It
is commonly perceived that Dispute Boards serve as the impetus for reducing
a contractor’s bid pricing.
•
Dispute
Boards provide economically efficient
resolution of disputes on construction and infrastructure projects without
any delay or with much less costs than disputes
•
Many
contracts will specify that the Dispute Board must give its decision or
recommendation within a specified timescale (84 days in the latest FIDIC Red
Book), which will be far faster than
one could expect to obtain a decision from arbitration or litigation
•
In
a Standing Dispute Board, the amount to be paid to the Board (usually the 0.01
- 0.02% of the project value[1]) is for all of the fees for the life of the
project no matter how many disputes
come before the Board
•
An ad hoc Dispute Board is clearly a cost saving with
only appointing a Dispute Board when it is required to resolve a particular
dispute. However, an
ad-hoc board will not have the background knowledge of the project that a
standing board would have, and therefore will
likely take longer to consider a dispute than a standing board would
•
Whilst
the Dispute Board may request further materials, there are typically no requirements for disclosure of documentary evidence
beyond the need, which also saves significant costs
•
To
summarise the affect of the DB boards on overall costs of the project, one must
consider pros and cons in light of what has already been discussed:
•
Indeed,
The DB provides the parties with a
dispute resolution process that is relatively
speedy and less costly than court or arbitration proceedings,
•
BUT such proceedings may be avoided
only temporarily if a party is dissatisfied with the decision of the adjudication
panel
•
Panels
are commonly required to provide decisions within a relatively short period of time (typically within
three months of a referral), which reduces overall costs
•
BUT
this means the panel may sometimes not be able to
conduct an in-depth and rigorous analysis of all the relevant (factual and
legal) issues
•
The
Board members have necessary skills and technical expertise in the subject
matter,
•
BUT sometimes such DB decisions may
be more ‘technical’ than ‘judicial’
in nature. That may not be appropriate for the final determination of the dispute
•
The
construction disputes might involve multiple parties. In the UK the situation
is more complex because of the parties' statutory right to adjudicate
•
However,
unless parties
specifically agree, the panel usually does not have the power to require disputes arising under different
contracts to be joined or consolidated
with disputes arising under the same contract in question and same parties
involved.
• The DB is less formal procedure and the Board members the wide freedom generally given to the
panel to act as experts and investigate the facts
• However, panel's proceedings may prove difficult to control. Analysis of
English case law[1]
suggests that enforcement of a Dispute Board's decision may be refused if there
has been a lack of fairness in the
procedures adopted
Conclusion
• To sum up, the Dispute Boards review or adjudication is an appropriate method as a conflict control and prevention mechanism in the contract to promote collaboration between business partners so they can solve problems early and avoid more costly end-point conflict resolution processes
[1] RSL (South West) Ltd v.
Stansell Ltd [2003] EWHC 1390 (assistance was sought from a programming
specialist, but the parties are not given an opportunity to comment on the
final report prepared by him) ; Discain Project Services Ltd v. Opecprime
Development Ltd. [2001] BLR 285 (one party was consulted upon submissions
made by the other without a reciprocal process); Woods Hardwick Ltd v. Chiltern Air
Conditioning [2001] BLR 23 (the failure to make available to one party
information obtained from the other party and various third parties); Balfour
Beatty Construction Limited v. Lambeth London Borough Council (use of an analysis different to that
advanced by the parties without informing the parties of the proposed
methodology and without seeking their observations on its suitability) See
overview of the cases in Dispute
Boards, Chapter 5 in Jane Jenkins
, International Construction Arbitration Law, Arbitration in Context
Series, Volume 3. p. 116, at
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