Surprisingly, the dispute results obtained from various regions of Pakistan are similar to the disputes found globally.
Although the resolution of disputes through ADR is taking place in Pakistan, the lack of appropriate laws supporting ADR, and other means of dispute resolution, are still lacking.
The stakeholders in the construction industry have little or no knowledge about dispute avoidance mechanisms and collaborative working methods, and party-to-party negotiations are the most reliable method of dispute resolution, especially within the public sector.
- The most common disputes found in Pakistan’s construction industry are ‘payment delay’, ‘extension of time’ and ‘behaviour and competency of people’.
- The majority of disputes take under one year to resolve; however few disputes take up to four years for resolution.
We have found that the International Chamber of Commerce (ICC) also sees cases arising from a wide range of industry sectors, with the construction/engineering and energy sectors usually generating the largest numbers of disputes. Together, these two sectors accounted for approximately 38% of all the ICC’s cases in 2020. Other sectors which include health/pharmaceutical, general trade and distribution, industrial equipment and services, and financing and insurance represent 5-7% of the cases.
Guest commentary by
Dr. Javed Uppal President,
Institution of Engineers Pakistan (IEP)
The Institution of Engineers Pakistan is a premier body of engineers with members spread across the country with local centres in all major cities and headquarters in Lahore. It is a non-profit, non-commercial independent organisation serving the purpose of procuring the latest know-how, disbursing this to its engineers, and preparing them to meet the challenges that the country faces today. The Institution has agreements with several worldrenowned parallel bodies for this purpose.
Construction dispute resolution, ways of conciliation and arbitration are established professional practice these days, especially, when international collaboration is available.
After Pakistan’s First Construction Dispute Report, we recently conducted three dispute resolution workshops which were participated by many engineers from around the country: senior and middle management levels, young professionals and students, with international experts from MKC, Currie & Brown, and the Chartered Institute of Arbitrators.
The brainstorming that arose from these workshops has given weight to this Guest Commentary and its findings, namely: our experiences on dispute resolution methods in Pakistan are glaringly mishandled causing a huge loss of public funds. Although in theory, the relevant clauses of many contracts are mainly derived from the Pakistan Engineering Council’s Rules of Conciliation and Arbitration, in practice, detailed SOPs are not present in many departments or are not given due attention to draw a clear line of action.
The work that is presently being done in dispute avoidance and risk management is inadequate and active pursuance through joint efforts among institutions such as the Institution of Engineers Pakistan and CIArb is needed to accelerate the matter. In addition to this, we consider that the construction industry is inadequately equipped with ADR tools and the awareness of ADR requires greater attention. This is also confirmed by the report. The report also shows ADR success in Pakistan is only 49%, whereas the global norms are over 90%. A leapfrog jump is possible through training, certification, and monitoring by a centralised authority.
The report shows that only 3% of survey respondents said that their projects did not lead to a dispute, while 97% of projects had one or more disputes. This situation can be reversed by working on wartime footings, assembling, and utilising adequate resources, large proportions of which are already being lost at public departments and contractors.
The legislature’s support towards ADR mechanisms is divided and we believe, that currently, enough work is not being done to bridge such division which can create the legal basis for reliance on ADR processes.