Mitsubishi Hitachi Power Systems Africa (Pty) Ltd v Murray & Roberts Power & Energy and Another

Mitsubishi Hitachi Power Systems Africa (Pty) Ltd (Mitsubishi) entered into a Main Contract with Eskom Holdings SOC Ltd (Eskom) as employer for construction work on the Medupi and Kusile power stations. Mitsubishi subcontracted portions of the work to Murray & Roberts Ltd (M&R). M&R alleged that Mitsubishi and Eskom concluded a further "Incentive Agreement" (referred to by Mitsubishi as "Initiative Arrangements"). M&R, not being a party to this agreement, sought disclosure of it and all relevant details to assess its entitlement to contractual benefits under clause 11.3 of the subcontracts. This clause provided that Mitsubishi "shall, upon receiving any contractual benefits from the Employer under the Contract, pass on to the Subcontractor such proportion thereof as may relate to the Subcontract Works." Mitsubishi refused disclosure. M&R referred the dispute to the Dispute Adjudication Board (DAB), which found M&R had a contractual right to disclosure but declined to order it, reasoning that Mitsubishi was bound to keep the Incentive Agreement confidential to Eskom and the adjudicator lacked power to compel breach of that obligation. M&R then applied to the High Court, which granted the disclosure order. Mitsubishi appealed.

• Whether M&R had a contractual right to disclosure of the Incentive/Initiative Arrangements concluded between Mitsubishi and Eskom
• Whether clause 11.3 of the subcontracts entitled M&R to a share of contractual benefits received by Mitsubishi
• Whether the duty of good faith and cooperation required Mitsubishi to disclose information to enable M&R to assess its entitlements
• Whether Mitsubishi's confidentiality obligations to Eskom under the Main Contract precluded disclosure to M&R
• Whether M&R qualified as a 'third party' for purposes of confidentiality provisions in the Main Contract
• The appropriate scope and formulation of the disclosure remedy

Appeal dismissed with costs, including costs of two counsel. The High Court's disclosure order was substituted with a narrower order directing Mitsubishi to disclose: (a) portions of the Incentive Arrangements relevant to M&R's entitlement to contractual benefits under clause 11.3 of the subcontracts; and (b) information relevant to contractual benefits received relating to the subcontract works to which M&R had entitlement under clause 11.3. Mitsubishi (first respondent in the High Court, appellant in SCA) ordered to pay costs of the appeal.

Where a subcontract entitles a subcontractor to a proportionate share of contractual benefits received by the contractor from the employer, the contractor has an implied obligation to disclose information necessary to enable the subcontractor to assess and enforce that entitlement. This disclosure obligation arises as an incident of the express contractual right and the duty of good faith that requires parties to act on the basis of informed understanding of their rights and obligations. A refusal to disclose would create an intolerable asymmetry of information inconsistent with commercial efficacy and the duty of good faith and cooperation. For purposes of confidentiality obligations in a main contract between employer and contractor, a subcontractor is not a "third party" where the main contract contemplates and recognizes the role of subcontractors in performing the works. The disclosure remedy must be tailored to the scope of the substantive contractual right - limited to information relevant to assessing the specific entitlement claimed.

The Court observed that the affidavits were particularly sparse in their treatment of the contractual arrangements, with only fragmentary excerpts attached, making it difficult to obtain a full understanding of the contractual landscape. The Court noted that even if Mitsubishi had owed conflicting duties to Eskom (which it did not), there would be little to weigh in favor of non-disclosure given that Eskom, cited as a party, chose not to assert any right to prevent disclosure and abided the outcome. The Court warned against using redaction as an opportunity to re-assert arguments (the privity and extinction arguments) that had already been rejected. The Court emphasized that since M&R's claim is by definition a share of a greater whole, information should place M&R in a position to ascertain the basis upon which contractual benefits fall within or outside the category of subcontract works.

This case is significant for establishing principles governing disclosure obligations in complex multi-party construction contracts in South African law. It affirms that the duty of good faith in contracts may give rise to implied disclosure obligations where one party requires information held by another to ascertain and enforce contractual rights. The judgment clarifies that commercial efficacy and good faith require parties to act on the basis of informed understanding of their rights and obligations, particularly in subcontracting relationships where information asymmetries exist. It provides guidance on interpreting confidentiality clauses in tiered contractual structures (employer-contractor-subcontractor), holding that subcontractors are not "third parties" for confidentiality purposes where the main contract contemplates their involvement. The case illustrates how courts will balance competing contractual duties and tailor equitable remedies to the scope of substantive rights rather than granting blanket disclosure orders. It is particularly relevant to construction law and the interpretation of "pass-through" or "back-to-back" clauses in subcontracts.