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Arbitration Proceedings under Article 36 of the Main Contract form ( No Quantities) E2(A)

The Form of Main Contract for Building Projects is the standard contract used for construction projects. This contract relates to the construction of projects and in cases where differences arise between the parties then they can resolve these differences outside the court through arbitration. Article 36 provides for the manner of resolving disputes between the employer, the architect and the contractor.

1. WHAT IS THE FORM OF MAIN CONTRACT FOR BUILDING PROJECTS

The Form of Main Contract for Building Projects is the Standard Contract used for construction projects. It is the contract that governs the relationship between the one who commissions the project (“Employer”) and the one who undertakes the construction of the project (“Contractor”). Available from the district building contractors’ associations.

The contract in question deals with technical issues related to the construction of the project and where disputes arise between the parties, the parties are given the right to refer their dispute for resolution outside the court through an escalation clause – that is, an arbitration clause where the parties agree go through various levels of alternative dispute resolution before finally reaching the courts.

2. ARTICLE 36

Article 36, is a densely written two-page article contained in the above contract, and contains a clause based on which:

(1) Any disputes or disputes arising before or after the performance or abandonment of the works regarding:

a)  Interpretation of the Contract

b)  Any matter concerning the Contract and/or in relation to the execution of the works…

then the matter of dispute or difference shall be submitted in writing by either party or by both parties, as the case may be, to the Architect (with express reference to the fact that such submission is made in accordance with the provisions of this paragraph of this article and, as the case may be, with a copy to the other party) to be resolved and issued by him in a written relevant decision (hereinafter referred to as “the Architect’s Decision).

According to the case D. Demetriou Developers Limited v. Εργοληπτική Εταιρεία «Χριγεσα» Λιμιτεδ Case Number 2411/13, date 06/03/2014 the relevant provision (clause 36 of Exhibit 1) is so broad as to cover all the disputes between the parties, both in relation  to the value and quality of the works and the interpretation of the terms of the contract.

3. MECHANISM OF ARTICLE 36(4)

Based on article 36(4) where the Alternative Dispute Resolution mechanism is contained, the architect can either issue a decision or not respond.

A.  Issuance of Decision

In case that the Architect issues a decision, this is communicated to both the contractor and the employer within 28 days from the date of submission of the issue to be resolved. The decision is final unless the following steps are taken within 28 days of the date of the decision:

(i) Filing of an Objection

The objection is filed by the party that does not agree with the decision by written notification to the architect and by giving a copy to the other party.

(ii) Following Referral to Arbitration

Thereafter, the interested party shall, by written notice to the other party, demand immediate referral of the dispute or difference to arbitration.

B.  Failure to issue a decision

There are two cases where it is considered that an architect’s decision has not been issued. The first is when the architect has not issued a decision at any point, while the second is when the architect issues a decision but does not communicate it within 28 days from the day of submission of the issue to be resolved.

Failure to issue a decision is equivalent to a final rejection of any claims that are the subject matter of the dispute unless the following actions are taken within 28 days of the expiration of the 28 days (which the architect had to issue the decision):

(i)   The interested party

(ii)  By written statement

(iii) To the other party

(iv) Require immediate referral of the dispute or difference to arbitration

4. NATURE OF ARTICLE 36

The nature of section 36(4) was considered in case C.S.G. Neokleous Brothers Constructions Ltd, Ν. Louizian Food Limited Case No. 1554/08, Dated 14/01/2014 of the District court by Judge Mavronikolas where the following were stated:

Article 36 of the contract provides for the manner of resolving disputes between the employer, architect and contractor and referring the dispute to arbitration. The process of referring a dispute to arbitration is progressive. It is preceded by the submission in writing to the architect of a dispute or difference to be resolved and the issuance by him of a written relevant decision (architect’s decision).

Σχετικά Άρθρα

Conciliation Rules of the Cyprus Center for Alternative Dispute Resolution
Mediation Rules of the Cyprus Center for Alternative Dispute Resolution
Arbitration Rules of the Cyprus Center for Alternative Dispute Resolution