FIDIC DB Rules

DRBF International Conference Sao Paulo 15 May 2011

Murray Armes
THE DISPUTE BOARD PROCESS
Flexible
Could have consequences for either party
Informal
Serious, judicial
A good dispute resolution process is
(a) Fair
(b) Economical
(c) Quick
(d) PREDICTABLE

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WHY WE NEED RULES
DB may have wide authority
Procedural rules best fitted to resolve
the dispute
DBs are a creature of contract
Contracts contain Procedural Rules
Helps parties to know how things will work - predictability
Helps the parties to understand on what they need to do
Helps parties (and the DB) to understand what the DB must do
Rules agreed when contract is agreed

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CONTRACTUAL BASIS FOR THE RULES IN FIDIC
CONTRACTS
Clause 20.2 (20.3 Gold Book): Appointment of the DB
The Dispute Adjudication Agreement
Incorporated into party agreement
Appended to the General Conditions
General Conditions of Dispute Board Agreement, Article 4
General Obligations of the (DB) Member
Subarticle 4(e):
The Member shallcomply with the annexed procedural rules and
with Sub Clause 20.4 of the Conditions of Contract
Sub Clause 20.4: Obtaining Dispute Boards Decision: DB procedure

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FIDIC CONTRACTS
Red Book: 9 Procedural Rules
MDB Version: 9 Procedural Rules
Yellow Book: 6 Procedural Rules
Silver Book: 6 Procedural Rules
Gold Book: 12 Procedural Rules

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REVIEW OF THE PROCEDURAL RULES DB
SITE VISITS
Rule 1 (Red, MDB, Gold)
DAB shall visit site at intervals of no more than 140 days
May be varied by party agreement
Includes visits at critical construction events
Visits will not normally be less than 70 days apart
May be less if a hearing is convened

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REVIEW OF THE PROCEDURAL RULES DB SITE
VISITS
Rule 2 (Red, MDB, Gold)
Timing and agenda for site visits to be agreed with Employer, Contractor and
DAB
If no agreement the DAB decides
Purpose is to enable DAB to remain familiar with project
Purpose is for DAB to remain alive to potential problems or claims

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REVIEW OF THE PROCEDURAL RULES DB SITE VISITS
Rule 3 (Red, MDB, Gold)
Visits to be attended by Employer, Contractor and Engineer
Visits to be co-rdinated by the Employer with Contractor co-operation
Employer to organise meeting and administration facilities
DAB to produce a site visit report
Report to be sent to Employer and Contractor

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REVIEW OF THE PROCEDURAL RULES - DOCUMENTS
Rule 4 (Red, MDB, Gold); Rule 1 (Yellow, Silver)
Employer and Contractor provide one copy of all documents requested by DAB
Includes Contract documents, progress reports, variations, certificates, other
relevant documents
All communications between Employer, Contractor and DAB to be copied to other
party
For a 3 person DAB copies of documents to be sent to all members

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REVIEW OF THE PROCEDURAL RULES STANDARDS
FOR DISPUTE REFERRAL
Rule 5 (Red, MDB, Gold); Rule 2 (Yellow, Silver)
If a dispute is referred under Sub Clause 20.4
DAB to proceed in accordance with Sub Clause 20.4
DAB to act fairly and impartially
Employer and Contractor to have reasonable opportunity to put its case

Each to have a reasonable opportunity to respond

DAB to adopt procedures suitable to the dispute
To avoid unnecessary delay and expense
Procedural flexibility

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REVIEW OF THE PROCEDURAL RULES AUTHORITY
OF THE DB
Rule 6 (Red, MDB, Gold); Rule 3 (Yellow, Silver)
DAB may conduct a hearing on the dispute
DAB will decide on the date and place
DAB may request documentation from the parties before the hearing

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REVIEW OF THE PROCEDURAL RULES - AUTHORITY
OF THE DB
Rule 7 (Red, MDB); Rule 9 (Gold)
DAB has power to adopt an inquisitorial procedure (unless previously agreed by
the parties)
DAB can refuse admission to hearings to persons other than representatives of
Employer, Contractor and Engineer
DAB can proceed in the absence of any party if DAB is satisfied notice was
received
DAB has discretion as what extent this power may be exercised

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REVIEW OF THE PROCEDURAL RULES ERRORS IN
THE DECISION
Rule 7 (Gold)
Within 14 days of giving its decision
If the Members agree
DAB has powers to correct errors of fact or principle
Chairman to notify Employer and Contractor
Chairman to issue an addendum

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REVIEW OF THE PROCEDURAL RULES - ERRORS
IN THE DECISION
Rule 8 (Gold)
Within 14 days of giving its decision
If a party consider Decision contains errors
Party may ask for clarification from the DAB
DAB to respond within 14 days
DAB has power to issue an addendum

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REVIEW OF THE PROCEDURAL RULES
AUTHORITY OF THE DB
Rule 8 (Red, MDB); Rule 5 (Yellow, Silver); Rule 10 (Gold)
Employer and Contractor empower the DAB to:
(a) Establish the procedure to be applied in resolving a dispute
(b) To decide on its own jurisdiction and the scope of any dispute referred
(c) Conduct hearings as it thinks fit, not bound by any procedures or rules
except those in the contract and these rules
(d) Take the initiative in ascertaining the facts and matters required for a
decision
Contd...

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(e) Make use of specialist knowledge
(f) Decide on payment and financing charges (interest) in accordance with the contract
(g) Decide on any provisional relief or conservatory measures
(h) Open up, review, revise any certificate, decision, determination, instruction, opinion
or valuation of the Employers Representative

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REVIEW OF THE PROCEDURAL RULES DB HEARINGS
AND DECISION
Rule 9 (Red, MDB); Rule 6 (Yellow,Silver); Rules 11 & 12 (Gold)
DAB not to express any opinions concerning merits during a hearing
DAB shall proceed to make its Decision in accordance with Sub Clause 20.4 (20.6
in Gold Book) , or as agreed by the parties

Contd...

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 If the DAB is of three or more members:
(a) DAB to convene in private after the hearing to have discussions and
prepare the Decision
(b) DAB to endeavour to reach a unanimous decision, or if not a majority
decision, minority member may be required to prepare a separate
report
(c) If any member fails to attend a hearing or fulfill any other
requirement the other two may proceed in its absence (unless one
of the parties does not agree, or the absent member is the
chairman who has instructed the others not to make a decision)

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SOME THINGS TO CONSIDER
We need rules to make the process predictable
How much flexibility should the DAB be allowed?
What are the pros and cons of amending the rules?

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FINALLY
Under Sub Clause 20.4 the DAB must give its decision within 84 days after
receiving the reference
What happens if 84 days is not enough?
Can the time for the decision be extended?
If so how should the DAB go about extending it?

2011 Probyn Miers Ltd