Dispute Resolution Boards*

A dispute resolution step is required in some construction and other commercial contracts. A dispute resolution board typically consists of three members (to avoid a “deadlock”), but, depending upon the nature and significance of the contractual relationship, the dispute resolution board might be a single individual. In determining the composition of the dispute resolution board the parties often desire to have subject matter experts who are familiar with the customs and practices in the industry involved. The decision of the board is usually binding on the parties pending the pursuit of de novo dispute resolution steps.

Even after the filing of a lawsuit, the parties may contractually agree to use a dispute resolution board to evaluate the merits of the dispute. In this setting, parties wanting an “early expert evaluation” of the merits of their dispute, in a very truncated proceeding and without extensive discovery, can obtain a very cost effective evaluation and even agree to be bound by the evaluation of the experts selected pending a final decision by the court or a jury. The decision of the Dispute Resolution Board is not introduced during a subsequent trial and has no precedential effect. It can also substitute for a presentation to a mock jury where the parties are interested in the opinions of experts in the field.

Indications for consideration:

  • The parties evaluate their respective cases (either on the issue of damages or liability) very differently but have sufficient knowledge and insight into their cases to make a presentation

  • The heart of the case involves a fairly narrow “industry practice,” question of law, or standard
  • The parties have significant concerns regarding the risks and uncertainties of protracted and expensive litigation and desire a preliminary evaluation from experts in the field
  • The parties desire a preliminary indication on the merits of their cases that may lead to an early resolution by other ADR techniques
  • The decision of the Dispute Resolution Board may establish an appropriate “status quo” or go forward agreement pending a complete resolution of the dispute by the court
  • One or more of the attorneys appears to need assistance in client control to effectuate an early resolution
  • The exposure or other interests in the litigation is sufficient to justify the costs

Timing

Although it is a tool that can be used at any stage of the litigation, it is most appropriate early in commercial, construction, or other types of business disputes where the parties have engaged in pre-dispute resolution steps and the issues involved in the litigation are fairly well understood. If the parties are interested in preserving an ongoing relationship, it is also a less adversarial and informal manner of reaching a resolution than the traditional litigation process.