INTERNATIONAL ARBITRATION 1/3LY
MARKET COMMENTARY 11
Across Africa, stakeholders find the court system challenging, as in most cases it is a long, expensive and arduous process. Local dispute resolution is also affected by a skill shortage at the administrative level and difficulties in securing appropriate experts, as well as allegations of corruption. As a result of these issues, international contractors are generally keen to negotiate international arbitration clauses and not to rely on the local courts. On large scale projects, most parties prefer to agree that any arbitration will take place in arbitral centres with longstanding experience and expertise. For this reason, arbitrations are still generally taking place in Europe, the Middle East or the United States. MITIGATING RISK AND THE FUTURE What does the future of construction dispute resolution in Africa look like? Across Africa, particularly South and East Africa, there has been increased activity in the construction industry insofar as infrastructure and resources are concerned. This is likely to translate into an increase in construction disputes and alternative ways in which to resolve them. At present, arbitration remains the most widely accepted form of dispute resolution, though we expect to see an increase in other forms of dispute resolution, such as disputes boards, in the future. It is also hoped that this increased activity will lead to a transfer of know-how and skills, resulting in both more expeditious local methods for resolving disputes and more efficient projects. Those looking to undertake a project in Africa should be aware of the range of legal issues that they may encounter, fully understand the implications of any contractual clauses relating to dispute resolution and ensure clear communication between parties at all times.
WHAT IS CAUSING DISPUTES IN CONSTRUCTION ACROSS AFRICA? Disputes across Africa tend to be generated by issues such as: • Poor design documents and drafting, as well as poorly adapted versions and non-standardised contracts • Delayed access to the site • Delayed progress with the works • Failure to comply with contractual obligations (at all or in a timely manner) • Lack of understanding of project requirements and professional negligence • The difference in construction contract negotiations and in contract management between public parties and private parties Construction projects in Africa are also prone to difficulties caused by the challenging environments in which they are negotiated and the asymmetrical knowledge and experience of the various parties to the contract. CHOOSING THE RELEVANT SEAT OF ARBITRATION Selecting the appropriate arbitral seat always requires careful consideration. In most cases, the competent court of the jurisdiction where the arbitral tribunal has its seat will be competent for any annulment procedure. South Africa is often chosen because its developed system of precedent provides parties with legal certainty. It is also a signatory to the New York Convention (which many African countries are not) and is more cost effective than many other African jurisdictions. Owing to marked differences between African jurisdictions, in contractual discussions it remains important that stakeholders carefully consider the consequences before agreeing to amendments to any dispute resolution clauses.
WE HAVE LAUNCHED A GLOBAL GUIDE TO DISPUTES IN THE CONSTRUCTION INDUSTRY. PLEASE EMAIL INFRASTRUCTURE@CLYDECO.COM TO RECEIVE A COPY.
OWING TO MARKED DIFFERENCES BETWEEN AFRICAN JURISDICTIONS, IN CONTRACTUAL DISCUSSIONS IT REMAINS IMPORTANT THAT STAKEHOLDERS CAREFULLY CONSIDER THE CONSEQUENCES BEFORE AGREEING TO AMENDMENTS TO ANY DISPUTE RESOLUTION CLAUSES.
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