Dispute Resolution Boards (DRBs) - Dispute Boards
What are Dispute Resolution Boards?
Dispute Resolution Boards, internationally known as “Dispute Boards”, are an alternative dispute resolution method whose purpose is for the parties to prevent or, as the case may be, efficiently resolve disputes arising during the execution of a construction contract while it is in progress.
The Dispute Resolution Boards exercise their functions from the beginning of the works until their total reception and participate as an impartial third party before the protagonists of the works (Owner or Client, Supervisor and Contractor), exercising a consultative and preventive function, avoiding disputes arising from possible disagreements between the parties through the issuance of recommendations; and a decision-making function, resolving disputes that could affect or paralyze the works by issuing decisions that are binding on both parties.
How are Dispute Resolution Boards formed and how do they work?
The Dispute Resolution Boards are composed of one or more experts with technical and legal knowledge in construction matters, called “adjudicators”, who are informed about the progress of the execution of the works and compliance with other technical aspects, and have the power to verify this through requests for information from the parties, site visits and hearings (either at the construction site or at the most appropriate place available to these experts).
The purpose of the Dispute Resolution Boards is to ensure that the work is not paralyzed or affected in its execution and that it continues its progress. It is precisely this feature that underlines its practical importance in today’s construction contracts.
What is the purpose and importance of Dispute Resolution Boards?
The infrastructure works are developed according to a time schedule proposed by the Contractor, programming its activities in the most efficient way possible in order to take care of its performance, minimizing its costs and maximizing its benefits. On the other hand, the Owner or Client expects to receive its work in the agreed time and based on a determined price and quality. On the other hand, the Supervisor, hired by the Owner, controls and supervises that the Contractor complies with the scope, budget and quality offered.
In most construction projects, the schedule and scope are usually modified for various reasons, including the requirements of the project or possible modifications that may arise in its execution, which creates an environment conducive to disagreements between the parties involved in the project when it is time to decide who will bear the cost of such variations, raising questions and queries, such as: Was it contemplated in the contract? Was it contemplated in the budget?
The Dispute Resolution Boards, as neutral and impartial third parties to the protagonists of the work, have as objectives, on the one hand, to reduce the conflict in the execution of the construction contract; and, on the other hand, in case a controversy arises, to resolve it by issuing binding decisions for the parties.
What service will the Arbitration Center of the Lima Chamber of Commerce provide?
The Center intervenes in the constitution of the Dispute Resolution Boards, making available to the parties a list of experts with proven experience in the resolution of conflicts in the construction field and taking all the necessary actions for the Boards to perform their functions efficiently. In addition, it is responsible for overseeing their procedural conduct until the completion of their work.
The Center also appoints the members of the Boards in replacement of the parties, when either or both parties fail to appoint the sole member or any of the three adjudicators, as appropriate.
Likewise, the Center oversees compliance with the ethical principles of the members of the Board and of the parties, for which purpose it has a Code of Ethics that contains a series of provisions aimed at ensuring that the Board’s actions are carried out in an ethical manner.
The Center also resolves any challenges raised by the parties against a bidder, in accordance with specific procedures and deadlines.
In addition, the Center is responsible for providing logistical support, a procedural manager and all the physical and digital infrastructure that the members of the Boards and the parties need to carry out their work properly. Thus, the Center handles all administrative matters of the procedure in order to ensure that the adjudicators act in a fully neutral manner, ensuring that the parties and the members of the Board concentrate their attention on preventing and resolving possible disputes arising from the work.
For further information and inquiries about the Dispute Resolution Boards, please send an e-mail to the following address: