Construction disputes rarely arrive suddenly. They build from instructed changes, late information, delayed payments and programme pressure that were each manageable when they happened. Arbitration is one way to resolve the resulting claims, but the quality of the outcome usually depends on the quality of the record assembled before the dispute was referred. This guide explains the practical questions that employers, contractors, consultants and developers should resolve early.
Quick answer: read the dispute clause before anything else. Preserve the contract, programme, site records, certificates, notices and contemporaneous correspondence, and identify whether the contract requires a dispute board, negotiation, adjudication or mediation step before arbitration. Kenyan arbitration law may be available once the contractual preconditions are met, but the facts and the clause determine the sequence.
Start with the dispute clause
A construction arbitration is only as sound as the agreement that permits it. The governing contract and its dispute resolution clause come first. The clause may require a reference to an engineer or architect for a decision, a period of negotiation, a dispute board, or a mediation before arbitration can begin. It may also set the seat, the language, the number of arbitrators, the method of appointment and the rules that apply.
Read the clause with the rest of the contract, including any particular conditions, appendices and incorporated documents. A clause that is internally inconsistent, or that names no institution and no seat, can be difficult to operate. Where the clause is unclear, check the position before a notice of arbitration is served, because a wrong first step can be expensive to correct.
What to preserve before the dispute escalates
Delay and valuation issues often turn on records created during the project, long before anyone contemplated arbitration. Preserve the building contract, the programme and its updates, the site diary, valuations, certificates, notices and correspondence. Keep originals, record when documents were received, and avoid altering or selectively collecting records after the dispute begins.
A short chronology identifying the issue, the relevant clause, the key events and the remedy sought helps advisers and decision makers assess the next step. The chronology should be factual and sourced, not argumentative. It is also worth recording what the other side has said and when, because silence and delay can matter under the contract as much as an express refusal.
Contractual steps before arbitration
Many construction contracts make arbitration a last step. If the contract requires a decision by the engineer, a period of negotiation or a mediation, those steps should be completed or the position explained. A party that begins arbitration without meeting a required precondition may face an objection at the outset, and the objection can consume time and cost before the merits are reached.
Where urgent relief is needed, the contract and the Arbitration Act 1995 may allow a party to apply to court for interim measures or to preserve assets and evidence. Urgency does not remove the need to read the clause. The right question is what the contract permits now, and what can safely wait for the tribunal.
Delay, payment and variation claims in arbitration
Construction arbitrations commonly combine several disputes: extensions of time, prolongation costs, variations, loss and expense, defects and payment for work done. Each needs its own evidential chain. A delay claim should connect the event to the programme and to completion. A variation claim should connect the instruction to the valuation. A payment claim should identify the certificate or valuation relied on and the amount outstanding.
Expert evidence is often useful for programme and quantum questions, but experts cannot repair a weak factual record. The tribunal normally decides on the evidence the parties provide, so the contemporaneous documents matter more than the length of the final submission. Separate undisputed amounts from disputed ones and make the relief sought in the arbitration clear.
Arbitration can resolve a dispute, but it does not always preserve a project relationship or produce a commercial result that either party wants. Negotiation or mediation may resolve part of the dispute without losing necessary rights, provided any limitation period or contractual time bar is watched. A mediation can also narrow the issues that an arbitration needs to address, which may reduce cost and time.
Use the contractual route where one exists. If the contract requires a dispute board or adjudication step, complete it or obtain advice on why it need not apply. If the parties agree to mediate, record the agreement in writing, including who will attend with authority to settle and how the mediation interacts with any pending arbitration.
Costs, timing and tribunal selection
Cost in construction arbitration is driven by the size of the claims, the number of parties, the volume of documents, the need for experts and the length of the hearing. Choices made at the start, including the seat, the rules, the number of arbitrators and the language, shape the cost and timetable. Institutional arbitration provides an administrative framework; ad hoc arbitration relies more heavily on the clause and the cooperation of the parties.
Timing is rarely determined by the law alone. The availability of witnesses, the completion of expert reports, the readiness of documents and the approach of the other side all affect the timetable. A realistic schedule set with the tribunal is usually more useful than a compressed timetable that fails.
When to take advice
Take advice before serving a notice of arbitration if the contract has preconditions, the dispute involves public procurement, the other party is insolvent or the claim may be time-barred. Our arbitration and ADR practice advises on construction disputes from the pre-dispute stage through to enforcement. Related guides cover the commercial arbitration process in Kenya and preparing a variation claim with proper notices and records. For a confidential first assessment, contact the firm.
A pre-arbitration checklist
- Read the dispute clause, including any conditions precedent, seat, rules and appointment method.
- Preserve the contract, programme, site records, certificates, notices and correspondence in original form.
- Prepare a sourced chronology of events, documents and communications.
- Complete or address any required negotiation, dispute board, adjudication or mediation step.
- Consider whether urgent relief is needed to preserve assets or evidence.
- Separate undisputed amounts from disputed claims and quantify the relief sought.
- Check limitation, contractual time bars and the position of any co-party or guarantor.
- Obtain advice before serving the notice of arbitration.
Primary sources
- Arbitration Act 1995, Kenya Law.
- Nairobi Centre for International Arbitration Act 2013, Kenya Law.
- National Construction Authority, for construction sector guidance and the register of contractors.
This article is general information, not legal advice.