As the complexities of modern infrastructure and projects continue to grow, so do the potential disputes arising from them. In the construction and engineering domain, where complex projects intertwine with complicated contractual agreements, disputes become inevitable. Recognizing the need for specialized dispute resolution mechanisms to cater to such disputes, the Pakistan Engineering Council (PEC) has embarked on a transformative journey by revamping its Arbitration and Conciliation Committee and upgrading into an Alternate Dispute Resolution (ADR) Centre as per global best practices. This upgrade and the inception of PEC’s ADR Centre is a testament to Pakistan’s readiness to elevate its profile on the international stage while fostering a culture of excellence and empowerment within the local engineering community.
As the regulatory authority for the construction and engineering industry in Pakistan, PEC holds considerable sway on rules, guidelines, and ethical behavior for engineers, contractors, and consultants. PEC also has a significant authority in developing policy and regulatory frameworks and managing government, business, and academic collaboration – thereby impacting the resolution of construction and engineering disputes.
The development of the PEC ADR Centre is timely and immensely beneficial for the construction industry and the nation as a whole, signaling a paradigm shift in Pakistan’s approach to resolving engineering disputes. This initiative highlights the acknowledgment of the regulator’s approach to introducing global best practices for construction disputes, which often demand a blend of technical expertise and legal acumen for satisfactory resolution. The knot tied between engineering, construction, and law converges to create a robust framework for dispute resolution, fostering a climate of expeditious dispute resolution and enhanced project delivery in Pakistan’s construction industry.
Construction and engineering projects are governed by precise technical specifications and industrial standards. These projects involve complex contractual agreements with multiple parties i.e. owners, contractors, subcontractors, consultants, etc, displaying multifaceted contractual arrangements, and stakeholder dynamics. The Pakistan Construction Disputes Report 2022 (PCDR), an independent survey and analysis of dispute resolution in Pakistan’s construction industry revealed that the most common disputes found in Pakistan’s construction industry are payment delay, extension of time and behavior, and competency of people in addition to ambiguities in such contracts leading to an array of disagreements over adherence to design requirements, breach of contract, change of scope, payment disputes, non-compliance of regulatory standards, prevalent laws, the quality of work done or materials used, health and safety protocols, or sustainable development goals.
In the past litigation was considered as a promising means of dispute resolution for complex construction and engineering disputes, however, this belief has eroded with time owing to its procedural inefficiencies, extensive delays, and blockage of cash flow in the projects. ADR methods such as amicable settlement, negotiation, mediation, and arbitration are presented as the favorable alternative. This transition has been driven by several factors, including the level of detail in construction disputes, the desire for more efficient and cost-effective resolution processes, and the need for specialized expertise in technical matters. As Pakistan enters a new era of economic growth and international trade expands, construction projects are becoming more intricate and interdisciplinary, and the demand for ADR mechanisms tailored to the specific needs of the engineering industry continues to grow.
Catering to this requirement, the PEC ADR Centre marks a significant milestone in the evolution of dispute resolution within the construction sector as the country’s inaugural construction and engineering-specialized ADR Centre. By launching this ground-breaking initiative, the PEC is establishing new standards of care for efficient and efficacious resolution of construction disputes by adhering to international standards of best practice, streamlining the dispute resolution process, leveraging technical expertise, and positioning the interests of the projects at foremost. The establishment of the PEC’s ADR Centre is expected to alleviate the burden of the judicial system, channeling the abundance of construction and engineering disputes towards the specialized resolution of PEC’s ADR Centre instead of the courts.
In 2023, PEC and the Chartered Institute of Arbitrators (Ciarb) Pakistan Branch entered into a Memorandum of Understanding, which has allowed the Ciarb Pakistan Branch to leverage its role as the pioneer of global best practices in ADR through the provision of technical infrastructure and capacity building to support PEC’s ADR Centre. For a brief background on Ciarb, is a UK-based international center of excellence for alternative dispute resolution (ADR). Founded in 1915 and granted the Royal Charter in 1979, it promotes ADR globally. With over 21,500 members across more than 150 countries, including Pakistan as their 42nd branch, Ciarb is a testament to the growing importance of ADR in today’s world.
Phase I of the collaboration between PEC and the Ciarb Pakistan Branch consisted of the provision of Arbitration Rules to construct the procedural framework for disputes referred to PEC ADR Centre. After the successful completion of the procedural framework via arbitration rules, the collaboration has moved on to Phase II, i.e. the capacity building to populate the PEC ADR Centre with practitioners upholding standards of utmost excellence as Fellows of the Chartered Institute, reflecting the highest grade of expertise. Phase III of this collaboration entails the launch of the ADR Centre and promotion as a leading institution for the resolution of construction and engineering disputes.
The establishment of the PEC ADR Centre unfolds on an ideal timeline as Pakistan is soon to evolve its statutory framework for arbitration through a new Arbitration Act 2024, expected to enacted soon. The coincidental yet strategic alignment of initiatives is aimed at enhancing the dispute resolution landscape in the country. The PEC ADR Centre stands to benefit significantly from the new Arbitration Act as this Act is expected to modernize and streamline arbitration procedures, making them more efficient and effective. The Act’s provisions could potentially strengthen the legal and procedural framework within which the PEC ADR Centre operates, thereby enhancing its capacity to handle complex disputes. Furthermore, the Act could provide greater legal certainty and predictability, which are crucial for the successful resolution of disputes through ADR methods. The dual effect of the Arbitration Act and PEC ADR Centre is tailored to meet the evolving needs of the engineering industry and beyond. This alignment could not only boost the effectiveness of dispute resolution but also contribute to the broader goal of fostering economic growth and development in Pakistan.
The innovative union of engineering, construction, and law through the PEC ADR Centre ushers Pakistan towards a new era of specialized dispute resolution – an era receptive to the technical nuances of construction disputes and their effective and efficacious resolution.
Incorporating mediation as a pre-litigation and pre-arbitration through multi-tier dispute resolution clauses into the PEC ADR Centre’s offerings can significantly enhance the expeditious resolution of disputes as an effective tool for early dispute resolution. Mediation as a pre-litigation and pre-arbitration feature can act as a sieve to help filter out disputes that can be resolved earlier, thereby allowing arbitration and litigation to focus on more complex and contentious issues. This efficient allocation of disputes can further expedite the overall dispute-resolution process. This also aligns with the global trend towards multi-tiered dispute resolution strategies and reinforces their commitment to providing tailored dispute resolution services.
From a futuristic perspective, the PEC ADR Centre and its collaboration with the Ciarb Pakistan Branch underscores the country’s commitment to building its muscle in dispute resolution and also amplifying Pakistan’s presence in international arbitration circles. It represents an important step towards elevating Pakistan’s profile in the international arena as an emerging centre for dispute resolution, adhering to a culture of global excellence through Ciarb’s technical infrastructure and capacity-building support.
Personally, as a legal practitioner with a background in civil engineering, the union between the two distinct fields of engineering with law is fascinating. This intersection has the potential to revolutionize construction and engineering dispute resolution in Pakistan, not only streamlining the resolution process but also ensuring that the technical nuances of engineering disputes are adequately addressed. As Pakistan navigates its future challenges and opportunities in the legal domain, the establishment of the PEC ADR Centre serves to provide informed resolutions in the engineering sector, delivering the best of both worlds.
