The Old Approach No Longer Works
Historically, the industry’s approach was to complete the Works first and resolve the commercial account later. Claims and disputes were left to be pursued long after Taking-Over. That approach is not sustainable.
Clause 21 of the 2017 Suite
The 2017 FIDIC Red, Yellow and Silver Books embed this commercial reality. Clause 21 requires the establishment of a standing Dispute Avoidance/Adjudication Board (DAAB) from the outset of the Contract.
The DAAB’s function is twofold: to assist the Parties in avoiding Disputes under Sub-Clause 21.3 and to decide disputes referred to it under Sub-Clause 21.4.
This represents a fundamental departure from the 1999 DAB regime, where boards were mostly appointed ad hoc and confined to adjudication of crystallised disputes.
From Resolution to Avoidance
The 1999 DABs were reactive in nature. Their decisions were binding but not final, being subject to a Notice of Dissatisfaction and subsequent arbitration.
The 2017 DAABs are proactive in practice. They are required to make regular site visits, to meet with the Parties, and to provide informal assistance or opinions before issues escalate into formal disputes.
Are They Working?
The answer is qualified.
Where the parties embrace the DAAB as a genuine dispute avoidance mechanism, the benefits are clear: quicker resolution, reduced cost and finality contemporaneous with completion.
The process also compels sharper claim discipline prior to any dispute. The parties are required to comply with the contractual machinery in that notices must be given duly and in time, claims must be substantiated and contemporaneous records must be maintained. Compliance in both procedure and substance promotes better contract management and record-keeping, making the preparation of claims less onerous and enhancing their credibility. The “throw it in and see what sticks” approach has little traction under the 2017 regime.
Where the Parties resist, the DAAB is often sidelined and treated merely as a procedural formality before arbitration under Sub-Clause 21.6. This undermines the very object of Clause 21. The revisions in 2017 regime and the involvement of the DAAB is to prevent narratives from being reconstructed in the boardroom or in arbitration. The strength of the DAAB lies in contemporaneous engagement at site level where the facts are still fresh and the individuals involved remain available.
Ultimately, the effectiveness of the DAAB continues to depend on the calibre, competence and independence of its members and the approach adopted by the parties.
Conclusion
The transition from DABs to DAABs is more than a procedural amendment. It reflects commercial common sense that completion should mean the works are complete, the account is settled and the Parties move forward without the drag of historic disputes.
The FIDIC 2017 suite provides the machinery. It is for Employers and Contractors alike to use it actively and in good faith, with the common objective of closing both the works and the commercial account at the same time.
We regard DAABs as a valuable tool for achieving timely and economical finality in projects. They demand discipline in contract administration and independence in adjudication, but the reward is a project that is truly done and dusted at completion.