Introduction

In engineering terms construction is the process of putting together different elements, using a detailed
design and a plan, to create a structure for a certain location. Mainly it is associated with large structures
like houses, railways, harbors and powerplants. 1 Construction industry is so huge, its contributions
towards the global GDP revolves around one-tenth of the total amount. And around 7% of the total
employment is provided through the construction industry. Over these years it has become so vast and
more into technology, that the industry has consumed over fifty percent of the world resources and two
fifth of the total energy. Sri Lanka is no alien to the construction industry, especially after 2009 when the
civil war ended lot of investments related to construction have been flowing into the country. The
governments took initiative in trying to build the infrastructure of the country suitable to the modern
world. Projects such as the Central Expressway, Keels Waterfront Project, Capital Heights by access
Engineering, Shangri-La, Lotus Tower, Mattala Airport and Hambanthota Harbor are special projects that
the government got involved. For many years Sri Lanka did not have a specific Act which would govern
the legal matters and regulations related to constructions. Which is why in 2014, the Construction
Industrial Development Authority (CIDA) Act No 33 was established by the parliament. The sole aim of
the Act was to regulate and standardize the development activities of the construction industry. Due to the
Act, the Institute of Construction, Training and Development which was incorporated by Act No.49 of
1957 was rescinded, and Construction Industry Development Authority (CIDA) became the legal
successor. The objective of the Authority is to control, manage and regulate the construction industry of
Sri Lanka. The Act No 33 focus on 4 major areas which are, establishment of the construction industry
development fund, settlement of disputes, quality of the professionals, manufacturers, and suppliers
related to the industry and most of all safety of the public.

Construction Disputes
1
'World Construction Industry' (Economywatch, 2020) <https://www.economywatch.com/world-
industries/construction/world.html> accessed 19 October 2020.
Most of construction projects are of long duration and high value, and foreseeing and planning for every
eventuality may be impossible. 2 It is the contractor and the employer who are at a high risk when it comes
to the construction industry. Many studies have discovered that risks, uncertainties, inadequate contract
documentation, and behavioral factors are notably sources of construction disputes. 3 When these disputes
are not resolved the projects tend to lag, tension increases and it even damages long term business
relationships. There are lot of cases regarding construction disputes, the state of Kerala V Joseph
Auchilose, the court held that the court procedure is time consuming, complex, and expensive.
The employer obligations according to the CIDA/SBD/02 is that he has to pay the Contractor for the work
done, he should take responsibility to reimburse for the loss and expenditures caused to the contractor. It
is true that it is the responsibility of the contractor to carry out the project within the contract period but
also according to the CIDA it is the obligation of the employer to cooperate to the contractor to do his
obligation. It is the duty of the contractor under CIDA/SBD/02 sub clause 9.1 to complete the
construction within the accepted time. The contractor should also take care of the standard of the work,
and also should be aware whether the building falls under necessary regulations and health and safety
standards adopted by the Act. Similar to any other partnership or contract, disputes and disagreements do
occur in the construction industry. This happens when either the contractor or the employer violates any
part of the contract or else fail to perform according to his obligations. In a construction related contract,
the obligations and the standards which must be followed will be stated. These disputes cause to stop the
projects temporarily or sometimes permanently because both parties will face a number of issues.
Generally, in order to solve these types of disputes Alternative Dispute Resolution methods will be
adopted. ADR methods practiced in Sri Lanka are Mediation, Conciliation and Arbitration. If none of
these methods seem to work, the parties are free to go into litigation.
Mediation is a structure, interactive process where an impartial third party assists in a discussion between
the parties in order to arrive at a negotiation. Conciliation is a method where a conciliator meets both
parties separately and helps them to arrive at an agreement. Arbitration is an important procedure because
a third party would hear to the dispute and arrive at a binding decision. Arbitration clause must be implied
in the contract in order for the parties to seek assistance from an arbitrator. Normally decision given by an
arbitrator are not usually challenged in court.

Legal Provisions

2
'Ieeexplore Digital Library' (2010)
3
Sai On Cheung and Karen Hoi Yan Pang, 'Anatomy Of Construction Disputes' (2013) 139 Journal of
Construction Engineering and Management.
According to the Construction Industry Development Act, No. 33 of 2014 Part IX, it states the settlement
of disputes under three sections. Settlement of disputes through conciliation or mediation by the Authority
(Section 50), Right to refer for Adjudication (Section 51) and Register of Adjudicators (Section 52). It is
the responsibility of the construction industries to adopt a proper ADR method, because under section 50
it states “If the parties desire any dispute relating to a contract for construction works, if it is not provided
for in the contract, may be settled through conciliation or mediation by the authority”, which only gives
the opportunity for the parties to seek resolution through mediation or conciliation. But it will not allow
resolution through Arbitration because Arbitration Act No. 11 of 1995 Section 3 states “An arbitration
agreement may be in the form of an arbitration clause in a contract or in the form of a separate
agreement.”
When a dispute cannot be settled through either conciliation or mediation, the parties can go for
adjudication, this is mentioned in Section 50 and Section 51 4. The provisions describe the procedure for
Adjudication and for registration and renewal of the adjudicators.
The Construction Industry Development Act, No. 33 of 2014 under part X, it also mentions about the
Appeals board, Establishment of appeals board (Section 53) 5and Hearing and determination of Appeals
(Section 54)6. The Appeals board consist of not more than seven members appointed by the minster
himself under recommendations of the authority, and each of these members can hold office for three
years and can also be reappointed. The Appeals board was mainly established due to the fact that
litigation consumes a lot of time and also the people who hear the problem will not be an expert in
construction industry. But in the Appeals board, the minister has appointed a technical person who has
some knowledge in construction and most importantly the board tend to give a solution within two to
three months.
According to the International Federation of Consulting Engineers (FIDIC), a dispute shall be adjudicated
by a Dispute Adjudication Board (DAB) with regard to sub clause 20.2, 20.3, and 20.4. Clause 20.4 states
that any dispute may be referred to the DAB at any time. However, any such referral must be copied to
the other party and the engineer and both parties make available all relevant information in support of
their cases. Unless a notice of dissatisfaction is issued within 28 days, the decision would be considered
final.7

4
CIDA Act, S 50
5
CIDA Act, S 53
6
CIDA Act, S 51
7
(Fidic.org, 2020) <https://fidic.org/sites/default/files/24%20CLAUSE%2020,%20DISPUTE%20RESOLUTION.pdf>
accessed 19 October 2020.
Recommendations and Conclusion
CIDA act is doing a tremendous part in regulating the construction industry in Sri Lanka but it does not
mean that it should not undergo further developments. The are fund issues in the country therefore the
government must increase their funding towards the construction sector. World-Wide construction
industry should be considered when implementing the act because those changes are required for the
future. Some specific provisions must be more detailed, so this could be done with the use of some
technical involvement and also some of these provisions does not even seem to fit to the present scenario.
Employers and Contractors should be encouraged to use the ADR methods to resolve disputes rather than
litigation. A specific time framework should be set to settle dispute, if not, long period of time will be
consumed.
Even though the ICTAD and the Standard Forms (SBD, FIDIC) was available for 2014, it could not
control all the issues related to construction in the country. The Construction Industry Development Act,
No. 33 of 2014 is the first ever complete act formed by the parliament related to construction. The most
important aspect of the CIDA is that it was able to reduce disputes related to construction in Sri Lanka.
References
 'World Construction Industry' (Economywatch, 2020) <https://www.economywatch.com/world-
industries/construction/world.html> accessed 19 October 2020.
 'Ieeexplore Digital Library' (2010)
 Sai On Cheung and Karen Hoi Yan Pang, 'Anatomy Of Construction Disputes' (2013) 139 Journal
of Construction Engineering and Management.
 CIDA Act, S 50
 CIDA Act, S 51
 CIDA Act, S 53
 (Fidic.org, 2020) <https://fidic.org/sites/default/files/24%20CLAUSE%2020,%20DISPUTE
%20RESOLUTION.pdf> accessed 19 October 2020.
 Lanka, P. o (16 October 2014). Construction Industry Development Act, No. 33 of 2014