About Dispute Boards
A Dispute Board (DB) is defined as a standing body consisting of one, three or more independent persons who are chosen by the parties to assist them upon the signature or commencement of performance of a mid- or long-term contract, like construction contracts and contracts for works. The DB members help the parties avoid or overcome any disagreements or disputes that arise during the implementation of the contract and assist the parties in resolving their differences at an early stage, or even before they arise; through creating an atmosphere of communication between them. This is an obvious benefit that greatly minimizes costs, especially litigation and arbitration fees, and reduces loss of productive time
The significant differences between the DB and most other alternative dispute resolution techniques is that:
- The DB is appointed at the commencement of a project before any disputes arise and before any events have occurred which would lead to any dispute, and by undertaking regular visits to the site it is actively involved throughout the project (and possibly any agreed period thereafter).
- The DB is familiar with the terms of the contract, the history of the project and persons involved in its implementation. It has ongoing factual, technical and legal knowledge of the project and may deal efficiently with any type of dispute that may arise.
- The DB is able to intervene early and can propose solutions before the parties’ positions have solidified and sometimes even before the parties themselves have realised that they are heading towards a problem.
- Other methods of ADR (such as arbitration, meditation, conciliation and expert determination) are “one-shot” procedures that cease to operate and are only implemented after a dispute has arisen, unlike the DB.
- In contrast to other methods of dispute resolution that may be agreed upon in the construction industry, a DB acts in ‘real-time’ as compared to dealing with disputes which occurred in the far distant past such as in court proceedings and arbitration.
Dispute Boards may be either Dispute Adjudication Boards (DAB) or Dispute Review Boards (DRB).
Both types of Dispute Boards can always operate on a preventive basis, to anticipate and avoid the emergence of disputes, but significant differences arise when a formal dispute resolution process is started as well as in the conclusion rendered by the DB.
Dispute Adjudication Board (DAB)
When a dispute formally arises, and a party refers the dispute to the DB, the DAB shall issue a decision in respect of each referral, in a relatively short amount of time (84 days under the DB Rules of CRCICA), subject to submissions by the parties.
The decision becomes contractually binding on the parties immediately upon its receipt. However, if a dissatisfied party gives a notice of rejection to the decision, subject to a time-limit (of 28 days under the DB Rules of CRCICA), then the decision will not be final, and the dispute may be further referred to arbitration, or the courts, as the case may be.
Until issuance of the award or judgement, the parties will have to comply with the decision. Upon issuance of the award or judgement, this award or judgement will replace the decision issued by the DAB, where it differs or departs from the decision previously issued by the DAB.
Dispute Review Board (DRB)
When a dispute formally arises, and a party submits the dispute to the DB, the DRB will issue a recommendation, in a relatively short amount of time (84 days under the DB Rules of CRCICA), subject to submissions by the parties.
The recommendation will only be contractually binding on the parties, if no party is dissatisfied with the same and gives a notice of dissatisfaction, subject to a time-limit (of 28 days under the DB Rules of CRCICA). If a party submits a notice of dissatisfaction, then the dispute may be further referred to arbitration, or the courts, as the case may be, and the parties will not have to comply with the recommendation until issuance of the award of judgement.
If no party expresses dissatisfaction, within the time-limit, then the recommendation of the DRB, same as a decision from a DAB, becomes contractually binding and final upon the parties.
Both types of Dispute Boards allow for timely and efficient resolution of disputes arisen in the frame of the contract, however, parties may prefer a particular type to another, depending on their relationship, trust or the necessity to continue performing their obligations even in the case that a dispute arises, and others.
For instance, in the case of a long-term wide-scale construction contract, a DAB may be necessary or a preferred option in case of a dispute to avoid suspension of the works and irreparable delays; while still allowing parties to attend to arbitration, or the courts, if necessary, to finally settle the remaining disputes – that were not settled through the DB process – while continuing performance until issuance of an award or judgement by the same.
Distinct would be the case of parties accustomed to each other, with a privileged relationship, who might prefer the flexibility of the DRB, because they trust each other, in the bona fide execution and performance of the contract. Thus, they could choose whether to follow a DRB recommendation, or depart from the same, while still trusting each other in their respective and reciprocal execution and performance of the contract and their obligations under the same.