Construction Litigation: Building Bridges in South Africa
Christopher specialises in litigation and dispute resolution primarily in construction law; his experience includes traditional High Court litigation, arbitration as well as construction-focused adjudication. He discusses with Lawyer Monthly the ways in which South Africa’s legal sector has advanced in relation to construction.
What tends to be the main driver behind construction disputes?
South African construction projects suffer from many of the issues which plague construction projects generally – employers wish to minimise cost and ensure timeous completion of the project, whilst contractors seek to ensure they get adequate compensation, particularly in circumstances of delay, and to avoid incurring penalties for the inevitable delays to completion of the project. South Africa’s uncertain and sometimes volatile labour environment adds a further layer of complexity. Employer interference in industrial relations between contractors and their labour force also presents difficulties.
How often do disputes dismiss mediation and result in litigation? What are the reasons behind not being able to resolve disputes in mediation?
Whilst mediation is used in South Africa generally, its application in construction disputes is more limited. Of the four most commonly used standard form contracts in South Africa (FIDIC, NEC, JBCC and GCC), only two provide for voluntary mediation. Construction disputes generally proceed to adjudication prior to formal litigation. Adjudication is a common and increasingly used form of construction dispute resolution as it allows parties to resolve disputes during the lifetime of a project in an efficient and robust manner, so as not to impact on the continuation of the works. Adjudication will continue to grow as the government has initiated a process to implement a scheme of compulsory statutory adjudication. Disputes not resolved by adjudication usually end up in arbitration, save in certain government-related contracts which stipulate litigation before the courts. Arbitration is very widely used in South Africa.
As Thought Leader, can you share how you apply your leadership skills to heated disputes?
I believe that resolving construction disputes requires more than just an understanding of the law. In every problem presented to me, I try to understand the commercial and technical difficulties underpinning the dispute. To add true value, one needs to both understand and have an interest in the project and the intricacies of project planning from a time and cost perspective, as these are the principle issues which underlie disputes between construction contract parties.
Can you share to how your background in Politics, Philosophy and Economics (PPE), enhances your role as a legal expert?
I believe that my PPE studies provided with me a broad base of knowledge in areas which are fundamental to the context within which the law operates. The law seeks to create a framework within which people conduct their affairs. An understanding of economic and political theory and history allows one to better understand the broader societal policy rationales which underpin the law. Philosophical studies provided me with a solid grounding in critical thinking and reasoning, whilst also instilling in me an awareness of the bigger picture. This informs my approach to solving legal problems.
Have you noticed any trends in disputes regarding construction in South Africa?
The increased use of private arbitration in the construction dispute field has resulted in less disputes coming before our courts. This, in my view, has a stifling effect on the development of South Africa’s construction common law. Adjudication and arbitration tribunals readily apply to foreign law, particularly the United Kingdom, to construction disputes in areas where our law is less developed. This occurs particularly in relation to the application of principles for extension of time claims (eg: concurrency and float) and quantification of cost claims. From a commercial perspective, we have seen an increase in construction disputes on existing projects which commenced prior to the economic downturn after 2008. With the slowdown in economic activity, existing projects become fertile ground for disputes as employers seek to save money whilst contractors try to make up what they are not earning on new projects with an increased number of claims for additional compensation.
Moreover, how has construction developed in South Africa? Is there anything you are looking forward to witness?
There is a high degree of policy and political uncertainty in South Africa at the moment which, together with the difficult economic conditions, has resulted in decreased investment which has impacted the construction sector. If South Africa can resolve this uncertainty and create an enabling environment for business, then the country’s outlook looks very promising. South Africa’s currently stalled Renewable Energy Independent Power Producer Programme involving the construction of multiple renewable power plants in various parts of the country. In addition, full implementation of the government’s National Development Plan envisages, inter alia, significant public infrastructure investment at 10% of GDP focused on transport, energy and water. These programmes present significant and exciting opportunities for the construction sector.
Christopher Picas
Partner
Johannesburg
+27 11 586 6053
+27 11 586 6153 (fax)
cpicas@fasken.com
Christopher specialises in construction related litigation and dispute resolution. He advises and represents both employers and contractors in construction disputes, including claims for extension of time, payment of additional cost and disputes relating to workmanship and quality. Christopher represents clients in the power, transportation infrastructure and mechanical engineering industries. He is intimately involved in South Africa’s power expansion mega projects.
Fasken Martineau is a leading international business law and litigation firm with more than 700 lawyers. The firm has eight offices in Canada, Europe and Africa. Our practice spans every sector of business, industry and government. We provide strategic advice to a broad range of clients including close to half of the Fortune 100 companies. We work with corporate clients (large, medium and small companies), government agencies, regulatory authorities, non-profit bodies and individual clients. We offer expertise in both common law and civil law in English and French.
