Dispute Boards typically involve a 3-person panel of neutral individuals who follow a case through and work to prevent and resolve disputes from the outset.
Adjudication differs in that Adjudicators are brought in to deal with formal disputes and are not involved in the dispute prevention process. Adjudicators do not know about the underlying facts and can be more adversarial. Their decisions are enforceable but non-binding, so can be revised later.
The processes are similar in that they both feature independent neutrals who have expertise in the subject matter, and are expeditious processes.
Pros and Cons of Adjudication
- Alternative to litigation which is more time and cost effective;
- Majority of Adjudicators have a good level of knowledge and expertise in the subject area.
- No cost recovery;
- Adjudicators are supposed to be in control but in reality, have less influence than a judge;
- Submissions are getting longer and more complex so the process may be longer than originally envisaged;
- There is an increase in the number of jurisdictional challenges which distract from the main dispute;
- There is no early involvement (unlike with dispute boards) and the process is not collaborative, so relationships can be strained;
- Adjudicators vary greatly in skill and experience and may be unsuited to the specific dispute.
Best Practice in Adjudication
- Preparation is extremely important. The process is short and intense so ensure your documents are prepared and only start when you’re ready;
- Don’t treat the Adjudicator as an idiot – they do not like this!
- Avoid repetition of submissions and multiplicity of witnesses providing similar statements;
- Ensure your client is aware of how “full-on” the process is, and that they will be busy for a month;
- Engage with the other side – it isn’t a battle. If you engage with each other the process will run more smoothly;
- Present your best and worst case in your submissions;
- Prepare documents and witnesses in advance. Facts generally win cases and facts require evidence.
Dispute Boards (DBs) – Top Misconceptions
- They don’t add value à in reality they are a control management process which proactively deals with disputes in a cost-effective manner. Parties are losing time and costs in engaging in the dispute and the DB helps to minimise these.
- They cost too much à they cost on average 0.5%-0.15% of the project’s costs. In all cases this is definitely less than any other dispute resolution process.
- They impose their own concepts of fairness and equity à DBs must apply the contract as it is written and follow the DB agreement.
- Presence of the DB promotes a claim à DBs act before a claim has materialised and can attempt to resolve it, as opposed to promoting it. In any event, it is in the interest of fairness that claims be heard.
Best Practice in DBs
- Avoid waiting until it’s too late to involve the DB, as setting it up at the beginning allows DBs to assist with resolving any contractual ambiguity, therefore preventing later disputes. Have early and frequent meetings with the DB;
- Avoid failing to vet DB members properly;
- Avoid imposing procedural obstacles to access the DB. The DB is there to support early resolution, so take advantage of the open discussion;
- Avoid limiting DB members’ fees, expenses and the geographical area they are coming from, as any unreasonable limit could prevent the best quality DB member being appointed;
- Considering whether your geographical region has sufficient variety and scope of DB candidates and consider appointing from another region.
- In choosing DB members, consider what skill sets are required and which will be helpful – engineer, lawyer, programming, quantum etc.
- Avoid imposing limits on the DB’s jurisdiction. The DB Agreement should clearly state this; it is important the DB members have a strong and clear authority in order to reach a desirable outcome;
- Be sure that the parties correctly understand what a DB is, what their purpose is and how they function. If you misuse it could just become a road full of pitfalls – e.g., a lengthier procedure, draining more costs and resources. If you use the process properly it will provide you with reasoned and detailed decisions by experts who understand the process.
Adjudication and Dispute Boards was discussed in our webinar on 18 February 2021 with Ann Russo, DRBF and Giorgiana Tecuci, SCPA Tecuci-Paltineanu. Click here to view the webinar and detailed notes.
How can Barton Legal help?
At Barton Legal we have extensive experience in all the standard contract forms, including JCT as well as NEC, IChemE, and FIDIC.
We believe that an increased understanding of contractual terms and the roles and responsibilities of all parties ensures a successful conclusion to a project, which is why we always use plain English and ensure you understand and can apply the terms of your contract.
Our aim is to reduce legal gobbledegook and increase collaboration between parties to increase the prospects of completing your project on time and on budget
We place great emphasis in the early stages of the contract on understanding and preparing thoroughly, in order to avoid costly disputes later.
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