Dispute Review Boards: An New Asian Dispute Resolution Tool? - Part 1 An Overview

In this continuing series about different forms of dispute resolution commonly found in International construction contracts, this article in Part 1 seeks to give a general overview about the nature of Dispute Review Boards. In Part 2, we will examine the use and success of Dispute Review Boards in construction projects in China.

Now, more than ever, the global construction industry is under enormous financial pressure. A lack of adequate cash flow towards the contractor and professional team is a major reason that construction projects fail in tough economic times. As a result of this initial cash flow problem, there is even harder cash flow for the sub-contractors and specialist sub-contractors further down the supply chain and their ongoing projects grind to a halt.

Despite the tough time undergone by global construction industry, there will still be much activity in the Chinese domestic market in the near future. In total, spending in the Chinese construction industry will grow 9.7% annually until 2010, with non-residential buildings and infrastructure remaining the most significant sectors.

Furthermore, Chinese construction companies sphere of influence on the international construction stage continues to grow. Increasingly these companies will become exposed to the growing risks of contractual disputes in international construction projects where the need for flexible, less adversarial dispute resolution procedures, other than court proceeding and arbitration, to facilitate smooth project flow is becoming ever more prevalent.