Dispute resolution boards in construction
This article is all about dispute resolution boards in construction. They are not that common or important in minor to medium sized construction projects but are worth a mention as part of a general discussion of dispute resolution in construction.
Stravelles run a course in Adjudication which aims to allow the student to run their own adjudication as the referring or responding party without paying for legal representation.
We support legal representation in more complex cases but we want to encourage especially smaller companies to feel more confident fighting for their contractual rights.
Introduction
Dispute Resolution Boards (also known as Dispute Review Boards or Dispute Adjudication Boards) are simply a group of independent people who meet to discuss a dispute in a construction project.
Dispute resolution boards are only ever used on very large, complex construction and engineering projects which have many international stakeholders. Unless you are planning to work on a large project such as a new dam, a channel tunnel type project, you will never come across Dispute resolution boards.
The concept took off in the United States of America before being used worldwide. It has been used successfully in the following high profile projects:
- second bore of the Eisenhower Tunnel contract
- El Cajon Dam and Hydro Scheme in Honduras
Dispute Adjudication boards are simply a natural evolution of the process whereby the decisions of the board are binding in the interim just like the decision of an Adjudicator.
Composition of Dispute resolution boards in construction
A Dispute resolution boards in construction will consist of three members including:
- Technical member 1 – will be expert in the technical side of things e.g. an engineer
- Technical member 2 – will be expert in the technical side of things e.g. an engineer
- Legal member 1 – will be a legal expert
The chairman of the board is usually the legal member. All members must be very qualified, experienced and recognised in their respective professions.
Each party recommends one technical member and those members choose the third member as the chairman. If the two members cannot agree on a chairman then a nominating body can be appointed to recommend one.
What does the board do?
The board visits site regularly and deals with an issues that come up as they arise.
If one party has an issue or complaint they can submit notice to the board who will discuss its merits.
Contracts that include Dispute Resolution Boards
Dispute resolution boards have been used successfully in many construction projects including
- FIDIC contracts
- the World Bank (Procurement of Works) contract.
- Channel Tunnel Rail Link
Advantages
- The members of the board know the project intimately and are experts
- Dispute boards are completely Private
- No outsiders – there are no teams of lawyers working against each other
- Quick – a decision can be made on the spot
- Fosters spirit of co-operation – focus is on resolving an issue rather than apportioning blame around
- Lets the project proceed
- Allows many different parties from many different cultures and backgrounds to let disputes be handled by the ‘on the ground’ technical experts
Disadvantages
- Not enforceable unless by agreement in the contract terms
- There is no statutory right to a dispute resolution board
- Only feasible on huge construction and engineering projects
- The technical experts might come to an agreement that is great for progress and construction but may not be the most commercial decision for one party.