Why do employers and contractors in the building, construction and engineering industries (the construction industry) so often elect alternative dispute resolution mechanisms (ADR), such as adjudication or arbitration[2] proceedings, rather than submitting their disputes to the law courts for resolution?

Nobody (except perhaps lawyers) welcomes the incidence of ‘disputes’ in the construction industry.  In an effort to ascertain why disputes in the construction industry were so prevalent in England prior to 1994, Sir Michael Latham was commissioned to investigate this phenomenon.  In his final report (Latham Report),[3] he concluded and submitted that, in the first instance, the parties to a contract should do all in their power to avoid disputes.  However, where the parties’ endeavours showed that this was not possible, the Latham Report recommended that adjudication should be made the preferred dispute resolution mechanism, especially while the works were still in their execution phase.[4]  The Latham Report further recommended that arbitration and court proceedings should be considered only after the works had been completed.[5]  Accordingly, the Latham Report does not outright reject the latter types of proceedings to resolve disputes, but it expressed a clear preference for adjudication over the more formal dispute resolution procedures of arbitration and civil litigation while the works are in the execution phase.

The legislature in England considered the recommendations in the Latham Report to be of such vital importance that it subsequently promulgated legislation[6] prohibiting parties, regardless of the expressly stipulated dispute resolution mechanisms in their respective contracts, from seeking redress for their dispute(s) in the courts before they had followed and attempted to resolve such dispute(s) through the process of adjudication.


Adjudication and arbitration proceedings are intended to be less formal than court proceedings.  For adjudication proceedings to be what they are intended to be, i.e. quick and ‘robust’, they should be determined by having the parties furnish their respective submissions on paper, followed by a quick decision by an adjudicator made only on those papers.  No hearing should be held, unless it is absolutely necessary, and then only to answer pointed questions.  Unfortunately, this procedure is not observed in many of the adjudications conducted in this country.  Arbitration, however, is more substantive (depending on the rules applied) and is, in most instances, virtually akin to court proceedings.  The proceedings are held outside of a court, in a venue chosen by the parties, and presided over by a person chosen by the parties, or otherwise appointed by a specifically nominated third-party body, to resolve the parties’ dispute(s).


Over and above the abovementioned legislative changes introduced in England and Wales, the influence of the Latham Report evidently exerted its influence over industry publishers of many of the standard forms of contract resulting in them specifically making provision for multi-tiered ADR mechanisms, albeit not only for adjudication, in such contracts.[7]

Although there is nothing similar contained in South African legislation, the Construction Industry Development Board of South Africa (CIDB)[8] published its recommendations for the standard form contracts to be used in this country’s construction industry.  The CIDB’s recommendations merely serve as a guideline for the private sector, but they are binding on state-owned companies.[9]  Nevertheless, its recommendations are frequently also used in practice by the private sector.  All of the standard forms of contract recommended for use by the CIDB contain ADR mechanisms.

The standard forms of contract recommended for use by the CIDB are the following:

  1. The standard forms of contract published by the Fédération International des Ingénieurs-Conseils (FIDIC).
  2. The standard forms of contract developed and published by the Institution of Civil Engineers (ICE) and known as the NEC suite of contracts.
  3. The standard forms of contract published by the Joint Building Contracts Committee (JBCC).
  4. The General Conditions of Contract for Construction Works (GCC) published by the South African Institution of Civil Engineering (SAICE).

This gives rise to, at least, the following two questions: (i) Why is it that these standard form contracts, with their preordained preference for ADR, are preferred for or in the construction industry; and (ii) is ADR to the benefit, or the detriment, of the construction industry, specifically in South Africa.


A common misconception is that these proceedings[10] are necessarily cheaper.  They are not.  In fact, generally they are more expensive:  The parties are responsible to pay not only for their legal team (as they would in any court proceedings), but they now also have to pay for the venue, the administration of their dispute, as well as for the person presiding over their matter.[11]

The opportunity to select and appoint a presiding officer with experience in the field of the dispute is a very attractive feature of ADR.[12]  Reference is made to an ‘opportunity’ to nominate this presiding officer as parties often are unable to agree on a person or panel.  To avoid situations like this from arising, the parties agree beforehand that a neutral appointing body, such as the Association of Arbitrators, will make an appointment on their behalf.  Normally, the appointing body will then select and appoint a suitable experienced person (or tribunal of persons) to resolve the parties’ referred dispute(s).  For example, should the parties’ dispute concern a question of law, an experienced lawyer may be chosen as the presiding officer, or if their matter concerns a question of measurement, a quantity surveyor may be chosen as such.

These ADR mechanisms are especially attractive in the construction industry because of the privacy and confidentiality they afford the disputing parties.[13]  Accordingly, one of the foremost considerations when opting for ADR, over litigation in the country’s courts, is that of privacy and confidentiality.  In most contracts confidentiality of the proceedings is ensured in the drafting of the ADR clauses that specifically obligate the parties to maintain strict confidentiality at all times, that is, before, during and even after the termination of the proceedings.[14]  But how does this axiomatic preference for ADR affect the development of South Africa’s law of contract relative to the construction industry?


A challenge faced by researchers in this field is the limited publication of decisions relating to building, engineering and construction law, particularly regarding disputes arising from contracts based on some of the standard contract forms.[15]  The apparent reason for this scarcity (specifically in South Africa) seems to be attributable to the fact that decisions (determinations and awards) made pursuant to ADR are required to be kept strictly confidential.

Unfortunately, the inevitable result has been that whatever development there might have been in this field of law, remains shrouded by ADR confidentiality provisions, and this gives rise to uncertainty as to how applicable legal principles might have been applied in the context of any particular dispute.  Regrettably, this has led to less case law and writing on the topic than one otherwise might have hoped for and, in turn, it also detracts from any researcher’s ability to undertake a thorough investigation into any legal developments in the construction industry.

In essence, such uncertainty is mainly attributable to the fact that awards and findings in adjudications and arbitrations:

    1. are not published;[16]
    2. are not binding on South African courts[17] – indeed any such award may not even have any persuasive value in a court of law. This simply means that because a particular argument was successful in one arbitration, it does not mean that it necessarily will succeed in another.  Any previous arbitration award need not be considered by any other arbitrator, or any court for that matter.  This is different to the situation prevailing in the courts, where legal certainty is promoted by the doctrine of stare decisis.[18]  The objective of this doctrine:[19]

‘… is to avoid uncertainty and confusion, to protect vested rights and legitimate expectations as well as to uphold the dignity of the court.  Therefore, when a decision on a legal principle has been delivered by a superior court it must be followed by all courts of equal and inferior status, until such time as that judgment has been overruled or modified by a higher court or by legislative authority.’

The question then becomes whether, for the sake of justice and transparency, is it perhaps time to require the construction industry to seek redress for their disputes in a forum where the law applicable to them may be developed, and published, which will promote greater certainty as to the disputing parties’ rights and obligations.

Perhaps ADR has gained much popularity in South Africa not only because it is preferentially ordained in standard forms of contract, but also because South Africa, unlike England and Wales,[20] does not have the benefit of a specialised court in this field of law with presiding officers that are experts in that field.  In England and Wales this has been achieved by a special court, viz., Technology and Construction Court (TCC), that was created specifically to deal primarily (but not exclusively) with disputes arising from the construction industry.  The TCC is presided over by acknowledged experts in the field of technology and construction.  Although South Africa also does not have the benefit of specific legislation dealing with matters arising out of the disputes in the construction industry,[21] which further hampers the development of the law pertaining thereto, perhaps the time is now ripe to consider the implementation of a system similar to the English model.


What may assist the construction industry in South Africa is a statutorily established specialist court to which industry participants are required to refer disputes that may arise between them.  Although it is accepted that in doing so there will be occasions when the much-liked features of privacy and confidentiality will have to be forsaken, it is also undeniable that the law applicable to the construction industry is in dire need of development.  Perhaps sacrificing privacy and confidentiality for the sake of development of the law applicable to this industry will promote legal certainty which, in turn, could contribute to the reduction in the incidence of disputes.

It must accordingly be recognised that there is justification to consider a specialised law court in South Africa for the construction and technology industry, similar to that recognised and provided for in England and Wales.[22]

Dr Tanya Nicole Hendry
8 March 2021

[1]  By Dr Tanya Nicole Hendry, LLD, LLM, LLB, M.Inst.D, MCIArb, FFAArb, SCL(UK), a director of CSSI (Construction Support Services international).

[2]  There will be a further article in the near future explaining the difference between adjudication and arbitration proceedings and how contract drafters can prevent the one being turned into the other.

[3]  Sir Michael Latham ‘Constructing the Team by Sire Michael Latham Joint Review of Procurement and Contractual Arrangements in the United Kingdom Construction Industry’ Final Report, July 1994, published by HMSO (the Latham Report), pages 87 and 91.

[4]  C Dancaster ‘Construction Adjudication in the United Kingdom: Past, Present, and Future’ Journal of Professional Issues in Engineering Education and Practice © at ASCE Library, April 2008, page 204 ( (accessed 8 March 2021).

[5]  Latham Report, page 91.

[6]  Housing Grants, Construction and Regeneration Act, 1996.

[7]  See Sub-Clauses 20.2 to 20.8 of the FIDIC (Fédération International des Ingénieurs-Conseils) conditions of contract (1999), as well as Sub-Clauses 21.1 to 21.8 of the 2017 editions of FIDIC’s Red and Yellow Books, and Clause W of the NEC (the standard forms of contract developed and published by the Institution of Civil Engineers [ICE] and known as the New Engineering Contract [NEC] suite) conditions of contract.

[8]  The Construction Industry Development Board (CIDB) is a national body established in terms of the Construction Industry Development Board Act 38 of 2000.

[9]  See

[10]  This reference is to both adjudication and arbitration.

[11]  Arbitrator or adjudicator, rather than a judge.

[12]  Having the benefit of agreeing to an adjudicator or arbitrator, rather than having a judge appointed, provides the parties with the opportunity to choose a practitioner well-versed in their field of dispute.

[13]  Many are made subject to stringent confidentiality provisions.  T Boxall, A Hutchison, M Wright ‘NEC3 ECC clause 10.1: An enforceable contractual duty of trust and co-operation in the construction industry?’ 2017 Stell LR 97, 117.

[14]  See, as examples, Sub-Clauses 20.2 to 20.8 of the FIDIC conditions of contract (1999), or Sub-Clauses 21.1 to 21.8 of the 2017 editions of the Red Book and Yellow Book, as well as Clause W of the NEC conditions of contract.

[15]  Such as FIDIC, NEC, JBCC and GCC.

[16]  The contracts in question require the process to be a private and confidential dispute resolution process. In other words, even though the arbitrators provide reasoned decisions, those decisions and the reasoning behind them are not made available to any persons, other than the contracting parties participating in an arbitration.

[17]  This is so even where an opportunity does arise to present such an award in court.

[18]  Derived from the Latin maxim ‘stare decisis et non quieta movere’.  See MDJ Wallis ‘Courts and Tribunals‘ in the Law of South Africa (LAWSA), Vol 10, 3rd edition, para 520 and the authorities cited there.

[19]  Id.

[20]  In England and Wales this takes place through the Technology and Construction Court, a sub-division of the Queen’s Bench Division, which itself is one of three divisions of the High Court of Justice.

[21]  Like, for instance, Germany (as an example, see § 651 German CC) and England (as an example, see the Housing Grants, Construction and Regeneration Act, 1996) has.

[22]  See footnote 20 above.