DISPUTE RESOLUTION QUESTION & ANSWER

MODEL TERMS OF APPOINTMENT OF A DAB

QUESTION
What we are wishing to locate is the model terms of appointment published by FIDIC, which are
referred to in Clause 20.3(a) of FIDIC's "Conditions of Contract for Design-Build and Turnkey", First
Edition 1995. Please could you clarify this reference. If it is a separate publication, we need to get
hold of it.
ANSWER
Model Terms of Appointment for a Dispute Adjudication Board under the Orange Book were issued
as a loose-leaf insert and reproduced at pages 151-163 of the Guide. FIDIC has moved on since then,
and the best approach would be to base Terms hereafter on those published within the 1999 First
Editions of the 1999 FIDIC Contracts.
ADJUDICATORS FEES
QUESTION
What are the standard fees for adjudicators?
ANSWER
The World Bank's International Centre for Settlement of Investment Disputes (ICSID) offers standard
fees and expenses for members of Arbitral Tribunals constituted under the ICSID Convention. The
rates are appropriate for members of the FIDIC President's List of Approved Dispute Adjudicators.
Entitlements comprise:
1. a fee for each day of their participation in meetings of the Arbitral Tribunal concerned; and
2. a fee for the equivalent of each 8-hour day of other work they perform in connection with
the proceeding.
Days of participation in meetings include days of travel to and from the meetings. Fees for periods of
other work below 8 hours may be claimed at the rate of one-eighth of the applicable fee per hour of
work performed. The standard level of the fees is at present US$3,000 per meeting day or 8-hour
day of other work. That amount has been determined for the fees in the expectation that Tribunals
will not propose higher amounts to the parties. Per Diem subsistence allowances are paid in lieu of
reimbursement of subsistence expenses when the arbitrators are away from their normal place of
residence. The allowances are considered to cover all personal expenses such as charges for lodging,
meals, etc. and all other expenses that are not specifically reimbursable. Reimbursable travel
expenses comprise expenses for travel in connection with meetings of the Tribunal concerned. The
travel should in all cases be arranged from the place of residence to the place of the meeting and
return by the most direct route.
WHAT CHANGES TO THE GENERAL CONDITIONS FOR THE ENGINEER TO BECOME THE DAB?
QUESTION
We are seeking some general advice concerning a client's changes to the following Particular
Conditions of Contract: Sub-Clause 1.1.2.9 DAB - Delete current definition and insert: "DAB means
the Engineer acting under sub-clause 20.4". - Deleted Sub-clauses 20.2, 20.3 and second paragraph
of sub-clause 20.4 - Deleted, Appendix General Conditions of Dispute Adjudication Agreement The
above changes to the Particular Conditions would appear to restore the powers and authorities of
the Engineer to those traditional roles under the FIDIC Conditions of Contract for Works of Civil
Engineering Construction, Fourth Edition 1987 (The Red Book). We assume the deletion of the DAB is
a common practice for clients to retain some degree of control on disputes and save costs. Could
you please indicate if some ambiguity or omissions may arise elsewhere in the General Conditions
with the above changes?
ANSWER
The changes to the General Conditions for the Engineer to become the DAB require detailed study
and depend on the policy and requirements of the Employer. They also need to be co-ordinated with
the applicable law, particularly in countries with a civil law jurisdiction or if the law includes
provision for statutory adjudication as in the UK. FIDIC cannot comment on the Particular Conditions

for individual projects. Discussion at training courses in Europe is confirming that most contracts
using 1999 FIDIC Contracts include the provision for an independent DAB, particularly contracts
under the MDB version and other contracts with provisions for international finance. Obviously
there are cost implications but the indications are that the cost of a DAB is less than the cost of a
lengthy dispute with other resolution procedures, including legal and other costs.
CONTRACTOR'S OBLIGATIONS
QUESTION
I am an engineer and I am involved in a litigation case where FIDIC was incorporated in a wood
waste power plant contract. It would be easier if the case is referred to arbitration where the
arbitrator is normally a person well verse in engineering contract and engineering matters.Normal
litigationtrial judge will be difficult to fathom the implications of each conditions contained in the
FIDIC. I was looking for legal cases to support my argument that under an engineering contract
involving a power plant, the performance and reliability of the power plant is clearly defined. The
plant will be accepted when it passes a performance test to show that the plant can generate
contract capacity and a 30 days non failed reliability run. As the operation of wood waste plant is
primitive and can easily go wrong unless it is operated with care. Any power plant can be easily
damaged if out of specification fuel is used. Because of this, the contractor is not required to
guarantee that the plant can produce the rated capacity throughout the defects liability period
which in this case is two years. Lawyers like to refer to pass cases as reference for their argument. I
feel that if can find some judgement in arbitration or litigation to show that performance test and
reliability run are sufficient to prove that the plant had complied to specification a large part of
litigation time can be saved. I am sure since the introduction of FIDIC in 1957 until now this kind of
argument should have been concluded, except I am unable to locate such case law easily. I would be
most grateful if you could shed some light on this matter and at the same time guide me to some
sites that I can get this information.
ANSWER
The FIDIC Conditions of Contract for Plant and Design-Build are very clear, at Clauses 9 to 12, about
the Contractor's obligations for Tests, Handing-Over and during the Defects Liability Period. Further
information for the particular project would be given in the Particular Conditions and the Employer's
Requirements or Specification. However, any additional obligations and the way in which these
documents are interpreted for a particular dispute will depend on the applicable law, which will be
different in different countries. FIDIC are not informed about Arbitral Awards or Judgements by the
Courts. For information about any Arbitral Awards you should consult an Arbitration Centre. The
best source is probably the International Chamber of Commerce in Paris