Should Kenya Adopt Statutory Adjudication for Construction Disputes?
The construction industry in Kenya is a cornerstone of economic growth, contributing significantly to infrastructure development and job creation. However, disputes within the sector—ranging from payment disagreements to contract breaches—often lead to costly and time-consuming litigation, stalling projects and straining relationships. To address this, Kenya should consider adopting statutory adjudication, a proven dispute resolution mechanism that could transform the industry.
Construction projects are inherently complex, involving multiple stakeholders, tight deadlines, and substantial financial investments. Disputes are almost inevitable, with common issues including delayed payments, scope changes, and quality concerns. In Kenya, these disputes frequently escalate to court, where lengthy legal processes can delay projects by months or even years. This not only increases costs but also undermines investor confidence and hampers the sector’s growth.
Traditional dispute resolution methods, such as arbitration and litigation, are often ill-suited for the fast-paced nature of construction. Arbitration, while flexible, can be expensive and slow, while court proceedings lack the technical expertise needed to address industry-specific issues. As a result, parties are left grappling with unresolved conflicts, stalled projects, and eroded trust.
What is Statutory Adjudication?
Statutory adjudication is a legally mandated, time-bound process designed to resolve disputes quickly and efficiently. Originating in the United Kingdom with the Housing Grants, Construction and Regeneration Act of 1996, it has been adopted in countries like Australia, Singapore, and Malaysia with remarkable success. Under this system, disputes are referred to an impartial adjudicator—a construction expert—who delivers a binding decision within a short timeframe, typically 28 days.
The process is simple: a party submits a claim, the other party responds, and the adjudicator evaluates the evidence to issue a decision. The decision is enforceable immediately, ensuring that projects can continue without prolonged interruptions. If either party is dissatisfied, they can pursue arbitration or litigation later, but the adjudicator’s ruling stands in the interim.
Why Kenya Needs Statutory Adjudication
Adopting statutory adjudication in Kenya would address several challenges facing the construction industry:
1. Speed and Efficiency: Construction projects thrive on momentum. Adjudication’s 28-day timeline ensures disputes are resolved swiftly, preventing delays that could derail timelines and inflate costs.
2. Cost-Effectiveness: Litigation and arbitration often involve hefty legal fees, which can be prohibitive for small contractors. Adjudication is less formal and more affordable, leveling the playing field for all parties.
3. Expertise: Adjudicators are typically construction professionals with deep industry knowledge, enabling them to understand technical issues and deliver fair, informed decisions.
4. Preserving Relationships: The adversarial nature of litigation can destroy business relationships. Adjudication’s collaborative approach encourages parties to resolve disputes amicably, fostering long-term partnerships.
5. Boosting Investor Confidence: A reliable dispute resolution mechanism signals a mature and predictable business environment, attracting both local and foreign investment.
Learning from Global Success
Countries like the UK and Singapore offer valuable lessons for Kenya. In the UK, statutory adjudication has reduced litigation in the construction sector by providing a faster alternative. In Singapore, the Building and Construction Industry Security of Payment Act ensures contractors are paid promptly, addressing a common source of disputes. These models demonstrate that statutory adjudication can be tailored to local contexts while delivering tangible benefits.
Challenges and Considerations
Implementing statutory adjudication in Kenya would require careful planning. Key steps include:
- Legislative Framework: A dedicated law, similar to the UK’s 1996 Act, would need to be enacted to establish adjudication as a mandatory process for construction contracts.
- Capacity Building: Training adjudicators and raising awareness among stakeholders is critical to ensure the system’s success.
- Cultural Shift: Some parties may resist moving away from traditional litigation. Advocacy and pilot programs could help build trust in the process.
The Way Forward
Kenya’s construction sector is at a pivotal moment. With ambitious infrastructure projects like the Nairobi-Mombasa Expressway and affordable housing initiatives underway, the need for efficient dispute resolution has never been greater. Statutory adjudication offers a practical solution to streamline processes, reduce costs, and enhance the sector’s competitiveness.
Policymakers should prioritize drafting legislation to introduce statutory adjudication, drawing on global best practices. Stakeholders, including contractors, developers, and professional bodies, must also champion this reform to ensure its successful adoption. By embracing adjudication, Kenya can unlock the full potential of its construction industry, driving economic growth and delivering projects that benefit all citizens.
Adapted from: Desmond Odhiambo