Architecture practice- arbitration and conciliation

ARC 404 : PROFESSIONAL PRACTICE
B.ARCH VI SEMESTER : FEBRUARY 2015
INTRODUCTION
CHAPTER TOPIC
01 Understanding the basic concepts and terminology in architectural practice
02 The differences between architectural profession and other professional disciplines
03 A clear knowledge of code of conducts and ethics in profession
04 The knowledge of apex monitoring body to protect the interest of the profession
05 Role of an architect in conceptualizing, design proposal until the execution
procedures
06 The relationship between the architect and other executive agencies
07 The legal dimension of professional practice, architect’s role as an arbitrator
08 A comprehensive understanding of office set up, office administration, selection
procedure for various posts, man power management within the office and
resource leveling

ARBITRATION & CONCILIATION
MEANING OF ARBITRATION
DEFINED AS A METHOD OF RESOLVING DISPUTES
BETWEEN TWO PARTIES BY A THIR PARTY

NEED FOR ARBITRATION
DISPUTES ARISING BETWEEN
OWNER & ARCHITECT
QUALITY OF SERVICE, LACK OF SUPERVISION, PAYMENT OF FEES ETC
OWNER & CONTRACTOR
PAYMENTS,EXTENSION OF TIME, RECTIFICATION OF DEFECTS

ADVANTAGES OF ARBITRATION
RESOLVING DISPUTES IN COURTS IS EXPENSIVE,
TIME CONSUMING AND STAINS RELATIONSHIP
ARBTRATION IS QUICKER LESS EXPENSIVE
AND RELATIONS REMAIN CORDIAL

CONCILIATION
Conciliation and mediation by a third party
Is quicker and still less expensive as
An “alternative method of dispute resolutions”
Mediator known to both parties
Arbitration act 1940 replaced by
Arbitration & conciliation act 1996 -16th august 1996

Need for an arbitration agreement
Both parties have to agree in writing
Inserting a clause in “letter of appointment”
In the case o a building contract, between the owner
and the contractor, IIA form of Conditions of Contract
has a clause ( Clause 56).
Unless there is an arbitration agreement, Arbitrators
have no jurisdiction to enter upon any reference. If
there is no prior agreement, the same can be formally
done on a stamp paper to make it legally valid.

Role of Project Architect in Arbitration
Project architect has a dual role
1. As per clause 55 of IIA, he acts as a “Quasi-
Arbitrator” to give his decision on “excepted
matters” between the client and the contractor
where his decision is final and binding.
2. He is required to supply whatever information(
copies of correspondence, drawings, site
supervision memos etc.) the Arbitrators require in
connection with any reference.

Project Architect as a “Quasi-Arbitrator”
Project architect is required to give his decision on the following
“excepted matters”.
1. Clause 5 of IIA Form of Contract: Interpretation of drawings in case of any
error or inconsistency
2. Clause 9 of IIA Form of Contract: Issue instructions to contractor (normally in
writing) from time to time.
3. Clause 19 of IIA Form of Contract: Contractors field organization, code of good
practice
4. Clause 25 of IIA Form of Contract: Permission to assign or sublet a part of
contract work.
5. Clause 26 of IIA Form of Contract: Responsibility of coordination and
payments of subcontractors
6. Clause 36 of IIA Form of Contract: Material & workmanship including levels,
colors shades, defective works etc.

Project Architect as a “Quasi-Arbitrator”
Project architect is required to give his decision on the following
“excepted matters”.
7. Clause 40 of IIA Form of Contract: Extension of time. There are 10 grounds for
claim of extension, however on the below 5 , projects architects decision is
final and binding
1. Force Majeure
2. Exceptionally inclement weather
3. Civil commotions, strikes etc.
4. Delay o part of Nominator contractors
5. Delay on account of artists tradesmen appointed by Owner.
In the above 5 cases, the architects decision is final and the contractor
cannot initiate arbitration proceeding.

Appointment of Arbitrators by parties
Parties to a dispute can appoint an Arbitrator or Arbitrators in the
following manner:
1. Named in the arbitration clause of the contract document
2. Each party appoints its own nominee and these joint arbitrators appoint the
presiding arbitrator
3. A person may be empowered in the arbitration clause to appoint an
arbitrator if the need arises
4. A sole arbitrator selected from a panels of names suggested by COA or
president IIA or by the Indian council of Arbitration
If one of the parties refuse to name its nominee, the other party can approach
the court.

Doctrine of Estoppel
Estoppel is a rule of evidence.
The definition of the word Estoppel is “ a bar or an impediment preventing a
party from asserting a fact to a claim inconsistent with a position he previously
took”.
When a party knowing fully well that he could take objection to arbitration
proceeding, takes part in the arbitration proceedings, taking his chance of the
decision being favorable to him cannot object to an award if it goes against him.
However if a party objects to the arbitration proceeding and then take part in it
under protest, it can object to the award if it unfavorable to him.

Removal of Arbitrators
An arbitrator once appointed can only be removed by a court of law or can be
asked by other two.
A court can remove an arbitrators under the following:
1. Arbitrator exceeds his jurisdiction or goes beyond the term of the contract.
2. Arbitrator misconducts himself or does not apply his mind to the disputes
3. Disqualification of the Arbitrator in terms of the Arbitration clause
4. Charges of fraud or favoritism against the arbitrator

Need for conciliation as an alternate dispute resolution method.
Shortcoming of old arbitration proceeding:
• Disputes never resolved in 4 months as stipulated in the old act
• Prolongation from both parties
• Issues are more delayed when more than one arbitrators are present
• Finding dates suitable to all parties
• Delay in compilation of documents and oral arguments
• One of the parties may take the matter to court during the progress of
arbitration on techno-legal issues
• With all these complication cost of hiring techno legal consultants getting
higher- beyond the reach of a small contractors
• Under such circumstances it has become necessary to find a better
alternative- the concept of “CONCILIATION” as an alternative dispute
resolute method.

Concept of Conciliation
Old system like in panchayats readapted in the light of changing socio-economic
conditions. A CONCILIATOR is a person who brings about conciliation between the
parties to a dispute.
• Both parties must have trust and confidence in him
• Suitable qualified if the mater is technical
• His power is only that of persuasion
• Required to maintain confidentiality of all cases referred too him
He works in three stages:
• Stage-1: Exploring to establish facts and discover respective attitudes of parties
• Stage-2: Exploring possibilities of finding equitable common ground.
• Stage-3: Bringing about conciliation between the parties

The Arbitration & Conciliation Act 1996
• Arbitration Act 1940 has become outdated.
• General Assembly of the UNO recommends that UNCITRAL adopted in 1985 be
the basis of new law to bring about uniformity of law of arbitral procedures and
the specific needs of the international commercial arbitration practice
• Though UNCITRAL deals with international disputes, with certain modification
they could serve domestic arbitration and conciliation.
• New act seeks to consolidate and amend the laws relating to domestic
arbitration, international commercial arbitration, enforce foreign arbitral award
and define laws relating to conciliation

Lessons for Architects from Arbitration cases
One of the main reasons why disputes arise between owners and contractor as far as
construction projects are concerned is that quite a few architects do not perform their roles
as Project Architect and Quasi-Arbitrators early on in the project.
Some of the steps that he can do to prevent such disputes are
1. Production drawings.- Complete and freeze design and drawings prior to tender.
2. Notification formalities- Issue all notifications on time
3. Certification of bill- Approve/certify all bills on time and ensure payments
4. Time as “Essence of Contract”.- Avoid Holds that can lead to extension of time.
5. Final Accord and satisfaction-Ensure full and final payment is done.
6. Minutes of site meetings- Weekly meeting and minutes recorded and approved by all
7. Consultant fees: Payment for sub consultants is one on time
8. Predesign Investigation: Owner required to furnish information about site
9. Accepting assignments: Proper documentation and fee structure as recommended by
COA
10. Premature termination of Architects services: Owner right on full payment of fees upto
that stage.

References
1. http://www.coa.gov.in/home/home.htm
2. Architectural Practice in India: Prof. Madhav Deobhakta & Ar.
Meera Deobhakta

Architecture practice- arbitration and conciliation

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