Making an Effective and Persuasive Case to a Dispute Board

This paper is based on my involvement with some 100 referrals made to dispute adjudication boards under the FIDIC forms of Contract and to an adjudicator under the NEC forms of contract. Although dispute adjudication has been around for many years, with the Dispute Resolution Board Foundation (DRBF) and FIDIC being the earliest and strongest advocates of this form of alternative dispute resolution (as opposed to arbitration or litigation), it still surprises me how contracting parties often have little apparent understanding of the intents behind dispute boards and contract adjudication, or how these processes can be used to resolve disputes effectively, quickly and inexpensively.

As examples, I have come across situations where:

  • A contractor has effectively accepted a dispute board panel entirely nominated by an Employer;
  • Referrals have been made where the wrong ‘dispute’ was referred to the dispute board;
  • A contractor has simply issued to a dispute board all the correspondence and documents relating to a matter and left it to the dispute board to try and find out from that pile of documents what the dispute was about and what issues needed to be decided;
  • A party presented a wholly new and different case to a dispute board from that which had previously been presented to, and rejected by, the other party; and
  • Parties have engaged legal counsel to ‘run’ their disputes, which then perhaps inevitably resulted in the dispute proceedings morphing into quasi-arbitrations, with all the attendant additional time and cost that entailed.

 

The message I want to convey in this paper is that, used properly and in accordance with designed intents, dispute boards and contract adjudication are very effective and economical means of resolving even the most complex of construction disputes quickly and efficiently, and usually without recourse to arbitration.

The secrets to success, if that is the appropriate expression, rest with the contracting parties:

1. Recognising the significant benefits dispute boards and contract adjudication can provide; and

2. Engaging specialist construction dispute practitioners to lead, administer and draft/ advocate party positions.

These secrets form the back-bone of this paper, and are encapsulated in its title “Making an Effective and Persuasive Case to a Dispute Board”. My use of the term dispute board in this paper is to be interpreted to refer to contract adjudication as well.

The first matter to consider is what is meant by the terms ‘effective’ and ‘persuasive’. Are they the same thing? In my view, the two terms have different meanings and objectives, but which must nevertheless co-exist if a party is to maximise its chances of succeeding with its case before a dispute board.

An effective case is one in which the following criteria are satisfied:

1. The submission allows the dispute board to decide the dispute as easily as possible, and within the prescribed time frame of the relevant contract provision. This means providing a clear, concise and complete submission that identifies and addresses each of the issues in dispute with argument and evidence. A failure to comply will likely compromise the dispute board’s ability to understand or decide the dispute, resulting in requests for clarification and/ or further information, which in turn will likely delay the time for issue of the decision.

2. The referral, including all submissions and hearings (if required), is fully compliant with the applicable dispute adjudication procedure and timescales. Any failure to comply will likely lead to jurisdictional challenges and/or requests for directions. In either event, that party’s position will likely be compromised and proceedings delayed.

3. The referral clearly identifies and preferably limits the number of issues in dispute. The more issues there are in dispute, the more arguments, evidence and documents that need to be advanced by the parties and considered by the dispute board. This increases the risks of complexity, confusion and mistakes, as well as likely causing delay to the process.

4. The referral must clearly but succinctly identify and address relevant facts, arguments and issues, preferably in a separate and well-drafted statement of case.

5. An effective dispute referral will be evidenced by the avoidance of multiple party submissions, jurisdictional challenges, requests for directions, and dispute board requests for clarification or further information.

A case can be effective, in that the above criteria are satisfied and a decision is issued within required timescales, but if that decision does not support the outcome the party was seeking under the referral, then that party’s case cannot be said to have been persuasive. So to be persuasive, further criteria apply. In my view, these additional criteria are:

1. The statement of case leads to the dispute board giving the decisions sought by a party;

2. The other (losing) party complies with the issued decision; and

3. The dispute board’s decision finally decides the dispute.

Although it is very common, under the FIDIC Conditions at least, for a losing party to issue a notice of dissatisfaction with a dispute board decision in order to reserve the right to take the dispute to arbitration, such right is rarely enacted. If the dispute board decision provides clear reasoning, as almost always they do, the decision normally sits as binding, becoming final and binding upon agreement of the final account. Of more common occurrence is the refusal of a losing party to immediately (or at all) comply with a dispute board decision, for which the 1999 editions of the FIDIC forms provide little in the way of salvation (a point of concern specifically addressed in the recent 2017 editions). The enforcement of dispute board decisions however falls outside the scope of this paper.

I outline eight tried and tested guiding principles for parties to use when making an effective and persuasive case to a dispute board.

If the criteria set out above define what the outputs of an effective and persuasive case to a dispute board are, what are the necessary inputs? In my experience, there are eight guiding principles that apply, most of which substantially benefit from being applied by experienced construction dispute practitioners familiar with managing and administering the referral process from start to finish. These eight principles are:

1. Honour the intent of the dispute board provisions
2. Comply with the applicable procedural rules
3. Clearly define the dispute
4. Analyse the dispute
5. Define dispute strategy
6. Statements of case
7. Advocacy of case
8. Managing perceptions

Honour the intent of the dispute board provisions

The FIDIC Forms of Contract provide for a Dispute Adjudication Board as the first tier of the dispute resolution process. The NEC forms provide for contract adjudication. The dispute board decides disputes arising between parties during the currency of a contract; the purpose being to provide parties with certainty on matters that otherwise may continue to escalate and critically impact successful completion of the project.

Although the FIDIC and NEC dispute resolution procedures are different, they have certain principles in common. Foremost among these is the relatively short timescale in which a dispute referral is to be decided – 84 days under the FIDIC Conditions and 8 weeks under the NEC forms (albeit these periods are extendable by agreement with the parties). The clear intent of both suites of contract is for the giving of decisions within a short time-scale in order to resolve, at least on an interim basis, disputes that may materially impact current and ongoing delivery of a project. For example, a dispute over whether a particular material is specified under the Contract or is a Variation has evident commercial and potential time impacts. Of more severity would be a claim for extension of time (under the FIDIC conditions) that goes unanswered by the Engineer or Employer’s Representative – is the contractor entitled to an extension or not? The answer to this question will have direct implications on the contractor’s planning of ongoing and future works – does it need to accelerate or not? Is time ‘at-large’? Is the contractor liable for delay damages or not?

The clear intent of the FIDIC and NEC suite of contracts is to give decisions within a short timescale in order to, at least on an interim basis, resolve the dispute that may impact the delivery of the project.

My plea to all parties and practitioners is to give effect to the FIDIC and NEC forms of contract provisions and avoid causing delay to the giving of decisions. Early decisions lead to certainty going forward, and take disputes off the table. What can anybody consider bad about that?”
Simon Longley, Partner, HKA
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