NEC 3: ‘Enforcement of adjudicators’ decision irrespective whether they are wrong in law or fact.

What happens if you, as a contractor were successful in an NEC adjudication, but the employer party fails to comply with the decision and gives notice of dissatisfaction and wishes to take the dispute to arbitration?

Core Clause 90.2 of the NEC3 provides that, that an adjudicator’s ‘decision is final and binding unless and until revised by the tribunal”.

The adjudication process is an alternative dispute resolution process contractually agreed upon by the parties. Therefore a party wishing to enforce the adjudicator’s ruling is required to institute action out of the civil court.

In Freeman, Wilhem NO versus Eskom, Eskom attempted to defend a summary judgment application on the basis that they disagreed with the adjudicator’s decision and intended referring a dispute to arbitration and therefore they were not obliged to comply with the adjudicator’s decision.

The court rejected this argument and held that “I am of the view that this would not constitute a bona fide defence that is good in law, as the parties expressly agreed, in terms of Core Clause 90.2 of the contract,  that an adjudicator’s ‘decision is final and binding unless and until revised by the tribunal”

The court furthermore held that “An adjudicator’s decision remains binding and enforceable until such time that it is revised in an arbitration process. In this regard in Bouygues (UK) Limited v Dahl-Jensen (UK) Limited [2000] BLR 49 [TCC] at 55, para. 35, which bears out this conclusion. Bouygues, which is a matter of the Queen’s Bench Division, Technology and Construction Court (“TCC”), concerned a dispute arising from a sub-contract, which provided for dispute resolution by adjudication pursuant to the Rules of the CIC Model Adjudication Procedure (2nd edition) which provided that:

“1.      The object of adjudication is to reach a fair, rapid and inexpensive decision upon a dispute arising under the contract and this procedure shall be interpreted accordingly.

 

  1. The Adjudicator’s decision shall be binding until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement.

 

  1. The parties shall implement the Adjudicator’s decision without delay whether or not the dispute is to be referred to legal proceedings or arbitration.

 

These decisions take into account the purpose of adjudication clauses namely that they are to provide for a speedy mechanism for settling disputes in construction contracts on a provisional and interim basis that requires enforcement pending final determination of disputes either by litigation arbitration or agreement.

This is so irrespective whether those decisions are wrong in point of law and fact. This is premised on the basis that if the decision is incorrect the mistake may be recouped and the subsequent arbitration or litigation.

Kindly take note that this article is for interest and shall not be construed as legal advice. Should you require assistance in any matter of this nature kindly contact Kevin Allardyce on kevin@allardyce.co.za