ENFORCEMENT OF DAB DECISIONS UNDER THB1999 FIDIC CONDITIONS OF CONTRACT:

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

FRBDERIC GILLION

Partne6 Fenwick Elli,ott LLPZ

1. INTRODUCTION

A couple of years ago, Christopher Seppälâ, legal adviscr for the FIDICContracts Committee, published a very useful commentaryu on ICC CaseNo 10619. That case was then and appears to be still now the only reportedcase under lhe Rules of Arbitration of the International Court of Arbitra-tion of the International Chamber of Commercc ("ICC") where an arbitraltribunal orderecl payment 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 "final".a

By that award, the arbitral tribunal held in effect that decisions of theengineer 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.t Christopher R Seppålä, "Enforcement by an Arbitral Tribunal of a Binding but Not Final Engineer's

or DAB's Decision u¡rdcr thc FIDIC Conditions" t20091 ICLR 414.a ICC Case No 10619 of 2001 (Itølian conl,ractmy. African enþloyr),Interim Award, an extract of which

can be found in (2008) lg ICC Intem.ational Court of Arbitralion Bullatin, 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, Ig69 (ICC Case No 3790of 1983 (Frmch contractorv, Li.byan E"rþIqn), Partial Award (1984) IX ICCA Yeørboohllg).

5 Mr Seppälã rightþ comments in his article that, since zl¡ticle 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 trr malters which it decides". Howeveç local court¡ may see things differently andconsidet tha[ an interirn award is only a provisional measure incapable of being enforced under the lawsof the ir country. This is addressed further below.

Pt 4l Enforcement of DAB Decisions und,er 1999 FIDIC Conditionç 389

wording of sut¡clause 67.1 of the 1987 Red 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 ro adecision of a DAB under the 1999 FIDIC Books". Mr Seppälâ concluded inhis article that:

"le]ven if one or 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 paynent to be made by one party to the other,then that decision should be enf'orceable directly by an interim or partial awardpursuant to the Rules of A¡bitration of the ICC."

Since ttrc publication of Mr Seppälä's article, a number of arbitral awardshave in fact been rcndered confirming the enforceability of non-final DABdecisio_ns by ordering the losing parfy ro pay immediately to thc winningparty the amounts ordcrecl by [he DAB even though a notice of dissatisfac-tion had been given in respect of those DAB decisions.s

A recent decision dated 20July 2010 of the Singapore High Court in PfPerusahaan Gas Negara (PnserQ TBK ("PGN") v. CRW Joint oþe,ration('¿CRW")e has however sent a confusing message to contractors andconstruction practitioners dealing with FIDIC Books. In that case, the HighCourt set aside an ICC award on the basis that the arbitral tribunat hádexceedcd its powers in making a final award ordering PGN to makeimmediate payment to CRW of the sum which the DAB had decided wasdue to CRw. Following an appeal by CRw, the Court of Appeal confirmedthe lower coul't's dccision to set asicle that arbitral award-in a judgmentdated 13July 201110 and concluded that what the arbitral tribuñatãid inthat arbitration-viz, summarily enforcing a binding but non-final decisionþf *ty- of a f'nal award without a hearing on the ¡¡6¡i¡s-1yas "unprece-dented and more cruciall¡ entirely unwarranted under the 1999 htOtCConditions of Contract".

. The impact of these decisions is difficult to predict. However, one thingis certain, the conclusion of the High Court is already being relied upon iñ

of thc tg8?.Rcd Book provides: "... the Contractor and the Employcr shall giveevcry decision of the linginccr unless and until the same shali bc revisedl as

d, in an arnicable selúcmcnt or an arbitral award."7 Srrb{l:ruec 20'4 of'thc l99g Rc<t Book ¡rrovirles: "fhe d,ecision [of a Dispute Adjudication Board]

shall bc binding on l¡oth Parties, wlto shall ¡rrornptly give effecr to it unless and untiiit shall be revisedin an arnicablc scttlcnlent or an arbit¡al awàr-<t a¡ described below."

8 In addition to tbe final award in ICC Case No L6122, which was subsequently set aside by theSingapore High Court in ajudgment date d Z0July 2010 (PT Pm,sahaan Gas Negara çt'usero) TBR7.'CRW.loí'rtl' Oþeration [2010] SGHC 202 (PGNv. CRW), the author is awa¡:c of thrce (ürrptrtrlished) lCÆ partiallwardr cnforcing binding bttt not fin¿rl DAß decisions, Thcy werc maclc i¡ 2bl0 an¿ 201 t an<t ärre ofthcm is rcferrrd üo i¡r thc Dilputg Boarrl Feclerati rc,carlier.lhís year, a. fìnalawnr.cl (ugtin arr lCC,award) ,ryt_o poy hy way of darrrirgcr thc ¿un<rr¡¡tr nwarded by a astfour ca¡cs relatc lo prqicctstltat to<rk placc in the same Buropean roun0.f, a civil law cou¡rtry which wasalso tlre seat of the arbitration.

e PT Pøusaha¿n Gos Negarø (Persøo) TBKr. cRWloònt oþeration tzOlOl SGHC 202.ro cRW toint oþøration v. FI' Perv"sahaan cas Negna çpnsero) TBK Íz0rrl sGcA 33.

390 The International Construction Law Rniatt [2011

other arbitration proceedings in support of defences to claims for immedi-ate payment of ámounts awarded by DABs as well as in enforcementprocèedings. For this reason, Court and the Courtof Appeal of Singapore meri

Although somè óf tfre findings of uttq in particular itsinterpretation of subclauses 20-6 and 20.7 are questionable, as exptainedbelow; they also have the merits of reminding those involved with FIDICBooks that the enforcement of DAB decisions is not a simple matter andthar a number of jurisdictional pitfalls exist which may prevent a winningparty from obtaining in arbitration the amounts aryarded ÞI ,h9 DAB. The

þresent article examines what these pitfalls are in- lig_ht of the decisions ofÈoth the High Court and the Court of Appeal of Singapore and alsohighlights some of the options which may be open to a winning party whoøstreJto have a DAB decision enforced by an arbitral award'

2. THE FACTS OF THE CASE

In February 2006, PGN, an Indonesian state-owned compan¡ 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 payment. 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 followingday, on 26 Novernber 2008, PGN gave notice of its dissatisfaction witl 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). Importantl¡ thedispute referred to arbitration was however not the underlying disputewhich was the subject of the DAB decision, but it was in fact a new dispute,namel¡ whether CRW was entitled to immediate payment by PGN of thesum awarded by thc DAB in its dccision 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 the DAB

pt 4l Enfmcemznt of DAB Decisions und,er 1999 FIDIC Conditions 391

decision was not "final and binding" as jt_lad served a notice of

äirrã,irø.tion and. thar a binding but nät final DAB decision could not be

äåîo"tt"¿ into a frnal arbitral awärd without first determining wåether the

ó-Án ¿".ision was correct (or ought to be revised) on the-rnerits. PGN in

;;;."t"r sought to argue that the powers of the arbiual tribunal set out in

Írlllu.rr. 20:611 did äot include-the power to direct a Party to rnake

iä-.ái"r" payment of the sum awardÞa ¡y the DAB without a review

confirming the correctness of the DAB decision""Th. urtTrul tribunal found in CRW's favour d held in a frnal award

l,,the Final Award") that thc DAB decision was binding and that PGN

ùJ- * obligation to make irnmediate payn ent to CRW of the

tlSif Z,Zg 8,8g4.57 amended by the DAB. The Tribunal also disrnissed in its

"*rr¿ þGN'. interpretation óf sut>clausc 20.6 and its argument that the

ãr5it ut tribunal shbuld open up and review the DAB decision. It however

"ot.¿ that pGN had still the right to commence a separate arbitralion to

open up, review and decision''CR\¡r/ then procee the Final d as a-judgment in

Si"lup"re. In response, I to set aside re re.gistration order and

dro"rä.tght an oider fror to set aside e Final Award pursu-a1t

to sectiJn 24 of the Singapore International Arbitration Act and Articlein t > of the UNCITRAÙ Model Law (set out in the First Schedule to the

Singapore International Arlritlation Act). PGN's application to set' asidc theournecl pending th s-eParaLc

Final Awärd. The Pr t forwardplication to $et aside thc s that theèeded its julisdiction by converting the DAB

decision into a final award without détermining first whethcr the DAB was

co.rrect on the merits.By its d.ecision dated Z0July 2010 ("the Higþ Court decision"),.the fILSh

Corirt of Singapore foundln ÞGN'r favour anã set aside the Final Award forlack ofjurisdiction of the arbitral tribunal.

Dissaîisfred with the High Court dccision, CRW filed ?n aPpell, which was

dismisse d by the Court ofþpeal of Singapore in its judgment dated l3July2011 ("the Court of Appeal decision").

3. THE PROCEEDINGS IN THE COURT BELOW:PGN v. CRWr2

The High Court decision

In reaching its decision to set aside the Final Award, the _High Court ofSingapore ãxamined the contractual framework set out in clause 20 for the

1r Sub<lause 20.6 of the Conditions of Contract provides: "The arbitrator(s) shall have full power to

open up, review and revlse any certificate, cletermination, instruction, opinion or valuation of the

Engineeç and any decision of the DAB, relevant to the dispute."

" [20t01 SGHC 202.

392 The International Construction Law Røuierx [2011

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

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

(1) the dispute that CRW referred to arbitration in ICC Case No16122 (namely PGN's non-payrnent 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-élause 20.6 of the Conditions of Contract, which,according to the Singapore court, requires "a review of thecorrecrrèss of the DAB decision"la arrd rnust be distinguishedfrom proceedings brought under sub-clause 20.7 which do notrequire the arbitral tribunal to consider the merits of the DABdeðision. 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 arbitration

The High Court noted in its decision that, under sut>clause 20.6 of theConditións of Contract, before a dispute can be subject to arbitration, i[must first have been referred to the DAB and an adequate and timely noticeof dissatisfaction must have been served in respect of the DAB decision.rs

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¡ PG-Ìrl's breachof subilause 20.4 of the Conditions of Contract which requires the decision

le lligh Court decision, [31].L4 Ibid. [3?].16 The Singapore court relied in particular on the first sentence of subclause 20.6 which provides that

"Unless settÈd amicabt¡ any dispute in respect of which the DAB's decision (if any) has not becomefinal and binding sl'ralt be flnally settled by international arbitration". 'I'his is also clear from thepenultimate paragraph of subclause 20.4 which provides that: "Except as stated in Sub{lause 2O.7

llrailure to CornþIy with Di"fþut¿ Ad,judícation Boørd,'s Deeisionl and SubClause 20.8 lDxlnri of Di^spute

Ad,jud,ication Boaril's Aþþointmmtl 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 Enforcemznt of DAB Decisions und,er lggg FIDIC Cond,itíons ggg

to-be gi-ven _gffect p..oTprÞ:r6 fhat dispute was clearly separare from rhesubstan[ive dispute dccided by the DAB^decision of 25 Ñovember Z00g andinrespect of which notice of dissatisfaction had been given.

It would scem that follo*i^g PGN's failure to pay rhe"invoice which CRWhad raised in the amount awardcd 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 to'compþwith"theDAB decision.

^ Applying strictþ the terms of the contract, the Fligh Court therefore

found that since the dispute had not been referred to tñ. DAB, the arbítraltribunal had exceeded the scope of the arbitration agreement in making itsFi4al Award.

the event that no parLy has expressand that DAB decision becomes asNo 16122, a norice of dissatisfacrionDAB clecision binding bur nor finaapplicable.

second ground: the merits of the DAB decision had to be heardfqry-wlV- !h5: High Court was wrong in íts inter¡gretatíon of sub-clauses20.6 and 20.7

The High court went on to explain in its judgment thar:"Even if, for the sake of argument, the Second Ðispute [namel¡ PGN's failurc to complywith the DAB decision in accordance with.sub<lause Zti.+l weie rcferable to arbitrarionunder Sub-Clause 20.ô without first being referred to the DAB, one must remember thatsutr<I. 20.6 does not allow an arbitral tiibunal to make final a binding DAB decisionwithout first hearing the merits of that )AB d.ecision."rz

- -----o ---

Because CRW had not referred to arbitration the merits of the DARdecision (becausc it wasfailure to comply withreference had "ignoredContracI concerningfoliowing:

rG Sub-clause 20.4 or the Cond.itions of Contract provides: " . , . The decision shall be binding on bothParties, which shall promptly give effect to it unlessind until it shall be revised in an amicable settlementor an arbitral tribunal . . . "17High Court decision, [33].18 lbid. [36].

3g4 The International Construction Law Rniew [2011

,,To su whether che DAB Decision was correct and

followi the ¡rayment of the sum which the DAß had

decide imit the dispute to only whethcr payment ofthat sum should be made immediatcly and, in doing so

In fact, there is no express right of a Party to refer tofailure of the other party to comply with a binding but narbitration com*"nced under SubClause 20.6 requires a review of the correctness ofthe DAB decision . . . the refcrencc was not on the merits of the DAB Decision (unlike

ICC ing the immediate enforceability of the

E^g of partial award under the auspices of the

ar¡i decision). Accordingl¡ the M4iority Tribunalexceeded its powers by rendering a final award under the pertaini^ng to ' . . a dispute

that was not ùthin thá scope of i.ne Arbitration Agreement ' ' ' "le

The author suggests that the conclusion which the High C_ourt reached

here results from ã wrong interpretation of both subclause 20.6 and subclause 20.7, which in turn led co a misunderstanding by the High Court ofthe type of dispute which a party may refer to arbitration undcr sub+lause

20.6.The High Court puts a lot of emphasis in ia decision on the distinction

between rntt.lu,rs.i 2O.O and, ZO.f to suggest that since sub<lause 20.7

expressly provides for the enforcement of a DAB decision in arbitrationwhìre thaì decision is "final and binding", then a DAB decision that is"bind,ing" 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 Bdition (1987) ofthé 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 it

provided that a party could only refer a dispute to arbitration if:

(a) it had referred it to the engineer for a decision,(b) the engineer had rendered.a decision (or failed to decide),

and(c) a party had expressed dissatisfaction with the decision, if any.

The problem therefore arose as to ryhat a parf should do after it harlobtained a favourable decision from the engineer which was not subse-

quently challenged by fhe 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 par[y refer such failure to arbitration?

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

Ls lbùt. î871.

'zo (1998) 9 Intarnational Cou.rt of Arbitrølion Bull¿tán, No 2, November.

tr

Pt 4l Enfmcemmt of DAß Decisions under 1999 FIOIC Conditi,ons 395

to challenge it within the time prescribed in the contract, the arbitraltribunal had no jurisdiction to make an award in respect of that decisionbecause 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 to enforce the decision before the courts ofthe losing party's country, admittedly not an easy task especially 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 subclause2O.7 of the 1999 FIDIC Books. Subclause 67.4 provides as follows:

"'Where neither the Employcr nor the Contractor has given nolice of intention tocommence arbitration of a dispute within the period stated in SubClause 67.1 and therelatcd decision has become ñnal and bindíng, either p:rty ma¡ if ttre othcr party failsto comply witl¡ such dccision, aod without preiudice to any ot}rer rights it may have,rcfcr the failure to arbitr¿tion in accordance with SuÞClauses 67..I- The provisions ofSub4latrse 67.1 and 67,2 shall not apply to any such referencc."

It is unfortunate that the High Court ignored or was unaware of thebackground behind the wording of subclause 20.7. When looking at whysubclause 2O.7 (and its equivalent provision in the 1987 FIDIC Colditionsof Contract-sub<lause 67.4) was introduced, it is clear that the intentionof the FIDIC draftsmcn was not to create some sort of distinction, assuggested by the High Court of Singapore, between those arbitrationproceedings brought under subclause 20.6 to deal with the merits of a DABdecision and those arbitration proceedings brought under sub<lause 20.7to enforce a DAB decision without consideration of the substantive disputebetween the parties. Their intention was simply to ensure that "final andbinding" decisions could be enforced in arbitration. It was not to prevent aParty .from refcrring to arbitration the other party's failure to comply withdecisions that arc "binding" but not "final".

with that background in mind, the author suggests, the High Court waswrong in concluding that, wrthout an express right provided fõr under thecontract, CRW was not allowed to refer to arbitration 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 that:

(a) a DAB decision is binding and the parties have to comply with it"notwithstanding that a Party gives a Notice of Dissãtisfactionwith such a decisiont>2r; arrd

(b) the winning par! may refer directly to arbitration a failure of thelosing parry to comply with "uny decision of the DAB, whetherbinding or lìnal and bindir:rg".zz

2r Gold Book, sub<lause 20.6.22 llrid. subclause 20.9.

"implicitJy rejectedref'er to arbitration

396 The Interna,tional Construction Law Røiew [2011

A similar wording would have been desirable in the MDB HarmonisedEdition of the Reä Book which was first published in May 2005 and

su 2006 and Junc 2010' The High Courtsp ubdause 20.7 had not been amended intit conclude that the drafters of that form

Prof Bunni' n to allow the winning party tocomply with a DABa ure of the losing party to

decision".23 This conclusion is totally ttnfoundecl'Significantly,by reading too much into sut>clause 20.7 and its distinction

with"subclaus'e 20.ø, the l{igh Court also ends up misconstruing sut>clause

20.6. In its decision, it relies-on the arbitral tribunal's express powers undersubclause 20.6 "to open up, revrew and revise . . . any decision of the DAB"to suggest that ,n

"ibittal tribunal would have no _powe-r to determine a

dispu"rË relating to the failure of one P-arty t9 c9:npry.*olh a DAB decision

witirout heariñg fi.rst the merits of -that

decision.2a The effect of thatwording in suËhuse 20.6 is however not to restrict_the type-of disp_ute

which än arbitral tribunal may determinc under that sut¡clause. If a

winning party were to refer to aibi rtion the losing Party party's failure to.o*pty" *itlt' a DAB d.ecision in an arbitraltribúnâl would. of course have the Pute, whichis clearly decision is

correct-p r arbitration (as set out in subclauses 20.

This leaves the question of wheth arbitral tribunal ought to have

opened. up, reviewdd and revised the DAB decision in circumstances wheretËe dispuie was limited to thc failure to comply with the DAB decision'

According to the High Court,,,An arbitration commenced under Sub.Clause 20.6 requires a revicw of the correctness

of the DAB decision"2s and therefore "the Arbitrat Tribunal must be asked by CRW to

review the correctness of the DAB Decision before it can made the DAB Decision'frnaland t¡indinE'."'u

Why a successful party must ask an arbitral tribunal to revicw the.ot."áto.ss of the DAB decision with which ic is satisfied is unclear. This, theauthor suggests, d.oes not make much sense and is certainly not a

requiremeáT of sut>clause 20.6. It is obviously open to the losing-pat_ty.t9

r.q...rt th. arbitral tribunal to o_pen_ -up, review and revisc the DABdeôision. Howeve¡ such a request should not, prevent tlre arbitral tlibunalfrom making an award in resþect of the losing party's failurc to give effectto a DAB decision.

23 High Court decision, [21].24 lbid. lz5l.25 ltid. lzTl.26 tbid.1341.

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

It appears that, on the facts of this case, PGN did ask the arbitral tribunalþ open up, review and revise the DAB decision. In these circumstances,yfrqhTlg Tu+9 a partial award ordering payment of the amounr ser outin the DAB decision, the arbitral tribunatitioút¿ have looked at the merirsof the case b,y reviewing the DAB decision. The arbitral tribunal howeverrefused to do so in this casc, on the basis ttrat pGN had. not filed acounterclaim in the arbitration, and it then proceed.ed. to make a finalaward argue!, that the arbitral tribunal may haveerred ity to pGN to present its case in relation tothe u was the subject of the DAB decision.Interestinslr, ttris is the main basis for the iourt of Appeal decision, asexplained further below.

4. THE DECISION OF THE SINGAPORB COURT OFAPPEAL: CRW v. pGN27

The Court of Appeal decision

{fthgugh the co.u¡t gf {ppgul ultimarely confirmed rhe High courtdecision to set aside the Final Award, the basis on which it råched itsdecision is quite different.

. The basis f<rr rhe Courr lSJuly 2011 essenrialtylies with the m_atters whicl apioiírted ro decide asset out in the Terms of Reference paities. The court ofAppeal explains the following:

"Thc 'l'OR ['l'crrns of Rcfcrencc] .*t.ltcd clcarty tt¡at the Arbit¡ation was commencedPu idons of Contract. Furtheç it is plain that

lli by the parries, corisenr, conferred an

Inwas entitled to immediate payment ofadditional issues of fact or lawwhich thedeem necessary to decide for the purpos

With what the Court of Appeal describes as "this crucial backclrop inmind", it went on to consiãêr whether the Final Award. was issued inaccordance with sut>clause 20.6. Trcfusing to open up, rmstcad to make a finalthe arbitral tribunal had ignored. the r

"fin1lfy [settle] " the dispúte berween rhe parties. The court of Appealconsidered that:

,_Wa]jl: |lajoritf. M:*!:T oug_ht ro have d.one, in accordance with rhe TOR (and,rn partrcular' subcl 20.6 of the 1999 FIDIC conditions of contiact)," lzott1 sccA 93.28 Court- of Appeal decision, [43].

398 The Intunational Cunstructi.on Law Reuieu [2011

was to make an interim award in favour of CRW for the amount asscssed by theAdjudicator (or such other appropriaæ amount) and then proceed to hear the parties'subst¿ntive dirpute afresh before rnaking afnnlaward."2e

The Court of Appeal considered that the Final Award was therefore notissued in accordance with subrclause 20.6, which in turn raised the questionof whether thc arbitral tribunal exceeded its jurisdiction in making theFinal Award (Article 34 (2) (a) (iü) of the Model Law) and whether ir

atural justice (section 24 (b) of rhe SingaporeAct). These were rhe two grounds rclied uþon byFinal Award and accepted by rhe Courr of Appeal

in this appeal.so They are discussed brielly below,

Whefher the arbitral tribrural exceeded its jurisdiction in making theFinal Award

It is interesting to note that the Court of Appeal makes no reference to thefact that the Dispute that CRWreferred to arbitration in ICC Case No 16122(namely PGN's non-payment of the surn set out in the DAB decision) hadnot been fìrst referrecl to the DAB and was therefore outsicle the arbitraltribunal's jurisdiction as the High Court decided (correctly in the author'sview) in its decision of 20July 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, reviewing and revising the DABdecision.

be right that the arbitral tribunalview and revise thc DAB decision insub<latlse 20,6 and the Terms offailure of the Majority Members to

consider the merits of the Adjudicatorls decision before making the FinalAward meant that they exceeded theirjurisdiction in making that award".31The Court of Appeal, rather confusingly, exptains that ran arbitrationcommenced under sub<lause 20.6 constitutes a rehearing, which in turnallows the parties to have their dispute "finally settlcd" in tlrat arbitra-tion"32 without delìning what the dispute is. In [his case, the dispute simplyrelated to PGN's non-payment of the sum set out in the DAß clecision-iúbreach of sub<lause 20.4, not to the undcrbang dispute that was the subjectof the DAB decision.

æ nid, [791.

_t: PÇI did not disputc tlte de to reject its subrnissions on.A,rt 3a (2) (a) (iv)of the Modcl Law, namel¡ that " s noi in accolda¡rcc with tl¡c agreement of thepartier, wlriclt requirecl the mcr ute and/or thc question of wñether the DABDecisi<¡n was made in accordance with ttrc Contract to be dcternriued prior to making that decision afinal award" (High Court decision, [9]),5r Court of Appeal decision, [85].

52 lbid. [82].

Pr 4l Enfarcemmt of DAB 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 its jurisdiction. The real questionis whether the Tribunal failed to exercise the authority that the partiesgranted to it by declining to open up, r9vi9w a^nd.revisc the DAB decision,ãnd whether this failure falls within Articlc A4 Q) (a) (iii) of the Model Law.

Unfortunately, this is not clearly addressed by the Court of Appeal in itsdecision.

Whether there was a breach of the rules of natu¡al justice at the arbitralhearing

In its clecision, 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 itsä[egations as tÒ which rule of natural justice had been contravened, andalso pointed out that PGN had been given an opPortunity to present oru"g,rê iß 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 Adjudìcator's decision, wittr all the relevant submissions and evidence, at a

' subsequent heáring before the AÍbiûal Tribunal. Howeveç it was denied this opportu-nity a.sthe Majority Members summarily made the Final Award without considering the

merits 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 wõuld have to start a fresh arbitration to review t]'e 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 can a winning party do to enforce a binding but not final DABdecision if the tosing pa.ty r.f"ses to give prompt effect to it as required bysub-clause 20.4?

As seen above, the High C possibility-of a simplereferral to arbitration of the omply with a bindingbut not final DAB decision. r felt in its judgmentthat it had to highlight 'far compkteness" what would then be open to a

ssCourt of Appeal decision, [94]

400 The International Construction Law Reuiatt [2011

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

(a) refer the underlying dispute covered by the DAB decision toarbitration 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 sec,r.. 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 arbitration".3s

Ítris section examines the practical problems raised by the solutionproposed by the High Court and considers whether any alternative andpríma faci¿ more simple options may be available to a party in whose favourã Uir,aing 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 arnount of the DAB decision in an interimpa;rment application.

o Óption 2: Refer directþ to arbitration the losing party's failure tocomply with the DAB decision.

o Option 3: Commence another DAB in respect of the losing party'sfailure to comply with the DAB decision and then refer that narrowdispute to arbitration.

. 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 application

Pursuant to sut>clause 14.3 (Ð of the 1999 Red and Yellow Books,36 a

contractor who has been awarded a sum of money following a DAB decisionshall include that sum in an interim payment application. If the contractordoes so, what should the engineer then do?

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

åa High Court decision [38].35 Court of Appeal decision' [66].36 SuL¡clause i4.3 provides: " . . . The Statement shall include the following items . . (0 any other

additions or deductiòns which may have become due under the Contract or otherwise, including those

under Clause 20 lClnin^s, Disþutts ønì, Arbitrationl .- ."

Pt 4l Enforcemcnt of DAB Decisions und,er lggg FIOIC Con:d,itions 401

qt'bsequently fails to pay the relevant Interim Payment Certificate ("Ip C,,),the contractor may rhen consider suspending ïork (sub<lau.. io.t¡ áíterminating the conrract (sub<lause 16.2 (c) ) iemployer's failure to pay rheamount due under an IPC).

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

the IPC. Inreresringl¡ the Golduires the Employer's Representa-ed by the DAB.37

I FIDIC Books, a dispute would ariseht to have certified the sum award.ed by thecould then be referred to the DAB for itsuld sul

non-flnal and arguably no real grterminating the contract.

. Option I is therefore unlikely to be an attractive route for a contractor

ryho is seeking immediate payment of the amount set out in a DABdecision.

Option 2: Refer {lectly to arbitration the losing party's failure to complywith the DAB decision

Can the winning parq simply referto comply with the DAB decision wi

Wcase, t

the DAIub<lause 20.4 (which requires rhe decision to

be. given effecc prgmptly)-and is a new and separate dispure from theoriginal dispute referied to the DAB. Pursuanr to sub-clausàs 20.4 to 20.6(and suþegt to the.exceprion of sub<lause zO.g-DAB no longer in place),""y. 1-.-h dispute will have to be referred first to rhe DAB foi irs ¿ecisioá,and followil$_ the giving of a notice of clissatisfacrion, the parties will haveto compll yrth the amicable settleTe.nt proced.ure before ih" di.p,rre maybe referred to arbitration. Failing rhis, the losing parry may objËct to thá

EshsrnOA

6 lObtaining Disþute Adjud.i.cation Board's Decisionl

402 The Intnnational Construction Law Rnian [2011

jurisdiction of the arbitral tribunal on the basis that the pre-conditions to

arbitration have not been fulfilled.Inrerestingl¡ in two of the four recent (unpublished) ICC cases of which

the aurhor is aware (in addition to ICC Case No 16122) where non-flnalDAB decisions were enforced by arbitral awards, the winning party did notrefer first ro the DAB the dispute relating to the losing party's failure tocomply with the DAB decision. Will this prove fatal to any enforcement ofthosè åwards? 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 award

mad.e 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 objections

being raised by the losing party during the arbitration or the enforcementprocãedings, a winning p*ty should therefore be advised not to proceedãirectþ wiitr Option 2 but to revert first to the DAB for a decision on the

losing party's failure to comply with iCs original DAB decision.

Æinãugn a second set of DAB proceeding-s fnay aPPear l" !: pointles-s,

this is, thé author suggests, the result of a lacuna in the drafting,of rubclause 20.7 ofthe 199éilUC Books. As explained above, that problem has

now been addressed. in the GoId Book which makes clear in its sub<lause

20.g that a pafty may refer directþ to arbitration the other party's failure tocomply øitr any decision of the DAB "whether binding or final and

binding".

Option 3: Commence another DAB (DAB 2) in respect of th¡ lo,sing

parqrrs failwe to comply with the DAB decision and then refer thatnarrow dispute to arbitration

Option 3 is the situation where a winning parry decides to go.back to the

DAB 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 sub-clau se 20.4for failing t9 qive effect p."--Plyto rhe nrif nnb decision and ordering the payment of the sum awarded by

the DAß and/or any damages flowing from that breach), the losing party is

likely to give again noticJ of dissatisfaction, and after the expiry of-theperiôd fðr amicable settlement, the winning Parq will be allowed to

proceed to arbitration.The key question raised by the Singapore courts' decisions is whether

that arbitration can be limited to the losing party's failure to comply withthe first DAB decision so as to simpliff the proceedings'

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

Pt 4l Enfmcement of DAB Decisions under 1999 FIDIC Conditionç 403

answer to that question is most definitely "ne". 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 subclauses 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 dispute aîyway simpli$' the arbitrationprocee dings?

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 (as

in 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 Løw Reuiew [2011

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

The effect of forcing the losing parry to commence its own arbitration isof course to reverse the parties' role in the arbitration in relation to theunderþing dispute which was the subject of the DAB decision. The losingpattf, as claimant in those proceedings, will have to establish that the firslDAB decision was incorrect and that the winning parry was not entitled tothe money awarded by the DAB. This may be advantageous for the followingreasons:

(a) The winning partywilt be able to get on with its claim for immediatePayrnent of the sum awarded by the DAB without having to spendsignifrcant time and money to prove again its entitlement.

(b) An arbitral tribunal may be more inclined to make a partial awardin, respect of the winning party's claim at anl early stage of thearbitration proceedings if it becomes clear that a long time will berequired for the losing parq to establish its case regarding themerits of the DAB decision. Any such award, provided of cóursethat it is n_ot ignored by the losing party, would put the winningParty in a fâvourable financial position and also a strong bargain-ing position in any amicable settlcmenr discussions.

Option 4: Proceed with DAB 2 and then refer to arbitration both theoriginal dispute and the losing party's failure to comply with the firstDAB decision

Tl: idea of option 4, which both the High courr and the Courr of Appealof Singapore seem to favour, is for the winning party to refer to arbitrationboth.the _original dispute covered by the DAB decision and the losingparty's failure to comply with the original DAB decision.

a1A¡ticle a (6) of the ICC Rules provides:"When.a party submils.a Request in connection with a legal relationship in respect of whicharbitration proceedings between thc same parties are already pending undeithese Rules, the Court

ilïåi.1ff-,iii:ffi; ending

court. once the Terms bY the

ay onlybe included in rhe pen

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 the limits of the Terms of Referenê. ,r.tl.s it has beenauthorized to do so by the arbitral tribunal, which shalt have regard to the nature of such new claimsor counterclaims, the stage of the arbitration and other relevant circumstances."

Pt 4l Enforcemznt of DAB Decisions undu 1999 FIDIC Conditions 405

According to. the High Court, it would then be open to the winning parryto request"an interim award ais-à,-ais the DAB decision to be enforceá, *itttamount owed as set out in the DAB decision to be paid pending accord-ingly". The Singapore court also added that "[t]he amount paia 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,

by being the claimant, the winning pvrry may gain somecontrol over the conduct of the proceedings. option 4 -Jy also bepreferred where the winning party is not entirely satisfied 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 that the arbitration willinevitably focus more on the merits of the underþing dispute which was thesubject of the first DAB decision than the fact tt"ithe 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 wilt be pleaded at thesame time and the first opportunity which the winning party may have torgqtest a partial award in respect of the losing party's failure to comply withthe DAB decision is likely to be many months after the filing of its requesrfor arbitration.

Considerations such as "lack of urgency" may then be raised by thelosing Puty to resist the making of a partial award ahead of the hearing ofthe underlying dispute, especially if that hearing is only months away. Íhelosing party may also argue thar the winning parry witl in any evenr be

1degullely compensated by an award of interest on the sums awarded bythe DAB. Why can't the winning party then wait a few more months for thefinal hearing and a final award on the underlying dispute?

The follo*irg points can be made by the winning par\r:(a) [Jrgency is irrelevant to the winning party's application for a

Partial award in respect of the other party's failure to comply witha DAR decisio . This is because the award sought by the winningparty is not a provisional or conservatory measure for whichevidence of urgency may need to be demonstrated. The awardsought by the winning party is one giving full immediate e{Tect 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 subclause 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 Intsrnational Construction Law Rcuierx [2011

dispute separate from the undetlp"S dispute c-oyergd þ7 tne-O{ndeôision. Ùnless that is made clear to the arbitral tribunal, thetribunal may proceed to make only l provisional award, which is

unlikely to be enforced internationally'(b) As for ihe suggestion that interest is an adequate_remedy where

damages are being sought, the correct measure of damages f9l ubreach by the losing party of its obligation under subclause 20.4to give prompt effect to a DAB decision is for Payment of theamount awarded by the DAB, and not simply interest. Thewinning parq should also recover as damages the reasonablecosts 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 subclause 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/partial/interim/provisional) and the type of relief(specific performance/damages) which it is seeking. This is discussecl

further 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 that, in order to obtain the t¡enefit of theNew York Convention on the Recognition and Enforcement of ForeignArbitral Awards (1958) , arr award must be "binding" (Article V (1) (e)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 tlr,e 1927 Geneva Convention described as

a "final award". Although that simplistic interpretation is no longerprevailing, there remains a debate between those who consider that theword "binding" should have a specifi.c meaning under the Convention, and

a2Article V (1) (e) of the New-York Convention states that recognition and enforcement can be

refused where "[t]he award has not yet become binding on the parties, or has been set aside orsuspended by a compete nt authority of the country in which, or under the law of which, that award was

made".

Pt 4l Enfmcemnnt of DAB Decisions und,er 1999 FIDIC Conditions 407

rhose 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 dèbate.nu Suffice to say that the New-York Convention d,oes 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 "final"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 d.ifferentthings:

(1) a global award which determines all of the issues in dispute in thearbitration, or disposes of any outstanding issues following earlierawards 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 "parLial" awards but more between awards which frnally 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 latter, 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 Fu.rchard,,Gaillard, Gold.ma,n on [nternational Comm"øcial Arbitration (Kluwer Law International, 1999), paras.t677-1684.

aa This was, e.g., the case with the award which was the subject of the article in the Dispute BoardFederation's Nsusl¿t@ September 2010.

a5 Robert Merkin, Arhitrøtion l-aw (LLP,2004), parc. 18.7.

408 The Intnnational Construction Law Rniatt [2011

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

order on account of that hnding; a partial award, by contrast, finally disposes -of

a

particular issue which has arisen bemèen the parties and is wholly independent from

iater awards which may be issued by the arbitrators'"

Interestingl¡ in ICC Case 10619, the first reported case of enforcement of

a decision oitir. engineer under clause 67, the claimant / contractor did not

seek a partial u*"îd in respect of a breach of contract (namel¡ the

,.sporrd.nt's failure to pay thè amountwhich the engineer had determined

to 'be due), but ro.rgttt instead an "interim award . . - ordering the

Respondent to immediately pay the amounts det

r.r åduuttce paymen[ in respect of any further plsicl due bt itt. Respondent pursuant to thclaimant was therefore seeking in that case was a provisional relief, namely,

"to order [Respondent] to piovisionally pay the sums recognized due by

t the annual rate of 77o, Pending thethe merit lsic] of the resPective

Ie of the dispute". This explains thes to the provisions of Article 23 (1) of

the ICC Rulesa6 relating to the power of an arbitral tribunal to order

conservatory and interim -.ur.r..t and the rules of the French New Civil

Code of procedure relating to the provisional enforcement of that interim

award.The author understands that the claimant did not seek to enforce the

interim award which it obtained in ICC Case 10619. It would have been

interesting to see if the enforcement of that award would have succeeded

given theþrovisional basis on which it was made'

To reduìe the risk of arguments being raised during any enforcement

proceedings, it is advisabte-for the winning party not to seek a.provisional

ielief or cónservatory measure, which will necessarily be in anticipation ojthe ultimate finding of the arbitral tribunal in a final award, but to seek

instead a final partiäl award in the context of an arbitration brought under

Option 4, above, or a broadened arbitration under Option 3.

ty should simPlY be one givingright to have a DAB decisionsub<lause 20.4 or to damages

of sul>clause 20.4. That award will be

ue of the losing part}l's failure to give

prompt effect ro the DAB decision, which is a substanlive claim distinct

iro- ihe underlyrng dispute covered by the DAB decision.

a6 Article 2g (l) of the ICC Rules provides: "Unless the parties have otherwise agreed, as soon as the

fìle has been transmitled to it, the .{¡bitral Tribunal may, at the request of a party, order any interim or

conserva.tory measure it deems appropriate ' ' ' "

Pt 4l Enfmcemmt of DAB Decisions und,er lggg FIDIC Cond,itions 409

What relief should be sought by the winning parry: damages and./orspecific performance?

In paragraph 16 of its decision, the High Court of Singapore explains that"[s]uing in contract for breach may nõt be the best pracìical móve for thewinning p?\7,_-especially when the decision only rèhtes ro paymenr ofmoney" as- " [t]he-winning party may need to prove damages, whiih may beno more than a claim for interests on the sum owing".

As mendoned above, the correct measure of damafes for a breach by thelo$19 P.atry.of its obligation under sut>clause 20.4 to give prompr effecr roa DAB decisi<¡n is, the author suggests, for paymcnt of-th. â-on.tt awarded.by the DAB, and not simply inrerest.

This is because, in most jr¡risdictions, the basic principle of damages forbreach of contract is to put the claimant into the sãme füancial posilion inwhich he would have been had the contract been properly p.tfor-.d. Inthis case, if the losing parry had promptly given effect to the beg decision,the other p.utty would have received the.amount awarded by the DAB.

Seeking damages_fior breach of contract should therefore be an adequateremedy,-provided of course that the winning parq is happywith the amounrawarded by the DAß.

In addition, and depending 9n the applicable law, the winning parry mayseek the enforcement of its right to rave the DAB decision comþtied wittrplomptly, i.e., the specific performance by the losing parry of its õb[gationunder subclause 20.4 ro pay rhe amounr awarded 6y-the'DAB.

Here a distinction must be drawn between common law and civil lawsystems. In common law systems, specific performance is deemed to be an

lief and as such adamages do no

å'"Tililiï* T,L .or,rracr perrormed by rhe debtor.aT

S.:T.h,.specific performance is usually considered the normal remedy incivil lawjurisdictions, subject to the distinction maclc in those jurisdicti'onsbetween (i) obligations to give or to transfer propcrry and (iii obligationsto do or not to do some act.a8 Where the objeðt of the obligation whlch hasbeen breached is to give (as this would arguably be the ca-se here with thelosing p-u-.ty'! obligation to give/transfer tó the'winning parq the amount.awalded þ1 {t. DAB), its execution in kind is likely to b. regarded in civillawjurisdictions as being available as of right, regardless of Ihe availabilityof d.amages.

whom the undertaking hasreement when it is possible

and 337. Also see r E Elder, "The case Agaiñst A¡bitral Awards "ftffii#i-];råi*tiLtilTransnational Commercial Disputes" (1997) tS fu¡ Int, No l,I-ZZ.

410 The International construction Law Reuiatt [2011

The question of the arbitral tribrrnal's- power to make an order forspecific þerformance will therefore dep-end on the aPplicable law, but also

on whether the arbitration agreement/the Terms of Reference permit suchshould be advised at the outset toan alternative remedY, the sPecificbligation under subclause 20-4 to

6. CONCLUSION

It witl be interesting to see how the issue of the enforcement of DAB

d,ecisions will be addîessed in the Second Edition of the 1999 FIDIC Books

which is expected to be published next yea.r. As explained above' one

approach *iri.h the FIDIC Cont acts Committge Tigltt.4gP.t will be toamend clause 20 along the lines of the FIDIC Gol.d Book (2008), i'e', (i) by

adding in sub<lause 20.have to comply with itDissatisfactio n with such

nt thar a party fails to comply with a decision of the DAB,

g or final^and binding, then the other pTty may refet tlt.árbit¡ation without háving to refer first that matter to the

DAB and then to wait for the amicable settlement period to expire'These amendments would bring more certainty to what is currently "t

ambiguous section of the 1999 suigive parties more faith in themeantime, and as the decision ofPb a notlce

o second

referral will be in respect of what is nlmelY,

the losing party's failure to comply of sut>

clause ZOI+. e,sécond DAB is of .ó.trc" 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 und.er sub<lause 20.5) the commen'cement of an

artritration,period is pparty wishe

The k.yarbitrationfirst DAB decision without having toauthor suggests that therethat. The High Court's s

current wording of sub<lreferring to arbitration that narro$

Pt 4l Enfmcement of DAB Decisions undn 1999 FIDIC Conditions 411

would seem is its conclusion that an arbitral tribunal would have no powerto determine a dispute relating to the failure of one party to comply with aDAB decision without hearing ûrst the merits of that decision.

Although the Court of Appeal in Singapore does not address specificallythat question,ae it would seem from its decision dated 13July 2011 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 the losing partf, which may indeed happen,so nothingwould then prevent the arbitral tribunal from making a final 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 orherhand, the losing party asks the arbitral tribunal to open up, review andrevise 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 aurhor suggests, apartial awar{ can still be made by the arbitral tribunal at an early-stage ofthe proceedings in respect of that separate dispute pending the finalresolution of the parties' underlying dispute. This is now a settled practicein arbitration proceedings brought under sub<lause 20.6 as even thè Courtof Appeal of Singapore seems to recognise in the conclusion of itsdecision.sl

ae The only reference can be found at para. 63 of the Court of Appeal decision.5o See n. 39, above.5r Court of Appeal decision, t10U.