I will hold my hands up and admit that I was slightly sceptical when I saw that the Chartered Institute of Arbitrators (CIArb) was intent on publishing its own dispute board rules. Why do we need another set of rules?
Also, the CIArb’s stated aim of providing rules that cater not only for construction and engineering projects, but also for other commercial and IT projects, seemed slightly unnecessary given that there appears to be little evidence of an appetite to have dispute boards on other types of projects.
However, having read the CIArb’s consultation paper, I’m now fully converted.
Critically for me, the authors don’t simply want to impose a set of rules, rather they have given potential users the opportunity of having an input in what should be in the rules. Also, even if dispute boards are yet to really take off in other sectors, it doesn’t follow that they are unsuitable. For example, there have been a number of well publicised disputes on major IT projects that dispute boards may have helped limit or even have prevented altogether.
Why should you bother reading the consultation paper?
I appreciate that many of you will have experience of dispute boards, particularly those of you working internationally, and the consultation paper will no doubt be of interest to you.
However, others might be saying to themselves, why should I bother even reading the paper because I’m not involved in dispute boards? Well, even though dispute boards are still relatively rare in the UK, I see it as being inevitable that their use will increase on major projects. More and more clients are recognising the benefits of dispute boards, and they are being backed by an increasing number of professional bodies. Not only is the CIArb producing rules, but RICS is training dispute board members and has set up a register of accredited dispute board members.
My tip would be to read the CIArb consultation paper. You don’t want to be caught short if your client wants some speedy advice on dispute boards.
CIArb consultation paper
The consultation paper has 28 questions that consider the key issues about dispute boards:
- The first six questions concern the nature of dispute boards under the proposed CIArb rules. Should they be limited to a reviewing function (commonly referred to as a Dispute Review Board (DRB) and popular in the USA), or be able to make binding decisions (commonly referred to as a Dispute Adjudication Board (DAB) and included in FIDIC contracts)? The choice between the two will shape the entire procedure and, possibly, the success of the rules. Whichever is adopted, the rules will have to cater for statutory adjudication in the UK and other jurisdictions.
- There then follows a section regarding the fees for dispute boards, and particularly standing boards as opposed to ad-hoc boards. The authors recognise that such costs can be a real concern for parties entering into construction and engineering contracts, even though in the long run they may actually save the parties money when compared to arbitration or litigation. Getting the fee structure right is therefore likely to be another determinative factor in the success of the rules. In my view, if dispute board members are only paid for work carried out, rather than receiving a monthly retainer, the parties may feel that they are getting more bang for their buck.
- The next sections concerns how dispute board members should be appointed under the rules, and how the dispute should be referred.
- There then follows questions about the enforcement of dispute board decisions. Just as the backing of the UK courts has been one of the key factors in the success of construction adjudication, the judiciary’s support in enforcement of dispute board decisions is also crucial. Internationally, there have been some hiccups in enforcement, for example in the Singapore case of CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK.
- The final questions concern ethics.
Unfortunately, the consultation has closed
The deadline for submissions was 21 November 2013 and so I admit that it might have been helpful if I’d written this blog a couple of weeks ago. However, I really hope that it’s not just lawyers and dispute board members that have commented, but also users of dispute boards, such as international engineering contractors, international development banks, and so on. Buy-in from users will be the key to the success of the CIArb dispute board rules.