PROCEDURES OF DISPUTE RESOLUTION AS REGARDS TO BCC PBA EDITION 6.2
By: Jared Kisten
Posted on: 21 April 2022
Construction delays are any event that takes place during construction which would ultimately delay the completion date of the project and results in additional costs: for the client or property developer it means they would not be able to earn rental income when they planned to; for the contractor it means they have to be on the construction site for a longer period of time which means there might be additional costs associated with that. Who is responsible for these costs?
In construction we have two types of delays: an excusable delay – where the contractor would get additional costs due to delays beyond the contractors control and an inexcusable delay – resulting from the contractors’ default. Nevertheless, it is not always a straightforward exercise to determine who is responsible for the delay and associated costs and in some instances, disputes arise between the parties.
This series of blogs will explore the provisions of the JBCC PBA for dispute resolution, starting with an overview of the procedures provided for within the JBCC PBA.
Where parties to the building agreement disagree regarding an action or inaction, or any other matter in terms of the agreement by either party, it is deemed to be a disagreement amongst the parties i.e., between the employer / principal agent / agent of the employer and the contractor. Typical cases of disagreements usually arise from adjudication of delay claims and adjustments to the contract value.
SETTLEMENT BY THE PARTIES
The JBCC PBA allows the parties a period of ten (10) working days to resolve disagreements by way of resolution in writing signed by each party. Where the disagreement is not resolved within the allowed time, the disagreement shall be deemed to be a dispute.
Provisions for a disagreement to be referred to a dispute are allowed for the JBCC PBA. These provisions are as follows:
- A notice of adjudication must be issued by the referring party which gave the notice of disagreement. This notice must be referred within ten (10) working days following the period allowed for the disagreement to be resolved.
- The notice must clearly define the scope of the dispute and the relief which the referring party seeks.
The contract data [CD] makes provisions for a body (including their applicable rules) to be nominated for adjudication and arbitration in terms of the agreement. In most cases, the Association of Arbitrators (Southern Africa) is nominated as the adjudication and arbitration bodies for dispute resolution.
Where the parties have not made provision for an adjudication and / or arbitration nominating body in the contract data, the referring party has the right to choose a local recognised body to suggest one or more persons as an adjudicator or arbitrator and such nomination shall be binding on the parties as stipulated in the JBCC PBA.
Any ruling given by the adjudicator is immediately binding and the parties must implement the ruling. This shall remain in force and continue to be implemented unless overturned in arbitration. Either party may give notice to refer the dispute to arbitration. Such notice of dissatisfaction must be issued to the adjudicator and the opposing party within ten (10) working days following the adjudicators ruling (determination).
According to the JBCC PBA, the dispute will be resolved by arbitration and not adjudication where the referring party failed to comply with procedures of adjudication and / or the referral of the adjudicator’s determination by either party.
The arbitrator will conduct a pre-arbitration meeting to determine the following for the arbitration proceedings:
Appointment of the arbitrator
The parties must acknowledge the appointment of the nominated arbitrator. The arbitration fees must also be agreed upon i.e., the parties may agree to split the arbitrators’ fees and other costs of arbitration on a 50/50 basis (until final reward in relation to costs has been made).
Confirmation that arbitral disputes exists.
The parties must confirm the arbitral dispute, the scope thereof, and that the arbitrator has jurisdiction to decide the dispute.
The rules for the arbitration.
The rules of the arbitration must be agreed. It is usually the rules of the nominating body i.e., the Rules for the Conduct of Arbitrations for the Association of Arbitrators (Southern Africa) (2018 Edition).
STEP IN THE PROCEEDINGS
Claimant to file its Statement of Claim
Respondent to file its Statement of Defence
Claimant to file its Replication (if any)
Respondent to file Rejoinder (if any)
Claimant to file its factual witness statements (with expert witness statements, if any)
Respondent to file its factual witness statements (with expert witness statements, if any)
Claimant to file its replying witness statements (if any)
The parties must agree to the arbitration timetable and the dates set out therein. The table below is a typical example of the dates to be determined for each step in the proceedings
Service of pleadings and documents
The parties must agree on the service of pleadings and documents i.e., by email and / or hard copy.
Witness statements to stand as evidence (under oath) in chief and any additional evidence over and above that set out in the witness statements must be confirmed.
The parties must confirm the service of witness statements i.e., the factual witness statements (including rebuttal statements), as supplemented if applicable, will stand as evidence in chief, subject to the witness confirming the contents of the statement under oath at which time every witness may clarify any errors in the statement. The parties may also confirm if the Arbitrator shall have a general discretion to allow either party to lead additional evidence over and above that set out in the witness statements.
The procedures of interlocutory applications must be agreed between the parties. For example, A Party (the “Applicant”) shall be entitled to set out in an email addressed to the Arbitrator and the other Party its application, the basis therefore and any representations or submissions it wishes to make (the “Application”) and The other Party will be entitled to respond within one week or such other time as the Arbitrator should allow, by email addressed to the Arbitrator and the Applicant setting out its opposition, the basis therefore and any representations or submissions it wishes to make (the “Opposition”).
The Arbitrator will be entitled to make any ruling having regard to the Application and the Opposition only and without oral hearing. Should the Arbitrator require a hearing or further representations or written submissions he will advise the Parties and issue directives accordingly.
The collation of indexed and paginated bundles must be determined and agreed by the parties. The availability of the bundles must also be confirmed i.e., 10 days before the hearing.
Venue and recording of proceedings
A venue or a virtual platform i.e., MS Teams must be determined and one of the parties will be responsible for arranging the transcription services (if required).
Handing down of the award
The arbitrators award shall be final and binding on the parties in terms of the JBCC PBA.
Adjudication and arbitration may be referred by agreement between the parties to mediation at any time during the proceedings. Where a dispute is referred to mediation, the provisions relating to adjudication and / or arbitration shall be deemed to be suspended.
The procedures of dispute resolution in the JBCC PBA are clearly defined and provides a structured path towards resolving disputes. The contract, together with various case studies available is referred to by an adjudicator / arbitrator in their determination and award.
This series will continue by exploring each of the procedures mentioned above in more detail and how each of them have been dealt with and applied previously in some cases.