Over the last few years attempts to change the contracting climate in the UK have become increasingly obtrusive, if not increasingly effective. The mutual compatibility of separate Conditions of Contract, (the Engineering Construction Contracts, for example), the adoption of common user language (dumbing down?) and legislation under the HGCR Act of 1996 come to mind. Recommendations made by Latham, Egan and Woolf also refer, and then there's partnering, ADR…….

Well, the FIDIC Conditions of Contract have been changing too, and in much the same way. The FIDIC rainbow, Red (works designed by the Employer), Yellow (Plant or M/E designed by the Contractor), Silver (Turnkey designed by the Contractor) and Green (short form for minor works designed by both or either), are all now to a common format, in simple everyday English, and replace the engineer's traditional "independent adjudicator" role with a separate adjudicating panel. The new FIDIC Conditions are designated in accordance with who carries design responsibility, rather than in accordance with the type of work - civil or mechanical/electrical, and the shift in attitude is reflected in the changed authority of the Engineer. He is retained, as traditionally employed by the Employer, under the Red and Yellow books, but replaced in Silver and Green by the Employer himself or his representative. All the books (albeit Green in a simplified form) set out in Clause 20 a common dispute procedure which provides:
• Notice of claim within 28 days of the event, a Condition Precedent to any recovery at all.
• Full detail to be submitted within 42 days of the event.
• Engineer or Employer to give a detailed response, yes or no (no sitting on the fence) within a further 42 days.
• If no agreement, Engineer or Employer to consult with Contractor before making a "fair determination".
• Either party may refer that decision to the Disputes Adjudication Board (DAB). If no DAB has been appointed, then that shall be done within 28 days of the decision to refer.
• The DAB shall give a decision within 84 days.
• Dissatisfaction with the decision must be notified within 28 days or it becomes final. Such a notice is a Condition Precedent for subsequent arbitration.
• A further 56 days cooling off - amicable settlement period must elapse before arbitration can be started.

That's the basic procedure, and if you are going down that path you will obviously read the Clause and the Appendix very carefully and follow the provisions precisely. However, a few general comments might be made.
It's not quite the same as the "28 day - adjudication - at - any - time" UK procedure, is it? Getting a decision will take about 6 months. It won't match the UK procedure for cheapness either - three high powered adjudicators making repeated visits to site, staying in hotels, meeting at intervals and to discuss the dispute……

The constitution, establishment and working of the DAB is prescribed in Clause 20 and the Appendices thereto. Generally made up of three people (one elected by each party to the contract, a Chairman by the two elected) they are each required to be experienced in the work, in the interpretation of contract documentation, and fluent in the relevant languages. Quite a tall order. A hydro plant would involve major civil works and major M/E works, very different fields of expertise. Engineers with experience as Arbitrators are probably the best bet, with the Chairman from a legal background.

The books vary as to when the DAB should be set up - Red on award of contract, Silver when the first dispute arises. The idea was that the DAB is unlikely (or at least less likely) to be needed for 'off-site' work, so it should be set up when site work starts. That is, at once on a civils contract under Red Book, but possibly after a long manufacturing lead-in for Yellow and Silver contracts.

If the DAB is set up in response to a specific dispute, as the Silver Book provides, then its expertise can be selected to suit. If set up on day one, when any sort of dispute might arise, over specialised adjudicators are best avoided.

I have no doubt that the DAB should be established on day one, irrespective of the type of work, and encouraged to function from that moment by intermittent site or works visits and briefings. Despite, and in fact contrary to, the particular provisions of Clause 20, experience shows that the most effective contribution of the DAB is a "nudge nudge, wink wink, do you really think that argument should be pursued" response to ongoing events. An informal, but informed, source of advice to both parties from three wise men who are increasingly familiar with the project, with the parties thereto and with each other can work wonders in cooling things down. OK, so it costs money, but the potential savings on dispute resolution, working relationships and non-productive argument are enormous.

Unlike the UK 1996 Act, the adjudication provisions included in FIDIC are not in themselves mandatory, though if the project comprises a construction contract under the Act and is carried out in the UK, then the UK Act kicks in. But overseas the parties can change the adjudication provisions by agreement and, perhaps, introduce rather more urgency into the proceedings.

It is worth noting that the inclusion of an adjudication procedure, particularly in the Silver Book, substantially reduces the authority and influence (clout might be a better word) of the Employer. There is an 'immediate' appeal against any decision he might make, and the Contractor doesn't have to honour it either, provided he says he won't within 14 days (Clause 3.5).

Incidentally, the DAB should not be confused with the Disputes Review Board of the World Bank Standard Bidding Documents. Decisions made by the DAB are binding unless changed in arbitration, those made by the DRB are recommendations only.

Replacing Engineer's Decisions by a DAB is welcome. But it's no quicker and it's more expensive. The main advantage, to both parties, depends on a rather more pragmatic approach than usual to the small print of the Contract Conditions. If the three members of the DAB are wise men, then the system can work wonders.

Philip Harvey is an Associate Director Trett Consulting, Darlington office.