A recent appeal judgement by a full bench of the Western Cape High Court in Cape Town has found that an adjudicator never had jurisdiction to decide certain disputes, making his decision unenforceable. The ruling highlights how adjudicators establish the extent of their authority when they accept an appointment.
“Adjudication has become the preferred first tier of dispute resolution in South Africa, and the courts have largely supported the enforcement of decisions,” says Euan Massey, director at MDA Attorneys. “This judgement is a reminder that enforcement depends on the adjudicator having authority to decide the disputes in the first place. If basic checks on scope are missed, a party can invest in a referral and succeed, only to find the decision cannot be enforced.”
The court found that the adjudicator lacked authority because some of the disputes referred to him were not covered by a notice of adjudication. The adjudication was ex parte, meaning the defending party did not participate. In the same matter, two disputes previously been referred were referred again, and the adjudicator who decided them did not know they had already been dealt with.
Massey notes that South Africa’s adjudication system is entirely contractual, and recent judgements show that some adjudicators accept appointments without sufficient enquiry into the extent of their mandate. This includes whether prior decisions have been made under the contract, the scope of what is being referred, and whether the disputes have been properly notified and are ready for adjudication.
The cost implications can be significant. MDA recently reviewed a case in which a subcontractor referred a single dispute to three different adjudicators. The result was three separate decisions, each with its own fees, along with additional legal and internal costs for the paying party.
“The adjudicators in these examples were not necessarily at fault,” says Massey. “But a good deal of time and effort could have been saved had these issues been dealt with at a pre-adjudication meeting and had the adjudicators been proactive upfront.”
Because the system is contractual, Massey adds, adjudicator nominating bodies are not compelled to follow set timelines or procedures when nominating adjudicators. He says they could also clarify their mandate and act accordingly, so that parties know when the time periods for a referral begin to run.
Practical steps
MDA recommends that adjudicators hold a pre-adjudication meeting in every matter, including ex parte referrals, to confirm:
- whether any prior adjudication decisions exist under the contract;
- the scope and size of the disputes being referred;
- whether each dispute has been properly notified and is ready for adjudication; and
- whether the contractual time periods are workable, particularly for large disputes such as final accounts.
“Some referrals, such as final account disputes, can run to thousands of pages, and the contractual time periods are not always suited to them,” says Massey. “If the parties cannot agree an extension, an adjudicator who is concerned about fairness should consider resigning so that the defending party has the time it needs to respond appropriately.”
Massey also encourages ongoing education for adjudicators, whether formal or through engagement with fellow practitioners. The Construction Adjudication Association of South Africa (CAASA) holds regular sessions to help adjudicators keep pace with developments.
“Adjudication is a mature process, but there is always room for improvement,” says Massey. “A few simple checks at the start will help protect the parties, the adjudicator and confidence in the system.”
