Dispute boards and dispute resolution
Dr Donald Charrett (2013) 16(4) IHC 59; (2013) 25(3) ACLB 59
· “Full term” Dispute Boards in Australia using “without prejudice” processes have been very effective in avoiding disputes.
· Dispute Boards can also provide a quick and cost effective method of ADR.
· These dispute resolution capabilities can also be used by an ad hoc Dispute Board, set up to resolve a particular dispute. · The DB process is flexible, and can be tailored to the needs of each individual dispute.
· A DB determination can be provisionally or finally binding by agreement.
Dispute Boards have increasingly been used in Australia on major construction projects. They have been very effective in assisting parties to avoid formal disputes. If a dispute does arise, the Dispute Board is available to provide an expeditious and cost-effective dispute resolution service. This paper discusses the role of the Dispute Board in such dispute resolution. It suggests that the techniques can also usefully be applied by an “ad hoc” Dispute Board, constituted to determine specific disputes after they have arisen.
The use of Dispute Boards has been growing in Australia on major infrastructure projects, particularly in New South Wales and Queensland. Of the 30 or so Dispute Boards that have been implemented in Australia and New Zealand to date, there have only been around ten formal disputes that the Boards have had to “determine”. To date, in all the projects in Australia that have had a full term Dispute Board, the disputes have been resolved within the Dispute Board process, and no dispute has progressed to arbitration or litigation.
Thus, Dispute Boards in Australia have been very effective in avoiding disputes, or where this has not been possible, in providing the parties with a speedy and cost-effective form of contractual adjudication. The reasons for the success of Dispute Boards are many, including the parties’ choice of and confidence in the Dispute Board members, the range of legal and technical skills amongst the Dispute Board members (typically a three person Board that includes both legal and technical expertise), and the familiarity of the Dispute Board with the parties, the Contract and the project because of their involvement from the start of the project. A Dispute Board’s dual role of dispute avoidance and dispute resolution can only be properly carried out by a “full term” Dispute Board, i.e. one constituted at the beginning of a project, the members of which become and remain familiar with the contract and the project documents, and meet regularly with the parties during project execution.
A Dispute Board’s “dispute avoidance” role has many similarities with mediation – a “without prejudice” process in which the Dispute Board assists the parties to find a “best for project” outcome (perhaps non-contractual) in relation to the inevitable issues that arise in any project. In this role the Dispute Board acts as a facilitator to promote good communication between the parties.
But, even with the best communication, issues may arise in an ongoing contract that cannot be resolved informally. The “without prejudice” process of dispute avoidance should not be unduly protracted if the parties are not making progress to a resolution of the issues. The parties may have irreconcilable views on the “facts”, the law applying to the “facts”, or the construction of the relevant contract terms. There may be probity issues that require an independent assessment of the legal merits before any payment can validly be made. A full term Dispute Board is well placed to make a formal decision (determination) on such a dispute: it is familiar with the parties, the project and the Contract from its regular meetings. It is likely to have a thorough understanding of the issues resulting in a dispute because of the parties’ previous discussions in regular meetings.
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