Dispute Resolution Process from DAAB to Arbitration under 2017 FIDIC Contracts

“Timely resolution of disputes has significant importance on the performance of the Construction Projects.”

Clause 21 in the 2017 Editions of the Red, Yellow and Silver Books defines and describes the dispute resolution procedure ranging from Dispute Avoidance/Adjudication Board (DAAB) to Arbitration.

1   Constitution of the DAAB 

1.1  Selecting the Members of the DAAB

The suitably qualified sole member or three members for the DAAB shall be selected from the list in the Contract Data.

In case of DAAB’s comprising three members, each party selects one member for the agreement of the other Party and both Parties consult for the third one for the chairperson position.

The member(s) shall be appointed within the time period stated in the Contract Data (if not stated 28 days after the date the Contractor receives the Letter of Acceptance).

1.2  Signing the DAAB Agreement

The DAAB is to be deemed to be constituted when the Parties and the sole member/the three members have signed the DAAB Agreement.

2   DAAB’s Decision Regarding the Dispute

The Dispute may be referred to the DAAB for its decision.

2.1 Referring a Dispute to the DAAB

The Reference of a Dispute to the DAAB (the “reference” in this Sub-Clause 21.4) shall¹;

(a) If Sub-Clause 3.7 [Agreement or Determination] applied to the subject matter of the Dispute, be made within 42 days of giving or receiving (as the case may be) a NOD uınder Sub-Clause 3.7.5 [Dissatisfaction with Engineer’s Determination]. If the Dispute is not referred to the DAAB within this period of 42 days, such NOD shall be deemed to have lapsed and no longer be valid;

(b) State that it is given under this Sub-Clause.

(c) Set out the referring Party’s case relating to the Dispute.

(d) Be in writing, with copies to the other Party and the Engineer; and

(e) For a DAAB of three persons, be deemed to have been received by the DAAB on the date it is received by the chairperson of the DAAB.

2.2 Decision of the DAAB

The DAAB is to decide within 84 days after receiving the reference (if not any other period proposed by the DAAB and agreed by the Parties).

The DAAB’s decision is to be given in writing to both Parties with a copy to the Engineer.

The decision is to be binding on both Parties and the Employer is to be responsible for the issue of Engineer’s compliance with the DAAB’s  decision.

3   Notice of Dissatisfaction – NOD 

3.1  Dissatisfaction with DAAB’s Decision

The Party which is dissatisfied with the DAAB’s decision;

may give a Notice of Dissatisfaction (NOD)  to the other Party, with a copy to the DAAB and to the Engineer,

is to state that it is a Notice of Dissatisfaction with the DAAB’s Decision and present the matter in Dispute, the reason(s) for dissatisfaction in the NOD.

is to give the NOD within 28 days after receiving the DAAB’s decision.

3.2  DAAB fails to Give a Decision

In case of DAAB’s failing to give its decision within the required time limits stated in Sub-Clause 21.4.3 [The DAAB’s Decision].

Within 28 days after the expiration of time limits, any Party may give a NOD to the other.

4   Amicable Settlement 

Both Parties are to try to settle the Dispute amicably after the Notice of Dissatisfaction given under Sub-Clause 21.4 [Obtaining DAAB’s Decision].

Unless otherwise agreed by both Parties;

In case of not achieving amicable settlement, the commencement of arbitration is to be on or after the twenty-eighth (28th) day after the day of the NOD given.

5   Failure to Comply with DAAB’s Decision 

In case of any Party’s failing to comply with the decision of the DAAB;

The other Party may refer the failure straight to arbitration under Sub-Clause 21.6 [Arbitration]

6   No DAAB in Place 

If there is no DAAB in place;

The Dispute may be referred by any Party straight to arbitration under Sub-Clause 21.6 [Arbitration].

7   Arbitration 

Any Dispute [2] in respect of which the DAAB’s decision (if any) has not become final and binding shall be finally settled by International Arbitration. Unless otherwise agreed by both Parties [3]:

(a) The Dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce;

(b) The Dispute shall be settled by one or three arbitrators appointed in accordance with these Rules; and

(c) The arbitration shall be conducted in the ruling language defined in Sub-Clause 1.4 [Law and Language].

Arbitration may be conducted;

Before and after the completion of the Works.

And the obligations of the Parties, the Engineer and the DAAB shall not be altered.

In case of any payment by one Party to the other;

without any further Notice or Certification, the amount is to be payable.

FOOTNOTES

1. The same Sub-Paragraph letters are used as in Sub-Clause 21.4 [Obtaining DAAB’s Decision] of the 2017 FIDIC Editions.

2. Subject to Sub-Clause 3.7.5 [Dissatisfaction with Engineer’s Determination], Sub-Clause 21.4.4 [Dissatisfaction with DAAB’s Decision], Sub-Clause 21.7 [Failure to Comply with DAAB’s Decision] and Sub-Clause 21.8 [No DAAB in Place].

3. The same Sub-Paragraph letters are used as in Sub-Clause 21.6 [Arbitration] of the 2017 FIDIC Editions.

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