Session 1: Background of Dispute Boards in The West and in The East

Yogyakarta, Indonesia, August 20-21, 2018
Session 1
Background of Dispute Boards in
the West and in the East
Presenter: Peer Dalland
Dispute Board
International Conference and Workshop 20 -21 August 2018
Yogyakarta, Indonesia.
© DRBF 2018
DISPUTE BOARDS
REGION 2 v REGION 3
 Region 2 – FIDIC Model
 International model using standard FIDIC or NEC General
Conditions of Contract.
 DRBF3 - the Australian model
 Multiple Australian General Conditions of Contract
© DRBF 2018
FIDIC MODEL
 Standard General Conditions of Contract
 FIDIC Red, Yellow or Silver book
 I will discuss Red book only
 Specific requirements for each Contract contained in
Particular Conditions of Contract
 Equitable risk allocation – defined in the standard
document
© DRBF 2018
FIDIC continued
 ICB procedures – international consultants and contractors
 Language and cultural differences between the Parties
 Contract language is generally English
 Applicable law is the law of the country in which the
project is being executed.
 Can be Civil Law or Common Law
© DRBF 2018
AUSTRALIAN MODEL
 Australia use a large number of different standard forms of
contract
 Bespoke General Conditions
 Different philosophy
 Transferring most or all risk to the Contractor
 Contract language is English
 Common Law
 Few, if any cultural issues
© DRBF 2018
PARTIES ARE GENERALLY EXPERIENCED IN

LITIGATION
 Contracts generally prepared by lawyers
 Parties are familiar with contractual disputes
 Large projects mostly administered and funded by
governments using their own versions of contracts
 Contractors are normally familiar with the conditions of
contract and the often inequitable risk allocation forced
upon them by Employers
 Relatively small pool of participants in each state as well
as nationally.
© DRBF 2018
Australian DB selection
 No preferred lists of experienced DB members
 Consult Australia does not provide list of adjudicators
 DRBF does not provide a list
 DB Member selection is often through existing work
related networks
© DRBF 2018
DB selection
 But does a list of “approved” adjudicators guarantee that
the selected candidate will perform to the Parties
satisfaction in all situations.
 Probably not
 But a DB member who has undergone intensive training
is more likely to perform better than someone who has
not received any formal training.
© DRBF 2018
REGION 2 - ICB CONTRACTS

 FIDIC contracts now used extensively throughout Region 2
 NEC viable alternative – UK, Middle East NZ
 FIDIC and NEC similar in their philosophy
 Equitable risk allocation and DB provisions
 Most major Contracts funded by MDBs
 FIDIC contracts mandated by MDBs
© DRBF 2018
FIDIC’S 5 GOLDEN PRINCIPLES

 The duties, rights, obligations, roles and responsibilities of all
the Contract Participants must be generally as implied in the
General Conditions, and appropriate to the requirements of
the Project.
 The Particular Conditions must be drafted clearly and

unambiguously.
 The PCs must not change the balance of risk/reward allocation

provided for in the GCs.
© DRBF 2018
5 GOLDEN PRINCIPLES
continued
 All time periods specified in the Contract for Contract

Participants to perform their obligations must be of
reasonable duration.
 All formal disputes must be referred to a Dispute

Avoidance/Adjudication Board (or DAB, if applicable) for a
provisionally binding decision as a condition precedent to
arbitration.
© DRBF 2018
ICB CONTRACTS
 Language Problems
 Employer - non English speaking country
 Contractor - may be Chinese, Korean Malaysian, Indonesian,
Japanese etc.
 Engineer – different country and different language background
 Cultural differences
© DRBF 2018
TYPICAL ISSUES ICB CONTRACTS

 Religious practices, holidays and customs
 Taboos – Nemele leafs
 Racism
 Displaced persons
 Land ownership and Rights of Way
 Local councils and communities
 Parties interrupting and speaking out of turn
© DRBF 2018
DB as the facilitator
 Listen to the Parties
 Does everybody understand what is being said
 Extra time may be needed – 1 hour meeting may extend to
6 hours
 Balancing act – facilitate without appearing to give advise
or opinions
 Robust attitude may be required to maintain order
© DRBF 2018
PREPARATION FOR DB MEETINGS

 Agenda
 Parties have often not complied with reporting
requirements – monthly reports received on the morning
of the meeting
 Hundred pages or more
 List of claims
 List of matters of concern
 Work through – slowly, very slowly
© DRBF 2018
TABOOS?
 Australian taboos – never be alone with one of the
Parties
 This does not always work out on an ICB contract in a
remote region in a developing country.
 Ex.: DB is travelling for 8 hours in a 4WD with the
Contractor and Employer, staying on site.
 About to leave: Contractor is there, but no Employer.
“Oh, he has travelled on to another project’, leaving
the DB alone with the Contractor.
© DRBF 2018
PREDICAMENT
 What to do.
 Call a taxi – Taxi needs to be 4WD to get there; anyway
there is no cell phone coverage, no internet.
 Insist that the Engineer travel with you; but then he will be
away from the project for at least 2 days?
© DRBF 2018
TRUST
 DB must always be aloof and independent and establish a
mutual trust between the DB and the Parties.
 Never discuss the project whilst travelling, because not all
members of the Parties’ teams are in the one vehicle with
you.
 Can be difficult, but must be a priority.
© DRBF 2018
BRIBES
 About to leave the Country;
 Contractor calls to say he wants to see the SDBM before he leaves.
Has got a present he wants to give.
 What might it be? Money? How much? What to do?
© DRBF 2018
Bribes
continued
 Don’t take the money

 Don’t even accept a tea bag!
 Stay independent – develop trust.
© DRBF 2018
Summary and conclusions

 DRBF Region 3 needs to establish and publish a list of adjudicators
who has received some formal training.
 Publish list on website with CVs
 Presently no “warranties” by DB members in Tripartite Agreements.
Needs to be included.
 Provide more training on FIDIC contracts
© DRBF 2018
The End
THANK YOU
© DRBF 2018

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Yogyakarta, Indonesia, August 20-21, 2018

PARTIES ARE GENERALLY EXPERIENCED IN

REGION 2 - ICB CONTRACTS

FIDIC’S 5 GOLDEN PRINCIPLES

 The Particular Conditions must be drafted clearly and

 The PCs must not change the balance of risk/reward allocation

 All time periods specified in the Contract for Contract

 All formal disputes must be referred to a Dispute

TYPICAL ISSUES ICB CONTRACTS

PREPARATION FOR DB MEETINGS

 Don’t take the money

Summary and conclusions

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