May 19, 2024

Tullio Corradini

Trusted Legal Source

Dispute boards and the Olympic Games: A tried and tested method of dispute avoidance – Construction & Planning

Dispute boards and the Olympic Games: A tried and tested method of dispute avoidance – Construction & Planning

The Olympic Games are an economical, logistical and
legal feat that tests a nation’s ability to deliver quality
infrastructure in a timely manner on the world stage.

A host city is placed under immense pressure to have all the
necessary facilities, venues and other associated construction work
completed on time for the sporting events to commence.

Delay is not an option and every government decision is openly
scrutinised in the public eye. However, as all in the construction
industry know, undertaking major projects is fraught with risk in
terms of delay, defects, cost blowouts and a raft of other
unexpected consequences.

For an Olympic Games host city, such as Brisbane in 2032, it is
imperative that the suite of contracts it enters into to build the
venues, facilities, and infrastructure contain appropriate dispute
avoidance and resolution mechanisms to manage the risks, and
inevitable disputes, as and when they arise.

Based on a history of success, this Insight proposes that
dispute boards, in whichever form, are most appropriate for the
avoidance of disputes. They are also useful for resolving disputes
that cannot be avoided without the need to have recourse to formal
dispute resolution processes such as public litigation or
arbitration.

Part 1: Introduction

In Australia and internationally, dispute boards
(DBs) have been used successfully on a number of
construction projects. DBs, in their various forms, are an
alternative to the standard dispute resolution processes that
parties often include in their construction contracts.

Although used less frequently, DBs when established and utilised
appropriately, are a highly effective mechanism for avoiding (and
where necessary resolving) disputes, providing a project with the
optimal chance of successful completion within time and budget.

Importantly, DBs are a creature of contract. The contract
prescribes the number of neutral third party members on the panel,
the rules and procedures the panel will apply and follow, and the
scope of their role during the project’s lifetime.

In general, members of a DB meet to review the project’s
progress, provide recommendations to resolve issues (often in an
interim and non-binding manner) and proactively assist the parties
to avoid formal disputes. As will be discussed in Part 2 of this
Insight, the effectiveness of a DB hinges upon, amongst other
things, careful consideration of the structure of the DB, the
parties trusting and investing in the DB, and appropriately skilled
members being selected to the panel.

An array of different construction projects have utilised DBs.
According to the Dispute Resolution Board Foundation
(DRBF), there have been 107 projects totalling
$59.2 billion in Australia since 1987 that have used a DB in some format.

Within Australia use of DBs has increased significantly in the
past decade, particularly in New South Wales and Queensland.
Internationally, given the popularity of the International
Federation of Consulting Engineers (FIDIC)
contracts, which have DBs in its standard terms, DBs are more
commonplace.

Relevantly, for the purpose of this Insight, DBs were used in
the contracts for the London and Rio Olympic Games in 2012 and 2016
respectively. Part 3 of this Insight details how DBs functioned at
those Olympic Games and the unique way that they were designed to
be most effective. The use of DBs in London and Rio, and the
success achieved, is an appropriate platform against which to
consider their continued and future use in the Brisbane 2032
Olympic Games.

Since the International Olympic Committee named Brisbane as the
host of the 2032 Olympic and Paralympic Games in July 2021,
Queensland has and continues to carry out significant work in
preparation for the games. An Olympic Infrastructure Agency is
expected to oversee the developments that include rebuilding and
improving existing stadiums, and constructing five new
stadiums.

It is estimated that most of the capital
investment will occur in the second half of this decade, averaging
$800 million to $1.1 billion annually between 2027 and 2030.
Further, that it will cost almost $7 billion to run the games,
which will be privately funded. On its own, the city’s major
stadium, the Gabba, will cost $2.7 billion to be rebuilt so that it
is ready for the opening and closing ceremonies. Funding for the
Gabba will be paid for by the Queensland State government. There
are also plans for a new ‘Brisbane Live’
entertainment arena at Roma Street that will be built seating up to
18,000 people.

Work is already underway on the Brisbane Metro – a fully
electric, high-capacity train network linking the city to the
suburbs to make it easier to connect people with the sporting
venues hosting events. Victoria Park is also expected to be
transformed and a number of ‘Green Bridges’ will be
constructed to improve access and enhance movement around the city.
Ultimately,
the Brisbane 2032 Masterplan
will require cooperation from all
levels of government and the private sector to ensure a successful
Olympic Games.

Cooperation, collaboration and dispute avoidance in Olympic
Games projects is crucial. The Olympic Games are uniquely
challenging. They have an immovable deadline, require an inordinate
number of people and contractors to ensure completion, and are
scrutinised globally.1 To this point, Anika Wells, the
federal Sports Minister, has acknowledged the hard deadline
associated with Olympics Games projects. But, the challenge for
Brisbane in 2032 is made more complex by the current climate of the
construction industry, which is plagued by global supply chain
issues and the rising costs of materials and resources. It is in
that context that the developments in Brisbane are primed for
disputation.

Accordingly, Part 4 of this Insight explores the use of DBs as a
principal mechanism for dispute avoidance, and where necessary,
resolution in the 2032 Olympic Games in the various contracts with
the contractors that will ultimately be delivering the projects on
the ground.

Part 2: A snapshot of DBs: the ‘what’, ‘why’
and ‘how’

What are DBs?

A DB is a contractual mechanism for real-time dispute avoidance
and rapid dispute resolution. Professor Paula Gerber refers to DBs
as a kind of dispute avoidance process, which fundamentally act as
a “circuit breaker to prevent escalation of
conflicts”.2

There are various forms of DBs, including Dispute Resolution
Boards, Dispute Avoidance Boards (DABs), Dispute
Adjudication Boards and FIDICs Dispute Avoidance Adjudication
Boards to name a few. This Insight refers to the general umbrella
term of DBs throughout.

A customary DB comprises a panel, usually three, of neutral
third party experts appointed by the parties at the outset of the
contract. The DB members meet regularly during the course of the
project, irrespective of whether any dispute has been referred to
them, to review project progress and facilitate early resolution of
issues as and when they arise before escalation into formal
disputes.3

Depending on the nature of the role of the DB stipulated in the
contract, the parties can request the DB to provide informal
decisions during the project. The DB can also be available to
provide more formal recommendations, or decisions, on the likely
outcome of any dispute. The preference in Australia is for DBs to
provide interim binding decisions.4

Significantly, a DB’s primary focus is on dispute avoidance,
which is in contrast to processes such as mediation, expert
determination, arbitration, litigation and other forms of
alternative dispute resolution – each of these is reactive in
nature and deal with the resolution of crystallised disputes.

Why are DBs used?

The principal benefit to be gained from a DB is
the avoidance of formal disputes on a project through rapid
real-time decision making thereby maintaining project relationships
and progress of the works. It is believed that DBs have a positive
impact
on project budget and timely project completion. This is
particularly important on high profile construction and
infrastructure projects such as the Olympic Games that have an
immovable end date and budgetary constraints.

The DB process may be considered akin to mediation (save for the
crystallisation of a dispute) in that the panel members aim to
assist the parties in a ‘without prejudice’ manner to find
‘best for project’ outcomes.5 DBs are
advantageous in that they can enhance more productive communication
between the parties and promote the early resolution of issues
before each side becomes entrenched in their positions. The
evidence indicates that in the majority of cases, projects with DBs
have been completed under budget, finished on or ahead of time, and
avoided litigation or arbitration costs.

How can DBs be used most effectively?

The incorporation of a DB on a construction project must be done
by carefully considering the nature, size and location of the
project, and the parties involved. Only once the specific needs of
the project and parties are identified can a DB be properly
designed.

In particular, the choice of panel members is often one of the
critical factors in a DB’s success. It is imperative that the
parties have confidence, faith and respect in the panel members and
the DB procedures. In order for the DB to have the highest chance
of success, all parties must also put any adversarial tendencies to
one side and adopt a cooperative approach at the outset.

Depending on where the project is located, it may be necessary
for the panel members to have had experience in the particular
region and understand the local laws. Further, the panel members
may require specific legal or technical skills depending on the
nature of the project and the potential issues the parties may
anticipate arising.

Accordingly, for a DB to be most effective, the parties must
tailor the processes to meet the needs of the individual
project.

Part 3: Use of DBs on previous Olympic Games projects

2012 London Olympic and Paralympic Games

The 2012 London Olympic and Paralympic Games (London
Olympics
) involved multiple large-scale projects,
comprising venues (including the Olympic stadium, aquatics centre,
velodrome and velopark), transportation improvements (including
utilities, structures, bridges and highways) and broadcasting and
media. In total, the 55 major projects for the London Olympics were
completed pursuant to more than 100 contracts and a budget of
£9.3 billion.6

The chosen form of contract was the New Engineering Contract
(NEC3). The dispute resolution provisions provided
a stepped process which included two DBs in the form of an
Independent Dispute Avoidance Panel (IDAP) and an
adjudication panel (Adjudication Panel). There
were two separate panels due to concerns around an
adjudicator’s jurisdiction under the UK’s statutory
adjudication legislation and issues of enforcement. The Institution
of Civil Engineers, and other bodies assisted with appointing the
DBs.

The standing panels were funded as a project cost, and the
contractors covered the remaining costs associated with formal
referrals.7 If challenged, the final decision-making
tribunal was the Technology and Construction Court of England and
Wales.8

IDAP comprised 11 construction professionals (including the
chair, Dr Martin Barnes9) all with experience
in major projects, but with a breadth of varied expertise and
skills to address any type of issue.10 The members were
designated to specific projects in which they would dedicate
particular attention.

IDAP’s focus was on finding practical and logical solutions
to problems as they arose before they became time-consuming and
costly disputes.11 Regular meetings were held and there
was monitoring of the various projects. The DB process was designed
to be flexible so that it could be adapted to suit any particular
dispute and there were limited procedural rules.

At the time of implementing the IDAP for the London Olympics, Dr
Barnes stated that:12

“The innovative approach of
avoiding rather than resolving disputes is essential given the
unique challenges that the [Olympic Delivery Authority] and its
contractors face in delivering the London 2012 infrastructure and
venues, particularly the immovable end date.”

Disputes not capable of resolution through the IDAP consultation
process could be referred to the dedicated Adjudication
Panel.13 There were 12 members (including the chair,
Peter Chapman) and the Adjudication Panel was required to comply
with the UK statutory adjudication legislation.

It is reported that the DB process on the London Olympics worked
exceptionally well and was an effective vehicle for avoiding the
majority of disputes.14 Only two disputes required
adjudication, no court actions were commenced and, overall, the
London Olympic venues were delivered on specification, ahead of
time and within budget.

It was observed that having a dual panel system was particularly
effective so that conflict avoidance could be prioritised and left
unencumbered by the separate adjudication
process.15 Further, the informal nature of
the DB process, inclusion of early warning procedures and real-time
decision-making were credited as reasons for the London
Olympics’ success.

From the London Olympics experience, three trademarks of an
effective DB were identified:16

  • the client’s leadership;

  • the establishment of two panels beyond reproach, each with a
    set criteria to operate; and

  • a proper risk sharing based on appropriate principles.

Ultimately, the success of DBs in the London Olympics justified
their subsequent use in the construction contracts for the Rio
Olympic Games in 2016.17

2016 Rio Olympic and Paralympic Games

Similarly to the London Olympics, the 2016 Rio Olympic and
Paralympic Games (Rio Olympics) implemented a DB
panel for dispute avoidance and resolution across some 35
contracts. The primary justification for embracing DBs for the Rio
Olympics was to safeguard the timely completion of
installations.18

The Brazilian Government was responsible for the delivery of
city bid commitments, being the main venues and infrastructure, and
Rio 2016 was responsible for delivery of the games, including what
are described as the ‘overlay’ contracts.19 The
DB panel was introduced for the Rio 2016 contracts.

Experience in the implementation and use of DBs in Brazil was
limited at this time and importantly there was no established list
of local trained DB members. The DRBF was therefore involved in
assisting Rio 2016 in the formation and mechanics of the DB. The
DRBF created two panels, a panel of DB members from which each
party could select one DB member (the third was chosen by the
party-selected DB members), and a panel of DB chairs who would
chair the three-person DBs.

Bespoke DB rules were drafted based on principles from
ConsensusDocs 200.4 and 200.5 and were consistent with local laws.
These bespoke rules formed part of the contract between Rio 2016
and the individual contractors.

Key features of the DB panels were:20

  • a separate DB was established for each contract, which could be
    permanent or ad hoc with one or three members. The
    preference was a permanent or standing DB with three
    members;21

  • party-selected DB members were chosen from a list of trained
    and certified local members. The DB members were required to have
    undergone training under the Rio 2016 DAB Training Programme (run
    by the DRBF), be properly certified, and be fluent in Portuguese or
    Spanish. Either party had the right to reject a party selected
    member, although grounds for rejection were limited in scope;

  • DB chairs were also to be selected from the DB members list. DB
    members were chosen based on their familiarity with local law,
    geographic proximity to the Rio Olympics, previous DB experience
    and fluency in Portuguese or Spanish and English;

  • short timetables were in place to accord with the short
    programs for the procurement of the Rio 2016 projects to ensure
    that construction timelines were met. This included appointing the
    DBs at the outset of the contract, setting frequent DB site visits,
    and requiring rapid delivery of the DB’s opinions and
    decisions;

  • the DBs had the power to provide written advisory opinions when
    jointly requested. A formal referral of a dispute could be made to
    the DBs to obtain a binding decision. DB decisions were binding
    until overturned by arbitration;

  • operational assistance was provided by a DB Program Manager to
    help the parties in the initial establishment of the DBs, and
    thereafter procedural operation of the DBs. This was important
    given the short timetables and to provide consistency across the 35
    DBs; and

  • remuneration rates for the DBs were fixed as a daily rate and
    monthly retainer. DB fees were split equally between the parties
    and included administration charges and the DB Program Manager
    fee.

Use of DBs in the Rio Olympics was regarded as successful.
Ultimately the DBs were rarely used, however the existence of the
DBs motivated the parties to resolve their issues as they arose.
Accordingly, the aim of dispute avoidance was
realised.22 By also incorporating a degree of expediency
into the process, it gave the Rio Olympics the greatest chance of
avoiding delays in construction.

Significantly, use of DBs on the Rio Olympics raised the profile
of DBs in Brazil and has been regarded as the catalyst for adoption
of DBs into public works contracts.

Part 4: Key issues for the 2032 Brisbane Olympic and Paralympic
Games

The 2032 Brisbane Olympic and Paralympic Games (Brisbane
Olympics
) are less than 10 years away. As with any Olympic
Games projects, the focus is on building a legacy of success and
creating a lasting impact in Queensland following the conclusion of
the Brisbane Olympics.

An issue that should be front of mind during the planning and
strategic procurement phase is how disputes should be dealt with.
Disputes, as we all know too well, have the ability to cause
significant cost overruns and project delays. This is of particular
importance in the context of an Olympics project involving
substantial infrastructure and construction works over numerous
contracts, with an immoveable end date (extensions of time beyond
that date are not an option) and a limited budget funded from the
public purse.

It is against this backdrop that focus should be directed
towards dispute avoidance in the first instance. It is
evident from the discussion above regarding the London and Rio
Olympics, that the DBs established on these projects contributed to
the successful completion of these projects through limiting
disputation. It is suggested that establishing a DB for the
Brisbane Olympics could offer similar substantial benefits.

If the Brisbane Olympics are to follow suit and engage a DB,
there are a number of factors that will require careful
deliberation:

  • DB format

    Two separate panels were established for the London Olympics, one
    to deal with dispute avoidance and the other for determining formal
    disputes.23 In comparison, in the Rio Olympics the
    established panel had the dual function of dispute avoidance and
    determination. There are significant benefits to be gained by a DB
    adopting a dual function, including expedited high quality decision
    making given the DB’s intimate knowledge of the project and an
    element of satisfaction in any DB decisions given the professional
    relationship, and trust built between the parties and the DB
    members during the course of the project.

    There is also the issue of whether a three person standing DBs is
    preferred, or whether one person ad hoc DBs may be
    suitable for smaller contracts. Save in circumstances where
    disputes are of limited complexity and value, the preference should
    be towards three person standing DBs.

  • DB skills and experience

    This is a key characteristic in determining the success of a DB. It
    is imperative that the appointed DB members have the necessary
    technical and legal skills coupled with practical DB experience.
    This is vital so that the DB can carry out its duties to a high
    standard, and that the parties can trust the DB members in their
    analysis and decision making.

    The DRBF is well established and actively involved in Queensland.
    The DRBF has an established list of experienced DB members from
    which suitable members could be drawn. This is in contrast with the
    Rio Olympics where there was a lack of DB experienced candidates in
    the first instance.

  • Commitment to the DB process

    The Rio Olympics DB process applied to all underlay contracts. In
    the London Olympics use of the IDAP was recommended, but not
    mandatory, for all contracts. To facilitate the full potential of
    the DB, it is important to secure buy-in and participation to the
    DB process from the key project participants early on. Further, the
    parties must be confident in the DB and ensure that it has an
    ongoing working knowledge of the various projects and maintains a
    detailed understanding of progress and potential issues.[24]

  • Applicable DB rules

    The applicable DB rules will require careful consideration and
    where appropriate should be modified to suit the specifics of the
    Brisbane Olympics. Standard DB rules are often based on the FIDIC
    suite of contracts or the International Chamber of Commerce DB
    Rules. The DB rules on the Rio Olympics were specially tailored to
    suit the requirements of local laws.

  • Early DB involvement

    DBs are ordinarily established on execution of the contract.
    Consideration should be given to whether early
    appointment/involvement of the DB (or at least some members of the
    DB) would be beneficial. This may assist in developing the DB rules
    and the mechanics for the processes to be written into the various
    contracts.

  • Form of contract

    The London Olympics chose to use NEC3 as its standard form
    contact. NEC3 has a focus on early resolution of issues and early
    contractor involvement. Potential options for the Brisbane Olympics
    could include NEC4 ECC Option W3 which allows for a DAB, or
    alternatively a bespoke contract.

Part 5: Conclusion

Olympic Games projects are often described as accelerated
regeneration projects involving complex construction and
infrastructure contracts. Given that it is highly likely that
disputes will necessarily arise, focus should be directed towards
avoiding disputes before they crystallise and the parties become
entrenched in their positions. Drawing from the London and Rio
Olympics experience, it is clear that DBs are a vital element of
the dispute avoidance framework to prevent disputes derailing the
building and construction work required for the Olympics Games.

However, the inclusion of a DB must be done on a
project-specific basis. The success of any DB depends on the
quality of the members, location, nature and size of the project,
the parties involved, the degree of familiarity with DB processes
and the particular contractual procedures governing the DB. For the
Brisbane Olympics, assistance from local bodies such as the DRBF is
likely to be critical for the effective setup and operation of a
DB.

In addition to DBs, it is also essential that contracts are set
up properly at the outset in terms of commercial risk being owned
by the most appropriate party, early engagement of the supply chain
and a commitment to fostering a collaborative culture.

Footnotes

1 Paula Gerber and Brennan Ong, Best
Practice in Construction Disputes: Avoidance, Management and
Resolution
(LexisNexis Butterworths, 2013) 198.

2 Paula Gerber and Brennan Ong, ‘Best
Practice in Construction Disputes’ (2014) 80(3)
Arbitration 346, 347.

3Christopher Miers, ‘Real Time Dispute
Resolution in Rio de Janeiro … since you cannot delay the Olympic
Games’ (2015) 31(7) Construction Law Journal 399,
399.

4 For example, the decision would be binding
unless challenged by a party within 30 days of the DB’s
decision.

5Donald Charrett, ‘Dispute Boards and
Dispute Resolution’ (2013) 25(3) Australian Construction
Law Bulletin
59, 59.

6 Paula Gerber and Brennan Ong, Best
Practice in Construction Disputes: Avoidance, Management and
Resolution
(LexisNexis Butterworths, 2013) 197.

7 Wolf von Kumberg, ‘The Use of Conflict
Avoidance Boards in Green Projects: A Conflict Avoidance Blueprint
for Global Environmental Sustainability’ (2022) 23(1)
Business Law International 45, 55.

8 Richard McLaren, ‘2012 London Olympics:
Dispute Resolution in a Commercial Context’ (2012) 13(2)
Business Law International 123, 135-6.

9 President of the Association for Project
Management and the original author of the NEC.

10 Paula Gerber and Brennan Ong, Best
Practice in Construction Disputes: Avoidance, Management and
Resolution
(LexisNexis Butterworths, 2013) 200.

11 Nael Bunni, ‘What has History Taught us
in ADR? Avoidance of Dispute!’ (2015) 81(2)
Arbitration 176, 179.

12 Richard McLaren, ‘2012 London Olympics:
Dispute resolution in a commercial context’ (2012) 13(2)
Business Law International 123, 135.

13 Nael Bunni, ‘What has History Taught us
in ADR? Avoidance of Dispute!’ (2015) 81(2)
Arbitration 176, 179.

14 Peter Rosher, ‘The Application of
Dispute Boards in the Field of Satellite Projects’ (2016) 2
International Business Law Journal 119, 119; Murray Armes,
‘Everybody has Won and all must have Prizes: How the Dispute
Board process could improve UK adjudication’ (2011) 27(7)
Construction Law Journal 552, 557; Nael Bunni, ‘What
has History Taught us in ADR? Avoidance of Dispute!’ (2015)
81(2) Arbitration 176, 179.

15 Wolf von Kumberg, ‘The Use of Conflict
Avoidance Boards in Green Projects: A Conflict Avoidance Blueprint
for Global Environmental Sustainability’ (2022) 23(1)
Business Law International 45, 56.

16 Nael Bunni, ‘What has History Taught us
in ADR? Avoidance of Dispute!’ (2015) 81(2)
Arbitration 176, 179.

17 Peter Rosher, ‘The Application of
Dispute Boards in the Field of Satellite Projects’ (2016) 2
International Business Law Journal 119, 119.

18 Dante Figueroa, ‘Dispute Boards for
Infrastructure Projects in Latin America: A New Kind on the
Block’ (2017) 11(2) Dispute Resolution International
151, 167.

19 Christopher Miers, ‘Real Time Dispute
Resolution in Rio de Janeiro … since you cannot delay the Olympic
Games’ (2015) 31(7) Construction Law Journal 399, 400.
The overlay contracts for the delivery of the games were mostly
temporary constructions such as the media building, pools, an
arena, ramps and decking, barriers, lighting and signage, bridges,
cranes, water and waste treatment, stands and seating.

20 Augusto Figueiredo, ‘Session 6:
Evolution of Dispute Board Practices’ (Conference PowerPoint,
DRBF Annual International Conference, 22-23 May 2015); Dante
Figueroa, ‘Dispute Boards for Infrastructure Projects in Latin
America: A New Kind on the Block’ (2017) 11(2) Dispute
Resolution International
151, 167; Christopher Miers,
‘Real Time Dispute Resolution in Rio de Janeiro … since you
cannot delay the Olympic Games’ (2015) 31(7) Construction
Law Journal
399, 401.

21 Ultimately budget cuts meant that there was
a shift from a standing panel to ad hoc DBs.

22 Ann Russo, ‘The Use of DABs for
Olympics and Major Sporting Events’ (Conference PowerPoint,
DRBF Regional Conference, Brisbane, 3 November 2022).

23 This was primarily due to issues around
compliance with statutory adjudication provisions but is reported
to have worked effectively.

24 Paula Gerber and Brennan Ong, Best
Practice in Construction Disputes: Avoidance, Management and
Resolution
(LexisNexis Butterworths, 2013) 203.

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.





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