ASSOCIATIONS
No easy path to peace
on a building project
When disputes arise on a building project, despite proper
contractual procedures, what are the options to resolve the matter?
By Joint Building Contracts Committee (JBCC)
U
It is important to note that no certified payment can be
withheld: payment must be made in terms of the contract
for the undisputed amount while the disputed issues are
referred to an adjudicator to resolve before the next
payment cycle. The adjudicator’s determination is
immediately binding - but may be overturned in
subsequent arbitration.
we Putlitz, CEO of the Joint Building Contracts
Committee (JBCC), here looks at the situation – and
finds that in the end time, productivity and harmony
are not part of the avenues towards agreement.
Regardless of the Standard Form Contract (SFC) chosen,
all the contracts include dispute resolution options.
Implementation of these procedures to a large extent
involves the parties at war consulting trained outsiders to
avoid involvement of the legal profession unless
absolutely necessary.
Let’s look at the trained outsiders that can be engaged to
create settlement.
The first and best option is for the parties to share what
could end up being quite a few cups of coffee to amicably
discuss the issues and explore possible solutions acceptable
to both. Obviously, this is the fastest and most cost-
effective solution and all information remains confidential.
But, sadly, it’s probably the least likely way employed in
dispute dilemmas in the world we live in today.
ARBITRATION
This final level of dispute of resolution clauses in Standard
Form Contracts is arbitration, which is strictly regulated and
largely follows court procedures. However, this is a drawn-
out process as it must deal with dispute issues in depth.
Arbitrators must be qualified and operate within a set of
rules. The arbitrator’s decision is final and binding and can
only be overturned by a court order.
Some Standard Form Contracts provide for the
appointment of a dispute avoidance board consisting of one
or three persons (with technical, financial and legal skills)
appointed on a retainer to keep an eye on all phases of a
project to timeously identify possible problems that could
become disputes and find alternative solutions before
swords are crossed.
MEDIATION
ADJUDICATION
If mediation does not work, there’s adjudication. This
process was evolved in the 1980s in England to find a
speedy solution to mostly technical issues that led to
payment disputes. Adjudication is widely used throughout
the English-speaking world and most countries have
regulated the process by publishing ‘adjudication rules’.
The adjudicator should be qualified to apply the principles
of natural justice and have technical skills to analyse a
problem and make an appropriate determination on such
matters and its payment issues.
8
APRIL / MAY 2019 //
LITIGATION
So, if coffee is not on the menu, the next step could be to
move on to mediation and hire an outsider to mediate the
matter under dispute. Mediation has gained support in the
building and construction industry in most countries,
including South Africa. But it is important that the mediator
is trained to deal with people to fully extract and fully
understand the crux of a problem to guide the parties to
possible solutions. The parties talking to one another could
also agree to resolve the matter by asking the mediator –
who has been privy to all relevant information – to suggest
a non-binding solution to the parties, commonly referred to
as ‘expert determination’.
Outside the Standard
Form Contracts process,
the parties in conflict can
turn to the courts and
resort, one would think
reluctantly, to litigation.
This is an extremely long
and very costly process involving several levels of legal
expertise. In fact, the South African Department of Justice
has issued a directive that building-related disputes must
be resolved using the dispute resolution procedures
provided in Standard Form Contracts and only be referred to
the courts by exception. In other words, don’t waste the
court’s time – and your money – unless you absolutely must.
To sum up, depending on the nature of a project, and its
location, any or all the techniques in Standard Form
Contracts listed above may be employed to resolve
disputes. But it would be so much better for all concerned if
more of the parties really want to avoid conflict and first try
the coffee compromise chat first.
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