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Ekurhuleni West College v Stanley & Trencon Construction (Pty) Ltd

Yet another case confirming that an adjudicator’s decision is enforceable without delay irrespective of whether it has been referred to arbitration.

By Kelly Stannard

Introduction

Ekurhuleni West College (“EWC”) and Trencon Construction (Pty) Ltd (“Trencon”) entered into a JBCC Principal Building Agreement in terms of which EWC was the employer and Trencon was the main contractor. Various disputes arose between the parties, which were referred to adjudication before Mr Stanley (the “adjudicator”). The adjudicator published his decision without considering EWC’s rejoinder and without convening a hearing.

EWC filed a notice of dissatisfaction referring the matter to arbitration. In addition, EWC sought an order from the High Court for the review and setting aside of the adjudicator’s decision. EWC contended that the adjudicator had exceeded his jurisdiction and had not acted impartially or independently when he rejected EWC’s rejoinder and failed to conduct a hearing.

The issues to be decided by the High Court were:

  • Whether the institution of arbitration proceedings by EWC precluded the review application before it
  • Whether the adjudicator had breached the principles of natural justice by failing to consider EWC’s rejoinder or to conduct a hearing
  • Whether EWC was bound by the adjudicator’s decision and obliged to give effect to it without delay until overturned or varied by arbitration

Review application precluded?

Adjudication is founded in contract. When the parties contracted with each other, they knew that disputes may arise and that in such event, a temporary acceptable solution was provided for to ensure completion of the contract within the agreed timetable.[1] De Vos J held that the determination of disputes in terms of a contractual obligation effectively prevents the courts from exercising their normal review jurisdiction.[2]

De Vos J concluded that an adjudicator’s decision is not reviewable for the following reasons:

  • It is not an official act but rather an intermediate step agreed by two independent contracting parties.[3]
  • Such contracting parties explicitly declared to be bound and give effect to the adjudicator’s decision until finalization of arbitration proceedings.[4]
  • The constitutional principle of legality has not been breached if effect is given to an agreement voluntarily entered into by contracting parties who explicitly agreed to be bound and to give effect to the adjudicator’s decision.[5]

De Vos J held further that because EWC had elected to treat the adjudicator’s decision as one capable of being referred to arbitration, it is not open to it to change its mind and seek to enforce two mutually exclusive remedies simultaneously and EWC’s review application should be dismissed on this basis alone.[6]

Natural justice breached?

Adjudication is an accelerated form of dispute resolution and adjudicators are subject to less strict standards of due process. Having considered international and local case law on adjudication, De Vos J noted that adjudicators are generally not qualified lawyers, have a need to speedily resolve the dispute and are afforded the initiative to ascertain the facts which they deem necessary to determine the dispute.[7] De Vos J confirmed that our courts are of the opinion that as long as adjudicators act generally in accordance with the usual rules of natural justice, without bias and within their terms of reference, their decision can be enforced.[8]

Regarding the failure to consider EWC’s rejoinder, De Vos J held that the adjudication rules did not provide for the delivery of a rejoinder, the rules merely authorized the adjudicator to request further information from either of the parties and, accordingly, there is no merit in EWC’s contentions.[9] The adjudicator’s approach was entirely consistent with the rules and the agreed procedure.

Regarding the failure to conduct a hearing, De Vos J held that in terms of the adjudication rules, the adjudicator had a discretion to conduct a hearing and that because there was nothing which indicated that the adjudicator acted with male fides / an ulterior motive when he decided to determine the dispute on the papers and because in his expert opinion he felt that he could determine the dispute on the papers alone, no principles of justice had been violated.[10]

Adjudicator’s decision to be given effect to without delay?

De Vos J considered that the agreement reached between the parties was clear – Both parties had intended for the adjudicator’s decision to be binding unless and until set aside or varied in arbitration[11] – and thus held that EWC is contractually obliged to give effect to the decision and Trencon is entitled to a court order to that effect.[12]

Conclusion

De Vos J concluded with an order that EWC’s application for review of the adjudicator’s decision be dismissed with costs, including the costs of two counsels, and that the adjudicator’s decision is declared binding.

Thus, once again, the courts have confirmed that adjudicator’s awards are no joke and that losing parties cannot rely on technicalities and additional dispute procedures to avoid them. Don’t let your opponent fool you into thinking that an adjudicator’s award is not binding as there are limited circumstances in which this is true.

  1. Para 42.
  2. Para 42.
  3. Para 43.1
  4. Para 43.2
  5. Para 43.3.
  6. Para 60.
  7. Para 44.
  8. Para 44.
  9. Para 58.
  10. Para 59.
  11. Para 61.
  12. Para 61.