by Johan van der Wath and Khonzi Zondi.
Introduction
Most construction agreements contain a dispute resolution clause in terms of which the dispute must either be adjudicated by means of Adjudication or the dispute can be referred to Adjudication at the election of the party referring the dispute. The agreement then changes the default position, being that all disputes are resolved by means of litigation.
In terms of the JBCC PBA 2018 edition 6.2 agreement (“JBCC 6.2”) for instance, a dispute can be declared and referred to adjudication if the correct procedure is followed.
What is Adjudication?
Adjudication is an alternative dispute resolution method in terms of which an adjudicator is appointed to adjudicate duly declared disputes between contracting parties.
The adjudication proceedings usually follow a process in terms of which the documents exchanged between the parties must set out the facts, evidence and legal argument that the parties intend to rely on. An oral hearing is only held if the adjudicator decides that it is necessary to do so. If an oral hearing is not held then the adjudicator makes an award based on the documents that was presented to him. If an oral hearing is held the adjudicator makes an award based on the documents exchanged and what was presented to him during the hearing.
Referral of a dispute for adjudication – Notice of Adjudication
Clause 30.3 of the JBCC 6.2 states that a dispute shall be referred to adjudication by the referring party (the same party who issued the notice of disagreement), within 10 days after expiry of the notice of disagreement time period, by way of a notice of adjudication. This imposes a duty on the referring party to furnish a notice of adjudication in order that the dispute can be resolved by means of adjudication proceedings.
Content of the Notice of Adjudication
In terms of clause 30.4 of the JBCC 6.2, the notice of adjudication must clearly define the scope of the dispute and the relief sought by the referring party. It is clear from clause 30.4 that there are two aspects that a notice of adjudication must contain, namely the “scope of the dispute” and the “relief sought”. We will now hereunder discuss what exactly is meant with these two aspects.
The scope of the dispute
The scope of the dispute must include the relevant details of the dispute, which will include how the dispute originated. For instance, if the dispute revolves around a contractors’ dissatisfaction with the principal agents decision that its extension of time claim was rejected, then all the details regarding the claim and the rejection thereof must be set out in the NOA. It will also assist to include the relevant supporting documents in this regard. In our example, the following documents can be included:
- The notification of intention to claim that was submitted to the principal agent;
- The extension of time claim that was submitted to the principal agent;
- The principal agents ruling on the extension of time claim.
The relief sought
The relief sought must set out what the referring party wishes to achieve with the adjudication, for instance that an extension of time claim be granted and the date for practical completion be extended to a certain date.
What happens if a Notice of Adjudication is not filed timeously?
Clause 30.5 of the JBCC 6.2 states that failure to comply with the above stipulated time periods for the notice of adjudication bars the referring party from referring the dispute to adjudication and as a consequence of this failure, the matter will thereafter (after the expiry of that above stated time period) be resolved by arbitration and not adjudication.
What happens if a Notice of Adjudication does not comply with the agreement?
If the NOA does not comply with the provisions contained in the agreement, then the other party can object thereto. The adjudicator must then determine whether the NOA complies with the agreement. If the adjudicator finds that the NOA does not comply with the agreement, the adjudicator may find that he/she does not have jurisdiction to adjudicate the dispute and the dispute will then have to follow arbitration proceedings, which is more expensive and takes longer to complete.
Conclusion
It is imperative for contracting parties to the JBCC 6.2 agreement to fully understand the contents of clause 30.0 and to comply with the time periods for filing of a NOA and ensure that the NOA contains the required information.
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