Dispute Resolution Process from DAB to Arbitration in the 1999 FIDIC Red Book

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

In our case; the Contractor encounters delay which is caused by the Employer.

Therefore, the Contractor considers that it is entitled to Extension of Time for completion and additional payment for delay related costs.

The Contractor submits a claim.

The Engineer makes a determination of that claim, but the Contractor becomes dissatisfied with the determination.

After the appointment of the Dispute Adjudication Board (DAB), the Contractor refers the dispute to the DAB.

The DAB gives its decision, but again, the Contractor disagrees with the decision of the DAB.

At the end, arbitration is commenced and the dispute is settled under the Rules of Arbitration of the International Chamber of Commerce.

In this document, you will find the key issues and the procedure to be followed regarding the process of dispute resolution from DAB to Arbitration in accordance with Clause 20 of the 1999 FIDIC Red Book.

1   Appointmen of the DAB 

1.1  Selecting the Member(s) of the DAB

The DAB is to be appointed within the time period stated in the Appendix to Tender.

The DAB is to contain one or three suitably qualified member(s).

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

The members of the DAB are to be selected from the list in the Contract.

1.2  Dispute Adjudication Agreement

The agreement between Parties and either the sole member (“adjudicator”) or each of the three members shall incorporate by reference the General Conditions of Dispute Adjudication Agreement contained in the Appendix to these General Conditions, with such amendments as are agreed between them [1].

2   DAB’s Decision Regarding the Dispute

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

2.1 Referring a Dispute to the DAB

The Reference of a Dispute to the DAB [2];

Either Party may refer the dispute in writing to the DAB for its decision, with copies to the other Party and the Engineer.

Such reference shall state that it is given under Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision].

For a DAB of three persons, the DAB shall be deemed to have received  such reference on the date when it is received by the chairman of the DAB.

Both Parties shall promptly make available to the DAB all such additional information, further access to the Site and appropriate facilities as the DAB may require for the purposes of making a decision on such dispute.

2.2 Decision of the DAB

The DAB is to decide within 84 days after receiving the reference or within such other period [3].

The decision is to state that it is given under Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision].

The decision is to be binding on both Parties and the Parties will give effect to it unless and until it is revised by an amicable settlement or arbitration.

3   Notice of Dissatisfaction 

3.1  Dissatisfaction with DAB’s Decision

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

May give a notice of dissatisfaction to the other Party, within 28 days after receiving the DAB’s decision.

In case of not giving any notice of dissatisfaction by either Party within 28 days after receiving the DAB’s decision, the decision is to become final and binding.

3.2  DAB’s failure to Give a Decision

In case of DAB’s failure to give its decision within the period of 84 days or within another approved period after receiving such reference;

Within 28 days after the expiration of time limits, any Party may give a notice of dissatisfaction 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 20.4 [Obtaining Dispute Adjudication Board’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 fifty-sixth (56th) day after the day of the notice of dissatisfaction given.

5   Failure to Comply with DAB’s Decision 

In case of any Party’s failure to comply with the decision of the DAB;

The other Party may refer the failure straight to arbitration under Sub-Clause 20.6 [Arbitration].

6   No DAB in Place 

If there is no DAB in place;

The Dispute may be referred by any Party straight to arbitration under Sub-Clause 20.6 [Arbitration].

7   Arbitration 

Any Dispute in respect of which the DAB’s decision (if any) has not become final and binding shall be finally settled by International Arbitration. Unless otherwise agreed by both Parties [4]:

(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 three arbitrators appointed in accordance with these Rules; and

(c) The arbitration shall be conducted in the language for communications 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 DAB shall not be altered.

FOOTNOTES

1. The same Sub-Paragraph letters are used as in Sub-Clause 20.2 [Appointment of the Dispute Adjudication Board] of the 1999 FIDIC Red Book.

2. The same Sub-Paragraph letters are used as in Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision] of the 1999 FIDIC Red Book.

3. Proposed by the DAB and approved by both Parties.

4. The same Sub-Paragraph letters are used as in Sub-Clause 20.6 [Arbitration] of the 1999 FIDIC Red Book.

This information is provided for your convenience and does not constitute any “Legal Advice”. This document is prepared for the general information of the interested persons. This should not be acted upon in any specific situation without appropriate legal advice.

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