Increasingly, Dispute Review Boards (DRBs) are playing an
important role in construction projects both in Canada and
internationally as parties appreciate the assistance of neutral
experts with a familiarity with their projects who are able, on a
quick and informal basis, to provide non-binding recommendations
that divert disputes from what could otherwise become protracted
and costly disputes.
DRBs are agreed to and appointed in the contract documents at
the outset of a project. Typically, DRBs consist of one to three
members who are agreed upon by both parties or selected through a
nomination process. Members are selected for their subject matter
expertise and experts are thus rarely called over the course of the
board's deliberations. They familiarize themselves with the
project and its key participants, and often conduct site visits at
which parties make presentations to the board (Chern on Dispute
Review Boards (Oxford: Blackwell Publishing, 2008) and F.E.A.
Sander et al, 19 C.L.R. (2d) 194.).
Once a formal dispute has arisen, either party may refer the
matter to the board; however, in rare cases, the board may
intervene on its own, without the parties' consent. Hearings
are held as soon as possible and the board has full control over
the hearing and decides on the admissibility of evidence and the
manner in which it is presented. Rules of legal procedure do not
apply, nor are boards based on the principle of fairness in the
presentation of evidence. However, a code of ethics has been
developed for DRBs (Chern; R.M. Matyas et al, Construction
Dispute Review Board Manual, (New York: McGraw Hill,
DRBs must issue written reasoned recommendations within a short,
prescribed period of time. Such recommendations are not binding. If
a party refuses to accept a recommendation, the contract usually
provides for recourse to some further dispute resolution process to
occur after substantial performance or, in some cases, total
completion of the project. A party's failure to accept the
board's recommendation does not in itself entitle the other
party to stop performance (Chern)
Despite the early involvement of board members, the costs of
DRBs appear to be significantly less than those involved in
litigation, or even adjudication. A three-person dispute board
typically costs between 0.05 and 0.3 percent of total project
costs, with member fees falling between $1000 and $2000 per day.
The costs of the hearing depend on the time required for the
hearing, and the time required to prepare written recommendations
(Chern; Matyas et al).
A telling factor in the use of DRBs is the size of the projects
for which they are employed. While DRBs are often thought to be
feasible only for major projects, they are actually most often used
for projects with a volume of less than $100 million (Chern).
While DRBs are frequently hailed as a cost-effective alternative
to litigation, this dispute review mechanism is not perfect. The
non-binding quality of recommendations issued by the board can be a
weakness, given that dissatisfied or, more crudely,
"losing" parties can proceed to seek a second decision
from the courts.
In addition, while the informal nature of DRB hearings is often
cited as one of its strengths, the absence of procedural rules can
result in a lack of confidence in the board's recommendations.
The absence of lawyers at DRB hearings has been said to be a
weakness, particularly where contractual interpretation and complex
points of law are involved. DRBs have been criticized for appearing
to place equities before contract provisions or the facts of the
dispute in making recommendations.
Despite these concerns, DRBs have proven to be a tremendous
asset to parties wishing to advance their projects while resolving
contentious issues before they develop into full-blown disputes.
Through DRBs, parties utilize the skills of experts in the relevant
field, who have direct knowledge of the project and the interests
of stakeholders, to preserve the relationship and, ultimately,
ensure the success of the project.
By Keith A. Bannon, with the assistance of Safia
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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