Enforcement of construction contracts through the adjudication process

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More often than not, contracting parties (the "parties’) will include ‘dispute resolution’ clauses in construction agreements in order to regulate the manner in which disputes are to be resolved. . One of the mechanisms through which disputes are resolved is a process of ‘adjudication’.

Like other dispute resolution processes, adjudication is one of those processes that was created for contracting parties to resolve their contractual disputes more speedily. While some dispute resolution bodies have introduced rules to regulate the adjudication process, it is not uncommon for parties to stipulate the process and timelines to be followed from the time of notifying the dispute until the ‘adjudication determination’ (the "Determination’) is issued by an ‘Adjudicator’.

Despite the fact that the parties often understand both the adjudication process as well as the role of the adjudicator when a dispute is initiated, the contractual stipulations seldom outline the manner in which the determination of an adjudicator is to be enforced by the successful party upon conclusion of the adjudication process. This is to say that while most Dispute Resolution clauses outline the manner and process of resolving a dispute, it is not a common feature for clauses of this nature to specifically set out how a determination issued by the adjudicator is to be given effect.

The trigger for enforcement is the determination that the adjudicator's decision has final effect. The question of whether or not a determination is final in effect brings in its wake the process of interpreting not only the dispute resolution clauses but also the construction agreement as a whole in order to ascertain the intention of the parties. This entire exercise is necessary as determinations do not have the status of, and cannot be equated to, court orders.

In Steve Biko Foundation v. Frese NO and Another (A5008/2017) [2018] ZAGPJHC 446 (7 March 2018), the full court on appeal had to consider the enforcement of a determination contained in a construction agreement consequent upon the court a quo sanctioning that the determination be given effect. In this matter, adjudication had been overtaken by an arbitration process that had not run its course. As a result, the adjudication was not ‘final," as further steps had been contemplated in the construction agreement and pursued by one of the parties. Similarly, the Court also recognized an adjudicator’s determination in Basil Read (Pty) Ltd v. Regent Devco (Pty) Ltd (41108/09)201 ZAGPJC75 (9 March 2010).

On the other hand, in Stefanutti Stocks (Pty) Ltd v. S8 Property (Pty) Ltd, 2013 JDR 2441(GSJ), the Court interpreted the terms of the construction agreement and concluded that the parties are obliged to give effect to a decision of the adjudicator without delay if such enforcement is contractually sanctioned. The Court held that the words ‘without delay’ in the enforcement terms signified an intention that ‘effect be given to the adjudicator’s decision until it is set aside by an arbitrator.’

These decisions reveal that the question of whether or not a determination is capable of enforcement ultimately rests on the interpretation attached to the relevant clauses. The outcome of the interpretation exercise determines whether or not the determination is final in nature. Depending on the outcome, a court may either refuse to enforce a determination that is not final or conclude that the determination is final and binding and therefore capable of being enforced. Should the latter be the position, courts will give effect to the adjudicator’s outcome without further delay upon the filing of a court application. Only at this stage will the determination enjoy court-order status.