Resolution of Construction Disputes through Institutional Arbitration in Ethiopia: The Practice and Legal Challenges.

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Addis Ababa, Ethiopia


Construction is a large, dynamic, complex and a very vital sector of economy in many countries. The industry has started to play a vital role for developing countries as they are considerably dependent on the growth and development of physical infrastructures. Similarly, the sector is a corner stone of the economy for Ethiopia. The complex nature of the construction industry and the existence of various players in the sector such as owners, suppliers, financiers, designers, contractors, consultants, employer representatives, sub contractors and other sector actors have made disputes in the industry normal and sometimes inevitable. Furthermore the sector transactions and disputes have peculiar features than any other sectors of commercial business. The sector transaction and dispute involve larger amount of money having multiple interested parties with independent contractual relationships and multiple claims and contain large volume of documents. Due to the inevitability of dispute in the sector, crafting an appropriate mechanism of dispute resolution has been considered as a significant task. The resolutions of the construction sector dispute mainly require skilled and experienced expertise and demand rapid resolution of disputes for the success of a project. A judge who is trained only in law without having the required knowledge and experience of construction sector works will not be able to understand the technically complex disputes of the sector. Moreover, resolving disputes occurring in the construction sector in time, swiftly and professionally contributes for the successful completion of projects with allocated budget, time and quality. Due to this various alternatives and on site dispute resolution mechanisms such as Dispute resolution advisor, Dispute review board, Dispute adjudication board, negotiation and arbitration are in place in different parts of the world to ensure justice and efficiency in resolving the sector specific disputes. At international level arbitration is highly advocated as the most efficient means of dispute resolution for construction disputes than the formal adjudication system. To assess the practice and challenges of construction dispute arbitration of institutional arbitration centers in Ethiopia, both legal framework and the institutional practice of Arbitration centers are analyzed by the study. However, in Ethiopia the practice of institutional arbitration is not considerable and well developed and the existing arbitration laws are not also comprehensive to fit the rapidly growing construction sector business and associated disputes. Therefore, enacting comprehensive legal framework, policies and establishing strong arbitration centers which serve the country and the rest of the world is suggested as major recommendation.