Adjudication challenges in construction contracts: Lessons from Muzzy v Davis

Can a contractor challenge an adjudicator’s decision because of procedural fairness or jurisdiction? The recent UK case of Construction Muzzy Ltd v Davis Construction offers valuable insights into how courts approach such challenges and why most attempts fail.

The case at a glance

The subcontractor performed groundworks and drainage works under two separate subcontracts with the contractor. Disputes over unpaid sums led to two adjudications, both of which awarded payment to the subcontractor. The contractor refused to comply, prompting the subcontractor to seek enforcement of both decisions.

The contractor resisted enforcement on three grounds:

• Procedural unfairness, alleging improper reliance on an unsolicited surrejoinder;
• Jurisdictional overlap, arguing the second adjudication duplicated the first; and
• Predetermination, claiming the adjudicator failed to approach the second dispute impartially.

Legal findings

The UK court granted summary judgment in favour of the subcontractor, enforcing both adjudication decisions. It rejected the contractor’s challenges on all three grounds:

• Natural Justice: The court found that the adjudicator’s reliance on an unsolicited surrejoinder did not materially affect the fairness of the process. The adjudicator had already addressed the key issues, and the surrejoinder merely reinforced his conclusions. The court emphasised that procedural fairness must be assessed in context, and minor deviations do not automatically invalidate the process.
• Jurisdiction: The court held that the two adjudications arose under separate subcontracts and were therefore distinct. The contractor’s argument that the disputes were “substantially the same” was dismissed. Each subcontract gave rise to independent rights and obligations, and the adjudicator was not required to resign.
• Bias: The adjudicator’s expectation of a similar outcome in the second adjudication did not amount to predetermination. The court found that the adjudicator reviewed the evidence and made findings based on the subcontractor’s submissions. The contractor’s non-participation left the adjudicator with only one side’s evidence, which was not inherently unfair.

Implications for South African practice

This case introduces a novel approach to adjudication enforcement, particularly in how courts treat procedural objections. In South African law, adjudication is also recognised as a binding interim dispute resolution mechanism. However, courts have declined to enforce adjudication decisions where there were breaches of natural justice or jurisdiction.

• In Group Five v Transnet (Pty) Ltd v Transnet SOC Limited (45879/2018) [2019] ZAGPJHC 328 (28 June 2019), the court refused enforcement as the adjudicator issued their decision late ie lack of jurisdiction (based on the NEC3 W1 clause) and lack of participation by one party ie breach of natural justice.
• In Framatome v Eskom [2020] JOL 48681 (GJ), the court distinguished between enforceable and unenforceable decisions based on jurisdictional overreach. The adjudicator’s second decision was found to be outside his mandate ie the dispute referred to him and thus unenforceable.
• In eThekwini Municipality v Coopepativa Muratori & Cementisti – CMC Di Ravenna Societa Cooperativa [2023] JOL 59485 (SCA), the court upheld enforcement, emphasising the binding nature of adjudication and the principle of pacta sunt servanda. Public policy was not a valid ground to resist enforcement.

These cases show that both UK and South African courts support the enforcement of adjudication decisions and unless there is a clear breach of jurisdiction or natural justice, the courts will not intervene.  While the contractor raised novel variations for breaches of jurisdiction and natural justice, the courts refuted them as insufficient.

The South African judgements show that our courts will, generally, accept a breach of jurisdiction where:

• The adjudicator has missed the deadline for issuing its decision and does so after the contractually agreed date;
• The decision goes beyond the dispute or relief referred to the adjudicator.

A breach of natural justice is evidenced by:

• Bias – there must be demonstrable and clear proof of this;
• A failure to allow all the parties to be heard (although this doesn’t mean that each party must be given the same opportunities – only that it must be fair).

Contact Nikita Lalla, Ricardo Pillay, Danielle Giannico, or Msizi Zungu to mitigate risks and minimise disputes when planning, negotiating, or delivering infrastructure projects.