The Public Construction Commission (PCC) has revised the Model Contract for Construction Procurement on June 4. Specifically, the arbitration clause has been enhanced by several supporting measures in order to encourage procuring entities to resolve contractual disputes by arbitration. By doing so, PCC concretely implements the strategic goal of “Facilitation of the construction dispute resolution brought in line with the international practices”
Minister Jenn-Chuan Chern expressed that, the existing regulations have regulated that the contracting parties between the procuring entity and the supplier may refer to an arbitration institution for arbitration in case of failing to reach an agreement over the contractual dispute. However, in practice, the entities had little intent to file for arbitration jointly with the suppliers in the past. In this regard, PCC has broadly solicited opinions from the government entities, the business sector, and the academia, as well as drawn from the experiences of the Taiwan Area National Expressway Engineering Bureau of the Ministry of Transportation and Communications, and then stipulated the terms and conditions in conducive to the arbitration mechanism in the model contract accordingly. The revision includes the selection of arbitration institution, the appointment methods of arbitrators, and chairperson of arbitral tribunal, the choosing of arbitration place, the disclosure of arbitration procedure and arbitration award, the facts and reasons which shall be specified in the arbitral award , etc.
Since the professional competence and impartiality of the arbitrators are important to the quality of the arbitration, therefore, the model contract revised has stipulated the appointment method of arbitrators clearly. Each party shall respectively list at least 10 candidates for arbitrators to the other party, and the counter party shall select the arbitrator representing for other party from the list provided by the other party. By doing so, the arbitrators with reliability from both parties would be speedily appointed. PCC believes, through the provision of arbitration supporting measures to the model contract, procuring entities will be more confident in using the arbitration system; and thus, adopt arbitration for dispute resolution without hesitation. Step by step, the local arbitration mechanism will be led to professional- and independent-oriented manner which is in line with the international arbitration mechanism.
If a contractual dispute arising from a construction in progress could not be settled where the suggested measures complementary to arbitration are not embodied in the original contract, the suggested measures can also be extended. As the procuring entity wishes to solve the dispute by arbitration, it may incorporate the above mentioned measures as the content of the arbitration agreement in order to speed up the dispute resolution, which is benefitial to improve the quality of public construction and the development of the construction industry.
PCC encourages procuring entities to handle the contractual dispute by arbitration method. In this regard, similar measures complementary to arbitration clause have been added into other model contracts related to public construction i.e., the model contracts for project management of public construction, technical service of public construction, turn-key construction procurement, turn-key construction procurement of energy saving and effectiveness assurance project, and the open contract for disaster rescue and repair. Consequently, the contractual dispute resolution practice fits the trend of international dispute resolution, and will also strengthen the construction sector’s competitiveness of our country.