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Construction Adjudication in South Africa

South Africa does not yet have a statutory framework regulating adjudication as a dispute resolution mechanism. Adjudication is, however, widely adopted in the South African construction industry on major infrastructure and energy projects, through the dispute resolution clauses contained in most standard form construction contracts i.e. FIDIC, NEC and JBCC. There is no limit as to what types of disputes can be referred to adjudication, with most contracts requiring all disputes that arise under the contract to be referred to adjudication as the first step in a multi tired dispute resolution process.

The South African courts have recognised the importance of adjudication in resolving disputes on construction projects, describing it as “a measure for the summary and interim resolution of disputes, subject to their final resolution by arbitration where appropriate”. There is consistent judicial precedent, by way of just one such example being the case of Framatome v Eskom Holdings SOC Ltd (357/2021) [2021] ZASCA 132 (1 October 2021) confirming the binding and enforceable nature of an adjudicator’s decision until such time as it is replaced by an arbitral award. Accordingly, the South African courts will only interfere in an adjudicator’s award in limited circumstances, namely a material procedural irregularity or a lack of jurisdiction on the part of the adjudicator.

 

Benefits of adjudication

Adjudication has many benefits and perhaps the foremost of these has to be the efficiency of the process as it’s designed to ensure the smooth running of any contract under which a dispute arises and to enable this dispute to be quickly and efficiently resolved. Construction disputes are generally complex and expensive to litigate, while adjudication tends to cut through that complexity offering fast and practical solutions, with the process typically taking place over a truncated period from the selection of the adjudicator to the final decision, saving time and money.

Other key advantages of adjudication include:

  • Adjudication produces a final decision that the parties are encouraged to respect – and the majority of adjudication decisions do tend to be accepted by the parties as the final result
  • Parties can select the adjudicator they wish to use or at least the characteristics of the adjudicator
  • The adjudicator can act as an investigator
  • Due payments can be enforced without waiting for an arbitration award and because of the quick turnaround times in the adjudication process this can result in a business receiving a significant and speedy cash injection
  • The adjudicator and disputing parties can all agree – and adhere – to a fast, flexible and streamlined process

 

When is it best to use adjudication?

The main objective of adjudication is to protect cash-flow during construction projects by resolving disputes without resorting to lengthy and expensive proceedings.

It is therefore best to use adjudication for resolving claims relating to:

  • interim payments
  • delay and disruption of the works
  • extensions of time for completion of the works
  • defects in the works; and
  • the final account.

In addition, adjudication may be considered for disputes relating to breach of contract, termination of a contract and professional negligence.

 

Adine Abro has received her Diploma in International Construction Adjudication from the Royal Institution of Chartered Surveyors (RICS).  She has also been appointed by the Arbitration Foundation of South Africa (AFSA) to their commercial panel of adjudicators.

Adine is available to accept appointments as an adjudicator for all your local and international construction disputes.

At Adine Abro Attorneys, expertise is key when it comes to Construction Adjudication.