Gordon L. Jaynes glj4law@aol.com A DAM GOOD THING Gordon L. Jaynes glj4law@aol.com Copyright 2008

“The world requires at least ten years to understand a new idea “The world requires at least ten years to understand a new idea.” Sir Ronald Ross Copyright 2008

El Cajon, Honduras – "A Dam Good Thing"

Standard Bidding Document “Procurement of Works and User’s Guide” “MDB Harmonised Conditions for Construction” Copyright 2008

What is a Dispute Board? Clause 20, MDB Harmonised Conditions Dispute prevention Dispute decision One person/three persons Copyright 2008

Who can Serve? “Professionals experienced in the type of construction involved and with the interpretation of contractual documents.” “Fluent in the language for communication defined in the Contract” Must undertake to abide by (and be liable for failure to observe) various commitments made in the Agreement of service. Copyright 2008

How are the members selected? Each Party nominates one for approval by the other Party The two so chosen nominate Chair for approval by the Parties A “default” provision is included Replacement and termination Copyright 2008

How does the DB operate? Site Visits At or near start of construction and thereafter at intervals of not more than 140 days; Accompanied by Parties & Engineer on “tour” of site; Informal discussion of progress of the Works and any impending problems or disagreements; Report of visit delivered before departure from site. Copyright 2008

How does the DB operate? Other DB is “to endeavor to prevent potential problems or claims becoming disputes.” Includes working with Engineer Can be summoned on short notice for critical events during construction (28 days notice) Between site visits, receives Monthly Progress Reports, including Variations, Claims, and Programme Changes. Copyright 2008

How does the DB process a dispute which is referred to it? Engineer makes a determination on any claim and either Party, if in disagreement, can refer to the dispute to the DB. Procedural Rules: Annex contains less than one page of procedures. DB has great latitude, but must act -- “fairly and impartially between the Parties” and “adopt procedures suitable to the dispute, avoiding unnecessary delay or expense.” Copyright 2008

How does the DB process a dispute which is referred to it? Written submissions Hearing: Informal compared to arbitral hearings Presentations by persons directly involved in the day-to-day construction of the Works Can work on “documents only” Copyright 2008

How does the DB process a dispute which is referred to it? DB will seek unanimity, but if unsuccessful, decision is by majority Majority may require dissenting opinion to be produced Decisions are to be reasoned and to be in writing Decisions are immediately binding, unless and until revised in an amicable settlement or by arbitration Copyright 2008

What are the steps to obtain such revision? Must give notice of dissatisfaction within 28 days of receipt Must engage in amicable settlement efforts for a minimum of 56 days After the minimum of 56 days of amicable settlement efforts either Party can commence arbitration Copyright 2008

Why do MDBs favour DBs? Some $90 billion of construction disputes have been resolved amicably by use of DBs Most resolved by the time construction is complete Cost is much less than arbitration or litigation (0.05% to 0.24% of final Contract Price; average 0.15%) Copyright 2008

How are DBs paid? Monthly Retainer fee for: Daily fee for: Being available on short notice Becoming and remaining familiar with the Contract Indirect costs All other matters not covered by the daily fee Daily fee for: Site visits including maximum of 2 days of travel time in each direction Hearings (if not during Site visit) Studying written submissions on a dispute Private meetings of DB to reach decisions Reimbursement of costs. Copyright 2008

What problems with DBs have arisen on MDB financed Contracts? Lack of training of borrowers/aid recipients False “economies”: Defer establishment of DB Reduce frequency of Site visits Eliminate monthly retainer fee Reduce daily fee Copyright 2008

El Cajon, Honduras – "A Dam Good Thing"