A judgment of July 16, 2014 of the Singapore High Court enforcing a “binding” but not “final” decision of a dispute adjudication board under the FIDIC Conditions of Contract for Construction 1999 (the so-called “Red Book”) is to be welcomed.
PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (Indonesia) emphasises the importance, when interpreting the FIDIC disputes clause, of giving effect to its intention to facilitate the cash flow of contractors, and denies that failure to comply with a “binding” but not “final” decision of a dispute adjudication board is to be interpreted as giving rise to a dispute separate from the one underlying the dispute adjudication board decision itself.
Known as Persero II, the new case is a successor to an earlier one between the same parties (Persero I). In Persero I, CRW Joint Operation had begun in 2009 an ICC arbitration against another Indonesian company, PT Perusahaan Gas Negara (Persero) TBK, for the sole purpose of giving prompt effect to a “binding” but not “final” decision of a dispute adjudication board. The arbitral tribunal had granted in 2009 the relief sought by CRW but the Singapore courts set aside its final award in 2011, holding that the arbitral tribunal was not entitled to enforce such a decision by way of a final award without addressing the merits in the same arbitration.
As a result, CRW Joint Operation began thereafter in 2011 a second ICC arbitration against PT Perusahaan Gas Negara (Persero II), requesting an interim award to enforce the same “binding”, but not “final”, decision of the dispute adjudication board as in Persero I, as well as a final award on the merits of the claims underlying the dispute adjudication board’s decision.
A majority of the arbitrators upheld CRW’s request and ordered PT Perusahaan Gas Negara, by an interim award, to pay the amount of the dispute adjudication board decision. The latter company then applied to have the award set aside.
Download the full article Article_Singapore The Second Persero Case.pdf
by Christopher Seppälä
Partner, White & Case LLP Paris
Legal Advisor, FIDIC Contracts Committee
