Arbitration in FIDIC Contracts and Mechanisms for the Settlement of Disputes Arising Therefrom
Keywords:
: FIDIC, international arbitration, dispute resolution mechanisms, Dispute Avoidance/Adjudication Board (DAAB), enforcement of arbitral awardsAbstract
Arbitration in FIDIC contracts is recognized as one of the most efficient dispute resolution mechanisms in international construction projects; a mechanism that, alongside institutions such as the Engineer, the Dispute Adjudication Board, and the Dispute Avoidance/Adjudication Board, establishes a multi-tiered and dynamic framework for the management of claims and disputes. This study, drawing upon theoretical approaches derived from contract economics, contractual governance, and alternative dispute resolution (ADR) theories, provides a comprehensive analysis of FIDIC mechanisms and their associated legal and institutional challenges. The findings indicate that the inherently incomplete nature of construction contracts and the existence of asymmetric information between the contracting parties strengthen the role of dispute boards as a “contract-completing” institution, and their decisions frequently prevent disputes from escalating to final arbitration proceedings. Nevertheless, challenges such as conflicts of interest involving the consulting engineer, divergences in the recognition and enforcement of interim decisions within national legal systems, and the absence of updated arbitration legislation in jurisdictions such as Iran continue to constitute significant obstacles to the effective operation of these mechanisms. By examining the interaction between dispute boards and arbitration, analyzing enforcement barriers, and evaluating the standards introduced by the 2017 FIDIC reforms, the present article proposes a set of legislative and institutional solutions aimed at enhancing transparency, neutrality, and the enforceability of decisions. The results of the study may contribute to improving the quality of contractual governance, reducing transaction costs, and enhancing the efficiency of dispute resolution in international construction projects.
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