Expert: ALI IRVALI - 1/19/2012

Question
Dear Ali
We are contracted to use FIDIC MDB 2006 version.
My question in relation to Sub Clause 20.4-Obtaning Dispute Board's Decision.
I refer 4th Paragraph such as;

Within 84 days after receiving such reference,or within such other period as may be proposed by the DB and approved by both Parties,the DB shall give its decision,which shall be reasoned and shall state that it is given under this Sub Clause.The Decision shall be binding on both Parties,Who shall promptly give effect to it unless and until it shall be revised in an amicable settlement of an arbitral award as describe ed bellow.

Question
If DAB has given its decision and one party has given notice of Dissatisfaction within 28 days,do the parties should effect the DAB Decision until amicable settlement or Abitrial award is received.

Case
Employer has not paid interest on delayed payment and contractor has referred the matter to DAB.DAB has given decision to pay it.
Now the Employer has issued Notice of Dissatisfaction and just stay without taking any further action.What is the contractual situation and what are the next steps that can be taken by the Contractor.
your valuable explanations are respectfully expected.
Best Regards
Rohana

Answer
Dear Rohana,


A DAB seems to be a quasi arbitral panel (having some but not all the features).  It does not have the full powers of an arbitral court and the principle of  its effects in further disputes.
As Dispute Adjudication is purely contractual and the contract permits dissatisfaction with the decision of the DAB.  According to Sub-Clauses 20.2  the DAB settles disputes on a provisional interim basis. The decisions of the DAB remain open to review by arbitration. According to Sub-Clause 20.4 the DAB decision shall be binding on the parties unless reviewed by arbitration. It becomes finally binding if neither party notifies a declaration of dissatisfaction within 28 days after receipt of the decision. Again, according to Sub-Clause 20.4 the DAB shall not be dealt as an arbitrator or arbitral tribunal. However, if the DAB decision is neither an expert determination nor an arbitral award, the question remains as to what is the true nature of the DAB decision.

The Sub-Clause 20.4, Obtaining Dispute Board’s Decision sitipulates that, " If either Party is dissatisfied with the DB’s decision, then either Party may, within 28 days after receiving the decision, give notice to the other Party of its dissatisfaction and intention to commence arbitration. If the DB fails to give its decision within the period of 84 days (or as otherwise approved) after receiving such reference, then either Party may, within 28 days after this period has expired, give notice to the other Party of its dissatisfaction and intention to commence arbitration.
In either event, this notice of dissatisfaction shall state that it is given under this Sub-Clause, and shall set out the matter in dispute and the reason(s) for dissatisfaction. Except as stated in Sub-Clause 20.7 [Failure to Comply with Dispute Board’s Decision] and Sub-Clause 20.8 [Expiry of Dispute Board’s Appointment], neither Party shall be entitled to commence arbitration of a dispute unless a notice of dissatisfaction has been given in accordance with this Sub-Clause."

Therefore, in accordance with the above, the Employer notified his dissatisfaction regarding decision of DAB. Now, it is your right to commence arbitration, however, the Contract refers to amicable settlement before invoking arbitration such as, Sub-Clause 20.5 Amicable Settlement, stipulates that " Where notice of dissatisfaction has been given under Sub-Clause 20.4 above, both Parties shall attempt to settle the dispute amicably before the commencement of arbitration. However, unless both Parties agree otherwise, arbitration may be commenced on or after the fifty-sixth day after the day on which a notice of dissatisfaction and intention to commence arbitration was given, even if no attempt at amicable settlement has been made."

If the employer insist and no amicable settlement comes out, then you can refer to Sub-Clause 20.6 Arbitration, which stipulates that" Unless indicated otherwise in the Particular Conditions, any dispute not settled amicably and in respect of which the DB’s decision (if any) has not become final and binding shall be finally settled by arbitration. Unless otherwise agreed by both Parties:..."

Generally, arbitrators also accepts the decision already given by DAB, as you can say a confirmation, however takes more time than DAB procedure.

Best Regards

IRVALI