Following the Adjudication Route

In line with the trend in a growing number of countries, adjudication in South Africa is increasingly being used as the first step in the dispute resolution process in the construction industry, says Chris Binnington, -Chairman of the Association of Arbitrators SA. In this regard, England took the lead with the promulgation of the Housing Grants and Regeneration Act, which came into law in February 1998, making it mandatory for virtually all forms of construction contracts to use adjudication to resolve disputes. This was followed by similar legislation in Australia and New Zealand. “In fact, most standard forms of contract have introduced adjudication, including in South Africa, where it is now found in this country’s four standard forms of contract – JBCC, FIDIC, NEC and GCC 2004 – which are mandatory for government and parastatal organisations and recommended by CIDB for the private sector,” says Binnington.

The key element of adjudication, according to Binnington, is that it is immediately binding but not yet final. Following the publication of the adjudicator’s decision, either or both parties may file a notice of dissatisfaction and the unresolved portion of the dispute would then proceed to arbitration or court depending on the provisions of the contract. “Unfortunately, South Africa does not have a statute equivalent to the English Act and consequently the enforcement of an adjudicator’s decision is a matter of contractual obligation between the parties whereby they agree to be bound by the adjudicator’s decision. Failure to honour that obligation could result in an application to court for an order against the defaulting party,” explains Binnington. He emphasises that because adjudication is contract specific, each of the forms of contract mentioned above treats adjudication in different ways but the essential principal of immediacy, in so far as adjudication decisions are concerned, applies to all four forms of contract. Binnington says the majority of adjudications will be considered on papers submitted to the adjudicator and consequently the quality of these submissions will have a distinct impact on the outcome of the adjudication.

“While professional legal contribution to the preparation of submissions is permissible, a hearing is not usually required making formal representation unnecessary thus minimising cost. The parties are responsible for the adjudication costs in equal shares and no award of costs is ever made in adjudication,” he says. During the second half of 2005, the Association of Arbitrators SA received a number of requests, mostly from the building industry, to appoint adjudicators, “If this trend continues,” says Binnington, “and there’s no reason why it should not, South Africa will be faced with an urgent requirement for suitably qualified arbitrators.” In anticipation of this future demand the Association, in conjunction with Binnington Copeland & Associates, is running training courses in South Africa as well as in Botswana where the government has adopted the FIDIC forms of contract, which provide for adjudication. The Association has also established a panel of adjudicators and will continue with its training efforts to ensure that those interested in mastering the process are able to do so.

Chris Binnington, Chairman of the Association of Arbitrators SA,

CONSTRUCTION WORLD – JANUARY 2006