CURRENT PROPOSALSFOR FURTHER INTRODUCTIONOF DISPUTE BOARDS WITHIN

THE CONSTRUCTION INDUSTRYIN ROMANIA

1. BACKGROUND

Since 1993, Romania is receiving an important infusion of capital in transport and environmental sector, in order to upgrade its infrastructure in view of the forthcoming accession to the EU.

The main sources of the funds are:

• The International Financing Institutions (EIB, EBRD, World Bank, JBIC, etc)

• The European Commission through PHARE and ISPA programmes

The conditions imposed by the above Financing Institutions were, among others, the use of their procurement rules of which, of particular interest being the use of FIDIC Conditions of Contract (Fourth edition 1987 reprinted in 1988 and 1992, and later the First Edition 1999)

2. EVOLUTION OF THE SETTLEMENT OF DISPUTES CLAUSES IN THE PAST

The FIDIC 1987 does not provide for a DAB, but indicates that all disputes shall be assessed by the Engineer, as per Sub Clause 67.1 [Request for Engineer’s Decision].

According to Sub Clause 2.6 [Engineer to act impartially], the Engineer was deemed to act impartially. However in practice it was noted that such condition was rather difficult to be fulfilled. Consequently, many Engineer’s decisions resulted to be biased or inadequate, which generated complex disputes between the Parties and also jeopardized the sound implementation of many projects

3. EVOLUTION OF THE SETTLEMENT OF DISPUTES CLAUSES TO DATE.

All contracts using FIDIC 1999 Conditions of Contract, have provisions for a Dispute Adjudication Board.

In Romania, DAB is believed to facilitate the decision making task of the various Employers. The DAB does not provide a decision factor but merely balanced solutions.

The experience of using DAB in Romania, stand as factual evidence for proving the following:

• The financial and time related resources involved in solving the disputes are less than in the case of arbitration,

• DAB’s decisions are impartial and objective,• The standards in terms of construction

management were significantly improved.

4. EVOLUTION OF SETTLEMENT OF DISPUTE CLAUSES IN FUTURE

National Authority for Regulating and Monitoring of Public Acquisitions

• specialized body of Central Public Administration under the coordination of the Romanian Government

• main objective: to establish, promote and implement a dynamic and modern public acquisition policy

• promotes a new law regarding public acquisitions and prepares the methodological norms for the application of the same

The reform of the public procurement system with relevance to the years

2005 – 2007

• Governmental Strategy• Acknowledges the main disadvantages of the

past system: e.g. the ad-hoc derogation from the legal provisions regarding public procurement, in respect of the awarding of contracts of a major importance

• The fundamental principles - legislative compatibility with the

Aquis Communitaire - the embracement of the

European Union practices in the public procurement field

Legislative projects

• laws and regulations in order to harmonize the Romanian system of legislation with the European regulations

• modifications and replacement of the existing laws and the implementation of a concordance table with the terms of the EU Directive 18/2004

Future Conditions of Contract

• Probably will comprise the European contracting principles expanded on a Romanian framework

• Will be developed considering the factors of an economical or social nature

• Will cover the lacunas created until now by the gap between the Romanian contracts and the new EU approach

• Will probably establish a link and a correspondence between FIDIC and Romanian law

National Council for Claims’ Solving

• independent body • the main goal: to solve all the disputes arising from the

bidding procedure • will not have jurisdiction over the disputes arising

between the Parties after the signature of the Contract

DAB Place in the New Adopted Contracts for Construction

In this state of affairs, taking into account the proven benefits of having a DAB in place during works contracts, and also mindful of the general reluctance of public officials to make complex decisions regarding public money, it is possible that the Conditions of Contract to be adopted probably beginning of 2007 in Romania, might include provisions for a DAB procedure similar to those within FIDIC 1999 Red Book Conditions of Contract

CONCLUSIONS

• Aim of Romanian new approach in public procurement sector will search to establish fair rules regarding procurement and execution of works contracts

• The uncontested benefits of DAB will be probably recognized by establishing, legally, the use of DAB in Romania

• In dispute resolution speed, economy, impartiality and

fairness will be the paramount considerations

THANK YOU