Assignment – 4

Group-2 Members
1. Abdi Mohamoud
2. Abdulkani Mohammed
3. Ayalew Assefa
4. Daniel Asnake
5. Girum Aklilu
6. Feleke Menuta
7. Seme Eshetu
8. Suleman Ali
9. Senayt Girma
10. Temam Abdurahman
11. Yilikal Mitiku

SUBMITTED TO: EPHREM GIRMA (PH.D)

SUBMISSION DATE: 19 March, 2022
 Assignment – 4

1. Briefly discuss the following three types of Dispute board (DB):

• Dispute Review Board (DRB);
• Dispute Adjudication Board (DAB);
• Combined Dispute Board(CDB);

Dispute Boards

A dispute board, according to the International chamber of Commerce (ICC), ‘is a

standing body typically set up upon the signature or commencement of performance of
a mid- or long-term contract, to help the parties avoid or overcome any disagreements
or disputes that arise during the implementation of the contract’. Although the dispute
boards can be found in other fields such as research and development, intellectual
property, production sharing and shareholder agreement, they are commonly used in
construction project (ICC, Dispute Board Rules, 2015 revision).

The dispute boards according to the ICC are:

1. Dispute Adjudication Board (DAB) issue decisions, which must be complied

with immediately by the contracting parties.
2. Dispute Review Board (DRB) issue recommendations, which are not
immediately binding on the contracting parties but become so if no party
objects within 30 days of receiving it.
3. Combined Dispute Board (CDB) renders an intermediate solution between the
DRB and the DAB. The CBD normally issues recommendations but may issue
decisions if a party so requests and no other party objects, or the dispute board
so decides on the basis of criteria set out in the Rules. (Dispute board rules,
2015 revision).
Services provided by the dispute boards
The dispute boards may, according to ICC Dispute board rules (the “Rules”), facilitate
the Parties in avoiding or resolving their Disagreements and Disputes. They may assist
the contracting Parties in:

1. Avoiding Disagreements under Article 16.

2. Resolving Disagreements through informal assistance under Article 17, or.
3. Resolving disagreements through Formal Referral for a Conclusion under
Article 18.

Dispute Boards are not arbitral tribunals and their Conclusions are not enforceable like
arbitral awards. Rather, the Parties contractually agree to be bound by the Conclusions
under certain specific conditions set forth herein, (Art.1, Sub-clause 2, ICC the
“Rules”).

Establishment of dispute board and their composition

The Parties, according to FIDIC Sub-clause 20.2 [appointment of the dispute board],
shall appoint a dispute board by the date stated in the Contract Data. In the ICC rules,
the parties should establish the DBs at the time of entering the contract and they are
required to specify whether the DB shall be DAB, DRB, or CDB. Also, the contracting
parties shall cooperate with each other and with DB in the application of rules (Dispute
Board Rules, Article 3). Most DBs are composed of 3 members but in small projects,
however, DBs may have only one member. The contracting parties enjoy a total
freedom to appoint the members of the DB and the method that is most often used is:
1. Each party appoints one member of the DB
2. The two members thus nominate the third member and their choice must be
approved by the contracting parties.
The FIDIC contracts according to the sub-clauses 20.2, and 20.3, and the ICC rules
in Article 7 [Appointment of the DB Members], sub-clause 3 and 4, consider the
possibility of a disagreement between the parties when they have to appoint the
members of the DB. In such a case, provisions are made for an external authority to
substitute the parties and appoint the members of the DB in the parties’ place. In the
ICC rules, for example, the “Dispute Board Centre” can be called upon by either party
or both to proceed with the appointment.
 Article 7, sub-clause 4 and 5 respectively, according to ICC Rules
states that: ‘Where the Parties have agreed that the DB shall have a sole DB
Member, they shall jointly appoint the sole DB Member. If the Parties fail to
appoint the sole DB Member within 30 days after signing the Contract or within
30 days after the commencement of any performance under the Contract,
whichever occurs earlier, or within any other time period agreed upon by the
Parties, the sole DB Member shall be appointed by the Centre upon the request
of any Party’, Article 7, sub-clause 3.
‘When the DB is composed of three DB Members, the Parties shall jointly
appoint the first two DB Members. If the Parties fail to appoint one or both DB
Members within 30 days after signing the Contract or within 30 days after the
commencement of any performance under the Contract, whichever occurs
earlier, or within any other time period agreed upon by the Parties, both DB
Members shall be appointed by the Centre upon the request of any Party ’, Article
7, sub-clause 4.

Independency of the DB members and confidentiality of their work

Every DB member should be impartial and independency of the contracting parties.
Also, any information obtained by a DB member during the course of the DB's activities
shall be used only for purposes of the DB's activities and shall be treated as confidential
by the DB member, unless otherwise agreed by the contracting parties and DB
members under Article 8 and 9 of the ICC Rules.

DB’s member agreement

By referring to Article 10 of ICC rules, every DB Member shall, before commencing DB

activities, sign with all of the Parties a DB Member Agreement. If there are three or
more DB Members, each DB Member Agreement must have substantive terms that are
identical to the other DB Member Agreements, unless otherwise agreed by the Parties
and the DB Member concerned.

The Contracting Parties have a capacity of any time, without cause and with immediate
effect, to jointly terminate the DB Member Agreement of any DB Member but shall pay
the monthly management fee to such DB Member for at least three months following the
termination, unless otherwise agreed. Similarly, Every DB Member may terminate the
DB Member Agreement at any time by giving a minimum of three months’ written notice
to the Parties, unless otherwise agreed.

Begging and End of the DB activities.

The DB members begin their activities after every DB Member and the Parties have
signed the DB Member Agreements. Unless otherwise agreed by the Parties, the DB
ends its activities upon receiving notice from the Parties of their joint decision to disband
the DB. However, any dispute that arises after the DB has been disbanded must be
settled by arbitration, if the parties so agreed, or by any court of competent jurisdiction.
ICC Rules, Article14. Also, the DB member can, at any time, resign the DB by giving
three months' written notice to the parties, unless otherwise agreed.
Table 1: advantages and disadvantages of different dispute boards
Type Advantage disadvantage
- The choice of this type of DB tends to solve the disputes - Because of being not binding, it can be
in a consensual manner, not in an antagonistic way. rejected by the losing party.
- Support DB’s recommendation by the two parties makes - The party who refuses to comply with the
Dispute Review Board it possible to maintain a minimum of harmony between recommendation has to notify its
(DRB) the parties and thus to facilitate the subsequent disagreement in writing within a given
performance of the project.
period of time, once failing this, the
recommendation becomes binding.
- This type of DB permits the quick issuance of a - The appeal to the DAB is roughly
mandatory decision aggressive as it leads to an authoritarian
- the performance of the contract will continue even decision and increases the hostility
if one of the parties is not satisfied by the decision of the between the parties.
DAB - This fast procedure with potentially
- It prevents a paralysis of the project due to the bad will
irreversible consequences may not be
of one of the parties.
The dispute adjudication the most appropriate way to solve
-
board (DAB) complex disputes requiring a detailed
review.
- The decisions issued by the DAB are
binding only because the parties have
agreed in the contract to be bound by
them.

- The CDB aim is to combine the advantages of the DRB
and of the DAB.
- The CDB issues mere recommendations which are
similar to a negotiated resolution of the dispute, and
The Combined dispute
which preserve the good relations between the parties.
board (DAB)
- Where a serious or urgent dispute endangers the
continuation or the proper performance of the contract,
one of the parties can request the CDB to hand down a
binding decision.
- There is no precise dividing line between the
extent of the recommendation and the extent
of the decision.
- The parties do not know in advance whether
the determinations of the CDB will be
optional or mandatory.
- They have to rely on the soundness of the
judgment of the members of the CDB, which
is more uncertain.
References
[1]

Internation chamber of. Dispute Board Rules. Icc, 2015 Edition.

[2] FIDIC MDB-Harmonized edition , 2010.