Rather than bringing in mediators after things go wrong, the ODA is appointing dispute boards as a cost-effective and informal way of resolving squabbles before they become rows
The London 2012 Olympics will be a challenge for the construction industry. The increase in work will inevitably result in more disputes, which will need speedy resolutions. As such, it is welcome news that the Olympic Delivery Authority has announced that dispute boards will be included in its contracts.
Dispute boards consist of between one and three independent people, selected by the project team. They differ from other forms of dispute resolution in that they are appointed at the beginning of a project, rather than after a dispute arises. This means the board members can make regular site visits and keep up to date with the project.
These dispute boards will give companies a mechanism for resolving conflict in an informal and cost-effective manner. They also mean that the parties involved have a substantial degree of ownership of the system, as they decide who sits on the board.
The key issues to consider when appointing a dispute board are:
• Its members should be trusted independent professionals
• All members should be familiar with the project from the outset and should keep themselves updated about developments on site through regular site meetings.
There are three types of board:
• The first model is a dispute review board and it is the most consensual option. The board recommends a course of action if asked, but the parties are not obliged to adhere to this. This option would not be suitable for a project likely to be affected by mistrust between the parties or inability to communicate effectively
Companies hoping to win Olympic projects can get off the starting blocks now by exploring and understanding the role dispute boards can play
• The second approach involves a dispute adjudication board that can issue decisions that will be binding upon the parties until set aside by a court or arbitrator. Such a board would carry out the duties of an adjudicator. Its procedures will, inevitably, be more detailed and expensive for the parties than the first model but it has the advantage of forcing a solution should one or more parties take issue with the board’s findings.
• The third is a hybrid of the first two, called a combined dispute board. It carries out the functions of the first model by issuing recommendations if requested, but has the power to adjudicate in the same way as a dispute adjudication board if a party asks it to do so.
If a party objects to a dispute being adjudicated, the board has to decide whether to issue a recommendation or a temporarily binding decision. The Department of Constitutional Affairs (DCA) has issued guidance as to the factors that the board should take into account in deciding which path to follow.
Of course, no company working on an Olympic construction project can be forced to use a dispute board. They can merely be asked to consider it. There is nothing to prevent an outside mediator being appointed after a dispute has arisen or if no dispute board has been set up. However, the disadvantage of this method is that it could cause time delays during a crucial stage of a project.
In addition, litigation should not be entered into until other dispute resolution procedures have been tried. The DCA’s guidance states that “the courts take the view that litigation should be a last resort and that claims should not be issued when a settlement is still being explored”.
This means that if a company goes to court without trying to resolve the dispute in some other way, the court is likely to be unkind when it comes to awarding costs.
Companies hoping to win projects for the 2012 Olympics can get off the starting blocks now by exploring and understanding the role dispute boards can play in resolving conflict.
Dispute boards provide a real opportunity for the industry to mend its ways and deliver Olympic projects that are low on litigation but high in examples of partnership. It is a chance to showcase the work of the UK construction industry.
Sean Hazell is a partner in the dispute resolution team at Darbys Solicitors in Oxford