Framatome v Eskom Holdings SOC Limited

Eskom concluded a NEC3 Engineering and Construction Contract with Areva NP (later ceded to Framatome) for the replacement of steam generators at the Koeberg Nuclear Power Station. The contract provided for compensation events and a dispute resolution mechanism through adjudication (Option W1), with adjudicator decisions binding until revised by arbitration. A compensation event arose concerning revised key dates. Disputes were referred to adjudication, resulting in Decision 7 (February 2019) confirming the existence of a compensation event and directing assessment, and Decision 11 (July 2019) finding that Eskom, through its Project Manager, failed to timeously assess the compensation event. Under clause 64.4 of the contract, Framatome’s quotation was deemed accepted. Eskom refused to comply fully with Decision 11, arguing that the adjudicator lacked jurisdiction and that Decision 11 was invalid. Framatome sought enforcement in the High Court, which declined enforcement of Decision 11. Framatome appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The High Court’s order was set aside and replaced with an order declaring Eskom in breach of the contract, directing Eskom to recognise and implement the adjudicator’s decision of 23 July 2019, confirming revised key dates and completion dates, and ordering Eskom to pay substantial additional amounts and interest to Framatome in accordance with the adjudicator’s award.

The case reaffirms the strong South African law principle that adjudicators’ decisions in construction contracts are binding and enforceable on an interim basis until revised by arbitration. It underscores the policy of supporting adjudication as a speedy, cash-flow–protective mechanism and limits judicial interference in enforcement proceedings. The judgment strengthens certainty in NEC3 adjudication and discourages parties from resisting compliance by raising jurisdictional or merits-based challenges better suited for arbitration.