FAQ

What is adjudication?

Adjudication is a method for the swift resolution of disputes in complex projects, such as construction. A neutral expert (adjudicator) or Dispute Board accompanies the entire project, helping to prevent conflicts and issuing binding conclusions if disputes arise.

If ongoing oversight by a Dispute Board is unnecessary, but a technically complex issue needs quick resolution, an ad hoc Dispute Board can be set up to address a specific dispute.

The primary goals of adjudication are to:

• Avoid delays in work.
• Save time and money.
• Ensure the uninterrupted progress of the project.

What are the differences between the types of Dispute Boards?

The rules of adjudication provide for three types of Dispute Boards:

1. Dispute Review Boards (DRB)
   • Purpose: The board helps prevent and resolve disagreements at an early stage before they escalate. If disputes cannot be avoided, the board issues binding recommendations.
   • Conclusion: Recommendations become binding and final after 30 days unless a party objects. If a party raises objections within 30 days, the recommendation need not be followed.
   • When Used: Typically, in long-term projects where various disagreements may arise throughout the project.

2. Dispute Adjudication Boards (DAB)
   • Purpose: The board also helps prevent and resolve disagreements. It is selected when parties prefer a stricter approach to ensure conclusions are not arbitrarily ignored.
   • Conclusion: Binding immediately upon issuance. Parties must comply even if they disagree.
   • When Used: In projects where delays are unacceptable.

3. Ad Hoc Dispute Boards
   • Purpose: Created solely to resolve a specific dispute and usually dissolved afterward. Ad hoc boards do not oversee projects or perform preventive functions.
   • Conclusion: Like a DAB, the decision is binding immediately upon issuance.
   • When Used: When a dispute needs to be resolved as quickly as possible.

What conclusions are issued following adjudication?

Conclusions are issued in the form of recommendations or decisions. The main differences are as follows:

How long does adjudication take?

Adjudication begins at the start of the project and continues throughout its duration, including regular monitoring and consultations. When a specific dispute arises, resolving it typically takes 40–60 days. This timeframe applies to the dispute resolution process itself, not the overall functioning of a permanent board.

In ad hoc adjudication, the dispute resolution process usually takes no more than two months.

What if the conclusion is not voluntarily implemented?

If one party fails to comply with a binding conclusion, the other party may bring the matter to court or arbitration. The court or arbitration will not re-examine the adjudicator’s conclusion but will address the failure to comply and the resulting liability.

Potential claims in such proceedings may include:

• Specific performance: Requiring the defaulting party to fulfill the actions mandated by the Dispute Board’s conclusion.
• Damages or monetary sanctions: Compensation for non-compliance with the conclusion, which constitutes a breach of the contract as amended by the adjudication process.

What if a party disagrees with the conclusion?

If a party disagrees with the conclusion, they must notify the other party of their refusal to comply within the prescribed time. In such cases, the dispute can be referred to court or arbitration for de novo review.

The Dispute Board’s conclusion may be used as evidence but does not carry pre-established legal weight.

What is the legal effect of the conclusion?

The conclusion is binding on the parties, similar to a contractual obligation, the terms of which is determined by a third party (the Dispute Board). It can:

• Establish a breach of obligations and impose liability.
• Amend the terms of the contract.

In Russia, there are no restrictions on allowing a third party to determine contractual terms, enabling conclusions to be treated as equivalent to supplemental agreements.