Arbitration is a method of resolving disputes between two or more parties by reference to one or more persons appointed for that purpose, typically in accordance with procedures laid down in the Arbitration Act 42 of 1965.
Litigation is the system by which the advocates representing each side adduce arguments in a court of law to persuade the tribunal (judge, jury, or assessors) that they have the better legal case.
In an NEC contract, adjudication is the formal, fast-track dispute resolution process used when the Employer and Contractor cannot agree.
All the standard forms of contract supported by the Construction Industry Development Board contain adjudication procedures – CIDB Best Practice Guideline #C3 Adjudication
NEC3 Adjudication Procedure
Each NEC3 form of contract requires that the party notifying a dispute refers it to the Adjudicator for a decision. The decision is binding on the Parties unless and until it may be changed by subsequent reference to the tribunal (arbitration or litigation as selected by the Parties in the Contract Data) and is final and binding if a Party does not notify the other Party of his intention to refer the matter to the tribunal within 4 weeks of the Adjudicator’s decision. Such reference to the tribunal is not permitted if the matter has not first been referred to the Adjudicator.
The adjudication procedure in the NEC3 family of contracts is included either in Section 9 of the Core Clauses for short contracts or under Option W1 (Dispute Resolution) for other contracts. (Option W2 is only applicable in the UK). The Adjudicator has jurisdiction from the NEC3 Adjudicator’s Contract entered between him/her and both of the Parties and has duties arising from a combination of that contract and the contract between the Parties from which the dispute referred to him has arisen.
Resolution of a dispute by adjudication is mandatory in all NEC3 contracts. There are strict time bars for the notification of a dispute and implementation of the adjudication process which, if not observed, would not only deny the Parties their rights to adjudication, but also to any possible further reference to either arbitration or litigation. The Adjudicator’s fees, based on an agreed hourly rate, and expenses are shared equally between the Parties irrespective of the outcome.
NEC4 Adjudication Procedure
With the publication of NEC4 the publishers, Thomas Telford, have made significant adjustments to the dispute resolution procedures. The NEC4 contains provisions for two alternative dispute resolution approaches for all the main contracts, but with an additional one for the Engineering and Construction Contract:
Option W1 (Used outside of the UK)
Option W2 (Used when Adjudication is the method of dispute resolution and the United Kingdom
Housing Grants, Construction and Regeneration Act 1996 applies)
Option W3 (for the ECC4 used outside of the UK when a Dispute Avoidance Board is the method of dispute resolution)
The majority of NEC4 contracts in South Africa will make use of Option W1 which is very similar to the provisions of Option W1 under NEC3. The adaptation of Option W1 under NEC4 is that a dispute is first referred to the Senior Representatives of the Parties. If the dispute is not resolved by the Senior Representatives within two weeks, then it is referred to the Adjudicator. NEC4 includes the following standard wording under clause W1.2(3):
If the Adjudicator is not identified in the contract data or if the Adjudicator resigns or is unable to act, the Parties choose a new adjudicator jointly. If the Parties have not chosen an adjudicator, either Party may ask the Adjudicator nominating body to choose one. The Adjudicator nominating body chooses an adjudicator within seven days of the request. The chosen adjudicator becomes the Adjudicator.
Please read the Contract Data to determine who the Adjudicator Nominating Body is (usually ICE-SA represented by its Chairman) and any other conditions relating to the appointment of an adjudicator.
Option W3 is used for more complex projects that span a longer time period. With Option W3, a Dispute Avoidance Board is appointed at the time the contract is entered into between the Parties. If the Parties require a replacement Dispute Avoidance Board member and they cannot agree, then the Dispute Avoidance Board nominating body will be requested to nominate a person (usually ICE-SA represented by its Chairman for South Africa).
ICE-SA is the Adjudicator Nominating Body named in many NEC Contracts in Southern Africa.
There are two options for appointing an adjudicator:
1 - Select your own Adjudicator from our list and contact the Adjudicator directly.
a) An Adjudicator should ideally be appointed at the same time as the contract between the Parties is awarded.
If this is not done:
b) The Parties can subsequently agree on the adjudicator to be appointed.
Any person wishing to locate an experienced and qualified Adjudicator for a dispute under an NEC contract may search through the ICE-SA Panel of NEC Adjudicators, evaluate the person’s CV, and then contact the individual chosen.
This service is provided to the industry free of charge in South Africa.
A tri-partite Adjudicator’s contract must then be entered into between the parties to the contract and the Adjudicator.
2 a) Should the parties to a contract not agree on the person as Adjudicator, the NEC contract makes provision for the Adjudicator Nominating Body to select a person to determine the dispute on behalf of the parties.
b) The Chairman of ICE-SA may also be called upon to nominate an Adjudicator where an Adjudicator resigns or becomes unable to act, and the Parties cannot agree on a replacement.
From 1 January 2025, an Adjudicator Nomination Fee of R8 000.00* is levied for ICE-SA to act as the adjudicator nominating body. *(VAT Not applicable)
A tri-partite Adjudicators’ contract must then entered into between the Parties to the contract and the Adjudicator.
ICE Country Representative (South Africa): Prof Marianne Vanderschuren
Email: communication@ice-sa.org.za
Address: SAICE House, Thornhill Office Park, Bekker Road, Vorna Valley, Midrand, 1685, South Africa
