Dohne Construction (Pvt) Ltd v Unki Mines (Pvt) Ltd

### Preamble
1
HH 43-21
HC 2440/20
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DOHNE CONSTRUCTION (PVT) LTD

versus

UNKI MINES (PVT) LTD

HIGH COURT OF ZIMBABWE

CHAREWA J

HARARE, 12 November 2020 & 17 February 2021

Opposed Application – Compelling order

Mr T Mpofu with Mr R Chawatama, for the applicant

Mr D Tivadar, for the respondent

CHAREWA J: This is an application to compel the respondent to comply with the decision of an adjudicator in terms of Clause W1.4 of the engineering and construction contract between the parties.

Background

On 6 and 7 March 2013, the parties entered into a construction agreement whereby the applicant was required to perform all tasks in connection with the construction of a total of 158 housing units for the respondent. The contract provides, in clause W1.3, for a two stage dispute resolution process: that any disputes would be referred to an adjudicator whose decision, in accordance with clause W1.3 (10), is final and binding as a contractual obligation unless and until revised by a tribunal.

Disputes did arise between the parties, as they were wont to, given the nature and scope of the contract. The first dispute was referred to adjudication and a determination made. Respondent did not give a notice of dissatisfaction with the adjudicator’s decision, which is thus final and binding. Nothing need be said further about it.

The second dispute, which arose out of the respondent giving a termination certificate on the contract, and which has culminated in these proceedings, was also referred to adjudication. The adjudicator ruled as a matter of fact and law that such termination was improper as it arose out of the respondent’s own wrongdoing. In any case, the termination certificate was not issued promptly and in accordance with the contract. It is in respect of this adjudicator’s decision that applicant seeks a compelling order despite that respondent has issued a notice of dissatisfaction with it and has thus sought its referral to the arbitration tribunal.

The issue

The matter thus turns on the interpretation of clause W1.3 (10) of the construction agreement: whether, the adjudicator’s decision is enforceable as a contractual obligation despite the notice of dissatisfaction with it and consequent referral to the tribunal. And, if so, whether the matter is still live, having escaped the vicissitudes of prescription.

Parties’ submissions

The applicant presents simple and clear arguments:

The decision of the adjudicator is binding on the parties unless and until revised by the tribunal and is enforceable as a matter of contractual obligation between the parties and not as an arbitral award,

The respondent is obliged to give effect to the adjudicator’s decision as a matter of contractual obligation;

Consequently, applicant is entitled to the relief sought.

On its part, respondent raises every conceivable defence imaginable in the circumstances, the most cogent of which include that:

there is no legal basis for the relief sought as applicant is attempting to enforce the adjudicator’s determination as if it is an arbitral award;

the matter is already before the courts and the current process is thus an abuse of process. Therefore the matter is res judicata or at any rate there is issue estoppel;

the applicant’s claim has prescribed as three years have expired since the adjudicator’s decision;

the matter is not properly before the court as a notice of dissatisfaction with the adjudicator’s decision has been given and thus the matter is pending arbitration. Besides there are disputes of fact which can only be resolved at arbitration or by way of action;

Further, the application is improper as enforcement of the adjudicator’s decision deprives respondent the opportunity to counterclaim at arbitration; and

Finally, that the draft order is incompetent as it cannot be given effect to, as the construction contract is complete.

Analysis

This is a matter squarely predicated on contract and consequent contractual obligations. The parties’ relationship, rights and duties are governed within the four corners of the engineering and construction contract between the parties. Disputes arising out of the performance of the contract are thus determined by the provisions of that contract. These provisions provide an elaborate adjudication process for dispute resolution and make that process part of the contractual terms, quite unlike the dispute resolution processes of the Arbitration Act [Chapter 7:15] or the Labour Act [Chapter 28:01]. It is a process sui generis which purpose is dictated by business convenience and the need to speedily and effectively resolve commercial disputes. As remarked by Zhou J, this is not a situation unique to Zimbabwe, but part of a growing jurisprudence obtaining in such countries as South Africa and the United Kingdom, which purpose is to promote modern commerce. The courts have thus embraced a robust approach to enforcement of adjudicators’ decisions in accordance with the terms of the contracts between the parties.

The interpretation of Clause W1.3 (10) thus stands to resolve the substantive matter.

Mr Tivadar, for the respondent makes the concession that the adjudicator’s decision is enforceable as a contractual obligation. This thus puts paid to the respondent’s first line of defence that there is no legal basis for the relief sought as applicant is attempting to enforce the adjudicator’s determination as if it is an arbitral award.

By the same token, once the concession is made that the adjudicator’s decision is final and binding until set aside by the tribunal, the argument that the matter is not properly before the court as a notice of dissatisfaction with the adjudicator’s decision has been given and the matter is thus pending arbitration, cannot hold. A notice of dissatisfaction or referral to arbitration does not, within the context of the contractual terms, serve to suspend or stay the adjudicator’s decision.  Therefore the application is properly before the court, seeking as it does specific performance of a contractual obligation.

In the same vein, the argument that there are disputes of fact which can only be resolved at arbitration or by way of action, which make this application improper are also irrelevant. The purpose of Clause W1.3 (10) is to ensure swift and effective dispute resolution. The adjudicator’s decision is such resolution. Any dissatisfaction with that decision may be resolved by the tribunal at a later stage of proceedings. In the meantime, the tenor of the contract is that its obligations, including the adjudicator’s decision, must be performed as is. In any case, there can be no dispute of fact arising out of enforcement of the adjudicator’s award.

The same principle disposes of the argument that the application is improper as enforcement of the adjudicator’s decision deprives respondent the opportunity to counterclaim at arbitration. In any event, it is not correct that the opportunity to counterclaim at arbitration is taken away as any such successful counterclaim may in fact revise or set aside the adjudicator’s decision as envisioned in the contract.

Nor should the court be unnecessarily detained by the submission on issue estoppel or res judicata. The application grounding this submission was withdrawn. It does not exist. Besides the judgment therein dealt with the first adjudicator’s award, and not the award grounding this application.

Now whether it is competent for the court to order specific performance on a contract where there are conflicting averments as to the state of completion or non-completion of the contract, is, I believe, another red herring raised by the respondent. This application is not concerned with the factual status of the completion or non-completion of the contract. It is concerned, rather, with compliance with an adjudicator’s decision. The question this court is concerned with is: is there in existence an extant decision by an adjudicator, and if so, has that decision been complied with. If the answer is yes, then the court is being requested to order that that decision be complied with. The factual basis as to the status of completion of the contract was a matter before the adjudicator and will be a matter for the arbitration process. Besides, if the contract is now complete, respondent will not suffer any prejudice by the grant of this order.

Nor shall I clothe the respondents’ submission that applicant is seeking an interdict with any gravitas. The applicant’s cause of action and relief sought are so palpably clear that there is no room for such an assumption: applicant seeks an order compelling respondent to perform in accordance with its contractual obligation as decided by the adjudicator.

Finally, the respondent submits that applicant’s right to a compelling order has prescribed. The relevant adjudication decision was rendered in 2015. Therefore, in terms of s15 of the Prescription Act [Chapter 8:11], the applicant’s claim has prescribed, it having been instituted in 2020.

It is trite that prescription only begins to run when a cause of action is complete. However, once again, the respondent wishes to lead the court on a wild goose chase. What applicant is suing for is specific performance on an adjudicator’s decision. The entire decision of the adjudicator has been referred to arbitration by the respondent. Such arbitration process is not yet complete.

S17(1)(d) provides that

“If the debt is the subject matter of a dispute submitted to arbitration, and the period of prescription would, but for this subsection, be completed before or on, or within one year after,

the date on which the relevant impediment referred to in paragraph (a), (b), (c), (d) or (e) has ceased to exist, the period of prescription shall not be completed before the expiration of the period of one year which follows that date.”

Clearly, since the adjudicator’s decision is contested and has been referred to arbitration, which arbitration process is not yet complete, any claim arising therefrom cannot have prescribed.

In the circumstances, I can find no justifiable reason to decline this application.

Disposition

In the premises the application is granted in terms of the draft order with costs.

Mawere Sibanda, applicant’s legal practitioners

Gill, Godlonton & Gerrans, respondent’s legal practitioners