Dispute Review Boards are known by many names. They are often referred to as Dispute Boards, Dispute Avoidance Boards, Dispute Adjudication Boards and Dispute Resolution Boards. Whatever their name, they have become a standard dispute resolution mechanism for contractual disputes. They are specifically designed to meet the needs of mid or long term construction contracts.
What is the purpose of a Dispute Review Board?
The primary function of Dispute Review Boards is to assist the parties to a construction contract avoid disputes by:
- facilitating and improving communication; and
- encouraging the resolution of contentious issues by the parties at the job level before they become disputes; or
- if the issue cannot be resolved at job level, to assist the contracting parties to resolve disputes quickly and cost effectively without the need for arbitration or litigation.
In the first instance, Dispute Review Boards can informally assist the parties (if they so require) to resolve any disagreements which arise during the course of the contract works. The members can make recommendations or decisions regarding issues and disputes referred to them by any of the contracting parties.
The primary advantage of a standing Dispute Review Board (as opposed to an ad hoc appointment of an adjudicator or arbitrator) is that, whenever a dispute arises, the members of the Dispute Review Board will have a high degree of knowledge of, and familiarity with:
- the project;
- its contractual context and
- its progress,
which enables the Dispute Review Board to assist the parties informally by providing recommendations, or if required, to render a decision within a relatively short period of time.
How do I set up a Dispute Review Board?
Dispute Review Boards will typically comprise either one or three members.
The most effective Dispute Review Boards are formed at the start of the contract, well before construction work begins. Those members will then remain in place throughout the duration of the contract.
To be effective, Dispute Review Board members must:
- be experienced in the type of project being undertaken;
- have a thorough knowledge of relevant contractual issues;
- be respected for their experience and expertise; and
- be impartial and independent.
Dispute Review Board members may be appointed by the parties or by an institution like the Building Disputes Tribunal. Regardless of how the appointment is made, the member must be completely independent of any contracting party.
What jurisdiction do Dispute Review Boards have?
The parties are free to determine the jurisdiction of the Dispute Review Board and the rules of procedure it should follow in resolving disputes.
It is important to consider that Dispute Review Boards are not acting in a judicial capacity but as experts. Accordingly, a Dispute Review Board can adopt an inquisitorial or investigative approach. Generally, there is no requirement for Dispute Review Boards to comply with the rules of natural justice. Further, there is no objective standard of fairness that must be complied with.
What is the legal effect of a Dispute Review Board decision?
A Dispute Review Board’s decision may be either non-binding, or binding. It must be complied with unless or until reversed, or modified by agreement of the parties, or by a court or by an arbitral tribunal. The requirement for a decision of the Dispute Review Board to be complied with in the meantime is the very essence of the value of Dispute Review Boards – they provide a means of resolving disputes in the first instance to enable the project to continue, even if following later arbitration or litigation, the result may be reversed or modified in some way.
A Dispute Review Board’s decision is not an arbitral award capable of enforcement, nor does it have the status of a court judgment. Accordingly, a decision is only binding as a matter of contract between the parties. The appropriate method of enforcing a Dispute Review Board’s decision is by way of an action for breach of contract. In enforcement proceedings, there is very little room for the defaulting party to resist enforcement unless it can establish that the Dispute Review Board exceeded its jurisdiction. An example of this might be where a Dispute Review Board has issued a decision in respect of a matter that was not referred to it. Another example might be where it has issued a provisional decision where the parties only authorised it to issue a final decision.
Why are Dispute Review Boards a good idea?
Dispute Review Boards provide an effective alternative way of avoiding, managing and resolving conflict on construction projects.
Dispute Review Boards create a forum in which contractual issues can be addressed before they progress to the stage of actual disputes that require formal resolution. The aim is to ensure that the project proceeds to completion without delay caused by disputes by:
- improving communication between the parties;
- informally assisting the parties to resolve contentious issues promptly at appropriate job levels; and
- providing a speedy and relatively inexpensive dispute resolution process by means of an impartial and interim, but binding, determination of the parties’ contractual rights by an independent expert, or experts, pending final resolution of the dispute by agreement, court or an arbitral tribunal.