What is Construction Arbitration in South Africa?
Construction arbitration in South Africa provides an effective means with which to solve disputes between project commissioners and contractors, or contractors and sub-contractors. However, to understand why construction arbitration in South Africa is necessary to ensure payment disputes can be resolved in a cost effective manner, one has to understand the arbitration process.
What Is Arbitration?
It is a procedure that can be followed to solve disputes in South Arica, also as related to the construction industry. The parties to the dispute agree to submit their dispute to one or more arbitrators who will decide the outcome of the dispute. It is an alternative to court litigation.
The parties involved in the dispute choose the arbitrator or arbitrators, such as Allardyce & Partners. The parties can also approach the Association of Arbitrators of South Africa called AASA or the Arbitration Foundation of Southern Africa called AFSA to appoint an arbitrator. The selection process of the arbitrator is usually stipulated in the agreement between the parties.
The Arbitration Act No. 42 of 1965 and amendments govern the arbitration process, also as related to the construction industry. The parties to the agreement must have a written agreement in which they agree to use the process of arbitration to solve any existing or future dispute through arbitration. It is thus recommended that parties to a construction agreement take the proactive step in reducing the cost and time it takes to solve disputes by using arbitration and stipulating such in their agreement.
The dispute is heard by the arbitrator or arbitrators in private at a venue and time selected by the parties involved in the dispute. The arbitrators use a relevant system for solving the dispute according to the industry in which the dispute arose. As such, the arbitration process followed must be suitable for the particular circumstances of the dispute, such as a system suited for hearing and deciding on disputes in the construction industry of South Africa.
Construction arbitration in South Africa has certain characteristics, which are briefly discussed below.
Confidentiality
Any disclosures during the hearing and the arbitration process are confidential. As such, the parties to the dispute do not have to be concerned about damage to their public image because of the dispute. If a court orders arbitration for a dispute in the construction industry, then the court order is public.
Arbitrator Appointment
The parties to the dispute appoint the arbitrator or ask AASA or AFSA to recommend a suitable person.
Neutrality
The arbitration, whether for a dispute between parties from South Africa or for an international dispute, must be neutral. This means that the particular law, time, venue, and language of arbitration are chosen by the parties to the dispute.
Consensual
All parties to the dispute must agree to use arbitration as a means to solve the dispute. The parties can agree to arbitration when faced with a dispute or they can have a clause in their construction agreement that stipulates that arbitration be used for any disputes. Once agreed on arbitration, a party to the dispute cannot just withdraw from the process.
Binding Decision
The arbitrator has the final decision over the dispute. If a court order is in place to enforce compliance, the award is as binding as the court order.
Where to Get Help
Construction arbitration in South Africa is thus a viable alternative to lengthy court proceedings. The contractors and employers are able to solve their disputes without excessive delays in the project or payment. We provide objective arbitration services relevant to the needs of parties in the construction industry.
Call us on +27 (011) 234 2125 for assistance with construction arbitration in South Africa.
Disclaimer: This article is for information purposes only and does not constitute legal advice. Call on our attorneys for legal advice, rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing – August 2018.
