CIArb Features

Construction, disputes and adjudication practice in Zambia: Challenges and opportunities

26 Apr 2019

Disputes are the order of everyday life and these do happen in private life, family, and businesses among others. So what is a dispute? A dispute is “a disagreement on a point of law or fact, a conflict of legal views or of interests between two persons”[1] Disputes can be classified as rights and interest based disputes respectively. Rights disputes arise from an existing relationship or existing agreement while Interest disputes occur when parties trying to forge a relationship or negotiate a new agreement. The former type is considered to be the most important as it normally characterises all legal disputes and relates to “any conflicting assertions as to the rights and obligations of the parties.”

Alternative dispute resolution

Alternative dispute resolution (ADR) refers to a wide range of procedures that serve as alternatives to litigation through the courts for the resolution of disputes generally involving the intercession and assistance of a neutral and impartial third party. There are various ADR mechanisms that are widely used in different jurisdictions Zambia inclusive. Alternative Disputes Resolutions mechanisms can be classified as Disputes settlements and disputes resolutions. Disputes settlements mechanisms include; Arbitration, Adjudication and Expert Determination and dispute resolution include Mediation, Conciliation and Negotiation among others. For purposes of this article construction adjudication will be discussed.

Construction Adjudication

Construction Adjudication is a procedure under which an independent third party, called an Adjudicator, within a fixed time period and in accordance with agreed procedures, is expected to give an interim Decision on a dispute, which must be implemented"[2]. This mechanism allows for work to proceed while the process is ongoing unlike arbitration and litigation which can be lengthy in arriving at a final determination of a dispute.[3] This process allows for prevention of projects stalling while awaiting for a resolution. In construction adjudication, experts in the filed related to the disputes are appointed and as such an adjudicator makes a decision based on the evidence presented to him/her as relates to the rights and obligations of the parties within the context of the applicable contract and law. It’s expected that, the adjudication process should be consensual under the terms of the contract arrangement. For example, according to the ciarb Rules, and an adjudicator is expected to make a decision within 28 days from the date the dispute was referred.[4] It’s expected that, if either party is unsatisfied within the 28 days when the written decision is made can refer the same to arbitration, if neither party refers the decision to arbitration within the stipulated time, then the decision is final and binding.[5] The adjudicator’s decision is enforceable as a matter of contract.[6]

Construction adjudication has been rated as one of the most successful ADR mechanisms used in construction disputes in jurisdiction such as England and Wales with a 90% success rate over decision reached being accepted or form a basis of a negotiated settlement and thus the dispute does not proceed to arbitration or litigation.[7] In cases were a party fails to adhere to the decision of the adjudicator, the decision is immediately enforceable in court. In the UK, this is achieved by way of summary judgement.[8]

Common construction disputes in Zambia

The construction industry is faced with numerous disputes arising from different reasons and circumstances. Disputes strain relationships and in turn affect construction projects. Some of the problems result into protracted disputes that ultimately affect project completion as seen where some projects have been delayed or abandoned. The development in the use of ADR, courts do urge disputants to use ADR mechanisms although in Zambia the options for construction disputes is limited to Mediation[9] and Arbitration[10] as these are the only mechanisms with comprehensive legislation. It’s undeniable that disputes can occur at design or implementation of a project hence having an effective mechanism such as adjudication for resolving disputes is cardinal. Due to inadequate legislation to deal with construction disputes, players in the industry depend on standard form of contracts such as the FIDIC Condition of Contract for Construction, Building and Engineering Works Designed by the Employer otherwise known as the Red Book which provide for ADR mechanisms. However, these standard forms are not mandatory and the trend has been for parties especially the Employer to modify the ADR clauses which normally only leaves amicable settlement and arbitration as the only means of dispute resolution.

In the Zambian case, the Road Development Agency who is the major stakeholder in public funded projects such as roads. The agency provides for amicable settlement and arbitration in its general conditions of contract. It has been noted that for most of the foreign investment involving multinational companies, disputes are to be dealt with by the courts in the UK which leaves the gap which is the absence of an authority to take the lead to develop and guide the industry into mandatory adoption of construction agreements which have provisions for dispute resolution methods which has had serious consequences on many projects. This gap has been identified as a big challenge in the construction industry as most players perceive Arbitration as costly and time consuming especially for small scale contractors.

Legislative framework

In Zambia, the use of Alternative Dispute Resolution is recognized in Article 118 (2) (d) of the Zambian Constitution[11] which provides that alternative forms of dispute resolution, including traditional dispute resolution mechanisms, shall be promoted provided that the traditional dispute resolution mechanisms shall not- a) Contravene the Bill of Rights; b) Be inconsistent with the provisions of the Constitution or other written law; c) be repugnant to justice and morality. This is a good starting point that the supreme law of the land has this provision. However, such a provision ought to be supported by comprehensive Acts of parliament which normally provides for procedures and practice as the case is for Arbitration, Mediation and Conciliation. However, for adjudication, there is no specific law that exist despite the important role this mechanism play in the construction industry.

In the absence of a specific law, the Zambian Courts do recognize any contract by parties to have any dispute between them adjudicated. And any decision made by an adjudicator is valid and is enforceable as a consequence of the parties’ agreement to abide by the adjudicators decision. The importance of a specific law on construction Adjudication cannot be over emphasized especially given the current massive construction projects being undertaken in the country. Many countries are being progressive as in having strengthened legislation on the practice of ADR. The UK, Malaysia and India are among the countries with specific legislation on Construction Adjudication. Other countries such as Kenya, South Africa and Mauritius are in the process of enacting legislation on Construction Adjudication.

Benefits of enacting construction adjudication legislation

  • The enactment of an Adjudication law will make it compulsory for cash flow disputes to be referred to Adjudication eliminating the possibility of parties going to court and obtaining an injunction which normally stalls projects.

  • Adjudication resolves cash flow disputes before other contractual disputes between the parties go to either arbitration or litigation.

  • It would provide for quick and easy enforcement of the adjudication decisions.

  • It attracts more foreign investments as investors want to invest where costs and time effective Alternative Dispute Resolutions mechanisms are in place for speedy resolving of any disputes.

  • Once the law is in place, it will improve sustainability in the Construction Industry.

  • In addition to the above benefits general benefits of any ADR mechanisms such as preservation of relationships, cost effective, expediency as disputes are resolved faster and parties can move on with their business without the cloud of litigation apply.

Recommendation

Zambia should consider enacting legislation on construction adjudication given the benefits this law has in enhancing not only the adjudication practice but its role in dealing with construction disputes in a more efficient and cost effective manner. The lack of specific law on adjudication possess numerous challenges among them commencement of the process. The lack of the law has continued to limit the practice of adjudication. The need to put in place this law cannot be over emphasized especially in a developing country like Zambia with massive construction projects. The enactment of this law will enhance resolving of construction disputes before getting to either arbitration or litigation. It will give parties to a construction contract a statutory right to have all construction disputes resolved through adjudication which is speedy and cost effective.

About the author: Mary Mutupa (ACIArb) is a Lawyer, ADR (Mediator and Arbitrator) and Development practitioner, Gender and Human Rights activist. Holds a LLB, LLM in Human Rights, and has 15yrs work experience. She is a Committee Members of CIArb Zambia and Young Members Group Zambia Chair person. Currently working for the Law Association of Zambia-National Legal Aid Clinic for Women as the Deputy Executive Director.

 

[1] Detersmann and Jaenicke, 1992, p.5.
[2] Ibid
[3] Jane Jenkins, International Construction Arbitration Law (2nd revised edn, Wolters Kluwer), para 3.03 (D)
[4] Refer to the CIArb Zambia Branch Rules on construction adjudication, or the Zambia Public Procurement Authority cl 24.2 or World Bank Small Works Conditions of Contract
[5] e.g. Zambia Public Procurement Authority General condition of contract for Small Works,2012 cl 24.3
[6] Andrew Burr, International Contractual and Statutory Adjudication (Informa Law, 2017) para 19.29 -19.49
[7] John Uff, Construction Law (11th edn, Sweet and Maxwell,2013) p 67, 81
[8] Andrew Burr, International Contractual and Statutory Adjudication (Informa Law, 2017) para 2.42
[9] Various Mediation Court Rules provided for in the High Subordinate Courts Mediation rules.
[10] Arbitration Act No.19 of 2000.
[11] Article 118 (2) (d) of the Constitution of Zambia (amended) 2016