Keisuke Fukui, director at the Japan International Co-operation Agency (JICA), makes clear the importance they place to standing boards amid some challenges.
Speaking to an international conference of legal experts, Keisuke Fukui has set out the importance Japan’s international development agency places on dispute boards but noted challenges with adoption.
Fukui said: “Any projects over ¥3bn now have a requirement for a standing board and the standing cost for this is paid by the employer. In 2021 we assessed projects and found that from 2018 to 2020, we had 161 total contracts at the ¥3bn threshold. 143 of those had dispute board requirements in the contracts, 71 of which had standing dispute board requirements. However, only 40 actually had a standing dispute board.”
“So, having a standing dispute board written in the contract does not mean they always happen. The number of standing boards are increasing but now is the time to focus on the establishment and better use of boards, not least because of the effects of Covid 19.”
Those challenges were partially practical and partly cultural, explained Fukui. “One challenge is to find sufficient trained members for a standing board and we appreciate FIDIC working to increase the number of accredited people.”
“We also need to help employers, contractors and engineers understand more about the dispute board’s role and how they work. So, since 2008, JICA has been carrying out dissemination activities on dispute boards across our funded projects and have been helping to train adjudicators.”
Establishing dispute boards was not the only problem, he said. “There also has to be an environment of honouring the decisions of the dispute board because if there isn’t and if the board is ignored, then the value of them is not achieved.”
This matters because uncertainties have rarely been more acute. Fukui commented “As we’ve seen with Covid-19, and with price hikes, and even just to secure materials freight at all right now, uncertainty matters. So it is a good timing for all the contracting parties – executing agencies, contractors and engineers – to have a better understanding of the conditions of standard contracts as everyone thinks about what to do about these issues.”
Keisuke Fukui was speaking on the second day of the FIDIC Asia Contract Users Conference on 19 May 2022.
