Can a party be forced into adjudication if the contract says the parties must mediate first?

Most construction contracts provide for some form of multi-tiered dispute resolution. This is typically mediation or negotiation as a first step, followed by adjudication, arbitration or litigation if the initial step fails.

In practice, parties in a hurry to enforce a payment claim sometimes bypass the first tier altogether and proceed directly to adjudication, on the assumption that the adjudicator will simply determine his own jurisdiction and press on.

But what happens when the other party objects, insists on mediation, and refuses to participate in an adjudication that was never properly triggered?

The Full Court of the Western Cape Division recently considered this question on appeal and delivered a judgment that reinforces the binding nature of tiered dispute resolution clauses and sets clear limits on an adjudicator's power to assume jurisdiction where a contractual precondition has not been met.

Superway Construction (Pty) Ltd v Cape Metal Windows Servicing CC and Another, Appeal Case No. A286/2025 (Full Court, Western Cape Division)

Superway Construction was the main contractor for the refurbishment of 2 Military Hospital in Wynberg, Cape Town. It appointed Cape Metal Windows Servicing CC as a subcontractor to supply and install aluminium windows, doors and shopfronts. Their subcontract provided expressly that "dispute resolution is to be by means of mediation" as the first step.

A dispute arose about alleged outstanding payments. The Association of Arbitrators appointed an adjudicator, Mark Ilbury, to resolve it, notwithstanding that the primary subcontract made no provision for such an appointment. Superway did not accept the adjudicator's appointment.

The adjudicator initially indicated that unless Superway accepted his terms, the matter could not proceed. He then reversed his position and directed the adjudication to proceed regardless, without first hearing from Superway.

Superway repeatedly objected in writing, stating that the subcontract required mediation first and that the referral to adjudication was incompetent. It offered no fewer than three alternative dates for the contractually agreed mediation to take place.

The adjudicator decided that mediation was not "a prerequisite to proceeding to adjudication" and continued the process without Superway's participation. He ultimately delivered a determination that, in the Court's words, amounted to "nothing more than a rubberstamping" of the subcontractor's claims.

Cape Metal Windows applied to enforce the determination. The court a quo found in its favour and ordered Superway to comply. Superway appealed to the Full Court.

Jurisdiction and the contractual gateway

The Full Court rejected Cape Metal Windows' position. It held that the source of an adjudicator's jurisdiction is the underlying written contract between the parties. Jurisdiction cannot logically be established or expanded by what the adjudicator himself later decides about it - "this would be putting the cart before the horse."

To determine whether he had jurisdiction at all, the adjudicator first had to consider what the parties had actually agreed as to how a decision-maker would acquire jurisdiction in the first place.

On the facts, it was common cause that the subcontract required mediation as the first step, that Superway had called for mediation, and that no mediation had taken place. The Court held that mediation was "an indispensable jurisdictional gateway", a condition precedent, not merely a procedural nicety, the absence of which went to the adjudicator's jurisdiction, not merely to whether he decided the dispute correctly.

The Court dismissed several further arguments. It rejected the contention that a separate standard-form document (argued to have been incorporated by reference) somehow made mediation merely optional. It held that the primary subcontract, the hand-signed instrument containing manuscript insertions reflecting genuine negotiation, took precedence.

It rejected the argument that Superway's earlier termination of the subcontract extinguished the mediation obligation, noting that a dispute resolution clause exists precisely to resolve disputes arising out of or in relation to the contract, including disputes about its termination.

And it rejected any suggestion of waiver or acquiescence and found that Superway had consistently, repeatedly and in writing objected to the adjudication, refused to accept the adjudicator's appointment, and actively sought mediation on three proposed dates. This was the opposite of waiver.

Constitutional and comparative context

The Court also engaged with the constitutional dimension. It acknowledged that compulsory mediation imposed unilaterally on unwilling litigants might raise real concerns under sections 9 and 34 of the Constitution, but found that was not this case at all.

Here, the parties had themselves voluntarily agreed that mediation would come first. Enforcing that bargain vindicated, rather than offended, the parties' rights. For comparative interest, the Court referred to the English Court of Appeal's decision in Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002, which held that courts may encourage but not compel unwilling parties into non-binding ADR, but distinguished that scenario from a voluntary contractual agreement.

The appeal was upheld, the enforcement order was set aside, and Cape Metal Windows was ordered to pay costs.

Comment

This judgment is an important reminder that a tiered or staged dispute resolution clause (here, mediation as an express first step before any adjudication) is not a mere formality or procedural preference. It can be a genuine jurisdictional precondition, the absence of which can void a subsequent adjudicator's determination entirely, however carefully reasoned that determination might otherwise be.

For adjudicators and dispute resolution bodies making appointments, the lesson is to check, at the very outset, precisely what dispute resolution steps the parties agreed to and in what order, rather than proceeding on the assumption that a request for adjudication can simply be actioned.

Here, the Association of Arbitrators purportedly made an appointment under a subcontract that did not even provide for it. The result was a determination that was a nullity from the start.

It is also important for a party that genuinely wishes to preserve its contractual right to mediate to assert that right clearly, promptly and in writing. Superway did that here, repeatedly, including by proposing actual dates, and it was precisely this consistent, contemporaneous objection that distinguished the case from any suggestion of waiver or acquiescence.

If a party bypasses a mandatory first-tier step in the hope that speed and momentum will carry the day takes a real and expensive risk that the entire process will later be set aside as jurisdictionally incompetent.