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Speedy dispute resolution saves costs

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BY michelle Munyanduki-Mutungwazi

IN the now well-known Intratrek Zimbabwe (Private) Limited versus Zimbabwe Power Company appeal application, the judge highlighted that: “The prejudice, which results from delays in resolving the disputes between the parties by dialogue in terms of the provisions of the contract, is to the public and the country’s development. The parties must, using the provisions for dialogue and dispute resolution provided for in the contract, engage and relate.”

The learned judge in this case explains that the prejudice owing to delays in dispute resolution is not only to the parties, but to the public and to the country’s development.

This analysis is universally applicable. While others may personalise a national project, the real benefactors and at the same time victims of delay are the public.

It is a prejudice to the public and development that the tax payer always pays.

The Intratrek matter presents an interesting hypothesis which deserves to be placed into proper perspective.

In this particular matter, the implementation and/or completion of 100 megawatts (MW) solar project was delayed because parties subjected the project to lengthy litigation, from 2016 to date.

These proceedings were undertaken without exhausting the provisions for dialogue and dispute resolution provided for in the contract.

The delay in the solar power project meant less power supply to the national grid.

Supply and demand would, therefore, indicate that, if there is less power generation and so a lower amount of power supplied, at the same time as an increasing demand, there would be an increased price for electricity.

Ultimately, this results in an increase in production and input costs for other goods, resulting in the price of basics like bread and others also increasing.

It is important to recognise, especially in national projects, that the taxpayer bears the majority if not all of the cost and risk in most instances. If the projects are started, they are inevitably the provider/financier of last resort.

In the event that parties chose expensive dispute resolution routes like litigation or arbitration, it is potentially the taxpayers’ money on the line.

It is untenable that we have standardised and best practice contracts being decorated with clauses on dispute adjudication and avoidance, yet parties insist on litigation or arbitration as a preferred dispute resolution method.

What the judge refers to above as “provisions for dialogue and dispute resolution provided for in the contract”, is the referral of disputes to dispute adjudication and avoidance boards (DAABs).

Over time dispute boards were adopted as a response to the frequency of disputes detrimental to project budgets and programmes.

This is especially the case when dealing with International Federation of Consulting Engineers (FIDIC) contracts that have as a golden principle and a condition precedent to arbitration, the resolution of disputes through DAABs.

According to the Global Construction Dispute Report by Arcadis, early dispute avoidance decreases the volume of lengthy and costly disputes.

DAAB members will ideally be experienced in both the type of project and contract.

As a result, their involvement from the onset of a project can help to prevent or minimise the potential of dispute occurrence.

Their efficiency is also in their availability to deal with a referred matter within a 28-day notice and obligation to make binding and, therefore, legally enforceable decisions within a time limit of 84 days; all at a reasonable agreed cost.

Why parties avoid such an effective and efficient dispute resolution mechanism is an investigation on its own as it attempts to ensure the best outcome for all parties involved.

DAABs are, therefore, designed to try and avoid issues in projects which ultimately are there to serve the public.

They should not be viewed as an option, but a necessity, creating a more stable and reliable mechanism for project delivery.

It is regrettable that in the aforementioned case study after years of litigation, the judge refers the matter back to a DAAB, where it should have all started and hopefully ended.

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