Dispute Adjudication and Avoidance Boards: A public interest

Michelle Munyanduki, Zimbabwe

In 2018, Michelle Munyanduki was instrumental in pioneering the first FIDIC training in her home country Zimbabwe. She is a lawyer who specialises in construction contracts and has worked as a construction contracts consultant since 2016. She graduated top of her class from the University of Namibia with accolades that include best in contract law. Michelle naturally translated her passion for contracts to a career in the construction industry as a construction contracts consultant.

In the now well known Intratrek Zimbabwe (Private) Limited versus Zimbabwe Power Company appeal application, Chitapi J highlighted that:

“The prejudice which results from delays in resolving the disputes between the parties by dialogue in terms of the provisions of the contract is to the public and the country’s development…. the parties must, using the provisions for dialogue and dispute resolution provided for in the contract (EPC FIDIC), engage and relate.” vii

The learned judge in this case explains that the prejudice owing to delays in dispute resolution is not only to the parties but to the public and to the country's development. This analysis is universally applicable. While others may personalise a national project, the real benefactors and at the same time victims of delay are the public.

Prejudice to the Public and development-Tax payer always pays The Intratek matter presents an interesting hypothesis which deserves to be placed into proper perspective. In this particular matter, the implementation and/or completion of 100MW solar project was delayed because parties subjected the project to lengthy litigation, from 2016 to date.

These proceedings were undertaken without exhausting the provisions for dialogue and dispute resolution provided for in the contract. Supply and demand would therefore indicate that, if there is less power generation and so a lower amount of power supplied, at the same time as an increasing demand, there would be an increased price for electricity. Ultimately, this results in an increase in production and input costs for other goods resulting in the price of basics like bread etc increasing.

It is important to recognise, especially in national projects, that the taxpayer bears the majority if not all of the cost and risk in most instances and if issues occur is inevitably the provider/financier of last resort . In the event that parties chose expensive dispute resolution routes like litigation or arbitration, it is potentially the taxpayers' money on the line. It is untenable that we have standardised and best practice contracts being decorated with clauses on dispute adjudication and avoidance , yet parties insist on litigation or arbitration as a preferred dispute resolution method.

DAABs: a public interest.

What the judge refers to above as ‘provisions for dialogue and dispute resolution provided for in the contract’, viii is the referral of disputes to Dispute Adjudication and Avoidance Boards (DAABs). Over time dispute boards were adopted as a response to the frequency of disputes and their detriment to project budgets and programs. This is especially the case when dealing with FIDIC contracts that

have as a golden principle and a condition precedent to arbitration, the resolution of disputes through DAABs. According to the Global Construction Dispute Report by Arcadis, early dispute avoidance decreases the volume of lengthy and costly disputes. ix

DAAB members will ideally be experienced in both the type of project and contract. As a result, their involvement from the onset of a project can help to prevent or minimise the potential of dispute occurrences. Their efficiency is also in their availability to deal with a referred matter within a 28 day notice and obligation to make binding and therefore legally enforceable decisions within a time limit of 84 days; all at a reasonable agreed cost. Why parties avoid such an effective and efficient dispute resolution mechanism is an investigation on its own as it attempts to ensure the best outcome for all parties involved. .

DAABs are therefore designed to try and avoid issues in projects which ultimately are there to serve the public. They should not be viewed as an option but a necessity, creating a more stable and reliable mechanism for project delivery. It is regrettable that in the aforementioned case study that after years of litigation, the judge refers the matter back to a DAAB, where it should have all started and hopefully ended.