Dispute Review Boards

Definition

Dispute review boards (DRBs) are independent entities established to resolve disputes that arise during the execution of contracts, particularly in construction and large-scale projects. They provide a mechanism for timely and cost-effective resolution by offering recommendations and decisions on disputes before they escalate to litigation or arbitration. By having a DRB in place, parties can maintain their working relationship and avoid the disruptions that often accompany formal legal proceedings.

5 Must Know Facts For Your Next Test

1. DRBs are typically composed of professionals with expertise in the relevant industry, such as construction, engineering, or law, ensuring informed decision-making.
2. The use of DRBs is especially common in large-scale infrastructure projects, where the complexity and size of contracts can lead to numerous disputes.
3. Parties usually agree on the establishment of a DRB at the beginning of a project, outlining the procedures for selecting members and addressing disputes.
4. DRB recommendations are generally non-binding unless specified otherwise in the contract, allowing parties to decide whether to accept the resolution or pursue other legal options.
5. Incorporating DRBs into project agreements can significantly reduce the time and costs associated with dispute resolution compared to traditional litigation.

Review Questions

• How do dispute review boards contribute to maintaining relationships between parties involved in international business contracts?
  • Dispute review boards help maintain relationships by providing a structured yet informal process for resolving disputes before they escalate into more serious conflicts. By addressing issues promptly and offering expert recommendations, DRBs prevent misunderstandings from damaging business relationships. This proactive approach allows parties to focus on collaboration rather than becoming embroiled in adversarial legal battles.
• Compare and contrast dispute review boards with arbitration as methods for resolving disputes in international business.
  • Dispute review boards and arbitration serve similar purposes in resolving disputes, but they differ significantly in their processes and outcomes. DRBs operate during project execution and provide recommendations to prevent disputes from escalating, while arbitration is a formal process that results in binding decisions after a dispute has arisen. Additionally, DRBs promote ongoing communication and collaboration between parties, whereas arbitration can create a more adversarial atmosphere.
• Evaluate the effectiveness of dispute review boards in reducing litigation costs and time delays in international construction projects.
  • Dispute review boards have proven effective in reducing both litigation costs and time delays in international construction projects by addressing disputes early in their development. By providing timely recommendations based on industry expertise, DRBs allow parties to resolve issues without resorting to lengthy legal proceedings. This not only saves money but also keeps projects on schedule, fostering a more cooperative environment that benefits all stakeholders involved.

Related terms

Arbitration: A method of resolving disputes outside of court, where an impartial third party makes a binding decision based on the evidence and arguments presented by both sides.

Mediation: A voluntary process in which a neutral third party helps disputing parties communicate and negotiate a resolution without making binding decisions.

Contractual Agreement: A legally binding arrangement between two or more parties outlining their rights and obligations in relation to a particular project or transaction.