Article written by Celeste Frank, Candidate Attorney, checked and released by Jordan Dias, Associate at Schindlers Attorneys.
28 September 2021
BACKGROUND
On 15 March 2015, Sasol South Africa (Pty) Ltd as an employer (“the Appellant”) and Murray & Roberts Limited as a contractor (“the Respondent”), concluded a construction contract in terms of which the Respondent would render certain engineering and construction services to the Appellant at its plant in Secunda. The contract provided for the appointment of a project manager to perform certain functions under the contract and the mechanism to resolve the disputes that might arise between the parties. The dispute had to be first notified and referred to the adjudicator (appointed in terms of the adjudicator’s contract), for adjudication, whose decision was enforceable as a contractual obligation and had to be complied with, pending the referral to arbitration.
During the execution of the contract, various disputes arose between the parties. These are mainly related to the correctness of the assessments made by the project manager in respect of payments claimed by the Respondent in terms of the contract. The project manager did not allow some of the payment applications submitted by the Respondent and as a result thereof, the Respondent referred the dispute to the adjudicator. The adjudicator rejected the Respondent’s claims. The Respondent then referred the disputed payments to the arbitrator who found in favour of the Respondent. The Respondent requested that the project manager implement the terms of the award by adjusting payments in relation to all the disputes, however, the project manager only implemented the terms of the award for some of the disputes and refused to implement the terms for the remaining disputes.
The Respondent subsequently referred the project manager’s refusal to the adjudicator, who then ordered the Appellant to pay the outstanding payments and comply with the adjudicator’s award. As a result of the Appellant’s refusal to comply therewith, the Respondent approached the High Court to enforce the adjudicator’s decision.
The Appellant opposed the application contending that it was justified to ignore the adjudicator’s decision on the ground that it was invalid and launched a counterapplication, in which it sought an order declaring that the first decision, previously made by the adjudicator, was enforceable as contractual obligations between the parties. The High Court upheld the Respondents’ claims and dismissed the Appellant’s counterapplication.
In the Supreme Court of Appeal (“SCA”), the Appellant contended that the adjudicator’s subsequent decision was invalid. The Appellant argued that the adjudicator had decided on a dispute which was the same or substantially the same as the ones that he had previously decided on, which was something that he was not entitled to do under the adjudicator’s contract; he had no authority to receive information after the time allowed for him to do so had expired, and he had no jurisdiction to issue a decision after the time allowed for him to do so had expired.
COURT HELD
The SCA dismissed the Appellant’s contentions stating that, in terms of clause W1.3(5) read with clause 50.5 and 51.3 of the contract, the adjudicator was entitled to review and revise any action or inaction of the project manager. When acting under these clauses, the adjudicator was not reconsidering his prior decisions but simply doing what the projector manager was supposed to have done, in terms of the contract and in accordance with the principles established in the arbitration award.
The Court held that the adjudicator had complied with the time periods stipulated in the contract and the adjudicator’s contract and that the notices of dissatisfaction purportedly issued by the Appellant were premature. The appeal was dismissed, and the Appellant was ordered to pay the Respondent immediately.
VALUE
This case shows us how important it is to challenge the legitimacy of an adjudicator’s decision due to the consequences that may emanate from failing to perform in terms thereof.
