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The global landscape of construction and engineering projects is complex and fraught with potential for disputes. Recognising the need for efficient, fair, and timely resolution mechanisms, the International Federation of Consulting Engineers (FIDIC) has implemented Dispute Adjudication Boards (DABs) and Dispute Avoidance/Adjudication Boards (DAABs) in its Rainbow Suite of Contracts, the most widely used standard form construction contracts in the World. These mechanisms introduce a paradigm shift towards minimizing project disruptions and fostering positive stakeholder relationships.

Advantages of the DABs/DAABs:

Many studies, foremost of which includes the Asian Development Bank’s of 2018, has revealed a staggering preference for dispute avoidance processes with a 94% success rate in circumventing costlier dispute resolution methods. The salient advantages of the DAB’s / DAAB’s are:

1. Early dispute resolution and project continuity: DABs and DAABs facilitate the resolution of disputes at their nascent stage, significantly reducing the potential for escalation. This “early dispute resolution” approach is not just about settling disagreements swiftly but also about ensuring that projects continue to progress with minimal interruption, thus ensuring that financial and contractual disagreements do not stall the ongoing work, thereby preserving momentum and reducing the costs associated with delays.

• Expertise and familiarity: One of the standout advantages of DABs and DAABs is the board members’ expertise and project familiarity. Professionals who have relevant experience and knowledge of the project’s intricacies can help the boards make informed decisions which respect the project’s technical realities and the parties’ contractual obligations.

• Cost and time efficiency: DABs and DAABs pave the way for significant cost and time savings by avoiding the lengthier processes of arbitration or litigation, hence parties can resolve disputes more economically. This efficiency is particularly beneficial in large-scale projects where cost and time overruns can have substantial financial implications.

• Minimised project disruption: The use of DABs and DAABs minimises disruption to ongoing projects. This a very important consideration for project managers and stakeholders aiming for timely completion. By providing a structured yet flexible approach to dispute resolution, these boards help maintain the project’s schedule and budget, thus directly contributing to the project’s overall success.

• Preservation of relationships: Maintaining a positive relationship between the project parties is another critical advantage of DABs and DAABs. The non-adversarial nature of their proceedings helps prevent the erosion of trust and goodwill that often accompanies more confrontational dispute resolution methods.

• Flexibility and binding decisions: DABs and DAABs offer a flexible approach to dispute resolution, with the ability to provide binding or non-binding decisions based on the contract’s stipulations. This flexibility allows parties to tailor the dispute resolution process to their specific needs, providing a customisable solution that can adapt to the project’s unique requirements.

• Public and stakeholder confidence: Implementing DABs and DAABs can also enhance public and stakeholder confidence in a project. Knowing that an efficient, fair, and expert- driven process is in place for dispute resolution reassures investors, regulatory bodies, and the public about the project’s management and its adherence to best practices.

• Encouraging risk sharing: Finally, the presence of DABs and DAABs encourages risk sharing among project parties. By providing a clear mechanism for addressing and resolving disputes, these boards create an environment where parties are more willing to engage in cooperative risk management, knowing that potential disputes will be handled constructively and efficiently.

Additionally, the five FIDIC Golden Principles (GP’s), as launched in 2019, are the contractual principles of each form of the FIDIC contract which FIDIC considers to be “inviolable and sacrosanct”. Simply put, a lack thereof would render the contract in question no longer a FIDIC Contract.

The most straightforward of these principles is the GP #5, which set outs that:

“Unless there is a conflict with the governing law of the Contract, all formal disputes must be referred to a Dispute Avoidance/Adjudication Board (or a Dispute Adjudication Board, if applicable) for a provisionally binding decision as a condition precedent to arbitration.”

Hence, FIDIC’s position as regards the DAB / DAAB is quite clear: You must have them unless there are legal concerns etc!

This said, there the most significant drawbacks which come to mind in relation to employing DAB’s / DAAB’s are perhaps Costs, Enforceability and Limited Availability of Qualified Professionals.

In effect, the cost of adjudication as compared to arbitration is very limited. Arbitration is a very long process that takes years (sometimes decades including execution of the arbitral awards!) hence entails excessive legal and other associated costs.

Perhaps the “Achilles’ heel” of DAB’s / DAAB’s is enforceability. The provisionally binding nature of DAB/DAAB decisions means that while the decisions are to be complied with immediately, they can be contested in arbitration if either party issues a Notice of Dissatisfaction (NOD). This provisional enforceability angle is sometimes considered as a burden by the parties. There are however a number of methods to improve the DAB / DAAB decisions in this regard, most convenient of which is providing that the DAAB/DAB’s decision is final and binding for disputes with a value less than a specified amount or complexity.

Furthermore, finding individuals with the requisite expertise, experience, and language skills to serve on DABs/DAABs can be challenging. This is especially true in regions with a high demand for adjudicators who can communicate in the local language, further complicating the board’s composition and functionality.

To address this challenge, FIDIC Credentialing Limited (FCL) launched the FIDIC Certified Adjudicator (FCA) Programme for qualified dispute adjudicators who offer dispute avoidance and/or dispute adjudication services to the infrastructure industry.

It is a rigorous yet rewarding programme and its successful completion entitles the certificate holders to apply to be on the prestigious FIDIC President’s List of Approved Adjudicators as well. More on the FIDIC Certified Adjudicator Programme can be found at: https://fcl.fidic.org/our-programmes/adjudicators

About the author: C. E. Bayrak is a FIDIC Certified Adjudicator, Civil Engineer and Chartered Construction Manager who has over two decades of professional experience in the engineering and construction sectors.