DAB and

DISPUTE
RESOLUTION

GGM Wijethilleke
BSc.Eng.(Hons.);C.Eng.;
MICE(Lond);MIE(SL)
Back Ground of FIDIC
• FIDIC COC for Works First Edition in 1957
- the Decision of the Engineer

• Fourth Edition - 1987 (Red Book , Yellow Book)

• In 1996
Why DAB Introduced
BACKGROUND - FIDIC CONTRACTS

•
Decision by the Engineer
It is often said that:
1) the Engineer is paid by the Employer
2) playing dual roles is difficult
3)disputes are sometimes related to the Decision
made by the Engineer
4) might be difficult to overturn Engineer’s
determination previously made
• to answer these allegations DAB concept was introduced
in 1996 with supplement to 4th edition(Optional)
 FIDIC Contracts
• FIDIC has published 5 widely used Works Contracts

- Red Book for “Construction Contract”

- Yellow Book for “Plant Contract”
- Silver Book for “EPC/Turnkey Contract”
- Gold Book for “Design, Build, & Operate
Contract”
- Green Book for Short Form of Contract
- Pink Book is MDB version of Pink Book
 FIDIC Contracts Contd

• Standardize the terminology

• Make the documents as user-friendly as possible
• To solve the problem of the Engineer not seen as
acting Impartially while he was employed and paid
by the Employer DAB provision was introduced in
1999 for “Construction”, “Plant and Design & Build
“and “EPC / Turnkey “Contracts.
 Which Book to use

• Red Book – The Employer ( or the Engineer) do most of the

Design, Construction Contract
• Yellow Book – The Contractor to do the most of the Design,
Plant & Design Build
• Silver Book – The Employer wishes to implement the
Project on a fixed price basis with little involvement.
The Contractor takes full responsibility for the design,
construction and operation with little supervision from the
Employer.
 • RED BOOK
• Conditions of Contract for
Construction
• Design responsibility with the Employer
• Payment Based on re-measurement ( rates and
prices in BOQ applied to “Actual” quantities )
• Supervision by the Engineer
• YELLOW BOOK
• CONDITIONS OF Contract for Plant and Design –Build

• Detailed Design done by the Contractor;

• The Employer gives Employer’s Requirements
• Payment based on Lump Sum;
• Supervision by the “Engineer” , who represents the
Employer
• SILVER BOOK
• Conditions of Contract for EPC/Turnkey Projects

• Employer issues Employer’s Requirements

• Design & Investigations by the Contractor
• Supervision by the Contractor
• Payment based on Lump-sum
• Employer maintains presence through “Employer’s
Representative “ (if appointed).
 Clause 20:
CLAIMS,DISPUTES and
arbitration
• Most frequently used Clause in the Conditions of
Contract
• Includes procedures, such as the submission and
response to Contractor’s Claims, which must be
used when a problem has arisen
• It also includes the procedures for the appointment
of Dispute Adjudication Board, which must be used
at or before the commencement of Works
Sub Clause 20[Claims , Disputes &
Arbitration] - Contd.

• 20.1 Contractor’s Claims

• 20.2 Appointment of DAB
• 20.3 Failure to Agree DAB
• 20.4 Obtaining DAB’s Decision
• 20.5 Amicable Settlement
• 20.6 Arbitration
• 20.7 Failure to comply with DAB’s Decision
• 20.8 Expiry of DAB’s Appointment
What is the DISPUTE IN
FIDIC
Description In FIDIC COC-MDB edition (2006)
• Sub Clause 20.4 –Obtaining DAB Decision
“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 disputes 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 given under this Sub- Clause. “
Why DAB is introduced in
FIDIC Contracts
• It is often said that:
1) the Engineer is paid by the Employer
2) playing dual roles is difficult
3)disputes are sometimes related to the
Decision made by the Engineer
4) might be difficult to overturn Engineer’s
determination previously made
 Claim and Dispute Resolution
• Red Book 1987 /Yellow Book 1987
The Engineer makes determination of
Claim , and Decision of Dispute
• Red Book 1999 / Yellow Book 1999
The Engineer makes determination of
Claim,
DAB makes decision of Dispute
• Silver Book 1999
The Employer makes determination of
Claim, DAB makes decision of Dispute
• Appointment of DAB- S C
20.2

• The DAB shall comprise, as stated in the Appendix to

Tender , either one or three suitably qualified persons

• Single Member – Sole Adjudicator

• Three Member, Dispute Adjudication Board

Appointment of DAB
• Full Term (Standing) DAB
Appointed just after the conclusion of the
construction Contract
Periodical Site Visit regardless of existence of
the dispute
Adopted in Red Book 1999
• Ad-hoc DAB
Appointed after occurrence of dispute
Adopted in Yellow Book 1999 & Silver Book
1999 Sub Clause 20.2
Appointment of DAB -
Contd.

Three Person DAB

• Each Party nominate one Member for the approval of

the other Party
• Approval under Sub Clause 1.3 “should not be
unreasonably withheld or delayed
• Selected two Members propose Third Member who
shall act as Chairman for the approval of both
Parties.
Appointment of DAB -
Contd.
One Person DAB (Adjudicator)

• Either Party May Nominate

• FIDIC allows for list of potential adjudicators in
Tender documents and for selection from this list .
Not to be imposed by one Party
• Parties must agree on nominee.
• Appointment to be by the date stated in Contract
Data
Qualifications of Member

• Fluent in the language of communication stated in

the Contract.
• Professionally experienced in the type of
construction involved in the works
• Experienced with interpretation of contractual
documents
• Availability for Site Visits
• Impartial and independent of contracting Parties
and Engineer
Qualifications of DAB Member –Contd.

• No interest financial or otherwise with contracting

Parties and with the Engineer
• Nationality

• Technical Persons or legal persons ??

Failure to Agree Member/s
• Sub Clause 20.3

• An appointing entity or official named in the

Appendix to Tender upon request of both Parties
after due consultation with both Parties shall
appoint the Member
• This appointment shall be final and binding
• Each Party shall pay half the costs of the appointing
entity or official.
Contract Agreement for
DAB
• FIDIC provide Draft Dispute Adjudication
Agreement – Three Party Agreement
• General Conditions of Dispute Adjudication
Agreement” – APPENDIX
• Procedural Rules - Annex
• Fees to be paid: Retainer Fee and Daily Fee,
reimbursable cost - (Travelling , Secretarial Services,
etc.)
General Conditions of Dispute Adjudication Agreement

• Definitions
• General Provisions
• Warranties
• General Obligations of the Member
• General Obligations of the Employer and the
Contractor
• Payment
General Conditions of Dispute
Adjudication Agreement – Contd.

• Termination ( Full term only)

• Default of Member
• Disputes

Annex – Procedural Rules

Appointment Commencement
- Full Term
• Commencement Date defined in the Contract
• When Agreement is signed by the Employer, the
Contractor and Member(sole) or Members
• Notice to be given by the Employer and the
Contractor to Member /s when agreement is
effective
• If no notice given 6 months after the Member/s
sign Agreement then it is void and ineffective
Period of Agreement

• Full Term – Till the Discharge ( Sub Clause 14.12)

becomes effective

• AD Hoc - When DAB has given its decision unless

other dispute has been referred to the
DAB in the Sub Clause 20.4 time
period.
- May be extended by Agreement
 Claims as seen by
different persons cont..
• The Developer who wants to get the job done
looks at it from the viewpoint of the of the person
who has to find the money to meet the Claim. His
tendency is to think that the engineer who
prepared the Contract has failed in his duty and
thereby given the Contractor the opportunity to
move in.
• The Engineer who administers the Contract ??
Termination of
Agreement
by Employer and
Contractor
• Appointment of any Member may be terminated
bymutual agreement of both Parties but not
unilaterally
• 42 days notice may be given
• If Members fails to comply with Agreement
termination can be given by notice to take
immeadiate effect signed by the Employer and the
Contractor
Termination of
Agreement
by Member
• Appointment of a Member is personnel

• Member can resign from Full Term DAB by giving

no less than 70 days notice to both the Employer
and the Contractor

• If either Party fails to comply with Agreement the

Member without prejudice to his other rights, can
terminate by notice to both.
Replacement of
Member
• Parties may appoint a suitably qualified person to
replace one or more Members of the DAB

• Replacement only effective if a Member declines to

act, or is unable to act as a result of death ,
disability , resignation or termination of
appointment

• Replacement appointment follows same procedure

as stated in Sub Clause 20.2
Agreement -Warranties
• Member warranties and agrees that he/ she is , and
shallbe impartial and independent of the
Employer , the Contractor and the Engineer

• Must promptly disclose everything that is

inconsistent with the warranty

• A Member must not act as advocate for, or act as

representative of the Party which nominated him /
her.
Operation of DAB – Acquaintance
with the Project First Site Visit
• Logistics
- Basis : the DAB should be seen as a member of the
project Team
- Confirmation of Contract Documents
Contract Agreement, Conditions of Contract,
Technical Specifications, Bills of Quantities
Drawings , Programme, Monthly reports,
Main Variations,ClaimNotices etc.
-
Operation of DAB – Acquaintance with
the Project First Site Visit Contd..

• Discovering potential disputes

• Establishment of communication network

DAB Principles
• Allow Parties to refer disputes to DAB for its
Decision
• Possibility of to seek an opinion from the DAB

• The DAB is required to give its Decision with

reasons within 84 days

• Dispute Avoidance Role

 DAB Procedure
• DAB has power to establish procedure to be applied
in deciding a dispute

• Determine Time Table

• Decide about jurisdiction, and the scope of the

dispute

• Conduct a hearing as it thinks fit

DAB Procedure
Contd.
• Take initiative to ascertain the facts and matters
required for the decision

• Make use of its own specialist knowledge

• Open up review and Revise certificates, decisions, or

determinations

• Decide upon provisional relief such as interim or

conservatory measures
 Adjudication Procedure
• The Referral ( Statement of Claim,SOC ) by the
Claimant

• Statement of Response (SOR) by the Respondent

• Statement of Answer by the Claimant

• Clarifications requested by the DAB

Adjudication Procedure
Contd.
• Hearing
The Parties are allowed for oral and/ or written
submissions

• Final submission , it allows the Parties to summarize

the submissions already made, and not to bring new
issues/materials

• If new materials / issues are brought in final

submission those are not entertained.
 The Referral
• The Referral
- Contractual basis for the claim
- The facts and Analysis in support of the Claim
- The Decision sought
some parties Present :
Details of the Contract, Dispute in Brief,
Decision Sought / Maters to be Determined
The Facts and Analysis in support of Claim
Supporting Documents ( Annexures)
 The Response
• Contractual arguments

• Reply to the technical basis of the Claim

• The Decision sought

 The Hearing

• The DAB may require Site Visit if:

- Physical conditions are the cause of the
Dispute

- Defective workmanship is the fundamental

cause of the Dispute
 The Hearing Contd.

• Attendance
The DAB may decide to limit the persons
attending the Hearing or require that oral
presentation be made by persons familiar with or
resident at the Site

- Presence of Third Party Experts ??

- Presence of Lawyers ??
 DAB Working
• Conclusion of the Hearing

The DAB declares the hearing closed when

- it has received and understood all written
submissions;
-it is satisfied that it is in possession of
sufficient factual evidence ,
• It may, require post hearing submissions if the DAB
wish to clarify some issues further.
DAB WORKING -
Contd.
• The DAB decision must be reasoned

• The decision of the DAB to the extent possible

should be unanimous

• A statement establishing its juridiction including a

mention that it is issued under Sub Clause 20.4
DAB WORKING -
Contd.
• Decision
It should contain at least following
- a description of the dispute and the background
- The Claimant’s position
- The Respondent’s position
- The DAB Analysis and Findings ,and
- The Decision .
THANK YOU