ENFORCEMENT OF DAB DECISIONS UNDER THEI999 FIDIC CONDITIONS OF CONTRACT:

A RECENT DE,VELOPMENT: CRW JOINT OPERATIONV. PT PERUSAHAAN GAS NEGARA (PERSERO) TBK1

FRBDERIC GILLION

Partnq Fenwick Elli,ott LLP2

1. INTRODUCTION

A couple of years ago, Christopher Seppälä, legal adviscr for thc FIDICContracts Committee, published a very useful commenturyu on ICC CaseNo 10619. That case was then and appears to be still now the only reportedcase under [he Rules of Arbitration of the International Court of Arbitra-tion of the International Chamber of Commercc ("ICC") where an arbitraltritrunal orderecl pa¡rment by an interim award of the sum set out in anengineer's decision which had been the subject of a notice of dissatisfactionand was as a result "binding" but not "frnal".a

By that award, the arbitral tribunal held in effect that decisions of the .

engineer under clause 67 of the FIDIC Conditions of Contract for Works ofCivil Engineering Construction, Fourth Edition, 1987 ("the 1987 RedBook"), could be enforced by an interim or partial awards ordering thelosing party to pay immediately the amount assessed by the engineer in hisdecision.

Considering the implications of that case for the 1999 suite of FIDICBooks where the engineer's decision is replaced by a decision of a DisputeAdjudication Board ("DAB"),.Mr Seppälä's view was that because the

' [2Or11 SGCA 33.2 The views expressed in this article are entirely those of the author and not necessarily those of the

firm.å Christopher R Seppälå, "Enforcement by an Arbitral Tribunal of a Binding but Not Final Engineer's

or DAB's Decision undcr thc FIDIC Conditions" 120091 ICLR 414.a ICC Case No 10619 of 2001 (Itøliøn conlracttrv. Afriatn emþloyr\,Interim Award, an extract of which

can be found in (2008) 19 ICC International C,ourt of Arbitration Bullzti,n, No 2, 85. In an earlier ICC case,an arbitral tribunal had, by a partial award, ordered payment of final and binding decisions of theengineer under clause 67 of the FIDIC Conditions of Contract, Second Edition, 1969 (ICC Case No 8790of 1983 (Frmch colltrøcttr v. Li@øn Emþlnyer) , Partial Award (1984) IX ICCA Yearbooh llg) .

5 Mr Seppålã rightþ comments in his article that, since r\rticle 2 (iii) of the ICC Rules does notdistinguish between a partial and an interim award " [t]hey mean the same thing and any such award isfinal as to the issue or matters which it decides". Iloweveç local courl: may see things differently andconsider that an interim award is only a provisional measure incapable of being enforced under the lawsof their country. This is addressed further below.

Pt 4l Enforcement of DAB Decisions und,er lggg FIDIC cond,iti,ons 389

wording of sub¡clause 67.1 of the 1987 Re d Book6 and of subclause 20.4 ofthe 1999 FIDIC'BooksT was indeed very similar, the interim award made bythe arbitral tribunal in ICC Case No 10619 was "direcrly applicable to âdecision of a DAB under the 1999 FIDIC Books". Mr Seppãlâ concluded inhis article that:

"[e]ven if one o¡ both parties have given a notice of dissatisfaction with respect to adecision of a DAB pursuant to subclause 20.4, eactr party is bound to give effeèt to thatdecision, and if that decision calls for a payment to

-be made by one pärty to the other,then that decision should be enf'orceable directly by an interim- or partial award

pursuant to the Rules of Arbitration of the ICC."

Since thc publication of Mr Seppälä's article, a number of arbitral award,shave in fact been rcndered confirming the enforceability of non-final DABdecisio-ns by ordering the-losing parfy ro pay immediately to thc winningPa:rty.the amounts ordered by t"he DAB evén though a noiice of dissatisfac--tion had been given in respect of those DAB deciiions.s

A recent decision dated 20July 2010 of the Singapore High Courr in ffPsrusahaan Gas -Negara (PerserQ TBK ("pGN")-v. CRw ¡ot"t oþnation('¿cRw")e has horúever sent a confusing -"r.^g. to contractors andconstruction- practitio^n_ers dealing with FIDIC BookJ. In that case, the HighCourt set aside an ICC award on the basis that rhe arbitral tribunat hädexceeded its powers in making a final award ordering pGN to makeimmediate Payment to CRW of the sum which the DAB Íad decided wasdue to CRw. Following an appeal by CRw, the Court of Appeal confirmedthe lower cout't's dccision to set asicle that arbitral awarà'in a judgmentdated 13July 201110 and concluded that whar the arbitral rribuädäid inthat arbitration-viz, summarily enforcing a binding but non-final decision!r *"y- or a f,nal award without a ìreariñg on the merits-was "unprece-dented and more cruciall¡ entirely unwãrranted under the 19gg FIDICConditions of Contract".. The impact of these decisions is difficult to predict. However, one thingis certain, the conclusion of the High Court is ålread.y being relied upon iñ

" . . . the Contractor and the Employcr shall givcr unlcss and until the same shall bc revisedl asan arbitral award."" fhe decision [of a Dispure Adjudication Board]give effect to it unless and until it shall be revised

escribed below."8 In addition to the final award in ICC Case No t6122, which was subsequently set asi<le by theSingapore High Court-in ajudgment dated. Z0July 2010 (PT Pm.rsahaan Gas Negara (pusero) TBK¿. CRW.loint Oþeratior¿ [2010] SGHC 202 (PGNv. Cr¿I4Ð, fhe I

e PT Perusaha.an Gaç Negara (Persøe TBKv. CRWJoònt }þeration t20l0l SGHC 202.ro CRWJoint Oþerationv. PT Prru;ahaøn Ga,s Negaia çt ersero) TBrKtz0lIl SC'CA 33.

390 The Internati,onal Construction Law Reuiatt [2011

other arbitration proceedings in support of defences to claims for immedi-ate payment of amounts awarded by DABs as well as in enforcementproceedings. For this reason, the decisions of the High Court and the Courtof Appeal of Singapore merit careful examination.

Although some of the findings of the High Court and in particular itsinterpretation of subclauses 20.6 and 20.7 are questionable, as explainedbelow, they also have the merits of reminding those involved with FIDICBooks that the enforcement of DAB decisions is not a simple matter andthat a number of jurisdictional pitfalls exist which may prevent a winningparty from obtaining in arbitration the amounts awarded by the DAB. Thepresent article examines what these pitfalls are in light of the decisions ofboth the High Court and the Court of Appeal of Singapore and alsohighlights some of the options which may be open to a winning party whowishes to have a DAB decision enforced by an arbitral award.

2. THE FACTS OF THE CASE

In February 2006, PGN, an Indonesian state-owned company, entered intoa contract with CRW for the construction by CRW of a pipeline and opticalfibre cablc from Grissik to Pagardewa in Indonesia. The contract incorpo-rated the General Conditions of the FIDIC Conditions of Contract forConstruction (First Edition, 1999) ("the 1999 Red Book"), with someamendments (together "the Conditions of Contract").The law governingthe contract was that of Indonesia.

A dispute arose between the parties regarding certain variations inrespect of which CRW sought additional pa)¡rnent. Following a referral ofthat dispute to the DAB, thc DAB issuccl scveral decisions, all of which wereaccepted by PGN except for one dated 25 November 2008 ordering PGN topay CRW a sum in excess of US$17m. ("the DAB decision"). The followingda¡ on 26 Novernber 2008, PGN gave notice of its dissatisfaction wirh theDAB decision in accordancc with subclause 20.4 of the Conditions ofContract.

PGN subsequentþ refused to comply with the DAB decision. This ledCRW to file a request for arbitration with the ICC International Court ofArbitration on 13 February 2009 (ICC Case No 16122). Importantþ thedispute referred to arbitration was however not the underlying disputewhich was the subject of the DAB decision, but it was in fact a new disþute,namel¡ whether CRW was entitled to immediate payment by PGN of thesum awarded by thc DAB in its decision of 25 November 2008 ("thedispute"):

CRW's case was that, notwithstanding PGN's notice of dissatisfaction,PGN still remained bound by the DAB decision and was required to"promptly give effect" to that decision in accordance with subclause 20.4of the Conditions of Contract. In its defence, PGN argued that rhe DAB

pt 4l Enfmcemznt of DAB Decisions under 1999 FIDIC Conditions

decision was not "final and binding" as lt had served a notice ofãissatisfaction and that a binding but not final DAB decision could not beçonverted into a final arbitral award without firstDAB decision was correct (or ought to be reviseoarticular sought to argue that the Powers of the'sub<larrse 20.611 did not include the power to direct a Pafty to makeimmediate payment of the sum awarded by the DAB without a reviewconfirming the correctness of the DAB decision.

The arb-ítral tribunal found in CRW's favour and held in a final award("the Final Award") that thc DAB decision was binding and_,1hat PGNhad an obligation to make immediate payment to CRW of theUSgl?,298,834.57 amended by the DAB. The Tribunal also dismissed in itsaward PGN's interpretation of sut>clause 20.6 and its argument that thearbitral tribunal should open up and review the DAB decision. It howevernoted that PGN had still the right to commence a separate arbitration toopen up, review and revise the DAB decision.^CR\ t then proceeded to register the Final Award as a judgment inSingapore. In response, PGN applied to set aside the Legistration order andalso sõught an order from the court to set aside the Final Award pursuantto sectiJn 24 of the Singapore International Arbitration Act anã Articleg4 (2) of the UNCITRAL Model Law (set out in the First Schedule to theSingapore I asidc theregistration s_eParaLcapþücation t forwardtyÞCN in support of its application t< s that thearbitral tribunal had exceeded its jurisdiction by converting the DABdecision into a final award without determining first whether the DAB wascorrect on the merits.

By its decision dated Z0July 2010 ("the High Court decision"), the LltghCourt of Singapore found in PGN's favour and set aside the Final Award forlack ofjurisdiction of the arbitral tribunal.

Dissatisfied with the High Court dccision, CRW filed an appeal, which wasdismissed by the Court of Appeal of Singapore in itsjudgment dated l3July2011 ("the Court of Appeal decision").

3. THE PROCEEDINGS IN THE COURT BELOW:PGN v. CRW12

The High Court decisionIn reaching its decision to set aside the Final Award, the High Court ofSingaporc examined the contractual framework set out in clause 20 for the

1r Sub-clause 20.6 of the Conditions of Contract provides: "The arbitrator(s) shall have full power toopen up, review and revise any certificate, determination, instruction, opinion or valuation of theEngineeç and any decision of the DAB, relevant to the dispute."

" [2oro1 SGHC 202.

391

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392 The International Construction Law Rniatt [2011

resolution of disputes between the parties and in particular the require-ment for a dispute to have gone through various steps, including a referralof the dispute to the DAB, before it may be referred to arbitration. It alsoconsid,ered the distinction between the proceedings envisaged by sub-clauses 20.6 and 20.7 of the Conditions of Contract.

The High Court held that the arbitral tribunal had acted outside itsjurisdiction in two respects:

(1) the dispute that CRW referred to arbitration in ICC Case No16122 (namely PGN's non-pa)¡ment of the sum set out in the DABdecision) had not been first referred to the DAB and wastherefore "plainly outside the scope of subcl 20.6 of the Condi-tions of Contract"ls; and

(2) the arbitration proceedings commenced by CRW were madepursuant to sub-clause 20.6 of the Conditions of Contract, which,according to the Singapore court, requires "a review of thecorrectness of the DAB decision"la and must be distinguishedfrom proceedings brought under sub-clause 20.7 which do notrequire the arbitral tribunal to consider the merits of the DABdecision. That distinction meant, according to the Singaporecourt, that the arbitral tribunal had acted outside its jurisdictionby making final a binding DAB decision without first hearing themerits of that DAts decision.

Those two grounds for allowing PGN's application to set aside the FinalAward are discussed briefly below.

First ground: the dispute had not first been referred to the DAB-a pre.condition to arbitrationThe High Court noted in its decision that, under sub-clause 20.6 of theConditions of Contract, before a dispute can be.subject to arbitration, itmust first have been referred to the DAB and an adequate and timely noticeof dissatisfaction must have been served in respect of the DAB decision.ls

In this case , the dispute that was referrcd to arbitration related to PGN'snon-payment of the sum set out in the DAB decision, namel¡ PGN's breachof sub<lause 20.4 of the Conditions of Contract which requires the decision

re lligh Court decision, [31].t4 lbid. [371.rB The Singapore court relied in particular on the first sentence of subclause 20.6 which provides that

"IJnless settled amicabl¡ any dispute in respect of which the DAB's decision (if any) has not becomefinal and binding shall be finally settled by international arbitration". This is also clear from thepenultimate paragraph of sub-clause 20.4 which provides that: "Except as stated in Sub{lause 2O.7lFailure to Comþ$ with Disþutz Ad,judícøtion Board's Decisionl and SubClause 20.8 'pxlnry of DisþuteAd.judication Board's Aþþoi.ntmentl neither Party shall be entitled to commcnce arbitration of a disputeunless a notice of dissatisfaction has been given in accordance with this SubClause."

Pt 4l Enforcemcnt, of DAB Decisions und,er lggg FIDIC cond,itions 393

to u Tht dispute was clearly separate from thesu y rhe DAB decision of 25 ñovèmber 200g andin dissatisfaction had been given.It would seem that follo*i.g PGN's failure to pay the"invoice which CRWhad raised in the amount awardccl bv the DAB, CRW did not consider itnecessary to revert back to the DAB with its further dispute relating toPGN's refusal to pay that invoice and therefore its failure ,"'tãÁprywith"theDAB decision.

^ Applying strictþ the terms of the contract, the High Courr thereforefound t]lat since the dispute had not been referred to tË. DAB, the arbítraltribunal had exceeded the scope of the arbitration agreement in making itsFiqal Award.

the event that no party has expressand that DAB decision becorries as binding. In ICC CaseNo 16122, a notice of dissatisfacrion by pGñ, making theDAB clecision binding but nor fina .?'was tlr"rìør" .rot'applicable.

second,ground: the merits of the DAB decision had to be heard1qs1-w!rr_ q5: rrigh courr was \ilrong in its inteqgrerarion of sub-clauses20.6 and 20.7The High court went on to exprain in its judgment that:

"Even if, for the sake of argument, the Second Dispute [namel¡ pGN's failurc to complywith the DAB decision in àccordance with sub-cla"r" zô,+l were rcferable to arbitrationunder Suþclause 20.ô without first being referred to the DAB, one r¡.rrt,"-.*ber thatsub-cl' 20'6 does not allow an arbitral tiibunal to make final a binding DAB decisionwithout first hearing the merits of that DAB decision.,,i7 -----o --*Because CRW had not referred to arbitration the merits of the DARdecision (becausc it was sarisfied with the DAB dfailure t":"Tply with that decision, the Highreference had "ignored the provisions of suËlContract concerning dispúte resolution".lsfollowing:

16 sub-clause 20.4 or the conditions of contract provides: " . . . The decision shall be bindìng on bothParties, which shall promptly give effect to it unlessind until it shall be revised in an amicable settlementor an arbitral tribunal.. . "17High Court d.ecision, [33].18 lbid. 1361.

394 The International Construction Law Rniaa t2011

"To summarise, the real dispute was clearly whether rhe DAB Decision was correct andfollowing that, whether CRW was entitled to the payment of the sum which the DAß haddecided was due. Flowever, CRW tried to limit the dispute to only whethcr payment ofthat sum should be made immediatcly and, in doing so, wrongly relied on sub-cl. 20.6.In fact, there is no express rightof aparty to refer to arbitration undcr subcl.20.7 afailure of the other paity to comply with a binding but not final decision of the DAB. Anarbitration commenced under SubClause 20.6 requires a review of the correctness ofthe DAB decision . . . the refcrence was not on the merits of the DAB Decision (unlikeICC Case No 10619, where the issue regarding the immediate enforceability of theEngineer's decision was pursue d as an interim or partial award under the auspices of thearbitration on the merits of the Engineer's decision). Accordingly, the M4iority Tribunalexceeded its powers by rendering a final award under the pertaining to . . . a disputettrat was not within the scope of the Arbitration Agreement . . . "le

The author suggests that the conclusion which the High Court reachedhere results from a wrong interpretation of both subclause 20.6 and subclause 20.7, which in turn led to a misunderstanding by the High Court ofthe type of dispute which a party may refer to arbitration undcr sub<lause20.6.

The High Court puts a lot of emphasis in its decision on the distinctionbetween rntt.lu,rtei 20.0 and 2O.l to suggest that since sub<lause 20.7expressly provides for the enforcement of a DAB decision in arbitrationwhire that decision is "final and binding", then a DAB decision that is"binding" but not "final" cannot be enforced by an arbitral award undersut>clause 20.6.

It was however never intended for sub<lause 20.7 to be interpreted thatway. That provision was in fact introduced in the Fourth Edition (1987) ofthe FIDIC Conditions of Cont¡act to correct a deficiency of clause 67 of the'previous Second (1969) and Third (1977) Editions.

Clause 67 of the second and third editions was indeed unclear as itprovided that a party could only refer a dispute to arbitration if:

it had referred it to the engineer for a decision,the engineer had rendered a decision (or failed to decide),anda party had expressed dissatisfaction with the decision, if any.

The problem therefore arose as to what a parLy should do after it haclobtained a favourable decision from the engineer which was not subse-quently challenged by the other party (through the issue of a notice ofintention to commence arbitration). That decision became as a resulr "finalancl bindirg". If the losing party then failed to comply with that decision,could the winning party refer such failure to arbitration?

That precise question was raised in ICC Case No 7910.20 In that case, thearbitral tribunal considered that in a situation where the engineer'sdecision had become final and binding because the losing party had failed

re lbùt. [371.20 (1998) 9 Intørwtional Cou,rt of Arbitrøl,ion Bullctin, No 2, November.

(a)(b)

(c)

Pt 4l Enfmcemznt of DAB Decisions under 1999 FIDIC Conditions 395

to challenge it within the time prescribed in the contract, the arbitraltribunal had no jurisdiction to make an award in respect of that d.ecisionbecause no party had expressed its dissatisfaction with the engineer'sdecision.

This obviously put the winning party in an unsatisfactory position as itsonly recourse was then to seek tõenfoice the decision before the courts ofthe losing party's gou.ltry, admittedly not an easy task especiatly if the losingparq is the state itself or a state entity.

To address that issue, the 1987 FIDIC Conditions of Contract insertedsut>clause 67.4, the language of which is essentially repeated in subclause20.7 of the 1999 FIDIC Books. subclause 67.4 providés as follows:

"Where neither the Employer nor the Cont.ractor has given notice of intention tocommence arbitration of a dispute within the period stated in SubClause 67.1 and the

to any such referencc."

It is unfortunate that the High Court ignored or was unaware of thebackground behind. tt. wording of subclause 20.7. When looking ar whysub-clause 20.7 (and its equivalent provision in the 1987 FIDIC Coäditioniof Contract-sub<lause 67.4) was introduced, it is clear that the intentionof the FIDIC draftsmcn was not to create some sort of distinction, as'suggested by the High Court of Singapore, between those arbitrationproceedings brought under sub-clause 20.6 to deal with the merits of a DABdecision and those arbitration proceedings brought under subclaus e 20.7to enforce a DAB decision without considêrationõf the substantive disputebetween the parties. Their intention was simply to ensure that "final and.t could be enforced in arbitraiion. It was not to prevent ap g .to arbitration the other party's failure to comply withcl 'binding" but not "fi.nal".

ound in mind, the author suggests, the High Court waswrong in c_oncluding that, without an express rigñt provided fär under thecontract, CRW was not allowed to refer to arbi[rati,on the narrow issue ofPGN's failure to comply with the DAB decision.

The position is obviously much clearer now with the recent FIDIC GoldBook (2008) which provides rhar:(a) a DAB decision is binding and the parties have to comply with it

"notwithstanding that a Party giveì a Notice of Dissåtisfactionwith such a decision"2r. a¡nd

(b) the winning parq may refer directly to arbitration a failure of thelosing parry to comply wirh "any decision of the DAB, whetherbinding or linal and bindíng".zz

2r C,old Book, sut>clause 20.6.22 llrid. subclause 20.9.

396 The Intcrnational Construction Law Røiatt [2011

A similar wording would have been desirable in the MDB HarmonisedEdition of the Reã Book which was first published in May 2005 andsubsequentþ amended in March 2006 and Ju¡_c 2010. The High Courtspecifüally ielied. on the fact that subdause 20.7 had not been amended inthe MDB Harmoriised Edition to conclude that the drafters of that form"implicirJy rejected Prof Bunni's suggestion to allow the winninq pargr.tgref'ei to arbiiration a failure of the Josing party to comply with a DABdecision".2S This conclusion is totally unfounde<l.

Significantly,by reading too much into sut>clause 20.7 and its distinctionwith-subclaus'e 20.6, the High Court also ends up misconstruing sut>clause20.6. In its decision, it relieson the arbitral tribunal's express powers undersubclause 20.6 "to open up, review and revise . . . any decision of the DAB"to suggest that an arbitral tribunal would have no powe_r to determine arlispuLé relating to the failure of one party to comply.*olh a DAB decisionwiihout hearing fi.rst the merits of that decision.2a The effect of thatwording in subclause 20.6 is however not to restrict the type _of disPutewhich ãn arbitral tribunal may determinc under that subclause. If awinning parq were to refer to arbitration the losing partyPalty's failure to.o*pþ *itlt a DAB decision in breach of sub-clausc 20.4, an arbitraltribúnâl would of course have the power to determine that dispute, whichis clearly separate from the dispute of whcther the DAB decision iscorrect-provided that the prerequisites for arbitration (as set out in sut¡clauses 20.4 and 20.5) have been satisfied.

This leaves the question of whether the arbitral tribunal ought to haveopened up, reviewed and revised the DAB decision in circumstances wherethe dispute was limited to thc failure to comply with the DAB decision.According to the High Court,

"An arbitration commenced under SutrClause 20.6 requires a revicw of the correctnessof the DÂB decision"2s and therefore "the Arbitral Tribunal must be asked by CRW toreview the correctness of the DAB Decision before it can made the DAB Decision'frnaland binding'."'u

Why a successful party must ask an arbitral tribunal to revicw thecorrectness of the DAB decision with which it is satisfied is unclear. This, theauthor suggests, does not make much sense and is certainly not arequiremeni of sut>clause 20.6. It is obviously open to the losing_parry qrequest the artritral tribunal to oPen up, review and revisc the DABdeðision. However, such a request should not prevent tlre arbitral tribunalfrom making an award in respect of the losing party's failurc to give effectto a DAB decision.

23 High Court decision, [2I].24 lbid. l35f .25 lbid. lz7l.26 lbid.1341.

Pt 4l Enforcernent of DAB Deci,sions und,er lggg FIDIC Cond,itions Bg7

It appears that, on the facts of this case, PGN did ask the arbitral tribunalto open up, review and revise the DAB d.ecision. In these circumstances,ffrqhyyg T"+9 a partial award ordering paymenr of the amounr ser outin the DAB decision, the arbiral tribunaliri"úr¿ have looked at the merirsof the case by reviewing the DAB decision. The arbitral tribunal howeverrefused to do so, in this casc, on the basis that pGN had not filed acounterclaim in the arbitration, and it then proceeded. to make a finalaward' This is where, it could be argued, that ttie arbitral tribunal may haveerred in.not.giving an opportunity to PGN to present its case in relation tothe underlying. dispute which was the subject of the DAB decision.Interestinslr, tnis is the main basis for rhe iourt of Appeal ãecision, asexplained further below.

4. THE DECISION OF THE SINGAPORB COURT OFAPPEAL: CRW v. pGN2z

The Court of Appeal decision

{fthgugh the c".y, 9f {ppgul urtimatery, confirmed rhe High courrdecision to set aside the Final Award, the basis on which it reached itsdecision is quite different., The basis f<¡r the

lies with the m_atte, tSJuly 2011 essentiallyappointed to decide asset out in the Terms of Reference paìties. The court ofAppeal explains the following:

t the Arbitration was commencedof Contract. Further, it is plain ihate parties, corisent, confeired an

was entitled to immediate payment ofadditional issues of fact or dwwhich thedeem necessary to decide for the purpos

With what the Court of Appeal descrit¡es as "this crucial backdrop inmind", it went on to consiåêr whether the Finar Award. was issued inaccordance with sut¡clause 20.6. Trcfusing to open up, review and reviinstcad to make a final awarcl withoutthe arbitral tribunal had ignored, the"fin1lly [settle] " rhe dispirte berweeconsidered that:

"what the Majority Members ought to have done, in accordance within particular, subcl 20.6 oi the rggg FIDIC conditions" lzott1 sc'cA 93.28 Court of Appeal decision, [43].

the TOR (and,of Contract),

398 The International Construction Law Rntiatt t2011was amount asscssed by theAdj oceed to hear the párties'sub

The Court of Appeal considered that the Final Award was therefore noted the questionin making theand whether it

PGN for setting aside the Final Awarin this appeal.So They are discussed

Whether the arbitral tribrural exceeded its jurisdiction in making theFinal AwardIt is i_nteresting to note that the Court of Appeal makes no reference to thefact that the Dispute that CRWreferred to árbitration in ICC Case No l6lZZ(namely PGN's non-payment of the sum set out in the DAB decision) hadnot been lìrst referrecl to the DAB and was therefore outside the arbitraltribunal's jurisdiction ?s the High Court decide<t (correctly in the author'sview) in its decision of 20 July 2010.

The Court of Appeal found that the arbitral tribunal exceeded itsjurisdiction in making the Final Award solely on the basis that the tribunalissued the Final Award without opening up, ieviewing and, revising the DABdecision.- Although_ the Court of Appeal may be right rhat the arbitral tribunal

should not have refused to open up, review aád revise thc DAB d.ecision in!s!, of the powcrs givcn io it by sub+lause 20,6 and rhe Terms ofReference, it is unclear horry " ttlh¿: failure of the Majority Members toconsider the merits of the Adjurclicatorls decision beforè -r,kirrg the FinalAward meant that they exceeded theirjurisd.iction in making thai award".slThe Court of 4pPeal, rather confusingl¡ explains rhar ian arbitrationcommenced under subdause 20.6 constitutes-a rehearing, which in turnallow.s^the_ parties to have their dispute "fìnally settled""in rlrat arbitra-tion"32 without delìning what the^diqpute is. In this case, the clispute simplyrelated to PGN's non-payment of thè sum set out in the DAß clecision^iúbreach of sub<lause 20.4, not to the underlyrng dispute that was the subjectof the DAB decision.

n nid, [791.-t: PÇ|l did_n<¡t disputc tlte decision of the l"Iigh-Courr ro rejecr its subrnissions on Ärt Ba (2) (a) (iv)of the Modcl Law, namel¡ that "tl¡c arl¡iual proðedure rnar .r.riin accorclance with thc agreement of theparties, wlriclr required the mcrirs of rhc u¡idcrlying dispute and,/or thc qucstion of *fi.ih., the DABDecision was made in accorclance witlr the Contraci to be dcter¡rrined priãr to making that decision afinal award" (High Court decision, [g]).5r Court of Appeal decision, [85].52 lbid.1821.

Pt 4l Enfmcemmt of DAß Decisions und,er 1999 FIDIC Conditions 399

The arbitral tribunal made a fi,nal award in respect of the dispute thatwasreferred to it. It did not therefore exceed is jurisdiction. The real questionis whether the Tribunal failed to exercise the authority that the partiesgranted to it by declining to open up, review and revise the DAB decision,and whether this failure falls within Articlc A4 Q) (a) (iii) of the Model Law.Unfortunately, this is not clearþ addressed by the Court of Appeal in itsdecision.

Whether there was a breach of the rules of natural justice at the arbitralhearingIn its decision, the High Court dismissed PGN's submission that there hadbeen a breach of the rules of natural justice at the arbitral hearing. Theposition of the High Court was that PGN had not been very clear in itsãllegations as to which rule of natural justice had been contravened, andalso pointed out that PGN had been given an opportunity to present orargue its case on why it should be entitled to open up, review and revise theDAB decision.

The Court of Appeal did not agree with the High Court's conclusion onthat point and considered that:

"PGN was entiiled to be accorded a proper opportunity to comprehensively present itscase on the Adjudicator's decision, \Mith all th.e relevant submissions and evidence, at a

' subsequent hearing before the Arbitral Tribunal. However, it was denied this opportu-nity as the M4jority Members summarily made the Final Award without considering themerits of the real dispute between the parties."53

The Court of Appeal therefore concluded that there had been a breachof natural justice in this case, which caused real prejudice to PGN in so faras PGN would have to start a fresh arbitration to review the DAB decision,which would require additional time and costs.

5. OPTIONS OPEN TO A SUCCESSFUL PARTYWHOWISHES TO ENFORCE A BINDING BUT NOT FINAL DAB

DECISION

What then caLtt awinning party do to enforce a binding but not final DABdecision if the losing party refuses to give prompt effect to it as required bysub-clause 20.4?

As seen above, the High Court clearly dismisses the possibility of a simplereferral to arbitration of the losing party's failure to comply with a bindingbut nor final DAB decision. T'he High Court however felt in its judgmentthat it had to highlight 'for compltteness" what would then be open to a

ssCourtof Appeal decision, [94].

400 The International Construction Law Reuieut [2011

winning par:q in those circumstances. The High Court held obitefa that awinning party could do the following:

(a) refer the underlpng dispute covered by the DAB decision toartritration and ask the arbitral tribunal to review and confirm theDAB decision; and

(b) include a claim for an interim award in respect of the amountwhich the DAB ordered the losing party to pay.

This view seems to be shared by the Court of Appeal which suggests that"the practical response is for the successful party in the DAB proceedingsto secure an interim or partial award from the arbitral tribunal in respect ofthe DAB decision pending the consideration of the merits of the parties'dispute(s) in the same arbitratioÍl".35

This section examines the practical problems raised by the solutionproposed by the High Court and considers whether any alternative andþrima faci¿ more simple options may be available to a party in whose favoura binding but not final DAB decision was made in the event that the otherparq fails to give prompt effect to it.

Four options will be considered:o Option 1: Include the amount of the DAB decision in an interim

payment application.o Option 2: Refer directþ to arbitration the losing party's failure to

comply with the DAB decision.o Option 3: Commence another DAB in respect of the losing party's

failure to comply with the DAB decision and then refer that narrowdispute to arbitration.

o Option 4 (the option favoured by the Singapore courts): Proceedwith this second DAB and then refer to arbitration both theunderþing dispute and the losing party's failure to comply with thefirst DAB decision.

Option 1: Include the amount of the DAB decision in an interimpayment applicationPursuant to sut>clause 14.3 (Ð of the 1999 Red and Yellow Books,36 acontractor who has been awarded a sum of money following a DAB decisionshall include that sum in an interim a¡rment application. If the contractordoes so, what should the engineer then do?

In theor¡ the engineer should give effect to the DAB decision and certiffany amount awarded to the contractor by the DAB. If the employer

3a High Court decision [38].35 Court of Appeal decision, [66].36Subclause14.3provides:"...TheStatementshallincludethefollowingitems...(Ðanyother

additions or deductions which may have become due under the Contract or otherwise, including thoseunder Clause 20 lClni,ns, Dòsþutes and, Arbitrationf . . ."

Pt 4l Enforcemcnt of DAB Decisions und,er |ggg FIDIC Cond,itions 401subsequently fails to pay the relevant Interim Payment Certificate (.,IpC,,),the contractor may then consider rrrrp.rrairrg work (sub<lause 16.l) orterminating the contract (sub.clause 16.2 (c) ) femployer's failure to pay theamount due under an IpC).

n notice of its dissatisfaction with thesider that no amount is in fact due toecision, and therefore decide not to

the IPC. Inreresringly, the Golduires the Employer's Representa_ed by the DAB.37

e 1999 FIDIC Books, a dispure would ariseht to have certified the sum award.ed. by thecould then be referred to the DAB fór itsuld subseorrently confirm that the engineerarded by the DAB in añ IpC.

d again give notice ofLrther DAB d..i,å;üiiffiäïjxinon-final and arguably no real ground. for suspending the work orterminating the contract.

- option I is therefore unlikely to be an attractive route for a contractor

1vh9 .is seeking immediate payment of the amount set out in a DAB0eclslon.

option 2: Refer directly to arbitration the losing parrys failure to complywith the DAB decisionCan the winning pairq simply referto comply with the DAB decision wi

20.4 (which requires rhe decision tonew ancl separate dispute from thePursuant to sub-clausès 20.4 to 20.6

in place),and rollowils. the givin ffitffi;to comply with the ami proced.ure before the dispute maybe referred to arbitrati the losing parry may object to the

Em all, within 2g dayss, is Interim paymeitor ccordance with a6 lobtaining Disþute Adjud,ication Board,,s Decisionl

402 The Intnnational Construction Law Reaian [2011

jurisdiction of the arbitral tribunal on the basis that the pre-conditions toarbitration have not been fulfilled.

Inrerestingly, in two of the four recent (unpublished) ICC cases of whichrhe aurhor ii'aware (in addition to ICC Case No 16122) where non-finalDAB decisions were enforced by arbitral awards, the winning party did notrefer firsr ro the DAB the dispute relating to the losing Party's failure tocomply with the DAB decision. Will this prove fatal to any enforcement ofthose awards? Maybe not, but the findings of the High Court in the PGNv.CRW case will certainly provide further ammunition for the losing Partyshould it seek to resist any enforcement proceedings and set aside the awardmade against it by arguing that the arbitral tribunal had no jurisdiction tomake such award.

To be on the safe side, and to reduce the risk ofjurisdictional objectionsbeing raised by the losing parq during the arbitration or the enforcementproceedings, a winning parry should therefore be advised not to proceedãirectþ with Option 2 but to revert first to the DAB for a decision on thelosing party's failure to comply with its original DAB decision.

Although a second set of DAB proceedings may appear to be pointless,this is, the author suggests, the result of a lacuna in the drafting of sut>clause 20.7 of the 1999 FIDIC Books. As explained above, that problem hasnow been addressed in the Gold Book which makes clear in its sub<lause20.9 that aparty may refer directly to arbitration the other party's failure tocomply with any decision of the DAB "whether binding or flnal andbinding".

Option 3: Commence another DAB (DAB 2) in respect of the losingparqf's failure to comply with the DAB decision and then refer thatnarrow dispute to arbitrationOption 3 is the situation where a winning party decides to go back to theDAB and then to refer to arbitration only the losing party's failure tocomply with the DAB decision.

Once a further decision has been obtained from the DAB (confirmingthe losing party's breach of sut¡clause 20.4for failing to give effect promptþto the first DAB decision and ordering the payment of the sum awarded bythe DAB and/or any damages flowing from that breach), the losing party islikely to give again notice of dissatisfaction, and after the expiry of theperiod for amicable settlement, the winning party will be allowed toproceed to arbitration.

The key question raised by the Singapore courts' decisions is whetherthat arbitration can be limited to the losing party's failure to comply withthe first DAB decision so as to simplif the proceedings'

According to the High Court of Singapore in the PGNv. CRW case, the

Pt 4l Enfmcement of DAB Decisions under 1999 FIDIC Conditi,ons 403

answer to that question is most definitely "no". The High Court made clearin its judgment that, in limiting the dispute to the payment of the sumwhich the DAB had decided was due, CRW "wrongly relied on subcl. 20.6"as " [a]n arbitration commenced under subcl. 20.6 requires a review of thecorrectness of the DAB decision".38

As explained above, the High Court seems to have misinterpreted sub-clauses 20.6 and 20.7 and, the author suggests, nothing should in factprevent aparly from only referring to arbitration the other party's failure tocomply with a DAB decision, provided of course that the prerequisites forarbitration set forth in sub<lauses 20.4 and 20.5 have been satisfied.

Putting aside any jurisdictional objections which the losing partymay seek to raise in light of the findings of the High Court, would thereferral of such a narrow disputeproceedings?

aîyway simpli$' the arbitration

In practice, when faced with a claim for the immediate payment of thesum awarded by the DAB, the losing parq is likely to seek to broaden thescope of the arbitration by asking the arbitral tribunal to decide the meritsof the original dispute and/or to open up, review and revise the first DABdecision.3e This is what in fact PGN sought to do in ICC Case No 16122 byasking the arbitral tribunal in its Answer to CRW's Request for Arbitration"to open up, review and revise the fAdjudicator's] decision, as well as tohear relevant witnesses and experts to obtain actual information andevidence relevant to the dispute".ao

As already mentioned above, the arbitral tribunal in that case declined todo so, on the basis that PGN had not filed a counterclaim. Arguably, thereshould be no need for the losing parry to file a counterclaim as sub-clause20.6 makes clear that " [t]he arbitrator(s) shall have full power to open up,review and revise . . . any decision of the DAB, relevant to the dispute". Ifthe dispute referred to the DAB is the failure of one party to comply witha DAB decision in breach of sub<lause 20.4, then the DAB decision shouldbe relevant to that dispute. In any event, in order to avoid any argument (asin ICC Case No 16122), the losing parq can easily file a separate request forarbitration setting out its counterclaim combined with a request to theInternational Court of Arbitration of the ICC to include its claim in thepending proceedings initiated by the winning party pursuant to Article

38 High Court decision, [37].3e That said, in one of the four ICC cases of which the author is aware where an arbitral tribunal

enforced a binding but non-final DAB decision, the dispute which was referred to arbitration was limitedto the losing party's failure to comply with the DAB decision. The losing party decided not to broadenthe scope of the arbit¡ation. The arbitral tribunal then rendered a final award ordering the losing partyto pay the amount of the DAB decisions by way of damages. That final award was enforced successfullyagainst the losing party.

ao Court of Appeal decision, [47].

404 The Intnnational Construction Law Reuial [2011

erefore unlikely to result in a simpledings could ever be simple). Whar isrbitration the losing party's failure to

The effect of forcing the losing parq to commence its own arbitration isof course to reverse the parties' role in the arbitration in relation to theunderþing dispute which was the ¡ubject of the DAB d.ecision. The losingpattf, as claimant in those proceedings, will have to establish that the firs"tDABLrAIJ declslon was incorrect and that the winning pa;rry was not entitled tothe money awarded by the DAB. This may be advaniug.ôns for rhe following

decision rncorrect and that the

reasons:

(a)

(b)

The winning partywill be able ro ger on with its claim for immediatepa)ment of the sum awarded by the DAB without having to spendsignificant time and money to prove again its entitlement.An arbitral tribunal may be more inclined to make a partial awardin- respect of the winning party's claim at an early stage of thearbitratio! proceedings if it becomes clear thatalong tirãe will trerequired for the losing party to establish its .u.r. régurding themerits of the DAB decision. An ' such award, provided of cõursethat i pur the winningParq a sffong bargain-itg p ons.

Option 4: Proceed with DAB 2 and then refer to arbitration both thegrtqrrul dispute and the losing party's failure to comply with the firstDAB decisionTl:.idea of option 4, which both the High Courr and. the Courr of Appealof Singapore seem to favouq is for the winning party to refer to arbitrãtionboth.the _original disprrte covered by the DAÎì dêcision and the losingparty's failure to comply with the original DAB d.ecision.

a1 Article a (6) of the ICC Rules provides:"Wh in connection with a legal relationship in respect of whicharbit same parties are alread.y iending under'these Rriles, the Courtmay to include tproceedings, provided that the Terms

lluoe t ending

court. once the Terms of Reference h by the

be included in rhe pending proceedin ay only

Article 19 of the ICC Rules provides:"After the Terms of Reference have been signed. or approved by the Court, no party shall make newclaims or counterclaims which fall outside tne timits ôf the Teims of Referenc. ,r.,1.r, it has beenauthorized to do so by the arbitral tribunal, which shall have regard to the nature of such new claimsor counterclaims, the stage of the arbitration and other relevãnt circumstances."

Pt 4l Enforcenzent of DAB Decisions under 1999 FIDIC Cond,itions 405

According to the High Court, it would then be open to the winning parryto request"an interim award ais-à,-ais the DAB deciiion to be enforceá, *itúamount owed as set out in the DAB decision to be paid pending accord.-irgY".The singapore court also added that "[t]he amôunt paìd out isliable to be returned to the payer, depending on how the tribunal, afterreviewing DAB decision, decides the case".

In that situation, the winning party would be the claimant in thearbitration and therefore lose the benefits of Option 3. That said, somemight _argue, !,1 being_ the claimant, the winning parry may gain somecontrol over the conduct of the proceedings. Option 4 miy also bepreferred where the winning party is not entirely sarisfied wittr the DABdecision because some of its claims were dismissed or not considered by theDAB and the amount awarded by the DAB is as a result much lower than theone which the winning party can expect to recover by pursing its claims inarbitration.

The main problem with Option 4 is the fact thar the arbitration willinevitably focus more on the merits of the underþing dispute which was thesubject of the first DAB decision than the fact thaithe DAB d.ecision hasbeen ignored by the losing party.

In practice, unless the arbitral tribunal orders a bifurcation of thewinning Party,s claims at the outset, all of its claims will be pleaded at thesame time and the filst opportunity which the winning party may have tor-eqtest a partial arya1d in respect of the losing party's failure to comply withthe DAB decision is likely to be many months after the frIing of its réquestfor arbitration.

Considerations such as "lack of urgency" rnay then be raised, by thelosing Pury to resist the making of a partial award ahead of the hearing ofthe underlying dispute, especially if that hearing is only monrhs u*uy. ih"losing pa-rty may also argr.re that the winning parq will in any event be1de1ryleþ _compensated by an award of interest on the sums áwarded bythe DAB. Why can't the winning party then wait a few more months for thêfinal hearing and a final award on the underþing dispute?

The follo*irg points can tre made by rhe winning party:(a) IJrgency is irrelevant to the winning party's application for a

partial lward in respect of the other party's failure-to comply witha DAR decision. This is because the award sought by the winningparq is not a provisional or conservatory measure for whicñevidence of urgency may need to be demonstrated. The awardsought by the winning party is one giving full immediate effect tothe winning party's right to have DAB decisions complied withpromptly in accordance with sub-clause 20.4 or to damages inrespect of the losing party's breach of sutrclause 20.4. That awardwill therefore be final with respect to the issue of the losing party'sfailure to give prompt effect to the DAB decision, which is a

406 The Intnnational Construction Law Reuial [2011

dispute separate from the undetlptg dispute covered by the DABdeðision. Unless that is made clear to the arbitral tribunal, thetribunal may proceed to make only a provisional award, which isunlikely to be enforced internationally.

(b) As for the suggestion that interest is an adequate remedy wheredamages are being sought, the correct measure of damages for abreach by the losing party of its obligation under sub-clause 20.4to give prompt effectamount awarded bywinning parq should

to a DAB decision is for payment of thethe DAB, and not simply interest. Thealso recover as damages the reasonable

costs incurred by him in dealing with the consequences of thatbreach, which will include for example the costs of DAB 2.

(c) Also, the suggestion that interest is an adequate remedy fails totake into account that the winning party's case may not simply beframed as a claim for damages, but also (subject obviously to theapplicable law) as a claim for the enforcement of the winningparty's right to have DAB decisions complied with promptly, i.e.,the specific performance by the losing party of its obligationunder sub-clause 20.4 to pay the amount awarded by the DAB.

Whether the winning party proceeds with Option 4 or Option 3, theabove arguments and counter-arguments highlight the importance for thewinning party to frame its claim properly and to consider at the outset theform of the award (frnal/parttal/interim/provisional) and the type of relief(specific performance/damages) which it is seeking. This is discussedfurther below.

Final/partial/interim/provisional award?

The problem associated with the form of the award is not new and has infact given rise to a vast debate amongst arbitration lawyers. Part of thecontroversy comes from the fact tltat, in order to obtain the benefit of theNew York Convention on the Recognition and Enforcement of ForeignArbitral Awards (1958) , art award must be "binding" (Article V (1) (.)nt),a word which is not defined by the New-York Convention.

Some commentators originally suggested that a "binding award" was justanother way of expressing what tll.e 1927 Geneva Convention described asa "fi.nal award". Although that simplistic interpretation is no longerprevailing, there remains a debate between those who consider that theword "binding" should have a specific meaning under the Convention, and

azArticle V (1) (e) of the New-York Convention states that recognition and enforcement can berefused where "[t]he award has not yet become binding on the parties, or has t¡een set aside orsuspended by a competent authority of the country in which, or under the law of which, that award wasmade".

Pt 4l Enfmcernent of DAB Decisions under 1999 FIDIC Conditions 407

those for whom an award should only be considered binding if it is bindingunder the law of the country where the award was made.

The purpose of this article is not to add to what is already a ratherconfused debate.a3 Suffice to say that the New-York Convention does notdetermine the procedure under which an award must be recognised orenforced, but simply provides, in its Article III, that " [e] ach ContractingState shall recognise arbitral awards as binding and enforce them inaccordance with the rules of procedure of the territory where the award isrelied upon", provided that such awards comply with the conditions setforth in the New-York Convention.

It follows that the procedural rules of the country where the award is tobe enforced should not be ignored by a winning party who wishes to obtainan award in respect of the other party's failure to comply with a DABdecision, especially since those local rules often require awards to be "flnal"in order to be enforceable. If that is the case, then it will be essential for thewinning parq to ensure that the award which it is seeking will be regardedas "final" for the purposes of those local rules.

The problem is that "final award" is often used to mean two differentthings:

(1) a global award which determines all of the issues in dispute in thearbitration, or disposes of any outstanding issues following earlier' awards dealing with some aspects of the dispute; and

(2) a partial award which disposes of at least one aspect of thedispute, for example, an award on jurisdiction, liability, prelimi-laary points of law or a distinct substantive claim.

In practice, partial awards are sometimes referred to as "final partialawards" so as to make clear that such awards are conclusive as to the issueswith which they deal.aa In that sense, partial awards should be contrastedwith global awards, rather than final awards.

The key distinction to bear in mind here is therefore not between "fi.nal"and "partial" awards but more between awards which finally dispose ofissues between the parties and those which merely order an interim reliefpending further resolution of the issues in dispute in a final award. Thepurpose of the latteç described as interim or provisional awards, is typicallyto grant interim financial relief in order to preserve the claimant's cashflow. As Robert Merkin put itas:

a3 A full discussion of the opinions of various authors on this subject can be found in Fouchard,,Gai'll^ard,, Gold.man on Internati,onal Commercial Arbitratiora (Kluwer Law International, 1999), paras.1677-1684._

aa This was, e.g., the case with the award which was the subject of the article in the Dispute BoardFederation's Naulztter, September 201 0.

a5 Robert Merkin, Arbitrøtion Law (LLP,2004), par¿. 18.7.

The Intnnational Construction Law Rcuiatt

,,a provisional award anticipales the ultimate finding of the arbitrators and makes an

order on account of that hnding; a partal award, by contrast, finally disposes _of a

particular issue which has arisen betwèen the parties and is wholly independent fromiater awards which may be issued by the a bitrators"'

Interestingl¡ in ICC Case 10619, the first reported case of enforcement ofa decision oitir. engineer und,er clause 67, the claimant / contractor did notseek a partial .*rTd in respect of a breach of contract (namel¡ therespondänt's failure to pay thê amountwhich the engineer had determinedto 'be due), but tortfini instead an "interim award . . ' ordering theRespondent to immediáteþ pay the amounts determined Þy,1. engineer as

,n ådr,unce payment in reépèct of any further payment which.would resultlsic] due Uy in. Respondent pursuant to the final award". What the.lui¡¡u.rt wai therefore seeking in that case was a provisional relief, namely,"to order [Respondent] to piovisionally pay the sums recognized due bythe Engin..ç plnr accrued interest at the annual rate of 7Vo, pending thefinal .¡iag-."t of the Tribunal on the merit lsicl of the respectiveurg.rri.rls of the parties on the whole of the dispute". Tlit ..IPlu]t.t-.th.,.Lr"rr." in the clåimant's submissions to the provisions of Article 23 (1) ofthe ICC Rulesa6 relating to the power of an arbitral tribunal to orderconservatory and interim measuret and the rules of the French New CiúlCode of Procedure relating to the provisional enforcement of that interimaward.

The author understands that the claimant did not seek to enforce theinterim award. which it obtained in ICC Case 10619. It would have treeninteresting to see if the enforcement of that award would have succeededgiven theþrovisional basis on which it was made'

To reduìe the risk of arguments being raised during any enforcementproceedings, it is advisable-for the winning party n9t !o seek a provisionalielief o. .orr.rvatory measure, which will necessarily be in anticipation ojthe ultimate finding of the arbitral tribunal in a final award, but to seekinstead a fi.nal partiãl award in the context of an arbitration brought underOption 4, abovì, or a broadened arbitration under Option 3.

The award ro be sought by the winning parq should simplybe one givingfull immediate effect ó the winning party's right to have a DAB decisioncomplied with promPtly in acin respect of the losing PartY'sfinal in that it will dispose ofprompt effect to the DAB decision,i.o- ihe underlFng dispute covered by the DAB decision.

a6 A¡ticle 23 (1) of the ICC Rules provides: "Unless the parties have otherlvrse agreed, as soon as thefile has been transmitted to it, the dbiral Tribunal may, ùt the request of a party, order any interim orconservatory measure it deems appropriate ' ' ' "

[2011

IBæIE

Pt 4l Enforcement of DAB Decisions und,er lggg FIDIC cond,itions 409

What relief should be_ sought by the winning party: damages and,/orspecific performance?

f1 galagraph 16 of its decision, the High Court of Singapore explains that"[s]uing in contract for breach may trot be the best påciical move for thewinning p".\7,_-especially when the decision onry t.lut"r to paymenr ofmoney" as, " [t]he.winningparty may need to prové d.amages, *rri.n may beno more than a claim for interests on the sum owing',.

r a breach by the

tåiîi:;ffi"is, the basic principle of damages for

breach of contract is to put the-claimant into the sãme fiìancial posiîion inwhich he would have been had the contract been properly p.rfor-.d. Inthis case, if the losing party had promptly given efféct r" rh. beg decision,the other party would have received ihe'amount awarded by the DAB.

ach of contract should therefore be an adequatethat the winning parq is happywith the am^ount

In addition, and depending on thseek the enforcement of its right top{omptly,i.e., the specific perforunder subclause 20.4 to pay the

Here a distinction must be drawn between common law and. civil lawsystems. In common law systems, speequitable form of relief and as suchin situations where damages do ncontrast, civil law systems proceed ocreditor of an obligation is to have the contract performed by the d.ebtor.aTAs such, specific performance is usucivil lawjurisdictions, subjecr ro rhbetween (i) obligations to give orto do or not to do some act.a8 Whebeen breached is to give (as this would arguably be the case here with thelosing p_u-.ry': obligation to give/transfer tó the'winning parq the amountlwalded Þ1 {t. DAB), its execution in kind is likely to ¡. regarded in civillawjurisdictions as being available as of right, regárdless of ihe availabilityof damages.

" :;:ii3i:i,1"ü:.i;J:åäff*T;JriTg,iilo

and 387. Arso see r E Erder, "rhe case orur;,r"*,o!rK'"trtrJ'"!iËi#i-];riÏ-t"i}tilTransnational Commercial Disputes" (lgg?) tS Ar¡ Int, No l,I_g2.

4to The International Construction Law Reuiatt [2011

The question of the arbitral tribrrnal's_ power to make an order forspecific þerformance will therefore depend on the applicable law, but alsool1 whether the arbitration agreemeît/the Terms of Reference Permit suchrelief. For this reason, the winning party should be advised at the outset toinclude in its Request for Arbitration, as an alternative remedy, the specificperformance by

-the losing party of its obligation under subclause 20.4 toþay the amount awarded bY the DAB-

6. CONCLUSION

It witl be interesting to see how the issue of the enforcement of DABd,ecisions will be addiessed in the Second F,dition of the 1999 FIDIC Bookswhich is expected to be putrtished next year. As explained above, oneapprciach whi.h the FIDIC Contracts Committge Tigltt.{gP.t will tre toamend clause 20 along the lines of the FIDIC Gold Book (2008), i..., (i) byadding in subclause 21.6 that the DAB decision is binding and th_e partieshave t-o .o-ply with it "notwithstanding that a PayW gives -a Notice ofDissatisfaction with such a decision" and 1ii¡ by providing in sut¡clause 20.7that, in the event that a party fails to comply with a decision of the DAB,whether binding or final and binding, then the other Pa:q may refet tt.t.failure itself to árbitration without having to refer fi.rst that matter to theDAB and then to wait for the amicable settlement period to expire.

These amendments would bring more certainty to what is currently u^ambiguous section of the 1999 sui doubtgive þardes more faith in the n themeantime, and as the decision of ates, aparq in whose favour a DAB decision has been made should be advised toÈrinþ a second set of DAB proceedings should$9_otþer.p-arty issrre a noticeof dîssatisfaction and then ignore the first DAB decision. That second'referral will be in respect of what is essentially a seParate dispute, namelY,the losing party's faihrre to comply with that decision, in breach of subclause ZO.+. e,second DAB is of course likely to delay by four to five months(i.e., the time for the DAB to make a decision and the SGday period ofamicable settlement under subclause 20.5) the commencement of anarbitration, which may be critical in some jurisdictions where the limitationperiod is particularþ short. sential step if the winningparq wishes to enforce the^ The key question is wh Pa\ty may then refer toarbitration simply the issue of the lo failure to comply with thefirsr DAB decisi,on without having to refer also the underþing dispute. Theauthor suggests that there is nothing in sub.clauses 20.6 or 20.7 to preventthat. The High Court's suggestion thatcurrent wording of sub<lause 20-7 is toreferring to arbitration that narl issu

Pt 4l Enfmcement of DAB Decisions under 1999 FIDIC cond,itions 4ltwould seem is its conclusion that an arbitral tribunal would have no powerto determine a dr¡pute relating to the failure of one par.q to comply with aDAB decision without hearing first the merirs of that decision._ Although the Courtof Appeal in Singapore does not address specifically

that questign,nn it would seem from its decision dated 13July 20i1 that itsmain criticism of the Final Award made by the arbitral tribunal in ICC CaseNo 16122 is that the Tribunal declined to open up, review and revise theDAB decision where it was requested by PGN to do so. Should no suchreque_st be made by th-e losing partf, which may indeed happen,so nothingwould then prevent the arbitral tribunal from making a hnal award iñrespect of the losing party's failure to comply with a DAB decision withouthaving to deal with the merits of the underþing dispute..If, on the otherhand, the losing party asks the arbitral tribunal to open up, review an¿revise the DAB decision (by the filing or not of a counterclaim) and thearbitration is as a result no longer limited to the question of the failure ofthat party to comply with the DAB decision, then, the author suggests, apartial awar{ can still be made by the arbitral tribunal at an earlyïage ofthe -proceedjngs in respect of that separate dispute pending 'the "finalresolution of the parties' underlying dispute. This is now a settléd practicein arbitration proceedings brought under sub<lause 20.6 as even thi Courtof Appeaf of Singapore seems to recognise in the conclusion of itsdecision.sl

ll Th. orily reference can be found at para.63 of the court of Appeal decision.5o See n. 39, above.5r Court of Appeal decision, t1011.