2015/7/20 EnforcementOfInterimBindingDisputeBoardDecisionsRealEstateandConstructionUK

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UK: Enforcement Of Interim Binding Dispute Board

Decisions
LastUpdated:1July2015
ArticlebyJohnWright
GoodmanDerrickLLP

InternationalconstructionprojectsfrequentlyuseanindustryformknownastheFIDICConditionsofContract.Althoughthe
contractsvary,thedifferencesarenotsignificantforthepurposesofthisarticle.

TheFIDICConditionsofContractforConstruction(wherethedesignisundertakenbyoronbehalfoftheEmployer)areknown
asthe"RedBook".Inthiscontract,thestandardformprovidesfortheappointmentattheoutsetoftheprojectofaDispute
AdjudicationBoard("DAB").AlthoughtheDAB'sprimefunctionistoassistthepartiesinavoidingdisputes,insomeprojects
thisisnotpossibleanddisputesarereferredtotheDABeitherduringthecourseofthecarryingoutoftheprojectworksor
subsequently.

Clause20.4oftheRedBookprovidesthattheDAB'sdecision:

"Shallbebindingonbothparties,whoshallpromptlygiveeffecttoitunlessanduntilitshallberevisedinanamicable
settlementoranarbitralaward..".

Clause20.4alsogoesontoprovidethatapartywhoisdissatisfiedwiththeDAB'sdecisionmay,within28daysafterreceiving
thedecision,givenoticetotheotherpartyofitsdissatisfaction.ThisiscriticalbecauseifnoNoticeofDissatisfaction("NOD")is
given,thecontractprovidesthatthedecisionbecomesfinalandbindingontheparties.

Insummary,therefore,apartywhoisdissatisfiedwiththeDAB'sdecisioniswelladvisedtogiveanoticewithinthe28day
periodasotherwiseithasnofurtherrecoursetochallengetheunderlyingmeritsofthedecision.

Thesuccessfulpartyusuallyhasarelativelysimpletaskinenforcingadecisionthathasbecomefinalandbindinganditis
unnecessarytogointothisprocedurehere.TheproblemhastraditionallyarisenwhereaNODhasbeengivenandyetthe
losingpartyhasfailedtopaytheamountorderedbytheDAB'sdecision.

ItcanbeseenimmediatelythatthedisputeresolutionsystemsetoutintheFIDICSuiteofContractsisunlikelytosucceed
unlessthereisamechanismfortheenforcementofdecisionswhichareonlytemporarilybindingandnotfinalandbinding.The
EnglishCourtshave,eversincetheadventofadjudication,beenrigorousintheirsupportoftheadjudicationprocessandhave
steadfastlyrefusedchallengesagainstenforcementunlesstherehasbeenaseriousbreakdownintheprocedureorthe
adjudicatorhasexceededhisjurisdiction.

TheEnglishCourtshavealsoinOctober2014lentsupporttotheuseofDisputeBoards.InthecaseofPeterboroughCity
CouncilEnterpriseManagedServicesLimitedtheTCCJudgeupheldaclauseinaFIDICcontractmandatingthe
resolutionofdisputesbyaDABdespiteonepartywishingtoproceedstraighttolitigation.TheauthorwastheDABappointed
bythenominatingbodyandproceededtodeterminethedispute.

Unfortunately,thesamepracticalandcommercialapproachasfoundintheEnglishCourtsregardingadjudicationandDABs
generallyhasnotgenerallybeenseenworldwideasregardstheenforcementofDABdecisions.

Althoughtherehaveovertheyearsbeenanumberofincidenceswherepartieshavesoughttoenforcetemporarilybinding
DABdecisionsreachedunderFIDICcontracts,thesehavegenerallybeeninarbitrationandthereforeunreported.Therehave
beenarticlesintheConstructionlegaljournalsregardingsuchcasesbutofcoursethefactsareveryrarelysetoutinfullanda
bodyofcaselaw,similartothatwhichexistsinEnglandregardingtheenforcementofadjudicator'sdecisions,hasnotbeen
builtup.TheonlycaseonenforcementofDABdecisionswhichhasreachedtheCourtsisthecaseinSingaporeofPT
PerusahaanGasNegara(Persero)TBKCRWJointOperation("ThePerseroCase").

Althoughthefactsofthecasearesimple,theproceduralhistoryisextraordinarilycomplexandcannotbesetoutinfullhere.
SufficeittosaythattheContractor("CRW")obtainedadecisionfromtheDABorderingtheEmployer("PGN")topayitsum
US$17,000,000.PGNissuedaNoticeofDissatisfactionverypromptlyandsothedecisionremainedonlytemporarilybinding.
PGNrefusedtopayandin2009CRWappliedtoanArbitralTribunalforenforcement.

ThefirstArbitralTribunalissuedafinalawardandthiswassetasidebothintheHighCourtofSingaporeandtheCourtof
AppealonthebasisthattheTribunalshouldnothavegrantedafinalawardasthatthenprecludedanydiscussiononthe

http://www.mondaq.com/x/407920/Arbitration+Dispute+Resolution/Enforcement+Of+Interim+Binding+Dispute+Board+Decisions 1/2
2015/7/20 EnforcementOfInterimBindingDisputeBoardDecisionsRealEstateandConstructionUK
underlyingmeritsoftheDABdecision.TheCourtssaidthattheTribunalshouldhaveissuedonlyaninterimorapartial
award,whichwouldhavekeptalivethedebateonthemeritsofthefactsandmattersunderlyingtheDABdecisionwhichPGN
wasentitledtohaveifitsowished.

In2011,CRWcommencedfresharbitralproceedingsandadifferentlyconstitutedTribunalissuedaninterimaward("the2011
Award")orderingpaymentofthesumscontainedintheDABdecision.CRWthenappliedtotheHighCourttoenforcethe2011
AwardagainstPGN,andinturnPGNsoughttosetasidethe2011Award.

TheHighCourtenforcedthe2011AwardandPGNthenappliedtotheSingaporeCourtofAppeal.ThejudgmentoftheCourt
ofAppealwasdeliveredon27May2015,butonlybyamajorityof2:1.Fortunately,amongstthemajoritywastheChief
Justice,SundareshMenonCJ.Itis,however,ameasureofthestrengthofthedissentingjudgmentthatwhereasthemajority
judgmentrunsto64pagesthedissentingjudgmentextendstonolessthan96pages.ThemajorityjudgmentupheldtheHigh
Court'sdecisionandenforcedthe2011Award.

TheCourtofAppealemphasisedthattheDABdecisionremainedbindingnotwithstandingtheissueofanNODandthepaying
partymustcomplywiththedecisionpromptly.ThechallengebyPGNtothe2011AwardwasrejectedonthebasisthatPGN's
righttohavetheunderlyingmeritsofthecasedeterminedeitherinthesameoraseparatearbitrationwasnotprejudicedor
affectedatallbythe2011AwardwhichsimplydealtwiththepaymentofthesumsintheDABdecision.

TherewasalsosomediscussionastowhetheritwasnecessaryforthesuccessfulpartyunderaDABdecisiontoreferany
failuretopaybacktotheDABbeforecommencingarbitrationproceedings.This,perhapsonthefaceofitslightlystrange,
resulthadbeenreachedinsomeoftheearlierarbitrationsbroughttoenforceaDABdecision.TheCourtofAppealmadeit
clearthatthiswasnotnecessaryandthatasuccessfulpartycouldreferthepayingparty'sfailuretohonourtheDABdecision
toanArbitralTribunalandseekaninterimorpartialawardenforcingthatdecision.

Theverylengthydissentingjudgmentwastotheeffectthatthe2011Awardwasaprovisionalawardwhichwasoutsidethe
ambitofanawardcapableofenforcementundertherelevantSingaporelegislation.Perhapsfortunatelyforthefutureof
speedydeterminationofissuesarisingfromDABdecisions,thisviewdidnotfindfavourwiththemajority.

Itisnow6yearssinceCRWobtainedtheDABdecisionbutitappearsthatPGNmayhavenowexhausteditsattemptstoavoid
payment.

AssomeonewhofrequentlysitsasaDAB,theauthorwelcomesthepragmaticapproachadoptedbythemajorityofthe
SingaporeCourtofAppealandhopesthattheirreasoningwillbeadoptedinotherjurisdictions.

Thismay,intheevent,onlybeatemporaryproblem.NotonlyhasFIDICproposedtheadoptioninitscontractsofaspecificset
ofwordingmakingitclearthatthefailuretopayatemporarilybindingDABdecisioncanitselfbereferreddirecttoarbitration,
butalsothenewFIDICSuiteofContractsisexpectedtoincludewordingincludedinoneofthemostrecentcontractswhich
putsthematterbeyonddoubt.

Thecontentofthisarticleisintendedtoprovideageneralguidetothesubjectmatter.Specialistadviceshouldbesoughtabout
yourspecificcircumstances.

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