We reported earlier this year on a spate of recent court decisions in different jurisdictions giving support for the use of dispute adjudication boards (DABs). DABs can provide an effective means for parties to obtain interim binding decisions on disputes pending any final resolution by arbitration or litigation – applying a ‘pay now, argue later’ approach designed to keep long term projects on track and avoid disruption to cashflow.
However, enforcing DAB decisions is not always straightforward, as highlighted in the recent decision of the Singapore Court of Appeal in PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (which is likely to be influential in other jurisdictions). It now appears that the way should be clear for the contractor in that case to enforce the DAB's decision but it has taken him nearly seven years to reach this point. What lessons can be drawn from this saga? In our recent ebulletin, Mark Lloyd-Williams, Ann Levin and David Nitek, Partners in our London office, explore the details of the case and the salient take-away points.
We have previously reported (here) on a recent spate of court decisions in several jurisdictions which examined contractual clauses providing for the use of Dispute Boards as a dispute resolution procedure.
On Thursday 12 March 2015, at 9.00am (GMT), Mark Lloyd-Williams and David Nitek, Partners in our Construction and Engineering team in London, will deliver a webinar on ‘Making the best use of Dispute Boards‘.
Dispute Boards offer great flexibility – they may be appointed either as and when disputes arise, or for the life of a project; and can give either a (temporarily) binding decision, or a non-binding recommendation. The webinar discussion will consider the circumstances in which Dispute Boards can add value to projects (with a focus on construction and engineering projects), techniques for maximising the advantages they can offer and the enforcement of Dispute Board decisions that are binding.
This event is part of our series of “Soundbite” webinars, designed to update Herbert Smith Freehills LLP clients and contacts on recent developments without having to leave their desks. Once you have registered, the webinar can be accessed “live”, with a facility to send in questions to the speakers in real time, or you can listen to a recording after the event. The webinars, both live and archived, also qualify for one CPD point.
If you would like to register for the webinar, or to obtain a link to the archived version, please contact Jane Webber.
Three separate court decisions in different jurisdictions in recent months have given support to dispute adjudication boards (DABs) as a form of dispute resolution and, more generally, the enforcability of contractual dispute resolution clauses.
DABs, which often comprise a panel of three members, provide a decision on a dispute which is binding pending any subsequent determination by a court or arbitral tribunal should one of the parties pursue litigation or arbitration. In this sense they are similar to adjudicators’ decisions. Commonly seen in international standard form contracts in the construction and infrastructure industries, clauses requiring disputes to be referred to a DAB before court or arbitration are intended to keep a long term project on track by providing quick resolution to disputes and avoiding disruption to cashflow – applying a ‘pay now, argue later’ approach.
Two decisions in England and Switzerland last year both considered the provisions in the FIDIC suite of contracts (used extensively in the construction industry) that require referral of disputes to a DAB. In both cases, the courts held that the referral to a DAB was mandatory, with only limited exceptions – rejecting arguments that the parties could opt out of the process once the dispute had arisen and refer the dispute direct to arbitration or court proceedings (although, on the facts in the Swiss case, the court considered that an exception based on principles of good faith applied). Michael Mendelblat of our Construction team comments on the Swiss and English decisions below.
Shortly after those judgments, in an important decision in an arbitration context, the Singapore Court of Appeal upheld an interim award made by an arbitral tribunal giving effect to an obligation to promptly comply with a DAB decision. Our arbitration team comments on this Singapore decision on our Arbitration Notes blog here.
Underlying all three decisions is the view that parties should be held to their bargain where they have clearly expressed their intention to resort first to a particular form of dispute resolution (in this case DABs) before escalating the dispute to court or arbitration.
Earlier this year, the ICC Commission on Arbitration set up a Consultative Task Force comprising experts in the field of international ADR to review and revise their ADR Rules, Rules for Expertise and Dispute Board Rules. These ICC rules are available for parties to adopt, either in their commercial contracts or at the point of dispute, to resolve their dispute through ADR (for information click here), expert determination (for information click here), or a dispute board (for information click here). To view the ICC’s current rules, click here.
The guiding principle for the Task Force is that changes or additions to the above rules should only be made when it is genuinely useful or genuinely necessary to do so. The Task Force is currently amending the various rules, and meetings are taking place to discuss their drafts. It is the ICC’s expectation that the revised ADR rules will be submitted to the ICC Commission members at a meeting in November 2012, and approved in the spring of 2013.
Herbert Smith Freehills are on the Consultative Task Force and have advised the ICC on the revision of their ADR Rules.