Dispute Resolution Boards

Contract Journal - 20/06/2007

Originating in the United States, dispute boards are well understood by our international counterparts, but remain a relatively new concept in the UK. David Blake. Chairman of Blake Newport Associates takes a look at what they are, how they work, and critically, how successful they are proving to be….

Thanks to high profile projects such as Wembley and the Olympics, the need for a clear dispute resolution strategy is back at the top of the corporate agenda. But the critical question remains - how is effective dispute resolution delivered on the ground?

Dispute boards are a relatively new form of dispute resolution in the UK, and generally exist in one of two forms: a Dispute Review Board (DRB) or a Dispute Adjudication Board (DAB). They differ only in the fact that those recommendations made by a DAB are binding, and must be immediately implemented unless overturned by arbitration or litigation. Both are financed at contract level, and made up of a panel of usually three experienced and impartial reviewers who, in an ideal scenario, are appointed before a contract begins, to reign in and where possible, prevent problems before they arise!

This is one invention for which we have the Americans to thank. Dispute boards are widely used in the States, with the first ever documented dispute board used on the Boundary Dam and Underground Powerhouse Project in Washington back in the 1960s. In the UK, the best known use of dispute boards was on the Channel Tunnel project but they have also been applied on the Docklands light rail extension, and Saltend Power Plant, as well as a series of highway and hospital projects. But just how successful are they?

When it comes to the hard facts and figures we are reliant on the States, but the outlook is promising. Of the 1200 projects that have employed DRBs, over £90 billion dollars of construction costs have been aggregated and the majority of DRB recommendations made, have been accepted and implemented. In essence, they work – and the key reason behind it? The level of integration facilitated by the dispute board..

Dispute boards are formed with communication and expertise in mind, and made up by members that adhere to strict guidance from FIDIC, ICC and ICE, centring upon neutrality; impartiality; independence; disclosure; qualifications; experience; availability; and confidentiality. The board meets with all parties periodically on site, ensuring regular updates on progress, and allowing the team to address any issues or challenges that have occurred. The focus is upon resolving disputes informally as and when they occur, through discussion and communication. It is only when a dispute cannot be resolved in this manner that it is referred to the dispute board, who then produce a written, non-binding, or binding recommendation for its resolution, depending on their mandate.

The advantages of this approach are clear, bringing objectivity and neutrality to a project. Thanks to the direct knowledge that the dispute board holds, both of the project, and of its key participants, it is able to influence behaviour, preserving on-site relationships and filtering out and refining disputes. But it’s not all plain sailing. DRB decisions are non-binding which means that unless all parties are fully signed up to the approach, then there is no concrete means of enforcing recommendations. The format is also open to abuse, with the presence of on-site resolution encouraging some contractors to test their luck with speculative claims. On some smaller projects, the associated costs can also be prohibitive.

So what can we conclude? My view is that the benefits by far outweigh the drawbacks. In theory, the concept of communication and resolution as opposed to stalemate and dispute is more than sound, and in practice the figures support the claim that preventing problems before they escalate can only beneficial to business’ bottom line.

But contractors and industry should take heed – passing judgement with hindsight is of no use to any of us. If dispute boards are to succeed, they must be established at the outset of a contract, not half way through it. Forward-thinking and a bit of sound planning could mean the difference between success, and failure.

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