1. The document discusses multi-tier dispute resolution processes in construction contracts, including the engineer's efforts to reach agreement, fair determination, amicable settlement, and arbitration. 2. It provides an overview of the roles and responsibilities of the Dispute Adjudication Board (DAB) as outlined in the FIDIC 1999 contract, including the appointment process, obtaining decisions, and notices of dissatisfaction. 3. Selecting qualified and impartial arbitrators/adjudicators is important for an effective dispute resolution process as their quality can make or break the process and the reputation of the process depends on them.

2. ‫الفيديك‬ ‫عقود‬
-
‫فض‬ ‫هيئات‬
‫النزاعات‬
‫الدكتور‬ ‫االستاذ‬
/
‫الهجان‬ ‫شريف‬
‫قوانين‬ ‫استاذ‬
‫التشيد‬

4. FIDIC 1999 S it
FIDIC 1999 Suite
Multi tier Dispute Resolution
Multi-tier Dispute Resolution

5. 1. Engineer endeavours to reach agreement (3.5)
1. Engineer endeavours to reach agreement (3.5)
2. Engineer’s Fair Determination (3.5)
4. Amicable settlement (20.5)
then, if necessary,
5 A bit ti (20 6)
5. Arbitration (20.6)

9. Sub-Clause 2.6 Wherever, under the Contract, the
Engineer is required to exercise his discretion by:
Engineer is required to exercise his discretion by:
(a) giving his decision opinion or consent
(a) giving his decision, opinion or consent,
(b) expressing his satisfaction or approval
(b) expressing his satisfaction or approval,
(c) determining value, or
(c) determining value, or
(d) otherwise taking action which may affect the rights and
( ) g y g
obligations of the Employer or the Contractor
he shall exercise such discretion …

11. S b Cla se 1 1 2 6 "Employer's Personnel"
Sub-Clause 1.1.2.6 "Employer's Personnel"
h E i
means the Engineer,…
1 E i d t h
1. Engineer endeavours to reach
agreement  mediation
2. Engineer’s Fair Determination

12. Di t B d l d
Dispute Boards evolved
in the US in the 1960s:
in the US in the 1960s:

13. 1. Boundary Dam in Washington (1960s);
2. Eisenhower Tunnel Contract in Colorado (1970s);
2. Eisenhower Tunnel Contract in Colorado (1970s);
3 Honduras Electricity Board embarked on the El
3. Honduras Electricity Board embarked on the El
Cajon Dam and Hydropower Project (1980);
Cajon Dam and Hydropower Project (1980);
4 Ch l T l j t 
4. Channel Tunnel project  ;
5. Hong Kong International Airport  ;
6. Ertan Hydroelectric Power Project, Sichuan,
China (1991);

14. C Hi t i
Case Histories

15. Channel Tunnel  DAB (5 members) made
Channel Tunnel  DAB (5 members) made
recommendations on 16 disputes = US$ 3B
recommendations on 16 disputes US$ 3B.
3 f th d ti t t d
3 of the recommendations were not accepted:
1. the 1st was accepted after the arbitration was
t i t d
terminated;
2 th 2 d ti ll lt d d i bit ti
2. the 2nd was partially altered during arbitration;
d
3. the 3rd was referred back to the DAB panel for a
further decision & eventually settled
further decision & eventually settled.

16. China: Ertan Hydroelectric Project
China: Ertan Hydroelectric Project
Determinations  binding not
Determinations  binding not
final  referred to
the board 
the board 
.

17. Af i K t D P j t
Africa: Katse Dam Project
Contract:
Contract:
Determinations  recommendations
 not final & not binding
 not final & not binding.

18. 12 disputes referred 
12 disputes referred 
went to arbitration.
The arbitration upheld the
dispute board recommendation
dispute board recommendation.

19. Hong Kong Airport
Hong Kong Airport
A disputes review group 6 members
A disputes review group = 6 members
Panel of 1 or 3 members depending on
nature/complexity of the dispute.
Decisions were binding but not final
Decisions were binding but not final.

20. 6 disputes referred to the DRB,
p ,
only 1 went on to arbitration
 the disputes review group
d i i h ld
decision was upheld.

21. : Docklands Railway
: Docklands Railway
Dispute board  2 sets of 3 members
Dispute board  2 sets of 3 members
one technical + one financial with a
one technical + one financial with a
h i ll h b
common chair; all chosen by
agreement of the parties.
Construction period 1996 to 1999
Construction period 1996 to 1999.

22. Determinations were final.
disputes referred to
disputes referred to
the dispute board.

23. : Saltend Private Power Plant
: Saltend Private Power Plant
DB = 5 members  all chosen by
agreement of the parties.
g p
Construction period: 1997 - 2000.

24. Determinations agreed to be
.
Total number of disputes
Total number of disputes
f
referred to the dispute board
was .
as

25. Chi Y ll Ri Di i P j t
China: Yellow River Diversion Project
12 di t h d & ttl d
12 disputes heard & settled
with none taken further.

26. USA: I-15 Reconstruction – Salt
USA: I-15 Reconstruction – Salt
Lake City Utah Dept of Transport
Lake City, Utah Dept of Transport
P j t l t d i 4 50 t
Project completed in 4.50 years at
a cost = US$ 1.52 billion
1 dispute was heard & settled

27. • DB is appointed at the commencement of
pp
the project.
p j
Undertaking reg lar site isits  acti el
• Undertaking regular site visits  actively
i l d th h t t ti
involved throughout construction.
• Becomes part of the project 
influences the performance of the parties.

29. 1 Contaminated Not Foreseeable Ground Water
1. Contaminated Not Foreseeable Ground Water
2. Failure to Comply with Notice Requirements
3. Priority of Contract Document
4. Overheads and Profits for Varied Works and
Claims
5 Window Glazing Flashings & Casings
5. Window Glazing, Flashings & Casings
6 L tt f C dit
6. Letter of Credit

32. Obligation of the Employer to Pay the Contractor
FIDIC Red Book 4th edition
Adjustment
Clause title (Subject)
Clause No.
T + C
Engineering Drawings delay
6.3 & 6.4
T + C
Physical conditions
12.2
C + P
Setting out (errors based on incorrect data)
17.1
C + P
Exploratory boreholes
18.1
C + P
Repairs and Employer's Risks
20.3
T + C
Fossils, antiquities, structures
27.1
C + P
Opportunities to other Contractors
31.2
T + C
Tests
36.5
C
Uncovered work
38.2
T + C
Suspension
40.2 T C
Suspension
40.2
T + C
Employer's failure to give possession
42.2
C + P
Cost of remedying defects
49 3 C + P
Cost of remedying defects
49.3
T = Time ; C = Cost ; P = Profit adjustment

33. C
Search for defects
50.1
C + P
Variations
52.1
C + P
Extra payment for Variation Orders
52.1 & 52.2
C
15 % reduction or increase
52.3
C + P
Special Risks Damage to Works by
65 3 C + P
Special Risks, Damage to Works by
65.3
C
Special Risks, Increased costs arising from
65.5
C & C + P
Termination of Contract
65.8
T + C
Defaults by Employer
69
by formula
Increase or decrease of cost
70.1
C
Changes in legislation
70 2 C
Changes in legislation
70.2
C + P
Currency and Rates of Exchange
71

34. New Red Book, 1999

35. Sub-Clauses Requiring Notices by the Contractor
Adjustment
Title
Sub-Clause
-
Care & supply of documents
1.8 pp y
1.8
T + C + reasonable profit
Delayed drawings or instructions
1.9
T + C + reasonable profit
Right of Access to the Site
2 1 T + C + reasonable profit
Right of Access to the Site
2.1
T + C + reasonable profit
Co-operation
4.7
T + C
Unforeseeable physical conditions
4 12 T + C
Unforeseeable physical conditions
4.12
T + C
Fossils
4.24
T + C + reasonable profit
Testing
7 4 T + C + reasonable profit
Testing
7.4
T
Extension of time for completion
8.4
T + C
C f i
8 9 T + C
Consequences of suspension
8.9
Termination
Prolonged suspension
8.11
T ki O th W k & S ti
10 1 -
Taking Over the Works & Sections
10.1
C + reasonable profit
Taking Over parts of the Works
10.2
T = Time / C = Cost

36. Adjustment
Title
Sub-Clause j
T + C + reasonable profit
Interference with Tests on Completion
10.3
C + reasonable profit
Contractor to search
11 8 C + reasonable profit
Contractor to search
11.8
Value not agreed
Omissions
12.4
T + C (by formulae)
Adjustments for changes in legislation
13.7
T + C + reasonable profit
Entitlement to suspend work
16.1
T + C
Consequences of Employer’s risks
17.4
-
Notice of force majeure
19.2 j
19.2
-
Duty to minimise delay
19.3
T + C
Consequences of force majeure
19 4 T + C
Consequences of force majeure
19.4

37. Adjudication
Adjudication
C t t l
St t t Contractual
Statutory

38. UK Housing Grants, Construction &
Regeneration Act 1996 requires
Regeneration Act 1996 requires
l t ll UK t ti t t
almost all UK construction contracts
to contain adjudication clauses

39. Contractual Adjudication

40. Types of Dispute Boards
ypes o spute oa ds
• Dispute Review Board (DRB)
p ( )
• Dispute Adjudication Board (DAB)  FIDIC
• Combined Dispute Board (CDB)  ICC

41. FIDIC 4th edition in 1996 adopted the
Dispute Adjudication Board (DAB)
Dispute Adjudication Board (DAB)

replaces the Engineer’s
replaces the Engineer s
role.

43. 20.2 Appointment of the Dispute Adjudication Board
Disputes shall be adjudicated by a DAB in accordance with
Sub-Clause 20.4…
The Parties shall jointly appoint a DAB by the date stated in
the Appendix to Tender…
If the DAB is to comprise 3 persons, each Party shall nominate
one member for the approval of the other Party. The Parties
shall consult both these members and shall agree upon the
third member who shall be appointed to act as chairman
third member, who shall be appointed to act as chairman.

44. Th f h i f i h h l
The terms of the remuneration of either the sole
member or each of the three members, including
the remuneration of any expert whom the DAB
consults, shall be mutually agreed upon by the
Parties when agreeing the terms of appointment.
Each Party shall be responsible for paying one-
y p p y g
half of this remuneration.
half of this remuneration.

45. If at any time the Parties so
If at any time the Parties so
agree, they may jointly refer
g , y y j y
a matter to the DAB to give
its
its …

46. The appointment of any member may
y y
be terminated by mutual
be terminated by mutual
agreement of both Parties, but not
by the Employer or the Contractor
by the Employer or the Contractor
ti l
acting alone.

47. 20.3 Failure to Agree Dispute Adjudication Board
g p j
If any of the following conditions apply, namely:
y g pp y y
(a) the Parties fail to agree upon the appointment of the sole
member of the DAB by the date stated in the first paragraph
of Sub-Clause 20.2,
(b) either Party fails to nominate a member (for approval by the
other Party) of a DAB of three persons by such date
other Party) of a DAB of three persons by such date,
(c) the Parties fail to agree upon the appointment of the third
(c) the Parties fail to agree upon the appointment of the third
member (to act as chairman) of the DAB by such date, or

48. (d) the Parties fail to agree upon the appointment of a
(d) the Parties fail to agree upon the appointment of a
replacement person within 42 days…,
p p y ,
, upon the request of either or both of the Parties
and after due consultation with both Parties,
. This appointment shall be
fi l d l i E h P t h ll b ibl
final and conclusive. Each Party shall be responsible
for paying one-half of the remuneration of the
for paying one-half of the remuneration of the
appointing entity or official.
pp g y

49. 20.4 Obtaining Dispute Adjudication Board’s Decision
g p j
If a dispute (of any kind whatsoever) arises between the
If a dispute (of any kind whatsoever) arises between the
Parties in connection with, or arising out of, the Contract or
the execution of the Works, including any dispute as to any
certificate, determination, instruction, opinion or valuation of
the Engineer, 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
i d thi S b Cl
given under this Sub-Clause.

50. Within 84 days after receiving such reference, or
Within 84 days after receiving such reference, or
within such other period as may be proposed by the
DAB and approved by both Parties, the DAB shall
give its decision, which shall be reasoned and shall
state that it is given under this Sub-Clause.
The decision shall be on both Parties, who
shall promptly give effect to it unless and until it shall be
i d i i bl ttl t bit l d
revised in an amicable settlement or an arbitral award as
described below
described below.

51. If either Party is dissatisfied with the DAB’s
If either Party is dissatisfied with the DAB s
decision, then either Party may, within 28 days after
receiving the decision, give notice to the other Party
of its dissatisfaction.
If the DAB fails to give its decision within the period
of 84 days (or as otherwise approved) after receiving
such reference, then either Party may, within 28 days
after this period has expired, give notice to the other
Party of its dissatisfaction.

52. In either event, this notice of dissatisfaction
In either event, this notice of dissatisfaction
shall state that it is given under this Sub-
shall state that it is given under this Sub
Clause, and shall set out the matter in dispute
Clause, and shall set out the matter in dispute
and the reason(s) for dissatisfaction…
and the reason(s) for dissatisfaction…
in accordance
with this Sub-Clause.

53. If the DAB has given its decision as to a
If the DAB has given its decision as to a
matter in dispute to both Parties, and no
notice of dissatisfaction has been given
by either Party within 28 days after it
received the DAB’s decision, then
upon both Parties
upon both Parties.

54. In the event that:
(a) neither Party has given notice of dissatisfaction within
(a) neither Party has given notice of dissatisfaction within
the period stated in Sub-Clause 20.4,
(b) the DAB’s related decision (if any) has become final and
binding, and
then the other Party may...
d S b Cl 20 6
under Sub-Clause 20.6.

55. DB Members:
1. Selection
2 Appointment
2. Appointment
3 Q liti R i d
3. Qualities Required

56. Selecting arbirators/adjudicators
• It is the quality of the arbirators/adjudicators
• It is the quality of the arbirators/adjudicators
that makes or breaks the process
that makes or breaks the process.
• Reputation & acceptability of the process
d d th lit f th
depends upon the quality of the
bi t / dj di t
arbirators/adjudicators.

57. • An arbitrator/adjudicator, like a judge,
must act impartially and may be removed
from his appointment if he fails so to act.
A bit t / dj di t h ld t t
• An arbitrator/adjudicator should not act as
the advocate, still less as the servant, of
the party who appointed him.

58. DAB functions:
DAB functions:
1. Visit the site periodically & become
f ili ith j t
familiar with project.
2. Keep up to date with progress &
bl
problems.
3. Encourage the resolution of disputes.
4. Prepare Decisions on disputes in a
timely manner.

59. The process encourages a win-win rather than a win-
lose lose
lose philosophy. lose-lose
Decisions not implemented may form the basis
p y
for an amicable settlements. (Sub-Clause 20.5)
DAB Decision is a condition precedent to the
DAB Decision is a condition precedent to the
commencement of arbitration proceedings
commencement of arbitration proceedings.
Th D i i i d i ibl id i
The Decision is admissible as evidence in
arbitration
arbitration.

60. The Reasoning
Reasoning is an essential part of
th d i i
the decision.
Persuades the parties that the DAB studied all
relevant matters & reached a conclusion similar to
that which may be expected from an arbitrator.

61. They also serve who only
stand & wait
Members serve even when they wait &
Members serve even when they wait &
become an instrument of dispute avoidance or
become an instrument of dispute avoidance or
t l t i i i i th tb k f di t
at least minimising the outbreak of disputes.
John Milton Sonnet (1673)

62. Annex -

63. 5. If any dispute is referred to the DAB in accordance
with Sub-Clause 20.4 of the Conditions of Contract.
the DAB shall proceed in accordance with Sub-
the DAB shall proceed in accordance with Sub
Clause 20.4 and these Rules. Subject to the time
allowed to give notice of a decision and other relevant
factors the DAB shall:
factors. the DAB shall:
(a) act fairly and impartially as between the
( ) y p y
Employer and the Contractor. Giving each of them a
opportunity of putting his case and
responding to the other's case and
responding to the other s case. and
(b) adopt procedures suitable to the dispute.
( ) p p p
avoiding unnecessary delay or expense.

64. 6. The DAB may conduct a hearing on the
y g
dispute, in which event it will decide on the
d spute, c e e t t dec de o t e
date and place for the hearing and may request
date and place for the hearing and may request
that written documentation and arguments from
that written documentation and arguments from
the Employer and the Contractor be presented
the Employer and the Contractor be presented
to it prior to or at the hearing
to it prior to or at the hearing.

65. 7. Except as otherwise agreed in writing by the
Employer and the Contractor
to refuse admission to hearings or
to refuse admission to hearings or
audience at hearings to any persons other than
representatives of the Employer. The Contractor
and the Engineer, and
but shall have
discretion to decide whether and to what extent
this power may be exercised.

66. 8. The Employer and the Contractor empower the
p y p
DAB, among other things, to:
(a) establish the procedure to be applied in
deciding a dispute.
(b) decide upon the DAB's own jurisdiction, and
as to the scope of any dispute referred to it.
(c) conduct any hearing as it thinks fit, not being
bound by any rules or procedures other than
those contained in the Contract and these Rules.

67. (d) take the initiative in ascertaining the facts and matters
required for a decision.
(e) , if any.
(f) decide upon the payment of financing charges in
accordance with the Contract
accordance with the Contract.
(g) decide upon any provisional relief such as interim
(g) decide upon any provisional relief such as interim
or conservatory measures, and
y
(h) open up, review and revise any certificate,
( ) p p, y ,
decision. Determination, instruction, opinion or
valuation of the Engineer, relevant to the dispute.

68. 9 The DAB shall not express any opinions during any
9. The DAB shall not express any opinions during any
hearing concerning the merits of any arguments
g g y g
advanced the by the Parties. Thereafter. the DAB shall
make and give its decision in accordance with Sub-
Clause 20.4. or as otherwise agreed by the Employer
and the Contractor in writing If the DAB comprises
and the Contractor in writing. If the DAB comprises
three persons:
three persons:
(a) it shall convene in private after a hearing. in order
(a) it shall convene in private after a hearing. in order
to have discussions and prepare its decision;

69. (b) it shall endeavour to reach a unanimous decision: if
this proves impossible the applicable decision shall
be made by a majority of the Members. who may
i th i it M b t itt t
require the minority Member to prepare a written report
for submission to the Employer and the Contractor;
for submission to the Employer and the Contractor;
(c) if a Member fails to attend a meeting or hearing or
(c) if a Member fails to attend a meeting or hearing, or
to fulfil any required function. the other two Members
may proceed to make a decision, unless:
(i) either the Employer or the Contractor does not agree that they do so. or
(ii) the absent Member is the chairman and he/she instructs the other Members
(ii) the absent Member is the chairman and he/she instructs the other Members
to not make a decision.