Construction projects, whether big or small, face several challenges, many of which could lead to legal disputes, the key questions are what are the most common disputes that may arise in the construction industry and what are the roles of arbitration, adjudication and mediation.
In this article, we explore the most common disputes arising out of the construction industry and the mechanisms in place to resolve them.
The most common disputes in construction law include but are not limited to:
- Payment disputes: Disagreements over when and how payments should be made including can cause disputes between parties involved in the building project.
- Delays and Extensions disputes: Delays can be caused by various factors such as delays in delivery of materials, weather conditions etc. When delays occur, they often lead to disputes between the parties involved in the building project.
- Design and Defect Disputes: Disagreements about the quality of work performed, adherence to specifications and design, or the need for rework to rectify defects could also give rise to disputes.
- Unilateral changes to the scope of work: making unilateral changes in design, materials, timelines or work specifications without proper authorization or agreement can lead to a dispute especially when the parties differ on the valuation of these changes.
Construction disputes tend to be complex as they often involve multiple parties and millions of rands. If a dispute in a building project arises, there are several dispute resolutions mechanisms available to parties involved, such as mediation, adjudication and arbitration. While all these mechanisms aim to resolve the dispute, they differ significantly in approach and outcome.
MEDIATION
Mediation is one of the most cost-effective mechanisms of alternative dispute resolution in the construction industry. It is a process within which an independent mediator facilitates negotiation between the parties involved to assist them to amicably reach a mutually acceptable solution. It is important to note that decision of the mediator is not binding, and it is based more on a facilitated negotiation which could either lead to a settlement or no agreement.
ADJUDICATION
Adjudication is a quick form of dispute resolution designed to provide interim resolutions on a specific dispute. This is usually a step prior to arbitration. Parties are required to make written submissions in a form of an affidavit to an adjudicator. The adjudicator will then make a decision based on the submissions. The decision of the adjudicator is binding unless the dissatisfied party gives notice of intention to proceed with arbitration proceedings. The aim of adjudication proceedings is to allow parties to resolve their disputes quickly so that cashflow and construction work can continue.
ARBITRATION
Arbitration is the most formal and adversarial dispute resolution mechanism. In arbitration, an independent and impartial arbitrator makes an award after considering the representations of the parties in dispute, which is final and binding, and not subject to an appeal. In arbitration proceedings the outcome from ascertaining and establishing facts about the dispute in a formal hearing, rather than looking at the submissions and formulating a ruling out of them.
In conclusion, it is important for contractors and employees to understand these common legal disputes and be able to effectively navigate this complex legal landscape.
For all your construction legal needs, kindly contact Hahn & Hahn Attorneys.