To answer my own question, “Are dispute boards a viable means of resolving disputes in the UK?”, I’d say yes. Others may disagree, but I’ll explain why I think this.
A brief history of dispute boards
Dispute boards in one form or another have been around since the late 1960’s. They started off in the USA and spread internationally. First the World Bank and then FIDIC included them in their contracts. Other development banks followed suit, as did the Institution of Civil Engineers (ICE). In addition to the contracts, there are a number of organisations who publish stand-alone dispute board rules (including the International Chamber of Commerce and the Dispute Resolution Board Foundation (DRBF)).
Although dispute boards are more commonly used abroad, they have been used in the UK (on the Channel tunnel and the Docklands Light Railway). They came to prominence more recently when it was announced that the ODA would be using a type of dispute board on the Olympic site (they called it an Independent Dispute Avoidance Panel). As the name suggests, the remit of this board is to avoid disputes and there is a separate panel of adjudicators to deal with disputes that cannot be avoided. It appears to have been a success, since we haven’t seen a host of contractors and sub-contractors (or professional consultants) heading towards the TCC with complaints (unlike some other recent developments!).
Dispute boards in the UK have to take into account the Construction Act 1996 and the right it grants a party to a construction contract to refer a dispute to adjudication “at any time“. Some may argue that one of the main reasons that we do not have dispute boards in the UK is because we don’t have lots of big engineering projects being built (like dams, highways, pipelines and airports). However, the Olympics aside, I think dispute boards would be suitable for a number of current domestic projects (like Crossrail, the tube upgrade, HS2 and a new London airport (if they happen)). Also, what about all the skyscrapers that are appearing on the London skyline? All of these projects are large enough to benefit from a dispute board.
So what are the advantages of a dispute board?
Many types of dispute board exist, often tailored to suit an individual project. I’m using the term here to include dispute review boards (DRB) and dispute adjudication boards (DAB). The most obvious advantages include:
- Expertise. The dispute board members will have been selected for their knowledge and expertise at the outset and before a dispute arises. By being involved during the project, they will also have a better understanding of it, making it easier for them to resolve any disputes that do arise.
- Flexibility. The parties can agree the procedure in advance and can agree changes to that procedure during the course of the project.
- Preventing disputes. The existence of the dispute board itself may act as an incentive to the parties to negotiate and settle, rather than being seen to make frivolous claims to it.
- Maintaining a relationship. The process is semi-consensual and the parties have a stake in making it work.
Inevitably, there are also disadvantages in using a dispute board and the most commonly cited ones are:
- Cost. The cost of establishing and maintaining the dispute board for the duration of the project.
- Enforcement. The potential difficulties in enforcing a dispute board decision. Often arbitration is the dispute resolution method of choice and if the parties do select the courts instead, the TCC hasn’t yet developed a procedure akin to the one it developed to enforce adjudicators’ decision (although it is arguable that similar principles would apply if any party appeared before it).
- Binding nature of decision. Depending on the nature of the board, the decision may not be binding on the parties.
However, on balance, I believe the advantages outweigh the disadvantages. For example, the cost of maintaining the dispute board may offset the costs the parties would incur if they were regularly in dispute.
What next for dispute boards?
As I said at the outset, I think dispute boards are a viable alternative in the UK. However, I also have to own-up to having a vested interest in them, as I am part of the RICS Dispute Board Working Group. RICS has developed a training, assessment and accreditation programme for professionals (not just surveyors) who wish to train to become dispute board members. RICS has also set up a register of dispute board members.
The training is designed to help individuals understand more about dispute boards and, ultimately, to teach them how to be an effective dispute board member. To be registered with the RICS, an individual will need to have completed both modules of the training, pass an interview and, depending on previous experience of dispute boards, undertake a period of mentoring. Ultimately, the RICS will have a group of individuals that have been trained to the highest standards.