Introduction

The Agreement and Conditions of Contract for Building Works (the JBC Contract) is Kenya’s predominant form of contract for private construction projects. It was published by the Joint Building Council in Kenya with the sanction of the Architectural Association of Kenya and the Kenya Association of Building and Civil Engineering Contractors.

Conversely, the International Federation of Consulting Engineers (FIDIC) Contracts have been developed as the international standard for the construction industry. They are recognised globally as a suite of standard form contracts for international construction and engineering projects.

Both regimes provide structured dispute resolution mechanisms aimed at ensuring efficiency, fairness, and continuity of project de livery. This article critically examines those mechanisms, contrasts their practical application, and highlights strategic approaches contractors may employ to recover outstanding sums and protect contractual rights.

Administration and Structure

JBC Contracts are administered by the Architect and Quantity Surveyor, who are appointed by the Employer. The contract clearly outlines their roles, powers, and duties. FIDIC Contracts, on the other hand, are administered by the Engineer, who is appointed by the Employer (under the Red and Yellow Books). Under FIDIC Contracts, the Red Book provides the conditions of contract for the construction of buildings and engineering works where the detailed design is done by the Employer (or his representative). It is not suitable if most of the works are Contractor-designed. The Yellow Book, on the other hand, lays out the conditions of contract for plant and design build for electrical and mechanical plant and for building and engineering works where the design is done by, or on behalf of, the Contractor.

In contrast, the Silver Book is only suitable for use with experienced Contractors who are familiar with sophisticated risk management techniques. It is thus suitable for the provision on a turn key basis of a process or power plant, of a factory or similar facility, or of an infrastructure project, or of other development where:

• A high degree of certainty of final price and time is required; and
• the Contractor takes total responsibility for the design and execution of the project with little involvement of the Employer.

Under the usual arrangements for turnkey projects, the Contractor carries out all the Engineering, Procurement and Construction (EPC), providing a fully equipped facility, ready for operation (at the turn of the key). In terms of administration of the Contract, there is no Engineer under the Silver Book, and the Employer directly administers the Contract. Both FIDIC and JBC Contracts can be amended to meet the tailored needs of the project.

Settlement of Disputes Under JBC

Settlement of disputes under the JBC is regulated under Clause 45 (the notice requirement). Where a dispute arises between the Employer or the Architect on his behalf and the Contractor, either during the progress of Works or after the completion of the Works, such dispute shall be notified in writing by either party with a request to submit it to arbitration and to concur in the appointment of an Arbitrator within thirty (30) days of the notice.

The dispute shall be referred to the arbitration, and the final decision on the appointment of the Arbitrator is to be made by the parties. If parties fail to agree on an Arbitrator, one shall be appointed by the Chair or Vice-Chair of the Architectural Association of Kenya or the Chartered Institute of Arbitrators (Kenya Branch). Arbitration proceedings must be preceded by a notice issued within ninety (90) days of the occurrence or discovery of the matter or issue giving rise to the dispute.

Matters that can be referred to arbitration before practical completion include the appointment of a replacement Architect, Quantity Surveyor or Engineer upon the said persons ceasing to act. Other matters can only be referred to arbitration after practical completion/abandonment of works/termination unless the Employer and Contractor agree otherwise in writing.

Arbitration provides a viable alternative to litigation, as an arbitral award is final and binding. Notwithstanding the foregoing, Clause 45.4 compels parties to first attempt to settle the matter amicably before referring it to arbitration. Disputing parties may attempt to resolve issues amicably, either independently or with the aid of third parties. Negotiation involves direct, informal, and flexible dialogue between parties, aimed at reaching a mutually acceptable solution.

Mediation, by contrast, engages a neutral third-party mediator to facilitate communication and guide parties toward a voluntary settlement. While the mediator does not impose a decision, an executed mediation agreement presented to the Court for adoption becomes legally enforceable. Alternative Dispute Resolution (ADR) is increasingly favored over litigation for being cost-effective, private, and less adversarial, fostering long-term relationships between parties.

Settlement of Disputes Under FIDIC

Under FIDIC Contracts, the dispute resolution process is substantially the same under the Red, Yellow, and Silver Books. The only difference arises from the fact that:

• The Red Book provides for a standing Dispute Adjudication Board (DAB), whereas under the Yellow and Silver Books, it is an ad hoc DAB (on a need basis); and
• There is no Engineer’s determination under the Silver Book because this contract is administered by the Employer directly. What we have is the Employer’s determinations under Clause 3.5.

Clause 20.4 onwards provides for a multi-tiered dispute resolution process which comprises of:

i. Procedure before the DAB

Members of the DAB must be mutually agreed upon by the parties within twenty eight (28) days from the date the Contract comes into force. This also includes provision for appointing DAB members where parties fail to agree on their initial appointment, replacing DAB members, terminating the appointment of DAB members and remunerating DAB members.

• Either party may refer a dispute to the DAB for its decision, including any dispute as to any certificate, determination, instruction, opinion or valuation of the Engineer (or Employer under the Silver Book).
• The notice of dispute must be in writing and provided to the other Party and the Engineer.
• The DAB (acting as experts and not Arbitrators) is required to give notice of its decision to the parties, including reasons supporting the decision, no later than the 56th day after it received such reference.
• Following the DAB decision, if either Party is dissatisfied with the decision, it may give a notice of dissatisfaction (NOD) within twenty eight (28) days of its receipt.
• Similarly, if the DAB fails to give a decision within the 56-day period, either Party (on or before the 28th day after the day of receipt of the notice of the decision) may give a NOD. The notice shall set out the matters in dispute and reasons for dissatisfaction.
• The parties may then refer the dispute to amicable settlement and ultimately to arbitration for “final” determination.
• Parties may contractually incorporate expert determination during this period to resolve technical, financial or valuation disputes before escalating to formal arbitration.
• If DAB gives a notice of its decision and no NOD has been given by either Party during the 28-day period, then the DAB’s decision shall become final and binding upon the Employer and Contractor.

ii. Enforcing a DAB decision (Clause 20.7)

• Where a party fails to comply with a DAB decision that is final and binding, clause 20.7 expressly allows the other Party to refer this failure directly to arbitration. It does not have to go back to the DAB or through an amicable settlement process.

iii. Amicable Settlement (Clause 20.5)

• Parties are required to attempt an amicable settlement of any dispute before commencing arbitration.
• This, however, only applies where the dispute has been referred to the DAB and/or where either party has given a NOD.
• Unless parties otherwise agree, arbitration may be commenced on or after the 56th day after the day on which the NOD was given – even if no attempt at an amicable settlement was made.

iv. Arbitration

• All 3 books provide that the disputes will be finally determined by arbitration.
• Clause 20.6 provides that disputes will be finally settled under the Rules, institution, and language set out in the Appendix to the Tender.
• Such disputes include ones in respect of which the decision (if any) of the DAB has not become final or binding, settlement has not been reached, and/or where the DAB’s appointment expires

Conclusion

Incorporating ADR clauses in contracts, leveraging expert reconciliation for technical disputes, and engaging with government entities through structured alternative dispute resolution mechanisms protects Contractors’ financial interests and secures recoveries for work done while maintaining long-term relationships with the Employer.