FIDIC hosts a dispute avoidance Forum at the GIC in Singapore

FIDIC hosts a dispute avoidance Forum at the GIC in Singapore

FIDIC hosted a dispute avoidance and adjudication forum during the Global Infrastructure Conference (GIC) last month in Singapore. This event was split into two sessions which covered a wide range of topics that allowed both specialists and practitioners to share their views and discuss critical challenges in a constructive manner.

The Forum was co-moderated by FIDIC’s Legal Counsel, Daduna Kokhreidze and Dr S. Hardjomuljadi, also included panellists and speakers such as Sir V. Ramsey, K. Gough, C. Seppala, T. Dedezade, V. Leloup and M. Kuscher.

Both sessions of the Forum were well attended and attests to the strong interest which practitioners and those working in the infrastructure sector have for dispute avoidance and adjudication. Much of the discussion centred around the Practice Note: Dispute Avoidance. When it was first being drafted, it received a great deal of critical input from various Contracts Committee members, independent experts and FIDIC Certified Adjudicators who are all listed on the FIDIC President’s list of ADAs. It is still in the draft format and will be further discussed at the next forum in November 2023.

This is a critical development as dispute avoidance and dispute resolution are deeply embedded in the FIDIC contracts. In particular, the provisions of the FIDIC Red Book (1999 edition) included a DAB provision. With time and due to feedback from practitioners working in the industry, this has since evolved to a DAAB provision – given the importance of reducing litigation and providing the parties with more amicable solutions to their disputes.

In turn, this has led to an increasing need for qualified dispute avoidance and dispute resolution experts who are familiar with both the FIDIC forms of contracts and how they apply in the real world.

Arguably, there are two main factors leading to this demand. One is the requirement to have a standing DAAB – as outlined in the 2017 editions of FIDIC contracts, and secondly, the fact that the World Bank and other MDBs have adopted the FIDIC standard forms contract (including the 1999, 2017 and 2022 Guide). This adoption shows the importance the industry holds for these contracts in the bidding process within the infrastructure sector.

This endorsement has also led to the need to ensure that there are around 600 – 700 qualified dispute avoidance and dispute resolution experts who are available globally and able to address disputes which may arise between the contractual partners in a construction or engineering project, including those which fall under the MDB bidding process.

 

In the last four years, the DAB/DAAB has evolved. It is regarded today as an important mechanism which provides the parties with a procedure for resolving disputes at a much lower cost and in less time than required for arbitration. This DAAB process can also be considered as the first stage in what could ultimately become a multi-tiered dispute resolution process.

When an amicable settlement fails, the parties could move to arbitration, and if these options fail, then the matter would lead to litigation. This is problematic as contracts are time bound and projects are often very expensive to get off the ground and functioning. Delays and disagreements can be expensive. Consequently, the parties should make every effort to mitigate both.

At the Forum sessions, some of the Forum’s speakers and attendees are FIDIC Certified Adjudicators who are listed on the FIDIC President’s list of Approved Dispute Adjudicators. Others are FIDIC Volunteers and committee members who are passionate about adjudication and dispute avoidance. They shared both their insights into the practical aspects of working in this sector, as well as the challenges faced in mediation. Their experience as members of dispute avoidance and dispute resolution boards also enriched the discussions and their invaluable experience allowed for a more in-depth analysis of the best practices and what does not work in practical terms due to limitations and unforeseen circumstances.

Part A dealt with some of the global challenges facing the industry while Part B, dove deeper into some of the aspects that came under the Practice Note and its recommendations.

The draft Practice Note was discussed in a broad manner. The recommendations for how it could be further developed.

Raising awareness about DAABs and the role they play is a critical first step as some contracting parties are not aware of its existence or function at the contract signing phase, nor the advantages of having this option available.  

In addition, the parties should explore amicable solutions if they want to keep the contract on track. The cost of replacing contractors and engaging new engineers can be costly to the project, as well as time consuming – given how much of both would be lost in negotiating this new process.

However, it was raised that having a DAAB is not always straightforward – as in the case of government-funded construction projects. Some governments prefer to defer the decision for several reasons including the fear of scrutiny or the fear of abuse of power, or for fear of the possibility of establishing a precedent for other foreign company or contractors. It therefore goes without saying that it up to State to create an enabling environment for exploring amicable solution options.

This said, here are some of the key takeaways:

  1. A dispute board is only as good as the members in it.
  2. Parties need to trust the DAB/DAAB – and that trust must be maintained.
  3. Independence and impartiality are fundamental.
  4. Collaboration or a collaborative spirit are important.
  5. There is a difference between a standing and an ad hoc DAB. This can give the impression of controlling the forward direction.

There will be a new Dispute Resolution and Adjudication Forum which will be held at the Official International Contract Users Conference in London, UK. This event will take place from 27 – 28 November 2023.

It is not too late to register. Head over to the FIDIC events page here to buy your ticket.

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