enacted to provide for the settlement of disputes by arbitration tribunals in terms of written arbitration agreements and for the enforcement of the awards of such arbitration tribunals. The relevance of the Arbitration Act on arbitration contemplated in section 30 of the Gas Act is evident from the provisions of section 40 of the Arbitration Act, which provide: This Act shall apply to every arbitration under any law passed before or after the commencement of this Act, as if the arbitration were pursuant to an arbitration agreement and as if that other law were an arbitration agreement: Provided that if that other law is an Act of Parliament, this Act shall not apply to such arbitration in so far as this Act is excluded by or is inconsistent with that other law or is inconsistent with the regulations or procedure authorized or recognized by that other law. 13 Gas Act, 2001 Piped Gas Regulations, Government otice R. 321, Gazette o of 20 April

34 In simple terms, section 40 of the Arbitration Act means that the procedure for settlement of disputes by way of arbitration, in terms of section 30 of the Gas Act, as well as any matters incidental thereto will unfold according to the relevant provisions of the Arbitration Act as if the Gas Act was an arbitration agreement. The proviso in the said section 40 denotes that the only instances where the provisions of the Arbitration Act would not apply to the arbitration in terms of section 30 of the Gas Act would be where: a. the Gas Act excludes the application of the Arbitration Act to arbitrations contemplated in section 30; or b. the Arbitration Act is in conflict with the Gas Act, the Piped Gas Regulations or the arbitration procedure authorized or recognized there under. othing in the Gas Act or Piped Gas Regulations in general and in section 30 or regulation 15 in particular, excludes the application of the Arbitration Act; and the arbitration procedure foreshadowed in the Arbitration Act accords significantly with the procedure outlined in sections 30(1)(b) and 30(3) of the Gas Act and the entire regulation 15 of the Piped Gas Regulations. Accordingly, the part of this document dealing with arbitration collectively outlines the arbitration process from the Gas Act, Piped Gas Regulations and Arbitration Act perspectives. 34

35 4.2 Mediation Pre-mediation process activities Step 1 VALIDIT ASSESSMET OF MEDIATIO REQUEST (Within 10 working days of receipt of mediation request) a. The officer assesses if: (i) the request is in writing; (ii) the request sets out the nature of the dispute between the parties, and both disputants approve of ERSA acting as mediator or require ERSA to appoint a suitable person to act as mediator [section 30(1)(a) read with regulation 14(1)]; (iii) the dispute concerns the trading of gas or the rendering of gas services For instance, with regard to trading of gas same matters as all those foreshadowed in paragraphs to above. with regard to rendering of services same matters as all those foreshadowed in paragraph and above; or the trading licensee has, contrary to a licence condition imposed by ERSA, not provided an advisory service with regard to the safe and efficient use, handling and storage of gas to its customer. (iv) the disputants are willing to cooperate with each other so as to work out a mutually agreeable solution or negotiate a settlement; and/or (v) the disputants have, as their priority, the retention of business relations vis-à-vis the rigid application of relevant law. 35

36 b. The officer determines if ERSA will mediate the dispute or if a third party will be appointed to mediate on its behalf, 14 and advise the disputants accordingly. c. The officer obtains necessary approval for the appointment of the mediator, and the necessary appointment is done. Step 2 ESTIMATIO OF TOTAL MEDIATIO COSTS (Within a further 14 working days) a. The officer does a reasonable estimation of the total costs likely to be incurred by ERSA for providing a mediation service. b. The officer prepares a submission to the PGS (i) setting out the nature of the dispute and why it is considered that such dispute should be mediated; (ii) recommending whether or not any mediation fees should wholly or partly be charged in terms of regulation 16(1) read with regulation 16(2)(a); and (iii) recommending who should pay such fees, how and to whom. Step 3 PREPARATIO FOR THE MEDIATIO PROCESS (Within a further 14 working days) a. The officer acquaints him or herself with basic knowledge of all relevant law and other prescripts applicable to the subject matter of the dispute, not 14 Section 30(2)(a) and regulation 14(2)(b) of the Piped Gas Regulations 36