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12/05/2020
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Dispute Boards in Construction
Projects
13 May 2020
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LexisNexis® Confidential 2
The law as stated during this webinar is
up to date as of 7 May 2020
Dispute Boards in Construction
Projects
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Introduction
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Senior Associate
CMS
Partner and Co-head of Infrastructure,
Construction and Energy Disputes
CMS
Adrian Bell
Jay Randhawa
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Agenda – Dispute Boards
• General
• Who can refer disputes and Procedure to be followed?
• Dispute Resolution Board (DRB) v. Dispute Adjudication Board (DAB)
• Standing Dispute Boards v. Ad-Hoc Dispute Boards
• Dispute Prevention Benefits
• Dispute Resolution Benefits
• Binding Nature & Enforcement of Dispute Board Decisions
• FIDIC 2017 Suite & FIDIC
• NEC4 Suite
• Dispute Boards – Perspective
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General
DISPUTE BOARDS
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Dispute Boards - General
• Aim
o Communication
o Contentious situation
o Independent and involved
• Role
o Dispute avoidance
o Dispute resolution
o Both?
• Constitution
o 1 member
o 3 members
o More?
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Dispute Boards - General
• Experience
o Industry
o Project
o Discipline
• Effectiveness
o Start of Project v. during Project
o Site Visits
• Project Familiarity
o Bridge between Employer and Contractor
o First-hand insight
• Cost – Who is to bear?
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Who can refer disputes and procedure
to be followed?
DISPUTE BOARDS
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Reference to Dispute Boards
• Who can refer disputes?
o Employer
o Contractor
o Third-parties – (suppliers, subcontractors etc.)?
• Procedure
o Document only basis
o Hearing format
o Considering submissions
o Reasoned determination
• Is there a time duration for rendering the determination?
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DRB v. DAB
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DRB v. DAB
• Dispute Resolution Board (DRB)
o US Model
o Recommendation
o Persuasive? Binding?
o DRB – Dispute Review Board?
• Dispute Adjudication Board (DAB)
o European Model
o Determination
o Binding?
o Objection to DAB Decision
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Standing v. Ad-Hoc Dispute
Boards
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Standing v. Ad-Hoc Dispute Boards
• Appointment and Expiration
• Role
o Dispute avoidance
o Dispute adjudication/resolution
• Suitability
o Large v. comparatively smaller projects
o Responsiveness
• Approach
o Proactive v. Reactive
• Cost Perspective?
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Dispute Prevention Benefits
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Dispute Prevention Benefits
• Bilateral Agreement
• Positive Relations
• Open Communications
• Trust and Cooperation
• Prevent aggregation of claims
• Minimise contractual posturing
• Claims management
• Dispute prevention
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Dispute Resolution Benefits
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Dispute Resolution Benefits
• High resolution rate
• Impartial forum
• Informal and rational
• Trust and Cooperation
• Parties predisposed to Dispute Boards
• Transactional costs reduction (i.e. legal & consulting fees)
• Real-time dispute management
• Informed decisions efficiently
• Lower bids
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Binding Nature & Enforcement
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Binding Nature and Enforcement of Dispute Board Decision
• Binding Nature
o Contractual clause
o Period to notify dissatisfaction
o Final and binding
o Arbitration?
• Enforcement
o Distinct from Arbitration award
o Approach court or arbitral tribunal
o Non-compliance = Breach of contract?
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FIDIC 2017 Suite
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FIDIC 2017 SUITE
• DAB to DAAB
o Dispute Adjudication Board (FIDIC 1999 Suite)
o Dispute Avoidance and Adjudication Board
o 42-day period for commencing proceedings retained
• New Role
o Dispute Avoidance
o DAAB Procedural Rules Expanded
• Security for Repayment
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FIDIC 2017 SUITE
• Limitation & Prescription Periods
• Can Dispute Board decisions which are not final be enforced?
• Deemed acceptance to Dispute Avoidance and Adjudication Agreement
• Jurisdictional Issues
• Cost Impact of DAAB
• Practice Adoption
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FIDIC, DISPUTE BOARDS & COVID-19
• FIDIC Covid-19 Guidance Memorandum to Users of FIDIC Standard Forms of Works Contract (April 2020)
• FIDIC Webinar: Covid-19: ADR and the role of dispute avoidance (23 April 2020)
o International judge and arbitrator, Sir Vivian Ramsey stated industry moving into an era of dispute avoidance
o President of the Dispute Resolution Board Foundation Region 2, James Perry mentioned that prime importance of dispute boards is facilitating discussions
o Moving forward – Could dispute discussions take place digitally? Providing of PPE on projects?
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FIDIC 2017 and DAAB in the future
• Multilateral Development Banks (MDB) supporting increased use of DAAB
• Breaking convention in Middle East and Africa
• Mandating 2017 FIDIC Suite/DAAB
• FIDIC Golden Principle 5 (GP5):
Unless there is a conflict with the governing law of the Contract, all formal
disputes must be referred to a Dispute Avoidance/Adjudication Board (or a Dispute Adjudication Board, if applicable) for a provisionally binding decision as a condition precedent to arbitration.
• Rationale behind GP5?
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NEC4 Suite
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NEC 4 Suite
• Option W3
o Obligatory referral of all “Potential Disputes”
o Constitution (1 or 3 members)
o Site visits at specified intervals
o Referral & Review
• Dispute v. potential disputes?
• Recommendation to become binding?
• NEC & FIDIC Compared
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Perspective
Dispute Boards
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Dispute Boards – Perspective Matters
• Cost Justification
• Dispute Boards Success Rate
• Dispute Boards as an Insurance?
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Upcoming Construction webinars
• (Brief) COVID-19 and the energy sector (2020) – 29 May 2020
• Termination of construction contracts (2020) – 7 July 2020
• Insolvency in construction (2020) – 13 October 2020
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Thank you and reminders
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