By Zimri Attorneys
2026-08-26
Dispute resolution clauses are often overlooked clauses in a contract. Most contracting parties are understandably more focused on the success of a contractual relationship than on potential disputes. It is only when a dispute arises that the clauses pertaining to its resolution come into focus.
Dispute resolution clauses pre-determine how parties will resolve disputes that may arise out of their contract. Sometimes parties choose processes other than court. Where parties wish to maintain confidentiality in resolving their disputes, for example, they opt for arbitration or adjudication, instead of court proceedings.
Another mechanism widely discussed in recent years is mediation, where an impartial third person, called a mediator, facilitates discussion to resolve a dispute amicably. A dispute resolution clause can contain one or more agreed processes. For example, parties can agree to mediation as a first step and arbitration as a second step if the dispute is not resolved in the mediation. Ironically, disputes can arise regarding the contents of the dispute resolution clauses themselves.
In the recent case of Superway Construction (Pty) Ltd v Cape Metal Windows Servicing CC and Another (Appeal) (A286/2025) [2026] ZAWCHC 407 (13 August 2026), the Western Cape High Court had to interpret a dispute resolution clause to determine whether it was properly implemented. The court found that the mediation clauses in a construction contract provided a prescriptive step in the dispute resolution process. Accordingly, where the dispute in that matter was adjudicated without first mediating, the adjudicator lacked jurisdiction to decide the matter. A decision by an adjudicator in that instance therefore could not be enforced.
Notably the court stated that compulsory mediation can offend the right to protection and benefit before the law. However, where parties have agreed to mediation as a first step in a dispute, this right requires the court to enforce the agreed dispute resolution mechanism.
It is therefore important for businesses to consult legal practitioners regarding the meaning of these clauses and how they will operate before signing commercial agreements. Clauses which are inappropriate for the business relationship may lead to unintended, long and/or expensive processes.
In agreements between private entities, parties can mutually agree on appropriate mechanisms with relative ease. If your business offers services on government projects, it is unlikely that you will have an opportunity to change aspects of these clauses in standardized contracts. In those circumstances, it is best to understand how these clauses may operate in the event of a dispute.
In the construction industry, in particular, standardize contracts such as the NEC, GCC, FIDIC and JBCC contracts which are incorporated into service level agreements sometimes conflict with the provisions of the service level agreement. As a result disputes often arise regarding the implementation of dispute resolution clauses.
The Superway Construction case is a reminder that dispute resolution clauses must be clearly drafted or well understood at the time of contracting. After conclusion, agreed dispute resolution processes must be followed strictly. If the parties wish to later alter agreed mechanisms, they must come to a new agreement on those processes. If no such variation is agreed, the initial contractual mechanisms will apply, and this process can have a fundamental effect on one party’s ability to obtain justice.