DAB hand at sorting out

Hamish Macdonald, regional director, Systech International, discusses the growing popularity of Dispute Adjudication Boards.

Given the increasing use of Dispute Adjudication Boards (DABs) in the region it seems appropriate to describe in more detail the setting up and workings of DABs. This article, the first of two, addresses the alternative types of DABs and the importance of the selection of the DAB Members. The second article will describe the actual dispute adjudication procedure and discuss the benefits of the process to the project participants.

As discussed in the above article, there are two types of DABs: the first is the "full-term" DAB, established before the start of works, and the second being the "ad-hoc" DAB, established only after a dispute has arisen.

The main difference between the above two types of DABs is the role that the full-term DAB can play even before a dispute arises. The typical full-term DAB arrangement will have the DAB visit the project site at regular intervals, whether or not disputes have arisen. The principal purpose of the visits is to enable the DAB members to supplement the written information, which is sent to them on a regular basis, with first-hand impressions gathered during site "walk-abouts". In addition, the regular site visits enable the DAB members to talk with the representatives of the parties and the engineer to further familiarise themselves with the project status and ongoing issues.

Early appointment and regular site visits enable the full-term DAB members to become highly conversant with the project and to actually observe the problems on site as they develop. Technical difficulties and their contractual ramifications can readily be appreciated and, should the DAB be subsequently required to make a decision on a dispute, its close knowledge of the project and of the issues (and personalities) involved should permit quick, well-informed, even-handed and consistent responses.

A further, significant advantage of the full-term DAB over the ad-hoc DAB is its ability to act informally, outside the more formal hearings on referred disputes, to discuss with both parties and/or give an advisory opinion on matters of concern or differences of opinion that may, if not resolved at an early stage, develop into full blown disputes.

Concerning the time for appointment and duration of the DAB, the full-term DAB should be appointed immediately after the signing of the contract and should exist throughout the contract period. The ad-hoc DAB is only appointed once a dispute has arisen and typically only exists until it issues its decision on that particular issue, although it can happen that the parties take advantage of the existence of the DAB to refer other disputes to it.

Selection of the right persons to serve as members of the DAB is critical to the success of the process. Typically each party selects one member of the DAB with the third member, who acts as chairman, being appointed jointly by the parties or by the first two members. For DABs to function well, a right of (reasonable) objection over the other party's selection should be included. There should also always be a default appointment procedure in case one of the parties fails to comply with the nomination requirements.

An alternative method of selection is to have a list of potential DAB members included in the contract appendix from which the parties may select candidates whenever necessary. It is preferable that the list of potential names is prepared jointly by the parties with nominations being agreed after the submission of tenders but prior to the commencement date.

DAB members should be chosen with care because the success of the dispute board will depend on the parties' confidence in the expertise of the members.

In construction projects the majority of issues brought to the attention of a DAB have a technical content and, in such cases, a member with little or no understanding of such matters may fail to appreciate the extent of the dispute and so be unable to contribute to proceedings. Additionally, members need to be well-versed in contract administration and confident in their ability to understand contractual provisions. Dispute resolution experience will be an advantage and a knowledge of the language of the contract is essential.

Other qualities essential for DAB membership include open-mindedness and respect for the opinions of the other members. Whilst decisiveness may be a virtue, individuals possessing very dominant personalities may prove unsuitable as DAB members. Impartiality, objectivity and independence are also vital qualities and should not be compromised, or appear to be compromised, by a member having a professional or personal affiliation with an organisation involved with the project.

The final essential requirement for any DAB member must be availability throughout the anticipated existence of the DAB.

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