The FIDIC contracts which we frequently encounter in international contracting, contain detailed regulations with regards to resolving the disputes that may arise under the projects.
In situations where it is not excluded from the scope of application by the parties of project / contract, FIDIC stipulates a gradual / multi-tier resolution of disputes. In this sense, in case where the extension of time and/or additional payment claims (or any similar claims) of the Contractor causes a dispute between the parties of the contract, FIDIC regulations provide that the disputes shall primarily be resolved by the "dispute adjudication board", as commonly referred to as the DAB (or, in some cases, dispute board / DB). As a matter of fact, in cases where the DAB process is not excluded, the operation of this process constitutes a precondition (condition precedent) for the commencement of arbitration. In that sense, for instance, if a party resorts to arbitration without first operating the DAB process, the arbitration process may be suspended or, in some cases, even rejected.
Therefore, in cases where the DAB process is not excluded from the scope of application, the dispute shall primarily be resolved by the DAB. That being said, as it is frequently witnessed in practice, the party who is dissatisfied with the decisions rendered by DAB (particularly the party that is found to be -partially or completely- unjust) objects to the DAB decision. To be more precise, the party who disagrees with the DAB decision issues a "notice of dissatisfaction" addressing the counterparty with respect to DAB decision. Indeed, per the FIDIC regulations, notification of the relevant notice of dissatisfaction to the counterparty of the contract in a certain period, appears as a precondition for the dispute to be moved to the next stage, namely the arbitration (and, in some cases, the amicable settlement process before arbitration).
In this sense, if the notice of dissatisfaction is not submitted in accordance with the terms and conditions stipulated under the FIDIC, it is not possible to bring the dispute to arbitration and the decision rendered by DAB would become binding upon the parties. For the very reason, notice of dissatisfaction that is to be submitted against the decision rendered by the DAB should comply with the conditions stated under the FIDIC and, moreover, it should cover certain points that should be considered for each dispute on case-by-case basis.
The minimum conditions to be covered in the notice of dissatisfaction are listed in the FIDIC. Accordingly, the notification must first be addressed to the other party of the contract. In other words, the notification should be forwarded to the counterparty of the contract, and not to the DAB committee. Moreover, in the relevant notification, it should be clearly stated that the notification is given in accordance with the provision of Clause 20.4 of FIDIC, where the notice of dissatisfaction is generally regulated. On an additional note, within the content of the notice, it would be useful for the notifying party to clearly indicate the intention to recourse to arbitration with respect to the dispute in hand; hence, notification of this intention to the counterparty is also stated in the FIDIC regulations. Finally, the content of the notification should cover the DAB decisions subject to the objection and the reasons for dissatisfaction. Yet, the reasons to be covered in the notice of dissatisfaction do not have to be too broad or in detail that would normally be included in the request for arbitration; in this sense, the reasons for dissatisfaction can be concisely explained with more generic expressions.
On the other hand, if either party is partially dissatisfied with the DAB decision, a notice of partial dissatisfaction against the DAB decision should be the preferred method. For instance, in case a couple of disputes are resolved under the DAB and if the party is dissatisfied with few of these decisions, it would be advisable to file a partial dissatisfaction against those decisions, rather than contesting to the whole DAB decision. The advantage of this is that, if the counterparty to the contract does not object to those decisions that have not been challenged, such (undisputed) decisions will become final and will not be subject matter of arbitration any further.
For all these reasons, in terms of protecting the rights of the contracting parties, it is critically important to analyse the decision of the DAB elaborately, to identify the decisions that will be disputed, and to object against only these decisions in the notice of dissatisfaction. However, the content of the notice of partial dissatisfaction should be prepared carefully and designed in the manner that will not lead to any loss of rights on a going forward fashion.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.