AN ASSESSMENT OF THE USE OF ARBITRATION

AS A FORM OF ALTERNATIVE DISPUTE

RESOLUTION IN THE CONSTRUCTION INDUSTRY
BY

IBRAHEEM AMINAT ABOLANLE

F/HD/08 /3520112

DEPARTMENT OF QUANTITY SURVEYING,

SCHOOL OF ENVIRONMENTAL STUDIES,
YABA COLLEGE OF TECHNOLOGY,
YABA, LAGOS.

PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT

FOR THE AWARD OF HIGHER NATIONAL DIPLOMA IN
QUANTITY SURVEYING

NOVEMBER, 2010

1
 CERTIFICATION

This is to certify that this research project “an assessment of the use of arbitration

as a form of alternative dispute resolution in the construction industry” is an

original work carried out by IBRAHEEM AMINAT ABOLANLE in the

department of Quantity Surveying, School of Environmental Studies, Yaba College

of Technology, Yaba, Lagos in fulfillment of the award of Higher National

Diploma in Quantity Surveying.

IBRAHEEM AMINAT ABOLANLE ----------

DATE

MR. U. I. INYANG-UDOH ---------

Supervisor DATE

MR. U. I. INYANG-UDOH ---------

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

anything from the settlement. If the borrower is mentally unsound or weak

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

evidence and is the best way to remove all doubts; ………”

3
 DEDICATION

This research is dedicated to God Almighty, my loving parents, my

adorable siblings and the memory of my late grandmother, Alhaja

Olorunkemi Awawu Ibraheem.

Also to everyone who offered immeasurable advice, information, knowledge

and understanding all through the years.

4
 ACKNOWLEDGEMENT

I give all praises and adoration to Almighty Allah (SWT) for his goodness,

guidance, mercies and compassion through these rigorous years of academic

struggle.

My profound gratitude goes to my precious parents Mr and Mrs Ibraheem

for their love and support in every wise. Without you, I would not have

existed.

My sincere thanks goes to my supervisor who also happens to be my Head

of Department Mr. U.I. Inyang-Udoh who painstakingly worked through my

draft manuscripts to give corrections and emphatic guidance towards the

realisation of this study. Also, I cannot forget my lecturers Mr. Kadiri, Mr.

Oyebade, Mr. Ekhator, Mr Mafimidiwo, Mr Esan, Mrs. Idowu, Mr. Hungbo,

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

Toyin. May God bless and reward you all abundantly.

To my siblings Mr Afeez Ibraheem and his wife (Mrs Kafayat Ibraheem),

Ibraheem Monsurat, Ibraheem Mulikat, Ibraheem Halimat, Ibraheem

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

than a brother), Mr S. Lawal, Mr A. Lawal, Mr Ayo Ayo, Mrs Ogunjemilua,

Mr wasiu, other members of staff of Billing Cost Assocites, Mr Ebere and

Mr Chris of Society of Construction Industry Arbitrators (SCIArb) for their

love and support. Thank you.

My friends Orundami Adenike, Raheem Omolara, Ajala Kamaldeen,

Agboluaje Abdulgafar, Atunrase Misturah, Abu Abdulkareem, Schedrach

Ifeanyi, Baiyewumi Olalekan, Owopetu Oluwafemi, Owolabi-Dada

Shakirah you all have impacts in my life and I pray to have positive impact

in yours too. Thank you.

Not to forget my coursemates like Sheleru Femi Ibrahim, Alley-Obalokun

O. Ilyas, Dauda Y. Babatunde, Okedeji Damilola, Ajewole Esther, Solanke

Morenikeji, Osuolale Sikiru, Emerenini Uchechukwu, Muritala Ibrahim,

Ilesanmi Taiwo, R. Oteshile, J. Akinlehin and others who stood by me

during the years of academic struggle. May God bless you all and guide

your steps aright.

6
 APPROVAL PAGE

I, hereby recommend that this project under my supervision and assessment

titled: AN ASSESSMENT OF THE USE OF ARBITRATION AS A FORM

OF ALTERNATIVE DISPUTE RESOLUTION IN THE CONSTRUCTION

INDUSTRY be accepted for the award of Higher National Diploma in

Department of Quantity Surveying.

--------------------- ---------------------------

MR. U.I. INYANG-UDOH MR. U.I. INYANG-

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.

Literatures were reviewed and questionnaires administered and retrieved

from respondents among which were consulting firms, construction
companies, clients, lawyers and other professional.
Fifty questionnaires were administered and 35 questionnaires representing
70% were returned.

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

Table of content vii

List of tables ix

List of figures x

CHAPTER ONE

1.1 Background of the study 1

1.2 Statement of Research Problem 2

1.3 Research Questions 2

1.4 Aim and objectives of the study 2

1.5 Justification for the study 3

1.6 Study Methodology 3

1.7 Scope and Delimitation of the study 4

1.8 Definition of Terms 5

1.9 Glossary 6

9
CHAPTER TWO

2.0 Literature Review 6

2.1 Preamble 6

2.2.0 Dispute and dispute resolution in the construction industry 7

2.2.1 Dispute in the construction industry 7

2.2.2 Effect of disputes in the construction industry 8

2.3.0 Dispute resolution 9

2.3.1 Discussion 9

2.3.2 Litigation 9

2.3.3 Alternative Dispute Resolution 10

2.4.0 Arbitration 15

2.4.1 Arbitration process 15

2.4.2 Rights and duties of arbitrator 17

2.4.3 The award of an arbitrator 20

2.4.4 Misconduct in arbitration 21

2.4.5 Arbitral bodies 22

2.4.6 Legal backing to arbitration 23

2.5.0 Summary of literature 23

10
CHAPTER THREE

3.0 Research Methodology 34

3.1 Introduction 34

3.2 Research Design 34

3.3 Population of the study/sample frame 34

3.4 Sample and sampling Techniques 34

3.5 Data collection instrument 35

3.6 Procedure for Data Collection 35

3.7 Method of Data collection 36

3.8 Constraints on Data Collection 36

CHAPTER FOUR

4.0 Data Analysis and presentation 37

4.1 Introduction 37

4.2 Analysis and presentation of data 38

4.3 Discussion of findings 63

4.4 Summary of Findings and Discussion 65

CHAPTER FIVE

5.0 Conclusions and Recommendations 66

5.1 Conclusion 66

5.2 Recommendation 66

References 67
Appendix A – Questionnaire

11
LIST OF TABLES Page

4.1 Response to distributed questionnaire 37

4.2 Respondent’s type of organisation 38
4.3 Profession of respondent 39
4.4 Qualification of respondents 40
4.5 Professional bodies of respondents 42
4.6 Years of experience of respondent 43
4.7 Projects handled by respondents 44
4.8 Projects with minor disputes resolved among parties 45
4.9 Projects with major disputes not resolved among parties 46
4.10 Projects with disputes resolved through arbitration 48
4.11 Effectiveness of arbitration in resolving disputes 49
4.12 Extent of usage of various dispute resolution techniques 50
4.13 Awareness of A.D.Rs and their legality 51
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 Suggestion for the use of arbitration 55
4.18 Determination of existence of situations in which arbitrator’s award is disregarded 55
4.19 How often arbitration clauses are inserted in contract conditions 56
4.20 Duration of arbitration process 57
4.21 How long after hearings, awards are produced 58
4.22 Factor contributing to disputes on construction projects 59
4.23 Cost significance arbitration as compared with litigation 60

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

1. 1.0 BACKGROUND OF THE STUDY

The construction industry in Nigeria is a large one which is continuously growing.

Construction projects with more complex nature are now being executed. More intricate

methods of execution, sophisticated plant and so on are now being employed.

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'

representatives (referred to as consultants), Architects, Quantity surveyors, Engineers,

Contractors who execute the project and a host of many others who are directly or

indirectly involved such as security personnels, local authorities and so on.

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

guide whilst having little or no cost implication.

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

Assessment of the use of Arbitration as a form of Alternative Dispute Resolution (ADR)

in the construction industry".

1.2.0 STATEMENT OF RESEARCH PROBLEM

This research study is set out of assess critically the use of arbitration process in resolving

disputes iii the construction industry in Nigeria as a result of observing rampant

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

this, the main problem is resolved into the following sub-problems:

1. To determine level of awareness and use of arbitration as a means of resolving

disputes in construction works.

2. To identity the professional mostly used as an arbitrator in resolving disputes in

the Nigerian construction industry.

3. To find out whether arbitration as a means of disputes resolution Is actually a

better option to the use of the court of law.

4. To find out the most contributory factor to disputes in the construction industry.

15
1.3.0 RESEARCH QUESTIONS

1. What is the level of awareness and familiarity of arbitration as a means of resoling

disputes?

2. Is there any law r act recognizing arbitration and making it legal?

3. How long does an arbitration process take in resolving disputes?

4. Who is mostly used as an arbitrator and why?

5. Does arbitration process actually save cost?

1.4.0 AIM AND OBJECTIVES OF THE STUDY

The main aim of this is to assess the use of arbitration as an Alternative Dispute

Resolutions technique in the Nigerian Construction industry with a view Of Suggestion

Arbitration as an economical and effective means of resolving disputes or discourage

further use of arbitration for resolving such disputes. The objectives for achieving tile

above stated aim are:

I To determine / examine familiarity of arbitration and the extent of usage among

professionals in the industry.

2. To examine the effectiveness of arbitration

3. To determine the legality of arbitration

3. To identity the cost constituted by arbitration in comparism with litigation

1.5.0 JUSTIFICATION FOR THE STUDY

This research study is deemed necessary to determine situation where arbitration should

be adopted as a means of resolving disputes with a clear examination into its

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

seem to be divergence in the:

 Perception of arbitrator's role with respect to conciliation (Kaufmann-

Kohler and Bonnin, 2008).

 Conception of the validity of arbitration act (Adekoya, 2009)

1.6.0 STUDY METHODOLOGY

In gathering data for this study; literature and theoretical foundations are to reviewed

which include:

 Textbook prominent and distinguished authors

 Published articles

 Past arbitration cases

 Journals of professional institutes.

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

major clients who undertake construction projects regularly.

The analysis of this research will be given in later chapters thereby resulting to probable

conclusions and recommendations.

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

be examined critically. Other forms of Alternative Dispute Resolutions [A.D.R] might

just be mentioned but not fully explained and also the study will be limited to Lagos state

due to resource and time constraints.

1.9.0 DEFINITION OF TERMS

1. Ex acquo et bono : According to conception of right and good

2. Lex Arbitri : The law guiding an arbitration process or sitting

3. Lien: Legal claim on somebody's property, legal right to keep or sell somebody

else's property as security for a debt.

4. Quasi Judicial: Having resembling powers of court, describing an arbitrator with

powers that are similar to those of a court.

5. Sine qua non : Essential condition or pre-requisite.

6. Write a court order to stop doing what is specified.

1.10 GLOSSARY

1. ACA Arbitration and Conciliation Act

2. ADR Alternative Dispute Resolution

3. UNCITRAL: United National Commission on International Trade Law.

18
 CHAPTER TWO

2.0.0 LITERATURE REVIEW

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

residential, commercial, industrial and so on) to heavy engineering projects (like

construction of gas turbine, power plant to mention just a few) and civil engineering

projects (involving construction of dams, bridges, vesselbases, stadia, highways, tunnels,

railtracks, piling works and the likes).

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

activities and the success or otherwise depends on the relative co-operation,

commt1nication, and understanding between the participants involved from the inception

to execution and completion of the project.

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

cases both civil and criminal.

19
It is in the light of the above, that the author is making an attempt to carry out an

assessment of arbitration as a form of Alternative Dispute Resolution in the construction

industry.

2.2.0 DISPUTES AND DISPUTE RESOLUTION IN THE CONSTRUCTION

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.

2.2.1 DISPUTES IN THE CONSTRUCTION INDUSTRY

Oxford Advanced Learners' Dictionary (6'h edition) defines dispute as 'argument or

disagreement between two or more people, groups or teams'. Seeley (1984) referred to it

as 'arguments, debates and differences in opinion or decision'. According to Ashworth

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

instructions issued to or received by him'. According to Ashworth and Hogg (2007),

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

disputes. The causes could be from;

i.) The employer or client if he gives poor brief, interferes with contractual duties of

contract administrator or gives late payments, or requires variation often.

ii) The consultants if they do not give adequate designs, lack appropriate competence

and experience, lack co-ordination, give incomplete or late information or

delegate responsibilities unclearly.

iii.) The contractor if he fails to manage the site, coordinate the subcontractors or plan

his works well, gives poor standards of workmanship, delays subcontractors'

payment or engages in unnecessary dispute with subcontractor.

iv.) The subcontractor if he mismatches subcontract conditions with that of the main

contract, fails to follow or adopt agreed procedures.

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

of construction projects being adversarial, existence of various forms of contract

and warranties being used and so on. The position of Ashworth and Hogg (2007)

summarizes the entire causes of disputes on construction projects except that it

could also be caused by change in certain regulations or standards.

2.2 EFFECTS OF DISPUTES ON CONSTRUCTION PROJECTS

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,

i) Increase in cost of construction: Once dispute is not being resolved amicably on

site, it will definitely constitute a cost which might be minute or significant. It

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

pay for damages.

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

the time that will be taken to wrap up the project.

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).

2.3.0 DISPUTE RESOLUTION

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

along way towards avoiding disputes on construction sites. Avoidance of dispute is of

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

conditions of contract for method of resolving disputes.

There are basically three methods of resolving disputes in construction projects:

 Discussion between parties

23
 Litigation

 Alternative Dispute Resolution

2.3.1 DISCUSSION BETWEEN PARTIES

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

or other legal proceedings.

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

expense and time (Ashworth and Hogg, 2007).

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

presentation. Availability of courts and judges to hear the case.

Daudu (1999) opined that judicial officials were losing their morale (become less

trustworthy, easily corrupted) due to inadequate remunerations and working facilities

especially here in Nigeria, hence reduction by having recourse to Alternative Dispute

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.

2.3.3 ALTERNATIVE DISPUTE RESOLUTION (A.D.R.)

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)

describe it as a provision for means of resolving disputes without resorting to arbitration

or the courts. They also maintained that are just formal processes of negotiation which

has been used traditionally over the years to settle disputes,

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

arbitration as a form of Alternative Dispute Resolution. This difference in opinions can

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

Resolution techniques are perceived as alternative to litigation as well as to arbitration

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

popular form of resolving dispute is litigation, ev,~ry other technique employed to

resolve a dispute is therefore seen as an alternative to litigation (even dialoguing to agree)

and as a result an alternative dispute resolution technique. The common factor in

alternative dispute resolution techniques is the use of consensus and of third-party

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

business relationship is preserved.

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

where there is difficulty in proofing a claim". Some forms of Alternative Dispute

Resolution are highlighted below;

 Mediation/Conciliation

 Adjudication

 Mini-trial

 Mutual fact finding

 Dispute resolution boards,

 Arbitration

1) Mediation: This is the most widely used form of Alternative Dispute Resol ution.

It involves the disputing parties appointing an independent neutral whose

background will reflect the matters in dispute which means the neutral might be an

engineer, a quantity surveyor or anybody possessing a qualification particularly

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

agreement and monitoring the implementation.

2) Adjudication: This technique of Alternative Dispute Resolution takes the form of

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

non-binding but can be used as a basis for further negotiations or as a temporarily

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

1996 which imposes statutory adjudication in most written construction contracts

(though there are some exceptions like oil and gas contracts and private homes).

The scheme revolutionized dispute resolution for construction contracts (which

include contract between employers and construction professionals) because if one

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

extended by mutual agreement of the parties.

Although, this is not so common in Nigeria but cases in technology and

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

that very few adjudications lead onto full arbitration or litigation.

3) Minitrial: This is other wisely called 'executive' tribunal'. This normally takes the

form of a senior managerial representative of each party and an independent

advisor referred to as a 'neutral' (Ashworth and Hogg, 2007). A minitrial panel is

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

but no knowledge or interest in the dispute as stipulated by Ashworth and Hogg

(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

to coming to a consensus. The length of the negotiations depends on complexity of

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

position in order to reach speedy resolution of the dispute.

5) Disputes Resolution Boards: This involves the appointment of dispute resolution

boards under specific forms of contract (for example; dispute - adjudication board

under the International- Federation of Consulting Engineers conditions of

contract).It is becoming more common. The boards comprise individuals

appointed by parties to the contract, the board's role being to adjudicate on

disputes referred to them by either party.

6) Arbitration: The use of arbitration to resolve a dispute in building contract comes

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

law courts -litigation

It might also be of interest to know that Alternative I?isp:ute Resolution techniques have

the following merits:

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

washing of dirty linen in public is avoided, hence confidentiality is retained.

b.) Economy: The cost of employing Alternative Dispute Resolution technique is

economical compared with the legal and other costs resulting from lengthy

litigation. Daudu (1999) expresses costs of Alternative Dispute Resolution

techniques as being affordable.

c.) Timely: Alternative Dispute Resolution processes can be concluded within

reasonable short time.

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.

e.) Understandable: There is no deep use of technical mumbo-jurnbo uttered by

legally trained minds; hence Alternative Dispute Resolution language tends to be

more natural.

31
f.) Relieving: Alternative Dispute Resolution techniques serve as means of relieving

the load of the judicial system.

Conclusively, it can be deduced from the aforementioned that Alternative Dispute

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

2.4. 1. ARBITRATION PROCESS

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

proceeding thereby redefining arbitration as thus; 'the reference of a dispute or difference

between not less than two parties for determination after hearing both sides in judicial

manner, by a person or persons other than a court of competent jurisdiction. Although an

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

as a dispute resolution technique in contractual disputes.

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

consider to be an intelligent suggestion because the matter in dispute should be a factor to

be considered in choosing an arbitrator. Also this is in accordance with Usman (1998)

who believes that a situation where an arbitrator is not well acquainted with the subject

matter in dispute could be regarded as misconduct. Such scenario as described in clause

41.2.2 of the J.C.T (where an appointed arbitrator is considered not appropriately

qualified to determine the dispute or difference under a contract hence matter being

referred to another arbitrator) can be prevented.

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;

 Appointment of new architect or quantity surveyor.

 Validity of an architect's instruction.

 Certificates; as to whether it has been improperly prepared or withheld.

 Application for extension of time

 Determining whether works are in accordance with contract

 Opening up of works for inspection.

 Justability of determining contractor's employment after a loss.

2.4.2 RIGHTS AND DUTIES OF AN ARBITRATOR

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

or revise, any notice, certificate or decision or even determine matters in dispute as if

such certificates had not been given. According to Fagbohunlu (2008), there are three

classes of duties imposed on an arbitrator and they include;

 Duties imposed on him by applicable rules and laws

 Duties imposed on him by parties in the arbitration agreement

 Duty to meet certain levels of morals.

35
Duties imposed on him by applicable rules and laws

This means that rule of arbitration whether international or institutional impose specific

duties or responsibilities on the arbitral tribunal and some of tern include;

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

about arbitrator's independence or impartiality as early as possible.

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

not beyond the scope submitted for arbitration.

iv. Duty to be physically and mentally capable of conducting proceedings as inability

might result in termination of arbitrator's appointment.

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

with the first schedule, article 15 of United National Commission on International

Trade Law (UNCITRAL) rules.

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

private nature of proceedings, records and hearings should not be communicated

36
 to others without consent of the involved parties.

viii. Duty to communicate expert's reports to parties, such reports or evidentiary

documents which are likely to have an effect on the arbitrator's decision. There

should also be reasonable opportunities for parties to comment on such

information or advice given by the experts.

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

and not individual criteria of arbitrator on abstract justice in accordance with

section 22(3) and 47 (4) of (A.C.A.) Arbitration and Conciliation Act.

x. Duty to consider relevant circumstances when determining language to be used at

arbitral proceedings in accordance with section 18 of (A.C.A.) Arbitration and

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.

Duties imposed on him by parties in the arbitration agreement

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

appointment) before signing such agreement.

Duty to meet certain levels of morals

The arbitrator is expected to have certain level of morals in dealing with parties, example

of such may include;

37
i. Declining to accept an appointment if he will be unable to give the case sufficient

time and attention as a potential or prospective arbitrator.

ii. Treating parties with dignity and respect e.t.c.

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)

198 8 and are as follows:

a. Procedure without hearing (rule 5)

b. Full Procedure with hearing (rule 6)

c. Short Procedure with hearing (rule 7)

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

award within 28days after receipt of last statement.

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.

2.4.3 THE AWARD

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

decision (Ajanlekoko, 2008). The importance of an award cannot be over-emphasized as

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

i.) Certain in its meaning

ii.) Consistent in all its part

iii.) Directed to all matters referred but must not exceed the scope of submission

iv.) In compliance with any special direction in the 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

misconduct of arbitrator and proceedings.

2.4.4 MISCONDUCT

Misconduct' in the context of arbitral proceedings according to Faghohunlu (2008) could

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

minister of internal affairs and another vs. Arbitrator)

vi) Where an arbitrator wrongfully admits and act on evidence which goes to the root

of the questions submitted.

vii) Where an award is inconsistent or ambiguous.

Also Usman (1998) gave more instances that could be regarded as misconduct

and they include;

viii) Where the arbitrator is not well acquainted with the trade and practice in respect

of which disputes has been brought.

ix) Where the arbitrator delegates any part of his authority including where umpire

delegates to a co-arbitrator except where the delegation relates to an

administrative matter which has nothing to do with the award.

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

award or resolving to litigation.

41
2.4.5 ARBITRAL BODIES

There are four main arbitral bodies in Nigeria namely; Chartered Institute of Arbitrators

Nigeria Branch, Chartered Institute of Arbitrators Nigeria CIArb (Nig), Construction

Arbitrators and Maritime 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

lectures, seminars and promotional material for effective dissemination of dispute

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

stricter in its membership by organizing training courses and examination forums at

various level as high standards are the hallmark of any professional body or association.

Association of Construction Arbitrators of Nigeria: This body is made up of mainly

professional in the construction industry in Nigeria including, Architects, builders,

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.

Maritime Arbitrators Association of Nigeria: This became a specialized association in

2005, it is relatively young but very active. Its main objective is to enlighten the

stakeholders in tile maritime industry about arbitration.

2.4.6 LEGAL BACKINGS TO ARBITRATION

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

following functions; promote resolution of disputes within Lagos through arbitration, to

provide administered administration proceedings and also provision of arbitral tribunal

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

award until fees are paid.

2.5.0 SUMMARY OF LITERATURE

Though it is almost impossible not to have disputes on construction projects, disputes

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

inception riot after construction has commenced so as to reduce advent of variation,

hence reducing chances of disputes arising.

Provisions being made in the contract for mode of settling disputes are very essential and

their importance cannot be over-emphasized. Especially, arbitration as contained in

clause 41 of the Joint Contract Tribunal and clause 66 of the Institute of Civil Engineers

to resolve disputes timely and economically.

44
 CHAPTER THREE

3.0 RESEARCH METHODOLOGY

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.

3.2 RESEARCH DESIGN

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.

3.3 POPULATION OF THE STUDY / SAMPLE FRAME

The sample frame constitutes of all professionals involved in the construction industry

within Lagos. These range from architects to builders, quantity surveyors, estate valuers,

engineers and so on irrespective of the type of organisation whether consultancy,

construction or even client organisations. A certain percentage of the population was

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.

3.4 SAMPLE AND SAMPLING TECHNIQUES

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

questionnaires were administered to willing respondents.

On the whole, the researcher is certain that the sample is a true representation of the

population.

3.5 DATA COLLECTION INSTRUMENT

The instrument employed for data collection was a questionnaires deisnged to measure

several variables. The questions were structured to be comprehensive and simple to

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

qualification, type of organisation and so on. Section A is aimed at determining the

extent of usage and effectiveness of arbitration as perceived by the respondent which is

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

implications as compared with litigation.

3.6 PROCEDURE FOR DATA ADMINISTRATION

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

the aid of Likert’s scale in analyzing some variables.

3.8 CONSTRAINTS OF DATA COLLECTION

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

4.0 DATA PRESENTATION AND ANALYSIS

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

recommendations bearing in mind information gotten from literature review.

4.2 DATA ANALYSIS AND PRESENTATION

4.2.1 RESPONSE TO DISTRIBUTED QUESTIONNAIRES

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

be used for analysis hence a total of 35 (thirty-five) questionnaires to be analyzed with a

percentage of seventy (70%) of questionnaires sent out.

Table 4.1 Response to distributed questionnaire

Arbitrators Others Total

Professionals
Questionnaire sent Nr 13 37 50
% 26% 74% 100%

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

4.2.2 Characteristics of respondents

Table 4.2 Respondent’s type of organisation

Organisation Frequency Percentage

Q. S Consultancy 12 34.29

Arch. Consultancy 5 14.28

Engineering 3 8.57

Design and Build 1 2.86

Design and Surveying 1 2.86

Construction 4 11.42

Client 2 5.72

Law firm 7 20.00

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

represents that of the firm / organisation.

4.2.3 Profession of Respondents

Table 4.3 Profession of Respondents

Profession Frequency Percentage

Quantity Surveying Consultancy 14 40.00

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%.

4.2.4 Qualification of respondents

Table 4.4 Qualification of respondents

Qualification Frequency Percentage

HND 6 17.14
B.Sc 9 25.72
MSc 1 2.86
Hnd/ BSc + Professional 7 20.00
qualification
MSc + Professional qualification 5 14.28
LL.B & B.L 7 20.00
Total 35 100.00

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

percentage of 25.72%, second highest is from holders of either B.Sc or HND+

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

possess adequate qualification to enhance their ability to supply reliable information.

52
4.2.5. Professional bodies of respondents

Table 4.5 Professional bodies of respondents

Qualification Frequency Percentage

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

Figure 4.5 Professional bodies of respondents

From table 4.5 and figure 4.5, it is seen that the highest number of respondents are

members of Nigerian institute of quantity surveyor (NIQS) having a percentage of forty

(40%) of the total response, however 4 out of the 14 are members of the society of

construction industry arbitrators (SCIArb) while 1 happens to also be a member 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

are also members of NSE (Nigerian Society of Engineering, 1 respondent is also a

member of NIA (Nigerian Institute of Architect) and 1 other, a member of NBA

(Nigerian Bar Association). Then the NIA out of which 1 is a member of SCIArb and

another 1 a member of another body.

4.2.6 Analysis of years of experience of respondents

Table 4.6 Years of experience of respondents

Years X Frequency Fx Percentage

0–5 3 13 39 37.15

6 – 10 8 11 88 31.43

11- 20 15.5 5 77.50 14.28

21- 50 35.5 6 213.00 17.14

Total 35 417.50

Mean = fx = 41750

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.

4.2.7 Numbers of projects handled by respondents

Table 4.7 Numbers of projects handled by respondents

Number X Frequency Fx Percentage

1- 10 5.5 7 38.50 20.00

11- 20 15.5 9 139.50 25.72

21- 30 25.75 4 103.00 11.42

31- 40 35- 50 3 105.50 8.57

41- 50 45- 50 2 91.00 5.72

51- 75 63 5 315.00 14.28

None 0 5 0 14.28

35 793.50 100

55
Mean = fx = 793.50

f 35

=22.68 Approximately 23 projects

Figure 4.7 Numbers of projects handled by respondents

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 =

∑fx/∑f = 339.50/35 = 9.7 = 10projects

Figure 4.8 Disputes resolved without third 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

Range Frequency Midpoint Percentage

f x fx

None 11 0.00 0.00 31.43%

1-10 19 5.50 104.50 54.29%

11-20 3 15.50 46.50 8.57%

21-30 1 25.50 25.50 2.86%

57
31-40 1 35.50 35.50 2.86%

41-50 0 45.50 0.00 0.00%

51-75 0 63.00 0.00 0.00%

Total 35.00 212.00 100.00%

Mean number of projects with major disputes not resolved among parties =

∑fx/∑f = 212.00/35 = 6.06 = 6 projects

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.

See illustration below; 7 x 100 = 87.5%

4.2.10 Analysis of projects with dispute resolved through arbitration

Table 4.10 Projects with dispute resolved through arbitration

Range Frequency Midpoint Percentage

f X Fx

None 13 0.00 0.00 37.14%

1-10 20 5.50 110.00 57.14%

11-20 1 15.50 15.50 2.86%

21-30 0 25.50 0.00 0.00%

31-40 1 35.50 35.50 2.86%

41-50 0 45.50 0.00 0.00%

51-75 0 63.00 0.00 0.00%

Total 35.00 161.00 100.00%

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

resolve major disputes on construction projects.

4.2.11. Analysis of how effectively disputes are resolved through arbitration

Table 4.11 Analysis of how effectively disputes are resolved through arbitration

Effectiveness Frequency Percentage

60
Very effectively 10 28.57%

Effectively 5 14.29%

Fairly effectively 4 11.43%

Effectively 3 8.57%

No idea 13 37.14%

Total 35 100.00%

Figure 4.11 Effectiveness of arbitration in resolving disputes

4.2.12 Analysis of extent of usage of various dispute resolution techniques

Table 4.12 Extent of usage of various dispute resolution techniques

61
 Resolution Technique Rank Mean Item Score

Arbitration 1 3.03

Mediation 2 2.31

Litigation 3 2.20

Dispute Resolution Boards 4 1.97

Adjudication 5 1.83

Minitrial 6 1.43

Figure 4.12 Extent of usage of various dispute resolution techniques

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.

4.2.13 Analysis of awareness of Alternative Dispute Resolution Techniques and their

legality
Table 4.13 Awareness of Alternative Dispute Resolution Techniques and their legality
Awareness Frequency

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.

Table 4.14 Respondents’ awareness of arbitration

Awareness Frequency Percentage

Yes 32 84.85%

No 3 15.15%

Total 35 100%

Figure 4.14 Respondents’ awareness of arbitration

4.2.15 Analysis of numbers of time respondents have served as arbitrator

Table 4.15 numbers of time respondents have served as arbitrator

64
 Nr of

times Frequency Midpoint Percentage

f x Fx

None 25 0.00 0.00 71.43%

1-5 7 3.00 21.00 20.00%

6-10 2 8.00 16.00 5.71%

11-20 1 15.50 15.50 2.86%

21-50 0 35.50 0.00 0.00%

51-75 0 63.00 0.00 0.00%

Total 35.00 52.50 100.00%

Mean number of times respondents served as arbitrator

∑fx/∑f = 52.50/35.00 = 1.50

65
Figure 4.15 Numbers of time respondents have served as arbitrator

4.2.16 Analysis of numbers of time respondents have served as expert witness

Table 4.16 Numbers of time respondents have served as expert witness

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%

Mean number of times respondents served as expert witness

∑fx/∑f = 67.00/35.00 = 1.91 = 2.00

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

witness about two (2) times.

Table 4.17 Suggestion for the use of arbitration

Source Mean Item Score Rank

Agreement in the contract

condition 3.2 1

Clients' suggestion 2.69 2

Consultants' suggestion 2.63 3

Contractors' suggestion 2.43 4

Reference from Court 1.91 5

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

of agreement in the contract condition as this is ranked 1 st . According to respondents,

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.

Table 4.18 Determination of situations in which arbitrators’ awards were disregarded

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

How often Frequency Percentage

Very often 19 54.29%

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

Range Frequency Midpoint Percentage

f x Fx

3-6months 23 4.50 103.50 65.71%

6-12months 8 9.00 72.00 22.86%

12-24months 4 18.00 72.00 11.43%

24-36months 0 30.00 0.00 0.00%

Above 36months 0 45.50 0.00 0.00%

Total 35.00 247.50 100.00%

Mean Number of months arbitration process takes

∑fx/∑f = 247.50/35 = 7.07 = 7months

Figure 4.19 Duration of arbitration process

70
4.2.21 Analysis of how long after hearings, awards are produced

Table 4.21

Range Frequency Percentage

21days 23 65.71%

30days 8 22.86%

60days 4 11.43%

90days 0 0.00%

Above

90days 0 0.00%

Total 35.00 100.00%

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.

4.2.22 Analysis of factors contributing to disputes on construction project

Table 4.22

Factors Ranking Mean Item Score

Cost issues 1 3.29

Time issues 2 3.11

Quality of work issues 3 2.91

Specification issues 4 2.89

Client's issues 5 2.49

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.

4.2.23 Analysis of cost significance of arbitration as compared with litigation

Significance Frequency Percentage

Very significant 4 11.43%

Significant 2 5.71%

fairly significant 8 22.86%

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

arbitration process is not significant as compared with that of litigation since, 6% 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

55% of respondents who claim that it is not in the least significant.

73
DISCUSSIONS OF FINDINGS

From the literature review, legality of arbitration was established under the provision of

(ACA) Arbitrations and Conciliations Act and (UNCITRAL) United National

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.

The analysis reveal that

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

Dispute Resolution and arbitration as shown in table 4.18.

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

because they understand the nitty-gritty of the matter in dispute which is in

accordance with the literature review.

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

review of literature. This brief duration is enough to prove that arbitration is

inexpensive. This is further proved in table 4.23 and figure 4.19 in acco rdance

with review of literature.

5. There are situations in which the award of an arbitrator is discarded and some of

the reasons gotten from respondents include misconduct of an arbitrator or non

compliance with the lex-arbitri, this is also in line with information from literature

review. However, if parties do not abide by awards, an injunction or lien could be

given from court.

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

construction industry, it could be deduced that the popularity is increasing.

7. Respondents believe suggestion for use of arbitration comes mainly from contract

agreement, followed by client, then consultants and contractors as shown in table

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

from literature review.

75
SUMMARY OF FINDINGS AND DISCUSSION

 Cost overrun and time overrun are the main causes of disputes on construction

projects.

 An arbitrator’s misconduct is a big setback to the acceptance and adoption of

arbitration. Hence, arbitrators should understand nature of dispute and perform his

duties judiciously exercising his rights without infringing that of the parties.

 Arbitration as a form of Alternative Dispute Resolution is still new to some

clients and professionals especially contractors. Hence need for creating more

awareness.

 Arbitration is more economical than litigation.

 Arbitration is very legal and effective as an Alternative Dispute Resolution

(ADR) tool and not another method aside ADR.

76
5.0 CONCLUSIONS AND RECOMMENDATION

5.1 CONCLUSIONS

The cumulative effect of disputes on construction projects is undesirable and should

therefore be checked. To effectively put this under control and reduce its effect, it is

imperative that arbitration as an economical and effective tool be incorporated in

contracts at pre-contract stage. It is capable of building contractual relationship among

parties.

5.2 RECOMMENDATIONS

After thorough analysis, it is imperative to state the following 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
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