1. DRBF 6th annual International Conference 6-7 May 2006 - Budapest, Hungary Ladies and Gentlemen, dear Guests, First of all, I would like to thank the organizers of this conference for your kind invitation that permits me to participate to this prestigious conference in my capacity as General Director of Romanian National Company for Motorways and National Roads of Romania.

2. The main topic of my presentation refers to “The Experience of the Romanian National Company for Motorways and National Roads with regards to the Dispute Adjudication Board advantages and disadvantages” The Dispute Adjudication Board, for a work contract in Romania, was introduced for the first time, via the First edition of FIDIC 1999 Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer, in 2002 and adopted by the Romanian National Company for Motorways and National Roads for contracts financed through ISPA.

3. Until then, the DAB had never been used in Romania, although in 1996 FIDIC introduced a Supplement to its Conditions of Contract for Works of Civil Engineering Construction, fourth edition, 1987, which provided also for a Dispute Adjudication Board consisting of either 1 or 3 three persons. In 2002, after the first contracts using the General Conditions of Contract according to FIDIC 1st edition 1999 (Red Book) were signed, there have been made all the necessary arrangements in order to appoint various Dispute Adjudication Boards.

4. In one particular case regarding the Contract for the Construction of the City of Pitesti By Pass, co-financed by EBRD under the old FIDIC Conditions of Contract, it has been appointed a Dispute Resolution Board. We now intend appointing DABs for all contracts financed by EIB for the roads rehabilitation programme, which still adopt the old FIDIC Conditions of Contract. On current ISPA contracts we have appointed Dispute Adjudication Boards for the following projects:

5. 4R11 – Rehabilitation of NR 6 Craiova – Filiasi, km 233+200 – km 268+390, 4R12 – Rehabilitation of NR 6 Filaisi –Ciochiuta, km 268+390 – km 298+ 000, 4R13 – Rehabilitation of NR6 Ciochiuta – Drobeta turnu Severin km 298+000 – km 332+150, Construction of Sibiu Motorway By Pass, 4R14 Widening to four Lanes of NR 5, Adunatii Copaceni – Giurgiu, Construction of Bucharest – Constanta Motorway, sector Drajna – Fetesti, Construction of Bucharest – Constanta Motorway, sector Fetesti- Cernavoda, Rehabilitation of NR6 Drobeta Turnu Severin – Lugoj ( consisting of 5 works

6. Since the first DAB members’ site visit, there have been established supplementary procedures aimed to help the Parties (Employer, Contractors, and DAB) to better understand the interrelationship between Parties and the sharing of responsibilities. After each site visit, the DAB Members elaborated reports which contained findings from the Site Visit and proposals to solve potential disputes between the Parties. Up to date there have been four disputes referred to the DAB relevant to the following four Contracts:

7. 4R11 – Rehabilitation of NR 6 Craiova – Filiasi, km 233+200 – km 268+390, 4R12 – Rehabilitation of NR 6 Filaisi –Ciochiuta, km 268+390 – km 298+ 000, 4R13 – Rehabilitation of NR6 Ciochiuta – Drobeta Turnu Severin km 298+000 – km 332+150, Construction of Sibiu Motorway By Pass DAB Hearings took place in each case and DAB balanced decisions were received timely for all four disputes.

8. Unfortunately all four decisions were in favour of the Contractors. Nobody is perfect!! Nevertheless, we will treasure this experience in order to do better in future. However, the DAB decisions have enabled us to identify what indeed went wrong and who was responsible for the wrong doing and to rectify mistakes, which are hoped that will not be repeated again in future.

9. I wish to highlight though that the DAB hearings and decisions, provided good experience in the understanding of complex problems and from this experience we succeeded in unblocking complex situations. At the same time we became also aware of Employer’s risks not identified before that due to lack of proper handling of these risks it allowed, rightly, the Contractor to claim for various supplementary costs, which could have been avoided.

10. We also identified from this DAB experience that if the following tasks are handled in a timely manner, disputes are narrowed done considerably and unnecessary conflict is avoided: submission of benchmarks in due time to the Contractor; finalization of the land acquisition process prior to the issuance of the notice to commence works; settlement of the utilities-related problems at the design stage; elaboration of the working drawings, approval and transmission of the same in due time to the Contractor.

11. We intend to make all efforts to implement DAB’s recommendations for the successful finalization of the contract works. At the same time, I want to mention also that from site meetings with the DAB members and also from the DAB hearings we and the Contractor’s representatives have become aware that for a better implementation of such contracts, certain Contract Clauses and the Terms of Reference for Consultancy must be improved. To this purpose, for a better contract management, we intend to:

12. bring certain modification to the Special Clauses of the Contract (an example being the clause regarding “Contractor’s Programme of the Works” by way of standardizing through guidelines the preparation of programmes, but not only); properly use the Contract Clause regarding “Employer’s Claims; implement the Conditions of Contract – FIDIC - Yellow Book as appropriate;

13. adopt the Society of Construction Law Delay and Disruption Protocol in order to implement adequate guidance for better resolution of claims in a conflict free manner; adopt “Time Impact Analysis” as the preferred method for evaluation of extension of time claims; test the knowledge of our Consultants in FIDIC Conditions of Contract and Project Management before appointing them in the position of Engineer in the sense of FIDIC; train better our personnel regarding their knowledge and deeper understanding of the FIDIC provisions.

14. It is our view that unlike the Engineer the DAB is a completely neutral body. It allows for speedy, interim decisions by technically qualified persons, independent of the Parties, and yet familiar with the project and the Governing Law of the contract. As the DAB is entirely independent of the Employer, the DAB may reasonably be expected to render more fair and impartial decision than the Engineer. Based on our experience we can vouch for this.

15. If the decision of a DAB should not finally resolve a dispute to the Parties’ satisfaction, it may nevertheless serve to reduce the gap between the two parties’ positions, and thereby improve the chances that the Parties themselves will be able to negotiate an amicable settlement and thus avoid arbitration. This has indeed been the case for three of the four above mentioned disputes.

16. However, although for the majority of disputes the advantages of the DAB outweigh its few disadvantages, the time allowed by the DAB procedures to the Respondent Party has been found to be insufficient when compared with the Claimant undue advantage in view of the almost unlimited time that the Claimant, naturally, has when preparing a referral/submission to the DAB. Some improvement in this respect would be required.

17. I conclude by saying that the FIDIC’s alternative of having disputes settled by the DAB procedure instead of the Engineer is a welcome development by the Romanian National Company of Motorways and National Roads. This, we hope should enable the majority of disputes to be settled without arbitration and somehow in an amicable manner. I thank you all.