13/02/2023

FIDIC CONDITIONS OF CONTRACT

MODULE 3
UNDESTANDING DAB

1. Introduction
2. Understanding Dispute Adjudication
Boards (DABs): enabling Parties, their
Representatives, Engineers and Dispute
Board Members to understand and
manage DAB process under the FIDIC
Conditions of Contract 1999 First Edition
Red, Yellow and Silver Books.
3. Highlights on the changes to Dispute
Resolution procedure brought by the
recent update of 2017 Second Editions.

INTRODUCTION
Contents
1. Dispute Management in Construction
2. Dispute Boards (DB): function, structure & format,
jurisdiction, advantages & disadvantages.
3. Dispute Boards – USA/ICC/FIDIC
4. Alternative Dispute Resolution (ADR)
5. Mediation/Conciliation/Adjudication/Arbitration.
6. ADR in Tanzania

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DISPUTE MANAGEMENT IN CONSTRUCTION

Construction projects have historically been fertile

grounds for disputes and conflicts.
Disputes are endemic to the collaborative nature of
construction. It seems prudent to anticipate the disputes,
even where the precise nature of the dispute is
unknowable, and create a structure for proactively
addressing and resolving them when they do arise.

Collins English Dictionary:

“A DISPUTE is an argument or a disagreement between people or groups”

DISPUTES are artificial impediments of business relations. They have two main reasons:

 difference of opinion as to the legal and factual situation

 or failure to comply with the law

Traditional dispute resolution, whether arbitration or litigation, when invoked

at the end of the project, takes place too late to save it or get it back on track.

Instead, proactive onsite real-time dispute resolution: mediation, dispute

reviewing, dispute adjudication, is warranted to protect working
relationships, cash flows and schedule progress.

This tendency in “preventive law” is widely spread around the world, saving
time, project costs and legal fees.

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DISPUTE BOARDS

All stakeholders in the construction community know all too well

that construction projects almost inevitably give rise to disputes,
sometimes even over the smallest of details. As a result, over the
past several decades, the construction industry has developed a
unique dispute resolution approach known as a dispute board to
https://www.ibanet.org/article/114bd03c-737a-4ca7-8228-
0ecf7b5a4c88 quickly and efficiently resolve disputes and avoid or minimize the
need to resort to formal litigation or arbitration.
“Dispute board” is a generic term that describes a panel of three independent and
impartial individuals such as lawyers, engineers, and other experts who are selected by the
contracting parties to resolve project-level disputes before the commencement of more
formal dispute resolution processes such as arbitration or litigation. Dispute boards attempt
to facilitate the resolution of disputes by mediating issues that arise during an extended
project or adjudicating more contentious disputes.

In the United States and Canada, the most common terms are Dispute Review Board or
Dispute Resolution Board; in Australia: Dispute Avoidance Board; FIDIC forms of contract:
Dispute Adjudication Board (1999) or Dispute Avoidance & Adjudication Board (2017).

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PURPOSE OF A DISPUTE BOARD

The primary function of Dispute Boards is to assist the
parties to a construction contract avoid disputes by:

•facilitating and improving communication;

•encouraging the resolution of contentious issues by the parties at the job level before
they become disputes
In the first instance, Dispute Boards can informally assist the
parties (if they so require) to resolve any disagreements which
arise during the course of the contract works.
•if the issue cannot be resolved at job level, to assist the contracting parties to resolve
disputes quickly and cost effectively without the need for arbitration or litigation.
The members can make recommendations or decisions
regarding issues and disputes referred to them by any of the
contracting parties.

https://www.buildingdisputestribunal.co.nz/dispute-review-boards-overview/

STRUCTURE OF A DISPUTE BOARD

Dispute Boards will typically comprise either one or three members.
The most effective Dispute Boards are formed at the start of the contract, well
before construction work begins. Those members will then remain in place
throughout the duration of the contract.
To be effective, Dispute Board members must:
•be experienced in the type of project being undertaken;
•have a thorough knowledge of relevant contractual issues;
•be respected for their experience and expertise; and
•be impartial and independent.

Dispute Board members may be appointed by the parties or by an appointing

institution. Regardless of how the appointment is made, the member must be
completely independent of any contracting party.
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DISPUTE BOARDS FORM - STANDING & AD HOC

Significant factor parties should consider when deciding to implement a dispute
board is whether the dispute board should be a standing or ad hoc board.
A standing board is appointed at the outset of a project, meets with the parties at
regular intervals, and disbands at the end of the project or when the final project-
level disputes have been resolved by the board.
An ad hoc dispute board is appointed only after the parties refer a formal
dispute for resolution.
The current trend among dispute board rules favors standing boards.
From 2017 FIDIC recommends that dispute boards be appointed as standing
boards. While more costly than ad hoc boards, standing dispute boards have the
ability to remain engaged for the duration of the project, which ensures that the
dispute board members can familiarize themselves with the parties, the intricacies
of the project, and the issues most likely to give rise to disputes early on.
This feature is thought to be the principal advantage of a standing board.

DISPUTE BOARDS JURISDICTION

The parties are free to determine the jurisdiction of the Dispute Board and the rules
of procedure it should follow in resolving disputes.
At the first instance the Dispute Board has to verify its jurisdiction:
 Existence of dispute
 Appointment of DB members
 Dispute is beyond contract scope
 Existence of a contract
Jurisdiction issues shall be decided by the DB itself.
It has “kompetenz-kompetenz” the German word,
meaning the ability of an arbitral tribunal to rule
on the question of whether it has jurisdiction.
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THE LEGAL EFFECT OF A DISPUTE BOARD DECISION

A Dispute Board’s decision may be either non-binding, or binding.

It must be complied with unless or until reversed, or modified by agreement of the

parties, or by a court or by an arbitral tribunal.
The requirement for a decision of the Dispute Board to be complied with in the
meantime is the very essence of the value of Dispute Boards – they provide a
means of resolving disputes in the first instance to enable the project to continue,
even if following later arbitration or litigation, the result may be reversed or
modified in some way.
A Dispute Board’s decision is not an arbitral award capable of enforcement, nor
does it have the status of a court judgment. Accordingly, a decision is only binding
as a matter of contract between the parties. The appropriate method of enforcing
a Dispute Board’s decision is by way of an action for breach of contract. In
enforcement proceedings, there is very little room for the defaulting party to resist
enforcement unless it can establish that the Dispute Board exceeded its jurisdiction.

ADVANTAGES

On high-value construction projects of significant durations, Dispute Boards can be a

cost-effective method for resolving project disputes without souring project-level
relationships or disrupting the progress of the work.

 A readily available panel of experts who are well

versed in the nuances of a specific project can
moderate the parties’ positions and facilitate
compromise;
 The DB members’ knowledge and understanding of
the project give parties confidence that their concerns
will be addressed fairly and carefully. In doing so,
parties may be more willing to accept the dispute
board’s decisions, even ones that are unfavourable.
Indeed, statistics suggest that dispute board decisions
are rarely challenged in subsequent litigation or
arbitration;
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ADVANTAGES continue

 DBs save time: by ensuring that contentious disputes, many of which involve
significant cost and time ramifications, can be resolved in real time, a dispute
board limits the risk that a contractor, subcontractor, or supplier will suffer the
severe cash flow limitations that can come with protracted disputes
 DBs save money: Dispute Boards offer a less formal process that does not
necessarily require the direct involvement of outside attorneys and experts
(though many parties do consult with attorneys and experts behind the scenes),
the cost of resolving a dispute is often less than it would be in conventional
arbitration or litigation. This is especially helpful for low-value disputes that
might not be worth litigating or taking to arbitration. Although parties usually
present a number of disputes to a Dispute Board at a time, the cost of doing
so can be relatively low when compared to more conventional dispute
resolution proceedings, meaning that Dispute Boards can limit the need to
aggregate large numbers of claims until they reach a value that would justify
arbitration or litigation.

DISADVANTAGES

 DBs can be significant cost centers: Standing Dispute Boards, panels that are
engaged for the duration of a project, require the contracting parties to pay the
fees and expenses for three professional engineers and/or attorneys to travel to
the project site on a periodic basis and oversee complex technical disputes.
The overall costs of a Dispute Board are typically less than an arbitral tribunal in a
formal arbitration proceeding (although they are not minor and may not be justified
for smaller, more routine projects).
Dispute Resolution Board Foundation’s Manual states “ the carrying costs of DB
relative to the budget of the project are small, usually in the range of 0.05% to
0.15% of project costs.”
 DB members, especially engineers, who lack formal legal training, may disregard
the requirements of a contract in favour of their own sense of equity and judgment.
In doing so, there is a risk that a dispute board could deny a party the benefit of
their bargain by ignoring specific contractual terms.
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DISADVANTAGES

 DB decisions, whether binding or not, are relatively easy to ignore and difficult
to collect: even if a DB issues a binding determination, construction contracts
often allow either party to challenge the determination within a set period of
time and take the dispute to arbitration or litigation;
 Binding DB determinations, even if not challenged, cannot be enforced by an
arbitral tribunal or court like an arbitration award under the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the
New York Convention).

DISPUTE BOARDS - USA

Dispute Boards (DB’s) have been around in one form or another since the late 1960’s.
The first documented use In 1975 - the Dispute
of DB - the Boundary Board process was first
Dam and Underground used during construction of
Powerhouse Project, the the second bore of the
Pend Oreile River, Eisenhower Tunnel for
Washington State Interstate 70 in Colorado.

In 1996 the Dispute Resolution Board Foundation (DRBF) was founded as a

global not-for-profit organization dedicated to promoting the avoidance
and resolution of contract disputes using the unique and proven Dispute
Board (DB) method.
The DRBF provides assistance with the worldwide application of the Dispute Board method by
providing advice and suggestions tailored for the conditions and practices existing in project
areas. The rapid spread of the process worldwide has resulted in the process being used on
more than $270 billion worth of construction projects, achieving avoidance of numerous disputes
and delivering significant savings.
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EISENHOWER MEMORIAL TUNNEL

The Eisenhower Memorial Tunnel located approximately 60miles west of

Denver in Colorado: two vehicular tunnels designed to carry four lanes of
Interstate 70 traffic at elevation of 11,000 feet. The four lanes are carried
through twin bores, each approximately 1.7 miles long. The owner was the
Colorado Department of Highways (now of Transportation)
The work on bore one the North Tunnel went from November 1967 to
March 1973. The job bid was at $49.6 million with a projected construction
period of four years. It ended up costing $109 million and took almost six
years to complete.

Michael Gay, Sr. P.E. Office Engineer

The second bore was bid in August 1975 with cost of

$102.8 million. The design and construction of the
second bore of the Eisenhower Tunnel was based on
information obtained from the difficult experience of
the first bore and construction was a success in every
sense of the word.
The contract included DAB, which had three disputes.
The owner and contractor practiced partnering before
it became fashionable, their relations were cordial
throughout construction, and all parties were pleased
at the end of the project. The final cost of the project,
including many owner requested change orders, was
approximately $108 million. 4

DRB Members Palmer King and Charles McGraw

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INTERNATIONAL CHAMBER OF COMMERCE - DISPUTE BOARDS

“DB” - a standing body, set up upon the signature or commencement of performance contract
used to help parties avoid or overcome any disagreements or disputes that
arise during the implementation of the contract.
The ICC Dispute Board Rules (“Rules”) consist of a comprehensive set of provisions for
establishing and operating a DB. They cover such matters as the appointment of the
dispute board member(s); the services they provide and the compensation they
receive.
DBs have three basic functions they emphasize the importance of informal and formal
approaches to disputes:
identify the disagreement and encourage the parties to resolve it on their own without
further involvement of the DB
intervene with informal assistance to help the parties resolve the matter by agreement
determine a dispute through a recommendation or a decision issued after a procedure
of formal referral

INTERNATIONAL CHAMBER OF COMMERCE - DISPUTE BOARDS

“DB” - a standing body, set up upon the signature or commencement of performance contract
used to help parties avoid or overcome any disagreements or disputes that
arise during the implementation of the contract.
DBs have three basic functions they emphasize the importance of informal and
formal approaches to disputes.
identify the disagreement and encourage the parties to resolve it on their own
without further involvement of the DB.
If this is impossible or the disagreement is too entrenched, the DB can intervene with
informal assistance to help the parties resolve the matter by agreement.
Alternatively, the DB could also determine a dispute through a recommendation or a
decision issued after a procedure of formal referral.

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THREE TYPES OF DB
Dispute Adjudication Boards (DABs)
issue decisions that must be complied with immediately

Dispute Review Boards (DRBs)

issue recommendations that are not immediately binding on
the parties become so if no party objects within 30 days.

Combined Dispute Boards (CDBs)

offer an intermediate solution between DRB and DAB. They
normally issue recommendations but may also issue decisions
if a party so requests and no other party objects or the DB so
decides on the basis of criteria set out in the Rules. There is a
contractual obligation to comply with recommendations and
decisions—when so required—by disallowing objections on
the merits as a defense to non-compliance and through
explicit use of the terms “final” and “binding.”

Parties wishing to use the Rules are advised to include an appropriate clause
in their contract. For this purpose, ICC proposes three standard ICC Dispute
Board Clauses (“Clauses”)—providing respectively for the three DB types:
ICC Dispute Adjudication Board followed by ICC arbitration if required
ICC Dispute Review Board followed by ICC arbitration if required
ICC Combined Dispute Board followed by ICC arbitration if required

https://iccwbo.org/dispute-resolution-services/dispute-boards/ 11
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DISPUTE ADJUDICATION BOARDS - FIDIC

1995 – Orange Book for Design, Build & Turnkey

Works, introducing concept of Dispute Adjudication
by the independent Dispute Adjudication Board.
1999 – First Edition of FIDIC Suite of Contracts with
updated versions of the Red and Yellow Books
together with a Green Book (short form of contract)
& Silver Book (turnkey contracts). This publication
firmly established practice of the independent
Dispute Adjudication Board.

2017 – Second Edition of FIDIC Rainbow Suite of

Contracts. The update addressed users concerns over
the past 18 years arising out of practice of the1999
Forms and reflects current international best practice.
A key theme of the Second Edition is the increased
emphasis on dispute avoidance by introduction of
Dispute Avoidance/Adjudication Boards (“DAABs”)

ALTERNATIVE DISPUTE RESOLUTION (ADR)

The court proceedings are expensive and time-consuming, as an alternative, the
business community has developed so called ALTERNATIVE DISPUTE RESOLUTION
(ADR) proceedings, that employs non-adversarial (i.e. out of court) ways to
determine legal controversies. These methods are informal, cheaper and faster,
in comparison to the traditional litigation process.

In terms of Alternative Dispute Resolution the Parties seek the INTERVENTION of

a third party to assist them in finding a solution to their dispute. The procedure is
purely voluntarily and consensual, albeit compulsory, in case, that the Contract so
provides.

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Alternative Dispute Resolution (ADR) is the preferred method of resolving

disputes in the construction industry, without the need for Court, which are
quicker and more cost-effective than Court proceedings.

Parties to a construction contract have a range of options for the ADR prior to a
litigation, including inter alia:

Mediation Conciliation Adjudication Arbitration

MEDIATION
“mediare” = “to heal”

• Mediation is a form of ADR, wherein parties mutually

appoint an independent and impartial third party, called
the mediator, who helps the parties in reaching an
agreement which is mutually accepted by the parties
concerned.
• Mediation is a systematic and interactive process, which
employs negotiation techniques to assist the parties in
finding the best possible solution to their problem.
• As a facilitator, mediator attempts to expedite discussion
and build an agreement between the parties with an aim
to settle the dispute. The decision made by the mediator
is not binding like an arbitral award.

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CONCILIATION
“conciliare“ = “to unite”

• Conciliation is a method adopted by the parties for

resolving the dispute, wherein the parties out of their
free consent appoint an unbiased and disinterested
third party, who attempts to persuade them to arrive
at an agreement, by way of mutual discussion and
dialogue.
• Conciliation is characterised by the voluntary will of
the parties who want to resolve the dispute.
• The conciliator plays an advisory role, wherein he/she
suggests potential remedies to the problem. The
conciliation process completes with a settlement
between the parties

ADJUDICATION
“adjudicare” = “grant or award as a judge”

• Adjudication is a contractual or statutory procedure

for swift interim dispute resolution. It is provided by a
third party adjudicator selected by the parties in
dispute.
• Adjudication leads to a decisions on the merits of the
case.
• Adjudication decisions are binding unless and until
they are revised by arbitration or litigation.
• “Adjudication has proven effectiveness in helping
construction parties to resolve their disputes swiftly and
cost-effectively, which has allowed projects to be
completed without wasted cost and time in litigation” 3
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ARBITRATION
“arbitrare” = “to judge”

• Arbitration is a process of resolving contractual

dispute outside of judicial system.
• Arbitration gives the parties substantial autonomy
and control over dispute resolution process by
choosing the arbitrators (usually one or three);
deciding whether the procedure administered by
arbitral institutions or ad hoc; choosing place and
language of arbitration.
• Arbitration, in most instances, involves a final and
binding award that is enforceable in a national
court.

ALTERNATIVE DISPUTE RESOLUTION IN TANZANIA

As long as human beings have conscience and intellect to think about the
future, definitely there will be conflicts. Conflicts are made by human beings
and methods to solve them must be created through human intelligence.
H.H. the Dalai Lama, Dharamsala
The Spread of ADR to Africa
Modern ADR introduced by the World Bank and developed
Western countries as part of globalization process in the 1980s
through to 1990s
Socio-economic and political reforms
structural adjustment programmes SAPs:
good governance; human rights frameworks;
legal sector reforms
C.J. Mashamba
Modern ADR mechanisms were borrowed, with modifications, from
Dr. Mashamba traditional African justice systems that are intrenched on restorative justice.
a Senior Lecturer at
the Law School of
Tanzania; The African indigenous justice system is community based, human centered
an Advocate of the and employs restorative and transformative principles in conflict resolution.
High Court of
Tanzania. Elechi O. Human rights and the African Ingenious Justice System
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ADR in Tanzania

Brief History
April 1993 Judges Conference in Arusha resolved Tanzania should introduce some
forms of ADR, fitting local conditions in Judiciary’s bid to get rid of delays in disposal
of cases.
Chief Justice Francis Nyalali appointed Committee of three High Court Judges,
chaired by Hon Mr. Justice Mroso (retired)

Mroso Committee recommended the adoption of ADR in the form of negotiation,

conciliation, mediation, case evaluation and arbitration
1994 ADR introduced in Tanzania Government Notice No 422, amendment to the
1st Schedule to the Civil Procedure Code Act 1966.
The legal framework for arbitration in Tanzania Mainland is governed by two main
pieces of legislation, the Civil Procedure Code Cap.33 R.E. 2002 and The
Arbitration Act, Cap. 15 (Act No. 2 of 2020), which replaced the Arbitration Act
1996 (1931).

CONTENTS

1. FIDIC – Principles of Dispute Avoidance & Resolution

2. General Conditions of Dispute Adjudication Agreement.
3. DAB Procedural Rules
4. Dispute Avoidance
5. Operation of Clause 20
6. Disputes and their Resolution

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FIDIC – Principles of
Dispute Avoidance & Resolution

RED Conditions of Contract for Construction for Building & Engineering

Works, designed by the Employer
YELLOW Conditions of Contract for Plant & Design Build for Electrical & Mechanical
Plant, & for Building & Engineering Works, designed by the Contractor
SILVER Conditions of Contract for EPC/Turnkey Projects
FIDIC Conditions of Contract state: the Dispute Adjudication Board's decision
shall be binding on both Parties, who shall promptly give effect to it unless and
until it shall be revised in an amicable settlement or an arbitration award.
CLAUSE 20 CLAIM, DISPUTES & ARBITRATION
All FIDIC Forms of
Contract recommend Dispute Adjudication as a regular means of dispute resolution

disputes reference
Dispute Adjudication Board – DAB

Arbitration 17
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GENERAL PROVISIONS SUB-CLAUSE 1.1.2 PARTIES & PERSONS

1.1.2.9 “DAB” means the person or three persons so named in the Contract, or other
person(s) appointed under Sub-Clause 20.2 [ Appointment of the Dispute Adjudication
Board ] or Sub-Clause 20.3 [ Failure to Agree Dispute Adjudication Board ]

CLAUSE 20 CLAIM, DISPUTES & ARBITRATION

20.1 Contractor’s Claims
20.2 Appointment of the Dispute Adjudication Board
20.3 Failure to Agree Dispute Adjudication Board
20.4 Obtaining Dispute Adjudication Board’s Decision
20.5 Amicable Settlement
20.6 Arbitration
20.7 Failure to Comply with Dispute Adjudication Board’s Decision
20.8 Expiry of Dispute Adjudication Board’s Appointment

TYPICAL SEQUENCE OF DISPUTE EVENTS

8.1 20.2 20.4 A Party 20.4 A Party 20.6 A Party

Commencement Parties refers dispute may issue may initiate
Date appoint to DAB “notice of arbitration
DAB dissatisfaction”

Parties present Amicable settlement

submissions to DAB

< 28d <84d < 28d > 56d

Arbitrator/s
appointed
DAB gives
decision
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TYPICAL SEQUENCE OF DISPUTE EVENTS

Party gives 20.2 20.4 A Party 20.4 A Party 20.6 A Party

notice of Parties refers dispute may issue may initiate
intention to appoint to DAB “notice of arbitration
refer dispute to DAB dissatisfaction”
a DAB

Parties present Amicable settlement

submissions to DAB

< 28d <84d < 28d > 56d

Arbitrator/s
appointed
DAB gives
decision

TYPICAL SEQUENCE OF DISPUTE EVENTS

Party gives 20.2 20.4 A Party 20.4 A Party 20.6 A Party

notice of Parties refers dispute may issue may initiate
intention to appoint to DAB “notice of arbitration
refer dispute to DAB dissatisfaction”
a DAB

Parties present Amicable settlement

submissions to DAB

< 28d <84d < 28d > 56d

Arbitrator/s
appointed
DAB gives
decision
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20.2. Appointment of the DAB

Appointment jointly by the Parties, as per Contract requirements

Structure: Sole or 3 Members

Constituted: date of DAB Agreement between the parties & sole

member/3 members
Terms of Remuneration: mutually agreed by Parties; paid equally
(1/2 each Party)
Replacement/Termination: mutually agreed by Parties

DAB Term: expiry on the date of discharge (14.12) or 28days

after DAB decisions given (21.4)

APPOINTMENT PROCESS

The Parties:
the Employer & the Contractor
as stated

8.1 Unless otherwise stated

APPENDIX TO TENDER
Commencement Date
28days
in the Particular Conditions
shall be within 42 days
after the Contractor receives
the Letter of Acceptance

Parties jointly appoint

"FULL-TERM“ (STANDING) DISPUTE ADJUDICATION BOARD

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APPOINTMENT PROCESS

The Parties:
the Employer & the Contractor
as stated

SUB-CLAUSE 20.2

Parties jointly appoint

“AD HOC“ DISPUTE ADJUDICATION BOARD
28days after
a Party gives NOTICE of INTENTION to
the other Party to refer a dispute to DAB

"FULL-TERM“ (STANDING) DISPUTE ADJUDICATION BOARD

• nominated before any dispute even arises at the start of a
construction project, as a preventative mechanism to monitor and
ensure the unhindered implementation of the project;
• becomes part of the project team;
• performs regular visits on site and normally provide workable
solutions to difficult or contentious matters, following a “hands-on”
approach, before the parties become polarized in their views.
“AD HOC“ DISPUTE ADJUDICATION BOARD
formulated once the dispute has arisen to provide
the disputing parties with a satisfactory solution on
how the matters at issue should be resolved.
The “standing permanent” DAB has a significant advantage over the “ad hoc” DAB
in facilitating the resolution of the issues by the “DAB”, acting as a mediator through
ongoing “without prejudice meetings” as the works progress thus mitigating the
chances of misunderstandings developing into formal disputes, unlike the “ad hoc”
appointment which takes place only after the formal dispute materializes.
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STRUCTURE

DAB shall comprise suitable qualified persons “the members“

Appendix to Appendix to
Tender Tender

or

 The members of the Board should be experienced and should have the respect of
the Parties in order to fulfil their obligations adequately.
 The Board acts as a team and not as individual representatives of the parties. As
such the Board should exhibit a balance of experience and professional expertise.
 Unless the Employer and the Contractor are from the same country it is preferable
for each member of the DAB to be of a different nationality to each other and
not of the same nationality as either of the parties
The Parties empower the DAB members to reach decisions with which they undertake
to comply the DAB members must have the ability and experience to wield
these powers wisely and who are willing to do so.

DAB MEMBERS QUALIFICATIONS

Professional experience in the to understand the problems which face the Parties during
type of the Construction Works the execution of the works; appreciate the skills needed
to undertake the works in a professional manner; to
optimize problems solutions.

Contractual documents an understanding of the rights, obligations & liabilities of

interpretation skills the Parties is of fundamental importance: in order for a
project to be successfully undertaken it is vital that the
coordination and dispersal of information between the
parties involved runs as smoothly as possible.

Fluent in the Contract language the ruling language of the contract defined in the
for the communication Appendix to Tender. However, FIDIC considers that the
official and authentic texts to be the versions in the
English language.

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It is essential that the membership of the DAB is mutually agreed

upon by the parties and not imposes at the Party.

DAB
1. Each Party shall nominate one member for the approval of
the other Party.
2. The Parties shall consult both these members and shall agree
on the third member to be appointed to act as chairman.
A LIST of potential members The members shall be selected from the list
maybe included in the Contract
It is reasonable to assume that for smaller contracts a
one person in DAB is sufficient.

General Conditions
of Dispute Adjudication Agreement

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The Appendix to the General Conditions of the 1999 FIDIC form of Contract
GENERAL CONDITIONS OF DISPUTE ADJUDICATION AGREEMENT
DAA
The Dispute Adjudication Agreement is a tripartite agreement between the
Parties to the Contract on the one hand and the Board Member on the other.

This tripartite agreement shall comprise the DAA, the

General Conditions of DAA and the Procedural Rules.

The standard form of tripartite agreement is included as part of the selection

of forms available in the FIDIC Conditions of Contract. It is an agreement
between the parties on the one hand and the member on the other.
Details of the parties
and member; Situation of
the parties and purpose
of the DAB; Validity
period; Scope of work;
DAB Procedures & terms
of reference of the DAB
members; Payment terms
and conditions; Disputes
& Governing Law;
Signatures

The date of the execution

of the Agreement is the
trigger date for the
commencement of the DAB
procedure within the
contract.
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20.3. Failure to Agree DAB

The Parties fail to agree appointment of sole DAB member 20.2

Either Party fails to nominate a member of 3 persons DAB
The Parties fail to agree appointment of a third member to act as DAB
chairman
The Parties fails to agree on appointment of replacement person (≤42d)
result of death, disability, resignation of termination of appointment
The appointing entity or official named in the Appendix to Tender
shall, upon the request of either or both of the Parties and after due
consultation with both Parties, appoint this member of the DAB. This
appointment shall be final and conclusive.
Appendix to Tender the President of FIDIC or a person appointed by the
President
Tanzania National Construction Council NCC
Registration Fee
Tanzania Institute of Arbitrators TIArb Shs500,000/$218

20.4. Obtaining DAB Decision

One of the primary objectives of the DAB is to facilitate the early resolution of disputes
by informal non adversarial means. The DAB’s role is to settle disputes. Settlement will
not have been achieved if a party refers to dispute onwards to arbitration.
The strength of the DAB procedure is that whenever there is a problem on site, whether it
is caused by a difference of opinion or a technical matter, a problem of interpretation
of the contract, or of communication, or simply a misunderstanding, it can be referred
quickly to an independent tribunal. The problem can then be resolved, with the
assistance of the DAB, whether this requires an opinion, advice or a binding decision.
Reference to DAB: by either Party’s, in writing – to other Party & Engineer.
To stipulate this Sub-Clause
Parties Obligations: make available to DAB all information, access to Site &
appropriate facilities.
The DAB’s Decision: time within 84 days or as agreed by DAB & Parties (if
DAB’s fees are paid); written/reasonable/Sub-Clause; binding
Dissatisfaction with DAB’s Decision: Notice of Dissatisfaction NOD with
reasons within 28 days – proceed with amicable settlement/arbitration; No
NOD – decision is final & binding 25
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20.7. Failure to comply with DAB Decision

The DAB issued Decision

(a)Neither Party as given notice of dissatisfaction within the period stated

in Sub-clause 20.4 [Obtaining Dispute Adjudication Board's Decision]

(b) the DAB's related decision (if any) has become final and binding, and
(c) a Party fails to comply with this decision
the other Party may, without prejudice to any other
rights it may have, refer the failure itself to arbitration
under Sub-Clause 20.6 [Arbitration].
Sub-Clause 20.4 [Obtaining Dispute Adjudication
Board's Decision] and Sub-Clause 20.5 [Amicable
Settlement] shall not apply to this reference.

20.8. Expiry of DAB Appointment

If a dispute arises between the Parties in connection with, or arising out

of, the Contract, and there is no DAB in place, whether by reason of the
expiry of the DAB's appointment or otherwise:

(a) Sub-Clause 20.4 [Obtaining Dispute Adjudication Board's Decision]

and Sub- Clause 20.5 [Amicable Settlement] shall not apply, and
(b) the dispute may be referred directly to arbitration under Sub-
Clause 20.6 [Arbitration].

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GENERAL CONDITIONS OF DISPUTE ADJUDICATION AGREEMENT

1. Definitions
The “Member” - is a sole member of DAB or adjudicator
or - is one of the three persons who are jointly called DAB,
the other two persons a called the “Other Members”

2. General Provisions -
DA Agreement becomes effective
On the latest of the following dates

the Commencement Date the Employer, the Contractor

defined in the Contract
the Employer, the Contractor
& the Member each signed
DAA
the Employer, the Contractor
& each of the Other
Members each signed DAA
& each of Members (or
Member) signed DAA
When DAA has taken effect, the Employer
and the Contractor shall each give notice to
the Member accordingly. If the Member
does not receive either notice within six
months after entering into the DAA shall be
void and ineffective

3. Warranties
The Member shall promptly
disclose any fact or circumstance
which might appear inconsistent
Impartiality & Independence of the Employer, the with the warranty and agreement
Contractor and the Engineer of impartiality and independence.

The Member should always maintain impartiality and independence, and inform the
Other Members and the Parties whenever any matter arises which could cause the
Member's impartiality or independence to be called into question.

The Employer & the Contractor rely on Member’s

Experience:
• in Contract Works to be carried out by the Contractor;
• in interpretation of contract documentation;
• fluent in language of communication
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4. General Obligations of the Members

The Member shall not

have financial interest in the Parties/the Engineer/the Contract,

except payment under DAA
have previous employment/professional/personal relationship
with the Parties/the Engineer, except were disclosed in writing
have employment the Parties/the Engineer for duration of DAA,
except were agreed in writing
give advice to the Parties/Parities’ Personnel related to the
Contract, except in accordance with procedural rules
enter into discussions/make agreements with the Parties/the
Engineer regarding future employment with them

General Obligations of the Members

The Member shall

comply with the annexed procedural rules and with Sub-Clause

20.4 of the Conditions of Contract

ensure his/her availability for all site visits and hearings as are
necessary;

treat the details of the Contract and all the DAB's activities and
hearings as private and confidential, and not publish or disclose
them without the prior written consent of the Employer, the
Contractor and the Other Members (if any);

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General Obligations of the Members

The Member shall

become conversant with the Contract and with the progress of the
Works (and of any other parts of the project of which the
Contract forms part) by studying all documents received which shall
be maintained in a current working file

be available to give advice and opinions, on any matter relevant to

the Contract when requested by both the Employer and the
Contractor, subject to the agreement of the Other Members (if any).

5. General Obligations of the Employer & the Contractor

The Parties / Parties’ Personnel shall not request advice from or

consultation with the Member regarding the Contract, otherwise than
in the normal course of the DAB's activities under the Contract and the
Dispute Adjudication Agreement, and except to the extent that prior
agreement is given by the Parties and the Other Members (if any)
The Parties undertake to each other and to the Member that the
Member shall not, except as otherwise agreed in writing by the
Parties, the Member and the Other Members (if any):
be appointed as an arbitrator in any arbitration under the Contract
be called as a witness to give evidence concerning any dispute before
arbitrator(s) appointed for any arbitration under the Contract;
be liable for any claims for anything done or omitted in the discharge or
purported discharge of the Member's functions, unless the act or omission
is shown to have been in bad faith.
The Parties jointly and severally indemnify and hold the Member harmless
against and from claims from which he is relieved from the above liability
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General Obligations of the Employer & the Contractor

Whenever the Parties refer a dispute to the DAB under Sub-Clause

20.4 of the Conditions of Contract, which will require the Member
to make a site visit and attend a hearing, the Parties shall provide
appropriate security for a sum equivalent to the reasonable
expenses to be incurred by the Member.

6. Payment

The individual tripartite agreement between the Parties and the

Member may define the precise method of payment of the member.
The General Conditions define the scope of such payments.
Clause 20.2. Each Party responsible for paying one half of the member’s
remuneration with both the Parties, jointly and severally, undertake to pay the
member under the Terms of the Tripartite Agreement
The payment to the Member
”standing” DAB “ad hoc” DAB
Retainer fees
Daily fees Daily fees
Expenses Expenses
Taxes in Country of Project Taxes in country of Project
• The Member is to be paid in the agreed currency.
• Fees will remain at a fixed sum for the first two years of any project.
• The rates reflect anticipated inflation for the period.
• Future alterations to the fees are by agreement
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Payment

MONTHLY RETAINER FEES

Provisions relate to a full-term DAB
- being available on 28 days' notice for all site visits and hearings;
Member - becoming and remaining conversant with project developments and
shall be maintaining relevant files;
paid as - all office and overhead expenses: secretarial services and office
follows supplies incurred in connection with his duties;
- all services performed hereunder except, remunerated as daily fee.
The retainer fee shall be paid with effect from the last day of the calendar
month in which the DAA becomes effective; until the last day of the calendar
month in which the Taking-Over Certificate is issued for the whole of the Works.
From the first day of the calendar month following the month in which Taking-
Over Certificate is issued for the whole of the Works, the retainer fee shall be
reduced by 50%, to be paid until the first day of the calendar month in which
the Member resigns or the Dispute Adjudication Agreement is otherwise
terminated

DAILY FEE
Member - each day or part of a day up to a maximum of two days' travel time
shall be in each direction for the journey between the Member's home and the
paid for site, or another location of a meeting with the Other Members (if any)
- each working day on site visits, hearings or preparing decisions;
- each day spent reading submissions in preparation for a hearing
EXPENSES
incurred in connection with the Member's duties: the cost of telephone
calls, courier charges, travel expenses, hotel and subsistence costs
a receipt submitted for each item in excess of 5% of the daily fee

TAXES
levied in the Country on payments made to the Member (unless a
national or permanent resident of the Country)

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PAYMENT PROCEDURE & TIMING

INVOICES
the monthly retainer & air fares quarterly in advance.
other expenses & daily fees on conclusion of a site visit or hearing.
All invoices shall have a brief description of activities performed during the
relevant period and shall be addressed to the Contractor.
The Contractor shall
• pay each of the Member’s invoices in full within 56 days
• apply to the Employer (in the Statements under the
Contract) for reimbursement of one-half of the amounts
of these invoices
The Employer shall pay the Contractor in accordance with the Contract
If the Contractor fails to pay the Employer shall pay to the Member
and recover all sums paid in excess of one-half of these payments, plus all
costs of recovering these sums and financing charges
If the Member does not receive payment within 70 days: the Member may:
(i) suspend services (without notice) until the payment is received,
and/or (ii) resign appointment by giving notice under Clause 7

DAILY FEE
- each working day spent reading submissions, attending hearing (if
any), preparing decisions, or making site visits (if any);
Member - each day or part of a day up to maximum of two days travel time in
shall be each direction for the journey (if any) between the Member’s home
paid for and site or another location of a meeting with Other Members (if
any) and/or the Employer and the Contractor;
EXPENSES
incurred in connection with the Member's duties: the cost of telephone
calls, courier charges, travel expenses, hotel and subsistence costs
a receipt submitted for each item in excess of 5% of the daily fee

TAXES
levied in the Country on payments made to the Member (unless a
national or permanent resident of the Country)

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PAYMENT PROCEDURE & TIMING

Advances
25% of estimated daily fees DAA takes effect
estimated total expenses
INVOICES
balance of daily fees & expenses thereafter
less the amounts advanced.
All invoices shall have a brief description of activities performed
during the relevant period and shall be addressed to the Contractor.
The Contractor shall
• pay each of the Member’s invoices in full within 28 days
• apply to the Employer (in the Statements under the
Contract) for reimbursement of one-half of the amounts
of these invoices
If the Contractor fails to pay the Employer shall pay to the Member
and recover all sums paid in excess of one-half of these payments, plus all
costs of recovering these sums and financing charges
If the Member does not receive payment within 28 days: the Member may:
(i) suspend services (without notice) until the payment is received,
and/or (ii) resign appointment by giving notice final & binding,
effective when received by the Parties

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Sample Cost Estimate for a simple road

project – 1-Person DB
DB member is a resident in the country.
Daily Fee is US$2,000/day
Retainer Fee is US$2,000/month.
Construction Term: 2 years
Number of DB Member: 1

7. Termination
at any time
the Parties the Member
may jointly terminate the DAA may resign Clause 2

42 days' notice to the Member 70 days' notice to the Parties

A notice by the Employer or
the Contractor, but not by
both, shall be of no effect
Any such notice, resignation and termination shall be
final & binding
on the Employer, the Contractor and the Member.

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8. Default of the Member

The Member fails to comply with any obligation under
Clause 4 General Obligations of the Members

The Member
• shall not be entitled to any fees or expenses hereunder
• shall reimburse each of the Employer and the Contractor for any fees
and expenses received by the Member and the Other Members (if
any), for proceedings or decisions (if any) of the DAB which are
rendered void or ineffective.
This is an onerous clause and any minor infringement or minor procedural error would not
typically invalidate any decision. Any infringement must be of some substance. The
Parties are duty bound to hold the member harmless for any act or omission unless it was
in bad faith.
intentional dishonest act by not fulfilling legal or contractual obligations,
misleading another, entering into an agreement without the intention or means
to fulfill it, or violating basic standards of honesty in dealing with others
https://dictionary.law.com

9. Disputes

Any dispute or claim arising out of or in connection with this Dispute Adjudication
Agreement, or the breach, termination or invalidity thereof, shall be finally settled
under the Rules of Arbitration of the International Chamber of Commerce by
one arbitrator appointed in accordance with these Rules of Arbitration.

Each Member is an individual person who may be reluctant

(or have insufficient resources) to incur the costs of arbitration
and may prefer an alternative dispute resolution procedure.

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DAB Procedural Rules

PROCEDURAL RULES

The Procedural Rules embodied within the General Conditions of Contract guide
the DAB through the execution of its duties and define the day to day procedures
of the board.
The guidelines for the routine operation of the DAB should be flexible in order to
meet the varying circumstances that may arise during the life of the project.

The board is constrained by two principle factors:

• To act fairly and impartially as between the Employer at the Contractor,
giving each of them a reasonable opportunity of putting its case and
responding to the others case, and
• To adopt procedures suitable to the dispute, avoiding unnecessary delay
and expense
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PROCEDURAL RULES
intervals
Site Visits
DAB shall visit the site at The period between
1 to 3 intervals of not more than consecutive visits shall not
140 days, including critical be less than 70 days,
construction events, at the except as required to
request of either the Parties convene a hearing
Unless otherwise agreed by the Parties
Timing and Agenda agreed jointly by the DAB and the Parties
in the absence of agreement by the DAB.
Purpose to enable the DAB to become and remain
acquainted with the progress of the Works & of
any actual or potential problems or claims
Attendance the Parties and the Engineer, coordinated by
the Employer in co-operation with the Contractor
Conference facilities and secretarial services by the Employer
Report on DAB activities At the conclusion of each site visit & before
leaving the site copies to the Parties

PROCEDURAL RULES
Documentation the Parties to provide to the DAB one copy of all
documents: contract documents, progress reports,
variation instructions, certificates etc 4 to 7
Communication between the DAB and the Employer or the Contractor shall
be copied to the other Party.
Dispute the DAB’s conduct:
Sub-Clause 20.4 • act fairly and impartially as between the Parties,
giving each of them a reasonable opportunity of
putting his case and responding to the other's case,
• adopt procedures suitable to the dispute, avoiding
unnecessary delay or expense 1 to 4
Hearing the DAB to decide on the date and place & may request
written documentation from the Parties
Hearing Procedure the DAB’ power: * adopt an inquisitorial procedure;
* refuse admission to hearings or audience at hearings to
any persons other than representatives of the Parties and
the Engineer; * proceed in the absence of any party, who
received notice of the hearing
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PROCEDURAL RULES
DAB Authority the Parties empower the DAB

8 to 9
Communication between the DAB and the Employer or the Contractor shall
be copied to the other Party.
Dispute the DAB’s conduct:
Sub-Clause 20.4 • act fairly and impartially as between the Parties,
giving each of them a reasonable opportunity of
putting his case and responding to the other's case,
• adopt procedures suitable to the dispute, avoiding
unnecessary delay or expense 5 to 6
Hearing the DAB to decide on the date and place & may request
written documentation from the Parties
Hearing Procedure the DAB’ power: * adopt an inquisitorial procedure;
* refuse admission to hearings or audience at hearings to
any persons other than representatives of the Parties and
the Engineer; * proceed in the absence of any party, who
received notice of the hearing

PROCEDURAL RULES

DAB Authority the Parties empower the DAB:

8
i. establish the procedure in deciding a dispute,
ii. decide upon the DAB's own jurisdiction, and as to the
scope of any dispute referred to it,
iii. conduct any hearing as it thinks fit, not being bound
by any rules or procedures other than those contained
in the Contract and these Rules,
iv. take the initiative in ascertaining the facts and
matters required for a decision,
v. make use of its own specialist knowledge, if any, 5
vi. decide upon the payment of financing charges in
accordance with the Contract,
vii. decide upon any provisional relief such as interim or
conservatory measures,
viii. open up, review and revise any certificate, decision,
determination, instruction, opinion or valuation of
the Engineer, relevant to the dispute
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PROCEDURAL RULES

Hearing Process & DAB Decision The DAB shall not express any opinions
during any hearing concerning the merits 9
of any arguments advanced by the Parties

i. it shall convene in private after a hearing, in order to have

discussions and prepare its decision;
ii. it shall endeavour to reach a unanimous decision: if this
proves impossible the applicable decision shall be made by a
majority of the Members, who may require the minority Member
to prepare a written report for submission to the Parties
iii. if a Member fails to attend a meeting or hearing, or to fulfil 6
any required function, the other two Members may nevertheless
proceed to make a decision, unless:
• either the Employer or the Contractor does not agree
that they do so, or
• the absent Member is the chairman and instructs the
other Members to not make a decision.

Dispute Avoidance

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DISPUTE AVOIDANCE
The Disputes Adjudication Board (DAB) is an impartial and independent
panel of one or three people who are ideally appointed at the start of
project and give decisions on any disputes.
The standard procedure of the DAB’s
operation will include becoming familiar with
the details of the project and the construction
methods to be adopted and becoming
conversant with the contract documentation.
FIRST DAB MEETING
privately, solely with its own members
to discusses the practicalities of its own operation and administration
to ensure that its members are fully briefed on details of the project
to discuss DAB’s standards of conduct
to establish the principles of its communications with the parties and
between themselves.

SITE MEETINGS Regular site meetings are to be held at a frequency of about

3 months depending upon the complexity of the works.
The DAB chairman arranges to convene a first meeting
at the site with the DAB members together with the Parties.

the operations of the DAB &

frequency of DAB meetings.

• Travelling and accommodation arrangements

• Meeting room and secretarial service
• Agreement of attendees
• Agenda format
• Format of meeting minutes
• Conduct of site visits and meetings
• Format and frequency of standard reporting to the DAB
• Format of reporting from the DAB to the parties
• Procedure for claims administration and tracking
• Procedure for disputes referral
• Confirmation by the parties of their own administration procedures
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PURPOSE OF DAB SITE VISIT

-to enable the members to become familiar with Works
-to remain acquainted with the progress of the works
-to become aware of any actual or potential problems or claims
DAB proactive role -to ensure that a climate of co-operation exists in which problems may
be discussed and resolved prior to becoming escalated into a dispute
Attendees -the members of the DAB
-one or two representatives from each of the Parties
-representatives of the Engineer
-representatives of the Sub-Contractors, as necessary
-other participants, as required to conduct presentations
Documentation Standard routine documentation from Parties to the DAB is copied to
the other Party and to each Member of the DAB. All communications
from the DAB is copied to each of the Parties
The initial submission: copies of the contract, drawings, specifications and the programme.
The regular submission of documents: monthly progress reports, variation instructions,
certificates and other performance related documents.
The DAB may also request specific documents at times other than the normal monthly
submissions.

SITE VISIT FORMAT

the form of an arrival and “check in” at the site of all visit and meeting delegates
Initially a tour of the site is made with
the Engineer acting as guide.
The DAB members are accompanied
the progress of the works is by representatives of the Parties.
shown The Parties furnish to the DAB members
one copy of all standard performance
the impacts of any particular related documents.
circumstances are brought to
the attention changes to the planned
progress of the works or to
the resources of the
Contractor are highlighted Construction problems or the
impact of any particular
influence on the works are
Upon the conclusion of the site tour brought to the attention
the Meeting is convened
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SITE MEETINGS
chairs the opening remarks
Meeting DAB confirm the previous meeting minutes
Chairman describes DAB activities since the last site meeting

presents a Works’ Progress Report with status of work schedule

outlines potential problems together with proposed solutions

Contractor provides Claims Issues Report: the status of any claims made
and outlines any potential claims
discussions with the other Party regarding claims issues
provides views of the Contract and makes a statement of its
views regarding the progress and further comments upon the
status and progress of any claims or discussions potentially
Engineer leading to problems.

Presentations and discussions are made with specific regard to the

works programme, contract value, variations, claims and problems
Upon the conclusion of the Site Meeting with
the Parties the DAB meets in private

DAB PRIVATE MEETING

DAB prepares Meeting Report to the Parties.

- outlines the activities undertaken during the visit to the site

- gives observations on the presentations made by the Parties
DAB shall not give any opinion or advice regarding any particular issue
raised at the meeting or visit, unless specifically requested by the Parties

The report is normally issued to the Parties prior to

the departure from the site of the DAB members
7 Good design team management: Good information is crucial;
8 Record keeping: Disputes can often be resolved by
retrospectively considering records that have been kept during
the project. However, those records are often not sufficiently
detailed.
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DISPUTE AVOIDANCE IN PRACTICE

Many in the construction industry hope that
they will never encounter a claim or a dispute.

It might be that a request for an extension of time or additional money for

variations has not been dealt with, or that the contractor is simply losing
money, or that defects have arisen during or after completion of the project.
Attempts to deal with (or rather avoid) these issues arising requires action
much earlier than simply responding to a dispute. A good practice approach
is, therefore, to avoid conflict and proactively seek to resolve disputes
appropriately

Conflict avoidance requires clear, concise, careful and proper planning of the strategy
for the execution of a project. It is also about adopting a proactive conflict avoidance
approach such as risk analysis, clarity in the contract documentation or partnering.

DISPUTE AVOIDANCE IN PRACTICE

Many in the construction industry hope that
they will never encounter a claim or a dispute.
However, claims and disputes are
simply symptoms of problems
that have manifested themselves
in relation to a project:

*a request for an extension of time; *additional money for variations; or

*contractor is simply losing money; or *defects have arisen during or after
completion of the project
Attempts to deal with (or rather avoid) these issues requires action much earlier
than simply responding to a dispute. A good practice approach is to avoid
conflict and proactively seek to resolve disputes appropriately.

Conflict avoidance requires clear, concise, careful and proper planning of the strategy
for the execution of a project. It is also about adopting a proactive conflict avoidance
approach such as risk analysis, clarity in the contract documentation or partnering.
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DISPUTE AVOIDANCE IN PRACTICE

Conflict avoidance generally include:
1. Good management: Proactive planning and management of future work, as
well as raising early issues of concern can avoid disputes;
2. Clear Contract Documentation: Ambiguities in contract documents can lead to
argument, disagreement and dispute. Focusing on the specific details of the
particular project (rather than generalization) is important;
3 Partnering and Alliancing: Building cooperation between the project
participants and fostering team spirit is extremely valuable;
4 Good Project Management: Planning ahead and managing generally and
specifically the time, money and risks associated with the project are crucial;
5 Good Client Management: Understanding the client’s objectives and
communicating issues and problems early on are fundamental;
6 Good contractor management: A regular objective assessment of progress
and the costs relating to a project also involves communicating well with the
contractor and dealing positively and objectively with problems that arise;
7 Good Design Team Management: Good information is crucial;
8 Record Keeping: Disputes can often be resolved by retrospectively considering
records that have been kept during the project.

Dispute ADJUDICATION
important aim
Dispute AVOIDANCE

The issue is whether the parties are

really open & inclined to avoid disputes
FIDIC prevailing intention to avoid disputes/conflicts
Provisions of General Conditions:

- The Engineer shall consult with each of the Parties in an endeavour to

reach an agreement 3.5 Determination;
- “Standing” DAB shall make periodical site visits and issues shall be
discussed at early stage;
- DAB shall proceed in endeavour to reach agreement, when dispute has
arisen;
- Both Parties shall attempt to settle dispute amicable avoid Arbitration
sub-clause 20.5 Amicable Settlement
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Common Law
Legal system characterized by There is no general rule requiring
case law, which is law developed parties to negotiate in good faith
by judges through decisions of (bona fide)
courts and similar tribunals
Evolved primarily in England,
consequently, English-speaking The principle parties themselves
world operates under common law. make bargains & take precautionary
measures to avoid formal dispute
resolution or the need for mediation,
adjudication, arbitration or litigation.
Proactive avoidance measures:
• Drafting Contracts carefully;
• Monitoring jobs closely;
• Keeping accurate schedules and records; “to deal honestly and fairly with
• Staying informed about relevant legal issues; each other and to refrain from
• Training management personnel adequately; taking unfair advantage”
• Considering innovative project delivery
methods and technologies

Civil Law
Legal system originating in Europe provides good faith negotiation rules
whose most prevalent feature is
that its core principles are codified
into a referable system which Courts recognize parties obligations
serves as the primary source of law.
Primary Obligation of the parties is to perform in terms of contract
Secondary Obligation specifies how the parties have to perform
for example
The German Federal Supreme Court has held that during the construction period the
parties to a construction contract are obliged to co-operate provided that the contract
includes such an express or implied duty. If disagreements or differences between the
parties to the contract arise during contract performance on the need for adapting the
contract or the way in which the contract might be adapted or so as to its implementation
in changed circumstances, the parties are in principle required to negotiate in an
endeavour to reach a mutual settlement of such differences or disagreements if the
contract so requires. The Court held, that provided there is such an express or implied
duty, the parties may not refuse to negotiate and co-operate, since this is a breach of
contract. BGH, Urteil vom 28.10.1999-VII ZR 393/98

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WORKSHOP 1 – CHALLENGES & CONFLICT OF INTEREST

A CONFLICT OF INTEREST is a clash between the private

interests and the official responsibilities of a person in a
position of trust. To safeguard the integrity of the
adjudication process, adjudicators same as arbitrators must
be INDEPENDENT AND IMPARTIAL.
A conflict of interest, or the appearance of a conflict, can
arise when the adjudication of an applicant may conflict
with personal interests, friendships, affiliations,
relationships, financial interests, or otherwise.

Adjudicators have a duty to disclose potential conflicts of interest, and must

inform the parties of any circumstances that emerge during the proceedings that
could give rise to doubts over their impartiality or independence. This obligation is
ongoing for the entire duration of the adjudication.
Adjudicators also have a duty to investigate – that is, they must make reasonable
efforts to inform themselves of potential interests or relationships that might create
a conflict.

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ADJUDICATION RULES AND PROCEDURES PROVIDE FOR THE DUTY TO

DISCLOSE POTENTIAL CONFLICTS OF INTEREST.
FIDIC General Conditions of Dispute Adjudication Agreement
WARRANTIES: “The Member warrants and agrees that he/she is and shall be
impartial and independent of the employer, the Contractor and the Engineer”
An adjudicator’s failure to disclose a conflict of interest may result in serious
consequences. It could constitute a ground to challenge the adjudicator’s
appointment and, if successful, lead to the disqualification of the
adjudicator.

Discussion: “How Remote is Remote?”

Operation of Clause 20

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FIDIC OPERATION OF CLAUSE 20

The FIDIC Conditions of Contract include provisions for the submission,
consideration and resolution of claims and disputes under a number of
different clauses.
Clause 20, deals specifically with Claims, Disputes and Arbitration.
Clause 20.1 Contractor’s Claims prescribes the procedure to be followed
by the Contractor if he considers himself to be entitled to an extension of
time to additional payment or to both. This clause refers only to claims by
the Contractor
Clause 20.2 Appointment of the Dispute Adjudication Board states that
disputes shall be referred for adjudication by a DAB.
Clause 20.3. Failure to Agree Dispute Adjudication Board deals with the
Parties failure to agree upon member appointment of and/or replacement
Clause 20.4 Obtaining Dispute Adjudication Board’s Decision
The reference to the DAB must be construed under the procedure agreed
by both parties and included within the contract. The DAB will apply the
provisions of contract and the Governing Law to the matters in dispute.

Operation of Clause 20 continue

Clause 20.5 Amicable Settlement states that both Parties shall attempt to
settle the dispute amicably before the commencement of arbitration
Period - the first 56 days after the notice of dissatisfaction has been issued,
and by agreement thereafter
Procedure - Parties have the greatest flexibility in the choice of procedure,
including direct negotiation, conciliation, mediation etc
DAB Role not participating in amicable settlement procedures, whether
before a dispute arises or after a Party has notified dissatisfaction with the
DAB's decision.
Arbitration may be commenced on or after the 56th day
after the day on which notice of dissatisfaction was given,
even if no attempt at amicable settlement has been
made, unless both Parties agree otherwise.

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Operation of Clause 20 continue

Clause 20.6 Arbitration
any dispute in respect of which the DAB’s decision (if any) has not
become final and binding shall be finally settled by international
arbitration, unless settled amicably

Arbitration is a private procedure in which a Unless otherwise agreed by both Parties:

sole arbitrator, or panel of 3 arbitrators, will
decide the dispute and render an award which
should be enforceable by due legal process.
The 1958 New York "Convention on the
Recognition and Enforcement of Foreign
Arbitral Awards" makes enforcement of the
award easier in the many countries which have
ratified this Convention.
Tanzania ratified the New York Convention on
12 January 1965
(a) the dispute shall be finally settled
under the Rules of Arbitration of the
International Chamber of Commerce,
(b) the dispute shall be settled by three
arbitrators appointed in accordance with
these Rules, and
(c) the arbitration shall be conducted in
the language for communications Sub-
Clause 1.4 Law and Language

A non-refundable filing fee of US$5,000,

which is paid by the Claimant when it files a
“Request for Arbitration;

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Clause 20.6 Arbitration - continue

The arbitrator(s) power

- to open up, review and revise
any certificate, determination, instruction, opinion or valuation of the Engineer;
any decision of the DAB, relevant to the dispute;
- call the Engineer as a witness to give evidence
Any DAB decision shall be admissible in evidence in the arbitration.
Neither Party shall be limited in the proceedings before the arbitrator(s):
- to the evidence or arguments previously put before the DAB to obtain its decision
- to the reasons for dissatisfaction given in its notice of dissatisfaction

Commencement
Arbitration may be commenced prior to or after completion of the Works.
The obligations of the Parties, the Engineer and the DAB shall not be altered by
reason of any arbitration being conducted during the progress of the Works.

Operation of Clause 20 continue

Clause 20.7 Failure to Comply with Dispute Adjudication Board’s Decision
If the DAB's decision has become final as well as binding, both Parties must
give effect to it.

If either Party fails to do so, the other Party may refer this failure
to arbitration, without having to request a further DAB decision or
to attempt amicable settlement again.
Unless allowed by law, neither Party can challenge the DAB's decision
after it has become final and binding under the Contract.

Clause 20.8 Expiry of Dispute Adjudication Board’s Appointment

If a dispute arises when there is "no DAB in place“ either Party can initiate
arbitration immediately, without having to reconvene a DAB for a decision and
without attempting amicable settlement.
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Disputes and their Resolution

DISPUTES & THEIR RESOLUTION

Clause 20.2 states that disputes shall be adjudicated by a DAB. The scope of
a dispute is made in Clause 20.4, which is wider than the requirements for a
notice under Clause 20.1.
FIDIC does not define what is meant by the word dispute.
The word will therefore have its normal meaning, that is
any statement, complaint, request, allegation or claim which has been rejected
and that rejection is not acceptable to the person who made the original
statement or complaint.
It is clearly not necessary for a complaint to have been considered by the
Engineer in order to create a dispute The wording of Clause 20.4 states
that a dispute of any kind whatsoever may be referred to DAB in connection
with or arising out of the contract or the execution of the works including any
dispute as to any certificate, determination, instruction, opinion or valuation of
the engineer.

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DISPUTES & THEIR RESOLUTION continue

Dispute 20.4
No matter can be
referred to the DAB Dispute stages DAB Procedure 20.2/20.4
unless it is in dispute
Decision 20.4

A dispute may be said Amicable Settlement 20.5

to have arisen when: Arbitration 20.6/20.7
• A final determination has been rejected
• Discussions have been terminated without agreement
• When a party declines to participate in discussions to reach agreement
• When so little progress is being achieved during protracted discussions
that it has become clear that agreement is unlikely to be achieved
FIDIC DAB is empowered
• to adjudicate all dispute related to payment and extension of time claims;
• to open up, review and revise any certificate, decision, determination, opinion,
instruction, or valuation of the Engineer;
• to establish any procedure; to decide on jurisdiction; to adopt an inquisitorial
role; to proceed ex-parte.

DISPUTES & THEIR RESOLUTION continue

Engineer DETERMINATION – REFERENCE - DECISION

Determination Rejection Reference DAB

Engineer DETERMINATION – NOMINATION - DECISION

Determination Rejection Nomination DAB

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WORKSHOP 2 – JURISDICTIONAL CHALLENGES

If the adjudicator does not have jurisdiction to determine the dispute, their
decision will be null and invalid, and a court will not enforce it. A
jurisdictional challenge is when a Respondent makes a submission
challenging the ADJUDICATOR’S JURISDICTION to determine a dispute.

DISPUTES & THEIR RESOLUTION continue

JURISDICTION
to start with DAB is to verify its jurisdiction
Issue One – objection on the Existence of Dispute
The DISPUTE will be constituted if a claim has been made, which
has subsequently been rejected.
A “dispute” can only arise once the subject matter of the claim, issue or
other matter has been brought to the attention of the opposing party
and that party has had opportunity of considering and admitting,
modifying or rejecting the claim or assertion. In order to constitute a
dispute, a claim must have been made which has been rejected. (ICC
International Court of Arbitration Bulletin 74)
One of the most important jurisdictional issues – whether
any omission of the Engineer will constitute dispute.
In case of inactivity of the Engineer to proceed in accordance with
Sub-Clauses 20.1 and 3.5 the dispute will be constituted once the
Contractor has informed the Employer about the fact that the
Engineer remained silent for more that 42 days, hence the dispute is
constituted.
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JURISDICTION continue
Issue Two wrongful appointment of DAB members
Clause 20.2 deals with the appointment of the DAB. It requires
that the DAB shall be jointly appointed by the parties by the date
stated in the Contract Documents, stipulating: appointment date,
composition and definition of required qualification.
Issue Three there is no contract or that the dispute falls
beyond the contract scope

Claims arise from instruction for contract amendment, which the

parties failed to agree on.

Issue Four there is no DAB in place contractually

Reason of the expiry of the DAB's appointment or otherwise

JURISDICTION continue
DAB’s authority to decide its jurisdiction
The principle of kompetenz-kompetenz is the jurisdictional principle to empower
an adjudicating body to exercise on the issues on its own jurisdiction submitted
before it it can decide on the pleas challenging its own jurisdiction submitted
before it.

Competence of DAB to rule on its jurisdiction

DAB may rule on its own jurisdiction, including ruling on any
objections with respect to the existence or validity of the
adjudication agreement, and for that purpose, - an
adjudication clause which forms part of a contract shall be
treated as an agreement independent of the other terms of
the contract.
Discussion: jurisdictional challenge to
adjudication enforcement 54
 13/02/2023

NATURAL JUSTICE
An adjudicator is under a duty to comply with the rules of natural justice and
to abide by procedural fairness.
Where an adjudicator acts in serious breach of natural justice his decision will
not be enforced.
1 Bias
Breaches of justice may include 2 Failure to act impartially
3 Procedural irregularity

The Adjudicator PRINCIPLES OF PROCEDURAL FAIRNESS

to avoid to adhere
1 Act fairly and impartially between the parties;
allegations of 2 Give each party an equal and reasonable opportunity to
breach of the rules present its case and to deal with its opponent’s case;
of natural justice 3 Ensure each party is fully apprised of any arguments
against it, and is given a reasonable opportunity to comment,
whether those arguments are raised by the other party or by
the adjudicator;
4 Follow the adjudication procedure agreed in the contract;
5 Adopt procedures appropriate to the case.

DISPUTES & THEIR RESOLUTION continue

REFERRAL OF A DISPUTE
If a dispute of any kind whatsoever arises between the parties in connection
with or arising out of the Contract for the execution of the works then either
party may refer the dispute in writing to the DAB for its Decision by giving

Notice of Referral of Dispute

copies are to be circulated to the other party and to the Engineer.

The reference under the Sub-Clause 20.4 to the DAB must be construed as being a
request by the Referring Party/Claimant under the procedure agreed by both parties
and included within the contract. The DAB will apply the provisions of contract and the
Governing Law to the matters in dispute.

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Notice of Referral of Dispute

The Referral Notice will
• state the clause of the contract under which it is made and will include all the
supporting documents.
• state the claims made and basis of the dispute.
• include a detailed analysis of the claims made including the terms of the contract
which are relevant and will clearly define what determination is required from the
DAB
The presentation of the documents and arguments
to be made in a clear and logical format:
• outline to both the other party and to the DAB members all aspects of the dispute
without further explanation Time is very short for the determination process
and any time lost in further explanation detracts from the time available for the
analysis of the issues in hand. This is particularly important when considering complex
technical argument or the presentation of arguments by experts.

DAB receives the Referral Notice

requirement to follow the Procedural Rules
power
One of the Rules empowers the DAB to establish
the procedure to be applied in deciding a dispute.
Parties obligations
In order to assist the DAB, the parties are obliged within the contract to
make available to the DAB such matters as further information, access to
the site and any appropriate facilities as the DAB may require for the
process of making a decision.
Referral Date when the chairman of the DAB receives the reference

Time for Decision

The period of time in which the DAB is required to reach its
decision is defined in the general conditions as 84 days, but
this is often amended to 56 days in the Particular Conditions
of Contract.
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DISPUTE ADJUDICATION PROCESS

The DAB chairman
receives referral
circulates copies
to other DAB members
The board then decides how to proceed

The DAB is under a duty to give each party a reasonable opportunity to put his
case and to respond to that of the other. The DAB will study the referral notice and
the chairman will issue the procedural directions for the conduct of the reference.
The DAB has the authority to :
• Conduct any hearing it thinks fit
• Take the initiative in ascertaining the facts and matters required for a decision
• Make use of its own specialist knowledge
• Decide upon the payment of financing charges
• Decide upon any provisional relief
• Open up and review and revise any certificate, determination, instruction,
opinion, or valuation of the engineer relevant to the dispute.

The Procedural Directions will include provision for the following:

• A time table for the submission of a response and defence to the Referral Notice
• Preliminary Issues
• Reply to Response (if required)
• Reply to Reply to Response (if required)
• Conduct a Hearing or proceed with Documents Only
• Hearing Dates
• Hearing Format
• Translation of documents
• Attendees
• Witnesses
• Hearing Agenda
• Opening / closing statements in writing
• Decision date
A provision within the procedural directions may also need to be made in the
event that the parties wish to make alterations to the procedure or to extend any
time provided for the provision of documents.
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Documents Only Proceedings.

The matters referred may be capable of
decision without the need for a hearing.

Decision made on a documents only basis

In most international contracts this is not considered to be an ideal basis of

conduct. Parties from differing backgrounds and cultures may wish to have
a hearing in order to ensure that the DAB members are fully aware of the
facts and background of the matters at issue from their own point of view.
Often parties are translating documents and are concerned that no
meaning is lost in the translation, or that they have not misunderstood the
relevance of any points made in the submissions of others.

DAB HEARING
The hearing should be conducted in a manner that encourages
openness, truthfulness and a thorough disclosure of all pertinent
information bearing on the matters in dispute.
The meeting should include a number of basic stages:
• Registration
• Procedural Issues
• Preliminary Issues
• Jurisdictional Issues
• Referring Party • Responding Party
o Opening o Opening
o Witness submissions o Witness submissions
o Respondent questions o Referring Party questions
o Witness re-submission / clarification o Witness re-submission / clarification
• Respondent summing up • Referring Party summing up

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DAB Hearing continue

HEARING TIME & LOCATION

It is normally prudent for the chairman of the DAB to
ensure that the hearing does not end until both parties
have confirmed that they have nothing further to add.

The hearing days are limited in ideal conditions to some

6 hours, include adequate breaks and that meals are
provided for attendees in private locations, convenient
for the hearing location but within the same building.
Side rooms to be provided for each of the parties, and
for the DAB members, in which private discussions may
be held.
The hearing will be convened at a convenient and
economical location for the parties, witnesses and
advocates
This is not always at the job site

DAB Hearing continue

EX-PARTE PROCEEDINGS
The DAB may proceed with the hearing in the absence of any
party who the DAB is satisfied had received adequate notice of
the hearing. The procedural rules allow the DAB discretion to
decide whether and to what extent this power is exercised.

It is within the policy of natural justice to allow parties to know what the claims are
against them and for them to be given an opportunity to reply and defend
themselves.
Where parties and their representatives originate from differing parts of the world
problems with travel arrangements may exist and may well be created outside the
control of those travelling.
It is therefore prudent for the DAB to ensure that prior to proceeding in any hearing
ex-parte it is satisfied that the absent party has no valid reason why not to attend
and that all possible attempts to ensure attendance have been made.

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DAB Hearing continue

EVIDENCE WITNESSES

The parties must agree to what extent they wish

their witnesses to be present during the hearing.
The DAB has the authority to refuse admission to
hearings or audience at hearings of any persons other
than the representatives of the parties and the Engineer.

This provision is more relevant in jurisdictions which may insist that all meetings
relating to disputes involving public funding should be open to the public.
&
It is contrary to the spirit of the DAB to have the press or
any third party recording the procedures for any purpose.

WITNESSES
normal practice
A witness of a fact is a person with knowledge
about the relevant facts in a particular case who
appears before DAB, through a witness statement
and potentially in person, to provide testimony Particular requirements
pertaining to the facts.
An expert witness is a person with extensive
experience or knowledge in a specific field
or discipline beyond that expected from a
function layperson. The expert witness's duty is to
apply their expertise to give a professional
opinion to on particular matters in dispute.
Witnesses
normally - are not question under oath
- the terms “examination” and “cross examination” are not utilized
duty
DAB Chairman to act fairly, impartially and to put at ease as much as possible
the parties and the witnesses.
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DAB Hearing continue

DOCUMENTATION
The parties furnish to the DAB members one copy
of all standard performance related documents.
The initial submission includes the contract documentation, copies
of the contract, drawings, specifications and the works programme.
The regular submission of documents to the DAB are normally
made monthly and will include progress reports, variation
instructions, certificates and other performance related documents.
The DAB may also request specific documents at times other than
the normal monthly submissions. In such cases the documents are to
be provided with copies sent to the other party.
During the hearing further documentation may be provided or requested by one of
the parties.
Scrutiny Any original documents provided in copy format in the submissions should
be provided at the hearing, should either party so require.
Contemporary Records Clause 20.1 The parties to inspect and to receive copies
at the time of the event in question and as such the
necessity for such disclosure is limited.

DAB Hearing continue

CONDUCT OF HEARING
PROTOCOL developed by the DAB members
DAB Chairman to chair the meeting and control the participants, procedure
and time table.
DAB Members decide questioning format: through the chair or in open forum,
participate in the procedure
DAB questioning may be undertaken after the questioning by
the other party but before any resubmission questioning.

Having heard the parties and asked any necessary questions the DAB chairman
brings the hearing to a close.
The DAB members shall not express any opinions during the hearing concerning
the merits of the arguments put forward by either of the parties nor must they show
favour to either party at any time. They then meet in private after the hearing
in order to have discussions and prepare the decision.

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CONDUCT OF HEARING
INITIAL PRIVATE MEETING of the DAB members

at the location of the hearing and immediately after the hearing itself

OBJECTIVES
• To develop a schedule and time table for the conclusion of its deliberations
• To decide if any further submissions are required
• To achieve unanimous agreement
• To develop a format and compose the Decision

DECISION

The procedural rules An Unanimous

state that the members DECISION
shall endeavour to reach

Majority A Majority Minority

Reasoning DECISION Reasoning
The majority members require the minority member
- to specify aspects of the disagreement
together with his analysis for the disagreement
- to state what decision he would have made
THE REASONING had he been acting as a sole member
- to persuade the parties that the DAB has fully studied all relevant matters
- to reach a conclusion similar to expected from an arbitrator.

The General Conditions of Contract state the DECISION is admissible in evidence in arbitration.
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DECISION FORMAT
• A statement of the FIDIC clause under which the Decision is published
• The identities of the Parties
• The identity of the Contract
• Outline of Dispute
• The issues
• The remedies sought
• The positions of each of the parties
• Outline of the procedure adopted for the resolution of the dispute
• The reasoning of the DAB and a revue of its opinion on the principles
involved
• Unanimity statement
• The Decision
• Signature
• Place and date of Decision
• Confidentiality and circulation statement

DECISION continue
The procedural rules
- do not empower the DAB to amend its decisions
If either of the parties dissatisfied it must comply but may give the
required notice entitling it to arbitrate after attempting amicable settlement
20.4 A Party may
< 28days issue “notice of > 56days 20.6 A Party may
dissatisfaction” initiate arbitration
In case of an erroneous statement a party is to bring the error to the
DAB's attention to issue a proposed amendment for the agreement of
the parties.
- do not allow DAB to enter into any form of debate with the either
the Claimant or the Respondent on the details of its Decision.

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ENFORCEMENT
The parties have contracted to comply
with decision of the DAB properly given.
Clause 20.7
in the event that neither party has
served a notice of dissatisfaction
the decision has become final and binding
failure to comply with the decision
may be referred to arbitration.

This will enable a party to pursue enforcement through the

normal procedures associated with arbitral decisions.

ENFORCEMENT
The parties have contracted to comply
with decision of the DAB properly given.
This will enable a party
to pursue enforcement
through the normal
procedures associated
with arbitral decisions.

failure to comply
with the decision
the decision has may be referred
become final to arbitration
in the event that and binding
neither party has
served a notice
of dissatisfaction
Clause 20.7
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ALTERNATIVE METHOD OF ENFORCEMENT

The enforcement by a contractor, during the course of the contract

Any further failure by the
Employer to comply will
leave the Contractor
remedies of suspension or
termination in accordance
with Clause 16.1 and 16.2

Employer is then
obliged to pay
the sum so
Engineer is obliged certified
to include the
The Contractor decision within his
evaluation Clause 14.7
includes the DAB
decision within an
interim payment Clause 14.6
application
Clause 14.3

Dispute Resolution Principles

2017 FIDIC Rainbow Suite

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TWO
DISPUTE RESOLUTION PRINCIPLES
2017 FIDIC RAINBOW SUITE
The provisions on dispute resolution under FIDIC are generally influenced
by a global trend towards avoiding lengthy arbitration and seek
disputes solved by other means.
December 2017 Revised Editions of FIDIC Conditions Of Contract
(Second Edition)
1999 edition Dispute Resolution Provision amended
The “avoidance of disputes” regime
has been expanded in 2017 FIDIC.
FIDIC 1999 - Dispute Adjudication Board
DAB FIDIC 2017 Dispute Avoidance/Adjudication Board
DAAB
Conciliation and mediation
Upon a joint request from the parties, the DAAB
may provide assistance and/or informally discuss
any disagreement arisen between the parties.

Dispute Resolution Principles 2017 continue

GP5: Unless there is conflict with the governing

law of the Contract, all formal disputes must be
referred to a Dispute Avoidance/Adjudication
Board for a provisionally binding decision as a
condition precedent to arbitration.

FIDIC General Conditions of Contracts – ALL BOOKS define “DISPUTE” as any

situation where:
(a) one Party makes a claim against the other Party (which may be a Claim, as
defined in these Conditions or a matter to be determined by the Engineer/Employer’s
Representative under these Conditions, or otherwise);
(b) the other Party rejects the claim in whole or in part;
(c) the first Party does not acquiesce, by giving Notice of Dissatisfaction provided
however that a failure by the other Party to oppose or respond to the claim, in whole
or in part, may constitute a rejection if, in the Circumstances, the DAAB or the
arbitrator(s), as the case may be, deem it reasonable for it to do so.
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Dispute Resolution Principles 2017 continue

A notable change
in the 2017 FIDIC
Claims, Disputes and Arbitration

Employer’s & Contractor’s Claims Disputes and Arbitration

With this change it was made clear that a claim is not the same as a dispute
and vice versa, i.e. a claim is a request for an entitlement under the Contract,
whereas a dispute arises if such claim is rejected or ignored.

CLAIM must be made before a dispute can arise

After a claim has been made, the dispute resolution procedure under
the 2017 FIDIC
1. The Engineer’s determination
THE THREE-TIERED 2. The DAAB’s decision
DECISION SYSTEM 3. Arbitration

Dispute Resolution Principles 2017 continue

The ENGINEER - First Step
The Engineer is given authority to conduct claim resolution and shall
act as the first-tier of dispute avoidance between the parties.

20.2.1 Notice of Claim be given to the Engineer (copy to the other Party)

20.2.5 The Engineer shall proceed with agreement or determination of

such claim, as per 3.7.
the Engineer must act neutrally when determining claims
and shall not be deemed to act on behalf of the Employer

3.7 The Engineer shall first consult with
both parties and encourage discussions
between the parties in an endeavor to
reach an agreement within 42 days
21 DISPUTE
RESOLUTION
PROCEDURE CLAIM becomes DISPUTE
Engineer shall make a fair
determination: in details with
reasons within new 42 days
BINDING on the parties
unless a party gives
Notice of Dissatisfaction
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Dispute Resolution Principles 2017 continue

The DAAB - Second Step
The main objective of the DAAB is to settle disputes between the parties
without having to go through often lengthy and costly arbitration procedure
21.4 Disputes between the parties
referred to the DAAB decision DECISION within 84 days

BINDING on the parties

the parties (and the Engineer) must promptly comply with
the DAAB’s decision whether or not a party gives a NOD

A party disagreeing with DAAB’s decision can prevent it

from becoming final by giving a NOD within 28 days.

If no NOD is given to a decision of the

DAAB, the decision shall become
Dispute comprised by such FINAL AND BINDING on both parties.
NOD shall be finally
settled by ARBITRATION

Dispute Resolution Principles 2017 continue

ARBITRATION - Third Step
Before arbitration is commenced, FIDIC encourages the parties to
amicably settle a Dispute comprised by a NOD as one last attempt
to avoid arbitration.
21.5 amicable settlement period is mandatory

Unless the parties agree otherwise, 28 days must

lapse after issuance of the NOD - a “cool off” period

21.6 ARBITRATION can be commenced (amicable

settlement discussion or not)
Unless the parties agree otherwise in particular conditions,
the arbitration to be settled in accordance with the Rules of
Arbitration of the International Chamber of Commerce (ICC)
The AWARD of the arbitral tribunal will be the final and binding decision of the
dispute between the parties
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Dispute Resolution Principles 2017 continue

ARBITRATION - Third Step
Before arbitration is commenced, FIDIC encourages the parties to
amicably settle a Dispute comprised by a NOD as one last attempt
to avoid arbitration.
21.5 amicable settlement period is mandatory

Unless the parties agree otherwise, 28 days must

lapse after issuance of the NOD - a “cool off” period

21.6 ARBITRATION can be commenced (amicable

settlement discussion or not)

The award of the arbitral tribunal will be the

final and binding decision of the dispute be-
tween the parties

TYPICAL SEQUENCE OF DISPUTE EVENTS ENVISAGED IN CLAUSE 21

69

CLAUSE 21. DISPUTES & ARBITRATION
21.1. Constitution of the DAAB
Appointment jointly by the Parties within
the time as Contract Data/28days after
Letter of Acceptance
Structure: Sole or 3 Members, as per
Contract Data or 3 Members; as listed in
Contract Data
Constituted: date of DAAB Agreement
between the parties & sole member/3
members
Terms of Remuneration: mutually agreed
by Parties; paid equally (1/2 each
Party)
Replacement/Termination: mutually
agreed by Parties
DAAB Term: expiry on the date of
discharge (14.12) or 28days after
DAAB decisions given (21.4)
21.4. Obtaining DAAB’s Decision
Reference: time limit 42 days; Sub-
Clause; Party’s case related to Dispute;
written – to other Party & Engineer
Parties Obligations: make available to
DAAB all information, access to Site &
appropriate facilities
The DAAB’s Decision: time within 84 days
or as agreed by DAAB & Parties (if
DAAB’s fees are paid);
written/reasonable/Sub-Clause; binding
Dissatisfaction with DAAB’s Decision:
NOD with reasons within 28 days –
proceed with amicable
settlement/arbitration;
No NOD – decision is final & binding
13/02/2023
21.2. Failure to Appoint DAAB Member
If Parties failed to appoint DAAB (21.1)
the appointment by appointing entity or
official as in the Contract Data
21.3. Avoidance of Disputes
If the Parties so agree, they may
jointly request (in writing, with the
copy to the Engineer) the DAAB to
provide assistance and/or informally
discuss and attempt to resolve any
issue or disagreement . If DAAB
becomes aware of an issue or
disagreement, it may invite Parties to
make such a joint request.
21.5. Amicable Settlement
Attempt to settle Dispute amicable; Arbitration on
or after 28 days after NOD, even if no attempt
at amicable settlement
21.6. Arbitration
Unless settled amicably, any Dispute in respect
of which the DAAB’s decision has not become
final & binding, shall be settled by international
arbitration, unless otherwise agreed.
21.7. Failure to comply with DAAB’s Decision
Party fails to comply with DAAB’s decision other
Party refers the failure to Arbitration
21.8. No DAAB in place
Dispute may be referred to Arbitration
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WORKSHOP 3 – MOCK DAB HEARING

THANK YOU
71