Dispute boards & IDR

Dispute Boards continued

Dispute Boards are popular on international contracts and have been a standard feature of FIDIC contracts for a number of years. Domestically in the UK their use to date has been limited, although such an arrangement is being used on all major contracts for the 2012 Olympics. In the UK the power granted to a Dispute Board requires careful consideration so as not to conflict with the process of adjudication.

A relatively new role which is becoming increasingly popular and resembles a single member Dispute Adjudication Board is that of the Independent Dispute Resolver. It is now widely accepted that contract administrators are rarely independent of the employer, however it is recognised that the impartial role envisaged in many contracts for the contract administrator to resolve disagreements is a valuable one.

To overcome the actual or perceived bias of the contract administrator towards the employer, the contract administrator's dispute resolution role is given to a independent third party known as the Independent Dispute Resolver. Disagreements are referred to this person for resolution instead of the contract administrator. The decision of the Independent Dispute Resolver may be finally binding unless challenged in arbitration or litigation.

Dispute Boards or Independent Dispute Resolvers have the benefit of knowing what is going on during the contract. The parties therefore do not have to produce lengthy submissions when referring disputes as there is no need to explain the surrounding circumstances of the dispute in detail. Hearings are usually held on site and are relatively informal.

Dispute Boards are often criticised as being expensive. However, they are unique as they carry out in the first instance the role of dispute avoidance, dispute resolution is secondary. It is difficult to put a monetary value on this but it is obvious that if disputes are avoided altogether, or at worst settled during the contract, negating the requirement for further dispute processes such as arbitration and litigation, then this method is a very cost effective and relatively informal method of managing disagreements on a construction contract.

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