Referral under FIDIC: What It Is and How It Works

In the context of contracts published by the International Federation of Consulting Engineers (FIDIC), a “referral” refers to the formal process by which a dispute between contracting parties—typically the Employer and the Contractor—is submitted to a Dispute Avoidance/Adjudication Board (DAAB) for a decision. FIDIC contracts, such as the FIDIC Red Book and the FIDIC Yellow Book, are structured to encourage early dispute resolution and minimize the need for arbitration or litigation. The referral mechanism is a key step in this structured dispute resolution process.

The referral process usually begins when a disagreement arises that cannot be resolved amicably between the parties. Either party may then issue a formal notice of dispute and proceed to refer the matter to the DAAB. This referral must be made in writing and should include detailed particulars of the dispute, such as the contractual basis of the claim, relevant facts, and the relief or remedy sought. Once the dispute is referred, the DAAB—typically composed of one or three independent experts jointly appointed by the parties—reviews submissions from both sides, may conduct hearings if necessary, and ultimately issues a reasoned decision within a specified timeframe, often 84 days depending on the contract edition.

The decision issued by the DAAB is binding on both parties, who are required to promptly comply with it, even if one party disagrees with the outcome. If a party is dissatisfied, it may issue a Notice of Dissatisfaction (NoD) within the prescribed period, which preserves its right to later refer the dispute to arbitration. However, until such time, the DAAB’s decision remains enforceable. This system ensures that disputes do not disrupt project progress and provides a relatively quick and cost-effective means of resolving conflicts compared to formal legal proceedings.

Overall, referral under FIDIC plays a crucial role in maintaining contractual balance and project continuity. By requiring disputes to be addressed first through a structured adjudication process, FIDIC contracts promote fairness, reduce delays, and support efficient project delivery in the construction and engineering industries.