Introduction To FIDIC Dispute Adjudication Board Provisions (Owen - 2004)

 

INTRODUCTION TO FIDIC DISPUTE ADJUDICATION BOARD PROVISIONS

CONDITIONS OF CONTRACT FOR CONSTRUCTION FIDIC 1999 COPY RIGHT 2004 Gwen Owen

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1.0 INTRODUCTION  This course reviews of the requirements and procedures for the FIDIC Conditions of Contract from a practical point of view with regard to the Dispute Adjudication Adjudication Board. It is a practical guide rather than a detailed legal leg al ana analys lysis is,, to ass assist ist eng engin ineer eers s and oth others ers wil willl use con constr struct uction ion contracts. Ref efer eren ence ce wi will ll be ma made de to th the e FIDI FIDIC C for form of co cont ntra ract ct an and d cl clau ause se references will generally apply to clauses in the Conditions of Contract for for Co Cons nstr truc ucti tion on 19 1999 99 ed edit itio ion, n, th the e “ne new w red bo book ok”. ”. Th The e no note tes s are are comments on the clauses and references should be made by the reader to the complete wording in the FIDIC contract.

2.0 THE CONSTRUCTIO CONSTRUCTION N CONTRACT A construction contract is made between two parties: •

•

An owner who is referred to as the Employer, who has decided that he needs the project and who will pay for the project. The Employer will need to establish his requirements, decide who will prepare prepare the detailed design and check that the construction meets his requirements, and A Contractor who will prepare all or any part of the design as required by the employer and who will actually construct the works.

 The project organisation for the design, supervision and construction may vary but the tasks must be carried out by someone, either on be beha half lf of the th Em Empl ploy oyer erfor orConstruction on be beha half lf ofare the the Co Cont ntra ract ctor or.. Th The ebyFI FIDI DIC C Conditions ofe Contract based on design the Emplo Em ployer yer.. The act actual ual des design ign is us usual ually ly car carri ried ed out by a Con Consul sultin ting g Engineer, on behalf of the Employer. The Conditions of Contract for Plant and Design Build and the Conditions of Contract for EPC/Turnkey Pr Proje ojects cts ar are e ba based sed on des design ign by the Con Contra tracto ctorr. Aga Again, in, the act actual ual design may be carried out by a Consulting Engineer, but on behalf of  the Contractor.

3.0 THE CONDITIONS OF CONTRACT  The Conditions of Contract include:

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• •

General Conditions Particular Conditions

FI FIDI DIC C Ge Gene nera rall Co Cond ndit itio ions ns of Co Cont ntra ract ct are are in inte tend nded ed to be us used ed unchanged for every project. The Particula Particularr Conditions are prepared for the par partic ticula ularr pr proje oject ct tak takin ing g acc accoun ountt of any cha change nges s or add additi itiona onall clauses to suit the local and project requirements. Some employers have ha ve ava availa ilable ble the their ir own ver versio sions ns of the Gen Genera erall Con Condit dition ions s whi which ch incorporate some changes to suit their own requirements. Normally Normal ly Gener General al Condi Condition tions s incl include ude the Appe Appendix ndix to Tender whic which h gives essential project information some of which must be completed by the Employer before issuing the tender documents, together with som ome e in info forrmat atio ion n which hich must be ad adde ded d by th the e ten tende derrer upo pon n submission of the tender. In any project in order to overcome problems it will often be necessary to carry out additional work and this will take time and money. The most mo st co comm mmon on situ situat atio ion n is th that at th the e Co Cont ntra ract ctor or sp spen ends ds mo mone ney y an and d claims it back from the Employer. It is the then n nec necess essary ary to dec decide ide wheth whether er the Empl Employe oyerr mu must st pay pay,, or whet wh ethe herr the the Co Cont ntra ract ctor or mu must st be bear ar the the ad addi diti tion onal al co cost st.. Th The e in init itia iall decision will normally be made by the Employer’s Representative or Engineer. However this can only be an interim decision and is subject to ap appe peal al to th the e En Engi gine neer er or th the e Di Disp sput ute e Ad Adju judi dica cati tion on Bo Boar ard d an and d ultimately to an arbitrator or the courts. The actual dispute resolution processes vary in different FIDIC forms of contract.  The basis on which such decisions must be made is laid down in the Conditions of Contract. The Conditions of Contract deal with the roles of  the parties to the Contract and lays down their rights and obligations under the Contract.

4.0 INTERNATIONAL CONTRACTS An international contract may be defined as a contract in which one of  the parties is from a different country to the country of the project. In many cases the requirements outlined in the Conditions of Contract for international contracts are similar to those for domestic contracts, but there are additional matters such as different legal systems, or local customs and procedures, currency which must be considered.

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5.0 THE FIDIC F FAMIL AMILY Y OF CONTRACT CONTRACTS S In 1999 FIDIC published the first edition of four new standard forms of  contract: Conditions of Contract for Construction Recommended for building or engineering works designed by the Employer or by his representative, the Engineer. Under the usual arrangements for this type of contract, the Contractor constructs the works in accordance with a design provided by the Employer. Howeve How ever, r, the wor works ks ma may y inc includ lude e som some e ele eleme ments nts of Con Contra tracto ctorr designed civil, mechanical, electrical and/or construction works. •

Conditions for Plant and Design Build Recommended for the provision of electrical and / or mechanical plant, and for the design and execution of building or engineering works. Under the usual arrangements for this type of contract, the Cont Co ntrrac acttor design signs s and pr prov oviide des s, in acc cco orda danc nce e with th the e Employer’s requirements, plant and / or other works; which may includ inc lude e any com combin binati ation on of civ civil, il, me mecha chanic nical al,, ele electr ctrica icall and and/or /or construction works. •

Conditions of Contract for EPC/Turnkey Projects Suitable for the provision on a turnkey basis of a process or power plant, of a factory or similar facility, or of an infrastructure project or ot othe herr ty type pe of de deve velo lopm pmen ent, t, wh wher ere e (i (i)) a hi high gher er de degr gree ee of  certainty of final price and time is required, and (ii) the Contractor tak takes to tota tall res espo pons nsib ibil ilit ity y fo forr th the e de desi sign gn an and d ex exec ecut utio ion n of the the project, with little involvement of the Employer. Under the usual arrangements for turnkey projects, the Contractor carries out all the engineering, procurement and construction (EPC): providing a •

fully equipped facility, ready for operation at the “turn of the key”. Short Form of Contract Recommended Recom mended for building or engineering works of relatively small capital value. Depending on the type of work and the circum cir cumsta stance nces, s, thi this s for form m ma may y als also o be sui suitab table le for con contra tracts cts of  greater value, particularly for a relatively simple or repetitive work or work of short duration. Under the usual arrangements for this typ type of co cont ntra ract ct,, th the e Co Cont ntrrac acttor co cons nstr truc uctts th the e wor orks ks in acco ac cord rdan ance ce wi with th a de desi sign gn pr prov ovid ided ed by the the Em Empl ploy oyer er or by hi his s representative, but this form may also be suitable for a contract which includes, or wholly compromises, contractor designed, civil, mechanical, electrical and / or construction works. •

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 To complement the above FIDIC published its Contracts Guide during 2000. In the preparation of the Conditions of Contract for Construction, it was recognised by FIDIC that, while there are many sub clauses which may be ge gene nera rall lly y ap appl plic icab able le,, th ther ere e are are so some me su sub b cl clau ause ses s wh whic ich h mu must st necessarily vary to take account of the circumstances relevant to the part pa rtic icul ular ar co cont ntra ract ct.. Th The e su sub b cl clau ause ses s wh whic ich h we werre co cons nsid ider ered ed to be applicable to many but not all contracts have been included in the General Conditions, in order to facilitate their incorporation into each contract.  The General Conditions were prepared on the following basis : •

•

Interim and final payments will be determined by measurement, applying the rates and prices in a Bill of Quantities If the wording in the General Conditions necessitates further data, then the sub clause makes a reference to that data being contained contai ned in the App Append endix ix to Tend ender, er, the dat data a eit either her bei being ng prescribed by the Employer or being inserted by the Tenderer.

•

Where Wher e a su sub b cl clau ause se in th the e Ge Gene nera rall Co Cond ndit itio ions ns de deal als s wi with th a matt ma tter er on wh whic ich h diff differ eren entt co cont ntra ract ct term terms s are are li lik kel ely y to be applic app licabl able e for dif differ ferent ent con contra tracts cts,, the pri princi nciple ples s app appli lied ed in writing the sub clause were: o

o

Users would find it more convenient if any provisions which they did not wish to apply could simply be deleted or not invoked, than if additional text had to be written (in the Particular Conditions) because the general conditions did not cover their requirements; or In oth other er cas cases, es, whe where re the app appli licat cation ion of the abo above ve wa was s thought to be inappropriate, the sub clause contains the prov pr ovis isio ions ns wh whic ich h we werre co cons nsid ider ered ed ap appl plic icab able le to mo most st contracts.

 The FIDIC Conditions are based upon the principle that the Engineer has the authority authority to determine determine additional payments. However, neither the Employer nor the Contractor is finally bound by the Engineer’s in inter terpr preta etatio tion n or det deter ermi minat nation ion.. Cla Clause use 20 def define ines s the ste steps ps to be taken where the Engineer’s decision is not acceptable to one or both parties.

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6.0 DISPU DISPUTES TES – DISP DISPUT UTES ES ADJUD ADJUDICA ICATIO TION N BOARD BOARD   The The Con Condit dition ions s of Con Contra tract ct giv gives es the rig rights hts and obl obliga igatio tions ns of the parties to the contract. Other people such as the engineer, consultant or sub-contractor may also be involved in the preparation, analyses or administration of any claim cannot beally the principle whoan makes or re recei ceives ves the claim claim. . Wh While ile itbut ma may y be leg legall y pos possi sible ble for out outsi side de person to claim that either the employer or the contractor has caused them them da dama mage ge by ne negl glig igen ence ce or fa fail ilin ing g to co comp mply ly wi with th so some me le lega gall obligation, any such claim is outside the scope of this presentation. Disputes result in a substantial dilution of effort, delays and diversion of capital. The FIDIC Conditions of Contract include provisions for the submission, consideration and resolution of claims and disputes under a num number ber of dif differ ferent ent cla clause uses. s. The pri primar mary y cla clause use of int inter erest est her here, e, clause 20, deals specifically with Claims, Disputes and Arbitration. It envisages the establishment of a Dispute Adjudicati Adjudication on Board, known as the DAB. A DAB is a panel of experienced, respected, impartial and independent reviewers. The board is normally organised before construction begins and meets at the job site periodically. The DAB members are provided with wi th the con contra tract ct doc docum ument ents, s, plans plans and spe specif cifica icatio tions ns and bec become ome familiar with the project procedures and the participants and are kept abreast of job progress and developments. The DAB meets with the Employer’s and Contractor’s representatives during regular site visits and an d enco encour urag ages es th the e res esol olut utio ion n of di disp sput utes es at jo job b le leve vel. l. When When an any y dispute flowing from the contract or the work can not be resolved by the parties it is referred to the DAB for Decision.  resolution. The DAB procedure was conceived as facilitate a methodprompt of primary dispute Thus the procedures should reference of  disputes to the board as soon as job level negotiations have reached an impasse. Referral to the board only after multiple levels of Employer and Contractor reviews is inconsistent with the process and counterproductive in terms of time and expense.

7.0 PRINCIP PRINCIPAL AL PAR PARTICI TICIP PANTS IN C CONTR ONTRACT ACT  The purpose of this presentation is not to examine the legal role of  each ea ch of the the pa part rtic icip ipan ants ts of th the e co cont ntra ract ct.. Th The e Co Cont ntra ract ct is a le lega gall lly y binding agreement which imposes duties and responsibilities upon the parties who entered into the agreement, that is the Employer and the

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Contractor. The Engineer is not a party the contract but is appointed by Contractor. the Employer to carry out duties that are stated in the contract. The Engineer has no rights to change any of the conditions of contract. The foll follow owin ing g no note tes s ou outl tlin ine e th the e role ole of th the e En Engi gine neer er,, Em Empl ploy oyer er an and d Contractor with regard to any claims resulting from the contract or the works.   The The FIDI FIDIC C 19 1999 99 co cont ntra ract cts s ha have ve intr introd oduc uced ed a nu numb mber er of co cont ntra ract ct admini adm inistr strati ation on pr proce ocedur dures es whi which ch mu must st be fol follow lowed ed by bot both h par partie ties. s. Whils Wh ilstt the these se proce procedur dures es ar are e nor normal mally ly con consi sider dered ed as goo good d wor workin king g practice the obligations which they impose on the parties within the cont co ntra ract ct wi will ll invo involv lve e ad addi diti tion onal al co cost st an and d co cons nsid ider erab able le ad addi diti tion onal al paper pa perwor work k par parti ticul cularl arly y for the con contra tracto ctorr. The Em Emplo ployer yer in a FID FIDIC IC contract delegates the administration to the Engineer.

Part articu icular larly ly not notewo eworth rthy y of the these se adm admini inistr strati ative ve pr proce ocedur dures es are are the following: •

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•

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•

•

•

•

•

•

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Clause 2.4 enables the Contractor to require the Employer to provide details of his arrangements to finance the project Clause 2.5 requires the Employer to follow a procedure for any claims against a Contractor Clause 4.9 refers to a quality assurance system which must be specified Clause 4.21 requires the Contractor to submit details in monthly progress reports Cl Clau ause se 6.7 6.7 req equi uirres th the e Co Cont ntra ract ctor or to ma main inta tain in he heal alth th an and d safety records Clau Clause se 6. 6.10 10 req equi uirres th the e Co Cont ntra ract ctor or to su subm bmit it de deta tail ils s of  personnel and equipment Clause 8.3 requires the Contractor to give notice of  programming implications of future events or circumstances Cl Claus ause e 13. 13.2 2 giv gives es a pr proce ocedur dure e for the Con Contra tracto ctorr to sub submi mitt value engineering proposal proposals s Cl Claus ause e 14. 14.3 3 giv gives es a pr proce ocedur dure e for the Con Contra tracto ctorr to sub submi mitt reports for interim payment valuations Clause 20 provides stringent claims procedure ures and requirements for the upkeep of contemporary records   The The FID FIDIC IC gui guidan dance ce not notes es su sugge ggest st an add additi itiona onall sub cla claus use e with thiin th the e stand tanda ard Clau ause se 3 to al alllow for for man anag agem emen entt meetings.

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7.1 RISK    The allocation of risks between the Employer and Contractor is defined within the contract. In general the Contractor accepts all the risks that are not specifically allocated to the Employer Employer.. The Employer’s liabilitie liabilities s in incl clud ude e 17.3. wh what at are are kn know own n as sp spec ecia iall ri risk sks, s, wh whic ich h ar are e de desc scri ribe bed d ou outt Clause  The General Conditions allocate the risk between the parties on a fair and equitable basis, taking account such matters as the insurability, sound principles of project management, and each party’s ability to foresee and mitigate the effect of the circumstances relevant to each risk.   The The Con Condit dition ions s of Con Contra tract ct giv gives es the rig rights hts and obl obliga igatio tions ns of the parties to the contract. All claims which are made because of problems which arise under or in connection with the contract must follow the procedures procedur es which are laid down in the contract. Clai Claims ms ar are e ge gene nera rall lly y mad ade e by th the e Parti arties es du due e to th the e fo foll llow owin ing g circumstances : • • • • •

Entitlement to an extension of time Entitlement Entitlementt to additional payments Entitlemen Entitlementt to the recovery of costs Entitlemen Non fulfilment by one party of an obligation under the contract Additional payments due to legal entitlement

7.2 THE ENGINEER  The contract is administered by the Engineer who is appointed by the Empl Em ploy oyer er.. Th The e En Engi gine neer er do does es no nott rep eprres esen entt the the Em Empl ploy oyer er for for al alll purp pu rpos oses es.. Th The e En Engi gine neer er is de deem emed ed to ac actt fo forr the the Em Empl ploy oyer er an and d is included in the schedule of Employer’s Personnel as listed in Clause 1.1.2.6. However, under clause 3.5 if the Engineer is called upon to make ma ke a det deter ermi minat nation ion the then n af after ter con consul sultin ting g wit with h eac each h par party ty he is required to make a fair determination. Under clause 14.6 the Engineer is required to certify interim payment certificates in an amount which he fairly determines to be due. Clause 14.3 (f) states that interim valuations shall include any additions or deduct dedu ctio ions ns wh whic ich h ma may y ha have ve be beco com me du due e un unde derr cl clau ause se 20 20.. Th The e inclusion of any sums due from any decision of the DAB in any interim Page 8 of 61

 

valuatio valua tion n cer certif tifica icate te sho should uld be ma made de ir irrresp espect ective ive of any not notice ice of  dissatisfaction issued by either party. This is due to the wording in the fourth fou rth par paragr agraph aph of Cla Clause use 20. 20.4 4 whi which ch sta states tes tha thatt the par partie ties s sh shall all promptly prompt ly give effect to the decision of the DAB until it has been revised by an amicable settlement or by an arbitration award. Clause 3.1 states that the Engineer has no authority to relieve either party of any duties, obligations or responsibilities under the contract.   The The ma main in ex exce cept ptio ion n to this this is the the au auth thor orit ity y to in inst stru ruct ct va vari riat atio ions ns,, because they may include omission of work. The FIDIC contract allows the the En Engi gine neer er,, bu butt no nott th the e Em Empl ploy oyer, er, to is issu sue e an in inst stru ructi ction on un unde derr Clause 3.3. The Contractor is not permitted to change the permanent works unless the Engineer has instructed or approved the variation. If  the th e Em Empl ploy oyer er wa want nts s to ma mak ke an any y ch chan ange ges, s, he mu must st req eque uest st th the e Engineer to issue the instruction. If the Employer gives an instruction dir direc ectl tly y to th the e Co Cont ntra ract ctor or th then en th the e Co Cont ntra ract ctor or mu must st ob obta tain in th the e Engineer’s confirmation confirmation and instruction before he executes the change. Strict adherence to these requirements is essential for the Engineer to maintain technical and financial control over the project  The Engineer has an extremely important role in the administration of  the contract and the way in which he carries out his duties will have a major impact on the work of the Contractor and the success of the project. In accordance with clause 3.1 if the Engineer is required to attain att ain the app appro roval val of the Em Emplo ployer yer bef befor ore e ex exer ercis cising ing a spe specif cified ied authority the requirements shall be as stated in particular conditions.   The The Em Emplo ployer yer und undert ertak akes es not to im impos pose e fur furthe therr con constr strain aints ts on the Engi En gine neer er’s ’s au auth thor orit ity y ex exce cept pt as ag agrree eed d wi with th the the Co Cont ntra ract ctor or.. An Any y additional constraints on the Engineer would therefore be a breach of  contract by the Employer for which the Contractor would be entitled to claim damages. Under Clause 1.3 the Employer’s approval of the Engineer exercising any specific specified authority shall be in writing and shall not be unreasonably withheld or delayed. When deciding which constraints to list in particular conditions the Employer should take account of the likelih lik elihood ood of the Cont Contracto ractorr bein being g entit entitled led to reco recover ver the addi addition tional al costs cos ts he inc incurs urs whi whilst lst the Eng Engine ineer er awa awaits its the Em Empl ploye oyer’s r’s wri writte tten n approval. When the Contractor receives an Engineer’s communication for which is the Employer’s prior approval was required, the Contractor is not entitled to query whether it was approved. For the purposes of  the contract the Employer is deemed to have given approval. For the purpose of the Engineer’s agreement with the Employer, whether the Empl Em ploy oyer er ac actu tual ally ly ap appr prov oved ed is a ma matt tter er of fa fact ct an ac acti ting ng wi with thou outt approval may be a breach of his consultancy agreement.

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 The Engineer is empowered under Clause 3.3 to issue instructions and Contractor is generally obliged to comply. If the Contractor considers that certain specified circumstances prevent him from complying with a variation instruction then he may give notice which is described in Clause 13.1. It may be necessary for immediate oral instructions to be given under certain circumstances, although they should be avoided wherever possible, procedures are specified for instructions which are not immediately confirmed in writing. The procedures require prompt confirmation or denial of an alleged oral instruction, in order that its validity of invalidity can be established as soon as practicable. Under Clause 3.5 of the contract the Engineer is required to make dete de term rmin inat atio ions ns.. Clau Clause ses s 2.5 2.5 an and d 20 20.1 .1 sp spec ecif ify y pr proc oced edur ures es fo forr the the submission by each party of claims for financial compensation and / or extensions extension s of the contract period. Major projects give rise to major risks whic wh ich h ha have ve to be de deal altt wi with th if th they ey oc occu curr. Clai Claims ms pr proc oced edur ures es are are specified so as to provide the degree of formality considered necessary for for the the pr prop oper er ad admi mini nist stra rati tion on of a pr proj ojec ect. t. Co Comp mply lyin ing g wi with th thes these e proce cedu durres an and d maint ainta aining ning a co co-o -ope perrati ative app pprroac ach h to the determination of all adjustments the contract should enhance the likelihood likel ihood of achieving a successfulto project. In accordance with Clause 1.3 determinations shall be in writing and nott be un no unrrea easo sona nabl bly y wi with thhe held ld or de dela laye yed. d. Th The e En Engi gine neer er sh shal alll no nott delega del egate te his aut author hority ity to det deter ermi mine ne any ma matte tterr in acc accor ordan dance ce wi with th Clau Clause se 3.5. 3.5. Th The e pr proc oced edur ure e for for ma maki king ng a de dete term rmin inat atio ion n is that that the the Engi En gine neer er firs firstt co cons nsul ults ts wi with th ea each ch pa part rty y se sepa para rate tely ly or jo join intl tly y an and d endeavours to achieve the agreement of both parties. If the agreement of bo both th pa part rtie ies s ca cann nnot ot be ac achi hiev eved ed wi with thin in a rea easo sona nabl ble e ti time me the the Engineer is then required to make a fair determination in accordance with contract. The Engineer is then required to notify both parties of his determination which is binding until and unless it is revised under the dispute resolution procedure under clause 20. In practice the Engineer may ma y fir first st ma make ke an int interi erim m det deter ermin minati ation on ind indica icatin ting g his int intent ention ion to revise it when further particulars are presented to him, and meanwhile in incl clud udin ing g th the e ap appr prop opri riat ate e ad adju just stm men ents ts in an any y in inte teri rim m pa paym ymen entt certificates.

7.3 7. 3 CLAI CLAIMS MS BY T THE HE EM EMPL PLO OYE YER R If the Employer considers himself to be entitled to any payment under any clause of the contract then the Employer or the Engineer shall give notice and particulars to the Contractor. In some cases such as under clause 4.19 and 4.20 notice is not required. These procedures are much

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less onerous than those for Contractor’s claims. Af After ter the Employer has provided notice the Engineer makes determination under clause 3.5. With regard to claims by the Employer a number of clauses specifically refer to Clause 2.5 but a number of others do not. The Employer should take great care to exercise the correct procedure before making any deduction or claim under the contract. Clauses requiring requiring notice under clause 2 .5 include: • • • • • • •

Clause 7.5 rejection Clause 7.6 remedial work Clause 8.6 rate of progr progress ess Clause 8.7 delay damages Clause 9.4 tests on completion Clause 11.3 extension of defects notification period Clause 15.4 payment after termin termination ation

Clauses not requiring notice under clause 2.5 include: • • •

Clause 4.19 electricity water and gas Clause 4.20 Employer’s equipment and free issue material Other services requested by the contractor

Other clauses allowing for claims a deduction by the employer include: • •

•

• • • • • • • •

Clause 4.2 performance security Clause 5.4 evidence of payments subcontractors Clause 9.2 delayed tests

to

nominated

Clause 10.2 taking over of parts of the works Clause 11.4 failure to remedy defects Clause 11.6 further tests Cl Clau ause se 11 11.11 .11 cl clea eara ranc nce eo off s sit ite e Clause 13.7 adjustments in legislation Clause 17.1 indemnitie indemnities s Clause 18.1 general requir requirements ements for insurances Clause 18.2 insurance for works and contractors equipment

7.4 7. 4 CLAI CLAIMS MS BY T THE HE CO CONT NTRA RACT CTOR OR

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Most claims are made by the Contractor and may be claims for an extension of time for the completion of the works, for the re reim imbur burse semen mentt of cos costs ts inc includ ludin ing g in som some e cas cases es re reaso asonab nable le pr profi ofit. t. Claims for additional time frequently result in a claim for additional payments, which under the FIDIC conditions must be submitted as a separate claim. All claims for additional time or money must follow the procedures of  cl clau ause se 20 20.1 .1 wh whic ich h req equi uirre a no noti tice ce to th the e Eng ngin inee eerr as so soon on as practicable and in any event not later than 28 days after the Contractor beca be came me aw awar are, e, or sh shou ould ld ha have ve be beco come me aw awar are, e, of th the e ev even entt or circumstances. If the Contractor fails to give notice of a claim under this thi s cla claus use e he sha shall ll not be ent entitl itled ed to add addit ition ional al pay payme ment nt and the Employer shall be discharged from all liability in connection with the claim cla im.. The Con Contra tracto ctorr is also also und under er an one onero rous us obl obliga igatio tion n to keep contemporary records records as may be necessary to substantiate the claim. In general the sequence of procedures for the submission of claims in accordance with Clause 20 and other clauses may be summarised as follows : 1. The Contra Contracto ctorr notif notifies ies tha thatt he is awa aware re of a sit situa uatio tion n in whi which ch may give rise to a problem 2. Th The e Co Cont ntra ract ctor or give gives s no noti tice ce th that at he co cons nsid ider ers s hi him mse self lf to be entitled to additional time or additional payment 3. Th The e Co Cont ntra ract ctor or give gives s no noti tice ce wh when en he ac actu tual ally ly su suff ffer ers s de dela lay y or additional costs 4. The Co Contrac ntractor tor k keeps eeps co contem ntemporar porary y reco records rds 5. The Contrac Contractor tor subm submits its his ful fully ly detai detailed led claim with suppo supporti rting ng particulars 6. The Eng Engineer ineer rrespo esponds nds to appr approve ove or dis disappr approve ove the clai claim m 7. The En Enginee gineerr then cer certifi tifies es inte interim rim pa paymen yments ts 8. The Engineer proceeds in accordance with clause 3.5 to determine determi ne any extension of time or additional payments 9. If the the Co Cont ntra ract ctor or do does es no nott ag agrree wi with th the the En Engi gine neer er the the cl clai aim m beco be com mes a disp disput ute e an and d th the e pr proc oced edur ures es of cl clau ause se 20 20.4 .4 are are followed   The The de defi fini niti tion on of a disp disput ute e un unde derr Cl Clau ause se 20 20.4 .4 is wi wide derr th than an th the e req equi uirrem emen entt for for a no noti tice ce un unde derr Clau Clause se 20 20.1 .1.. For ex exam ampl ple e if th the e Con ontr trac acto torr ob obje jec cts to an inst instru ruct ctio ion n by th the e En Engi gine neer er th then en th the e Contractor is obliged to comply with the instruction under clause 3.3, but there may be a dispute which could be referred directly to the DAB under clause 20.4. In any event the Contractor is obliged under Clause 8.1 to proceed with the works with due expedition and without delay.

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Disput Disp utes es co conc ncer erni ning ng ad addi diti tion onal al ti time me or mo mone ney y mus ustt fo foll llow ow th the e procedures of clause 20.1. This procedure could take several months before the problem could be referred to the DAB unless both sides to agree to ask the DAB for an opinion under clause 20.2.  The various requirements for the submissions of claims could result in parallel procedures and more than one referral to the Engineer under Clause 3.5 from the same situation. In some circumstances it may be desirable for the Engineer to proceed under Clause 3.5 as quickly as poss po ssib ible le afte afterr th the e situ situat atio ion n ha has s aris arisen en,, in or orde derr to av avoi oid d fu furt rthe herr argument, or at least establish clear boundaries of any difference of  opinion. Clause 8.3 also includes a general requirement for the Contractor on to promptly give notice to the Engineer of specific probable future events or circumstances which may adversely affect the work, increase the contract price or delay the execut execution ion of the works. When submitting a claim the Contractor should include reference to all clauses which may be relevant. Some claims situations are covered by mor ore e th than an on one e cl clau ause se an and d Co Cont ntra ract ctor or’s ’s en enti titl tlem emen ents ts may va vary ry depending upon which clauses are used as the justification for the claim. Clau Clause ses s in incl clud udin ing g following:

sp spec ecif ific ic

req equi uirrem emen ents ts

fo forr

cl clai aims ms

in incl clud ude e

th the e

Clauses which require the contractor to give notice of an event which may cause delay or additional cost: • • • • • •

Clause 1.9 delayed drawings or instructions Clause 4.12 unforeseeable physical conditions Clause 4.24 fossils Clause 16.1 Contractor’s entitlement to suspend work Clause 17.4 consequences of Employer’s risks Clause 19.4 consequences of force majeure

Clauses which entitled the contract out to an extension of time and or additional payments: • • •

•

Clause 1.9 Clause 2.1 Clause 4.7

delayed drawings or instructions right of access to the site setting out

Clause 4.12 unforeseeable physical conditions

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• • • • • • • • •

Clause 4.24 fossils Clause 7.4 testing Clau Clause se 10 10.2 .2 ta taki king ng ov over er par arts ts of the the w wor orks ks Clause 10.3 interference with tests on completion Clause 11.8 Contractor to search Clause 13.7 adjustments for changes in legislation Clause 16.1 Contractor’s entitlement to suspend work Clause 17.4 consequences of Employers risks Clause 19.4 consequences of force majeure

Clauses which involve valuation or similar requirements: • • • • •

Clause 12.3 evaluation Clause 12.4 omissio omissions ns Clause 15.3 valuation at date of termin termination ation Clause 16.4 payment on termina termination tion Clause 18.1 general requir requirements ements for insurances

Cl Class asses es whi which ch provi provide de for the Contr Contract actor or to cla claim im pr profi ofitt as wel welll as costs: • • • • • • • • • •

Clause 1.9 delayed drawings are instructions Clause 2.1 right of access to the site Clause 4.7 setting out Clause 7.4 testing Clause 10.2 taking over parts of the works Clause 10.3 interference with tests on completion in Clause 11.8 Contractor to search Clause 16.1 Contractor’s entitlement to suspend work Clause 16.4 payment on termina termination tion Clause 17.4 consequences of Employers risks on

8.0 8. 0 CLA CLAUS USE E 20: 20: CL CLAI AIMS MS & DI DISP SPUT UTES ES 8.1 CLAUSE 2 20 0.1 8.2 GENERAL Clause 20.1 prescribes the procedure to be followed by the Contractor if he co cons nsid ider ers s him himse self lf to be en enti titl tled ed to an ext xten ensi sion on of ti tim me to additional or both. This clause refers claims by the Cont Co ntra ract ctor or..payment Eq Equi uiva vale lent nttopr prov ovis isio ions ns fo for r cl clai aims ms byonly the theto Em Empl ploy oyer er ar are e

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included in Clause requirements.

2.5

which

contains

much

less

stringent

 The requirements of Clause 20.1 are in addition to other requirements for not notice ices s in simi similar lar cir circum cumsta stance nces. s. Clear Clearly ly the these se not notice ices s can be combin com bined ed but the su suppo pporti rting ng infor informa matio tion n tha thatt is re requi quire red d and the further actions that are to be taken by the Engineer and the Contractor will vary for each notice. Various clauses that Contractor’s entitlements to claim are expressed using similar words which typically are as follows: •

•

•

•

•

•

“The con “The contra tracto ctorr sh shall all giv give e not notice ice”  ”  – this is obligatory but a failure to notify may be due to him not having suffered delay and not having incurred costs “The contractor shall be entitled” – entitled”  – this is not stated as being subject to anyone’s opinion “Subject to Clause 20.1” – 20.1”  – the second and final paragraphs of  which may affect the Contractor’s entitlements “An ext extens ension ion if com comple pletio tion n is del delaye ayed”  d”  – so it should be calculated by reference to the delay in completion “Payment of any such costs” – costs”  – which is the cost attributable to the the ev even entt or ci cirrcu cums msta tanc nces es ex excl clud udin ing g co cost sts s wh whic ich h are are no nott attributable thereto “Plus reas “Plus reasonabl onable e profi profit”  t”  – thi this s phr phrase ase is inc inclu luded ded in cla clause uses s relating to failures by or on behalf of the Employer and not to other risks

Clause 20.1 specifies the procedures which the contractor must follow in pursuit of acclaim and the consequences of a failure to do so.

8.3 NOTICE ICE PE PER RIO IODS DS If the Contractor considers himself to be entitled to any extension of  time for the completion of the works or for any additional payments under any clause of the contract he should give notice to the Engineer Engineer..  The notice shall describe the event of circumstances giving rise to the claim and shall be given as soon as practicable. In any event is the Page 15 of 61

 

notice noti ce mu must st be give given n no nott la late terr th than an 28 da days ys af afte terr the the Co Cont ntra ract ctor or became aware or should have become aware of the relevant event or circumstance giving rise to the claim. In practice it may be easier to establish whether notice was given within 28 days after the Contractor shoul sh ould d hav have e bec becom ome e awa aware re of the re relev levant ant eve event nt or cir circum cumsta stance nce giving rise to the claim. Generally there is no need for this notice to indicate how much extension of time or additional payments may be claimed or to state the clause or other contractual basis of the claim. Notices must comply with Clause 1.3. Clause 4.21 requires progress reports to list all notices which have been given under Clause 20.1.  The notice is to be sent to the Engineer with a copy to the Employer in accordance with Clause 1.3. The recipient is not required to respond other oth er than than to ack acknow nowled ledge ge re recei ceipt pt and Clau Clause se 1.3 and sh shoul ould d not regard the notice is an aggressive act but merely as an act which enables the Employer to be aware of the possibility that the Contractor has an enhanced entitlement. This first notice is the start of the detail procedure specified in Clause 20.1. The Contractor must ensure that notices are given in due time in order to protect his rights under the contract. Failure to give notice in accordance with the first paragraph of  Clau Clause se 20 20.1 .1 de depr priv ives es th the e Co Cont ntra ract ctor or of al alll hi his s en enti titl tlem emen entt to an any y extension of time and/or compensatio compensation. n. Notices are vitally important will for the administration of the contract by the Contractor and for the administration of the contract and its life consequences by the Engineer and Employer. Notices enable the Engineer to make his own observations and make his own records of the events giving rise to the claim. They also enable the th e En Engi gine neer er to co cons nsid ider er wh what at po poss ssib ible le ac acti tion ons s he may tak take to overcome the problem. Notices put the problems on record and enable the the Co Cont ntra ract ctor or to rec ecei eive ve pr prom ompt pt de deci cisi sion ons s on hi his s en enti titl tlem emen ent. t. A further, and possibly more drastic, consequence of the notices will be to enable the Employer to take a decision to determine the contract.   Thi This s de deci cisi sion on ma may y be tak aken en if th the e Em Empl ploy oyer er co cons nsid ider ers s th that at th the e consequences of claims made by the Contractor will render the project to be no longer feasible. Whether a failure to give a notice or provide information can remove legal entitlement is a matter which may depend on the applicable law. However it is clear that under this contract notice is essential for the Contra Con tracto ctorr to est establ ablish ish his his leg legal al ent entitl itleme ements nts.. Claus Clause e 20. 20.1 1 impos imposes es procedural obligations on the recipient of the Contractor’s claims and submissions. By comparison with the Contractor’s procedural failures it will be noted that no consequences are stated in respect of the failures Page 16 of 61

 

of such recipients. If a dispute arises the Contractor may draw the DAB’s attention to the Engineers or the Employer’s procedural failures. In some circumstances the Contractor may have an entitlement under applicable law in respect of these failures.

8.4 RECORDS It is the requirement under Clause 20.1 that the Contractor shall keep contempor cont emporary ary rec records ords.. The rec record ords s are those that are neces necessary sary to substantiate the claim. The extent of recording is the responsibility of  the th e Co Cont ntra ract ctor or as he is th the e on one e wh who o is ab able le to an anti tici cipa pate te wh what at subst su bstant antiat iation ion wil willl be app appro ropri priate ate.. The im impor portan tance ce of goo good d re recor cord d kee eepi ping ng ca cann nnot ot be ov over erem emph phas asis ised ed.. Th The e res esol olut utio ion n of di disp sput utes es frequently rests rests on the adequacy of contemporaneous recor records. ds. Records are to be kept on site or at any other locations acceptable to the Engineer. The Engineer may monitor the record keeping and he may ma y instr instruct uct the Con Contra tracto ctorr to ke keep ep fur furthe therr con contem tempor porary ary re recor cords. ds.  There is no apparent restriction in the clause relating to the definition of further and better particulars. The Contractor is obliged to permit the Engineer to inspect the records and if instructed provide copies to the Engineer.  

8.5 8. 5 NOTI NOTICE CE OF DE DET TAI AILE LED D CLA CLAIM IM Within 42 days after the Contractor became aware of the event or circumstance giving rise to the claim he is required to submit to the Engineer a fully detailed claim. The claim must include full supporting particulars. If the claim has a continuing effect then the procedures specify that the Contractor : • • •

•

submits each detailed interim claim submits interim claims at monthly intervals submi su bmits ts fur furthe therr pa parti rticul culars ars as the Eng Engine ineer er ma may y re reaso asonab nably ly require to make a final claim within 28 days after the end of the end of  the circumstance circumstance giving rise to the claim

Within 42 days after receiving acclaim the Engineer shall respond with his approval or disapproval and detailed comments.

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 The above two time periods are subject to the alternative proviso that any, “…other such period as may be proposed…and approved…” could approved…” could be adopted. Whether the requested additional time is reasonable will depend upon the circumstances and complexity of the matter. However it any event of the approval or disapproval of the Engineer may not be unreasonably unreas onably withheld or delayed.  The Contractor is entitled to prompt payment of such amounts as have been bee n re reaso asonab nably ly sub substa stanti ntiate ated d as due und under er con contra tract. ct. He doe does s not need to wait until he has submitted every element of the substantiation of any particular claim.  The final paragraph of Clause 20.1 confirms that its requir requirements ements are in addition to those of any other clause applicable to any claim. Although it may may be po poss ssib ible le for for on one e no noti tice ce to sa sati tisf sfy y the the req equi uirrem emen ents ts of  different clauses, under this final paragraph if the Contractor fails to comp co mply ly wi with th an any y su such ch req equi uirrem emen entt then then he ru runs ns the the ri risk sk that that an any y extension of time or additional payment may be reduced by reason of  the failure having prevented or prejudiced proper investigation of the claim. This final paragraph must not be regarded as allowing a penalty to be ap appl plie ied d in so som me ar arbi bitr trar ary y ma mann nner er,, ho howe weve verr it sh shou ould ld be recognised that the Contractor should have been able to comply with the requirements. Of interest here are the following 2 cases relating to the failure to give noti no tice ce no nott be bein ing g fa fata tall to a su succ cces essf sful ul cl clai aim. m. So Some me co comm mmen enta tator tors s consider that the clause may be construed as contra proferentem. proferentem. It should however be noted that neither case relates to the FIDIC 1999 form of contract but do relate to similar finite clauses. UK jurisdiction : Welsh Health BLR 80 (QBD);

Holland Hannen & Cubits (Northern Limited v Technical Services Organisation (1981) 18 (1985) 35 BLR 1 (CA)

US jurisdiction : 2,086 (1959)

Mertz (JW) IBCA No 64, 59-1 BCA (CCH) para

8.6 DISPU DISPUTES TES ADJ ADJUDI UDICA CATIO TION N BOARD BOARD  The Disputes Adjudication Board (DAB) (DAB) is an impartial and independent panel of one or three people who are ideally appointed at the start of  project and give decisions on any disputes. When requested by both the Employer and the Contractor the DAB shall be available to give advice or opinions on any matter relevant to the contract.

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 The DAB has four main functions : •

•

• •

 To visit the site periodically and become familiar with the details of the project  To keep up to date with activities, progress, developments and problems at the site Encourage the resolution of disputes by the parties When a dispute is referred to it, hold a hearing, complete its deliberations and prepare a Decision in professional and timely manner

  The The DA DAB’s B’s ro role le is to set settle tle dis disput putes es.. Set Settle tleme ment nt wi will ll not hav have e bee been n achieved if a party subsequently refers the dispute on to arbitration.  The FIDIC guidance notes for the preparation of particular conditions include an alternative paragraph for Clause 20.4 which enables the Engineer to be appointed as the DAB. This cannot be recommended, recommended, as in practice the Engineer is an employee of the Employer and will not be perceived to be either independent or impartial impartial.. Although the contract states that the DAB shall comprise of either 1 or 3 suitably qualified persons it is often the case that on large complex projects involving a number of disciplines the tribunal may consist of 5 persons of whom any 3, selected by the chairman, will sit at any time on a particular dispute. Ideally the members of the dispute adjudication boar board d are appointed at the beginning of the contract. FIDIC’s example for the letter of tender al allo lows ws the the Co Cont ntra ract ctor or to ac acce cept pt or rej ejec ectt na name mes s pr prop opos osed ed by the the Emplo Em ployer yer and to inc includ lude e the Con Contra tracto ctor’s r’s own sug sugges gestio tions ns for his nominee. If this procedure is used it is essential that the tenderer does not feel and any pressure to accept the Employer suggestions but feels free to propose his own suggestions. It is preferable but not essential for the individuals to be agreed before the letter of acceptances issued.   The The adj adjudi udicat cation ion pr proce ocedur dure e dep depend ends s for suc succes cess s on am among ongst st oth other er things and the party’s confidence in the agreed individuals who will serve on the DAB, and therefore it is essential that candidates for this position and not imposed by either party on the other. FIDIC as an appointing entity will nominate individual DAB members if  requested to do so. FIDIC does not administer adjudication other than to no nomi mina nate te ad adju judi dica cato tors rs,, if th the e no nomi mina nati ting ng au auth thor orit ity y ha has s be been en delegated to it under the contract.

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  Typically the DAB is organised at the beginning of the contract and cond co nduc ucts ts an init initia iall me meet etin ing g at th the e si site te wh when en co cons nstr truc ucti tion on is ju just st beginning. It meets with both parties and is supplied with copies of the contra con tract ct doc docum ument ents s and is provi provided ded wi with th a proje project ct bri briefi efing ng whi which ch acquaints the DAB with the nature of the work and the Contractor’s plans and proposals for executing executing it. At the initial meeting the timing of  the board’s regular site visits are established and the procedures for submitting submittin g data to the DAB by the parties are established. One of the One the un uniq ique ue fe feat atur ures es of th the e DA DAB B is that that it is es esta tabl blis ishe hed d to promote resolution of disputes while construction is still underway. The board’s ability to respond promptly and intelligently requires that it be kept informed of construction activities, progress and problems. Each board member should be provided with a complete set of contract documents and included on the distribution list of periodic progress reports and progress meeting minutes. It recommended that a joint progress progr ess report should be delivered by the parties to the DAB members on a monthly basis.  The DAB normally meets on site every three months with a view to re remai mainin ning g acq acquai uainte nted d wit with h the pr progr ogress ess of the wor works ks at any act actual ual potential problems or claims. At the conclusion of the site visit the DAB shall prepare a short report of its activities during the visit and shall send copies to each of the parties.   The The ver very y ex exist istenc ence e of a re readi adily ly ava avail ilabl able e mu mutu tuall ally y acc accept eptabl able e and impartial board tends to promote bilateral agreement on matters that have historically been referred to third party adjudication. Experience has shown that the DAB facilitates positi tiv ve relations, open communications, trust and co-operation normally only associated with partn pa rtneri ering. ng. The There re ar are e sev severa erall re reaso asons ns for thi this. s. Part artici icipan pants ts to the process are effectively deprived of any opportunity to posture - they do not want to lose their credibility with the DAB by taking tenuous or extreme positions. In addition since the typical DAB handles disputes on individual basis, the accumulation of claims is minimised and there is generally not an ever-growing ever-growing backlog of unresol unresolved ved claims or issues creating an atmosphere fostering acrimony. On any DAB project the parties are encouraged to identify evaluate and deal with claims and disputes in a prompt businesslike manner. At each regular meeting the DAB asks about any potential disputes and also requests a status report on claims that may feature in the future. In this manner the parties focus for an early identification and analysis and prompt resolution while remaining aware of the board’s availability in the event of an impasse.

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With the agreement of the parties the board is also available to provide non no n bind bindin ing g ad advi vice ce an and d op opin inio ions ns on an any y ma matt tter er rel elev evan antt to th the e contract. cont ract. This is part particul icularly arly usefu usefull wher where e techn technical ically ly know knowledg ledgeable eable and experienced neutrals have been selected to participant the board.  The procedures adopted by the DAB should be simple, straightforward fair and efficient facilitating prompt reference reference of disputes to the board.  The output of the board generally takes the form of a decision. The decision of the board is normally made by the unanimous consensus of  its member members. s. The decis decisio ion n is re reaso asoned ned and set sets s out the mat matter ter in dispute, the board provides opinions on the principles involved and the basis of its decision. Reasons are essential part of the decision as when properly written they may persuade both parties that any further action may result in similar conclusions.

8.7 8. 7 COST COST & COST COST BENE BENEFI FIT T Each party is responsible for paying one half of the remuner remuneration ation of the DAB members. Both the Employer and the Contractor are jointly and severally liable to pay the DAB members their fees and expenses. Historical data indicates that the normal costs of the DAB within a contract do not amount to more than 1% of the total contract value. Data available from the Dispute Resolution Board Foundation in the United States indicates that in 1988, 7 projects were known to exists with wi th DR DRBs Bs (Di (Dispu spute te Revi eview ew Boa Board rd)) re regi giste stere red. d. In the these se pr proje ojects cts 16 re recom comme menda ndatio tions ns wer were e ma made de of whi which ch non none e wer were e app appeal ealed. ed. Up to December 2001 over 820 contracts were completed with either a DAB or DRB representing an aggregate value in excess of US$ 68B. More than 1,000 disputes have been settled within these projects and only 30 proceeded to further litigation. One of our grea eatt DAB suc ucce ces ss st stor orie ies s in Eur uro ope has be been en the construction of the Channel Tunnel where the DAB consisted of five memb me mbers ers.. Onl Only y thr three ee me membe mbers rs sa satt on any par partic ticula ularr pan panel. el. Pane anels ls made recommendations on some 16 disputes with a total value of US$ 3B. It is reported that 3 of the recommendations were not accepted and wer were e furth further er appea appealed led to arbi arbitrati tration. on. The firs firstt recomm recommendat endation ion was wa s acc accept epted ed aft after er the arb arbitr itrati ation on wa was s ter termi minat nated ed the sec second ond was partially altered during arbitration and the third and this is mum was referred referr ed back to the panel for a further decision and eventually settled.  The success of the Channel Tunnel DAB in addition to further success stories with major infrastructure projects in the US, Central Europe, China, India and Southern Africa indicate the trends of acceptance of  Page 21 of 61

 

the the sy syst stem em wo worl rldw dwid ide. e. Th The e Wor orld ld Ba Bank nk ha has s no now w ad adop opte ted d a po poli licy cy requiri requiring ng disp dispute ute rev review iew boar boards ds pro producin ducing g recomm recommendat endations ions rath rather er than decisions on all its larger projects.

8.8 8. 8 PERC PERCEI EIVE VED D BARR BARRIE IERS RS   The The DAB pr proc oces ess, s, al alon ong g wi with th mos ostt cu curr rren entt AD ADR R pr proc oces esse ses, s, are are comparatively new and may be considered by some to be experimental. In reality the DAB procedure provides readily available consider cons idered ed disp dispute ute res resoluti olution on advi advice ce on an ongoi ongoing ng basi basis. s. The DAB does not supplant the decision-ma decision-making king responsibility or authority of the parties but can facilitate decision making. The typical DAB timetable encourages ongoing dispute resolution. Often at a third party decision by an agreed neutral is of great benefit to public employers who are sometimes understandably sensitive to the potential for taxpayer and medi me dia a at atte tent ntio ion n as asso soci ciat ated ed wi with th de deci cisi sion ons s res esul ulti ting ng in ad addi diti tion onal al compensation or increased project time. It is difficult to quantify the benefits of a DAB in real cost terms. As the procedure of the DAB is of a prophylactic nature, the lack of disputes may ma y to the the ca casu sual al ob obse serv rver er indi indica cate te a red edun unda danc ncy y of the the bo boar ard. d. However the presence of the board normally acts as a catalyst for better communication communication and cost effective resolution of day to day issues on site. Amongst some there may be a perception that the DAB imposes its own concepts of fairness and equity. However a competent board will not imposes its own ideas of fairness and equity on the parties. Rather it will will str strive ive for a pr proce ocedur dure e and dec decisi ision on ma makin king g pr proce ocess ss whi which ch is consistent with the language of the contract which form the basis of  the par party' ty's s agr agreem eement ent. . The sta standa ndard rd tri tripar partit tite e agr agreem eement ent re requi quire res s members to comply with applicable laws and contract provisions. The ultimate safeguard is the ability of either of the parties to serve a notice of dissatisfaction which is allowed by Clause 20. Potential users of the DAB system may consider that as the effort and expense of submitting the dispute to the board is relatively small a contractor may utilise the process to test the viability of seemingly marginal claims. However on the contrary it has not been observed that that pa part rtie ies s fo foll llow ow th this is rou oute te an and d stat statis isti tica call ev evid iden ence ce sh show ows s that that numerous projects which include DABs have had few or no disputes. Some So me ob obse serv rver ers s ha have ve co comm mmen ente ted d th that at DAB ABs s ad add d an anot othe herr la laye yerr unnecessarily to the dispute resolution process. This in turn is claimed will add to the time taken for absolute dispute resolution. However in Page 22 of 61

 

my op opin inio ion n th the e co cont ntra rary ry is th the e rea eali lity ty.. Bo Boar ards ds wi with th we well ll in info forrme med d members, available on a continuous basis during the duration of the projects often provide recommendations, advice and decisions normally with no delay.   Typical DAB procedures involve pre-hearing submissions, referral and respons response e stat statemen ements ts fro from m the part parties ies all normal normally ly accom accompani panied ed by supporting documentation. Some observers claim that this documentation provides parties with free discovery. However as a more practical matter, supporting documentation is likely to surface early in any event and as such this is not considered to be a valid criticism. My ex expe peri rien ence ce sh show ows s th that at th the e DAB pr proc oces ess s pr prev even ents ts or red educ uces es acrimony acri mony. Rat Rather her than foste fostering ring a winwin-lose lose phil philosop osophy, hy, the pro process cess encourages a win-win philosophy. Mutual cooperation eliminates such acti ac tion on ex expe pens nses es as lega legall an and d exp xper ertt fees fees,, wh whic ich h are are no norrmally ally a significant cost burden to the parties and ultimately add to the costs of  any dispute resolution process. Criticism that limited discovery and sworn testimony and the lack of  cross-examination during informal hearings creates drawbacks to the process. These comments to a large extent miss the point of any DAB process. The DAB process is a consensual procedure. True disputes of  material facts seldom remain after the hearing process. The extensive docum doc ument entati ation on on larg larger er pr proje ojects cts as wel welll as any re readi adily ly ava avail ilabl able e knowledge of witnesses minimises factual disputes.   The The maj ajor or crit critic icis ism m of th the e DAB pr proc oces ess s is it its s ap appa parren entt lack lack of  enforceability. In most jurisdictions any adjudication procedure is non statutory. In the FIDIC form the DAB process is contractual. Hence any failure to abide by the process will result in breach of contract. The parties are provided with various options within the contract for dealing with decisions generated by the DAB. Experience has shown that in cases where decisions have not been implemented in their entirety dur urin ing g the pe perriod iod of a pr proj ojec ectt the hey y hav ave e for formed th the e bas asiis for for negotiated settlements.

9.0 CLA LAU USE 20.2 20.2 & 2 20. 0.3 3 9.1 DI DISP SPU UTES TO DA DAB B Clause 20.2 states that disputes shall be adjudicated by a DAB. The scope of a dispute is made in Clause 20.4, which is wider than the requirements for a notice under Clause 20.1.

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FIDIC does not define what is meant by the word dispute. The word will therefore have its normal meaning, that is, any statement, complaint, request, allegation or claim which has been rejected and that rejection is not acceptable to the person who made the original statement or complaint. It is clearly not necessary for a complaint to have been considered consider ed by the Engineer in order to create a dispute. The wording of  Clau Clause se 20 20.4 .4 st stat ates es th that at a disp disput ute e of an any y ki kind nd wh what atso soev ever er ma may y be referred to DAB in connection with or arising out of the contract or the execu ex ecutio tion n of the wor works ks inc inclu ludin ding g any dis disput pute e as to any cer certif tifica icate, te, determination, instruction, opinion or valuation of the engineer. A dispute may be said to have arisen when : • • •

•

A final determination has been rejected Discussions have been terminated without agreement When Wh en a par party ty dec declin lines es to par partic ticipa ipate te in dis discus cussi sions ons to reac each h agreement When Wh en so littl little e progr progress ess is bei being ng ach achiev ieved ed dur during ing pr protr otract acted ed discussions that it has become clear that agreement is unlikely to be achieved

9.2 DA DAB B CONS CONSTI TITU TUT TIO ION N Clause 20.2 deals with the appointment of the DAB. It requires that the DAB shall be jointly appointed by the parties by the date stated in the appendix. The defa fau ult date is stated to be 28 days after the Commencement Date. The DAB shall comprise of either one or three suitably qualified persons. The definition of suitably qualified persons will be discussed below. FIDIC conditions of contract state that that the DAB's decision shall be binding on both parties who shall promptly give effect to it unless and until it shall be revised in an amicable settlement or an arbitration award. Hence the parties empower the DAB to reach decisions with which they undertake to comply. The DAB members must therefore be select sel ected ed ver very y car carefu efull lly y. In or order der to ma maxim ximise ise the DA DAB's B's cha chance nces s of  success in avoiding arbitration members must be trusted and have the conf co nfiide den nce of bo both th part rtiies es.. It is th ther eref efor ore e es ess sen enttial tha hatt th the e membership of the dab is mutually agreed upon by the parties and not imposes at the part party y.  This Clause states that in the case of a three person DAB each party shal sh alll no nomi mina nate te on one e me memb mber er fo forr th the e ap appr prov oval al of the the othe otherr pa part rty y.

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Appr pprova valls, as stat stated ed elsew lsewh her ere e in the co cont ntrrac actt, shal alll not be unreas unr easona onably bly wit withhe hheld ld or del delaye ayed. d. Eac Each h par party ty sh shoul ould d end endeav eavour our to nominate a truly independent expert with the ability and freedom to act impartially and develop a team spirit within the DAB and make unani un animou mous s dec decis ision ions. s. It ma may y the there refor fore e be re reaso asonab nable le to wit withho hhold ld approval of a proposed member if it appears unlikely that he will not endeavour to reach a unanimous decision. This reason for disapproval may be based upon reasonable grounds for anticipating that he will decline to discuss matters constructively within the DAB. Having chosen two members the parties are then required to consult both the members chosen and agree upon the third member, who shall become the chairman of DAB. The agreement on the chairman can sometimes be difficult for numerous reasons. In reality the members may find it easier to agree with each other the nomination of chairman and then propose that person to the parties for their agreement.  The Clause anticipates that the nomination of a one person DAB or the chairman of a three person DAB is mutually agreed. In such cases the Employer Emplo yer nor norma mally lly pr provi ovides des the nam names es of sui suitab table le per person sons s for the tenderer to select. A party may be reluctant to choose names from a list of people who have already been contacted by the other party. Experience shows that this process becomes more difficult during the contract when the DAB has not been established at the start of the project. It is reasonable to assume that for smaller contracts a one person in DAB is sufficient. Current Current practice in the United States indicates a small contract to have a value of $20M or less, however in some states such as Florida, small contracts are said to be below $2M. Within the EC 3 man DABs are the norm on all contracts. On mega projects and projects with varied technical complexity it is normal to have a 5 man panel from which the chairman will choose any 3 suitable persons to hear a particular dispute. Where Wher e pr proj ojec ects ts invo involv lve e ma many ny la laye yers rs of su sub b co cont ntra ract ctor ors s or ha have ve a number of contractors then some advantage may be considered by having either a common DAB or an “Interlocking” DAB member who sits on a number of boards within the same project. Where Wher e pr proj ojec ects ts invo involv lve e a nu numb mber er of “l “lay ayer ers” s” su such ch as co cons nsul ulta tant nt agrree ag eeme ment nts, s, su supp ppli lier er ag agrree eem men ents ts an and d no nomi mina nate ted d su sub b co cont ntra ract ct agreements, in addition to the contractor’s own sub contractors the a multi layer DAB may be considered to be beneficial. Procedural and administrative administr ative problems are inherent in such systems, particularly with re regar gard d to con confid fident ential iality ity and adm admis issib sibili ility ty.. How Howeve ever, r, the enh enhanc anced ed Page 25 of 61

 

dispute resolution process may outweigh the difficulties in establishing and running such a system.

9.3 9. 3 SEL ELEC ECTI TION ON OF ME MEMB MBER ERS S As me menti ntione oned d abo above ve eac each h par party ty nom nomina inates tes one pot potent ential ial me memb mber er.. Often Ofte n the the invi invita tati tion on to te tend nder er issu issued ed by the the Em Empl ploy oyer er co cont ntai ains ns a schedule with names of potential DAB members. The Tenderer is not oblige obl iged d to sel select ect any anyone one from from thi this s lis listt and ma may y sub substi stitut tute e fur furthe therr names which become suggestions and do make the tender conditional. It is preferable that the list of potential names is prepar prepared ed jointly by the parties. In such cases nominations may be agreed after the submission of tenders but prior to the commencement date. In the event of failure to agree nominations the provisions of Clause 20.3 will apply. Clause 20.3 provides a default appointment procedure in the event that the parties fail to agree nominations by particular dates.  The specific “failure”  “failure” dates dates are: •

•

•

•

Failure to appoint a sole member by the date stated in the appendix to tender Fai ailu lurre to no nomi mina nate te mem embe bers rs by th the e da date te stat stated ed in th the e appendix to tender Failure to agree on the appointment of chairman by the date stated in the appendix to tender Failure to agree member replacement within 42 days of vacancy

 The default appointment procedure allows for the appointing entity to appoint members upon a request by either or both of the parties for such appointment. In the appendix to tender the default appointment entity is the President of FIDIC or a person appointed by him. The Clause allows for due consultation with both parties by the appointing entity on prior to its determination of the appointment. This provision may prove problematic in the case where one party is already resisting the appointment of anyone on to the DAB. The consultation process may be seen as a further opportunity for delay and veto. In order obtain the nomination of a board member it is necessary to make a request to the President of FIDIC together with the submission of a fee. The request should contain sufficient detail of the contract and of the problems to nomination. be decided by to enabletakes the President to make a suitable Theadjudication normal consultation the form

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of the submission to the parties of one or more names of suitable candidates together with their CV’s. It is expected that the parties respond with no delay with either their acceptance or rejection of the names put forward. Once made the appointment becomes final and conclusive. A further method of member selection occasionally used is to have a list of potential members included in the contract appendix from which the parties may select candi candidate dates s whene whenever ver neces necessary sary.. As with the consultation process above, this method is not ideal. Listees may no longer be available when required and depending upon the origin of  the list no names may prove suitable to a party intent on proceeding directly to arbitration.

9.4 9. 4 QUAL QUALIT ITIE IES S OF OF D DAB AB ME MEMB MBER ERS S Board members must must be selected c carefully arefully because : •

•

  The parti parties es empow empower er the DAB to rreach each deci decision sions s with whic which h they undertake to comply, and  The DAB member cannot ordinarily be removed, except with the agreementt of both parties agreemen

 The members of the board should be experienced and should have the respect of the parties in order to fulfil their obligations adequately. The board boa rd acts as a tea team m and not as ind indivi ividua duall re repr prese esenta ntativ tives es of the parties. As such the board should exhibit a balance of experience and profe profess ssion ional al exp expert ertise ise.. Unl Unless ess the Em Emplo ployer yer an and d the con contra tracto ctorr are are from the same country it is preferable for each member of the DAB to be of a diff differ eren entt na nati tion onal alit ity y to ea each ch ot othe herr an and d no nott of th the e sa same me nationality as either of the parties.  Training courses for board members have been established by FIDIC and a list of suitable board members has been published by them. Several other organisations throughout throughout the world have also establish established ed lists of potential nominees.

 The standard criteria for inclusion on such a list normally consist of : • • •

Membership of the listing organisation Appropri Appropriate and professional qualifications Minimumate of academic ten years experience in a senior position

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•

• • •

Knowledge and experience of the relevant documentation Formal dispute adjudication training and assessment Good interpersonal communication skills Ability to be impartial and objective

contract

9.5 BASIC BASIC QUA QUALIT LITIE IES S REQ REQUIR UIRED ED BY BY DAB M MEMB EMBERS ERS  The parties empower the DAB members to reach decisions with which they they un unde dert rtak ake e to co comp mply ly.. Th Ther erefo eforre the the DAB mu must st co comp mpri rise se of  members have the ability and experience to wield these powers wisely and who are willing to do so.

9.6 EXPERIENCE   It is important that the member has experience of the discipline in which the dispute has occurred. He is then able to understand the problems which face the parties during the execution of the works and bett be tter er ap appr prec ecia iate te th the e sk skil ills ls ne need eded ed to un unde dert rtak ake e the the wo work rks s in a profess pro fessiona ionall mann manner er.. When pro problem blems s occur occur,, know knowing ing the diffi difficult culties ies which each party faces, he has a better understanding of the solutions required. An und unders erstan tandin ding g and kno knowle wledge dge of con constr struct uction ion me metho thods ds is als also o advantageous. Although construction methods change from project to project and indeed from country to country, knowledge of standard syste sy stems ms as the they y re relat late e to par partic ticula ularr con condi ditio tions ns is im imper perati ative. ve. The selection of correct or adequate working methods and equipment is normally vital to the successful implementation of projects. One of the functions of the DAB may be to provide advice and opinions if required to do so. It is therefore of great benefit to the parties that the board mem embe berrs ar are e exp xpe erien rience ced d and hav ave e a br broa oad d bas ase e of ind ndus ustr try y knowle kno wledge dge.. Wi Witho thout ut thi this s ex exper perien ience ce the there re wou would ld be little little ben benefi efitt in consulting the members on any aspect of problem solvi solving. ng. It is of course impossible that members are always completely up to date da te wit with h all new con constr struct uction ion dev develo elopm pment ents s thr throug oughou houtt the wor world. ld. Howe Ho weve verr at th the e be begi ginn nnin ing g of a pr proj ojec ectt the the me memb mber er is req equi uirred to familiarise himself with all aspects of the project and it is for the parties to ensure that the members are adequately briefed. Any gaps in the members knowledge or experienced may thus be addressed at an early stage.

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Having a board member who has an overview on a number of similar projects in differing areas of the world will provide the parties with the conf co nfid iden ence ce th that at th thei eirr ch chos osen en disp disput ute e res esol olve verr un unde ders rsta tand nds s th the e problems problem s which they face on a day to day basis.

9.7 9. 7 CONT CONTRA RACT CT KN KNOW OWLE LEDG DGE E An understanding of the rights, obligations and liabilities of the parties is of fundamental importance for board members. Projects upon which DAB’s DA B’s ar are e use used d ar are e nor norma mall lly y lar large ge com compl plex ex wor works ks in invol volvin ving g ma many ny disc discip ipli line nes s an and d sk skil ills ls.. In or orde derr for for a pr proj ojec ectt to be su succ cces essf sful ully ly undertaken it is vital that the coordination and dispersal of information betwee bet ween n the par partie ties s invol involved ved run runs s as sm smoot oothl hly y as pos possi sible ble.. Of Often ten parties involved in complex projects employ large numbers of staff, many of whom are unaware of the detailed responsibilities and risk allocation between the parties. Contract documentation involving the general and particular conditions of co cont ntra ract ct in ad addi diti tion on to sp spec ecif ific icat atio ions ns an and d co cont ntra ract ct de deta tail ils s ma may y become voluminous. It is the case that judiciously placed questioning by board members may contribute to the smooth running and free flow of in info form rmat atio ion n be betw twee een n th the e pa part rtie ies s wi with thou outt in inte terf rfer erin ing g wi with th an any y contractual posturing being established by either party. During the consideration of issues and particularly during site meetings knowledge of the contractual position of the parties is essential in order that meaningful observations may be made regarding the allocation of  risk and the liabilities of the parties.

9.8 9. 8 LANG LANGU UAGE AGE CA CAP PABIL ABILIT ITY  Y  A working knowledge of the language of the contract is required by each of the members of the board. The ruling language of the contract may be defined in the appendix to tender. However, FIDIC considers that the official and authentic texts to be the versions in the English language. It may be the case that some of the documents produced during the running of a project are in a different language to the language of the contract and that many of the employees involved in the project may commu com munic nicate ate in a langu language age oth other er tha than n the off offici icial al lan langua guage ge of the cont co ntra ract ct.. It is of some be bene nefi fitt to th the e par arti ties es if th the e mem emb ber is

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sufficiently fluent in the languages involved in the project in order that he may remain fully conversant with all the activities of the works.  There may be occasions however where the particular knowledge of a language by a member may be disadvantageous. A case may exist where both parties are of a different nationali nationality ty and have no knowledge of each other’s language but rely on the common language of the cont co ntra ract ct wi with th wh whic ich h to co comm mmun unic icat ate. e. If th the e bo boar ard d me memb mber er ha has s knowledge of the common language together with the language of one of the parties then any dealings by the member in one of the party’s la lang ngua uage ge ma may y be se seen en as co comp mprrom omis isin ing g hi his s in inde depe pend nden ence ce.. Th This is situation most commonly occurs in the consideration of untranslated documentation where common language translations are not provided.

9.9 DISPU DISPUTE TE RESOL RESOLUTI UTION ON EXPERI EXPERIENC ENCE E   The The pr proce ocess ss of dis disput pute e re resol soluti ution on is one inv involv olving ing tec techni hnique ques s and understanding not normally provided to project participants during the course of their working lives. Dispute Resolution techniques utilised by the DAB are to be considered as contract tools available to the parties. As with all other aspects of the project successful use of these tools require skill and experience. It is of great benefit to the parties that the participants in the DAB have a knowledge of the particular dispute resolution skills required in order to instil confidence in the parties that their problems problems and disputes have been adequately considered and that the decision reached takes into account all of the matters raised by the parties as well as their contractual obligations obligations..   The The su succ cces ess s of an any y DA DAB B wi will ll be me meas asur ured ed ag agai ains nstt an any y fi fina nali lity ty it achieves. Thus proceeding to arbitration may be an indication that the de deci cisi sion on of th the eon DA DAB B is to be ch chal alle nged ed. . Th The e is issu sue e of a No Noti tice ce of  Dissatisfaction the other hand isleng not necessarily an indication that the matter put before the DAB has not adequately been determined.  The issue of the Notice may be the only opportunity which a party has to extend the time in which it considers the opinion of the DAB. This may be made by the agreement of the parties and may be an essential element of the agreement proces process s particularly where one of the parties to a decision is a joint venture or government body where complex internal consultation is necessary.

9.10PROCEDURAL KNOWLEDGE

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It is probably true that all projects and problems are unique. The scope of iss ssue ues s invo involv lved ed wi with thin in th the e pr prob oble lem ms may be si sim mil ilar ar to th thos ose e encountered elsewhere. However the unique nature of many situations often lead to differences of opinion. It is therefore important that DAB mem embe berrs are fam amiilia liar wi witth va varriou ous s for forms of pr pro obl blem em sol olvi vin ng procedures. Differing procedures may be utilised to resolve differing problems.  The FIDIC form of contract specifies procedures to be utilised by the DAB. Thus each party and board member is fully aware of the steps to be taken in the day to day routine of the process. However it is naïve to cons co nsid ider er that that in a no non n bind bindin ing g an and d po poss ssib ibly ly in info forrma mall pr proc oces ess s the the procedure to be adopted for all eventualities will be the same. Each problem may contain a feature which may render resolution within a rigid set procedure unsuitable. Members need to be experienced and knowledgeable about what procedures are available and which would best fit the matters in hand.  The DAB is a consensual process and as such the parties must have suffici suffi cien entt co conf nfid iden ence ce in the the bo boar ard d me memb mber ers s to en enab able le a fl flex exib ible le appr ap proa oach ch to be ta tak ken wh when en a un uniq ique ue si situ tuat atio ion n aris arises es.. Th The e DAB chairman’s responsibility will include a requirement to ensure that the procedure to be adopted under any particular situation provides the parties with a fair and equitable opportunity to prepare their case and to respond to the case of the other party. The choice of any particular procedure, or deviation from it, may be necessary to ensure that the process proceeds in a timely and cost efficient manner. A deviation to the agreed procedure may be made by the parties upon the suggestion of either of the parties but will always appear to be morre ac mo acce cept ptab able le as an im impa part rtia iall su sugg gges esti tion on if ma made de by the the DAB chairman.

9.11QUALIFICATIONS Formal Form al quali qualificat fications ions are always an emot emotive ive iss issue ue when comp comparin aring g stan standa darrds fr from om on one e co coun untr try y to an anot othe herr. It is th the e ca case se th that at DAB members mem bers pro probably bably origina originate te fro from m a bro broad ad spect spectrum rum of expe experien rienced ced prac pr acti titi tion oner ers s wh whos ose e se seni nior orit ity y an and d in indu dust stry ry ba base sed d ex expe peri rien ence ce is qualification enough. However a basic criterion in the modern world when dealing with matters relating to either technical complexity, legal obligation, programming or financial issues is that the qualifications of  the member provides a theoretical and informed background for the basis of any opinion. The qualification process is also an opportunity to

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le lear arn n from from,, an and d be as asse sess ssed ed by by,, sp spec ecia iali list st ex expe pert rts s in the the su subj bjec ectt matter. In our modern commercial world it is a condition precedent in most professional institutions that membership is preceded by a course of  st study udy cul culmi minat nating ing in an acc accept eptabl able e qua quali lific ficati ation. on. Mem Member bersh ship ip of a prof pr ofes essi sion onal al inst instit itut utio ion n indi indica cate tes s th that at a mi mini nimu mum m stan standa darrd of  knowledge and assessment has been achieved by the individual. However the qualifications required by DAB members will relate to the issues to be considered by him.

9.12AVAILABILITY  Availability is of key importance to any DAB process. The members are required to become familiar with the details of the project but are not involved on a day to day basis. Hence the commitment to membership of the board is one of a part time nature over the period of the project. In so some me ca case ses s th this is ma may y ex exte tend nd into into a nu numb mber er of ye year ars. s. Poten otenti tial al members must be aware of the commitment and must allocate time within their diaries for such eventuality. Attendance at regular progress meetings or hearings is a specific date related requirement. Allocation of regular adequate periods of time to re remai main n fam famili iliar ar wi with th the pr proj oject ect is als also o re requi quire red. d. Mem Member bers s wil willl be re requi quirred to stu study dy re regul gular ar pr progr ogress ess re repor ports, ts, nor normal mally ly pr provi ovided ded on a monthly basis. Member’s availability availability may also be affected by health or age factors. If a potential member is to retire from professional life then it is incumbent upon him to en ensur sure e that he do does es not enter into a DA DAB B com commitm mitment ent from which he may need to withdraw due to retirem retirement ent during the term of the DAB. It is up to individual aspirants to ensure that their health is adequate for the tasks which they may wish to undertake. A typical example may be where a project is located in an area in which persons with some breathing difficulties may find problematic such as in high altitude or damp or impure atmospheres. Availability may also be affected through political circumstance. It is of  little value to appoint board members who are unavailable due to their inability to obtain the necessary travel documentation to visit the site or any location where prime components may be manufactured.

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In some states in the US members, due to economic restrains on the expenses of board members, DAB aspirants in some states, such as California, are said to be unavailable if they reside more than 2 hours travelling distance from the job site.

9.13IMPARTIAL Impart Impa rtia iali lity ty is of fund fundam amen enta tall im impo port rtan ance ce to th the e DAB de deci cisi sion on.. Members are required to be impartial and must be seen to be impartial. Although at times the member may be called upon to use his own knowledge and experience, if he intends to rely on that knowledge or expe ex peri rien ence ce th then en he mu must st so info inforrm the the pa part rtie ies s an and d gi give ve them them an opportunity to address him on that particular submission. He should not have any prior knowledge of the subject matter of the part pa rtic icul ular ar disp disput ute e wh whic ich h he ma may y de deci cide de is pe pers rsua uasi sive ve.. Th The e pr prio iorr know kn owle ledg dge e ma may y be eith either er inco incorr rrec ectt or ma may y cr crea eate te di diff ffic icul ulty ty wh when en attempting to distinguish differences with submitted evidence.   The rules of natural justice must prevail in all dealings between the DAB and the parties and all inform information ation must be provided to all parties. Correspondence Corr espondence between the parties and the DAB is to be copied to the other parties and other DAB members> DAB members must not meet privately with either of the parties. If a procedural meeting is requested by one party but objected to by the other it is often prudent for the DAB to agree to the meeting. Any failure to so may be seem by the requesting party to be a bias against him. The DAB must decide in many cases what requests are genuine and what requests are made with impure ulterior motives such as delay or frustration. remedy forthe calling unnecessary meetings may be found by a costThe award against calling party.

9.14INDEPENDENT  The members are not permitted to be commercially linked in any way with the parties nor have any financial interest in the project. This re restr strict iction ion str stretc etches hes to bot both h dir direct ect fin financ ancia iall re relat lation ionshi ships ps suc such h as employment or consulting services, as well as other financial dealings such as share ownership. In the FIDIC form this restriction does not apply to past relationships. However any such relationships are to be declared in writing to the parties prior to the execution of any DAB cont co ntra ract ct or ag agrree eeme ment nt.. It is incu incumb mben entt up upon on the the po pote tent ntia iall bo boar ard d

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member to declare any interest which he has or as ever had with the parties as soon as possible. The parties may then decide by agreement whether they perceive the declared interest to be of any significance.  The member must also not enter into any discussions nor make any agreements with either of the parties in relation to any future work or employment. Frivolous objections to the membership of the board may be discounted if it clear that the objection has no real foundation. However if there is any doubt this should be aired as soon as possible and wherever and whenever the situation permits prior to the confirmation of a member on to the board.

9.15LAWYERS  The inclusion of lawyers on a primary dispute resolution board at job level may be considered to be questionable. This may the case where any decision required revolves around technical issues only. However most major projects have complex legal relationships and the question of co cont ntra ract ct int nter erpr pret etat atio ion n may of ofte ten n be beco com me at issue in any any consideration of the matters in dispute. A lawyer who has a further technical qualification or understanding will be a great asset to any board and will provide a firm basis of legal understanding. Howeve Howe ver, r, it is the the ca case se th that at th the e req equi uirrem emen entt of an any y as aspi pira rant nt DA DAB B member, particularly within the FIDIC forms, should have a knowledge and un unde derrsta tan nding ding of co cont ntra ract ct law aw.. Wher erev ever er iss ssu ues of leg egal al interpretation interpr etation are to be made by the board then the respective views of  the parties will be made to the board by their submissions. It is then the of the the information provided them by the duty parties. Theboard boardtoisinterpret not required to make any primarytodecisions reg egar ardi ding ng lega legall inte interp rprret etat atio ions ns.. It is my op opin inio ion n that that this this is no nott a recognised function of any DAB. The board may however make an interpretation regarding the compliance of a party with any particular condition of the contract.

9.16 TERMINATION TERMINATION OF DAB MEMBERS Clause 20.2 provides for a procedur procedure e for the selection of a replacem replacement ent DAB member or for the termination of the appointment of any member.  The clause safeguards against any unilateral decision of a party. For the termination of a member it is required that the both parties agree. The

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conditions of termination are defined within the tripartite agreement entered into with the member and the parties. It is notable that the clause notes that a replacement member shall be installed due to the inability of a member to act. Definitions of inability to act include disability. It can only be assumed that it must be the case that must be shown that the disability prevents a member from itundertaking the full gambit of his roleactually on the board. Legislation in some jurisdictions may also determine the capacity to terminate an appointment due to disability.

10.0DAB 10.0 DAB FRAMEWORK  FRAMEWORK  10.1GENERAL CONDITIONS OF DISPUTE ADJUDICATION AGREEMENT  Contract The appendix to the Generalupon Conditions of the 1999 FIDIC form of  contains conditions which Dispute Adjudication will be undertaken in the Contract. The Dispute Adjudication Agreement is a tripartite agreement between the parties to the contract on the one hand and the board member on the other. The board member is an in indi divi vidu dual al an and d th the e ag agrree eeme ment nt is pe pers rson onal al to hi him m al alon one. e. He is no nott permitted to assign or subcontract the agreement without the prior agreementt of the parties. agreemen  The agreement will define whether the member is a sole adjudicator or a member of a panel and if he is to be acting as chairman.  The general provisions of the agreement define the period of the DAB and particularly define the start date and the completion date which is normally normal ly the discharge date mentioned in Clause 14.12 of the contract.  The start date takes effect on the occasion of a number of alternatives: • •

•

 The commencement date of the contract   The date when all the participant in the tripartite agreement have executed the agreement, or When Wh en all the tri tripar partit tite e agr agreem eement ents s bet betwee ween n the par partie ties s and other DAB members have been executed.

When the agreements have taken effect then it is the responsibility of  teach of the parties to notify each of the board members members..

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It is evident that when a DAB has not been constituted at the beginning of a pr proje oject ct the then n pr proce ocedur dural al del delays ays may be enc encoun ounter tered ed aft after er the agreement of the DAB constitution, but before it has any jurisdiction to act. If it is considered that delays in the commencement of the DAB activi act ivitie ties s may giv give e ris rise e to ex exten tensi sions ons of per period iod und under er Cl Claus ause e 20. 20.4 4 (period in which a DAB has to reach a decision) then a further clause morre cl mo clos osel ely y de defi fini ning ng th the e co comm mmen ence ceme ment nt da date teform of of the thea definition trip tripar arti tite te agreement should be considered. This may take the of an actual commencement date or a date unrelated to any further notice by either of the parties, such as the date of execution of the tripartite agreement alone.   The The mem embe berr is ob obli liga gate ted d to rem emai ain n av avai aila labl ble e to un unde dert rtak ake e th the e provi provisio sions ns of the tri tripar partit tite e agr agreem eement ent des despit pite e a per perio iod d of 6 months months elapsing during which the silence of the parties is permitted. This may be problematic to a busy practitioner who needs to make decisions regarding the most beneficial use of his time. Parties should attempt in all cases to minimise the delays between the execution of the tripartite agreementt and the commencement of the DAB activities. agreemen During periods of non confirmation of the contract commencement the member is obliged to remain available to the parties, however will be at risk of the agreement not proceeding. He will be uncompensated for the period prior to the termination or confirmation of the agreement.  The long period of allowable silence prior to the determination of the agreementt will in the long term inflate the costs of DAB participatio agreemen participation n to the industry.  The agreement may be terminated by the resignation of the member. Appl Ap plic icab able le la law w ma may y en enti titl tle e th the e mem embe berr to res esig ign n un unde derr ce cert rtai ain n conditions. Clause 6 of the agreement also entitles him to resign in the case of the non payment of his fees and expenses. Resignation is a very drastic action to be taken by the member and one Resignation which may have considerable consequences. Confidence of the parties and an d th thei eirr su supp ppor orte ters rs in th the e DAB sy syst stem em wi will ll be un unde derrmi mine ned d if a member resigns in anything other than a genuine circumstance not already envisaged in the contract.

10.2WARRANTIES  The warranties of the member are very onerous in the FIDIC conditions.  The warranties are far reaching and will have effect throughout the life of the agreement. Although two of the members of the DAB may have

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been nominated or selected by the parties, each member enters into an agreement with both parties and owes no allegiance to any party.  The prime warranties of the members of the DAB are : • • •

 That he is independent of the Parties  That he will be impartial to the parties  That he shall promptly disclose to the parties any matter which may arise which could cause the member’s independence or impartiality to be brought into question.

 The agreement also defines the repr representations esentations upon which the parties have relied when entering into the agreement. In order to satisfy his contractual obligations the member must ensure that he is fully aware and an d in info form rmed ed of th the e iden identi titi ties es of th the e pa part rtie ies s to the the co cont ntra ract ct.. Th This is information he will specifically need in order to investigate his own conflicts of interest with the parties.   The The pa part rtie ies s ha have ve pa part rtic icul ular arly ly relie elied d up upon on the the kn know owle ledg dge e that that the the member is : •

• •

Experienced in the work which the contractor is to carry out under the contract Experienced in the interpretat interpretation ion of Contract Documentation Flue Fluent nt in th the e la lang ngua uage ge fo forr co comm mmun unic icat atio ions ns de defi fine ned d in the the Contract.

10.3 OBLIGATIONS OBLIGATIONS OF THE DAB MEMBERS  The general obligations of the member are listed by FIDIC to ensure that he is fully aware of the detail of his obligations and his duty to maintain his independence and impartiality.  The obligations may be summarised as : •

No financial interest & Independence

 This is a further fu rther detailed definition of the requir required ed independence of  the member. member. It is imperative that the independence of the member is est establ ablis ished hed and ma main intai tained ned in or order der to ens ensur ure e the con contin tinued ued confidence of the parties in both the member and the DAB system. •

Disclosure

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It is understood that in some cases some contact between the parties and the member may have existed prior to the present contract. Indeed, if one of the parties is to nominate a potential membe me mberr the then n the like likeli lihoo hood d of a pr previ evious ous con contac tactt is hi high. gh. Thi This s eventuality is catered for by the disclosure to the parties by the memb me mber er of an any y pr prev evio ious us relat elatio ions nshi hips ps pr prio iorr to th the e pr pres esen entt agreement. disclosure is deemed be broader thandirector, merely contact with The the parties as any personaltocontact with any officer or employee of the parties or the Engineer is also required to be disclosed.  The level of the disclosure is to be to the best of his knowledge and recollection. The level of disclosure may be less than that imposed by the strict disclosure regime imposed by some states in the US. However it is prudent to assume that compliance with local statute may override any contractual obligations by the member and as such strict compliance with the disclosure rule will reduce any possible problems at any later date. •

Compliance with rules

•

Availability

•

Privacy

It is und ndou oubt bted edlly int nten ende ded d that the DAB pr pro oce cedu durres an and d deliberations are to remain private and confidential. The privacy affects not only the communications and decisions of the board but also its deliberations. In some cases even the fact of the DAB will wi ll rem emai ain n co conf nfid iden enti tial al.. In th the e US US,, wh wher ere e pu publ blic ic po poli licy cy ma may y dem de man and d th that at an any y he hear arin ing g or mee eeti ting ng wh wher ere e pu publ blic ic fund funds s or proj pr ojec ects ts are are to be disc discus usse sed d wi will ll be reg egar arde ded d as op open en pu publ blic ic meetings, such public admittance should be resisted. It may be regarded regard ed that the DAB process is not a final and binding procedure but is rather a private dispute resolutio resolution n procedure and not subject to public scrutiny.   The The ca case se ma may y ex exis ists ts wh wher ere e th the e av avai aila labi bili lity ty of do docu cume ment ntat atio ion n pres pr esen entted for for any DAB pr proc oced edur ure e is req equi uirred for for a futu futurre arbitration or litigation. It is to be noted that this confidentiality agreement relates relates to the member and not to the parties. Note that the provisions of Clause 20.6 allows for the decision of the DAB to be admissible as evidence in any arbitration proceeding proceeding.. •

Advice and opinions

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It is often of great value to the parties to solicit the opinion of the DAB regarding particular issues. This is in line with the object of  the DAB which is to enhance relationships between the parties to such an extent that all problems and difficulties between them are resolved prior to their becoming disputes. The general obligations state a member shall be available to give advice and opinion on anythat relevant matter.  The giving of the advice is conditional to the agreement of the partie par ties s and the oth other er me memb mbers ers.. In mo most st nor normal mal cir circum cumsta stance nces s advi ad vice ce or op opin inio ion n wi will ll be fo forrma mall lly y req eque uest sted ed an and d the the DAB wi will ll cons co nsul ultt wi with th ea each ch othe otherr pr prio iorr to the the ad advi vice ce or op opin inio ion n be bein ing g provided. The advice or opinion, as with all communications, will be provided to both parties simultaneously. Advice or opinion may be solicited on procedural matters as well as substantive issues. It may be the case that the parties wish to agree on certain issues whilst retaining some elements of the matter for the decision of  the board. Advice in such a case may be on the structure of the wording of the pre-agreement issues. In any case it is imperative that advice or opinion is only given within the formal communications guidelines of the DAB communications procedure.

10.4OBLIGATIONS OF THE PARTIES   The The Part arties ies agre agree e tha thatt the DA DAB B me memb mbers ers sh shall all not be sol solici icited ted for advice or opinion without the prior approval of the other party and the other members.  The parties undertake that no member of the DAB should participate in any future arbitration either as arbitrator or witness other than by the agreement of the parties and all the DAB members. Any involvement as a future arbitrator would render the member considerable difficulties in complying with say S.33(1)a of the UK Arbitration Act which calls for the arbitrator to act impartially particularly if he has already decided the matter in a particular way under another procedure.  The parties also undertake not to hold the member liable for any act or omission unless it is shown to have been in bad faith. The act of bad faith, particularly with regard to the obligations of the member, would become significant if at some stage the act would render any decision of the DAB to become unenforceabl unenforceable, e, void or defective.

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Whenever a dispute is referred to the DAB the parties are obligated to provi provide de a sec securi urity ty of ex expen penses ses wh which ich mem member bers s ma may y re reaso asonab nably ly be expected to incur during site visits and hearings. It is reasonable to expect that most hearings will be undertaken during normal site visits, however cases may arise when extended hearings or additional visits ar are e req equi uirred ed.. Th The e ex expe pens nses es fo forr th thes ese e pa part rtic icul ular ar vi visi sits ts wi will ll not not be specifically accountedtripartite for in the routine payments made to members under their individual agreements agreements. .

10.5PAYMENT OF DAB MEMBERS   The The in indi divi vidu dual al tr trip ipar arti tite te ag agrree eeme ment nt be betw twee een n the the pa part rtie ies s an and d the the member may define the precise method of payment of the member. However, the General Conditions define the scope of such payments.  The member is to be paid in the agreed currency. It is the responsibility of the member to ensure that the agreed currency is suitable for him and is capable of acceptance by him.  The payment to the member is made up of four elements : •

Retainer Fee

  The The ret etai aine nerr is co cons nsid ider ered ed to be pa paym ymen entt fo forr the the me memb mber er’s ’s avail ava ilabi abilit lity y to act as re requi quirred by the agr agreem eement ent.. It is nor norma mally lly computed as being the equivalent of one or two days per month.  The retainer also recompenses the member for the time involved in remaining conversant with the project and for maintaining his files. All elements of his office expenses are deemed to be included in the retainer fee. In the case of the chairman of the DAB the retainer may have an increased value from that of other members due to his administrative role. •

Daily Fee

 The daily fee represents the time of the member at the site during re regul gular ar vis visits its whi which ch is dee deeme med d to inc includ lude e a cer certai tain n am amoun ountt of  travelling time.   Th The ra rate te also also inc ncllud ude es th the e ti tim me invo vollve ved d in the read adiing of  subm su bmis issi sion ons s in pr prep epar arat atio ion n for for he hear arin ings gs,, th the e ti tim me sp spen entt at hearings, in deliberations and in the preparation of decisions. If it

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is anticipated by the member to incur costs or fees relating to any other oth er act activi ivitie ties s the then n the me membe mberr sho should uld see seek k app appro roval val of the parties in advance of incurring any liability. Both the retainer and daily fee will remain at a fixed sum for the first two years of any project. The rates will therefore reflect any anticipated inflation forprudent the period. Future alterations to the fees are by agreement. It is that such agreement is specified in the original base document to ensure that future fees reflect any anticipated increases. It is of interest to note that many FIDIC infrastructure projects are located in countries where local currency and costs are subjected to uncertain inflation levels. Payment of members in such states needs to be sympatheti sympathetic c to such alterations. •

Expenses

 This includes the reimbursement of any direct costs incurred by the member during the undertaking of his duties. Any administrative costs relating to the expenses will be recovered by the member through his retainer fee which is deemed to include his overhead costs. •

 T  Taxes axes in c country ountry of project

 The payment to the member will include any local taxes to which the member’s fees and expenses may be subjected. In some cases this may relate to withholding taxes or notional earnings related taxes at the point of origin of the payment. This reimbursement will wi ll no nott ap appl ply y if th the e mem embe berr is a pe perrman anen entt res esid iden entt in th the e contract country.  This provision may provide the member with some difficulties if, in orde orderr to ob obta tain in a wo work rk pe perrmi mitt or bu busi sine ness ss vi visa sa,, he ne need eds s to become a notional permanent resident in the contract country. In such a case the taxes to which he will be subject will not become reimbursable reimbur sable through the contract. •

Payment Timing

In accordance with Clause 20.2 each party shall be responsible for paying one half of the member’s remuneration. However in terms of the Tripartite Agreement both the parties, jointly and severally, undertake to pay the member.

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Payment for all fees and expenses are made by the submission of  in invo voic ices es by th the e me memb mber er to th the e Co Cont ntra ract ctor or.. Th The e Co Cont ntra ract ctor or is obliged to pay all of the member’s invoices in full within 56 days.  The Contractor is reimbursed by the Employer by one half of the invoiced amount. In the event of any failure of the Contractor to pay the sums required the Employer duty The to pay the full invoiced amount withinthen a further period ofhas 14adays. Employer is the there reaf after ter reim reimbur bursed sed by the Contr Contract actor or for one ha half lf of the invoiced amount plus any collection costs and financing charges.   The The mo mont nthl hly y ret etai aine nerr an and d ai airr fa farres ar are e pa paid id ar are e pa paid id ea each ch 3 months, in advance of the period. Invoices for the daily fee and all expenses other than airfares are submitted after each site visit or hearing. •

Default of Payment

In an any y ca case se wh wher ere e th the e pa part rtie ies s de defa faul ultt in the the pa paym ymen entt to the the member of any of the retainer, fees and expenses after a period of  70 days from the submission of invoice, then he is entitled to either suspend his services without notice or resign his appointment by giving the requisite notice. Both events may run concurrently.

11.0 TERMINATION TERMINATION OF DAB It is the object of the DAB to be in place for the duration of the project.   The The term termin inat atio ion n cl clau ause se is incl includ uded ed for for the the ev even entu tual alit ity y of a jo join intt requ quir irem emen entt, by ag agrree eem men ent, t, to br briing to an end the mem emb ber ers s appointment. The notice period to the member of such termination is 42 days. The member may resign his appointment by giving 70 days notice to the parties. If on the other hand the member fails to comply with any condition of  the th e Di Disp sput ute e Adjud djudic icat atio ion n Ag Agrree eeme ment nt th then en th the e pa part rtie ies s may ay,, by agreement, agreemen t, immediatel immediately y terminate the appoi appointment ntment of the member member.. In the event of any failure of the Employer or Contractor to comply with any condition of the Adjudication Agreement then the member may give an immediate notice of termination to the parties.

12.0DEFAULT OF MEMBER

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If the member fails to comply with any of the obligations which he is under then he is not entitled to any fees and expenses. Further Furthermore more he is liable to reimburse the parties for any fees and expenses of the other DAB members for any proceedings of decision of the board which are rendered render ed void or ineffective.  pr This Thi sedur isural an er on oner erou s uld cl clau set an and d call an any y in mi mino nor rdate in infr inge gem en ent t sion or mino nor proc oced al erro ror r ous wo woul dause no not typi typica lly y inva vali lida tefrin an any ymde deci cisi on..mi An Any yr infringement must be of some substance. The parties are duty bound to hold the member harmless for any act or omission unless it was in bad faith. Hence his actions to render a decision void or ineffective must have been in bad faith. It is of interest to note that one of the duties of the member is to act impartially. If a member always favours the party which nominated him and refuses to reach a unanimous decision against such a party due to an allegiance with that party may run the risk of his actions being shown to have been in bad faith. In such a case he will loose the immunity immuni ty granted to him under the contract and become in default.

13.0DISPUTES All disputes relating to the DAB Agreement between the member and the parties is to be resolved by one arbitrator under the rules of the ICC.

14.0TRIPARTITE AGREEMENT   The standard form of tripartite agreement is included as part of the selection of forms available in the FIDIC Conditions of Contract. It is an agreement between the parties on the one hand and the member on the other. Various form of the agreement exists and each will reflect the particular circumstances of the parties, the project and the form of  DAB. Each for Each form m of the agr agreem eement ent,, in wha whatev tever er pr prese esenta ntatio tion n for forma mat, t, wi will ll contain the following sections: • • • •

Details of the parties and member Situation of the parties and purpose of the DAB Validity period Scope of work

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• • • •

DAB Procedures & terms of reference of the DAB members Payment terms and conditions Disputes & Governing Law Signatures

 The date of the execution of the Tripartite Agreement is normally the trigger date for the commencement of the DAB procedure within the contract.

15.0CLAUSE 20.4 15.1 OBTAINING OBTAINING A DAB DECISION One of the primary objectives of the DAB is to facilitate the early resolution resolu tion of dispute disputes s by infor informal mal non adv adversarial ersarial m means. eans. The DAB’s role is to settle disputes. Settlement will not have been achieved if a party refers to dispute onwards to arbitration.  The strength of the DAB procedure is that whenever there is a problem between the people on site, whether it is caused by a difference of  opin op inio ion n or a te tech chni nica call ma matt tter er,, a pr prob oble lem m of in inte terp rprret etat atio ion n of the the contract, or of communication, or simply a misunderstanding, it can be referred quickly to an independent tribunal. The problem can then be re resol solved ved,, wi with th the as assis sistan tance ce of the DA DAB, B, whe whethe therr thi this s re requi quire res s an opinion, advice or a binding decision. If a disp disput ute e of an any y ki kind nd wh what atso soev ever er aris arises es be betw twee een n the the pa part rtie ies s in connection with or arising out of the Contract for the execution of the works then either party may refer the dispute in writing to the DAB for its Decision.  The reference to the DAB must be construed as being a request by the Cl Clai aiman mantt und under er the proce procedur dure e agr agreed eed by bot both h par parti ties es and inc includ luded ed within the contract. The DAB will apply the provisions of contract and the Governing Law to the matters in dispute. Unless the parties have agreed otherwise they have not empowered to the DAB to disregard any provision of the contract and make a decision on principles of fairness and equity alone. On the contrary, they have agreed to give effect of the DAB’s decision complying with the terms of  the contract.  The discussion of the meaning of the word dispute is given elsewhere in this document. It is not necessary for the matter relating to any Page 44 of 61

 

claim to have been considered by the Engineer under either Clause 2.5 or 3.5 to create a dispute, however it is probable that notice would already have been given under Clause 2.5 or 20.1. Copies of the referral notice are to be circulated to the other party and to the Engineer.  The Referral Notice will state the clause of the contract under which it is made and will include all the supporting documents. The referral will state the claims made and basis of the dispute. It will also include a detailed analysis of the claims made including the terms of the contract whic wh ich h ar are e relev elevan antt an and d wi will ll cl clea earl rly y de defi fine ne wh what at de dete term rmin inat atio ion n is required from the DAB.  The presentation of the documents and arguments should be made in a clear and logical format. The Referral Notice ideally needs to outline to both the other party and to the DAB mem members bers all aspects of the dispute without further explanation. Time is very short for the determination process and any time lost in further explanation detracts from the time availa ava ilable ble for the ana analys lysis is of the issue issues s in han hand. d. Thi This s is par partic ticula ularl rly y impo im port rtan antt wh when en co cons nsid ideri ering ng co comp mple lex x tech techni nica call ar argu gume ment nt or the the presentation of arguments by experts. Having received the Referral Notice, the DAB is required to follow the Procedural Rules (discussed below). One of the Rules empowers the DAB to establish the procedure to be applied in deciding a dispute. In order to assist the DAB, the parties are obliged within the contract to make available to the DAB such matters as further information, access to the site and any appropriate facilities as the DAB may require for the process of making a decision. It is important that the parties are aware of the Referral Date ofruns the dispute as the period of time in which the DAB reaches its decision from that date. In the case of the FIDIC conditions of contract the Referral date is the date upon which the chairman of the DAB receives the reference.  The period of time in which the DAB is required to reach its decision is defined in the general conditions as 84 days, but this is often amended to 56 days in the Particular Conditions of Contract. Immediately upon receipt of the Referral Notice the chairman of the DAB circulates copies of the Referral to the other members of the board and notifies the parties of the Referral Date. The detailed role of the chairman of the DAB is discussed below chairman below.. In the case where the panel of  DAB members is more than 3 the DAB chairman will also inform the Page 45 of 61

 

parties parti es whi which ch 3 me membe mbers rs wil willl ma make ke up the DAB for that par partic ticula ularr dispute.   Toget ogethe herr wi with th no noti tifi fica cati tion on to th the e pa part rtie ies s of the the Ref efer erra rall Da Date te the the chairman issues procedural directions for the conduct of the dispute re resol soluti ution on pr proce ocess ss.. The proce procedur dural al dir direct ection ions s wi will ll define define the ste steps ps which aresuch to be taken during the Decision period and will include a time table for matters as: • • • • • • • •

Response to the Referral Exchanges of documents and further and better particulars Site visits and information submission Hearings Attendance Witnesses Opening Statements Decision period

 The period of time in which the decision of the DAB is to be published is noted in the contract. However the DAB may propose to the parties a different time period for their approval.  The DAB may consider that an interim decision or a decision in parts may ma y be of so some me be bene nefi fitt to th the e pa part rtie ies s fo forr the the di disp sput ute e res esol olut utio ion n procedure procedur e and may suggest that a number of decisions may best serve the situation where complex issues may be interdependent.  The Decision is required to be reasoned and is binding upon the parties unless and until it is revised by an amicable settlement or an arbitral award. The format and content of the decision is discussed below. With the issue of the decision the parties are bound to undertake the following : •

Give effect to the decision

  The parties have empowered the DAB to reach a decision with which they undertake to comply irrespective of any dissatisfaction with wit h tha thatt dec decis ision ion.. The dec decisi ision on ma may y be revis revised ed by som some e lat later er cour co urse se of ac acti tion on bu butt an any y fu futu turre ac acti tion on wi will ll no nott in inva vali lida date te the the nece ne cess ssit ity y to co com mply ply wi with th th the e req equi uirrem emen ents ts of th the e de deci cisi sion on promptly. •

Proceed with the Works

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 The contractor is obliged to proceed with the works in accordance with the contract irrespective of whether it agrees or not with the decision of the DAB. If a party eventually decides to reject the decision of the DAB then it must mu st is issu sue e a for forma mall Not Notice ice of Dis Dissa satis tisfac factio tion. n. The not notice ice mu must st be issued 28 days of thefailure DAB’sofdecision must state the reason reasons for the within dissatisfaction. Any the DABand to reach a decision by thes due date will also be a valid reason for issuing a Notice of  Dissatisfaction. If no notice of dissatisfact dissatisfaction ion is served by either party within the 28 day period then the decision shall become final and binding on both parties. With the exception of the matters referred to in Clause 20.8, the issue of a decision of the DAB on any dispute is a condition precedent to the commencement of any arbitration proceedings under or in connection with the contract during the term of the DAB.

16.0CLAUSE 20.7 16.1FAILURE TO COMPLY WITH A DAB DECISION Unless allowed by law, neither party may challenge the decision of the DAB afte afterr it ha has s be beco come me fina finall an and d bi bind ndin ing. g. In the the ca case se wh wher ere e the the decision has become final and binding and a party fails to comply with the decision then the failure itself may be referred to arbitration. This process will allow for the mechanics of an arbitral award to be applied to the DAB’s decision.  The remedy offered by Clause 20.7 will not prejudice any other rights that that the the pa part rtie ies s ma may y ha have ve.. Th Thes ese e wi will ll in incl clud ude e othe otherr en enfor force ceme ment nt remedies within the contract which will be discussed below.

17.0CLAUSE 20.8 17.1 DISPUTES TO ARBITRATION ARBITRATION Disputes may be routed directly into arbitration thus by-passing the requirements requir ements of Clause 20.4, in the event that there is no DAB in place.

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 There may be no DAB in place due to the expiry of its appointment or by any other reason such as non agreement of its constitution due to the intransigence of one of the parties. In some cases, although the DAB may have ceased to exist due to the termination of its appointment period, however its reconstitution on an ad-hoc basis may be considered to be a reasonable forum within which any dispute may rdictio es esol olve ved, av avoi oidi ding ng ssion un unne nece cess ssar y pute de dela lay yto an and d itrati ex expe pens nse. e. yIninv so some me  be jurisdic juris tions nsd,the su submi bmiss ion of a ary dis disput e arb arbitr ation on ma may involv olve e considerable time and expense which may be unwarranted due to the scope of the dispute. In cas cases es whe where re a dir direct ect re refer ferral ral to arb arbitr itrati ation on is adopte adopted d the then n the specific requirements of Clause 20.4 and 20.5 will not apply.

18.0PROCEDURAL RULES   The The Pr Proc oced edur ural al Rules ules em embo bodi died ed wi with thin in the the Ge Gene nera rall Co Cond ndit itio ions ns of  Contract the DAB through the execution of its duties and the day toguide day procedures of the board. Many routine matters aredefine to be conducted utilising procedures which the DAB may establish from time to time and the partiers specifically empower the DAB to establish the procedure to be applied in deciding a dispute. The guidelines for the routine operation of the DAB should be regarded as flexible in order to meet the varying circumstances that may arise during the life of the project. In any event the board is constrained by two principle factors: •

•

  To act fairly and impartially as between the Employer at the Contra Con tracto ctor, r, giv giving ing eac each h of the them m a re reaso asonab nable le opp opport ortuni unity ty of  putting its case and responding to the others case, and   To ad adop optt proc oced edur ures es suita uitabl ble e to the di dis spu pute te,, av avo oidi ding ng unnecessary delay our expense

  The above principles are to be considered within the context of the ver ery y co conf nfiined time ta tabl bles es de defi fin ned with thin in the co con ntra tract for for th the e cons co nsid ider erat atio ion n of ref efer errred disp disput utes es an and d the the ne nece cess ssit ity y to es esta tabl blis ish h procedures which are most appropriate to the circumstances of each particular dispute.  The standard procedure of the DAB’s operation will include becoming familiar with the details of the project and the construction methods to be adopted and becoming conversant with the contract documentation. Normally the DAB convenes a first meeting privately,

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solely sole ly wi with th it its s ow own n mem embe bers rs.. At th that at me meet etin ing g it di disc scus usse ses s th the e practicalities practicaliti es of its own operation and administration. It ensures that its members are are fully briefed on the details of the project and discusses its standards of conduct and the principles of its communications with the parties and between themselves.  procedures The DA The DAB B mem member bers s agr agree ee bet betwee ween n the thems mselv elves es the their operat rating ing which will include such routine matters as: ir own ope • • • • • • •

standard agendas standard format of meeting minutes scheduling of future meetings travel arrangements meeting room arrangements invoicing arrangements arrangements with the parties facilities required required for the site visits and meetings to be provided by the Employer.

 The DAB chairman arranges to convene a first meeting at the site with the DAB members together with the parties. At the first meeting the chairman encourages discussion regarding the operations of the DAB and solicits suggestions as to the frequency of DAB meetings. Regular site site mee eeti ting ngs s ar are e to be he held ld at a fr freq eque uenc ncy y of ab abou outt 3 mon onth ths s depending upon the complexity of the works. It may become prudent to alter the frequency of site visits in the case possibly of key activities being undertaken at the site or during periods where only routine non problematic activities are scheduled. At the first meeting routine communications and administrative issues will be discussed and agreed which will include : • • • • • • • • • • •

 Travelling and accommodation arrangements as necessary Meeting room and secretarial service arrangements Agreement Agreem ent of attendees Agenda format Format of meeting minutes Conduct of site visits and meetings Format and frequency of standard reporting to the DAB Format of reporting from the DAB to the parties Procedure for claims administration and tracking Procedure for disputes referral Conf Co nfir irm matio ation n by th the e pa part rtie ies s of th thei eirr ow own n ad admi mini nist stra rati tion on procedures

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 The purpose of any DAB visit to the site is to enable the members to become familiar with and remain acquainted with the progress of the works and to become aware of any actual or potential problems or claims. The board needs to be proactive. It does not undermine the authority of any of the parties or employees but rather takes positive steps to ensure that a climate of co-operation exists in which problems may be discussed and resolved prior to becoming escalated into a dispute.  The attendees at such site visits and meetings will normally be the members of the DAB together with one or two representatives from each ea ch of th the e pa part rtie ies s an and d th the e En Engi gine neer er.. If it is de deci cide ded d to mak ake e a subm su bmis issi sion on to th the e DAB to so soli lici citt ad advi vice ce or op opin inio ion n th then en furt furthe herr attendees may be required in order conduct such presentations. Subcontractors are not normally represented at such meetings, however their attendance at relevant meetings may be beneficial in order that the board members may become familiar with the specific details of  the sub-contractor’s involvement. Al Alll sta standa ndard rd ro routi utine ne doc docum ument entati ation on fr from om the par partie ties s to the DA DAB B is copied copi ed to th the e oth ther er par arty ty and to ea each ch mem embe berr of th the e DAB. Al Alll communications from the DAB is copied to each of the parties.  The routine site visits and meetings take the form of an arrival and “check in” at the site of all visit and meeting delegates. Initially a tour of th the e si site te is mad ade e wi with th th the e En Engi gine neer er ac acti ting ng as gu guid ide. e. Th The e DAB members are accompanied by representatives of the parties. During the site tour the progress of the works is shown and the impacts of any part pa rtic icul ular ar ci cirrcu cums msta tanc nces es ar are e br brou ough ghtt to the the atte attent ntio ion n of the the DAB members. Any changes to the planned progress of the works or to the reso sour urce ces s of th the e Co Cont ntrrac acttor ar are e hi hig ghl hliigh ghte ted d dur uriing the tou ourr. Construction problems orattention the impact of any influence on the works are brought to the of the DABparticular members. Upon the conclusion of the site tour the meeting is convened. The chairman of the DAB chairs the meeting. The meeting is opened by the chairman with his opening remarks which confirm the previous meeting minutes and in which he describes any activities of the DAB since the last site meeting.   The The Co Cont ntra ract ctor or pr pres esen ents ts a rep epor ortt an and d ma mak kes a stat statem emen entt on it its s progr progress ess and sta status tus of its its wor work k sch schedu edule. le. It out outli lines nes any pot potent entia iall problems together with any proposed solutions. The contractor also provi provides des a pr progr ogress ess re repor portt on any dis discus cussi sions ons wit with h the oth other er par party ty regard regarding ing any poten potential tial claims iss issues. ues. The contr contractor actor discuss discusses es the status of any claims made and outlines any potential claims to be Page 50 of 61

 

made. The Engineer then provides his views of the contract and also make ma kes s a sta statem tement ent of its its vie views ws re regar gardin ding g the progr progress ess an and d fur furthe therr comments upon the status and progress of any claims or discussions potentially leading to problems. Presentations Pres entations and discussions as necessary are also made with specific regard to the works programme, contract value, variations, claims and problems. Upon the conclusion of the site meeting with the parties the DAB meets in private and prepares its meeting report to the parties. The report is normally issued to the parties prior to the departure form the site of  the DAB members. The report outlines the activities undertaken during the visit to the site and gives its observations on the presentations made by the parties. Unless specifically requested by the parties the DAB shall not give any opinion or advice regarding any particular issue raised at the meeting or visit.   The The pa part rtie ies s fu furrnish nish to the the DAB me memb mber ers s on one e co copy py of al alll stan standa dard rd perform perfo rmance ance rel related ated docu document ments. s. The init initial ial subm submissi ission on incl includes udes the contract documentation, copies of the contra tract, drawings, specifica spec ification tions s and the work works s pro program gramme. me. The reg regular ular submiss submission ion of  documents to the DAB are normally made monthly and will include prog pr ogrres ess s rep epor orts ts,, va vari riat atio ion n inst instru ruct ctio ions ns,, ce cert rtif ific icat ates es an and d ot othe herr performance related documents. The DAB may also request specific documents at times other than the normal monthly submissions. In such cases the documents are to be provided with copies sent to the other party. If a dispute is to be referred to the DAB then the procedures at Clause 20.4 are to be followed.  The general powers of the DAB are noted to include: • • • •

 The establishment of any procedur procedure e  To decide on jurisdiction  To adopt an inquisitorial role  T  To o proce proceed ed ex-parte

 The issue of a Referral Notice to the DAB should not be hampered or delayed dela yed by res restric trictive tive or cumb cumberso ersome me contr contractua actuall pro provisi visions. ons. Some particular conditions call for all claims documentation to be submitted and referred referred to an initial process prior to formal submission to the DAB. Such procedures may add to the cost and exist time of the dispute resolution process. Where such draconian clauses within a contract there

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may be occasions when the DAB is called upon to decide whether a dis ispu pute te is ca cap pab able le of subm bmiission ion di dirrec ectl tly y to the bo boa ard for for its consider cons ideratio ation. n. Any supp supplem lementar entary y or inter interlocut locutory ory pro provisi visions ons nega negate te the concept of the DAB process. When the Referral Notice is served it should be accompanied by all the relevant documentation supporting materials. The wording of the Referral Notice should beand concise and clearly state what the Claimant is aski as king ng the the DAB to de deci cide de.. Th The e ref efer erra rall No Noti tice ce sh shou ould ld co conf nfir irm m the the contractual provisions under which the claim is made and provide all the arguments to support the claim. The Referral Notice will define the scope of the dispute and hence the jurisdiction of the DAB.  The DAB chairman is the person who receives the Referral and then circulates copies to the other DAB members. The board then decides how to pr proc ocee eed. d. The DAB is un und der a du duty ty to gi give ve eac ach h party rty a reasonable opportunity to put his case and to respond to that of the other. The DAB will study the referral notice and the chairman will issue the procedural directions for the conduct of the reference.  The DAB has the authority to: • •

• • • •

Conduct any hearing it thinks fit  Take the initiative in ascertaining the facts and matters required for a decision Make use of its own specialist knowledge Decide upon the payment of financing charges Decide upon any provisional relief  Open up and review and revise any certificate, determination, instruction, opinion, or valuation of the engineer relevant to the dispute.

Normal Norm ally ly the the Pr Proc oced edur ural al Di Dirrec ecti tion ons s wi will ll in incl clud ude e pr prov ovis isio ion n for for the the following : •

• • • • •

A time table for the submission of a response and defence to the Referral Notice Preliminary Issues Reply to Response (if required) Reply to Reply to Response (if required) Conduct a Hearing or proceed with Documents Only Hearing Dates o o

Hearing Format  Translation of documents

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Attendees Witnesses o o Hearing Agenda o Opening / closing statements in writing Decision date o

•

A provision within the procedural directions may also need to be made in the event that the parties wish to make alterations to the procedure or to extend any time provided for the provision of documents.  The DAB may alter the time table of the procedure but will not under normal circumstance alter the decision date. The DAB chairman must be aw awar are e of th the e ne nece cess ssit ity y for for an ad adeq equa uate te ti time me pe peri riod od fo forr DAB memb me mber ers s to de deli libe bera rate te an and d ex exch chan ange ge de deci cisi sion on dr draf afts ts pr prio iorr to the the agreementt of the final decision. In the event that the procedural time is agreemen not sufficient to adequately make deliberations then the chairman may request the parties to agree an alternative time table or may limit the issues under referral or may propose to issue staged decisions.  The matters referred referred may be capable of decision without the need for a hearing. In such cases the decision will be made on a documents only basis. In most international contracts this is not considered to be an ideal basis of conduct. Parties from differing backgrounds and cultures may wish to have a hearing in order to ensure that the DAB members are fully aware of the facts and background of the matters at issue from their own point of view. Often parties are translating documents and are concerned that no meaning is lost in the translation, or that they have not misunderstood the relevance of any points made in the submissions submiss ions of others.

19.0DAB 19.0 DAB HEARING HEARING   The The he hear arin ing g sh shou ould ld be co cond nduc ucte ted d in a ma mann nner er th that at en enco cour urag ages es open op enne ness ss,, ca cand ndou ourr an and d a th thor orou ough gh di disc sclo losu surre of all all pe pert rtin inen entt information bearing on the matters in dispute. The meeting should include a number of basic stages: • • • • •

Registration Procedural Issues Preliminary Issues  Jurisdictional  Jurisdiction al Issues Referring Party o Opening

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Witness submissions Respondent questions o o Witness re-submission / clarification Responding Party o Opening Witness submissions o o

•

Referring Party questions Witness re-submission / clarification Respondent summing up Referring Party summing up o o

• •

It is normally prudent for the chairman of the DAB to ensure that the hearing does not end until both parties have confirmed that they have nothing further to add.  The hearing will be convened at a convenient location for the parties.   Thi This s is no nott al alwa ways ys at th the e job job site site.. The The pr pres esen ence ce of wi witn tnes esse ses s an and d advocates may determine that a location other than at the job site will be more convenient or more economical. The hearing rooms should be equipped with any necessary presentation equipment needed by the parties and must provide adequate seating, table space and ventilation or air conditioning. Adequate refreshment facilities are essential for any successful hearing.   The The co cond nduc uctt of the the he hear arin ing g sh shou ould ld be su such ch that that he hear arin ing g da days ys ar are e limited in ideal conditions to some 6 hours. The format of the hearing should also include adequate breaks and that meals are provided for attendees in private locations, convenient for the hearing location but within the same building. It is normally convenient for side rooms to be provided for each of the parties, and for the DAB members, in which private discussions may be held. A normal DAB hearing will not provide for the transcript of the meeting to be taken. On occasion recesses may be necessary for the parties to consider their positions and to consider the evidence put to the DAB and the DAB may need time to deliberate on what inquisitorial line needs to be taken. Witnesses are not normally questioned under oath. The DAB process should be no more formal than necessary. The terms “examination”  and “cross examination”  are not utilised when referring to witnesses and it is the function of the chairman of the DAB to act fairly and impartially and to put at ease as much as possible the parties and the witnesses.

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 The parties must agree to what extent they wish their witnesses to be pres pr esen entt du duri ring ng th the e he hear arin ing. g. Th The e DAB ha has s the the au auth thor orit ity y to ref efus use e admission to hearings or audience at hearings of any persons other than the repr representatives esentatives of the parties and the Engineer Engineer.. This provision is mor more e re relev levant ant in juris jurisdic dicti tions ons whi which ch ma may y ins insist ist tha thatt all mee meetin tings gs re relat lating ingItto disput putes es to inv involv olving ing pub publi cthe fun fundin ding gtosho should uld the be press ope open n or to any the public. is dis contrary the spirit oflic DAB have third party recording the procedures for any purpose.  The DAB may proceed with the hearing in the absence of any party who the DAB is satisfied had received adequate notice of the hearing.  The procedural rules allow the DAB discretion to decide whether and to what extent this power is exercised. It is within the policy of natural  justice to allow parties to know what the claims are against them and for them to be given an opportunity to reply and defend themselves. Where parties and their representatives originate from differing parts of the world problems with travel arrangements may exist and may well be created outside the control of those travelling. It is therefore prudent for the DAB to ensure that prior to proceeding in any hearing ex-parte it is satisfied that the absent party has no valid reason why not to attend and that all possible attempts to ensure attendance have been made. During Duri ng th the e hea eari ring ng furt furthe herr do docu cume ment ntat atio ion n may be pr prov ovid ided ed or req eque uest sted ed by on one e of th the e pa part rtie ies. s. Th The e DAB sh shou ould ld di disc scou oura rage ge the the production of volumes of new documents and submissions at hearings.  These generally lead to more time required by the parties to consider the the do docu cume ment nts s an and d an any y ne nece cess ssar ary y repl eplie ies. s. Mo Morre ti time me wi will ll also also be required by the DAB to consider such documents. Any original documents format in the submissions should be provided at theprovided hearing in forcopy scrutiny, should either party so require. The DAB members may also require sight of such materials.  This provision provision should only be necessary in cases where the authenticity of documents is questioned. The parties have provisions in Clause 20.1 to inspect contemporary records and to receive copies at the time of  the event in question and as such the necessity for such disclosure is limited.  The DAB members must develop a protocol for their conduct at the hearing. It is normal for the DAB chairman to chair the meeting and control the participants, procedure and time table. They should decide betwee bet ween n the thems mselv elves es suc such h ma matte tters rs as que questi stioni oning ng for forma mat, t, wh wheth ether er through the chair or in open forum, but should not be reluctant to acti ac tive vely ly pa part rtic icip ipat ate e in th the e pr proc oced edur ure. e. It is no nott no norrma mall pr prot otoc ocol ol to Page 55 of 61

 

in inte terr rrup uptt the the qu ques esti tion onin ing g of wi witn tnes esse ses s by ad advo voca cate tes s bu butt ce cert rtai ain n circumstances may dictate that this is necessary. The normal format may be that DAB questioning may be undertaken after the questioning by the other party but before any resubmission questioning questioning.. Having Havi ng hear heard d the parties and ask asked ed any necessar necessary y quest questions ions the DAB chairman brings the hearing to ahearing close. concerning The DAB members shall not express any opinions during the the merits of the arguments put forward by either of the parties nor must they show favour to either party at any time. They then meet in private after the hearing in order to have discussions and prepar prepare e the decision. It may be convenient to locate the initial private meeting of the DAB at the location of the hearing and immediately after the hearing itself.  This will enable the members to have access to any documents of the parties exhibited at the hearing but not submitted.  The initial meeting of the members has three primary objectives: •

• • •

 To develop a schedule and time table for the conclusion of its deliberations  To decide if any further submissions are required  To achieve unanimous agreement  To develop a format and compose the Decision

 The procedural rules state that the members shall endeavour to reach a unanimous decision. No mention is made in the contract conditions of  any consequence of not reaching a unanimous decision. If it cannot re reach ach a una unanim nimous ous dec decisi ision on the then n a ma major jority ity dec decisi ision on wi will ll bec become ome appl ap plic icab able le.. In su such ch a ca case se th the e rea easo soni ning ng of bo both th the the ma majo jori rity ty an and d minority should be included in the decision. It is normally considered nece ne cess ssar ary y by th the e ma majo jori rity ty me memb mber ers s to req equi uirre that that the the mi mino nori rity ty member specifies any aspects of the decision with which he disagrees together with his analysis for the disagreement. The minority member should also state what decision he would have made had he been acting as a sole member.  The presentation of the decision should be in a short form. In such a procedure as the DAB protracted and over lengthy decisions are not in keeping with the spirit of the process.  The format of the decision will be such as to contain the following data: •

A statement of the FIDIC clause under which the Decision is published

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• • • • • • •

•

• • • • •

 The identities of the Parties  The identity of the Contract Outline of Dispute  The issues  The remedies sought  The positions of each of the parties Outl Ou tlin ine e of th the e pr proc oced edur ure e ad adop opte ted d fo forr the the res esol olut utio ion n of the the dispute   The reasoning of the DAB and a revue of its opinion on the principles involved Unaniminity statement  The Decision Signature Place and date of Decision Confidentiality Confidentiali ty and circulation statement

  The The re reaso asoni ning ng is an ess essent ential ial par partt of the dec decis ision ion.. Wh When en pr prope operly rly written may persuade partiesathat the DABsimilar has fully studied all relevantitmatters and hasthe reached conclusion to that which may be expected from an arbitrator. It may be the case that one of the parties may have been unaware of the strength or weakness of any particular argument before the publication of the reasoned decision.  The general Conditions of Contract state that the decision is admissible in evi eviden dence ce in arb arbitr itrati ation. on. Ar Arbit bitrat rators ors ma may y regar regard d a wel welll re reaso asoned ned decision as persuasive.  The rules do not empower the DAB to amend its decisions and it would be inappropriate for the DAB to enter into any form of debate with the either the Claimant or the Respondent on the details of its Decision. Essentially the DAB will have reached a decision with which the parties have undertaken to comply. If either of them is dissatisfied, it must comply but may give the required notice entitling it to arbitrate after attempting amicable settlement. It is po poss ssib ible le th that at th the e DAB AB's 's de deci cisi sion on ma may y in incl clud ude e an err erron oneo eous us statement. In such a case a party may wish to bring the error to the DAB AB's 's at atte tent ntio ion. n. Alth Althou ough gh th the e DAB may be in incl clin ined ed to res espo pond nd,, because it is not empowered to amend its decision, it may consider it appropriate to issue a proposed amendment for the agreement of the parties. Either party may withhold agreement, but may not achieve much by so doing. In practice the parties may be prepared to agree th that at the DA DAB B am amend end its dec decis ision ion,, par partic ticula ularly rly if the am amend endmen mentt is beneficial expense. in terms of settling the dispute and in avoiding unnecessary

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20.0ENFORCEMENT  The parties have contracted to comply with any decision of the DAB properly given. Clause 20.7 states that in the event that neither party has served a notice of dissatisfaction and the decision has become final and binding then then an any y fail failur ure e to co comp mply ly wi with th th the e de deci cisi sion on ma may y be ref efer errred to arbitration. This will enable a party to pursue enforcement through the normal procedures associated with arbitral decisions.   The The alt alter ernat native ive me metho thod d of enf enfor orcem cement ent by a con contra tracto ctor, r, dur durin ing g the course of the contract, is by the inclusion of the decision within an in inter terim im pay paymen mentt app applic licati ation on in acc accor ordan dance ce wi with th Cla Clause use 14. 14.3 3 of the contra con tract. ct. The Eng Engine ineer er is obl oblige iged d to inc inclu lude de the dec decis ision ion wit within hin his evaluation in terms of Clause 14.6 and the Employer is then obliged to pay sum so Con certified. further by the to comply will wi ll the leave leave the Contra tracto ctorrAny reme emedie dies s failure of sus suspen pensio sion nEmployer or ter termi minat nation ion in accordance with Clause 16.1 and 16.2.

21.0DAB 21.0 DAB CHAIRMAN CHAIRMAN   The The ro role le of the DA DAB B cha chair irma man n is me menti ntione oned d but re rema mains ins und undefi efined ned within the FIDIC Conditions of Contract.  The chairman undertakes an important role within the procedur procedure e which may determine the success or failure of the process. He must retain the confidence and respect of the parties and his fellow board members and must ensure that the administration of the DAB runs smoothly and the ethics of the board remain unchallengeable.   The chairman co-ordinates, whenever necessary, between the parties and the board members and is responsible for any administration of  the board. At the instigation of the board it is the responsibility of the chairman to co-o co -orrdina dinate te the de defi fini niti tion on and es esta tab bli lis shm hmen entt of the int nte erna nall administrative procedures of the Board. He advises the other board members on the organisation of its rules and procedures which the memb me mbers ers wi will ll ado adopt pt and tak takes es con contr trol ol of the adm admini inistr strati ation on of the activities of the board. He also co-ordinates communications between the board and the parties.

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In many cases he also needs to educate the other board members in the expected behaviour and ethics of DAB membership. In many cases the th e chai chairrman may be th the e on only ly exp xper erie ienc nced ed DAB mem embe berr. Th The e remaining remai ning board members often chosen by the parties are occasionally unfamiliar with the requirements and responsibilities of DAB members. It the that DAB need to reminded that role olis e often en enta tail ils s case inde indepe pend nden ence ce members an and d im impa part rtia iali lity ty.be Th The e pe perrce cept ptio ion ntheir of  imparti imp artialit ality y by members needs to be seen as well as under understood stood.. The example exampl e of a party appointed member arriving and departing from DAB meetings in a vehicle supplied by one of the parties is a prime example of how not to behave. Direct contact by members with one of the parties in private should be avoided at all costs.  The chairman provides draft documentation, for the agreement of the other members, regarding such matters as meeting agendas and time tables. He takes a leading role in the production of meeting minutes and ensures the attendance of the other board members at meetings and site visits. He also often co-o o-ordin dinates the provision of  accom acc ommod modati ation on ar arran rangem gement ents s for mem member bers s dur during ing vis visits its wit with h the parties. His other responsibilities include the provision and circulation between board members of copies and translations of documents as required. He is not re requi quire red d to adm admini iniste sterr the re remu muner nerati ation on and pay payme ment nt of  members, as each tripartite agreement is personal to the individual member.  The main procedural function of the chairman is to chair meetings and si site te vis visits its and ens ensur ure e th that at any jur juris isdic dictio tional nal is issue sues s ar are e dea dealt lt wi with th witho wi thout ut any undue del delay ay.. He tak takes es the le lead ad ro role le in the dra draft fting ing of  decisions ensures that theall viewpoints of of the other members are taken into and consideration during discussions the board. He ensures th that at the com compos positi ition on of any recom ecommen mendat datio ions ns and dec decisi isions ons of the boar bo ard d are are pr proc oced edur ural ally ly co corr rrec ectt an and d refl eflec ectt al alll the the vi view ewpo poin ints ts of  memb me mber ers. s. In th the e ca case se of a ma majo jori rity ty de deci cisi sion on he en ensu surres that that the the re reaso asonin ning g of bot both h the ma major jority ity and mi minor norit ity y vie view w com comply ply wit with h the requirements of the contract.  The chairman ensures that the formal requirements of a decision are embodied in the document. He signs and executes the Decision on behalf of the DAB.   The ultimate responsibility for the success of any DAB rests with its chairman who may be in a position to encourage the parties to the

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contract contra ct to ado adopt pt a con consen sensua suall and coo cooper perati ative ve att attitu itude de whi which ch wil willl ultimately ultimatel y ensure the success of any project.

22.0ACKNOWLEDGEMENTS

•

• •

FIDIC : Conditions of Contract for Construction 1999 Edition FIDIC : The FIDIC Contracts Guide : 2000 ECV : Conditions of Contract for Construction : 2002

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•

•

Brian Totterdill : FIDIC Users Guide : Thomas Telford 2001 DRBF : Construction Dispute Review Board Manual : McGraw Hill 1996