Is an Adjudication decision enforceable even when it is incorrect in South Africa?

Is an Adjudication decision enforceable even when it is incorrect?

The South Africa Supreme Court of Appeal has recently shed light on whether an adjudicator’s award is binding on both parties in the case of Framatome v Eskom Holdings SOC Ltd ((355 of 2021) [2021] ZASCA 132 (01 October 2021)).

The Case

The contract between Eskom and Framatome is that they used a NEC 3 contract for the replacement of steam generators at Koeberg Nuclear Power Station. This contract, being a NEC contract, provided for adjudication as the first method of dispute resolution between the parties. There was a despite that arose relating to a compensation event notified by the project manager of Eskom. Framatome won this dispute when it came to adjudication and Eskom ignored the adjudicator’s award.

Another dispute went to adjudication which dealt with the assessment of the compensation event of the original dispute. Eskom refused to provide an evaluation of the compensation event and the adjudicator concluded that Eskom had failed to make a full assessment in due time as required by the original decision. Framatome’s proposed quotation was concluded to be accepted in terms of the provisions of the contract. Eskom notified the adjudicator of its dissatisfaction with this decision and Framatome tried enforcing the various decisions in the High Court.

The High Court found in favour of Eskom that the adjudicator had acted outside his terms of reference and that he exceeded his jurisdiction. He had decided on issues not referred to him. Framatome appealed to the Supreme Court of Appeal.

Court of Appeal Decision

The court asked the question of whether or not the adjudicator confined himself to a decision of the issues that were referred to him by the parties. If he did so, then the parties were bound by his decision.

The court held that:

a)???The adjudicator did confine himself to the issues referred. At no point did he depart from the real dispute between Eskom and Framatome.

b)???Only an arbitral tribunal could revise the adjudicator’s decision – because an arbitral tribunal had not been used, the decision was binding on both parties.

c)???Eskom was ordered to make full payment to Framatome.

?The court remained in line with Hudson’s Building and Engineering Contracts, that ‘it is only in rare circumstances that the court will interfere with the decision of an Adjudicator…’

The usual position that an Adjudicator’s decision can only be interfered with where there the adjudicator has no jurisdiction, where there is really bias, or the appearance of bias still applies.

A party should not agree to refer a dispute to adjudication assuming that if the adjudicator decides against them, they can ignore the decision. The courts still will promote the idea that an Adjudicator’s decision will be enforced in the majority of cases.?

George William Gibbs LLB(Hons) LPC - Consultant - Hanscomb Intercontinental Ltd

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