Arbitration and the Arbitrator

Arbitration is a process for resolving disputes that arise between two parties — usually the project owner and one or more contractors— in front of some third party mutually accepted by the disputing parties as final judge. The idea is to resolve disputes relatively quickly and far less expensively than going through the civil courts.

In managing disputes arising in the course of engineering projects, an arbitrator in addition to being unbiased in the eyes of the disputing parties must also possess or be able to summon the advice of technical engineering expertise, including perhaps legal expertise as well, pertaining to the particular technical area involved. This role is usually filled by a consulting engineer, who conducts both the technical and administrative phases of an arbitration.

FIDIC contracts play a vital role and give power to the consultant engineer when there is a requirement for the contractor. The idea here is to take the first and important step of attempting to resolve the problem before it goes to arbitration.

According to FIDIC’s standards, a contract must provide for an arbitration process of some kind. Typically, arbitrations are concluded by an adjudicating body consisting of three arbitra­tors chosen by each party. These two select the third arbitra­tor, who conventionally serves as president of the commission. International contracts must define the nationality of the third arbitrator as the decision will be crucial in the case of a deadlocked vote of the rest of the arbitral tribunal. Additionally, in the case of disputes in international contracts, the contract must define who will be the third arbitrator, in case the parties fail to select one. Appointment authority comes from the management of arbi­tration in private institutions such as the International Chamber of Commerce.

Within 84 days [12 calendar weeks] from the date for receiving a request from either an owner or contractor, a consultant engineer should be appointed to initiate arbitration of their dispute. The owner and the contractor are to submit their acceptance or rejec­tion of the consulting engineer’s decision in writing. If neither party submits an appeal from the decision within 70 days [10 calendar weeks], it is considered final and an arbitral tribunal is to take the decision of the consultant engineer into account.