8/10/2019 Dispute Resolution Question

1/2

DISPUTE RESOLUTION QUESTION & ANSWER

MODEL TERMS OF APPOINTMENT OF A DAB

QUESTION

What we are wishing to locate is the model terms of appointment published by FIDIC, which are

referred to in Clause 20.3(a) of FIDIC's "Conditions of Contract for Design-Build and Turnkey", First

Edition 1995. Please could you clarify this reference. If it is a separate publication, we need to gethold of it.

ANSWER

Model Terms of Appointment for a Dispute Adjudication Board under the Orange Book were issued

as a loose-leaf insert and reproduced at pages 151-163 of the Guide. FIDIC has moved on since then,

and the best approach would be to base Terms hereafter on those published within the 1999 First

Editions of the 1999 FIDIC Contracts.

ADJUDICATORS FEES

QUESTION

What are the standard fees for adjudicators?

ANSWER

The World Bank's International Centre for Settlement of Investment Disputes (ICSID) offers standardfees and expenses for members of Arbitral Tribunals constituted under the ICSID Convention. The

rates are appropriate for members of the FIDIC President's List of Approved Dispute Adjudicators.

Entitlements comprise:

1. a fee for each day of their participation in meetings of the Arbitral Tribunal concerned; and

2. a fee for the equivalent of each 8-hour day of other work they perform in connection with

the proceeding.

Days of participation in meetings include days of travel to and from the meetings. Fees for periods of

other work below 8 hours may be claimed at the rate of one-eighth of the applicable fee per hour of

work performed. The standard level of the fees is at present US$3,000 per meeting day or 8-hour

day of other work. That amount has been determined for the fees in the expectation that Tribunals

will not propose higher amounts to the parties. Per Diem subsistence allowances are paid in lieu ofreimbursement of subsistence expenses when the arbitrators are away from their normal place of

residence. The allowances are considered to cover all personal expenses such as charges for lodging,

meals, etc. and all other expenses that are not specifically reimbursable. Reimbursable travel

expenses comprise expenses for travel in connection with meetings of the Tribunal concerned. The

travel should in all cases be arranged from the place of residence to the place of the meeting and

return by the most direct route.

WHAT CHANGES TO THE GENERAL CONDITIONS FOR THE ENGINEER TO BECOME THE DAB?

QUESTION

We are seeking some general advice concerning a client's changes to the following Particular

Conditions of Contract: Sub-Clause 1.1.2.9 DAB - Delete current definition and insert: "DAB means

the Engineer acting under sub-clause 20.4". - Deleted Sub-clauses 20.2, 20.3 and second paragraphof sub-clause 20.4 - Deleted, Appendix General Conditions of Dispute Adjudication Agreement The

above changes to the Particular Conditions would appear to restore the powers and authorities of

the Engineer to those traditional roles under the FIDIC Conditions of Contract for Works of Civil

Engineering Construction, Fourth Edition 1987 (The Red Book). We assume the deletion of the DAB is

a common practice for clients to retain some degree of control on disputes and save costs. Could

you please indicate if some ambiguity or omissions may arise elsewhere in the General Conditions

with the above changes?

ANSWER

The changes to the General Conditions for the Engineer to become the DAB require detailed study

and depend on the policy and requirements of the Employer. They also need to be co-ordinated with

the applicable law, particularly in countries with a civil law jurisdiction or if the law includes

provision for statutory adjudication as in the UK. FIDIC cannot comment on the Particular Conditions

8/10/2019 Dispute Resolution Question

2/2

for individual projects. Discussion at training courses in Europe is confirming that most contracts

using 1999 FIDIC Contracts include the provision for an independent DAB, particularly contracts

under the MDB version and other contracts with provisions for international finance. Obviously

there are cost implications but the indications are that the cost of a DAB is less than the cost of a

lengthy dispute with other resolution procedures, including legal and other costs.

CONTRACTOR'S OBLIGATIONSQUESTION

I am an engineer and I am involved in a litigation case where FIDIC was incorporated in a wood

waste power plant contract. It would be easier if the case is referred to arbitration where the

arbitrator is normally a person well verse in engineering contract and engineering matters.Normal

litigationtrial judge will be difficult to fathom the implications of each conditions contained in the

FIDIC. I was looking for legal cases to support my argument that under an engineering contract

involving a power plant, the performance and reliability of the power plant is clearly defined. The

plant will be accepted when it passes a performance test to show that the plant can generate

contract capacity and a 30 days non failed reliability run. As the operation of wood waste plant is

primitive and can easily go wrong unless it is operated with care. Any power plant can be easily

damaged if out of specification fuel is used. Because of this, the contractor is not required toguarantee that the plant can produce the rated capacity throughout the defects liability period

which in this case is two years. Lawyers like to refer to pass cases as reference for their argument. I

feel that if can find some judgement in arbitration or litigation to show that performance test and

reliability run are sufficient to prove that the plant had complied to specification a large part of

litigation time can be saved. I am sure since the introduction of FIDIC in 1957 until now this kind of

argument should have been concluded, except I am unable to locate such case law easily. I would be

most grateful if you could shed some light on this matter and at the same time guide me to some

sites that I can get this information.

ANSWER

The FIDIC Conditions of Contract for Plant and Design-Build are very clear, at Clauses 9 to 12, about

the Contractor's obligations for Tests, Handing-Over and during the Defects Liability Period. Furtherinformation for the particular project would be given in the Particular Conditions and the Employer's

Requirements or Specification. However, any additional obligations and the way in which these

documents are interpreted for a particular dispute will depend on the applicable law, which will be

different in different countries. FIDIC are not informed about Arbitral Awards or Judgements by the

Courts. For information about any Arbitral Awards you should consult an Arbitration Centre. The

best source is probably the International Chamber of Commerce in Paris