Dispute Board Agreement: What You Need to Know
A dispute board agreement is a contractual mechanism designed to resolve disputes that may arise between parties involved in a construction project. It involves a panel of experts, usually comprising three members, who are appointed to offer non-binding opinions and recommendations aimed at preventing disputes from escalating into formal legal proceedings.
The dispute board agreement is particularly useful in the construction industry, where disagreements can be costly, time-consuming and detrimental to the success of a project. For instance, disputes may arise due to differences in interpretations of contract terms, delays in the completion of work, payment disputes, or disagreements over quality of workmanship.
To implement a dispute board agreement, the parties involved in the project must agree to the appointment of a dispute board, the terms of reference, and the procedures to be followed in resolving disputes. The panel members are typically appointed at the outset of the project and remain in place throughout the project’s duration.
The dispute board agreement can take two forms: the Dispute Adjudication Board (DAB) and the Dispute Review Board (DRB). The DAB is a more formal mechanism that involves binding adjudication of disputes, while DRB is a less formal process that focuses on monitoring and recommending solutions to disputes.
In the DRB process, the panel members conduct site visits and document reviews to monitor the progress of the project and identify potential disputes. They provide non-binding recommendations and evaluations aimed at resolving disputes before they escalate. The recommendations and evaluations are usually communicated in writing and delivered to both parties.
In the DAB process, the panel members conduct a formal hearing to adjudicate disputes. Their decision is binding, and the losing party is obliged to comply with the panel’s decision. The DAB process is generally more expensive than the DRB process, but it can save time and money in the long run.
The primary benefits of a dispute board agreement include:
– It provides a quick and cost-effective mechanism for resolving disputes, thereby preventing them from escalating into costly legal proceedings.
– It ensures that the parties involved in the project maintain a good working relationship, which is essential for the success of the project.
– It helps to identify potential disputes early, allowing the parties to take corrective measures before they become critical.
– It promotes transparency and fairness in resolving disputes, as the panel members are experts in the field and do not have any biases towards either party.
In conclusion, a dispute board agreement is an essential contractual mechanism that can help parties involved in construction projects to resolve disputes in a timely, cost-effective, and fair manner. While it may add some additional costs at the outset of a project, it can save time, money, and stress in the long run by preventing disputes from escalating into lengthy and costly legal proceedings.