Dispute Resolution Boards: appointing DRB members and encouraging the diverse next generation of board members

Simple modifications could effect significant change 6 min read

The common practice of parties who appoint members to a Dispute Resolution Board (DRB) is to nominate people who have prior experience serving on a DRB. This significantly limits the pool of candidates who might be appointed.

In this Insight, we discuss the contractual structure governing the appointment of DRB members, how members are usually appointed, and possible modifications to the appointment process to reduce barriers for new entrants and increase the diversity of candidate pools and, consequently, DRBs.  

Key takeaways

• The structure of the DRB is agreed by the parties at the time of negotiating the construction contract and can be as flexible in design as the project and parties require.
• A DRB is usually comprised of a panel of three senior professionals within the construction industry who have experience and relevant specialist knowledge (although, for smaller projects the DRB can be comprised of one member). The DRB is usually established by each party appointing a member. The two selected members then jointly appoint the third member as chair.
• In practice, parties tend only to consider candidates who have previous experience as DRB members. As a result, the pool of candidates is often limited to experienced arbitrators, mediators and other construction industry professionals, who are almost exclusively male.
• There are a number of ways in which selection processes can be improved for candidates to encourage a more diverse makeup of DRBs (including with respect to gender).
• A straightforward way to improve the process is by the DRB members themselves adopting different practices. That is, given the DRB chooses the chair and not the parties, there is significant scope for the DRB itself to expand the pool of experienced members through that appointment.

What is a DRB?

DRBs are a dispute avoidance and resolution mechanism designed to avoid and/or resolve disputes between parties to a construction contract. This may occur informally or formally, by the DRB issuing advisory opinions or determinations on issues that have either been referred by the parties, or raised by the DRB for consideration.

Because of the associated expense, DRBs are usually only appointed on major projects.

DRBs have been adopted by the construction industry with the aim of:¹

• reducing litigation;
• ensuring projects run on time and within budget;
• reducing the prospect that disputes continue post project completion; and
• promoting a collaborative approach between the parties.

The structure of the DRB is agreed by the parties at the time of negotiating the construction contract and can be as flexible in design as the parties require.

Ordinarily a DRB is comprised of a panel of three senior professionals within the industry who have extensive experience and relevant specialist knowledge (but can be comprised of a single individual on smaller projects).

Selecting DRB members

For a three-member panel, the DRB is usually established by each party appointing a member, who then jointly appoint the third member as the chair.

The construction contract or DRB agreement will usually prescribe the minimum requirements of DRB members (ie the member needing to have a minimum number of years' experience in the construction industry and/or relevant qualifications in certain fields such engineering, law or business). The minimum requirements usually set a low threshold to allow the parties to select candidates from a wide pool.

However, in practice parties tend to only consider candidates who have previous experience as a DRB member on other large projects.

While this is understandable given the DRB has significant powers and there is risk involved in getting the selection process 'wrong', as a result, the pool of candidates is often small and limited to a group of experienced DRB practitioners. Furthermore, due to the historical gender imbalance that persists in the construction and legal industry (discussed below), these candidates are almost always male. For example, records of the Dispute Resolution Board Foundation (DRBF) indicated that out of 2191 projects that had used DRBs to 2012, only 18 had female DRB members (or fewer than 1%).²

How can someone obtain experience as a DRB member without having prior experience?

Where a candidate does not have prior experience, usually they will be appointed:

• on the basis of having particular expertise that is seen as desirable for the project;
• due to the unavailability of other candidates with the preferred, prior experience;
• on the basis of a perception (misguided or not) by the appointing party that the individual will be favourably disposed to that party (eg a perception of a candidate as being 'contractor friendly'); or
• as chair, by the two nominated DRB members agreeing to appoint someone who has not previously held a DRB role. However, this rarely occurs in practice.

What has contributed to the gender imbalance on DRBs?

The construction industry is, and has historically been, a male-dominated industry—87.3% of the workforce is currently comprised of men.³

Those women who work within the industry do not commonly work onsite or in senior management, but rather tend to hold administrative or HR roles.⁴

This gender imbalance is a contributor to DRB members being almost exclusively male. The broader, historical gender imbalance in engineering, the legal industry (particularly at the Bar) and in the judiciary is likely another contributor.

Similar to continuing initiatives to increase female representation and participation in Parliament, on company boards, in STEM fields and at the Bar (among other areas), increasing the gender diversity of DRB appointments is also an important objective.

How can the selection processes for candidates be improved to encourage new entrants and/or a more gender diverse makeup of DRBs?

Where the DRB comprises two party-selected members who appoint a chair, the following steps can be taken to encourage a more diverse makeup of DRBs.

Include female candidates in proposed lists for appointment to the DRB

Parties and their legal representatives can take a proactive approach and ensure at least one female is listed as a potential candidate for appointment, even without any prior DRB experience, as well ensuring the candidate list is diverse in a broader sense.

The DRBF has already recognised the need for diversity on DRBs through its diversity and inclusion statement,⁵ which provides that the DRBF will 'take the steps reasonably available to ensure that, wherever possible…Lists of Dispute Board members or chairs the DRBF provides to parties, counsel, in-house counsel or others include a fair representation of diverse candidates'.

The DRBF also encourages diversity in parties' appointments to DRBs, as well as encouraging senior and experienced DRBF practitioners to 'support, mentor/sponsor and encourage diverse DRBF members' to pursue DRB appointments.

Region 3 of the DRBF, which is the Australia & New Zealand chapter of the DRBF, has also recently ratified a similar statement and established a Diversity and Inclusion Working Group to identify and support the actions set out in the statement.

Include a requirement in the construction contract that at least one DRB member must not have prior DRB experience and/or must be female

Without restricting the parties' choice of candidates, it is open to the parties to agree that:

• at least one DRB member must not have prior DRB experience; and/or
• at least one female DRB member is to be appointed.

This could be achieved by prescribing in the relevant contract that the DRB members appoint a new or female candidate as the third DRB member, in circumstances where both party-appointed candidates are experienced or male.

Finally, even where there is no contractual stipulation, a responsibility falls upon DRB members appointing the chair to consider candidates without prior experience—with the inevitable outcome that upon such an appointment occurring, the pool of experienced candidates will expand.