Blockchain and Smart Contracts for Avoiding and Resolving Construction Disputes and Enforcing Dispute Adjudication Board Decisions

Abstract

This article explores how blockchain and smart contracts can revolutionize dispute resolution in the construction industry, particularly by addressing enforceability issues seen in traditional mechanisms such as The Federation Internationale des Ingenieurs-Conseil’s (FIDIC) dispute adjudication board (DAB). While FIDIC’s DAB decisions are binding but not final, leading to enforcement challenges, blockchain-based solutions offer more immediate and efficient alternatives. Following doctrinal, normative and partially comparative qualitative legal research methodologies, this study examines the potential of smart contracts to automate contract performance and payment, manage task performance and resolve disputes. Promising developments in blockchain-based smart contracts enable secure, performance-based payments and incorporate an escrow mechanism to minimize disputes. Despite these advancements, risks related to noncompliance remain. This article proposes improvements, including private blockchains, escrow mechanisms, and expert pools and transposing a standardized contracting on-chain for dispute resolution to enhance compliance and reliability. By integrating blockchain with traditional systems, this article suggests that stakeholders such as FIDIC can formalize procedures and provide clearer, enforceable outcomes, addressing existing gaps in enforcement and improving access to justice in construction disputes. The construction industry has been exploring a variety of uses of blockchain. As blockchain and smart contracts are adopted further in the industry, dispute resolution and enforcement of outcomes via these technologies will be implemented widely in the future. Despite these challenges, the use of blockchain and smart contracts can facilitate the enforcement of DAB decisions, thereby eliminating the formal enforcement stage. We call arbitration institutions, regulators, and coders to explore the market and address issues related to blockchain enforcement. The design of platforms and procedures utilizing blockchain technology for DAB enforcement must incorporate trustworthy and reliable mechanisms. Collaborative efforts between arbitration institutions and technical developers are necessary to address this emerging need in the market. By developing robust, transparent systems, the gap between technology and legal processes can be bridged, ensuring that blockchain-based enforcement aligns with the established principles of justice and dispute resolution.