ENFORCEMENT OF
ADJUDICATOR’S AWARDS
– APPROACH OF SOUTH
AFRICAN COURTS
THROUGH THE CASES
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
OPENING REMARKS
o The legal principles relating to the enforcement of adjudicator’s
awards is founded in contract law;
o The appointment of an adjudicator is by agreement between the
parties. This agreement also provides that a party will be bound
by an adjudication award until its upset by way of the next
agreed step in the proceedings;
o The adjudication is a relatively new concept in South African
Law, however it is quickly gaining traction;
o It has been adopted and is present in the four major standard
term construction contracts.
o At this stage adjudication is still optional
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
PROPOSED AMENDMENT TO THE CONSTRUCTION
INDUSTRY DEVELOPMENT BOARD ACT, 2000
o The Minister of Public Works published a notice on 29 May 2015
in the Government Gazette, under which the Minister called for
public comment on certain proposed amendments to the CIDB
Regulations;
o Doing away with the “pay when paid” provisions in construction
contracts;
o Every constructions work contract and construction works
related contract must provide for an adjudication procedure,
which adjudications may arise at any time;
o All disputes under such contracts must be referred to
adjudication before arbitration proceedings can be instituted;
o A decision of an adjudicator will be binding on the parties and
must be given effect to even though either party refers such
dispute to arbitration or takes the decision on review;
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
PROPOSED AMENDMENT TO THE CONSTRUCTION
INDUSTRY DEVELOPMENT BOARD ACT, 2000 .. CONT
o Further the proposed regulations will provide for:
• The appointment of the adjudicator;
• The powers and duties of the adjudicator;
• The rights of the parties to be legally represented;
• The confidentiality of adjudication proceedings;
• The period within which the adjudicator must make a
decision;
• The manner in which the adjudicator must make a decision;
and
• The effect of the adjudicator’s decision.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
OVERVIEW OF CASES TO BE DISCUSSED
o Case law discussed:
• Radon Projects v N V Properties & Gary Stephen Myburgh
2013 (6) SA 345 (SCA) / 2013 3 ALL SA 615 (SCA);
• Jonroux Builders & Contractors (Pty) Ltd v PTY Props 16
(Pty) Ltd - PTA High Court, case number: 63394/12
(unreported);
• Basil Read (Pty) Ltd v Regent Devco (Pty) Ltd [2011] JOL
27946 (GSJ)(unreported);
• Esor Africa (Pty) Ltd / Franki Africa (Pty) Ltd JV v Bombela
Civils Joint Venture (Pty) Ltd 2014 JDR 1824
(GJ)(unreported);
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
OVERVIEW OF CASES TO BE DISCUSSED
• Tubular Holdings (Pty) Ltd v DBT Technologies (Pty) Ltd
2014 (1) SA 244 (GSJ);
• Stefanutti Stocks (Pty) Ltd v S8 Property (Pty) Ltd 2013
JDR 2441 (GSJ) (unreported);
• Sasol Chemical Industries Limited v Odell and Another
[2014] JOL 32529 (FB)(unreported);
• Freeman, August Wilhelm, N.O and Another v ESKOM
Holdings Limited case no 43346/09;
• Thyssenkrupp PDNA Engineering (Pty) Ltd v Flour SA
(Pty) Ltd and Another case no: 04219/2013; and
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
FREEMAN, AUGUST WILHELM, N.O AND
ANOTHER V ESKOM HOLDINGS LIMITED CASE NO
43346/09
o This is subsequent to adjudication proceedings arising from the
NEC 2.
o Application for summary judgement arising from two decisions
by the adjudicator regarding the release of retention monies
and outstanding payments.
o Application for summary judgment is made where the
defendant has no bona fide defence and is simply trying to
delay the process.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
FREEMAN, AUGUST WILHELM, N.O AND
ANOTHER V ESKOM HOLDINGS LIMITED CASE NO
43346/09
o ESKOM alleged, inter alia, that:
o ESKOM was not the Supervisor and the award directing
the issue of a Defects Certificate did extend to ESKOM or
the payment of any monies,
o a notice of dissatisfaction had been issued and that
ESKOM was therefore excused compliance with the
adjudicator’s decisions,
o the adjudicator delivered his decisions outside the final 4-
week period for notifying his decision, and
o ESKOM had launched a counter claim in another
adjudication
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
FREEMAN, AUGUST WILHELM, N.O AND
ANOTHER V ESKOM HOLDINGS LIMITED CASE NO
43346/09
o The court held that ESKOM’s defences to the first dispute had
no merit. Note ESKOM’s defences went to the enforceability of
the award – alleging it was not the Supervisor and there was
no order to pay the retention.
o The second defence was dismissed as simply being outside
the clear wording of the contract which states that an
adjudicator’s “decision is final and binding unless and until
revised by the tribunal.”
o The third defence of a late order was also dismissed. The
contract did not state that a late award would be invalid, or that
there was a provision making time of the essence in making
the award.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
FREEMAN, AUGUST WILHELM, N.O AND
ANOTHER V ESKOM HOLDINGS LIMITED CASE NO
43346/09
o As adjudication was not arbitration, it was not subject to the
Arbitration Act and the time periods therein. The remedy for a
late award is a notice of dissatisfaction, and ESKOM did not
notify the dissatisfaction until after the award was issued.
o The counter claim was also dismissed as the adjudicator had
dismissed it and no notice of dissatisfaction had been issued.
o Summary judgement issued.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
RADON PROJECTS V N V PROPERTIES & GARY
STEPHEN MYBURGH 2013 (6) SA 345 (SCA) / 2013 3
ALL SA 615 (SCA)
o Contractor asserted various claims against the employer in
relation to the construction of the East London Convention
Centre;
o The appeal concerned the manner in which disputes are
resolved under the Principal Building Agreement of the Joint
Building Contracts Committee (JBCC) 4th ed March 2004;
o More particularly it concerned certain jurisdictional challenges
to the arbitrator’s power to determine certain disputes;
o In this instance arbitration could only be instituted after
practical completion was obtained; before this disputes had to
be resolved, provisionally, by adjudication (clause 40 of JBCC);
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
RADON PROJECTS V N V PROPERTIES & GARY
STEPHEN MYBURGH 2013 (6) SA 345 (SCA) / 2013
3 ALL SA 615 (SCA)
o Quotes on adjudication:
• “In Macob Civil Engineering Ltd v Morrison Construction Ltd
adjudication was described, in the context of English Litigation, as
“… a speedy mechanism for settling disputes [under] construction
contracts on a provisional interim basis, and requiring the decision
of adjudicators to be enforced pending the final determination of
disputes by arbitration, litigation or agreement.… But Parliament
has not abolished arbitration and litigation of construction disputes
it is merely introduced an intervening provisional stage in the
dispute resolution process.”
• “The authors of Hudson’s Building and Construction Contracts
observed that under the New Zealand construction legislation
adjudication is regarded as essentially a cash flow measure
implementing what has been colloquially described as a “quick
and dirty” exercise to avoid delays in payment pending definitive
determination of litigation.”
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
RADON PROJECTS V N V PROPERTIES & GARY
STEPHEN MYBURGH 2013 (6) SA 345 (SCA) / 2013
3 ALL SA 615 (SCA)
o This dispute concerned claims by the contractor for revisions to
the date for practical completion (and related provisions) in
consequence of delay. During the course of construction a
number of such claims were submitted to the principal agent
under clause 29 of the building contract.
o After practical completion the contractor submitted to the
principal agent what is called a ‘consolidated claim’ –
consolidation of a number of individual claims for revisions of
the contract on account of delay. According to the contractor’s
work claims made in the course of construction, but revised in
the light of information that subsequently came to hand. The
principal agent failed to respond to the consolidated claim and
a dispute arose that the contractor referred to arbitration.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
RADON PROJECTS V N V PROPERTIES & GARY
STEPHEN MYBURGH 2013 (6) SA 345 (SCA) / 2013
3 ALL SA 615 (SCA)
o The employer objected to the jurisdiction of the arbitrator
primarily on the contention that the contractor was purporting
to revive claims that were disposed of finally in the course of
construction. The employer went on to allege that even if a
dispute came into existence it is not competent to be submitted
to arbitration, because the dispute arose before practical
completion, and is thus required to be resolved by adjudication.
o The court’s findings:
• “The latter objection can be disposed of at once. I have
already explained at some length that the question whether
a dispute is to be resolved by adjudication, or whether it is
to be resolved by arbitration, depends upon when it is
submitted for resolution, and not upon when the dispute
arises.”
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
RADON PROJECTS V N V PROPERTIES & GARY
STEPHEN MYBURGH 2013 (6) SA 345 (SCA) / 2013
3 ALL SA 615 (SCA)
• “a contractor is not obliged to submit the dispute to
adjudication. He may choose instead to complete the works
and submitted then to arbitration. If the present disputes
can indeed be said to have arisen before practical
completion that would be no bar to the resolution by
arbitration.”
o The court also made some interesting findings regarding the
ability of an arbitrator to determine his jurisdiction to hear a
dispute, however these are not relevant for the purpose of this
discussion.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
THYSSENKRUPP PDNA ENGINEERING (PTY) LTD v
FLOUR SA (PTY) LTD 04219/2013
o Application in terms of section 6 of the Arbitration Act for a stay
of proceedings.
o The main application was to interdict the adjudicator from
deciding any matters as there was a dispute on his
appointment: Thyssenkrupp arguing he was not properly
appointed and Flour that he was.
o This does not deal with the appointment of the adjudicator, but
the stay of proceedings in terms of the Arbitration Act as the
dispute fell within the terms of the contract.
o A key consideration in the case it is about whether or not an
arbitrator can enquire into his own jurisdiction.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
THYSSENKRUPP PDNA ENGINEERING (PTY) LTD v
FLOUR SA (PTY) LTD 04219/2013
Per Nugent JA in RADON Projects:
“The response of the arbitrator cannot be faulted. When confronted with a
jurisdictional objection an arbitrator is not obliged forthwith to throw up his
hands and withdraw from the matter until a court has clarified his jurisdiction.
While an arbitrator is not competent to determine his own jurisdiction that
means only that he has no power to fix the scope of his jurisdiction. The
scope of his jurisdiction is fixed by his terms of reference and he has no
power to alter its scope by his own decision (in the absence of agreement to
the contrary).”
The dispute was held to be a matter to be referred to arbitration
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
JONROUX BUILDERS & CONTRACTORS (PTY) LTD
V PTY PROPS 16 (PTY) LTD
o Brief facts of the case:
• The plaintiff issued summons against the defendant founded
on a written agreement whereupon work was done and the
amount of R 1 335 614.29 was claimed;
• The defendant raised a special plea that the action be stayed
pending the invocation and final determination of the disputes
by way of dispute settlement provisions as contained in
clause 40 of the agreement between the parties.
• The plaintiff thereupon did not take any further steps in the
action, but instead referred the matter to adjudication. The
parties filed pleadings and supporting documentation. Both
parties made written submissions and on 21 July 2011 the
adjudicator made an award in favour of the plaintiff in the
amount of R 169 811.20;
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
JONROUX BUILDERS & CONTRACTORS (PTY) LTD
V PTY PROPS 16 (PTY) LTD
o The defendant tendered payment of this amount however the
plaintiff noted its objection to the award and gave notice that it
intended referring the dispute to be finally determined by
arbitration;
o The defendant (employer) objected to the appointment of an
arbitrator (on the basis that no C.V’s were attached when the
Association of Arbitrator’s proposed names for arbitrators), and
complained that the plaintiff (contractor) was in breach of the
agreement in that it prematurely instituted summons against the
defendant, which summons was still pending and should be
withdrawn. The plaintiff replied that the defendant was raising a
unnecessary technical defences and set the matter down for trial;
o Accordingly, the court was faced with the question of whether a
party can litigate in court, instead of arbitration, after the
adjudication process has been instituted and completed.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
JONROUX BUILDERS & CONTRACTORS (PTY) LTD
V PTY PROPS 16 (PTY) LTD
o The defendant argued that if there was a notice of
dissatisfaction (in respect of the adjudication) then it was to be
finally resolved by the Arbitrator. If there was no notice of
dissatisfaction then the Adjudicator’s decision is final and
binding. As it stands now the Adjudicator’s award is binding
between the parties until an Arbitrator finds on the notice of
dissatisfaction.
o The plaintiff argued that they do not accept the adjudicator’s
decision. They attempted to refer the matter to arbitration but
the defendant objected despite their special plea in which they
requested arbitration.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
JONROUX BUILDERS & CONTRACTORS (PTY) LTD
V PTY PROPS 16 (PTY) LTD
o The court found:
• The principle of pacta sunt servanda is an entrenched
principle in the law and was found under the the
Constitutional principle of inter alia human dignity;
• The parties agreed that when a dispute as to any matter
arising out of or concerning the agreement arose in the
matter was to be referred to adjudication. The plaintiff has a
right to note its dissatisfaction with the Adjudicator’s award.
The parties agreed that if such notice was delivered by any
of the parties to the Arbitrator they will finally decide the
dispute. This is the route the parties agreed upon and the
plaintiff invoked this process. The plaintiff cannot now make
an about turn and set the matter down for trial.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
JONROUX BUILDERS & CONTRACTORS (PTY) LTD
V PTY PROPS 16 (PTY) LTD
o Resorting back to the action not only militates against the
contract and the entrenched principle of pacta sunt servanda, but
is bad in law procedurally and substantively. By allowing for the
dispute to be referred to arbitration, after an Adjudicator’s
decision had been issued, effectively gave a party a “right to
appeal” which the plaintiff invoked.
o The jostling between the attorneys as to what issues may be
raised before the Arbitrator and who the Arbitrator must be did not
give the plaintiff the right to resort back to the action. The
Arbitrator will be appointed and the arbitrator will deal with the
issues raised before him. The reason for this is trite: parties
cannot initiate two sets of proceedings based on the same claim
and then alternate between the processes until they receive a
result they like.
o The court upheld stayed the action pending the finalisation of the
dispute resolution process.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
ESKOM HOLDINGS LTD v CMC-MAVUNDLA-IMPREGLIO
JOINT VENTURE AND ANOTHER case no 2014/15608
o This case concerns the adjudicator’s appointment.
o The adjudicator’s appointment had run for three years, under
three successive contracts, terminating 31 March 2012, 31
December 212 and 31 December 2013.
o After 31 December 2013, CMC-Mavundla kept referring
disputes the adjudicator and ESKOM kept trying to appoint a
new adjudicator, complaining that CMC-Mavundla was
frustrating this.
o ESKOM sought declaratory orders that the adjudicator’s
appointment had terminated on 31 December 2013 and no
further disputes could be referred to him, and his decisions
after 31 December 2013 were null and void and that ESKOM
was not obliged to renew his appointment. A new adjudicator
was to appointed by the adjudicator nominating body.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
ESKOM HOLDINGS LTD v CMC-MAVUNDLA-IMPREGLIO
JOINT VENTURE AND ANOTHER case no 2014/15608
o The Contract Data provided for a choice of adjudicators, Brady
of Chapman. Brady was ill and could not accept any
appointment. Only if one or the other could not act, was the
nominating body to be approached.
o Once Chapman was appointed, the proviso regarding the
nominating body fell away.
o The court held that the adjudicator’s contract was collateral to
the main contract. The main contract provided for the
mechanism by which the Employer and contractor could
terminate the adjudicator’s contract.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
ESKOM HOLDINGS LTD v CMC-MAVUNDLA-IMPREGLIO
JOINT VENTURE AND ANOTHER case no 2014/15608
o If the parties do not agree to terminate the adjudicator’s
appointment, it terminates only when the adjudicator resigns or
is unable to act.
o The renewal of the contracts was held to be consistent with
reviewing the adjudicator's fees which would efflux over the
time of the contract.
o One party does not enjoy the right to unilaterally terminate the
adjudicator's appointment. If there is bias or abuse of the rules
of natural justice, the aggrieved has its remedies, and in the
event of enforcement this can be raised as a defence.
o ESKOM depended on a finding that the main contract was not
the final word on the appointment of the adjudicator, and the
court disagreed.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
BASIL READ (PTY) LTD V REGENT DEVCO (PTY) LTD
o The applicant (contractor) sought an order against the
respondent (employer) for the payment of R 29 554 941.97,
predicated upon a payment certificate issued by the
respondent’s principal agent. The parties relationship was
governed by the JBCC contract;
o Brief facts:
• On 25 August 2009 the principal agent issued an interim
payment certificate certifying that the sum of R 29 554
941.97 was due and payable by the respondent to the
applicant by no later than 1 September 2009. The applicant
contends that the respondent is contractually obliged to pay
the sum to be applicant, but has failed to do so;
• Upon the respondent’s failure to make payment the matter
was referred to adjudication and the Adjudicator found in
favour of the applicant;
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
BASIL READ (PTY) LTD V REGENT DEVCO (PTY) LTD
o The respondent denied liability and alleged that the
adjudicator’s determination based on the payment certificate is
unlawful, unenforceable and void for a number of reasons,
consequently, the amount reflected in the payment certificate
was not due and payable in terms of the contract;
o The decision revolved around an extension of time claim. In the
adjudication the respondent contended that the applicant was
not entitled to an extension of time and payment of expenses
incurred in respect of two claims. The adjudicator found in
favour of the applicant. The respondent alleged that the
adjudicator did not give consideration to the evidence placed
before him by the principal agent, and wrongly accepted
misrepresentations by the applicant which, influenced his
determination, consequently the determination is unlawful,
unenforceable and void. Aggrieved by the determination, the
respondent referred it to arbitration;
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
BASIL READ (PTY) LTD V REGENT DEVCO (PTY) LTD
o The respondent believed that the applicant cannot seek an
order the consequence whereof, was to give effect to
improperly obtained determination because this subverts the
intention of the contracting parties. Secondly, it was never the
intention of the parties that they would be bound by an
improperly obtained termination;
o The applicant, on the other hand, alleged that the certified sum
of R 29 554 941.97 did not become due and payable upon the
handing down of the adjudicator’s determination but became
due and payable upon the issue of the payment certificate;
o The fact that the respondent disputed the adjudicator’s
determination does not excuse it from complying with its
contractual obligations which include its obligation to pay the
amount certified in the payment certificate;
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
BASIL READ (PTY) LTD V REGENT DEVCO (PTY) LTD
• Finally, the applicant contended that both the contract and
the Adjudicator’s Rules state that the parties are to act in
accordance with the adjudicator’s determination until such
time as it is set aside by arbitrator. Declaring a dispute in
relation thereto does not relieve the respondent of its
contractual obligations.
o The court’s findings:
• The applicant’s claim is predicated on a payment certificate
which originates from a contract, not as incorrectly submitted
by the respondent, in the adjudicator’s determination;
• The respondent’s principal agent issued an interim payment
certificate at the time when the principal agent knew that the
respondent disputed the adjudicator’s decision. In acting
thus, the principal agent certified that the respondent is
indebted to the applicant in the amount reflected in the
interim payment certificate.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
BASIL READ (PTY) LTD V REGENT DEVCO (PTY) LTD
o The alleged irregularities in the adjudicator’s determination do
not absolve the respondent from honouring its obligations in
terms of the contract. The respondent did not contend that the
principal agent proceeded to issue the interim payment
certificate contrary to its authority, scope or mandate.
o The respondent cannot claim that the principal agent exceeded
his mandate because at all material times the latter deferred to
it before issuing the payment certificate;
o The respondent’s remedy lies in clauses 40.4 and 40.5 which
respectively stipulate should either party be dissatisfied with
the decision given by the adjudicator, such party shall give
notice of its dissatisfaction to the other party, and the dispute
will then be resolved by arbitration.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
BASIL READ (PTY) LTD V REGENT DEVCO (PTY) LTD
o The respondent had clearly exercised its contractual right by
referring the dispute to arbitration, consequently, the
respondent was locked within the purview of clause 40.3, which
prescribed that the respondent shall be bound by the decision
of the adjudicator and shall give effect there to without delay
unless and until the adjudicator’s decision is set aside by an
arbitrator.
o The respondent cannot set aside a payment certificate validly
issued by the principal agent “in the absence of a contractual
provision to the contrary or on the basis of an agreement or
waiver”, where the principal agent had acted within the
authority and the scope conferred to it by the respondent.
o The respondent was ordered to make payment of the certified
amount.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
ESOR AFRICA (PTY) LTD / FRANKI AFRICA (PTY) LTD
JV V BOMBELA CIVILS JOINT VENTURE (PTY) LTD
o Brief facts of the case:
• The applicant sought an enforcement order of a DAB
decision that the respondent pay the applicant the sum of R 8
662 628.09;
• The respondent contended firstly that the DAB decision is not
final and binding because it does not automatically render the
monetary amount due, owing and payable because the
respondent gave notice of the dissatisfaction in respect of the
decision which the respondent contended prevented the
decision from being “final and binding”. In particular the
respondent contended that once a notice of dissatisfaction is
given then the parties are required to engage one another in
attempting to settle the matter amicably failing which the
matter must go to arbitration. Added to this was the
contention that the dispute resolution process had not been
completed and the application to court was premature.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
ESOR AFRICA (PTY) LTD / FRANKI AFRICA (PTY) LTD
JV V BOMBELA CIVILS JOINT VENTURE (PTY) LTD
• The second issue raised followed on from the first; the court
should not exercise jurisdiction as the parties agreed to
proceed to arbitration if they were unable to settle the matter
of the delivery of the notice of dissatisfaction with the DAB
decision.
o The court found:
• The DAB dispute resolution process in respect of a particular
issue, including the amount that ought to be certified for an
interim draw, occurs while the contractor continues to
perform the balance of its construction obligations under the
contract. It self-evidently means to ensure that the parties
continue with the contractual relationship in a non-adversarial
manner for the mutual advantage, namely to complete the
contract timeously without the one withholding performance of
its obligations until the dispute is resolved.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
ESOR AFRICA (PTY) LTD / FRANKI AFRICA (PTY) LTD
JV V BOMBELA CIVILS JOINT VENTURE (PTY) LTD
• The court highlighted the fact that clause 20.4 of the contract provided
that once the DAB at given its decision “The decision shall be binding on
both parties, shall promptly give effect to it unless and until it shall be
revised in an amicable settlement or an arbitral award as described
below. Unless the Contract has already been repudiated or terminated,
the Contractor shall continue to proceed with the Works in accordance
with the Contract.”
• The DAB provision is clearly intended to provide an expedited process of
dealing with disputes as and when they arise, including the adequacy of
interim payment certificates. The DAB decision is not final but the
obligation to make payment or otherwise perform under it is.
• The key to comprehending the intention and purpose of the DAB process
is that neither payment nor performance can be withheld when the
parties are in dispute. The DAB process ensures that the quid pro quo
for continued performance of the contractor’s obligations even if it is
dissatisfied with a DAB decision…
• The court ultimately enforced the DAB decision.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
TUBULAR HOLDINGS (PTY) LTD V DBT
TECHNOLOGIES (PTY) LTD
o Facts of the case:
• The respondent was the main subcontractor on the Eskom Kusile
project. Part of the subcontracted project was in turn
subcontracted by the respondent to the applicant;
• The dispute resolution procedure agreed upon between the parties
was that contained in clause 20 of the Standard FIDIC Conditions
of Contract. It provided for disputes between the parties to first be
referred to a Dispute Adjudication Board (“DAB”) who was to give a
decision. Any party dissatisfied with the decision could give a
notice of dissatisfaction after which it was to be referred to
arbitration;
• In this case, dispute arose between the parties, that was referred to
the DAB, the DAB gave a decision, the respondent gave a notice of
dissatisfaction with this decision (as did the applicant). In the
application to court, the applicant demanded, in the interim,
compliance with the decision as the respondent refused to comply.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
TUBULAR HOLDINGS (PTY) LTD V DBT
TECHNOLOGIES (PTY) LTD
o The essence of the dispute revolved around the interpretation of clause
20.4. The applicant submitted that the parties were required to give prompt
effect to the decision by the DAB which was binding unless and until it was
set aside by agreement or arbitration following a notice of dissatisfaction,
whereas the respondent contended that the mere giving of a notice of
dissatisfaction suspended the effect of the decision.
o The court’s findings:
• The court found that the notice of dissatisfaction did not in any way
detract from the obligation of the parties to give prompt effect to the
decision until such time, if at all, it is revised in arbitration. The notice of
dissatisfaction does, for these reasons, not suspend the obligation to
give effect to the decision. The party must give prompt effect to the
decision once it is given;
• In other words, until such time as the decision becomes final (after the
lapse of the 28 day period within which to give a notice of
dissatisfaction) the decision is binding but of an interim nature;
• The court referred to both the local case law (which we have already
dealt with) as well as UK jurisprudence;
• The respondent was ordered to comply with the decision.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
STEFANUTTI STOCKS (PTY) LTD V S8 PROPERTY
(PTY) LTD
o Facts of the case:
• This decision also revolved around the enforcement of a
decision handed down by an adjudicator, in terms of clause
40 of the JBCC agreement;
• The applicant, the building contractor, refer to a dispute
between the parties to the adjudicator. The adjudicator
delivered his decision, in favour of the applicant, however the
respondent, the employer, contended that it was not obliged
to give effect to the adjudicator’s decision as it had given
notice of its dissatisfaction therewith pursuant to clauses 40.3
to 40.5 of the JBCC agreement;
o Court’s decision:
• The court gave a brief history of the adjudication process,
starting out in the United Kingdom;
• The court summarised all of the case law relating to
adjudication that we have already discussed;
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
STEFANUTTI STOCKS (PTY) LTD V S8 PROPERTY
(PTY) LTD
o The court concluded:
“Having regard to the purpose of the provisions of the
agreement by introducing a speedy settling of disputes in
construction agreements on a provisional, interim basis, I can
find no reason not to follow the judgement in Tubular Holdings,
which is in harmony with the decisions of Spilg J in Bombela and
Mokgoatlheng in Basil Read”
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
STEFANUTTI STOCKS (PTY) LTD V S8 PROPERTY
(PTY) LTD
o The case law discussions in this case are very useful and this
case gives a very good summary of the preceding decisions.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
SASOL CHEMICAL INDUSTRIES LIMITED V ODELL
AND ANOTHER
o Facts of the case:
• The first respondent, was appointed as an adjudicator in
respect of disputes arising from the contract between the
applicant and the second respondent. The first respondent
took the view that it was not within his power to grant the
applicant an extension of time for each to lodge in
submissions more than four weeks after the referral date;
• The main question the court had to decide was whether the
adjudication decision of the first respondent could be set aside
because the first respondent did not entertain a request by the
applicant for an extension of time;
• In terms of the dispute resolution mechanism agreed upon
between the parties the particular clause provided that further
information was to be provided to the adjudicator within four
weeks of the referral;
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
SASOL CHEMICAL INDUSTRIES LIMITED V ODELL
AND ANOTHER
o The facts of the case:
• In this case, the referral notice was served on the applicant on
17 December 2013, during the builders’ holiday and the
person dealing with this matter for the applicant was already
on holiday;
• They returned on 13 January 2014. On 14 January 2014 she
requested the second respondent for an extension on the
second respondent was not willing to acceded to such
request. This gave rise to the court application.
• The relief sought was a declaratory order that the first
respondent (the adjudicator) is entitled to consider a request
for an extension of time in which the applicant could file a
response or furnish information to the second respondent’s
referral notice.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
SASOL CHEMICAL INDUSTRIES LIMITED V ODELL
AND ANOTHER
o The court’s decision:• “Adjudication is not subject to the common law. Mr Snellenburg referred to an
unreported judgment of the Gauteng South High Court, Freeman and Another v
Eskom Holdings Ltd (Case No 43346/09, 23 April 2010) where the court points out
that adjudication is not arbitration. The Freeman case is referred to in Tubular
Holdings (Pty) Ltd v DRT Technologies (Ptvl Ltd 2014 Cl l SA 244 (GSJ). Both
decisions make it clear that the purpose of adjudication is to arrive at a speedy
resolution of a dispute. The proceedings before the adjudicator are not subject to
the rules of natural justice, save in the plainest cases, as it is put in the dictum of
the United Kingdom Court or Appeal quoted with approval in para [24.4.2] of the
Freeman case. The parties are bound by the decision of the adjudicator and the
tribunal has the power to re-open the dispute.”
• “Adjudication is meant to be a speedy remedy to assist cash flow and not to hold
up the contract. The finding of the adjudicator stands until it is set aside by the
tribunal. The remedy of the applicant is to place its case before the tribunal. Even if
in this case the adjudicator may have made a mistake by not entertaining the
request of the applicant for an extension (and I do not think the adjudicator made a
mistake) the adjudication stands. The strictest timeframes in clause W 1.3(3)
accord with the intention of adjudication as being a speedy remedy, not subject to
the rules of natural justice.”
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
SASOL CHEMICAL INDUSTRIES LIMITED V ODELL
AND ANOTHER
o This last sentence of the court’s decision:• “The strictest timeframes in clause W 1.3(3) accord with the intention of
adjudication as being a speedy remedy, not subject to the rules of natural justice.”
o This takes the issue perhaps a little too far. A material breach of
the rules of natural justice is unlikely to be countenanced by our
courts. Further, it may be a breach of the adjudicator's contract
itself, which will add further grist to the mill.
o Court also found that, for an interdict to be ordered, there must
be an absence of another remedy. As the contract made provision
for proceeding to the tribunal, the right to an interdict was not
established.
MDA l CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING
CONCLUSION
o Our courts have adopted a very robust approach to the
enforcement of adjudication awards.
o There are hardly any decisions where adjudication awards
have not been enforced. In most instances this will favour the
contractor as opposed the employer as that’s just the common
chain of events!
o The robust attitude of the courts is of great value to all
participants in the construction industry, and will only be
complimented by the proposed regulations.
o Parties use adjudication to get a decision now, if the courts
were not so robust, this would frustrate the entire point of
adjudication.
THANK YOU