Construction Law: Arbitration vs Adjudication – When to Adopt Which Process

Contractors and sub-contractors that operate in the construction sector in South Africa would commonly face unfair payment/compensation in accordance with their contractual agreements with clients and project managers. Luckily, Allardyce & Partners Attorneys offer specialists in the domain of Construction and Contractual Law, giving contractors/sub-contractors a fighting chance when entering a legal dispute with a client/project manager. Today, we will compare the process of arbitration with adjudication, and discuss when to adopt which process for the best possible outcome.

Arbitration

Arbitration is a procedure where both parties that are involved in a legal dispute agree to let an impartial third party decide the outcome of the case. The arbitrator is normally an expert in the specific legal domain and industry, in this case, Construction and Contractual Law. The arbitrator’s decision is legally binding and can be enforced in a court of law.

Adjudication

The procedure of adjudication is intended to be a condition precedent to either arbitration or litigation, with a third-party adjudicator appointed to the legal dispute when both parties fail to agree on an adjudication procedure. This procedure can be mandatory in Construction and Contractual Law disputes between contractors/sub-contractors and clients/project managers.

When to Adopt Which Process

If you are a small and emerging contractor, you are at a disadvantage when entering a major legal dispute, which is why alternative dispute resolution mechanisms have been introduced. The majority of major construction agreements in South Africa features adjudication as part of the contract, meaning that this mechanism can be enforced on such agreements. An adjudicator’s decision is legally binding but can be reviewed during an arbitration or court proceedings. However, the outcome of an adjudication can play a role in your case during arbitration or litigation.

When you need an expert in Construction and Contractual Law, Allardyce & Partners Attorneys offers an extensive range of legal services to assist your business on a legal front. Please contact us on 011 234 2125 or email us at enquiries@allardyce.co.za with any enquiries.