Dispute Boards

A Dispute Board (“DB”) is a standing body composed of one or three DB Members. Typically set up upon the signature or commencement of performance of a mid- or long-term contract, they are used to help parties avoid or overcome any disagreements or disputes that arise during the implementation of the contract. Although commonly used in construction projects, DBs are also effective in other areas. These areas includes research and development; intellectual property; production sharing and shareholder agreements. 

The ICC Dispute Board Rules (“Rules”) consist of a comprehensive set of provisions for establishing and operating a DB. They cover such matters as the appointment of the dispute board member(s); the services they provide and the compensation they receive. 

DBs have three basic functions. They emphasise the importance of informal and formal approaches to disputes. The Rules explicitly provide that, upon perceiving a potential disagreement, the DB may identify the disagreement and encourage the parties to resolve it on their own without further involvement of the DB. If this is impossible or the disagreement is too entrenched, the DB can intervene with informal assistance to help the parties resolve the matter by agreement. Alternatively, the DB could also determine a dispute through a recommendation or a decision issued after a procedure of formal referral. Each of these functions is of equal importance in helping to reduce the risk and cost of disruption to the parties’ contract. 

The Rules give parties a choice between three types of DB—each of which are distinguished by the type of conclusion it issues upon a formal referral. Dispute Adjudication Boards (DABs) issue decisions that must be complied with immediately. On the other hand, Dispute Review Boards (DRBs) issue recommendations that are not immediately binding on the parties, however, become so if no party objects within 30 days. Finally, Combined Dispute Boards (CDBs) offer an intermediate solution between DRB and DAB. They normally issue recommendations but may also issue decisions if a party so requests and no other party objects or the DB so decides on the basis of criteria set out in the Rules. There is a contractual obligation to comply with recommendations and decisions—when so required—by disallowing objections on the merits as a defence to non-compliance and through explicit use of the terms “final” and “binding.” 

Parties wishing to use the Rules are advised to include an appropriate clause in their contract. For this purpose, ICC proposes three standard ICC Dispute Board Clauses (“Clauses”)—providing respectively for the three DB types. In addition, ICC proposes a model Dispute Board Member Agreement, covering such matters as the DB Member’s undertaking and remuneration, as well as the duration of the agreement.