case updates

Engineer’s non-final decision of considerable concern and notwithstanding the possibility

enforced by unanimous ICC uncertainty under both pre-arbitral that at the end they may be revised
arbitral award procedures has been what value, if any, or set aside in arbitration or by a
is to be given to the binding decision of further agreement to the contrary,
Christopher R Seppälä
an Engineer or a DAB? If such decision there is no reason why in the
White & Case LLP, Paris is not respected, are there any means face of such a breach the arbitral
by which it can be enforced? tribunal should refrain from an
An ICC arbitral tribunal, in an interim
The recently-published ICC immediate judgment giving the
award in ICC Case No 10619 (see
award referred to above expressly Engineer’s decisions their full
(2008) 19(2) ICC Int’l Ct of Arb Bull
addresses the issue and provides a force and effect. This simply is the
85-90), has unanimously decided that
most welcome solution. law of the contract.
an Engineer’s non‑final decision on a
By an interim award in ICC Case
dispute under Clause 67 of the FIDIC [Para 22, emphasis added]
No 10619, a tribunal of three
conditions of contract for works of
arbitrators, sitting in Paris, Thus, an arbitral tribunal may and,
civil engineering construction (the
unanimously held, at the request of when requested to do so, should
‘FIDIC Conditions’), fourth edition,
the claimant  (Contractor), that enforce decisions of the Engineer
1987 should be enforced by an
certain decisions of the Engineer under Clause  67 by an interim
arbitral award.
under the FIDIC Conditions, award under the ICC Rules ordering
Since the Dispute Adjudication
fourth edition, 1987 which awarded the other party immediately to pay
Board (DAB) has replaced the
sums to the claimant  Contractor, their amount even though one or
Engineer as a decider of disputes
could be enforced by such an award both parties have given a notice of
under the current (1999) editions
under the ICC Rules of Arbitration, intention to commence arbitration
of the FIDIC forms of contract for
even though one of the parties (the with respect to them.
major works (the ‘1999 FIDIC
claimant  Contractor, in fact, who As, in this case, one of the parties
Books’), the author can see no
was seeking to enforce the had given such a notice of intention
reason why the same principle
decisions) had given a notice of to commence arbitration, the
should not apply to a non-final
intention to commence arbitration dispositive section of the interim
decision of a DAB under the
with respect to the decisions. award expressly reserved the rights
current editions.
The arbitrators held that such of the parties as to the merits of the
The ICC arbitral tribunal’s
decisions can be given effect to by case until the tribunal’s final award.
decision is briefly described below.
such an interim award – which, under In this author’s view, the tribunal’s
As readers of Construction Law
the ICC Rules, is final as to the matters approach is entirely consistent with
International will know, FIDIC
decided  – because Clause  67 of the the way Clause  67 of the FIDIC
construction contracts before
FIDIC Conditions expressly provides Conditions was intended to operate.
publication of the 1999 FIDIC
that a decision of the Engineer under ICC arbitral tribunals had
Books provided for the referral of
that Clause is binding on the parties previously ordered payment of
disputes between the Contractor
notwithstanding that either or both ‘final and binding’ decisions of the
and the Employer to the Engineer
of them have given a notice of Engineer under Clause  67 of the
for decision and that, only if a party
intention to commence arbitration. FIDIC Conditions, second edition
expressed dissatisfaction with the
In this connection, the second (1969), that is, decisions which had
decision, in a specified way, could
paragraph of Sub‑Clause  67.1 not been the subject of any notice
the dispute be referred to
provides: of intention to commence
arbitration. Unless and until
‘… the Contractor and the arbitration within the contractually
revised in arbitration (or by an
Employer shall give effect stipulated time limit (90 days under
amicable settlement), that decision
forthwith to every such decision the second edition) at all (see ICC
was deemed to be binding on the
of the Engineer unless and Case Nos. 3790/3902/4050/4051/
parties and, thus, settled the matter
until the same shall be revised, 4054 (joined cases), summarised in
provisionally at least.
as hereinafter provided, in an Abdul Hamid El‑Ahdab, Arbitration
In the 1999 FIDIC Books, FIDIC
amicable settlement or an arbitral with the Arab Countries (Kluwer,
replaced the Engineer as the
award.’ Deventer, 1990) at 889‑891).
decider of disputes by a DAB. But
However, the interim award in Case
otherwise the pre-arbitral procedure The tribunal stated as follows:
No 10619 is the first example of a
for the settlement of disputes is ‘If the above Engineer’s decisions
published award of which this
essentially unchanged. have an immediate binding
author is aware where an arbitral
However, as construction effect on the parties so that the
tribunal has ordered payment by
arbitrations frequently take several mere fact that any party does
an interim award of the amount of
years and are often not even begun not comply with them forthwith
an Engineer’s decision which is
until near the end of a project, an issue is deemed a breach of contract,
‘binding’ but not ‘final’; that is,

26 Construction Law International Volume 4 No 3 September 2009

which had been challenged, within
the contractually stipulated time
period, by one or other or both of
the parties.
The same result should obtain,
the author submits, in the case of a
decision of a DAB under Clause 20
of the 1999 FIDIC Books as the
arbitral tribunal in Case No 10619
found applies in the case of a
decision of the Engineer under
Clause 67 of the FIDIC Conditions,
fourth edition. This should be so
because the relevant language of
Clause  67 of the fourth edition
(quoted above) and of Clause 20 of
the 1999 FIDIC Books is to the
same effect. Sub‑Clause 20.4 of the
1999 FIDIC Books provides as
follows:
‘The decision [of a DAB] shall be
binding on both Parties, who shall
promptly give effect to it unless
and until it shall be revised in an
amicable settlement or an arbitral
award as described below.’
Accordingly, even if one or both
parties have given a notice of
dissatisfaction (which is equivalent to
the notice of intention to commence
arbitration under the fourth
edition of the FIDIC Conditions)
with respect to a decision of a
DAB, each party is bound to give
effect to that decision (unless and
until overturned by a subsequent
amicable settlement or arbitral
award) and, if that decision calls, for
example, for a payment to be made
by one party to the other, then that
decision may be enforced directly
by an interim award pursuant to the
ICC Rules of Arbitration. That is the
logical conclusion to draw from the
interim award in Case No. 10619.
Christopher R Seppälä is a Partner in
White & Case LLP, Paris, and Legal Advisor
to the FIDIC Contracts Committee. A
shorter version of this article was first
published in Global Arbitration Review in
June 2009. An article discussing the
interim award in ICC Case No 10619 in
detail will be published in The International
Construction Law Review later in 2009.
Construction Law International Volume 4 No 3 September 2009 27
Twenty-six minutes late Important points raised by the
tender was properly rejected judgment include the following.
Rupert Choat and Siobhan Costello
Equal treatment/ rectifying
CMS Cameron McKenna LLP, London
errors
In J B Leadbitter & Co Ltd v Devon
The ITT provided that tenderers
County Council [2009] EWHC
would be given an opportunity,
930 (Ch) [2009] CILL 2713, a
after the deadline, to rectify errors
judgment delivered on 1 May
in tenders which were submitted
2009, the English High Court
before the deadline and accepted
decided that a contracting entity
by Devon CC. While the claimant
for the purposes of the public
accepted it did not submit its entire
procurement rules was entitled
tender before the deadline, it
to reject a tender for a framework
argued that Devon CC should have
agreement where part of the
waived strict compliance with the
tender was submitted 26 minutes
ITT and allowed it to correct its
late. The Cour t decided this
error (by submitting the case studies
was neither disproportionate
after the deadline so the tender
nor was it unequal treatment or
would not be rejected). It argued
discrimination. The judgment
that not permitting this would
gives important guidance
constitute unequal treatment and
on the application of tender
discrimination against it.
rules, particularly timing, and
The Court disagreed. The Court
also considers the viability of
did not find that the failure to
proportionality arguments in
include the case studies was an
procurement challenges.
‘error’ as provided for in the ITT;
The tender in question required
rather, the claimant’s tender was
at least four case studies to be
substantially incomplete. The
submitted as part of the tender.
Court’s view was that this part of
The invitation to tender (ITT)
the ITT neither obviated the need
clearly stated that each tenderer
to submit a complete tender nor
would have only one opportunity
did it provide a means by which
to submit documents to the
tenderers could supply substantial
contracting authority’s portal (and
documents or substantial sections
thereby submit its bid). The tender
of documents after the deadline so
documentation also clearly stated
as to complete tenders. Devon CC’s
the remaining tender rules.
failure to waive strict compliance
The claimant, J B Leadbitter &
with the ITT was applied equally to
Co Ltd, submitted its tender before
all tenderers. Indeed, the Court’s
the 1500 hrs deadline on the
opinion was that a waiver of terms
relevant date, but before 1500 it
which are stated as applying
realised it had failed to include the
without exception carries the very
case studies with the rest of its
risks of unequal treatment,
tender. It then attempted to submit
discrimination and a lack of
the case studies to the portal before
transparency which the contracting
1500 but was unable to do so as the
authority is required to avoid.
system only permitted one loading
of documents by each tenderer
and the claimant was now on its Proportionality
second attempt. The claimant then
The claimant further alleged that,
e-mailed the case studies at 1526
as a general principle of European
(ie, 26 minutes after the deadline).
Community law, Devon CC owed an
The contracting authority (Devon
obligation to act proportionately in
County Council) rejected the
the treatment of the tender and,
claimant’s tender on the basis that
in not doing so, it was in breach
it had not submitted a complete
of this obligation. Proportionality
tender by the deadline.
case updates
involves an authority (1) acting to
suit the purpose of their powers;
(2) achieving that purpose by means
least burdensome to those affected;
and (3) imposing burdens that are
proportionate to the intended goal.
The Court found that the
principle of proportionality is
capable of applying to the
implementation of a procurement
process (as well as the selection of
tender criteria). However, the
Court made clear that it will not
intervene on this point unless the
decision is unjustifiable. Authorities
have a ‘margin of appreciation’ to
act proportionately (unlike for
breaches of the equal treatment,
non-discrimination and
transparency requirements) so that
the court will only disturb an
authority’s decision where it has
committed a ‘manifest error’.
In this case, the Court found that
the ITT could not have been
clearer on the requirement for a
single upload and submission
before the deadline – the
implication being that Devon CC’s
decision to reject the claimant’s
tender was justifiable and it did not
act disproportionately in doing so.
Acceptance of late submissions
The Court noted the lack of clarity
in this area. It went on to state that
there may be circumstances where
proportionality will, exceptionally,
require the acceptance of late
submission of the whole or
significant portions of a tender,
most obviously where it results from
fault on the part of the procuring
authority. But, in general, even if
there is a discretion to accept late
submissions, there is no requirement
to do so, particularly where, as in
this case, it results from a fault on
the part of the tenderer.
Conclusion
Proportionality may provide fertile
ground for challenging authorities’
selection of tender criteria and
their implementation. This is at
28 Construction Law International Volume 4 No 3 September 2009
a time where there are signs of
an increasing number of tender
challenges in the UK. This increase
may be due to a combination of two
things: first, short-term financial
need outweighing the fear for some
of disputing tenders and, secondly,
accelerated public spending on
projects that risks breaching
procurement rules (although there
are reports that this is stuttering in
some areas).
Expect further cases in this
developing area. No one involved in
the procurement of public projects
can afford to be left behind.
Rupert Choat is an Partner and Solicitor
Advocate and Siobhan Costello an
Associate with CMS Cameron McKenna
LLP, based in London. This note originally
appeared on www.law-now.com.
Reproduced by permission.
The first UK court decision
on net contribution clauses
Emmanuel Ninos
Shadbolt LLP, London
The recent Scottish Court of Session
case of Langstane v Riverside & Others
[2009] CSOH 52 is the first case in
the UK to question whether net
contribution clauses are effective.
The case looked specifically at
whether a Housing Association
(Langstane) had appointed a
consulting engineer (Ramsay &
Chalmers, who were the second
defendant) on the ACE conditions
and, if so, which version (1988 or
1998). The distinction is important,
as the 1998 version contains a net
contribution clause. The Court
found, on the facts, that Ramsay
was appointed on the 1998 version
– so the Court then turned to look
at the applicability of the net
contribution clause itself.
What is a net contribution
clause?
A net contribution clause (also
known as a proportional liability
clause) is a common feature in many
standard form contracts used in
the construction and engineering
industry, such as the appointment
of an architect or an engineer
published by RIBA or ACE, for
example.
If there is a problem with a
construction project resulting in a
loss, this may well be the fault of
more than one of the parties
designing or constructing the
project. The party suffering the
loss can sue any of the parties at
fault and each will be 100 per cent
liable for damages, whatever their
share of the blame. A net
contribution clause tries to change
this position – it generally states
that the liability of each party will
be limited to the amount which
would be apportioned to that party
by a court and/or which it is just
and reasonable for them to pay.
Instead of the party who suffered
the loss suing one party at fault,
and leaving it to them to claim
against any other people jointly
liable, a net contribution clause
also puts the onus on the party who
has suffered a loss and who wishes
to recoup all of its losses to claim
against all parties potentially at
fault.
It has in the past been argued
that where a net contribution
clause is included in a standard
form contract the ‘reasonableness
test’ found in the Unfair Contract
Terms Act 1977 would apply,
resulting in the net contribution
clause being rendered invalid. This
case considered that argument.
The facts of the case
Langstane was seeking to recover
from Ramsay losses suffered as a
result of the partial collapse of a
property on which Ramsay had been
involved in renovation works and
which arose from an alleged breach
of contract and/or negligence. The
net contribution clause purported to
restrict the damages that Langstane
could recover from Ramsay.
 Langstane sought to establish
that the Unfair Contract Terms Act
1977 (the Act) applied to the
contract, and so the net
contribution clause was itself
subject to the terms of the Act. If
the Act applied, the clause could
potentially be excluded from the
contract.
In trying to establish this, a
number of points were looked at,
of which the following are the most
pertinent:
• If the net contribution clause
was shown to exclude or restrict
liability then under clause
16 of the Act the term would
have no effect if it was not fair
and reasonable to incorporate
the ter m into the contract.
So, did the clause exclude or
restrict the liability of Ramsay?
Unsurprisingly, Langstane said it
did, and Ramsay said it did not.
Ramsay said it simply sought to
ensure that they were only held
liable for the consequences of
their own breaches of duty and
were not held liable (under the
principle of joint and several
liability) for breaches of duty by
other contractors and consultants.
The Court agreed with Ramsay.
• The Court also had to consider
whether the parties were dealing
on the basis of Ramsay’s written
standard terms of business. If
they were, then under clause 17
of the Act any term would have no
effect for the purpose of enabling
a party to the contract who is in
breach of a contractual obligation
to exclude or restrict any of its
liability to the ‘customer’ in
respect of that breach, if it was not
fair and reasonable to incorporate
the terms in the contract.
• The Court agreed with the
argument put forward by Ramsay
that this clause did not apply
because they were not dealing on
their standard terms of business
– the terms were drafted and
promulgated by the ACE and
used widely within the profession.
• This meant that Langstane was
not a ‘customer’ under the Act,
Construction Law International Volume 4 No 3 September 2009 29
and the relevant clause of the Act
did not apply.
The decisions reached on the above
two points meant that the Court did
not have to decide whether the net
contribution clause was fair and
reasonable in the circumstances.
However, the Court said (obiter)
that they would hold the clause to
be fair and reasonable in any event.
The reasons given for this were
threefold:
1) Although such clauses have
attracted controversy, this has
not stopped them being used.
2) Langstane had shown willingness
to contract on the basis of the
ACE conditions.
3) Also, importantly, it was open to
Langstane to ensure that proper
insurance was in place in the
event that one or more of the
contractors or consultants was in
breach of contract or duty. If
such insurance is in place, then
it should be possible in the event
of insolvency of the contractor
or consultant to go against the
insurer. The Court saw nothing
unfair or unreasonable in the
client taking a risk that it had
adequately covered itself against
the possible insolvency of those
whom it had itself appointed.
Practical points
This case was decided on its
particular facts – it does not establish
generally accepted principles. The
judge was specifically addressing the
question of whether the clause was
so unreasonable as to fall foul of the
Act. The judgment has already come
in for some criticism, and should
not be taken as judicial approval
of net contribution clauses in all
circumstances.
You may, however, find that
people refer to this case to bolster
arguments for the inclusion of a
net contribution clause – in fact,
the ACE itself does just that in its
new suite of appointments. We do
need to remember that this is not
really justified. Joint and several
liability is an established principle
of English law – in the past
Parliament itself has reviewed the
principle and declined to amend it
– and this Scottish case does not
over-ride Parliament. The decision
may represent a persuasive
authority for the English courts,
but we do not know what decision
they would reach in similar
circumstances.
If a party contracts on its own
individual standard terms, which
incorporate a net contribution
clause, then it will be much harder
to argue that the Act does not
apply. As such, the party will have
to prove that the clause is fair and
reasonable in all the circumstances.
Do not assume that net
contribution clauses drafted by
ACE, RIBA or similar professional
bodies are appropriate in all cases
– there will be projects where such
clauses should be amended or
struck out, in order to represent a
fair balance between the parties.
In any event, it is good practice
for all parties in a project (but
particularly a client) to consider
what would happen if one member
of the professional team were to
enter insolvency, and check
whether appropriate insurance is
in place.
Emmanuel Ninos is an Associate at
Shadbolt LLP, London. This article was
originally published on www.lexology.
com. Reproduced by permission.
EU/UK procurement – the
three month rule
Jeremy Glover
Fenwick Elliott LLP, London
It is well known that claims brought
for a breach of the 2006 Public
Contracts Regulations must be
made within a tight three month
time limit. There have been two
recent cases, Brent London Borough
Council v Risk Management Partners
Ltd [2009] EWCA Civ 490 and
Amar yllis v HM Treasur y [2009]
EWHC 962 (TCC) which have
case updates
considered this principle.
Regulation 47(7) makes it clear
that there is a two step process:
‘(7) Proceedings under this
regulation must not be brought
unless –
(a) the economic operator
bringing the proceedings has
informed the contracting
authority... of the breach or
apprehended breach of the duty
owed to it… and of its intention
to bring proceedings under this
regulation in respect of it; and
(b) those proceedings are brought
promptly and in any event within
3 months from the date when the
grounds for the bringing of the
proceedings first arose unless the
court considers that there is good
reason for extending the period
within which the proceedings may
be brought.’
Brent London Borough Council v
Risk Management Partners Ltd
The Brent case came before the
English Court of Appeal. Here
RMP claimed that certain contracts
of insurance had been awarded
by Brent Authority to the London
Mutual Ltd (LAML) outside of
a tender process in which they
participated. It is important to note
that RMP were only making a claim
for damages. Among other issues,
Brent said that the claims were
started more than three months after
the date on which the grounds for
bringing the proceedings first arose.
In particular, Brent submitted that
grounds for bringing proceedings
existed (and that time therefore
started to run) in November 2006
when RMP were told that Brent
was obtaining insurance elsewhere.
Proceedings were not commenced
until 6 June 2007. If Brent was right,
RMP were well out of time.
Pill LJ noted that:
“When considering when grounds
for proceedings first arose it is
necessary to bear in mind that
the Regulations prescribe the
procedure which a contracting
30 Construction Law International Volume 4 No 3 September 2009
authority must follow before
entering into a contract with a
supplier of goods or services...
It follows that a failure by the
contracting authority to comply
with any step in the required
procedure involves a breach
of duty sufficient to support a
claim under the Regulations.
Moreover, because the procedure
governs the whole process from
the formation of the intention
to procure goods or services to
the award of the contract and is
structured in a way that is intended
to ensure equal treatment and
transparency throughout, a failure
to comply with the procedure at
any stage inevitably undermines
the integrity of all that follows.’
In doing so, he expressly recognised
the problem that whilst grounds for
bringing proceedings may exist well
before the procedure reaches the
award of a contract, the Regulations
do not expressly identify the point at
which that will occur. The relevant
chronology was as follows:
(i) On 9 October 2006, Brent
resolved in principle to
participate in LAML;
(ii) On 7 November 2006, the
RMP were told by Brent’s
brokers that Brent ‘had
committed to going into the
Mutual’ but that there was
uncertainty whether it would
be ready by the next renewal
date (1 April 2007) and there
would be some insurance that
would be sought outside it
anyway. Accordingly there was
to be a full tender exercise;
(iii) At a meeting on 13 November
2006, Brent resolved to approve
participation in LAML;
(iv) In December 2006 Brent
invited tenders for cover
generally from 1 April 2007;
(v) On 18 January 2007, Brent
began membership with LAML;
(vi) Because incorrect docu-
mentation had been used, a
replacement invitation to
tender was issued on 1 February
2007. RMP tendered in time;
LAML did not participate;
(vii) On 7 March 2007 a repre-
sentative of Brent told RMP,
informally, that Brent’s
insurance would be dealt with
through LAML. In response
RMP looked at Brent’s website
and located the decision of 13
November 2006;
(viii) RMP sought formal con-
firmation by letter of 19 March
2007, and received it by letter
from Brent of 27 March;
(ix) Brent made payments to LAML
from 16 March onwards;
(x) By letter of 4 May 2007 RMP’s
solicitors raised with Brent
the question of breach of the
regulations;
(xi) Proceedings were begun on 6
June 2007.
Brent submitted that grounds for
the bringing of proceedings first
arose in November 2006 when they
resolved to approve participation
in LAML or, alternatively, on 18
January 2007 when they became a
member of LAML. Brent said that
either time runs or it does not
and a claimant cannot (if out of
time from the date a breach has
been apprehended) improve his
position by waiting for the actual
breach to occur.
The judge at first instance,
Stanley Burnton LJ, held that:
‘In my judgment, therefore, for
the purposes of the Regulations
in the present case “grounds for
the bringing of the proceedings”
first arose when the breach which
forms the subject of the claim
occurred. It would have been
different if the claim were for an
injunction to restrain a breach of
the Regulations; but it is not.
‘It is therefore necessar y to
determine when the breach of
the Regulations first occurred.
It seems to me it was when
the appellant abandoned the
tender process and awarded
the contracts to LAML. That
occurred in March 2007. Until
then, it could have lawfully
awarded the insurance contracts
to a company participating in the
tender process.’
The Court of Appeal agreed. The
key here was the date when Brent
abandoned the tendering process
and made payments to LAML.
Only then were Brent committed
to taking policies from LAML.
Before March 2007, RMP had not
sustained the damage which was
the basis of their claim. It may be
that RMP could earlier have made
an application for interim relief but
that did not start time running on
the claim actually made.
In any event, in the view of the
Court of Appeal, there was good
reason for extending the period
within which the proceedings
could have been brought, within
the meaning of regulation 47(7)
(b). As late as February 2007, Brent
issued an invitation to tender and,
late in the month, RMP submitted
a tender in response within time.
Accordingly, Brent should not be
allowed to defeat, on the ground of
delay, the claim brought by RMP at
the time it was.
Amaryllis v HM Treasury
Here Amaryllis submitted a pre-
qualification questionnaire in
respect of a framework agreement
for the supply and installation of
furniture on a national basis. The
agreement was to be divided into
six lots. Amar yllis was informed
by letter on 17 March 2008 that it
had come though the first stage on
four of the lots. On 9 April 2008
there was a meeting between the
parties at which the question of
Amaryllis’s unsuccessful tender on
Lot 1 was raised. Although there
was a considerable dispute as to
the way in which the topic was
raised, it appeared to Mr Justice
Coulson to be ‘beyond argument’
that Amaryllis wanted to know why
their bid on Lot 1 was unsuccessful
and that HMT did not give them
very much information in response.
Amaryllis wrote to HMT on 15 April
2008 seeking an explanation. HMT
responded on 21 April 2008 in a
letter which the judge again felt
did not provide a clear or cogent
Construction Law International Volume 4 No 3 September 2009 31
explanation as to how and why
Amaryllis had been unsuccessful.
On 23 May 2008, Amaryllis said it
would not be submitting a tender
for Lots 2–5 because it had no
confidence that any tender
submissions would be given a fair
and valid assessment. On 4 June
2008, Amaryllis indicated its
intentions to bring proceedings,
but again requested reasons as to
why the Lot 1 bid was rejected.
Amaryllis were of the view that they
had to commence proceedings by
16 June 2008, 3 months after they
received notice of their rejection
on Lot 1. They duly did so even
though HMT had not provided any
response to the June letter.
Amaryllis made a number of
claims. First, it appeared that no
marks were allocated to section F
which dealt with previous
experience when the tender
information stated that all sections
would be marked. Amaryllis also
complained that HMT had
evaluated the responses without
having informed any tenderer as to
the relative importance ascribed to
each question – in particular, the
importance and weighting to be
given to the environmental
management issues. The judge
described this as being a bit like
being required to do an exam
without knowing what marks were
available to any given question.
Finally, Amaryllis complained that
it was given a zero under a business
heading on the basis that it brought
in furniture rather than
manufacture it itself.
HMT said that Amaryllis were
not entitled to bring a claim
because it had not provided notice
of its intentions and had not
brought its claim in time. As stated
above, under Regulation 47(7)(a)
of the Public Contracts Regulations
2006, a party is required to provide
written notice of the breach and its
intentions to bring proceedings.
Here, Mr Justice Coulson thought
that adequate notice was provided.
The regulations were clearly
identified in the June 2008 letter
and both Amaryllis’ intentions and
the actual breach complained of
were clearly identified. Finally, the
judge said that the adequacy of the
notice had to be considered against
the backdrop of the (lack of)
information provided by HMT.
Further, HMT said that Amaryllis
did not act promptly. The judge
said that the starting point is when
the specific breach of the
regulations actually occurred. That
will often be when the actual
decision is made to exclude a
tenderer. However, here the
grounds for bringing the
proceedings first arose when the
irrevocable decision was taken by
HMT to exclude Amaryllis on Lot
1. Therefore, the relevant date was
the date on which HMT wrote to
inform Amaryllis that its bid had
been unsuccessful, 17 March 2008.
Note too that the three month
period is intended to be a
maximum period. Even if the
proceedings have been commenced
within that period, it is still
necessary for the court to consider
whether or not they have been
commenced ‘promptly’. Therefore,
here, even though proceedings
were brought within the three
month period, the judge had to
review what had actually happened.
Between 17 March and 22 April
2008, there was no culpable delay
on the part of Amaryllis. It
received a letter at the start of
Easter week and a meeting was
arranged in the first full working
week after Easter. Amaryllis then
wrote on 15 April 2008, receiving
an inadequate answer on 22 April
2008. HMT focused on the fact
that between 22 April 2008 and 4
June 2008, little, if anything,
outwardly happened to progress
this matter. However, the judge
disagreed that nothing relevant
happened during this period. The
evidence was clear that Amaryllis
was involved in making enquiries
with other potential tenderers to
try and piece together the possible
reasons for their exclusion.
Amaryllis knew that it had been
 case updates
excluded. It was entitled to gather
what information it could about
the reasons for its exclusion and
then balance the results of those
researches against the risk of
commencing proceedings against
a party with whom it had an
ongoing commercial relationship.
Finally no criticism of Amaryllis
could be made of the period 4
June and 16 June 2008, the period
where it was awaiting a response to
a letter from HMT.
In addition, the judge thought it
fair to compare Amaryllis’ speed of
reaction with HMT’s conduct
during the relevant period. HMT
FROM ICP-NET
Deleting DAB Clauses
Précis by Elizabeth Slattery
Corbett & Co International Construction
Lawyers Ltd, London
O n 7 May 2009, Edward
Corbett posted the following
question on ICP-Net in relation
to the enforcement of Dispute
Adjudication Board (DAB)
decisions:
‘How many employers will
delete the DAB provision from
FIDIC–type contracts if the
contract forces them to pay up,
either by making non-payment
a termination offence or by
giving the Contractor a right to
a summary award in arbitration?
How much difference would it
make if the Employer has a right
to security from the Contractor
in exchange for payment? I see
a lot of FIDIC contracts and only
32 Construction Law International Volume 4 No 3 September 2009
was anything but prompt. Indeed,
had it been necessary to consider
whether Amaryllis needed any
extension of time, Mr Justice
Coulson felt that HMT’s conduct
during the relevant period was
likely to have been the main cause
of any delay and that no prejudice
would have been suffered by HMT
as a consequence of that delay.
Therefore Amaryllis would have
had a real prospect of
demonstrating good reason for any
delay, had it been necessary.
Accordingly, the judge concluded
that Amaryllis was duly entitled to
pursue its claim against HMT.
a few have had the DAB clause
removed.’
Edward invited opinions from
ICP colleagues with experience of
employers removing DAB clauses,
in particular from those who advise
employers on their contracts, asking:
‘Do you think greater
enforceability will lead to more
frequent deletion? Is the problem
on a scale that should make
FIDIC war y of changing the
enforcement regime?’
Many thoughtful responses were
received from around the world
offering differing views and
experiences. The overall
impression gained from the
contributions is that there is
considerable reluctance on the
part of employers (and in some
jurisdictions contractors also) to
utilise the DAB provision in a
FIDIC contract. DAB clauses are
Conclusion
Both these cases demonstrate the
importance if you intend to make
a challenge to a publicly procured
project, of acting promptly. While
it is true that both these cases also
suggest that the courts will take a
fair and reasonable approach in
deciding whether the three month
time limit has been complied with
or not, it is important to bear in
mind that they will only do so, if it is
appropriate in all the circumstances.
Jeremy Glover is a Partner at Fenwick
Elliott LLP in London.
frequently removed by employers,
although in some countries this is
less likely where the project is
particularly large, complex or
prestigious. Those contributors
who addressed the enforcement
issue generally took the view that
this situation would not be helped
by greater contractual
enforceability, nor security in
exchange for payment.
The experience of Marc Frilet
from France is that DAB clauses are
non-existent in domestic French
contracts (notwithstanding his own
view that they can be useful in
specific situations) and that as a
general rule French contractors
are not in favour of a DAB in an
international contract. He says that
the position may be different in a
project of great complexity or
above a certain financial threshold
and suggests that the threshold of
US$50 million currently advised by