Research Into Use of Dispute Resolution Boards in Large IT Projects

A new year means new opportunities and challenges.

For me, this means that, after years of gradual transition from being a legal advisor and advocate to focusing on acting as a neutral mediator and arbitrator, I’ve finally completed my metamorphosis, formally retiring from the practice of law as of the end of 2016.

One of my new projects for 2017 is with a working group of the International Technology Law Association (ITechLaw) that is preparing a report on the use of dispute resolution boards (DRBs) in large, long-term IT development and implementation contracts. We are also looking at the use of other similar dispute resolution models, such as project umpires, early neutral evaluation, and combined mediation/arbitration procedures (med-arb).

I have written about Dispute Resolution Boards and Project Umpires in the past. (See here for my 2013 SLAW column on project umpires.) The basic idea is to adapt a dispute resolution process that has been widely used for large construction projects for almost 50 years for use in other large technology projects.

The dispute board – or individual umpire – is appointed at the beginning of a project and is available, on call, if a dispute arises. The process is extremely flexible. Some disputes may be resolved informally, through negotiation and mediation. If the parties can’t agree, hearings typically proceed quickly and and with minimal procedural formality. Each party has the opportunity to explain its position, present relevant information and documents, and respond to the other party’s position. The board or umpire may be mandated to provide a non-binding recommendation, or a binding decision (e.g. in the form of an arbitration award).

The experience in the construction field is that dispute boards greatly reduce the time and cost of resolving disputes and minimize delays in the project itself. The expectation is that large technology projects would see the same benefits. But there still seems to have been relatively little experience with dispute boards (or umpires) in the information technology sector.

Contracts for large IT projects typically include some kind of formal governance process, often a project steering committee and an agreed escalation process, if there is a dispute. They may include a mandatory mediation step before the parties go to arbitration or litigation. And the industry still seems to be divided on whether arbitration is a good idea or not. There are strong views on both sides.

But, as projects get bigger and more complex, and as they involve more suppliers and joint efforts, there is a need for more cost-effective ways to resolve the disputes that inevitably arise.

The ITechLaw research project, therefore, is a welcome step in benchmarking what dispute resolution processes parties around the world are currently using for large technology projects.

I would be most interested in hearing from anyone who has any direct experience working with any of these models – or is aware of their use – in IT or other technology projects. I’m especially looking for Canadian examples, but also interested in the experience elsewhere.

In particular, we want to find out:

1. What kinds of dispute resolution clauses are commonly used in large IT contracts?
2. Examples of IT projects that have used a DRB, single umpire, or similar project neutral (i.e. named for the duration of the project, in advance of a dispute arising)?
3. Examples of med-arb or other hybrid processes.
4. What is the experience using the process when a dispute actually arises?
5. Does it work as intended? If not, why?
6. How was the dispute finally resolved?

Any assistance with this research would be most appreciated!

If necessary, information or case studies can be provided in a way that protects the confidentiality of the parties and the specific project or dispute.

Readers may reply to me privately at michael.erdle@practicalresolutions.ca.