Qualelect case ‘another cautionary tale’ regarding adjudication enforceability

There are, however, exceptions to this rule if an adjudicator can be shown to have exceeded their jurisdiction, or breached the broader rules of natural justice, when handing down an award. This fact was re-affirmed in the recent case of Framatome v Eskom Holdings, but the precedent remains target practice for challenging the status quo.

This was the case in yet another matter which was brought before Judge Windell in the Gauteng Local Division of the High Court, Johannesburg, in Qualelect Investment Holdings v Belo Kies.

The facts of the case

Qualelect and Belo Kies had entered into a construction contract to supply and install electrical works at a shopping mall in Mpumalanga. In 2018, a dispute arose between them regarding Belo Kies’ imposition of penalties for Qualelect’s alleged late completion of the work, and its demand for Qualelect to also carry out certain remedial works. The dispute was referred to adjudication, as this was the first tier of dispute resolution provided for in the parties’ agreement. The appointed adjudicator ultimately gave an award in favour of Qualelect, who sought to enforce the award in the High Court.

Belo Kies’ primary argument centred on the adjudicator’s jurisdiction, as this is a basic prerequisite for an adjudicator’s award to be effective and enforceable. In support of its arguments Belo Kies alleged, amongst other things, that the adjudicator:

• did not take all the submissions into account because the adjudicator did not reference certain amendments in the replication;
• did not determine all the issues;
• determined irrelevant issues;
• did not give reasons for his determination; and
• in doing so, exceeded his jurisdiction.

A practical approach to enforcement

Handing down her judgment, Judge Windell rejected Belo Kies’ arguments and in doing so made several practical observations regarding adjudications and the role of adjudicators.

Firstly, on a practical level, she noted that adjudicators are required to consider all submissions in a very short period of time. Adjudicators are human and have “a right to be wrong”, but an aggrieved party is not left without remedy to “correct” incorrect awards. There is still the opportunity to refer issues to arbitration and opposing enforcement is not a back door to avoid the consequences of an incorrect award.

Secondly, she said that the test of whether there is a “respectable” or “clear” case of jurisdiction having been exceeded remains the benchmark to assess if jurisdiction has, in fact, been exceeded. It is not enough to imply that jurisdiction had been exceeded. It must be more brazen than that.

Finally, the judge emphasised that it is not the court’s duty to interrogate the merits or correctness of an adjudicator’s award – either in law or in fact – when enforcement is sought. If an aggrieved party requires clarification of an award, it is again not left without remedy as it can request that directly from the adjudicator, usually within a prescribed period.

Parties raising arguments in opposition to enforcement of adjudicator’s awards must therefore be sure that they have not set themselves up to fail by not appreciating the effect of awards before entering into that dispute resolution process.

Impossibility of performance: a new spin on an old defence?

Belo Kies also went further. It argued that Qualelect, in seeking enforcement of the adjudicator’s award, was delaying the inevitable arbitration for as long as it could. It claimed that requiring Belo Kies to perform in terms of the adjudicator’s award would also make it impossible for it to proceed with the arbitration, resulting in the enforcement application being launched for an improper purpose.

But this argument ignores the terms of the parties’ agreement, which is based on standard form wording. Enforcement is a contractual right which Belo Kies itself would have enjoyed were it in the position of seeking enforcement. It could not seek to avoid the consequences of the contractual bargain because the shoe was on the other foot. 

So, the precedent supporting the sanctity and enforceability of adjudicator’s awards remains intact. But this does not appear to be a deterrent to respondents nonetheless raising the same old defences in the hopes that a new spin might yield a different result.

Co-written by Eugenie Werth of Pinsent Masons.