Out-Law Guide 3 min. read
18 Aug 2015, 10:26 am
FIDIC is the International Federation of Consulting Engineers, known by its French acronym. It was formed in 1913, with the objective of promoting the interests of consulting engineering firms globally. It is best known for its range of standard conditions of contract for the construction, plant and design industries. The FIDIC forms are the most widely used forms of contract internationally, including by the World Bank, the Asian Development Bank, and the African Development Bank for their projects.
The DAB is the first step in the dispute resolution process for these contracts, and aims to resolve disputes before they go on to more formal arbitration. If it does its job well, a DAB can help both sides to see the truth of a situation and to accept its decision, so that arbitration is no longer needed.
That's only going to happen if the DAB has the right panel members, with the right mix of skills, experience and empathy to understand the situation, make an informed decision and communicate that well to both parties.
This guide outlines the qualities that a DAB member should have.
Each DAB will have either one member or three, nominated by the parties involved in the dispute. To do the job well, these members must have:
A member with significant in-field experience in the type of construction contract being discussed is going to have a much better chance of understanding the practical, commercial and technical issues involved. This will give them a better chance of understanding both parties' positions.
A good working knowledge of the relevant contract law as it applies to construction contracts is also needed, along with the ability to understand the often complex interactions of rights and obligations, and the ability to interpret a contract. This does not mean that the panel member needs to be a lawyer, but some knowledge of the relevant laws, and the ability to assess potentially contradictory interpretations of law, will lead to better decisions being made.
Language fluency is also essential, as the role will involve reading and analysing large quantities of information, including detailed contractual provisions, project records, plus written and oral submissions from the parties, witnesses, and legal authorities. An understanding of contractual language and of DAB proceedings is also needed.
Experience in resolving disputes in the industry is also useful, including familiarity with recognised techniques of dispute resolution.
A member of a DAB has to act fairly and impartially if the process is to work successfully. They can't act as an advocate for, or represent, the party that nominated them, and parties should make sure that they nominate truly independent experts to the DAB.
Members are expected to disclose any facts or circumstances that might affect their independence or impartiality, and any conflicts of interest. In particular, they must not advise the parties or their employees on the contract.
Each party should be given a reasonable chance to put their case, and to respond to the other party's case, and members must not express their opinions on the merits of either party's argument.
After considering the case the DAB has to present the parties with a well-organised, reasoned decision showing that all applicable rules and procedures have been followed. This should guide the parties through the legal principles involved, and explain all grounds for the final decision.
Well-argued decisions with rational explanations can speed the resolution of a claim, persuading both parties that the DAB has considered all aspects and come to a sensible conclusion.
The better and more convincing the reasons given, the more likely it is that parties will accept the decision and avoid going forward to arbitration. The DAB's decision should make the strength of the winning party's case clear to both parties. If a member of a three-member DAB does not agree with the conclusions of the other two members then that member can be invited to publish a minority report. This prevents confusing or inconsistent decisions, or long deliberations to reach agreement.
The DAB's decision is binding on both parties, and final if neither party submits a 'notice of dissatisfaction' within 28 days.
If the DAB members are experienced, fair, logical and independently-minded, and explain their (or the majority’s) decision well, they stand a better chance of instilling confidence that the dispute has properly considered and that the decision is fair and acceptable.