Selection of Dispute Board Members

In this blog we explore questions concerning how the parties may select members to serve on a dispute board.

Sub-Clause 20.2 (Appointment of the Dispute Adjudication Board) of the FIDIC Red Book (the other books included similar clauses), provides that The Parties shall jointly appoint a DAB by the date stated in the Appendix to Tender … If the DAB is to comprise three persons, each Party shall nominate one member for the approval of the other Party. The Parties shall consult both these members and shall agree upon the third member, who shall be appointed to act as chairman. … However, if a list of potential members is included in the Contract, the members shall be selected from those on the list, other than anyone who is unable or unwilling to accept appointment to the DAB.’

Thus, the parties are obliged to propose one member each and, in consultation with the two nominated members, the parties shall agree on the third member who shall be chairman of the DAB. It should be noted firstly that the DAB members are obliged to be impartial and have had no previous dealings or relationship with the nominating party and secondly, that each party has to approve the other party’s nominated member. In selecting a person to nominate, the parties should be looking for appropriate qualifications, experience and expertise in the matters that are likely to arise on the project.

If a list of potential DAB members is included in the Contract, the parties should select from the list. Hopefully, the compliers of the list will have researched this properly and the listed members will be suitably experienced, qualified and have no existing relationship with the parties.

Although FIDIC does not suggest this, it is an alternative suggestion that the parties meet initially, each having previously prepared a list of potential members. It should be a simple matter to review the list, exclude any potential members that do not match up to the required criteria and to produce a mutually agreed shortlist. Hopefully, the parties will then be able to jointly select members having the most suitable background to serve the project best. It is suggested that a good balance of members is to select one from an engineering background, one from a quantum background and one from a legal or contractual background.

It could be that one of the parties does not view the appointment of the DAB as favourable, so a situation may develop that such a party could take steps to obstruct the process by inaction or unreasonable rejections of the other party’s nominee or the DAB chairman. In such a case, Sub-Clause 20.3 (Failure to Agree Dispute Adjudication Board) provides that ‘the appointing entity or official named in the Appendix to Tender shall, upon the request of either or both of the Parties and after due consultation with both Parties, appoint this member of the DAB’. Therefore the appointment of the DAB cannot be unduly prevented by one of the parties.

We will discuss what makes a suitable DAB member at length in a future blog.

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