BUiD FIDIC Dispute Mechanisms

NGBCopyright1 of 59 BUiD’Disp Mech FIDIC

Dispute Resolution Mechanisms under the Dispute Resolution Mechanisms under the FIDIC Conditions of ContractFIDIC Conditions of Contract

A presentation A presentation totoThe British University in DubaiThe British University in Dubai

bybyNael G. Bunni,Nael G. Bunni, BSc, MSc, PhD, CEng, FICE, FIEI, BSc, MSc, PhD, CEng, FICE, FIEI,

FIStructE, FCIArb, FIAE, RConsEIFIStructE, FCIArb, FIAE, RConsEI..

CharteredChartered Engineer, Conciliator/Mediator and Registered Chartered ArbitraEngineer, Conciliator/Mediator and Registered Chartered Arbitratortor

28th December 2011


SynopsisSynopsisSynopsisThe FIDIC IdentityThe FIDIC IdentityThe FIDIC Forms of ContractThe FIDIC Forms of ContractDispute ResolutionDispute ResolutionThe Introduction of ADR, 1987The Introduction of ADR, 1987The procedure set for claims and dispute The procedure set for claims and dispute resolutionresolutionThe Introduction of DAB, 1995, 1996, 1999The Introduction of DAB, 1995, 1996, 1999The Gap in SubThe Gap in Sub--Clause 20.7 of the 1999 Clause 20.7 of the 1999 Major Forms of ContractMajor Forms of Contract


The FIDIC identityThe FIDIC identityThe FIDIC identityFIDIC FIDIC -- Federation Internationale des Federation Internationale des Ingenieurs Ingenieurs -- ConseilsConseilsFounded in 1913 in Ghent , Belgium by the Founded in 1913 in Ghent , Belgium by the national associations of consulting engineers national associations of consulting engineers of Belgium, France & Switzerlandof Belgium, France & SwitzerlandHas grown to represent associations from Has grown to represent associations from over 84 countries worldwideover 84 countries worldwideSecretariat is located in Geneva, SwitzerlandSecretariat is located in Geneva, Switzerland

Contd./2


The FIDIC identity (Contd/2)The FIDIC identity The FIDIC identity (Contd/2)(Contd/2)

One of the first committees established in 1913 was One of the first committees established in 1913 was the Contract Documents Committee.the Contract Documents Committee.Its Terms of Reference were:Its Terms of Reference were:–– To monitor contract documents of interest to consulting To monitor contract documents of interest to consulting

engineers regarding:engineers regarding:

construction of objects or works;construction of objects or works;»» erection and installation of works;erection and installation of works;»» maintenance of installations in operation; andmaintenance of installations in operation; and»» supply of materialssupply of materials

–– To inform contractors, suppliers and officials concerning To inform contractors, suppliers and officials concerning contract documents recommended by FIDICcontract documents recommended by FIDIC


The FIDIC Forms of ContractThe FIDIC Forms of ContractThe FIDIC Forms of ContractFirst standard form of contract published in First standard form of contract published in 19571957–– It was the first edition of the Red Book for civil It was the first edition of the Red Book for civil

engineering works in the international fieldengineering works in the international field–– Since then FIDIC has become known outside the Since then FIDIC has become known outside the

engineering profession for its standard forms of engineering profession for its standard forms of contractcontract

The Red Book was followed by the Yellow The Red Book was followed by the Yellow Book for Electrical and Mechanical Works Book for Electrical and Mechanical Works including erection on siteincluding erection on site Contd./2


The FIDIC Forms of Contract (Contd./2)The FIDIC Forms of ContractThe FIDIC Forms of Contract (Contd./2)(Contd./2)

Standard Forms & Associated DocumentationStandard Forms & Associated Documentation–– Conditions of Contract for Works of Civil Engineering Conditions of Contract for Works of Civil Engineering

Construction (Red Book), 4th Edition, 1987; updated 88 & 92Construction (Red Book), 4th Edition, 1987; updated 88 & 92–– Conditions of Contract for Electrical and Mechanical Works Conditions of Contract for Electrical and Mechanical Works

including erection on site (Yellow Book), 3rd Edition, 1987including erection on site (Yellow Book), 3rd Edition, 1987–– Conditions of Contract for DesignConditions of Contract for Design--Build and Turnkey (Orange Build and Turnkey (Orange

Book), 1st Edition, 1995Book), 1st Edition, 1995–– Conditions of SubConditions of Sub--contract for Works of Civil Engineering contract for Works of Civil Engineering

Construction, 1st Edition, 1994Construction, 1st Edition, 1994–– Tendering Procedure, 2nd Edition, 1994Tendering Procedure, 2nd Edition, 1994–– Client/Consultant Client/Consultant -- model services Agreement (White Book), model services Agreement (White Book),

3rd Edition, 1998; 43rd Edition, 1998; 4thth Ed. 2006Ed. 2006–– Joint Venture (Consortium) Joint Venture (Consortium) -- Agreement, 1st Edition, 1992Agreement, 1st Edition, 1992–– SubSub--consultancy Agreement, 1st Edition, 1992consultancy Agreement, 1st Edition, 1992–– Dredging & Reclamation Form of Contract, 1st Edition, 2006Dredging & Reclamation Form of Contract, 1st Edition, 2006



First standard form of contract published in 1957: First standard form of contract published in 1957: The first edition of the Red Book for civil The first edition of the Red Book for civil engineering works in the international field;engineering works in the international field;Second Edition 1967 & Third Edition 1977;Second Edition 1967 & Third Edition 1977;Fourth Edition in 1987, Amended in 1988 and later Fourth Edition in 1987, Amended in 1988 and later significantly amended in 1992;significantly amended in 1992;The Yellow Book for Electrical and Mechanical The Yellow Book for Electrical and Mechanical Works including erection on site: First Edition in Works including erection on site: First Edition in 1963, Second Edition 1977 & Third Edition 1987.1963, Second Edition 1977 & Third Edition 1987.

Contd./4



Standard Forms & Associated DocumentationStandard Forms & Associated Documentation–– Conditions of Contract for Works of Civil Engineering Conditions of Contract for Works of Civil Engineering

Construction (Red Book), 4th Edition, 1987; updated in 88 & 92Construction (Red Book), 4th Edition, 1987; updated in 88 & 92–– Conditions of Contract for Electrical and Mechanical Works Conditions of Contract for Electrical and Mechanical Works

including erection on site (Yellow Book), 3rd Edition, 1987including erection on site (Yellow Book), 3rd Edition, 1987–– Conditions of Contract for DesignConditions of Contract for Design--Build and Turnkey (Orange Build and Turnkey (Orange

Book), 1st Edition, 1995Book), 1st Edition, 1995–– Conditions of SubConditions of Sub--contract for Works of Civil Engineering contract for Works of Civil Engineering

Construction, 1st Edition, 1994 Construction, 1st Edition, 1994 –– Tendering Procedure, 2nd Edition, 1994; superseded in 2011 by Tendering Procedure, 2nd Edition, 1994; superseded in 2011 by

the Project Procurement Guidethe Project Procurement Guide–– Client/Consultant Client/Consultant -- model services Agreement (White Book), 3rd model services Agreement (White Book), 3rd

Edition, 1998; 4Edition, 1998; 4thth Ed. 2006Ed. 2006–– Joint Venture (Consortium) Joint Venture (Consortium) -- Agreement, 1st Edition, 1992Agreement, 1st Edition, 1992–– SubSub--consultancy Agreement, 1st Edition, 1992consultancy Agreement, 1st Edition, 1992–– Dredging & Reclamation Form of Contract, 1st Edition, 2006Dredging & Reclamation Form of Contract, 1st Edition, 2006



The 1999 Red Book The 1999 Red Book –– Conditions of Contract for Conditions of Contract for Construction, (for Building and Engineering Works, Construction, (for Building and Engineering Works, Designed by the Employer) Designed by the Employer) –– General Conditions, Guidance General Conditions, Guidance for the Preparation of the Particular Conditions;for the Preparation of the Particular Conditions;

First Edition of a new Yellow Book, 1999: Conditions of First Edition of a new Yellow Book, 1999: Conditions of Contract for Plant and DesignContract for Plant and Design--Build for Electrical and Build for Electrical and Mechanical Plant, and for Building and Engineering Works, Mechanical Plant, and for Building and Engineering Works, Designed by the Contractor Designed by the Contractor –– General Conditions, Guidance General Conditions, Guidance for the Preparation of the Particular Conditions;for the Preparation of the Particular Conditions;

First Edition of the Silver Book, 1999: Conditions of First Edition of the Silver Book, 1999: Conditions of Contract for EPC turnkey Projects, Designed by the Contract for EPC turnkey Projects, Designed by the Contractor Contractor –– General Conditions, Guidance for the General Conditions, Guidance for the Preparation of the Particular Conditions;Preparation of the Particular Conditions;



First Edition of the Green Book, 1999 First Edition of the Green Book, 1999 –– Short Form of Short Form of Contract Contract –– Agreement, General Conditions, Rules for Agreement, General Conditions, Rules for Adjudication and Notes for Guidance;Adjudication and Notes for Guidance;The Harmonised Multilateral Development Banks Form of The Harmonised Multilateral Development Banks Form of Contract, 1Contract, 1stst Ed. 2005, 3Ed. 2005, 3rdrd Ed. 2010;Ed. 2010;The most important development is the introduction of the The most important development is the introduction of the ““Gold BookGold Book”” in 2008: for Design, Build & Operate projects;in 2008: for Design, Build & Operate projects;The Subcontract Form for the 1999 Red Book, published in The Subcontract Form for the 1999 Red Book, published in 2010;2010;The Project Procurement Guide 2011, replacing the The Project Procurement Guide 2011, replacing the Tendering Procedure of 1994; andTendering Procedure of 1994; andNow working on many other updates and new documents.Now working on many other updates and new documents.


The Harmonised MDB FormThe Harmonised MDB FormThe Harmonised MDB FormMDB: The Harmonised Multilateral Development MDB: The Harmonised Multilateral Development Banks Form of Contract, 2005;Banks Form of Contract, 2005;Intended for MDB funded projects;Intended for MDB funded projects;FIDIC retains copyright & Management;FIDIC retains copyright & Management;Based on the 1999 Red Book, which remains FIDICBased on the 1999 Red Book, which remains FIDIC’’s s recommended Form, but amended shifting many risks recommended Form, but amended shifting many risks to the Contractor, including the reduced Authority of to the Contractor, including the reduced Authority of Engineer;Engineer;The 3The 3rdrd Ed. was issued in 2010;Ed. was issued in 2010;With many changes, some rightly heavily criticised: for With many changes, some rightly heavily criticised: for example. Clause 20example. Clause 20


FIDIC Forms of Contract with contractor

121212


Model Services Agreement between Employer and Engineer

Updated4th Edition - Sept. 2006

666

The White BookThe White Book


Employeror OwnerEmployeror Owner

Engineer Contractor

OtherConsultants

Suppliers

Manufacturers

Sub-contractors

The Usual contractual arrangements in a construction project

Direct contractIndirect relationship


Dispute Resolution

Until 1987, FIDIC opted for ArbitrationIn 1987, FIDIC introduced AmDRIn 1995, FIDIC introduced DAB

Dispute ResolutionDispute Resolution

Until 1987, FIDIC opted for ArbitrationUntil 1987, FIDIC opted for ArbitrationIn 1987, FIDIC introduced AmDRIn 1987, FIDIC introduced AmDRIn 1995, FIDIC introduced DABIn 1995, FIDIC introduced DAB


The Dispute Settlement ClausesThe Dispute Settlement Clausesin the prein the pre--1999 FIDIC Forms1999 FIDIC Forms

The Dispute Settlement Clauses in the pre 1999 The Dispute Settlement Clauses in the pre 1999 Yellow Book are Clauses 2 & 50 of The Conditions Yellow Book are Clauses 2 & 50 of The Conditions of Contract: Amicable Settlement Arbitration;of Contract: Amicable Settlement Arbitration;The Dispute Settlement Clause in the pre 1999 Red The Dispute Settlement Clause in the pre 1999 Red Book is Clause 67 of The Conditions of Contract:Book is Clause 67 of The Conditions of Contract:Amicable Settlement Arbitration;Amicable Settlement Arbitration;The Dispute Settlement Clause in the White Book is The Dispute Settlement Clause in the White Book is Clause 8: Negotiation Mediation Arbitration.Clause 8: Negotiation Mediation Arbitration.


Yellow Book 1987 Impartial Engineer, Sub-Clause 2.4

Yellow Book 1987 Impartial Yellow Book 1987 Impartial Engineer, SubEngineer, Sub--Clause 2.4Clause 2.4

Engineer to Act ImpartiallyEngineer to Act Impartially2.4 2.4 Wherever, under the Contract, the Engineer is Wherever, under the Contract, the Engineer is

required to exercise his discretion by:required to exercise his discretion by:(a) giving his decision, opinion or consent,(a) giving his decision, opinion or consent,(b) expressing his satisfaction or approval,(b) expressing his satisfaction or approval,(c) determining value, or(c) determining value, or(d) otherwise taking action which may affect (d) otherwise taking action which may affect

the rights and obligations of the the rights and obligations of the Employer or the Contractor,Employer or the Contractor,

he shall exercise such discretion impartially within he shall exercise such discretion impartially within the terms of the Contract and having regard to all the terms of the Contract and having regard to all the circumstances.the circumstances.


Red 1987/92 Impartial Eng. – Clause 2.6Red 1987/92 Impartial Eng. Red 1987/92 Impartial Eng. –– Clause 2.6Clause 2.6The Engineer to Act ImpartiallyThe Engineer to Act Impartially2.6 Wherever, under the Contract, the Engineer 2.6 Wherever, under the Contract, the Engineer

is required to exercise his discretion by:is required to exercise his discretion by:(a) giving his decision, opinion or consent,(a) giving his decision, opinion or consent,(b) expressing his satisfaction or approval,(b) expressing his satisfaction or approval,(c) determining value, or(c) determining value, or(d) otherwise taking action which may affect (d) otherwise taking action which may affect

the rights and obligations of the the rights and obligations of the Employer Employer or the Contractor,or the Contractor,

he shall exercise such discretion impartially he shall exercise such discretion impartially within the terms of the Contract and having within the terms of the Contract and having regard to all the circumstances.regard to all the circumstances.


The Dispute Settlement Clause, Y.B.The Dispute Settlement Clause, Y.B.

The relevant Clauses to Dispute Settlement in The relevant Clauses to Dispute Settlement in the pre 1999 Yellow Book are Clauses 2 & 50 the pre 1999 Yellow Book are Clauses 2 & 50 of The Conditions of Contract. of The Conditions of Contract. Clause 2:Clause 2:–– 2.1 Engineer2.1 Engineer’’s Duties;s Duties;–– 2.4 Engineer to Act Impartially2.4 Engineer to Act Impartially–– 2.5 Engineer2.5 Engineer’’s Decisions and Instructions;s Decisions and Instructions;–– 2.8 Disputing Engineer2.8 Disputing Engineer’’s Decisions and s Decisions and

Instructions.Instructions.

The Relevant Dispute Settlement Clauses in the Yellow Book

The Relevant Dispute Settlement The Relevant Dispute Settlement Clauses in the Yellow BookClauses in the Yellow Book


The Dispute Settlement Clause, Y.B.The Dispute Settlement Clause, Y.B.2.72.7 Disputing EngineerDisputing Engineer’’s Decisions and Instructionss Decisions and Instructions–– If the Contractor If the Contractor disputes or questions any decisiondisputes or questions any decision or or

instruction under Clause 2.5 or a written confirmation instruction under Clause 2.5 or a written confirmation under Clause 2.6, under Clause 2.6, he shall give notice to the Engineer within he shall give notice to the Engineer within 28 days28 days after receipt thereof, giving his reasons.after receipt thereof, giving his reasons.

–– The Engineer shall The Engineer shall within a further period of 28 days by within a further period of 28 days by notice to the Contractor and the Employer with reasons, notice to the Contractor and the Employer with reasons, confirm, reverse or vary such decision or instruction.confirm, reverse or vary such decision or instruction.

–– If either party disagreesIf either party disagrees with the action taken by the with the action taken by the Engineer, or if the Engineer fails to reply to the Contractor's Engineer, or if the Engineer fails to reply to the Contractor's notice within the stipulated 28 days, notice within the stipulated 28 days, and the matter cannot and the matter cannot be settled amicablybe settled amicably that party shall be at liberty, subject to that party shall be at liberty, subject to SubSub--Clause 50.1, to Clause 50.1, to refer the matter to arbitrationrefer the matter to arbitration in in accordance with the Contract.accordance with the Contract.

The Dispute Settlement Clauses, Y.B.The Dispute Settlement Clauses, Y.B.The Dispute Settlement Clauses, Y.B.


The Dispute Settlement Clause, Y.B.The Dispute Settlement Clause, Y.B.5050 Disputes concerning EngineerDisputes concerning Engineer’’s Decisionss Decisions–– 50.150.1 If either party If either party is dissatisfiedis dissatisfied with a decision or instruction of with a decision or instruction of

the Engineer as confirmed, reversed or varied the Engineer as confirmed, reversed or varied in accordance with Clause in accordance with Clause 22 he may he may refer the matter to arbitrationrefer the matter to arbitration pursuant to Subpursuant to Sub--Clause 50.2.Clause 50.2.

–– Unless the dissatisfied party has Unless the dissatisfied party has notified the other party and the notified the other party and the Engineer within 56 daysEngineer within 56 days of such decision or instruction of his intention of such decision or instruction of his intention to refer the matter to arbitration, he shall be to refer the matter to arbitration, he shall be deemed to have accepted deemed to have accepted the decision as final.the decision as final.

–– Reference to arbitration shall not relieve the Contractor of hisReference to arbitration shall not relieve the Contractor of his obligation obligation to proceed with the Works in accordance with the Engineer's decito proceed with the Works in accordance with the Engineer's decision or sion or instruction, nor relieve the Employer of any of his obligations instruction, nor relieve the Employer of any of his obligations under the under the Contract.Contract.

–– The Contractor shall in any such arbitration be at liberty to reThe Contractor shall in any such arbitration be at liberty to rely on ly on reasons additional to the reasons stated in the notice given undreasons additional to the reasons stated in the notice given under Suber Sub--Clause 2.7.Clause 2.7.




50.2 Arbitration50.2 Arbitration–– If at any time any question, If at any time any question, dispute or difference shall arisedispute or difference shall arise

between the Employer and the Contractor in connection with between the Employer and the Contractor in connection with or arising out of the Contract or the carrying out of the or arising out of the Contract or the carrying out of the Works Works either party shall be entitled to refer the mattereither party shall be entitled to refer the matter to be to be finally settled by arbitration in accordance with the finally settled by arbitration in accordance with the RulesRules of of Conciliation and Arbitration of the International Chamber of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in Commerce by one or more arbitrators appointed in accordance with those Rules, or by arbitration in accordance accordance with those Rules, or by arbitration in accordance with such other rules as are specified in Part II.with such other rules as are specified in Part II.

–– The Arbitrator(s) shall have full power to open up, review The Arbitrator(s) shall have full power to open up, review and revise:and revise:(a) any decision or instruction of the Engineer referred to (a) any decision or instruction of the Engineer referred to arbitration pursuant to Subarbitration pursuant to Sub--Clause 50. 1, andClause 50. 1, and(b) any certificate of the Engineer related to the dispute. (b) any certificate of the Engineer related to the dispute.



50.3 50.3 Works to ContinueWorks to Continue–– Performance of the Contract shall continue during arbitration Performance of the Contract shall continue during arbitration

proceedings unless the Employer shall order suspension. If proceedings unless the Employer shall order suspension. If any such suspension is ordered the reasonable costs incurred any such suspension is ordered the reasonable costs incurred by the Contractor and occasioned thereby shall be added to by the Contractor and occasioned thereby shall be added to the Contract Price.the Contract Price.

–– No payments due or payable by the Employer shall be No payments due or payable by the Employer shall be withheld on account of pending reference to arbitration.withheld on account of pending reference to arbitration.

50.4 50.4 Time Limit for ArbitrationTime Limit for Arbitration–– Formal notice of arbitration must be given to the other Formal notice of arbitration must be given to the other

party, and where required to the appropriate arbitration body, party, and where required to the appropriate arbitration body, no later than no later than 84 days after the issue of the Final Certificate of 84 days after the issue of the Final Certificate of PaymentPayment..


67.167.1 Settlement of DisputesSettlement of DisputesEngineerEngineer’’s Decisions DecisionIf a dispute of any kind whatsoever arises between the Employer If a dispute of any kind whatsoever arises between the Employer and the Contractor in connection with, or arising out of, the and the Contractor in connection with, or arising out of, the Contract or the execution of the Works, whether during the Contract or the execution of the Works, whether during the execution of the Works or after their completion and whether execution of the Works or after their completion and whether before or after repudiation or other termination of the Contractbefore or after repudiation or other termination of the Contract, , including any dispute as to any opinion, instruction, including any dispute as to any opinion, instruction, determination, certificate or valuation of the Engineer, the determination, certificate or valuation of the Engineer, the matter in dispute shall, matter in dispute shall, in the first place, be referred in writing to in the first place, be referred in writing to the Engineer, with a copy to the other party.the Engineer, with a copy to the other party. Such reference Such reference shall state that it is made pursuant to this Clause. shall state that it is made pursuant to this Clause. No later than No later than the eightythe eighty--fourth day after the day on which he received such fourth day after the day on which he received such reference the Engineer shall give notice of his decisionreference the Engineer shall give notice of his decision to the to the Employer and the Contractor. Such decision shall state that it Employer and the Contractor. Such decision shall state that it is is made pursuant to this Clause.made pursuant to this Clause.

The Dispute Settlement Clause, Red B.The Dispute Settlement Clause, Red B.The Dispute Settlement Clause, Red B.


–– Unless the Contract has already been repudiated or Unless the Contract has already been repudiated or terminated, the Contractor shall, in every case, continue to terminated, the Contractor shall, in every case, continue to proceed with the Works with all due diligence and the proceed with the Works with all due diligence and the Contractor and the Employer shall give effect forthwith to Contractor and the Employer shall give effect forthwith to every such decision of the Engineer unless and until the same every such decision of the Engineer unless and until the same shall be revised, as hereinafter provided, in an amicable shall be revised, as hereinafter provided, in an amicable settlement or an arbitral award.settlement or an arbitral award.

–– If either the Employer or the Contractor be dissatisfied with If either the Employer or the Contractor be dissatisfied with any decision of the Engineerany decision of the Engineer, or if the , or if the Engineer fails to give Engineer fails to give notice of his decision on or before the eightynotice of his decision on or before the eighty--fourth dayfourth day after after the day on which he received the reference, then either the the day on which he received the reference, then either the Employer or the Contractor Employer or the Contractor may, on or before the seventieth may, on or before the seventieth day after the day on which he received notice of such day after the day on which he received notice of such decision,decision, or on or before the seventieth day after the day on or on or before the seventieth day after the day on which the said period of 84 days expired, as the case may be, which the said period of 84 days expired, as the case may be, give notice to the other party, with a copy for information to give notice to the other party, with a copy for information to the Engineer, of his intention to commence arbitration, as the Engineer, of his intention to commence arbitration, as hereinafter provided, as to the matter in dispute. hereinafter provided, as to the matter in dispute. ………………………………



Such notice shall establish the entitlement of the Party giving Such notice shall establish the entitlement of the Party giving the same to commence arbitration, the same to commence arbitration, ……., ., no arbitration in respect no arbitration in respect thereof may be commenced unless such notice is giventhereof may be commenced unless such notice is given..

67.2 Amicable Settlement67.2 Amicable SettlementWhere notice of intention to commence arbitration as to a Where notice of intention to commence arbitration as to a dispute has been given in accordance with Subdispute has been given in accordance with Sub--Clause 67.1, Clause 67.1, the the parties shall attempt to settle such dispute amicably before theparties shall attempt to settle such dispute amicably before thecommencement of arbitration.commencement of arbitration. Provided that, unless the parties Provided that, unless the parties otherwise agree, arbitration may be commenced otherwise agree, arbitration may be commenced on or after the on or after the fiftyfifty--sixth day after the daysixth day after the day on which notice of intention to on which notice of intention to commence arbitration of such dispute was given, even if no commence arbitration of such dispute was given, even if no attempt at amicable settlement thereof has been made.attempt at amicable settlement thereof has been made.–– (reasons for the Clause being obligatory)(reasons for the Clause being obligatory)



67.3 Arbitration67.3 ArbitrationAny dispute in respect of which:Any dispute in respect of which:(a) the decision, if any, of the Engineer has not (a) the decision, if any, of the Engineer has not

become final and binding pursuant to Subbecome final and binding pursuant to Sub--Clause 67.1, andClause 67.1, and

(b) amicable settlement has not been reached (b) amicable settlement has not been reached within the period stated in Subwithin the period stated in Sub--Clause 67.2, Clause 67.2, shall be finally settled, unless otherwise shall be finally settled, unless otherwise specified in the Contract, under such Rules of specified in the Contract, under such Rules of .. .. ………………………………..



67.467.4 Failure to Comply with EngineerFailure to Comply with Engineer’’s Decisions Decision

Where neither the Employer nor the Contractor has Where neither the Employer nor the Contractor has given notice of intention to commence arbitration of a given notice of intention to commence arbitration of a dispute within the period stated in Subdispute within the period stated in Sub--Clause 67.1 and Clause 67.1 and the related decision has become final and binding, the related decision has become final and binding, either party may, if the other party fails to comply with either party may, if the other party fails to comply with such decision, and without prejudice to any other rights such decision, and without prejudice to any other rights it may have, refer the failure to arbitration in it may have, refer the failure to arbitration in accordance with Subaccordance with Sub--Clause 67.3.Clause 67.3. The provisions of The provisions of SubSub--Clauses 67.1 and 67.2 shall not apply to any such Clauses 67.1 and 67.2 shall not apply to any such reference.reference.



The Engineer as an adjudicatorThe Engineer as an adjudicatorunder the under the 19921992 Red BookRed Book

Dispute Dispute Reference to the Engineer Reference to the Engineer –– [[84 days84 days for the Engineer to make a decision]for the Engineer to make a decision]

The Engineer The Engineer gives notice ofgives notice of his decision in writinghis decision in writing–– [[70 days70 days for Emp. or Cont. for Emp. or Cont. to disagreeto disagree & give notice of & give notice of

intention to commence arbitrationintention to commence arbitration]]

If notice of intention to commence arbitration is If notice of intention to commence arbitration is given, then attempt amicable settlement (56 days)given, then attempt amicable settlement (56 days)

–– [[If no settlement, arbitration may then commence. Place, If no settlement, arbitration may then commence. Place, no. of arbitrators & language may be insertedno. of arbitrators & language may be inserted]]

IICC Rules apply unless stated otherwise in Part IICC Rules apply unless stated otherwise in Part II–– [ [ Extreme care must be taken in amending this clauseExtreme care must be taken in amending this clause]]


( ( See Figure 1)See Figure 1)

If no If no settlementsettlement is reached, is reached, arbitration will proceed using the arbitration will proceed using the ICC Rules, unless otherwise stated or agreed.ICC Rules, unless otherwise stated or agreed.

If If Amicable SettlementAmicable Settlement is not successful, then either party may is not successful, then either party may proceed to arbitrationproceed to arbitration after 56 days of the notice as per Cl. 67.3after 56 days of the notice as per Cl. 67.3

5656 daysdays Amicable Settlement isAmicable Settlement is to be to be attemptedattempted to settle the disputeto settle the dispute

Notice to Notice to Intention to Intention to Refer the Dispute to arbitration is served if either Refer the Dispute to arbitration is served if either Party isParty is dissatisfied with the Engineerdissatisfied with the Engineer’’s decision or where the s decision or where the

70 days70 days Engineer fails Engineer fails ggiveive such decisionsuch decision..( Decision of the Engineer is considered by the Employer ( Decision of the Engineer is considered by the Employer

. . & Contractor )& Contractor )..EngineerEngineer shall give notice of hisshall give notice of his decision in respect of the Dispute is decision in respect of the Dispute is given in writing to thegiven in writing to the Employer and the ContractorEmployer and the Contractor..

84 days84 days ( Dispute is to be settled by the Engineer )( Dispute is to be settled by the Engineer )..Matter inMatter in Dispute is Dispute is referredreferred toto the Engineer in writingthe Engineer in writing, with a copy to , with a copy to the other party, under Clause 67.1 of the Conditions.the other party, under Clause 67.1 of the Conditions.

The Procedural Steps under ClThe Procedural Steps under Cl.. 6677 of the of the Red Book, 1992Red Book, 1992


The Dispute Settlement ClausesThe Dispute Settlement Clausesin the 1999 FIDIC Formsin the 1999 FIDIC Forms

The Dispute Settlement Clauses in the 1999 The Dispute Settlement Clauses in the 1999 FIDIC Forms are Clauses 2.5, 3.5 & 20 of The FIDIC Forms are Clauses 2.5, 3.5 & 20 of The Conditions of Contract:Conditions of Contract:–– Disagreement under any clause of the Contract;Disagreement under any clause of the Contract;–– Claim leading to Dispute under 2.5 or 20;Claim leading to Dispute under 2.5 or 20;–– Negotiation under SubNegotiation under Sub--Clause 3.5 leading to a Clause 3.5 leading to a

Determination by the Engineer;Determination by the Engineer;–– Reference to the DAB leading to a Decision;Reference to the DAB leading to a Decision;–– Amicable Settlement;Amicable Settlement;–– Arbitration.Arbitration.


The Engineer as a Negotiator and/or Determinator

under the 1999 Red & Yellow

The Engineer as a Negotiator The Engineer as a Negotiator and/or Determinatorand/or Determinator

under the under the 19991999 Red & YellowRed & Yellow


Impartial or fair –Red & Yellow Sub–Clause 3.1

Impartial or fair Impartial or fair ––Red & Yellow Red & Yellow SubSub––Clause 3.1Clause 3.1

3.1 Engineer3.1 Engineer’’s Duties and Authoritys Duties and Authority…………………….. . The Engineer may exercise .. . The Engineer may exercise (his)(his)authority authority …………. as specified in or necessarily to be . as specified in or necessarily to be implied from the Contract. implied from the Contract. ………………………………....Except as otherwise stated in these Conditions:Except as otherwise stated in these Conditions:–– (a) whenever carrying out duties or exercising (a) whenever carrying out duties or exercising

authority, specified in or authority, specified in or implied by the Contract, implied by the Contract, the Engineer shall be deemed to act for the the Engineer shall be deemed to act for the Employer;Employer;

–– (b) the Engineer has no authority to relieve either (b) the Engineer has no authority to relieve either Party of any duties, obligations or Party of any duties, obligations or responsibilities under the Contract; andresponsibilities under the Contract; and


Impartial or fair –1999 Red & Yellow Sub–Clause 3.1

Impartial or fair Impartial or fair ––1999 Red & 1999 Red & Yellow SubYellow Sub––Clause 3.1Clause 3.1

–– (c) any approval, check, certificate, (c) any approval, check, certificate, consent, examination, inspection, consent, examination, inspection, instruction, notice, proposal, request, test, instruction, notice, proposal, request, test, or similar act by the Engineer (including or similar act by the Engineer (including absence of disapproval) shall not relieve absence of disapproval) shall not relieve the Contractor from any responsibility he the Contractor from any responsibility he has under the Contract, including has under the Contract, including responsibility for errors, omissions, responsibility for errors, omissions, discrepancies and nondiscrepancies and non--compliances.compliances.


Impartial or fair –Red & Yellow Sub–Clause 3.5

Impartial or fair Impartial or fair ––Red & Yellow Red & Yellow SubSub––Clause 3.5Clause 3.5

Determinations 3.5Determinations 3.5Whenever these Conditions provide that the Whenever these Conditions provide that the Engineer shall proceed in accordance with this Engineer shall proceed in accordance with this SubSub--Clause 3.5 to agree or determine any Clause 3.5 to agree or determine any matter, the Engineer shall consult with each matter, the Engineer shall consult with each Party in an endeavour to reach agreement. If Party in an endeavour to reach agreement. If agreement is not achieved, the Engineer shall agreement is not achieved, the Engineer shall make a make a fair fair determination in accordance with determination in accordance with the Contract, taking due regard of all relevant the Contract, taking due regard of all relevant circumstances.circumstances.


Reference to the DAB under the FIDIC Reference to the DAB under the FIDIC ContractsContracts

R e l e v a n t c l a u s e R e l e v a n t c l a u s e

* Sub* Sub--Clause 2.5 SubClause 2.5 Sub--Clause 20.1 Clause 20.1

S u b S u b –– C l a u s e 3 . 5C l a u s e 3 . 5

SubSub--Clauses 20.2 & 20.4Clauses 20.2 & 20.4

*For example, sub-clause 13.3 of the Y.B.


Time limits for the procedure under SubTime limits for the procedure under Sub--Clauses Clauses 20.4 & 20.5 20.4 & 20.5 of FIDICof FIDIC’’s s New Red Book New Red Book -- Standing DABStanding DAB

If Employer or Contractor DissatisfiedIf Employer or Contractor Dissatisfied

2. Notice of dissatisfaction with Decision2. Notice of dissatisfaction with Decision

28 days

1. DAB - 84 days.

DISPUTEDISPUTE

Parties must give effect to DAB’s DecisionParties must give effect to DAB’s Decision

Parties must attempt Amicable SettlementParties must attempt Amicable Settlement 56 days

3. If unsuccessful, go to Arbitration3. If unsuccessful, go to Arbitration



BackgroundBackgroundBackgroundIn an article In an article ““The Gap in SubThe Gap in Sub--Clause 20.7 of Clause 20.7 of the 1999 FIDIC Contracts for Major the 1999 FIDIC Contracts for Major WorksWorks””, [2005] ICLR 272, , [2005] ICLR 272, besides identifying besides identifying the gap, were highlighted the gap, were highlighted ““the practical the practical problems that might arise as a resultproblems that might arise as a result”” of that of that Gap.Gap.The anticipated problems did arise and had to The anticipated problems did arise and had to be dealt with not only by Arbitral Tribunals be dealt with not only by Arbitral Tribunals but most recently and cogently by the High but most recently and cogently by the High Court in Singapore & subsequently this year Court in Singapore & subsequently this year by the Court of Appeal there.by the Court of Appeal there.


In SubIn Sub--Clause 20.4 of the 1999 FIDIC Forms, Clause 20.4 of the 1999 FIDIC Forms, the decision of a DAB will become binding on the decision of a DAB will become binding on the parties, the parties, ““who shall who shall promptly give effectpromptly give effect to to it unless and until it shall be revised in an it unless and until it shall be revised in an amicable settlement or an arbitral award as amicable settlement or an arbitral award as described below.described below. UnlessUnless …”…”..Although nonAlthough non--compliance is tantamount to a compliance is tantamount to a breach of contract, compensation for which breach of contract, compensation for which will be damages, but such damages might not will be damages, but such damages might not be satisfactory.be satisfactory.

1. Introduction1. Introduction1. Introduction


Sub-Clause 20.7 provides:SubSub--Clause 20.7 provides:Clause 20.7 provides:““In the event that:In the event that:(a)(a) neither Party has given notice of dissatisfaction within the neither Party has given notice of dissatisfaction within the

period stated in Subperiod stated in Sub--Clause 20.4 [Obtaining Dispute Clause 20.4 [Obtaining Dispute Adjudication BoardAdjudication Board’’s Decision], s Decision],

(b)(b) the DABthe DAB’’s related decision (if any) has become final and s related decision (if any) has become final and binding, and binding, and

(c)(c) a Party fails to comply with this decision,a Party fails to comply with this decision,then the other Party may, without prejudice to any other then the other Party may, without prejudice to any other rights it may have, refer the failure itself to arbitration underights it may have, refer the failure itself to arbitration under r SubSub--Clause 20.6 [Arbitration]. SubClause 20.6 [Arbitration]. Sub--Clause 20.4 [Obtaining Clause 20.4 [Obtaining Dispute Adjudication BoardDispute Adjudication Board’’s Decision] and Subs Decision] and Sub--Clause 20.5 Clause 20.5 [Amicable Settlement] shall not apply to this reference.[Amicable Settlement] shall not apply to this reference.””


“The Gap” in Sub-Clause 20.7““The GapThe Gap”” in Subin Sub--Clause 20.7Clause 20.7Considering the Gap in SubConsidering the Gap in Sub--Clause 20.7 of the Clause 20.7 of the 1999 FIDIC Contracts for Major Works, the 1999 FIDIC Contracts for Major Works, the question that arises is therefore:question that arises is therefore:What happens if the What happens if the ““DABDAB’’s related s related decisiondecision”” has not has not ““become final and become final and bindingbinding””? ? (i.e., If one or all the Parties have given a (i.e., If one or all the Parties have given a Notice of Dissatisfaction Notice of Dissatisfaction ““NoDNoD”” with respect with respect to the decision of the DAB?) to the decision of the DAB?)


The DAB’s Decision may result in:The DABThe DAB’’s Decision may result in:s Decision may result in:any one of the following situations:any one of the following situations:

-- neither party gives a NoD, the decision becomes neither party gives a NoD, the decision becomes final and binding and both parties accept and final and binding and both parties accept and implement it;implement it;

-- neither party gives a NoD, the decision becomes neither party gives a NoD, the decision becomes final and binding but one party or indeed all final and binding but one party or indeed all parties refuse to implement the decision; orparties refuse to implement the decision; or

-- one party or indeed all parties, issue a NoD and one party or indeed all parties, issue a NoD and one party or all parties refuse to implement the one party or all parties refuse to implement the decision of the DAB. decision of the DAB.


A lacuna or a gapA lacuna or a gapA lacuna or a gap

The Singapore High Court (Ang Saw Ean J) The Singapore High Court (Ang Saw Ean J) concluded in PT Perusahaan Gas Negara concluded in PT Perusahaan Gas Negara (Persero) TBK v. CRW Joint Operation (Persero) TBK v. CRW Joint Operation [2010] SGHC 202, that, [2010] SGHC 202, that, ““There appears to be There appears to be a lacuna or gap in the 1999 Red Book in so a lacuna or gap in the 1999 Red Book in so far as it does not confer an express right on a far as it does not confer an express right on a winning party to refer to arbitration a failure winning party to refer to arbitration a failure of the losing party to comply with a DAB of the losing party to comply with a DAB decision that is decision that is ‘‘bindingbinding’’ and not and not ‘‘finalfinal’’ in in nature.nature.


Sub-Clause 20.9 of the DBO FormSubSub--Clause 20.9 of the DBO FormClause 20.9 of the DBO FormFIDIC has recognised the problem with the wording FIDIC has recognised the problem with the wording of Subof Sub--Clause 20.7 and rectified it in the Gold Book Clause 20.7 and rectified it in the Gold Book (the equivalent Sub(the equivalent Sub--Clause is 20.9), published in Clause is 20.9), published in 2008, as follows:2008, as follows:““In the event that a Party fails to comply with any In the event that a Party fails to comply with any decision of the DAB, decision of the DAB, whether binding or final and whether binding or final and bindingbinding, then the other Party may, without , then the other Party may, without prejudice to any other rights it may have, refer the prejudice to any other rights it may have, refer the failure itself to arbitration under Subfailure itself to arbitration under Sub--Clause 20.8 Clause 20.8 [Arbitration] for summary or other expedited relief, [Arbitration] for summary or other expedited relief, as may be appropriate. Subas may be appropriate. Sub--Clause 20.6 [Obtaining Clause 20.6 [Obtaining Dispute Adjudication BoardDispute Adjudication Board’’s Decision] and Subs Decision] and Sub--Clause 20.7 [Amicable Settlement] shall not apply to Clause 20.7 [Amicable Settlement] shall not apply to this reference.this reference.””


Singapore High Court (Ang Saw Ean J) concluded in PT

Perusahaan Gas Negara (Persero) TBK v. CRW Joint Operation [2010] SGHC 202

Singapore High Court (Ang Singapore High Court (Ang Saw Ean J) concluded in PT Saw Ean J) concluded in PT

Perusahaan Gas Negara Perusahaan Gas Negara (Persero) TBK v. CRW Joint (Persero) TBK v. CRW Joint Operation [2010] SGHC 202Operation [2010] SGHC 202


The Facts in the CRW case in 2010The Facts in the The Facts in the CRW case in 2010CRW case in 2010The Contract in this case was for the design, The Contract in this case was for the design, procurement, installation, testing and preprocurement, installation, testing and pre--commissioning of a 36 inch in diameter pipeline in commissioning of a 36 inch in diameter pipeline in Indonesia. The Contract was based on the 1999 Indonesia. The Contract was based on the 1999 Edition of the FIDIC Red Book with some Edition of the FIDIC Red Book with some modifications. During the course of the contract, a modifications. During the course of the contract, a dispute arose between the Parties in respect of 13 dispute arose between the Parties in respect of 13 Variation Orders, which was, pursuant to SubVariation Orders, which was, pursuant to Sub--Clause 20.4 of the Conditions of Contract referred Clause 20.4 of the Conditions of Contract referred to a Dispute Adjudication Board for resolution. The to a Dispute Adjudication Board for resolution. The DAB heard the dispute and rendered a number of DAB heard the dispute and rendered a number of decisions all of which save for one was accepted by decisions all of which save for one was accepted by the Respondent (PGN). the Respondent (PGN).


The Facts in the CRW case in 2010The Facts in the The Facts in the CRW case in 2010CRW case in 2010The one that was not accepted was a decision directing the The one that was not accepted was a decision directing the Respondent pay the Claimant (CRW) the sum of Respondent pay the Claimant (CRW) the sum of US$17,298,834.57 and accordingly the Respondent US$17,298,834.57 and accordingly the Respondent submitted a Notice of Dissatisfaction in that respect. The submitted a Notice of Dissatisfaction in that respect. The Claimant subsequently filed a Request for Arbitration with Claimant subsequently filed a Request for Arbitration with the ICC International Court of Arbitration wherein it the ICC International Court of Arbitration wherein it adopted the position that in accordance with Clause 20 of adopted the position that in accordance with Clause 20 of the Conditions of Contract, notwithstanding the Notice of the Conditions of Contract, notwithstanding the Notice of Dissatisfaction, the Respondent was obliged to pay the sum Dissatisfaction, the Respondent was obliged to pay the sum of US$17,298,834.57 to the Claimant. However, the of US$17,298,834.57 to the Claimant. However, the Claimant also made the case that a second dispute had Claimant also made the case that a second dispute had arisen in this matter, i.e., the Respondentarisen in this matter, i.e., the Respondent’’s s refusalrefusal to to comply with the DAB decision and pay such sum to the comply with the DAB decision and pay such sum to the Claimant.Claimant.


The Facts in the CRW case in 2010The Facts in the The Facts in the CRW case in 2010CRW case in 2010The arguments presented by the Parties were The arguments presented by the Parties were relatively straightforward. On the one hand the relatively straightforward. On the one hand the Claimant argued that the Notice of Dissatisfaction did Claimant argued that the Notice of Dissatisfaction did not affect the binding nature of the DAB decision and not affect the binding nature of the DAB decision and that in accordance with Subthat in accordance with Sub--Clause 20.4, the Clause 20.4, the Respondent was still obliged to Respondent was still obliged to ““promptly give effectpromptly give effect””to the DAB decision. On the other hand, the to the DAB decision. On the other hand, the Respondent argued that as a result of the Notice of Respondent argued that as a result of the Notice of Dissatisfaction, the DAB decision had not become Dissatisfaction, the DAB decision had not become final and binding since the merits of the decision had final and binding since the merits of the decision had not been the subjectnot been the subject--matter of a review by an arbitral matter of a review by an arbitral tribunal.tribunal.


The Facts in the CRW case in 2010The Facts in the The Facts in the CRW case in 2010CRW case in 2010

An Award was rendered by a majority of the Arbitral An Award was rendered by a majority of the Arbitral Tribunal wherein it was decided that the DAB Tribunal wherein it was decided that the DAB decision was binding on the Parties and therefore, the decision was binding on the Parties and therefore, the Respondent was obliged to make an immediate Respondent was obliged to make an immediate payment to the Claimant under the Contract. The payment to the Claimant under the Contract. The Majority Award dismissed the RespondentMajority Award dismissed the Respondent’’s argument s argument that the Tribunal should open up and review the DAB that the Tribunal should open up and review the DAB decision but noted that the Respondent could decision but noted that the Respondent could nonetheless commence a separate arbitration to open nonetheless commence a separate arbitration to open up, review and if necessary, revise the DAB decision. up, review and if necessary, revise the DAB decision.


The Facts in the CRW case in 2010The Facts in the The Facts in the CRW case in 2010CRW case in 2010The Respondent (PGN) referred the matter to the High Court of The Respondent (PGN) referred the matter to the High Court of

Singapore and submitted that the Final Award should be set Singapore and submitted that the Final Award should be set aside pursuant to Article 34(2)(a)(iii) and (iv) of the aside pursuant to Article 34(2)(a)(iii) and (iv) of the UNCITRAL Model Law and further, pursuant to Section UNCITRAL Model Law and further, pursuant to Section 24(b) of the International Arbitration Act. Its claim was 24(b) of the International Arbitration Act. Its claim was particularised as followsparticularised as follows::

(a)(a) In contravention of Article 34(2)(a)(iii) of the Model In contravention of Article 34(2)(a)(iii) of the Model Law, the Majority Members exceeded their mandate Law, the Majority Members exceeded their mandate and jurisdiction in converting the DAB decision into a and jurisdiction in converting the DAB decision into a final award without first determining the merits of the final award without first determining the merits of the partiesparties’’ underlying dispute and/or without underlying dispute and/or without determining whether the DAB decision had been determining whether the DAB decision had been made in accordance with the contractual provisions made in accordance with the contractual provisions between the Parties;between the Parties;


The Facts in the CRW case in 2010The Facts in the The Facts in the CRW case in 2010CRW case in 2010

(b)(b) In contravention of Article 34(2)(a)(iv) of In contravention of Article 34(2)(a)(iv) of the Model Law, the arbitral procedure was the Model Law, the arbitral procedure was not in accordance with what the parties had not in accordance with what the parties had agreed to which required the merits of the agreed to which required the merits of the underlying dispute and/or the accordance of underlying dispute and/or the accordance of the DAB decision with the contractual the DAB decision with the contractual provisions between the Parties be provisions between the Parties be determined prior to the issuance of a final determined prior to the issuance of a final award; andaward; and


The Facts in the CRW case in 2010The Facts in the The Facts in the CRW case in 2010CRW case in 2010(c)(c) In contravention of Section 24(b) of the In contravention of Section 24(b) of the

International Arbitration Act, the Majority International Arbitration Act, the Majority Members, in breach of the rules of natural justice, Members, in breach of the rules of natural justice, refused and/or failed to hear the parties on the refused and/or failed to hear the parties on the merits of the underlying disputes and/or the merits of the underlying disputes and/or the accordance of the DAB decision with the accordance of the DAB decision with the contractual provisions between the parties.contractual provisions between the parties.[1][1][1][1] There was a fourth ground upon which the Respondent sought to There was a fourth ground upon which the Respondent sought to have the Final Award set aside that was on the premise that the have the Final Award set aside that was on the premise that the DAB DAB had not applied the governing law of the contract (Indonesian lahad not applied the governing law of the contract (Indonesian law) to w) to its decision and/or added new claims to the claims originally its decision and/or added new claims to the claims originally submitted, but this ground was rejected at the outset of the Higsubmitted, but this ground was rejected at the outset of the High h Court Hearing and therefore did not form any part of the Appeal.Court Hearing and therefore did not form any part of the Appeal.


The High Court JudgmentThe High Court JudgmentThe High Court JudgmentIn determining the challenge to the majority award, the Court In determining the challenge to the majority award, the Court considered the provisions of Article 34(2)(a)(iii) of the considered the provisions of Article 34(2)(a)(iii) of the UNCITRAL Model Law noting that there were two situations UNCITRAL Model Law noting that there were two situations that might fall within its ambit. The first was where the arbitthat might fall within its ambit. The first was where the arbitral ral tribunal exceeded its jurisdiction by dealing with matters in ittribunal exceeded its jurisdiction by dealing with matters in its s award that had not been referred to it and the second concerned award that had not been referred to it and the second concerned the situation whereby the dispute referred to the arbitrators wathe situation whereby the dispute referred to the arbitrators was s one that went beyond the scope of the arbitration agreement one that went beyond the scope of the arbitration agreement entered into between the parties. It was this latter situation entered into between the parties. It was this latter situation that that the Court concluded arose in this case, i.e., the Court concluded arose in this case, i.e., ““a dispute that was a dispute that was not within the Arbitration Agreement, or that it went beyond thenot within the Arbitration Agreement, or that it went beyond thescope of that agreement.scope of that agreement.”” The Court went on to examine the The Court went on to examine the dispute that was referred to arbitration in this case, noting thdispute that was referred to arbitration in this case, noting that at the arbitration had been commenced by the Claimant pursuant to the arbitration had been commenced by the Claimant pursuant to SubSub--Clause 20.6 of the Conditions of Contract, which states as Clause 20.6 of the Conditions of Contract, which states as follows:follows:


The High Court JudgmentThe High Court JudgmentThe High Court Judgment““Unless settled amicably, Unless settled amicably, any dispute in respect of which the any dispute in respect of which the DABDAB’’s decisions decision (if any) has not become final and binding shall (if any) has not become final and binding shall be finally settled by international arbitration.be finally settled by international arbitration.”” ..The Court stated that SubThe Court stated that Sub--Clause 20.6 made it clear that a Clause 20.6 made it clear that a dispute that may be submitted to arbitration under Subdispute that may be submitted to arbitration under Sub--Clause Clause 20.6 was one that had been referred to a DAB, but by its own 20.6 was one that had been referred to a DAB, but by its own admission, the Claimant had characterised the nonadmission, the Claimant had characterised the non--compliance compliance with the DAB decision as a with the DAB decision as a ““Second DisputeSecond Dispute””. The Court . The Court opined that this was opined that this was ““not only a different dispute, but was also not only a different dispute, but was also one that had not been referred to the DAB yet. one that had not been referred to the DAB yet. …… Given the Given the opening words of subopening words of sub--cl 20.6, the Second Dispute was plainly cl 20.6, the Second Dispute was plainly outside the scope of suboutside the scope of sub--cl 20.6 of the Conditions of Contract. cl 20.6 of the Conditions of Contract. It follows that the Majority Tribunal, and hence the Majority It follows that the Majority Tribunal, and hence the Majority Award, exceeded the scope of the Arbitration Agreement; the Award, exceeded the scope of the Arbitration Agreement; the Majority Award is therefore liable to be set aside under ArticleMajority Award is therefore liable to be set aside under Article34(2)(a)(iii)34(2)(a)(iii)


The High Court JudgmentThe High Court JudgmentThe High Court JudgmentThe High Court elaborated even further on its interpretation of The High Court elaborated even further on its interpretation of SubSub--Clause Clause 20.6 pointing out that even if the second dispute as identified 20.6 pointing out that even if the second dispute as identified by the Claimant by the Claimant could be referred to arbitration without first being dealt with could be referred to arbitration without first being dealt with by a DAB, its by a DAB, its provisions did not allow an arbitral tribunal to make a final anprovisions did not allow an arbitral tribunal to make a final and binding DAB d binding DAB decision without first hearing the merits of that DAB decision. decision without first hearing the merits of that DAB decision. The Court The Court quoted the powers bestowed on an arbitral tribunal pursuant to Squoted the powers bestowed on an arbitral tribunal pursuant to Subub--Clause Clause 20.6, stating that 20.6, stating that ““[[a]na]n arbitral tribunal is bound by the perimeters of the arbitral tribunal is bound by the perimeters of the claims submitted to it and, thus, may not order interim measuresclaims submitted to it and, thus, may not order interim measures without the without the request of a party. However, that did not make the Majority Awarequest of a party. However, that did not make the Majority Award valid. rd valid. Clause 20 of the Conditions of Contract did not allow for an arbClause 20 of the Conditions of Contract did not allow for an arbitral tribunal itral tribunal to make final a DAB decision without first hearing the merits ofto make final a DAB decision without first hearing the merits of that DAB that DAB decision. decision. …… In context, the Arbitral TribunalIn context, the Arbitral Tribunal’’s powers under subs powers under sub--cl 20.6 was cl 20.6 was expressly to open up, review and revise the DAB Decision, which expressly to open up, review and revise the DAB Decision, which meant that meant that an adjudication on the Second Dispute without determining the coan adjudication on the Second Dispute without determining the correctness of rrectness of the DAB Decision would be tantamount to converting that binding the DAB Decision would be tantamount to converting that binding but nor but nor final decision into a final arbitration award and ignoring the pfinal decision into a final arbitration award and ignoring the provisions of the rovisions of the Conditions of Contract concerning dispute resolutionConditions of Contract concerning dispute resolution””..


The High Court JudgmentThe High Court JudgmentThe High Court Judgment–– The Court concluded its findings on the provisions of Article The Court concluded its findings on the provisions of Article

34(2)(a)(iii) of the UNCITRAL Model Law by the following:34(2)(a)(iii) of the UNCITRAL Model Law by the following:““To summarise, the real dispute was clearly whether the DAB To summarise, the real dispute was clearly whether the DAB Decision was correct and following that, whether CRW was Decision was correct and following that, whether CRW was entitled to the payment of the sum which the DAB had decided entitled to the payment of the sum which the DAB had decided was due. However, CRW tried to limit the dispute to only was due. However, CRW tried to limit the dispute to only whether payment of that sum should be made immediately and, whether payment of that sum should be made immediately and, in doing so, wrongly relied on subin doing so, wrongly relied on sub--cl 20.6. In fact, there is no cl 20.6. In fact, there is no express right of a party to refer to arbitration under subexpress right of a party to refer to arbitration under sub--cl 20.7 a cl 20.7 a failure of the other party to comply with a binding but not finafailure of the other party to comply with a binding but not final l decision of the DAB. An arbitration commenced under subdecision of the DAB. An arbitration commenced under sub--cl cl 20.6 requires a review of the correctness of the DAB decision.20.6 requires a review of the correctness of the DAB decision.


The High Court JudgmentThe High Court JudgmentThe High Court JudgmentFirst, First, CRWCRW’’ss reference to arbitration involved a reference to arbitration involved a ‘‘disputedispute’’, which , which was never referred to the DAB. Second, the reference was not was never referred to the DAB. Second, the reference was not on the merits of the DAB Decision (unlike ICC Case No. 10619 on the merits of the DAB Decision (unlike ICC Case No. 10619 where the issue regarding the immediate enforceability of the where the issue regarding the immediate enforceability of the EngineerEngineer’’s decision was pursued as an interim or partial award s decision was pursued as an interim or partial award under the auspices of the arbitration on the merits of the under the auspices of the arbitration on the merits of the EngineerEngineer’’s decision. Accordingly, the Majority Tribunal s decision. Accordingly, the Majority Tribunal exceeded its powers by rendering a final award pertaining to: (aexceeded its powers by rendering a final award pertaining to: (a) ) a dispute that was not referred first to the DAB, bearing in mina dispute that was not referred first to the DAB, bearing in mind d that before a dispute can be subject to arbitration, it must firthat before a dispute can be subject to arbitration, it must first st have been referred to the DAB and the appropriate NOD must have been referred to the DAB and the appropriate NOD must have been served have been served ……; and (b) a dispute that was not within the ; and (b) a dispute that was not within the scope of the Arbitration Agreement (similar to the factual scope of the Arbitration Agreement (similar to the factual scenario in scenario in TiongTiong HuatHuat Rubber). Hence, the Majority Award Rubber). Hence, the Majority Award was liable to be and was indeed set aside under Article was liable to be and was indeed set aside under Article 34(2)(a)(iii) of the Model Law.34(2)(a)(iii) of the Model Law.


The Court of Appeal JudgmentThe Court of Appeal JudgmentThe Court of Appeal JudgmentThe Judgment in this case can be found by The Judgment in this case can be found by going to Google & searching for:going to Google & searching for:““the Appellantthe Appellant’’s Case filed by CRW on 1 s Case filed by CRW on 1 October 2010October 2010””


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