Yogyakarta, Indonesia, August 20-21, 2018
Session 1
Background of Dispute Boards in
the West and in the East
Presenter: Peer Dalland
Dispute Board
International Conference and Workshop 20 -21 August 2018
Yogyakarta, Indonesia.
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
DISPUTE BOARDS
REGION 2 v REGION 3
Region 2 – FIDIC Model
International model using standard FIDIC or NEC General
Conditions of Contract.
DRBF3 - the Australian model
Multiple Australian General Conditions of Contract
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
FIDIC MODEL
Standard General Conditions of Contract
FIDIC Red, Yellow or Silver book
I will discuss Red book only
Specific requirements for each Contract contained in
Particular Conditions of Contract
Equitable risk allocation – defined in the standard
document
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
FIDIC continued
ICB procedures – international consultants and contractors
Language and cultural differences between the Parties
Contract language is generally English
Applicable law is the law of the country in which the
project is being executed.
Can be Civil Law or Common Law
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
AUSTRALIAN MODEL
Australia use a large number of different standard forms of
contract
Bespoke General Conditions
Different philosophy
Transferring most or all risk to the Contractor
Contract language is English
Common Law
Few, if any cultural issues
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
PARTIES ARE GENERALLY EXPERIENCED IN
LITIGATION
Contracts generally prepared by lawyers
Parties are familiar with contractual disputes
Large projects mostly administered and funded by
governments using their own versions of contracts
Contractors are normally familiar with the conditions of
contract and the often inequitable risk allocation forced
upon them by Employers
Relatively small pool of participants in each state as well
as nationally.
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
Australian DB selection
No preferred lists of experienced DB members
Consult Australia does not provide list of adjudicators
DRBF does not provide a list
DB Member selection is often through existing work
related networks
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
DB selection
But does a list of “approved” adjudicators guarantee that
the selected candidate will perform to the Parties
satisfaction in all situations.
Probably not
But a DB member who has undergone intensive training
is more likely to perform better than someone who has
not received any formal training.
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
REGION 2 - ICB CONTRACTS
FIDIC contracts now used extensively throughout Region 2
NEC viable alternative – UK, Middle East NZ
FIDIC and NEC similar in their philosophy
Equitable risk allocation and DB provisions
Most major Contracts funded by MDBs
FIDIC contracts mandated by MDBs
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
FIDIC’S 5 GOLDEN PRINCIPLES
The duties, rights, obligations, roles and responsibilities of all
the Contract Participants must be generally as implied in the
General Conditions, and appropriate to the requirements of
the Project.
The Particular Conditions must be drafted clearly and
unambiguously.
The PCs must not change the balance of risk/reward allocation
provided for in the GCs.
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
5 GOLDEN PRINCIPLES
continued
All time periods specified in the Contract for Contract
Participants to perform their obligations must be of
reasonable duration.
All formal disputes must be referred to a Dispute
Avoidance/Adjudication Board (or DAB, if applicable) for a
provisionally binding decision as a condition precedent to
arbitration.
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
ICB CONTRACTS
Language Problems
Employer - non English speaking country
Contractor - may be Chinese, Korean Malaysian, Indonesian,
Japanese etc.
Engineer – different country and different language background
Cultural differences
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
TYPICAL ISSUES ICB CONTRACTS
Religious practices, holidays and customs
Taboos – Nemele leafs
Racism
Displaced persons
Land ownership and Rights of Way
Local councils and communities
Parties interrupting and speaking out of turn
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Yogyakarta, Indonesia, August 20-21, 2018
DB as the facilitator
Listen to the Parties
Does everybody understand what is being said
Extra time may be needed – 1 hour meeting may extend to
6 hours
Balancing act – facilitate without appearing to give advise
or opinions
Robust attitude may be required to maintain order
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
PREPARATION FOR DB MEETINGS
Agenda
Parties have often not complied with reporting
requirements – monthly reports received on the morning
of the meeting
Hundred pages or more
List of claims
List of matters of concern
Work through – slowly, very slowly
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
TABOOS?
Australian taboos – never be alone with one of the
Parties
This does not always work out on an ICB contract in a
remote region in a developing country.
Ex.: DB is travelling for 8 hours in a 4WD with the
Contractor and Employer, staying on site.
About to leave: Contractor is there, but no Employer.
“Oh, he has travelled on to another project’, leaving
the DB alone with the Contractor.
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
PREDICAMENT
What to do.
Call a taxi – Taxi needs to be 4WD to get there; anyway
there is no cell phone coverage, no internet.
Insist that the Engineer travel with you; but then he will be
away from the project for at least 2 days?
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
TRUST
DB must always be aloof and independent and establish a
mutual trust between the DB and the Parties.
Never discuss the project whilst travelling, because not all
members of the Parties’ teams are in the one vehicle with
you.
Can be difficult, but must be a priority.
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
BRIBES
About to leave the Country;
Contractor calls to say he wants to see the SDBM before he leaves.
Has got a present he wants to give.
What might it be? Money? How much? What to do?
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
Bribes
continued
Don’t take the money
Don’t even accept a tea bag!
Stay independent – develop trust.
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
Summary and conclusions
DRBF Region 3 needs to establish and publish a list of adjudicators
who has received some formal training.
Publish list on website with CVs
Presently no “warranties” by DB members in Tripartite Agreements.
Needs to be included.
Provide more training on FIDIC contracts
© DRBF 2018
Yogyakarta, Indonesia, August 20-21, 2018
The End
THANK YOU
© DRBF 2018
