Adjudicator’s Perspective

Daduna Kokhreidze
Partner
Nodia, Urumashvili and
Partners

President
Georgian Association of
Consulting Engineers
 Dispute Avoidance / Adjudication Board (“DAAB”) – effective
dispute resolution
FIDIC Golden Principle

GP5: “All formal disputes must be referred to a Dispute

Avoidance/Adjudication Board (or a dispute adjudication
board, if applicable) for a provisionally binding decision as a
condition precedent to Arbitration.”
 Dispute Avoidance / Adjudication Board – effective dispute
resolution
FIDIC 2017 Contract Editions “2017 Eds”:

• Reflect the experience gained from use of previous editions;

• Bring clarity and greater detail;
• Enhance mechanisms for dispute avoidance.
In this presentation:
“Rule” refers to a rule under DAAB Procedural Rules of 2017 Eds;
“GC of DAAA” means General Conditions of the Dispute Adjudication/Avoidance Agreement;
Red Book 2017 Ed is quoted unless stated otherwise.
DAAB Procedural Rules: Rule 1 Objectives

DAAB shall conduct its activities and shall use its powers to achieve
the following objectives:

“(a) to facilitate the avoidance of Disputes that might

otherwise arise between the Parties; and
(b) to achieve the expeditious, efficient and cost effective
resolution of the Disputes that arise between the Parties.”
Dispute Boards under 1999 Eds

Red Book 1999 Ed – Standing Dispute Adjudication Board (“DAB”)

• DAB is appointed at the outset of the project;

• DAB makes site visits;
• Becomes and remains acquainted with the progress of the
Works;
• Familiarises with any actual or potential problems or claims;
• Gives opinions upon joint request of the Parties.
Dispute Boards under 1999 Eds – Standing DAB

Dispute Board:
• is familiar with the Parties and the project;
• gains trust and confidence of the parties;
• influences the conduct of the Parties throughout the project;
• is in a position to facilitate dispute avoidance;
• is available to resolve disputes as and when they arise.
Dispute Boards under 1999 Eds

Yellow and Silver Books – ad hoc DAB

• DAB is appointed to resolve a particular dispute that has

already arisen;
• DAB has no power to give opinions.
Dispute Boards under 1999 Eds – Ad hoc DAB

Dispute Board:
• is not familiar with the project, its progress or any other problems
other than the dispute referred to;
• is not authorised to express opinions on merits of any arguments
advanced by the Parties;
• its appointment is terminated when the board gives its decision
(unless another dispute is referred to the same board);
• generally is not in a position to prevent disagreements turning into
disputes, but could help in avoiding costly arbitration.
 Dispute Avoidance/Adjudication Board under 2017 Editions
• The most significant change – “chairperson” instead of “chairman” in
the GCs;
• A standing board in all three contracts;
• Clearly set out objectives of the DAAB Activities – Rule 1;
• Dispute avoidance = preventing disagreements turning into disputes
by means of an Informal Assistance given by the DAAB to the Parties
under 21.3 (GC of DAAA 1.4);
• In the course of Informal Assistance:
• the Parties are not bound by the advice given by the DAAB;
• DAAB is not bound by any views or advice given.
 DAAB under 2017 Editions

New Provision 21.3: Avoidance of Disputes

“If the Parties so agree, they may jointly request (in writing, with a copy to the
Engineer) the DAAB to provide assistance and/or informally discuss and attempt
to resolve any issue or disagreement that may have arisen between them during
the performance of the Contract. If the DAAB becomes aware of an issue or
disagreement, it may invite the Parties to make such a joint request.

Such joint request may be made at any time, except during the period that the
Engineer is carrying out his/her duties under Sub-Clause 3.7 [Agreement or
Determination] on the matter at issue or in disagreement unless the Parties
agree otherwise”.
 DAAB Decision

Should the dispute arise, the DAAB

• shall complete and give its decision within 84 days, unless
agreed otherwise (expedited proceedings) (Sub-Clause 21.4)
• act fairly and impartially between the Parties to (Rule 6):
• give each Party a reasonable opportunity to put its case and
respond to the other party’s case;
• adopt a procedure suitable to the Dispute, avoiding
unnecessary delay and/or expense.
What is expected from DAAB:

• Perform the DAAB Activities, now defined as:

“..activities carried out by the DAAB in accordance with the Contract and the
GCs, including all Informal Assistance, meetings (including meetings and/or
discussions between the DAAB members in the case of a three-member
DAAB), Site visits, hearings and decisions.”
• Decide to what extent to exercise its powers;
• Be and remain independent and impartial (GC of new DAAA,
clause 4).
What is expected from DAAB:

• Become and remain informed, listen to the Parties;

• Be experienced and knowledgeable in the type of work in
question;
• Be experienced in the interpretation of construction and/or
engineering contract documents;
• Be fluent in relevant language(s);
• Be available to act as the DAAB;
• Keep confidentiality.
 What is expected from the Parties

Typical wrong assumption:

Opening paragraph in a referral of a new dispute:
“Dear DAB, as you know…”

The board does not know, unless the board is given documents and is
informed by the Parties.
 What is expected from the Parties

Keep the DAAB informed throughout the project:

• in the interest of the Parties;
• in the interest of the Project;
• to enable the board to deliver the informed decision or advice.
GC of new DAAA 5.1 (d) and 6.6
Communicate properly:
• language;
• copy all communication to the other party.
Submit the documents to the DAAB (Rule 4.3).
 What is expected from the Parties

The Parties shall respect the process and cooperate with the DAAB

2017 Eds GC of new DAAA clause 6.3:

“In connection with the DAAB’s Activities, each Party shall:
(a) Cooperate in good faith with the DAAB; and
(b) Fulfil its duties, and exercise any right or entitlement, under the
Contract, the GCs and the DAAB Rule and otherwise
In the manner necessary to achieve the objective under Rule 1 of the
DAAB Rules.”
 Thank you!
Happy to take any questions.
daduna@nplaw.ge

Daduna Kokhreidze
Partner at Nodia, Urumashvili and Partners
President of Georgian Association of Consulting Engineers