News & events

Can a dispute be avoided?

The question is not as simple as it appears. International construction and infrastructure projects are by their very nature, complex, often requiring collaboration with several technical experts working with diverse teams and stakeholders to effectively manage and implement the various aspects of the project.

The complexities of the contract may also lead to disagreements on certain aspects of its terms or how it the contract should be executed. Discord on critical points can lead to claims and when a dispute arises, there can be delays which in turn could have adverse consequences on the project as a whole.

Having a suitably experienced or robust dispute resolution mechanism in place can therefore not be understated. It is equally important to have experts who have experience in managing disputes provide their guidance on the contractual terms and the obligations of the parties. Over the course of their professional careers, such experts should also have a space to discuss and consider any new or unexpected details which could impact the dispute.

One such notable platform is the Dispute Avoidance Forum at the FIDIC Global Infrastructure Conference in Geneva. At the event in September, experts and legal practitioners gathered to deliberate on some of the latest developments in the dispute avoidance and dispute resolution.

The FIDIC Dispute Avoidance Practice Note II was at the centre of the two-day discussion where the attendees focused on the latest developments in the dispute avoidance, as well as the worldwide demand for dispute boards. They also considered the role and importance of the appointment of dispute boards.

Split into Part A and Part B, the attendees, which included members of the FIDIC President’s list, advocates, observers and experienced professionals working in the field of dispute management, were able to work together as part of breakout groups to discuss different sections of the Practice Note. Some of the issues considered included the timing of the appointment, the question of whether an ad-hoc dispute board versus standing dispute board was better or if there should be 1 member versus a 3-member DB, cost-efficiency of the dispute board, how to appoint the Chair of the 3-member DB, the skillsets of the DB members, etc.

The participants were split into discussion groups to better facilitate feedback between them and this allowed for an intensive analysis of specific issues to which each group was allocated. The attendees considered the multi-projects scenarios as well as the importance of dealing with quantum and delay programming. It was felt that transparency, knowledge sharing, as well as confidentiality were essential aspects of the discussions between the parties.

This Forum is popular and generally well-attended, attesting both to the importance of being able to discuss vitals aspects of dispute avoidance and adjudication, as well as the considering the practical real-world application of FIDIC contracts within both the national and international spheres. The Forum also serves to improve the Practice Note as it goes through various stages of iteration as it gets further fine-tuned, thanks to the feedback from experts and practitioners who work in adjudication and arbitration and who understand both the intricacies and merits of the FIDIC contracts, the challenges or limitations faced by parties and the need for a cohesive approach when it comes to adjudication.

Is the core function of a dispute board dispute avoidance? This was debated. Parties should agree on the establishment of an ad-hoc dispute board and when a standing board should be established. They also felt that an ad hoc DB is advantageous when you appoint tailor-made adjudicators – based of course on the nature of the DB.

It was also considered that it was better to have a 3-party DB membership. It would be more expensive for the parties as well to have a standing DB as opposed to an ad-hoc DB. Another observation was the DBs are more successful in the US and UK, and that a standing board’s main skill should be that of a peacemaker.  

It was also proposed that the Note should include arbitration or a final situation in the draft section that ties into the draft note.

One attendee joked that a lawyer’s favourite phrase when asked a question is to reply, “It depends”. This made many in the room laugh as the sentiment was one that was evidently commonly shared. Another person joked that there should be a way of measuring ego as this is both a skill and an impediment. Using confidence or an ego skills test could be used to determine how difficult relations are between the parties and the question was asked if a DAB member needed to be charismatic in order to best manage the DB.

Here are some key takeaways:

• Cost efficiency is not synonymous with cost saving.
• Engaging more with local capacity is good for cost saving.
• The experience of the Chair is the most important aspect in the selection of the Chair.
• Remuneration of the Chairperson, wingman and/or members of the DB should be discussed at the initial stage.
• The ability to make a decision is a vital skill.
• The DB must have empathy for both parties, implement good communication skills, be incorruptible, flexible, reliable and available for site meetings/visits.

If you missed your chance to engage at this Forum during the FIDIC Global Infrastructure Conference, there is another chance to participate next month and share your views on how to better advance dispute avoidance practices within the industry.

The next Forum will be held in London in the first week of December 2024 at the FIDIC ICUC event.

For more information on this upcoming conference and to find out how you can get your ticket, visit the website listed below and register before tickets run out.

Find out more by clicking on this link: https://events.fidic.org/cucinternational2024