Civil Engineering December 2022 | Vol 30 No 11

Civil Engineering December 2022 19 in the first instance, by adjudication, which was designed to be a rapid and relatively inexpensive process. This legislation, namely the Housing Grants, Construction and Regeneration Act of 1996, is now in force in the UK and parties to construction contracts are allowed to refer a dispute for adjudication at any time. Similar legislation has been adopted in parts of Australia, New Zealand, Singapore and Hong Kong. South Africa attempted to introduce a “prompt payment act” in 2016 that would have provided, among other things, for statutory adjudication, but it was opposed by certain government institutions as being anti-competitive and has not been enacted. South Africa, as does the rest of Africa, relies on the terms of the contract to provide for adjudication as one of the phases in the (usually) stepped dispute resolution process. The World Bank is also advocating that such procedures be used on projects it funds, where the FIDIC MDB Harmonised Edition Contract (the Pink Book of 2010) is usually used (which provides for a standing Dispute Board). Construction disputes are better served by mechanisms that are speedy, cost effective and binding. Such mechanisms should be conducted by an independent third party and should be under- taken by a person (or group of people) chosen by the parties and with the required legal/technical knowledge. Such mechanisms should be able to hear any matter, should be capable of becoming final and enforceable, and should not interfere with the progress of the works. It also recognised that small and emerging contrac- tors are disadvantaged – even imperilled – in the event of a major dispute. The Construction Industry Development Board (CIDB) took the lead to officially introduce adjudication on construc- tion contracts in South Africa and published a Procurement Practice Guide in 2003. This document dealt, inter alia, with the implementation of adjudication and advocated that “adjudication should be applied to all categories of construction contracts, namely engineering and construction works, services and supplies, at both prime and subcontract level, and should be a mandatory requirement for the settlement of disputes prior to the completion of the contract.” In South Africa, the CIDB advocated four contract forms for use on public sector contracts. Two of these (FIDIC and NEC) are international contracts and the other two are home grown South African contracts (JBCC and GCC). Initially, only the NEC contract made provision for adjudication. The first edition “rainbow suit” of FIDIC, published in 1999, adopted adjudication as a means of resolving disputes in the first instance, and the second and third steps in the process remained as they had been in the previous editions of the FIDIC contracts, being amicable settlement followed by arbitration. As new versions of our local contract forms were published, these too, in keeping with the CIDB policy guideline, make provi- sion for adjudication as a mandatory step in the dispute resolution process. Mediation and/or amicable settlement are currently a voluntary process that can be attempted by agreement between the parties. WHAT IS ADJUDICATION REALLY? The CIDB’s Procurement Practice Guide defines adjudication as “an accelerated and cost-effective form of dispute resolution that, unlike other means of resolving disputes that involve a third-party intermediary, results in an outcome that is a decision by a third party, which is binding on the parties in the dispute.” However, adjudication is often defined by reference to what it is not. Adjudication is not arbitration or litigation, nor is adjudica- tion a decision by the engineer/project manager. Adjudication is often described as being “rough justice”, de- ciding “who should hold the money for now”. This promotes cash flow to the small players. Of course, the adjudicator’s decision is subject to review by (usually) an arbitrator if one of the parties in the adjudication is sufficiently unhappy with the outcome of the adjudication. Surprisingly few adjudicator’s decisions are subject to review by an arbitrator. Anecdotal evidence from the UK suggests that only around 3% of disputes are referred to arbitration after adjudication. However, a large proportion of adjudicators’ decisions have to be enforced by a subsequent court action to force one of the parties (usually the loser) to comply with the adjudicator’s ruling. In South Africa, courts have followed the lead of courts elsewhere in the developed world (particularly the UK) and are recognising the need to enforce such decisions. Unfortunately, owing to backlogs and an overloaded court system, this can take as much as nine months to achieve. In the United Kingdom, enforcement applications are heard by the Construction and Technology courts, and this usually takes less than a month. We have a “kitchen sink approach” to adjudications in South Africa. A dispute on any topic relevant to a contract can be referred for adjudication. By contrast, New South Wales in Australia is quite narrow in its application of adjudication, which is limited only to matters concerning payment. In other jurisdic- tions (like Malaysia), only disputes concerning certified payment may be referred to adjudication. Adjudication may take the form of ad-hoc adjudication where the adjudicator is only appointed when a dispute arises and for a specific dispute. Ad-hoc adjudicators do not normally then become standing adjudicators to deal with subsequent disputes should these arise. Alternatively, a standing dispute board is ap- pointed at the commencement of the contract. The current market trend appears to be for standing rather than ad-hoc appointments. This is because there is a move towards dispute avoidance and the Dispute Board fulfils the role of a Dispute Avoidance and Adjudication Board, and so needs to be available before a claim turns into a dispute. In the 1999 FIDIC rainbow suit, the Red Book provided for standing Dispute Adjudication Boards (DAB), but the Yellow and Silver Books made provision for ad-hoc adjudication. However, the 2017 FIDIC rainbow suit, second edition, calls for standing adjudicators for all the contracts. The NEC3 and NEC 4 both call for standing adjudication. In South Africa, the preference appears to be for ad-hoc adju- dication. This may be for cost reasons, as well as clients appearing to be hedging their bets. If they get a bad decision from the first adjudicator, they can change adjudicators for subsequent disputes. Standing DAB members charge a monthly retainer fee that is charged quarterly in advance. The standing DABs are usually required to conduct site visits and meet with the parties and the engineer. These are usually at not less than 70-day and not more than 140-day intervals. The DAB members charge a daily fee for travel time and the site visit