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The Dispute Adjucation Board (DAB) in FIDIC Public Contracts

Under the rules provided in the FIDIC public contracts 1999 (irrespective whether yellow or red book), namely Sub-Clause 20.4, if a dispute arises between the parties to that contract in connection with the contract or the works performed thereunder, including any dispute as to any certificate, determination, instruction, opinion or valuation of the Engineer, further to the appointment of the DAB, either party may refer that particular dispute in writing to the DAB for its decision.

Albeit the FIDIC agreement 1999 does not expressly regulate the procedure pertaining to bringing a claim by either party before the DAB, we have summarized below the steps undertaken in practice. It is worth noting that these steps may be variated by the DAB as it may consider fit to the respective dispute, but, from our experience, the procedure usually conducted by the DAB is the one presented below.

The whole process of DAB is commenced by the referral submitted by the interested party (Contractor or Employer). The respective referral shall set the jurisdiction and limits of the DAB.

After claimant’s referral and the defendant’s answer are submitted, the Site Visit takes place, followed by hearings of the parties and submission of the written notes (if such are further requested by the DAB).

The procedure ends with a decision issued by the DAB. During the 84-day period when the aforementioned steps take place, the parties may use legal, technical and accounting services of experts and the Engineer may participate in the hearings if the DAB requires his/her presence and the parties do not object.

The period of 84 days mentioned above may be extended upon proposal of the DAB and conditioned upon the agreement of the parties. In practice, this period might be reduced (if there is one or several disputes) or even increased (if there is a large compendium of claims). Either way, the parties shall promptly give effect to the DAB Decision unless and until it shall be subsequently revised in an amicable settlement or an arbitral award.

If either party is dissatisfied with the DAB’s decision or the DAB fails to give its decision within the period of 84 days after receiving a dispute, that party may issue a Notice of dissatisfaction within 28 days from the issuance of the DAB Decision or from when the 84-day period has expired without the issuance of a Decision.

Even though the DAB Decision is not a jurisdiction per se for the parties, as would be the case for a decision rendered by the Court/Arbitral Courts, the failure of the Contractor or the Employer to enforce the DAB Decision is likely to trigger the contractual liability of the defaulting party to undergo the DAB Decision.

As for the evidentiary value of the DAB Decision, in the Romanian law system, there is no evidence that is considered decisive or more important than other. Therefore, the courts/arbitral courts will take into consideration the DAB Decision along with other evidence. However, from a practical standpoint, the DAB Decision should weigh more heavily than other evidence introduced in a dispute, mainly because the Decision is issued by an impartial expert. In such respect, as a rule, a judiciary expertise is further requested by the court/arbitral court and the DAB Decision is overall evaluated by also considering such expertise.

The DAB Decision is mandatory after its issuance, regardless of whether a Notice of dissatisfaction has been submitted. However, according to a recent ruling of the Romanian High Court of Cassation and Justice (which has not been published yet), the decision issued by the DAB for which a notice of dissatisfaction has been served cannot be provisionally enforced by the favored contractual party.

In practice, in cases where the DAB Decision is definitive, the party to whom the decision is favorable, has two options: (i) refer the entire dispute to court / arbitration – i.e., going on the merits of the case; or (ii) refer the observance of the DAB to court / arbitration – i.e., the court / arbitration must solely acknowledge the obligatory nature of DAB decision and decide upon enforcement thereof. This latter approach, however, is unlikely to have the expected success in Romania, as the judges / arbitrators will have to review the merits of the case and they will be quite tempted to go on the merits of the case.

Finally, at the beginning of 2018, Government Decision no. 1/10.01.2018 brought several amendments in the field of construction and infrastructure projects in Romania (which are carried out under public contracts) and the DAB procedure has been replaced in full with a similar procedure which will be conducted by the Supervisor.

Av. Răzvan Vlad
Nestor Nestor Diculescu Kingston Petersen

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