Dispute Boards


A Dispute Board can be defined as “a panel of one or three suitably qualified and experienced independent persons appointed under the contract to be available to confer with the parties to assist in the avoidance of disputes or if necessary to provide a determination on a dispute referred to it“. This is the definition of a “standing” Dispute Board, typically appointed at the commencement of a Contract, becoming familiar with the Contract and the project, and meeting regularly with the parties to facilitate the resolution of issues before they mature into formal disputes. Such a Dispute Board is able to provide a reasoned decision on a formal dispute in a limited time and at low cost, because it is already “up to speed” with the issues.

By contrast, an “ad hoc” Dispute Board is only established after a dispute has arisen, and acts essentially as an adjudicator or expert to provide a reasoned decision of the dispute referred to it. Since an ad hoc Dispute Board is only appointed to determine the specific dispute, it cannot assist the parties to avoid disputes in the way that a standing Dispute Board can. There is little to distinguish an ad hoc Dispute Board from contractual adjudication. There are several variants of Dispute Boards. A Dispute Resolution Board or a Dispute Review Board (DRB) provides a non-binding decision on a dispute referred to it; the DRB decision will only be binding if the parties agree that they will adopt it.  This is the preferred Dispute Board model in the United States.  A Dispute Adjudication Board (DAB) provides a provisionally binding decision on a dispute referred to it; if neither party issues a notice of dissatisfaction within a defined time, the decision becomes final and binding. If either party issues a notice of dissatisfaction, the decision is binding unless and until it is later overturned by agreement or arbitration or litigation.

The 1999 FIDIC Red Book[1] implements a standing DAB, whereas the 1999 FIDIC Yellow Book[2] and 1999 Silver Book[3] implement ad-hoc Dispute Adjudication Boards.  The 2017 second editions of the Red, Yellow and Silver Books implement a Dispute Avoidance/Adjudication Board (DAAB), a renamed DAB to emphasise that its primary role is to assist the contracting parties to avoid disputes; it is only called on to adjudicate disputes if a party notifies a formal dispute. Dispute Boards in Australia are now typically called Dispute Avoidance Boards for the same reason, and they have proved to be very effective in assisting the parties to avoid disputes.

In their dispute resolution role, Dispute Boards have features in common with adjudication and expert determination.

In assessing the full role of a standing Dispute Board, the major perceived disadvantage is the cost. Whilst the cost of a Dispute Board is typically a small percentage of the overall contract cost, in absolute terms the cost of three senior and experienced people with the appropriate expertise along with their associated travel costs may appear to be substantial. In this writer’s view, these costs can be well justified as “insurance”, given the track record of projects with Dispute Boards having very few disputes.

The Dispute Resolution Board Foundation has published “Dispute Board Manual A Guide to Best Practice and Procedures”. The book is available as a free download from the Dispute Resolution Board Foundation website (https://www.drb.org/publications-data/library/ ) or in hard copy from Amazon.  A review of this Manual can be accessed here.

[1] FIDIC Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer.

[2] FIDIC Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant and for Building and Engineering Works, designed by the Contractor.

[3] FIDIC Conditions of Contract for EPC/Turnkey Projects.