Adjudication is an alternative dispute resolution method primarily used during planning and implementation phases of major projects. It is mainly used in the construction industry.

An independent expert (adjudicator) or a panel of experts consisting of three members (Dispute Adjudication Board - DAB) is commissioned to resolve conflicts that arise during a project and to issue provisionally binding decisions.

The aim of adjudication is to resolve disputes at an early stage before they develop into time-consuming and costly litigation. Experts are already deployed at an early stage of a project and accompany the project throughout its entire duration. If disputes arise between the parties in the course of the project, the experts can render a provisional and binding decision within a relatively short period of time. This way, delays due to disputes that would slow down the progress of the project can be avoided. However, a court or an arbitral tribunal can annul or modify the decision.

Adjudication should already be agreed upon as a method of dispute resolution when a contract is concluded. The DIS recommends combining an adjudication clause with an arbitration clause.

Advantages of adjudication

Adjudication offers many advantages:

  • A project-accompanying dispute resolution method for parties wishing to settle disputes at an early stage to ensure the success of a (construction) project.
  • The possibility for experts to resolve disputes quickly and professionally, thereby reducing the risk of delays or failure of a (construction) project.
  • Prevention of costly legal disputes associated with contractual penalties, arbitration or state court proceedings.
  • Parties can select experts with the necessary professional skills as adjudicators. The DIS may propose names of potential adjudicators to any party upon request.

DIS Adjudication Process

The party wishing to initiate project-accompanying adjudication proceedings shall notify the other party in writing of the nomination of an adjudicator. A copy of this notification shall be sent to the DIS Main Secretariat. Upon receipt of this copy by the DIS Main Secretariat, the adjudication proceedings commence.

Depending on the agreement of the parties, adjudication proceedings are conducted either by a sole adjudicator or by three adjudicators (Dispute Adjudication Board – DAB).

The parties may freely choose and nominate the sole adjudicator or, in case of adjudication with three adjudicators (DAB), two party-appointed adjudicators. In case of three adjudicators, the two party-appointed adjudicators jointly nominate a chairman. If the parties fail to nominate a sole adjudicator or two party-appointed adjudicators within one month, each party may request the nomination of an adjudicator by the Appointing Committee of the DIS. The DIS may propose names of potential adjudicators to any party upon request.

The parties shall ensure that each adjudicator receives a complete text of the original contract and, where appropriate, further information on the project. The sole adjudicator, or the DAB, and the parties must agree on a first meeting to enable the adjudicator/the DAB to obtain a deeper understanding of the project and to determine the details essential to the adjudicators’ work. Regular meetings between the parties and the adjudicators shall usually take place every six months and, if possible, at the project site.

Unless otherwise agreed, the parties shall send written reports on the project’s progress to each adjudicator on a regular, monthly basis.

In principle, the adjudicator(s) shall be active for the entire duration of the project. The parties may include a time limit in the Adjudicator Contract. Otherwise, the parties can jointly decide when the activities of the DAB as a whole or of individual adjudicators will be terminated.

In the event of a dispute, dispute-related adjudication proceedings can be conducted. The decision of the sole adjudicator or the DAB must be justified in writing. Decisions shall be issued as soon as possible, usually within four weeks after the oral hearing or after receipt of the last written submission. The decisions are binding. Their binding effect ceases to apply if and to the extent that they are set aside or amended by a decision of an arbitral tribunal or by a decision of a state court.

Costs of Adjudication Proceedings

The costs of adjudication are calculated based on the Table of Costs for DIS Adjudication Proceedings.

The fee for the nomination of an adjudicator by the Appointing Committee of the DIS is €250 per adjudicator. The fee for the decision on the appointment or challenge of an adjudicator is also 250 €.

The adjudicators’ remuneration consists of a basic monthly fee and a variable fee on an hourly basis. The hourly rate of the variable fee is €300. The basic monthly fee of an adjudicator is eight times the hourly rate. The fees are subject to the applicable VAT.

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