Professional Documents
Culture Documents
NOVEMBER, 2010
1
CERTIFICATION
This is to certify that this research project “an assessment of the use of arbitration
DATE
Supervisor DATE
HOD
2 i
INSPIRATION
I drew my inspiration from the word of the supreme being; Q3:23 “Hast thou
not turned thy vision to those who have been given a portion of the Book?
They are invited to the Book of Allah to settle their dispute but a party of
them turn back and decline the arbitration” Q2:282 which goes thus;
“O believers! When you deal with each other in lending for a fixed period of
time, put it in writing. Let a scribe write it down with justice between the
parties. The scribe, who is given the gift of literacy by Allah, should not
refuse to write; he is under obligation to write. Let him who incurs the
liability (debtor) dictate, fearing Allah his Rabb and not diminishing
or is unable to dictate himself, let the guardian of his interests dictate for him
with justice. Let two witnesses from among you bear witness to all such
documents, if two men cannot be found, then one man and two women of
your choice should bear witness, so that if one of the women forgets
anything the other may remind her. The witnesses must not refuse when they
are called upon to do so. You must not be averse to writing your contract)
for a future period, whether it is a small matter or big. This action is more
just for you in the sight of Allah, because it facilitates the establishment of
3
DEDICATION
4
ACKNOWLEDGEMENT
I give all praises and adoration to Almighty Allah (SWT) for his goodness,
struggle.
for their love and support in every wise. Without you, I would not have
existed.
realisation of this study. Also, I cannot forget my lecturers Mr. Kadiri, Mr.
Mr. Adebayo for their rich lectures and parental guidiance. I also appreciate
the efforts of some other staff of Yabatech who made my dream of Yabatech
a reality and indeed a success; Mrs Adejare, Mrs Sanya, Mr John and Mrs
Quamdeen and my niece Jolaosho Olamide, thanks for being there. I love
5
you all. I pray God directs your paths and make all your endeavours
successful.
I feel indebted to Mr Niyi Ijogun, Mr Oyegoke Albert (you have been more
Shakirah you all have impacts in my life and I pray to have positive impact
during the years of academic struggle. May God bless you all and guide
6
APPROVAL PAGE
--------------------- ---------------------------
UDOH
Supervisor H.O.D.
7
ABSTRACT
A study was carried out to assess the use of arbitration as a form of
Alternative Dispute Resolution (ADR) in the construction industry with a
view of suggesting it as an economical and effective method of resolving
disputes or otherwise.
The findings of the study revealed that arbitration can rebuild contractual
relationship among disputing parties, It is also clear that the awareness of
arbitration is increasing but still needs to be harnessed.
The conclusion however was that arbitration is relatively economical and
effective in settling disputes and the following recommendations were made:
The need for emphasizing incorporation of arbitration as a means of
settling dispute at the pre-contract stage.
Construction participants should ensure a genuine readiness to refer to
arbitration in any occurring dispute.
Enlightenment programmes should be organized for client and
professionals on the use of arbitration.
8
TABLE OF CONTENTS
Title Page
Certification i
Dedication ii
Acknowledgement iii
Approval Page iv
Abstract vi
List of tables ix
List of figures x
CHAPTER ONE
1.9 Glossary 6
9
CHAPTER TWO
2.1 Preamble 6
2.3.1 Discussion 9
2.3.2 Litigation 9
2.4.0 Arbitration 15
10
CHAPTER THREE
3.1 Introduction 34
CHAPTER FOUR
4.1 Introduction 37
CHAPTER FIVE
5.1 Conclusion 66
5.2 Recommendation 66
References 67
Appendix A – Questionnaire
11
LIST OF TABLES Page
12
LIST OF FIGURES Page
4.1 Response to distributed questionnaire 38
4.2 Respondent’s type of organisation 39
4.3 Profession of respondent 40
4.4 Qualification of respondents 41
4.5 Professional bodies of respondents 42
4.6 Years of experience of respondent 43
4.7 Projects handled by respondents 45
4.8 Projects with minor disputes resolved among parties 46
4.9 Projects with major disputes not resolved among parties 47
4.10 Projects with disputes resolved through arbitration 48
4.11 Effectiveness of arbitration 50
4.12 Extent of usage of various dispute resolution techniques 51
4.13 Awareness of A.D.Rs and their legality 52
4.14 Awareness of arbitration 52
4.15 Times respondents have served as arbitrator 53
4.16 Times respondents have served as expert witness 54
4.17 Determination of existence of situations in which arbitrator’s award is disregarded56
4.18 How often arbitration clauses are inserted in contract conditions 57
4.19 Duration of arbitration process 58
4.20 How long after hearings, awards are produced 59
4.21 Cost significance arbitration as compared with litigation 60
13
CHAPTER ONE
Construction projects with more complex nature are now being executed. More intricate
The above would not be possible without human beings: the people, who initiate the
ideas, combine the resources - the site, the plant, the materials and the methods towards
the realization of proposed projects. These people include the client, various clients'
Contractors who execute the project and a host of many others who are directly or
More often than not, due to the nature of man, there are bound to be disagreements or
arguments between the people mentioned above at one time or the other during the course
of executuring the project. Some of these arguments are settled on site but the serious
ones no settled on site will require the interference oil' an outsider. However, these
disputes should be resolved in a manner such that it will be done timely and such
situations will not re-6ccur. It should also be settled using the contract that was signed as
Such cases often end up in court rooms and are unnecessarily dragged over a period of
14
time. 'there is also the possibility of the court officials not understanding the nitty-gritty
of construction projects and the industry as a whole. This situation calls for better
avenues of resolving such disputes giving rise to the concept of Alternative Dispute
Resolution (A D R).
It is in the light of this that the author is concerned and looking at the topic "An
This research study is set out of assess critically the use of arbitration process in resolving
occurrence of disputes and huge sums to resolve this dispute which takes long period
thereby resulting in cost over run of construction projects. In order to find Solution to
4. To find out the most contributory factor to disputes in the construction industry.
15
1.3.0 RESEARCH QUESTIONS
disputes?
The main aim of this is to assess the use of arbitration as an Alternative Dispute
further use of arbitration for resolving such disputes. The objectives for achieving tile
This research study is deemed necessary to determine situation where arbitration should
16
effectiveness especially when.
It has been observed that the number of reported legal cases suggests a certain
litigations nature driving the construction industry. The associated costs are often
high damage the image of the industry (Kaufmann- Kohler ad Bonnin, 2008).
With the law and practice of arbitration being increasingly standardized there still
In gathering data for this study; literature and theoretical foundations are to reviewed
which include:
Published articles
Also, questionnaires which contain questions relevant to the study with columns for
answers and suggestions would be prepared This would be administered [and collected]
by hand to professionals and contractors involved in the construction industry and also
The analysis of this research will be given in later chapters thereby resulting to probable
17
1.8.0 SCOPE AND DELIMITATIONS OF STUDY
The scope of this study will cover all types of construction works and the geographical
spread of the study will be within the boundaries of Lagos state, Nigeria. Arbitration will
just be mentioned but not fully explained and also the study will be limited to Lagos state
3. Lien: Legal claim on somebody's property, legal right to keep or sell somebody
1.10 GLOSSARY
18
CHAPTER TWO
2.1 PREAMBLE
The construction industry in Nigeria plays major role in the development of her economy
through the provision of various structures ranging from buildings (which may be
construction of gas turbine, power plant to mention just a few) and civil engineering
Many projects today are being abandoned in various parts of the country as a result of
unresolved disputes between parties involved leading to setbacks in the level which ought
to have been attained in our economy. This is so because processes involved are group
commt1nication, and understanding between the participants involved from the inception
Hence, any hitch that erupts during any of the processes involved should be speedily
dealt with so that the project can be realized timely and economically. It is being
observed that most disputes on construction projects are being referred to the courts
which are usually crow&-d because there they are limited. This is in accordance with
Moneke (2007) who posits that judges in litigation are usually overburdened with a lot of
19
It is in the light of the above, that the author is making an attempt to carry out an
industry.
INDUSTRY
More often than not, due to the nature of man, there are bound to be disputes between the
stakeholders on construction projects at one time or the other during the course of execu
ting the project. Marilyn, Sedgwick and Arnold (2009) opine that in times when the
world is experiencing economic troubles and money is tight, disputes often arise because
construction projects participant are not willing or able to compromise and use cash to
smooth over the rough spots. Some of these arguments are settled on site but the serious
ones not settled on site will require the interference of an outsider, either consensually or
otherwise. However, these disputes should be resolved in a manner such that they will be
done timely and such situations will not reoccur. It should also be settled using the
contract that was signed as guide whilst having little or no cost implication.
disagreement between two or more people, groups or teams'. Seeley (1984) referred to it
and Hogg (2007), disputes are common features of the construction industry which occur
20
daily.
There are many factors that can give rise to disputes. The Aqua group (1981) opines 'that
disputes and claims can be traced back to failures by one of the parties to the contract,
one of the professional advisers or some other party connected with the contract, to do his
work efficiently, to express himself clearly or to understand the full implications of the
disputes can still arise even on projects with best intentions even when every possibility
of disagreement has been potentially eliminated. They (Ashworth and Hogg, 2007) also
agree with the authors above and explain how each of the stakeholders could cause
i.) The employer or client if he gives poor brief, interferes with contractual duties of
ii) The consultants if they do not give adequate designs, lack appropriate competence
iii.) The contractor if he fails to manage the site, coordinate the subcontractors or plan
iv.) The subcontractor if he mismatches subcontract conditions with that of the main
21
v.) The manufacturers and suppliers if they fail to define performance or purpose.
Ashworth and Hogg (2007) still maintain that disputes could arise from the nature
and warranties being used and so on. The position of Ashworth and Hogg (2007)
The above stated causes of disputes should however be prevented from occurring but in a
case where any of such situations occur, according to Emmanuel (2003) being supported
by Ashworth and Hogg (2007), such disputes could have enormous effects except the
dispute is resolved timely on projects. Three of such effects are being discussed below,
might come as a result of idle time spent, compensation to be paid, inflation in the
prices of materials as are sult of longer time taken to execute works. Even, the
cost of resolving the dispute through any of the available methods. Although the
bearer of the cost of resolving dispute can be determined by the third party but all
other costs will be borne by client except where the contractor has been overpaid
and he has to pay back the client. The contractor might also bear additional costs
or loss where he is found to have breached a condition of the contract and has to
22
ii) Time overrun of construction projects: The delays caused by contractor, client
or even the consultants and time taken to resolve disputes on a project all add to
iii) Abandonment of the proiect: This is also a possibility, Joint Contract Tribunal
1980 '80), clause 25 allows for determination of even by contractor. Mostly, when
contracts are determined, it is not usually an easy job to re-award the contract to
another contractor because he (the new contractor) would incur cost of bringing
his own plant to site, and such other costs which would have been paid earlier to
the first contractor. The project will be abandoned during the long period of trying
to resolve the dispute or awaiting trial in court, (that is if the dispute is ever being
resolved).
Ashworth and Hogg (2007) imply that the need for effective and timely communication
of information should form part of the contract irrespective of the procurement path.
They believe that understanding this need and encouraging others to do likewise will go
utmost importance but where they cannot be avoided or amicably settled on site, a more
formal and systematic approach must be adopted. Provisions are now being -made in
23
Litigation
This is otherwise called mutual settlements and it requires involved parties holding series
of meetings with the aim of arriving at an agreement. A third party might be called in to
help find something everyone can agree on. In some cases, the third party is called
mediator or conciliator. However situations like this have no legal recognition and the
parties may still open up a case that has already been agreed on (earlier) the settled in cart
2.3.2 LITIGATION
This is a dispute resolution procedure which takes place in courts. It involves third parties
who are trained in the law usually solicitors and barristers, and a judge who is appointed
by the courts. This method of solving disputes is often expensive and can be a very
lengthy process before the matter is resolved, sometimes taking years to arrive at a
decision. The process is often extended upon appeal, to higher courts involving additional
The party who feels aggrieved and initiates the process is called "plaintiff 'while the
other party being sued is referred to as "defendant" in the court system. Ashworth and
Hogg (2007) explain that a case needs to be properly prepared prior to the trial; a
considerable amount of time can elapse between the commencement of the proceedings
24
and the trial. A typical action is started by issuing of a "writ". This places the matter on
the official record. A copy of the writ is served on the defendant, either by delivering it
personally or by any other means such as, through the office of a solicitor. The general
rule is that the defendant s must be made aware of the proceedings against them. The
speed of an hearing in most cases depends on; Expeditious preparation of the case by the
parties concerned.
Availability of competent legal advisers to handle the case in terms of its preparation and
Daudu (1999) opined that judicial officials were losing their morale (become less
Resolution).
From the foregoing, it should be noted that all facts of a dispute are included in the claim
(by the plaintiff) and also proved to the judge (presiding in the court system) by
admissible evidence which may be oral or documentary, Oral evidences are given from
memory by a person who heard or saw what took place; mere hearsay are not allowed.
Usually the burden of proofing lies on the party asserting the fact. However not all cases
brought to litigation are being resolved especially here in Nigeria litigation case.
A.D.R is the acronym for Alternative Dispute Resolution. Daudu (1999) defines it as "an
25
encapsulation of the policy of encouraging peaceful settlement of pending citizens
disputes and the early settlement of pending litigation. Also Ashworth and Hogg (2007)
or the courts. They also maintained that are just formal processes of negotiation which
Ashworth and Hogg (2007), argued that arbitration was not a method of Alternative
Dispute Resolution, so also adjudication but Daudu (1999) in his presentation regarded
be attributed to the authors' difference in location and locality. The former being in the
United Kingdom while the other is a Nigerian based in Nigeria. Alternative Dispute
and adjudication in the British and United Kingdom commercial world because they are
the most common forms of resolving disputes over there. But here in Nigeria, the most
neutrals to achieve settlement. Practical solutions to the disputes can be obtained, as such
the disputes can be resolved in a manner that is satisfactory to all concerned such that the
It has been variably argued that alternative dispute resolution techniques are methods of
26
putting lawyers out of business but in reality, lawyers have a role to play in assisting the
client in towards successful dispute resolution; they could advise on preferred technique
where it is foreseen that the case might still remain unsettled in court. In fact, they should
appreciate alternative dispute resolution because it was wittingly said that a court is "a
place where what was confused before remains unsettled than ever especially where the
case is not well prepared or something very minute is being omitted in the presentation or
Mediation/Conciliation
Adjudication
Mini-trial
Arbitration
1) Mediation: This is the most widely used form of Alternative Dispute Resol ution.
background will reflect the matters in dispute which means the neutral might be an
relevant to the nature of the claim (Emmanuel, 2003). Ashworth and Hogg (2007)
explained that the procedures start with a preliminary meeting being arranged by
the neutral to discover the substance of the dispute and decide on how best to
proceed. The parties will make formal presentations at a joint session. This will
27
then be followed by series of private meetings called 'caucuses' between the
neutral moving from one caucus to the next, reporting the views of each party in
turn. This leads the neutral to being able to suggest a formula for agreement which
in turn may lead to a settlement. Such agreement is terminated in the same way as
a mini-trial. After the agreement, the mediator might be responsible for preparing a
draft of the settlement agreement and also assist in binding the parties to their
a reference to a neutral third party, who is required to give a finding either on the
whole case or on a particular aspect of the case, though the finding is usually
binding decision pending the period after which parties are free io seek legal or
arbitral award to reverse the earlier decision. Ashworth and Hogg (2007) cited
sections 108 to 113 of the housing grants, constructions and regeneration act of
(though there are some exceptions like oil and gas contracts and private homes).
party to the contract wishes a dispute to be heard, he can call for adjudication and
the adjudicator when appointed has 28days to make his award unless this period is
construction courts around the globe now deal with the enforcement of
28
adjudication awards which the judges are determined to uphold except it has been
proved that no contract existed or major breach of natural justice has occurred in
the award of adjudication. However, this technique has the advantage of often
leading to settlement without the matter going any further. The reason for this is
that a party that has lost in adjudication will think carefully before proceeding with
arbitration or very expensive litigation because he might as well lose again, with
the additional penalty of paying the other side's costs. Current statistics suggest
3) Minitrial: This is other wisely called 'executive' tribunal'. This normally takes the
formed, comprising of the neutral (who chairs the panel) and senior executive
members from the disputing parties. Meanwhile, the executive members of the
disputing parties should preferably be individuals who were not previously directly
involved in the dispute and also be of status that possesses authority to bind the
respective parties. The neutral has to be someone with knowledge of the industry
(2007). The requirement of the neutral is same as that of a good arbitrator but their
tasks are different unlike an arbitrator who hears the argument and decide which is
preferable, the neutral becomes more involved by listening, suggesting and giving
advice on matters of fact and sometimes on law as well. After inviting series of
experts and witnesses, the executive members enter into a negotiation with a view
29
the matters in dispute. Once a negotiated statement, is reached with the aid of the
neutral, he will draft the statement of agreement there and then. This will then be
followed by a formal agreement ending the matter. The name minitr.ial is however
misleading as it can be seen that the procedure is totally consensual (requires the
consent of the parties involved to make it binding) which is not the case with trials.
4) Mutual Fact Finding: This is a system by which parties are offered a technical
expert's assessment of their case to assist negotiations. It is possible for the parties
to jointly select the expert as well as to pr ovide him with an initial brief It was
gathered that this method is preferred where issues are of a complex technical
nature. The benefit is that it is a faster way of narrowing the issues in dispute as
well as giving the parties an objective appraisal of the merits or demerits of their
boards under specific forms of contract (for example; dispute - adjudication board
about following the agreement of the parties either when the dispute arises or more
often as a term of the original contract. For instance, Joint Contract Tribunal
(J.C.T.) conditions of contract provide that if a dispute arises between the parties
to the contract, then either party can call for arbitration. In general, it involves a
30
third party (whether an individual, a board or an arbitrator court), not acting as a
court, of law being empowered to take decisions which disposes of the 'dispute
after c I ritical. examination of the dispute. However, if the award of the arbitrator
is biased or one of the parties feels cheated, then the matter can be re-opened in
It might also be of interest to know that Alternative I?isp:ute Resolution techniques have
a.) Privacy: The processes are carried out in private so that the parties need noi air
their grievances in public. Ashworth and Hogg (2007) concur that harmful
economical compared with the legal and other costs resulting from lengthy
d.) Controlled: A solution can be tailored or geared towards a business result rather
than a result governed by rule of law, which may be too restrictive or largely
inappropriate.
more natural.
31
f.) Relieving: Alternative Dispute Resolution techniques serve as means of relieving
Resolution techniques are the most effective and economic form of resolving dispute in
the construction industry because the matters of disputes are being critically examined by
professionals who are used to the nitty-gritty of the construction industry. Also, the third
parties or neutrals are mostly architects, quantity surveyors, engineers, lawyers, builders
and so on. Another point be:ng made, clear is that litigation is the last resort (if need be)
for all disputes no matter the complexity of the, conflict, Though there are arguments as
to whether awards of arbitration should still be tampered with in law courts or that the
court has no jurisdiction whatsoever or business in matters of arbitration but this will be
looked into. in later findings of this study through examination of the legal backings of
arbitration.
2.4.0. ARBITRATION
Wood (1978) wrote that arbitration is necessary when there is a major dispute between
the employer and the architect or engineer on his behalf and the contractor which cannot
be resolved in any other way- apart from legal proceedings. The Aqua group (1981)
agreed with the above stated but emphasized an exception to this provision which is in
relation to the statutory tax deduction scheme because the legislation has already
provided other method settling such dispute under the VAT agreement. Wood (1981)
32
also, opined that arbitration can be generally expeditious and possibly slightly less
expensive than litigation. He also believed arbitration might be heard within two and a
half years while litigation may take up to four and a half years and also that the use of
arbitration has improved with only one drawback of bad records cases heard together
with their awards are not reported. Ashworth and Hogg, 2007 believe that arbitration has
been the most chosen method of resolving disputes between parties to a building contract
although other contracts are traditionally heard in courts. Akinbote (2008) cited
K.SU.D.B vs FANZ limited case (a case which went as far as supreme court, Nigeria)
where the court made judicial pronouncement on the judicial review of arbitral
between not less than two parties for determination after hearing both sides in judicial
arbitration agreement may be present for future differences, arbitration is the reference of
actual matters in contract. The relevance of the above assertions cannot be denied.
However, it should still be pointed that examination of recent arbitration cases shows that
the duration varies with respect to complexity of matter in dispute and could be as brief
as two months in contrast with Wood (1978). The importance of reports of arbitration
cases is not being overemphasized by Wood (1978) as they would be useful if they were
kept because disputes with similar principles could be arbitrated on several times. Also
the judicial review cited by Akinbote (2008) points to the appropriateness of arbitration
Akinbote (2008) maintains that arbitration clauses were sine qua non and an integral part
33
of most contracts entered into by parties in Nigeria, either domestic or international. This
is buttressed by Ashworth and Hogg (2007) explain that where such clauses exist, even if
such case is taken to court, the court will rule that arbitration should be the propqr forum
since it has been chosen as the path for hearing the disputes. The c6urt will also stay any
legal action taken in breach of the arbitration agreement under section 9 of the arbitration
act of 1996. The Aqua group (198 1) also maintains that where an arbitrator is named in
the contract, the matter is automatically referred to him though he believes the choice
should be left till when the dispute arises before choosing appropriate arbitrator which I
who believes that a situation where an arbitrator is not well acquainted with the subject
qualified to determine the dispute or difference under a contract hence matter being
Provisions are now being made in various forms of contract allowing for settlement of
dispute through arbitration. Example of such includes clause 35 of the J.C.T. (Joint
Contract Tribunal) 'form of contract and also clause 66 of the I.C.E. (Institute of Civil
Engineers) conditions of contract. The Aqua group (198 1) opines that matters on
arbitration will only take place after practical completion of the works or determination
of the contract unless with written consent of both parties to the contract. Wood (1978)
also agrees with this opinion and further says that it could be heard after alleged practical
34
completion, alleged determination of the contract or abandonment’s of the works.
However true, this is, there are still exceptional cases of disputes where arbitration can
commence during the progress of the works and they include disputes arising in
connection with;
According to Wood (1978), the arbitrator has the right to order for measurements or
valuation as may be required to either determine right of the parties or ascertain and
award any sum which ought to have been includQ1 in any certificate. He can also review
such certificates had not been given. According to Fagbohunlu (2008), there are three
35
Duties imposed on him by applicable rules and laws
This means that rule of arbitration whether international or institutional impose specific
i. Duty to be and stay impartial (to) and independent (of) any of the parties involved
ii. Duty of disclosure; this requires that the arbitrator or arbitral tribunal makes
relevant fact which might affect the judgement or possibly give rise to doubts
iii. Duty to effectively resolve the dispute between the parties by rendering a valid
award; he should ensure that the award covers decisions on all matters within and
v. Duty to adopt procedures which are suitable to the circumstances of the particular
case. The experience of the arbitrator will be of great help in achieving this in as
much as parties are given full opportunities of presenting their case in accordance
vi. Duty to conduct proceedings fairly without undue delay whilst considering all
material issues. This can be achieved by allowing each party reasonable time to
present their case and also respond to case'of the other party.
vii. Duty to keep arbitration confidential as implied in the arbitration agreement. The
36
to others without consent of the involved parties.
documents which are likely to have an effect on the arbitrator's decision. There
ix. Duty not to decide evacuate bono or as amiable compositor unless authorized by
parties. This means that 'fixed and recognizable' system of law must be applied
Conciliation Act.
xi. Duty to take account of relevant considerations when fixing arbitrator's fee which
might include complexity of subject matter, time spent on proceeding and so on.
This implies that an arbitrator must observe the matter and agreement carefully to
ascertain whether he would be able to carry out such duties (in the event of his
The arbitrator is expected to have certain level of morals in dealing with parties, example
37
i. Declining to accept an appointment if he will be unable to give the case sufficient
It should also be noted that the arbitrator has the say on type of proceeding to be adopted
for the arbitration. Ajanlekoko (2008) explains that the rule of arbitratioil could be any of
three procedures; this was found to be in accordance with Joint Contract Tribunal (JCT)
Procedure without hearing (rule 5): Under this rule, the claimant is required to serve
his statement of case within 14days of the preliminary meeting. The respondent will also
be required to submit his statement of within the next l4days. However, they must include
every document and list of such documents considered pecessary to support their
statements since there will be no hearing. If the claimant so wish, he has the right to serve
a reply to the statement of defense within 14days after receipt of such defense. The
exchange of statements will be monitored by the arbitrator and he is due to publish his
award within 28days (or more, within the arbitrator's discretion) after receipt of last of the
statements.
38
Full procedure with hearing (rule 6): Under this rule, there is service of statements
from the staternent of case from claimant, to defense, reply to defense, counter claim,
defense to counter claim just as in (a) above but the duration of service of documents is
of 28days interval except if the statement is of a reply to the defense of a counter claim
where the given duration is 14days. After receipt of all the statements, date and venue for
oral hearing is being fixed and arranged by the arbitrator after which he publishes his
Short procedure with hearing (rule 7): Under this rule, each party bears his own cost of
arbitration unless, the arbitrator decides otherwise at his own discretion. It involves a
preliminary meeting after which a hearing must take within the following .21 days.
However, the parties must identify and dispatch copies of documents to be relied upon at
the hearing to both their opponents and the arbitrator at least 7days before the hearing.
The arbitration award refers to the judgment or decision of an arbitrator or the appointed
umpire where there are two arbitrators to decide the dispute and they differ in their
various authors have described it in a variety of ways, all depicting the sole importance of
the award. One of such is Aniekan (2008), quoting Mann (1985) who is of the opinion
that award is no more than a part, the final and vital part of a procedure which must have
a territorial central pointer seat Ajanlekoko (2008) posits that the arbitration law provides
for parties to give notice to arbitrator before the award is made requiring a 'reasoned
39
award'. The award must be
iii.) Directed to all matters referred but must not exceed the scope of submission
Ipaye (1998) explains that an award must be in writing, signed by the arbitrator or
majority of the arbitrators and should disclose the reasons upon which the award is based,
the date on which it is made and the place of arbitration. A copy must then be made
available to each party. Ajanlekoko (2008) opines that either party may apply to the
arbitrator for interpretation of the award within 15days of receipt of such award. However
good an award may be, it could still be set aside if any misconduct is discovered. This is
being supported by Faghohunlu (2008) who emphasized that the conduct of reference for
the award should not be connected to technical or actual misconduct, as the court may set
aside such award. But, it should be noted that misconduct in this sense refers to both
2.4.4 MISCONDUCT
be constituted;
i) Where arbitrator does not comply with the terms of-the arbitration agreement.
ii) Where an award which ought not to be enforced on the ground of public policy is
made.
40
iii) Where the arbitrator has been bribed or corrupted.
iv) Where the arbitrator does not decide on all matters referred to arbitration
V) Where the arbitrator breached rule of natural justice (an example is seen in
vi) Where an arbitrator wrongfully admits and act on evidence which goes to the root
Also Usman (1998) gave more instances that could be regarded as misconduct
viii) Where the arbitrator is not well acquainted with the trade and practice in respect
ix) Where the arbitrator delegates any part of his authority including where umpire
Summarily, from the aforementioned, I would say where an arbitrator is negligent of any
of his mentioned duties or. breaches rules of natural justice or goes beyond the scope of
matters in arbitration, misconduct has been constituted. This could either result to
removal of arbitrator or remission for amendment, setting aside part or whole of the
41
2.4.5 ARBITRAL BODIES
There are four main arbitral bodies in Nigeria namely; Chartered Institute of Arbitrators
The Nigerian Branch of Chartered Institute of Arbifrators ClArb (UK) Nig: This
was granted status on the 22 nd December,, 2007 and became functional in March 2008.
Their mandate is to develop and promote the art and practice of arbitration by giving
resolution guides. They provide venues for arbitration proceeding on request. The centre
hag a conference hall, hearing rooms, retiring room and a library. According to Akinbote
(2008), they are arguably the most vibrant body of arbitrators in Nigeria.
Chartered Institute of Arbitrators Nigeria ClArb (Nig): This was recently founded by
a group of seasoned Nigerian Arbitrators. The marked difference between this body and
the first is that the former insists on membership by examination the latter insists on
experience in the practice and law of arbitration. It is believed that this body will soon be
various level as high standards are the hallmark of any professional body or association.
Structural engineers, Quantity Surveyors and so on. The Nigerian Institutes of Quantity
Surveyors and that of Arcitects have provision for-appointment and conduct of arbitration
42
in their respective statutes.
2005, it is relatively young but very active. Its main objective is to enlighten the
According to Adekoya (2009), the arbitration and Conciliation Act (Cap Al 8 of tile laws
of Nigeria 2004) enacted in 1988 is the current federal legislation which governs arbitral
proceedings at both state and federal level. However, there is also the Lagos Court of
Arbitration Law which applies to all arbitrations with Lagos as the seat. These same laws
were used to establish the Lagos court of arbitration anid intended to perform the
and panels of neutrals. The main difference between this law and the Arbitration and
Conciliation Act is that it grants the arbitral tribMial power to exercise a lien over its
can be reduced to the barest minimum by ensuring effective and adequate communication
and cooperation between all stakeholders involved in the construction process. Also,
parties to tile contract should have clear understanding of contract before committing
43
themselves after which each of the parties should endeavour not to breach any of the
conditions of the contract. Clients should also endeavour to give clear brief from
Provisions being made in the contract for mode of settling disputes are very essential and
clause 41 of the Joint Contract Tribunal and clause 66 of the Institute of Civil Engineers
44
CHAPTER THREE
3.1 INTRODUCTION
This chapter gives an overview of the procedures used in carrying out the research study
as it pertains to method and instrument of collecting data and also the methods of
analysis.
The research design adopted for this research is a sample survey design. It involves the
use of self administered questionnaires which were structured to meet the objectives for
the study by surveying selected consultancy firms, construction firms and so on.
The sample frame constitutes of all professionals involved in the construction industry
within Lagos. These range from architects to builders, quantity surveyors, estate valuers,
made up of lawyers and arbitrators who have been involved in arbitration process and
also lawyers who have the knowledge about the legality or otherwise of issues discussed.
The sample size is 35 and the sampling technique adopted was the probabilistic sampling
technique which entails sizing a target respondent to determine wether he would give
reliable and workable result and also the willingness of this respondent to partake in the
45
survey. Under probabilistic sampling method is also purposive sampling which involves
particular respondents whom the researcher is certain has the required expertise and
information which he (the researcher) needs. For the purposive, a list of members of the
society of arbitrators was gotten from the secretariat, their addresses were traced and
On the whole, the researcher is certain that the sample is a true representation of the
population.
The instrument employed for data collection was a questionnaires deisnged to measure
enable quick and reliable data to be collected from the envisaged sample of the
population.
The first part aimed at finding out respondents characteristics such as profession
the first objective. The Section B, C, D were also structured to meet the remaining three
objectives which are determining popularity among stakeholders, legality and cost
Since it is common knowledge that “no result is better than the data collected”. Utmost
care was taken to ensure that questionnaires were self administered and collected by
researcher.
46
3.7 METHOD OF DATA ANALYSIS
In analyzing the data collected, the researcher made use of quantitative and statistical
tools, frequency tables were used, graphical presentation of data were made by use of
tools like bar chart, pie chart and so on. Relative Importance Index was also used with
Most of the addresses gotten from the directory of (Society of Construction Industry
Arbitrators) SCIArb were old addresses, this caused the researcher tedious work having
to locate new addresses of arbitrators. Also the attitudes of some professional towards
filling of questionnaires was not encouraging. You had to parade several times before
filled questionnaires could be retrieved from respondents. Hence researcher spent more
time and money. Even at the end of this, some questionnaires still could not be retrieved.
However, the lawyers demonstrated good attitudes in this regard, they were very
welcoming and did not waste time in completing the required information.
47
CHAPTER FOUR
4.1 INTRODUCTION
This chapter is concerned with the presentations and analysis of data generated from the
questionnaires used in field survey. This forms the basis for inference and associated
Fifty (50) copies of questionnaires were administered but only 37 copies were returned.
This gives about seventy four percent (74%) response rate. The statistical breakdown of
questionnaires responses rate is shown in table 4.1 below. The returned questionnaires
were then scrutinized and it was discovered that two (2) of the questionnaires could not
Questionnaire Received Nr 8 27 35
% 16% 54% 70%
Questionnaire Not received Nr 5 10 15
% 100% 20% 30%
48
Figure 4.1 Response to distributed questionnaire
Q. S Consultancy 12 34.29
Engineering 3 8.57
Construction 4 11.42
Client 2 5.72
Total 35 100
49
Figure 4.2 Respondents’ type of organisation
The respondents were classified based on their organisation with a view that their opinion
Architecture 7 20.00
Engineering 4 11.42
Estate Surveying - -
Building 2 5.72
Law 7 20.00
Others 1 2.86
Total 35 100
50
Figure 4.3 Profession of Respondents
From the above, it is shown that the highest number of questionnaires were filled by
quantity surveyors with frequency of 14 and a percentage of forty (40%). Then the
architecture profession and law having frequencies of 7 and (twenty percent) 20% each
then the engineers with a percentage of 11.42%.
51
Figure 4.4
Figure 4.4 Qualification of respondents
Table 4.4 and figure 4.4 above show that majority of respondents are B.Sc holders with a
professional qualification with a percentage of 20%, Bachelor of law and Masters at law
also hold 20%. Then holders of higher National Diploma with percentage of 17.14%. We
also have respondents with Master of Science and Professional qualification with 14.28%
of the total response and the least response was gotten from a Masters of science holder
having 2.86% of total response. The purpose for this is to be sure that the respondents
52
4.2.5. Professional bodies of respondents
NIQS 14 40.00
NIA 7 20.00
NIOB 3 8.57
SCIAB 8 22.86
NSE 4 11.42
NBA 7 20.00
Others 5 14.28%
NIA
5 OTHERS
1 1
SCIArb 3
NBA 6 1
2 1 NSE
4 1
1
9 1
1
NIOB
NIA
From table 4.5 and figure 4.5, it is seen that the highest number of respondents are
(40%) of the total response, however 4 out of the 14 are members of the society of
53
(NIOB) Nigerian Institute of Builders. The next highest response are from members of
SCIArb with percentage of 22.86 out of which 4 members also belong to NIQS,2 others
(Nigerian Bar Association). Then the NIA out of which 1 is a member of SCIArb and
0–5 3 13 39 37.15
6 – 10 8 11 88 31.43
Total 35 417.50
f 35
=11.93 =12years
54
Figure 4.6 Years of experience of respondents
The above mean is closest to 12 therefore it is assumed that on the average, all
respondents have experience of 12years. This implies that data produced by respondents
can be trusted.
None 0 5 0 14.28
35 793.50 100
55
Mean = fx = 793.50
f 35
4.2.8 Analysis of minor disputes resolved among parties without interference by third
parties
Table 4.8 Disputes resolved without third parties
Range Frequency Midpoint Percentage
f x fx
None 6 0.00 0.00 17.14%
1-10 17 5.50 93.50 48.58%
11-20 6 15.50 93.00 17.14%
21-30 6 25.50 153.00 17.14%
31-40 0 35.50 0.00
41-50 0 45.50 0.00
51-75 0 63.00 0.00
Total 35.00 339.50 100.00%
56
Mean number of projects with minor disputes resolved among parties =
4.2.9 Analysis of projects with major disputes not resolved among parties
Table 4.9 Analysis of projects with major disputes not resolved among parties
f x fx
57
31-40 1 35.50 35.50 2.86%
Mean number of projects with major disputes not resolved among parties =
Fig 4.9 Projects with major disputes not resolved among parties
Table 4.9 and fig 4.9 both represent the number of projects executed by respondent which
had disputes which were not resolved. Eleven (11) respondents representing 31.43% of
the sample size claimed not to have handled any of such projects while nineteen (19)
respondents representing 54.29% of the sample size had handled projects between 1-10
58
number with disputes unresolved. Three (3) respondents had executed 1-20 numbers of
such projects, 1 respondent each had executed between 21-30 and 31-40 numbers of such
projects.
With the mean calculated from here and the mean of total projects by respondents
handled about 87% of all projects handled by respondents fall within this category.
f X Fx
59
Figure 4.10 Projects with dispute resolved through arbitration
Table 4.10 and figure 4.10 above shows that 37% of respondents with frequency of 13
have not been involved in any project where arbitration was used to resolve disputes.
About twenty (20) of the respondents representing about 57% of respondents have been
involved in 1-10 number of projects where arbitration was used to resolve major disputes.
One respondent each representing about 3% of all respondents have handled between 11-
20 and 31-40 number of projects in which arbitration was used to resolve disputes.
In a bid to arrive at average number of projects in which arbitration has been used to
Table 4.11 Analysis of how effectively disputes are resolved through arbitration
60
Very effectively 10 28.57%
Effectively 5 14.29%
Effectively 3 8.57%
No idea 13 37.14%
Total 35 100.00%
61
Resolution Technique Rank Mean Item Score
Arbitration 1 3.03
Mediation 2 2.31
Litigation 3 2.20
Adjudication 5 1.83
Minitrial 6 1.43
62
Response from respondents are being analysed above in figure 4.12 and table 4.12 using
mean item score method with the aid of likert’s scale show that Arbitration is the most
used of all the listed resolution techniques with a percentage of 23.73%. This is followed
by mediation with a percentage use of 18.09%, next to this is litigation with ranking of 3
and a percentage of 17.23%. Dispute resolution board is 4th on the ranking with a
percentage use of 15.43%, Adjudication is on rank 5with percentage use of 14.33% and
the 6th on the ranking is minitrial with a percentage use of 11.20%.
This implies that arbitration, mediation and litigation are most widely used techniques in
that order.
Yes 28
No 5
No idea 2
Total 35
63
Figure 4.13 Awareness of Alternative Dispute Resolution Techniques and their legality
About 80% of respondents claimed to know about alternative dispute resolution (ADR) techniques and
their legality, about 14.29% of the sample doubt the legality of ADRs while about 5.71% do not know
about ADRs at all.
Yes 32 84.85%
No 3 15.15%
Total 35 100%
64
Nr of
f x Fx
65
Figure 4.15 Numbers of time respondents have served as arbitrator
Nr of
times Frequency Midpoint Percentage
f x fx
None 16 0.00 0.00 45.71%
1-5 17 3.00 51.00 48.57%
6-10 2 8.00 16.00 5.71%
11-20 0 15.50 0.00 0.00%
21-50 0 35.50 0.00 0.00%
51-75 0 63.00 0.00 0.00%
Total 35.00 67.00 100.00%
66
Figure 4.16 Numbers of time respondents have served as expert witness
Figure 4.16 and table 4.16 show that on the average, respondents have served as expert
condition 3.2 1
The above analysis was done using the mean item score method and the result is as
shown on table and figure, it can be deduced that most arbitrations take place as a result
clients also suggest arbitration often times as this is on rank 2. On rank 3 is consultant’s
67
suggestion followed by contractor’s suggestion on rank 4 and reference from court on
rank 5.
exist or not.
Frequency Percentage
Yes 5 14.29%
No 17 48.57%
No idea 13 37.14%
35 100.00%
Figure 4.17
The above figure and table indicate that 48.57% of respondents believe that situations in
which awards of arbitrators are disregarded exist. Reasons given for this include
misconduct by arbitrator or arbitration not done in accordance with the lex arbitri of that
arbitration process.
68
Table 4.19 How often arbitration clauses are inserted in contract conditions
Often 5 14.29%
Sometimes 9 25.71%
Rarely 0 0.00%
At all 2 5.71%
Total 35 100.00%
Figure 4.16
Figure 4-20 How often arbitration clauses are inserted in contract conditions
From the above data presented in table 4.19 and figure 4.16, it was seen that most
respondents believe arbitration clauses are inserted in contract conditions very often.
69
Table 4.20 Duration of arbitration process
f x Fx
70
4.2.21 Analysis of how long after hearings, awards are produced
Table 4.21
21days 23 65.71%
30days 8 22.86%
60days 4 11.43%
90days 0 0.00%
Above
90days 0 0.00%
71
Fig. 4.20
Figure 4.18
From the above, the most selected period of award is 21days with a percentage of about
66%. Hence, it is accepted that most awards are produced 21days after hearing.
Table 4.22
Consultant's
incompetence 6 2.14
From the above, it is shown that cost issues on rank 1 are the most contributory factors to
dispute on construction projects. The table further shows time issues on rank2.
Significant 2 5.71%
72
Not significant 19 54.29%
No idea 2 5.71%
Fig 4.19
It can be deduced from the above analysis done with frequency table that the cost of
respondents have no idea about cost of arbitration but 5% believe it is significant while
about 12% believe it is very significant. However, this cannot be compared with about
73
DISCUSSIONS OF FINDINGS
From the literature review, legality of arbitration was established under the provision of
Commission on International Trade Law rules and also by various authors. The analysis
of field survey also show that 80% of respondents believe in its legality as shown in table
4. 13.
1. The most contributory factor to disputes was cost issues followed by time issues
i.e cost overrun and time overrun as shown in table 4.22 of analysis. On the
average, for 10projects handled by respondents, there has been about four with
disputes unresolved.
2. About 15% of respondents do not know about arbitration and this comprise
mainly of clients and contractors. However, about 85% are aware of Alternative
3. Ten (10) number of respondent claim to have served as arbitrators and nineteen
(19) as expert witness although only eight (8) numbers belong to SCIArb. This
implies that some arbitrators are not yet members but they are able to arbitrate
Out of the ten above, there are seven quantity surveyors, 2architects and a lawyer
which reveals that quantity surveyors are the professionals mostly used as
arbitrators.
74
4. The effectiveness of arbitration according to respondents is high and shown in
table 4. and figure 4. . The duration is within 6months and could be as low as
2months as against two and a half years (2 1/2) as opined by Wood (1978) in the
inexpensive. This is further proved in table 4.23 and figure 4.19 in acco rdance
5. There are situations in which the award of an arbitrator is discarded and some of
compliance with the lex-arbitri, this is also in line with information from literature
6. Arbitration and mediation are the most used techniques of resolving dispute, but
they are closely followed by litigation. Resolution boards are also often used.
However, this is slightly different from literature review that potrays a litigious
7. Respondents believe suggestion for use of arbitration comes mainly from contract
4.17. Furthermore, it is proved that the court could refer a case to arbitration if
arbitration has been agreed as the path for resolving dispute and parties refuse by
first taking the dispute to court. This is in line with Ashworth and Hogg, 2007
75
SUMMARY OF FINDINGS AND DISCUSSION
Cost overrun and time overrun are the main causes of disputes on construction
projects.
arbitration. Hence, arbitrators should understand nature of dispute and perform his
duties judiciously exercising his rights without infringing that of the parties.
clients and professionals especially contractors. Hence need for creating more
awareness.
76
5.0 CONCLUSIONS AND RECOMMENDATION
5.1 CONCLUSIONS
therefore be checked. To effectively put this under control and reduce its effect, it is
parties.
5.2 RECOMMENDATIONS
Quantity surveyors are the professionals most used as arbitrators because they are
responsible for preparation of contract conditions and they understand it better
The need for emphasizing incorporation of arbitration as a means of settling
dispute at the pre-contract stage.
Construction participants should ensure a genuine readiness to refer to arbitration
in any occurring dispute.
Enlightenment programmes should be organized for client and professionals on
the use of arbitration.
77
REFRENCES
Arbitration and Conciliation Act Chapter 18, Laws of the Federal Republic of Nigeria
1990. (ACA 19,LFN 1990)
Adekoya, F. (2009). Nigeria enacts two new arbitration laws. Retrieved 8:00pm, March
30 2010 from http: //www.arbitration. practicallaw.com (in Nigeria)
Aniekan, I. (2008). Determinig the lex arbitri of international commercial arbitration for
purpose of the validity of an arbitral award. The news journal of the Chartered
Institute of Arbitrators, Nigeria Branch, 5 (1), Jan-April 2008, 6-10
Ashworth, A., & Hogg, K. (2007). Willis‘ practice and procedure for Quantity Surveyor,
(12th ed.). Oxford: Blackwell Publishing Limited.
Babajide, O. (2008). About the Chartered Institute of Arbitrators and the achievement of
the Nigerian Branch over the past 10years. Retrieved March 30 2010 from
http: //www.ciarbnigeria.org/page_bldr_images/pages/chairmans_mssg.pdf
Fagbohunle, B.(2008). The duties of arbitrators. The news journal of the Chartered
Institute of Arbitrators, Nigeria Branch, 5 (1) Jan-April 2008), 6-10
78
Ipaye, A. (1998). Rudiments and processes of arbitration and litigation in construction
contracts. The journal of the Institute of Construction industry Arbitrators
(fourth edition, July-Sept 1998), 21-26
JCT (1980). Standard form of building contract Joint Contract Tribunal (JCT’80) private
with quantities
Seeley, I.H (1997). Quantity surveying practice. macmillan publishers ltd., London and
basingstoke; The pitman press, bath.
The Aqua Group (1981).Contract administration for the building team, Granada.
Wood, R.D (1978).Building and civil engineering claims. The pitman press, Bath.
79