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29 April 2017
Article by: Gia Costella
MDA Consulting associate Niel Coertse discusses alternative dispute resolution in construction contracts and MDA Consulting's programme.
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Independent, multidisciplinary legal consulting firm MDA Consulting has introduced its Programme in Construction Adjudication, to be launched in February 2013 by the University of Pretoria, in reaction to industry challenges, says associate Niel Coertse.

“The construction law field is a dynamic field, with many aspects, such as legal, financial and insurance present in any contract. It is also an underdeveloped field in South Africa, compared with that of the UK.

“The UK has specialist technology and construction courts, which South Africa relies on for judgments and inputs to form a basis for resolving disputes. It also has the Society for Construction Law, which conducts research into classic construction disputes and, from there, provides best practices and guidelines for resolving those. We do not have anything like this in South Africa,” he states.

Coertse notes, however, that the body of construction and engineering law know-ledge in South Africa is not as vast as that of the UK.

“The problem is that our courts are not bound by the decisions of foreign courts. So, in a dispute our courts will refer to the South African body of knowledge, such as other court decisions, first. If they do not find what they need, then only will they look at external and foreign sources.

“With this new course we hope to enrich the South African body of knowledge,” he explains.

Another challenge, notes Coertse, is that South African universities do not currently offer any courses specifically focused on construction law.

“It is a field in which you end up by chance, after you have studied for your law degree, by working in that division in a law firm, for example. The UK, meanwhile, offers a Master of Science in Construction Law and Adjudication.

“So, I think there is definitely space for the development of this field in South Africa through education, consulting and other services specifically related to this field,” he says.

Coertse notes that, with regard to contracts, there is often a gap between the personnel dealing with the technical aspects of a construction project and those dealing with the commercial aspects.

“They often do not have an under- standing of what the others are doing and it is important to bridge this gap,” he says.

Currently, he says MDA Consulting is attempting to bridge this gap by providing education at training sessions and public seminars.

Further, Coertse notes the challenges that arise through the use of adversarial contracts.

“Our legal system in South Africa is of an adversarial nature and this is reflected in the types of contracts that are used by employers and contractors alike. These pose problems, especially for contractors, who have to deal with many loopholes in the contracts, which are often introduced through substantive amendments to standard form contracts, simply to receive payment.

“The problem is exacerbated in the clauses of the contracts and the companies then pass the buck on that. We are seeing more and more contractual disputes going from the inception of a claim all the way through to adjudication and arbitration, if necessary,” he notes.

The solution to these problems and challenges begins with education, Coertse emphasises.

“We are seeing some contractors becoming more commercially astute and resorting to employing lawyers and legal advisors to review the contracts and terms before going to tender.

“It is important for them to know who they are contracting with and be sure that they will be paid, while it is also important for the employers to know who will be contracting for them and whether the contractors are able to deliver,” he says.

He adds that contractors need to educate themselves, not only on the technical aspects of the project, but also on what they are warranting and undertaking through the contracts they sign.

“I see a contract as a tool that both contractors and employers can use pre-emptively at the tender stage of a project to minimise risks such as payment and design risks. During the construction phase the contract can then be used proactively to manage other types of risks that arise during this phase.

“I see too many contractors who are hesitant to claim for fear of annoying their employers, but a contract is a set of rules that was agreed upon by both parties. It should be used as a basic premise from which to depart for contractor and employer, to ensure delivery of the project on time, within budget and to specification,” states Coertse.

MDA Consulting intends to extend this knowledge through its programme.

Programme in Construction Adjudication

“With construction adjudication progres-sively becoming more entrenched as a procedure for resolving construction disputes across the industry, a need has now arisen for legal professionals who advise and/or assist and/or represent parties in adjudications, or who practise as adjudicators themselves to be formally trained in the practice.

“Adjudication is not governed by legis- lation like arbitration is. The courts are leaning towards letting the parties involved choose their dispute resolution procedures, and have recently enforced adjudicator’s decisions,” says Coertse.

The eight-month programme is aimed at construction and legal professionals who have experience in the construction industry and who currently advise, assist or represent parties in construction adjudications, who may wish to practise as adjudicators or have an interest in construction law, claims and contracts.

The syllabus is divided into four modules and will be presented at the University of Pretoria’s main campus.

Coertse claims that the course is the first of its kind in South Africa and will be recognised by the Council of Higher Education for Continuing Professional Development purposes.

“The programme will provide all delegates with an understanding of the nature, extent and application of South African construction law in the formulation, prosecution and defence of construction claims, from a contractor’s and an employer’s point of view.

“It will also examine the various initia- tives and steps being implemented to promote the application of construction adjudication and help put in place a statutory framework for construction adjudication in South Africa, and consider what (if any) the nature, form and content such a statutory framework may take,” explains Coertse.

He notes that the Construction Industry Development Body (CIDB) is considering implementing compulsory adjudication as a dispute-resolution procedure in construction contracts, and where they do not have these in place, the CIDB’s rules will then apply.

“We pre-empt that once the CIDB’s dispute-resolution procedures are legally enforceable, we will be able to provide a competent body of adjudicators who will be able to address construction disputes in the correct manner, through our course,” he concludes.


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