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Tripartite Arbitration In Construction Disputes
December 2005 | Litigation & Arbitration | Litigation Brief

Most contracts between employers and professionals involved in construction projects in Singapore contain an arbitration clause. Arbitration is frequently preferred to litigation as it is seen as a more private means of resolving disputes and allows the parties to choose arbitrators with the relevant expertise to preside over their dispute.

The Singapore Institute of Architects' standard-form contract for employers and architects, the Conditions of Appointment & Architect's Services & Modes of Payment, is in common use. The institute's Articles and Conditions of Building Contract is the most commonly used construction contract between employers and contractors in Singapore. Both contracts contain an arbitration clause. However, the arbitration clauses in these contracts make no provision for tripartite arbitration involving the employer, the architect and the contractor. In certain circumstances this effectively excludes the possibility of arbitration.

When there are problems in a construction project, it is not uncommon for an employer to take issue with the work of both the architect and the contractor. An employer may consider that defects in the project are attributable to two or more factors, including:

• poor design
• poor workmanship and
• inadequate supervision of the works.

In most cases, the architect is responsible for the design and supervision of the works, whereas the contractor is responsible for the standard of workmanship.

The employer cannot begin a single arbitration procedure with both architect and contractor without an agreement from all parties, as the arbitration clauses of the contracts do not provide for tripartite arbitration. If there is no general agreement, the employer will have no recourse other than to sue both the architect and the contractor. It would be unwise to commence separate arbitrations against the architect and the contractor, as these arbitrations would, in most cases, involve the same question (eg, whether the works are defective). Separate arbitration hearings by different tribunals would open up the possibility of two inconsistent findings on the same issue. The employer would also incur greater costs.

A landmark case before the English Court of Appeal involved a similar problem. In Taunton-Collins v Cromie [1964] 2 All ER 332, the sued the architect, who partly blamed the contractor in his defence. The employer joined the contractor as a co-defendant. The contractor applied for a stay of proceedings in favour of arbitration, as there was an arbitration clause in the contract between the employer and the contractor. The English Court of Appeal held that it would be undesirable to have two proceedings before two different tribunals which might reach inconsistent findings. It therefore dismissed the contractor's application.

The judge stated that the most sensible solution would be to allow tripartite arbitration. English legislation has since removed the problem. Under the Arbitration Act 1996, an English court no longer has discretion when it comes to enforcing an arbitration agreement.

In Singapore, Section 6(2) of the International Arbitration Act (Cap. 143A) sets out a similar position. This could encourage employers to incorporate tripartite arbitration clauses into their contracts. However, under Section 6 of the Arbitration Act (Cap. 10), which governs most local arbitrations, the granting of a stay of court proceedings in favour of arbitration is a matter for the court's discretion.

It may therefore be timely for the Singapore Institute of Architects to revise its standard-form contracts to include tripartite arbitrations involving contractors and architects. These contracts already envisage tripartite arbitrations between an employer, a contractor and a subcontractor in Section 37(8). It would be in keeping with the spirit of the arbitration clauses to amend the contracts between employer and architect and employer and contractor to allow for arbitration between the three parties.