The Sanctity of the Arbitration Process in Terms of an NEC3 Agreement

The sanctity of the arbitration process in terms of an NEC3 agreement. The courts respect the provisions of arbitration agreements.

NEC contracts are a family of standardised contracts that are published commercially in the United Kingdom (the term “NEC” is an acronym for New Engineering Contract). These standard contracts provide various options that can be included in project management contracts, including dispute options. For example, W1 is a dispute resolution procedure including the appointment of an adjudicator and an arbitration process in the event of a party being dissatisfied with the decision of the adjudicator. Option W1 comprises part of the Part C1-agreement and contract data form.

It sometimes happens that a dispute arises concerning the dispute resolution procedure itself. In those circumstances, the issue then becomes how these disputes should be resolved. In Transnet SOC Ltd v Group 5 Construction (Pty) Ltd and Others (7848/2015) [2016] ZAKZDHC 3 (9 February 2016), Transnet approached the High Court effectively requiring that the dispute in question be determined by the court.

The respondent argued on the authority of Zhongi Development Construction Engineering Co Ltd v Kamoto Copper C SARL 2015 (1) SA 345 (SCA) that the Applicant was not entitled to bypass the arbitration process to which it had agreed to in the contract. The court held that where the parties have expressly agreed to an arbitration process, courts will generally not be entitled to determine issues that fall within the province of an arbitrator in terms of that process unless an order has been granted in terms of section 3(2) (b) of The Arbitration Act number 42 of 1965. This section refers to the powers that the court has, on good cause shown, to order that any particular dispute referred to arbitration shall not be referred to arbitration.

In the Transnet matter, the court upheld the principle established in Zhongi.

  • By: Zinhle Mavuso (Candidate Attorney)


NB: This article is for information purposes only and does not constitute legal advice. You are advised to consult with us before using/relying on this information.

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