The business community is familiar with binding arbitration as an alternative to traditional litigation. A less well-known alternative dispute resolution process is available to resolve conflicts during the performance of a contractual project. Dispute Boards (DB) have been used for years to facilitate dispute resolution in large construction and engineering projects. The International Chamber of Commerce recently adopted a new set of procedures for these and other types of complex ongoing projects, and these rules offer a welcome alternative to protracted post-project litigation. These Dispute Board Rules provide three standard DB clauses for international projects.
One type of dispute resolution system is a Dispute Review Board (DRB), that issues non-binding “Recommendations” of disputes that arise during the project. If none of the parties object within a specified time the Recommendation becomes contractually binding. If a party objects, the recommendation is not binding, and the parties may later resolve the conflict in court or through binding arbitration.
A second vehicle provided by the recent rules is a Dispute Adjudication Board (DAB), which issues provisionally binding “Decisions” that are contractually binding – unless and until an objecting party later convinces a court or arbitral panel to vacate or modify the DAB’s Decision. This procedure appears better suited for situations where quick resolution and speedy implementation is critical.
The third, and most innovative procedure under the ICC’s Dispute Board Rules, is a Combined Dispute Board (CDB). This hybrid has the flexibility to either issue non-binding Recommendations, or – at a party’s request – to act like a “DAB” and issue a provisionally binding Decision.
Other international arbitral bodies have similar procedures – among them the Cairo Regional Centre for International Commercial Arbitration (Claim Review Board) and the Oslo Chamber of Commerce (Mini-trial) and the International Centre for Dispute Resolution (DRB).
Using these DB rules presents important negotiating and drafting choices. The parties need to agree upon the type of DB, and they may agree to modify the procedures and the rules under which the DB will operate. The International Chamber of Commerce encourages the establishment of a DB at the start of a contract – although a Board may be set up after the project is under way.