Question

Q1) Discuss the Dispute Adjudication Board (DAB), the Appointment of the Dispute Board, and the Failure to Agree on the Composition of the Dispute Board, Obtaining Dispute Board’s Decision in the FIDIC 1999

Answer 1

Dispute Adjudication Board (DAB):

Particularly in Construction industry there might be disputes arising between Sub-contractors and the employers. The Fidic conditions of contract envisages the establishment of a Dispute Adjudication Board, known as the DAB.

Appointment of DAB

• DAB is generally a pannel of 3 who are experienced, respected, impartial and independent reviewers.

DAB provide non-binding recommendations to the contracting parties on issues arising at site.

The Board is organised before construction begins and the DAB meets at the job site Periodically.

The DAB has four main functions

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

They are provided with contract documents,plans and specifications and become familiar with the project details and the participants and are kept updated regarding the progress and developments.

The DAB meets with employers and conractors representatives on regular site visits and encourages the resolution of disputes at various level of project progress.

When any dispute flowing from the contract or the work can not be resolved by the parties it is refered to the DAB for Decision.

In the 1999 FIDIC contracts "Rainbow suite", DAB has been asked to followed.Basically employers engineer was empowered to make decisions on disputes of additional works. But, the contractors were distrustful as the engineer was appointed by employers. These gave rise to new FIDIC "rainbow" suite of contracts introduced in 1999.

Fidic also introduced two forms of DAB's- the full-term or standing DAB -IN RED BOOK of FIDIC Contracts.

"Ad hoc" DAB Provided in Yellow Book and Silver Book of Contracts.

The use of Dispute Board was successful in international projects, the idea of making decisions binfing was therefore in line with the prevailing view about how to improve the operation of constrution Projects.

The DAB Procedure was conceived as a method of Primary dispute resolution. Thus the procedures should facilitate prompt references of disputes to the board as soon as job level negotiations have reached an impasse. Referal to the board only after multiple levels of employer and contractor views is inconsistent with the process and counter-productive in terms of time and expense.

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 that decision. The decision may be revised by some later course of action but any future action will not invalidate the necessity to comply with the requirements of the decision promptly.

• Proceed with the Works
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 issue a formal Notice of Dissatisfaction. The notice must be issued within 28 days of the DAB’s decision and must state the reasons for the dissatisfaction. Any failure of the DAB to reach a decision by the due date will also be a valid reason for issuing a Notice of Dissatisfaction.

If no notice of dissatisfaction is served by either party within the 28 day period then the decision shall become final and binding on both parties.

Failure to agree on DAB:
Unless allowed by law, neither party may challenge the decision of the DAB after it has become final and binding. In the case where 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.

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 be resolved, avoiding unnecessary delay and expense. In some jurisdictions the submission of a dispute to arbitration may involve considerable time and expense which may be unwarranted due to the scope of the dispute.

states that in the event that neither party has served a notice of dissatisfaction and the decision has become final and binding then any failure to comply with the decision may be referred to arbitration. This will enable a party to pursue enforcement through the normal procedures associated with arbitral decisions.