Ahead of speaking at the FIDIC Global Infrastructure Conference in Geneva this month, Fenwick Elliott partner Nicholas Gould spoke to Infrastructure Global about dispute avoidance in the international construction sector.
What are the latest trends and developments in the dispute avoidance arena internationally?
The latest trends and developments in dispute boards and dispute avoidance is most definitely a greater emphasis on avoidance. The appointment of dispute boards is really aimed now at making the most of the dispute avoidance function. It involves a proactive interaction with the parties, a serious and proper review regularly in relation to ongoing issues that might affect the completion date or additional costs. This only works of course if both parties are keen to use a dispute board in that way. You cannot simply leave the parties to their own devices in order to avoid disputes as this doesn’t change the inter-party dynamics and therefore will not lead to an improved outcome.
Tell us about dispute boards and why their use on global projects is important?
Dispute boards are now being used more widely internationally. Particularly in relation to international bank funded projects. There has certainly been an expansion of dispute boards across Asia, with a particular emphasis in Indonesia, Philippines and Nepal. There has also been a surge of dispute boards across Africa. Part of this trend has been caused by the multilateral development banks’ emphasis and insistence on the use of dispute boards, given the success that has been seen in relation to the avoidance of dispute and early resolution of disputes.
Is there enough take up of dispute boards and in dispute avoidance generally?
There is certainly a great take-up of dispute boards solely for the purposes of avoidance. A great deal can be added to a project by the use of dispute boards’ avoidance processes. They provide an independent sounding board for the parties in relation to issues or problems that might be arising on a project. Dispute boards can also provide informal guidance and assistance, not necessarily about what the parties should do, but how the parties might approach and analyse the problem, the contractual issues, the specification and the works etc. It is really very much a case of helping the parties think ‘outside of the box’ and come up with a wider range of practical ideas which allow the parties to then focus on and decide their own pathway, but with guidance and assistance from the dispute board.
As an acknowledged construction law expert, how can legal and contractual matters be seen more as a benefit rather than a hindrance to our industry?
When the parties are trying to resolve an issue, they often focus on their own positions. Over time these positions become further apart. The benefit of looking at the contract is that it does allocate risks between the parties. It is the benchmark for resolving formal disputes. It also sets out the mechanisms for dealing with issues relating to quality, time and money as they arise. If the parties apply the mechanisms in the contract and consider who has really taken the particular risk, then it should bring them much closer towards a resolution. It might be unfortunate to accept that the risk has fallen to you, but it’s much better to accept that now than to go an arbitration and lose.
International specialist arbitration, construction and engineering lawyer at Fenwick Elliott, Nicholas Gould, will be speaking at the Dispute Avoidance and Adjudication Forum at the 2024 FIDIC Global Infrastructure Conference in Geneva on Monday 9 September 2024.
