Chern on Dispute Boards E-Book

Cyril Chern

• Herausgeber: John Wiley & Sons
• Kategorie: Wissenschaft und neue Technologien
• Sprache: Englisch

Seitenzahl: 1099

Veröffentlichungsjahr: 2011

Beschreibung

A dispute board is a panel of impartial members, appointed at the outset of the construction contract, whose purpose is to monitor progress, resolve disputes as they arise and provide a forum for discussing difficult matters. This book provides an in depth analysis of dispute board law and detailed, practical explanations of how dispute boards work in construction contracts for those actively involved. as well as for those who need to learn the process. Important features of the book include: Explanation of how a dispute board works: Insider knowledge of board operations: Key documents to run a dispute board: Detailed discussion of dispute board law (covering key jurisdictions worldwide): Forms of practice and procedure, and sample documents Reviews of the previous edition "Chern's book provides an extremely practical guide, covering not only an introduction to the process but also providing check lists and sample documentation.... This book will be welcome by practitioners in the area and newcomers to the dispute board process." --The International Journal of Arbitration, Mediation and Dispute Management, November 2009 "This book will provide a very useful, perhaps essential, guide to parties commissioning large capital construction projects, those advising them and those bidding to carry out such works, and importantly, the project funders." --The Expert & Dispute Resolver "This is a must-have book for grown up contractors" --Tony Bingham, Building "His timely work ...concentrating on what may prove to be the primary means of dispute resolution for major international construction projects is to be welcomed." --HHJ Humphrey Lloyd, QC, The International Construction Law Review "This excellent book on Dispute Boards is a must for every construction lawyer, engineer, architect and contractor who is either involved in Dispute Boards or wants to be" --Herbert Wilson, The Journal of the Dispute Board Federation

Leseprobe

Table of Contents

Cover

Chern on Dispute Boards

Title page

Copyright page

The Author

Preface

Acknowledgements

Chapter 1 The Dispute Board Concept

What is a dispute board?

Recommendations vs Binding Decisions

Chapter 2 Types of Dispute Boards

The Dispute Review Board (DRB)

The Dispute Adjudication Board (DAB)

The Combined Dispute Board (CDB)

Common Aspects of all Dispute Boards

Chapter 3 Legal Basis for Dispute Boards

Legal Systems – Overview

The Historical Development of Dispute Boards

Contemporary Legal Development of Dispute Boards

Mandatory Provisions

The Scheme for Construction Contracts

The Act – Main Areas – Is There a Dispute?

Adjudicator’s Powers and Duties

Changes to the Housing Grants Act

Adjudication and Dispute Boards in England

Extension to International Cases

Host Country Rules – Dispute Boards under Common, Civil or Sharia Law

Chapter 4 Case Histories

Dispute Boards in Operation

Historical Cases

Chapter 5 Appointing and Establishing a Dispute Board

Composition of Dispute Boards

Major International Appointing Bodies

Basic Standards

Chapter 6 Selection of a Dispute Board

Qualifications

The need for continuing disclosure

Where Can Dispute Board Members be Found?

Dispute Board Member Qualification, Training and Certification

Chapter 7 Referral to a Dispute Board

Starting the Process – Informal versus Formal

Procedural Requirements

Duties of the Parties

Chapter 8 Elements of a Referral

Referral by the Contractor

Referral by the Employer

Preliminary Matters and Setting Out the Dispute

Chapter 9 Site Visits

The Concept of Site Visits

Establishing an Agenda

Practice and Procedure at Site Visits

Issuing a Site Visit Report

Chapter 10 The Hearing Process

Hearing Preparation

Guidelines for Operation

The Roles of the Owner/Employer and Contractor

Deliberations after Hearing

Dispute Adjudication Board Decision Difference

Arbitration

Chapter 11 Board Member Conflicts

Pre-Existing Conflicts of Interest

The Dispute Board Federation Code of Ethics

Chapter 12 Removal of Board Members

Contract Provisions

Voluntary Removal

Non-Voluntary Removal

Consequences of Dispute Board Member Removal

Adding New Board Members During Proceedings

Notice of Termination of Dispute Board Member by Parties

Chapter 13 Dispute Boards – Use, Training and Current Practice

Maritime Industry Dispute Boards

Maritime Disputes

ICC Rules

Dispute Board Member Training Programmes

Practice in the United States

Chapter 14 Development Banks

The World Bank Rules

Dispute Review Experts

Other Multilateral Development Banks

Chapter 15 Additional Forms

Sample Dispute Board Member Agreements

General Operational Procedure Checklist

Appendix 1 FIDIC (Red Book) Conditions of Contract for Construction

Subclause 20 – Claims, Dispute and Arbitration

FIDIC (Red Book)

FIDIC (Red Book) General Conditions – Annex Procedural Rules

Appendix 2 FIDIC (Yellow Book) Conditions of Contract for Plant and Design-Build

Subclause 20 – Claims, Dispute and Arbitration

FIDIC (Yellow Book)

FIDIC (Yellow Book)

Appendix 3 FIDIC (Silver Book) Conditions of Contract for EPC Turnkey Projects

Subclause 20 – Claims, Dispute and Arbitration

FIDIC (Silver Book)

FIDIC (Silver Book)

Appendix 4 FIDIC (Gold Book) Conditions of Contract for Design, Build and Operate Projects

Subclause 20 – Claims, Dispute and Arbitration

Clause 20 Claims, Disputes and Arbitration

Appendix 5 Dispute Board Rules of the International Chamber of Commerce

Introductory Provisions

Types of Dispute Boards

Establishment of the Dispute Board

Obligations of the Dispute Board Members

Obligation to Cooperate

Operation of the Dispute Board

Procedures before the Dispute Board

Determinations of the Dispute Board

Compensation of the Dispute Board Members and ICC

General Rules

Appendix

Standard ICC Dispute Board clauses

Model Dispute Board Member Agreement

Appendix 6 Sample Oaths and Affirmations

Appendix 7 The Dispute Board Federation Dispute Adjudication Board Ad Hoc Rules for Use in Independently Administered Dispute Board Matters

Introductory Provisions

Resources

Table of Cases

Index

Chern on Dispute Boards

Practice and Procedure

Dispute boards were first introduced a little over 20 years ago. Since then, close to USD$130 billion worldwide has been spent on construction projects that have used dispute boards. Of these, 98 per cent were constructed without any court battles and of the remaining 2 per cent, the dispute board decisions were upheld by either arbitration or the courts: a truly impressive record. Yet very little is known about what dispute boards are and how they operate.

This book provides the knowledge necessary for those actively involved in dispute board work, as well as for those who need to learn the process. Important features of the book include:

analysis of the differences between dispute adjudication boards, dispute resolution boards and combined dispute boards;in-depth discussion of both the existing and historical international case law on dispute boards, including its history under the UK common law, European civil law and Islamic Sharia law;analysis of the differences between the various major standard forms of dispute board rules – FIDIC, International Chamber of Commerce (ICC) and Dispute Board Federation (DBF) – along with sample wording to add to or modify these forms as needed;analysis of how referrals are made to dispute boards and sample forms;an in-depth discussion of the ethical requirements relating to dispute board members;comparison of board selection techniques, with guidelines for implementation and recommendations for the parties;sample forms for use in establishing a dispute board;discussion of site visits, how they should be conducted and sample forms;general forms for use in operating a dispute board, form agendas, form reports and their use;how to use a dispute board as a sounding board for grievances;in-depth discussion of how to write a decision or recommendation, with examples of actual dispute board decisions and recommendations;disclosure forms, questionnaires for potential board members, and comparison of board member agreements and sample forms;a discussion of how effectively to use witnesses and the preparation and presentation of witness statements in dispute board hearings;forms of notice and procedural rules governing the operation of dispute boards;international case studies with claims, responses and decisions;enforcement of dispute board decisions;analysis of situations requiring the removal of dispute board members and form agreements for their removal;discussion of the use of dispute boards in areas other than construction.

This edition first published 2011

© 2008 Cyril Chern

© 2011 Cyril Chern

Wiley-Blackwell is an imprint of John Wiley & Sons, formed by the merger of Wiley’s global Scientific, Technical and Medical business with Blackwell Publishing.

First edition published 2008

Second edition published 2011

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Library of Congress Cataloging-in-Publication Data

 Chern, Cyril.

 Chern on dispute boards : practice and procedure / Cyril Chern. – 2nd ed.

p. cm.

 Includes bibliographical references and index.

 ISBN-13: 978-0-470-67033-0 (hardcover: alk. paper)

 ISBN-10: 0-470-67033-9

 1. Construction industry–Law and legislation–United States. 2. Construction contracts–United States. 3. Dispute resolution (Law)–United States. I. Title.

KF902.C464 2011

343.73'078624–dc22

2011013767

A catalogue record for this book is available from the British Library.

This book is published in the following electronic formats: ePDF 9781119951988; Wiley Online Library 9781119952015; ePub 9781119951995; Mobi 9781119952008

The Author

Cyril Chern

Dr Chern is a Barrister practising at Crown Office Chambers, London. Additionally, he is a Chartered Architect, Fellow of the Chartered Institute of Arbitrators, Fellow of the Dispute Board Federation, Chartered Arbitrator, Accredited Mediator and Adjudicator and holds the degrees of BArch (Honours) in Architecture and Engineering and Juris Doctor. He has practised since 1972, specifically in the areas of engineering and construction disputes in the United Kingdom, the EU and internationally. As an adjudicator he is on numerous appointing bodies, including the FIDIC President’s List of Approved Adjudicators, The Dispute Board Federation (Geneva) Panel of Approved Dispute Board Members and the Institution of Civil Engineers (ICE) Dispute Board panel. He has extensive experience in civil and structural engineering design issues, supervision of construction, contract management, construction insurance, arbitration, mediation, adjudication and other methods of dispute resolution. He has had over 580 engineering construction dispute references and has served on over 100 dispute boards in that time, acting as chairman on most occasions. He has over 40 years’ experience in arbitration, mediation and adjudication and has handled complex international commercial and construction matters in over 20 countries worldwide, located in North and South America, Europe, the Middle East, China and Africa.

Dr Chern is a member of various panels, groups and committees both in the United Kingdom and abroad, including the FIDIC Adjudicators Assessment Panel and the Dispute Board Federation Advisory Panel, the Association Suisse de L’Arbitrage, the Civil Mediation Committee, the Society of Construction Arbitrators and the Association of Consulting Engineers, and he is a Fellow of the Centre for International Legal Studies in Austria, a Fellow of the Dispute Board Federation (Geneva) and its Secretary. Additionally, he is a dispute board trainer for FIDIC, the DBF and International Chamber of Commerce (ICC) rules and procedures.

In addition to this book, Dr Chern is the author of a large number of papers and articles on dispute boards, construction disputes and mediation and is the author of International Commercial Mediation and The Law Of Construction Disputes, both published by Informa Publishing, London. He is also the co-author and subject editor for Emden’s Construction Law – ADR and Dispute Boards, published by LexisNexis Butterworths, London.

Preface

In the early 1980s I was an arbitrator on a large trade dispute in China. One weekend, whilst visiting the countryside outside Beijing, I took the opportunity to visit the ancient Ming Tombs. This is the general name given to the mausoleums of 13 emperors of the Ming Dynasty (1368–1644). The mausoleums have been perfectly preserved, as has the necropolis of each of the many emperors. Because of its long history, the site has a high cultural and historic value. The layout and arrangement of all 13 mausoleums are very similar, but vary in size as well as in the complexity of their structures. They are all in exemplary condition and, as the story goes, bricks were embedded with the signature of the brick maker and, if any brick collapsed during the life of the brick maker, he would be found and beheaded. I was certain that the tombs were in as fine condition that day as they were when constructed. Needless to say, this always struck me as one effective way to prevent shoddy construction.

Over the years, I have thought back to that visit and reflected on the various ways in which construction projects turn from one’s dream into reality, and I have always marvelled at the fact that most construction projects, no matter how small, have a tendency to result in litigation. Litigation which in many instances ruins the project, as well as the members of the construction team, and which tends to arise from small misunderstandings that grow out of proportion, many times inflamed by the very people hired to help resolve the process.

In the 1980s the process of dispute boards first developed on international projects and, over the last 30 years, it has been growing exponentially worldwide. As at today, over US$100 billion worth of construction and other projects worldwide have successfully utilised dispute boards to prevent delay, avoid and/or resolve disputes as they arise and prevent little misunderstandings from turning into major disputes, with the resultant litigation. The original purpose of this book was to introduce a text which could be used to further dispute boards internationally and to aid those who worked on them. In the early days of dispute boards, most dispute board members came from the ranks of arbitrators or adjudicators and utilised their own procedures and methods. Others who wanted to serve on dispute boards either learnt on the job or by attending what few courses there were on the subject. It is from this background that the idea for a book dealing specifically with dispute boards, the processes involved, the forms used and other details came into being. The intent is to show both the active practitioner as well as the novice what the dispute board process is all about, how it functions, what it takes and to provide ‘real world’ examples of the forms, reports, recommendations and decisions that occur on a day-to-day basis on dispute boards worldwide. It should be noted however that any names used in examples and samples in this book are fictitious. I hope that the reader can make use of the information and that it enables the dispute board ‘revolution’ to spread, not just in the area of construction but into new fields and processes which can be rapidly adapted to its use.

Cyril Chern

July 2011

Acknowledgements

I am indebted to my colleagues for their assistance and encouragement in the production of this book, as well as for some of the samples reproduced. I would also like to thank the Fédération International Des Ingénieurs-Conseils (FIDIC) in Geneva, as well as the International Chamber of Commerce (ICC) in Paris, the Dispute Board Federation (DBF) in Geneva, and the Dispute Resolution Board Foundation (DRBF) in Seattle for the permission granted to me to quote and reproduce some material from their publications.

I would also particularly like to thank Dr Paul Sayer, my Editor at Wiley-Blackwell, for his kind efforts on my behalf.

Chapter 1

The Dispute Board Concept

Worldwide, substantial sums of money are transferred with great trepidation several hundred times annually from municipalities to construction engineering firms. This is because statistically the construction industries have a high rate of disputes and delay, and until recently these have not been easily resolved without recourse to lengthy arbitrations or worse yet to the courts.

In 1986 Lord Donaldson, one of England’s great judges, put it best when he said:

‘It may be that as a judge I have a distorted view of some aspects of life, but I cannot imagine a civil engineering contract particularly one of any size, which does not give rise to some disputes. This is not to the discredit of either party to the contract. It is simply the nature of the beast. What is to their discredit is that they fail to resolve those disputes as quickly, economically and sensibly as possible.’

The ‘nature of the beast’ is changing, however, thanks in great measure to the use of dispute boards. As an example, the Ertan Hydroelectric Dam in China valued at US$2 billion1 had 40 disputes referred to its dispute review board for decision and no decision of this dispute board went on to arbitration or litigation of any kind. The Hong Kong International Airport valued at US$15 billion had six disputes referred to its dispute board and of those only one went on to arbitration, at which time the decision of the dispute review board was upheld, and the Katse Dam in South Africa valued at US$2.5 billion had 12 disputes referred to its dispute board and of these only one went on to arbitration where, again, the decision of the dispute review board was upheld. In each instance, the dispute board did resolve those disputes as quickly, economically and sensibly as possible.

Dispute boards work, and sometimes their mere presence and the ability of the dispute board members to give informal opinions before any dispute even arises can be of immense assistance. A good example of this in the United Kingdom is the Docklands Light Railway valued at US$500 million, where no disputes ever fully arose or were submitted to the dispute board, or the Saltend Private Gas Turbine Power Plant in the north of England valued at US$200 million, where both the number of disputes referred to the dispute board and the number that went to arbitration were zero. Needless to say, such statistics were unheard of in the construction industry before the advent of the dispute board.

What Is a Dispute Board?

In the scheme of dispute resolution, the methods most familiar are either arbitration or a court trial. In both you have a ‘judge’, be it an actual judge or an arbitrator chosen by the parties, and in each the ‘judge’ is presented with evidence of an event or set of events that have happened in the past which have caused a dispute and which now the parties hope to resolve. A similar method is adjudication, where the title ‘judge’ is substituted with the title ‘adjudicator’. Here the adjudicator again reviews events from the past to come to a decision in the same way that a ‘judge’ or arbitrator does, but usually on a shorter time schedule. Following along this line we come to dispute boards. A dispute board is different in a number of ways. For starters, it is specific to the ‘job-site’ and as a dispute adjudication process it typically comprises three independent and impartial persons (adjudicators) selected by the contracting parties. The significant difference between dispute boards and most other alternative dispute resolution techniques (and possibly the reason why dispute boards have had such success in recent years) is that the dispute board is appointed at the commencement of a project, before any disputes arise and before any events have occurred which would lead to any dispute, and by undertaking regular visits to the site it is actively involved throughout the project (and possibly any agreed period thereafter).

A dispute board becomes a part of the project administration and thereby can influence, during the contract period, the performance of the contracting parties. In contrast to other methods of dispute resolution in the construction industry, a dispute board acts in ‘real-time’ as compared with dealing with events in the far distant past, such as in court proceedings and arbitrations. The idea behind a standing dispute board is that it may be called upon early in the evolution of any dispute, which cannot be resolved by the parties, and asked to publish decisions or recommendations on how the matters in issue should be resolved. It is usual (but not compulsory) that an opportunity remains for the matter to be referred to arbitration or to the courts if the dispute board’s decision does not find acceptance by the parties. Thus a dispute board may be likened to the UK’s adjudication process, either under statutory-compliant contracts or under the regime established by statute itself.2 What a dispute board does that UK statutory adjudication does not do is to provide a regular and continuing forum for discussion of difficult or contentious matters; to identify ways forward by acting in an informal capacity and to create valuable opportunities for the parties to avoid disputes by keeping proactive communication alive. Another aspect, which is less often discussed, is that by establishing a dispute board from the inception of the project, the dispute board members become part of the project team and are thought of in a different fashion, and because of their ‘hands-on’ approach they can be trusted to be fair and impartial and their advice is respected and taken more readily than would be the case with a third party or stranger to the project.