Court gets it wrong: Adjudicator’s decision issued under an NEC3 rendered enforceable

In the recent decision of Eskom Holdings SOC Limited v Framatome, the High Court was asked to consider whether the adjudicator’s decision, issued under a NEC3 ECC was enforceable. The adjudicator set aside the project manager’s assessment and directed the project manager to make a new assessment of the compensation event.  Typically, in our experience, the adjudicator sets aside the project manager’s assessment and issues their own assessment. In addition – and where the main point of contention arises –  the adjudicator directed that if the project manager did not comply,  the parties should meet in person after a notice of dissatisfaction was issued, and the adjudicator would then decide the issue of quantum.

The court ruled that the adjudicator was within their powers to issue a decision and additional instructions in the manner they did. The court considered the use of the word “any” in clause W1.3(5) conferred wide powers on the adjudicator to request any information and is inimical to a restrictive interpretation. This was consistent with the “wide inquisitorial powers” which, according to the court, allowed the adjudicator to instruct the parties on the question of quantum, after granting a decision on the merits.

In our respectful view, we disagree with the court’s finding and reasoning. The provisions of the NEC3 are clear – after a decision on the dispute is issued, the adjudicator’s mandate is terminated, subject to allowing a two-week period for correction or errors. After that period ends, the adjudicator has no power (under the NEC contract or in law) to decide an issue in the dispute unless all parties agree to an extension.

The adjudicator lacked the powers and jurisdiction to instruct the parties to return the dispute to him if the question of quantum was not settled.

W1.3(5), which deals with the powers of the adjudicator, cannot be read to permit an adjudicator to issue instructions or requests for information after their mandate has terminated (after or as part of the decision issued on the dispute). This would lead to the adjudicator unilaterally extending the period allowed to them to decide a dispute, which is inconsistent with the terms and purpose of the provisions in the NEC3 Contract.

For more insight on navigating the NEC3 and NEC4, book a session with construction law specialists Ricardo Pillay and Nikita Lalla.