DRBF CONFERENCE

JAKARTA
JANUARY 2020
Session 2 Successful DB Implementation
Key Considerations in Establishing an Effective and Successful
Dispute Board and Lessons Learned from Site Visits.
Presenter: Peer Dalland

Peer Dalland - Dalland Associates Pty Ltd

Establishing an Effective and
Successful Dispute Board
• On International (ICB) contracts governed by
FIDIC General Conditions of Contract.
• How I conduct regular Site Visits as a Single
Dispute Board Member – SDBM
• Objective: to make the DB process work to the
advantage of all Parties to a Contract including
the Engineer

Peer Dalland - Dalland Associates Pty Ltd

FIDIC General conditions of Contract
• Dispute Adjudication Board, DAB, to 1999 Red Book and MDB
Harmonised 2006 and 2010.
• 2017 FIDIC General Conditions of Contracts use Dispute
Avoidance/ Adjudication Board or DAAB and DAA Agreements.
• These terms do not in any significant way alter the purpose or
operation of the DAB as Dispute Avoidance has always been at
the core of the Dispute Board Process.
• Refer Subclause 4(k) in the Appendix – General Conditions of
Dispute Board Agreement: “The Member shall be available to
give advice and opinions on matters relevant to the Contract
when requested by the Employer and the Contractor subject to
the agreement of the other Members(if any).

Peer Dalland - Dalland Associates Pty Ltd

Some basic problems
• The DB Agreement is not always included in site
copies of Contract Documentation.
• The Employer, Contractor and the Engineer are often
ignorant of the functions and purpose of dispute
boards.
• This contributes to the process not being fully
understood and implemented in an effective manner.
• Sometimes the chosen DAB members are also equally
ignorant about the purpose and operation of Dispute
Boards, leading to dysfunctional DB processes.

Peer Dalland - Dalland Associates Pty Ltd

Example
• 3- member DAB. - lawyer/arbitrators – never visited the
site in 2 years of operation.

• 600+ claims – 23 referrals – 3 decisions, one late and

the other two subject to “Notice of Dissatisfaction” by
both Parties

Peer Dalland - Dalland Associates Pty Ltd

Importance of Site Visits
• Site Visits are mandatory unless otherwise agreed
with both the Contracting Parties.

• Procedural Rule No 1. – “Unless otherwise agreed

by the Employer and the Contractor, The DAB shall
visit (my emphasis) site at intervals of not more
than 140 days, including times of critical
construction events, at the request of either the
Employer or the Contractor.
Peer Dalland - Dalland Associates Pty Ltd
Dispute Board Training
• In 2008 I prepared a report for the ADB with
recommendations on how to improve the functionality
of the DB process and recommended that Dispute
Board training should be undertaken.
• I elaborated further on this proposal in an article
published in the DRBF Forum in 2008. Following
through on this and to improve the operation and
outcomes of claims and disputes in Contracts where I
was directly involved as Contracts Specialist, SDBM or
DRE,

Peer Dalland - Dalland Associates Pty Ltd

Dispute Board Guidelines
• In 2008/9 I prepared a document headed
Dispute Board Guidelines in which I outlined
the functions of, and how to use the Dispute
Board to its fullest advantage to all
stakeholders in the Contract.

Peer Dalland - Dalland Associates Pty Ltd

• These Guidelines are intended to be used as a ready
reference on all matters relating to operation and
functions of the Dispute Board including the General
Conditions of Dispute Board Agreement, Procedural
Rules and relevant clauses extracted from the General
Conditions of Contract.
• Specific Procedures proposed by the DAB during the
first and second Site Meetings are also contained in
these guidelines together with the DAB’s proposed
procedure for obtaining advice and opinions, proposed
procedure for referrals and preliminary time schedule
for referrals.
Peer Dalland - Dalland Associates Pty Ltd
Procedures for keeping the DAB
informed
•During the Introduction at the first Site
Meeting, the DAB will briefly outline
the contractual procedures for the DB
process as well as procedures to be
agreed for keeping the DAB and the
Parties informed of relevant issues.

Peer Dalland - Dalland Associates Pty Ltd

DB Agreement and Procedural Rules
• Dispute Board Agreement (Attachment 1) and

• Procedural Rules (Attachment 2) which

governs the functions and operation of the
Dispute Board.

• These documents are not always included in

the site copies of the Contract.

Peer Dalland - Dalland Associates Pty Ltd

Dispute Adjudication Boards - Dispute
Avoidance tools.

• A Dispute Board (DB) is the most useful tool to reduce

the impact of contentious issues and to avoid formal
disputes. There are some important provisions in
Clause 20.2 of the General Conditions of Contract
(Attachment 4) which can be of great benefit in the
dispute avoidance process. This is the provision that
“If at any time the Parties so agree, they may jointly
refer a matter to the DB for it to give its opinion.
Neither party shall consult the DB on any matter
without the agreement of the other party.” (My
emphasis).

Peer Dalland - Dalland Associates Pty Ltd

Site Visits
• The purpose of regular site visits by the DB is
stated in (b) of the Procedural Rules and is “to
enable the DB to become and remain
acquainted with the progress of the Works
and of any actual or potential problems or
claims, and, as far as reasonable, endeavour
to prevent potential problems or claims from
becoming disputes.”

Peer Dalland - Dalland Associates Pty Ltd

Early identification of potential
problems
• It is important that all parties involved in the
daily operation and execution of the Contract
understands the importance of early
identification of potential problems and
matters of concern.

Peer Dalland - Dalland Associates Pty Ltd

Site Visits and DAB Site Meetings
Meeting

• Site meetings are part of Site Visits and should be conducted

on a “without prejudice” basis.
• Should the DAB prepare detailed minutes of meetings?
• I do not provide minutes, but a detailed Report at the end of
the visit in accordance with Item 6 in the DB Agreement and
Procedural Rule No 3 which states:
• At the end of the site visit the DAB will prepare a report on
its activities outlining in broad terms the matters discussed
and matters of concern to the Parties as well as matters
which are of concern to the DAB.

Peer Dalland - Dalland Associates Pty Ltd

Procedural Rule No. 3.
Site visits shall be attended by the Employer, the
Contractor and the Engineer and shall be co-
ordinated by the Employer in co-operation with the
Contractor. The Employer shall ensure the provision
of appropriate conference facilities and secretarial
and copying services. At the conclusion of each Site
visit and before leaving the site, the DAB shall
prepare a report on its activities during the visit
and shall send copies to the Employer and the
Contractor.

Peer Dalland - Dalland Associates Pty Ltd

Item 6 in the DB Agreement:
• The Member shall submit invoices for
payment of the monthly retainer and air fares
quarterly in advance. Invoices for other
expenses and for daily fees shall be
submitted following the conclusion of a site
visit or hearing. All invoices shall be
accompanied by a brief description of
activities performed during the relevant
period and shall be addressed to the
Contractor.
Peer Dalland - Dalland Associates Pty Ltd
Agreed Procedures
• The DAB to briefly outline the contractual procedures for the
DB process as well as procedures to be agreed for keeping
the DAB and the Parties informed on relevant issues.
• The Appendix to Section IV of the General Conditions of
Contract contains the General Conditions of the Dispute
Board Agreement (Attachment 1) and Procedural Rules
(Attachment 2) which governs the functions and operation
of the Dispute Board. The Procedural Rules are also
contained in Annex 1 to the DAB tripartite Contract
Agreement (Attachment 3). Copies of these documents are
attached for easy reference.

Peer Dalland - Dalland Associates Pty Ltd

Documentation to be provided to the
DAB.
• The parties are required under the Contract to provide the
DAB with copies of all monthly reports and minutes of
meetings, as well as any correspondence which would deal
with any contentious issues, including requests for, and
amendments to the Construction programme, access,
obstructions and site possession issues which may be
requested by the DAB.
• The Project Manager for the Contractor and the Engineer
shall be jointly responsible for passing all relevant
information on to the DAB as soon as it becomes available
to the parties, always with a copy to the other Party.

Peer Dalland - Dalland Associates Pty Ltd

Proposed itinerary for Site Visits
• Itinerary prepared by the DAB is based on information
provided by the Parties and the Engineer. Monthly
reports may or may not have been made available to
the DAB prior to the Site Visit.
• I include the final itinerary in the relevant Site Report
and discuss any changes and reasons for such changes.
This may be important for future reference.

Peer Dalland - Dalland Associates Pty Ltd

 Preparation for Site Visits and DAB
Meetings
• Itinerary in conjunction With Employer and Contractor.
• Agenda: based on information supplied by the Parties.
• NOTE: You may have noticed that in the Guidelines, the DAB
will arrange the Itinerary for Visits. This is consistent with
Procedural Rule No. 2 which states: The timing of and
agenda for each site visit shall be as agreed jointly by the
DAB, the Employer and the Contractor, or in the absence of
agreement shall be decided by the DAB. In my experience
the Parties are not always forthcoming in agreeing on either
Itinerary or Agenda but will generally contribute to
individual items on each.

Peer Dalland - Dalland Associates Pty Ltd

Reporting Requirements
• Parties do often not comply with reporting
requirements – monthly reports may be received on the
morning of the meeting
• Hundred pages or more
• List of claims
• List of matters of concern

Peer Dalland - Dalland Associates Pty Ltd

SITE REPORTS TO REPORT ON DAB
ACTIVITIES
• Generic information - Description of the Works,
location, value and the Contracting Parties
• The agreed representatives of the various parties for the
purpose of Site Meetings:
• Outline itinerary and activities performed.
• Daily meetings, attendance, outcomes. Issues of
concern to the Parties and/or the Engineer to be
discussed (refer monthly reports)

Peer Dalland - Dalland Associates Pty Ltd

Claims Procedures
• Only matters which are in dispute can be referred to the
Dispute Board for a decision. Under the MDB FIDIC Contract
a Dispute will only arise once the Engineer has delivered his
Determination on a matter in accordance with Sub-Clause
3.5.

• Failure by the Engineer to give a determination on a claim

submitted by the Contractor pursuant to Sub- Clause 20.1
within the period stipulated in that clause, or within a
further time agreed between the Parties, is deemed under
the Sub-Clause 20.1 of the Contract to constitute a rejection
of that claim.

Peer Dalland - Dalland Associates Pty Ltd

Referrals
• Any Party which disagrees with the Engineer’s
Determination may refer the matter to the Dispute
Board in accordance with Sub-Clause 20.4.

• The DAB to stress the point that the submission of a

Sub-clause 2.5 or 20.1 claim’s notice should NOT be
construed as a “hostile” act and that complying with
provisions of the Contract which are in fact designed as
dispute avoidance provisions, should be rigorously
complied with.

Peer Dalland - Dalland Associates Pty Ltd

Proposed Additional Procedure for
Referral of Disputes to the DAB.
DAB
• Before referring a matter, which is in dispute, the referring
Party (the Claimant) must submit an Early Warning Notice
to the other Party and to the DAB, advising that the matter
will be formally referred for a Decision. The Early Warning
Notice must be in writing and be received by the other Party
and the DAB at least 5 days before the Referral is submitted.
The Parties shall make at least one attempt at settling the
matter before the Referral is formally lodged. The Date of
the Referral is when it is received by the DAB.
• This procedure must be agreed by the Parties at Site
Meeting No 1
• Rule 5 (b): The DAB shall adopt procedures suitable to the
dispute…

Peer Dalland - Dalland Associates Pty Ltd

 Compliance with the Provisions of the
Contract
• The provisions of Sub-clause 20.1 and 3.5 provides for a
consultation process where the Engineer shall consult
with each Party in an endeavour to reach agreement.
This should be considered as a contractual dispute
avoidance/reduction provision.

Peer Dalland - Dalland Associates Pty Ltd

PREDICAMENT
• The Oxford Dictionaries defines predicament as “a
difficult, unpleasant, or embarrassing situation”.

Peer Dalland - Dalland Associates Pty Ltd

Predicament 1 - TABOOS
• Australian taboos – never be alone with one of the
Parties
• This is not always possible on an International contract
in a remote region of a developing country.
• Ex.: DAB is travelling for 8 hours in a 4WD with the
Contractor and Employer, staying on site for one or
more nights.
• About to leave: Contractor is there, but no Employer.
“Oh, he has travelled on to another project’, leaving the
DAB alone with the Contractor.

Peer Dalland - Dalland Associates Pty Ltd

• Options
• Call a taxi? – Not an option in most locations. There is
no cell phone coverage, no internet and no taxis.
• Insist that the Engineer travel with you; but then he will
be away from the project for at least 2 days? But he is
deemed to be representing the Employer.
• What does the DAB do?

Peer Dalland - Dalland Associates Pty Ltd

TRUST
• This is a common situation. It must be agreed at the first
Site Meeting that this situation, if it arises, will not
compromise the DAB in any way, and this agreement
must be recorded in Site Report No. 1.
• The DAB must always be aloof and independent and
establish a mutual trust between the DAB and the
Parties.
• Never discuss the project whilst travelling, because not
all members of the Parties’ teams are in the one vehicle
with you.
• Can be difficult but must be a priority.
Peer Dalland - Dalland Associates Pty Ltd
 Predicament 2 – Dispute Board Site
Meetings
• Employer’s Representative does not turn up – late
substitution
• Insists on Contractor’s Claim Specialist not be allowed in
the meeting
• What powers do the DAB have during site meetings?
• Not specifically mentioned in the DB Agreement, but
Rule 7 deals with the DAB’s powers at hearings.

Peer Dalland - Dalland Associates Pty Ltd

Predicament 3 - Site Inspections
• Site inspection – cracks in the road in a steep cut and fill
section. You think you know what is wrong, but how to
encourage the Parties to investigate the problem.
• The DAB has identified this as a dangerous situation based
on their own expertise. (Rule 8 (e) in the Procedural Rules –
“The Employer and Contractor empower the DAB, among
other things, to make use of its own specialist knowledge,
if any.”
• The problem is potential slip failure and should be assessed
by Geotechnical experts.
• How to proceed.

Peer Dalland - Dalland Associates Pty Ltd

 Predicament 4 – Dispute Referrals
• Contractor’s Dispute referral – non-reimbursement by the
Engineer of pension payments for 12 months or more.
• Sub-clause 13.7 - Adjustment for Changes in Legislation
• Employer says Contractor is entitled to payment, but no
paymenthas been certified by Engineer
• Engineer and Employer not responding to Contractor’s
requests.
• DAB Site meeting 5 days before 84-day limit for DAB
decision expires
• What options does the DAB have?

Peer Dalland - Dalland Associates Pty Ltd

Predicament 5 - Hearings
• About to start the hearing
• The Employer’s in-house counsel states: “If you find in
the Contractor’s favour on this we will appeal it to the
ICC. We have 15 other Contracts with the same
provision you are about to interpret, and it will cost us
many millions of dollars”.
• What are the possible implications?

Peer Dalland - Dalland Associates Pty Ltd

 Thank you.

Peer Dalland - Dalland Associates Pty Ltd