Mediation has been doing the rounds in the South African construction industry for the last three decades and was initially introduced into the civil engineering& construction sector of the industry in the 1982 edition of the General Conditions of Contract for Works of Civil Engineering Construction (GCC), and later into the building sector via the 1991 edition of thePrincipal Building Agreement (PBA) published by the Joint Building Contracts Committee(JBCC).
It is widely accepted that mediation is intended to be a voluntary, non-binding, flexible, informal &confidential process.
Although the process involves a third party, namely the mediator, it is the parties who remain responsible for the outcome.
This is known as the facilitative model of mediation and in this model, as the name so aptly implies, the mediator aims to facilitate a settlement between the parties without interjecting his own expertise of opinion into the dispute.
The mediator attempts to accomplish this by, inter alia, conveying information between the parties in a re-framed & unmuddled format, exploring possible offers, concessions & counteroffers with the parties by helping them consider these from different vantage points and reality testing them by, for example, asking a party to consider how its position might stand up in court of law.
These functions, skills and techniques are specific to mediation and require training, practice and an acute understanding by the mediator of his/her role in order to ensure any possibility of success.
What I wish to look at in this article is how mediation is currently being applied in the South African construction industry.
How is mediation currently being applied?
The primary and most important function of a mediator is to develop a rapport with the parties in order to create an environment of trust and confidence.
This environment is crucial in order toestablish a mutually beneficial framework for co-operative decision-making that allows the freedom in which to analyse the conflict, to promote constructive communication, to facilitate negotiation and problem-solving, to educate the parties regarding their opposing positions and interests, to empower the parties to develop their own solutions, to allow the mediator the opportunity to impose pressure on the parties to settle, to allow the mediator the opportunity to test the parties’ positions by rigorously submitting it to reality testing and,finally to help the parties come to their own settlement based on their needs.
In order to achieve this mediators has to have a firm grasp of the soft and hard skills of their trade, the hard skills are easily taught and learnt but the soft skills require a lot of practice but beyond practice it requires a trust in the mediation process above a trust in the mediators own knowledge and experience of the industry or subject matter the dispute relates to.
Research shows that internationally, mediation in the construction industry, is the domain of the legal fraternity with as much as 80% of mediators having a legal background.
In South Africa the inverse is true with mediators being drawn mostly from professionals in the construction industry.
In the 2004 edition of the General Conditions of Contract for Construction Works (GCC), which is still widely used despite a new edition appearing in 2010, the contract states that if the contract data provides for mediation as dispute resolution mechanism the mediator will be appointed by the South African Institute of Civil Engineering (SAICE).
The contract further states that “The Mediator shall, as soon as reasonably practical, give to each of the parties his written opinion on the dispute, setting out the facts and the provisions of the contract on which the opinion is based…”
In the 2010 edition of the GCC mediation has been completely omitted from the contract as a dispute resolution mechanism having been replaced by amicable settlement with the help of an impartial third party called the neutral.
Any procedure may be followed but it is recommended that the procedures, as set out on the GCC 2010 Amicable Settlement Procedures document be followed. These include negotiations, mediation, conciliation, expert determination or an executive panel to hear both parties informally.
The GCC 2010 Amicable Settlement Procedures describe Mediation as follows: “The Neutral, called the Mediator in this instance, applies his expert knowledge of the domain of the issue to negotiate a compromise. If he fails to settle the issue, he shall give an opinion which is not binding, unless accepted by the parties concerned.”
In the “NOTES ON SAICE AMICABLE SETTLEMENT PROCEDURE, FIRST EDITION 2010” (the notes) published by SAICE the function of the mediator is described as “…to resolve an issue by presenting the parties with a reasonable opinion that is acceptable to both of them. For this reason he must be an expert in the domain of the issue so that he holds the confidence and respect of both parties.”
The notes further states that mediation does not seek to establish legal rights but rather an acceptable compromise and for that reason lawyers should not be allowed to represent the parties at the “hearing”.
This tendency echoes the South African Association of Consulting Engineers general philosophy that disputes arising in the execution of engineering works can best be settled by engineer mediators.
It is clear that the outlook of the South African engineering fraternity, who currently deals with the lions share of mediations in the South African civil engineering & construction industry, is that the trust of the parties is (and if it isn’t it should be) founded on the knowledge and experience of the engineer who will be acting as a mediator rather than on building a rapport with the parties.
In this scenario the engineer depends completely on his own competency to bring an end to the dispute and therefore the parties can never be responsible for the outcome of the mediation and hence can never own the solution.
In the event that either party does not agree to amicable settlement the dispute resolution mechanism is adjudication by way of a standing adjudication board.
This course of action can never address the needs of the parties as the mediator function is reduced to giving an expert opinion.
In the latest edition of the JBCC PBA, the dispute resolution mechanism will be adjudication and failing referral to adjudication within the required time frame, the dispute will be resolved by arbitration. In the event that the parties fail to agree to either the adjudicator or arbitrator, as the case may be, the Chairman of the Association of Arbitrators (the Association) will appoint same.
In making its appointment The Association will attempt to match the skill set of the adjudicator or arbitrator to the specific facts of the dispute, by way of example any monetary claim will generally be handed to a Quantity Surveyor, any design or construction related claim will be handed to an Engineer or Architect.
Notwithstanding the provisions of relating to adjudication and arbitration the parties may, by mutual agreement, refer the dispute to mediation.
In the event that the parties cannot agree on a mediator or do not know a suitable candidate they generally approach the Association and the Association will appoint a mediator using the same rationale employed when appointing an adjudicator or arbitrator.
The mediation will proceed in terms of the “Mediation Rules” (the rules) published by the Association.
The rules states that “The mediator shall endeavour to assist the parties to settle the dispute by agreement. The mediator shall not adjudicate the dispute, make any recommendations to the parties or advise any party on the merits of the dispute.”
This bodes well for the future of mediation in the residential and commercial building sector of the South African construction industry.
However, according to research findings, the current reality is that in most of these cases the parties to the mediation signed an agreement binding themselves to the mediators opinion until otherwise ordered in arbitration or litigation proceedings.
This shows that the parties don’t enter into the process in order to reach their own settlement to which they can agree to be bound and in the process be empowered.
This fact, coupled with the permeating view of the South African engineering fraternity, causes the mediators in the residential & commercial building industry disputes to fall into the same trap of relying on their knowledge and experience to find trust and a solution rather than empowering the parties the reach an amicable settlement based on their own needs.
The research has shown that mediation in the South African construction industry is not consistent with the accepted principles of the facilitative mediation process, as the mediator does not generally assist the parties in determining their own settlement; instead the mediation activities centre mainly on the collection of information on the dispute by the mediator and the formulation of a solution by the mediator. The research also revealed that the mediator’s knowledge and utilisation of specific mediation process skills and techniques are limited as they rely on their knowledge and experience to “solve” disputes.
In South Africa the difference between mediation is that an expert gives an expert opinion as opposed to adjudication where an expert gives an expert determination. This is much of a muchness and has caused mediation to become devalued as an effective dispute resolution mechanism.
References:
1. An investigation into the mediation of disputes in theSouth African construction
Industry, Althea Povey, Journal of the South African Institution of Civil
Engineering, Vol 47 No 1, 2005, Pages 2–7, Paper 562;
2. Management Guide to the General Conditions of Contract 2010, Willie Claassen,
SAICE;
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