Construction Law

U.D Asanka Sandamali

Registration No: 403bnl23011

Lecturer; Mr.Mahesh Abeynayake

Continuous Assessment – Construction Law
Marsters of Laws in Business Law /Programme II

2023- Semester1
Declaration Form
1. I declare that this assignment is my own work
2. I have acknowledged ideas of other authors (if Any) Following standard
Acknowledgement practice
3. I am aware of the consequences of cheating and malpractice
4. I am willing to answer any query raised by any academic staff member in relation to this
report at any time during the course
5. I understand that the decision relating to mark on this report is purely based on my
performance and that if first and final.
Date:- 20.08.2023
U.D AsankSandamali

Signature

Name U.D Asanka sandamali

Specimen Letter for Handing over assignment

U.D Asanka Sandamali

No.42,Kosatadeniya, Mirigama.

DEAN
FGS
KDU
SUBIMITION OF Assignment
1. Assignment Construction Law is forwarded here with for (marking/Approval) Please.

U.D Asanka Sandamali

(Signature)

U.D Asanka Sandamali

Registration No: 403bnl23011

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QUESTION/TASK:

Discuss Alternative Dispute Resolution (ADR) methods used in the construction industry
under the Construction Industry Development Act (CIDA Act) No 33 of 2014 and Standard
Bidding Documents/Standard Documents for Construction Contracts “SBD 1-4: CIDA-2007” in
Sri Lanka.

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 Content

 Introduction
 Nature of Construction Industry
 How it differs from other Sectors
 Special features of Construction law
 Practical situation of construction Field in Sri Lanka
 How construction field behave in other countries.

 Laws of Construction Industry

 History of Sri Lankan Construction Law(ICTAD)

 Current Legislation of Construction Law (CIDA Act)
 Role of Construction Industry Development Authority(CIDA)
 Main areas covered by Construction Industry Development Act No.33 of 2014.

 ADR Methods Under Construction law

 What are the alternative dispute resolution methods (ADR) in CIDA Act in Sri Lanka.
 What is the international practice of ADR methods in Construction Industry
 What is the law/standard documents for Governing ADR

 Laws of Construction Industry

 What is the law/standard documents for Governing ADR in Sri Lanka

 Sri Lankan Current Legislation of Construction Law
 Main areas covered by Construction Industry Development Act No.33 of 2014.

 ADR methods Under Construction law

 What are the alternative dispute resolution methods (ADR) in CIDA Act and
Standard Bidding Documents/Standard Documents for Construction Contract “SBD 1-
4: CIDA-2007” in Sri Lanka.

 Advantages and Disadvantages of alternative dispute resolution methods (ADR) in

CIDA Act and Standard Bidding Documents/Standard Documents for Construction
Contract “SBD 1-4: CIDA-2007” in Sri Lanka.

 Conclusion

 Recommendations

 Bibliography

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Introduction

Nature of Construction Industry

Today, each and every parts of the world and the people are running behind a massive development
which is creating huge changes and competition second by second. At Present, these developments
and changes has taken place in every field despite the level of technology, economic stability ,
religious or cultural differences, political or geographical condition and with the usage of speedy
and unbelievable technological enhancement together with all other development whole world can
be taken to a one man’s hand by a minute. Among of all other phenomenon, Economy of a country
is the main thing which creates influences on the stability of each and every field. Accordingly,

Construction industry plays a major role in any country with the highest necessity of development of
each and every areas including economy. This construction industry provide the basic and essential
service of a country. Basically ,Construction is a field which provide shelter for the population of a
country. This is not limited to build a house for a human or a one family it spreads each and every
needs of a human. when we take education, economy, health, Sports, Business and any other area of
human involve ,we can see the contribution of construction industry. Constructions were very simple
and very primitive at past and now it is a massive and major industry which has become main part of
every field of society.

Construction basically defend on a agreement /contract between one or two party for the
completion/part of completion specific construction upon agreed conditions.

Contract-construction

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How it differs from other Sectors

 It is very fast and efficient industry

 Construction field is not a isolated field like any other industry ,and we can’t show

boundaries of construction field like any other industry since this industry has connected

with every other industries.

 Also construction industry is a industry where massive developments and changes made

every day when compare to other industries.

 Construction industry not limited to involve in one to two needs of society/People

 It Contribute each and every part of Life of Human.

Roads, Hospital, Hotels, school, universities are some of them which represent education,

health, entertaining.

 We can see so many professionals involve with construction industry. (Engineers,

Architectures, Building Contractors and etc.)

 Also there are so many supportive third parties for construction industry. Manufactures,

Suppliers, Financial Institutions, Government Organizations and etc.

 Very wide and complex industry which engage since very small and simple constructions to

massive projects.

 Mainly connect and motivated to follow with international stranded guidelines/regulations

 Laws and governing rules are quite flexible than other laws. ADR Methods can be used

instead of Litigation.

 So many laws Statute,Regulations in other industries are involve with the Construction law

and those are closely interconnected

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Special features of Construction law Laws

Construction Law other than other laws

 Laws and Regulations are very wide as suit to the nature of industry.

 Laws are complex and application is differ according to the scenario.

 Risk is high in the field and laws has covered up to some extent.

 There should be a speedy law and enforcement system for disputes.

 Cost involving in highest when arise dispute.

 Laws are to be updated day by day according to the necessity of

developments.

 Governing rules are quite flexible than other laws. Parties has discretion
to decide what should be the process for dispute resolve at the time
which parties enter into agreement.

 Use ADR more than other field as per the nature of industry and
necessity of developments.

 Can mutually resolve and come to a conclusion/settlement considering

to time and cost involve in Litigation.

 Construction is going although disputes are between parties and .

 Quality and time is a matter in construction industry and each party

should adhere to the condition of agreement since if dispute arise it
affect both party.

 Accordingly, so many laws, Statute are involve with the construction

law, Contract Law, Company Law, Insurance law, Commercial and
Company Law and etc.

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Practical situation of construction Field in Sri Lanka

Construction industry is vey complex industry which has wide process and application .There are so
many construction projects are implementing at present when compare to previous time in Sri Lanka.
Also we can see huge construction projects which are already finished and still working. such as
Lotes Tower, Luxury residential apartment, luxury hotels and etc. So, when we compare with other
countries and present Sri Lankan construction industry, we can say that there are good and
competitive industry which support to maintain well practice within Sri Lankan construction field
although it is still developing with the direction of international laws and regulations.

How construction field behave in other countries.

There are very technological and advanced construction industry in many foreign countries when we
compare to Sri Lanka. As developed countries and the ability of spending high cost, developed
Information Technology this construction industry has arrived very important and complex
condition. Also the rules and regulation for the development of construction industry has flexible
enough and those has addressed to the said practical necessity of the country. We can learn from
foreign industries and make more practical law for the construction law in the country.

Laws of Construction Industry

Construction Laws and Regulations are very wide and has been made suit to the nature of industry.
Laws are complex and application is differ according to the scenario. Since the risk and cost in
construction industry is very high ,this laws has covered that nature up to some extent. Further, there
should be a speedy law and enforcement system for disputes in this industry. Cost involving is very
high when arise dispute arose in construction industry. Laws need to be updated day by day
according to the necessity of developments of the construction industry when compare to other
industries,. Governing rules are quite flexible and Parties has discretion to decide what should be the
process for dispute resolve at the time which parties enter into agreement. Construction industry is
used ADR methods in dispute more than other field as per the nature of industry and necessity of
speed changes. Accordingly parties can mutually resolve those disputes and come to a
conclusion/settlement considering the time and cost involved in Litigation and other legal procedure.
Construction works is not stopped although disputes were arose between parties Further, Quality
and time is very important matter in construction industry and each party should adhere to the
condition of agreement since if dispute arose it affect both party negatively. Accordingly, based on
the special characteristics and different nature of construction industry, so many laws, Statute are
involve with the construction law, Contract Law, Company Law, Insurance law, Commercial and
Company Law and etc. to regulate the function of construction field.

There are two or more parties involving in same construction project upon contract or Agreement.
Further we can see that as promise or set of promise between two or more parties upon particular
duties and responsibilities which they can enforce by law.

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“A contract is a bargain or agreement between persons giving them rights and duties in law”2
“…in the absence of a full contract to regulate the parties' rights and obligations…the result is
confusion and acrimony”1

Basically, contact is a agreement between two parties and both parties bind upon duties and with
fulfilling their obligation each party get the other party’s task.

Agreement/Promise

Within two or more Parties

Each party has duties and

Contract responsibility

Can be enforceable by Law

What is the law/standard documents for Governing ADR in Sri Lanka

 Construction Industry Development Act (CIDA Act) No 33 of 2014

 Standard Bidding Documents/Standard Documents for Construction Contract “SBD 1-4:
CIDA-2007”

Sri Lankan Current Legislation of Construction Law

The current legislation invole in construction field is Construction Industry Development Act. No.
33 of 2014 (CIDA Act) which is more known as CIDA Act.
This Act relevant to the practice and development of the construction industry of Sri Lanka.
At Present, this act regulate the activities of the construction industry. When we go through CIDA
Act, we can realize that there are so many essential requirements for the development of this
construction industry As we discussed above We can see so many professionals involve with
construction industry. (Engineers, Architectures, Building Contractors and etc.)

Also there are so many supportive third parties for construction industry. Manufactures, Suppliers,
Financial Institutions, Government Organizations and etc

CIDA Act has covered many areas in construction industry including, Publishing materials,
information related to the construction and it has guided to a quality construction work according to
the standards such as Quality of the construction project by giving grades for excellence. Further,
Sections in the CIDA Act No.33 of 2014 covers many areas of construction projects in Sri Lanka .
Main areas covered by Construction Industry Development Act No.33 of 2014.
1
Cunningham v Collett and Farmers (A Firm) (TCC) [2006] EWHC 1771 (TCC).
10
1.) National policy on construction
2.) Section -04:Establishment of the national advisory council on construction
3.) Section -06 :Objectives of the council
4.) Section -08:Establishment of the Construction Industry Development Authority
5.) Section -12: Objectives of the authority
6.) Section -13:Functions of the authority
7.) Section -14:Powers of the authority
9.) Section -26: Register of qualified persons
10.) Section -45: Technical auditing
11.) Section -50 :Settlement of disputes through conciliation or mediation by the authority
12.) Section -51: Right to refer for adjudication
13.) Section -52: Register of adjudicators
14.) Section -67: Interpretation
Section -19: Construction industry development fund

ADR metords Under Construction law

Amicable Settlements

Mediation

Consiliation

Dispute Resolution Adviser(DRA)

Early Neutral Evaluation

Expert Determination

Mini-Trial

Adjudication /DAB/DRB/DB

Arbitration

Construction industry is used ADR methods in dispute more than other field as per the nature of
industry and necessity of speed changes. Accordingly parties can mutually resolve those disputes
and come to a conclusion/settlement considering the time and cost involved in Litigation and other

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legal procedure. Construction works is not stopped although disputes were arose between parties
Since the risk and cost in construction industry is very high ,this laws has covered that nature up to
some extent. Further ,there should be a speedy law and enforcement system for disputes in this
industry. Cost involving is very high when arise dispute arose in construction industry. Accordingly,

Contractual disputes are time-consuming, expensive and unpleasant. They can destroy
client/supplier relationships painstakingly built up over a period of time and can impact on the
supply chain. They can add substantially to the cost of a contract, as well as nullifying some or all
of its benefits or advantage2

What are the alternative dispute resolution methords (ADR) in CIDA Act and Standared
Biddding Documents/Standard Documents for Construction Contract “SBD 1-4: CIDA-2007” in
Sri Lanka.

Construction Industry Development Act (CIDA) No. 33 of 2014 of Part IX and Part X has state how
dispute need to be addressed and settle without go for litigation which take long time and high cost.
Accordingly, we will see what are the provisions with related to ADR under CIDA Act.
Section No. 50:Settlement of disputes through Conciliation or Mediation by the Authority
51:Right to refer for Adjudication
52:Register of Adjudication

Mediation This is a fair and efficient  The mediator will be an independent

person, who will not make a decision,
process to help you resolve
judge or advice, however, will
disputes and reach an facilitate discussions between the
parties, with the aim of resolving the
agreement. A neutral mediator
dispute.
assist to resolve dispute  Mediators are generally highly
experienced in the area of the dispute
 It is usually considerably less costly
than litigation.
 Everything that happens in mediation
is confidential
Conciliation A Conciliator can make official  Conciliation ensures party autonomy -
The parties can choose the timing,
recommendations/suggestions language, place, structure and content
for settlement terms and can of the conciliation proceedings.
 Conciliation ensures the expertise of
also give advice on the subject the decision maker - The parties are
free to select their conciliator.
matterwhich makes conciliation  A conciliator does not have to have a
more of an advisory service. specific professional background.
 The parties may base their selection
on criteria such as; experience,

2
OGC 2003 Guidance on ADR.
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 professional and/ or personal
expertise, availability, language and
cultural skills. A conciliator should be
impartial and independent.
 Conciliation is time and cost efficient
- Due to the informal and flexible
nature of conciliation proceedings,
they can be conducted in a time and
cost-efficient manner.
 The adjudicator is a neutral person
who is not involved in the day to day
running of the construction contract.
.

Adjudication This is a process in which a  Adjudication is a quick process,

which is designed to ensure that cash
neutral third party will give a flow is maintained during the
decision on a dispute. The construction process Adjudication is
less expensive than court/litigation
decision of adjudicator will be proceedings.
binding, unless or until it is
revised in Arbitration or
Litigation

Advantages and Disdvantages of alternative dispute resolution methords (ADR) in CIDA Act and
Standared Biddding Documents/Standard Documents for Construction Contract “SBD 1-4:
CIDA-2007” in Sri Lanka

ADR methods

fast, inexpensive, fair, simple, flexibility, confidentiality, minimum delay.

However,

ADR methods are also having issues like drawbacks and pitfalls apart from their respective
advantages.

Conclution

Construction industry is used ADR methods in dispute more than other field as per the nature of
industry and necessity of speed changes. Accordingly parties can mutually resolve those disputes
and come to a conclusion/settlement considering the time and cost involved in Litigation and other
legal procedure. Construction works is not stopped although disputes were arose between parties
Since the risk and cost in construction industry is very high ,this laws has covered that nature up to
some extent. Further, there should be a speedy law and enforcement system for disputes in this
industry. Cost involving is very high when arise dispute arose in construction industry. Accordingly
it is very important to avoid dispute between parties and all the necessary action need to be taken to
avoid dispute between parties.
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So bellow mention precautions can be taken out to avoid disputes between parties as per expert’s
opinion in the construction industry

1)A clearly worded contract, including additional remedies for the partners, as well as
procedures for resolving disputes as soon as possible (e.g. early warning notices, regular
meetings);
2) Effective contract and project management to encourage communication and information
sharing, advance notice of potential problems, risk reviews, program me updating, cost
revisions and so on;
3) Active and proactive dispute management, before the problems escalate and the partners
need to consider their options for dispute resolution.

Further, In the recent case of Pickard Finlason v Lock the judge said “On any view and
regardless of the outcome it is a matter for regret that what had been an extremely good
working relationship between the parties has deteriorated to such a level that the parties
have been unable or unwilling to settle their differences and have instead expended such
substantial amounts of time, money and, I am sure, stress and anxiety in the pursuit and
defense of their respective claims.”

Construction industry is used ADR methods in dispute more than other field as per the nature
of industry and necessity of speed changes. Accordingly parties can mutually resolve
those disputes and come to a conclusion/settlement considering the time and cost involved
in Litigation and other legal procedure.

Accordingly, as a Final conclusion we can say that Alternative Dispute Resolution methods
are in in CIDA Act and Standard Bidding Documents/Standard Documents for Construction
Contract “SBD 1-4: CIDA-2007” in Sri Lanka, are very useful and effective to balance
conflicts that occur within construction industry. Further
ADR method can provide a fair, cost efficient and fast solution which suit to speedy and
complex industry like Construction. However, This legal procedures need to be facilitated
by current government and supportive regulatory bodies for proper and speedy service.
Further, awareness about the advantages of the alternative Dispute Resolution (ADR)
need to be communicated to relevant parities who engage in construction Industry.

Recommendations

 Need to motivate parties in construction industry to use ADR methods in Construction

Industry.
 Need to take action to limit time for ADR methods further.
 There is a special Parliament Act for Mediation (Special categories of Disputes) Act, No. 21
of 2003.need make arrangements to facilitate these provisions in practical construction
industry.
 Need to enact special legislation for s ADR methods, for Conciliation and Adjudication.
 legal procedures need to be facilitated by current government and supportive regulatory
bodies for proper and speedy service.
 Awareness about the advantages of the alternative Dispute Resolution (ADR) need to be
communicated to relevant parities who engage in construction Industry.
 Professionals involve in the industry need to be well treated and training program me with
related to international rules and regulation.
 construction professionals will more encourage to refer disputes to ADR methods.

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Bibliography

 Construction Industry under the Construction Industry Development Act (CIDA Act) No 33 of
2014
 Standared Biddding Documents/Standard Documents for Construction Contract “SBD 1-4:
CIDA-2007
 Adriaanse, J (2010) Construction Contract Law (Third Edition) Palgrave Macmillan, Chapter
16.
 Joint Contracts Tribunal Standard Building Contract 2011 Edition: With Quantities JCT 2011
SBC/Q, clause 9.

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