Feeling combative? Let's dance

Cite as: December 2011 85(12) LIJ, p.32

Dispute avoidance processes (DAPs) are used on major projects to resolve conflicts that might otherwise escalate into litigation. 

By Dr Paula Gerber and Brennan Ong

Feeling combative? Let's dance

It has been observed that “conflict is inevitable, but combat is optional”.1 As Figure 1 illustrates below, dispute avoidance processes (DAPs) are intended to act as a circuit breaker, preventing inevitable conflict from escalating into disputes that may ultimately culminate in combative litigation or arbitration.

DAPs are the legal equivalent of preventive medicine. Just as we immunise our children against preventable diseases such as chickenpox, mumps and measles, so too should we be helping our clients to immunise themselves against disputes that potentially give rise to expensive and drawn-out litigation.

Although DAPs were initially developed for use on major construction projects, they are suitable for any major long-term contractual arrangements, including shipbuilding and the provision of IT services. The first DAP to be developed was the Dispute Review Board (DRB), which was created in the United States in the mid-1970s, and remains one of the most widely used DAP models. More than 30 years later, there are multiple DAP models available to suit a variety of circumstances, including Dispute Adjudication Boards3 developed in Europe in the late 1990s, and Dispute Resolution Advisers, developed in Hong Kong in the mid-1990s.4 The number of different models that fall under the DAPs umbrella is constantly increasing as hybrid models are developed to suit particular projects. For example, the Independent Dispute Avoidance Panel was developed to help avoid disputes during works to deliver the venues and infrastructure for the London 2012 Olympics.5

Although there are multiple DAP models available, Australia has so far experimented with only one, namely the DRB. This article therefore concentrates on analysing how DRBs work, Australia’s history with their use and the role that lawyers, particularly construction lawyers, can and should play in relation to this DAP model.

What is a dispute review board?

A DRB generally comprises a panel of three independent experts who are appointed by the contracting parties at the start of a project. It is preferable for the panel to be made up of members from a mixture of backgrounds. In the case of a construction project, for example, the contracting parties should select board members who have extensive experience in the type of construction being performed, e.g. a senior engineer, as well as someone experienced in resolving issues of contractual interpretation, e.g. a construction lawyer.6 Having diversity among the board members ensures that the DRB has the capacity and skills to identify potential complexities germane to the project (whether technical or legal), and can proactively assist the contracting parties to avoid and/or deal with these complexities before or as they arise, thereby preventing them from escalating into disputes.7 This is why the DRB is kept up to date with project developments, through regular site visits and meetings with key project personnel (generally every few months), and by being sent important project documentation between site visits.

These regularly scheduled visits and meetings not only permit the DRB to maintain a close working knowledge of all stages of the project, but also allow it to play a role in facilitating positive working relations between all project personnel. Under the watchful eye of three well-respected industry experts, the contracting parties tend to moderate their behaviour so as to maintain their credibility and not appear foolish in front of the DRB.8 Thus, correspondence between the contracting parties becomes less hostile under the shadow of the DRB. The aggressive and confrontational culture that has come to be expected in construction projects is transformed into one of cooperation, where all parties are focused on the successful completion of the project. This creates an environment that is less conducive to unresolved conflicts and disputes.9

If conflict is not successfully avoided, and a dispute between the parties materialises, the DRB is there to resolve the dispute in real time before either party’s position becomes intractable.10 Having the ability to resolve conflicts and disputes as they arise, as opposed to waiting until the project is complete, ensures that the hostilities between the contracting parties are kept to a minimum and that a dispute does not become a disruptive influence on the progress of the project.11 As soon as the parties believe that discussions alone can no longer resolve the dispute, the DRB organises a hearing that allows both parties to explain their position regarding the issue in dispute.12 The hearing is designed as a relatively short and informal process and is conducted more like a site meeting than a trial or arbitration.13 The outcome of the hearing is a non-binding recommendation that outlines how the DRB believes the dispute should be resolved.

DRBs effectively carry out two distinct functions:

  • ‌to avoid disputes; and
  • ‌to resolve those disputes which have not been successfully avoided.

Indeed, the Dispute Resolution Board Foundation (DRBF) – a non-profit organisation based in Washington – has reported that such is the success of this two-pronged approach to disputes that in more than 2000 global construction projects, more than 98 per cent were completed with no outstanding disputes.14

DRBs in Victoria

Although the first use of a DRB in Australia was in the 1980s, it was not until 2006 that we started to see significant use of this DAP model. So far 25 Australian construction projects have used a DRB. Most of these have been in Queensland and New South Wales, with Victoria and Tasmania yet to try one. However, the concept is not unknown to Victorian lawyers. George Golvan QC has served as chairman on two New South Wales DRBs, John Sharkey from the Melbourne office of Norton Rose is serving on a DRB in New Zealand, and Donald Charrett of the Victorian Bar is one of the committee members of the Dispute Resolution Board Australasia Inc. Given that there are senior Victorian lawyers involved in the use and promotion of DRBs in Australia and abroad, it should be just a matter of time before we see a Victorian construction project using a DRB.

It is interesting to note that while DRBs were and are being used in the construction of two of Australia’s three desalination plants – the Sydney and Adelaide plants – the Victorian desalination project is not using any form of DAP. Given that the Victorian plant has been plagued by problems,15 the parties may, with hindsight, wish they had used a DRB. The presence on the Sydney desalination plant of a DRB (chaired by George Golvan QC of the Victorian Bar) has been credited with playing a key role in this project being completed on time, within budget and with no outstanding disputes. Indeed, Sydney Water was so impressed by the performance of the DRB in helping the parties to avoid disputes that it will seriously consider using a DRB on all its large infrastructure projects.16

DRBs around the world are generally used on large-scale infrastructure and engineering projects, because these projects are particularly conducive to vast claims that quickly become costly disputes.17 As shown in Figure 2, Australia’s experience with DRBs reflects this global practice in that they are being predominantly used on road, rail and dam projects.18

Australia’s DRBs have been so effective in assisting parties to prevent disputes that only three disputes have ever been referred to the DRB for formal resolution, and on all three occasions the DRB’s recommendations were accepted by the parties. In light of Australia’s 100 per cent success rate with DRBs – no project has so far ended up in arbitration or litigation – Victorian lawyers advising clients on forthcoming major projects (such as the $55 million upgrade of the Great Southern Stand of the Melbourne Cricket Ground (MCG))19 should consider the potential benefits of using a DRB on such a project.

The legal profession and DAPs

“The entire legal profession – lawyers, judges, law teachers – has become so mesmerized with the stimulation of courtroom contest that we tend to forget that we ought to be healers of conflict.”20

Some members of the legal profession may cynically view the growth of DAPs in this country as a threat, since they have the potential to significantly reduce the number of disputes that clients require to be litigated, or resolved through ADR. However, the above quotation from a former Chief Justice of the United States reminds us that our role as lawyers is to heal conflicts, not escalate them into a gladiatorial battle. Rather than being viewed as a threat, DAPs should be seen as an opportunity for the legal profession to assist their clients in new and innovative ways.

Lawyers can play a lead role in spearheading the use of DAPs in Australia, as their advice is often sought during the early stages of project planning with regard to appropriate project delivery methods. This presents an opportunity for lawyers to provide advice about the appropriateness of a DAP for their clients’ projects.21 Given the number of different DAP models, clients would benefit from sound legal advice regarding their pros and cons. Lawyers should therefore ensure that they have a thorough understanding of the intricacies of all DAP models so they can properly assess what is best for their clients’ project.22

Conclusion

While Australia is not yet part of the DAP revolution, there are encouraging signs that this may be about to change. There is increased use of DRBs on major projects, albeit not yet in Victoria. Lawyers involved in major projects should grab the opportunity to become involved in this revolution or risk being left behind. Victorian lawyers can play a significant role in the further promotion and use of DRBs, and DAPs generally, to become “genuine healers of conflict rather than instruments of war; a role that is all too often performed by litigators”.23

The legal profession often complains that law schools fail to teach students what they need to know for practice, with one lawyer decrying “the difference between what law schools teach and what lawyers do”.24 However, when it comes to DAPs it is the academy that is taking the lead. Monash University and the University of Melbourne both teach their students about DAPs in their construction law subjects. It is now time for the legal profession to do what the law schools are already teaching.


Dr Paula Gerber is a senior lecturer at Monash University Law School, where she teaches construction law. She is also a sessional member of the Victorian Civil and Administrative Tribunal in the Domestic Building List. Brennan Ong is a research assistant at Monash University Law School.

1. Max L. Lucado, at www.iwise.com/4yMNh.

2. Paula Gerber and Brennan Ong, “DAPs: when will Australia jump on board?” (2011) 27(1) Building and Construction Law Journal 4, 8.

3. Paula Gerber, “Dispute avoidance procedures (‘DAPs’) – the changing face of construction dispute management” (2001) 1 International Construction Law Review 122, 127.

4. Colin Wall, “The genesis, development and future use of the Dispute Resolution Adviser system”. Paper delivered to the Society of Construction Law, Hong Kong, 17 November 2004, pp1–25.

5. “Independent Dispute Avoidance Panel set up to smooth London 2012 construction”, New Civil Engineer, 8 April 2008: www.nce.co.uk/independent-dispute-avoidance-panel-set-up-to-smooth-london-2012-construction/1084696.article.

6. Brennan Ong and Paula Gerber, “Dispute boards: is there a role for lawyers?” (2010) 5(4) Construction Law International 7, 12.

7. Ong and Gerber, note 6 above.

8. Kathleen Harmon, “Construction conflicts and Dispute Review Boards: attitudes and opinions of construction industry members” 58 Dispute Resolution Journal 66.

9. Paula Gerber, “Alliances and Dispute Review Boards: best friends or worst enemies?” (2011) Australian Journal of Civil Engineering.

10. Dispute Resolution Board Foundation, DRBF Practices and Procedures Manual (2007) at [6], available at www.drb.org/manual.htm.

11. Gerber and Ong, note 2 above, at 11.

12. DRBF Manual, note 10 above.

13. Paula Gerber, “Construction Dispute Review Boards” (1999) 10 Australasian Dispute Resolution Journal 9.

14. Dispute Resolution Board Foundation, “DRBF Database” 2007, at www.drb.org/manual/Database_2005.xls.

15. See, for example, Mark Debono, “Desal company faces penalties over delays”, ToowoombaNews.com, 6 April 2011, at australianews.com.au/australia/queensland/darlingdowns/toowoomba/story? cityid=9901bdf5-f527-4b68-852d-149172949fd4& storyid=6c7e9acd-ef2c-46bc-9c89-4497a85608e2.

16. For an in-depth discussion about the performance of the DRB on the Sydney desalination plant project, see George Golvan, “Practical issues in the establishment and operation of a Dispute Resolution Board – some reflections on Sydney’s Desalination Plant Project Dispute Resolution Board” 132 Australian Construction Law Newsletter 30.

17. James Groton, “Alternative dispute resolution in the construction industry” (1997) 52(3) Dispute Resolution Journal 49–57.

18. Paula Gerber and Brennan Ong, “21 today! – Dispute Review Boards in Australia: past, present and future” (2011) 22(3) Australasian Dispute Resolution Journal 180.

19. “Vic Coalition Govt and MCC fund major upgrade of MCG’s Great Southern Stand”, media release from the Premier of Victoria, 21 September 2011, at www.premier.vic.gov.au/media-centre/media-releases/ 2034-vic-coalition-govt-and-mcc-fund-major-upgrade-of-mcgs-great-southern-stand.html.

20. Warren Burger, “The state of justice” (1984) 70 American Bar Association Journal 62 at 66.

21. Burger, note 20 above.

22. Evan Chesler, “Trouble with the law”, The Economist (13 November 2010) 67.

23. Ong and Gerber, note 6 above, at 7.

24. Ong and Gerber, note 6 above, at 12.

25. Gerber and Ong, note 18 above.

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