NEWS LETTER 2013

AJCE Activity 2012

JICA's Initiative on Dissemination of Dispute Board
Adjudicator Committee , AJCE
1. Background
The Japan International Cooperation Agency(JICA) has carried out various dissemination
activities of the Dispute Board (DB) for projects
financed by JICA ODA loan. Since 2008, AJCE
has been involved in this program as a memberof the JICA Study Team, together with Kyoto
University and Nippon Koei Co., Ltd.. The DB is a
new dispute resolution mechanism introduced inFIDIC construction contracts in 1999. At present,
all of JICA's standard bidding documents (SBD)
for construction employ the DB system, as shown
below.

answers (Q&As) are as follows:
Q1: When the country's legal system does notdeal with DB, I think the DB's decision does nothave a binding effect. What is your comment on
this?
A1: The dispute resolution procedure with DB isagreed by contract parties based on theprinciple of ''freedom to contract''. We do notthink the DB process has any conflict with thenational legal system. If a law related toalternative dispute resolution (ADR) is available, it
may support DB mechanism; however, it is not aprerequisite for effectiveness of the DB's decision.
Furthermore, the successive process, including
amicable settlement and arbitration, is stipulated
in the FIDIC contract, when either party isdissatisfied with the DB's decision.
Q2: When either party is dissatisfied with the DB'sdecision, it can proceed with the arbitration. In
this case, can the DB cost be regarded aswasted expense?
A2: According to statistics in the United States,
only 2% of disputes referred to DB went toarbitration. This means that most of disputes weresettled at the project site level and this fact
should be well-recognized. Furthermore, astanding DB is able to mitigate the outbreak ofthe dispute by its dispute prevention function.
The dispute may result in the delay ofcompletion of the project entailing hugesocioeconomic loss to a nation. The benefits
brought by DB can be sufficiently justified bysuch reasons.
Q3: Can the cost of DB be covered by JICA ODA
loans?

JICA SBD and Dispute Board

JICA SBD

Conditions of Contract

Dispute Resolution by:Works

FIDIC MDB harmonizededition

Standing DBPlant

ENAA form

Standing DBSmall WorksMDB original

Adjudicator

However, it is observed that application of theDB in actual projects shows very slow progress,
and the following bottlenecks have beenrecognized for its full-scale application:1) Demand-side (or user-side) issue: The real
benefit of DB has not been realized by theparties of construction contract. Hence, theestablishment of the DB has not yet been
positively supported.
2) Supply-side issue: The availability of the DB
member (or the adjudicator) is insufficient
specially in the Asian region in considerationof growing demands.
This paper describes JICA's initiative in thedissemination of DB in the past five years.
2. Countermeasures for Demand-side Issues
1) Dispute Board Promotion Seminar
JICA delivered DB seminars in Indonesia,Vietnam, Sri Lanka, Philippines, Cambodia,
Bangladesh, India, and Japan inviting publicofficers, contractors, and consultants to raise theawareness on the DB. There were 14 seminars
held with more than 1,100 participants in total. In
the seminars, a lot of questions were asked bythe participants and typical questions andDB Promotion Seminar in Vietnam28

NEWS LETTER 2013
established and maintain their national lists. The
outcome of this survey was then utilized for thesetting up of the Japanese National List by AJCE.
3) Adjudicator Training and Assessment Workshop
In order to verify the usefulness of the DB
Adjudicator Training Kit, the Adjudicator Training
Workshop (ATW) and Adjudicator Assessment
Workshop (AAW) were held in Tokyo in 2010,
inviting the candidates for adjudicators. The
result of the assessment was delivered to JICA bya three-member assessment panel. This result
was further conveyed to AJCE, which
established its National List in May 2011 based on
it. The AJCE list is the first list of adjudicators inAsia consisting of seven adjudicators at present.

A3: JICA considers that the DB cost is not a legal
cost but a part of project management cost,
therefore it is an eligible cost under JICA ODA
loans. JICA will discuss the establishment of DB
with the executing agency of the JICA ODA
project during the project appraisal stage sothat the cost allocation for DB will be ensured
under the loan for upcoming projects.
2) Dispute Board Manual
JICA issued the user's manual of the DB in 2012.
This concise manual has only 60 pages, butcovers all the important aspects of a DB. It canbe downloaded at the JICA website. The outlineof the DB manual is as follows:

Mock Hearing at AAW

Interview at AAW

Outline of DB Manual3) Mock Dispute Board Seminar
A seminar titled ''Mock Dispute Board Seminar''
was held in Jakarta in May 2012, which aimed todeepen the understanding on Dispute Board by
stakeholders of JICA ODA project bydemonstrating mock hearings between DB andemployer/contractor/engineer based on typicalconstruction dispute scenarios. About 100
participants attended the seminar.
3. Countermeasures for Supply-side Issue
1) DB Adjudicator Training Kit
JICA developed a training kit for candidates foradjudicator in 2010.
The 300-pagecomprehensive training material was designed
to be used in the five-day adjudicator training
workshop corresponding to FIDIC's Module 3/3A.
Mr. Gordon Jaynes joined the JICA Study Teamfor the preparation of this kit.
2) Survey on Adjudicator National List
FIDIC has a list of approved adjudicators called
the FIDIC President's List of Approved DisputeAdjudicators. At present, 61 adjudicators areregistered in the list. To cope with increasing
demand for adjudicators, FIDIC encourages its
Member Associations (MAs) to establish theirown National List of adjudicators. The JICA Study
Team visited several MAs who already have lists,
namely the VBI of Germany, SIDir of Poland, and
ARIC of Romania, in order to learn how they

AJCE Adjudicator List (at Website)

4. Conclusion
As a result of the continued efforts by JICA, theawareness on DB has been gradually raised in
the JICA's ODA recipient countries and theirexecuting agencies. Its progressive approach isappreciated by FIDIC as well as the MultilateralDevelopment Banks. The ATW and AAW done in2010 in Tokyo were repeated in Manila inNovember 2012, which invited candidates for
adjudicator from Sri Lanka, Indonesia, Vietnam,
and the Philippines. It is expected that new
national lists of adjudicators will be established inthe Asian region in the very near future.

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