Litigation and arbitration of construction disputes have become increasingly expensive, time consuming and unappealing. Adjudication, expert determination and dispute boards (evaluative ADR) are increasingly being used to resolve disputes in a more timely and cost-effective manner than litigation or arbitration.  In contrast to the compromise outcome typically negotiated by the parties in a mediation or conciliation, these evaluative methods of ADR result in a reasoned determination in accordance with the contract and the law, prepared by a third party independent neutral. Each of the alternatives has its advantages and disadvantages, canvassed in this paper. Statutory adjudication for certain types of disputes is mandated in a number of jurisdictions around the world, and although the resulting determination is only provisionally binding, in the great majority of cases it becomes de facto finally binding. Disputing parties can implement expert determination in either a binding or non-binding form, tailored to suit the circumstances of a particular dispute. Dispute boards come in two versions – an ad hoc dispute board set up to adjudicate a specific dispute, and a standing dispute board implemented at the start of a project that is not only able to adjudicate disputes if they arise, but is in a unique position to assist the parties to avoid disputes. The paper discusses the formal requirements for each of these evaluative methods of ADR, and makes some suggestions as to the types of disputes they are most suited to.

The construction industry covers a vast collection of issues and is always subject to the potential for dispute, just like any other industry. Here, as part of Lawyer Monthly’s Specialist Advocate feature, we turn our attention to the Australian construction sector by speaking to Dr Donald Charrett, a barrister practising in construction law, and an accredited Arbitrator, Mediator and FIDIC trainer.

A Dispute Board under a FIDIC contract can speedily and economically adjudicate disputes. The commercial value of Dispute Boards is potentially far greater than as adjudicators of formal disputes. A standing Dispute Board, implemented at the start of a project and meeting regularly with the contracting parties, is able to assist them to avoid disputes. The worldwide track record of Dispute Boards shows that they are very effective in helping the parties avoid formal disputes, however if disputes eventuate, in adjudicating an outcome according to law in a timely and cost effective manner. Recent judgments reviewed in this paper have provided clarity on the mandatory requirements for Dispute Board decisions and their enforceability. This article briefly reviews Dispute Board costs in the light of the significant risk cost of disputes and concludes that the ‘insurance’ cost provides clear commercial value to the parties in an international construction contract.

This paper addresses the following issues:

·    “Full term” Dispute Boards in Australia using “without prejudice” processes have been very effective in avoiding disputes.

·    Dispute Boards can also provide a quick and cost effective method of ADR.

·    These dispute resolution capabilities can also be used by an ad hoc Dispute Board, set up to resolve a particular dispute. · The DB process is flexible, and can be tailored to the needs of each individual dispute.

·     A DB determination can be provisionally or finally binding by agreement.

The argument about what is the “best” method of resolution of construction disputes has been a topic of discussion at recent construction law conferences, if perhaps somewhat tongue-in-cheek.

The paper suggests some criteria that may make the search for the “best” method of DR for a particular dispute not illusory, and hopefully a little less elusive. It is implicit in the following that the analysis must ultimately be in the context of a specific and unique dispute, and not a generalized class of disputes. In each dispute, the disputants will view the relevant factors from their own subjective viewpoint. Accordingly, it is submitted that there is no objective “best” method in the abstract, even for a generalized class of disputes.

The thesis of this paper is that the “best” method of resolution of a particular dispute from an individual disputant’s perspective is typically the one that achieves the appropriate proportionality between the competing demands of the time and cost of the process, and the “justice” it delivers. In practice, this generally involves the selection of a DR method that gives the highest priority to the most important element(s), and balances the remaining element(s) accordingly, whilst giving necessary weight to the desired features of the process.

Contractual adjudication and dispute boards are two methods of alternative dispute resolution (ADR) of construction disputes which have not yet been widely used in Australia, but have been growing in use internationally, particularly over the last decade or so. The two methods have a number of common characteristics.  They both aim to provide a speedy and relatively inexpensive resolution of a dispute by means of an impartial determination of the parties’ contractual rights by an independent expert (or experts), without foreclosing the possibility of final binding dispute resolution by means of arbitration or litigation. Dispute boards (DBs) have the additional important aim of avoiding disputes, by providing a forum in which contractual issues can be addressed before they progress to the stage of actual disputes which require formal resolution.