6 Advantages of DABs Over Arbitration

Some people initially fail to see the many advantages of Dispute Boards over arbitration, so we thought it would be useful to offer a brief comparison.

 

Arbitration

  • The arbitrators first have to be selected and appointed.
  • The panel has to be available and become familiar with both the project and the matters in dispute.
  • Arbitrators are appointed to deal with existing disputes when they cannot be resolved at project level.
  • The arbitration process tends to be a drawn out and lengthy procedure.

 

Dispute Adjudication Boards

  • Standing DABs are appointed at the beginning of the project.
  • The DAB is familiar with the project and the parties.
  • Part of the DAB’s obligation is to advise the parties and facilitate agreement and consequently to avoid disputes occurring in the first place.
  • If a dispute does occur, the DAB is obliged to provide a decision within 84 days.
  • The whole concept of DAB’s is that disputes are settled quickly by industry experts.

 

Dr. Nael Bunni has calculated that arbitration costs the parties between $150,000 and $200,000 per day of arbitration, or between 12.5% and 38% of the claim value. The DRBF has calculated that arbitration costs may be 10-15% of project value.

The DAB will cost the parties for the time spent dealing with the dispute and possibly some travel expenses. According to the DRBF, this works out at between 0.05% of the construction cost on dispute free projects and 0.25% for more difficult projects. The costs are also shared by the parties.

Given further DRBF statistics that on projects with DABs, 98% of disputes are resolved at project level and of the remaining 2% that were referred to arbitration, almost all of the arbitration decisions agreed with the DAB, it is hard argue that DAB’s are not a much better way of dealing with disputes than arbitration in all respects.