DAAB Research

DAAB
THE DISPUTE AVOIDANCE/ADJUDICATION BOARD
UNDER THE 2017 FIDIC RED BOOK
AMER HDAIB
MARCH 20, 2021
Table of Contents
TABLE OF CONTENT .......................................................................................................... i
1. CH1 - INTRODUCTION ....................................................................................................... 1

1.1.Aim and Objectives.................................................................................................................. 1
1.2.Significance of the Research .................................................................................................... 1
1.3.Research Methodology ............................................................................................................ 2
2. CH2 – EMPLOYER’S AND CONTRACTOR’S CLAIMS ........................................ 3

2.1.Claim’s Definition in construction industry .......................................................................... 3
2.2.Claims under The 2017 FIDIC Red Book ............................................................................... 4
Key Changes to Claim Provisions under The 2017 FIDIC Red Book .................................. 4
3. CH3 – THE DISPUTE AVOIDANCE/ADJUDICATION BOARD (DAAB) ......... 7

3.1.Definition of the Dispute ......................................................................................................... 8
3.2.Reasons behind Disputes ........................................................................................................ 8
3.3.Evolution of Dispute Resolution ............................................................................................. 9
3.3.1. Dispute Resolution under FIDIC Red Book before 1999..................................................... 9
3.3.2. Dispute Resolution under 1999 FIDIC Red Book ............................................................. 10
3.3.3. Dispute Resolution under The 2017 FIDIC Red Book................................................ 12
3.4.DAAB Roles and Duties......................................................................................................... 14
3.5.DAAB Pros and Cons ............................................................................................................ 15
3.5.1. DAAB’s Advantages ..................................................................................................... 16
3.5.2. DAAB’s Disadvantages ................................................................................................. 17
3.5.3. Cost of the DAAB ......................................................................................................... 17
i
3.6.Composition of the DAAB ..................................................................................................... 17
3.6.1. Selection of DAAB Members ....................................................................................... 18
3.6.2. Qualities of DAAB Members........................................................................................ 19
3.7.DAAB in the Middle East ..................................................................................................... 22
3.7.1. Are employers in the Middle East willing to use DAAB? ................................................. 23
3.7.2. Enforceability of DAAB decision under Civil Law .......................................................... 25
3.7.3. Desired actions to promote DAAB in Middle East ........................................................... 25
4. CH4 – THE DISPUTE RESOLUTION ......................................................................... 27

4.1.Obtaining a DAAB Decision ................................................................................................. 27
4.2.Negotiation and Amicable Settlement .................................................................................. 29
4.3.Arbitration – The Last Step to Resolve a Dispute ............................................................... 30
5. CH5 – CONCLUSIONS AND RECOMMENDATIONS ........................................... 32
6. BIBLIOGRAPHY .................................................................................................................. 35
ii
CH1 - INTRODUCTION
Every construction project is unique and has different challenges along the course of the
project, either in the design stage or during execution. For that and other reasons, such as the
complexity of the construction project and the involvement of different parties, some disputes
may arise between the two main parties in the project (the employer and the contractor). In
fact, in most construction projects, disputes between the employer and the contractor are
unavoidable due to the nature of the construction contract, where the parties usually have
different perspectives on the key elements of the construction contract: the cost, timeliness,
and quality of the works.
There are several reasons that lead to disputes between the contracting parties, mostly when
the cost, timeliness, or quality of the works is affected by an action from one party without
reasonable remedy from the other party, especially if the contract contains ambiguous terms
and conditions. The complexity of the construction process is another reason for disputes
between the parties. Still other reasons may also lead to different levels of disputes in
construction projects, so a specific procedure is needed to resolve such disputes.
Different dispute resolution mechanism can be adopted in the construction contract based on
the nature of the dispute and the relation between the parties. Usually, the selection of a
specific dispute resolution mechanism takes into consideration the cost, the timeframe to
finally resolve the dispute, the enforceability of the mechanism’s outcomes, and the
availability of interim relief. The more the contract contains clear procedures to resolve
disputes when they arise, the more smoothly the project goes. Therefore, it is recommended
to use a standard form of contract to attain certainty in the contract terms, as these standard
forms are tested over years on a wide range of projects and keep developing over time.
The FIDIC standard forms of contracts are considered the most-used forms of contracts in the
world. Recently, FIDIC has launched a new revision of their standard forms of contracts to
address the industry’s feedback on the previous revision and to achieve clarity, transparency,
and certainty, as well as to balance the risk allocation between the employer and the
contractor.
1
One of the major amendments to the new FIDIC suit is the dispute resolution mechanism;
this amendment aims to make the process of resolving the disputes in construction projects
faster, cheaper, and more effective. In fact, the new forms are intended to avoid disputes
between the parties by providing dispute avoidance roles to the dispute board.
1.1 Aims and Objectives
This research aims to discuss the improvement of the dispute resolution mechanism and
dispute resolution board under the FIDIC Red Book, and determine whether the development
of the dispute resolution mechanism under The 2017 FIDIC Red Book will encourage the
construction industry to adopt this mechanism in construction contracts.
1.2 Significance of the Research
FIDIC has developed the dispute resolution mechanism in the 2017 Red Book to make the
process more efficient. Although the FIDIC Red Book is broadly used in the Middle East,
very few projects implement the FIDIC Red Book dispute resolution mechanism to resolve
disputes. This study will highlight the reasons behind that and whether the updated
mechanism in the 2017 Red Book will encourage professionals to adopt it in new construction
projects.
Since the new revision of the FIDIC Red Book was recently launched, there are few studies
dealing in detail with the new 2017 Red Book. This research is expected to shed light on the
improvement of the dispute resolution mechanism under the 2017 Red Book and help
construction professionals to understand the importance of an efficient dispute resolution
mechanism in construction projects.
1.3 Research Methodology
The methodology adopted in this research is a doctrinal research, in which previous literatures
including books, reports and journal articles related to disputes and the dispute resolution
mechanism under the FIDIC Red Book are analysed.
The literature review was undertaken on the claims and dispute resolution mechanism under
FIDIC standard forms of contracts with analysis of the main and subordinate literature
sources.
2
CH2 - EMPLOYER’S AND CONTRACTOR’S CLAIM
The complexity of construction contracts makes disputes between the parties inevitable, even
when the parties choose to use one of the standard forms of contracts such as FIDIC standard
forms. However, FIDIC recognizes this fact and continues to improve the claims procedure
in its standard forms of contracts which is the first step to improve dispute resolution
mechanism and dispute avoidance.1
The 2017 FIDIC Red Book includes more detailed provisions for notices and time bars with
regards to claims and disputes, which increases the burden on the parties and the engineer of
administering the contract2. This is because the parties must follow the claim procedure set
out in the contract.
2.1 Claim’s Definition in construction industry
The new version of the FIDIC Red Book has defined the terms used in the conditions of the
contract in order to avoid misinterpretation of any important terms during the construction
process3, so the term “claim” is now defined as a request or affirmation by one party to the
other for an entitlement or relief under the terms of the contract, and a dispute arises when it
is rejected4.
In general, a party may submit a claim in the following circumstances5:

• Entitlement to additional payments.
• Entitlement to recover a cost.
• Entitlement for an extension of time.
• Party’s failure to fulfil and obligation under the contract.
• Legal entitlement for additional payments.
1
Jonathan Hosie, ‘Employer’s financial arrangements and claims under FIDIC forms of contract’ (2016) Construction
Law Review Chartered Institution of Civil Engineering
2
Stephenson Harwood, ‘Dispute resolution under FIDIC 2017’ (2018) < http://www.shlegal.com/insights/dispute-
resolution-under-fidic-2017> accessed 10 February 2021
3
Nael Bunni, The FIDIC Forms of Contract (3rd edn, Blackwell Publishing, Oxford 2005) 293
4
Christopher R. Seppälä, ‘Contractor’s Claims Under The FIDIC Contracts For Major Works’ (2005) Construction
Law Journal London
5
Andy Hewitt, Construction Claims and Responses: Effective Writing and Presentation (2nd edn, Wiley Blackwell, UK
2016) 315
3
2.2 Claims under The 2017 FIDIC Red Book
In construction projects, most claims are submitted by the contractor for additional payments
or extension of time; however, the employer’s claims usually are for reduction of the contract
price or extension of the defect notification period (DNP)6. Previously, the contractor’s claims
were separated from the employer’s claims, and different procedures were required for each
party’s claims. The contractor’s claims procedure was more detailed and complicated
compared to the employer’s claims, as the latter controls the money7, but in the new version,
in order to achieve clarity, balanced risk allocations, and reciprocity between the parties’
obligations, FIDIC decided to have one claim procedure for both parties under Clause 20
[Employer’s and Contractor’s Claims]. The separation from the dispute resolution Clause 21
[Disputes and Arbitrations] is to emphasise that a claim does not necessary constitute a
dispute8.
Key Changes to Claim Provisions under The 2017 FIDIC Red Book
The new revision of the FIDIC Red Book emphasises the need for reciprocity between the
obligations of the parties9. To this end, significant changes to parties’ claims provision have
been made in the new FIDIC Red Book. This includes the following:
a. Separating the claims provisions from the dispute provisions. This separation aims to
direct the parties to the fact that not every claim is a dispute.
b. Clause 20 [Employer’s and Contractor’s Claims] in the new FIDIC Red Book deals with
the employer’s claims the same as the contractor’s claims10, using the same rules and
claims procedure, unlike the 1999 edition, which dealt with the employer’s claims
differently than the contractor’s claims in separate clauses, Clause 2.5 for the employer’s
claims and Clause 20.1 for the contractor’s claims, which were considered more
6
Ruveyda Komurlu and David Arditi, ‘The Role of General Conditions relative to Claims and Disputes in Building
Construction Contracts’ (2017) Vol. 4, No. 2 International Journal of Contemporary Architecture 29
7
Jakob Sorensen, ‘FIDIC Conditions of Contract – 2017 update’ (2017) Holst Advokater
8
Michael Blackburne, ‘The New FIDIC 2017 Yellow Book – what you need to know’ (2017) DAC beachcroft <
https://www.dacbeachcroft.com/en/gb/articles/2017/october/the-new-fidic-2017-yellow-book-what-you-need-to-
know/> accessed 11 February 2021
9
Mahesh Rai, ‘FIDIC 2017 update – Changes in Contract Administration and Management’ (2018) Drew Napier Legal
Update
10
Ibid
4
procedural and complicated than the employer’s claims11. Furthermore, in the new
edition, the term claiming party is used as a party-neutral term, which eliminates the
privilege of one party over the other.
c. Providing an advance warning system under the new Sub-Clause 8.4, this requires each
party and the engineer to notify the other parties in advance of any known or probable
events or circumstances which may increase the contract price, delay the work execution
or affect the performance of the works. In all cases, the contractor may submit a proposal
(upon the engineer’s request) to avoid or minimize the effect of such event(s).12
d. Claims time bars have been set out in the new claims provisions, which require the
claiming party to submit a Notice of Claims to the engineer within 28 days of awareness
of such claim; a party’s failure to do so will discharge the parties from any liabilities
regarding that event, as the claim will be considered time barred13.
e. Similarly, fully detailed claims shall be submitted by the claiming party within 84 days
(rather than 42 days under the 1999 edition) from the date of awareness of such claim;
the required documents of the fully detailed claims are also listed in the new FIDID Red
Book, which reduces the repeated arguments between the parties about whether the fully
detailed claim submitted contains all the required documents (the 1999 edition required
“full supporting Particulars” only, which was considered as a grey area)14.
f. Time Bar Waiver: The new claims provisions empower the engineer or DAAB to waive
a compliance failure with the time bar provisions in making the engineer’s determination
or agreement as well as DAAB’s decision related to the claim.15
g. Under the new Sub-Clause 1.3, the parties are required to identify any notice (including
Notice of Claim) as a “notice”, which aims to avoid dispute between the parties as to
whether a notice has been given to the other party or not.
11
Nael G Bunni, ‘A Comparative Analysis of the Claim & Dispute Resolution Provisions of FIDIC’s 1999 Major
Forms of Contract Against its Earlier Forms’ (2006)
12
Adrian Bell, Aidan Steensma and Victoria Peckett, ‘CMS guide to the FIDIC 2017 suite’ (2017) CMS Law-Now <
https://www.cms-lawnow.com/publications/2017/12/new-fidic-second-editions-cms-guide-to-the-fidic-2017-suite>
accessed 10 February 2021
13
Mahesh Rai, ‘FIDIC 2017 update – Changes in Contract Administration and Management’ (2018) Drew Napier
Legal Update
14
Ibid
15
5
CH3 - THE DISPUTE AVOIDANCE/ADJUDICATION BOARD
(DAAB)
The new FIDIC Red Book has a number of key changes to the dispute board to encourage
dispute avoidance between the parties, such as splitting the Claim Clauses from the Dispute
Clauses and sharpening the role of the dispute board. Also, the more detailed notice
requirements and time bar provisions with regard to the claims and dispute will definitely
increase the administrative burden on the parties as well as the engineer. The claims procedure
has been unified for both the contractor and the employer.
Although the framework for dispute resolution in the new FIDIC Red Book has remained
similar to that in FIDIC 1999, there are significant changes in the new revision as stated
previously which encourage dispute avoidance.
There is common approach among FIDIC users of deleting the DB provisions in their
contracts, ignoring (or underemphasising) the importance of the Dispute Boards. This is due
to several perceptions16:
• The DB cost is an extra expense which can be avoided.

• The consultant is paid to do this job
• From the employer’s point of view, any early binding decision regarding a dispute
will miss the negotiation advantage, as contractors usually try to avoid extra cost and
time by taking the dispute to arbitration.
• It is difficult to recover any amount from a foreign contractor if the decision is
reversed by arbitration.
However, the dispute adjudication board system has considerable proven success where it has
been applied in the market, especially in large projects17. The existence of a Dispute Board
will likely prevent disagreements between the parties from developing into disputes by
informal intervention during regular site visits.
16
Mark Goodrich, ‘Dispute Adjudication Board: Are they the future of dispute resolution?’ (2016) white & Case <
https://www.whitecase.com/publications/article/dispute-adjudication-boards-are-they-future-dispute-resolution>
17
Ibid
6
3.1 Definition of the Dispute
There are various definitions of a dispute. In FIDIC, a dispute is defined as18 “any situation
where one Party makes a claim against the other Party (which may be a Claim, or a matter
to be determined by the Engineer, or otherwise); (b) the other Party (or the Engineer under
Sub-Clause 3.7.2) rejects the claim in whole or in part; and (c) the first Party does not
acquiesce (by giving a NOD under Sub-Clause 3.7.5 or otherwise), provided however that a
failure by the other Party (or the Engineer) to oppose or respond to the claim, in whole or
in part, may constitute a rejection if, in the circumstances, the DAAB or the arbitrator(s), as
the case may be, deem it reasonable for it to do so.” In other words any claim that has been
rejected by the other party and the rejection is not acceptable to the first party who made the
original claim19.
3.2 Reasons behind Disputes
When parties enter a construction contract, they always intend to avoid disputes, and if one
happens for any reason, they think it can be solved amicably. Unfortunately, most likely, the
case will be the other way around, and the parties must face some unavoidable disputes. The
logical question here is, if both parties intend to avoid disputes, why do disputes still arise?
There are different reasons for disputes between the parties, which are summarized as
follows20:
• Poor contract administration.

• Poorly drafted contract terms, especially the ones related to claims or dispute
resolution.
• Misunderstanding the contract’s terms and conditions.
• Incomplete design or insufficient employer requirements.
• Not a suitable contract for the procurement method.
• Parties’ failure to perform their contract obligations.
• Unrealistic contract period and time scale.
18
The 2017 FIDIC Red Book Sub-Clause 1.1 [Definitions] 1.1.29
19
Simon Tolson, Jeremy Glover and Stacy Sinclair S, Dictionary of Construction Terms (1st edn, Informa Law Routledge,
Oxon 2012) 53
20
Sai On Cheung, Construction Dispute Research Conception, Avoidance and Resolution (1st edn, Springer, Switzerland
2014) 78
7
• Unfair risk allocation in the contract.
• Improper site instructions.
• Poor communication structure.
3.3 Evolution of Dispute Resolution
The method of dispute resolution under FIDIC contracts has developed from recourse to
arbitration directly after the engineer’s determination, through a dispute board that could give
recommendations, to the Dispute Adjudication Board in the 1999 edition of the FIDIC Red
Book, which, in the 2017 edition, was developed to include a dispute avoidance role and is
now called the Dispute Avoidance/Resolution Board (DAAB).
3.3.1 Dispute Resolution under FIDIC Red Book before 1999
Two stages to resolve a dispute were introduced at the first issue of FIDIC contracts in 1957,
which allowed the parties to go for arbitration at the end of the project, giving the engineer
the lead in contractual matters; this was developed to a possibility to approach arbitration
before completion of the project21.
Later, under the 1987 edition, the engineer had to make his/her decision on any matter within
84 days from the date of the referral; the engineer should be impartial when making his/her
decision and the decision should take immediate effect by the parties unless reversed by
amicable settlement or arbitration. Then, if neither party expressed dissatisfaction with the
engineer’s decision, the decision became final and binding. If either party was dissatisfied
with the engineer’s decision, he/she should refer the matter to arbitration. There was a period
of 56 days before commencement of the arbitration to allow the parties to reach an amicable
settlement on the disputed matter. If no settlement was reached or even attempted, then the
dispute should be finally decided by arbitration.22
A three-tiered dispute resolution procedure to include a dispute adjudication board giving a

binding decision appeared for the first time in the Orange Book (Design-Build and Turnkey)
in 1995. However, in the same year, the World Bank Standard Bidding Conditions mandated
21
Eugenio Zoppis,’DAAB and Dispute Resolution Under the 2017 FIDIC Forms of Contract’ (2018) King’s College,
London
22
Ibid
8
that parties include a Dispute Review Board (DRB) in their contracts. The main role of the
board was to review and make recommendation about the disputed matter; if no objection
was made to the DRB’s recommendation, then it became binding on both parties. This
initiative was the turning point for FIDIC to adopt a Dispute Board in the supplement to its
Red and Yellow Books in 1996.23
3.3.2 Dispute Resolution under 1999 FIDIC Red Book
In FIDIC’s Red Book 1999, claims, disputes, and arbitration are regulated in Clause 20; the
contractor must give notice for any claim for additional payment or extension of time and
must keep all contemporary records, detailed particulars shall be submitted within 42 days.
However, notice is not required for all claims under this version of the FIDIC Red Book. For
example, Sub-Clause 13.3 does not require the contractor to submit a notice if he/she receives
an instruction from the engineer. The engineer shall approve, disapprove, or comment on the
claim within 42 days.24 However, there is no time limit for the engineer to issue his/her
determination; it is only not to be unreasonably withheld or delayed.25
The claim procedure for the employer is less procedural than that for the contractor’s claim26;
the employer is required to give notice with particulars as soon as practical after he/she
becomes aware of the matter giving rise to the claim; then, the engineer shall proceed with
his/her determination.
The engineer’s obligation to act impartially under the 1999 FIDIC Red Book has been defined
as making a fair determination for any claim. However, the engineer is required to consult
with both parties to reach an amicable settlement without obligation to make positive effort
and without a duty to act neutrally during this process; this arguably considers the engineer
as the employer’s personnel.27 Then the engineer’s determination becomes binding on both
parties unless revised in further procedure under Clause 20.
23
Ibid
24
Nael G. Bunni, ‘A Comparative Analysis of the Claim & Dispute Resolution Provisions of FIDIC’s 1999 Major
25
Ibid
26
Philip Van Rensburg, ‘Employers’ claims under FIDIC contracts’ (2016) Hogan Lovells <
https://www.hoganlovells.com/en/publications/employers-claims-under-fidic-contracts> accessed 13 February 2021
27
London
9
The DAB in the 1999 FIDIC Red Book can give advice or opinion if requested by either
party; however, this advice or opinion is not binding. According to Bunni28, “by providing its
opinion on the matter in contention or on the disagreement the Dispute Adjudication Board
may throw a revealing light on the rights and obligations of the parties and thus prevent a
matter from becoming a dispute”.
Nevertheless, a binding DAB decision can be obtained if either party refers the dispute to the
DAB, which shall give its decision within 84 days from the referral. Either party may give
dissatisfaction notification within 28 days as a condition precedent to proceeding with
arbitration; if no such notice is given, then the DAB decision becomes final and binding.29
The activation of this provision is subject to the claim evolving in a dispute. Although the
dispute is not defined in this version, the definition may be sought from the applicable law.
The referral to arbitration is subject to parties’ attempting to settle the dispute amicably 56
days prior to referral to arbitration. However, if the DAB’s decision is not complied with by
either party, then the dispute may be directly referred to arbitration. Also, if there is no DAB
in place, the parties can refer any dispute directly to arbitration, which gives a path to
resolving a dispute if one party is frustrating the DAB appointment.30
Under the Yellow and Silver Books of the 1999 edition, the DAB is appointed on an “ad-hoc”
basis, unlike in the Red Book, in which the DAB is appointed on a “standing” basis. The
weakness of using “ad-hoc” is that the DAB has no proactive role to prevent a dispute, since
it is called only if a claim has already become a dispute. Also, parties can make it difficult to
appoint DAB members as a tactical interest to delay the DAB’s decision on a dispute.
3.3.3 Dispute Resolution under The 2017 FIDIC Red Book
As highlighted in Chapter Two, The 2017 FIDIC Red Book (in addition to the rest of the new
FIDIC suite) has addressed many shortfalls from the previous revisions, such as the
programming requirements, extension of time, advance warning, new variation procedure,
28
Nael G. Bunni, ‘A Comparative Analysis of the Claim & Dispute Resolution Provisions of FIDIC’s 1999 Major
29
Gwyn Owen, ‘The Working of the Dispute Adjudication Board (DAB) under New FIDIC 1999 (New Red Book)’
(2003)
30
Ibid
10
enhancement of the engineer’s rules and duties, risk allocation, and of course the dispute
resolution procedure, which includes the role of encouraging dispute avoidance.
In The 2017 FIDIC Red Book, the dispute resolution clause has been split into two clauses,
separating the claims procedure from the dispute procedure. Clause 20 now deals with both
parties’ claims, and Clause 21 deals with dispute resolution.
For better clarity and to avoid interpretation of the claim or the dispute under the applicable
law or other means of interpretation, the new revision provides a specific definition of the
claim as31 “a request or assertion by one Party to the other Party for an entitlement or relief
(…) in connection with, or arising out of, the Contract or the execution of the Works”, and
the dispute as32 “means any situation where:
“(a) One Party makes a claim against the other Party […]
“(b) The other Party (or the Engineer […]) rejects the claim […];
“(c) The first Party does not acquiesce (by giving a NOD) […]”
Clause 20 now deals with both the contractor’s claims and the employer’s claims with the
same procedure, unlike the previous revisions. This shows a neutral stance between the
contracting parties. Also, the clause uses a party-neutral term, “the claiming party”, to
emphasise the neutrality between the parties.
Three cases are described as reasons for making a claim33: if the either party considers
him/herself entitled to additional payment or extension of time (extension of DNP period)
from the other party or other entitlement or relief against the other party. The claiming party
shall submit the Notification of Claim within 28 days from the date of awareness of the event
that causes the claim, and the engineer shall respond within 14 days whether the notification
was given on time or not; otherwise, the notification is considered valid.
Following the Notification of Claim, the claiming party shall submit a fully detailed claim
with particulars within 84 days; however, for the first time, FIDIC has specified that if the
31
32
33
Stephenson Harwood, ‘Dispute resolution under FIDIC 2017’ (2018) <http://www.shlegal.com/insights/dispute-
11
claim has a continuing effect, then the fully detailed claim submission is interim and shall be
followed by monthly detailed submissions; the final fully detailed submission shall be made
within 28 days after the continuing effect ceases its effect.
Upon receiving the fully detailed claim, the engineer shall carry on with the assessment of
the claim by firstly consulting both parties and encouraging them to reach a binding
agreement within 42 days. If no agreement is reached, then the engineer shall make a fair and
neutral determination within 42 days; otherwise, the claim is deemed to be rejected.
Notification of Dissatisfaction (NOD) shall be submitted by the dissatisfied party within 28

days; otherwise, the engineer’s determination becomes final and binding. After the NOD is
given, the dispute may be referred to the DAAB.
The dispute shall be referred to the DAAB within 42 days from the date of the NOD;
otherwise, the NOD expires, and the engineer’s determination becomes final and binding.
DAAB shall make a decision on the dispute within 84 days from the date of referral; its
decision is binding and final (unless referred to arbitration), and any amount included in the
DAAB’s decision shall be payable without further certificate or notice.
Alternatively, the DAAB may be jointly requested to provide an informal opinion or advice
on a disputed matter, as this will assist the parties in dispute avoidance. Even though this
advice is not binding on either party or the DAAB, this task can’t be initiated if the claim is
under the engineer’s determination.34
If either party is dissatisfied with the DAAB’s decision, then he/she shall give a NOD within
28 days of issuance of the DAAB’s decision; otherwise, the DAAB’s decision becomes final
and binding.
If any decision is not given effect promptly, then the parties can refer the dispute to arbitration.
Also, if there is no DAAB in place for any reason, the parties may refer the dispute directly
to arbitration.35
If the NOD on a DAAB’s decision has been issued on time, a mandatory 28 days shall be
allowed for the parties to resolve the dispute amicably prior to referring the dispute to
34
Ibid
35
Ibid
12
arbitration. Once the dispute has been referred to arbitration (i.e., all above procedure’s steps
have been followed on time), then the Arbitral Tribunal shall have full power to review and
open up the DAAB’s decision as well as the engineer’s determination on the disputed matter
as long as they are not final and binding.
3.4 DAAB Roles and Duties
The Dispute Avoidance/Adjudication Board is a neutral and independent panel who give a
decision on any dispute that may arise between the parties; the decision can take the form of
an opinion or advice if it is requested by either party for any matter related to the contract, or
the form of an award in case of an official dispute submitted by either party. In order to do
so, the DAAB shall36:
• Periodically visit the site and become aware of the project’s details and progress.
• Stay updated with all activities and progress and any problems at the site.
• Encourage dispute avoidance and amicable dispute resolution.
• Conduct official dispute resolution procedure (including hearings, evidence review,
and issuing a decision) in a professional manner.
Usually, the DAAB meets on site every 3 months to familiarise itself with the actual work
progress and any problems and potential claims; the DAAB shall prepare and communicate
with the parties a short report after each visit highlighting their activities during the site visit.37
The existence of the DAAB in the project promotes mutual agreement between parties on any
matter that potentially raises a dispute. Experience shows that the Dispute Board facilitates
trust and cooperation between the parties, open communications, and positive relationships;
the main reason behind that is that the disputes are handled on individual basis, which
minimizes the accumulation of unresolved claims, which usually create an acrimonious
atmosphere.
The Dispute Board usually issues a binding decision, which is normally made by unanimous
consensus of the board members.38
36
Gwyn Owen and Brian Totterdill, ‘Dispute boards: procedures and practice’ (1st edn, Thomas Telford 2008)
37
John Redmond, Adjudication in Construction Contracts (1st edn, Blackwell Science, Oxford 2001)
38
13
3.5 DAAB Pros and Cons
There are several methods for dispute resolution in the construction industry, each of which
has advantages and disadvantages. Parties choose which method to use in their contract
accordingly. In this section, a summary of the DAAB’s advantages and disadvantages will be
highlighted.
3.5.1 DAAB’s Advantages39
• The DAAB members become part of the team, which allows them to be aware of all
problems during the project.
• The DAAB members usually have a considerable level of construction knowledge,
which makes the DAAB’s decision more accurate.
• The periodic site visits allow the DAAB members to be aware of the project’s progress
and anticipate any disputes or issues.
• The DAAB’s existence prevents claims or matters from becoming disputes.
• The DAAB deals with each claim individually, which prevents claims from being
cumulative.
• The DAAB’s decision must be given with 84 days, which is a relatively short period.
• The DAAB can give opinions on any matter if requested by the parties.
• Compared to other dispute resolution methods, the DAAB is cheaper.
• The DAAB is impartial and independent, which makes its decision more acceptable
to the parties.
• The DAAB has a duty to encourage dispute avoidance between the parties.
• The DAAB provides a form of “insurance” for the parties to resolve any dispute that
may arise or prevent a dispute from arising.
• The DAAB’s decision is binding on both parties and becomes final if no NOD is
issued within 28 days from the date of receiving the DAAB’s decision.
Edward Corbett, ‘Moment of decision? The future of dispute boards under the FIDIC forms and beyond’ (2009)
39
Construction Law International Volume 4 No 3
14
3.5.2 DAAB’s Disadvantages40
• The DAAB adds to the project’s cost.

• The enforcement of the DAAB’s decision is not at the same level of enforcement as
arbitration awards or court judgments.
• The DAAB’s decision is not final unless no NOD has been submitted by either party.
3.5.3 Cost of the DAAB
The cost of the DAAB is normally divided between both parties; however, the historical data
show that the average cost of the Dispute Boards within a contract does not exceed 1% of the
total contract value, with less than 2% of DAAB decisions being referred to further arbitration
or litigation.41 This is a very strong indication to consider a DAAB as cost-effective process
for dispute resolution.
3.6 Composition of the DAAB
Similar to the previous revision, the new FIDIC Red Book requires that parties jointly appoint
the DAAB members within 28 days after receiving the Letter of Acceptance by the contractor
unless otherwise stated.
The DAAB shall comprise one or three suitably qualified members (three members is the
default number if not stated in the Contract Data); each party shall select one member with
the agreement of the other party, then both members, after discussion with both parties, shall
select the third member, who acts as chairman of the panel.42
3.6.1 Selection of DAAB Members
Since the DAAB’s decision shall be binding on both parties unless it is revised in further
amicable settlement or arbitration, it is wise for the parties to select the members very
carefully. Each of the DAAB members must be a totally independent, qualified person with
the ability to act impartially to make a unanimous decision with the DAAB panel.43
40
41
42
43
Ibid
15
For small contracts, it is reasonable to have a sole member in the DAAB; similarly, the
number of members can be increased for megaprojects. However, if the project contains
several contractors, or many layers of subcontractors, or several supplier agreements, or
nominated subcontractors, it is preferable to have a common DAAB panel or “Interlocking”
DAAB members who join different boards within the same project in order to have a more
efficient DAAB.44
As stated above, each party suggests one potential member of the DAAB. Usually, the tender
documents contain a list of potential DAAB members; the tenderer can add further names,
which become the tenderer’s suggestions, and the tender may become conditional. If possible,
the list of potential names should be prepared jointly by both parties, who may agree on the
nomination of the members after the tender submission but before the commencement date.45
In case of failure to agree on nominations of DAAB members, then the appointment entity46
shall appoint the DAAB members upon request from either party and after consultation with
both parties; this appointment shall be final and conclusive.
The following conditions are considered as failure to appoint the DAAB members47:
a. If the parties fail to agree on the sole member within 28 days after the letter of
acceptance or as otherwise stated in the contract.
b. In case of a three-member DAAB, if either party fails to select a member or disagrees
with the other party’s member, or the parties fail to select the chairman of the DAAB
within the time limit specified in the contract.
c. If the sole member or one of the three members (as the case may be) declines or is
unable to act as a DAAB member, and the parties fail to select a replacement within
42 days of vacancy.
d. If either party refuses to sign the DAAB agreement (after completing the selection
process) within 14 days from the date of the other party’s request.
44
Ibid
45
Jeremy Glover, ‘FIDIC Dispute Adjudication Boards’ (2015) Fenwick Elliott
<https://www.fenwickelliott.com/research-insight/articles-papers/contract-issues/fidic-dispute-adjudication-boards>
46
Ibid
47
JICA, ‘Dispute Board Manual’ (1st edn Japan International Cooperation Agency 2012)
16
3.6.2 Qualities of DAAB Members
The parties delegate to the DAAB members the power to make decisions which affect the
project and the parties, and it is normally not easy to remove one member, except if there is
consent between both parties. Therefore, it is necessary to ensure that the DAAB members
have the required experience and ability to wield these powers wisely and effectively.
a. Experience
It is essential that the DAAB member have a level of experience of the discipline that is
relevant to the dispute, so he/she will be better understanding the problems that faced during
the execution of the works, and the level of skills required to work in a professional manner,
which will allow him/her to give reasonable solutions and make better decisions.
Although the construction methods differ in each project and each country, having knowledge
of standard construction methods is an advantage to the DAAB members. It is a great benefit
to the parties seeking advice or an opinion from an experienced board that has good
knowledge of the industry practices.48
However, it is impossible for all members to have knowledge of all up-to-date construction
developments, so the parties shall make sure that the members are well briefed on the project
and become familiar with all aspects of the project to be able to address any knowledge or
experience gaps at an early stage.
b. Contractual Knowledge
It is significant for the DAAB members to have adequate knowledge of the parties’ rights,
liabilities, and obligations in the project. Normally, DAABs are used in large projects, in
which the contract documentation is voluminous and contains the general and particular
conditions, drawings, specifications, etc. The interpretation of such huge documents
allocating the risks between the parties requires a considerable level of knowledge and skills
to allow the DAAB members to issue the fairest decision accordingly.49
48
49
17
c. Language Competence
It is required that the DAAB members have a working knowledge of the contract’s language
(which may be defined in the Contract Data) to be able to understand and interpret the contract
documents professionally.
There are some cases where parties may communicate during the course of the project with a
common language other than the contract language; in this case, it is advantageous to the
DAAB member to have knowledge of the second language to remain fully conversant with
all work activities.50
On the other hand, being fluent in a language other than that of the contract documents may
be considered as a disadvantage to the DAAB member if only one party can communicate by
using this other language, especially if a communication happens between the DAAB member
and one party using the language other than the contract’s language, which the other parties
do not understand. In this case, the DAAB member may be considered to be compromising
his/her independence.51
d. Dispute Resolution Experience
The dispute resolution mechanism requires special techniques and understanding, which are
normally not provided during the course of construction. The DAAB members’ having this
special knowledge and experience gives confidence to the parties that the decisions they reach
consider all matters raised by the parties along with their contractual obligations; this will
satisfy the parties, so they will voluntarily comply with the DAAB’s decision, thereby
reducing further submission to arbitration.
e. Different Procedural Knowledge
The fact that each project and each problem is unique (even if similar issues have been
encountered elsewhere) makes different situations lead to differences of opinion. Therefore,
50
51
18
it is essential that DAAB members be familiar with different problem-solving procedures and
methods.
Even though the DAA procedure is specified within the FIDIC Contracts, this procedure may
not be suitable for some cases, which may require the DAAB members to deviate from it in
order to reach to an efficient, correct, and fair decision in a timely and cost-efficient manner.52
This depends on the level of confidence that parties have in the DAAB members to adopt a
flexible approach when a unique situation arises.
It is the DAAB chairman’s responsibility to make sure the adopted procedure for a particular
situation provides both parties equitable chances to present their cases and fair opportunities
to prepare for and respond to the other party’s case.53
f. Impartiality
Impartiality is a fundamental requirement for the DAAB’s decision. Bias toward one party
will definitely give the other party a simple, direct ground to challenge the DAAB’s decision
and will affect the reputation of the biased DAAB members. DAAB members must be
impartial as long as the DAAB is inboard. The members should not have prior knowledge of
any kind of the subject matter of the dispute, as this may affect their decision if their
knowledge is incorrect or may make it difficult to distinguish the differences in the officially
submitted evidence.
Other aspects of impartiality include the natural justice in all dealings with the parties. All
correspondences must be distributed to both parties as well as other DAAB members, and no
meetings should be held privately with either party.54
g. Independence
The DAAB members must not have any commercial link of any kind with the parties, or any
direct or indirect financial interest in the project, such as share ownership, consulting services,
employment, etc. However, any financial relation must be declared to the parties prior to
52
53
54
19
conclusion of the DAAB agreement. Also, there should not be any discussion or agreement
with either party for future business.55
3.7 DAAB in the Middle East
The construction industry has grown dramatically in the Middle East in the last two decades;
therefore, it is necessary in the Middle East to use a cost - and time - effective dispute
resolution mechanism which provides enforceable outcomes as well as interim relief to ensure
that it continues to lead the construction industry in the region.
The history of using the FIDIC standard forms of contracts in the Middle East shows some
employers’ reluctance to move from previous versions to the updated ones for different
reasons, including the following56:
• Each employer used to modify their contract to suit their needs and developed their
contract accordingly.
• Over time, the cost of building, testing, and developing the modified form becomes a
considerable factor when moving to a new form.
• The employer becomes well aware of their contract’s terms and conditions and the
risk allocation between the parties, so when they move to a new form of contract, they
may need to spend more effort, time, and money in each circumstance during the
course of the project.
Moreover, using a specific method of dispute resolution provides a comfort zone to the parties
for awareness of all the procedures and requirements when a dispute arises, and this gives the
parties a reason not to adopt another dispute resolution mechanism such as the DAAB.
3.7.1 Are employers in the Middle East willing to use DAAB?
The FIDIC forms of contracts are mostly used in the Middle East. However, the Middle East
construction industry have been reluctant to use the Dispute Adjudication Board as a dispute
resolution mechanism, even though the DAB has had success in preventing claims from
escalating to disputes in different regions by encouraging constructive communication and
55
56
Kamal Paranawithana, ‘Will DAB in FIDIC Red Book Sufficiently Resolve Disputes in Dubai’ (2013) SLQS <
http://slqsuae.org/reports-article/> accessed 13 February 2021
20
providing a trustworthy opinion to the parties, which encourages the parties to settle any
disputes amicably.
Lack of awareness of the advantages of using DAABs in construction projects in the Middle
East is arguably the main reason behind the unpopularity of the DAAB in the Middle East57,
but there are other reasons, such as58:
• Employers’ lack of interest in resolving disputes early, as different levels of disputes

will give them better deals at the end of the project.
• Employers’ and contractors’ lack of awareness of the benefit of dispute avoidance in
the project’s lifetime and cost.
• Less experience with the DAAB process in the Middle East, as many engineers and
employers have never been in a DAAB process.
• Assuming that appointing a standing DAAB will incur additional cost to the project.
• Some bad experiences with using DABs in the Middle East, which led to a number of
cases before the courts, which damaged people’s view of using DABs. For example,
in some cases, noncompliance with the DAB procedural rules by some DAB members
affected the future use of DAB as an effective dispute resolution mechanism.
International data and statistics show that most DAB decisions satisfy both parties. For
example, DRBF statistics from the US 59show that 98% of the disputes referred to DABs were
resolved, and 98% of the dissatisfied decisions (which are 2% of overall DAB decisions)
which are further referred to arbitration or litigation are decided similarly to the DAB’s
decisions or recommendations.
3.7.2 Enforceability of DAAB decision under Civil Law
Unlike arbitral awards, DAABs’ decisions are not recognized in most of courts in Middle
East.60 However, this does not mean that DAABs’ decisions are not enforceable under Civil
57
58
Ibid
59
Dispute Board MENA < http://www.disputeboardsmena.com/impressive-statistics/> accessed 12 February 2021
60
Adrian Bell and Aidan Steensma, ‘Enforcing DAB decisions under the FIDIC form: uncertainty continues’ (2015)
CMS Law-Now < http://www.cms-lawnow.com/ealerts/2015/06/enforcing-dab-decisions-under-the-fidic-form-
uncertainty-continues?> accessed 11 February 2021
21
Law legislation, as some professionals thought: The usually civil codes preserves the good
faith principle and the freedom of contract, and these two principles are significant for
enforcement of DAAB decisions before courts. Since the parties are free to choose the
contractual terms, if the DAAB provisions were part of these terms, then the parties must
abide by the DAAB’s decisions under the principle of acting in good faith, and failure to do
so will result in the defaulting party’s being considered in breach of the contract.61
Another option to enforce a DAAB’s award before the courts is to consider the DAAB’s
decision as a debt or to seek an attachment order, where the courts have the power to do so.
However, that is only applicable if the court considers that the arbitration clause in the
contract is for dispute referral.62
3.7.3 Desired actions to promote DAAB in Middle East
Even with the positive changes in the new FIDIC Red Book to encourage the industry to use
the DAAB widely, some measures still need to be taken in order for the DAAB to be widely
used in the Middle East. Most of these actions should come from the top level, as happened
earlier in the UK.
The first and most important action is that the DAAB’s non-final decision must be recognized
by legislation, which is the first thing that parties look for when they are choosing the method
of dispute resolution.63
Government entities may take the lead in adopting the DAAB as a mandatory dispute
resolution mechanism in their contracts; this will definitely encourage the market to follow
similar steps, especially when they recognize the benefit of using DAABs in construction
contracts.
On the other hand, construction-related international organizations such as FIDIC, CIArb,

RICS, CIOB, etc. must encourage the construction community in the Middle East to adopt
the DAAB in their construction contracts by providing seminars to educate the community
61
Ibid
62
63
Adrian Bell and Aidan Steensma, ‘Enforcing DAB decisions under the FIDIC form: uncertainty continues’ (2015)
CMS Law-Now < http://www.cms-lawnow.com/ealerts/2015/06/enforcing-dab-decisions-under-the-fidic-form-
uncertainty-continues?> accessed 11 February 2021
22
about the advantages and benefits of using DAAB, with some government support in this
regard.64
CH4 - THE DISPUTE RESOLUTION
The two primary objectives of the DAAB are to assist in the avoidance of disputes between
the parties; and to achieve swift, cost-effective and efficient resolutions of disputes that may
arise between them.
In order to do so, the DAAB shall conduct meetings with the parties and visit the site
periodically to stay aware of site progress and all events and circumstances that may arise in
a disagreement between the parties. These meetings and site visits shall be within a 10 to 20
weeks interval unless, upon the request of either party, there is a critical construction
circumstance (such as termination of the contract or suspension of the work), or an urgent
matter arises that requires the DAAB to hold a meeting with the parties. This could be a
remote meeting, such as a video conference, held within three days of such a request, and if
necessary, involve a visit to the site. Within 14 days of the meeting, the DAAB shall prepare
a report of all activities held during the meeting or the site visit and send it to both parties and
the engineer. All DAAB activities including meetings, site visits, hearings, reports,
communications and so on shall follow the language stated in the contract, unless otherwise
agreed upon by both parties and the DAAB65.
The power of the DAAB procedure is that all levels of disputes between the two parties—
whether it is technical issue, procedural matter, document interpretation or misunderstanding
can be easily referred to an independent third party who will provide informal advice or a
binding decision to resolve such disputes. The DAAB must apply the contract’s provisions
and the governing laws in any advice or decision.
64
Ibid
65
Anthony Albertini, ‘The role of dispute adjudication boards under FIDIC: a view from the Courts’ (2014)
CLYDE&CO < https://www.clydeco.com/insight/article/the-role-of-dispute-adjudication-boards-under-fidic-a-view>
23
4.1 Obtaining a DAAB Decision
If a dispute arises between the parties, then either party may seek a DAAB decision by
referring the dispute to the DAAB. This referral shall be in writing, sent to the other party and
to the engineer, stating the contract’s provision under which it is made with all substantiation
documents. Also, it should include a statement of the claim and relevant analysis. 66
Upon receiving the referral by the DAAB (the date when it is received by the chairman in
case of three members DAAB), both parties shall facilitate to the DAAB all required
information, access to the site and any other DAAB requirements necessary to make a
decision on the dispute. The chairman of the DAAB shall send notification to the parties of
the referral date along with procedural directions for the dispute resolution process, which
may include the steps involved, and schedule for the process.67
In addition to the DAAB’s power to decide the suitable procedural directions based on the
nature of the dispute, the DAAB also has the power to decide, on its own authority, the scope
of the dispute; appoint experts; conduct hearings; and schedule meetings and site visits as
required to make decisions and review and revise the engineer’s actions related to the
dispute.68
The DAAB decision shall be reasonable, provided in writing within 84 days of the date of
referral, and circulated to the parties and the engineer. As long as the decision is not revised
by amicable settlement or arbitral award, the decision shall be considered binding by both
parties and be complied with immediately. In addition, the work shall continue, irrespective
of any NOD given by either party.69
Any payment required to be paid from one party to the other as a part of the DAAB decision
shall be payable immediately, without any further notice or certificate. An appropriate
66
Dean O’Leary, ‘Using Dispute Adjudication Boards to Resolve Construction Disputes’ (2016) Al Tamimi & Co
<https://www.tamimi.com/law-update-articles/using-dispute-adjudication-boards-to-resolve-construction-disputes>
67
Anthony Albertini, ‘The role of dispute adjudication boards under FIDIC: a view from the Courts’ (2014)
CLYDE&CO < https://www.clydeco.com/insight/article/the-role-of-dispute-adjudication-boards-under-fidic-a-view>
68
Ibid
69
24
security for the payable amount may be requested from the payee to ensure repayment of the
amount in the event the decision is revised by amicable settlement or arbitral award.70
If either party decides to reject the DAAB decision or any part of it, then the dissatisfied party
shall, within 28 days of the DAAB decision, issue a formal NOD to the other party, the DAAB
and the engineer. The NOD must specify the rejected part of the decision and the reason for
dissatisfaction. However, if no DAAB decision has been issued within 84 days of the date of
referral, then either party can issue a NOD within 28 days of the expiry of this period.
If neither party has issued a NOD within a 28-day period, then the DAAB decision becomes
final and binding on both parties.
4.2 Negotiation and Amicable Settlement
According to the Global Construction Disputes Report (2017)71, parties prefer negotiation
and amicable settlement over other methods of dispute resolution. The reasons behind this
may include the fact that only the exact parties involved in the dispute will be a party to the
process, which allows them to openly present their concerns and ideas. Nevertheless, if the
parties try to get the best deal, negotiations will end up being a long, drawn-out process with
multiple discussions and meetings that may not result in an agreement.72
If the NOD on the DAAB’s decision has been issued on time, a mandatory 28 days shall be
allowed for the parties to resolve the dispute amicably prior to referring the dispute to
arbitration. Unless otherwise agreed to by both parties, commencement of the arbitration
process may start on or after 28 days from the date of issue of the NOD, even if a negotiation
was not attempted.
4.3 Arbitration – The Last Step to Resolve a Dispute
If no agreement has been reached after the expiry of the 28 days of negotiation for an amicable
settlement, then either party may refer the dispute to arbitration. The existence of a DAAB
70
Anthony Albertini and Rachel Chaplin, ‘The Role Of Dispute Adjudication Boards Under FIDIC: A View From The
Courts’ (2014)
<http://www.mondaq.com/x/356714/Contract+Law/The+Role+Of+Dispute+Adjudication+Boards+Under+FIDIC+A+
View+From+The+Courts> accessed 15 February 2021
71
London
72
25
decision in any dispute that has been referred to a DAAB is a condition precedent to
commence the dispute to further the arbitration proceeding.
Other cases where parties may refer the dispute to arbitration include73:
a. If the losing party fails to comply with a final and binding DAAB decision, then the other
party has the right to refer the failure itself to arbitration. This allows the arbitral award
procedure to be applied on the DAAB decision.
b. If a dispute arises while there is no DAAB in place due to expiry of the DAAB appointment
or the DAAB is not constituted, then either party may refer the dispute directly to arbitration,
with no condition precedent to the DAAB decision or amicable settlement.
When the dispute is referred to arbitration, the arbitration shall commence in accordance with
the Rules of Arbitration of the International Chamber of Commerce (ICC) by one or three
arbitrators, using the ruling language as defined in the contract, unless otherwise agreed to by
both parties.
Upon commencement of the arbitration process, the tribunal shall have the full power to
review, reopen and revise any determination, valuation or certificate issued by the engineer,
as well as the DAAB decision related to the dispute, unless such determination of the engineer
or the DAAB decision is final and binding.74
Moreover, the parties are not limited to the previous evidence or arguments put before the
DAAB when seeking its decision; also, the DAAB decision is considered acceptable evidence
in the arbitration.
If the arbitral award contains payment of any amount, this amount becomes payable without
the requirement of further certificates or notices; however, the obligations of the parties, the
engineer and the DAAB shall remain unaltered if the arbitration is conducted during the
progress of the work.75
73
Stavros Brekoulakis and David Brynmor Thomas, The Guide to Construction Arbitration, (Law Business Research,
2017)
74
London
75
Ibid
26
CH5 - CONCLUSIONS AND RECOMMENDATION
The complexity of construction projects makes disputes between the parties unavoidable. Eventually
all disputes must be resolved; therefore, people adopt different mechanisms to resolve their disputes.
A better option is to avoid such disputes by using a well-structured contract, as is the case with
standard forms of contracts.
FIDIC standard forms of contracts are considered the most used forms of contracts worldwide;
however, even by using such standard contracts, disputes between contracting parties still occur for
different reasons—mostly relating to their understanding and interpretation of the contracts’ terms.
The FIDIC keeps updating its standard forms of contracts to cover all contractual issues in the field
that are discovered over time. Recently (in 2017) the most updated version was released to the market,
addressing the industry’s feedback on the previous revision and to achieve clarity, transparency and
certainty, as well as to balance risk allocation between the employer and the contractor.
One of the major changes in the new FIDIC Red Book is the dispute-resolution provision; the
dissertation aims to examine the efficiency of the dispute-resolution mechanism under the 2017
FIDIC Red Book by examining the new claims procedure and dispute-resolution provisions and
analyzing the likely usage of the developed provisions in the new FIDIC Red Book, which has been
successfully achieved.
By releasing the new FIDIC forms of contract, the FIDIC aimed to enhance the project management
mechanism; achieve balance risk allocation between parties; strengthen the role of the engineer;
achieve certainty, clarity and transparency; and address the issues raised by the users of the 1999
edition.
The claim is the starting point for any dispute. The rejection of a claim followed by a rejection of the
rejection is simply a dispute; therefor, the claim provisions under the 2017 Red Book contain major
modifications to emphasise the need for reciprocity between the obligations of the parties and to
minimize the level of dispute as much as possible.
Unlike the previous revision, the new revision requires the employer and the contractor to follow the
same procedure for any claim, whether the claim is for additional payment (or reduction in contract
price) or extension of time (or extension of DNP). Also, the 2017 FIDIC Red Book includes more
27
detailed provisions for notices and time bars with regards to claims and disputes, which increases the
burden on the parties and the engineer to administer the contract.
Although the framework for dispute resolution in the new FIDIC Red Book has remained similar to
that of the 1999 FIDIC, there are significant changes in the new revision to encourage dispute
avoidance between the parties. This includes splitting the Claim Clauses from the Dispute Clauses to
emphasise that the claim does not signify a dispute, and sharpening the role of the dispute board.
Although the Dispute Adjudication Board system has considerable, and proven, success where it has
been applied in the market, especially in large projects, there is often a tendency among FIDIC users
to delete the DB provisions in their contracts, ignoring (or underemphasising) the importance of the
Dispute Boards. The existence of a Dispute Board will likely prevent disagreements between the
parties from developing into disputes by informal intervention during regular site visits.
The method of dispute resolution under FIDIC contracts has developed from recourse to arbitration,
directly after the engineer’s determination, through a dispute board that could give recommendations
to the Dispute Adjudication Board in the 1999 edition of the FIDIC Red Book, which, in the 2017
edition, was developed to include a dispute-avoidance role and is now called the Dispute
Avoidance/Resolution Board (DAAB).
Unlike arbitral awards, DAAB’s decisions are not recognized in the Middle East's courts. However,
different methods can be applied to enforce a DAAB decision before the courts, which were
explained in Chapter 3.
Given the positive changes in the new FIDIC Red Book, which encourages the industry to use the
DAAB widely, and the fact that the historical record shows that using a DAAB is less costly and
time-consuming for dispute resolution or even dispute prevention compared to litigation or
arbitration, some measures still need to be taken in order for the DAAB to be widely used in the
Middle East. The first and most important action is that the DAAB’s decision must be recognized by
legislation, and government entities may take the lead in adopting the DAAB as a mandatory dispute-
resolution mechanism in their contracts. Construction-related international organizations such as the
FIDIC, CIArb, RICS, CIOB and so on must encourage the construction community in the Middle
East to adopt the DAAB in their construction contracts by providing seminars to educate the
community about the advantages and benefits of using DAAB.
28
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DAAB

THE DISPUTE AVOIDANCE/ADJUDICATION BOARD

UNDER THE 2017 FIDIC RED BOOK

TABLE OF CONTENT .......................................................................................................... i

1. CH1 - INTRODUCTION ....................................................................................................... 1

1.2.Significance of the Research .................................................................................................... 1

1.3.Research Methodology ............................................................................................................ 2

2. CH2 – EMPLOYER’S AND CONTRACTOR’S CLAIMS ........................................ 3

2.2.Claims under The 2017 FIDIC Red Book ............................................................................... 4

3. CH3 – THE DISPUTE AVOIDANCE/ADJUDICATION BOARD (DAAB) ......... 7

3.2.Reasons behind Disputes ........................................................................................................ 8

3.3.Evolution of Dispute Resolution ............................................................................................. 9

3.3.1. Dispute Resolution under FIDIC Red Book before 1999..................................................... 9

3.3.2. Dispute Resolution under 1999 FIDIC Red Book ............................................................. 10

3.3.3. Dispute Resolution under The 2017 FIDIC Red Book................................................ 12

3.4.DAAB Roles and Duties......................................................................................................... 14

3.5.DAAB Pros and Cons ............................................................................................................ 15

3.5.1. DAAB’s Advantages ..................................................................................................... 16

3.5.2. DAAB’s Disadvantages ................................................................................................. 17

3.5.3. Cost of the DAAB ......................................................................................................... 17

3.6.1. Selection of DAAB Members ....................................................................................... 18

3.6.2. Qualities of DAAB Members........................................................................................ 19

3.7.DAAB in the Middle East ..................................................................................................... 22

3.7.2. Enforceability of DAAB decision under Civil Law .......................................................... 25

3.7.3. Desired actions to promote DAAB in Middle East ........................................................... 25

4. CH4 – THE DISPUTE RESOLUTION ......................................................................... 27

4.2.Negotiation and Amicable Settlement .................................................................................. 29

4.3.Arbitration – The Last Step to Resolve a Dispute ............................................................... 30

5. CH5 – CONCLUSIONS AND RECOMMENDATIONS ........................................... 32

1.1 Aims and Objectives

1.2 Significance of the Research

1.3 Research Methodology

2.1 Claim’s Definition in construction industry

In general, a party may submit a claim in the following circumstances5:

• The DB cost is an extra expense which can be avoided.

3.2 Reasons behind Disputes

• Poor contract administration.

3.3 Evolution of Dispute Resolution

3.3.1 Dispute Resolution under FIDIC Red Book before 1999

A three-tiered dispute resolution procedure to include a dispute adjudication board giving a

3.3.2 Dispute Resolution under 1999 FIDIC Red Book

3.3.3 Dispute Resolution under The 2017 FIDIC Red Book

Notification of Dissatisfaction (NOD) shall be submitted by the dissatisfied party within 28

3.4 DAAB Roles and Duties

3.5.1 DAAB’s Advantages39

Construction Law International Volume 4 No 3

• The DAAB adds to the project’s cost.

3.5.3 Cost of the DAAB

3.6 Composition of the DAAB

3.6.1 Selection of DAAB Members

d. Dispute Resolution Experience

e. Different Procedural Knowledge

Construction Law International Volume 4 No 3

3.7 DAAB in the Middle East

3.7.1 Are employers in the Middle East willing to use DAAB?

• Employers’ lack of interest in resolving disputes early, as different levels of disputes

3.7.2 Enforceability of DAAB decision under Civil Law

3.7.3 Desired actions to promote DAAB in Middle East

On the other hand, construction-related international organizations such as FIDIC, CIArb,

CH4 - THE DISPUTE RESOLUTION

4.2 Negotiation and Amicable Settlement

4.3 Arbitration – The Last Step to Resolve a Dispute

Sorensen J, ‘FIDIC Conditions of Contract – 2017 update’ (2017) Holst Advokater