Adjudication

Although the advantages of Dispute Boards („DB“) are numerous, especially in the process of dispute avoidance, it is a matter of fact, that the Parties very often exclude the DB clauses from FIDIC or other standard conditions of the Contract, as dispute resolution mechanisms. In the alternative, even if the DB clauses are not excluded, the Parties simply decide not to appoint the DB.

One of the reasons may be insufficient awareness of what the DB stand for and what the DB’s role exactly is. However, another identified reason is fact that the Parties do not have control over the DB’s costs which leads to uncertainty and hesitation towards the DB’s appointment.

Moreover, for relatively small size contrasts and related disputes, it is shown in the practice that the costs of a three-member DB may reach the costs of the Sole Arbitrator in arbitration. The involvement of the DB in preventing disputes may be called into doubt under such circumstances.

CDRC is one of the rare dispute resolution centres which recognises above mentioned issue. Therefore, CDRC established the DB’s capped fees in relation to the amount in dispute, which it considers reasonable.

In particular, should CDRC be designated as the appointing entity for nominating DB members in the Contract (absent of the party’s agreement), CDRC will appoint DB members who will adhere to the capped fee scheme established by CDRC. In this way, uncertainty about the DB’s costs will be avoided. Further, CDRC strongly believes that the DB’s capped fees scheme will also encourage the appointed DB members to use their time most efficiently, preventing the DB proceedings from turning into expensive mini-arbitrations, which also occur in practice.