By Jude Njoku

Against the backdrop of several litigations which hamper the speedy execution of construction contracts in Nigeria, built environment last week, canvassed the use of arbitration as an alternative means of resolving disputes in the construction industry.

The experts who brainstormed at the 5th Building & Construction Economic Round Table, BCERT 5, organised by the Quantity Surveyors Registration Board of Nigeria, QSRBN in Abuja, made a strong case for arbitration as an alternative dispute resolution because it provides for technical matters to be handled by those with the requisite technical knowledge of the subject matter of the dispute.

Setting the tone for the brainstorming session, the QSRBN President, Mallam Hussani Adamu Dikko explained that disputes and disagreements are common features of all human relationships and their occurrence contracts are not out of place.

“Arbitration as a means of settling disputes in the construction industry is increasingly becoming popular. All construction contracts have provision for Arbitration as one of the conditions that govern the contract. Arbitration has been very effective in all jurisdictions around the world hence its increasing prominence,”Dikko explained.

He further noted that “construction arbitration is a very technical area and only those who have sound and technical knowledge of construction processes and technology can successfully practise construction arbitration either as Arbitrators or expert witnesses in an arbitration proceeding.

The major reason for arbitration is that it provides for technical matters to be handled by those with the requisite technical knowledge of the subject matter of the dispute.   It is therefore important to let you know that the practice of arbitration by construction professionals is a litmus test of their knowledge and grasp of issues in construction processes and practice”.

Sharp practices

The QSRBN President noted that although lawyers are becoming increasingly interested in construction arbitration, they (lawyers) should acquire knowledge and good grasp of construction processes and practice. “Without this, the temptation is there for the Lawyer to confuse arbitration processes with judicial processes as if they are the same or interchangeable whereas they are miles apart. The rules in litigation are drastically different from the rules in arbitration,” he said.

Mallam Dikko decried the trend “whereby parties who sign up for arbitration at inception of contract use all kinds of intrigues and subterfuge to frustrate arbitration whenever disputes arises”.  “Whenever there is an arbitration provision in construction contract, the process must be exhausted before any party can opt for litigation. Therefore submission to arbitration is a condition precedent to litigation.   But parties often try to frustrate arbitration using all forms of technicalities.

This should be frowned at. Whilst it is possible to obtain favourable judgement in the courts based on technicalities, it is almost impossible to obtain favourable awards in arbitration based on technicalities.   In arbitration, matters are treated on their merit and facts are sacrosanct in arbitration.   These realities account in part to the increasing popularity which arbitration enjoys today in the construction industry,” he said.

Defects of Arbitration Act

Mr Augustine Uchechukwu Kalu who did an overview of Arbitration & Conciliation Act of 2004, posited that “disputes are likely in the world of complex and complicated construction industry”. “ This is because a typical construction project may involve several parties performing diverse roles. When and where such disputes arise, the traditional mechanism for resolving same is litigation.

The enormous expense, delay and the coercive character of litigation resulted to a strong need for an alternative means of resolving disputes that not only preserves the relationship of the disputants, but equally ensures the progress of the project while the resolution lasts. This need finds fulfilment in arbitration,”he said.

Kalu stated that although the Act has laid a fairly good foundation for the growth of the law and practice of arbitration in Nigeria, he posited that the dynamism of the society has exposed the fundamental defects of the law.  These defects, he argued, require urgent surgical operation if Nigeria were to join the league of best international practitioners in arbitration. Buttressing this point, he said, “Sections 1-5 of the Act which deal with the agreement to arbitrate do not define the term (arbitration) and equally fail to recognise electronic data as a form of writing.

In default of agreement by the parties on the number of arbitrators, the Act imposes three arbitrators with the heavy financial burdens that go with such a high number of arbitrators. The position of an umpire recognised by certain jurisdictions has no place in the Act.

The Construction industry probably suffers most from some of the provisions of the Act because the industry requires a certain measure of protection by way of peculiar provisions relating to consolidation and or concurrent proceedings, the right of parties to continue construction even while arbitration progresses.   Again, the applicability of the Statute of limitation to arbitration is silent under the Act”.

Pros and cons of arbitration

Speaking on the Nature of Construction Arbitration and its Uniqueness, Dr Rotimi Joseph of the University of West England, Bristol, identied both the pros and cons of using arbitration to resolve dispuetes in the construction industry.

“The advantages of arbitration include: flexibility, economy, expedition, privacy, freedom of choice of arbitrator, and finality.   On the other hand, the disadvantages of arbitration appear to have been on the increase. In comparison to litigation, where the judge and court facilities are provided at public expense, the parties to arbitration will ultimately have to bear the costs of the arbitrator and the facilities. Where, as is often the case in construction, more than two parties are involved in a dispute there is relatively little statutory power to consolidate the actions in one arbitration,” he said.

Speaking on “Flash points for disputes in construction contracts in Nigeria- A review of the Standard Form of Contract,” Mr. Jude Uzoma Anyanwu noted that although disputes and claims are common in construction projects, he contended that they should be minimised through clear identification of requirements, team formation, good communication channels, good bidding practices and complete construction documents.

Anyanwu who the Principal Partner of CostBenefit Consultants, a firm of quantity surveyors, noted that  disputes also occur over variations and poor drawings and documentation. “Coordinating engineering and architectural drawings from the beginning can help avoid such conflicts,” he said.