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• Dispute Resolution Boards

Introduction

I recently attended a Conference in Budapest relating to Dispute Resolution Boards as a means of resolving disputes in international construction contracts. However, if you are more used to projects based in Devon & Cornwall you should still read on.

The Institute of Civil Engineers is preparing a clause in its standard form of contract whereby Dispute Boards may be established that comply with the UK Statutory Provisions for Adjudication so that Dispute Boards may be used in the UK. Indeed, Dispute Boards are currently being used on several large projects in the UK.

So what is a Dispute Board? It is a job site Dispute Adjudication process consisting of three independent persons selected by the contracting party. The significant difference between Dispute Boards and Adjudication is that the DRB is appointed at the commencement of a project and undertakes regular visits to site and receives project documentation. Meetings between the parties and the Dispute Board become part of the project administration and can influence the behaviour of the contracting parties thus avoiding disputes. Furthermore, if a dispute is likely or does arise, then the Board can be called upon early in the evolution of any dispute and asked to publish a decision or recommendation on how matters should be resolved. It is usual that an opportunity remains for the dispute to be referred to arbitration or the Court if the Dispute Board's decision is not accepted by the parties. However the DRB also provides a regular forum for discussion of contentious matters to identify ways forward and provides opportunities for parties to avoid disputes. In the USA Dispute Review Boards have typically provided non binding recommendations. However, Dispute Adjudication Boards where the Board provides an interim binding decision are now common place in international contracts, particularly those under the FIDIC form of international building contract.

By the end of 2005, more than 1,250.00 projects have been completed or are undergoing construction utilising DBs. To date there are up to 30 cases reported where a DB's decision or recommendation on a dispute has been referred to Arbitration or the Court. Of those referrals, very few decisions of DRBs have been overturned.

It remains to be seen whether, other than in the largest projects, the contracting parties will wish to pay 3 independent professionals to constitute a Board and meet on a regular basis throughout the project.

Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.