Dispute Boards

•          Dispute Boards can be described as a technique of ‘disputes avoidance’ rather than resolution. Avoiding disputes by identifying, investigating and discussing problems at an early stage helps to see the contract work delivered on time and within budget.

•          Hence, avoidance should be understood not as denying that conflict exists; rather, it is understood as a preference for detecting emerging disputes and having procedures and personnel on hand to help mitigate the risks. There’s clear practical reason for this in the construction industry: disputes delay work, and delays have a domino effect in costs and dispute escalation^[1]

•          The major difference from litigation, arbitration or mediation is that a Dispute Board is appointed from the start of the contract so the members of the Dispute Board know both the project and the parties very well and have regular contact

 

•          DB mechanism provides the parties with the opportunity to select decision makers with appropriate skills, technical expertise and experience for the project/contract in question

 

•          Dispute Boards reach decisions or recommendations not only by considering the facts of disputed issues as presented to them by the parties but also by taking into consideration their own knowledge, experience and expertise

 

•          Under both the ICC and FIDIC rules, the DAB is expected to visit the site regularly and be informed of ongoing issues and claims. DAB board members will therefore potentially have a longer and wider-ranging role with both the project and the parties, instead of simply resolving a discrete issue in isolation

• Some Dispute Board provisions establish a monetary threshold for disputes to be heard by the Dispute Board, for example disputes under $100,000 (so called "small claims" procedures)

• Common features of the Dispute Board clauses include:

o     Expertise of the Dispute Board members;

o     Impartiality of the Dispute Board members;

o     Confidentiality requirement including use of information in further arbitration/litigation;

o     A requirement that the panel members keep themselves regularly informed of the progress of the project

o     Period to issue decisions/recommendations (typically within three months of a referral)^[2]

o     Specification on whether the Dispute Board will make recommendations and/ or issue binding decisions

• Selection procedures of board members must assure completely impartiality to provide credibility to their recommendations and party respect and confidence in reports

• The parties may choose to have an experienced construction lawyer serve on the Dispute Board. This can be very beneficial with respect to contract law issues and interpretation of the parties’ intent

• Contracting parties should seriously consider the issue of potential admissibility or inadmissibility of Dispute Board recommendations when drafting the Dispute Board agreement

•Usually the agreement will preclude Dispute Board members from being called to testify in any subsequent adjudicatory proceedings

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[1] Ian Macduff, Resolving – and avoiding – construction disputes: notes from the ICC-FIDIC conference, http://kluwermediationblog.com/2013/06/26/resolving-and-avoiding-construction-disputes-notes-from-the-icc-fidic-conference/

 

[2] Under the FIDIC 1999 Red Book contract, a claim is first referred to the Engineer. If a party is unhappy with the Engineer's determination, it may then refer the dispute to the DAB for its decision. The DAB has 84 days to issue its decision (clause 20.4).