8/2/2021
In late June, the Brazilian Senate approved Bill No. 206/2018[1], drafted by Senator Antonio Anastasia (PSD-MG), which provides for the creation of dispute boards in contracts celebrated by the Union, States, Federal District, and Municipalities.
Dispute boards are a dispute resolution method, in which a committee of experts is formed to resolve controversies arisen between the parties, along with the development of the contractual relationship.
Internationally, dispute boards are frequently used in construction projects, especially for contracts financed by the World Bank, and that follow the International Federation of Consulting Engineers (FIDIC) standards.
In Brazil, large construction projects have made use of such committees, most of all during the World Cup and the 2016 Olympic Games in Rio de Janeiro. Before that, the most emblematic example concerns the contracts for Line 4-Yellow of the São Paulo subway.
The city of São Paulo was a pioneer in regulating the use of such committees in public contracts executed with the direct and indirect municipal administration (Municipal Law No. 16.873/18). Following the trend, in 2020, the city of Belo Horizonte issued a specific law regarding the matter (Municipal Law No. 11.241/20).
The main goal of dispute boards is to enable quick and technically adequate decisions, in order to allow the advancement of the contract without straining the relationship of the parties.
maintain a sphere of prevention or dispute resolution in real-time, acting simultaneously to the occurrence of the challenges faced by the parties. This results in a faster and more efficient settlement.
The Dispute Resolution Board Foundation[2] revealed that 85% to 98% of disputes submitted to the dispute boards were satisfactorily resolved, demonstrating its effectiveness.
Even though Bill 206/2018 contains some technical imperfections, the initiative is admirable and meets the current (and rightful, in our opinion) trend of adopting appropriate methods of dispute resolution with the Public Administration.
In view of this, the use of this mechanism, particularly in long-term contracts or of greater complexity, presents itself as an interesting alternative for the construction sector.
Especially for transmitting confidence that disputes should be resolved in a more effective manner, the implementation of dispute boards reveals itself as an important attraction to investors who seek security in their endeavors.
Coauthors: Patricia Trompeter Secher, Silvia Rodrigues Pachikoski and Tonico Monteiro da Silva
