FIDIC 1999 (Red Book) Dispute Adjudication Board's: The UAE Construction Industry Perspective

FIDIC 1999 (Red Book) Dispute Adjudication Board’s:
The UAE Construction Industry Perspective
:‫رؤية قطاع االنشاءات في االمارات العربية المتحده عن‬

)‫ ( الكتاب األحمر‬1999 ‫مجلس فض المنازعات في عقود الفديك‬
by
DARREN BRUEN
A dissertation submitted in fulfilment

of the requirements for the degree of
MSc CONSTRUCTION LAW AND DISPUTE RESOLUTION
at
The British University in Dubai
Dr. Abba Kolo

January 2018
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“Since the beginning of time, disputes have emerged and flourished and so, too have the
methods of resolving those disputes throughout the centuries”.1
N G. Bunni
1
N G. Bunni, ‘What has History Taught Us in ADR? Avoidance of Dispute!’ (2015) 81 Arbitration, Issue 2,
Chartered Institute of Arbitrators
Abstract:
It could be said that every construction project is unique in that the basic variables of time,
cost, quality and contractual risk allocation are never consistent from one project to the next,
and it would be naïve to think that the causes of construction disputes could be removed by a
cleverly worded contract. Add in the human element and you have a breeding ground for high
levels of uncertainty, dispute and conflict. Disputes may not be avoidable in many
circumstances, but there are now recognised ADR methods of dispute resolution available to
the contracting parties. DABs standalone in that they are both dispute avoidance and
resolution method, DBs have developed international quite successfully over the past fifty
years in mature economies such as the US, UK, Australia and Western European countries.
However, in the UAE the process has had limited success, and has not gained traction as a
method of dispute resolution, with Employer’s even removing the DAB related sub-clause
from the standard FIDIC conditions. From my experience UAE Employer’s and Contractor’s
still favour arbitration or litigation to resolve disputes, this dissertation will investigate why.
The primary aim of this dissertation is to identify if UAE construction professionals

recognise that the current methods of dispute resolution employed under UAE construction
contracts is no longer sufficient to meet the needs of the industry, and are alternatives such as
DABs the answer. All parties to a construction contract want a dispute resolution process
which could be considered fair, efficient in terms of time and cost and protects/maintains
existing business relationships. It can be argued that DABs meet these criteria in that they act
as a buffer by promoting dispute avoidance and management techniques, thus preventing
disputes reaching more prolonged levels of resolution like arbitration or litigation.
This dissertation explores the benefits of DABs in the context of the UAE construction
industry by reviewing international publications and data on the subject. In addition detailed
opinion were sought from reputable construction professionals in the UAE and an on-line
survey was conducted to get the representative opinion of the wider UAE construction
industry on DABs as the potential primary method of construction dispute resolution. The
dissertation also discussed why DABs are currently not being utilised in the UAE and what
measures need to be adopted to overcome these obstacles. Education, training, promotion of
the benefits of DABs, change in industry culture, alignment of Employer and Contractor
perspectives and government participation (legislation) are need in order for DABs to become
more prevalent in the UAE construction industry.
‫ملخص موجز‪:‬‬
‫إنشائي فري ٌد في نوعه حيث أن تخصيص المتغييرات األساسية كالوقت‪ ،‬والتكلفة‪ ،‬والجودة‪،‬‬
‫ٍ‬ ‫مشروع‬
‫ٍ‬ ‫يمكن القول بأن كل‬
‫مشروع آلخر‪ ،‬ويكون من السذاجة بمكان‪ ،‬التفكير في أن نزاعات اإلنشاء من‬
‫ٍ‬ ‫والمخاطر اإلنشائية ال تكون مطلقا ً ثابتة من‬
‫ت عالية‬
‫الممكن حلها بواسطة عق ٍد تتم صياغته بذكاء‪ .‬باإلضافة إلى العنصر البشري‪ ،‬مع وجود بيئ ٍة مالئمة لخلق مستويا ٍ‬
‫) ‪ADR‬من الغموض‪ ،‬والنزاع والصراع‪ .‬وقد يتع َّذر تجنب النزاعات في العديد من الظروف‪ ،‬إالَّ أن هنالك أساليب بديلة (‬
‫) بأنها أسلوب لتجنب النزاعات وحلها‪DABs ،‬لحل النزاعات متاحة اآلن ألطراف التعاقد‪ .‬وتتميز مجالس حل النزاعات (‬
‫ناجح دوليا ً خالل الخمسون عاما ً الماضية في االقتصاديات الناضجة ‪DABs‬وقد تطورت مجالس حل النزاعات (‬
‫ٍ‬ ‫) بشك ٍل‬
‫مثل الواليات المتحدة‪ ،‬والمملكة المتحدة‪ ،‬وأستراليا‪ ،‬ودول غرب أوروبا‪ .‬ومع ذلك‪ ،‬وفي أ‪.‬ع‪.‬م‪ ،‬فإن هذه العملية قد حققت‬
‫نجاحا ً محدوداً‪ ،‬ولم تحظى بالقبول كوسيلة لحل النزاعات‪ ،‬مع قيام جهات العمل بإزالة البند الفرعي الخاص بمجلس تحكيم‬
‫النزاعات من الشروط النموذجية لعقود "فيديك"‪ .‬ومن خالل تجاربي‪ ،‬فإن جهات العمل والمقاولون في أ‪.‬ع‪.‬م‪ ،‬ما زالوا‬
‫يفضلون التحكيم‪ ،‬أو التقاضي لحل النزاعات‪ ،‬وستعمل هذه األطروحة على التحري عن السبب وراء ذلك‪.‬‬
‫إن الهدف األساسي لهذه األطروحة هو لتحديد ما إذا كان خبراء اإلنشاءات في أ‪.‬ع‪.‬م قد أدركوا بأن األساليب الحالية لحل‬
‫النزاعات والتي يتم تطبيقها بموجب عقود اإلنشاءات في أ‪.‬ع‪.‬م لم تعد كافية لإليفاء بمتطلبات الصناعة‪ ،‬وأن البدائل مثل‬
‫إنشائي يرغبون في عملية ح ٍل للنزاع يمكن إعتبارها منصفة‪ ،‬وفعالة من ‪DABs‬الـ(‬
‫ٍ‬ ‫ي عق ٍد‬
‫) هي الحل‪ .‬إن جميع أطراف أ ِّ‬
‫) ‪DABs‬حيث الوقت والتكلفة مع حماي ٍة ومحافظ ٍة على عالقة األعمال الحالية‪ .‬ويمكن القول بأن مجالس حل النزاعات (‬
‫تتوافق مع هذه المعايير حيث أنها تعمل كمخفِّف للصدمات من خالل الترويج لتجنب النزاعات‪ ،‬مع توفير تقنيا ٍ‬
‫ت لإلدارة‪،‬‬
‫ت مطولة من الحلول كالتحكيم أو التقاضي‪.‬‬
‫مما يعمل على الحد من وصول النزاعات إلى مستويا ٍ‬
‫) في سياق صناعة اإلنشاءات في أ‪.‬ع‪.‬م من ‪DABs‬وتعمل هذه األطروحة على إستكشاف فوائد مجالس حل النزاعات (‬
‫خالل القيام بمراجعة النشرات والبيانات الدولية بشأن الموضوع‪ .‬باإلضافة إلى ذلك‪ ،‬تم السعي للحصول على آرا ٍء‬
‫تفصيلي ٍة من مشاهير الخبراء في مجال اإلنشاءات في أ‪.‬ع‪.‬م‪ ،‬مع القيام بإجراء إستبيا ٍن مباشر على اإلنترنت للحصول على‬
‫) بإعتباره األسلوب األساسي ‪DABs‬الرأي التمثيلي األوسع في مجال صناعة اإلنشاءات بشأن مجالس حل النزاعات (‬
‫) حالياً في ‪DABs‬المحتمل لحل النزاعات‪ .‬كما تقوم األطروحة بمناقشة السبب وراء عدم إستخدام مجالس حل النزاعات (‬
‫أ‪.‬ع‪.‬م‪ ،‬وما هي اإلجراءات المطلوب إتخاذها للتغلب على هذه الصعوبات‪ .‬إن التعليم‪ ،‬والتدريب‪ ،‬والترويج لفوائد مجالس‬
‫) سيعمل على تغيير ثقافة الصناعة‪ ،‬إن تقارب وجهات نظر جهة العمل والمقاول‪ ،‬ومشاركة ‪DABs‬حل النزاعات (‬
‫) أكثر إنتشاراً داخل صناعة اإلنشاءات ‪DABs‬الحكومة (الجهات التشريعية) مطلوبة حتى تصبح مجالس حل النزاعات (‬
‫في أ‪.‬ع‪.‬م‪.‬‬
Acknowledgments:
The author wishes to thank everybody who has contributed in many ways in allowing me to
successfully complete the various aspects of this dissertation. I would like to express my
sincere gratitude to all those who encouraged and supported me throughout the completion of
this dissertation and for the two years whilst completing my MSc in Construction Law and
Dispute Resolution.
The author extends appreciation to my supervisor Dr Abba Kalo, for all his invaluable advice
and encouragement, all the people that participated in the online questionnaire survey, give
time for interviews and helped proof read the dissertation.
Thank you to the library staff at The British University in Dubai for their assistance with this
dissertation. Finally a special thanks to my wife Roma and son Iollan for their constant moral
support and encouragement throughout the duration of my studies. To them I dedicate this
work.
A. Table of Contents: Page Numbers:
A. Table of Contents………………………………………………....................................i
B. List of Figures………………………………………………………...........................iv
C. List of Interviewees……………………………………………………………………v
D. Abbreviations……………………………………………………...............................vii
Chapter 1: Introduction.................................................................................................1
1.1. Introduction……………………………………………………........................2
1.2. Research Background.........................................................................................4
1.3. Aims and Objectives..........................................................................................6
1.4. Scope of Study……….......................................................................................7
1.5. Research Methodology.......................................................................................8
1.6. Structure of Dissertation.....................................................................................9
Chapter 2: Literature Review………………………………………………………..11
2.1. Introduction.......................................................................................................12
2.2. The Construction Contract ................................................................................14
2.3. Risk Allocation and Management .....................................................................16
2.4. Contractual Claims.............................................................................................18
2.5. Conflict Avoidance………………....................................................................21
2.6. Contractual Disputes..........................................................................................22
2.7. Methods of Dispute Resolution .........................................................................24
2.7.1. ADR………………………………………………………………….25
2.7.2. Mediation / Conciliation……………………………………………...27
2.7.3. Arbitration……………………………………………………………28
2.7.4. Litigation……………………………………………………………..31
i
2.8. Statutory Adjudication………………………………..……………………….33
2.9. History of DABs................................................................................................35
2.10. Types of DBs ...................................................................................................39
2.11. DB Procedures and Rules.................................................................................40
2.12. Overview of FIDIC 1999 Clause 20................................................................42
2.12.1. Establishing the Dispute Board…………………………………….42
2.12.2. Referring to the Dispute Board…………………………………….45
2.12.3. Dissatisfaction with the Dispute Boards Decision…………………47
2.12.4. Enforcement of the Dispute Boards Decision……………………...48
2.12.5. Expiry of the Dispute Board………………………………………..51
2.12.6. Referring the DABs Decision to Arbitration……………………….54
2.13. DABs in the UAE…………………………………………………………….55
2.14. Conclusion……………………………………………………………………56
Chapter 3: Research Methodology……….….............................................................58
3.1. Introduction.......................................................................................................59
3.2. Selected Research Methodology.......................................................................59
3.3. Analysis of Questionnaire Responces...............................................................60
3.4. Semi-Structured Interviews...............................................................................61
3.5. Ethical Concerns and Limitations…………………………………………….63
Chapter 4: Survey Findings…………………............................................................64
4.1. Introduction.......................................................................................................65
4.2. Survey Analysis.................................................................................................66
4.3. Conclusion.........................................................................................................79
ii
Chapter 5: Analysis, Interpretation And Discussion……........................................81
5.1. Introduction.......................................................................................................82
5.2. DABs in the UAE Discussion and Analysis.....................................................82
Chapter 6: Conclusion…………..................................................................................93
6.1. Introduction……………………………………………………………...……94
6.2. Conclusion…………………………………………………………………….94
6.3. Achievement of Dissertation Objectives……………………………………...97
6.4. Further Study………………………………………………………………….99
6.5. Research Limitations………………………………………………………….99
Word Count.………………………………………………………………...…………...100
Bibliography......................................................................................................................101
Table of Statutes And Cases………………………………………………..…………...111
Appendices.........................................................................................................................113
Appendix A: Dissertation Proposal Form.
Appendix B: Semi-Structured Interviews (Coded).
Appendix C: Questionnaire Survey Results.
iii
B. List of Figures:
Figure 1.1. Dissertation Objectives…………………………………………………………...7

Figure 6.1. Dissertation Objectives and Findings……………………………………………97
iv
C. List of Interviewees
 Adrian Cole, Partner King and Spalding
Adrian is a construction law specialist advising on disputes relating to energy and

infrastructure development in the Middle East. Prior to becoming a lawyer, he qualified as an
engineer / quantity surveyor and has first-hand experience of the practical issues in the
engineering and construction industries.
 Andy Hewit, FICCP, FCIOB, FCInstCES, FQSi, ACIArb
Andy is the author of the books Construction Claims & Responses and The FIDIC Contracts:
Obligations of the Parties. Andy has over 40 years’ experience in the construction industry
which has been gained in the United Kingdom, Africa and in the Middle East, where he has
been based for the past 18 years.
 John Papworth Chartered Arbitrator, FRICS, FCIArb, FCInstCES, FACostE,

FDBF, AFIChemE, Companion of the ICE
John is a practicing Dispute Board Chairman and Member. He is on the FIDIC President’s
List of Adjudicators and on the DB Panels of the ICE, the Dispute Board Federation, the
Dispute Resolution Board Foundation and the Engineering Professions Association of
Namibia. His DB experience has been gained in the Middle East, Eastern Europe and East
and Southern Africa over a period of ten years, having been appointed on 22 occasions.
 Nicholas Gould, Partner Fenwick Elliott

Nicholas is an expert in dispute resolution where his experience spans litigation,
arbitration (domestic and international), adjudication, DAB/DRB, mediation, early neutral
evaluation and expert determination. He regularly acts as a mediator in construction,
engineering and commercial disputes, sits as adjudicator on international Dispute
Adjudication Boards and as arbitrator, and is a registered legal practitioner, DIFC Court.
v
 Michael Grose, Partner Clyde & Co.
Michael reviews, advises on and prepares construction contracts for major projects,
particularly the FIDIC suite of contract conditions. As a result, he has considerable
experience of conducting arbitration in the Gulf, including as an arbitrator appointed by the
Dubai International Arbitration Centre. He is the author of the first book on construction law
in the Gulf, "Construction Law in the United Arab Emirates and the Gulf".
 Royston Pendley, Legal Manager Al Naboodah Group Enterprises LLC
Royston is responsible for the legal affairs of Al Naboodah Construction Group, which
includes Civil, Buildings, MEP and Fit-out Contracting divisions. He has been in the UAE
for over 15 years and has considerable experience in Arbitrations, Mediations and dispute
resolution within the UAE construction industry.
vi
D. Abbreviations
AAA – American Association of Arbitration

ADCCAC - Abu Dhabi Commercial, Conciliation and Arbitration Centre
ADR – Alternative Dispute Resolution
AED – Arab Emirates Dirham
BOQ – Bill of Quantities
CA – Court of Appeal
CASD – Centre for Amicable Settlement of Dispute
CDB – Combined Dispute Board
CEDR – Centre for Effective Dispute Resolution
CEO – Chief Executive Officer
CIArb – Chartered Institute of Arbitrators
CIOB – Chartered Institute of Builders
CPC – Civil Procedure Code
CPR – Civil Procedure Rules
CQS – Client Quantity Surveyor
CTC – Civil Transaction Code
DAB – Dispute Adjudication Board
DB – Dispute Board
DIAC – Dubai International Arbitration Centre
DIFC – Dubai International Financial Centre
DIFC-LCIA - Dubai International Financial Centre – London Centre for International
Arbitration
DLC – Defect Liability Certificate
DRB – Dispute Review Board
DRBF – Dispute Resolution Board Foundation
DRE – Dispute Review Expert
EOT – Extension of Time
EPC – Engineering, Procurement and Construction
EU – European Union
FIDIC - Federation Internationale Des Ingenieurs-Conseils
GCC – Gulf Cooperation Council
GDP – Gross Domestic Product
vii
GM – General Manager
HC – High Court
HGCRA – Housing Grant, Construction and Regeneration Act
HMSO – Her Majesty’s Stationary Office
ICC – International Chamber of Commerce
IDAP – Independence Dispute Avoidance Panel
JCT – Joint Contracts Tribunal
JICA - Japan International Cooperation Agency
LD – Liquidated Damages
LCIA – London Court of International Arbitration
MDB – Multilateral Development Bank
ME – Middle East
MENA – Middle East and North Africa
NEC – New Engineering Contracts
NoD – Notice of Dissatisfaction
PMBOK – Project Management Body of Knowledge
PMI – Project Management Institute
QS – Quantity Surveyor
RICS – Royal Institute of Chartered Surveyors
SCT – Small Claims Tribunal
TCC – Technology and Construction Court
TOC – Taking Over Certificate
UAE – United Arab Emirates
UK – United Kingdom
UNCITRAL – United Nations Commission on International Trade Law
US – United States
USD – United States Dollar
viii
CHAPTER ONE
Introduction
1
1.1. Introduction:
The construction industry is susceptible to disputes, for a number of various reasons. Firstly,
almost all construction projects are unique, each new project throws up different challenges,
this is because design, technology and construction techniques are continually evolving, and
over the past twenty years this evolution has gathered significant pace. Few construction
projects are built exactly as originally planned, there are a number of situations where claims
can develop into disputes and conflict between the parties, e.g. variations to the original
design, deviation from the programme, payment concerns and quality issues to name but a
few.
The fundamentals of any construction contract revolves around time, cost2, quality and risk
allocation, any changes in these fundamentals may give rise to an entitlement of claim for
additional payments, mainly through a variation, delay or disruption claim. The perspectives
of both parties may be completely different as to what constitutes a valid claim under the
contract, this intransient view is what leads to numerous construction disputes. The question
as to who is at fault for causing the dispute is often complex technically, commercially and
legally, which necessitates the intervention of an independent third party, because the dispute
cannot be resolved amicably between the contracting parties. The role of the third party is to
assess the merits of the dispute and render a decision as to which party may be at fault.
The parties to a construction contract generally spend insignificant periods of time

negotiating the contractual mechanisms of the dispute resolution clauses. If and when
disputes do arise they can become costly relatively quickly. But if both parties have an
understanding of how the mechanisms of the contract work, the likelihood of disputes arising
will be reduced. The process of dispute resolution in the construction industry has changed
dramatically over the past forty years, the process has moved from contracting parties
pursuing litigation to resolve disputes, then moving to arbitration as the most popular means
of dispute resolution, to the current situation where ADR has come to the forefront of
construction dispute resolution.
2
“From my own experience in my ten most recent arbitrations the costs of the reference and award have varied
from 2.58% to as much as 37% of the overall value of the amount in dispute, with an average of 12.75%”. N G.
Bunni, ‘What has History Taught Us in ADR? Avoidance of Dispute!’ (2015) 81 Arbitration, Issue 2, Chartered
Institute of Arbitrators
2
The objective of this dissertation is to identify and investigate the possibility of adopting
DABs on large to medium size projects in the UAE as method to avoid, manage and resolve
construction disputes in a more cost effective and time efficient manner. Although DBs exist
under various forms, in both bespoke and standard contracts, for the purpose of this
dissertation the research will mainly focus on the FIDIC 1999 (Red Book) DAB provisions,
mainly due to the fact FIDIC is the most common form of contract encountered in the UAE
and wider ME construction industry.
In many jurisdictions around the world there are now several ADR methods available to
contracting parties, which provide an alternative to arbitration and litigation, such methods
are more time efficient and less costly. This leads to ask the obvious question as to why the
UAE construction industry has not embraced these ADR methods, particularly where such
methods have been proven to be successful in other jurisdictions. Is the UAE at risk of falling
behind international best practice when it comes to construction dispute resolution, and
would the introduction of DABs backed up by relevant statutory legislation be the answer?
Most construction dispute ultimately revolve around monitory issues, the Contractor’s profit
margin and the Employer’s costs. When the financial position of either party is threatened
there is a high potential for conflict and disputes to emerge. The reasons why disputes evolve
will be discussed in Chapter 2, however, the main concerns of any party to a construction
dispute, and the process of resolving the said dispute generally revolve around:
a) Cost,
b) Time taken to get an award/decision/judgement,
c) Interim relief (so as to maintain cash flow)
d) Enforcement of the award/decision/judgement.
3
1.2. Research Background:
Over the past 40 years the UAE has experienced unprecedented growth in its construction
industry, the cyclical rise and fall in the UAE economy (which is driven by oil exports, and in
recent years but to a lesser extent tourism) have mirrored the rise and fall in the fortunes of
the UAE construction industry. The economic crisis of 2008 had a devastating impact on the
global construction industry, and impacted the UAE particularly severely, during that period
a number of major infrastructure projects such as the Dubai Metro, Burj Khalifa, Dubai and
Abu Dhabi airport expansions were at various stages of completion. The sudden lack of
liquidity in the market forced a number of major projects contracts to be terminated,
suspended indefinitely or continued with a significantly reduced scope, all of which had an
impact on cash flow and payments, which ultimately led to numerous construction
contractual disputes. Some disputes from this period have taken years to resolve in arbitral
tribunals and the UAE Courts, and cost USD millions in legal fees and lost time.
The UAE is again expecting huge growth in construction related activity in the run-up to
hosting EXPO 2020 and a number of other major developments throughout the region.
However, the sustained low oil prices since 2015 are impacting cash flow and liquidity within
the UAE construction industry. “Across the region, many projects and programmes are facing
a very different economic business case than when they were initially planned, this has
resulted in a rise in the number of project deferrals and cancellations, which in turn has led to
an increase in the volume of claims submitted and formal disputes that have materialised”.3
The UAE construction industry is susceptible to external global economic shocks, mainly due
to the open economic model adopted by the UAE, the AED peg to the USD, the number of
international construction related companies operating in the UAE and the commodity market
fluctuations in international oil prices. There may well be uncertain economic times ahead
due to external risks and global geo-political tensions in Korea, Syria/Iraq, Ukraine and the
impact of Brexit. However, the consensus is that the world economy is growing steadily,
even considering all the current global issues. Global growth is expected to be 3.5% in 2017,
3
Global Construction Disputes Report (2017) Avoiding the same Pitfalls Arcadis
https://images.arcadis.com/media/2/4/B/%7B24BB2290-3108-4A38-B441-
E3C0B95FB298%7DGlobal_Construction_Disputes-2017.pdf accessed 15 October 2017
4
and increase to 3.6% in 20184. Advanced economies of the US, Europe, Japan and China are
experiencing above average rates of GDP growth, due to historically low interest rates and
recovery in global manufacturing and trade. The latest economic data for the UAE is also
relatively positive5. However, any shocks to the global economy will have both a direct and
indirect impact on the UAE economy and liquidity.
When there is a lack of cash flow and liquidity in the construction industry there will be
disputes, because contractual claims will be rejected or ignored by Engineer’s/Employer’s,
leaving the Contractor with no other option but to utilise the dispute resolution mechanisms
available under their contracts. Such disputes can cause major disruptions to the Contractor’s
cash flow, problems surrounding this issue in the UK were highlighted by Lord Denning6.
The UAE construction industry in 2017 is facing similar problems experienced in the UK in
the 1990’s prior to the introduction of the HGCRA7, with regards negative cash flows.
Currently, there is no effective dispute resolution mechanism in place in the UAE
underpinned by legislation and the Courts which would provide ‘interim relief’ to the party
suffering financially due to a prolonged dispute, based on the principle of ‘pay now, argue
later’. The impact of prolonged disputes can have a domino on cash flow through the supply
chain from the Main Contractor, to Sub-Contractors and material suppliers, this also effects
the wider UAE economy.
Therefore, there is currently a need in the UAE to ensure that robust dispute resolution
mechanisms are put in place which are time and cost effective, provide some form of interim
4
Monetary Fund World Economic Outlook (2017)
https://www.imf.org/en/Publications/WEO/Issues/2017/09/19/world-economic-outlook-october-2017
accessed 28 October 2017
5
International Construction Market Survey (2017) http://www.turnerandtownsend.com/media/2389/icms-
survey-2017.pdf accessed 15 October 2017 Construction cost inflation was 3.7% globally in 2016 compared to
1.5% in the UAE, with a projection of 2% in 2017. The average cost per meter squared of construction in the
UAE (Abu Dhabi and Dubai) was USD 1,725.7 this favourable compared to other major global cites, London
cost USD 3,213.99, Hong Kong USD 3,487.82 and New York USD 3,806.92. Profit margins in the UAE were
typically 8% with preliminary costs running at 11% of the contract value this compares favourably with average
profit margins in Europe and Asia.
The International Monetary Fund Statistical Appendix (October 2017)
https://www.imf.org/en/Publications/WEO/Issues/2017/09/19/world-economic-outlook-october-2017 accessed
14 October 2017 Found that UAE Real GDP growth is projected to be 3.4% in 2018 (average of 3.1% up to
2022). The Consumer Price Index (CPI) for the UAE is projected to be 2.9 in 2018 and the Current Account
Balance will be 2.1% in 2018 (average 3.7% up to 2022).
6
D Bowes, ‘Practitioners Perception of Adjudication in UK Construction’ (2007) Procs 23 rd Annual ARCOM
Conference cited Lord Denning “One of the greatest threats to cash flow is the incidence of disputes, resolving
them by litigation is frequently lengthy and expensive, arbitration in the construction context is often as bad or
worse”.6
7
English Housing Grants, Construction and Regeneration Act (1996)
5
relief and are enforceable in the UAE Courts. DABs are not new to the UAE or wider ME
region, as the “most commonly used form of contract used in the region is the FIDIC
Rainbow suite of contracts. However, DAB provisions have historically been deleted on
many projects in the region,8 nonetheless there have been moves by the Abu Dhabi
Government to introduce DAB clauses in their standard contracts. Although, the DAB is ad-
hoc which removes the benefit of dispute avoidance which a standing DAB provides, it is a
move in the right direction and gives hope that other Employer’s in the UAE construction
industry will take note of.
DABs were conceived to overcome the deficiencies associated with Litigation and
Arbitration proceedings as a method of resolving construction disputes. In the UAE for a
variety of different reasons almost all construction contracts have arbitration as the default
method of dispute resolution. Considering that in 2016 the average value of disputes in the
ME were higher than the global average at USD 56 million, with the average length of
disputes being 13.7 months9, it is extraordinary that the adoption of DABs as a method of
dispute avoidance/resolution in the UAE has been lethargic to date. This is extraordinary
considering the documented benefits of DABs internationally as a process of dispute
avoidance/resolution, combined with the experience and intimate knowledge of the
construction process the DAB members would bring to a project.10 DABs can prevent
disputes by:
 Promoting bilateral agreement,

 Facilitating positive relationships, open communications, trust and cooperation,
 Minimising inflated claims and posturing,
 Encouraging early identification, evaluation and prompt resolution of claims.
8
Dispute Adjudication Boards, http://www.arabianindustry.com/construction/news/2014/dec/4/dispute-
adjudication-boards-4894760/ accessed 05 September 2017
9
10
P Taplin and G Atherton, ‘Will Hindsight Promote the Case for Dispute Adjudication Boards?’ (2014)
Adjudication Society Newsletter
6
1.3. Aims and Objectives:
The overall aim of this dissertation is to identify the potential utilisation of DABs in the UAE
construction industry. The dissertation will also determine if construction professionals
within the industry would prefer to move away from the tried and tested and some might say
flawed methods of dispute resolution, such as arbitration and litigation, in favour of a dispute
avoidance method such as DABs. The objectives of this research are:
Dissertation Objectives
 To discuss construction risks and the causes of construction disputes in the UAE.
 To examine and explain the functions of DABs.
 To investigate the DAB Sub-Clauses under FIDIC 1999 Red Book with particular
focus on recent international court rulings with regards the enforcement of the DABs
decision, and how this would apply in the UAE Courts.
 To identify if construction professionals in the UAE actually want DABs as a method
of dispute avoidance/resolution.
 To ascertain why DABs are not utilised more in the UAE, and the reasons why.
 To discuss actions which can be taken in the UAE to make DABs a viable option for
the contracting parties.
Figure 1.1. Dissertation Objectives
1.4. Scope of Study:
The scope of this dissertation is limited to the use of DABs in the UAE, based mainly on
FIDIC 1999 with reference to international best practice. When parties enter into a
construction contract, the may have varying aims, the primary objective of the Contractor is
to generate profit and revenue, while the same would be true for the Employer, be they a
developer or government entity11. Most Employer’s and Contractor’s operating in the UAE
are experienced and understand the circumstances that generally lead to disputes on
construction projects. However, the question this dissertation will attempt to answer is why
DABs are not more commonly used in the UAE as a method of dispute avoidance and
resolution, when this particular region could benefit most from them.
11
Infrastructure projects to develop the economy are also based on revenue generation and increasing GDP.
7
Firstly, this research intends to investigate and illustrate if construction professionals
operating in the UAE want to or would avail of DABs as a mechanism to resolve construction
disputes. Secondly, the opinions of construction professionals with experience in the UAE
construction industry, knowledge of the UAE legal system and DAB procedures and rules
will be gathered through interviews. The selected group of interviewees will provide relevant
background knowledge to examine if current UAE legislation allows the enforcement of
DAB decisions in the UAE Courts, and could statutory legislation be introduced in the UAE
to supplement the DABs decision to provide some form of interim relief to the claimant while
the dispute is being resolved.
1.5. Research Methodology:
The research methodology adopted was both doctrinal and quantitative (refer to Chapter 3
Research Methodology), the reason these methodologies were chosen was to allow the author
and subsequent readers of this body of work gain an understanding and insight into the
particular subject matter, as to why DABs are not more widely used in the UAE. The purpose
of this dissertation is to identify if construction professionals believe DABs are the best
solution to dispute avoidance/resolution in the UAE construction industry, and can DABs
provide a measure of interim relief and would the DABs decision be enforceable in the UAE
Courts if necessary. The following research strategy was adopted:
Literature Review:
A review of current literature was undertaken on the subject of DABs, both primary and
secondary literature sources were used as part of the research. Detailed analysis was
undertaken of articles, books, journals, relevant web-sites and previous dissertations in the
area of construction claims, dispute, ADR methods and DABs under FIDIC 1999 Red Book.
Semi-Structured Interviews:
Semi-Structured interviews were carried out with a number of leading UAE construction
professionals so specific information could be obtained on the subject of DABs based on a
phenomenological research approach. This form of interview allowed specific issues to be
raised during the course of the interview, and give the interviewee greater freedom to express
their view on the subject. The questions were sometimes replicated, where appropriate, with
8
each interview so as to allow analyses of the responses clearly. The transcripts of the
interviews can be found under Appendix B.
Questionnaires:
Construction professionals in the UAE were invited to participate in an on-line survey
questionnaire, the purpose of which was to gather data from a relatively large number of
respondents including Sub-Contractor, Main Contractors, Employers, Consultants (Engineers
& Architects) and lawyers. The aim of the Questionnaire is to determine if UAE construction
professionals are aware of DABs and would they welcome them as a primary method of
dispute resolution. A copy of the questionnaire can be found under Appendix C.
1.6. Structure of Dissertation:
Chapter One: Research Introduction
Chapter one acts as an introduction to the basic concepts of DABs and provides a roadmap
detailing the scope of the study undertaken, including research background, aims and
objectives, research methodology and structure of the dissertation. It also provides the reader
with an insight into the research rationale and details the context as to why the author entered
into the research study.
Chapter Two: Literature Review
Chapter two consists of an in-depth literature review focusing on a number of key areas, such
as construction risk, claims and disputes, review of the FIDIC 1999 Clause 20 [Claims,
Disputes and Arbitration], summary of the UAE legal system and current dispute resolution
methods utilised in the UAE.
Chapter Three: Research Methodology
This chapter set out the methodology selected in this research work, it also details research
methods, concerns, research limitations and question development.
9
Chapter Four: Survey Findings
Chapter four provides analysis and interpretation of the empirical data collected from the on-
line questionnaire conducted for this study. The findings where possible have been enhanced
with graphic interpretation and correlated with previous research identified in the literature
review.
Chapter Five: Analysis Interpretation & Discussion
This chapter presents discussion, analysis and interpretation of information gathered during
the literature review research and from the semi structured interviews. The chapter describes
the participant group and outlines the analytical approach taken.
Chapter Six: Conclusion
This chapter draws conclusions arising from the analysis and findings of the study in
response to each research objective, and presents recommendations as to the future of DABs
in the UAE. This chapter also reviews options for further research, which could add to the
existing body of knowledge.
10
CHAPTER TWO
Literature Review
11
2.1. Introduction:
The purpose of this literature review is to provide a summary for the reader of the core ideas
and arguments which have been recently published relating to construction industry disputes
and the advances in alternative dispute resolution/avoidance mechanisms, with a particular
focus on DABs under the FIDIC 1999 (Red Book). An extensive literature search was carried
out to identify all the major aspects of dispute boards, the research found there to be a
consistent view from scholars and experts in the field with regards the advantages and
disadvantages of dispute boards.
The structure of this literature review is as follows:
1. Describe a construction contract, identify risk allocation under the contract, how a
claim becomes a dispute and dispute avoidance techniques.
2. The literature review will provide an overview of the history, rules and procedures of
DABs and identify the most common methods of dispute resolution in the UAE.
3. Provide in-depth analyses of FIDIC 1999 Clause 20, and the criteria and
responsibilities of the DAB members.
4. The review will conclude with a summary of dispute adjudication in the UAE.
The earliest record of conflict was the Book of Genesis12, it can be said that “wherever there
is human endeavour, there is conflict, a conflict of differing interests, of needs, of opinion or
simply a conflict over a desired outcome to a prior agreement”.13 Nearly all
construction/engineering projects will experience some form of dispute during the lifetime of
the construction contract, the impact the dispute has on the parties in terms of cost, time and
continued business relationships will depend on the parties’ attitudes to resolving the dispute,
and the methods of disputes resolution prescribed under the contract. “By and large
construction projects are a breeding ground for disputes of all kind, they result from many
12
“But the Lord came down to see the city and the Tower the people were building, the Lord said, if as one
people speaking the same language they have begun to do this, then nothing they plan to do will be impossible
for them, come let us go down and confuse their language so they will not understand each other”. N G Bunni,
‘What has History Taught us in ADR? Avoidance of Dispute’ (2015) 81 Arbitration, Issue 2, Chartered Institute
of Arbitrators
13
Ibid
12
factors, including unfair allocation of risk, unrealistic expectations and schedules, poorly
prepared contract documents, financial issues, poor communication and even the economy”.14
In recent times the use of DABs have increased in conjunction with the continuing
globalisation of adjudication, coupled with the increased use of DRBs, “which originally
developed in the domestic US market”.15 While DABs are competing with other ADR
methods outside the traditional dispute resolution mechanisms of arbitration and litigation,
they do use a process of ADR based on adjudication, this is combined with the DAB
member’s knowledge of the construction industry. Therefore, the DAB can be more
inquisitorial than an Arbitrator. The rapid rise to prominence of DABs over the past twenty
years is due to the DABs ability to take early measure which would prevent potential disputes
escalating. As a method of dispute resolution the process is proactive rather than reactive, and
is the only method of ADR which is in place before the dispute even arises.
The UAE should be leading the way in ADR because of the significant volume of
construction activity throughout the Emirates, the number of international
contractors/suppliers operating in the market, the widespread use and familiarity with FIDIC
forms of contract and the number of construction professionals from all around the world
working within the UAE construction industry. Despite the UAE being a perceived
progressive and developed construction industry, the number of construction related disputes
continue to grow, as does the associated cost of such disputes. With this in mind, it is
remarkable that the UAE construction industry has not embraced the idea of exploring more
economical methods of dispute resolution that offers a relatively quick, cheap and less
stressful alternative to the more traditional dispute resolution methods of arbitration and
litigation.
The UAE construction market may very well consider itself a mature market with many
experienced Employer’s and Contractor’s operating successfully in the sector. However,
there is another side to the industry, one where Contractor’s and Sub-Contractor’s with less
bargaining power do not have the opportunity to resolve their disputes with larger trading
parties, due to onerous conditions of contracts and the exorbitant cost of arbitration and
14
K Harmon, American Arbitration Association Handbook on Construction Arbitration and ADR (3rd edn, Juris,
New York 2016)
15
N Gould, ‘Establishing Dispute Boards – Selecting, Nominating and Appointing Board Members’ (2006)
Society of Construction Law International Conference in Singapore
13
litigation proceedings. Currently, where there are major disputes under UAE construction
contracts there is no specific method of providing Contractors and Sub-Contractors with
some form of interim relief (summary judgement) during the actual construction phases, or
where the dispute extends beyond the completion date. A fairer and more economically
viable method of dispute resolution which could be acceptable to both parties and enforced in
the UAE Courts is required in order to protect the financial interests and cash flows of the
parties’ contractual rights under the contract. Is now right time to introduce DABs into the
UAE, and make DABs the standard rather than the exception?
2.2. The Construction Contract:
A construction contract is an “agreement between two or more parties which gives rise to
rights and obligations which will be enforced according to the system of law applying to the
contract”.16 Construction Contracts are more detailed and extensive when compared to other
types of contracts, as was noted by Lord Diplock17 and HHJ Newey18, construction contracts
were further defined under the HGCRA19. Under UAE Law contracts are defined under the
UAE CTC Article 12520, the source of law under all construction contracts in the UAE is
governed under the CTC Article 121. Islamic law has relevance to construction contracts with
16
W Godwin, International Construction Contracts A Handbook (1st edn, Wiley-Blackwell, UK 2013)
17
Modern Engineering (Bristol) Ltd v Gilbert-Ash Northern [1974] AC 689 “An entire contract for the sale of
good and work and labour for a lump sum price payable by installments as the goods are delivered and the work
done. Decisions have to be made from time to time about such essential matters as the making of variation
orders, the expenditure of provisional sums and extension of time for the carrying out of the work under the
contract”. S Cheung, Construction Dispute Research Conception, Avoidance and Resolution (1st edn, Springer,
Switzerland 2014)
18
J Adriaanse, Construction Contract Law (2nd edn, Palgrave Macmillan, New York 2007) cited HHJ Newey “I
think the most important background fact which I should keep in mind is that building construction is not like
manufacture of goods in a factory. The size of the project, site conditions, the use of many materials and the
employment of various kinds of operatives makes it virtually impossible to achieve the same degree of
perfection the a manufacturer can, it must be rare that a new building in which every screw and every brush of
paint is absolutely correct”.
19
Housing Grants, Construction and Regeneration Act (1996) The statutory definition of a construction contract
includes “any agreement in writing, or evidenced in writing, under which the party does any of the following (i)
carries out construction operations (ii) arranges for others to carry out construction operations (iii) provides
labour for carrying out construction operations”. J Murdoch and W Hughes, Construction Contracts Law and
Management (4th edn, Taylor and Francis, London 2008)
20
UAE Civil Transaction Code, Law # 5 of 1985, Article 125 “A contract is the coming together of an offer
made by one of the contracting parties with the acceptance of the other, together with the agreement of them
both in such a manner as to determine the effect thereof on the subject matter of the contract, and from which
results an obligation upon each of them with regard to that which each is bound to do for the other”.
21
UAE Civil Transaction Code, Law # 5 of 1985, Article 1 “The legislative provisions shall apply to all matters
dealt with by those provisions in the letter and in the spirit. There shall be no scope for innovative reasoning in
the case of provisions of definitive import. If the judge finds no provision in this Law, he must pass judgment
according to the Islamic shari'ah. Provided that he must have regard to the choice of the most appropriate
solution from the schools of Imam Malik and Imam Ahmad bin Hanbal, and if none is found there, then from
the schools of Imam al-Shafi'i and Imam Abu Hanifa as dictated by expediency”.
14
regards the principles of Riba22, Gharar23, good faith24 and due process25. UAE construction
contracts are governed under the CTC Muqawala26.
Under both common and civil law the legal concept of a contract is to “identify and apportion
the rights and obligations of the parties, since these rights and obligations stem from the
allocation of the risks to which the contract is exposed”.27 “The construction contract is
unique in that it seeks to provide for a specific remedy in the event of any breach of the terms
and conditions within its framework and/or for a contractual entitlement in respect of
specified events or perceived risks”.28 The Conditions of Contract confer rights and
obligations on the parties to the contract only (Privity of Contract)29. A typical construction
contract will contain30:
 The Contractor’s Tender

 The Employer’s Letter of Acceptance
 The Contract Agreement
 The Conditions of Contract (General Conditions)
 Particular Conditions (which are adapted to take account of specific project
requirements, e.g. local laws, physical condition of the site).
 The Technical Documents – (drawings, specifications and BoQ)
Some Employers have their own be-spoke contracts which are adopted to suit their specific
requirements. The meaning of the words used by the parties under the written contract is
“If the judge does not find the solution there, then he must render judgment in accordance with custom, but
provided that the custom is not in conflict with public order or morals, and if a custom is particular to a given
emirate, then the effect of it will apply to that emirate”.
22
Illicit gain or unjustified enrichment
23
An act of cheating, danger or unwariness “Gharar in transactions of sale causes the buyer to suffer a loss and
is the result of lack of knowledge concerning either the price or the subject matter” N G. Bunni, The FIDIC
Forms of Contract (3rd edn, Blackwell Publishing, Oxford 2005) cited Ibn Rushd.
24
Good Faith applies to the conclusion, performance, termination, Riba and Gharar
25
Both Parties should be heard by the Judge, unless the subject matter is forbidden by Shari’ah
26
UAE Civil Transaction Code, Law # 5 of 1985 Contracts of Work, Part 1 – Muqawala (contract to make a
thing or perform a task) Articles 872 to 896.
27
N G. Bunni, ‘A Comparative Analysis of the Claim & Dispute Resolution Provisions of FIDIC’s 1999 Major
Forms of Contract Against its Earlier Forms’ (2006)
28
Ibid
29
“The common law rule of privity is that a contract cannot be enforced by or against a person who is not party
to the contract”. J Uff, Construction Law (11 edn, Sweet and Maxwell, London, 2013). Privity of contract is
enshrined under the UAE Civil Transaction Code, Law # 5 of 1985, Article 250 and 252.
30
B W Totterdill, FIDIC Users’ Guide a Practical Guide to the 1999 Red Book (1st edn, Thomas Telford,
London 2001)
15
interpreted by the Court in a process called constructing the contract31. Nonetheless, all
contracts need to embody “good project planning, from feasibility through to construction
and operation, and should provide for timely design, programming and risk management
input from specialist supply chain members”.32
2.3. Risk Allocation and Management:
There are a number of risks specific to construction contracts which may arise from the
planning, design and tendering stage through to the actual construction, final completion and
handover. Most construction contracts will define the allocation of risk between the
Employer and Contractor based on the applicable law, and will have procedures and
mechanisms to deal with any disputes that arise during the course of the project33. A well
drafted construction contract should “allocate the risk of loss or damage occurring to the
project clearly and completely, so that each party knows precisely which risks he bears and
what the consequences are should a risk eventuate”.34 The performance or non-performance
of obligations under the contract is generally the root of all contractual disputes, because one
party believes that the other party is not performing their obligation under the contract. “It
follows that the parties must have a very clear understanding of what they are undertaking”.35
Risk can be defined as “hazard, danger, chance of loss or injury, or the degree of probability
of loss”36 and expressed as a mathematical equation37. Risk allocation must be determined by
the contracting parties, in order to identify which party can best foresee, control or bear the
risk and who would benefit or suffer more if the risk materialises, the philosophy of risk
31
The construction of the contract is the “interpretation by which the meaning of the contract is ascertained, the
construction of a commercial contract has nothing to do with the formation, or bringing about of the contract, it
is solely concerned with ascertaining the meaning of the contract entered into by the parties”. P S Davis, JC
Smiths The Law of Contract (1st edn, Oxford University Press, Oxford 2016)
32
33
“In general the Contractor accepts all the risks that are not specifically allocated to the Employer, the
Employer’s liabilities include what are known as special risks” which are set-out under Clause 17.3 [Employer’s
Risks]
34
35
J Murdoch, R Chapman and W Hughes, Construction Contracts Law and Management (5th edn, Routledge,
London 2015)
36
J Murdoch and W Hughes, Construction Contracts Law and Management (4th edn, Taylor and Francis,
London 2008)
37
Risk = Probability or frequency of the occurrence of a defined event multiplied by the Consequences of the
occurrence of that event.
16
allocation was summarised by Grove38. There are two types of risks to consider in a
construction contract, the first are risks which lead to damage, injury or physical loss, which
are insurable, and the second type are risks which could lead to delay in completion, cost
overruns or non-performance of the contract, which are uninsurable risks. For large
international construction projects risk can be separated into project delivery and
jurisdictional risk39.
“The FIDIC General Conditions allocate the risk between the parties on a fair and equitable
basis, taking account of such matters as insurability, sound principles of project management,
and each party’s ability to foresee and mitigate the effect of the circumstances relevant to
each risk”.40 The concept of foreseeability is defined under FIDIC 199941 however, the
Contractor is liable for the consequences of all risks not expressly allocated to the Employer
under the contract, refer to Sub-Clause 17.142. Under FIDIC 1999 Sub-Clause 17.643 the
scope and the extent of the parties’ liabilities to each other are outlined.
The process of managing contractual risk was identified by PMBOK44, risk can be broken
into Risk Analysis (risk identification45 and quantification46) and Risk Management (response
38
N G. Bunni, The FIDIC Forms of Contract (3rd edn, Blackwell Publishing, Oxford 2005) cited J B. Grove
“The ultimate goal of optimal risk allocation is to promote project implementation on time and on budget
without sacrifice in quality, that is, to obtain the greatest value for money, the goal for a repeat employer should
be to minimise the total cost of risk on a project, not necessarily the cost of either party”.
39
“Project delivery risks are that which relate to the delivery of a specific project and to the financing and
construction of a specific asset, and can include counter-party risk, site and ground condition, construction
contract risk, availability of financing and bankability of a project, materials price escalation risks”.
“Jurisdiction risks relate more generally to the jurisdiction within which the project is to be delivered and the
asset constructed. Jurisdictional risks include things like legal entity establishment and licensing procedures,
political and social stability, exchange rate risk, currency controls, availability of dispute resolution forums and
enforcement issues, to name a few”. S Kerur and W Marshall, ‘Identifying and Managing Risk in International
Construction Projects’ (2012) International Review of Law 2012, 1, 08
40
G Owen, ‘The Working of the Dispute Board (DAB) Under New FIDIC 1999 Red Book’, (2003)
41
FIDIC 1999 Red Book Sub-Clause 1.1.6.8 [Unforeseeable] “means not reasonably foreseeable by an
experienced contractor by the date for submission of the Tender”. Subject to an express term to the contrary,
risks that are foreseeable are borne by the Contractor and in contrast those that are not foreseeable are borne by
the Employer. E Sunna, ‘FIDIC 1999 Red Book - A Practical Overview’ (2007) Law Update 2007, 192, 26
42
FIDIC 1999 Red Book Sub-Clause 17.1 [Indemnities]
43
FIDIC 1999 Red Book Sub-Clause 17.6 [Limitation of Liability] “Neither Party shall be liable to the other
Party for loss of use of any Works, loss of profit, loss of any contract or for any indirect or consequential loss or
damage which may be suffered by the other party in connection with the Contract, other than under Sub-Clause
16.4 and Sub-Clause 17.1”.
44
PMBOK – A Guide to the Project Management Body of Knowledge (2013)
45
Risk identification methods include checklists, cost estimates, labour/staffing and procurement plans,
brainstorming and the development of a risk register.
46
Risk can be quantified using a number of methods, expected monetary value (EMV=Probability% by Impact
(AED)), triangulation method, sensitivity analysis, Tornado charts or more developed computer systems such as
Monte Carlo simulation or the Central Limit Theorem.
17
development47 and response control48), risk was also defined by PMI49. Risk identification
and assessment is not a science but an art, the allocation of risk will depend on the
procurement strategy of the Employer and experience of the Contractor. Equitable risk50 and
efficient contracts are “considered to be the gateways to dispute avoidance, allocation of risk
in construction projects should conform to accepted principles”.51
The inappropriate allocation of risk creates more disputes when the parties are of unequal
bargaining power. But “if the parties are of equal bargaining power there is nothing
inherently unfair with any determined allocation of risk, so long as the parties are fully aware
of the facts”.52 UAE Employer’s such as the Abu Dhabi and Dubai Governments often
heavily amend the standard FIDIC position allocating additional risk onto the Contractor53.
2.4. Contractual Claims:
A claim can be defined as “an assertion of a right or remedy” it is therefore important that the
parties to the contract understand the remedies available to them. Surprisingly, there is no
specific definition of a ‘claim’ in any of the FIDIC Forms of Contract54. “A claim under a
construction contract in practice is generally taken to be an assertion for additional payment
47
The type of response to risk depends on the parties experience, the general principles of risk response are to
accept (manage the risk), avoid or mitigate (transfer the risk through insurance) the risk. A party can only
respond to a contractual or commercial risk if they have developed a risk management plan.
48
The risk management plan allows the risk to be monitored and controlled (passive or active control). Most
large construction projects will have a risk calendar, which will incorporate review dates, risk trigger points and
identify periods when the risk may materialise.
49
“The systematic process of identifying, analysing and responding to project risk, it includes maximising the
probability and consequences of positive events, and minimising the probability and consequences of event
adverse to project objectives”. . M S. Bassiony, A El-Karim, A El Nawawy and A M Abdel-Alim,
‘Identification and assessment of risk factors affecting construction projects’ (2014) HBRC Journal Volume 13,
Issue 2, 2017
50
“Equitable risk allocation is a process where the risk is allocated to the party best able to control and manage
the risk, equitable risk allocation has been identified as one of the strategies that would reduce the incidences of
claims and disputes”. P Fenn, Commercial Conflict Management and Dispute Resolution (1st edn, Spon Press,
Oxon 2012)
51
S Cheung, Construction Dispute Research Conception, Avoidance and Resolution (1st edn, Springer,
Switzerland 2014)
52
P Hibberd and P Newman, ADR and Adjudication in Construction Disputes (1st edn, Blackwell Science,
Oxford 1999)
53
“It is common for a contractor to have more onerous claim notification provisions, more restrictive suspension
and termination rights, entitlement to certain time-related costs removed and a greater risk of unforeseeable site
conditions and errors in design documents”. M Kerr, D Ryburn, B McLaren and Z Or Dentons, ‘Construction
and Projects in the United Arab Emirates: Overview’ (2014) Practice Law, Multi-Jurisdictional Guide 2013/14
54
Under FIDIC 1999 Red Book the word ‘claim’ appears under Sub-Clause 2.5 [Employer’s Claim] and Sub-
Clause 20.1 [Contractor’s Claim].
18
due to a party (variations, delay or disruption) or for extension of the time for completion”.55
Even if the conditions of the contract do not specify entitlement to a ’claim’ the parties can
still exercise their rights under the applicable law (tort/delict). Construction contract claims
can be made based on the principle of quantum meruit56 and claims for ex gratia57 payment.
Claims generally arise under the contract due to the following reasons:
a) Entitlement to EOT
b) Entitlement to additional payments
c) Entitlements to recovery of costs
d) Non fulfilment by one party of an obligation under the contract
e) Additional payments due to legal entitlement
FIDIC 1999 provides for both Employer Claims58 and Contractor Claims59. If the Contractor
considers himself entitled to EOT or additional payment60 under any Clause of the Conditions
of Contract they must give notice to the Engineer within 28 days, otherwise the Employer
may be discharged from all liability61 (the Contractor must also give notice of any probable
future events that may adversely affect the work62). Submitting the claim within the 28 day
55
56
“Where no price is stated for work carried out within an existing contract, the employer will be obliged to pay
a reasonable sum”. J Uff, Construction Law (11th edn, Sweet & Maxwell, London 2015)
57
“Ex gratia payment are not claims which arise by virtue of a contractual entitlement, they are sometimes
entertained by employers and engineers as a matter of expedience to avoid arbitration or litigation and, indeed,
to maintain the goodwill necessary to complete the project successfully”. N G. Bunni, The FIDIC Forms of
Contract (3rd edn, Blackwell Publishing, Oxford 2005)
58
FIDIC 1999 Red Book Sub-Clause 2.5 [Employer’s Claims] “If the Employer considers himself to be entitled
to any payment under and Clause of these Conditions or otherwise in connection with the Contract, and/or to
any extension to the Defects Notification Period, the Employer or the Engineer shall give notice and particulars
to the Contractor”.
59
FIDIC 1999 Red Book Sub-Clause 20.1 [Contractor’s Claims]
60
Under FIDIC 1999 Sub-Clause 14.3 [Application for Interim Payment Certificates] if the DAB awards the
Contractor a sum of money, they would be entitled to include it in the interim payment application “The
Statement shall include the following items, as applicable, which shall be expressed in the various currencies in
which the Contract Price is payable, in the sequence listed: (f) any other additions or deduction which may have
become due under the Contract or otherwise, including those under Clause 20 [Claims, Disputes and
Arbitration]”. If the Employer fails to include payment in the relevant interim payment cert, the contractor could
invoke Sub-Clause 16.1 [Contractor’s entitlement to Suspend Work] or 16.2 [Termination by Contractor].
61
FIDIC 1999 Red Book Sub-Clause 20.1 [Contractor’s Claims] “If the Contractor fails to give notice of a
claim within such period of 28 days, the Time for Completion shall not be extended, the Contractor shall not be
entitled to additional payment, and the Employer shall be discharged from al liability in connection with the
claim”.
62
FIDIC 1999 Red Book Sub-Clause 8.3 [Programme] “The Contractor shall promptly give notice to the
Engineer of specific probable future events or circumstances which may adversely affect the work, increase the
Contract Price or delay the execution of the Work”.
19
time bar is condition precedent to the recovery of time or money, and it is unlikely that the
DAB or any subsequent arbitral tribunal would move away from this contractual provision63.
However, there are some arguments against the time bar under the UAE CTC Articles 24664
or 31865. “The general point being that it is wrong that a party who has genuinely suffered
a loss might be prevented from bringing a claim in respect of that loss for a technical
procedural breach”.66 It should be noted that the UAE civil codes also contain a provision
confirming the importance of what has actually been agreed between the parties, refer to
Article 24367 and 26568. There may be other ways around Sub-Clause 20.1 condition
precedent, refer to City Inn Ltd69
The Contractor must submit a detailed claim within 42 days of becoming aware of the event
giving rise to the claim. The Employer must also substantiate his claim by specifying the
Clause/Clauses or basis of the claim, there is no time limit specified under the Sub-Clause
2.570. In both cases the Engineer under Sub-Clause 3.571 will determine the Employer’s
63
Under English law for a notice to amount to a condition precedent it must use very clear words, “it must set
out the time for service and make it clear that failure to serve will result in a loss of rights under the contract”. N
Gould, ‘Enforcing a Dispute Board’s Decision: Issues and Considerations (2013)
64
UAE Civil Transaction Code, Law # 5 of 1985, Article 246 Under UAE law “the requirement to act in good
faith plays an important role in ensuring that contracting parties administer their contracts properly and fairly
and in a way that the contracting parties had envisaged (perhaps by reference to custom or the parties' previous
business dealings)”. S Hunt, ‘Good Faith’ (2009) DIFC Law Update 2009, 221, 20
65
UAE Civil Transaction Code, Law # 5 of 1985, Article 318 “No person may take the property of another
without lawful cause, and if he takes it he must return it”.
66
J Glover, ‘Sub-Clause 20.1 – the FIDIC Time Bar under Common and Civil Law’ (2015)
https://www.fenwickelliott.com/research-insight/articles-papers/contract-issues/sub-clause-fidic-time-bar
67
UAE Civil Transaction Code, Law # 5 of 1985, Article 243 (2) “With regards to the rights (obligations)
arising out of the contract, each of the contracting parties must perform that which he is obliged to do under the
contract”.
68
UAE Civil Transaction Code, Law # 5 of 1985, Article 265 (1) “If the wording of a contract is clear, it is not
to be departed from by way of interpretation to ascertain the intention of the parties”.
69
City Inn Ltd v Shepherd Construction Ltd [2003] S.L.T. 885 The dispute was whether or not the Contractor
was entitled to an EOT and if the Employer was entitled to deduct LADs. The contract contained a time bar
clause, requiring the Contractor to provide details of the estimated effect of an instruction within ten days.
Lord Drummond Young characterised the clause thus: “I am of opinion that the pursuers’ right to invoke
clause 13.8 is properly characterized as immunity; the defenders have a power to use that clause to claim an
extension of time, and the pursuers have immunity against that power if the defendants do not fulfill the
requirements of the clause.” The Engineer has the right to wave contractual procedural requirements, if the
Engineer rejects the Contractors claim due to a time bar clause they must make reference to the condition
precedent as a reason for the rejection.
70
FIDIC 1999 Red Book Sub-Clause 2.5 [Employer’s Claims] “The notice shall be given as soon as practicable
after the Employer becomes aware of the event or circumstances giving rise to the claim”.
71
FIDIC 1999 Red Book Sub-Clause 3.5 [Determinations]
20
Claim72 and Contractor’s Claim73 within 42 days of receiving the full supporting particulars
of the claim.
Many times when one party submits a claim the other party will submit a counterclaim, the
legal basis for a counterclaim is that it is an independent action, but must be similar to that of
the claim, meaning the events and facts must be the same. A counterclaim could be defined as
“an assertion made by a party, which can conveniently be examined and disposed of in an
action originally initiated by the other party”.74
2.5. Conflict Avoidance:
Conflict avoidance should be based on the old saying that “prevention is better than cure”, if
the parties can manage and resolve conflict before a formal dispute develops, this may lead to
an improved project performance while maintaining the parties relationship. All projects
require proactive conflict avoidance techniques, based on a clear and concise planning
strategy for the execution of the works. Gould75 identified a number of steps to be taken in
order to attempt to avoid conflict:
1. Proactive planning and management

2. Clear contract documents
3. Good project management
4. Good client management
5. Partnering and alliancing
6. Good design team management
7. Record keeping
72
FIDIC 1999 Red Book Sub-Clause 2.5 [Employer’s Claims] “The Engineer shall then proceed in accordance
with Sub-Clause 3.5 [Determinations] to agree or determine (i) the amount (if any) which the Employer is
entitled to be paid by the Contractor, and/or (ii) the extension (if any) of the Defects Notification Period in
accordance with Sub-Clause 11.3 [Extension of Defects Notification Period]”.
73
FIDIC 1999 Red Book Sub-Clause 20.1 [Employer’s Claims] “The Engineer shall then proceed in accordance
with Sub-Clause 3.5 [Determinations] to agree or determine (i) the extension (if any) of the Time for
Completion (before or after its expiry) in accordance with Sub-Clause 8.4 [Extension of Time for Completion],
and/or (ii) the additional payment (if any) to which the Contractor is entitled under the Contract”.
74
75
N Gould, ‘Conflict Avoidance and Dispute Resolution’ (2012) RICS Professional Guidance UK GN 91/2012
21
It is important to distinguish between conflicts, claims and disputes, “conflicts occur when
objects are incompatible and on the other hand disputes arise when a conflict becomes an
altercation”.76 If there is no claim by either party there can be no rejection or determination,
which ultimately means there is no dispute, although there may be disagreement of opinions
between the parties as to what constitutes a valid claim. “Dispute avoidance can only be used
if both parties wish it to take place whereas dispute resolution can be initiated by one party
alone once a dispute arises”.77 So when does a claim become a dispute? Judge Jackson J gave
his assessment in Amec Civil Engineering78. “A claim is no more than an assertion and cannot
become a dispute until there is a genuinely disputable issue”,79 refer to Fastrack
Contractors80, Gleeson Group81 and Halki Shipping82. “
2.6. Contractual Disputes:
The drafting of a good contract alone will not result in the avoidance of construction disputes,
as was highlighted by Lord Donaldson83. A dispute is defined as a “situation where two
parties typically differ in the assertion of a contractual right, resulting in a decision being
76
London 2008)
77
78
Amec Civil Engineering Ltd v Secretary of State for Transport [2004] EWHC 2339 (TCC) “The mere fact that
one party notifies the other party of a claim does not automatically and immediately give rise to a dispute, it is
clear, both a s a matter of language and from judicial decisions, that a dispute does not arise unless and until it
emerges that the claim is not admitted”.
79
P Hibberd and P Newman, ADR and Adjudication (1st edn, Blackwell Science, Oxford 1999)
80
Fastrack Contractors Ltd v Morrison Construction Ltd [2000] BLR 168 “The Employer argued that there was
no dispute to refer to adjudication on the basis that there were significant differences between the sums in the
interim application and the notice to adjudicate, and the discrepancies meant that there was no dispute about the
figures in the notice to adjudicate and hence no jurisdiction”.
http://www.adjudication.co.uk/archive/view/case/76/fastrack_contractors_ltd_v_morrison_construction_ltd_%5
B2000%5D_blr_168 accessed 28 October 2017
81
M.J. Gleeson Group v Wyatt Snetterton [1994] 72 BLR 15 (CA) “The Court held that the word ‘dispute’ in
clause must be given its ordinary meaning which prima facie comprehends the case where a claim has been put
forward and rejected”.
82
Halki Shipping Corporation v Sopex Oils Limited [1997] 3 All ER 833 “The Plaintiff asked the critical
question is what is meant by ʺdisputeʺ, relying on the decision of the House of Lords in Nova v. Kammgarn
[1977] 1 WLR 713, a ʺdisputeʺ means a genuine or real dispute, and that a claim which is indisputable because
there is no arguable defence does not create a dispute at all”. “The Defendant argued that ʺdisputeʺ means any
disputed claim, and therefore covers any claim which is not admitted as due and payable, based on the Court
rulings in Ellerine v Klinger [1982] 1 WLR 1375”.
http://www.nadr.co.uk/articles/published/ZzzzarbitrationLawReports/Halki%20v%20Sopex%201997.pdf
83
C Chern, Chern on Dispute Boards Practice and Procedures (3rd edn, Routledge, New York 2015) cited Lord
Donaldson “It may be that as a judge I have distorted view of some aspects of life, but I cannot imagine a civil
engineer contract, particularly one of any size, which does not give rise to some dispute. This is not to the
discredit of either party to the contract. It is simply the nature of the beast, what is to their discredit is that they
fail to resolve these disputes as quickly, economically and sensibly as possible”.
22
given under the contract, which in turn becomes a formal dispute”.84 A dispute resolution
clause will “set out the procedures to settle disagreements that arise out of the contract, and
also provide a gap fulfilling function to deal with unanticipated happenings”. 85 If the
construction contract is well drafted, and contain terms and conditions which are clear and
unambiguous, such terms should address the most foreseeable situations, “but cannot cover
all possible issues that may arise during the life of a project”.86
All construction disputes must be weighed in terms of time and cost, and also take account of
other factors such as business and personal relationships, the legal jurisdiction, obtaining a
binding decision, enforcement and measures of interim relief. If a dispute significantly
impacts the fundamental objectives of the project such as time, cost or quality it will
undoubtedly erode the chances of project success. When a dispute arises the first question
asked is, who is to blame?87 It is therefore important to have a robust dispute resolution
mechanism available to both parties under the contract. Whenever there are disputes the
parties will refer back to the expressed terms of the contract, dispute resolution decisions will
depend on the facts and the expressed terms, and to a lesser extent the implied terms and law.
The main causes of construction disputes are:88
 Failure to properly administer or poor understanding of the contract

 Unfair allocation of risk
 Contracts do not fit the procurement route chosen
 Poorly drafted or incomplete and unsubstantiated claims
 Parties failing to understand or comply with its contractual obligations
84
85
S Cheung, Construction Dispute Research Conception, Avoidance and Resolution (1st edn, Springer,
Switzerland 2014)
86
L Picard, American Arbitration Association Handbook on Construction Arbitration and ADR (3rd edn, Juris,
New York 2016)
87
The likelihood of having serious construction disputes on a project can be predicted long before they occur,
The CII developed a model dispute potential index which identified construction dispute predictors. “(i)
Owner’s management and organisation (ii) Contractor’s management and organisation (iii) Project complexity
(iv) Project size (v) Financial planning (vi) Project scope definition (vii) Risk allocation (viii) Contract
obligations.” SD-101 - DPI - Dispute Potential Index: A Study into the Predictability of Contract Disputes
https://www.construction-institute.org/resources/knowledgebase/knowledge-areas/disputes-prevention-
resolution-(best-practice)/topics/rt-023/pubs/sd-101 accessed 30 September 2017
88
23
 Errors or omissions in the contract documents
 Incomplete design information or employer requirements
 Pressure on available funding
 Over ambitious allocation of risk to one party or through the supply chain.
Most construction disputes cannot be foreseen when the parties enter into contract, “but the
gravity of the dispute can be diluted by following ethical practices and by performing
business in an unemotional and above-board manner”.89
2.7. Methods of Dispute Resolution:
Dispute resolution can be divided into final determination procedures such as arbitration and
litigation, and preliminary determination procedures such as Mediation / Conciliation, Early
Neutral Evaluation, Adjudication and Dispute Boards / Panels. The disadvantage of dispute
resolution is that it occurs after the dispute has arisen, and has already likely impacted the
project costs, cash flow and programme, possibly resulting in a deterioration of the
relationship between the parties. Professor Green90 has labelled the three pillars of dispute
resolution as negotiation, mediation/conciliation and an adjudicative process, all dispute
resolution processes are built on these pillars. The UAE construction industry has only
embraced a limited number of dispute resolution mechanisms, which is limited to negotiation
(Majlis), arbitration or litigation.
Direct negotiation between the parties is still the most efficient method of dispute resolution
adopted in the UAE91. Construction disputes are almost always negotiated before the parties
refer to the dispute resolution mechanisms under the contract. “Negotiation is a voluntary
process that can occur at any time after the dispute has arises, negotiations take place without
89
C Khekale and N Futane, ‘Management of Claims and Dispute in Construction Industry’ (2013) International
Journal of Science and Research
90
N Gould, P Capper, G Dixon and M Cohen, Dispute Resolution in the Construction Industry An Evaluation of
British Practice (1st edn, Thomas Telford Publishing, London, 1999)
91
“The Middle East, with its history of resolving disputes in the Majalis, is well suited for negotiation at senior
executive level as a form of ADR”. R Bell, ‘United Arab Emirates: Dispute Resolution In Abu Dhabi Part 1 -
Litigation Is Not The Only Way’ (2011)
http://www.mondaq.com/x/151798/Arbitration+Dispute+Resolution/Dispute+Resolution+In+Abu+Dhabi+Part+
1+Litigation+Is+Not+The+Only+Way accessed 29 November 2017
24
the assistance of third parties”.92 The art of negotiation is the least expensive and time
consuming method of dispute resolution available, but both parties have to find common
ground so as to maintain their business and personal relationships. There are three principle
negotiating strategies, positional93, principled94 and pragmatic, “using negotiation as a way to
communicate for the purpose of persuasion is the pre-eminent mode of dispute resolution”.95
Only when negotiations breakdown are other dispute resolution procedures considered.
2.7.1. ADR:
ADR can be defined as “a broad spectrum of structured processes, including mediation and
conciliation, which does not include litigation though it may be linked to or integrated with
litigation, and which involves the assistance of a neutral third party, which empowers parties
to resolve their own disputes”.96 The parties should agree to the amicable method of dispute
resolution (including the rules of the prescribed method) at the time of drafting the contract,
the success of the dispute resolution chosen will ultimately depend on the trust and good faith
of the parties.
ADR methods are generally less successful when emotions are high and the parties are not
interested in settling the dispute promptly. “Modern standard forms encourage the parties to
resolve their disputes amicably, i.e. without adjudication, arbitration or litigation, this
encouragement takes place in form of explicit reference to various modes of ADR and, in
some cases, to particular ADR procedures”.97 The UK Courts actively support ADR as a
92
C Y Enhada, C Turnage Gatlin and F Wilshusen, Fundamentals of Construction Law (1st edn, ABA Book
Publishing, New York 2003)
93
“Each side views the object of the negotiation as something finite that must be shared, stake out the position
they believe is in their own interest, and concentrate on winning that position for their side, this makes the
process an adversarial, competitive one”. A Bogardus, PHR / SPHR Professional in Human Resources
Certification Study Guide (2nd edn, Wiley Publishing, Indiana 2007)
94
“Is a settlement that will satisfy both sides’ interests by keeping a clear sight on one’s best alternative to a
negotiated agreement and on options for mutual gain”. The key principles are (i) Separate the people from the
problem (ii) Focus on interests, not positions (iii) Invent options for mutual gain (iv) Insist on objective criteria.
K Mackie, D Miles, W March and T Allen, The ADR Practice Guide Commercial Dispute Resolution (3rd edn,
Tottel Publishing, UK 2007)
95
N Gould, ‘Conflict Avoidance and Dispute Resolution’ (2012) RICS Professional Guidance UK GN 91/2012
96
Alternative Dispute Resolution: Mediation and Conciliation (Law Reform Commission Ireland, 2010)
97
London 2008)
25
method to resolve construction disputes, refer to Dunnett98. The advantages of ADR are
widely accepted within the construction industry,
 Speed / Cost – not the same level of involvement of lawyers and experts, also the
costs of arbitrators and the use of Arbitration Institutions can be avoided.
 Consensual Process – as ADR is a flexible process that facilitated settlement which is
confidential and without prejudice99, and removes the parties risk of being bound by a
decision of a third party (the process can be binding on the parties by providing a
form of wording).
 Neutrality and Fairness
 Preservation of Relationships
 Confidential
 The enforceability of ADR clauses was addressed in Hopper Bailie100 and the
endorsements of ADR confirmed by the English courts in Channel Tunnel,101 in that
the English Courts are in favour of letting the parties resolve their dispute in the
manner prescribed under their Contract.
98
Dunnett v Railtrack [2002] 2 ALL ER 850 “The Court of Appeal refused to make an order as to the costs with
reasoning that the defendant (who had won the case) had refused to contemplate ADR at a stage before the costs
of this appeal started to flow, hence the winning party could not recover costs”. J Murdoch, R Chapman and W
Hughes, Construction Contracts Law and Management (5th edn, Routledge, London 2015)
99
“Discussions or documents submitted during the mediation process cannot be used against the party who
made or produced them in subsequent proceedings”. A Powell, ‘Mediation in the UAE’ (2012) Law Update
2012, 248, 1
100
Hopper Bailie Associated Ltd v Natcon Group Pty Ltd [1992] 28 NSWCR 194 “The Plaintiff sought a stay
on arbitration proceedings until conciliation had concluded, there was an implied term in the conciliation
agreement that the parties would take all reasonable steps to resolve the issue”. The Court held that the
arbitration proceedings would not resume until the conciliation had been concluded. M Zahidul Islam, ‘Legal
Enforceability of ADR Agreement’ (2013) International Journal of Business and Management Invention 2319 –
8028. N Gould, P Capper, G Dixon and M Cohen, Dispute Resolution in the Construction Industry (1st edn,
Telford Publishing, London 1999) cited Giles J “Conciliation or mediation is essentially consensual, and the
opponents of enforceability contend that it is futile to seek to enforce something which requires the consent of a
party when co-operation and consent cannot be enforced”.
101
Channel Tunnel Group v Balfour Beatty [1993] A.C. 334 “The contract contained a clause providing that
disputes between the employer and the contractor shall, at the instance of either of them, be referred to and
settled by a panel of three experts “acting as independent experts but not as arbitrators”) before referring the
dispute to arbitration”. The panel’s decision was binding unless and until it was revised by any subsequent
arbitration. C Reymond, ‘The Channel Tunnel case and the law of International Arbitration’ (1993) Law
Quarterly Review 109, 337-342
26
2.7.2. Mediation / Conciliation:
Both mediation and conciliation are voluntary non-adversarial forms of forms of dispute
resolution, and can be defined as “a process whereby a dispute between two or more persons
or companies is resolved by remitting the dispute to a private hearing before an independent
third party (the Mediator) whose role is to assist the parties to reach a mutually satisfactory
solution to the matter in dispute”.102 Mediation is used more predominant in common law
jurisdictions, while conciliation is used in civil law jurisdictions. The main difference
between the two methods is the level of involvement of the third party, the conciliator will
propose a settlement solution, whereas the mediator will seek agreement between the
parties103. The main features of mediation/conciliation are:
 The speed of dispute resolution (mediations can be concluded in one day thus
avoiding an antagonistic drawn-out dispute).
 Relatively low legal, court, expert and advocacy fees (provided the parties to the
mediation act in good faith, with a willingness to resolve the dispute).
 Confidentiality of the proceedings are subject to the principle ‘without prejudice
privilege‘104 (which is not recognised in the UAE Courts), “the dispute will only
become public if it is necessary to enforce a settlement agreement in Court”.105
 Flexibility of the process, however, mediation/conciliation is not suitable in resolving
complex technical issues.
 The outcome of the mediation is non-binding on the parties unless the parties have
signed a mediation agreement (which is a simple contract) “once a settlement has
being reached it will bind the parties as in contract, and will preclude the bringing of
further proceeding in respect of the matter settled”.106
Mediation is not a new concept in the ME or UAE and has existed in the region for 1000’s of
years, but as a method of construction dispute resolution in the UAE the method has not
gained much traction to date. Nonetheless, the UAE judicial system and individual Emirate
102
P Hibberd and P Newman, ADR and Adjudication in Construction Disputes (1st edn, Blackwell, Oxford
1999)
103
Both mediation and conciliation must be recorded under contract for it to become binding on the parties.
104
“Discussions or documents submitted during the mediation process cannot be used against the party who
made or produced them in subsequent proceedings”. A Powell, ‘Mediation in the UAE’ (2012) Law Update
2012, 248, 1
105
C Clutterham, ‘Methods of Dispute Resolution Series: - Mediation’ (2010) Law Update 2010, 223, 9
106
J Uff, Construction Law (11th edn, Sweet & Maxwell, London 2013)
27
judiciaries have attempted to adopted ADR methods. The UAE Federal Law # 26 of 1999107,
Ministerial resolution 133 of 2001 established the procedure of the conciliation and
settlement committee and Dubai Law No.16 of 2009 established the CASD108 which was
opened in 2012.
In addition UAE freezones such as the DIFC have their own laws, regulations, courts (SCT109
and DIFC Court Rules, Part 27110) which are independent of the civil and commercial laws of
the UAE, together with a number of mediation centres in operation throughout the UAE, such
as the ICC Mediation Rules111, DIAC112, DIFC-LCIA Mediation Rules113, ADCCAC114 and
the RICS Mediation Panel115.
2.7.3. Arbitration:
Internationally Arbitration is preferred to litigation to resolve complex technical construction

related disputes, because Arbitration provides a final and internationally enforceable solution
to the dispute, refer to the New York Convention116. The term “arbitration” has no fixed or
107
UAE Federal Law 26 of 1999 Concerning the Establishment of Conciliation and Arbitration Committees at
Federal Courts
108
“The Centre for Amicable Settlement of Disputes (CASD) aims to facilitate the amicable and affordable
settlement of disputes via mediation within a period of one month before referring the matters to the court to
proceed via the usual court process”. “Any dispute referred to the Centre will be reviewed by mediators under
the direct supervision of the concerned judge”. A Powell, ‘The Centre for Amicable Resolution of Disputes in
Dubai’ (2013) Law Update 2013, 256, 13
109
“In the Small Claims Tribunal (SCT) if both parties agree claims with a maximum value limit of AED
500,000 can be considered by the SCT, if the parties are unable to reach a settlement the DIFC Courts will hold
a hearing and deliver a Court judgment”. “SCT proceedings are confidential and parties are not normally legally
represented”. N Bakirci, ‘The Role of Mediation in the DIFC Courts’ (2015) http://globallawsummit.com/the-
role-of-mediation-in-the-difc-courts/ accessed 24 October 2017
110
DIFC Court Rules (2014) Part 27 Alternative Dispute Resolution
111
ICC Mediation Rules (2014) was introduced in Dubai in 2014 “The rules govern the parties’ agreement to
ICC Mediation or any request made by the parties following a dispute to use the ICC Mediation process”. “The
rules emphasise the strict confidentiality of the process and outcome, they provide for the independence of the
mediator and restricts them acting in any future capacity once the mediation is completed”. E Al Tamimi,
‘Mediation – Does it work in the Middle East’ (2014) Law Update 2014, 269, 10
112
Under the 1994 DIAC Rules there are provisions relating to Conciliation, the provisions set out the
procedures and timeframe for conciliation, appointment of the conciliation panel, timeframe for concluding the
proceedings and the authentication of the final agreement.
113
The DIFC-LCIA Mediation Rules (2012)
114
The Abu Dhabi Commercial, Conciliation and Arbitration Centre (1993)
115
“The RICS mediation panel was established in (2012) and collaborates with the Dubai Courts to promote
public understanding of the advantages of the mediation process as a form of ADR”. A Powell, ‘Mediation in
the UAE’ (2012) Law Update 2012, 248, 1
116
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. The UAE
ratified the New York Convention in 2006 under Federal Decree No. 43/2006. “In theory the New York
Convention replaced the provisions of the Federal Law (11) of 1992 (“Civil Procedure Code”) concerning the
enforcement of foreign judgments in the UAE”. M L. Rubert, ‘Enforcement of Foreign Arbitration Awards in
the UAE’ (2014)
28
definite meaning. “It denotes the placing of a dispute before a third party to obtain a fair or
equitable resolution, based on discretion rather than fixed rules”,117 as was described by
Stephenson118. The main advantages of arbitration have traditionally been “privacy, speed of
resolution, cost effectiveness, convenience, finality, certainty and choice of tribunal”.119
But in recent times some of the benefits of arbitration as a method of resolving disputes in the
construction industry have been eroded. Arbitration has evolved to the point where it is
almost similar to litigation in terms of cost and time expended. “Around the world, the
constant and resounding criticism of arbitration is that it takes too long, and is too appealable,
in almost all surveys of arbitration users, time and delay ranks far more significantly than
cost”.120 It is clear that arbitration has some inherent structural problems, it can now take two
to five years to complete the arbitration process, and sometimes as long to enforce the award,
for Contractors with limited financial means this is not an option121.
Unlike litigation arbitration is a matter of the consent of the parties, and is confidential. “As
well as neutrality of forum, arbitration is preferred over litigation because enforcement of an
arbitral award is generally less problematic than seeking to enforce the judgement of a local
court”.122 The dispute in question will be assessed by the arbitral tribunal, made up of
construction industry professional who should have technical, quantum and
commercial/contractual expertise conducted according to the rules of the Institution
referenced in the Contract (FIDIC 1999 is under ICC Rules) or the arbitration agreement.
However, in the UAE there remains uncertainty as to how the local courts will treat the
arbitral award, in terms of enforcement.123 The losing party may attempt to delay their
117
118
“A voluntary procedure, available as an alternative to litigation, but not enforceable as the means of settling
disputes except where the parties have entered into an arbitration agreement, in such cases the right of either
party to have disputes resolved by arbitration will, except where there are good reasons to the contrary, be
upheld by the court”. D.A Stephenson, Arbitration Practice in Construction Contracts (3rd edn, E & FN Spon,
UK, 1993)
119
N G. Bunni, The FIDIC Forms of Contract (3rd edn, Blackwell Publishing, Oxford 2005)
120
S Hibbert, ‘Dispute Resolution in Abu Dhabi (Part 3) – A Lot Now Rides on Success of the DAB System’
(2010) http://kluwerarbitrationblog.com/2010/04/22/dispute-resolution-in-abu-dhabi-part-3-a-lot-now-rides-on-
success-of-the-dab-system/ accessed 30 September 2017
121
Arbitration only benefits parties who have the financial resources to justify fully-fledged arbitration
proceedings.
122
123
D O’Leary, ‘Using Dispute Adjudication Boards to Resolve Construction Disputes’
http://www.tamimi.com/en/magazine/law-update/section-14/february-8/using-dispute-adjudication-boards-to-
resolve-construction-disputes.html accessed 30 September 2017
29
liability to make payment as per the arbitration award by invoking technical arguments which
would challenge the arbitral award124. However, there are a number of clear benefits to
arbitration in the GCC region, such as (the parties can decide on the seat, applicable rules, the
tribunal and the arbitral process allows for a detailed analysis of claims and defences).
Arbitrations in the UAE are governed and enforceable under Federal Law125 and treaties such
as the Riyadh Convention126 and GCC Treaty127 (foreign awards are governed by New York
Convention). UAE law address a number of points including enforcement requirements 128. It
seems for UAE Contractors and Employers arbitration is still a better option to litigation both
in terms of monetary expenditure, procedural process and certainty of award, However,
arbitration is still considerably more costly and time consuming when compared to ADR
methods. The UAE has attempted to establish itself as a centre of International Arbitration,
with a number of centres such as DIAC129, DIFC-LCIA130, ADCCAC131 and arbitration
centres in Sharjah132 and RAK133 also. However, the UAE government has not yet introduced
legislative framework for arbitration (an Arbitration Act) based on the UNCITRAL Model
Arbitration Law134, although such legislation has been in the pipeline for a number of
years135.
124
Ibid
125
Federal Law (11) 1992 Civil Procedure Code Articles 203 to 218
126
Arab Convention on Judicial Cooperation (1983)
127
Agreement of Execution of Judgments, Delegations and Judicial Summons in the Arab Gulf Cooperation
Council countries (1996)
128
(i) The formalities required in order for an arbitration agreement to be valid; (ii) The constitution of the
arbitral tribunal; (iii) The circumstances in which an arbitrator may be dismissed from the arbitral tribunal; (iv)
The enforcement of awards; and (v) The circumstances in which an arbitration award can be challenged. M L.
Rubert, ‘Enforcement of Local Arbitration Awards in the UAE’ (2014)
129
Dubai International Arbitration Centre, which administers arbitrations under the DIAC Arbitration Rules
2007
130
DIFC London Court of International Arbitration, which administers arbitrations under the DIFC-LCIA
Arbitration Rules 2008
131
Abu Dhabi Conciliation and Arbitration Centre
132
Sharjah International Commercial Arbitration Centre
133
Ras Al-Khaimah Commercial and Arbitration Centre
134
The Model Law on International Commercial Arbitration (1985) and the Revised Model Law (2006) “The
Model Law was developed with a view to achieving two main objectives (i) to promote the harmonization and
improvement of national laws relevant to the resolution, by arbitration, of disputes arising out of international
commercial transactions (ii) offer a legislative model that would prove acceptable to states located in different
region, belonging to different legal traditions, and pursuing different economic polices”. F Bachard and F
Geinas, The UNCITRAL Model Law after Twenty Five Years: Global Perspective on International Commercial
Arbitration (1st edn, Juris, New York 2013)
135
The UAE has attempted to enact an arbitration law on two occasions; first in 2008 ("2008 Draft") and later in
2014 ("2014 Draft"). “The current United Arab Emirates ("UAE") `arbitration law' is enshrined in Articles 203-
218 of Federal Law No. 11/ 1992, as amended (the "UAE Civil Procedure Code")”. S Habib, ‘A new arbitration
law for the United Arab Emirates third time lucky?’ (2017)
30
2.7.4. Litigation:
“A contract is, by definition, a legally binding agreement and the governing law is stated in
the Contract, any disagreement or dispute may eventually be referred to the Courts of the
country of the governing law”.136 As a general principle litigation is a process where a
“dispute is decided by a court of law with jurisdiction or power over the dispute and to which
it has been referred in accordance with its procedures, unlike arbitration the source of a
court’s power to decide a dispute is not the agreement of the parties”.137
The UAE legal system138 is heavily influenced by a combination of legal principles from a
number of different legal systems (Napoleonic, Ottoman or Egyptian civil code). The UAE
like other Muslim states has three sources of law, which are the constitution, Sharia where
legislation is silent (Islamic law is based on two fundamentals, the Quran139 and the Sunna140
the combination of these two sources is called Sharia141, there are also two subsidiaries of
Islamic law, the Ijma142 and the Qiyas143) and jurisprudence144. As a civil law jurisdiction
statutes are the primary source of law in the UAE, each case is decided on its own merits,
https://www.lexology.com/library/detail.aspx?g=17b326b4-9f83-4ca3-aa23-b4ca2e0f93f1 accessed 14
November 2017
136
B W Totterdill, FIDIC Users’ Guide a Practical Guide to the 1999 Red Book (1st edn, Thomas Telford,
London 2001)
137
138
The emirates of Abu Dhabi, Dubai, Ajman, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain were
formed in 1971 under the UAE federal constitution, which provides for the allocation of power between the
federal and each emirate government. The Federal Law prevails over individual Emirate Laws, where the
Federal Law is absent or silent the Law of the Emirate will apply.
139
The holy book of the Islamic religion
140
“Is a reported compilation of the conversations (hadith) and deeds of the Prophet collected after his death”. C
Mallat, Introduction to Middle Eastern Law (1st edn, Oxford University Press, Oxford 2007)
141
“Shari’ah is a body of religious, ethical and legal rules, and strives to give effect to the intention of the parties
in matters of contract”. B Ahmed, C Randeniya and M Kiriella Bandara, ‘Litigation and enforcement in the
United Arab Emirates: overview’ (2017)
142
“In Islamic jurisprudence (fiqh) the matter on which ijma' is of interest is understood in one of the two
following ways: Any matter related to Shari'ah and any matter (of interest to Muslims)”. Shafaat A, ‘The
Meaning of Ijma' (1984) http://www.islamicperspectives.com/meaningofijma.htm accessed 31 October 2017
143
“Qiyas provided classical Muslim jurists with a method of deducing laws on matters not explicitly covered
by the Quran or Sunnah without relying on unsystematic opinion (ray or hawa). According to this method, the
ruling of the Quran or Sunnah may be extended to a new problem provided that the precedent (asl) and the new
problem (far) share the same operative or effective cause (illa)”. Oxford Islamic Studies On-line
http://www.oxfordislamicstudies.com/article/opr/t125/e1936 accessed 31 October 2017
144
Jurisprudence includes both laws and regulations relating to the practices of the religion of Islam as well as
laws and regulations relating to possession. It is found under UAE Civil Transaction Code, Law # 5 of 1985,
Article 2 - “The rules and principles of Islamic jurisprudence (fiqh) shall be relied upon in the understanding,
construction and interpretation of these provisions”. The Sunni rite of Islam has four schools of jurisprudence,
Hanafi, Maliki, Shafii and Hanbali, there is also the Shiah and Zaydi schools of jurisprudence.
31
unlike the ‘doctrine of binding precedent’145 in common law jurisdictions. Each Emirate has
its own judicial system, the structure of the UAE Courts is the Court of First Instance,
decision of that Court may be referred to the Court of Appeal and finally to the Court of
Cassation, all courts are governed by UAE Federal law146 (in the UK the courts are governed
by the CPR147, which are statutory rules).
Litigation can quickly become a costly and time consuming exercise with pre-trial procedures
and appeals taking years to resolve. In addition, “parties to a construction dispute have no
assurances that the judge presiding over the case will have knowledge of the standards of
practice of construction, this increases the risk of an erroneous judgement form a judge
struggling to comprehend complex industry practices”.148 This is a common issue for parties
taking construction related disputes to the UAE Courts, whereby a Court appointed expert149
will be appointed where the subject matter of the dispute is complex or requires specialized
knowledge. Generally, the Court will request an expert report, which will determine the facts
of the dispute. “It is the common practice of UAE judges to accept expert reports without
modification, questioning, or analysis, therefore, court-appointed experts, play a central and
powerful role”150. Such expert reports do not always address the root problem of a
construction dispute, which could combine technical, planning, quantum and
commercial/contractual elements, very few UAE court appointed experts are in fact ‘experts’
in all of these elements.
The major advantage of litigation over other forms of dispute resolution is parties may be
joined in an action, meaning “any number of claimants who have similar interests in the
subject matter of the litigation may join together in a claim”.151 Would the UAE benefit from
145
“The process of deciding a case in accordance with past judicial reasoning used by judges reaching decisions
in similar previous cases, the concept of keeping to past decisions is also tied to rules concerning the hierarchy
of English courts”. S Hanson, Legal Method and Reasoning (2nd edn, Cavendish Publishing Limited, London
2003)
146
UAE Civil Procedure Code, Federal Law # 11 of 1992
147
English Civil Procedure Rules (1999)
148
R Fullerton, American Arbitration Association Handbook on Construction Arbitration and ADR (3rd edn,
Juris, New York 2016)
149
“The court may, upon its own discretion or at the request of one or both of the parties, appoint an expert from
the List of Experts maintained by the jurisdiction's judicial administrative body, the litigants themselves may
also stipulate to the selection of a specific expert”. Business Laws of the United Arab Emirates (2011)
https://www.akingump.com/images/content/4/4/v4/4452/UAE-Business-Law-Book.pdf accessed 11 September,
2017
150
Ibid
151
32
a specialised construction court similar to the TCC152, although the TCC has some flaws153 if
something similar was available to parties in the UAE in would make the process of going to
the UAE courts less indeterminate.
2.8. Statutory Adjudication:
Adjudication can be defined as “a process whereby an appointed neutral and impartial party
is entrusted to take the initiative in ascertaining the facts and the law relating to a dispute and
to reach a decision within a short period of time”154 (or as identified by the ICC155). Lord
Ackner stated “Adjudication is a highly satisfactory process, it comes under the rubic ’pay
now, argue later’ which is a sensible way of dealing expeditiously and relatively
inexpensively with disputes which might hold up important contracts”.156 The major
difference between adjudication and other methods of ADR is that it results in a decision
which is enforceable, even if the other party does not voluntarily comply.
The growth of adjudication in the UK started during the late 1980’s and early 1990’s at a
time when the construction industry was searching for some credible form of alternative
dispute resolution, this came in the form of statutory adjudication HGCRA157. Prior to 1996
and the introduction of the HGCRA a party who wanted to pursue a dispute beyond the
provisions of the contract had two options, firstly refer the dispute to Arbitration if the
contract provided for it, or secondly refer the dispute to the courts. The objectives of statutory
adjudication was to improve cash flow and establish a speedy and efficient dispute resolution
process, based on the principle of ‘pay now, argue later’ or the ‘security of payment
152
The Technology and Construction Court allows “claims to be brought for building or other construction
disputes, including claims for the enforcement of the decisions of adjudicators under the Construction Act
(HGCRA)”. S Toison, J Glover and S Sinclar, Dictionary of Construction Terms (1st edn, Informa Law
Routledge, Oxon 2012)
153
“The TCC is crammed with enforcement proceedings, as losing parties look for some reason for not doing
what a procedure enacted for their industry’s benefit requires them to do”. D Griffiths, ‘Do Dispute Review
Boards Trump Dispute Adjudication Boards in Creating More Successful Construction Projects?’ (2010)
Chartered Institute of Arbitrators, 76 Arbitration 4
154
N G. Bunni, The FIDIC Forms of Contract (3rd edn, Blackwell Publishing, Oxford 2005)
155
“Is to reach a fair, rapid and inexpensive determination of a dispute arising under the contract and this
procedure shall be determined accordingly”. J Redmond, Adjudication in Construction Contracts (1st edn,
Blackwell Science, Oxford 2001)
156
D Griffiths, ‘Do Dispute Review Boards Trump Dispute Adjudication Boards in Creating More Successful
Construction Projects?’ (2010) Chartered Institute of Arbitrators, 76 Arbitration 4
157
Housing Grant Construction and Regeneration Act (1996) Section 108 (1) A party to every construction
contract to which the act applies has the right to refer any dispute arising under the contract to an independent
third party. Under the HGCRA 1996 “a party to every construction contract to which the Act applies has the
right to refer any dispute arising under the contract to an independent third party for adjudication”. J Murdoch
and W Hughes, Construction Contracts Law and Management (4th edn, Taylor and Francis, London 2008)
33
principle’158, in order to protect the Contractor’s cash flow. Other common law countries
have subsequently introduced statutory adjudication, Australia159, New Zealand160,
Singapore161 and Malaysia162. However, in civil law jurisdictions statutory adjudication has
not yet been implemented to the same extent as common law jurisdictions.
With statutory adjudication the successful party can apply for a summary judgement to the
Court for the enforcement of the adjudicators decision, however, the Courts can also move to
set aside the adjudicator’s decision, refer to Shaw163. The adjudication process is private164,
with a binding or temporary binding decision given by the adjudicator on or before the 28th
day after referral. Adjudication is considerably less costly than arbitration or litigation,
however, the process of adjudication has been hijacked, as was highlighted by Judge H.H
Toulmin165. Where the adjudicators decision has not been honoured parties have taken actions
through the Courts, refer to Macob166.
158
Building and Construction Industry (Security of Payments) Act (2009) Australian Capital Territory Under
Article 6 of the Act [Object of Act] (1) “The Object of this Act is to ensure that a person is entitled to receive,
and is able to recover, progress payments if the person – (a) undertakes to carry out construction work under
certain construction contracts; or (b) undertakes to supply related goods and services under certain construction
contracts”. (2) “In particular this Act – (a) grants an entitlement to a progress payment for construction work,
whether or not a construction contract provides for progress payments: and (b) establishes a recovery procedure
for construction work progress payment”.
159
Building and Construction Industry Security of Payment Act (1999) New South Wales
160
The Construction Contract Act (2002)
161
Building and Construction Industry of Payment Act (2004)
162
The Construction Industry Payment and Adjudication Act (2012) Introduced statutory adjudication as a
means of resolving payment disputes under construction contracts for projects carried out in Malaysia.
163
Shaw v MFP Foundations and Piling Ltd [2010] EWHC 9 The contractor obtained an adjudicator’s decision
against the Employer, the Employer did not pay, so the Contractor applied for a court order to enforce the
adjudicator’s decision. The Employer did not pay sum attached to the court order, and applied to the court to
have the statutory demands set aside on the grounds that they had a counterclaim in excess of the adjudicator’s
award. The court of appeal set aside the statutory demand under the Insolvency Rules, because the ‘pay now,
argue later’ principle cannot override the Insolvency Rules.
164
“Any information made available during the proceedings should not be released to third parties except
insofar as it is necessary to implement the decision of the adjudicator, or as may be required in subsequent
arbitral or legal proceedings”. N G. Bunni, The FIDIC Forms of Contract (3rd edn, Blackwell Publishing,
Oxford 2005)
165
P Coulson, Coulson on Construction Adjudication (2nd edn, Oxford University Press, Oxford 2011) cited
Judge H.H Toulmin in AWG construction services Ltd v Rockingham Motor Speedway [2004] EWHC 888
(TCC) “A procedure which parliament introduced to provide a quick, easy and cheap provisional answer so that
in particular, sub-contractors were not unjustly kept out of their money. It has developed into an elaborate and
expensive procedure which is wholly confrontational”.
166
Macob Civil Engineering v Morrison Construction Ltd [1999] BLR 93 the Main Contractor (defendant)
failed to comply with the adjudicator’s decision awarding the plaintiff immediate payment plus VAT, interest
and fees, the Plaintiff sought enforcement in the TCC. “The defendant submitted that it was entitled to a stay of
the court action pursuant to section 9 of the Arbitration Act 1996, that the adjudicator had been guilty of
procedural errors in breach of the rules of natural justice and that summary judgment was inappropriate in the
circumstances”. The Court upheld the adjudicator’s decision. D A. Stephenson, Arbitration Practice in
Construction Contracts (5th edn, Blackwell Science, Oxford 2001)
34
2.9. The History of DABs:
As the complexity of construction contracts increased with the rapid developments in

construction technology, contractors incurred additional overheads and became more
aggressive in protecting their margins, leading to claims, and subsequent disputes.
Construction disputes have increased over the past 50 years, methods such as arbitration and
litigation have become more expensive, time consuming and technically complex. The
construction industry has been creative in exploring different forms of dispute resolution
which are cost effective and time efficient, from this DABs have been developed and
expanded as an alternative to the traditional dispute resolution methods. In the 20 years since
Seppala stated the significance developments of dispute boards167, DABs have become more
widely accepted internationally, but have not replaced arbitration or litigation as the primary
method of dispute resolution, this is especially true in the UAE.
DBs developed in the US during the early 1950s and were initially adopted as a form of
amicable dispute resolution, and became known as DRBs. During the 1960s The Joint
Consulting Board168 was introduced on the Boundary dam and underground powerhouse in
Washington. In 1972 the US National Committee on Tunnelling Technology after conducting
a study made further recommendations169, which led to the first official DRB on the Colorado
tunnel project in 1975170. The latest DRBF statistical Database as of April 2017 identified the
number of projects with DRB’s at over 2,800 across almost 60 countries, with a construction
value of USD 277 Billion.171 According to the DRBF statistical data just over 98% of matters
referred to the DB are resolved with only 2% progressing to arbitration or litigation.
167
“The most significant development in procedures for dispute avoidance under international construction
contracts in recent years has been the introduction of the dispute review or adjudication board, to resolve
disputes instead of litigation or arbitration”. C Seppala, ‘The new FIDIC provisions for a Dispute Adjudication
Board’ (1997) The International Construction Law Review, Volume 14, Part 4
168
“Problems occurred during the course of the project, and the contractor and employer agreed to appoint two
professionals each to a four member JCB, in order that the board could provide non-binding suggestions”. The
project was completed without any litigation. N Gould, ‘Establishing Dispute Boards – Selecting, nominating
and Appointing Board Members’ (2006) Society of Construction Law International Conference in Singapore
169
The publication was entitled ‘Better Contracting for Underground Construction’ “in which the undesirable
consequences of claims, disputes and litigation were highlighted”. P Chapman, ‘The Use of Dispute Boards on
Major Infrastructure Projects (2015) Turkish Commercial Law Review, Vol 1, No.3
170
The project consisted of two tunnels which had to be bored, works on the first tunnel were beset by disputes.
This prompted the appointment of a panel to give non-binding recommendations on the second tunnel, which
involved the same parties, location and contractual terms. The strategy proved successful which results in the
spread of DRB’s on large infrastructure projects.
171
The Dispute Resolution Board Foundation DB Project Database https://www.drb.org/publications-data/drb-
database/ accessed 30 September, 2017
35
Construction dispute resolution has been evolving in the UK since the Banwell report 172 and
the subsequent reports from Egan173, Latham174, Woolf175, Arbitration Act176, HGCRA177,
Civil procedure rules178, the Scheme for Construction Contracts Regulations179 and The local
Democracy, Economic Development and Construction Act180. Contractual adjudication was
introduced to the UK standard forms181 in 1970. The JCT182 standard forms have also been
amended to create more robust dispute resolution mechanisms, as have the NEC183 with the
introduction of adjudication. DABs have been successfully used during the London 2012
Olympics184 and the construction of the Channel Tunnel185.
Internationally DBs were first used on the major hydro electrical project El Cajor Dam in
Honduras, with a DRB style board, DBs were also hugely successful on the Hong Kong
172
H Banwell, The Placing and Management of Contracts for Building Works,( MSO, London 1964)
173
J Egan, Constructing the team: Final Report of the Government, industry review of Procurement and
Contractual arrangements in the UK Industry (HMSO, London 1994)
174
Latham Constructing the Team, Final Report of the Government/Industry Review of Contractual and
Procurement Arrangements in the UK Construction Industry (HMSO, London 1994) Latham recommended
“that a system of adjudication should be introduced within all standard forms of Contract, unless some
comparable arrangement already existed for mediation or conciliation”.
175
Woolf Access to Justice, Final Report (HMSO London, 1996) The Woolf report implemented reforms such
as the Civil Procedure Rules (1998) and the Access to Justice Act (1999). The Report recommended that a new
proactive fast tracked system be adopted by the courts to deal with less complex cases. “The report stopped
short of recommending court-annexed ADR but did recommend that parties to litigation should be required, at
the pre-trail stage, to state whether they had discussed ADR”. J Uff, Construction Law (11th edn, Sweet &
Maxwell, London 2013). Woolf also recommended that “courts should take into account unreasonable refusal of
a court’s proposal that ADR should be attempted when considering costs”. K Mackie, D Miles, W March and T
Allen, The ADR Practical Guide Commercial Dispute Resolution (3rd edn, Tottel Publishing, UK 2007)
176
English Arbitration Act (1996)
177
The Housing Grants, Construction and Regeneration Act (1996)
178
English Civil Procedure Rules (1999) are statutory rules that apply throughout the civil courts with the aim of
improving the accessibility, speed and efficiency of the procedures of the civil court.
179
The Scheme for Construction Contracts (England and Wales) Regulations 1998, SI 1998/649
180
The Local Democracy, Economic Development and Construction Act (2009)
181
“The Subcontract Form DOM/1 introduced the process in 1976 to deal with subcontractor concerns about the
misuse of rights of set-off as excuse for non-payment”. J Adriaanse, Construction Contract law (2nd edn,
Palgrave Macmillan, New York 2007)
182
JCT Standard Form of Contract with Contractor’s Design introduced adjudication in the 1970’s
183
NEC was first published in 1993, the dispute resolution section of NEC 3 provides for options W1 and W2.
W1 is used for UK adjudication provisions, the HGCRA apply, W2 is used for international projects where
the HGCRA does not apply. Both options provide for adjudication as a mandatory pre-condition to
arbitration. Under NEC 4 the emphasis is on dispute avoidance, the dispute resolution section of NEC 4 has
been renamed ‘Resolving and Avoiding Disputes’.
184
The 2012 London Olympics had two panels which was successful very few disputes went to adjudication,
and no disputes were referred to arbitration. The first panel was the IDAP which were formed at the
commencement of the project, the purpose of this panel was to identify and find solutions for problems before
they evolved into disputes. The second panels function was to resolve disputes which were not avoided by the
IDAP process and implement the adjudication provisions available in the jurisdiction.
185
The Channel Tunnel Project used two dispute boards, each board had five serving members, one board
composed of engineers to deal with technical matters, and the other comprised of financial experts to deal with
disputes relating to the financial provisions of the BOOT concession agreement.
36
Airport project186. International financial institutions require projects that they finance to use
standing DBs, the World Bank first introduced DBs in 1995187 and in 2000 published a new
edition of the Procurement of Works, which modified the DB to mirror the FIDIC
procedures. MDBs first published the Harmonised Conditions for Construction188(which are a
modification of FIDIC 1999) in 2005, the Conditions were subsequently updated in 2006 and
2010, Other international financing bodies such as the IMF, Islamic Development Bank and
JICA promote the use of standing dispute boards, when financing large scale construction
projects.
FIDIC’s contractual dispute resolution mechanisms have developed over the past 60 years,
under the 1st Edition (1957) – dispute was referred to the Engineer, Works had to be
completed before any ad-hoc arbitration could commence, this was replaced by the ICC
arbitration under 2nd Edition (1969). The 3rd Edition (1977) was further developed and
provided for arbitration to commence before the Works were completed. The 4th Edition
(1987) which is common in the UAE and wider ME – introduced 56 day amicable settlement
before starting arbitration, this was made a mandatory step, so the parties could attempt to
settle their dispute by methods other than arbitration.
FIDIC first introduced DABs in its Orange Book (1995), the FIDIC (1996) Supplement of the
Fourth edition Red Book then adopted a DAB/Dispute Review Expert (“DRE”) procedure in
favour of the additional approach of relying upon the engineer acting as the quasi arbitrator as
well as an agent of the employer or owner. At the time FIDIC were developing DABs there
was criticism of the role of the Engineer, and his independence in making determinations189.
186
The Hong Kong Airport project consisted of a six member DRG (Dispute Review Group) to cover all Main
Contracts awarded by the HK Airport authority. When a dispute arose a panel of one or three members were
selected depending on the nature of the dispute, the DRG members were selected to provide a range of
technical, commercial and legal expertise to disputes that arose.
187
World Bank, Standard Bidding Documents Procurement of Works (1995) comprised of “inter alia a modified
FIDIC contract with provisions for dispute review boards to publish non-binding recommendations”. C Chern,
Chern on Dispute Boards: Practice and Procedure (1st edn, Blackwell Publishing, Oxford 2008)
188
FIDIC MDB Harmonised Construction Contract “Participating Banks that have a licence to use the MDB
Harmonised Construction Contract General Conditions aim to make the General Conditions available in their
standard bidding documents which the MDBs require their borrowers or aid recipients to follow”. FIDIC MDB
Harmonised Construction Contract http://fidic.org/MDB_Harmonised_Construction_Contract accessed 21
August 2017
189
Under previous forms of FIDIC contracts the role of the Engineer was an independent certifier of the Works
and adjudicator in the event of a dispute between the parties. The FIDIC 1999 suite of FIDIC contracts changed
the role of the Engineer to one of a direct agent of the Employer. The Abu Dhabi and the Dubai Municipality
public sector contracts have reduced the role of the Engineer, in that the “Engineer is obliged to seek the prior
approval of the Employer on matters including the contractor’s programme and expenditure monies pursuant to
37
“Given the historic powers of the Engineer under FIDIC contracts, it was not surprising that
the dispute board was given powers to make decisions which were binding on an interim
basis”.190 The two-tier system of dispute resolution under FIDIC 1987 was replaced by a five-
tier process under FIDIC 1999191.
FIDIC (1999) introduced the most fundamental changes to dispute resolution, under Sub-
Clause 20 there was an obligation to refer a dispute to DAB before initiating arbitration
proceedings, removing the need to refer a dispute to the Engineer before going to
arbitration192. The DAB procedure became mandatory rather than an option, for both standing
and ad-hoc DABs. Ad-hoc DABs were introduced under FIDIC 1999 Yellow Book (Plant &
Design Build) and the Silver Book Engineer Procure and Construct (Turnkey), the reason
given for not using a standing DAB in the Yellow and Silver Book was the need to reduce
DAB cost. However, Bunni rejects this suggestion193. Subsequently, ad-hoc DABs were
rejected in the FIDIC Gold Book (2008) “it is now widely accepted that establishing a DAB
only after the dispute has arisen is contrary to the fundamental philosophy of the DAB, which
is to play a major role in preventing disputes”.194
the contract sum and the issuing of certificates for completion or non-completion of the works”. 189 E Sunna and
O Al Saadoon, ‘FIDIC in the Middle-East’ (2007)
190
M Goodrich, ‘Dispute Adjudication Boards: Are they the future of dispute resolution?’ (2016)
https://www.whitecase.com/publications/article/dispute-adjudication-boards-are-they-future-dispute-resolution
accessed 01 September, 2017
191
“This multi-tier process has justifiably earned for itself the scientific title of ‘disputology’, particularly in
view of the fact that the Supplement to the Fourth Edition of the Red Book added an important aspect to the role
of the DAB, that of the Avoidance of Dispute”. N G. Bunni, ‘Dispute Boards in the Middle East’ (2013) DRBF
Conference, Paris
192
Under the ‘Guidance for the Preparation of Particular Conditions’ for the Red and Yellow Books the
Engineer can act in the place of the DAB. “If the Engineer is empowered in this way, the Particular Conditions
make it clear that the Engineer must act impartially, notwithstanding that the Engineer generally acts for the
Employer”. The guidance provides suggested wording for such a clause. J Glover, C Thomas and S Hughes,
Understanding the New FIDIC Red Book: A Clause by Clause Commentary (1st edn, Sweet and Maxwell, UK
2006)
193
“Firstly, disagreement that might turn into a dispute do arise even if the work is taking place outside the site,
and by using ad-hoc rather than standing DAB, the objective of avoiding dispute is lost”. N G. Bunni, ‘Dispute
Boards in the Middle East’ (2013) DRBF Conference, Paris
194
P Gerber and B J. Ong, ‘Look Before you Leap: Avoiding the Traps and Maximising the Benefits of Your
DRB’ (2012)
38
2.10. Types of DBs:
A dispute board is basically a tribunal established under the contract to resolve disputes (both
formal and informal) as they arise, the dispute board also functions as a vehicle to promote
dispute avoidance. The term Dispute Board is a generic terms, and covers the following (as
distinguished by the ICC Dispute Board Rules, introduced in 2004):
 DRBs: is a board of impartial professionals formed at the beginning of a project to

follow construction progress, encourage dispute avoidance, and assist in the resolution
of disputes for the duration of the project, and could be considered a process of
dispute attrition195. The DRB do not make any binding decisions.
 DABs: “gives a decision which is binding on the parties and enforceable as such but
is not usually final, the same dispute can be referred for final dispute resolution by a
court or arbitrator”.196
 CDBs: “normally issues its recommendations as to any dispute referred to it but may
issue a decision if so requested by either party and the other party does not object”.197
 DRA: Appointment of a DRA, can be done when a construction project does not
merit the appointment of a full DB. The process was developed in Hong Kong in the
1990s198.
There is a distinction between DABs and DRBs, in that the function of a DRB is to make a
recommendation which both parties voluntarily accept or reject, on the other hand the
function of a DAB is to issue decisions in writing that bind the parties, such a decision form
the DAB must be implemented immediately, until such a time as the parties agree to the
decision, or a arbitral tribunal or court will decide. DRB is advisory, while DAB is
adjudicatory.
195
S M John, ‘Dispute Review Boards in the Context of UK Construction’ (2002) cited Faulkner, Spurin and
Slaughter. “A systematic set of mechanisms to timely and efficiently eliminate disputes as early as possible and
so preclude or peel away as many disputes as cost effectively as possible, through an innovative reconfiguration
of the most useful aspects of classical arbitration methods”.
196
S Jordan, ‘Getting on board with dispute boards’ (2014)
http://www.gulfconstructiononline.com/news/160263_Getting-on-board-with-dispute-boards.html accessed 01
June 2017
197
“In the event of an objection, the Combined Dispute Board will decide whether to issue a recommendation or
a decision based on the rules under which it was constituted”. C Chern, Chern on Dispute Boards (3rd edn,
Informa Law, New York 2015)
198
The role of the DRA is to “purpose the most appropriate method of dispute settlement and make either a
recommendation or a non-binding evaluation, if matters are not resolved within a short period of time, the DRA
would be expected to then set the motion for a short form of arbitration”. N G Bunni, ‘What has History Taught
us in ADR? Avoidance of Dispute’ (2015) 81 Arbitration, Issue 2, Chartered Institute of Arbitrators
39
2.11. DB Procedures & Rules:
DB procedure have certain characteristics which differentiate it from other dispute resolution
processes, in that they operate throughout the duration of a project and the DBs determination
will ordinarily be only temporarily binding and is not enforceable in the same way an arbitral
award is. “The board is usually equipped with procedural powers enabling it to establish the
facts of the dispute”,199 and is empowered to decide on its own jurisdiction, similar to the
‘competence-competence doctrine’200 in arbitration. The Powers and Authority of the DB is
specified in the Procedural Rules, there are a number of international institutions which
prescribe procedures and rules for the operation of Dispute Boards. In the US the AAA DRB
Rules201 are the most common202.
The ICC Dispute Board Rules were launched in 2004203, and updated in 2015204 “the rules
have strengthened the obligation to comply with recommendations and decisions, when so
required, by disallowing objections on the merits as a defence to non-compliance and through
explicit use of the terms ‘final’ and ‘binding’.” The major change was with regards Article
15205 and Article 16206 were that it “empowers the DB to intervene if it considers there to be a
potential disagreement between the parties, the DB may raise the matter with the parties and
encourage them to avoid disagreement, and help them define the potential disagreement or
suggest a procedure that they might follow”.207
199
R Ragnar and V Mahnken, ‘ICC Dispute Board Rules: the Civil Law Perspective’ (2006) 72 Arbitration 4
200
The "Competence-Competence" Doctrine It is a general principle of international commercial arbitration that
a tribunal is empowered to make a determination as to its own jurisdiction to deal with the substantive claims in
dispute C Bailey, D Roughton, D Gilmore, G Margetson, P Godwin and K Willock, ‘The competence-
competence doctrine and the enforcement of arbitral awards’ (2011)
https://www.lexology.com/library/detail.aspx?g=70303764-71b7-4352-babb-6c8c8d399190 accessed 23
September 2017
201
AAA Dispute Resolution Board Hearing Rules and Procedures (2000)
202
The focus of the AAA procedure is on party autonomy based on a model contract that documents the rights
and responsibilities of owners, contractors and members of the DRB.
203
ICC Dispute Board Rules (2004) The 2004 Rules give the parties a choice between DABs, DRBs and CDBs
each distinguished by the type of conclusion it issues upon formal referral. The rules cover appointment of the
DB members, services they provide and compensation they receive. The ICC Dispute Board Rules “provided for
dispute review and adjudication detached from a specific industry sector”. R Harbst and V Mahnken, ‘ICC
Dispute Board Rules: the Civil Law Perspective’ (2006) 72 Arbitration 4
204
ICC Dispute Board Rules (2015) “The new rules explicitly provide that, upon perceiving a potential
disagreement, the dispute board may (1) encourage the parties to overcome it on their own, if this is impossible
or the disagreement to entrenched, the dispute board can (2) intervene with informal assistance to help the
parties resolve the matter by agreement or (3) determine a dispute through a recommendation or a decision
issued after a procedure of formal referral”.
205
ICC Dispute Board Rules (2015) Article 15 [Powers of the DB]
206
ICC Dispute Board Rules (2015) Article 16 [Avoidance of Disagreement]
207
N Khokhar and D Brown, ‘The New 2015 ICC Dispute Board Rules’ (2016)
https://www.clydeco.com/insight/article/the-new-2015-icc-dispute-board-rules accessed 05 November 2017
40
ICE Dispute Board Procedures208 were first issued in 2005. The rules offer two different
choices, one for international projects which would not be subject to the HGCRA, and
another for UK projects which would be compliant with the Act209. The CIArb through the
Practice and Standards Committee published its Dispute Board Rules in August, 2014210. The
rules had three key elements211. The FIDIC 1999 suite of Contracts under Annex to the
General Conditions of the FIDIC Dispute Adjudication Agreement sets out the procedural
rules for the DAB under nine different clauses/rules. The procedural rules for the various
international organisations listed above are similar, and provide for the following:
 Who and how the DAB members and chairperson should be appointed.
 Payment of the DB members.
 The replacement of DB members.
 Default appointment of DB members (only the AAA has no default procedure for
three board members).
 Referral to the DB, precondition under FIDIC 1999 that the Contractor must first
notify the Engineer under Sub-Clause 20.1 [Contractor’s Claims].
 Time allowed for the DB to give a decision.
 Effect of the determination (AAA is a non-binding recommendation, while FIDIC is
temporary binding or final and binding if no NoD is served).
 Periods for serving notice, range from 14 days (AAA) to 30 days (ICC).
 Content of the NoD, should be a written notice.
 What may be referred to arbitration or litigation, is not specified under AAA or ICE
rules.
208
ICE Dispute Board Procedures (2005) “The Contract may require the DB to make a recommendation, which
is not binding, or to make a decision, which is binding and enforceable and will stand unless superseded by
agreement, arbitration or a judgment by the Courts”.
209
“These procedures and rules may need to be modified to comply with any statutory requirements in the
applicable jurisdiction”.
210
Chartered Institute of Arbitrators Dispute Board Rules (2014) “The need for prompt, cost effective and
impartial dispute resolution can be found in many contractual relationships in several industries, in order to meet
this need the CIArb Dispute Board Rules cater to any medium or long-term project, whether construction, IT,
commercial or otherwise”.
211
“(i) A dispute board clause inserted into the contract. (ii) The rules themselves. (iii) A tripartite agreement
between the DB and the two parties to the contract”. M O’Reilly, ‘Legislation, Rules and Guidelines – The
Chartered Institute of Arbitrators Dispute Board Rules’ (2015) 81 Arbitration Issue 2, Chartered Institute of
Arbitrators
41
 The form of DB appointment is by Tripartite212/Dispute Board agreement.
2.12. Overview of FIDIC 1999 Clause 20:
The dispute resolution procedures under FIDIC 1999 are a multi-tier process which promotes
dispute resolution, “it starts with a dispute adjudication procedure followed by an amicable
dispute resolution mechanism and if both of these fail, then arbitration”. 213 The FIDIC DAB
procedural rules “allow an inquisitorial approach and for the DAB to take the initiative in
ascertaining the facts and matters required for a decision”214, unlike the role of the arbitrator.
FIDIC forms of Contract provide a mechanism for binding decisions as opposed to simple
recommendations. The DAB procedures under FIDIC 1999 consist of:
i. Clause 20 – the Dispute Adjudication Board.

ii. Appendix – General Conditions of Dispute Adjudication Agreement.
iii. Annex 1 – Procedural Rules.
iv. The Dispute Adjudication Agreement.
2.12.1. Establishing the Dispute Board:
When appointing the DAB the parties need to consider a number of matters, such as
identifying, nominating and selecting board members, whether the board will consist of one
or three members215(depending on what is stated in the Appendix to Tender), or if the DAB
212
A tripartite agreement “is the contractual mechanism establishing the rights and responsibilities of the
contracting parties and the members of the DB”. It is a three multi party contract between the employer,
contractor and one member of the DB. The agreement comes into force at the contract commencement date, or
when all parties have signed the agreement. The parties cannot directly request advice from the DB member
with regards any claims or disputes relating to the project, nor can any DB member be appointed as an arbitrator
or called to give evidence as a witness by either party. The DB members can become liable for any negligent act
on their part done in the discharge of their DB services, therefore, they are obliged to disclose issues relating to
conflicts, impartiality and independence. The Appendix to the FIDIC General Conditions of Dispute
Adjudication Agreement provides for a Dispute Adjudication Agreement, which is tripartite. R J Smith and R A
Rubin, American Arbitration Association Handbook on Construction Arbitration and ADR (3rd edn, Juris, New
York 2016)
213
N G. Bunni, ‘A Comparative Analysis of the Claim & Dispute Resolution Provisions of FIDIC 1999 Major
214
M Goodrich, Dispute Adjudication Boards: Are they the future of dispute resolution? (2016)
accessed 30 July 2017
215
“The DAB shall comprise, as stated in the Appendix to Tender, either one or three suitably qualified persons
(the members)”. If the number is not so stated and the Parties do not agree otherwise, the DAB shall comprise of
three persons.
42
will be a ‘Standing’216 or ‘Ad-hoc’217. The DAB should be impartial, independent, and
neutral, have no conflict of interests (Duty of Disclosure218) and serve both parties equally
and fairly, refer to Amec219. DAB members do not act as consultants or give advice on how
the works are to proceed. However, the DAB may consult with external experts in order to
carry out their duties. It is also important that the DAB members have a good contract law
background, and know how such laws are applied to construction contracts. They should also
have the ability to “assess potentially contradictory interpretations of law”220 this will result
in better decisions being made.
It would be beneficial to all parties if the DAB members have good technical knowledge and
experience of dispute resolution, procedural rules, and be able to identify with the Employer
and Contractor in terms of culture and language. The challenge for the parties is to establish a
DAB at the outset of the project, rather than waiting for a dispute to arise, “there is a need to
identify, consider and agree the appropriate individuals for the project, as well as to consider
independence and impartiality, and establish, and be seen to establish, a level playing-field
216
It is important where the contract provides for a standing DAB that it is appointed as soon as possible,
allowing the DAB become part of the project team, “so their advice will be readily accepted by all parties”. The
benefit of a standing DAB is that the DAB members can help the parties resolve their difference as and when
they arise, thus preventing the parties becoming polarised in their views. The purpose of the standing board is
dispute avoidance by encouraging the parties to solve their differences through direct communication at an early
stage, thus preventing disputes being referred to arbitration in the future. This approach generally results in
reduced costs, legal fees, loss of productivity and maintains the professional and business relationships between
the parties. N Gould and C Lockwood, ‘Dispute Board Rules Chartered Institute of Arbitrators’ (2014) Practice
and Standards Committee
217
An ad-hoc board is only appointed once a dispute has arisen, and is dispersed once a decision is made,
therefore, the board does not have the advantage of familiarity with the project team. The obvious benefit of this
type of DAB would be the cost saving as compared to a standing DAB. It is important for an ad-hoc DAB that
the parties ensure disputes surrounding the appointment of the DAB is minimised, by having a list of pre-
approved individuals named in the Contract, for one or multiple ad-hoc DABs.
218
The duty to disclose all facts which might lead to a challenge of the adjudicators decision/award, or any
circumstance that may arise which could call into question the independence or impartiality of the adjudicator. L
A. Mistelis, Concise International Arbitration (1st edn, Kluwer Law International, Netherlands 2010)
219
Amec Capital Products Ltd v Whitefriars City Estates Ltd [2004] EWHC 393 (TCC) “Adjudicator breached
the rules of natural justice and had obtained legal advice which was not disclosed to the parties for
comment, he had had a telephone conversation with a Partner at the solicitors acting for Amec that went
beyond merely administrative letters, and he would be bias because Amec had put the Adjudicator on notice
they would be looking to him for the costs of their first adjudication”. Court held “if an adjudicator sought
advice for a third party, then it was essential that he informed the parties in advance, notified the parties of
how the questions had been put in order that the parties had the opportunity to evalua te the advice and
comment”. https://www.fenwickelliott.com/research-insight/adjudication-case-notes/amec-capital-projects-
limited-v-whitefriars-city-estates-limited accessed 20 November 2017
220
What to expect from your FIDIC dispute adjudication board members https://www.out-
law.com/en/topics/dispute-resolution-and-litigation/arbitration-and-international-arbitration/what-to-expect-
from-your-fidic-dispute-adjudication-board-members/ accessed 02 October 2007
43
for the contractor and employer”.221 At the beginning of the project it remains unclear if
disputes will revolve around legal or technical issues, therefore the appointment of the DAB
members should be a mixture of both legal and technical specialists. The ICC DB centre
suggests that the DB should be preferably two engineers and one lawyer. Preferably board
member should be on the FIDIC, ICC, AAA or ICE DB lists, and should be able to
demonstrate continuing professional development. The ICC222 and ICE223 also have
procedures on the appointment of DB members.
Under FIDIC Sub-Clause 20.2224 the DAB must be appointed 28 days after the
commencement date, and stay in place until project completion. If the DAB is to consist of
three members, the parties will select one member from the list submitted by the other party,
the two party-appointed members will then proceed to nominate the third member
(president), who must be approved by both the Employer and Contractor. Sub-Clause 20.2
also deals with replacement225 and termination226 of DAB members. A member of the DAB
that wishes to resign must give 70 days’ notice to the Employer and Contractor, the
agreement will expire after the 70th day.
The provisions for establishing the DAB do not preclude either the parties from seeking other
methods for final dispute settlement. However, the benefits of appointing a standing DAB at
the commencement of the contract is immeasurable, this allows the board familiarise
themselves with the project before any disputes arise. The advantage of this is that when a
dispute does arise the DAB can deal with it immediately, no time is wasted. Difficulties arise
when all DAB members are rejected by one or both of the parties. The contract should
221
N Gould, ‘Establishing Dispute Boards – Selecting, Nominating and Appointing Board Members’ (2006)
Society of Construction Law International Conference in Singapore
222
ICC DB Rules Article 7 [Appointment of DB Members]
223
ICE DRB Procedures Clause 2 [Appointment of the Dispute Board]
224
FIDIC 1999 Red Book Sub-Clause 20.2 [Appointment of the Dispute Adjudication Board]
225
“If at any time the Parties so agree, they may appoint a suitably qualified person or persons to replace (or to
be available to replace) any one or more members of the DAB. Unless the Parties agree otherwise, the
appointment will come into effect if a member declines to act or is unable to act as a result of death, disability,
resignation or termination or appointment”. C Chern, Chern on Dispute Boards Practice and Procedures (3rd
edn, Routledge, New York 2015)
226
“The appointment of any member may be terminated by mutual agreement of both parties, but not by the
Employer or Contractor acting alone”. “Unless otherwise agreed by both parties, the appointment of the DAB
(including each member) shall expire when the discharge referred to in Sub-Clause 14.12 [Discharge] shall have
become effective”. C Chern, The Law of Construction Disputes (2nd edn, Informa Law Routledge, New York
2016) If the parties do agree to terminate the appointment of an individual member of the DAB, then they
should replace that person by agreement or if the parties cannot agree by nomination of the appointing entity.
44
contain a default appointment mechanism, similar to FIDIC Sub-Clause 20.3227. If one or
both parties fail to appointment or nominate a member (or members) to the DAB under Sub-
Clause 20.2, or the parties cannot agree to the appointment of the DAB chairman, or the
parties fail to replace a DAB member within 42 days, then either party may file a request to
the FIDIC President, or the official named in the Appendix to Tender shall seek to appoint a
member (or members) of the DAB panel. The ICC also provides for a default appointment
Article 7.2, 7.3, 7.4 and 7.5 and the ICE DRB procedures under clause 3.1.
2.12.2. Referring to the Dispute Board:
Under FIDIC Sub-Clause 20.4228 probably the most important element of the DAB is that, the
DAB must give a ruling on the dispute within a period of 84 days from the date of the written
notification of the dispute229. This is significantly more time than under UK statutory
adjudication (HGCRA), whereby a decision must be made within 28 days of referral, refer to
CIB Properties230. The World Bank231, ICC232 and ICE233 also have rules prescribing the time
the DB has to give a decision. DAB members receive regular progress reports and
information with regards the status of the works234, the DAB should maintain all relevant
project specific documents, and issue site reports after each scheduled visit. DAB members
must have, “the time and knowledge to deal with the matters as they arise, decisions always
need to be supported by reasons to satisfy the losing party”. 235 The DRBF describes the
227
FIDIC 1999 Red Book Sub-Clause 20.3 [Failure to Agree Dispute Adjudication Board]
228
FIDIC 1999 Red Book Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision]
229
“Within 84 days after receiving such reference, or within such other period as may be proposed by the DAB
and approved by both Parties, the DAB shall give its decision, which shall be reasoned and shall state that it is
given under this Sub-Clause”.
230
CIB Properties v Birse Construction [2004] EWHC 2365 the initial submission to the adjudicator contained
50 arch folders which increased to 150 during the adjudication process. The adjudicator’s timescale for giving a
decision was extended on a number of occasions by the mutual consent of the parties. However, the
adjudicator’s decision was challenged on the grounds the dispute could not be resolved fairly within the
timescale of the adjudication. The judge held that “the complexity of the case was not the test to be applied, but
rather whether the adjudicator was able to reach a fair decision within the timescale allowed by the parties”. J R.
Knowles, 200 Contractual Problems and their Solutions (3rd edn, Wiley-Blackwell, UK 2012)
231
“The standard bidding documents for procurement of works by the World Bank the DRB has to make its
recommendations at the latest 84 days after it has been notified”. R Ragnar and V Mahnken, ‘ICC Dispute
Board Rules: the Civil Law Perspective’ (2006) 72 Arbitration 4
232
ICC DB Rules Article 22 [Time Limit for Issuing a Conclusion]
233
ICE DRB Procedures Clause 4.5 [Referral to a Dispute Board]
234
The ICC DB Rules, Articles 11 and 12 “contain provisions ensuring that board members are kept informed
on the major developments on site from the beginning of the project, irrespective of whether a dispute occurs”.
235
45
obligations of DB members236, as well as providing guidelines during the course of their
service237.
Both parties are contractually obliged to refer any dispute in writing to the DAB in
connection with or arising out of the Contract. The DABs investigation of the dispute will
only commences once the Chairman of the DAB receives the notice of dispute 238. The
Referring party will give the history of the dispute in writing or orally, and the board will
issue a timetable of proceedings. The board will conduct a hearing and may request particular
items of evidence, such as additional documents, further submissions, witnesses of facts and
maybe expert evidence. The board will invite the defending party to set out their opening
statement, each party has the right to put their case to the board, refer to Balfour Beatty239. At
the end of the process the parties will make their closing statements, and the Board will then
make their recommendation or issue an award in favour of one of the parties.
The DABs decision is mandatory and binding on both parties 240, this is known as a
‘temporary final and binding effect’, which both parties must comply with, unless the DAB
decision is revised by Sub-Clause 20.5241 or Sub-Clause 20.6242. “The decision becomes, in
236
DB members must not have (i) Any direct or indirect financial ties, or employment ties (present or past) with
any party involved in the contract. (ii) A close personal or professional relationship with a key member of any
party directly or indirectly involved in the contract, which could give rise to the perception of bias. (iii) A
financial interest in the project or contract. DRBF Practices and Procedures (2007)
http://www.drb.org/concept/manual/ accessed 30 September 2017
237
DB member must not be (i) Employed as a consultant by any party directly or indirectly (unless written
permission is obtained from the other party) involved in the contract. (ii) “Participate in any discussions
regarding future business or employment, either full-time or as a consultant, with any party that is directly or
indirectly involved in the contract, except for services as a DRB member on other contracts, unless specific
written permission from the other party is obtained”. 237 N Gould, ‘Establishing Dispute Boards – Selecting,
Nominating and Appointing Board Members’ (2006) Society of Construction Law International Conference in
Singapore
238
“If a dispute (of any kind whatsoever) arises between the Parties in connection with, or arising out of, the
Contract or the execution of the Works, including any dispute as to any certificate, determination, instruction,
opinion or valuation of the Engineer, either Party may refer the dispute in writing to the DAB for its decision,
with copies to the other party and the Engineer”. A Hewitt, Construction Claims and Responses: Effective
Writing and Presentation (2nd edn, Wiley Blackwell, UK 2016)
239
Balfour Beatty v London Borough of Lambeth [2002] EWHC 597 (TCC) The adjudicator tried to obtain
certain information from the parties relating to the programme demonstrating the link between the
programme and the delay events. After only receiving partial information the adjudicator prepared his own
critical path analysis, and made his decision based on his own critical path analysis. “The complaint in this
case was that the adjudicator had not given the parties an opportunity to review and comment upon the
critical path analysis, as a result the Court held that the adjudicator had exceeded his jurisdiction by making
good the material deficiencies in Balfour Beatty's claim and by not giving a party a reasonable opportunity
of commenting upon the critical path analysis produced by him. The application for summary judgment was
therefore dismissed”. https://www.fenwickelliott.com/research-insight/adjudication-case-notes/balfour-
beatty-construction-limited-v-mayor-burgesses-london-borough-lambeth accessed 21 October 2017
240
“The decision shall be binding on both parties, who shall promptly give effect to it”.
241
FIDIC 1999 Red Book Sub-Clause 20.5 [Amicable Settlement] If the reasons for dissatisfaction cannot be
resolved amicably under Sub-Clause 20.5 they are then referred to Arbitration under Sub-Clause 20.6. The DAB
46
effect, a contractual obligation on both parties such that non-compliance with it by either of
them is a breach of contract and the party in breach would be liable in damages”.243
Notwithstanding any temporary award the contractor must continue to proceed with the
Works while the dispute is being reviewed by the DAB, unless the Contract has been
abandoned, repudiated or terminated.
2.12.3. Dissatisfaction with the Dispute Boards Decision:
Under FIDIC Sub-Clause 20.4 either party can give NoD to the DABs decision within 28
days after receiving the decision, or if the DAB fails to give a decision with 84 days 244. The
party giving the NoD must clearly set-out the reasons for the dissatisfaction. It is therefore
important that the DAB recommendations are in writing and are made directly to the
contracting parties by presenting its decision in a reasoned well organised manner in line with
the applicable rules and procedures to be followed, and with reference to the legal principles
involved. This will give the parties confidence that all aspects of the dispute were analysed by
the DAB when giving the final decision, and will more than likely result in the parties
accepting the decision without the need to resort to arbitration.
If either of the parties gives a NoD to the other party within 28 days after receiving a DABs
decision, the decision will be binding, but not final. In the absence of a NoD the DABs
decision will be final and binding on the parties, as the parties would have agreed under the
Conditions of Contract245. Failure to serve a NoD would mean the parties are bound by such a
clause, and the DABs decision would become final and conclusive. When the DABs decision
is binding, but not final it can be overturned by the courts or arbitral tribunal for a final
determination, nonetheless, the parties must comply with the DAB ruling until the decision is
overturned. However, the party to whom the DAB awarded the decision in favour of, may not
will not be performing its intended function if one party raises a NoD with every DAB decision, leaving the
other party without some form of interim relief, the parties will then have to refer the dispute to arbitration or
litigation (depending on what the contracts expressly states).
242
FIDIC 1999 Red Book Sub-Clause 20.6 [Arbitration]
243
N G. Bunni, ‘A Comparative Analysis of the Claim & Dispute Resolution Provisions of FIDIC 1999 Major
244
“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 Adjudication Board’s Decision] and Sub-Clause 20.8 [Expiry of Dispute Adjudication
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”.
245
“The difference between a decision being ‘binding’, or ‘final and binding’ is that the arbitral tribunal can
consider the failure to promptly give effect to a DABs final and binding decision and issue an interim award for
immediate payment”. N Gould, ‘Enforcing a Dispute Board’s decision: Issues and Considerations’ (2013)
47
want to wait for a final determination by way of arbitration or litigation, where they may be
exposed to insolvency due to the other party evading the DAB decision, especially where a
decision is binding, but not yet final refer to Persero246.
2.12.4. Enforcement of the Dispute Boards Decision:
The enforcement of the DAB decisions will have an immense impact on the attractiveness of
the process, especially in jurisdictions such as the UAE where there is no Statutory
Adjudication legislation, any failure to abide by the DAB decision would result in a breach of
contract. However, there are practical difficulties in ensuring that the binding decisions of the
DAB can be enforced, “because there would rarely be access to the courts to ensure that
decisions were enforced (as would be the case with statutory adjudication)”.247 If one party
believes the DABs decision is fundamentally flawed they need to be proactive and commence
arbitration at the end of the amicable settlement period, and seek to overturn the DABs
decision. Because, “the party seeking payment does not have to enforce the payment claim in
arbitration, it is the paying party that has to commence arbitration proceedings to challenge
the DAB decision and claim return of payment”.248
Under FIDIC Sub-Clause 20.7 there is provision for the successful party to enforce the DAB
decision249. However, there is a gap or lacuna in the current draft of Sub-Cause 20.7, in that
there is no solution offered “when a DABs decision has not become final and binding (i.e.
where one of the parties is dissatisfied with the decision), and the Party against whom the
decision was made fails to comply with it”.250 The non-compliant party will be in breach of
246
CRW Joint Operation v PT Perusahaan Gas Legara (Persero) TBK [2011] SGCA 33 “The Tribunal stated
that the main issue in contention between the parties was the meaning and effect of the following sentence
appearing in Sub-clause 20.4: ‘The (DAB) decision shall be binding on both parties, who shall promptly give
effect to it unless and until it shall be revised by amicable settlement or on an arbitral award as described
below’. The Arbitral tribunal held that even where the NoD is served the DABs decision is binding, and the
Respondent is contractually obliged to comply with the DABs decision under the express terms of sub-clause
20.4”. C Seppala, ‘How not to Interpret the FIDIC Disputes Clause: The Singapore Court of Appeal Judgment
in Persero’ (2012) The International Construction Law Review, Volume 29, Part 1
247
248
249
“In the event that: (i) Neither Party has given notice of dissatisfaction within the period stated in Sub-Clause
20.4. (ii) The DABs related decision (if any) has become final and binding, and (iii) A Party fails to comply with
the decision, then the other Party may, without prejudice to any other rights it may have, refer the failure itself to
arbitration under Sub-Clause 20.6”.
250
N G. Bunni, ‘The Gap in Sub-Clause 20.7 of The 1999 FIDIC Contracts for Major Works’ (2005)
48
contract, and the Party to whom the decision was awarded would be without a mechanism to
enforce it promptly.
A number of arbitral tribunals found Clause 20 unclear as to whether the party that had failed
to comply with the DAB decision which was ‘binding’ but not ‘final’251 could be referred to
arbitration under Sub-Clause 20.6 in a similar manner to a ‘final and binding’ decision
under Sub-Clause 20.7. Bunni identified that “Sub-Clause 20.7 is worded in such a way that
it only deals with the event where the Parties are satisfied with the decision”,252 and does not
indicate how to enforce a DAB decision which has been challenged in the 28 day period
provided under Sub-Clause 20.4. There is no denying that there are issues with the
enforcement of DAB decisions, as was seen in the recent Persero253 cases (2011 and 2015)
mainly due to the fact FIDIC 1999 Clause 20 is ambiguous under certain Sub-Clauses. FIDIC
251
“A DAB decision is ‘binding’ and not ‘final’ when either Party, within 28 days after receiving the DAB
decision, gives notice to the other party of its dissatisfaction with the DAB decision”.
252
N G. Bunni, ‘The Gap in Sub-Clause 20.7 of The 1999 FIDIC Contracts for Major Works’ (2005) It was
suggested by Bunni that Sub-Clause 20.7 is a “form of appeal to an arbitral tribunal seeking to confirm through
an arbitral award the requirement of compliance, as neither party had declared its dissatisfaction within 28
days”.
253
CRW Joint Operation v PT Perusahaan Negara (Persero) TBK [2011] SGCA 33 In 2006 PT Perusahaan Gas
Negara (Persero) (the Employer) a publicly owned Indonesian company and CRW Joint Operation (the
Contractor) entered into a Contract based on FIDIC 1999 Red Book for the design, procurement, installation,
testing and commissioning of a 36 inch diameter pipeline in Indonesia. During the course of the project a
number of disputes were referred to the DAB, but only one dispute for variations valued at USD 17 million
became contentious, the DAB awarded CRW USD 17 million. However, the Employer did not agree with the
decision and filled a notice of dissatisfaction, and refused to pay the USD 17 million.
After amicable settlement failed the CRW filed a request for Arbitration in 2009, pursuant to Sub-Clause 20.6
[Arbitration] (The Contract provided for ICC Arbitration in Singapore) for the purpose of enforcing the DABs
decision. PGN argued that “CRW’s request for prompt payment should be rejected as the decision was not yet
final and binding and asked the arbitral tribunal to open up, review and revise the decision of the DAB pursuant
to Sub-Clause 20.6”. The Employer did not file a counterclaim at that stage. The tribunal decided it had no
jurisdiction to open up and review the DABs decision and issued CRW the award of USD 17 million based on
the DABs decision, which was not final, but binding.
The Contractor sought to enforce the award in the Singapore High Court, and the Employer sought to have the
award set aside, on the ground that the tribunal had no power to issue a Final Award, the Singapore High Court
agreed with the Employer and the award was set aside based on two principles. Firstly, “the HC found that the
dispute with regards the enforcement of the DABs original decision should have been referred back to the DAB
before commencing arbitration, the non-payment of the DAB award was a second dispute. Secondly, the HC
found that “sub-clause 20.6 does not allow an arbitral tribunal to make final a binding DAB decision without
hearing the merits of that DAB decision”.
The Contractor appealed in 2011. However, the Court of Appeal held that the tribunal had acted in excess of its
jurisdiction by issuing a Final Award. The Court gave an opinion that “there was a ‘settled practice’ in FIDIC
cases for the tribunal to issue an interim or partial award pending the final resolution of the parties’ dispute”.
PT Perusahaan Negara (Persero) TBK v 253 CRW Joint Operation [2015] SGCA 30 The Contractor commenced
a fresh arbitration based on the Court of Appeals advice, and sought an interim decision establishing the
employer’s interim obligation to make payment. The new tribunal issued an interim award of USD 17 million in
2011. The Employer again sought to have the award set aside in the Singapore High Court, which was
dismissed. The Employer appealed. In the time between the High Court decision and the Court of Appeal
hearing the Arbitral tribunal issued a Partial Award for USD 13 million. However, the Court of Appeal
recognised the second Award as final and awarded the full USD 17 million.
49
have taken proactive measures to resolve the ambiguities that existed and issued a Guidance
Memorandum254, “to make explicit the intentions of FIDIC in relation to the enforcement of
the DAB decisions that are binding and not yet final”.255 The amendment suggested an
“express provision on enforceability of merely binding decisions without other steps needed,
and allowing a sum award by a DAB to be included in subsequent payment applications”.256
There are two schools of thought on Sub-Clause 20.7 the first school of thought is that a
“DAB which has been challenged by a NoD cannot be summarily enforced as an instrument
in its own right, the second school argues that it can be”.257 Both Dedezade258 and Gillion259
argued that a second referral to the DAB was necessary to enforce the original DAB decision,
while Seppala260 argued that the enforcement of the DABs decision should be treated
separately to the original dispute. Both schools of thought have their merits, the first school
relies on a fair meaning of the words used in the contract, while the second school is more of
a ‘pay now argue later’ philosophy. In the Persero case the Singapore HC put emphasis on
the ‘pay now, argue later’ formula/argument, however this formula/argument was not
considered under the Persero contract or by the Singapore CA. It will be interesting to see if
this judgement will be developed in other legal jurisdictions, especially in the UAE. There are
provision of UAE Law that could be relied on to enforce a DAB decision, it has yet to be
254
FIDIC Guidance Memorandum to Users of the 1999 Conditions of Contract (2013) the wording of Sub-
Clause 20.7 was replaced entirely “In the event that a party fails to comply with any decision of the DAB,
whether binding or final and binding, then the other party may, without prejudice to any other right it may have,
refer the failure itself to arbitration under Sub-Clause 20.6 [Arbitration] for summary or other expedited relief,
as may be appropriate”. “Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision] and Sub-Clause
20.5 [Amicable Settlement] shall not apply to this reference”.
255
N Bunni, C Ong and M O’Reilly, ‘The Enforcement of Dispute Adjudication Board Decisions: Persero and
the FIDIC Standard Form of Contract’ (2015) 81 Arbitration, Issue 4 Chartered Institute of Arbitrators
256
S Jordan, ‘Adjudication is future of dispute resolution’ (2015) http://www.cmguide.org/archives/4108
accessed 28 September 2017
257
N Bunni, C Ong and M O’Reilly, ‘The Enforcement of Dispute Adjudication Board Decisions: Persero and
the FIDIC Standard Form of Contract’ (2015) 81 Arbitration, Issue 4 Chartered Institute of Arbitrators
258
T Dedezade, ‘Are ‘binding’ DAB decisions enforceable? (2011) Construction Law International, Volume 6,
Issue 3
259
F Gillion, ‘Enforcement of DAB Decisions Under The 1999 FIDIC Conditions of Contract’ (2011) The
International Construction Law Review
260
In the first Persero case Seppala held that the Court of Appeal had made four errors “(i) The CA failed to
understand what the Arbitral Tribunal was appointed to decide (ii) The CA misinterpreted sub-clause 20.7 (iii)
The CA misinterpreted sub-clause 20.6 as requiring a rehearing of a dispute on the merits, contemplating a
single arbitration where all the existing differences between the parties arising from the DAB decision
concerned will be resolved and had failed to appreciate that, as PGN had referred to sub-clause 20.6 as a defence
and not as a counterclaim, the arbitral tribunal was without power to grant PGN affirmative relief under that
sub-clause (iv) The CA misinterpreted the effects of the Award”. C R Seppala, ‘How Not To Interpret The
FIDIC Disputes Clause: The Singapore Court of Appeal Judgment in Persero’ (2012) The International
Construction Law Review, Volume 29, Part 1
50
seen if the UAE Courts would enforce a DAB decision as prescribed by FIDIC, and under
similar circumstance to the Persero case261.
2.12.5. Expiry of the Dispute Board:
“The term of a standing DAB expires upon the Contractor’s submission of a written
discharge in accordance with the Contract, which confirms all disputes have been
resolved”.262 Under Sub-Clause 20.8263 if there is no DAB in place in connection with the
Contract “whether by the reason of the expiry of the DABs appointment or otherwise” the
dispute should be directly referred to Sub-Clause 20.6 and Sub-Clause 20.4, Sub-Clause 20.5
shall not apply.
What if the parties fail to move forward with forming or appointing the DAB, would Sub-
Clause 20.8 provide the opportunity for either party unwilling to participate in the DAB
process the chance to refer the dispute directly to arbitration? The drafting of Sub-Clause
20.8 may be seen as a perceived flaw of FIDIC 1999. However, under English Law where the
contract provides for a standing or ad-hoc DAB the obligation to refer a dispute to a DAB is
therefore a mandatory one, refer to Peterborough City Council264. Where a FIDIC contract
261
Would the UAE Courts contemplate “an interim arbitral award regarding the DAB decision, whilst the main
arbitral proceedings relating to the underlying dispute and subsequent challenge to the DAB decision remain
undecided”. D O’Leary, ‘Using Dispute Adjudication Boards to Resolve Construction Disputes’
262
Adjudication Society Newsletter DAB members serving on ad-hoc DAB are only appointed once the dispute has
arisen, and the appointment expires once the dispute has been resolved. Under the FIDIC Yellow Book the DAB
member’s appointment expires once the DAB has given its decision, unless there are other disputes referred to
the DAB before the original decision is given.
263
FIDIC 1999 Red Book Sub-Clause 20.8 [Expiry of Dispute Adjudication Board’s Appointment]
264
Peterborough City Council V Enterprise Managed Services Ltd [2014] EWHC 3193 Contract was under
FIDIC Silver Book, for the design, supply, installation and testing and commissioning of a 1.5 MW solar energy
plant, a term of the contract provided that the solar energy plant should produce a minimum of 55kW by a
specified date, failing which LD’s would apply. The contract provided that disputes were to be referred to the
DAB, who would issue a final and binding decision provided a notice of dissatisfaction was not given. The final
recourse for dispute resolution after the DAB decision was through the courts rather than arbitration. In July,
2014 the Contractor (EMS) gave notice of its intension to refer a dispute to a DAB, even though no DAB had
been established. In August, 2014 EMS applied for the appointment of a DAB.
The Employer ignored the DAB provisions and proceeded to court during August, 2014, the Contractor then
applied for a stay of the court action, based on the grounds that the parties needed to follow the contractual DAB
provisions. The Employer resisted on the following grounds. (1) The DAB provisions were unenforceable, this
argument was rejected by the court, because subsequent recourse was to the courts. (2) Because it was ad-hoc
there was no DAB in place when the dispute arose, this argument was also rejected because of Sub-Clause 20.8
which provided for an optional ad-hoc DAB. “Sub-Clause 20.8 would only apply to give Peterborough a
unilateral right to opt out of the DAB adjudication if the parties had agreed to appoint a standing DAB at the
outset, as Sub-Clause 20.2 provided for ad-hoc appointments”. Therefore, the argument put forward by EMS
51
provided for an ad-hoc DAB as a prerequisite to ligation, the court held that if such clause is
retained in a contract, it would not permit the parties to ‘opt out’ as “Clause 20.8 was
intended to apply to situations in which a full-term DAB has been appointed”.265
The Judge held that “Sub-clause 20.8 was intended to apply to those situations where a
'standing' DAB had been convened, but had, by the time of the dispute, ceased to be in place
for some reason, it did not confer a unilateral right on a party to opt out of the adjudication
provisions”.266 Under Sub-Clause 20.8 “the reference to ‘or otherwise’ seems to make it
clear that if one party's intransigence means that a DAB is not appointed, the other party can
then proceed straight to arbitration”.267 This position is supported by the FIDIC Contract
Guide268.
In another recent international case269 the Swiss Supreme Court ruled that the parties are not
allowed to bypass the DAB mechanisms and that the DAB process is mandatory. In this case
that the Contract required determination of the dispute through the DAB prior to litigation was accepted by the
Court”. (3) The DAB process was pointless in the context of the particular contract, was also rejected by the
court because the parties had to follow the dispute resolution provisions agreed to in the contract.
265
L Sellers, ‘FIDIC’s dispute adjudication boards: a guide to their use in the UAE’ (2015)
http://www.elexica.com/en/legal-topics/construction/21-fidics-dispute-adjudication-boards-a-guide-to-their-use-
in-the-uae accessed 03 August 2017
266
A Albertini and R 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 25 August 2017
267
268
The FIDIC Contract Guide noted with respect to Sub-Clause 20.8 that a DAB may not be in place due to
“party intransigence”, however, the FIDIC General Conditions do not set a time limit as to when the DAB
should be constituted. This would be an argument against the mandatory nature of referring the dispute to the
DAB before commencing arbitration. J Glover, ‘FIDIC Dispute Adjudication Boards’
https://www.fenwickelliott.com/research-insight/articles-papers/contract-issues/fidic-dispute-adjudication-
boards accessed 19 September 2017
269
4A_124/2014 - The parties entered into a FIDIC Red Book Contract in 2006, for road rehabilitation works in
Romania. A dispute was referred to the DAB in March, 2011 and both parties appointed their adjudicators by
May, 2011. The DAB Agreement between the parties was not agreed and there were a number of issues, such as
conflict of interests in the appointment of the DAB chairman, this continued until July, 2012 almost 15 months
after the dispute was first referred. The Contractor filed for Arbitration with the ICC during July, 2012. During
September, 2012 the prospective DAB chairmen circulated a draft Dispute Adjudication Agreement, which the
Employer suggested some changes be made to during October, 2012. The Contractor in writing refused to sign
the DAB Agreement because 18 months had passed since the dispute was initially referred, and arbitration
proceedings had already being initiated. The Employer challenged the jurisdiction of the Arbitration Tribunal,
claiming the Contractor had not followed the Contract DAB procedures.
The Arbitration Tribunal held that the DAB procedure under Sub-Clause 20 FIDIC form was “not mandatory in
that it would be a pre-condition to the right to initiate arbitration or that failure to observe it would lead to
inadmissibility”. The Tribunal also noted that FIDIC General Conditions do not set a time limit to form the
DAB, which would argue against the mandatory nature of the DAB before initiating arbitration based on a
number of points. (1) Sub-Clause 20.4 states “either party may refer the dispute in writing to the DAB for its
52
the Arbitration Tribunal ruled that the DAB procedures as outlined under Sub-Clause 20 of
FIDIC was not a mandatory pre-condition to commence arbitration proceedings, for the
following reasons: The word ‘shall’ under Sub-Clause 20.2 should not be read in isolation,
but in the wider context of the dispute resolution mechanism established under clause 20”.
Also, Sub-Clause 20.4 refers to the word ‘may’ which could suggest that the DAB is only an
option for each party to refer a dispute to.
The two cases are slight different in that the Swiss case the Employer frustrated the formation
of the DAB and arbitration tribunal, while in the Peterborough case the Employer wanted to
bypass the DAB and go straight to litigation. However, the decision from both jurisdictions
was that the DAB procedures shall be treated as mandatory, and condition precedent to
arbitration270.
decision”, suggesting that the DAB procedure is just an option available to both parties. (2) Sub-Clause 20.4
also states that no party can submit a request for arbitration without first giving a notice of dissatisfaction on
receiving the DABs decision, except as stated under Sub-Clause 20.7 and 20.8, Sub-Clause 20.8 would allow
direct recourse to arbitration without having to meet the DAB requirements.
However, the Employer filed to have the award set aside in the Swiss Courts, the Court held that, the DAB must
be operational and an agreed Dispute Adjudication Agreement is in place. The Swiss Court looked at the general
rules on the interpretation of the contract, and the common intent of the parties. The Court stated that the DAB
was mandatory, but it also took into account the breach of good faith from the Employer in delaying the
formation of the DAB. The Dispute Adjudication Agreement only comes into force when all parties have signed
it, until it is signed there is no validly constituted DAB, in this respect the arbitral tribunal was correct, there was
no DAB in place. The Employer could not argue on the mandatory nature of the DAB procedure as it had done
so much to frustrate it in the first place.
270
“If you don't comply promptly with the DAB's decision you will be in breach, there will then be another
dispute for failure to comply with the DAB's decision. The party trying to enforce the DAB's decision could go
to court and enforce the DAB decision as a debt, this is unlikely to happen because there is Arbitration sub-
clause, unless you had a sophisticated court who understands adjudication and what it is. If you go to Arbitration
you need to review the whole dispute again and seek an interim award, this also creates a problem, as was seen
in the Singapore case which dragged on forever. In reality the Arbitrator should award the money, the
Contractor holds the capital, if the Employer decides not to pay the dispute goes on and on. FIDIC are trying to
introduce new wording in the revised FIDIC Contracts to be issued in December, 2017 which will say that DAB
decisions which are not acknowledged by one party can be referred straight to Arbitration and payment to be
made on a summary basis”. Interviewee D – Code reference: 34 to 38
53
2.12.6. Referring the DABs Decision to Arbitration:
Sub-Clause 20.4 states “The DAB shall be deemed to be not acting as arbitrator(s)”271. Under
Sub-Clause 20.6 if the DABs decision has not become ‘final and binding’ it shall be settled
by international arbitration272. Therefore, as already discussed before a dispute can be subject
to arbitration it must be referred to the DAB, the question the arbitral tribunal must consider
is “has the non-payment of the DABs decision been referred to the DAB specifically, and if
not, does the arbitral tribunal have the jurisdiction to deal with the dispute”. 273 The ICC
arbitration have addressed the perceived gap issue in Sub-Clause 20.7, in the ICC case
16119/GZ274, 10619275 and 15751/JHN the tribunal considered it had the power to issue
interim or partial awards. However, the ICC arbitral tribunal declined to issue interim or
partial awards based on the DABs decision which are binding but not final, refer to ICC case
11813/DK and 16949/GZ276.
The ICC rulings seem to indicate that parties who fail to comply with the DAB provisions
under their contract will find the arbitral tribunal unsympathetic to their non-compliance, and
will seek to enforce the DAB decision in the arbitration by partial or interim awards being
made (subject to the arbitral tribunal power to review and revise the DAB decision at a later
date). In summary the tribunal could make an interim award for payment based on the DABs
decision. However, when the contract is governed by UAE law, reference needs to be made
271
“The purpose of this express reference is to make it clear that the written decision of the DAB is not to be
treated as an arbitrator’s award, and so cannot be said to be immediately finally conclusive, neither will the
DABs decision enjoy the status of an arbitrator’s award in respect of enforcement”. N Gould, ‘Recent
Developments: domestic and international’ (2004) 10th Adjudication Update Seminar
272
“Unless settled amicably, any dispute in respect of which the DABs decision (if any) has not become final
and binding shall be settled by International arbitration.”
273
A Tweeddale, ‘FIDIC’s Guidance Memorandum to users – a half-baked solution?’ (2014) Construction Law
International, Volume 9 Issue 2
274
ICC Case 16119/GZ “suggests that a partial final award and consequently also a final award are
inappropriate devices to allow enforcement but suggests, obiter, that an interim award might be effective”. T
Dedezade, ‘Are ‘binding’ DAB decisions enforceable? (2011) Construction Law International, Volume 6, Issue
3
275
“Under FIDIC 1987 Red Book, Clause 67 the arbitral tribunal granted an interim award in favour of the
claimant that was seeking to enforce an Engineer’s decision awarding them money”. G Di Folco and M
Tiggeman, ‘Enforcement of a DAB Decision Through an ICC Final Partial Award’ (2010) The Dispute Board
Federation, Issue 59
276
ICC Case 16949/GZ “The sole arbitrator declined to make a final award (the merits were not in front of him)
on the basis that ‘though non-compliance with the DAB decision would amount to a breach of contract, the
consequences of such breach would hardly be a claim for damages of the same amount already awarded”. T
Dedezade, ‘Are ‘binding’ DAB decisions enforceable? (2011) Construction Law International, Volume 6, Issue
54
to the UAE Civil Code, Article 265277. If the UAE Courts interpret the phrase ‘or otherwise’
under Sub-Clause 20.8 as clear, then it could be held that the DAB process is mandatory
under UAE Law when the FIDIC contract is not amended. Conversely, if the UAE Courts
view Sub-Clause 20.8 as unclear as in consideration of Article 265 it would then be important
to identify if whether the parties had expressed particular intent at the time of forming the
contract. The UAE courts are “likely to uphold FIDIC’s pre-conditions to arbitrate if, that is,
the DAB provision has not been struck out”.278
2.13. DABs in the UAE:
DABs are not new concept to the UAE or wider Middle East, as the FIDIC Rainbow suite of
contracts are the most commonly used form of contract throughout the region. However,
adjudication as provided for in standard FIDIC Contracts has not found much traction, nor
have Governments or the judicatory enacted any statutory legislation which would give a
mandatory right of adjudication in construction disputes. “The use of DABs in the UAE has
been conspicuous in its absence, instead of adopting what should be considered as a proactive
approach to dealing with disputes, it is more likely that Employers will delete the FIDIC 1999
DAB clauses, preferring instead to rely on the arbitral process, or the Courts, to settle any
disputes”.279 There is resistance to DABs in the UAE for a number of reasons, which shall be
discussed under Chapters 4 and 5. The use of DABs may be seen by the UAE Employer as
just another expensive layer of administration adding to the project costs, with the process
offering no guarantee of a final and binding award.
Nonetheless, the UAE has attempted to promote the use of DABs, Law Number 21 of 2006
as passed by the Abu Dhabi Government provided for “the standardization of the
277
UAE Civil Transaction Code, Law # 5 of 1985, Article 265 (1) “If the wording of a contract is clear, it is not
to be departed from by way of interpretation to ascertain the intention of the parties”. (2) “If there is scope for an
interpretative construction of the contract, an enquiry shall be made into the mutual intentions of the parties
beyond the literal meanings of the words, and guidance may be sought in so doing from the nature of the
transaction, and the trust and confidence which should exist between the parties in accordance with the custom
current in (such) dealings”. So if Sub-clause 20.8 is unclear then Article 265 will not resolve the issue “unless
the parties had expressed any particular intent at the time the contract was formed”. A Bell, J Witt and N Hall,
‘Dispute Adjudication Boards’ (2014) http://www.arabianindustry.com/construction/news/2014/dec/4/dispute-
adjudication-boards-4894760/ accessed 31 July 2017
278
D O’Leary, ‘Using Dispute Adjudication Boards to Resolve Construction Disputes’
279
55
construction contracts for the projects initiated by the government entities”.280 The Abu
Dhabi government in 2007 under the licence from FIDIC created two bespoke forms of
contract (Build only and D&B) which were specially modified forms of FIDIC municipality
construction contract to be used on all government contracts in the Emirate of Abu Dhabi.
The Abu Dhabi government contracts contain a provision for DAB under Sub-Clause 20.4,
however, they removed the standing DAB and replaced it with an ad-hoc, thus removing the
dispute avoidance function of the Clause, there were some amendments to the standard
FIDIC sub-clauses281.
2.14. Conclusion:
It could also be argued that disputes in construction contracts are inevitable due to the
number of interested parties involved in the process of designing, constructing and financing
a project. However, the main function of the DAB is dispute avoidance, rather than dispute
resolution, it is therefore important that a standing DAB is appointed once the project
commences so as to obtain the true benefit of the DAB, ad-hoc DABs do not provide a
dispute avoidance function.
The introduction and development of DABs by FIDIC has provided the parties to a
construction contract with an alternative to arbitration as a method of dispute resolution. The
reputation arbitration has gained of being a time consuming and costly procedure is
impacting its reputation as a viable option to resolve construction disputes. There are now
viable ADR methods available in the market, parties in the UAE now need to consider other
options such as DABs, which are considerably less expensive and time consuming compared
to arbitration and litigation and would promote a culture of dispute avoidance. However, to
date DABs have not found much traction in the UAE, apart from the Abu Dhabi government
contract, which has only provided for an ad-hoc DAB. There needs to be a cultural shift in
the mind-set of all parties involved in the UAE construction industry if DABs are to gain any
280
Z Rizvi, ‘FIDIC in the Middle East - The Must Know for Industry Players’
https://www.lexology.com/library/detail.aspx?g=beeb6477-d429-4864-add4-57ea6f5c0197 accessed 28
September 2017
281
(i) Sub-Clause 20.1 was amended so that the Employer deals with the Contractor’s claims and not the
Engineer. (ii) Sub-Clause 20.4 the DAB has 42 days instead of 84 to give a decision, the period can be extended
on the agreement of both parties. (iii) Sub-Clause 20.5 provides for amicable settlement, which involves senior
representatives of the parties into the dispute. (iv) Sub-Clause 20.6 provides for a further 30 day cooling off
period to try and resolve the dispute rather than resort to arbitration, which would be under ADCCAC rules.
56
traction in the region, this will require input from the federal government, judicatory, local
construction bodies and experts in DAB procedures and rules.
The major concern of any dispute resolution method is the enforcement of the award, the
UAE is unlikely to adopted any form of statutory adjudication legislation in the short to
medium term (the time taken to introduce the UAE Arbitration Act shows there is no real
appetite to reform and improve existing legislation). However, it is still unclear how the UAE
Courts would treat the enforcement of the DABs decision, this prompts the obvious question,
as the UAE construction industry matures, and projects become ever more technically
complex, with shorter programme durations and more commercial scrutiny from experienced
UAE Employers and Contractors of project cost, is the time now right for construction
professional to embrace the implementation of DABs as a mechanism to resolve disputes?
The following chapters shall attempt to answer this question.
57
CHAPTER THREE
Research Methodology
58
3.1. Introduction:
In Chapter two there was a comprehensive review of the relevant international and where
applicable UAE or ME specific literature with regards DABs. The literature review identified
that there is limited academic commentary on the application of DAB procedures within the
UAE. The aims and objectives of this study were identified in Chapter one, this Chapter will
introduce the research methodology adopted in order to complement existing literature and
develop arguments through the collection and analysis of the relevant empirical data used282.
The intension is to illustrate through the selected research methods the opinions and views of
construction professionals in the UAE in order to achieve valid, reliable and well-reasoned
conclusion with logical references to the aims and objectives of the study.
3.2. Selected Research Methodology:
In view of the literature research undertaken there is international consensus that when
standing DABs are utilised to their full potential there is a significant reduction in the number
of disputes finally referred to arbitration. Unfortunately, in the UAE and greater ME region
there has been a limited adoption of the FIDIC 1999 DAB contractual provisions (with the
exception of the Abu Dhabi government contracts ad-hoc DAB provisions). There is ample
data relating to construction dispute causes, cost and resolution in the UAE, with a focus
mainly on arbitration and litigation. However, there is limited available data available on
dispute avoidance or the application of various ADR methods in the UAE, specifically
DABs.
Research strategies were defined by Biggam283 and Freimuth284, while Creswell and Clark285
distinguished between deductive and inductive research. The two main types of research
282
Empirical data is research based on observation, evidence or experimentation, the hypothesis of the argument
can be tested by evidence. “In philosophical terms, empirical data is often defined as data which is collected
through the use of our senses”. P Oliver, Writing Your Thesis (1st edn, Sage Publications, London 2004)
283
“The research strategy refers to your over-arching approach to your empirical research, and there are a
number of tried and tested strategies to choose from, examples of which include: case study, survey,
ethnographic, experimental, historical, action research and grounded theory, you must identify your research
strategy, describe it and explain why it is appropriate to your research”. J Biggam, Succeeding with your
Master’s Dissertation (1st edn, Open University Press, UK 2008)
284
K Rudestam and E R. Newton, Surviving Your Dissertation (2nd edn, Sage Publications, London 2001) cited
M Freimuth “The three-level hierarchy of knowledge are “(i) Axiologic/Epistemic level – forms the foundation
for content and method within a field of inquiry (ii) Theoretical level – theories are premises to account for data
(iii) Empirical level”.
59
analysis used are quantitative286 or qualitative287, for the purpose of this dissertation both
qualitative research (inductive) and doctrinal research288 were used. Sweetman289, describes
the functions of the literature review, which lays the foundations of the research by using
primary and secondary sources of information to illustrate the data collection under the
literature review. The qualitative methods adopted comprised of interviews (semi-structured
and unstructured) and an on-line surveys with text and visual data analysis. If interviews and
survey are applied correctly they can obtain large volumes of relevant data in a relatively
short period of time.
3.3. Analysis of Questionnaire Responses:
A sampling290 methodology was adopted, which involved the design and distribution of an
online questionnaire during October/November, 2017. Naoum291 describes the stages in the
construction of a questionnaire, the questions were focused on obtaining specific information
with regards the aims and objectives of the study. The structure of the questionnaire was
simple, direct, clearly drafted and followed a logical sequence which was appropriate to the
target UAE construction industry professionals. The objectives of the questionnaire was to
285
J W. Creswell and V L. Plaro Clark, Designing and Conducting Mixed Method Research (2nd edn, Sage
Publications, London 2011) Deductive research “works from the ‘top down’, from a theory to hypotheses to
data to add to or contradict the theory”. Inductive research is defined as “bottom-up, using the participants’
views to build broader themes and generate a theory interconnecting the themes”. Quantitative research is
deductive and qualitative research is inductive.
286
“Quantitative research isolates and defines variables and variable categories, these variables are linked
together to form a hypotheses which is then tested on the data”. J Brannen, Mixing Methods: Qualitative and
Quantitative Research (1st edn, Routledge, New York 2016)
287
“Qualitative research begins with defining very general concepts, which as the research progresses may
change the outcome”. J Brannen, Mixing Methods: Qualitative and Quantitative Research (1st edn, Routledge,
New York 2016)
288
“Doctrinal research is research into the law and legal concepts, it is research which provides a systematic
exposition of the rules governing a particular legal category, analyses the relationship between rules, explains
areas of difficulty and, perhaps, predicts future developments”. T C. Hutchinson, ‘Developing Legal Research
Skills: Expanding the Paradigm’ (2008) Melbourne University Law Review, 32.
289
The literature review has a number of functions “(i) It shows that you have read widely around your chosen
topic (ii) It demonstrates your critical understanding of the theory (iii) It acknowledges the work of others (iv) It
informs and modifies your own research”. D Swetman, Writing your Dissertation (3rd edn, how to books, UK
2005)
290
“Sampling is basically the obtaining of a manageable part of the object or population that supposedly
possesses the same qualities as the whole”. The sample should be large enough to be significant, representative
as possible, defects acknowledged and the rational for it produced. D Swetman, Writing your Dissertation (3rd
edn, how to books, UK 2005)
291
There are three fundamental stages that you should take in constructing your questionnaire: “(i) Identifying
the first thought questions (ii) Formulating the final questionnaire (iii) Wording of questions”. In addition the
following should also be considered “(i) Which objective is the question related to (ii) Is the question relevant to
the aim of the study (iii) Is the question relevant to the research hypothesis (iv) Can the answer be obtained from
other sources”. S G. Naoum, Dissertation Research and Writing for Construction Students (3rd edn, Routledge,
New York 2013)
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determine if respondents were aware of DABs and would they welcome DABs as the primary
method of dispute resolution on construction projects in the UAE. The questionnaire
consisted of fifteen multiple choice questions, which were close ended questions with
unordered choices292. However, the participants were given the option of ‘other’ and
‘comment’ boxes were also provided under select questions, so as to allow participants
develop their replies, this approach was taken so as to maximize the number of respondents.
As identified by Hoxley293, response rates to online questionnaires are generally low, the
response rate for this study was over 40% with 177 individual responses. The questionnaire
was distributed to a wide circle of construction professionals in the UAE who would have
had experience of claims, disputes and dispute resolution methods under numerous
construction contracts. The questionnaire was distributed on-line through the surveymonkey
platform, with a brief description of the overall purpose of the research. The average
completion time was approximately five minutes per respondent.
3.4. Semi-Structured Interviews:
Primary data for this dissertation was gathered by utilizing both qualitative and quantitative
research in the guise of un-structured and in-depth semi-structured interviews. In order to
identify a broad range of views on DABs, it was deemed appropriate to conduct an in-depth
interview with a number of influential professionals currently working in the UAE
Construction industry. The interviews also sought to examine the many views concerning the
attitudes the interviewees had in relation to the overall state of the UAE Construction
industry, construction claims/disputes and the effectiveness of DABs to avoid and resolve
disputes.
A total number of six structured/semi-structured interviews294 were conducted between

October and November, 2017 participants were contacted through the authors existing
292
The respondents were asked to evaluate each choice and select the one that best reflected their opinions, there
was also an option to give comment if required.
293
A Knight and L Rudduck, Advanced Research Methods in the Built Environment (1st edn, Blackwell
Publishing, UK 2008) cited M Hoxley “Typical response rates quoted in text books have a mean of about 30 per
cent but one has to work hard to achieve this level of response”.
294
“A semi-structured interview is when you have an outline structure with key pointer questions, hoping to
generate a fluid, dynamic interview, this give you the opportunity to confront core issues and at the same time
allow the interview process to take unexpected twists and turns”. This method can be compared to a structured
61
business network or direct contact was made by way of an introductory e-mail which outlined
the University course for which the study was being conducted, a brief summary of the
dissertation and the interview approach. The interviewees were requested to confirm their
participation in the research.
Where possible all interviews were conducted face to face in the UAE, a number of
interviews were completed via Skype. Initially all participants were e-mailed a list of
predetermined questions a week before the interview, the objective of this was to give the
interviewee an understanding of the structure of the dissertation and allow them prepare their
answers accordingly. The interviews were recorded and the transcriptions were prepared
using the coding method295. The method of key word coding for analysis of the interviews
was chosen, because coding is a process of representing the operations by which data is
broken down and put back together in new ways.
Interviews were qualitative rather than a quantitative, with open ended questions, it was
therefore important that the interviewer avoided influencing the participant responses, refer to
King296. The interview questions were broken into categories based on the development of
the topics identified and described under the literature review. The limited data available on
DABs in the UAE allowed the author identify gaps in the existing research and direct and
develop questions to give professional insight on these topics. Questions were initially
grouped under headings relating to the aims and objectives of the study, the questions were
then refined and developed so as to allow the interview follow a seamless transition from one
topic to the next. A total of sixteen questions were addressed to the interviewees, with a
number of sub questions for discussion which allowed for more detailed and expressive
interview where a pre-prepared set of questions are answered, this maintains a focused interview process. J
Biggam, Succeeding with your Master’s Dissertation (1st edn, Open University Press, UK 2008)
295
“The reason for open ended questions is that the researcher has no clear hypothesis regarding answers,
analysis of open ended answers requires coding, so as to reduce the responses to a few general categories of
answers that can be assigned a numericial code”. S G. Naoum, Dissertation Research and Writing for
Construction Students (3rd edn, Routledge, New York 2013)
296
A Knight and L Ruddock, Advanced Research Methods in the Built Environment (1st edn, Blackwell
Publishing, UK 2008) cited A King who described a four-stage process of constructing and carrying out
qualitative research interviews: “(i) define the questions (ii) create an interview guide that is a list of topics to be
covered in the interview and a list of probes to elicit further details if required (iii) recruiting participants,
including sample definition and criteria, and consideration of confidentiality (iv) carrying out and analysing the
interviews, which addresses the practical issues associated with interviews, such as phrasing, starting and
ending, and difficult interviewees”.
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opinion to be given. A mock interview (pilot study297) was conducted with a colleague in
order to remove any unnecessary duplication of questions, refer to O’Leary298. All interviews
were recorded and transcribed, so as to provide an accurate record of the discussion.
3.5. Ethical Concerns and Limitations:
There were concerns that the interview approach would result in a small sample size of
opinion, for this reason the on-line questionnaire was used to complement the opinions of the
interviewees backed up with relevant statistical data from a wider sample base in the UAE.
As already identified there are a limited number of UAE projects where DABs have been
utilised, and in addition to the confidential nature of the DABs decisions, it was for these
reasons a case study approach could not be considered. A case study would have allowed the
prospect to explore the reasons why disputes were referred to the DAB, identify contractual
approaches to disputes, the DABs decisions, if the DABs decisions were referred to
arbitration, and most importantly it would give the opportunity to identify the true value of
DABs in terms of time and cost effectiveness.
Due to the highly regarded professional reputation of the interview participants within the
UAE construction industry it was of paramount importance that any opinions expressed by
the interviewees would remain confidential in relation to this particular study. All
interviewees were provided with a draft of the final interview transcript to confirm its content
was a true reflection of the opinions expressed in the interview. For the purpose of
confidentiality the transcribed interviews shall not be made public.
297
“The ‘pilot study’ involves testing the wording of the questions, avoiding ambiguous questions,
suggestions for analysing the data, as well as testing the technique selected for collecting the data”. S
G. Naoum, Dissertation Research and Writing for Construction Students (3rd edn, Routledge, New York 2013)
298
A Knight and L Ruddock, Advanced Research Methods in the Built Environment (1st edn, Blackwell
Publishing, UK 2008) cited O’Leary who identified the “need to have a pilot interview before beginning a final
interview schedule, which includes the need to gather feedback, reflect and where appropriate, modify the
interview plan”.
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CHAPTER FOUR
Survey Findings
64
4.1. Introduction:
The emphasis of this chapter will be to present the results of the online survey and provide a
detailed interpretation of the findings based on the aims and objectives of the dissertation.
This chapter will draws upon data collected in the literature review, which will allow the
identification of the key areas where analysis was required and was used as the basis of
question development. The views of UAE construction professionals were sought for a
number of specific issues, such as:
1. The challenges facing the industry at the moment,

2. The causes of construction related disputes,
3. Important aspects of resolving disputes,
4. The industries understanding of DABs, their advantages and disadvantages,
5. Statutory Adjudication,
6. Would construction professionals actually welcome the wider use of DABs as the
main method of dispute resolution in the UAE.
The data collected from the online survey allows for critical evaluation and examination of
the core subject matter of this dissertation and will also be discussed in more detail under
chapter 5 (Discussion and Analysis). The UAE construction industry is a complex and
competitive environment which draws professionals from varied backgrounds, Architects,
Engineers, QS’s, Planners, Lawyers etc… each profession will have its own view on how a
construction contract should be administrated, for this reason the survey sought to get opinion
from a wide spectrum of professionals across the industry, with over 177 individual responses
the survey will give a reasonably accurate snapshot of how the UAE construction industry
perceives DABs.
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4.2 Survey Analysis:
Q1. What is your Professional background?
Although the survey was distributed to a wide circle of construction professional in the UAE
the majority of participants were from a QS/commercial or engineering background. This was
not surprising seeing as the majority of contract administrators in the UAE come from the
QS/engineering professions. This question was asked so as to interpret and analyse the data
and views of survey participants from different professional backgrounds.
Q2. How would you categorise your current Company / Business?
The majority of respondents were working for a Main Contractor (31%) or Sub-Contractor
(30%), the percentage breakdown of the survey participants would be a fair proportional
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representation of the UAE construction industry at the moment. Again this question was
asked so as to determine trends in the respondent’s answers, with regards the opinions
expressed, knowledge of DABs, and were such opinions significantly different depending on
whether the participants were employed by the Contractor, Subcontractor, Client or a
Consultancy (Engineer/CQS).
Q3. What would you say is the biggest challenge facing the UAE Construction Industry
at present?
The survey identified that the lack of cash flow and liquidity in the UAE construction market
was the biggest challenge at the moment. Cash flow is the lifeblood of the industry and the
smallest of payment delays has the ability to disrupt and expose the entire supply chain to
significant hardship. Constraints around cash flow, and non-payments for works done will
result in harder attitudes towards entitlement, and undoubtedly will lead to more construction
disputes, the impact of which will ultimately flow through the supply chain, as was expressed
by a survey respondent299.
The second biggest challenge identified is below cost tendering300, this trend is not
sustainable in the long run and combined with the lack of liquidity in the market will also
299
“The lack of cash flow combined with unfair contracts is the recipe of complete failure of any business
system. There is an alarming imbalance between clients and contractors, coupled with the bias of contract
administrators and Employer representatives passing onto the Contractor parts of their design obligations and
not dealing with excusable delays and payment for varied works”.
300
“It is fairly common in times of economic depression for Contractors to buy their work by tendering at below
cost and then trying to recover their economic losses as a ‘total cost’ claim, the essence of a ‘total cost’ claim is
that the contractor tender cost is X and its cost to complete the contract is Y, and is therefore recoverable by
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result in an increased volume of disputes. How will these potential disputes be resolved? Is
arbitration the answer, is seems it may not be viable for many contractors/subcontractor in the
UAE due to the associated cost and lost productivity now associated with arbitration. The
initial objectives of arbitration could be summarised into five main objectives301, how many
of these objective are applicable to arbitration as we know it today.
Q4. In your opinion what is the most common cause of dispute encountered on UAE
construction projects?
The construction industry is particularly prone to disputes, because “few construction projects
are realised as planned and variations are the rule rather than the exception, whether the
contractor is entitled to additional payments for changes often causes dispute, time schedules
for completion are always tight and delays can lead to severe penalties”.302 As identified by
the survey results the main source of disputes in the majority of construction projects are
EOT (27%) and variation (23%) claims, which are sometimes not presented clearly by the
Contractor or not evaluated/assessed by the Engineer/Employer in a fair and reasonable
manner, this was also reflected in the survey. Following on from Question 3, late or non-
whatever they can muster by way of a claim”. However, the claim does not take account of the contractors
culpability for submitting the original render price below cost, just because costs exceeds revenue it does not
give the contractor entitlement to recover losses. A Burr, Delay and Disruption in Construction Contracts (5th
edn, Informa Law from Routledge, Oxon, 2016)
301
English Arbitration Act (1996) objectives were “(i) To ensure that arbitration is fair, cost-effective and rapid
(ii) To promote party autonomy (iii) To ensure that the courts have supportive powers at appropriate times (iv)
To ensure that the language used is user friendly and readily accessible to the parties (v) To follow the model
law wherever possible”. N Gould, ‘Conflict Avoidance and Dispute Resolution’ (2012) RICS Professional
Guidance UK GN 91/2012
302
R Harbst and V Mahnken, ‘ICC Dispute Board Rules: the Civil Law Perspective’ (2006) 72 Arbitration 4
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payments (17%) were identified as another source of dispute, this could also be linked to
variation and EOT claims not being paid by Employer’s.
There seems to be a reoccurring theme in the UAE of the same type of disputes being
repeated on numerous projects, and it is not unusual to find the same parties in similar
disputes on consecutive projects. It appears the UAE construction industry needs its own
version of the Latham report, or something similar, so the inherent problems associated with
construction in the UAE can be addressed at the highest level of government or at the very
least within the industry itself.
Q5. What would be your primary concern when procuring / tendering for a
construction project in the UAE?
The survey identified that risk allocation and liability (28%) were the primary concerns when
tendering or procuring a project in the UAE. In order to avoid or limit construction disputes
there needs to be fair and appropriate allocation of risk within the contract, the drafting of the
contract needs to be accurate and contracts need to be administrated in the sprit they were
intended303. Project costs and profit margin were also a concern, as both are heavily
influenced by the known and unknown risk allocated to the parties under the contract. Not
surprisingly contractual dispute resolution was only considered a primary concern by 3% of
303
“The substantive law of the contract will establish the ground rules for the interpretation of the contract and,
in particular, its dispute resolution procedures”. N Gould, ‘Enforcing a Dispute Board’s decision: Issues and
Considerations’ (2013)
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respondents, this backs up the views of experts on construction law and dispute resolution
that the parties to the contract pay little attention to the dispute resolution when tendering or
procuring a construction contract. Correctly drafted dispute resolution sub-clause can
streamline dispute resolution and reduce costs, the opposite applies if such sub-clauses are
poorly drafted, and they could be unenforceable and lead to even further escalation of conflict
between the parties.
Q6. What method of construction dispute resolution are you most familiar with?
The most common methods of dispute resolution in the Middle East in 2016 were:304
1. Party to Party negotiation
2. Arbitration
3. Adjudication
This was also reflected in the survey, with 63% stating that negotiated settlement is the most
common method of dispute resolution encountered in the UAE, followed by arbitration.
Amicable settlement generally takes the form of high level executive (CEO or GM)
discussions and agreement, this form of dispute resolution will not involve the parties who
were involved in the day to day intricacies of the project, thus removing any emotion from
304
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the discussion, which allows a wider corporate perspective of the actual dispute. Negotiated
settlement can be effective and inexpensive if consultants and lawyers are removed from the
process, the aim of the discussion should be to maintain continued business relationships.
The survey results indicate that respondents have not been exposed to DABs, this lack of
exposure and awareness could be one of the reasons why the introduction of contractual
DABs are not yet extensively utilised in the UAE.
Q7. Which of the following would you consider the most important when seeking to
resolve a construction dispute?
The survey respondents identified speed of decision (36%) as the most important when
resolving a dispute, the second most important consideration was cost (27%), followed by
flexibility of procedure. It could be argued from the research undertaken that DABs would
certainly meet the criteria of what UAE construction professionals consider important when it
comes to dispute resolution. DABs are a speedy process of dispute resolution (decision within
84 days of referral), according to DRBF costs of the DAB are between 0.05% of the
construction costs on dispute free projects and 0.25% for more difficult projects305, and the
procedure is substantially more flexible when compared to arbitration or litigation306.
305
Under FIDIC Sub-Clause 20.2 the DAB are remunerated equally by the parties, with both parties paying half
the fees, which are monthly retainer fee or daily fee for site visit and specific involvement. The process of
payment is that the DAB members will invoice the Contractor, who will then submit 50% of the invoice as part
of the interim payment application, payment will become due to the DAB members within 56 days of the
invoice submission. It is usual for the DAB members to propose their own fees, however, if the parties disagree
on the fees, “a court assessment to determine the reasonableness of the fee would be conducted and it is unlikely
the fee would be less than what was originally proposed by the member(s) of the DAB”. L Sellers, ‘FIDIC’s
71
Q8. What form of Contract are you most familiar with in the UAE?
Over 81% of respondents have or are using FIDIC forms of contract, the FIDIC suite of
contracts have been popular in the UAE and wider Middle East region since the 1970’s,
especially for public sector projects and with major developers. As was identified in chapter
two the DAB provisions are generally deleted from the conditions of contract by UAE
Employers, and the whole essence of dispute avoidance is removed, thus depriving both
parties of a proven method of dispute resolution, which is time efficient and cost effective.
Q9. How would you rate your understanding of FIDIC 1999 Dispute Adjudication
Board (DAB) procedures?
dispute adjudication boards: a guide to their use in the UAE’ (2015) http://www.elexica.com/en/legal-
topics/construction/21-fidics-dispute-adjudication-boards-a-guide-to-their-use-in-the-uae accessed 21 September
2017
306
The success of the DAB depends on the parties having a clear understanding of the DAB procedures and
process under the contract. The process is not suitable for parties that want rule-oriented final decision, the
board’s decisions are not binding precedents on the parties.
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As was seen in Question 8 over 81% of respondents are familiar with FIDIC forms of
contract. However, only 21% have a working knowledge or practical experience with DABs
(some respondents stated that their experience of DABs was outside the UAE). Only 15% of
respondents stated they had no understanding of DABs, the vast majority of these
respondents were working as a subcontractor. The survey shows there is awareness of DABs
but only 21% understand the procedures and process, the result is not surprising considering
that DABs have not penetrated the UAE construction industry as successfully as in other
jurisdictions around the world.
Q10. Why do you think DABs are not widely utilised in the UAE?
The majority of respondent believe lack of awareness (35%), construction industry culture
(23%) and lack of education and training (13%) to be the major blockers to DABs in the
UAE. As can be seen with Question 6 and 9 there seems to be a lack of awareness amongst
UAE construction professionals, DABs are not being promoted as an alternative in the UAE,
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this is something the industry as a whole needs to address 307. Professional bodies in the UAE
such as the RICS, CIArb, CIOB maybe should be doing more to promote ADR methods, but
they alone cannot drive change, there needs to be paradigm shift across the entire industry,
from Employer’s to Contractor’s, and down the supply chain. As 23% of respondents alluded
to the culture of the UAE construction industry is not willing to embrace change, for reasons
identified by a survey participant308. In order for the concept of DABs to be accepted there
needs to be a significant change in attitudes, as Gerber quoted309.
There are only a select number of construction professional who have served as a DAB
member in the UAE, mainly due to the fact DABs are rarely used in the region, but this is not
to say there is an absence of amply qualified construction professionals in the UAE who
could serve as board members310. Bodies such as Dispute Boards MENA311 do provide DAB
services in the UAE and wider ME region. Contrary, to the contemporary literature only 8%
of the survey participants identified ‘cost’ as a blocker to DABs in the UAE, as was
referenced under Question 7 the cost/fees312 of the DAB as a standalone dispute
avoidance/resolution is the most cost effective way to for an independent third party to
resolve disputes in a timely manner.
307
“Only once the parties develop such as understanding can they appreciate why dispute boards are focused on
the contemporaneous resolution of disputes in a harmonious way that preserves positive working relationships
between the parties”. C Chern and C Koch, ‘Efficient Dispute Resolution in the Maritime Construction Industry
Dispute Boards in Maritime Construction’ (2005)
308
“Employer’s do not want to use them (DABs) because many decisions will go against the Employer’s due to
design being incomplete. Employers and Contractors do not want to pay the up-front costs of a standing DAB
because they are not fully aware of the benefits of DABs and they are trying to keep costs down due to low
profit margins”.
309
“(Dispute boards) represent a paradigm shift away from the traditional focus of binding dispute resolution, in
favour of dispute avoidance and management, which encourages issues to be resolved at project level without
traditional adversarial attitudes”. P Gerber and B Ong, ‘DAPs: When will Australia Jump on Board?’ (2011) 27
BCL 4
310
DAB training methods will need to outline the philosophies and principles of DABs, so as to provide the
necessary training to enable dispute avoidance as well as dispute resolution techniques.
311
http://www.disputeboardsmena.com/ accessed 12 September 2017
312
“On both the Daily Fee and the Retainer Fee, it is to be remembered when deciding on fees that the Contract
Parties are investing in the DAB as a means of trying to avoid the much more costly and time-consuming
process of international arbitration or litigation, it is important not to be Penny wise but pound foolish”. N G.
Bunni, ‘Dispute Boards in the Middle East’ (2013) DRBF Conference, Paris cited “The Dispute Board Manuel
of the Japan International Corporation Agency” (2007)
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Q11. In your opinion what would be the main advantage of DABs if utilised in the
UAE?
DABs work more efficiently when there is respect from both parties to the processes and they
are prepared to respect the decisions made by the DAB after a dispute has been referred.
“Primarily, the presence of DAB will likely reduce confrontation and minimise disputes thus
promoting a non-adversarial environment where timely execution of the work becomes
possible”.313 Just over 23% of the survey participants felt the main advantage of DABs was
they were less expensive compared to arbitration314. Another advantage identified by
participants was that DABs promoted proactive dispute avoidance315, the key to this is
effective communication between the parties 316
. Just under 21% selected ‘fast decision’,
resolving disputes in a timely manner will allow both parties have a better understanding of
313
314
Although the cost benefits of DABs are difficult to determine they are considerably less expensive and time
consuming compared to arbitration and litigation.
315
Boards can be tailored for specific projects, the DAB will have real time project knowledge through
continual involvement as the project evolves resulting in fewer end of project claims as there is a focus on
proactive dispute avoidance and management. Also, the parties have control over the process and disputes can
be addressed immediately to experts with hands on construction experience.
316
Better communication on the project between the parties, with resolution of issues at project level, which
allow the project/contract to progress while the dispute is being resolved, thus reducing confrontation and
antagonistic correspondence between the parties.
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the final cost of the project, the impact on cash flow and programme. A further 20% held that
the neutrality of DAB was one of the main advantages of the process317.
Q12. In your opinion what would be the main disadvantage of DABs if utilised in the
UAE?
It can be difficult to change the mind-set of individuals or Employers who are used to dealing
with disputes in a prescribed way, such as through arbitration or litigation. There may be a
prejudiced attitude from the Employer that generally the Contractor’s claims have no merit,
and that disputes referred to DABs are just another layer of additional costs and lost time,
thus leading to many Employer’s reluctance to accept and embrace the benefits of DABs,
especially in the UAE.
DABs are not perfect, there are some inherent disadvantages associated with the process318,
the parties must take the view if the advantages of the DAB outweigh the disadvantages for
their particular project, there is no right or wrong answer to this, it depends on the
317
Members are neutral as they are jointly appointed based on the agreement of both parties, and are make
themselves available for casual consultations, thus reducing the need for third party intervention.
318
The board carries out their investigation and issue a decision they are bound to follow the rules of natural
justice. The board can be rendered ineffective if there are constant personality clashes between the board and the
parties.
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circumstances of the project in question and the parties attitudes to a number of various
factors, such as risk, costs, programme, claims and dispute resolution to name but a few. The
majority of survey participants (26%) held that the main disadvantage of DABs was that it
was not always a ‘final and binding decision’319, a further 24% believed the lack of statutory
adjudication in the UAE was a major drawback, such issues shall be discussed in more detail
in Chapter 5.
Q13. Do you believe a form of Statutory Adjudication should be introduced in the

UAE?
Not surprisingly 71% of the survey participants were in favour of Statutory Adjudication
being introduced in some form under UAE legislation. But would UAE legislation mirror
Adjudication legislation from common law jurisdictions, such as the UK. It could be argued
that the UK, Canadian or Australian construction markets are more developed (mature) from
a technical as well as a judicial perspective when compared to the UAE construction market.
Although the majority of UAE construction professionals would welcome Statutory
Adjudication, and the obvious benefits flowing from such legislation, as was expressed by
one of the survey participants320, the likelihood in the short to medium terms is that the UAE
will not adopted such legislation.
319
The biggest disadvantage of DABs is that the board’s decision is only enforceable under the contract, it is not
an arbitral award or judgement of the court. Where one party abuses and refuses to comply with the DBs
decision, there will be additional cost and time incurred by the other party to enforce the board’s decision.
320
“When statutory adjudication is compared with other methods of dispute resolution in the UAE such as, local
courts, arbitration, diwan and conciliation statutory adjudication definitely offers more advantages than most of
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Q14. Would you support a form of ‘Interim Award’ based on the principle of ‘Pay now,
argue later’ before the dispute is finally resolved by an arbitral tribunal or by the UAE
Courts?
When compared with the results of Question 13 (which identified 71% of participants were in
favour of Statutory Legislation) only 39% of UAE construction professionals supported the
principle of ‘pay now, argue later’, which is one of the fundamental advantages of Statutory
Adjudication. Perhaps this shows there is a lack of awareness as to what the principle of ‘pay
now, argue later’ actually means (would this also imply that the principles of Statutory
Adjudication are not really understood either), and follows on from Question 9 where only
19% of participants had a working knowledge of DABs. This would indicate there is still a
lack of awareness in the UAE construction industry as to what Statutory Adjudication
actually represents and the function of DABs as a form of dispute resolution. There is also a
clear divide between how Contractors321 and Employers/Engineers322 view Statutory
Adjudication and DABs.
these other methods”. “For example, there are many issues with court appointed experts in the UAE in that
many of them are not experts in the field in which they have been appointed by the courts. If a system similar to
that of the UK was established in the UAE then this kind of problem would not arise and parties would
generally get 'the right answer”.
321
“If Employer’s had to pay now and argue later it would assist Contractor's cash flow and potentially allow
Contractor's to complete works on time or even ahead of schedule, as it stands, Contractors are required to chase
money that is due and owing from Employer’s, which can take several years after a project has been finished”.
322
“I love this idea, as a client, if you have selected your contractor properly, why not to go for this solution, but
of course when you get such poor quality contractors you will be afraid to even pay the monthly payment
certification”.
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Q15. In your opinion should DABs be the primary dispute resolution mechanism under
UAE Construction Contracts?
Over 54% of participants agreed or strongly agreed that DABs should be the primary method
of dispute resolution in the UAE. However, 29% of participants are yet not convinced and
17% disagree. This follows the trend of the survey which indicates that DABs are not yet
fully understood in the UAE by the Employer or Contractor representatives. According to the
survey data a high percentage of Engineers (both working for Employer and Contractor) are
not in favour of the process, while DABs seem to be more popular with respondents from a
QS/commercial background.
4.3. Conclusion:
In conclusion the survey provided some interesting and conclusive data, in that UAE
construction professionals identified variation and EOT claims as the most common cause of
dispute, in addition to unfair allocations of contractual risk (primarily transferred from the
Employer to Contractor) and non-payment for works done, which is impacting cashflow. The
majority of respondents identified speed of decision and cost as the most important criteria
when it comes to resolving disputes, this would fit the criteria of what DABs could offer.
However, there seems to be a limited understanding of the DAB process in the UAE, with
only 21% of respondents understanding how DABs function in practice. The reasons for this
were identified as lack of awareness, education, training and the prevailing attitudes within
the UAE construction industry itself to ADR methods and DABs. The main disadvantages of
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DABs in the UAE were, the lack of statutory legislation, and the fact the decision is not a
final and binding, for this reason it’s not surprising that the majority of participants were in
favour of some form of statutory adjudication being introduced in the UAE. In essence the
cause and effect of disputes under UAE construction contracts could be addressed by a
dispute avoidance/resolution method such as DABs. However, only a slight majority (54%)
of respondents were in favour of DABs being the primary method of dispute resolution for
the UAE construction industry.
80
Chapter 5
Analysis, Interpretation and Discussion
81
5.1. Introduction:
This chapter will discuss and analyse the findings of the semi-structured interviews
undertaken with UAE construction professionals, the discussion will be supplemented with
the conclusions drawn from the literature review and on-line survey. The focus of this chapter
will be on addressing the final two objectives of the dissertation, which are to ascertain why
DABs are not widely utilised in the UAE, and discuss actions which can be taken in the UAE
to make DABs a viable alternative for the contracting parties.
5.2. DABs in the UAE Discussion and Analysis:
The Current UAE Construction Industry:
The UAE construction industry is likely to accelerate its output in the next two to three years,
mainly due to the number of projects planned, and current projects which will have to be
accelerated to meet the 2020 Expo. This may very well expose Employer’s and Contractor’s
to high levels of commercial and contractual risk, coupled with the current market cash flow
and liquidity issues, it seems the market conditions are ripe for a spike in construction related
disputes requiring third party intervention. At the moment such disputes are settled amicably,
or by referring to arbitration and/or UAE courts, ADR methods are currently not prevalent
under UAE construction contracts. The findings from the interviews, on-line survey and
current literature suggest that the lack of cash flow and liquidity in the market and below cost
tendering are currently a major concern. Interviewee C and D stated:
“At the moment Employers are tending to want to hold on to their money, when perhaps they
don't have any entitlement to do so. Therefore, the Contractors are starved of cash which is
impacting the viability of their companies”.323
“Below cost tendering is also an issue, in the past UAE Government agencies only selected
tier 1 Contractors to carry out large developments, in recent times this policy has changed
and it seems to be the lowest price wins the Tender. It is not unusual for new Contractors to
323
Interviewee C – Code reference 2 and 3
82
submit Tenders 30 to 50% lower than the tier 1 Contractors, this will not be sustainable in
the long term. Contractors will not survive in this environment”.324
The lack of cash in the industry may have a detrimental impact on the supply chain in the
short term which may give rise to an upsurge in construction commercial and contractual
disputes, as was acknowledged by a number of the interviewees325.
Claims and Disputes:
The major cause of disputes on almost all construction contracts are claims relating to
variations, delay or disruption not being recognised and the unfair allocation of risk, this was
also reflected in the respondents answers to the on-line questionnaire. A number of reasons
were identified by the interviewees as to why claims become disputes, from the Contractor’s
side often claims are poorly expressed and do not always demonstrate contractual entitlement
under the conditions of contract326. The Engineer under FIDIC 1999 is a representative of the
Employer, however their role is still to make an impartial determination of claims under the
contract327. Engineers in the UAE are not being impartial in their assessment of claims328,
telling quotations from Interviewee B and E are detailed as follows:
324
Interviewee D – Code reference: 4 and 5
325
“Having worked on several projects where the contractor is not getting paid, the contractor can finance the
project for a short period of time only, if sub-contractors and material suppliers are not paid then there is a
knock on effect in that labours and staff cannot be paid, and the project could come to a halt”. Interviewee B –
Code reference: 8
“In the past what has driven the UAE economy is the construction industry, with cash flowing down to other
related industries and the rest of the economy. So once the cash is stopped at source it impacts not only the
construction industry but the wider economy”. Interviewee D – Code reference: 1 and 3
326
“Reluctance of Contractors to take a ‘contractual’ position, e.g. acceptance of verbal instructions, failure to
report delays to the Employer, failure to issues appropriate contractual notices, failure to keep and retain
evidence of delay and disruption events”. Interviewee E – Code reference: 16
327
FIDIC 1999 Red Book [Engineer’s Determination] “The Engineer shall consult with each party in an
endeavour to reach agreement”. “If agreement is not achieved, the Engineer shall make a fair determination in
accordance with the Contract, taking due regard for all the relevant circumstances”.
“The Engineer doesn't always consult with both parties, generally they just discuss the claim with the Employer
before making a determination”. Interviewee A – Code reference: 49
328
“The Engineer not wanting to make a decision, usually for fear of upsetting the Employer, or making a
decision which upsets the Contractor, inability, usually due to inadequate training in contracts and law, on the
part of an Engineer to make a credible, reasoned decision”. “Unfortunately, many mature and experienced
Engineer's fail to give clear determinations and they have a lack of knowledge as to how the FIDIC conditions
work”. Interviewee A – Code reference: 7 and 42
“If the Engineer is not going to make a fair assessment it will only aggravate the situation, and put the Employer
in breach of contract, that is not going to promote the resolution of the dispute. Sometimes the argument
presented by the Engineer is that the Contractor has not presented all the information to them, where as in reality
on most projects the Engineer has huge amounts of information available to him, there is a tendency for
Engineer's to want all the information laid out on a plate for them. In some cases the Engineer's don't engage
constructively with the Contractor, or don't communicate their responsibilities to the Employer properly. It
83
“Engineer’s in the UAE are falling short of internationally recognised codes of conduct,
accepting appointments whereby their payments are, effectively, conditional upon doing the
Employer’s bidding, in addition to the lack of technical and language skills”.329
“Also, the Engineers inadequately expressed responses to claims are another cause of
dispute, where the Contractor submits a good claim in accordance with the conditions of
contract, often six months after the Contractors submission the Engineer replies with a one
line "your claim is rejected" without adequate reasons as to why the claim is rejected”.330
UAE Employers are unrealistic in the timeframe they want projects to be delivered in, their
procurement route selection and conditions of contract transfer all the risk to the Contractor,
and add in the rejection of legitimate variation and EOT claims by the Employer, and the
result will be a powder keg of potential disputes331. Contractors are trying to mitigate
potential LDs through various contractual claim mechanisms under the contract. However, a
number of interviewees have raised concerns:
“Currently, there is a blatant refusal to give extension of time or money for any claim, the
Employer's don't seem to consider the impact of their own actions. Even when the Engineer
or external consultant advises that the Contractor is entitled to time and costs the UAE
Employer will argue otherwise”.332
The above research suggests there is a high potential for dispute within UAE construction
contracts, to date UAE construction parties have not focused on dispute avoidance and
management techniques, and only seem to react once the dispute has crystallised into
arbitration or litigation proceeding333. The question to be addressed is why DABs are not
should be remembered that the Engineer provides a quasi-judicial role under the contract, where they are asked
to make fair determinations as a matter of contractual agreement between the parties, if they don't make fair and
reasonable determinations they are putting the Employer in breach of contract”. Interviewee C – Code
reference: 59 to 62
329
Interviewee E – Code reference: 12
330
Interviewee B – Code reference: 12
331
“Employer’s not ensuring that designs are adequately completed or coordinated, including the use of low-
quality consultants, and failure to allocate enough money to the design process”. “Employer’s issuing design
changes without issuing formal variations by the ‘back-door’ via amendments to shop drawings”. Interviewee E
– Code reference: 7 and 8
332
333
“Absolutely, parties are only acting when and if disputes actually arise, it seems to be the culture that parties
don't anticipate any disputes when the project commences, this never happen in reality”. Interviewee B – Code
reference: 21
84
widely utilised in the UAE construction industry, with an emphasis on dispute avoidance
rather than dispute resolution via arbitration or litigation, parties embarking on commencing
arbitration proceedings should be aware of its many pitfalls334.
Why are the DAB related Sub-Clause removed from UAE Construction Contracts
(FIDIC 1999)?
The on-line questionnaire found lack of awareness, education and training in addition to
construction industry culture as the main reason what DABs are not utilised in the UAE, but
there are also tactical reasons335. DABs have been proven to be successful in the “prevention
of claims and disputes by promoting early and rational identification of issues, promoting
constructive communication and making available a prompt nonbinding remedy which
promotes bilateral negotiations”.336 So why has the UAE construction industry not embraced
a proven method of dispute avoidance/resolution, Interviewee C enforced the points:
“Lack of interest in resolving the dispute early, there is a strongly held view among
Engineer's and Employer's that they get a better deal at the end of the project by deferring
entitlement, when they get a wrap up deal in the final account. Its only when the final account
deal cannot be agreed based on the terms being discussed do the parties then turn to some
form of dispute resolution”.337
This substantial lack of awareness amongst UAE Employers and Contractors as to the
benefits of dispute avoidance, and early dispute resolution, results in projects not being
delivered on time and within budget, as was highlighted by interviewee B:
334
“I don’t think particularly Employer's and Contractors are giving enough regards with how they are dealing
with their issues, that’s reinforced by the fact that the number of disputes referred to arbitration without the
parties really understanding what that means. Then the parties scramble round realising they started a process
they don't really understand, and struggle accordingly. The cost and constraint timetable, the requirement to
provide information to the tribunal all brings about the realisation that they started a process could have been
avoided if the parties had employed dispute avoidance techniques”. Interviewee C – Code reference: 10 to 12
335
“I think it’s a tactical decision, because Employer's feel they are in a better position to negotiate a solution if
there is no third party in the background, to whom a dissatisfied Contractor can have recourse”. Interviewee F –
Code reference: 36
336
R J Smith, American Arbitration Association Handbook on Construction Arbitration and ADR (3rd edn, Juris,
New York 2016)
337
Interviewee C – Code reference: 20 and 21
85
“There is a genuine lack of knowledge and awareness of the advantages DAB's in the UAE,
this is my experience from doing CPD presentations. However, 100% of the CPD
participants believe the presence of DAB's will reduce the number of disputes”.338
Many Engineers and Consultants in the UAE have never experienced DABs before and are
unfamiliar with the process, this can only be addressed through education and related sharing
of experiences from DAB experts operating in other jurisdictions globally. However, UAE
Employers are insisting on arbitration as the primary method of dispute resolution, this lack
of awareness as to the benefits of DABs means there is a reluctance to embrace change, as
was acknowledged by interviewee D and E:
“In the UAE most construction related activity is controlled by the state, so arbitration will
remain the default dispute resolution mechanism of choice”.339
“It is important to recognise that there is a reluctance on the part of Employers to embrace
any change to the commonly-used methods of dispute resolution because the arbitration
process including, the length of time an arbitration takes, and the difficulty of enforcement is
generally favourable to the Employer. Speedy resolution of disputes, and the payment of
interim awards, is very unlikely to find favour amongst developers in the UAE”.340
The unwillingness to embrace change on the part of UAE Employers is based on the
assumption that any form of ADR may weaken their commercial position, and the cost of a
standing DAB is not justified. A common question asked by Employer’s is why do we need
to waste money when there is no dispute, especially when profit margins are low, and the cost
of the dispute board will further dilute profits. This position is reinforced to Employers from
various vested interests within the industry, lawyers, claim consultants and some Engineers
who promote the belief that DABs are an unnecessary project cost, while overlooking the
virtues of early dispute resolution procedures. As was identified in the literature review and
analysis on the on-line questionnaire the cost of a standing DAB as a mechanism of dispute
338
Interviewee B – Code reference: 23 and 24
339
Interviewee D – Code reference: 48
340
Interviewee E – Code reference: 25 and 26
86
avoidance/resolution is significantly less than proceeding to an arbitral tribunal or through the
UAE courts341. Interviewee D enforced this point:
“Employer's need to realise that it is actually cheaper to try and resolve disputes as they go,
Employer's need to appreciate that it is more cost effective for an independent third
party/parties to give a decision on a dispute rather than an arbitral tribunal or court”.342
There may be a number of other reasons why UAE Employers are reluctant to adopt the
FIDIC 1999 conditions of contract and DAB related Sub-Clauses. One reason may be
familiarity with their own standard conditions of contract, which may be modified to suit the
Employer’s needs. Moving to a new modified form of contract would incur a time and cost
expense, in addition to the experience and knowledge lost. Also, there was a recent case in
the UAE where the DAB rules were not followed, which reflected badly on the DAB
process343. However, there is also an accountability issue, as was highlighted by an
interviewee344.
341
“Generally the DAB will review the dispute in 46 to 60 days and issue the decision time is money, so DABs
in this regard are more cost effective. DAB costs are shared by both parties, and there is an incentive not to rack
up costs, DAB costs are 0.025% of the overall actual project costs”. Interviewee A – Code reference: 24
342
Interviewee D – Code reference: 42
“The California Transport Authority for the past 20 years have used DRB's on all their projects, which give non-
binding recommendations. All the Contractors engage, and the Transport Authority always acknowledge the
non-binding decisions, which means the Final Account is known six months before the project is completed,
there are no arbitration or litigation costs, liability reduced and cash flows improved, resources can be
reallocated to new project without the need to fight disputes on old projects. This is really forward thinking, and
the Employer gets the benefits”. Interviewee D – Code reference: 43 to 45
343
A project in Dubai commenced in 2007 under FIDIC 1999 Red Book, a number of disputes were referred to
the DAB. The DAB decisions took between 100 and 300 days with many delays in the procedures. The
Employers was unhappy with the DABs decisions and attempted to have the decisions set aside in the Dubai
Courts, on the grounds that the DAB had not rendered its decision with 84 days. The Employer also sued the
DAB members for fees already paid, court and legal fees. The DAB continued to render decisions under the
Contract as the case in the Dubai Courts proceeded. The Contractor received no payment in respect to the DABs
decisions and also sued the DAB in the Dubai Courts, on the grounds the DAB proceeded ex-parte. S Hibbert,
‘The Influence of Dispute Boards Around the World: The Middle East Experience’ (2011) Introduction to
International Adjudication Conference
344
“There is also an accountability issue, in the sense that many large Employers seem to want a more rigours
formal dispute resolution method available to them when resolving a dispute, rather than an individual make a
recommendation that a certain number should be agreed”. Interviewee F – Code reference: 21
87
Actions needed for DABs to become more widely accepted in the UAE
There are a number of measures that need to be addressed before DABs can become the
mainstream dispute resolution procedure of the UAE construction industry. There needs to be
a culture change within the industry itself, as was highlighted by interviewee E and F:
“Any change in the industry culture has to come from the highest possible level, as it did in
the UK in the 1990s with the findings of the Latham report and the HGCRA, which was
driven by legislation, which put into practice some of the recommendation made in the
report”345
“Government Employer’s / Entities must take the lead in embracing DABs and other forms of
ADR. This would help others to recognise the benefits of utilising DABs. Similarly, the UAE
Courts would need to be encouraged to take a very robust approach to enforcement of
temporarily binding decisions of DABs”.346
This cultural change may be driven by economic pressure or the introduction of legislation,
or a combination of both. As was discussed previously in the study the Abu Dhabi
Government Contracts (2007) provide for an ad-hoc DAB as a way to promote ADR, this
was seen as a progressive step at the time347. However, the number of ad-hoc DABs
appointed under the Abu Dhabi government contracts has been limited348. Seeing as the UAE
Government (and individual Emirate Governments) are highly influential in the UAE
construction industry, and have been the largest funders of major infrastructure projects in the
country, they should be leading the way in encouraging a more balanced and rational
distribution of risk under their contracts, while promoting dispute avoidance/resolution
methods such as DABs.
345
Interviewee F – Code reference: 38
346
Interviewee E – Code reference: 58 to 60
347
“The Abu Dhabi government construction contracts expressly wanted to keep the DAB provisions in the
contracts, they didn't want them as standing DABs because they wanted the contract to be versatile to be used
across a wide variety of contracts. Standing DABs work for large infrastructure projects, but for small works
they are not cost effective, and are excessive. Here the Abu Dhabi government was showing leadership and
enlightenment saying we want to promote ADR through DABs, and this is why these provision were made in
the Abu Dhabi Government contracts”. Interviewee C – Code reference: 41 to 43
348
“This was a big step forward by Abu Dhabi, but there have been very few DAB's appointed despite it is a
requirement. Perhaps Contractors are afraid to upset the Employer and request the formation of a DAB, even
though it is a provision in the Employer's Contract (Abu Dhabi Government Contract)”. Interviewee B – Code
reference: 81 and 82
88
Some interviewees felt there was a lack of incentive to drive change within the industry itself,
the opinion was that the industry is to fragmented and lacking cohesion, unlike other
regions349. For this reason there needs to be a more proactive approach taken by the UAE
Government (and State Bodies involved in the UAE construction industry) together with the
key stakeholders in the construction industry, fostering contractual change and the acceptance
of ADR methods. The introduction of Statutory Adjudication legislation or a ‘pay now, argue
later’ principle in the UAE is unlikely in the short to medium term, as interviewee D
expressed:
“When UAE Employer's realise this will lead to prompt payments to Contractor's until the
dispute is finally resolved, this could be a blocker to the introduction of statutory
adjudication. Also, adjudication might not fit civil law countries as well as it does common
law countries, adjudication is a common law thing that came along to maintain cash flow
and get decisions made more quickly”.350
International professional bodies operating in the UAE, such as the RICS, CIOB or CIArb do
provide education seminars as to the benefits of ADR and DABs within the UAE, but perhaps
there needs to be a single coherent voice which can influence government decisions. It should
be noted that ADR methods are becoming more common with ethically minded UAE
Contractors and their supply chain when it comes to resolving disputes, with mediation the
ADR method of choice351. Without the combined efforts of all parties in the industry and
support of the UAE government and the judiciary the status quo will be maintained, meaning
arbitration will be the only option available to resolve construction contractual disputes in the
UAE, and methods such as DABs will continue to be overlooked by UAE Employers, to
what they might perceive as their advantage352.
349
“In the UK contractor yield more power compared to contractors in the UAE, the Hong Kong Contractors
association lobbied the government to incorporate a tiered dispute resolution mechanism under the contract,
which included mediation and adjudication, which demonstrated the power of the industry bodies coming
together”. Interviewee C – Code reference: 70
350
351
“ADR methods will become more common between the Contractors and the supply chain, because they need
to resolve their disputes to survive economically”. Interviewee D – Code reference: 18
352
Employers are taking advantage of the fact that arbitration effectively allows them to keep their money in
their own pocket. There is no appetite, I suspect, for accepting any measures which will be perceived by
Employers as quick resolution of disputes, if that means earlier payments to Contractors. Of course, this is
extremely short-sighted, in my view”. Interviewee E – Code reference: 62 to 64
89
UAE Law, and DABs
There may be concerns from some quarters that the DAB award may not be enforceable in
the UAE courts under current legislation, going by international standards and data the
number of DAB awards that are referred to arbitration are approximately 2%. Therefore, 98%
of disputes are resolved by the DAB to the satisfaction of both parties, however we never
read about the successful DAB awards, it’s only the minority of awards that are referred to
arbitration or directly to the courts that receive academic commentary, this point was stressed
by interviewee B:
“If you look at DRBF statistics from the US 98% of disputes referred to the DRB are
resolved, of the remaining 2% which go to Arbitration or Litigation, 98% of the decisions are
similar to the DRB recommendations”.353
“If a DAB decision is to be immediately enforced by a court then it is a consideration of the

substantive and procedural laws of the applicable country or countries that will determine
whether there is any chance of success”.354 The UAE civil code enshrines the principles of
good faith355, which is fundamental to the success of the DAB, as was seen in the Swiss
case356. Together with the principles of ‘freedom of contract’ the parties under a UAE
construction contract are free to choose their contractual terms357, if the parties have agreed
under the contract to abide by the DABs decisions, then the court should give effect to this,
failure to abide by the DAB decision would result in breach of contract by the defaulting
party, this point has to be tested in the UAE courts358. The enforcement of the DAB decision
353
Interviewee B – Code reference: 26
354
N Gould, ‘Enforcing a Dispute Board’s decision: Issues and Considerations’ (2013)
355
“The duty of good faith is not designed to curtail or fetter the ability of the contracting parties to negotiate at
arm’s length, the law is not concerned with the perceived fairness of a properly negotiated deal and recognises
the sanctity of the contract (subject, always, of course, to issues of public policy), the law will, however,
interfere where circumstances suggest that conduct has been improper or designed to mislead”. S Hunt, ‘Good
Faith’ (2009) DIFC Law Update 2009, 221, 20
356
4A_124/2014 “Where by the Employer could not argue on the mandatory nature of the DAB procedure it had
done so much to frustrate in the first place”.
357
Pacta sunt servanda ‘Agreements must be kept’
358
“More than likely, the UAE Court would unlikely say because there is a DAB decision it is final and binding,
if both parties are still arguing about the issue in the eyes of the Court there is still a dispute, the UAE judges are
not familiar with the commercial/contractual concepts adopted from other parts of the world”. Interviewee D –
Code reference: 54
90
(provisional award) should be treated similar to any other provision under the contract359,
interviewees C and E made the comments that:
“If the parties have agreed to resolve their disputes in a particular way by DABs, the courts
should effect to that and enforce the outcome of the contractually agreed process. The only
circumstance in which the UAE courts should engage with are due process issues, the courts
interest should be policing the contractually agreed process and not be replacing the
decision maker or makers with themselves”.360
“Provided that the contract clearly provides for the parties’ agreement that a provisional
award should have a temporarily binding effect, I do not see a good reason as to why the
Courts should not enforce the provisional award. The key is to set out very clearly that the
parties accept the provisional nature of the award, and must comply with the award on an
interim basis until finally determined in arbitration or by Court proceedings”.361
As identified already the lack of cash flow in the UAE construction industry is leading to
disputes, under current UAE legislation there is no provision for a summary judgement362
based on the principle of ‘pay now, argue later’, this results in UAE Contractors being
starved of cash years after projects and a lengthy dispute resolution process has been
completed. Would UAE Employers support the idea of making payments against an interim
award to Contractors on the recommendation of the DAB? Anybody familiar with the current
UAE construction industry would say this scenario is highly unlikely, interviewee C stressed
that:
359
“However, the courts would not just rubber stamp the DAB award and turn it into a judgement, because the
civil justice system is a key function of the state the courts would open up the DAB decision and look into it
afresh, they may treat it like an Engineer's certificate as an indication of what the right answer might be”.
Interviewee F – Code reference: 56
360
Interviewee C – Code reference: 85 and 86
361
Interview E – Code reference: 81 and 82
362
“In the UK the courts will grant a summary judgement where the parties have referred their dispute to a
DAB, and the decision has being made the UK Courts will enforce it. The UAE Courts do not have any process
of summary judgement, the DIFC Courts do have process which are a bit more summary in nature. There is a
growing wealth of jusprudiance in the UAE, which say decisions should be approved summarily pending a final
decision”. Interviewee C –Code reference: 96 and 97
91
“If the UAE government was to recognise that it’s not good for industry or commerce for
Contractors or Subcontractors to be put into insolvency due to lack of cash flow, then they
might be more incentivised to get more involved”.363
There are many hypothetical legal arguments that could be applied to the enforcement/non-
enforcement of a DAB awards in the UAE courts. However, as already highlighted if both
parties approach the DAB in good faith and follow the decisions made by the DAB, be they
‘final and binding’, or ‘binding, but not final’ awards, then the number of DAB decisions
referred to arbitration or the UAE courts should be in-line with the international standard, this
view was not accepted by one interviewee364. There are a number options when it comes
enforcing a DAB award in the UAE courts, the payment could be collected as a debt or part
of an attachment order365. From the research undertaken it’s clear there is an appetite for the
use of DABs in the UAE, but also the realisation that the process will not replace arbitration
in the short to medium term.
363
Interviewee C – Code reference: 105
364
“I think it is quite unlikely, given how few arbitration decisions are accepted in the UAE, remembering
arbitral awards come at the end of a very through process in which both parties participate fully”. “The
arbitration award is not a million miles away from the DAB award, in that you have three independent exerts
making a decision, but yet only 1 in 10 arbitral wards gets paid in the UAE”. Interviewee F – Code reference: 58
and 59
365
“In theory you could go to the UAE Court and say the DAB decision is a debt that must be paid, because the
Arbitration sub-clause is for the referral of disputes. It may be the case in the UAE that the judge will instruct
the other party to pay, the Courts have the power to do that in the UAE. This has been applied in other civil law
jurisdictions (Eastern Europe) successfully. There are other options such as an attachment order against the bank
account of the other party, the mechanisms are there, but there is too much uncertainty as to what the Court
ruling would be, it depends on how experienced the judge is and their understanding of construction contract
and the adjudication processes and procedures”. Interviewee D – Code reference: 50 to 53
“An attachment order is the procedure whereby a litigant is able to attach the UAE assets of a counter-party in
circumstances where it is suspected the counter-party may dissipate its assets, and can be obtained through the
UAE Courts and, by obtaining such an attachment, a Claimant is able to obtain security to ensure that the
counter-party retains sufficient assets for a judgment to be enforced”. R Bell and A Thornton, ‘Dispute
resolution in Abu Dhabi – Part 2 – Litigation in the Courts https://www.clydeco.com/insight/article/dispute-
resolution-in-abu-dhabi-part-2-litigation-in-the-courts accessed 29 November 2017
92
Chapter 6
Conclusion
93
6.1. Introduction:
The overall aim of this dissertation was to gauge UAE construction professionals perspective
with regards the use and function of contractual DABs as a method of dispute
avoidance/resolution, and identify if the wider use of DABs would be embraced within the
UAE construction industry. To achieve the objectives of this study a comprehensive literature
review identified the cause of construction disputes, detailed methods of dispute resolution
available in the UAE, demonstrated the function, process and procedures of DABs and
provided an analysis of DABs under FIDIC 1999 conditions of contract. Analysis and
theories identified under the literature review were enhanced with an online questionnaire
survey and semi-structured interview with industry experts.
This dissertation highlighted both the positive and negative features of the DAB process and
provided commentary and discussion as to why DABs are not more widely used under UAE
construction contracts. The study provided opinion and balanced assessment of what actions
are now needed in order for DABs to become more mainstream, and an accepted method of
dispute resolution within the UAE construction industry. The research has been successful in
achieving the primary aims of this dissertation, and has been structured in a manner that
allows the reader understand the link between risk, claims, disputes and different methods of
dispute resolution. The results of the research presents a snapshot of the current UAE
construction industry, and identified the difficulties and opportunities now facing it. The
following conclusion shall summarise the observations of the research.
6.2. Conclusion:
Since the inception of DBs in the US during the 1960’s their rise and popularity as a method
of dispute resolution on international construction projects has been growing steadily,
especially in common law jurisdictions, where the process has been supported by statutory
legislation. The UAE construction industry is relatively young, and would be classified as an
emerging market despite the number of high profile mega construction projects completed
over the past 20 years. Bearing this in mind, the legal system is also relatively inexperienced
when it comes to dealing with complex technical construction disputes, compared to more
developed legal systems such as the UK, US and Western Europe. Acceptance of ADR
methods such as DABs which could be employed to avoid and resolve construction disputes
is still in its infancy in the GCC region, as opposed to the more formal dispute resolution
94
methods favoured by UAE Employers, such as arbitration and litigation. As highlighted in
Chapters four and five, DABs are not viewed by UAE Employer’s as a viable alternative to
arbitration and litigation, and this stance seems unlikely to change in the near future.
The study research findings highlight that the majority of construction disputes are referred to
arbitration in the UAE, arbitration has been the default dispute resolution mechanism of
choice for UAE Employers/Contractors over the past 20 years. However, confidence in the
process is not what is once due to the excessive costs and time taken to complete the
arbitration process and enforce the award. Therefore, the region needs a new strategy to
quickly resolve construction related dispute, and standing DABs seem to meet the criteria of
a fast, cost effective dispute resolution process, coupled with the board members experience
and knowledge of the construction industry, the benefits of the process are obvious. As the
online questionnaire identified UAE construction professionals are open to other ADR
methods. There is a realisation within the industry that the old methods of dispute resolution
(arbitration and litigation) are no longer economically viable for many parties. There should
be no reason why DABs could not experience the same growth arbitration experienced in the
region since the mid-1990s, provided the UAE construction industry is committed to
accepting such change, in a similar vein as to how the UK construction industry accepted the
changes brought about by the introduction of the HGCRA.
As was identified in Chapter four FIDIC forms of contract are the most commonly used in the
region. From experience FIDIC 1999 has become more popular with UAE Employer’s and
Contractor’s over the past number of years, unfortunately the DAB related sub-clauses are
generally deleted, the reasons for this were discussed in detail under Chapter five. The view
of industry experts is that, UAE Employers are not prepared to settle dispute as the project
progress, but rather wait until the TOC or even the DLC have been issued, and resolve all
commercial and contractual matters within a final account settlement. The current cash flow
and liquidity issues in the market are compounding the already difficult financial position
many Contractors are now facing, with low profit margins, non-recognition of valid claims
by UAE Employers and contracts which could be considered perilous. Major UAE
Developers/Employers such as Emaar have reported profits of 27% for Q3 2017 366 while
366
Emaar Properties (Q3-2017) Results https://www.emaar.com/en/Images/2017-11
12%20Emaar%20Properties%20Q3 2017%20IR%20Presentation_tcm223-117057.pdf accessed 28 November
2017
95
Damac have reported profits of 13%367, while on the other hand Arabtec368 and Drake &
Scull369 have reported losses. Are the auditors of these UAE Developers/Employers taking
into account the reasons why Employers are showing profit and Contractors are not getting
paid?
Following much analysis and reflection it is the expressed view that the advantages of DABs
far outweigh any disadvantages associated with the process. Negative sentiments towards
DABs are generally based on lack of knowledge and understanding of the DAB process and
procedures. The most common perception parties have is that the DAB will have its own
concept of fairness and equality, or that the DAB would promote a culture of claims and
conflict. These myths can be easily debunked based on the statistical data available and the
substantial scholarly commentary from international industry experts as to the advantages of
contractual DABs, which have already been highlighted in this study. There are noted issues
with the drafting of FIDIC 1999 Clause 20 (which will hopefully be addressed in the new
FIDIC edition, to be released December, 2017)370, but these limited negatives are far
outweighed by the positives DABs contribute to dispute avoidance/resolution.
The UAE should be aiming to be a leader within the wider ME region in developing ADR
methods, such as DABs and development of specialised court similar to the UKs TCC. As
already discussed there needs to be a cultural change within the industry itself, supported by
government legislation, and clear judgements from the UAE courts. Statutory Adjudication
will not become a reality in the UAE in the short to medium term, but contractual
adjudication in the form of DABs can, provided the parties follow the DAB procedures and
respect the decision of the DAB. There is recognition within the industry that change is
needed, but for this change to materialise UAE Employers will have to be convinced of the
merits of DABs, which culturally, commercially and contractually may indeed prove difficult
367
W Abbas, ‘Damac see uptick in Q3 revenue’ Khaleej Time (UAE 18 October 2017)
368
I John, ‘Arabtec swings to Dh 2.35b annual loss’ Khaleej Times (UAE 22 February 2016)
369
D Saadi, ‘Drake & Scull removes CEO, narrow second quarter loss’ The National (UAE 14 August 2017)
370
The original Clause 20 is now split into two separate entities, Clause 20 is now entitled [Employer’s and
Contractor’s Claims] and Clause 21 [Disputes and Arbitration]. “Clause 20 prescribes a Claims procedure
that applies to both Employer and Contractor Claims”. “Sub-Clause 20.2, which is the longest Clause within the
General Conditions, imposes greater administrative requirements on a Party when issuing a Claim”. “Dispute
Adjudication/Avoidance Boards ("DAABs"): New Clause 21 requires the Parties jointly to appoint a 'standing
DAAB'; that is, a DAAB that is appointed at the start of the Contract, and remains in place for the duration of
the Contract to assist the Parties in the avoidance of disputes, and in the 'real-time' resolution of Disputes, if and
when they arise”. E Baker, A P. Lavers and R Major, ‘A New FIDIC Rainbow: Red, Yellow and Silver’ (2017)
https://www.whitecase.com/publications/alert/new-fidic-rainbow-red-yellow-and-silver accessed 06 December
2017
96
in the short term371. It is unlikely that UAE Employer’s will relinquish their perceived
position of bargaining strength when it comes to resolving contractual disputes, by allowing a
third party render binding/temporarily enforceable decisions during the course of the project.
The UAE construction industry is unlikely to see contractual DABs becoming mainstream in
the short to medium term, even though UAE construction professionals can clearly see the
benefits of DABs.
6.3. Achievement of Dissertation Objectives:
The following table outlines in summary the dissertation objectives and findings.
Dissertation Objectives Research Findings

 To discuss construction risks and  Under Chapter two the link between
the causes of construction disputes contractual risk, claims and disputes
in the UAE. were identified. This was supplemented
with commentary from UAE industry
experts and data obtained from the on-
line questionnaire.
 To examine and explain the  The history, function, process and
functions of DABs. procedures of DABs were identified and
complemented with contemporary
literature.
 To investigate the DAB Sub-  A detailed analysis of FIDIC 1999
Clauses under FIDIC 1999 Red Clause 20 [Claims, Disputes and
Book with particular focus on Arbitration] with a comprehensive
recent international court rulings assessment of recent international court
with regards the enforcement of the rulings directly related to Clause 20 was
DABs decision, and how this would provided. The author also commented on
apply in the UAE Courts. how DAB awards may be treated under
UAE law, and how the UAE Courts
would interpret a DAB decision.
371
There is a fear that DABs may take away the commercial control UAE Employers currently hold over the
Contractor, but there also has to be a realisation that the current status quo of dispute resolution is not
sustainable in the long term.
97
 To identify if construction  A progressive online survey was
professionals in the UAE actually undertaken to identify if UAE
want DABs as a method of dispute construction professionals were aware of
avoidance/resolution. DABs and would they welcome the
introduction of DABs as a mechanism to
resolve construction contractual
disputes. The results of the survey were
detailed under Chapter four.
 To ascertain why DABs are not  Under Chapter five the author
utilised more in the UAE, and the documented a number of reason why
reasons why. DABs are not more widely utilised in the
UAE, the discussion and analysis was
developed based on the data collected
from conducting a number of semi-
structured interviews with UAE
construction professionals (lawyers,
DAB members and industry experts).
Analysis was enhanced with the data
received from the on-line questionnaire
and the contemporary literature review
undertaken for this study.
 To discuss actions which can be  A number of actions and suggestions
taken in the UAE to make DABs a were provided in order to establish if
viable option for the contracting DABs could be considered a viable
parties. option to arbitration or litigation in the
UAE. The discussion was based on
contemporary literature, the online
survey results and comments derived
from the semi-structured interviews.
Figure 6.1. Dissertation Objectives and Findings
98
6.4. Further Study:
Research is a continuous process, it provides answers to specific questions, but while doing
so it also raises many others. While it could be suggested that this dissertations findings
represent a valuable academic contribution to research conducted in the UAE construction
industry, it is also acknowledged that there remains significant potential and opportunities for
the wider use of ADR methods, and particularly DABs in the UAE. Further research and
investigation into the topic would contribute and help expand the knowledge of UAE
construction professionals as to the benefits of DABs.
As identified in Chapter five there needs to be unified approach taken by all parties involved
in the UAE construction industry, to educate and develop dispute avoidance methods first,
and then develop cost/time effective methods of dispute resolution. The author would be
interested in carrying out further research by direct consultation with the professional bodies,
major contractors (international and domestic), developers/employers and the UAE legal
profession, so as to identify the various options available to resolve construction disputes
under UAE construction contracts, this could provide a consensus or road map as to how
construction disputes can be resolved in future.
6.5. Research Limitations:
While the general literature relating to DABs in the UAE was limited due to the fact that the
use of DABs are generally restricted to Abu Dhabi Government contracts, the sample size
within the UAE is quite small. However, there are a number of papers and books relating to
the subject from other GCC countries and wider civil law jurisdictions, in addition to case
studies in the US, Europe, Far East and the African continent. Due to the limited number of
current or past member that have served on a UAE DAB it was difficult to get a consensus as
to how UAE DABs function in reality. A number of interview requests were sent to the
largest UAE Employer’s in order to get their perspective of claims, dispute and DABs.
Unfortunately, there was no positive response to participate in the research. At the time of
this dissertation submission there was not an opportunity to review the revised FIDIC 1999
conditions of contract (2017 edition) or evaluate any significant changes to Clause 20.
99
Word Count:
Word Count 21,964 excluding the Declaration, Abstract, Acknowledgements, Abbreviations,

Contents Page, Footnotes, Figures, List of Interviewee, Bibliography, Appendices, and Word
Count.
100
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English Civil Procedure Rules (1999)
Housing Grants, Construction and Regeneration Act (1996)
Malaysia The Construction Industry Payment and Adjudication Act (2012)
New South Wales (Australia) Building and Construction Industry Security of Payment Act
(1999)
New Zealand The Construction Contract Act (2002)
Singapore Building and Construction Industry of Payment Act (2004)
The Local Democracy, Economic Development and Construction Act (2009)
The Scheme for Construction Contracts (England and Wales) Regulations 1998, SI 1998/649
U.A.E Civil Laws:
UAE Civil Transaction Code, Law # 5 of 1985
UAE Civil Procedure Code, Federal Law # 11 of 1992
UAE Federal Law # 26 of 1999
111
Table of Cases:
Amec Civil Engineering Ltd v Secretary of State for Transport [2004] EWHC 2339 (TCC)
AWG construction services Ltd v Rockingham Motor Speedway [2004] EWHC 888 (TCC)
Balfour Beatty v London Borough of Lambeth [2002] EWHC 597 (TCC)
Channel Tunnel Group v Balfour Beatty [1993] A.C. 334
CIB Properties v Birse Construction [2004] EWHC 2365
City Inn Ltd v Shepherd Construction Ltd [2003] S.L.T. 885
CRW Joint Operation v PT Perusahaan Negara (Persero) TBK [2011] SGCA 33
Dunnett v Railtrack [2002] 2 ALL ER 850
Ellerine v Klinger [1982] 1 WLR 1375
Fastrack Contractors Ltd v Morrison Construction Ltd [2000] BLR 168
Halki Shipping Corporation v Sopex Oils Limited [1997] 3 All ER 833
Hopper Bailie Associated Ltd v Natcon Group Pty Ltd [1992] 28 NSWCR 194
Macob Civil Engineering v Morrison Construction Ltd [1999] BLR 93
M.J. Gleeson Group v Wyatt Snetterton [1994] 72 BLR 15 (CA)
Modern Engineering (Bristol) Ltd v Gilbert-Ash Northern [1974] AC 689
Nova v. Kammgarn [1977] 1 WLR 713
Peterborough City Council V Enterprise Managed Services Ltd [2014] EWHC 3193
PT Perusahaan Negara (Persero) TBK v CRW Joint Operation [2015] SGCA 30
Shaw v MFP Foundations and Piling Ltd [2010] EWHC 9
4A_124/2014
112
APPENDICIES:
113
Appendix A: Dissertation Proposal Form.
114
Appendix B: Semi-Structured Interviews (Coded).
115
Appendix C: Questionnaire Survey Results.
116

FIDIC 1999 (Red Book) Dispute Adjudication Board's: The UAE Construction Industry Perspective

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FIDIC 1999 (Red Book) Dispute Adjudication Board's: The UAE Construction Industry Perspective

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FIDIC 1999 (Red Book) Dispute Adjudication Board’s:

The UAE Construction Industry Perspective

:‫رؤية قطاع االنشاءات في االمارات العربية المتحده عن‬

A dissertation submitted in fulfilment

Dr. Abba Kolo

The primary aim of this dissertation is to identify if UAE construction professionals

1.2. Research Background.........................................................................................4

1.3. Aims and Objectives..........................................................................................6

1.4. Scope of Study……….......................................................................................7

1.5. Research Methodology.......................................................................................8

1.6. Structure of Dissertation.....................................................................................9

Chapter 2: Literature Review………………………………………………………..11

2.2. The Construction Contract ................................................................................14

2.3. Risk Allocation and Management .....................................................................16

2.4. Contractual Claims.............................................................................................18

2.5. Conflict Avoidance………………....................................................................21

2.6. Contractual Disputes..........................................................................................22

2.7. Methods of Dispute Resolution .........................................................................24

2.7.2. Mediation / Conciliation……………………………………………...27

2.9. History of DABs................................................................................................35

2.10. Types of DBs ...................................................................................................39

2.11. DB Procedures and Rules.................................................................................40

2.12. Overview of FIDIC 1999 Clause 20................................................................42

2.12.1. Establishing the Dispute Board…………………………………….42

2.12.2. Referring to the Dispute Board…………………………………….45

2.12.3. Dissatisfaction with the Dispute Boards Decision…………………47

2.12.4. Enforcement of the Dispute Boards Decision……………………...48

2.12.5. Expiry of the Dispute Board………………………………………..51

2.12.6. Referring the DABs Decision to Arbitration……………………….54

2.13. DABs in the UAE…………………………………………………………….55

Chapter 3: Research Methodology……….….............................................................58

3.2. Selected Research Methodology.......................................................................59

3.3. Analysis of Questionnaire Responces...............................................................60

3.4. Semi-Structured Interviews...............................................................................61

3.5. Ethical Concerns and Limitations…………………………………………….63

Chapter 4: Survey Findings…………………............................................................64

4.2. Survey Analysis.................................................................................................66

5.2. DABs in the UAE Discussion and Analysis.....................................................82

6.3. Achievement of Dissertation Objectives……………………………………...97

6.4. Further Study………………………………………………………………….99

6.5. Research Limitations………………………………………………………….99

Table of Statutes And Cases………………………………………………..…………...111

Appendix A: Dissertation Proposal Form.

Appendix B: Semi-Structured Interviews (Coded).

Appendix C: Questionnaire Survey Results.

Figure 1.1. Dissertation Objectives…………………………………………………………...7

 Adrian Cole, Partner King and Spalding

Adrian is a construction law specialist advising on disputes relating to energy and

 Andy Hewit, FICCP, FCIOB, FCInstCES, FQSi, ACIArb

 John Papworth Chartered Arbitrator, FRICS, FCIArb, FCInstCES, FACostE,

 Nicholas Gould, Partner Fenwick Elliott

 Royston Pendley, Legal Manager Al Naboodah Group Enterprises LLC

AAA – American Association of Arbitration

The parties to a construction contract generally spend insignificant periods of time

 Promoting bilateral agreement,

Figure 1.1. Dissertation Objectives

1.4. Scope of Study:

1.5. Research Methodology:

1.6. Structure of Dissertation: