The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemdia.net

ALL foreign direct investment (FDI) projects will need an arbitration clause within their Heads of Agreement (HOA) under draft legislation being circulated for private sector feedback.

Bahamian construction industry professionals said the Construction Adjudication Bill embraces a “pay now, argue later” concept to dispute resolution that should significantly benefit the sector and its clients.

Ray McKenzie, president and principal of the Caribbean Civil Group (CCG), who was a panellist at the seventh annual Arbitration and Investment Summit, told Tribune Business: “The Construction Adjudication Bill draft being circulated right now essentially is a very beneficial piece of legislation that can hopefully be enacted very soon.

“Construction is a very high-risk industry, and the bill allows the mechanism for the owners and contractors to resolve disputes. Construction is an industry that invariably has disputes. Some can be resolved amicably and some can’t. When it can’t, it goes to an ADR (alternative dispute resolution) process like adjudication.

“This is going to be critical for business persons, such as contractors, operating in a very high-risk industry where cash flow is very important. The ideology behind the bill is to really pay now and argue later, with the appreciation that cash flow is critical to a contractor, is critical to the progression of a project.”

Mr McKenzie said one of the bill’s key provisions is for an ADR clause to be a component in all Heads of Agreements negotiated by the government for foreign direct investment projects. “Any FDI project that has a Heads of Agreement, we are proposing that adjudication and arbitration be a component of the HOA,” he added.

“The bill itself is very landmark, as there is no other regional country that has a Construction Adjudication Bill, so The Bahamas is ahead of the curve in that regard. Other features of the bill that are very important are timelines for which a dispute have to be resolved. Those timelines are very stringent.”

Mr McKenzie said the bill would work “hand in glove” with the Construction Contractors Act. “As part of any [contracors] bill ought to be an adjudication and arbitration component. It dove tails very nicely with the Contractors Act,” he added.