Pay first, arbitrate later: The reality of adjudication in SA construction conflicts

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Why adjudication exists and what courts do with it

Adjudication was designed to keep construction projects moving. Disputes over payment or performance cannot be allowed to stall a project for the months or years that arbitration or litigation takes.

The adjudication mechanism delivers a binding interim decision quickly, with final resolution deferred to arbitration if either party remains dissatisfied.

South African courts have firmly aligned themselves with this purpose. In Esor Africa (Pty) Ltd/Franki Africa (Pty) Ltd Joint Venture v Bombela Civils Joint Venture (Pty) Ltd, the court confirmed that adjudicator decisions are binding and enforceable unless and until revised by arbitration.

Applying a purposive interpretation of the International Federation of Consulting Engineers (Fidic) dispute resolution provisions, the court held that Clause 20 DAB decisions carry interim enforceability — not finality — and that contractors must continue working while employers must pay promptly.

This position has been consistently reinforced. In Tubular Holdings (Pty) Ltd v DBT Technologies (Pty) Ltd, the court reaffirmed that filing a notice of dissatisfaction preserves the right to arbitrate but does not suspend the obligation to comply with the adjudicator's decision in the interim.

The obligation to honour decisions "without delay" was underscored with reference to Basil Read (Pty) Ltd v Regent Devco (Pty) Ltd, and the interim-binding principle was further confirmed in Stocks & Stocks (Cape) (Pty) Ltd v Gordon.

Importantly, Sasol Chemical Industries Ltd v Odell and Another confirmed that an adjudicator's decision remains enforceable even where it contains errors of law. Mistakes of law do not affect the adjudicator's jurisdiction, and courts will not refuse enforcement on that basis alone.

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The two exceptions: When courts will refuse to enforce

While the default position is enforcement, courts recognise two narrow grounds on which an adjudicator's decision will not be upheld.

1. Exceeding jurisdiction

An adjudicator's authority is defined by the referral notice. If the adjudicator decides something beyond what was referred, or varies contract terms beyond the authority granted, they have exceeded their jurisdiction and the decision is unenforceable.

Framatome v Eskom Holdings SOC Limited illustrates this clearly. The court upheld the adjudicator's first decision, finding it fell within the mandate. It refused to enforce the second decision because the adjudicator had answered a question not referred under the contract — a textbook jurisdictional overreach.

Coppin J confirmed that enforcement should follow unless there is a clear case that the adjudicator decided an issue not referred to them. Where the position is unclear, the interim decision stands and must be complied with.

Group Five Construction (Pty) Ltd v Transnet SOC Ltd provides another important illustration. The contract required the adjudicator to publish his decision within four weeks of receiving final submissions, with any extension requiring mutual consent.

The employer declined to grant an extension, but the adjudicator issued his decision after the deadline regardless. The court held this to be a jurisdictional flaw — by acting after his authority had lapsed, the adjudicator exceeded the mandate granted by the contract, and the decision was unenforceable.

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2. Breach of natural justice

Where an adjudicator proceeds without one party's participation or denies a party a fair opportunity to present its case, enforcement will fail.

In Group Five Construction v Transnet, the court also refused enforcement on this basis, holding that natural justice requires both impartiality and equal opportunity to be heard. Procedural fairness is not a technicality — it is a core requirement.

What this means for how you draft and run adjudications

The case law makes clear that adjudication is only as reliable as the process used to invoke it. Courts will enforce decisions that fall within the adjudicator's mandate and were reached fairly.

They will not save a flawed process.

On drafting:

Referral notices must be precise. The adjudicator's jurisdiction is defined by what you refer. Vague or overbroad referrals create risk — either the adjudicator decides something beyond the referral, or a later court finds the mandate was exceeded.

Timeline provisions matter. If your contract specifies a decision deadline and requires mutual consent for any extension, treat that as a hard boundary. As Group Five demonstrates, an adjudicator who ignores it produces an unenforceable decision.

Ensure binding language is unambiguous. Courts enforce adjudication clauses where the contract clearly designates the decision as binding pending arbitration. Ambiguity in this clause creates unnecessary enforcement litigation.

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On compliance:

A notice of dissatisfaction does not suspend your obligation to comply. Pay first, arbitrate later.

If you believe an adjudicator has exceeded their jurisdiction, take legal advice immediately.
The threshold for establishing a jurisdictional challenge is high — courts require a clear and respectable case. A general disagreement with the outcome will not meet it.

Document procedural objections as they arise. If natural justice concerns exist, raise them during the process, not only when enforcement is sought.

The South African position: A summary

South African law on adjudication enforcement can be stated plainly:

The rule is immediate compliance. Adjudicator decisions bind parties from the moment they are issued and are fully enforceable by our courts, regardless of whether a notice of dissatisfaction has been filed or arbitration is pending. Errors of law in the decision do not change this.

The exceptions are narrow and strictly applied. A decision will only be refused enforcement where the adjudicator clearly exceeded their jurisdiction — by deciding a dispute not referred, acting after their authority lapsed, or varying contract terms beyond their mandate — or where there was a material breach of natural justice.

The consequence of getting it wrong cuts both ways. A party that refuses to comply risks court-ordered enforcement and adverse costs. An adjudicator who oversteps their mandate or fails to follow fair procedure produces a decision the courts will decline to uphold, leaving the referring party back at square one.

Adjudication works when parties use it properly. Draft referral notices carefully, respect procedural timelines, and treat compliance as the default — not the fallback.