Ethekwini Municipality v Cooperativa Muratori & Cementisti - CMC di Ravenna Societa Cooperativa

Ethekwini Municipality concluded a construction contract in 2015 with the respondent contractor for the Cornubia interchange project, using the General Conditions of Contract for Construction Works (2010). The contract was cancelled by the contractor in December 2018, which cancellation was not disputed. Three disputes were referred to adjudication in terms of the contract, resulting in decisions in August 2019 that Ethekwini pay the contractor approximately R10.1 million plus interest. Ethekwini did not comply. The contractor applied to the KwaZulu-Natal High Court to have the adjudicator’s decisions made orders of court and enforced. The High Court granted the relief. Ethekwini appealed to the Supreme Court of Appeal, arguing that enforcement would be contrary to public policy and that the court had a discretion to refuse enforcement because the contractor was financially distressed and subject to insolvency proceedings in Italy, creating a risk that Ethekwini might not recover the money if the adjudication decisions were later overturned.

The appeal was dismissed with costs, and the High Court’s order enforcing the adjudicator’s decisions and directing payment by Ethekwini Municipality was upheld.

The case confirms the strong enforceability of adjudication decisions in South African construction contracts and reinforces pacta sunt servanda. It clarifies that courts generally have no discretion to refuse enforcement of a binding adjudicator’s decision ordering payment of money merely because of insolvency risk or alleged unfairness. The judgment also draws an important distinction between discretionary specific performance ad factum praestandum and judgments enforcing payment of contractual debts.