Particular Dispute Settlement Proceedings

Disagreements, conflicts and disputes on plant construction and infrastructure projects are not welcome, but to a certain extent unavoidable. From the perspective of the project participants they should be settled within a short period of time so their outcome can be taken into account during further project implementation. Thus the project would not be jeopardized. Moreover, it is important to settle them at a reasonable cost for obvious reasons. Since I was inhouse counsel for many years I am well aware of these issues and take them into account.

Arbitration

Arbitration has a long tradition as means of dispute settlement in the field of plant construction. It is also important in infrastructure projects although court litigation is still relevant here. It should be noted that not only court proceedings take a long time but also arbitral proceeedings which normally last three years and more. Mainly due to the fees of outside counsel and experts arbitral proceedings have become quite expensive. The German Institution of Arbitration (Deutsche Institution für Schiedsgerichtsbarkeit, DIS, www.dis-arb.de) and the International Chamber of Commerce (ICC, www.iccwbo.org) offer sets of rules for arbitral proceedings.

As arbitrator I do not only want to achieve a legally convincing reasonable result but also ensure that the proceeding is concluded within a reasonable period of time – having regard to the wishes of the parties and taking into account the complexity of the respective dispute.

As alternative to arbitration ADR proceedings should be considered like adjudication, dispute boards or mediation which are faster than arbitration and not so costly.

Adjudication

In adjudication a neutral third party – the adjudicator – who is appointed by the parties or a neutral nominating body makes a provisionally binding determination after a summary procceding which only takes a few weeks or months which can be taken into account during further project implementation. The adjudicator can be a lawyer or an engineer or can have a commercial background – depending on what is at issue in the dispute. See for example the rules of expert adjudication of the German Institution of Arbitration (Deutsche Institution für Schiedsgerichtsbarkeit, DIS, www.dis-arb.de).

Dispute board

A dispute board is a panel often established at the beginning of a project before there are any disputes, which normally consists of three members. An interdisciplinary mix of engineers, lawyers and members with a commercial Background is typical and practical. Since it can familiarize itself with the project at its inception and since it has been established as soon as disputes arise it can act very quickly in order to resolve disagreements and disputes either informally or formally through recommendation or provisionally binding decision. See for example the Dispute Board Rules oft he ICC (www.iccwbo.org) or the adjudication rules of the German Institution of Arbitration (DIS, www.dis-arb.de)

Mediation should also be considered as a means of dispute settlement in the area of plant construction and infrastructure projects. It is a structured process where a neutral third party – the mediator – helps the parties negotiate a settlement. The German Institution of Arbitration (DIS, www.dis-arb.de ) and the ICC (www.iccwbo.org) offer mediation rules. Moreover a neutral expert opinion can be an appropriate instrument (s. Rules of Expertise of the ICC, www.iccwbo.org; expert opinion rules of the German Institution of Arbitration, DIS, www.dis-arb.de ).

On top of that the conflict management rules of the German Institution of Arbitration should be considered. If a project does not have a dispute board and the parties of a conflict cannot agree on an ADR mechanism they can try to find an appropriate ADR proceeding with the help of a conflict manager appointed according to the DIS (German Institution of Arbitration) conflict management rules (www.dis-arb.de). The conflict manager has no power to decide but is only entitled to make recommendations in respect of the appropriate ADR proceeding.

If a party needs an enforceable title with res iudicata effect it has to rely on either arbitration or court proceedings and it should keept in mind that the international enforceability of arbitral awards is still better than that of court judgments.