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Civil Engineer, DB Adjudicator, Mediator, Arbitrator

Port of Ehoala

This is a new port construction project in Port Ehoala at Fort Dauphin, Madagascar. The contract was based on the FIDIC MDB Harmonised Edition, 2005 in which DB is mandatory to use for the Parties.

Location:
Port Dauphin, Madagascar
Employer:
Port of Ehoala S.A. (joined by Rio Tinto who has a mining operation in SE Madagascar)
The Engineer/Design:
Baird, Canada
Contractor:
Daiho, Japan
Period:
October 2006 – July 2009
Contract:
FIDIC MDB Harmonised Edition 2005

Dr. Toshihiko Omoto was appointed as a Co-Member of a Three-Member DAB.

This is a project to build a new port, designed to export the mined material and to serve as a general cargo/tourist ship/passenger ferry port as well. A very large quantity of dredging work and a large breakwater were required, including pier design and construction.

DAB concept was new to all parties concerned. The Engineer led the parties to study the concept and conditions of contract of FIDIC Harmonised Edition. I was appointed by the Japanese contractor, Daiho.

Daiho worked in a very professional way to satisfy the contractual requirements in all aspects. The parties worked in a cooperative manner and did not have serious disagreements. Therefore, in the middle of the progress, the DB’s periodical site visits were suspended to save money, but the DB was kept informed of progress by monthly reports and general email contact. DB was happy with this arrangement. Contract was completed on time and within budget, no formal references of disputes to the DB. After all, the Contract parties and the Engineer became enthusiastic supporters of the DB concept. (The project manager of Rio Tinto, Chris Beaumont, made a presentation as a DB user at the DRBF Annual Conference in Cape Town, SA in May 2008. Daiho also made a report about DB in Madagascar in a Japanese construction magazine.)

When we set off to construct a new port for Rio Tinto on the Southeast tip of Madagascar neither the Employer, the Engineer, nor the Contractor had experienced a Dispute Board before. We did however appreciate that the whole concept of the Dispute Board is one that encourages the contract parties to work together to resolve issues as quickly and painlessly as possible.

Because of this we never had to use the Board for a formal dispute, but it was comforting to know that we had access to some very highly qualified experts should one develop.

The Employer – Chris Beaumont, General Manager Construction, Rio Tinto

Existence of the DB shall be reminded for prevention of dispute. The DB has certainly a deterrent power to any useless disputes between the employers/the engineers and the contractors. All the parties must be conscious of the DB when they take actions and decisions, and we think such deterrent effect of the DB must give benefit to both the contractors and the employers. Port of Ehoala project may be a good example for this.

Because there was no dispute throughout the project of Port of d’Ehoala, there was no referral for which the DAB have to work. In other words, the fact that there was no formal dispute is the proof that the original purpose of a DAB that is to prevent disputes has been achieved.

We are confident that the DB can assist the contractors for keeping their contractual rights, and we believe it is of benefit to the employers as well. For further spread of the DB, in addition to the cost issue (DB cost may be able to be reduced as it will be widely adopted), employer’s understanding must be essential on benefit of the DB.

The Contractor – Kiyotaka Arakawa, Overseas Branch, Daiho Corporation

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