Worldwide: Construction Law Update: Important Procedural Developments

Last Updated: 7 December 2015
Article by Alon Meyerov and Rob Scott

There are three important developments that are taking place in the field of dispute resolution. These developments will be of substantial interest to all involved in the construction industry.

These developments are :

  1. The introduction into law in 2016 of mandatory Adjudication and Prompt Payment Regulations, for all construction works contracts
  2. The submission to Parliament in 2016, of an International Arbitration Bill
  3. The establishment of the China/Africa Joint Arbitration Centre (CAJAC) in Johannesburg and Shanghai

Adjudication Procedure and Prompt Payment Provisions

The Minister of Public Works has proposed an amendment to the Construction Industry Development Regulations.

The draft amendments to the regulations have been published for public comment and are expected to come into law during 2016.

The amended regulations will apply to all construction works contracts or construction works related contracts, whether written or oral and in both the private and public sectors (excluding home building contracts). The definition of such contracts is very broad. The main import of the regulations will be the following :

  • A prompt payment provision which will provide the following:
    • That a contract may not contain any provision which makes payment to a contractor, service provider or supplier conditional upon the payer receiving payment from a third party. This will be of particular importance to sub-contractors who are entitled to payment from the principal contractor.
    • That a party to a contract may not withhold payment or part payment unless that party has given notice of intention to withhold payment and has given reasonable grounds, in terms of the contract, for doing so. Where a party is not satisfied with those reasons they may declare a dispute and refer the dispute to adjudication in terms of the regulations.
  • A provision for mandatory Adjudication, which will provide that:
    • every construction works contract or construction works related contract must provide for an adjudication procedure for the determination of any dispute;
    • where a party is not satisfied with the adjudicator's decision, that party may refer that dispute to arbitration in terms of the Arbitration Act or take the decision on review in terms of the Promotion of Administrative Justice Act;
    • the decision of the adjudicator is binding and the parties must give effect to that decision, within ten days from delivery of the adjudicators decision, even though a party may intend to refer that dispute to arbitration or to take that decision on review; and
    • any party to a dispute, may be assisted by or represented at the adjudication by a representative or advisors, including the legal representation.

Parties to a construction works contract or construction works related contract will not be able to contract out of these regulations. The purpose of the regulations is to introduce mandatory adjudication as a fast track mechanism for resolving disputes and increasing cash flow in the construction industry. The regulations are set to have a profound effect on the industry and industry participants need to get to grips with the regulations themselves and the impact that they will have.

The regulations in their existing draft form have been severely criticized and are likely to be subject to a number of amendments and further publication for public comment before they are signed into law.

International Arbitration

A draft International Arbitration bill is presently with the Department of Justice, for review, having been approved by the Law Development Commission. The bill, it is understood, is based on the UNCITRAL Model Law for International Arbitrations (that having been the Law Commission's proposal in 1997). The bill will be submitted to Parliament for approval next year.

It is a matter of speculation as to what extent the Model Law will be adjusted or tampered with – what is known is that the Law Commission had, in putting its proposal to the Department of Justice (as long ago as 1997), stressed the need promote two main threads, these being:

  • the liberalisation of International Arbitration by limiting the role of domestic courts; and
  • the emphasizing of party autonomy by allowing parties the freedom to choose how disputes should be determined

Our existing Arbitration Act of 1965 allows parties recourse to our courts in the course of arbitration proceedings on a large number of procedural matters. This of course detracts from the essence of arbitration proceedings and so the new bill is eagerly awaited.

In addition to the fact that the Department of Justice is currently reviewing the draft bill, there have in the last four or five years been a number of decisions of our courts which reveal an appreciation of the role of arbitration in modern society. These decisions have supported the sanctity of arbitration agreements and proceedings, and have limited in those respective matters, intervention by the court in arbitration proceedings, as also the review of arbitral awards. Our courts have gone so far as to say :

"The South African courts not only have a legal, but a socio-economic and political duty to encourage the selection of South Africa as a venue for international arbitrations. International arbitrations in South Africa will not only foster our comity among the nations of the world, as well as international trade but will also bring about the influx of foreign spending to our country (Zhongi Development Construction Engineering Company Limited vs Kamoto Copper Company SARL (2014) 4 ALL SA 614(SCA))"

These developments should be of interest to all involved in cross border disputes, from the points of view of predictability in the resolution of disputes, ease of enforcement of arbitral awards, and curtailment of judicial review of arbitral awards.

The China/Africa Joint Arbitration Centre (CAJAC)

CAJAC Johannesburg and Shanghai were launched last week as arbitration centres. The intention is to establish a number of further centres in China and Africa.

The Centre will provide dispute resolution services to facilitate and strengthen business, trade and investment between China and Africa.

Parties will subject the administration and arbitration of their dispute to CAJAC, by the signing of a model clause.

The publication of the applicable procedural rules is imminent. There will be two sets of rules, one of application in South Africa, and the other in China. Johannesburg and Shanghai will have access to a shared panel of arbitrators.

This development is of course unproven but it is understood that a number of disputes have already been referred to the Centre.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.