Imagine a world where it's possible to spot disputes before they happen. Impossible? Not if you believe in FIDIC's new superhuman dispute boards
Yes, yes I know you are up to your neck in umpteen forms of contract and damn it, as soon as you get your mind around JCT1990, then JCT1998, they change the bumf to JCT2005. Then some bright spark tries to get you to use the NEC forms, or the ICE forms, or more besides. So why am I going to point you towards the FIDIC forms? Come to think of it, what is a FIDIC form? And who uses it? Well, it's worth taking a peep at this international document because it contains some ideas for managing, even preventing, disputes.
If you do work abroad, especially if financed by the World Bank or European Union Fund, you will soon meet the FIDIC rules. And let me tell you this, it was ages before the UK invented the adjudicator that FIDIC had this chappy as a standard feature. In its latest form, invented last month, FIDIC now has a "dispute board". And one of the express rules is that the dispute board "shall as far as reasonable, endeavour to prevent potential problems or claims becoming disputes". Now then, I confess I don't know any other standard form contract that has taken that advanced step. The job of the dispute board is "to prevent problems and claims becoming disputes".
FIDIC some years ago decided that disputes would first be "decided" by the engineer. Then by an adjudicator, then it would go to "amicable settlement", then to an arbitrator. Disputes on small jobs are decided by a sole adjudicator. The three-person adjudication board is for beefy jobs. Then FIDIC suggested that the beefy job should see the three-person dispute adjudication board not only decide disputes but visit the project every few months to be briefed on progress. Now this latest step is for beefy jobs to have a person, or three, to prod about to prevent the adjudicator having to come near the site.
Can you see something new here? The adjudicator, the arbitrator and the judge only referees the quarrels and decides which argument is more convincing. He is an argument weigher. He comes to the dispute with a big set of scales in his white van. He piles the arguments into each pan, sees which ones weigh more. Even a mediator, that man who doesn't decide disputes, comes along only after a dispute has crystallised. So, all these characters first need the dispute. But the new boy or new dispute board is there to stop the dispute ever gaining a toehold. What shall we call him? A spoilsport? How about a dispute-stopper. Yes, that's it. The dispute board has a contractual duty under FIDIC forms to be a dispute-stopper.
How? The words in the document limit the scope of the dispute board's task. It is not there to "endeavour to prevent disputes". No. The words are "endeavour to prevent potential problems and claims from becoming disputes". What is a "potential problem"? How about the main contractor placing subcontracts with the cheapest outfit irrespective of ability to perform the subcontract? How about placing subcontracts where the outfit is wholly unsuited to manage the risks? How about placing subcontracts for design and construct packages when the subby hasn't anyone qualified to design one jot of its work? Do you see any "potential problems" here? And what about potential problems with the main contractor? The dispute board will have to cross check this fellow's finances for potential problems. Check his intention to staff the site, identify inadequate managers. And wow, the dispute board will have to monitor the programme for potential problems. That original programme will have to be tested, challenged and teased. The supply dates of materials will be cross checked for being realistic. Then there is the duty to "endeavour to prevent claims". Claims come out of the design team failing to provide information on time, of employers wanting change upon change, of folk covering their backsides because of the umpteenth cock-up. Claims come out of accelerating the works, disruption, prolongation, strikes, the odd bit of vandalism.
Claims come from folk failing to provide information, wanting change upon change and covering their backsides because of the umpteenth cock-up
The FIDIC dispute-stopper is brand new. And I want FIDIC to do us a favour. Please appoint your first man or woman of magic soon, because as soon as you have all done with this wonderperson we can put them on the transfer list? But we will ask one question at the end of the first appointment: "How many disputes did you stop?"
Tony Bingham is a barrister and arbitrator