DAABs involvement in sexual harassment and sexual exploitation and abuse

In early 2021 the Worldbank has published its new Standard Bidding Documents for Works [January 2021] reflecting its decision to involve DAABs in protecting human rights and social standards against sexual exploitation and abuse and sexual harassment practices. In line with its policies the Worldbank has introduced a number of fundamental changes to the FIDIC General Conditions of Contract, 2^nd Edition [2017]. Though the amendments are likely to interfere with the FIDIC Golden Principles GP 1 and 3 they do not necessarily breach them, because the modifications predominantly concern additional duties, rights, obligations, roles and responsibilities of all the Contract Participants which do not substantially modify the essence of the FIDIC Red Book and leave the original dispute resolution function of DAABs unchanged subject to one small concern which may not substantially impair the responsibilities of DAABs provided DAABs carefully handle the additional reporting obligation in PCC Sub-Clause 6.27.3 and the revised Procedural Rule 3.10.

It goes without saying that compliance with fundamental social rights is crucial. However, the new role of DAABs requires special attention by the Parties, the Engineer and the DAABs and special diligence.

The Worldbank requires to put in place an effective mechanism for receiving and promptly addressing allegations of SEA and/or SH from the Contractor´s or Employer´s Personnel or any other person including third parties. The mechanism and machinery allocates in clear words responsibilities and duties to the Parties, the DAABs and the Engineers and provides sanctions in the event of the Contractor´s failure to comply with SEA / SH obligations.

The Worldbank machinery imposes / entitles

• on Contractors to establish and maintain a grievance mechanism
• on the Engineer to monitor and supervise this activity
• on DAABs to monitor the Contractor´s compliance and to report on non-compliance if it becomes aware of it
• on the Engineer to initiate steps which are aimed at achieving compliance [Notice to Correct]
• on DAABs to decide on referrals in accordance with PCC Sub-Clause 21.9
• the Worldbank to disqualify the Contractor, as well as any Subcontractor/s determined to be non-compliant, from being awarded a Bank-financed contract

According to the General Conditions of Dispute Avoidance and Adjudication Agreement as revised by Worldbank DAAB activities shall include, inter alia, the handling of SEA/SH Referrals in accordance with Sub-Clause 21.9 of the revised and amended Conditions of Contract.

In this regard the following new GCC Sub-Clause 2.7 is added

“The Employer shall organize and run a SEA/SH orientation conference as soon as possible after the constitution of the DAAB and prior to the commencement of any physical work. The SEA/SH orientation conference shall be attended by the Contractor, its Subcontractors, the Engineer, the DAAB members and all other relevant persons. The objective of the SEA/SH orientation conference shall be to ensure a common understanding of all SEA contractual requirements and remedies, including those available under Sub-Clause 21.9 [SEA/SH Referrals], Sub-Clause 21.10 [Dissatisfaction with DAAB’s decision of SEA/SH Referrals] and Sub-Clause 21.11 [Bank’s disqualification of the Contractor and its Subcontractor/s].

Accordingly the amended Sub-Clause 21.1. provides:

The DAAB shall also review and decide on any SEA/SH Referral submitted to the DAAB pursuant to Sub-Clause 6.27.2 [Receipt of SEA/SH allegations] and Sub-Clause 6.27.3 [Contractor’s non-compliance with SEA/SH contractual obligations], in accordance with Sub-Clause 21.9 [SEA/SH Referrals].

In addition to this the SBD propose new Sub-Clauses 21.9-21-11 as follows:

21.9 SAE Referrals

EA/SH Referrals pursuant to Sub-Clause 6.27 shall be submitted by the Employer to the DAAB in writing, copied to the Contractor and the Engineer. For a DAAB of three persons, the SEA/SH Referrals shall be deemed to have been received by the DAAB on the date it is received by the chairperson of the DAAB. 

Upon receipt of a SEA/SH Referral, the DAAB shall request the Contractor in writing (copied to the Employer and the Engineer) to submit a statement demonstrating its compliance, including the compliance of any Subcontractor identified in the SEA/SH Referral, with the SEA/SH Prevention and Response Obligations, including the actions taken in response to a SEA/SH allegation and/or any Engineer’s Notice to Correct for non-compliance with the SEA/SH contractual obligations. The Contractor shall within 28 days of receipt of this request, submit in writing such statement to the DAAB copied to the Employer and the Engineer.

In reviewing the Referral, the DAAB shall focus exclusively on compliance of the Contractor, including any Subcontractor identified in the SEA/SH Referral, with the SEA/SH Prevention and Response Obligations, including the actions taken in response to the SEA/SH allegation and/or any Engineer’s Notice to Correct for non-compliance with the SEA/SH obligations. The DAAB shall not assess the merits of an underlying allegation, including the factual aspects of the alleged SEA and/or SH incident.

The DAAB decision, which shall state that it is issued under this Sub-Clause 21.9, shall be provided in writing to the Parties with a copy to the Engineer within 42 days of receiving the SEA/SH Referral. The decision of the DAAB taken pursuant to this Sub-Clause 21.9 shall be binding on the Parties and any of its Subcontractor/s as applicable.

The DAAB decision arising from an allegation of SEA/SH incident shall state whether the Contractor, including any Subcontractor identified in the SEA/SH referral, was in compliance with its SEA/SH obligations at the time of occurrence of the alleged incident. The DAAB decision shall not disclose the name of the alleged survivor nor of the alleged perpetrator.

Sub-Clause 21.10 Dissatisfaction with DAAB’s decision on SEA/SH Referrals

Sub-Clause 21.5 [Amicable Settlement] shall not apply.

If the DAAB’s decision has not become final and binding pursuant to Sub-Clause 21.4.4, the matter shall be finally settled by arbitration in accordance with Sub-Clause 21.6 [Arbitration].

The Parties agree that the time limit set in Article 1.6 of Appendix V to the ICC Arbitration Rules shall be 10 days from the notification of the Emergency Arbitrator Order unless the President of the ICC International Court of Arbitration determines that a longer period is necessary.

Sub-Clause 21.11 Bank’s disqualification of the Contractor and its Subcontractor/s

The Employer shall immediately notify the Bank of the DAAB’s decision on SEA/SH Referral, any notification received on the commencement of Emergency Arbitration, and the Emergency Arbitrator Order if any.

If the DAAB determines that the Contractor has failed to correct identified non-compliance with SEA/SH Prevention and Response Obligation or it was non-compliant with such obligations at the time of an alleged incident, the Bank may disqualify the Contractor, as well as any Subcontractor/s determined to be non-compliant, from being awarded a Bank-financed contract, unless the ICC Emergency Arbitrator grants an order in favor of the Contractor. The disqualification period shall be for two years unless the Contractors receives an arbitration award in its favor within the two year period. The Contractor’s disqualification under this Sub-Clause is without prejudice to the Parties’ rights and obligations under the Contract.

The new amended role of the standing DAAB as proposed by Worldbank includes therefore:

• the attendance of the DAA at a SEA/SH orientation conference as soon as possible after the constitution of the DAAB and prior to the commencement of any physical work [PCC Sub-Clause 2.7]
• the statement of observations in the DAAB´s site visit report, prepared in accordance with Rule 3.10 of the amended DAAB Procedural Rules, identifying potential non-compliance of the Contractor, including its Subcontractor/s, with the SEA/SH Prevention and Response Obligations [PCC Sub-Clause 6.27.3]
• the handling of SEA/SH Referrals in accordance with Sub-Clause 21.9 PCC regarding the Contractor´s non compliance with a Notice to Correct in respect of the Contractor´s failure to comply with the SEA/SH Prevention and Response Obligations under the Contract [PCC Sub-Clause 6.27, Sub-Clauses 21.9-21-11]

The Employer shall make referrals in writing, copied to the Contractor and the Engineer.

The Worlbank proposes to involve the DAAB in SEA /SH referrals with aim to obtain a DAAB decision on whether the Contractor has failed to correct identified non-compliance with SEA/SH Prevention and Response Obligation or it was non-compliant with such obligations at the time of an alleged incident. If the DAAB

• has been requested to confirm that the Contractor has failed to correct identified non-compliance with SEA/SH Prevention and Response Obligation or it was non-compliant with such obligations at the time of an alleged incident, and
• and confirms subject to the assessment of the evidence that the Contractor has failed to correct identified non-compliance with SEA/SH Prevention and Response Obligation or it was non-compliant with such obligations at the time of an alleged incident

the Worldbank may disqualify the Contractor, as well as any Subcontractor/s determined to be non-compliant, from being awarded a Bank-financed contract, unless the ICC Emergency Arbitrator grants an order in favor of the Contractor.

For a DAAB of three persons, the SEA/SH Referrals shall be deemed to have been received by the DAAB on the date it is received by the chairperson of the DAAB. The wording does not provide in express terms the Contractor´s right to submit referrals concerning SEA / SH matters. However, it is arguable that Contractor´s may refer a dispute to the DAAB if and when it is dissatisfied with any Engineer´s Notice to Correct under the amended Sub-Clause 6.27 in order to avoid that any non-compliance with the Notice to Correct may result in an Employer´s referral under PCC Sub-Clause 6.27 and 21.9.

If this is intended by Contractors they may rely on the FIDIC Sub-Clause 1.1.29 [Definition of Dispute][1] arguing that it claims that the Engineer (in his capacity as an Employer´s agent) has wrongly or erroneously asserted, and /or observed and/or ascertained the Contractor´s failure to comply with SEA or SH obligations, thus making a claim against the Employer regarding a matter to be determined by the Engineer under the Conditions, or otherwise. In my view the words “or otherwise” extend the definition of dispute to SEA /SH matters as asserted by the Engineer to Notices to Correct of the Engineer.

DAABs will certainly always attempt to avoid any perception of bias. Trust is difficult to build and easy to destroy. As a quasi-judicial body a DAAB will have therefore to comply with legally enshrined fundamental legal principles like the duty to separate powers. Thus, in its capacity as decision maker it may not adopt a role as quasi public prosecutor. Accordingly, DAABs will carefully consider how any DAAB observation reported in site visit reports will be perceived by taking in account that any observation regarding non compliance with SEA / SH obligations may result in sanctions.

[1] Yellow Book, Red Book / Sub-Clause 1.1.26 Silver Book