On the 16th of September 2019, eight of our Lebanon office employees attended a roundtable discussion arranged by the CIArb Lebanon Branch in partnership with the Dispute Resolution Board Foundation (DRBF). DRBF is a nonprofit organization formed in 1996 to promote the use of Dispute Boards worldwide; it has over 1,000 members from more than 70 countries.
The discussion focused on Dispute Boards for dispute avoidance, prevention, and resolution as well as their implementation for successful project delivery. This paper covers in brief what is meant by a Dispute Board, its formation, how it works, and its benefits.
What is a Dispute Board (DB)?
- A board of impartial professionals,
- formed (preferably) at the beginning of the project before disputes,
- to follow construction progress,
- encourage dispute avoidance, and
- assist in the resolution of disputes
- for the duration of the project.
- Commonly organized before construction begins
- Typically, 3 members, with one member serving as Chair
- Parties ensure that all members of the DB are
- Approved by both Parties
- Neutral and impartial
- Experienced in the work of the contract
- Have complementary skill sets
How does a DB work?
- Each member has copies of the contract documents
- Parties to the contract
- Other participants in the project
- All communications are through the Chair; no ex-parte communications
- Help resolve disputes at the job level:
- Identifies and discusses issues before they become disputes
- Holds informal hearings to provide Advisory Opinions
- Conduct joint meetings during regular site visits with the owner and contractor representatives
- Holds full hearings, if necessary, and provides written recommendations
DB Opinions, Recommendations, & Decisions: (2 types)
- Advisory Opinions: Verbal opinions given on issues after an informal hearing, before they develop into disputes.
- Recommendations and/or Decisions: Provided in writing with supporting rationale after a full hearing by the DB. B. Most DBs “Recommendations and/or Decisions” ended up with a “Final and Binding Decisions” agreed upon between the parties.
Major Elements for a Successful DB include:
- DB members sign a Three-Party Agreement obligating them to serve both parties equally.
- DB fees and expenses are shared equally by the parties.
- DB keeps well-informed of job developments through periodic review of relevant documentation and regularly visiting the site.
- The parties have access to an Advisory Opinion process.
- A dispute can be referred to the DB by either party.
- An informal but comprehensive hearing is convened promptly.
- The written recommendations of the DB are non-binding, but they are admissible later in arbitration or litigation.
- DB must apply the contract as written, in accordance with the Three-Party Agreement.
- The DB members are absolved from any personal or professional liability arising from DB activities, and cannot be called as witnesses in subsequent proceedings.
Added Value of DBs:
- More competitive bids
- Better communication and positive relationships on the job
- Facilitate trust and cooperation
- Resolution of issues at the job site level
- Reduce delays during the performance of the work
- Reduced legal and consultant fees
- Early identification and evaluation of disputes
- Fewer end-of-project claims; many disputes are avoided
- High resolution/success rates with reduced costs (Direct Costs of DBs Range from 0.06-0.30% of the final construction contract amount, shared equally between the parties)
- Minimal disputes go to arbitration or litigation
All resulting in lower total contract completion costs and time savings.
DGJ Action Plan:
In view of the above, spreading awareness for the use of DBs, providing members in DBs, and consultation services during such process is being promoted by our Contracts and Claim Management Department.