Dispute Boards: A Different Approach to Dispute Resolution
This chapter was published in International Mediation: The Comparative Law Yearbook of International Business. It is reprinted here with permission. © 2020 Kluwer Law International. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without written permission from the publisher.
Introduction
With the signing of the United Nations Convention on International Settlement Agreements Resulting from Mediation in August 2019, there has been a newfound focus on how parties can improve and expand the use of alternative forms of dispute resolution outside conventional litigation and arbitration proceedings.
Indeed, among the principal goals of the Singapore Convention on Mediation is to expand and standardize the use of mediation in jurisdictions around the world. In doing so, the Singapore Convention on Mediation raises the question of whether other, slightly less familiar, forms of alternative dispute resolution might be adaptable to larger numbers of jurisdictions and industries. In that vein, this article seeks to introduce another form of alternative dispute resolution, common to the construction industry, to a wider audience — “dispute boards.”
While dispute boards can take a wide variety of forms, they typically involve a three-member panel of impartial individuals (usually subject matter experts or attorneys) whose goal is to assist parties to resolve construction-related disputes without the need to resort to litigation or arbitration.
Dispute boards can serve a variety of roles on a project, ranging from proactive mediators, empowered to identify and aid the parties to avoid disputes, to more formal arbiters, empowered to issue formal binding determinations in connection with project level claims. As a result, dispute boards offer parties something akin to a hybrid dispute resolution method that lands somewhere between formalized arbitration and mediation. The flexible roles that dispute boards can play on international construction projects has made them attractive to many within the construction industry.
Dispute boards, however, are not without their disadvantages. For one, they can be costly and, as a result, may not be appropriate for all construction projects or contractual relationships. Separately, dispute board procedures can be susceptible to gamesmanship and recommendations/decisions issued by dispute boards may be easily avoided. As result, some may question the utility of having their case heard by a dispute board if the losing party is not ultimately required to follow the board’s decision.
Notwithstanding the above, dispute boards have existed for the better part of the last 50 years and have grown in popularity among owners and contractors, particularly on large, international construction projects. Indeed, a large number of standard form construction agreements, including the arguably most popular standard form international construction agreements from the Fédération Internationale Des Ingénieurs-Conseils (FIDIC), have included dispute boards as conditions precedent to formal arbitration.
Although uniquely suited to the complex world of construction disputes, dispute boards represent a practice that might be adapted to other forms of disputes and industries. As a result, in addition to introducing dispute board practices to a wider audience, the authors will explore the contexts in which a dispute board might be utilized outside the construction industry.
This article is organized as follows: First, it introduces the concept of dispute boards on international construction projects. Second, it summarizes the history of how dispute boards have evolved over the past 50 years. Third, it explains the basic procedural framework of dispute boards. Fourth, it identifies the most common issues related to the use of dispute boards. Fifth, it explores whether dispute boards might be adopted by other industries.