When disputes are decreasing in the rest of the World, but on the increase in the Middle East, why has this region been so slow to recognise the added value of dispute adjudication boards?
The FIDIC forms of contract are the most widely used contracts for construction works in the Middle East and North Africa. These contracts have included provisions for the appointment of Dispute Boards since 1999, but the adoption and use of DABs in the region has been slow when compared to most other parts of the world.
I believe that this is largely due to a lack of understanding of the significant benefits and the added value that Dispute Boards bring to construction projects. There is no reason why the MENA region should not take advantage of reduced project costs, reduced completion times, continuing goodwill and the avoidance of disputes that are now common elsewhere.
A website is due to be launched shortly, which is intended to provide information and resources relating to construction industry Dispute Boards, particularly for the Middle East and North Africa region. The aim of the website is to provide a better understanding within the region of the benefits and added value that Dispute Boards bring to construction projects and to increase their use in order to lower project costs, achieve reduced completion times, improve goodwill and avoid disputes.
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Hi Andy,
I had a query in relation to the use of DAB’s and what happens in the event that their decision was later overruled/ overturned at Arbitration.
For example what might happen if:
1. A Contractor believes he is entitled to a 60 day extension of time (EOT), which the Engineer and Employer do not believe the Contractor has entitlement to.
2. After referring the dispute to the DAB, the DAB makes the decision that the Contractor is entitled to a 60 day EOT and the Contractor re-programmes and executes the work on this basis.
3. However, the Engineer and Employer still do not agree with the DAB’s decision that the Contractor was entitled to this EOT of 60 days and wish to refer the matter to Arbitration.
4. During the Arbitration the Arbitration panel then overturn the DAB’s previous decision and agree with the Engineer and Employer that the Contractor was not entitled to the EOT.
5. In this case what would be solution, assuming that the Contractor has already completed the works taking into considering the original decision from the DAB.?
Hope the query make sense and I would be interested to have your thoughts on this matter.
Thank you.
Adrian
Hi Adrian – thanks for your comment. Andy is travelling today but I have passed your comment onto him and he’ll provide a response early next week. Regards, Nina.
Robert,
I could not agree more. I have been based in the Middle East for 18 years and have seen a definite swing away from the ‘old’ days when dispute were settled amicably in the Arabic tradition and towards arbitration and litigation. Probably this was inevitable given the massive amount of development that has taken place and which has often be undertaken by inexperienced players in the market place.
These days dispute are common and I have witnessed many that could have been settled quickly and easily by DABs had they been utilised. I understand that the arbitration centres and courts in the UAE have been backed up with cases in recent years and as you say, when things reach this stage it becomes a costly and lengthy process that often only benefits those who are in the business of arbitration.
Dubai and Qatar have recognised this as a significant problem and are making moves to adopt ADR processes – hopefully, this will include the use of standing dispute boards. We hope our website helps to educate people in the significant advantages that DABs bring to construction projects. Thank you for your contribution.
Hi,
Having just completed some research on this topic, I can state that one aspect of the lack of use of DAB’s are the revenue streams which are generated by the DIAC and DIFC – LCIA centres. In partciular, the DIAC, where although the fees are cheaper, I have found enforcement to be a particular issue (of course LCIA is based on English Law, so enforcement isnt such an issue). Arbitraiton is a business for Dubai. DAB’s would take this business away, for instance to ex-pat’ experts who travel from far and wide and don’t necessarily create an income for Dubai.
DAB’s are possibly not overly trusted also, as they are seen as ‘interim’, and not final, whereas Arbitraiton is (or is it, again, when I reference the issues with enforcement?). Hopefully the UAE shall embrace the DAB process, particualry the Standaing DAB, as I have found them, on the whole, to be uselful in resolving disputes, at the time of happening and not years down the line, when the information is scant and ‘missing’ – which only allows for more lawyers to argue point of law, when in fact Arbitraion should be more focused on points of fact.