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FIDIC Disputes

FIDIC Disputes

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Published by errajeshkumar
FIDIC Disputes
FIDIC Disputes

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Published by: errajeshkumar on Oct 22, 2012
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04/13/2013

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Posted by
PLC Construction
on 2nd April 2012.
Michael Stewart, partner, Pinsent Masons LLP:
 My 
 looked at the difficulties that can arise in a typical 
 scenario where anemployer does not honour a 
 (DAB) decision that is binding, but notfinal.This blog looks at the difficultie
s that can arise in relation to the definition of the “dispute” that is
submitted to the DAB and then to arbitration.
To recap, if the contractor does not like the engineer’s determination of a claim, it refers what is by that stage the “dispute” to the DA
B. The DAB then makes a decision on the matter.
If the employer is “dissatisfied” with the DAB’s decision, it can give 
. The parties then try and settle the dispute amicably. If that is not possible, the parties can referthe dispute to 
. 
A common scenario
 This process can give rise to another difficulty. For example, consider this scenario:
 
The contractor is retained on a civil engineering project under the 
. 
 
At an early stage of the works, the contractor discovers that the site investigationinformation included within the tender is deficient.
 
The contractor brings this to the attention of the engineer and the matter is discussed inthe normal manner.
 
After some delay, the contractor is instructed to carry out additional site investigation.
 
Once the results of those investigations have been considered, the contractor then has toexcavate to revised levels, positions and dimensions.
 
The contractor incurs costs in waiting to receive instructions from the engineer, carryingout the additional site investigation and then excavating to the revised levels.
 
The contractor submits a claim under clause 20.1, the engineer determines the claimunder clause 3.5 and the contractor then submits the dispute to the DAB, seeking torecover its costs by way of a variation under clause 13.1.
 
The DAB decides the matter, the contractor issues a notice of dissatisfaction and thedispute goes to arbitration.
 
 
At this stage, the lawyers become involved. Among other things, they point out that thecontractor also has entitlements under clauses 1.19 (delayed drawings or instructions) and4.12 (unforeseeable physical conditions). The contractor then puts its claim on thesealternative bases, as well as advancing its claim for a variation.
 
The employer alleges that the arbitral tribunal has no jurisdiction to deal with thealternative claims brought under clauses 1.19 and 4.12, as they were not put before the
DAB, so are not part of the “dispute” which is permitted to be submitted to arbitration.
 
What happens here?
 The underlying facts are identical for all the alternat
ive claims. Does the employer’s argument
have any merit?Is it fair to expect the contractor to have to think of all possible legal and contractual argumentswhen the dispute is referred to the DAB? If so, would this not defeat the commercial purpose of the tiered dispute resolution provisions, effectively meaning that the contractor would have toretain lawyers or specialist claims advisors during the whole of the works?Surely it must be open to the contractor to refine its entitlements as the dispute progressesthrough the tiers within clause 20?
There is also clause 20.6, which states that “neither party shall be limited in the proceedings
before the arbitrator(s) to the evidence or arguments previously put before the DAB to obtain its
decision”, but
what does this mean in practice?
Witney Town Council v Beam
 Much will of course depend upon the jurisdiction and the governing law. In terms of the positionin England and Wales, some guidance is provided in 
. Although a decision in relation to 
,the principles are equally applicable to thescenario set out above.In
Witney
, Akenhead J held that there was only one dispute between the parties by the time of theservice of the notice of adjudication and only one dispute had been referred to adjudication. He
therefore rejected the challenge made to the validity of the adjudicator’s decision. This decision
very much depended upon the facts of the case, but Akenhead J helpfully reviewed the relevantauthorities and restated the principles that should be applied when considering whether a partyhas attempted to refer more than one dispute to adjudication.
Parallel claims and practicalities
 The answer to any such jurisdictional challenges is relatively straightforward
 – 
simply ensurethat all parallel or alternative claims are included in the reference to the DAB. However, in thereal commercial world, this is far more easily said than done.
HOW NOT TO INTERPRET THE FIDIC DISPUTES CLAUSE: THE SINGAPORE COURT OF APPEAL JUDGMENT INPERSERO CHRISTOPHER R SEPPÄLÄ * Partner, White & Case LLP, Paris Special Adviser, FIDIC Contracts

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