Dispute Board (DB) or Dispute Resolution Committee (DRC)
The dispute board is an extrajudicial method of dispute resolution widely used in public and private contracts, such as construction and infrastructure, as well as in Public-Private Partnerships and Concessions. Dispute Boards may also be used as a means of settling disputes in other types of bilateral and succession in title contracts, such as alliance contracts and shareholders’ agreements. For its effectiveness, promptness, and cost-effectiveness, it is also recommended for use in out-of-court and court reorganization procedures.
It is composed through the appointment of experts in the technical or contractual matter in question, for the prevention or resolution of disputes arising during contractual performance. The board is usually formed at the beginning of the contracts, even before the dispute, in order to monitor the performance of the contract and to issue recommendations and/or decisions.
The dispute board is a method that works in real time, since the professionals that compose the committee have prior knowledge of the contract and the specificities related to its performance, based on minutes and management information received monthly, and also by making periodic inspection visits to the works performed.
It is important to emphasize some of the main advantages of using dispute boards, or DRBs, for the prevention or disputes resolution. Special attention is given to the experience of the professionals selected by the parties to be part of the board. The board shall be composed of independent, impartial, unbiased professionals with relevant expertise, which ensures the quality of recommendations and/or decisions and provides extreme agility for the proceeding.
The parties’ confidence in the reputation, knowledge and independence of the board members is critical for the parties to accept the board’s recommendations or decisions.
Statistics from the Seattle-based DRBF (Dispute Resolution Board Foundation) show that more than 90% of construction contracts in the United States, which included a Dispute Board clause, ended without litigation between the parties.