Reflection 1 of 14 - The Foreword, Chapter 1 and The Dispute Avoidance/Adjudication Board

Introduction

Thank you for subscribing to my newsletter and for your interest in this first edition, Reflection 1 of 14.? I begin with some brief coverage of the Foreword before I proceed on with a rundown of Chapter 1.? My reflections to follow will guide you through, in ascending order, each of the other 13 chapters of the book. ? (See here.) I will not dwell on the associated yet rather handy appendices.??

The Foreword

The foreword sets out to do three basic things.? First, to set out the aims of the book - namely, to provide a detailed, procedurally focussed account of the provisions of the FIDIC Second Editions regulating the inception and resolution of Claims and other matters that are particularly prone to disputation.? Laying out the processes for the claim resolution and dispute avoidance and, if necessary, resolution in a logical sequence, reflecting the life of a Claim, from cradle to grave.

I have sought to produce a result that is both introductory and practical, without shying away from the inherent complexity of the subject.

Where copious historical comparisons with (differently worded) earlier additions are avoided, the reader will find more explanation of the underlying legal principles and practical coverage of the default rules of arbitration, the ICC Arbitration Rules.

Secondly, the foreword identifies several practical realities warranting consideration - namely, at the risk of stating the obvious, across the multinational realm of application of the FIDIC Second Editions, there are no uniform binding case authorities.? Further, there exist two conflicting jurisprudential approaches to the proper rules of interpretation of a contract that is modelled on the FIDIC Second Editions - namely, that of, what I call, the ‘anational consistency’ school and that of the ‘private, party autonomy’ school.

Thirdly, I extend my heartfelt gratitude and affection to my supporters in this book-writing project, and I explain some technical features and aspects of the book, including, importantly, that all of the carefully curated appendices to the book are available separately to the purchaser of each copy.

Chapter 1

Fittingly, the first chapter introduces the reader to the DAAB.? At 69 pages, it is the second-largest chapter of the book.? Nearly a quarter of the main text.? The largest chapter is Chapter 1- the final decision on a Dispute - i.e., the arbitral procedure.? Perhaps that is fitting. ? It is all about FIDIC’s ‘star of the show’, the Dispute Avoidance/Adjudication Board (or ‘DAAB’ for short), the veritable ‘man for all seasons’ (if one may anglicise this cosmopolitan creation). The DAAB sits at the heart of dispute management.

And first and foremost, it seems to me that FIDIC has positioned the DAAB’s function as a peacekeeper front and centre.? That isn’t to say that the disposal of a fully formed dispute isn’t also a part of the function of the DAAB.? Indeed, its function in that regard is regulated at length in the fourth largest chapter of the book - Chapter 10.? More about that in due course.

Chapter 1 takes the reader through the full life cycle of the DAAB.? It starts with the ‘what’, the ‘why’, and the ‘how’.? As to the ‘what’, the DAAB is an entirely contractual association of contractually competent entities.? There is one DAAB Member, or there are three DAAB Members, contracting trilaterally with each of the Parties to the underlying Contract.? Unlike the Engineer of the Yellow Book or Red Book, each DAAB Member contracts directly with both Parties.? Holding the balance directly, as does a sturdy tripod, without the need for implied vicarious responsibility by the Employer as one sees traditionally about the Engineer.

As to the ‘why’, which is crucial, the ‘DAAB’ is enlisted to achieve a mission of adviser, peacekeeper and adjudicator.? Like one ought to expect for any modern professional functionary, the mission, powers, rights, duties, immunities, and procedures are suitably codified.? Chapter 1 seeks to analyse those aspects based on the wording carefully employed by FIDIC’s Updates Special Group and Update Task Groups and the underlying likely sources of influence in that task.? And the sources are legion.? That is because the concepts with which the drafting committee has engaged in its impressive work are, in many cases, longstanding if not classical.??

Like any consensual tribunal, the formation, reconstitution and dissolution of the DAAB are regulated along lines with which many arbitral practitioners or regular users of arbitral services will be familiar.? That is not to suggest that those regulations are simple or brief.? The process of forming the DAAB alone involves up to three stages, depending on whether the DAAB is solitary or comprises three Members.? The challenge of a DAAB Member involves four stages.? And there are four distinct ways in which the DAAB will cease to stand.? Nearly one-quarter of the chapter is concerned solely with the life cycle of the DAAB.

Yet the main bulk of the analysis focuses on how the DAAB sets about the discharge of its functions.? This is where, in my view, the FIDIC DAAB comes into its own. Its powers may be bifurcated into dispute avoidance on the one hand and adjudication on the other.? But within each limb, the powers are manifold and sophisticated, grounded in well-established, time-honoured concepts.? They include party autonomy, consensus, and speedy interim adjudication.?

The DAAB is a far more 'muscular' version of its two progenitors, the FIDIC First Edition DAB or the DRB (first introduced via FIDIC’s Conditions of Contract for Design-Build and Turnkey (First Edition, 1995).? It combines their functions and powers, etc., into a single, standing board.? As you might appreciate, that is a powerful combination. ? Yet, as one leading member of the dispute board community observed recently at a breakfast event in Paris at which I was empanelled:

although there is much ado about the adjudication procedures, functions and powers, etc., if all this is done properly, surely there will seldom be a need for them.

I could not agree more. The conscientious, experienced, fully-informed Members of the DAAB can and should serve to avoid creating a dispute.? Just as a statesmanlike, well-resourced, and conscientious peacemaker avoids a societal or inter-statal conflict.

In the second edition of this newsletter, I will take you on a tour of my treatment of the formative topic of the sources of a Claim and an entitlement.? Undoubtedly, the underlying concepts were within the view of FIDIC’s Updates Special Group and Update Task Groups as they produced Clauses 20 and 21 of the FIDIC Second Edition.? They are the subject matter of a relatively crisp Chapter 2 of my book and, more often than not, a would-be Dispute.

Thank you for your attention, and feel free to share this content.

Nicholas

14 July 2022