Dispute resolution in the construction industry: a new procedure has been introduced

Disputes often arise during construction projects. In these cases the client and the constructor face a unique challenge: how to settle the dispute without delaying the project and without adding extra costs? For such disputes the Arbitration Board for the building industry in the Netherlands (Raad van Arbitrage voor de Bouw, hereafter: "RvA") has introduced a new procedure to address this problem: the Fast Track Binding Advice procedure (FT-procedure).

The FT-procedure sets itself apart by its short duration. Within two working days after notification of the dispute, a meeting will be organized during which procedural arrangements will be made. Parties receive a (semi-)binding decision from one or more advising-experts (arbitrators from the RvA) within a maximum of 9 weeks.

This decision is – in any case – binding until completion of the project. The decision is also binding after completion of the project if none of the parties objects to the decision within 14 days.

This makes the decision in the FT-procedure different from the decision of a judge or arbitrator in a kort geding (summary proceedings) in the Netherlands, against which an immediate appeal is possible. Even though a decision in kort geding will (sometimes) be given within the same amount of time, such an appeal may still lead to substantial delays during the construction process. In addition, during the FT-procedure the parties are able to furnish proof and the examination is wider than in a kort geding.

Therefore, the decision in a FT-procedure is more likely to deal with the substance of the dispute at hand, than a decision in kort geding. This is also aided by the fact that RvA arbitrators are experts in the building industry.

The costs of the FT-procedure are EUR 7.500,- in case of one arbitrator and EUR 12.500,- in case of three arbitrators, with the costs being evenly divided among both parties, irrespective of the outcome of the procedure.

For further information about the FT-procedure, please contact our construction lawyers.