By Richard Hoal
The principle of “pay now, argue later” is the cornerstone of construction adjudication. An adjudicator’s decision is binding unless and until revised by a tribunal, and the losing party must comply with it promptly, regardless of whether it intends to challenge the decision in later proceedings. Without prompt compliance, the cash-flow preservation that adjudication exists to achieve is defeated, and the process becomes no more than an expensive advisory opinion.
In practice, however, employers often seek to resist paying adjudication awards. One increasingly common tactic is to argue that the contractor is financially precarious – a shell company, a foreign entity, a firm with no assets and that if the employer pays the award but later succeeds in arbitration, it will never recover the money. The argument has a superficial commercial logic: why pay a substantial sum to a party that might not be able to repay it? But the legal question is whether that risk however real, entitles an employer to refuse to comply with a binding contractual obligation.
The Gauteng Division of the High Court recently addressed this question, in a judgment that makes the position clear and should be a warning to employers who may be tempted to try that strategy.
China Coal No 5 Construction SA (Pty) Ltd v Bakubung Minerals (Pty) Ltd and Others, Case No. 2024-138173 (Gauteng Division, Johannesburg, Mali J, 1 September 2026)
Background
China Coal No 5 Construction SA (Pty) Ltd (“the Contractor”) and Bakubung Minerals (Pty) Ltd (“the Employer”) concluded a construction contract on 28 November 2017 in the NEC3 form, incorporating Z4 and W1 core clauses. The contract was for the mining development, engineering and construction of capital waste infrastructure, ore reserve development and related equipping at the Bakubung Platinum Mine, situated on two farms south of the Pilanesberg Complex. The Contractor was a private company, foreign-owned, established specifically for this project.
Various disputes arose during the performance of the contract. Some were resolved through addenda, but fresh disputes emerged in the latter stages of the works. In early 2024, the Contractor referred the outstanding disputes to adjudicator Mr Francois Spies. The adjudicator completed his decision on 18 September 2024, but the publication of the award was delayed until 24 October 2024 because the Employer had failed to pay its share of the adjudicator’s fees. The Contractor was compelled to pay the Employer’s share in order to obtain the decision, as the adjudicator exercised a lien over it.
The award was substantial: over R200 million in total. The Employer refused to comply with the award. The Contractor brought an application to enforce it.
•Richard Hoal
The Employer’s resistance
Bakubung resisted enforcement on multiple grounds. Its primary argument was that the Contractor was a foreign shell company with no assets, no ongoing operations in South Africa, no employees (all having been retrenched), and no South African bank account. Its turnover per CIPC records was less than R1 million as at 2025. The Employer contended that if it paid R201 million and later succeeded in having the adjudicator’s decision revised in arbitration, it would have no realistic prospect of recovering the money. It proposed instead that the award be paid into an attorney’s trust account pending the outcome of arbitration or review proceedings.
Beyond the financial-risk argument, the Employer raised several further objections. It contended that the relief claimed in respect of low-performance damages had not been properly made out in the Contractor’s notice of motion – arguing that the adjudicator had made no specific finding on the quantum of “remaining low-performance damages” and had therefore exceeded his mandate. It also contended that the Contractor had failed to join the adjudicator as a party to the proceedings, which it argued was fatal to the application. Finally, the Employer launched a counterapplication seeking a stay of enforcement pending a review application it said it intended to bring.
The Court’s reasoning
Mali J dismissed the Employer’s arguments. The Court commenced from the well-established principle that courts should be reluctant to interfere with an adjudicator’s determinations. Drawing on Hudson’s Building and Engineering Contracts (13th edition), the Court affirmed that adjudication is a form of “rough justice” – a rapid, interim, cash-flow-preserving mechanism in which errors, even serious ones, do not of themselves entitle the losing party to refuse compliance.
The Court traced the development of the “pay now, argue later” principle through the leading authorities. In Framatome v Eskom Holdings SOC Ltd, the Supreme Court of Appeal confirmed that an adjudicator’s decision under the NEC3 form is binding and enforceable pending arbitration, and that errors of fact or law do not entitle a party to refuse to give effect to it. In effect the parties, by choosing the NEC3 form, intended to exclude judicial interference in the interim.
In Radon Projects v NV Properties, the Supreme Court of Appeal – citing the English decision in Macob Civil Engineering v Morrison Construction – described adjudication as an interim measure designed to keep money flowing, with the dissatisfied party’s remedy being to proceed to arbitration, not to resist the decision. In Ekurhuleni West College v Segal, the Supreme Court of Appeal held that a dissatisfied party should proceed to arbitration rather than bringing piecemeal review proceedings, and that review should be entertained only where it is necessary to prevent grave injustice.
The Court also considered Murray & Roberts v SASOL, which confirmed that a court has no appellate jurisdiction over an adjudicator, and Amanz’Abantu v Coega Development Corporation, which applied Framatome and held that interrogating the merits of an adjudicator’s reasoning is impermissible at the enforcement stage.
On the central question of whether the Employer’s fear of non-recovery justified its refusal to pay, the Court relied on Ethekwini Municipality v CMC di Ravenna, the Supreme Court of Appeal’s authority on point, and confirmed that a fear of non-payment cannot justify non-compliance with a binding adjudication award. The Court quoted with approval the Constitutional Court’s reasoning in Beadica on the sanctity of contracts: the Employer had entered into a contract with the Contractor knowing exactly who the Contractor was – a foreign-owned, single-project entity – and could not now invoke those very characteristics as a basis for refusing to honour a contractual obligation arising from the dispute resolution mechanism it had agreed to. The mere existence of a risk of non-recovery does not relieve the Employer of its obligation to pay.
Mali J also noted that the compensation events portion of the award – R71 million – was entirely unchallenged. The Employer did not dispute that this amount was owing, yet it expected the Contractor to bear the burden of non-payment while the Employer pursued review proceedings it had not even commenced. This, the Court found, was untenable.
The counterapplication for a stay was refused. The Court observed that the Employer had been threatening to bring review proceedings since 2024 but had not in fact launched any such application. Granting a stay in those circumstances would prejudge the Contractor’s enforcement rights. Nor would the Court order payment into an attorney’s trust account: to do so would fundamentally undermine the purpose of interim payment through adjudication, which is to put the money in the hands of the party entitled to it under the binding decision, not to park it indefinitely pending further proceedings.
The Court’s order was comprehensive. The Employer was directed to forthwith give effect to the adjudicator’s decision and to pay over R71 million in compensation events and R129 million in repayment of low-performance damages as well as smaller amounts and interest at the prescribed rate from 24 October 2024. The orders were to endure until revised by settlement or arbitral award. Costs were awarded on the attorney-and-client scale – a punitive costs order reflecting the Court’s displeasure at the Employer’s conduct.
Comment
This judgment reinforces the “pay now, argue later” principle in circumstances that many employers will recognise - a contractor whose financial position makes recovery uncertain. Mali J’s reasoning makes clear that the principle applies with full force even where the contractor is a foreign shell company with no assets, no employees and no ongoing operations in the jurisdiction. An employer’s fear of non-recovery, however legitimate as a commercial concern, is simply not a defence to a binding adjudication award.
Employers cannot use a contractor’s financial status to avoid paying a binding award. If the employer entered into the contract knowing the contractor’s identity and corporate structure – as Bakubung did here – it cannot later rely on those very features to resist compliance. The Court’s reliance on the Constitutional Court’s reasoning in Beadica reinforces this - the sanctity of contractual obligations extends to dispute resolution mechanisms.
The punitive costs order on the attorney-and-client scale is itself noteworthy. It shows the Court’s clear displeasure at what it regarded as delay tactics by the Employer. An employer that refuses to pay a binding award, threatens review proceedings for years without actually launching them, and then seeks a stay of enforcement on the basis of a risk it assumed at the outset of the contractual relationship, invites precisely this kind of costs sanction.
The Employer’s failure to launch review proceedings despite threatening to do so since 2024 significantly undermined its position. Courts will look with scepticism at a party that invokes the prospect of review as a shield against enforcement while doing nothing to actually pursue that review. Coupled with the fact that the compensation events of R71 million were unchallenged – meaning the Employer accepted it owed at least that amount but still refused to pay anything at all - the Employer’s position was, as the Court evidently concluded, indefensible.
The outcome is clear - if an employer is dissatisfied with an adjudicator’s award, the only proper course is to comply with the decision and pursue arbitration promptly.
•Richard Hoal is a partner at Cox Yeats
