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Construction case connected with the government

Published on: Tue, 2013-12-10 14:29


The construction industry in Ethiopia is regulated by various legislative enactments which mainly come under two different domains; namely, civil construction laws, and government construction laws. The former laws apply where a private individual or company usually referred to as
‘employer’ (otherwise known as ‘owner’ or ‘client’) enters into a construction contract with a contractor. And the latter involves a government department which intends to have construction works carried out on behalf of the government for public interest. Thus, depending on whether the construction contract involves a private civil/business-to-business engagement or a government-
to-business, separate set of rights and obligations apply in the construction industry.

Disputes usually arise in the process of the performance of contractual obligations under construction contracts. When and if construction disputes come to the fore, litigations take years; costs may skyrocket; speed and efficiency give way to drawn out and tedious proceedings resulting mainly in the mismanagement of public fund that should have been otherwise spent on the
expansion of public infrastructure. This is unaffordable for the government department and the taxpayer. And, on the other side, hard-won reputation and good will of construction contractors are damaged. In fact, the loss of or damage to the good reputation in the market place will tax the contractor’s business heavily due to loss of confidence in the eyes of potential employers,
be it private investor or government employer. There is thus the imminent need for an effective, economic, and efficient means of settling such disputes.

This article first introduces the legal framework and the role of adjudication, as a new Alternative Dispute Resolution (ADR) method, in resolving government construction disputes, and, secondly, it examines the place of arbitration, i.e., by addressing the issue whether arbitration can validly beused in resolving government construction disputes in Ethiopia. Section 1 discusses the reason why construction claims and disputes abound in the construction industry. In Section 2, attempt is made to show some attributes that the government construction contracts law, as part of the administrative contracts law, would share in common. Sections 3 and 4 deal respectively with
the commonly used ADR and arbitral clauses in construction contracts in Ethiopia and the role that an adjudicator and the civil engineer play in resolving construction disputes. The issue of arbitrability of government construction contracts is analyzed, in Section 5, at greater length in light of recent court decisions and the relevant laws. The Article, finally, concludes by suggesting
some points on what can be done to settle the contentious issue of arbitrability of government construction contracts in Ethiopia.

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