A NEED FOR UNIFORM ADJUDICATION RULES[1]
Introduction
I was appointed as the adjudicator in the dispute between the Ekurhuleni West College v Segal and Trencon Construction[2] at the end of 2016.
The dispute arose out of a disagreement between the employer (Ekurhuleni West College) and the contractor (Trencon) concerning a number of issues regarding costs, completion dates and quality of workmanship.
The contract entered into between the parties was the JBCC Principal Building Agreement, Edition 5.1 dated 2014. The Adjudication Rules applicable to this dispute were the JBCC Adjudication Rules of 2014.
I conducted the adjudication in strict accordance with the above rules and issued my determination on 14 March 2017.
The Employer was dissatisfied with my determination, which found in favour of the contractor, and instead of referring the matter to arbitration in terms of the applicable Adjudication Rules, it elected to refer the matter directly to the Gauteng Division of High Court in Pretoria. After a period of approximately 18 months, the court upheld my determination and dismissed the Employer’s review application.
The judgment of the High Court was then appealed to the Supreme Court of Appeal (SCA), which handed down its judgement on 2 April 2020. The SCA dismissed the employer’s appeal with costs, including the costs of two counsel.
At the end of this stressful period, I asked myself how it was possible that the employer and its legal representatives could have been so wrong, i.e., in not following the designated route prescribed in JBCC Adjudication Rules of 2014, in opting to take the matter on review to a court of law.
On careful consideration, and on checking adjudication rules ordained in other building/construction contracts frequently used in South Africa, I concluded that there a number of different sets of adjudication rules. I raised this issue with the Construction Association of Adjudicators South Africa (CAASA). In response to my enquiry with CAASA, I received a comprehensive reply from Mr Norman Milne setting out the differences between the various sets of adjudication rules available at that time.
I would like to share the differences with the readers of Arbitrarily Speaking! in the hope that consensus could be achieved between the authors (or issuing authorities responsible for the formulation of such rules) to reach a common set of rules for all adjudications arising in the field of construction.
I understand that adjudication in South Africa might benefit if South Africa had a statute governing adjudications similar to the Arbitration Act 42 of 1965. According to Mr Milne’s investigation he found that in both the United Kingdom and Australia, where adjudication is legislated, domestic arbitration is all but nonexistent.
Paraphrasing the relevant portion of the report I received from Mr Milne, he found that all standard forms of contract endorsed by the Construction Industry Development Board (CIDB) – FIDIC, JBCC, GCC, and NEC – provide for adjudication. Each of these suites of contracts has its own rules under which adjudications are to be conducted. CAASA has a set of rules itself and the CIDB has published a draft set of rules. There is no uniformity across these various rules.
By way of example, the most important times for the: (i) submission of a statement of claim (SOC); submission of a statement of defence (SOD); and time period for adjudicators’ determinations (DET), appear as follows:
|
Type of Contract |
Time for SOC |
Time for SOD |
Time for DET |
| FIDIC 1999 |
Not prescribed |
Not prescribed |
Within 84 days of referral |
| JBCC 2020 |
Within 10 days |
Within 10 days of submission of SOC |
Within 25 days of submission of SOC |
| GCC 2015 |
Within 14 days from adjudicator’s appointment |
Within14 days of SOC |
Within 28 days after the last documents submitted or conclusion of hearing |
| NEC3 |
Between 2 and 4 weeks after notification of dispute |
Within 4 weeks of submission of SOC |
Within 4 weeks from the end of the period for receiving information |
| CAASA |
Within 21 days from adjudicator’s appointment |
Within 21 days of submission of SOC |
Within 21 days of conclusion of hearing or receipt of final submissions |
| CIDB |
Within 14 days from adjudicator’s appointment |
Within14 days of SOC |
Within 28 days of submission of SOC |
All the rules make provision for these times to be extended, as is invariably the case from time to time. The appointment of an adjudicator may be delayed where the parties fail to agree on the appointment of a particular adjudicator. Any delays in the appointment of an adjudicator, the submission of documents by the parties or the issuing of the adjudicator’s determination begins to question whether adjudication is indeed quick and efficient.
I agree with Mr Milne that to make adjudication more accessible to all parties in the construction industry I suggest that one set of uniform adjudication rules should be developed, as I had indicated earlier.
The most important matters to be unified in the new rules are:
- The need to identify a nominating body, which can appoint an adjudicator promptly where the parties cannot agree on his/her nomination.
- The stipulation of uniform timeframes, which must be adhered to subject to the adjudicator’s power to extend same in exceptional circumstances, for the various steps that need to take place.
- A stipulation that requires adjudicator to ensure that they can give the matter the necessary attention within the timeframes before he/she may accept the appointment.
- The need to avoid unnecessary hearings and work on documents only.
- The dispensing of formal legal representation to be avoided (wherever possible).
- The selection of adjudicators from the construction industry itself.
- A fast-track adjudication process should be developed for simple disputes.
Legislated adjudication with concise timeframes will go a long way to resolve unnecessary delays in achieving the aims of adjudication.
[1] Authored by Stanley H Segal, an architect – now retired – with over sixty years’ experience in architectural practice. He is the author of the well-known textbook Finsen’s – The Building Contract, third edition, Juta (2018). He has acted as an arbitrator, adjudicator, mediator, and expert witness in numerous cases. He is a Fellow of the Association of Arbitrators (Southern Africa) NPC.
[2] Reported as Ekurhuleni West College v Segal and Another (1287/2018) [2020] ZASCA 32 (2 April 2020).
