CHAPTER ONE

1.0 INTRODUCTION 1.1 BACKGROUND The construction industry plays a very important role in contributing significantly to the Gross Domestic Product (GDP) of any country. And it accounts for around one-tenth of the worlds GDP, seven percent of employment, half of all resource usage and up to 40 percent of energy consumption (United Nations Environment Programme, UNEP report, 1996). This industry has a profound impact on our daily lives: the buildings we live and work in, the roads and bridges we drive on, the utility distributions systems we use, the railways, airports and harbours we travel and trade from are all products of this vital industry. Sometimes, in this developmental process, certain disputes are bound to arise in the construction industry. Construction industry based disputes are technically complex more often than not, meaning that their investigations will be much more fact intensive than other types of disputes. Arbitration is dispute resolution process in which the disputing parties present their case to a third party intermediary (or a panel of arbitrators) that examine all the evidences and then make a decision for the parties. This decision is usually binding. According to David Musil, (2008), The Construction industry is dynamic and competitive environment. Relationship within construction, between clients, contractors, sub-contractors and suppliers, are often adversarial. The
1

presentations are made to prove one side right, the other wrong. Thus the parties assume they are working against each other, not cooperatively. Arbitration is generally not as formal as court adjudication, however, and the rules can be altered to some extent to meet the parties needs. Arbitration is the referral of a dispute to one or more impartial persons for final and .economical. Parties can exercise additional control over the arbitration process by adding specific provisions to their contract's arbitration clause or, when a dispute arises, by modifying certain of the arbitration rules to suit a particular dispute. 1.2 STATEMENT OF THE PROBLEM Great concern has been expressed in recent years regarding the dramatic in conflict and disputes in the construction industries of many countries and the attendant high cost both in terms of direct cost (lawyers, claims consultants, management time, delays to project completions) and indirect/ consequential costs (degeneration of working relationships, mistrust between participants, lack of teamwork and resultant poor standard of workmanship) Koh Cheo Poh, 2005. There exist several parties in the construction industry and this most times open up to many problems such as misunderstanding, different opinion and controversy, regarding the construction work and the contract agreement. If the disputes/ problems are not resolved in a proper manner, they (the parties

involved) will experience serious problems such as delay in work, financial losses and endless disputes (Aberra Bekele, 2005). When construction disputes cannot be resolved informally, disputes may lead to arbitration. If the construction disputes not able to reach the agreement between two parties or more, it will be litigation case. Construction disputes may end up involvement of high stakes such as multi-million Naira investments, professional reputations and even business survival of the owner. As to which method or technique is popularly accepted in the Nigerian construction industry, this paper tends to focus on establishing the cause or causes of these disputes and how they affect output, productivity and profitability of the construction industry and how arbitration can be employed in resolving these disputes. 1.3 AIM AND OBJECTIVES OF STUDY The aim or purpose of this project is to reveal useful and practical information on the concept of arbitration and the acceptance and implementation of arbitration as one of the methods of dispute resolution in the Nigerian construction industry. In order to achieve the above aim, objectives of this project have been formulated. The primary objectives of this project are: a) To study the nature of disputes and the resolution techniques in the Nigerian Construction Industry. b) To study the process and procedures of arbitration in the Nigerian Construction Industry.
3

c) To study the acceptance of arbitration in the Nigerian construction industry. d) To recommend the best method. 1.4 RESEARCH METHODOLOGY During the course of this project, the following methods of research and procedure would be employed: 1. Literature Works Introduction to the Construction Industry in Nigeria, concept of disputes and process/ methods of settlement. The introduction to the concept and process of arbitration. This is carried out by examination of books, magazines, journals and the internet. 2. Empirical Work is performed to examine the implementation and acceptance of arbitration in local construction industry as one of the methods to resolve/ settle disputes. This will be performed by preparing a set of questionnaires based on the literature review. 3. Analysis Data will be analysed using appropriate techniques such as Importance Index and correlation. 1.5 SCOPE OF STUDY The scope of study covers area such as: a) The analysis of concepts of disputes. b) The analysis of concept of arbitration in the construction industry. c) The analysis of concept of resolution approaches to disputes.

d) The survey of local (Nigerian) contractors to gain information about the use of arbitration and its acceptance in the local construction industry. The project will highlight the implementation of arbitration and how it can contribute to the Nigerian construction industry, the advantages and disadvantages of arbitration. And also other alternative methods besides arbitration that can be employed to ensure the success of the settlement process of disputes. 1.6 ABBREVIATIONS FIDIC International Federation of Consulting Engineers. RIBA Royal Institute of British Architects. NIA Nigerian Institute of Architect. ADR - Alternative Dispute Resolution DRA - Dispute Review Advisor DRB - Dispute Review Board DRE - Dispute Review Expert IP Important Index

CHAPTER TWO
2.0 INTRODUCTION This chapter will provide general information about the nature of disputes, definition and causes that can lead to disputes, what arbitration is, and also how arbitration can be employed in resolving various construction disputes. At the end of this chapter, construction disputes are categorised according to their characteristics. This chapter will also fulfil the first objective of this project. It is pertinent here, as general background information, to briefly describe or refer to the various types of building contract that are normally employed in the building and engineering industry. Quite commonly, standard forms of agreement are used when letting out a building or engineering contract. A standard form is an agreement that has been drafted and or approved by a body such as Architects, Engineers, Contractors or other international association or professional institution. It is generally accepted and used by these bodies or institution with or without amendments. The obvious advantage of using such standard forms is convenience and familiarity, as all parties concerned would have had experience and knowledge of the conditions contained in such forms. Also, it would cut down the cost of drafting a special agreement and avoid the loss of time that would usually be required to draft an agreement afresh. The usual standard forms of agreement used in Nigeria (and quite commonly in other Commonwealth countries its equivalent standard form) are the NIA

(Nigerian Institute of Architect) standard form of Contract, FIDIC (International Federation of Consulting Engineer), & ICE forms of contract (Nor Azim, 2003). The FIDIC form of agreement is usually used in an international contract such as those let out by the World Bank, Asian Development Bank or by the government departments, which are under certain obligation to use the FIDIC form of agreement. Another standard form of agreement is the ICE form of contract, which is introduced by the institute of Engineers and is usually used in a contract involving engineering works. The other standard form of agreement is the PAM contract, which is based on the RIBA (Royal Institute of British Architects) form of agreement and is used for building works. Where standard forms of agreements are not used, then specifically drafted contract will be used incorporating terms and the parties involved may agree to conditions as. Some owners or employers prefer to use a specifically drafted agreement to cater to the special circumstances that may be involved or that may arise in the course of the work. Under prevailing circumstances, building and engineering contract have become more difficult to administer or execute due to increase in complexity and magnitude of such works. Added to this there is a tendency to amend or add to the standard forms of contract without proper advice or consideration as to the consequences of such amendment or addition. Where a specific situation requires certain provision or omitted from the usual terms and conditions, it
7

would be far more prudent to seek proper legal advice and if necessary to have a contract specially drafted to cover such situation rather than attempt a do-ityourself amendment or alteration of the contract which may lead to ambiguity or confusion giving rise to disputes. One of the most common causes of disputes is the misinterpretation or misunderstanding of the powers, duties and responsibility of the parties. It is not usual to find that both the administrating party (i.e. the Architect or the Engineer or the Superintending officer) and the contractor are quite vague regarding the extent of their obligations, powers and responsibilities. This is exacerbated by their reluctance to seek advice to ascertain the exact position in any given situation in relation to the contract (Koh Cheo Poh, 2005). However, in the event that the parties cannot come to an amicable settlement on disputes then the only course of action remaining would be to submit such dispute for resolution by a third party which normally in a building or engineering contract would usually provide the proper procedures for the reference of any matter or differences arising from the contract for arbitration. In this respect, it is necessary to ascertain when a dispute has taken place and when such dispute has come within the scope of the arbitration clause. But it should be borne in mind that arbitration is normally the ultimate course in a building or engineering contract after all efforts to resolve any disputes have failed.

2.1 DISPUTES IN CONSTRUCTION Disputes can be defined, according to the Law Encyclopaedia, as a conflict or controversy; a conflict of claims or rights; an assertion of a right, claim, or demand on one side, met by contrary claims or allegations on the other. Dispute is the process of expressing dissatisfaction, disagreement, or unmet expressions. Conflict is ongoing, amorphous and intangible (Costantino and Merchant 1996). Disputes can arise from the interpretation and or application of any part of the contract documents and at any time during the execution of the contract. If the contract documents are ambiguous, unplanned and conflicting they will most certainly lead to disputes. In addition to disputes, conflict can manifest itself in a variety of other ways- sabotage, lack of productivity, low morale, and withholding information are some examples. Such situation can be further aggravated if numerous additions and omissions are made to the contract and the persons responsible for the administration of the contract on both sided are badly equipped to understand and apply the contract documents, (including instructions to tenderers, agreement and conditions of contract, specifications, drawings and bills of quantities and with annexure which form part of the contract). It can be said that the seeds of disputes are sown right from the outset if the above-described situation exist in any contract. Where ambiguous or conflicting provisions do exist and disputes do arise, there is a need to ascertain

if a dispute has arisen or whether the dispute can be amicably resolved before referring such disputes to arbitration.

2.2 CAUSES OF CONSTRUCTION DISPUTES There is a great deal in the literature, as to the causes of conflict and disputes. There is also a profusion of key terminology. Some writers refer to causes of conflict, others sources reasons, or triggers. The following are identified as causes of disagreements from literature survey: (Aberra Bekele, 2005) a) Misunderstandings usually occur because of poor communication. b) Values differ between people, professionals and skills, c) People often have unrealistic expectations. The client wants speedy completion and a quality building at a low price. The contractor may want more time, a more reasonable quality and maximum price. d) Emotions play a role, the ability to handle stress causes conflict. A persons self esteem (or lack of it) can cause also conflict. Factors under this heading include languages, dynamics, geography, childhood experiences, upbringing and religion. e) Education levels, both structured and unstructured learning can have an influence on conflict. f) Many things are different between projects. There are different teams, different funders and designers.

10

g) Not all people are equally skilled to visualize two-dimensional drawings in a three dimensional way. h) Changes to plans, deadlines, payment dates, and so on, can cause conflict. i) It does not matter whom or what one must blame for a delay. It could be the weather, a subcontractor, the bank or whoever. The mere fact that there is a delay could cause conflict. j) Parties often inadequately define quality. High quality may mean different things to a plasterer and to the project director or project manager. One must use objective standards to define materials and workmanship. One must precisely describe what one requires. A client may specify a much higher standard than what he really wants while wanting a lower price. k) A sub-contractor may misunderstand the actual requirements and may quote a lower price than other contractors may, then when he realizes his mistake, conflict results.

2.3 TYPES OF CONSTRUCTION DISPUTES Sundra Rajoo, 2010, identified the various disputes which are brought for resolution in arbitration which is equally applicable in Nigeria. They are as follows: (A) Determination of Agreement Disputes caused by the determination of the agreement are as follows:

11

(1) The failure of the contractor or sub-contractor to proceed in a competent, diligent and satisfactory rate (2) The contractor or sub-contractor ceasing work on site. (3) The employer repudiating the contract by denying contractor access to site, not making progress payment, being insolvent or claiming to determine the contract. (B) Payment and Time Disputes caused by the payment issues are as follows: (1) Non-payment of variation claims by contractor or sub-contractor. (2) Non-payment of progress claims by contractor or sub-contractor. (3) Non-payment of amount certified in final account. (4) Extension of time costs claims by contractor or sub-contractor. (5) Liquidated and ascertained damages charged against the contractor or subcontractor. (6) Retention monies not held in separate account by contractor. (7) Validity of final account and certificate. (8) Contractor claim sums for fluctuation of prices.

(C) Execution of Works and Delay Execution of work issues are as follows: (1) Changes in sub-structure design and lack of temporary support during excavations
12

(2) Defective materials and claims of negligent manufacture and supply (3) Poor quality of workmanship including defects in brickworks, tiling, footing and wall construction. (4) Delays and extension of time due to local authorities requirements. (5) Negligence and nuisance.

2.4 AREAS THAT CAN GENERATE CONSTRUCTION DISPUTES There are some specific areas of the design and construction process that can generate conflict. Aberra Bekele (2005), identified five (5) of them and they include the following: 2.4.1. THE DESIGN An incomplete, inaccurate or poorly coordinated design inevitably will produce a project with conflicts and unanticipated costs and delay. Conversely, nothing diminishes the risk of misunderstanding and litigation, and provides more protection for the owner, than an accurate and complete design. The traditional single prime contract can succeed only if, when the contract is priced, the plans and specifications are reasonably detailed and complete. Otherwise, the contract sum becomes an unreliable figure subject to changes and claims for delays and impact damages. However, in order to obtain a complete and accurate design, the owner must give its architect/engineer a reasonable period to develop a complete set of plans and specifications, and provide a fair fee for that service. The owner who

13

pinches pennies with its architect and sets an unreasonable schedule invites substandard plans/specifications, and time and cost overruns. The owners failure to pay fairly for adequate design and engineering will drive its design team to use off-the-shelf specifications and uncoordinated drawings, requiring the contractor and the design team to design the project as construction progresses. For similar reasons, fast-track construction increases the risk of misunderstanding and litigation. While commencing construction before a complete design is in place may be justified by the owners economic needs, the costs and risks of that approach should be considered when estimating cost and projecting completion dates.

2.4.2. SITE CONDITIONS Views differ on whether, and to what extent, a contract should provide additional compensation for differing site conditions. Some forms of contracts include a differing site conditions clause, which entitles the contractor to additional compensation for unexpected subsurface conditions meeting certain criteria. Some owners (public and private) model their contracts on these forms. Other owners utilize contracts that are silent on the issue, or expressly prohibit recovery for differing site conditions while placing all of the risk of the unknown on the contractor. The assurance of equitable compensation for differing site conditions encourages cautious contractors to submit lower bids, unencumbered by

14

contingencies for unknown conditions. Perhaps just as importantly, a differing site conditions clause helps protect prudent contractors against being underbid by competitors who are either too careless or too reckless to include such a contingency. Because hidden conditions can make the difference between a profitable contract and a financial disaster, competent contractors often insist on an equitable adjustment clause before submitting a bid on a job with significant risk of differing site conditions. No matter which approach is taken, the wise owner will make a thorough subsurface investigation so that as much can be known about the site as possible. That information should be shared with the contractor whether performing under a differing site clause or as a part of a contract with exculpatory language. Reliable structural engineering and design, and realistic pricing by the contractor, cannot be generated in the absence of such knowledge. A good exploratory program by a competent engineering firm will diminish misunderstandings and disputes resulting from extra work and foundation failures. The quality of this investigation, as much as an exculpatory clause, will diminish disagreements leading to litigation.

2.4.3. SITE SERVICES Generally, the owner has no contractual obligation to provide for inspection or site monitoring. The contractor has the obligation to provide its work in accordance with the plans and specifications, and free from defect. Nevertheless, the cautious owner will provide on-site representatives for

15

significant projects. That representative may be from the consultants office or he/she may be a permanent employee of an owner who does major construction work. Unfortunately, some owners, even on large projects, attempt to avoid overhead costs by cutting corners here. Even if the owner ultimately proves that the contractor made a bad pour or connected the steel improperly, it is infinitely better that discover the defect early rather than well into the construction stage, where litigation is usually the result. A good inspection is the contractors and owners best friend. It is just common sense for the owner to protect itself from the catastrophic consequence of others failures. 2.4.4. WHO IS IN CHARGE? A careful reading of some construction contracts makes it difficult to find anyone in charge. The architect/engineer often provides generic specifications, pushing true design responsibilities for specialty items down through the prime contractor to various sub-levels of subcontractors and suppliers. There might be conflict when no one was in charge, with each of the parties attempting to shift the risk to another. The owner and its architect/engineer, whatever their approach to exculpatory and risk-shifting provisions, should carefully review technical data to make certain that the project will function, that means even if an owner has to employ outside consultants or experts during the construction stages. The contractor also should not allow its subcontractors work to be performed and integrated into the project without careful observation. The

16

contractor is responsible for its subcontractors. He is in charge for their work, and needs to assure that it is properly done. 2.4.5. CONTRACTOR SUBMITTALS The shop drawing process seeks to avoid failures and misunderstandings by allowing the contractor to demonstrate the detailed application of the architect/engineers design. It is here that the prime contractor, the owner and architect have the best opportunity to avoid nonconforming products or defective work. Unfortunately, prime contractors are often approving subcontractors or supplier submittals while relying on the architect/engineer for final approval or disapproval. Although the architect has final legal responsibility to approve or reject shop drawings, a contractor who does not give time and attention to this area substantially increases the risk of failure and litigation. Contractors have a substantial self-interest in making sure that material and equipment suppliers conform to the design plans, and that unauthorized changes have been made. In short, all parties who have the opportunity to review shop drawings bear the responsibility to do so in order to assure successful project completion, no matter what the contract provides.

17

2.5.0 DISPUTE RESOLUTION

Dispute resolution is the process of resolving disputes between parties. The legal system provides a necessary structure for the resolution of many disputes. However, some disputants will not reach agreement through a collaborative process. Some disputes need the coercive power of the state to enforce a resolution. Perhaps more importantly, many people want a professional advocate when they become involved in a dispute, particularly if the dispute involves perceived legal rights, legal wrongdoing, or threat of legal action against them. The most common form of judicial dispute resolution is litigation. Litigation is initiated when one party files suit against another. In the Nigeria, litigation is facilitated by the government within federal, state, and municipal courts. The proceedings are very formal and are governed by rules, such as rules of evidence and procedure, which are established by the legislature. Outcomes are decided by an impartial judge and/or jury, based on the factual questions of the case and the application law. The verdict of the court is binding, not advisory; however, both parties have the right to appeal the judgment to a higher court. Judicial dispute resolution is typically adversarial in nature, e.g., involving antagonistic parties or opposing interests seeking an outcome most favourable to their position.

18

2.5.1 TYPES OF DISPUTE RESOLUTION METHODS The two most popular and most common types of alternative dispute resolution are mediation and arbitration. All other forms of dispute resolution are highlighted below: 1. Litigation Litigation (used when all other venues failed) is a dispute resolution method that is inquisitorial and adversarial, where by the disputant initiates legal action against the other party by going to court. It has a win/lose outcome and rarely satisfies both parties. It is costly and results into much delay for the disputants and may not do justice to the parties. However, the benefit of litigation is that the court has authority to find out the truth from the parties and the enforcement of the order or judgment is supported by other law enforcement agencies. It is also used when parties have low resources and need an umpire or when they cannot agree to other forms of dispute resolution. 2. Convening Convening identifies the issues in dispute and selects the personnel responsible for resolving the matter. The neutral, called a convenor, helps to bring the parties together in order to begin negotiating a solution. Once the parties have convened, they may use other ADR techniques to resolve the issues in dispute.

19

3. Conciliation Conciliation involves a third party (conciliator) that may or may not be neutral to the dispute. Conciliation is used when parties are unwilling, unable, or unprepared to come to the bargaining table. The conciliator may begin by carrying initial messages between the two parties and providing a neutral meeting place in an effort to help establish communications. He or she attempts to promote openness, build or re-build the relationship and clarify misperceptions between the two parties. A conciliator must be able to deal with strong emotions and build trust for cooperative problem solving. The conciliator helps the parties repair the relationship. After conciliation, the parties may use other ADR techniques to resolve the issues in dispute. 4. Facilitation Facilitation uses a third party or facilitator to improve the flow of information between two parties or within a group. The facilitator may or may not be neutral to the dispute. The facilitators emphasis is on providing an efficient procedure to continue dialog and move towards an agreement. His or her role is not to interpret factual issues or make recommendations like a mediator. Therefore, a facilitators role is more limited than a mediators. 5. Mediation Mediation is the most common and most popular form of ADR. Mediation requires a third party neutral or mediator who assists the parties in reaching an
20

agreement. Mediators need not be subject matter experts. The mediator will meet with each side individually or with both sides together as needed. Mediators do not have any decision-making authority and cannot impose a solution on the parties; the parties make the decision themselves. However, the mediator, like a facilitator, serves as the supporter of the process to keep discussions going so that the parties can resolve their dispute. 6. Settlement Judge Settlement Judge is a form of ADR available with the Armed Services Board of Contract Appeals. If parties elect to use a settlement judge they first draft an agreement on the procedures that will be used to carry out the proceedings. The agreement is drafted according to the circumstances of the case. Settlement judges primarily act as mediators and use a variety of techniques to resolve the dispute. The judge acts as a third party neutral to facilitate settlement negotiations. He or she will meet privately with both sides, as in Early Neutral Evaluation, and advise them on the merits of the case. Cases that are factually and legally complicated are well suited for the settlement judge procedure. 7. Early Neutral Evaluation Early Neutral Evaluation uses a third party neutral to provide an evaluation to both sides of a dispute. The neutral is usually an expert on the issue being disputed. Both sides informally present their case to the neutral who then advises each side individually on the strengths and weaknesses of their cases.
21

The evaluation may be binding or non-binding. Early neutral evaluation is an excellent alternative when there are many technical issues that need to be interpreted. It is also useful when decision makers or supervisors of one or both parties need clarification on the value of their cases. 8. Peer Review Panel Peer Review Panels, Dispute Panels and Dispute Resolution Panels use a single third party neutral, or a panel to help resolve disputes as soon as they are discovered in order to avoid traditional litigation. For workplace disputes, the panel will be composed of fellow employees and supervisors. The panel will review the conflicting data, fill in missing information, assess the issues, and clarify the facts to both sides. The panel helps to resolve conflicts by assessing the issues and making procedural or factual recommendations. For contracting disputes, the panel will be composed of subject matter experts that are selected by the disputing parties. The decision of the panel may or may not be binding, depending on the agreement made by the two parties beforehand. 9. Ombudsman Ombudsman, Ombudsperson or Ombuds are advocates designated by the company to confidentially investigate and resolve sensitive complaints. The ombudsman does not normally have the authority to enforce a solution.

22

Ombudsmen often work as advisors to management and a focal point for employees to help identify problems and recommend solutions. 10. Fact-Finding Fact-Finding and Neutral Fact-Finding involve the investigation of facts by an impartial expert or group. The fact-finder investigates, evaluates and reports the facts to both sides of the case. He or she is not permitted to resolve or decide any issues of law but his or her expertise is expected to carry significant weight with both sides. Fact-finding is successful if both parties resolve the dispute but it is also useful if negotiations fail. The information can still be used in traditional litigation. 11. Mini-Trial Mini-Trial is not a small trial. Its not a trial at all. It is a process where both sides of a dispute make brief presentations of their arguments to senior executives in their organizations. The most important requirement is that the senior executives have the authority to settle the dispute. After hearing the evidence, the senior executives will privately discuss the case. A third party neutral usually facilitates the process by helping with the presentation of evidence and acting as a mediator in order to reach a settlement. This technique is available mostly in the private sector.

23

12. Mediated Arbitration Mediated Arbitration (Med-Arb) is a combination of mediation and arbitration. Med-Arb uses a neutral mediator to resolve as many of the issues as possible. After reaching an impasse, the mediator or a new neutral then arbitrates the remaining issues in dispute. His or her decision can be binding or non-binding. Med-Arb allows both sides to quickly resolve simple issues so that efforts can now be placed on the more difficult issues. 13. Summary Jury Trial The Summary Jury Trial is a formal but abbreviated trial involving a presentation by the disputing parties to a panel of jurors. This process reality tests the case with a non-binding verdict to encourage the parties to negotiate for a settlement based upon their new assessment of litigation risk. The summary jury trial should not be confused with a mini-trial, an entirely different process. 14. Arbitration Arbitration is the second most popular type of ADR. It has been used extensively in recent years to resolve labor/management and commercial disputes. In arbitration, both parties present their issues to a third party neutral or panel. Generally, both sides have a role in selecting the arbitrator. The arbitrator is usually a subject matter expert. The rules of evidence are relaxed. Both sides can agree before hand on the amount of evidence allowed and the
24

time limits. The arbitrator makes a decision that has the full force and effect of law and is not open for appeal. The decision is usually binding but is kept private and does not set a precedent. 15. Private Judging Private Judging is a technique that falls between arbitration and litigation in terms of formality and control of the parties. The parties present their case to a judge in a private courtroom. Private Judges are usually retired judges who are experts in the matter under review.

2.5.2 ADVANTAGES OF ALTERNATIVE DISPUTE RESOLUTION The biggest advantage of ADR over litigation is it can provide the best solution with the least amount of resources. ADR techniques are extremely flexible. They allow parties to choose the amount of control they maintain and the amount of authority given to the third party neutral. Additionally, ADR is a non-adversarial process that helps to preserve the relationship between the two parties by making the communication cooperative vice combative. This cooperative atmosphere is attainable due to the confidential nature of the proceedings. Parties are more open to discussion if their statements are not available for public scrutiny.

25

2.5.3 DISADVANTAGES OF ALTERNATIVE DISPUTE RESOLUTION When agreeing to ADR, there is always an inherent lack of finality. Another inherent weakness is the lack of enforcement authority given to the neutral. The biggest disadvantage to ADR is that there is no guarantee that the dispute will be resolved. Because of these doubts, parties may feel that ADR is a waste of time and that ADR will only increase litigation costs by providing the other side with information that makes them vulnerable. To some parties, agreeing to ADR may be viewed as a weakness by the other side. Using ADR depends on the willingness and the good-faith of the other party. If one party acts in bad-faith they could merely be delaying action, which will cause further damage to the relationship. There is often a lack of information or lack of training on ADR on one or both sides. The lack of rules may lead lawyers to recommend against using ADR. Lastly, ADR lacks due process, procedural safeguards and does not set a precedent.

2.6 THE ORIGIN OF ARBITRATION It is not known exactly when formal non-judicial arbitration first began but it can be said with some certainty that arbitration, as a way of resolving disputes predates formal courts. Records from ancient Egypt attest to its use especially with high priests and their interaction with the public. Arbitration was popular both in ancient Greece and in Rome.
26

Under English law, the first law on arbitration was the Arbitration Act 1697, but when it was passed arbitration was already common. The first recorded judicial decision relating to arbitration was in England in 1610. The noted Elizabethan English legal scholar Sir Edward Coke refers to an earlier decision dating from the reign of Edward IV (which ended in 1483). Early arbitrations at common law suffered from the fatal weakness that either party to the dispute could withdraw the arbitrator's mandate right up until the delivery of the award if things appeared to be going against them (this was rectified in the 1697 Act). The Jay Treaty of 1794 between Britain and the United States sent unresolved issues regarding debts and boundaries to arbitration, which took 7 years and proved successful (Wikipedia, 2010). In the first part of the twentieth century, many countries (France and the United States being good examples) began to pass laws sanctioning and even promoting the use of private adjudication as an alternative to what was perceived to be inefficient court systems. The growth of international trade however, brought greater sophistication to a process that had previously been largely ad hoc in relation to disputes between merchants resolved under the auspices of the lex mercatoria. As trade grew, so did the practice of arbitration, eventually leading to the creation of a variant

27

now known as international arbitration, as a means for resolving disputes under international commercial contracts. In the United States, the so-called "forced arbitration" or mandatory binding, arbitration has recently been strongly criticized by Public Citizen, a Washington-based public interest advocacy group, which points out a tendency of arbitrators to rule against consumers and in favour of corporations or institutions. Today, arbitration also occurs online, in what is commonly referred to as Online Dispute Resolution, or ODR. Typically, ODR proceedings occur following the filing of a claim online, with the proceedings taking place over the internet, and judgment rendered on the basis of documentation presented. 2.7 HISTORICAL ANTECEDENTS OF ABITRATION IN NIGERIA According to Akin Akinbote 2008, the Arbitration Ordinance 1914, which was predicated on the English Arbitration Act 1889, is the first formal statute on Arbitration in Nigeria and dates back to the colonial times. Nigeria had its first set of Laws of the Federation in 1958, two years before independence in 1960. The Arbitration Ordinance 1914 was re-enacted as the Arbitration Ordinance Act Cap 13, Laws of the Federation of Nigeria and Lagos, 1958. By virtue of paragraph 2 of Section 1 of the Arbitration Ordinance Act 1958, the Act was applicable to the Northern, Western and Eastern Regions, Federal Territory of

28

Lagos; and interestingly or coincidentally, the then Southern Cameroons. It is interesting that this conference is taking place on the Cameroonian soil. It will equally be interesting to find out if the Law is still applicable today in an adopted or assimilated form. In any event, delving into this will certainly be hors sujet. The provisions of the 1958 Act was limited to domestic arbitration only as no reference was made to international commercial arbitration. One is not certain if there was any international commercial arbitration involving Nigerian parties or foreign parties either in Nigeria or abroad, prior to Independence in 1960. If there was, Nigeria then a colony of Britain would probably have been covered by the 1958 New York Convention. It is not clear whether Britain, being a signatory to the Convention, in the exercise of its sovereignty over the former colonies, could rightly have made the Convention applicable to Nigeria. It will be a subject of further research for one to reach a conclusion that Recognition and Enforcement of Foreign Arbitral Awards (The York Convention) was ever put into practice in Nigeria prior to Nigeria becoming a signatory to the Convention in 1988. The first indigenous Statute on Arbitration and Conciliation was enacted in 1988, by a military Decree. It was known as the Arbitration and Conciliation Decree 1988 (ACA1988) and came into effect on 13th March, 1988.

29

2.8 ARBITRATION IN CONSTRUCTION Arbitration has become recognized as the dispute settlement mechanism in the construction industry. It is seen as the final mode of dispute resolution which is beyond the usual attractions of arbitration, such as privacy, speed, flexibility and choice of the arbitrator. In the construction industry, arbitration is the norm because firstly, the prevalence of arbitration clauses in standard forms of contract; secondly, the technical content of disputes, leading to the use of arbitrators skilled in technical disciplines; and finally the need in many disputes for the arbitrator be empowered to open up, review and revise decisions or certificates, rising from the architects or engineers judgment in administering the building contract. The construction industry generates disputes that arise from matters of considerable scientific or technical difficulty. Two points working in combination increase the technical content and the utilization of technically qualified arbitrators in their resolution which are further enhanced by the consultants discretion in the various standard forms of building contracts. Firstly, the various standard form of building contracts instead of determining matters of uncertainty by prior contractual arrangements, tend to postpone them. The architect or engineer is given the discretion to decide on them later. This at times gives rise to uncertainty as regard to the scope of work to be undertaken, the time or schedule it should be completed, and the payment due to be paid on it. The architect or engineer when administrating the contract may make
30

evaluations. The disputes that arise from such determination are normally technical in nature although they may involve legal and contractual issues. Secondly, nowadays these ex post facto technical evaluations involve not only the consultants but also claim consultants. The latter are involved in promoting, preparing, arguing, defending, appealing claims and disputing technical evaluations. Eventually, given the frequency and experience of participants in such disputes encourages them to be more specialists in their resolution, and make their careers in construction arbitration.

2.9 ADVANTAGES AND DISADVANTAGES OF ARBITRATION Parties should consider whether or not to provide for arbitration as the chosen method of dispute resolution every time they enter into a contract. It is particularly important to do so where the parties or their assets are in different countries or where disputes give rise to complex technical issues. The most important advantages and disadvantages of arbitration that should be considered (according to Advocates for International Developments Guide to

Arbitration), when deciding whether to provide for arbitration as the dispute resolution methods in a contract are listed below: (A) ADVANTAGES 1. Enforceability: Due to international conventions, the potential for enforcing arbitral awards worldwide is much greater than that for court judgements. As there is little point in obtaining a court judgment which
31

cannot be enforced against suitable assets, this feature often conclusively determines the choice of arbitration over litigation for international contracts. The most important enforcement convention is the New York Convention which provides for the enforcement of arbitral awards in over 140 countries.) There is no such wide-ranging convention providing for the enforcement of court judgements (the closest being the Brussels Regulation, which is limited to parties in Europe). 2. Flexibility: Arbitration rules are generally simpler and more flexible than those of court proceedings. They are relatively easy to understand for parties of different nationalities, and the parties can adapt the dispute resolution process to suit their relationship and the nature of their dispute. In many cases, parties (or tribunals exercising discretion left to them by the parties) choose to follow a procedure that is similar to court proceedings. In some cases, the parties make significant changes to court procedure. For example, they may decide that their dispute should be determined on the basis of documents only, without a hearing. 3. Neutrality: Frequently, one party will not wish to submit to the local courts of another party. For example, party A may not be familiar with the language, legal culture or court procedure in party B's country or may fear that the courts in party B's country are not impartial. This will be a particular worry to party A where party B is a sovereign state, e.g. where A, a company based in Austria, has entered into a contract with B, the
32

Republic of Bolivia. Arbitration can provide politically neutral dispute resolution. The parties can select a neutral venue in a third country for the arbitration (e.g. London, England), appoint a multinational tribunal, request that international procedural rules be applied and choose a language for the proceedings with which they are comfortable (very frequently English). 4. Technical expertise and experience: Parties may select arbitrators with the appropriate expertise or experience in the subject matter of the dispute. Although some jurisdictions have very good specialist courts, parties run the risk of their dispute being decided by a judge with little or no relevant experience. 5. Choice of arbitrators: Unlike court proceedings, where parties generally have no input into the choice of judge for their case, the parties to an arbitration usually appoint, nominate or at least have some input into the selection of the tribunal. Most developed international arbitration laws require that all the arbitrators be impartial. However, a party can use its input into the selection process to help ensure that, as far as possible, the tribunal will understand the commercial context, the relevant issues and the parties' procedural preferences. 6. Cost / Speed / Finality: Lawyers' fees generally account for the majority of costs of proceedings (whether litigation or arbitration). The cost of the proceedings therefore generally depends on the complexity of the dispute,
33

the way the proceedings are conducted and their length. Arbitration can be speedier and less costly than litigation because of the finality of the award. Whereas a court judgment can often be appealed (prolonging matters by months and years), parties to international contracts normally agree that there is no right of appeal on the merits from any award. In many countries, awards may only be reviewed in strictly limited circumstances. Arbitration costs initially can be higher than those of court proceedings because the parties have to pay for arbitrators, any administering institution and the hiring of hearing venues. Arbitration can also take longer if the tribunal fails to impose strict deadlines. However, there are no court fees, and the parties can agree on streamlined or "fasttrack" procedures. Moreover, it is increasingly common for a successful party to be awarded all or part of its costs of the arbitration whereas this is not the norm in litigation in many countries. 7. Privacy: Although national laws and arbitration rules vary as to the degree of confidentiality afforded to arbitration, there can be no doubt that arbitration provides greater privacy and confidentiality than litigation (which is often public). The parties can expect that there will be no public right of access to the hearings and can provide for the required degree of confidentiality in their arbitration agreement, subject to any mandatory reporting obligations imposed by law, for example where there is a requirement to record any potential exposure to liability in the context of
34

financial reporting. Any confidentiality might come to an end or at least be put at risk if enforcement through the courts becomes necessary. 8. Commencement of proceedings: Arbitration proceedings can often be commenced more quickly than court proceedings. A party need generally only submit a short document to the appropriate arbitral institution and / or the other party to start the arbitration. The commencement of court proceedings can be more complicated, e.g. requiring a party to seek leave to serve process on the other party if that other party is abroad. (B) DISADVANTAGES The disadvantages of arbitration stem from the same characteristics. Arbitration is adversarial, thus it generally does nothing to create win-win solutions or improve relationships. Often it escalates a conflict; just as courtbased adjudication is likely to do. In addition, arbitration takes decision making power away from the parties. This results in a resolution of the current conflict, but does nothing to help the parties learn how to resolve their own conflicts more effectively in the future, as does mediation. Other people also fault arbitration for being too informal and potentially unjust. Only the courts, with their carefully regulated procedures can provide justice, some researchers believe. Some of the disadvantages summarized include: 1. Arbitration may become highly complex

35

2. Arbitration may be subject to pressures from powerful law firms representing the stronger and wealthier party 3. Arbitration agreements are sometimes contained in ancillary agreements, or in small print in other agreements, and consumers and employees sometimes do not know in advance that they have agreed to mandatory binding pre-dispute arbitration by purchasing a product or taking a job 4. If the arbitration is mandatory and binding, the parties waive their rights to access the courts and have a judge or jury decide the case 5. In some arbitration agreements, the parties are required to pay for the arbitrators, which adds an additional layer of legal cost that can be prohibitive, especially in small consumer disputes 6. In some arbitration agreements and systems, the recovery of attorneys' fees is unavailable, making it difficult or impossible for consumers or employees to get legal representation; however most arbitration codes and agreements provide for the same relief that could be granted in court 7. If the arbitrator or the arbitration forum depends on the corporation for repeat business, there may be an inherent incentive to rule against the consumer or employee 8. There are very limited avenues for appeal, which means that an erroneous decision cannot be easily overturned

36

9. Although usually thought to be speedier, when there are multiple arbitrators on the panel, juggling their schedules for hearing dates in long cases can lead to delays 10.In some legal systems, arbitral awards have fewer enforcement options than judgments; although in the United States arbitration awards are enforced in the same manner as court judgments and have the same effect 11.Arbitrators are generally unable to enforce interlocutory measures against a party, making it easier for a party to take steps to avoid enforcement of an award, such as the relocation of assets offshore 12.Unions may only make a weak effort to defend one member or a small group of members in arbitration due to increasing legal fees, without explaining to the members the adverse consequences of an unfavourable ruling 13.Rule of applicable law is not necessarily binding on the arbitrators, although they cannot disregard the law 14.Discovery may be more limited in arbitration or entirely nonexistent 15.The potential to generate billings by attorneys may be less than pursuing the dispute through trial 16.Unlike court judgments, arbitration awards themselves are not directly enforceable. A party seeking to enforce an arbitration award must resort to judicial remedies, called an action to "confirm" an award

37

17.Although grounds for attacking an arbitration award in court are limited, efforts to confirm the award can be fiercely fought, thus necessitating huge legal expenses that negate the perceived economic incentive to arbitrate the dispute in the first place. 2.10 ARBITRATION AGREEMEMENT In theory, arbitration is a consensual process; a party cannot be forced to arbitrate a dispute unless he agrees to do so. In practice, however, many fineprint arbitration agreements are inserted in situations in which consumers and employees have no bargaining power. Moreover, arbitration clauses are frequently placed within sealed users' manuals within products, within lengthy click-through agreements on websites, and in other contexts in which meaningful consent is not realistic. Such agreements are generally divided into two types:

Agreements which provide that, if a dispute should arise, it will be resolved by arbitration. These will generally be normal contracts, but they contain an arbitration clause

Agreements which are signed after a dispute has arisen, agreeing that the dispute should be resolved by arbitration (sometimes called a "submission agreement")

38

The former is the far more prevalent type of arbitration agreement. Sometimes, legal significance attaches to the type of arbitration agreement. For example, in certain Commonwealth countries, it is possible to provide that each party should bear their own costs in a conventional arbitration clause, but not in a submission agreement. The courts have also upheld clauses which specify resolution of disputes other than in accordance with a specific legal system. These include provision indicating:

that the arbitrators "must not necessarily judge according to the strict law but as a general rule ought chiefly to consider the principles of practical business"

"internationally accepted principles of law governing contractual relations". Agreements to refer disputes to arbitration generally have a special status in

the eyes of the law. For example, according to the Arbitration and Conciliation Act (Chapter 19, Laws of the Federation of Nigeria, 1990), this stipulates; 1) Every arbitration agreement shall be in writing contained(a) in a document signed by the parties; or

39

(b) in an exchange of letters, telex, telegrams or other means of communication which provide a record of the arbitration agreement; or (c) in an exchange of points of claim an of defence in which the existence of an arbitration agreement is alleged by one party and denied by another. (2) Any reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if such contact is in writing and the reference is such as to make that clause part of the contract. 2. Unless a contrary intention is expressed therein, an arbitration agreement shall be irrevocable except by agreement of parties or by leave of the court or judge. 3. An arbitration agreement shall not be invalid by reason of death of any party thereto but shall, in such an event, by enforcement by or against the personal representative of the deceased. 4. (1) A court before which an action which is the subject of an arbitration agreement is brought shall, if any party so request not later than when submitting his first statement on the substance of the dispute, order or stay of proceedings and refer the parties to arbitration. (2) Where an action referred to in subsection (1) of this section has been brought before a court, arbitral proceedings may nevertheless be commenced or
40

continued, and an award may be made by the arbitral tribunal while the matter is pending before the court. 5. (1) If any party to an arbitration agreement commences any action in any court with respect to any matter which is the subject of an arbitration agreement any party to the arbitration agreement may, at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceedings. (2) A court to which an application is made under subsection (1) of this section may, if it is satisfied(a) That there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement; and (b) That the applicant was at the time when the action was commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, make an order staying the proceedings. 2.11 APPOINTMENT OF ARBITRATOR According to the Arbitration and Conciliation Act (Chapter 19, Laws of the Federation of Nigeria, 1990), the parties can agree on a procedure for appointing the arbitrator or arbitrators. If they are unable to agree, each party will appoint one arbitrator and the two appointed arbitrators will appoint the
41

third arbitrator who will act as a presiding arbitrator. [section 11(3)]. If one of the parties does not appoint an arbitrator within 30 days, or if two appointed arbitrators do not appoint third arbitrator within 30 days, the party can request Chief Justice to appoint an arbitrator. [section 11(4)]. The Chief Justice can authorise any person or institution to appoint an arbitrator. [Some High Courts have authorised District Judge to appoint an arbitrator]. In case of international commercial dispute, the application for appointment of arbitrator has to be made to Chief Justice of India. In case of other domestic disputes, application has to be made to Chief Justice of High Court within whose jurisdiction the parties are situated. [section 11(12)]. 2.11.1 CHALLENGES TO APPOINTMENT OF ARBITRATOR An arbitrator is expected to be independent and impartial. If there are some circumstances due to which his independence or impartiality can be challenged, he must disclose the circumstances before his appointment. [section 12(1)]. Appointment of Arbitrator can be challenged only if (a) Circumstances exist that give rise to justifiable doubts as to his independence or impartiality (b) He does not possess the qualifications agreed to by the parties. [section 12(3)]. Appointment of arbitrator cannot be challenged on any other ground.. The challenge to appointment has to be decided by the arbitrator himself. If he does not accept the challenge, the proceedings can continue and the arbitrator can make the arbitral award. However, in such case, application for setting aside

42

arbitral award can be made to Court. If the court agrees to the challenge, the arbitral award can be set aside. [section 13(6)]. Thus, even if the arbitrator does not accept the challenge to his appointment, the other party cannot stall further arbitration proceedings by rushing to court. The arbitration can continue and challenge can be made in Court only after arbitral award is made (Arbitration and Conciliation Act, Chapter 19, Laws of the Federation of Nigeria, 1990).

2.12 PROCEDURE PROIR TO HEARING The Arbitral Tribunal should treat the parties equally and each party should be given full opportunity to present his/ her case. The Arbitral Tribunal is not bound by Code of Civil Procedure, that is, the parties to arbitration are free to agree on the procedure to be followed by the Arbitral Tribunal. If the parties do not agree to the procedure, the procedure will be as determined by the arbitral tribunal. Arbitral Tribunal has full powers to decide the procedure to be followed, unless parties agree on the procedure to be followed. The Tribunal also has powers to determine the admissibility, relevance, materiality and weight of any evidence. Place of arbitration will be decided by mutual agreement. However, if the parties do not agree to the place, the same will be decided by tribunal. Similarly, language to be used in arbitral proceedings can be mutually agreed. Otherwise, Arbitral Tribunal can decide.

43

2.13 ARBITRATION HEARING Participation in a professional standards hearing - arbitration or ethic - can be an intimidating experience for first time participants, witnesses and even new panel members. Knowing what will likely happen can make it a less stressful experience. Although the arbitration hearing process is based on the judicial model of a civil trial, there are important differences between a trial and an arbitration hearing. While parties to any professional standards proceeding are entitled to fundamental due process, technical rules of evidence and procedure do not apply in an arbitration hearing. While the burden of proof rests with the parties, arbitration panel members can ask questions (directly or through the chair) to ensure that they have a clear understanding of relevant issues and facts. This is key to rendering a fair decision. Parties are entitled to have legal counsel present but must respond to questions asked by panel members - or asked by other parties or their counsel when directed to respond by the chair. Prior to the hearing, parties have the opportunity to challenge potential panel members for cause. While there are no preemptory or "automatic" challenges, boards/associations make all reasonable efforts to ensure that panel members will be impartial, unbiased, and fair.

44

At the beginning of arbitration hearing the chair introduces themselves and the other panel members and explains the procedures that will be followed. The chair also introduces the parties and their counsel, and others who may be present to assist the panel, which might be board legal counsel, a court reporter, or board/association staff. Following the chair's introductory comments, the parties and their witnesses are sworn or affirmed. Witnesses are then excused from the hearing room until it is time for them to testify. The complainant(s) testifies first. Complainants can introduce evidence and call witnesses to support their case. The respondent or the respondent's attorney can cross-examine the complainant and witnesses who testify for the complainant. After the complainant(s) finishes his presentation, respondents have the opportunity to present their evidence and testimony. After the parties have had their chance to conduct cross-examination, panel members can ask questions of anyone who testifies. This differs from a trial in that while each party is primarily responsible for making their case, hearing panelists will want to clearly understand the events leading up to the dispute so that they can make an informed and fair decision. The fact that panel members can ask questions is no substitute for thorough advance preparation by the parties.

45

Following the parties' presentations and any subsequent questions from panel members, each party or their counsel is entitled to make a closing statement, succinctly summarizing the salient points of their case. After the closing statements, the chair adjourns the hearing and the hearing panel then (either immediately or at a future time) goes into executive session to determine the award. Awards may be for the amount requested or for a lesser amount. Hearing panels are not authorized to award more than was requested or to award punitive damages. Attorneys' fees and interest may be part of an award only if such amounts were part of the underlying contractual agreement that is the subject of the dispute. Parties to arbitration are entitled to due process. For that reason, parties may request procedural review of the arbitration hearing process if they believe they did not get a fair hearing. A review of the hearing process must be distinguished from review of the award itself. Disagreement with the decision of the hearing panel is not a basis to institute a procedural review. For an arbitration award to be overturned, it is necessary for a party to demonstrate that he or she was denied a fundamentally fair hearing.

2.14 STATEMENT OF SPECIAL CASES AND SETTLEMENTS The claimant should submit statement of claims, points of issue and relief or remedy sought. The respondent shall state his defence in respect of these

46

particulars. All relevant documents must be submitted. Such claim or defence can be amended or supplemented any time. After submission of documents and defence, unless the parties agree otherwise, the Arbitral Tribunal can decide whether there will be oral hearing or proceedings can be conducted on the basis of documents and other materials. However, if one of the partys requests, the hearing shall be oral, sufficient advance notice of hearing should be given to both the parties. [Thus, unless one party requests, oral hearing is not compulsory]. It is permissible for parties to arrive at mutual settlement even when arbitration is proceeding. In fact, even the Tribunal can make efforts to encourage mutual settlement. If parties settle the dispute by mutual agreement, the arbitration shall be terminated. However, if both parties and the Arbitral Tribunal agree, the settlement can be recorded in the form of an arbitral award on agreed terms. Such Arbitral Award shall have the same force as any other Arbitral Award.

2.15 THE MAKING AND FORM OF AN AWARD Decision of Arbitral Tribunal is termed as 'Arbitral Award'. Arbitrator can decide the dispute ex aequo et bono (In justice and in good faith) if both the parties expressly authorise him to do so. [section 28(2), Arbitration and Conciliation Act]. The decision of Arbitral Tribunal will be by majority. The arbitral award shall be in writing and signed by the members of the tribunal. [section 29]. The award must be in writing and signed by the members of
47

Arbitral Tribunal. [section 31(1)].. It must state the reasons for the award unless the parties have agreed that no reason for the award is to be given. [section 31(3)]. The award should be dated and place where it is made should be mentioned. Copy of award should be given to each party. Tribunal can make interim award also. [section 31(6)]. Arbitration act has over-riding effect; this is because, the act clarifies that notwithstanding anything contained in any other law for the time being in force, in matters governed by the act, the judicial authority can intervene only as provided in this act and not under any other act. 2.16.1 ENFORCEMENT OF FOREIGN AWARD The foreign awards which can be enforced in Nigeria are as follows: (a) New York convention Award (made after 11th October, 1960) (b) Geneva convention Award - made after 28th July, 1924. Since most of the countries have signed New York convention, normally, New York convention awards are enforceable in Nigeria. New York convention was drafted and kept in United Nations for signature of member countries on 21st December, 1958. Each country became party to the convention on the date on which it signed the convention.

48

Party which intends to enforce a foreign award has to produce the arbitral award and agreement of arbitration [original or its certified copy] to the district court having jurisdiction over the subject matter of the award. The enforcement of award can be refused by court only in cases specified. Otherwise, the foreign award is enforceable through court as if it is a decree of the court. If the court declines to enforce the arbitral award, appeal can be made to the court where appeal normally lies from the district court. However, no further appeal can be made (except appeal to Supreme Court). [Probably, the aggrieved party may be able to approach International Court of Justice, as the convention is an international convention, signed by many of the member countries]. One advantage of foreign award, according to foreign parties, is that Nigerian courts come into picture only at the time of implementation of award. The courts can refuse to implement the award only on limited grounds. 2.1. SUMMARY OF CHAPTER Construction is an amalgam of complex activities requiring a careful allocation of resources and preparation. The lack of such allocation and preparation can bring about workmanship and quality control problems. It may arise from personality clashes and differing goals espoused between various parties and members of the consultant team. This can poison the atmosphere without proper communication between the parties. The consultants may end up

49

issuing unclear and/or late instructions. Parties may lack good faith to resolve disputes on an amicable basis thus leading on to arbitration.

50

CHAPTER THREE
3.0 RESEARCH METHODOLOGY This chapter discusses data collection process in order to achieve the aim and objectives of this study. The following are the necessary steps during data collection: 1. Data on the causes of construction disputes and its impact on client organizations. 2. Questionnaire development 3. A sample selection. 4. Responses to Questionnaire Survey.

The way in which research is conducted may be conceived of in terms of the research philosophy subscribed to, the research strategy employed and so the research instruments utilised (and perhaps developed) in the pursuit of a goal the research objective(s) - and the quest for the solution of a problem - the research question. For any research to be successfully carried out, relevant data should be clearly defined and the informal investigation should show that the project is economically feasible, the next important step is to develop the most efficient plan for gathering the needed information. This means the researcher would design a plan as to where and how to get the desired relevant data.

51

3.1 RESEARCH DESIGN Research design is the overall operational pattern framework of the project. It stipulates the information to be collected, from which source or sources and by what procedure through which the information will be collected and also the nature of analysis required to analyse the collected information. Research design provides the glue that holds the research project together. A design is used to structure the research, to show how all of the major parts of the research project - the samples or groups, measures, treatments or programs, and methods of assignment - work together to try to address the central research questions (William M. Trochim, 2006). 3.2 DATA SOURCES The term data refers to groups of information that represent the qualitative or quantitative attributes of a variable or set of variables. Data are typically the results of measurements and can be the basis of graphs, images, or observations of a set of variables. Data are often viewed as the lowest level of abstraction from which information and knowledge are derived (Wikipedia, 2010). Literature review in Chapter II helps to identify the problems of the research. The details study on the role of clients, designers and contractor in construction process were carried out to identify the potential causes of dispute. Besides, the impact of construction dispute was also been identified. A standard questionnaire was prepared to ensure all relevant information is gathered. Pilot

52

survey and discussion with industry professional were carried out with the aim to test the prepared questionnaire. 3.2 THE QUESTIONNAIRE The questionnaire survey shown in the appendix A was formulated to access the collective perceptions of arbitration from clients, consultants and contractors, as to identify the causes of dispute and the effects of arbitration on construction projects in Nigeria. The questionnaire consisted of four sections, which are: Section A; which asked questions about the general information of respondents and types of organization. Section B; this collects the views of respondents with regards the significance of each cause of dispute and classified into 3 categories where category 1 is causes contributed by clients, category 2 is causes contributed by designers and category 3 is causes contributed by contractors. Section C, is to collect the views of the respondents with regards to the most significance of each impact of the poor construction documentation on clients organizations. Section D, is to examine the level of understanding of Arbitration and source of disputes encounter by respondent, best solution to resolve dispute at site and lastly precaution methods to avoid disputes occurring.

53

The questionnaire has been designed in such as way that to preserve the overview and provide unambiguous picture due to the cross flows between the groups and preventing any biases of group ratings and rankings. The ratings were assigned by each respondent on a scale from 1 to 5, where 1 represents very insignificant, 2 represents insignificant, 3 represents average, 4 represents significant and 5 represents very significant. 3.3.1 RESPONSE TO QUESTIONNAIRES Thirty- Five (35) questionnaires were sent to randomly selected numbers of Construction companies, which are mainly based in Abuja. This included the following: a) Bullet International Nig. Limited. b) Sazak Acres Biloque Company Limited. c) Julius Berger Nig. Limited. d) S.C.C Limited. e) Acres Limited. f) Cachez Nig. Limited.

Out of the 35 questionnaires sent out, 27 were sent back, which equates to 77% response rate. The composition of respondents that returned their questionnaires were clients (15.0%), designers (41.0%) contractors (41.0%) and others (3.0%).

54

The results provide a breakdown of valid responses by the respondent type as shown below:Table 3.1: Detail Breakdown of Respondents Type of Samples Client Oriented Designer (Architect, Quantity Survey, Structural Engineer & Services Engineer) General Contractors Others (Specialist contractors & Suppliers) TOTAL Return 4 11 11 1 27 Percentage 15 41 41 3 100% (Researchers Survey, 2010) The response rate in this survey is ok, although some companies refused to answer the questionnaire and gave various excuses. Among the most common reasons were: 1) The suitable person to fill the questionnaire is not available 2) You better ask someone there, Im not suitable for this 3) Im busy with my works now, can you come back later? 4) Sorry, I dont understand, look for someone else 5) Can u come again tomorrow, my boss / superior is not in 6) Company policy..cant answer any questionnaire

55

3.3.2 DATA SUMMARY/ RESPONDENTS POINT OF VIEW Data summary was important step to provide data for analysis. In order to achieve the study objectives, the data collected from questionnaire survey was categorized into 4 sections as below; 1) General profile 2) Respondents point of views 3) Others point of views 4) Additional questions on dispute issues.

3.3.2.1 SUMMARY OF RESPONSES The total questionnaires collected in the questionnaire survey were 27 numbers. The Questionnaire responses for overalls points of views were summarized as per below; 1. General Profile This section shows the job description of the respondents and their general job profile.
16 14 12 10 8 6 4 2 0 Less than 2 years 2-5 years 5-10 years 10-15 years 15 yr above Years of Experince

Fig 3.1: Bar chart showing the Respondents years of experience

56

No. of Repondents

Others 3%

Client Oriented 15%

Contractor 41%

Designer 41%

Fig 3.2: Pie chart showing the breakdown of Respondent. 2. Respondents Point of Views In the subsequent tables below, the indicators; 1,2,3,4 & 5 represents the following; 1 = frequency of the very insignificant response. 2 = frequency of the insignificant response. 3 = frequency of the average response. 4 = frequency of the significant response. 5 = frequency of the very significant response.

57

(A) Disputes leading to Arbitration (Category 1) Table 3.2.1: Respondents view on Disputes leading to Arbitration (Category 1) INDICATORS Response to Q1 Response to Q2 Response to Q3 Response to Q4 Response to Q5 Response to Q6 Response to Q7 1 2 1 1 2 2 6 4 2 3 7 3 3 11 16 9 9 5 12 10 4 7 5 15 9 12 4 7 5 1 2 2 6 7 4 5

(Researchers Survey, 2010) (C)Disputes leading to Arbitration (Category 2) Table 3.2.2: Respondents view on Disputes leading to Arbitration (Category 2) INDICATORS Response to Q1 Response to Q2 Response to Q3 Response to Q4 Response to Q5 Response to Q6 1 1 2 1 2 9 2 7 6 4 2 3 13 10 8 10 9 9 4 4 13 10 8 11 13 5 2 2 1 3 2

(Researchers Survey, 2010)

58

(D)Disputes leading to Arbitration (Category 3) Table 3.2.3: Respondents view on Disputes leading to Arbitration (Category 3) INDICATORS Response to Q1 Response to Q2 Response to Q3 Response to Q4 Response to Q5 Response to Q6 Response to Q7 1 1 2 1 1 2 3 2 3 5 5 8 8 3 10 8 13 10 11 8 9 4 11 11 7 10 10 9 8 5 3 6 3 1 1 1

(Researchers Survey, 2010) (E) The impact of Construction Disputes (Section C) Table 3.2.4: Respondents view on impact of Construction Disputes (Section C) INDICATORS Response to Q1 Response to Q2 Response to Q3 Response to Q4 Response to Q5 Response to Q6 Response to Q7 1 5 6 4 1 1 2 7 6 7 8 8 8 10 3 14 7 3 9 6 10 11 4 4 7 6 2 7 7 5 5 4 2 5 4 5 2 -

59

Response to Q8 Response to Q9 Response to Q10

8 2 6

12 19 9

7 5 6

1 4

(Researchers Survey, 2010) 4. Additional Questions on Dispute (Section D) In this section D, the questions aim to find out the opinions of the respondents about the level of understanding the term Arbitration, kinds of construction disputes encountered based on their working experiences, best solutions and methods to resolve disputes at construction site and precautions and avoidances to be taken account as to avoid disputes occurring at construction site. 3.3.3 PRELIMINARY ANALYSIS After collecting the information from the respondents, the next step is to analyze the information and available data. The method used in analyzing the information in the next chapter is the Important Index. The method used in ranking of causes of dispute and impacts on clients organization is by adopting the likert scale with 5- point scale. The formula of important index is shown below;

Important Index = (ai Xi) x 100 b

60

Where,

ai = Constant expressing the weight given each response (1-5) b = Number of option for weighting, if 5 point scale of response is assigned, then b = 5 Xi = n / N Where, N = Total of responses ni = Frequency of the response, i = 1,2,3,4,5 and illustrated as below.

n1 = frequency of the very insignificant response and corresponding to a1 = 1. n2 = frequency of the insignificant response and corresponding to a2 = 2. n3 = frequency of the average response and corresponding to a3 = 3. n4 = frequency of the significant response and corresponding to a4 = 4. n5 = frequency of the very significant response and corresponding to a5 = 5.

61

CHAPTER FOUR
4.0 DATA ANALYSIS This chapter discusses how the data will be analyzed, interpreted and presented as to achieve the objectives of identifying the causes of construction dispute according to its nature of occurrence during the construction process which results in arbitration and to identify its impact on clients organizations. It also evaluates and determines the significance of each cause and impact of construction disputes on clients organizations based on point of views of major parties involved in construction process. Moreover, the analysis would help in deriving the conclusion on the major contributor that causes the construction dispute as well as the most appropriate measures to overcome the disputes occurrences that leads to arbitration. The data obtained from the questionnaire survey were analyzed.

4.1 ANALYSIS OF DATA AND DISCUSSION The logical step after collecting all information and data needed from questionnaire and unstructured interviewed with industry professionals is to analyze the gathered data. Although the causes of construction dispute and its impact on clients organization were researched and investigated by many researchers but the cases here in Nigeria maybe quite different from those abroad. Researches in Nigeria did not cover much, thus most of the information are from overseas. Causes of construction dispute are identified by more

62

developed countries and are important to identify the causes of construction disputes in Nigeria construction industries so as to be aware of the consequences of un-resolved disputes which can affect the effectiveness and smoothness in construction process and consequently leading to arbitration. The data output has been presented by Important Index. The aim of this procedure was to establish the relative significance for the various causes of construction dispute to the effectiveness and smoothing in the construction process and establishing the relative significance of each impact to client organization in point of views of major parties involved in the construction project. 4.1.1 FINDINGS AND DISCUSSIONS The analysis of questionnaire was categorized into five sections. The method for analyzing the response of questionnaire survey was carried by calculating the important index of each cause and impact of poor construction documentation; average important index for each category of causes and important index for each impact of construction dispute. The output of data is also shown below. (1) Disputes leading to Arbitration This sections presents first stage of analysis which evaluates and determines the most significant causes of construction dispute. These causes are classified into causes by clients (category 1), designers (category 2) and contractors (category 3).
63

Table 4.2.1: Disputes leading to Arbitration Category 1, (Overall View) Causes of Disputes Leading to Arbitration (Category 1) Poor communications between and among the parties involved in the project Failure to appoint an overall qualified Project Manager Discrepancies/ ambiguities in contract documents The absence of team spirit among participants Reluctance in checking for constructability clarity and completeness of work Lowest price mentality in engagement of Contractors and Designers Inadequate tracing mechanism for RFIs (Request for Information Average Index Important Index 77.04 Rank

77.01 72.59 67.40 64.44

2 3 4 5

63.70

54.07 68.04

Table 4.2.1 shows the important index for each cause and the ranked results. For the causes of construction dispute (category 1); poor communications between and among the parties involved in the project is ranked one with Index point 77.04, followed by failure to appoint a overall qualified Project Manager which ranked second with index point of 77.01. The next is discrepancies/ ambiguities in contract documents, which ranked 72.59. Reluctance64.44; Lowest

64

price63.70, and lastly Inadequate tracing 54.07. An average Index recorded is 68.04. Table 4.2.2: Disputes leading to Arbitration Category 2, (Overall View) Causes of Disputes Leading to Arbitration (Category 2) Important Index Rank

Over-design and underestimate of the cost involve. 71.11 Design and specification oversight and error omissions resulting from uncoordinated civil, structural, architectural, mechanical and electrical designs. Incompleteness of drawing and specifications 69.63

1 2

69.01 65.19 59.99

3 4 5

Inadequate open and factual communication

Late information issued and cumbersome approach to RFIs (Request for Information). Failure to understand Clients responsibility to design team contract Average Index

54.81

64.96

From table 4.2.2, it shows the important index for each cause and the results of ranking. In this section, Over-design and underestimate of the cost involve. is ranked 1 with Index point 71.11; followed by design and specification oversights and errors or omissions resulting from uncoordinated civil, structural, architectural, mechanical and electrical designs which ranked 2 (index point

65

69.63) and Incompleteness of drawing and specifications which ranked 3 by the index point of 69.01.

Table 4.2.3: Disputes leading to Arbitration Category 3, (Overall View) Causes of Disputes Leading to Arbitration (Category 3) Lack of understanding procurement and in Important Index Rank

contract 75.55

Inadequate contractor management supervision 70.37 and coordination Failure to understand and correctly bid or the 65.93 works. Failure to plan and execute the variation changes of works. Reluctance to seek clarification. Inadequate CPM (Critical path method) scheduling and update requirements Delay / suspension of works Average Index 65.19

2 3 4

60.74 60.10

5 6

59.99 65.41

Referring to Table 4.2.3, the causes of construction dispute (category); are delay/ suspension of work (ranked 1, index point- 75.55), inadequate contractor management, supervision and coordination (ranked 2, index point-70.37) and

66

follow by reluctance to seek clarification; failure to understand and correctly bid or price the works with the index point of 65.93 and ranked 3. Table 4.2.4: The Impact of Construction Disputes, (Overall View) The Impact of Construction Disputes, (Overall Important Index Respondents View) Additional expenses in management 68.15 administration Time delays and cost overruns Rework and relocation cost for men, equipment and materials Loss of Professional reputation. Diminution of respect between partiesdeterioration of relationship and breakdown in cooperation Extended and/ or more complex award process Loss of Company reputation Possibility of Litigation cases. 65.18 63.70 62.96 62.20 Rank 1 2 3 4 5

59.26 57.78 56.29

6 7 8 9 10

Loss of profitability and perhaps business viability 55.56 Higher tender prices. Average Index 54.81 55.59

From table 4.4, all respondents agreed that the additional expense in management administration (ranked 1, index point 68.15) is the most significant impact of construction dispute on client organizations. Its tailed by time delays

67

and cost overruns which ranked 2 (index point 65.18) and rework and relocation cost for men, equipment and materials which ranked 3 (index point 63.70). (2) The Impact of Construction Disputes: Referring to Table 4.2.1., Table 4.2.2, Table 4.2.3, Table 4.2.4, the ten most significant causes of construction dispute based on the respondents point of views are listed according to the highest score of important index: 1. Poor communications between and among the parties involved in the project. (IP-77.04) 2. Failure to appoint a qualified overall Project Manager. (IP-77.03) 3. Lack of understanding and agreement in contract procurement. (IP-75.55) 4. Discrepancies / ambiguities in contract documents. (IP-72.59) 5. Over-design and underestimate of the cost involve. (IP-71.11) 6. Inadequate contractor management, supervision and coordination. (IP-70.37) 7. Design and specification oversight and error omissions resulting from uncoordinated civil, structural, architectural, mechanical and electrical designs. . (IP-69.63) 8. Incompleteness of drawing and specifications. (IP -69.01) 9. Additional expenses in management administration. (IP-68.15) 10. The absence of team spirit among participants. (IP-67.40) The respondents views show that the client is the main contributor of construction disputes in area of poor communications between and among the
68

parties involved in the project as well as deficient management which include supervision and coordination efforts on the part of the project. For example, it may be due to an owners inexperience in construction as well as design requirements. Moreover, the clients representatives may fail to check any discrepancies in the construction drawings or trace for any revised design requirements. Illcoordinated documents and supervision efforts by the clients representatives also will cause disputes as the project will be filled with constructions failures or defects. Besides, the respondents views that poor communications between and among the parties involved in the project, lack of open and factual communication between the client and contractor leads to construction disputes as the contractor or client being unable to express the construction difficulties formally and in details so that the designers may be able to give solution in timely manner. The results also revealed that design and specification oversights and errors or omissions resulting from uncoordinated civil, structural, architectural, mechanical and electrical designs may also lead to construction disputes as it will involve extra work or rework. The client may unwillingly not agree to the variation work and this will consequently lead to project delays. In addition, the survey shows that inadequate contractor management, supervision and coordination, lack of understanding and agreement in contract procurement and failure to plan and execute the changes of works by the contractor also causes construction disputes. This may be due to inability of the
69

contractor to perform his duties as a contractor and be alert for any variation of works which need serious attentions. Out of the ten major causes of construction dispute, the client contributed four causes, the contractor contributed three causes and the designer contributed three cause of construction dispute from the list. Therefore, by comparing the average index in category 1 (contributed by clients, average Index 68.04), category 2 (contributed by designers, average Index 64.96) and category 3 (contributed by contractors, average Index 65.41), from the respondents point of views, the major contributor is clients, followed by designers and lastly the contractors. 4.1.2. Section D, (RESPONSE TO THE UNDERSTANDING OF ARBITRATION) The respondents were being requested to indicate the level of understanding of the term Arbitration which appears as a clause in most contract conditions. The levels of understanding are arranged from: totally do not understand-1; do not understand-2; average-3; understand-4 and totally understand-5. Figure 4.1 shows the level of understanding of Arbitration.

70

Totally Do Not Do Not understand understand 4% 7% Totally Understand 26% Average 26%

Understand 37%

Fig 4.1: The level of understanding of Arbitration. It shows that most of the respondents do understand well the term and meaning of Arbitration. This also means that the parties involved in the construction have a good knowledge of Arbitration and this process may be resolved to when a construction disputes arises. 4.1.3. Section D, (RESPONSE TO THE KINDS OF CONSTRUCTION DISPUTE ENCOUNTERED) The respondents ticked the kinds of construction disputes which they had ever encountered on construction works. Most of the respondents agree that the construction disputes usually range from payment, changed conditions, additional works, delays and contract time. 4.1.4. Section D, (RESPONDENTS VIEWS ON APPROPRIATE

METHOD OF DISPUTE RESOLUTION ON CONSTRUCTION SITE)

71

The two questions are connected with each other as question 4 is a supportive to question 3. It is to counter check the information collected from question 3. Seven (7) respondents view that the methods to resolve the disputes at site are through arbitration and 20 respondents refer to ADR (negotiation, conciliation, mediation and etc) which they usually practice. In this finding, all respondents agree that any disputes occurred must be resolved in timely manner and adopt win-win situation (this is, a situation where when disputes are been resolved, all parties mutually benefits from the outcome of the resolution) between parties involved. 4.1.5. Section D, (OPINION OF RESPONDENTS TO PRECAUTION METHODS OF DISPUTE AVOIDANCE) The respondents about the precaution methods of disputes avoidance were sampled. The opinions perceived by the respondents are stated below: 1) Contractors always seek clarification from client/consultant; ensure instruction from client/consultant is properly documented; ensure forward planning and check clearly scope of work; responsibility and duties as a contractor. 2) Clients must ensure proper documentation of contract, variation orders and changes, schedule of rates, provisional quantities, detail drawings and specifications.

72

3) Designers and client representatives must have good communication and coordination on tracing any causes of disputes in timely manner such as oversights, errors and omissions of construction drawings before handing over to the awarded contractor. 4) The clients representatives must be skilled on good practice of site documentation and knowledge of site planning and management.

4.2 SUMMARY OF FINDINGS

73

CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS The aim of this research was to study and identify the causes of construction dispute and to study the impact of arbitration on the Nigerian construction industry. The survey reveals that the most significant causes of construction

dispute were contributed by clients, contractors and designers. Referring to Table 4.2.1 to Table 4.2.4, the major contributor of construction dispute and the impact of construction dispute on client organization in overall point of view can be identified. Besides, this survey also reveals the ten most significant causes of construction dispute contributed by clients, contractors, designers and others. It also views on construction dispute and which party is the major contributor and impact of construction dispute on client organization. Moreover, this survey also shows the level of understanding of Arbitration among the participants in construction industry in the Nigerian construction industry. The precautionary methods to avoid disputes occurring at site as well as methods to resolve the disputes at site can be studied based on the statements given by the respondents. Lastly, it is clear that each respondent from different organization has different point of views regarding the causes of dispute based on the nature of disputes occurrence during the project development.
74

5.1 CONCLUSION The investigation on issues related causes and impact of construction disputes on client organizations using the research methodology explained earlier helped in the establishment of the understanding of the effects of arbitration in the Nigerian Construction industry. According to all respondents, the analysis reveals that: I. The most significant causes of construction dispute contributed by clients are deficient/poor management, supervision and coordination efforts on the part of the project, have ambiguities in contract documents and reluctant to check for constructability, clarity and completeness of construction process. II. The most significant causes of construction dispute contributed by designers are incompleteness of drawing and specifications as well as design and specification oversights and errors or omissions resulting from

uncoordinated civil, structural, architectural, mechanical and electrical designs and lastly inadequate in open and factual communication. III. Moreover, the most significant causes of construction dispute contributed by contractors are delay/suspension of works, inadequate contractor

management, supervision and coordination, failure to understand and correctly bid or price the works, reluctance to seek clarification and failure to plan and execute the changes of works.

75

5.2 RECOMMENDATIONS The contract documentation includes drawings, specifications, conditions of contract, design revisions, project schedules, contract procedures, quality assurance documents and etc. I. It is important both contractors and building owners should understand what the conditions of contract is all about. The conditions of any contract form the bases of that contract. The conditions attempt to explain what should be done, how it should be done and what it is to be done. This is so because Building Construction is a very complex issue. Any discrepancies and ambiguities of the above stated documents can lead to disputes. The client should use standard contract form which is agreed and understood by the contractor. II. The client, designer, project manager must be able to work collaboratively to identify the need of designs and its specifications which within the clients budget, so as to minimize variations and produce good quality construction drawings. Many design problems can be eliminated with carefully thought through clients brief. Any design including shop drawings need checking as well as basic investigation. Design requires input from experienced construction personnel such engineer to identify the aspects of impractical, impossible or uneconomical to construct.

76

III.

When there are disagreements and conflicts between the parties involved, they must reach the common solution to solve the problems in timely manner. They should adopt win-win situation and shared the project goals. Avoid obstructive attitude; unwillingness to work together to solve problems; tendency to use threats, disrespect of a party, shifting blame, bad-mouthing and etc that can lead to disputes between parties involved. Initially, it might be wise to take one step back from the dispute to cool off, or to remove personalities from the dispute. This avoids the people becoming emotional from making a wrong decision to litigation. It is advised that parties involved in the construction should avoid temper tantrums, erratic and helpful abuse in either direct or written replies; on sensitive issues a cooling off period should precede a response; respond in a rational and objective way.

IV.

Each party must able to freely communicate its opinions, ideas and concerns to the other party. This helps clarify uncertainties, improve the overall project and lead to the situation where both parties work together to find solutions that best meet the needs of both. Open talking can change peoples focus from being antagonistic to cooperation. To eliminate potential confusion and misunderstanding, it is preferable to restrict the transmittal of information to a defined number a appointed recipients. All communications are confirmed in writing. For example, a

77

written instruction that knows by the participants involved such as client, designer, clients representative and contractor The project stakeholders should understand the important of record keeping. It will be required in any case because it is: 1) Required by law 2) Required by the terms and conditions of the contract 3) Needed to control the on-going work 4) Needed as data for estimating future work 5) Needed for preserving the contractors rights under the contract

5.3 RECOMMENDATION FOR FURTHER STUDIES More extensive investigations are recommended, particularly focused on the results presented and significant areas identified in this study. Quantitative data from more projects is needed. Case studies should also be put in progress to study the development of disputes scenarios, either into claims that are settled relatively soon through alternative dispute resolution or into protracted disputes that lead to litigation. The previous cases of disputes that have been heard in court can be analyzed and identified so as to determine the most significant contribution to dispute by the construction participants in the Nigerian scenario. The methodology and basic terminology developed in this study may provide a useful framework for benchmarking and comparing scenarios in other contractual regimes.
78

REFERENCES
Arbitration and Conciliation Act (Chapter 19, Laws of the Federation of Nigeria, 1990), Arbitration Topics; www.wikipedia.com. Accessed on 04:48 pm, Friday 11th August, 2010. Akin Akinbote (Jan. 2008). Arbitration in Africa - The State of Arbitration in Nigeria, 2008 Colloquium of the Association for the promotion of Arbitration in Africa, Seminar Notes. Encyclopaedia Incorporated. Koh Cheo Poh (2005). The Causes of Construction dispute on client organizations. MSc Thesis presented to the University of Technology, Malaysia pg 58-71 Kumaraswamy, M. M (1997), Conflicts, Claims and Disputes in Construction. Engineering, Construction and Architectural Management. 4/2.95-111. Nor Azmi Bin, B. (2003). Arbitration in Malaysia Construction industry. MSc Thesis presented to the University of Technology, Malaysia pg 7-10 Research works from the Department of Architecture Federal University of Technology, Minna Nigeria (2008). Sundra Rajoo (2010). Arbitration in the Construction Industry, Article by the Chartered Arbitrator, Advocate & Solicitor, Architect and Town Planner. The Encarta dictionary, (2007). Microsoft Corporation, 2006. William M. Trochim, (2006). Research design: Web Centre for Social Research methods. (Accessed online from www.socialreseachmethods.net at 9:41 am, 17th August, 2010). Americana (1994). Arbitration, pg.337 Vol. 2 Grolier

79

APPENDIX A

QUESTIONNAIRE ADMINISTRATION FOR ASSESSING EFFECTS OF ARBITRATION IN THE NIGERIA CONSTRUCTION INDUSTRY

Dear sir/madam, This questionnaire is designed to collect information on the above topic which is meant for pconfidential and shall not have any effect on the respondent. Thanks for your anticipated time and co-operation.

QUESTIONNAIRE SURVEY
SECTION A: COMPANY AND RESPONDENT PROFILE

Please fill in the blanks or tick in the box as shown. 1. Respondent Name : ______________________________________

2. Company Name :

______________________________________

3. Type of Job/ Position: _____________________________________ 4. Years of Experience: Less than 2 years 2 years to 5 years 5 years to 10 years 10 years to 15 years 15 years and above 5. Type of Organization:g Client Oriented Designer Contractor Others

80

SECTION B

Please indicate your best opinion for the following causes of Construction Disputes Indicator, 1 2 3 4 5 = = = = = Very Insignificant Insignificant Average Significant Very Significant

A. DISPUTES LEADING TO ARBITRATION (CATEGORY 1) 1. Inadequate tracing mechanism for RFIs (Request for Information) 2. Reluctant in checking for constructability, clarity and completeness of work 3. Discrepancies/ ambiguities in contract documents. 4. Poor communications between and among the Parties involved in the project. 5. Failure to appoint a qualified overall Project Manager 6. Lowest price mentality in engagement of Contractors and Designers. 7. The absence of team spirit among participants. 1 2 3 4 5

1 1 1 1

2 2 2 2

3 3 3 3

4 4 4 4

5 5 5 5

B. DISPUTES LEADING TO ARBITRATION (CATEGORY 2) 1. Failure to understand Clients responsibility under Design team contract 2. Over-design and underestimate of the cost involve. 3. Inadequate of open and factual communication. 4. Late information issued and cumbersome. approach to RFIs (Request for Information). 5. Design and specification oversight and error or omissions resulting from uncoordinated civil, structural, architectural, mechanical and electrical designs. 6. Incompleteness of drawing and specifications. 1 2 3 4 5

1 1 1

2 2 2

3 3 3

4 4 4

5 5 5

81

C. DISPUTES LEADING TO ARBITRATION (CATEGORY 3) 1. Inadequate contractor management, supervision and coordination. 2. Lack of understanding and agreement in contract procurement 3. Failure to understand and correctly bid or price the works. 4. Reluctance to seek clarification. 5. Failure to plan and execute the variation changes of works. 6. Inadequate CPM (Critical path method) Scheduling and update requirements. 1 2 3 4 5

7. Delay / suspension of works.

SECTION C The impact of Construction Disputes: 1. Additional expenses in management and administration

2 1 1 1

3 2 2 2

4 3 3 3

5 4 4 4 5 5 5

2. Possibility of Litigation cases. 3. Loss of Company reputation. 4. Loss of profitability and perhaps business Viability. 5. Time delays and cost overruns. 6. Diminution of respect between parties-deterioration of relationship and breakdown in cooperation. 7. Higher tender prices. 8. Extended and/ or more complex award process. 9. Rework and relocation cost for men, equipment and materials. 10. Loss of Professional reputation.

1 1

2 2

3 3

4 4

5 5

1 1

2 2

3 3

4 4

5 5

1 1

2 2

3 3

4 4

5 5

82

SECTION D 1. What is your understanding regarding Arbitration? Do Not Understand Average Understand Totally Understand

Totally Do Not Understand

2. What kind of construction disputes have you encountered? Disputes over payments Disputes over changed conditions (unforeseen ground conditions etc) Disputes over additional works Disputes over delays (suspension of works, site possession etc) Disputes over contract time (EOT, LAD etc). . 3. Based on your working experiences, please specify the methods of resolving disputes on Site.

4. In your opinion, what is the best solution to resolve disputes on Site? ADR (Negotiation, Conciliation, Mediation, etc) Arbitration Litigation 5. In your opinion, what is the best precaution to avoid disputes occurring on site?

83