Contractual adjudication in South Africa

A number of jurisdictions, including the United Kingdom, have passed primary legislation affording parties to construction contracts a statutory right to have disputes resolved in the first instance by adjudication.

Around a decade ago, the South African Minister of Public Works had proposed an amendment to the Regulations to the Construction Industry Development Board Act No. 38 of 2000, which sought to introduce similar (mandatory) statutory prompt payment and adjudication provisions to construction contracts, and which was intended to apply to both the private and public sector – regardless of whether the contract was concluded orally or reduced to writing. The draft amendment was published for comment, but was never passed. As a consequence, there is presently no mechanism for mandatory statutory adjudication in South Africa. 

Nevertheless, adjudication remains a core dispute resolution mechanism in numerous construction contracts. 

Is contractual adjudication an understood and well-used dispute mechanism?

Contractual adjudication in South Africa, like many other jurisdictions, serves a critical purpose in the construction sector: ensuring project momentum and financial stability through the rapid provisional determination of disputes. The Supreme Court of Appeal captured this intent in Framatome v Eskom Holdings SOC Ltd¹: 

“It is plain that the purpose of adjudication was to introduce a speedy mechanism for settling disputes in construction contracts on a provisional interim basis and requiring the decisions of adjudicators to be enforcedpending the final determination of disputes by arbitration”

The process, embedded in virtually all standard-form construction contracts in use in South Africa, such as JBCC, NEC, and FIDIC, is often described as a “quick and dirty” solution. It embodies the “pay now, argue later” principle, which is firmly supported by judicial precedent, and has evolved into a cornerstone of dispute resolution in the South African construction sector.

What are the typical time frames and structure for an adjudication? 

Contractual adjudication is designed as a rapid, streamlined mechanism to minimize disruption and keep construction projects moving. Its purpose, therefore, is not to resolve disputes exhaustively but to provide an interim decision that maintains cash flow and project momentum. 

Most standard-form construction contracts will stipulate the time frames within which an adjudicator should be appointed and the dispute referred to adjudication. Generally speaking, the contracts will also specify the dates by when submissions should be filed, as well as by when the adjudicator is required to render a decision. These time frames are usually capable of being extended or adjusted by agreement between the parties. 

Depending on the nature and complexity of the dispute, an adjudication is typically capable of being concluded in a matter of months, as opposed to the years it may take for a dispute to work its way through the court system. 

What is the process?

Typically, once a dispute crystallizes, the aggrieved party initiates the process by issuing a notice of adjudication. An adjudicator is then appointed promptly, and the matter proceeds primarily through written submissions: the referring party files a referral setting out the details of its claim and the relief sought, the responding party submits a response setting out the basis of its defence as well as any counterclaim, and, where necessary, further exchanges may follow. 

In certain cases, particularly where expert evidence has been submitted, the adjudicator may convene a hearing for oral evidence or for clarification of discrete technical issues. After reviewing the submissions, the adjudicator delivers a reasoned decision within a relatively short, contractually agreed timeframe.

Although speed is central to adjudication, timelines can extend due to complexity or by mutual agreement. High-value or technically intricate disputes often require more time, and delays may also arise from the parties’ conduct. Striking the right balance is critical: an overly rushed process risks poor decisions, while prolonged proceedings undermine adjudication’s purpose – i.e., keeping projects on track rather than bogged down in conflict.

How can the adjudication be enforced?

Adjudicators’ decisions, although not “final”, are generally binding on an interim basis and must be complied with until they are overturned or varied at arbitration. South African courts have consistently reinforced this obligation, making it clear that compliance with these decisions is not optional. Enforcement applications are typically brought by way of motion proceedings and will succeed unless the adjudication process is found to have been irregular or unfair, or the adjudicator is found to have acted beyond the limits of their jurisdiction.

Importantly, the remedy is not to convert the adjudicator’s decision into a court order, but rather to compel the defaulting party to honour its contractual obligations and give effect to the decision. South African courts have shown little tolerance for attempts to delay compliance. In Tension Overhead Electrification (Pty) Ltd v Ircon International Limited², the court rejected an argument that payment could be deferred because the matter was subject to arbitration, holding:

“Irrespective of the issue of finality of the determination and until finality occurs, the parties have expressly agreed with each other that they ‘… shall promptly give effect …’ to the determination. To ‘give effect’ to a determination sounding in money, means to pay whatever the adjudicator has determined.”

This approach underscores the “pay now, argue later” philosophy at the heart of adjudication. 

Can the outcome or process of an adjudication be challenged? 

An adjudicator’s decision must generally be complied with, save for exceptional circumstances such as gross irregularity or fraud. The grounds for challenge are narrowly defined and typically limited to jurisdictional errors, where the adjudicator acted outside their contractual authority, or procedural breaches where the agreed process was not followed.

Enforcement may also be resisted in cases involving a breach of natural justice, such as bias or denial of procedural fairness. However, mere dissatisfaction with the merits of the decision, or with the adjudicator’s interpretation of the facts, does not constitute a valid basis for challenge. 

Conclusion

Looking ahead, as infrastructure development accelerates and projects grow in complexity in South Africa, adjudication will remain a vital tool for sustaining efficiency and financial stability in the South Africa construction sector, reinforcing its role as a cornerstone of modern project delivery.

¹2022 (2) SA 395 (SCA).

²2020 JDR 0984 (GP).