RENOVATING IN SOUTH AFRICA

When a conflict arises over a building contract, there are many routes to resolving the impasse. One of the most effective methods, and the means perhaps most favoured by users of the Joint Building Contracts Committee (JBCC) contract, is arbitration.

What does arbitration involve?

Arbitration is a process whereby the parties involved in a building contract agree to refer any present or future dispute to the judgment of a mutually agreed third party. This person, called an arbitrator, is usually an expert in the construction industry. The role of an arbitrator is similar to that of a judge except when it comes to the principle of party autonomy. This means that the parties can agree on procedural and evidential matters, and procedures can be less formal.

The role of the arbitrator

An arbitrator should be able to:

• Act justly and impartially using his knowledge of the subject matter;

• Reach a fair decision, known as an 'award', based on the evidence and arguments submitted by the parties; and

• Take initiative in determining the facts and the law, where appropriate.

How is an arbitrator appointed and how does he reach his final decision?

The name of the arbitrator is usually inserted in the building contract schedule. However, if no name is given, or if the designated person is unwilling to act, or if the parties disagree over who should be the appointed arbitrator, he is then appointed by the chairman of the Association of Arbitrators. The arbitrator and the parties involved in the dispute are free to conduct the arbitration in whatever manner they wish, provided that the rules of natural justice are observed. The parties are not obliged to be legally represented.

The arbitrator must give his award within four months of a dispute being declared, according to section 23 of the Arbitration Act. Unless previously agreed otherwise, there is no appeal against the award and it may be enforced by an order of court. The arbitrator is required to explain his decision and also has the power to determine the allocation of costs i.e. who pays for the cost of arbitration and the amount of recoverable costs.

What are the advantages of arbitration?

Arbitration is private and usually informal. Most construction disputes can be settled quickly and fairly by arbitration. An arbitrator will be able to understand the issues concerning the various parties in a land, property or construction dispute. As mentioned earlier, the arbitrator’s decision is final and binding, although there are limited rights of appeal to the courts on procedural irregularities and points of law. Arbitrators should declare any interest to avoid appeals on the basis of bias.