Injunction stopping building contractors from seizing M1 Road stirs hot debate on social media

* Every construction contract has a payment mechanism which needs to be exhausted before contractors take the law in their own hands

* Actually it does not need to get there if contracts are handled professionally with proper dispute resolution

By Duncan Mlanjira

The actions by the Malawi Building & Civil Allied Traders Association (MABCATA) on behalf of 33 construction contractors, who took over the toll gates along the Blantyre-Lilongwe M1 Road at Chingeni in Ntcheu District and Kalinyeke in Dedza District and letting motorists to pass through without paying the required toll fees, has stirred hot debate on social media platform of Facebook.

The case was brought before the High Court’s Civil Division in Lilongwe on September 20 by Roads Fund Administration (RFA) and sitting judge, Justice Kenyatta Nyirenda granted an order of injunction against MABCATA) on behalf of 33 construction contractors whether by themselves, their servants, agents or whomsoever from taking over toll gates…until the determination of the matter or until a further order of the Court.

The Judge further ordered an inter parties hearing for an order of interlocutory injunction to be heard on October 1.

The debate was stirred by Kenneth Bowazi on his Facebook page, saying: “Every construction contract has a payment mechanism — this needs to be exhausted before contractors take the law in their own hands.

“Actually it does not need to get there if contracts are handled professionally with proper dispute resolution. If RFA has not paid the contractors on time, they are technically in breach of contract.

“Normally the contractor can negotiate the terms which I think they did and were unsuccessful. They, therefore, can escalate the matter for mediation.

“If no agreement is not reached then go further for adjudication which, if it fails, they can go for arbitration before going for litigation and further for expert determination before finally go for small claims court.

“As you can see there is quite a process and its obvious payment settlement can be reached in the process before any conflicts. On the contrary if contractors go on the street to take over the toll gates, they are technically on the breach of contract as well as the contract does not allow them to do so — their actions can attract contra charges that can work against their claim.”

Chimwemwe Ajassi chipped in to ask if Bowazi’s explanation of the ideal process is applicable to Malawi, saying: “Do we have arbitration panels? Are there any used cases that this process has been followed? I am highly skeptical because in Malawi we cut corners too much.”

On his part, Rodrick Chilipunde concurred with Bowazi but alluded that “there is a problem with the arbitration process in the construction industry in Malawi”, adding that “the trained arbitrators, in most cases in Malawi are Chartered Quantity Surveyors [but] they are never used [prefering] lawyers with general LLB degree”.

“I recently participated in the arbitration proceedings of which I gave a witness statement in support of my Ministry after a contractor had sued the Ministry for breach of contract and I am yet to give another witness statement in a similar case that is pending in our courts.

“I instructed the lawyers I am working with at Ministry of Justice to argue against litigation rather to go for arbitration. The Ministry won the case.

“I recall after giving my witness statement and cross examined by the claimant’s lawyer, I gave a brief lecture in court as to how construction contracts are framed. I went on to guide the Arbitrator as to what ‘fact’ he is expected to concentrate on in making the decision — whether to dismiss the claim or to award a counter claim.

“The Ministry made accouter claim [which] was awarded. The counsels I worked with at Ministry of Justice came to my office last week and admitted that the use of lawyers, who are not specialists in construction law, is not the right way to resolving construction disputes.

“Similarly, lawyers cited similar cases in medical fields where specialist medical personnel are overlooked instead general practitioners (lawyers) are used.  They informed me that a group of lawyers in Malawi are now lobbying government to include specialists in different professionals so that they should be incorporated in arbitral cases,” argued Chilipunde.

Rodrick Lengama appreciated Chilipunde’s explaination, adding: “Construction disputes should be able to be settled way back along the way as you have said. Going for litigation should be the last resort.

“Construction contracts have enough mechanism to settle disputes before expensive and long term court processes and if it reaches the courts, then expert witness is key.”

Timothy Nundwe alluded that most contractors are dubious and “they don’t want to pursue dispute resolution process because they do realise that most of their claims are dubious” — to which Joseph Phiri replied saying “contractors born of the government of today [are] likely to suffer when government changes”.

“This mentality also affects projects which span different governments as the government of today will always favour their projects initiated by them and their contractors.”

Former Attorney General, Chikosa Silungwe chipped in to ask: “Do contracts exist between RFA and the contractors? — first trillion kwacha question. Is RFA in breach of any construction contract, if at all? — second trillion kwacha question.

“Is the route taken by the contractors for recompense a judicial or extra-judicial one? — third trillion kwacha question.” To which Bowazi agreed as being “very pertnent questions indeed”, adding: “In the past, their projects have been handled by public works and roads authority, which makes them more of the funders than parties to the contract.

“However, the news in the public domain looks like the contractors are dealing directly with Roads Fund Administration, making them party to the contract.”

Chembe Kadangwe hinted that “the amounts that are being talked about are not small claims values and I am doubtful if the process you have highlighted is applicable to these contracts.

“The remedy for late payments is interest to the contractor and this sometimes takes years. This has been entrenched in the government payment system and has been going on for decades.

“What is clear, though, is RFA is not acting in good faith. Between RFA and MERA/Treasury, they can’t just shrug their shoulders and say, well, no fuel levies, therefore no payment to contractors. There is nothing contractual about that statement.”

Bowazi replied to Kadangwe, saying the process he initially highlighted “is generic, however, the way every construction contract has a payment mechanism of some sort that includes conflict resolution.

“It would be foolish for any framers of a contract not to include this process. The so called late payment remedy is just a corrupt way of milking contractors. I wonder if it is part of the system or just corruption. Every contract has payment stages whether by milestones or interim valuation and has a time limit attached.

Kadangwe further explained to his observation that the processes have “always been the remedy such that some projects never get completed as most of the funds are paid as interest instead of actual progress of work.

“There is a need to re-look the processes and policies around funding of infrastructure developments. There seems to be so much focus on perception than reality.

Jamesi Solomoni hinted that some contractors withdrew their obligations pending  payment, some took huge loans in banks, relying  on payment that  has been due now for two years or more.

“Banks interests, staff payment etc has now caused this. Note, Ministers and in some cases the Head of State has visited these projects and claimed progress of the nation.

Washington Chimuzu commented that Bowazi’s insights on the issue “has been simmering for quite some time — maybe close to a year now if not more. All this was avoidable but as they say, look for the opportunity in the crisis. Do we need a root cause analysis or is the cause of all this obvious? Should clients also be obligated to provide proof of funding prior to award of projects?”

To which Bowazi said it is “the more reason of having a feasibility study to prove a business case for clients. It should be obvious for Clients to be able to fund a project once its set for tender, unless the unthinkable happens which calls for immediate determination of the contract out of frustration.

“In all the cases, contractors’ dues should be paid and timely and contractors should use every mechanism available in the contract to seek remedies. The law should take charge and where loop holes are obvious repealing should take place.

“It should be a deliberate serious breach of governance for a government organisation or any persons to fail to meet its timely payment obligation. And laws safeguarding this should be there.”

Pezani Nseula asked: “Can a contractor finish a project without being fully funded by the relevant authorities? Where is the breach of contract when there is no tangible evidence of completed on the ground?

“I have a case of Neno Road project in mind where billions have been funded to contractors over the years but there is nothing to show for it on the ground.

To which Chimwemwe Ajassi responded, saying: “The Malawi government initially awarded the contract to build the Ntcheu-Tsangano-Neno-Mwanza Road to China Geo Civil Engineering. This project was part of an effort to improve infrastructure in Neno District, but the contract was terminated after several challenges arose.

“The contractor failed to meet key milestones, citing issues such as currency devaluation, fuel price escalations, and delays. Despite the government’s attempts to adjust the contract and offer extensions, the contractor was unable to make significant progress, leading to a mutual agreement to terminate the contract.

“The government is now in the process of finding a new contractor to complete the road,” he said while providing a link of an article published in the Nation newspaper: [oai_citation:2,K6.7bn road in fresh glitch | Nation Online](https://mwnation.com/k6-7bn-road-in-fresh-glitch/) [oai_citation:1,Malawi Government accuses Chinese contractor of abandoning road project | Malawi 24 | Latest News from Malawi](https://malawi24.com/2023/10/11/malawi-government-accuses-chinese-contractor-of-abandoning-road-project/).

Nseula further commented that Ntcheu-Tsangano-Neno-Mwanza Road has been funded with billions of Kwachas before and asked if the government sue China Geo for abandoning the project before completion.

“This road has been budgeted for more than three times from [President Bakili] Muluzi’s era. Each time the contractor disbands after collecting the initial contractual payment. I smell a rat.”

Ajassi chipped in to say: “I would think so. The best thing is to find out are the terms and conditions of the contract. What is permissible and how risks and mitigation were crafted.

“For instance, what did the contract say about currency devaluations? What did it say about early termination? I suspect corruption is involved- how can one road take 3 administrations.

“The Neno Road project is not an isolated case — check also the Rumphi-Nyika road and several others. Now we have these local contractors demanding extra payment. We must go back to the drawing board because there is inherent corruption in the construction industry.”

Bowazi agreed to Ajassi observations, saying: “The cited example show lack professionalism by contractors. In most cases contractors submit programmes that require continuous monitoring and non-performance should be able to be detected early in the process of progress.

“Taking three years to act raises a lot questions — the question of corruption cannot be overruled”, to which Profigo Victor said: “Most contracts include clauses for loss/expense and any delayed payments could attract interests.

“All these require proper documentation to be recovered. I doubt if these contractors are following what is in the conditions of contract. Contracts are straight forward where payments are concerned and that includes how delayed payments should be handled.”

Mike Kachere summed it up to say: “Just keep your eyes open, people. Let the government not concede because if it does, that will answer questions that are not here yet. Weird things have happened before.”