LEGAL FRAMEWORK FOR CONSTRUCTION BY BARAKAT ADEBISI …

LEGAL FRAMEWORK FOR CONSTRUCTION

DISPUTE RESOLUTION IN NIGERIA: A REFORM

ORIENTED ANALYSIS

BY

BARAKAT ADEBISI RAJI

A thesis submitted in fulfilment of requirement for the

degree of Doctor of Philosophy in Laws

Ahmad Kulliyyah of Laws

International Islamic University Malaysia

APRIL 2017

ii

ABSTRACT

This research studied the benefits of adopting ADR mechanisms specially designed

for dispute resolution in the construction in Nigeria. It also identified problems of

using ADR mechanisms and solutions to mitigate such problems. In order to achieve

these objectives, the study gathered information from both primary and secondary

sources. The study used mixed mode for data collection which consist of both

structured interview and survey in order to collect more data. Hence, Fifteen (15)

construction experts were interviewed consisting of legal practitioners, stakeholders

and judges who have been into construction practice for more than ten (10) years were

selected using purposive technique to get rich data. The findings revealed the

inadequacy of the legal framework for construction dispute resolution in Nigeria. This

has led to the abandonment of many of the projects across the country as well as

claiming the lives and properties of some stakeholders. In addition to triangulate the

data, five hundred questionnaires were self-administered to other stakeholders out of

which three hundred and seven responses were analysed. The statistical analysis was

performed on the data collected using SPSS to assess the effects of

various parameters

on ADR mechanism. From the statistical analysis carried out, the result revealed that

61% responses represent effective response rate and adequate for this study. While

91% of the respondents supported the use of ADR mechanisms in the attainment of

dispensation of justice system in construction dispute resolution in Nigeria. The

research has shown that the use of ADR will go a long way in resolving the disputes

associated with construction industry in Nigeria. It is evident that ADR mechanisms

would make a remarkable contribution to the existing practice of the construction

dispute resolution in Nigeria. Hence, this study recommends the provisions of the

ADR mechanisms specially designed for disputes management in construction

industry urging the policy makers and the stakeholders in the industry to contribute in

this direction in order to ensure cost-effective and time-bound resolution mechanism

that will rank the industry among its counterparts.

iii

البحث ملخص ABSTRACT IN ARABIC

المعدة ( ADR)تناول هذا البحث دراسة فوائد تبني آليات الوسائل البديلة لحل المنازعات لفض النزاع في أعمال البناء في نيجيريا، كما حدد البحث مشاكل استخدام بشكل خاص

وحلول هذه المشاكل، ومن أجل تحقيق هذه الأهداف، لقد تم جمع ( ADR)آليات المعلومات من المصادر الأولية والثانوية وتم استخدام وسائل البحث المندمج لجمع البيانات

أجل جمع المزيد من البيانات، من المقابلة المنظمة و المنهج المسحي من التي تتكون من كل خبيرا في صناعة البناء من الممارسين القانونيين 51لك قامت الباحثة بإجراء مقابلة ولذ

وأصحاب المصالح والقضاة الذين لهم الخبرة في ممارسات أعمال البناء لأكثر من عشر سنوات لهادفة، وكشفت النتائج عن عدم كفاية الإطار القانوني لتسوية باستخدام أدوات التقنية ا

منازعات أعمال البناء في نيجيريا، وقد أدى هذا القصور إلى التخلي عن العديد من المشاريع في جميع أنحاء البلاد، كما أدى إلى خسائر الأرواح وممتلكات بعض أصحاب المصلحة، ومن

703 تحليللأصحاب المصلحة حيث تم استبيانائة أجل تثليث البيانات، تم توزيع خمسمبرنامج التحليل ، وتم إجراء التحليل الإحصائي للبيانات المجموعة باستخدامالإجابات من

، ADRلتقييم آثار المعايير المختلفة على آليات ،(SPSS)الإحصائي للعلوم الإجتماعية ت تمثل معدل استجابة فعالة ٪ من الاستجابا15وأظهرت نتائج التحليل الإخصائي أن

٪ من المستجيبين آليات الوسائل البديلة لحل المنازعات 15كافية لهذه الدراسة، بينما أيد (ADR ) لتحقيق نظام إقامة العدالة في تسوية منازعات أعمال البناء في نيجيريا، وقد أظهرت

طويلا في حل الأبحاث أن استخدام الوسائل البديلة لحل المنازعات سوف يقطع شوطامن شأنها أن تقدم ADRالنزاعات المرتبطة بصناعة البناء في نيجيريا، ومن الواضح أن آليات

مساهمة ملحوظة في الممارسة الحالية لتسوية منازعات أعمال البناء في نيجيريا، ومن هذا ة المنطلق، توصي هذه الدراسة توفير آليات الوسائل البديلة لحل النزاعات مصممة خاص

لإدارة النزاع في صناعة البناء، وتستحث أيضا صناع السياسة وأصحاب المصلحة للمساهمة في هذا الاتجاه من أجل ضمان آلية تسوية محددة زمنيا فعالة من حيث التكلفة التي سوف

.ترفع مستوى الصناعة بين نظيراتها

iv

APPROVAL PAGE

The dissertation of Barakat Adebisi Raji has been approved by the following:

__________________________________

Ashgar Ali Bin Ali Mohamed

Supervisor

__________________________________

Nurah Sabahiah Mohammed

Co-Supervisor

_________________

Umar A. Oseni

Co-Supervisor

__________________________________

Mohd. Akram Shair Mohamed

Internal Examiner

__________________________________

Abdul Mohaimin B. Noordin Ayus

External Examiner

__________________________________

Tan Yeak Hui

External Examiner

__________________________________

Tunku Mohar Tunku Mohd Mokhtar

Chairperson

v

DECLARATION

I hereby declare that this dissertation is the result of my own investigation, except

where otherwise stated. I also declare that it has not been previously or concurrently

submitted as a whole for any other degrees at IIUM or other institutions.

Barakat Adebisi Raji

Signature…………………....………. Date …….……………….

ii

COPYRIGHT

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

DECLARATION OF COPYRIGHT AND AFFIRMATION OF

FAIR USE OF UNPUBLISHED RESEARCH

LEGAL FRAMEWORK FOR CONSTRUCTION DISPUTE

RESOLUTION IN NIGERIA: A REFORM ORIENTED ANALYSIS

I declare that the copyright holder of this dissertation are jointly owned by the

student and IIUM.

Copyright © 2017 Barakat Adebisi Raji and International Islamic University Malaysia. All rights

reserved.

No part of this unpublished research may be reproduced, stored in a retrieval system,

or transmitted, in any form or by any means, electronic, mechanical, photocopying,

recording or otherwise without prior written permission of the copyright holder

except as provided below

1. Any material contained in or derived from this unpublished

research may be used by others in their writing with due

acknowledgement.

2. IIUM or its library will have the right to make and transmit copies

(print or electronic) for institutional and academic purposes.

3. The IIUM library will have the right to make, store in a retrieved

system and supply copies of this unpublished research if requested by

other universities and research libraries.

By signing this form, I acknowledged that I have read and understand the IIUM

Intellectual Property Right and Commercialization policy.

Affirmed by Barakat Adebisi Raji

……..…………………….. ………………………..

Signature Date

iii

DEDICATION

This dissertation is dedicated to my beloved parents

iv

ACKNOWLEDGEMENTS

All praise and adoration is due to Allah (S.W.T), The Custodian and Giver of

knowledge to whomever He wishes. I thank Him for giving me the privilege to

complete this research.

It is my utmost pleasure to appreciate my husband – Engr. Abdus Sobur A.

Raji, my parents and other members of my family for their support and patience

during my doctorate program.

I would like to express my appreciation to my Supervisor Professor Ashgar Ali

Bin Ali Mohamed, he is not just a supervisor but a teacher indeed. To the other co

supervisor Associate Prof. Dr. Nurah Sabahiah Mohammed for her indefatigable

supervisions, unflinching support and thorough academic mentorship accorded me

throughout my study.

I must not close this gap without remembering my late Sheikh Aminullahi

Ibrahim and his dearest wife, Alhaja Habibah and my Uncle Abdur Razaq Ayinde for

their spiritual support which strengthens and keeps my matrimonial home going till

date may Allah reward them with all.

I also appreciate the support of the following brothers and sisters, Dr. Abdur-

Razaq Abdul Qadir for his immense contribution to this work, Brother Abdur Razaq

Sarumi (PhD Student), Dr. and Sheikh Ridwanullahi Raji and his dearest wife,

Taofiqoh Ajoke Nee Soluoku, Aisha Isa (PhD Student), Aisha Nee Abdul- I Qadir

Zubair and Brother, Dr. Abdus Sobur Ajibola Alim, Brother Ibrahim Bello and Dr.

Kamil Bello. They are all my computer teachers, I pray Allah to see you all through

your PhD programmes.

Finally, let me acknowledge the staff of the Post Graduate Unit in AIKOL for

their cooperation and patience in handling my affairs. A special thanks to sister

Anizah for her friendship throughout my studies.

Finally, I thank the entire members of the household of Professor Abdul-Ganiy

Abdus Salam Oladosu, for their immense contributions and those who directly or

indirectly did contribute towards the successful completion of this thesis.

v

TABLE OF CONTENTS

Abstract .................................................................................................................... ii Abstract in Arabic .................................................................................................... iii Approval Page .......................................................................................................... iv

Declaration ............................................................................................................... v Copyright ................................................................................................................. ii Dedication ................................................................................................................ iii Acknowledgements .................................................................................................. iv List of Tables ........................................................................................................... ix

List of Figures .......................................................................................................... x List of Cases ............................................................................................................. xi List of Statutes ......................................................................................................... xiii

List of Abbreviations ............................................................................................... xiv

CHAPTER ONE:INTRODUCTION ................................................................... 1 1.1 Background of the Study ........................................................................ 1

1.2 Statement of Problem ............................................................................. 3 1.3 Research Questions ................................................................................. 4

1.4 Objectives of the Study ........................................................................... 5 1.5 Literature................................................................................................. 5

1.5.1 The Advent of ADR in Construction Industry………………. .... 5

1.5.2 ADR in Construction Industries in Nigeria.................................. 8

1.5.3 ADR in Construction Disputes in UK and Malaysia ................... 18 1.5.4 Justification of the Current Research ........................................... 25

1.6 Scope and Limitation of the Study ......................................................... 26

1.7 Research Methodology ........................................................................... 27

CHAPTER TWO:THE CONCEPTUAL LEGAL FRAMEWORK FOR

MODERN CONSTRUCTION DISPUTE RESOLUTION ................................ 29 2.1 Introduction............................................................................................. 29 2.2 Meaning of Dispute Resolution .............................................................. 29

2.2.1 Relevance of ADR in Construction Disputes .............................. 30 2.2.2 Effect of ADR Provisions ............................................................ 31

2.3 The Need for ADR Mechanisms for Construction Dispute

Resolution in Nigeria .............................................................................. 32 2.4 Major Construction Dispute Resolution Mechanisms ............................ 33

2.4 On-Site Dispute Resolution and Avoidance Mechanisms ...................... 34 2.4.1 Dispute Review Board (DRB or DAB) ........................................ 35

2.4.2 Boards and other Dispute Resolution Mechanisms (Litigation

and Arbitration) ........................................................................... 40 2.5 Off-Site Dispute Resolution and Avoidance Mechanisms ..................... 42

2.5.1 Expert Determination ................................................................... 43 2.5.2 Enforcement of Expert Determination Decision .......................... 44

2.5.3 The Use of Expert Determination ................................................ 48 2.6 Statutory Adjudication ............................................................................ 50 2.7 Construction Court ................................................................................. 52

vi

2.8 Conclusion .............................................................................................. 53

CHAPTER THREE:DISPUTE RESOLUTION MECHANISM FOR

CONSTRUCTION DISPUTES IN NIGERIA .................................................... 55 3.1 Introduction............................................................................................. 55 3.2 General Nature of Construction Disputes in Nigeria .............................. 56 3.3 Dispute Resolution Mechanism Used for Construction Disputes In

Nigeria .................................................................................................... 57 3.3.1 The Use of Litigation for Construction Dispute Resolution in

Nigeria ......................................................................................... 59

3.3.2 The Outcome of Litigation on the Projects and Parties to

Construction Disputes in Nigeria ................................................ 61 3.3.3 Challenges of Litigation on Construction Projects in Nigeria ..... 63

3.4 The Use of Conciliation in Construction Industry in Nigeria ................ 64 3.5 The Use of Mediation in the Construction Industry in Nigeria .............. 66 3.6 The Use of Arbitration Process in Construction Industry in Nigeria ..... 67

3.6.1 Parties to Arbitration Agreement ................................................... 68

3.6.2 Commencement of Arbitration ...................................................... 68

3.6.3 Breach of Arbitration Agreement .................................................. 69 3.6.4 Arbitrability of Construction Disputes in Nigeria........................ 71

3.6.5 Recognition and Enforcement of Arbitral Award ........................ 72 3.6.6 Stay of Proceedings ...................................................................... 73 3.6.7 Arbitration cum Litigation in Nigerian Construction Industry .... 74

3.6.8 Solutions to the Challenges Facing Arbitration in Nigeria .......... 76 3.6.9 The Current Position of Arbitration in the Nigerian

Construction Industry .................................................................. 76 3.6 Conclusion .............................................................................................. 77

CHAPTER FOUR:DISPUTE RESOLUTION IN THE CONSTRUCTION

INDUSTRY IN NIGERIA: RESULTS AND ANALYSES ................................ 79 4.1 Introduction............................................................................................. 79

4.2 Methods and Procedure .......................................................................... 79 4.2.1 Population and Sampling Technique ........................................... 80 4.2.2 Sample Size .................................................................................. 82

4.2.3 Sampling and Demography of the Respondents .......................... 83 4.2.4 Response Rate .............................................................................. 86

4.3 Data Collection Method .......................................................................... 86

4.3.1 Questionnaire ............................................................................... 87

4.3.2 Face to Face Interview ................................................................. 87 4.3.3 Response Rate .............................................................................. 88

4.4 Proposal for the Introduction of Dispute Review Board ........................ 88

4.4.1 Relevance of Dispute Review Board in Construction Industry ... 89 4.4.2 Expert Determination is not Alien in the ADR Provision in

Nigeria ......................................................................................... 91 4.4.3 Ethical Consideration ................................................................... 93

4.5 Data Analysis and Presentation .............................................................. 93 4.5.1 Empirical Legal Analysis ............................................................. 94

4.6 The Role of Construction Industry in the Nigerian Economy ................ 100 4.7 Legal Framework for Construction Dispute Resolution in Nigeria........ 102

vii

4.7.1 Construction Dispute Resolution Mechanisms in Nigeria ........... 104

4.7.2 Perception of Litigation for Resolution of Construction

Disputes ....................................................................................... 105

4.7.3 Relevance of arbitration for construction dispute resolution ....... 107 4.7.4 Relevance of ADR in construction industry ................................ 109

4.8 Proposal for the Introduction of Other ADR Mechanisms ..................... 110 4.8.1 Introduction of Dispute Review Board ........................................ 110 4.8.2 Introduction of Statutory adjudication into the ADR Provision

in Nigeria ..................................................................................... 110 4.8.3 Expert Determination is not Alien in the ADR provision in

Nigeria ......................................................................................... 112 4.8.4 Introduction of Construction Dispute Court ................................ 114

4.9 Limitations and Contraints ..................................................................... 117

4.10 Conclusion ............................................................................................ 118

CHAPTER FIVE:CONSTRUCTION DISPUTE RESOLUTION: A CASE

STUDY OF MALAYSIA AND UK ...................................................................... 120 5.1 Introduction............................................................................................. 120 5.2 The Use of Litigation in Construction Industry in Malaysia .................. 121 5.3 The Use of Arbitration in Malaysian Construction Industry .................. 124

5.3.1 Parties to Arbitration .................................................................... 126 5.3.2 Enforcement of Arbitral Award ................................................... 127 5.3.3 The Challenges Facing Construction Industry in the Use of

Arbitration ................................................................................... 129 5.3.4 The Current Position of Arbitration in the Malaysian

Construction Industry .................................................................. 130 5.4 Historical Background of the Use of Mediation in Construction

Industry in Malaysia ............................................................................... 131 5.4.1 The use of Mediation in the Malaysian Construction Industry .... 131 5.4.2 Parties to Mediation in Construction Dispute .............................. 133

5.4.3 Mediation Procedure for Construction Dispute Resolution in

Malaysia....................................................................................... 133

5.4.4 The Position of Mediation in the Malaysia Construction

Industry ........................................................................................ 134

5.5 Statutory Adjudication in Malaysian Construction Industry .................. 135 5.5.1 The Use of Adjudication in the Malaysian Construction

Industry ........................................................................................ 138

5.5.2 Parties to Adjudication Procedure ................................................ 140 5.5.3 Procedure for Adjudication in Malaysia ...................................... 140 5.5.4 Enforcement of the Construction Industry Payment and

Adjudication Act (CIPAA 2012) in Malaysia ............................. 142

5.5.5 The Effect of Statutory Adjudication on the Construction

Projects in Malaysia..................................................................... 144 5.6 Establishment of Construction Court in Malaysia .................................. 146

5.6.1 Reasons for the Establishment of Construction Court in

Malaysia....................................................................................... 147

5.6.2 The Impact of Construction Courts on Projects ........................... 148 5.7 The Practice in UK Construction Industry ............................................. 148

5.7.1 The Use of Litigation in the UK Construction Industry .............. 148

viii

5.7.2 The Use of Arbitration in UK ...................................................... 149

5.7.3 The Use of Arbitration for Construction Disputes in UK ............ 153 5.7.4 The Use of Mediation for Construction Dispute Resolution in

UK ............................................................................................... 156 5.7.5 The Use of Statutory Adjudication in the Construction

Industry ........................................................................................ 161 5.7.6 Establishment of Technology and Construction Court in UK ..... 172

5.8 Conclusion .............................................................................................. 177

CHAPTER SIX:TOWARDS A SUSTAINABLE LEGAL FRAMEWORK

FOR CONSTRUCTION DISPUTES IN NIGERIA ........................................... 178 6.1 Introduction............................................................................................. 178 6.2 Construction Industry in Nigeria ............................................................ 178

6.3 Construction Contract ............................................................................. 180 6.4 Construction Disputes in Nigeria ........................................................... 181 6.5 Emergence of Construction Dispute Resolution in Nigeria ................... 183

6.6 Statutory Adjudication ............................................................................ 184 6.6.1 Construction Court ....................................................................... 185

6.7 Conclusion .............................................................................................. 189

CHAPTER SEVEN:CONCLUSION AND RECOMMENDATIONS .............. 192 7.1 Summary of the Research ....................................................................... 192

7.2 Findings of the Research ........................................................................ 193 7.3 Recommendations................................................................................... 196

7.4 Direction for Further Research ............................................................... 201

7.5 Conclusion .............................................................................................. 202

BIBLIOGRAPHY .................................................................................................. 204

APPENDIX A: QUESTIONNAIRE ........................................................................ 235 APPENDIX B: APPROVAL LETTER FROM KULLIYYAH .............................. 242

APPENDIX C: LAWS OF NIGERIA ..................................................................... 243

ix

LIST OF TABLES

Tables No. Page No.

‎4.1 The main features in the data 83

‎4.2 Respondents’ Domicile 85

‎4.3 Respondents’ views on the Relevance of Dispute Review Board 90

‎4.4 Respondents’ views on the application of expert determination as

provided for in ADR provisions in Nigeria 92

‎4.5 Socio-economic Backgrounds of the Respondents by sex, Age and

Marital Status 95

‎4.6 Showing the Sex of the Respondents 97

‎4.7 Showing the Age of the Respondents 97

‎4.8 The Marital Status of the Respondents 98

‎4.9 Socio-economic Background of Respondents by Qualifications 98

‎4.10 Distribution of the Responses received from the most six Cities

Notable for Construction Activities 99

‎4.11 Respondents’ Views on the Role of Construction Industry towards

the Economic Growth in Nigeria 101

‎4.12 Respondents’ Views on the Legal Framework used for Construction

Dispute Resolution in Nigeria 102

‎4.13 The Impact of the Construction Dispute Resolution Mechanism on

Projects in Nigeria 104

‎4.14 Respondents’ views on how they perceive Litigation as a means of

Construction Disputes Resolution 106

‎4.15 Respondents’ views on the use of Arbitration for Construction

Dispute Resolution 108

‎4.16 Respondents’ views on the need to adopt the statutory adjudication

mechanism used for effective resolution of delayed and non-payment

problems in other commonwealth countries for construction industry

in Nigeria 111

‎4.17 Respondents’ views on the Application of Expert Determination as

provided for in ADR provisions in Nigeria 113

‎4.18 Respondents’ views on the need for introduction of Construction

Dispute Court 114

x

LIST OF FIGURES

Figure No. Page No.

‎4.1 Demography of the cities used for the study 85

‎4.2 Respondents’ views on the relevance of dispute review boards 90

‎4.3 Respondents’ views on the Application of Expert Determination as

provided for in ADR provision in Nigeria 92

‎4.4 Socio-Economic Backgrounds of the respondent by sex 95

‎4.5 Socio-Economic Backgrounds of the respondents by age 96

‎4.6 Socio-Economic Backgrounds of the respondents by marital status 96

‎4.7 Socio-Economic Background of respondents by qualifications 98

‎4.8 Respondents’ views on the role of construction industry towards the

economic growth in Nigeria 101

‎4.9 Legal Framework for Construction Dispute Resolution 103

‎4.10 Frequency 104

‎4.11 Respondents’ view on how they perceive litigation as a means of

construction disputes resolution 106

‎4.12 Respondents’ views on the use of arbitration for construction dispute

resolution 108

‎4.13 Adoption of statutory adjudication mechanism 111

‎4.14 Respondents’ views on the application of expert determination as

provided for in the ADR provisions in Nigeria 113

‎4.15 Need for construction dispute court in Nigeria 115

xi

LIST OF CASES

ABB Transmission & Distributions Sdn Bhd v. Sri Antan Sdn Bhd & Anor [2008] 10

CLJ 1.

AMEC Capital Projects Ltd v. Whitefriars City Estates Ltd 96 Con LR 142, [2005]

BLR 1 CA, [2004] 20 Const LJ 338 and [2004] EWHC 393 (TCC).

Asia pools (M) Sdn Bhd v. IJM Construction Sdn Bhd, [2010] 2 CLJ 28.

Aspect Contracts (Asbestos) Limited (Respondent) v. Higgins Construction Plc.

[2015] UKSC 38.

B.C.C Ltd v. Imani & Sons Ltd /Shell Trustee Ltd (2006) NWLR (Pt.1013) 1.

Ban Hong Joo Mines v.. Chen &Yap Ltd [1969] 2 MLJ 83.

Bi-Courtney Limited v. Attorney General of the Federation, FHC/ABJ/CS/50/2009.

Bina Jati Sdn Bhd v. Sum-Projects (Bros) Sdn Bhd [2014] 5 MLJ 145.

Cable & Wireless Plc. v. IBM United Kingdom Ltd [2003] EWHC 316 (Comm).

Cantillon Ltd v. Urvasco Ltd [2008] EWHC 282 (TCC).

Carleton v. Strutt& Parker [2008] EWHC 424.

City Engineering (Nig.) Ltd v. Nigerian Airport Authority (1991) 9 SCNJ 272.

Clyde & Co LLP v. Bates Van Winkelhof [2011] EWHC 668 (QB).

Complete Building Solutions Ltd v. Brown & Anor [2015] EWCA Civ 1316.

Dawnays v. F.G Minister [1971] 1WLR 1250.

Farrelly (M&E) Building Services v. Byrne Brothers [2013] EWHC 1186 (TCC).

Fawehinmi Construction Company Limited v. Obafemi Awolowo University, Ile- Ife,

Nigeria (1998) 6 NWLR Pt. (553) 191.

FG Skerritt Ltd v. Caledonian Building Systems Ltd [2013] EWHC 1898.

GF II SA v. OMFS Company 1 Ltd [2013] EWCA Civ 1288.

Herbosh-Kiere Marine Contractors Limited v. Dover Harbour Board [2012] EWHC

84 (TCC).

Intelek Timur Sdn Bhd v. Future Heritage Sdn Bhd [2004] 1 MLJ 401 (FC).

International Niger Building Construction Company Ltd v. Giwa (2003) 13 NWLR

(Pt. 836) 69 at 118.

ISG Retail Ltd v. Castletech Construction Ltd [2015] EWHC 1443 (TCC).

Kano State Urban Development Board v. Fanz Construction Ltd (1990) 4 NWLR

(Part. 142) 1.

Kelana Erat Sdn Bhd v. Niche Properties Sdn Bhd & Anor [2013] 4 CLJ 1172.

Lombard Commodities v. Alami Vegetable Oil Products Sdn Bhd [2010] 2 MLJ 23.

Lai Siew Wah Sdn Bhd v. Ng Chin [1988] 1 MLJ 393.

Lee Contractors (M) Sdn Bhd v. Caster Inn Sdn Bhd [2001] 3 CLJ 31.

Leong Kum Whay v. QBE Insurance (M) Sdn Bhd [2006] 1AMR 668.

Leslie v. Farrar Construction Limited [2015] EWHC 58 (TCC).

MMC Engineering Group Sdn Bhd & Anor v. Wayss & Freytag (M) Sdn Bhd & Anor

[2015] MLJU 477.

Modern Building Wales Limited v. Limmer& Trinidad Co Limited [1975] 1WLR 1281

Mr. Popoola Elabanjo & Anor v. Chief (Mrs.) Ganiat Dawodu (2006) All FWLR

(Part 328) 646.

NAP Anglia Ltd v. Sun-Land Development Co Limited [2011] EWHC 51 (TCC).

NNPC v. Lutin Investment Ltd (2006) 12 NWLR (Part 96) 504.

xii

Okoye v. Nigerian Construction and Furniture Company (1991) 6 NWLR (Part 199)

540.

Onward Enterprises Ltd v. MV Matrix (2010), 2 NWLR (Part 1179) 530.

Ops Suria (EM) Sdn Bhd v. Ayuda Engineering Services Enterprise Sdn Bhd [2012] 4

CLJ 670.

PP Construction Limited v. Geoffrey Osborne Limited [2015] EWHC 325 (TCC).

Ras Pal Gazi Construction Company Ltd v. FCDA (2003) FWLR [Part 170] 1428.

Reinsurance Corporation v. J.D.P Construction Nigeria Ltd (2007) 5-6 SC. 96.

RJT Consulting Engineers v. DM Engineering (NI) Limited [2002] EWCA Civ. 270.

S.A. v. Tsingshan Holding Group Co Ltd [2015] EWHC 1974 (TCC).

Samar Binte Mansor v. Mustafa Kamarul Ariffi (1974), 2 MLJ 71.

Shell Trustees Limited v. Bill Construction Company Ltd (2006) 11-12 SC. 90.

Southport Success S.A. v. Tsingshan Holding Group Co Ltd [2015] EWHC

1974(Comm)

Systech International v. PC Harrington 2011] EWHC 2722 (TCC).

Ust-Kamenogorsk Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower

Plant LLP [2013] UKSC 35.

Walter Construction Group Ltd v. CPL (Surry Hills) Pty Ltd [2003] NSWSC 266.

West shield Civil Engineering Ltd and another v. Buckingham Group Contracting Ltd

[2013] EWHC 1825.

Westminster Building Co Ltd v.. Beckingham, [2004] EWHC 138 (TCC).

WRP Asia Pacific Sdn Bhd v. NS Bluescope Lysaght Malaysia Sdn Bhd [2015] MLJU

1125.

xiii

LIST OF STATUTES

Chapter A18 [Arbitration and Conciliation Act, Laws of the Federation of Nigeria

(LFN) [2004]

The 1999 Constitution of the Federal Republic of Nigeria (As Amended)

Arbitration Act 2005 (Revised 2011) (Malaysia)

Construction Industry Payment and Adjudication Act (CIPAA2012) (Malaysia

Arbitration Act 1996 (of England), 1996 CHAPTER 23 [17th June 1996]

Housing Grant, Construction and Generation Act 1996 was amended

xiv

LIST OF ABBREVIATIONS

ACA Arbitration and Conciliation Act

AA Arbitration Act

ADR Alternative Dispute Resolution

Bhd Berhad (Company/Limited)

CA Court of Appeal

DAB Dispute Adjudication Board

DRB Dispute Resolution Board

ED Expert Determination

EWHC England and Wales High Court

FIDIC Federation Internationale Des Ingenieurs Conseils

HGCRA Housing Grant, Construction and Regeneration Act (UK)

IAA International Arbitration Act (UK)

KLRCA Kuala- Lumpur Regional Centre for Arbitration (Malaysia)

LRCICA Lagos Regional Centre for International Commercial

Arbitration (Nigeria)

MLJ Malaysian Law Journal

MLJU Malaysia Law Journal Unreported

NCC Tribunal Construction Court

NJI National Judicial Institute

NLR Nigerian Law Report

NWLR Nigerian Weekly Law Report

PAM Pertubuhan Akitek Malaysia

SC Supreme Court

Sdn Sendirian (Private)

TCC Technology and Construction Court

UNCITRAL United Nation Commission on International Trade Law

v Versus

QB Queen’s Bench

EWHC High Court of England and Wales

ALL ER All England Reports

1

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Construction industry in Nigeria contributes immensely in the socio- economic

development as well as in the fulfillment of the societal needs given the number of

construction projects awarded daily either by individuals or government. However, the

most striking aspect of this is that many of these projects have been abandoned

majorly due to disputes. The concern of this study is that disputes emanating from

construction contract are yet to be properly addressed within the existing legal

framework for dispute resolution in Nigeria. This has led to a number of abandoned

projects in Nigeria. The inadvertent delay of construction cases occasioned in courts

has resulted into loss of time, cost and quality of these projects.

Litigation has been the preferred form of dispute resolution in construction

projects because it allows the court to determine and enforce party’s right or

obligation.1 However, litigation has proved to be time consuming and expensive and

this has given rise to the use of arbitration in construction disputes. Arbitration in

terms of cost and time is more beneficial than litigation, however, arbitration is almost

sharing the same features as litigation has necessitated the need to introduce other

1 Joshua Oluwadare Oyebode, “Strategies for Resolving Legal Matters on Civil Engineering Contracts

in Nigeria,” International Journal of Construction Engineering and Management, vol.4, no.5

(2015):159-164; Joy Ofinjite Ogaji, “The Viability of Applying Alternative Dispute Resolution

Processes in the Niger Delta Conflict”, (Diss. University of Warwick, 2013), Ghada M. Gad, Kalidindi

N. Satyanarayana, Jennifer Shane, and Kelly Strong, "Analytical Framework for the Choice of Dispute

Resolution Methods in International Construction Projects Based on Risk Factors," Journal of legal

affairs and Dispute Resolution in Engineering and Construction, vol.3, no. 2 (2011): 79-85; Chinyere,

Ikechukwu Ikea, "The Supervision and Categorization of Expenditure Risks in Infrastructure

Development Projects," International Journal of Business and Social Science, vol. 3, no. 1 (2012);

Chinyere, Ikechukwu Ikea, "Procedures and Arrangement for Dispute Resolution Management in

International Construction Development Projects," Interdisciplinary Journal of Research in Business,

vol.1, no. 9 (2011): 61-71.

2

Alternative Dispute Resolution (ADR) in the construction industry. Nowadays,

resolving disputes with alternative forms of dispute resolution has been on the rise in

the construction industry because of the complex nature of construction disputes and

the high cost of resolving disputes through litigation and the damage that these have

impacted on the parties’ business relationships.2 Moreover, parties wish to have

control over their matters given the complex nature of the industry, hence the need for

experts in the field to give rulings in line with professional ethics that will satisfy all

parties involved in the dispute at hand.3 Recently, the Nigeria government revoked

contract for construction of Lagos-Ibadan express road awarded to Bi-Courtney

Construction which later resulted into litigation. There were accusations and counter-

accusations from the contractor and the government on the abandonment of the

project.4 The court had to offer a helping hand by directing the parties to respect the

arbitration clause in the contract agreement hence parties were advised to resort to

arbitration for amicable settlement of their dispute.

Litigation is becoming the last resort for construction dispute resolution,

hence, parties to construction disputes are seeking for alternatives to litigation right

from the contract stage.5 The concern of this study is that despite the cases of

2 Allen L. Overcash, “Introducing a Novel ADR Technique for Handling Construction Disputes:

Arbitration,” Construction Lawyer, vol. 35, no.1 (2015):23-53; Ashcraft Jr, Howard W, "The

Transformation of Project Delivery," Construction Lawyer, vol. 34, no. 4 (2014); Bennett, Steven C,

"Non-Binding Arbitration: An Introduction," Dispute Resolution Journal, vol.61, no. 2 (2006): 22;

Kristen M Blankley, "Keeping a Secret from Yourself-Confidentiality When the Same Neutral Serves

Both as Mediator and as Arbitrator in the Same Case," Baylor L. Rev., vol. 63 (2011): 317. 3 Ibid.

4 Yusuf Ali, “Lagos-Ibadan: How Bi-Courtney’s Arbitration was Ignored,” The Nation, January 26,

2016, 2. 5 M. J. Kathleen and Harmon “Resolution of Construction Disputes: A Review of Current

Methodologies”, Leadership and Management in Engineering, vol. 3, no.4 (2003):187-201; Gebken,

Richard J., and G. Edward Gibson, "Quantification of Costs for Dispute Resolution Procedures in the

Construction Industry," Journal of Professional Issues in Engineering Education and Practice, vol.

132, no. 3 (2006): 264-271; Chicago Ndekugri, Issaka, and Victoria Russell, "Disputing the Existence

of a Dispute as a Strategy for Avoiding Construction Adjudication," Engineering, Construction and

Architectural Management, vol. 13, no. 4 (2006): 380-395; Yousefi, Saied, Keith W. Hipel, and Tarek

Hegazy, “Attitude-Based Negotiation Methodology for the Management of Construction Disputes,"

3

construction hearing and determining in courts, what could have been responsible for

abandoned projects? This study therefore, examines the practice of ADR mechanisms

specially designed for resolution of construction disputes in Nigeria, its effects on the

parties concerned, and the attitude of courts in relation to construction disputes with a

view to propose a lasting solution to the challenges affecting the industry.

1.2 STATEMENT OF PROBLEM

The report of the Project Audit Commission set up in year 2013 to investigate on the

Federal Government abandoned projects revealed that over 12,000 projects awarded

by the Federal Government of Nigeria had been abandoned across the country while

those of the states were even worse especially with the present economic recession. At

moment, major construction disputes are settled through litigation in Nigeria. The

inadvertent delay occasioned in court on construction dispute cases has resulted in loss

of time, cost and quality of projects. This has also resulted into loss of jobs,

unemployment, bankruptcy, and loss of lives and property of some of the stakeholders

concerned. The truth aspect of this is that judges and lawyers handling cases of

construction do not have the skill and knowledge required to tackle disputes arising

from the industry. This has accounted for series of unnecessary adjournments of

construction cases in courts. However, the law has provided for the use of ADR

mechanisms in Nigeria but unfortunately this is yet to be fully utilized for resolution

of construction disputes.6 It is beyond and peradventure that construction contracts are

Journal of Management in Engineering, 26, no. 3 (2010): 114-122; J.K. Yates and Juan Duran,

"Utilizing Dispute Review Boards in Relational Contracting: A Case Study," Journal of Professional

Issues in Engineering Education and Practice, vol.132, no. 4 (2006): 334-341; Keith W. Hipel, Tarek

Hegazy, and Saied Yousefi, "Combined Strategic and Tactical Negotiation Methodology for Resolving

Complex Brownfield Conflicts," Pesquisa Operacional, vol. 30, no. 2 (2010): 281-304. 6 See Section 19(d) of the 1999 Constitution of the Federal Republic of Nigeria. This Section Provides

“Respect for International Law Treaty and International Disputes by Negotiation, Mediation,

Conciliation, Arbitration and Adjudication”

4

awarded with specificity in relation to time of completion. Hence, when issues arise,

there is the need for ADR mechanism to address the problem without necessarily

affecting the time of completion. The ADR mechanism as presently constituted under

section 19 (d) of the 1999 constitution of the Federal Republic of Nigeria is

insufficient. Unfortunately, majority of construction disputes cases still go to court for

hearing and determinations thereby causing the inability of the industry to have the

best practices for addressing disputes whenever they occur.

It is in view of the above that recourse is made to two countries: UK and Malaysia

whose legal systems are highly developed and from which Nigeria can emulate.

1.3 RESEARCH QUESTIONS

The need to overhaul the legal framework used for construction dispute resolution in

Nigeria cannot be underscored with the modern drift towards the effective use of ADR

in other developing countries such as Malaysia. The study examined the legal

framework for construction dispute resolution in Nigeria by specifically addressing

the following questions:

1. What are the current techniques of dispute management used for resolving

construction disputes in Nigeria?

2. How can the legal framework for dispute management in the construction

industry be streamlined to be in tandem with the best practices worldwide?

3. Can the Malaysian and UK models of dispute management mechanisms

for construction disputes fit into the Nigerian legal system?

4. How can sustainable practices be introduced in the Nigerian construction

industry that will bring about cost-effiency and consensus in building

resolution of disputes?

5

1.4 OBJECTIVES OF THE STUDY

In an attempt to find solution to the question of what could have caused the problems

facing the construction project performance in Nigeria, the study seeks to achieve the

following objectives:

1. To examine the current techniques used for dispute management of

construction disputes in Nigeria;

2. To examine the legal framework for dispute management in the

construction industry;

3. To examine the legal frameworks for construction dispute resolution in

Malaysia and UK and to see what Nigeria stands to gain from their

practices; and

4. To propose a sustainable legal framework for construction dispute

resolution in Nigeria, Malaysian and UK model.

1.5 LITERATURE

The literature review is discussed under three main headings: the advent of ADR in

construction industry; ADR in construction industry in Nigeria; and ADR in

construction industry in Malaysia and UK. These different aspects of the relevant

literature are examined in order to understand their contributions to and relationships

with the current research as well as identify some focal gaps that need to be filled.

1.5.1 The Advent of ADR in Construction Industry

ADR had been in the construction industry nearly half a century ago. The United

States Army Corps of Engineers (USACE) initiated the use of partnering process to

6

promote disputes prevention in construction contracts.7 It was used to resolve disputes

arising from small scale projects but gained a wider acceptance in the industry to

address any form of disputes arising thereto. This practice was abused over time

because of its non-binding effect. As a proposal for reforms, Gregory and Peter wrote

on what drove majority of construction industries into using of ADR mechanisms for

resolving their disputes. Mention were made of cost effectiveness as well as avoidance

of overburdening work schedule among others.8 Gould, Nicholas asserted that the

general dissatisfaction with arbitration and the presumed increase in number of

disputes in the industry led to a review of the contractual and procurement systems in

the UK construction industry. In his report, he spotlights the lack of trust in the

industry and the need for greater cash flow management.9 Loukas A. Mistelis

observed that arbitration is nowadays widely used for private commercial disputes,

often with an international element. Its statutory introduction in the late seventeenth

century was justified as an alternative to a rigid and formalistic litigation system.10

ADR has been defined as a set of practices and techniques that aim to resolve

legal disputes outside the courts for the benefit of all disputants, to reduce the cost of

7 Suzan L. Podziba, “Small Project Partnering,” The Drayton Hall Stream bank Protection Project

(1994), 1-20; Mohammad Danuri, "A Revisit on the Current Practice of Resolution and ADR in the

Malaysian Construction Industry," Journal Design and Built Environment, vol.1, no. 1 (2012: 1-13;

Oyesola, Animashaun, 683; E.C. Harris, "Global Construction Disputes: A longer Resolution," Global

Construction Report, vol.1 (2013): 1-15; Onyema, Emilia, "The Multi-Door Court House (MDC)

Scheme in Nigeria: A case Study of the Lagos MDC, " Apogee Journal of Business, Property &

Constitutional Law, vol.2, no.7 (2013): 96-130; Muigua, Kariuki, and F. Kariuki, "ADR, Access to

Justice and Development in Kenya," In Strathmore Annual Law Conference 2014 held on 3rd & 4th

July 2014 at Strathmore University Law School, 2015; Wahab, Alwi Abdul, Court-Annexed and Judge-

Led Mediation in Civil Cases: The Malaysian Experience, Victoria University (Melbourne, Vic., 2013). 8 Gregory Don W and Peter Berg A, “The Need for Cost-Effective Dispute Resolution in the

Construction Industry,” Construction Lawyer, (2013): 17-22. 9 Gould, Nicholas, "Alternative Dispute Resolution in the UK Construction Industry," In 14th Annual

ARCOM Conference, pp. 428-437. 1998. 10

Hughes, Will, "Construction Management Contracts: Law and Practice," Engineering, Construction

and Architectural Management 4, no. 1 (1997): 59-79.