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International Construction Law Review

WHY INTERNATIONAL DISPUTE SETTLEMENT INSTITUTIONS SHOULD OFFER AD HOC DISPUTE BOARD RULES

VOLKER MAHNKEN

Senior Counsel, Siemens AG, Germany

1. Some introductory remarks on terminology

Dispute boards have become more popular and more widely used in recent years as a dispute settlement mechanism in international construction projects. A dispute board is an ADR mechanism in which a neutral third party—normally consisting of three persons—renders a determination in the form of a recommendation (which can become binding) or a (binding) decision on a (normally technical or legal) question in dispute within a relatively short time in an expedited proceeding. The terminology, which is becoming commonly accepted1 and which will be used in this article, is to call a dispute board2 that is to render recommendations a “dispute review board”3 (or “dispute resolution board”) and a dispute board that is to render a (preliminarily binding) decision a “dispute adjudication board”.4 Such determinations of dispute boards are not enforceable like arbitral awards; therefore, dispute boards and arbitral tribunals cannot be viewed as equivalent.5 Dispute boards have some resemblance to neutral experts in ADR,6 who have to render a determination on a specific question in dispute.

2. Why dispute boards have become popular in international construction

There are several reasons for the emergence of dispute boards, which relate to certain shortcomings of not only litigation but also arbitration. First, both litigation and arbitration tend to be expensive and time-consuming. Secondly, construction disputes are usually characterised by a mixture of technical and legal questions. If they are decided merely by lawyers in a litigation or arbitration, technical experts have to be involved as well (either by the tribunal or by the parties) in order to support the lawyers who have


[2006
The International Construction Law Review

434

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