By Advocate Bryan Hack
Adjudication is a regular feature of construction agreements. The title of this article could also read “choose a wise adjudicator” because a party to a construction agreement will more likely than not be obliged to follow the adjudicators’ decision regardless of how unhappy or aggrieved the party might be, suggests our construction legal expert, Advocate Bryan Hack.
The Gauteng Division of the High Court has recently had cause to consider whether an adjudicator’s decision can be reviewed and found it could not and gave the following reasons at paragraph [44] of the judgment:“I further take notice of the fact that the very nature of the adjudication process carries with it a risk of unfairness, either in the way the adjudication is conducted, or in the result, or both. The need to speedily resolve the dispute and the parties’ entitlement to an answer, increases the risk compared to a hearing, arbitration proceedings, and/or court proceedings. I further take into account that the adjudicator is entitled to take the initiative in ascertaining the facts and the law necessary to determine the dispute. Having regard to the fact that adjudicators are experts in their own field and probably not qualified lawyers increases the risk that they may adopt a procedure that is or might be seen to be unfair. I also accept that our courts are of the opinion that as long as the adjudicator acted generally in accordance with the usual rules of natural justice and without bias and within his terms of reference, his decision is likely to be enforced. “
Why adjudication?
The purpose of adjudication is to resolve an interim dispute in the course of the execution of the building works. The purpose is to allow a speedy and relatively inexpensive procedure to ensure that the work can continue and not be delayed because of the dispute. If recourse is had to arbitration at such an interim stage, the works are likely to come to a halt for many months to allow the formal procedures and the hearing in arbitration to take place.
As the court said in the quoted paragraph, a dispute in the course of the work requires a quick decision which may ultimately be shown not to have been the correct decision, but that risk is outweighed by the advantage of not having the work delayed.
The court expressed this at paragraph [24] as follows :
“The adjudication rules describe adjudication as an accelerated form of dispute resolution in which a neutral third party determines the dispute as an expert and not as an arbitrator, and whose determination is binding unless and until varied or overturned by an arbitration award.”
The advice I would therefore give is that when entering into a contract which provides for adjudication, as much care and consideration should go into the choice of adjudicator as is done with price and scope work.
To often, in my experience, the decision of who to appoint as adjudicator is left to the draftsman of the contract without the parties each being certain that they have adequate knowledge of the person nominated, and that they are satisfied that the person has the necessary independence, experience and ability to make a fair and correct decision. The parties will both be equally bound by that decision and the court is not likely to review any decision taken unless it is satisfied of the existence of very narrow criteria, primarily, that the adjudicator went outside and beyond the terms of reference. Terms of reference being the exact dispute which the parties had referred for a decision. Even if the decision is wrong, either on the facts or the law, a court will not interfere if it is a decision of what the adjudicator was called upon to decide.
“…consideration should go into the choice of adjudicator as is done with price and scope work.”
