The International Chamber of Commerce (‘ICC’) has just published a revised set of Dispute Board Rules to follow up on its original set of 2004. Nabeel Khokhar of DriverTrett and David Brown of Clyde & Co served on a task force assisting the drafting committee, with Nabeel speaking at the global launch of the new Rules at the ICC Headquarters in Paris in early October of this year. The new Rules contain some interesting changes, as Nabeel and David discuss in the following overview.
Dispute Board ('DB') members might be said to be in a unique position. They find themselves in between mediators and conciliators on the one hand, and binding dispute resolvers such as arbitrators on the other. As their name suggests, they are there to decide disputes, but is this all they should do? One of the most interesting considerations with respect to any set of DB rules is the extent to which they empower DBs to assist parties with potential or actual disputes in other ways.
In the 2004 edition of the Rules, the ICC already put forward ground-breaking provisions for a Dispute Board to provide various types of informal assistance to parties with their disagreements. The latest edition retains these provisions, but also contains an entirely new provision at Article 16 that empowers the DB to intervene if it considers there to be potential disagreements between the parties.
Thus, the DB may raise the matter with the parties and encourage them to avoid a disagreement, help them define the potential disagreement or suggest a procedure that they might follow, including informal assistance from the DB.
This dispute avoidance initiative is also to be found in a significant modification with respect to what the term 'disagreement' actually means. Does it encompass disputes? Yes, according to the definition of disputes in the first edition of the Rules. The new edition provides differently, since it defines a 'disagreement' as a difference between the parties that has not yet become a dispute and is not capable, therefore, of being referred as such to a DB.
What the ICC seems to be doing, in our view, is recognizing the attitude of many active DB members, who see their role as primarily one of enabling parties to avoid formal dispute resolution whether at DB level or in a later arbitration, for example.
The new ICC Rules go much further than the well-known FIDIC DB rules when it comes to facilitating dispute avoidance. It will be interesting to see how far the next editions of the FIDIC forms of contract will follow in the ICC's footsteps!
Despite the increased level of assistance that DBs can offer to assist parties in dispute avoidance and prevention should a dispute crystalize, the DB now has the power, pursuant to an addition to Article 15, to provide provisional relief in the form of interim or conservatory measures.
This brings the new ICC Rules in line with the FIDIC DB rules, which have always given the DB such powers under the Procedural Rules annexed to the FIDIC General Conditions of Dispute Adjudication Agreement.
This new power also harmonizes its DB Rules with the ICC’s Arbitration Rules, which permits such measures to be given by its arbitral tribunals.
Allowing DBs now to decide upon provisional relief should aid the process of enforceability of their 'Conclusions' (see below), which have been the subject of hot debate in recent times.
This leads us nicely on to another interesting development in the new Rules; that of terminology. The ICC has decided to re-name some of the titles given to important elements of the Rules.
One of the most noticeable re-namings has been that of the DB’s ‘Determination’, under the old Rules, to ‘Conclusion’ in its new Rules. The reason for the DB to now give a ‘Conclusion’ as opposed to a ‘Determination’, is apparently to avoid the mix-up between the DB’s Determination and the Engineer’s under the FIDIC Conditions of Contract, as FIDIC’s endorsement of DBs led to Boards becoming more common under FIDIC contracts and the inevitable confusion of Determinations as a result.
Regardless of whether the term ‘Conclusion’ is best suited to the decision of the DB or not, this source of potential confusion has now been addressed.
Any discussion of modifications to commercial dispute resolution rules would be incomplete without a word or two about fees. First, a useful modification is the addition of a provision making it clear how to proceed in the event that the parties and DB members have difficulty agreeing upon the latter's fees. The solution provided is sensible, namely that the ICC International Centre for ADR will resolve the matter with a decision that binds the parties.
The new edition of the Rules also seeks to address what has been perceived by many to be a drawback with standing DBs, namely that DBs appointed at the outset of a project may have little to do until a dispute arises, but nevertheless receive a relatively substantial 'retainer' fee for being on stand-by. It is thought that numerous potential users of DBs have been put off by what they consider to be the prospect of having to pay DBs for little or nothing unless/until a dispute arises.
The ICC has decided to retain the principle of a fee during this period when the DB may not be required to be particularly active. However, they have re-named it as a management fee instead of a retainer fee, representing the other significant re-naming carried out within the new Rules.
They have sought to underline the fact that the fee remunerates work carried out by the DB, particularly steps taken to familiarize itself with the contract documents and progress of its performance - in other words, it should not be seen as a standby fee, but one where the DB becomes, and remains, cognizant of the events, proceedings and progress of the project on which it is managing dispute prevention, avoidance and resolution.
The new 2015 ICC Dispute Board Rules have followed an evolutive path, seeking to be more in tune with the continually evolving contractual landscape of the modern day international construction industry.