Authored by Deniro Pillay.
In August 2026, the High Court, on appeal, ruled that parties to a subcontract agreement were bound to refer a dispute to mediation as a mandatory precondition before the dispute could proceed to adjudication.
The main contactor was contracted for the refurbishment of a hospital. The main contractor appointed the subcontractor to supply and install aluminium windows, doors and shopfronts. Their subcontract agreement provided that, as a first step, any dispute was to be resolved by mediation.
A dispute arose between the parties about alleged outstanding payments in terms of the subcontract agreement and an adjudicator was appointed to adjudicate the dispute. The appointment of adjudicator was not accepted by the main contractor on the basis that the subcontract agreement required mediation first and, therefore, the referral to the adjudicator was incompetent.
The adjudicator advised the parties that he decided that mediation was not a prerequisite to proceeding to adjudication. As a result, the adjudication proceeded without the participation of the main contractor and, subsequently, the adjudicator delivered his determination of the subcontractor’s claim. The main contractor refused to comply with the determination. The subcontractor applied to court to enforce the adjudicator’s determination.
The issues before the court were whether mediation was a mandatory precondition to any second-stage dispute resolution process, that being the adjudication; and, if so, whether the adjudicator could acquire jurisdiction when no mediation had occurred and the main contractor, who called for mediation, did not agree to dispense with it.
The court noted that when the parties signed the subcontract agreement, which contained the condition to mediate, they confirmed their informed consent to mediate as the first step in the dispute resolution process. The main contractor is entitled to the right of equal protection and benefit of the law in that it had the agreed contractual right to mediate.
The court decided that the subcontract agreement recorded that dispute resolution mechanism was to be mediation. Mediation was mandatory not optional. It was common cause that no mediation occurred despite the main contractor expressly requesting mediation. The subcontract agreement made mediation an indispensable jurisdictional gateway that must be followed by the parties to the dispute.
In the circumstances, the court ruled that the adjudicator acted without jurisdiction at all. As mediation was a condition precedent, the adjudicator’s determination was unenforceable.
This judgment is a reminder to contracting parties that they are bound to follow dispute resolution processes which they have voluntarily agreed to. It is important to consider the effect of dispute resolution clauses before signing an agreement.