This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.
The risks of time and cost overruns, resulting in protracted unresolved disputes, affect the bankability of infrastructure projects. While the practice of constituting a dispute board (“Dispute Board”) for each project has gained some traction in international standard forms, their application has not been consistent, given that they are typically appointed and administered by the stakeholders themselves.
On 23 October 2018, the Singapore Infrastructure Dispute-Management Protocol (“SIDP”) was launched following deliberations of a working group convened by Singapore’s Ministry of Law. We set out salient features of the SIDP and its potential application in managing and resolving disputes during the life cycle of the project.
Appointment of a Dispute Board
The SIDP is an opt-in protocol tailored for projects of more than S$500 million in value, and is easily incorporated using a standard clause provided for in the Appendix to the protocol. SIDP’s key feature is the appointment of the DB at any point in the project life cycle assisted by an authorized appointing body (“AAB”) which is presently the Singapore International Mediation Centre or the Singapore Mediation Centre. Notably, there is flexibility in the appointment of the DB:
- The request to appoint the DB may be made at any time by the parties jointly or singly;
- Parties have the flexibility to choose a DB comprising 1 to 3 expert professionals; and
- The DB members can be chosen by agreement or failing which appointed by the AAB.
It is recommended that the SIDP be adopted from project inception as a collaborative tool to enable early detection and efficient resolution of differences and disputes. This focus on collaboration is in-line with recent amendments to the NEC4 and FIDIC standard form contracts. Arguably, the SIDP goes a step further, by having expert professionals in the form of the DB oversee and provide guidance to the parties should the need arise.
For instance, clause 4.1 of the SIDP provides that the DB shall commence its work by meeting the parties to establish a schedule of DB Meetings and Site Visits, during which the DB shall review the performance of the contract and assist the parties in avoiding or resolving their differences and disputes.
Formal Dispute Resolution
Alternatively, clause 6 provides for a party to refer a dispute to the DB, and apply for the dispute to be resolved either through:
- Rendering of an Opinion by the DB; or
- Determination of the DB.
All 3 modes of resolving disputes have binding effect on the parties:
- Any Mediated Settlement Agreement reached is binding on the parties.
- Any part of an Opinion not duly objected to is binding, but not final, and must be complied with fully unless and until an arbitral tribunal or court decides otherwise.
- Unless objected to, a Determination becomes final and parties agree not to contest such a Determination.
In addition, the DB has relatively broad powers, such as requiring parties to produce any documents or materials relevant in relation to the discharge of its functions, examine the parities, their representatives and witnesses, appoint experts, and to determine application for interim or provisional relief in respect matters relating to the contract.
The Asian Development Bank has projected that US$1.7 trillion will be spent on infrastructural project from 2016 to 2030. The inherent bankability issues for these projects continue to present challenges for all stakeholders. It is hoped that the implementation of the SIDP will improve the bankability of these projects. However, its success will depend on the willingness of stakeholders to first agree to establish a DB which subscribes to the SIDP.