Transnational Construction Arbitration
Page 25
CHAPTER 3
Multi-tier dispute resolution clauses in construction contracts
Multi-tier dispute resolution clauses in construction contracts
Introduction
3.1 Disputes arising from construction contracts have been a fertile ground for developing novel methods of dispute resolution. This has led to the adoption of clauses that include multiple dispute resolution methods in an attempt to seek to resolve disputes more quickly and efficiently than using the usual methods of arbitration or litigation. It also allows the parties to see whether they can reach a consensual solution before arbitration or litigation. The wholly commendable aim can however create difficulties that render the multi-tier clauses a burden for a claimant and an opportunity to delay resolution of the dispute by a defending party. 3.2 In this chapter the author considers some of the typical issues that arise from these multiple clauses. It is helpful, first, to review two typical clauses found in practice.Typical multi-tier clauses
3.3 The International Chamber of Commerce (ICC) has a standard clause for use with a Dispute Adjudication Board (DAB) and then arbitration. It provides:- (a) All disputes arising out of or in connection with the present Contract shall be submitted, in the first instance, to the DAB in accordance with the Rules. For any given dispute, the DAB shall issue a Decision in accordance with the Rules. The DAB shall submit each Decision to ICC for review in accordance with Article 21 of the Rules.
- (b) If any Party fails to comply with a Decision when required to do so pursuant to the Rules, the other Party may refer the failure itself to Arbitration under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules of Arbitration.
- (c) If any Party sends a written notice to the other Party and the DAB expressing its dissatisfaction with a Decision, as provided in the Rules, or if the DAB does not issue the Decision within the time limit provided for in the Rules, or if the DAB is disbanded pursuant to the Rules, the dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules of Arbitration.
- (a) If a dispute of any kind whatsoever arises between the Employer and the Contractor in connection with, or arising out of, the Contract or the execution of the Works … shall, in the first place, be referred in writing to the Engineer, with a copy to
the other party. Such reference shall state that it is made pursuant to this Clause. No later than the eighty-fourth day after the day on which he received such reference the Engineer shall give notice of his decision to the Employer and the Contractor. Such decision shall state that it is made pursuant to this Clause.Page 26
- (b) If either the Employer or the Contractor be dissatisfied with any decision of the Engineer, or if the Engineer fails to give notice of his decision on or before the eighty-fourth day after the day on which he received the reference, then either the Employer or the Contractor may, on or before the seventieth day after the day on which the said period of 84 days expired, as the case may be, give notice to the other party, with a copy for information to the Engineer, of his intention to commence arbitration, as hereinafter provided, as to the matter in dispute. Such notice shall establish the entitlement of the party giving the same to commence arbitration, as hereinafter provided, as to such dispute and, subject to Clause 67.4, no arbitration in respect thereof may be commenced unless such notice is given.
- (c) If the Engineer has given notice of his decision as to a matter in dispute to the Employer and the Contractor and no notice of intention to commence arbitration as to such dispute has been given by either the Employer or the Contractor on or before the seventieth day after the day on which the parties received notice as to such decision from the Engineer, the said decision shall become final and binding upon the Employer and the Contractor.
- (d) Where notice of intention to commence arbitration as to a dispute has been given in accordance with Sub-Clause 67.1, the parties shall attempt to settle such dispute amicably before the commencement of arbitration. Provided that, unless the parties otherwise agree, arbitration may be commenced on or after the fifty-sixth day after the day on which notice of intention to commence arbitration of such dispute was given, even if no attempt at amicable settlement thereof has been made.
- (e) Any dispute in respect of which:
- (i) the decision, if any, of the Engineer has not become final and binding pursuant to Sub-Clause 67.1, and
- (ii) amicable settlement has not been reached within the period stated in Sub-Clause 67.2,
shall be finally settled, unless otherwise specified in the Contract, under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed under such Rules.