Dispute Boards - How they work
A Dispute Board (DB) is normally set up at the outset of a contract to informally assist the parties, if they so desire, in resolving disagreements arising in the course of the contract and to make recommendations or decisions regarding disputes referred to it by any of the parties.
Choosing your Dispute Board when negotiating your business contract
It shall be specified whether the DB is to be a Dispute Review Board, a Dispute Adjudication Board or a Combined Dispute Board.
Dispute Review Board (‘DRB’)
The DRB issues ‘Recommendations’ with respect to any dispute referred to it and constitutes a relatively consensual approach to dispute resolution. If no party expresses dissatisfaction with a Recommendation within a stated time period, the parties contractually agree to comply with the Recommendation. If a party does express dissatisfaction with the Recommendation within such time period, that party may refer the dispute to arbitration, if the parties have so agreed, or the courts. Pending a ruling by the arbitral tribunal or at the court, the parties may voluntarily comply with the Recommendation but are not bound to do so.
Dispute Adjudication Board (‘DAB’)
The DAB issues ‘Decisions’ with respect to any dispute referred to it and constitutes a less consensual approach to dispute resolution. By contractual agreement, the parties must comply with a Decision without delay as soon as they receive it. If a party expresses dissatisfaction with a Decision within a stated time period, it may refer the dispute to arbitration, if the parties have so agreed, or to the courts, but the parties meanwhile remain contractually bound to comply with the Decision unless and until the arbitral tribunal or the court rules otherwise. If no party expresses dissatisfaction with a Decision within the stated time period, the parties contractually agree to remain bound by it.
Combined Dispute Board (‘CDB’)
The CDB normally issues Recommendations with respect to any dispute referred to it but may issue a Decision if a party so requests and no other party objects. In the event of an objection, the CDB will decide whether to issue a Recommendation or a Decision on the basis of the criteria set forth in the Rules. The CDB thus offers an intermediate approach between the DRB and the DAB.
The essential difference between a Decision and a Recommendation is that the parties are required to comply with the former without delay as soon as they receive it, whereas a Recommendation must be complied with only if no party expresses dissatisfaction within a stated time limit. If a party is dissatisfied with a DB’s determination of a given dispute, whether in the form of a Decision or a Recommendation, it may refer the dispute to arbitration, if the parties have so agreed, or to the courts. The DB’s determination is admissible in any such further proceedings.
Click here to obtain the standard ICC Dispute Board clauses.
Setting up a Dispute Board in event of disagreement
The DB shall be established in accordance with the provisions of the parties’ contract or, where the contract is silent, in accordance with the ICC Dispute Board Rules. It shall be composed of one or three members (Article 7).
Under the ICC DB Rules, a party may request the ICC Dispute Board Centre to appoint a DB member in the event that the parties fail to do so. When making an appointment, the Centre shall consider the prospective DB member’s qualifications relevant to the circumstances, availability, nationality and relevant language skills, as well as any observations, comments or requests made by the parties (Article 7(8)).
The ICC Dispute Board Centre can also be asked to decide on a challenge of a DB member.
Every DB member must be and remain independent of the parties and shall sign a statement of independence (Article 8).
Relations between the parties and the Dispute Board
Before commencing DB activities, every DB member must sign a DB Member Agreement with all of the parties (Article 10).
ICC proposes a Model Dispute Board Member Agreement.
The parties and the DB are required to cooperate with each other to ensure that the DB becomes fully informed about the contract and the parties’ performance thereof as soon as possible (Article 11).
At the beginning of its activities the DB establishes a schedule of meetings and, if relevant to the contract, site visits. It does so in consultation with the parties (Article 12).
The proceedings before the DB are governed by the ICC DB Rules and, where the Rules are silent, by any rules which the parties or, failing them, the DB may settle on (Article 15).
The DB informally assists the parties, if they so desire, in resolving any disagreements that may arise during the performance of the contract and it makes Recommendations or Decisions regarding disputes referred to it by the parties (Articles 16 and 17). Unless otherwise agreed, a hearing is held before a Recommendation or Decision is made. The Recommendation or the Decision is issued promptly and, in any event, unless an extension is agreed, within 90 days of the Date of Commencement as defined in Article 17(2) of the Rules.
Decisions of DABs and CDBs can be reviewed as to form by the ICC Dispute Board Centre if so agreed by the parties (Article 21).