Construction Law Update: Important Procedural Developments

Author:Mr Alon Meyerov and Rob Scott
Profession:Clyde & Co

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 :

The introduction into law in 2016 of mandatory Adjudication and Prompt Payment Regulations, for all construction works contracts The submission to Parliament in 2016, of an International Arbitration Bill 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...

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