INTERNATIONAL CHAMBER OF COMMERCE

ICC Case No. 16765

CLAIMANT(S) V
V.. RESPONDENT(S)

FINAL A
AW
WARD

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 Table of Contents

Final Award ..................................................................................................................................................................................................... 0

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Final A
Award
ward in Case 16765 (Extr
(Extract)
act)

-.
123. It is the Claimant's position that the Respondent failed to comply with its obligation under
Sub-Clause 2.5 of the Contract to refer the matter to the Engineer for its determination under Sub-
Clause 3.5 of the Contract. The Claimant therefore requests the Tribunal to reject the
Respondent's Counterclaim.

124. Clause 2.5 of the Contract provides in relevant parts that:

If the Employer considers himself to be entitled to any payment under any Clause on these
Conditions or otherwise in connection with the Contract, and/or to any extension of the Defects
Notification Period, the Employer or the Engineer shall give notice and particulars to the
Contractor.

[...]

The notice shall be given as soon as practicable after the Employer became aware of the event or
circumstances giving rise to the claim. A notice relating to any extension of the Defects
Notification Period shall be given before the expiry of such period.

[...]

125. Clause 3.5 of the Contract provides in relevant parts that:

Whenever these Conditions provide that the Engineer shall proceed in accordance with this Sub-
Clause 3.5 to agree or determine any matter, the Engineer shall consult with each Party in an
endeavour to reach agreement. If agreement is not achieved, the Engineer shall make a fair
determination in accordance with the Contract, taking due regard of all relevant circumstances.

[...]

126. Moreover, Clause 20.4 of the Contract provides in relevant parts that:

If a dispute (of any kind whatsoever) arises between the Parties in connection with, or arising out
of, the Contract or the execution of the Works, including any dispute as to any certificate,
determination, instruction, opinion or valuation of the Engineer, then after a DAB has been
appointed pursuant to Sub-Clause 20.2 [Appointment of the Dispute Adjudication Board] and 20.3
[Failure to Agree Dispute Adjudication Board] either Party may refer the dispute in writing to the
DAB for its decision, with copies to the other Party and the Engineer. Such reference shall state
that it is given under this Sub-Clause.

[...]

127. It appears from the provisions referred to above, that the Contract created a multi-tier
mechanism to be followed should a dispute arise between the Parties. The Tribunal is of the view
that the Respondent's Counterclaim on delay damages is a matter of admissibility rather than
jurisdiction.

128. The Tribunal has reviewed the evidence presented to it during the proceedings, which

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 include the DAB Referrals 1 and 2. There is no indication from these documents that the
Respondent has raised its Counterclaim regarding delay damages ... prior to the present
arbitration, before the Engineer or the DAB. In particular, the Tribunal has reviewed the Parties'
positions in the DAB Decisions 1 and 2 as well as the Parties' Notices of Dissatisfaction, and notes
that the Respondent did not at any time raise claims before the DAB in relation to its
Counterclaim for delay damages ... in the present arbitration. Although the Respondent could
have submitted its Counterclaim for delay damages before the DAB when Referrals 1 and 2 were
filed, however the Tribunal notes that the Respondent missed its opportunity to file its
Counterclaim before the DAB. The Tribunal considers that the Respondent is only legally entitled
to bring a claim at arbitration if it first complies with the Contract, namely Sub-Clauses 2.5, 3.5,
and 20.4. In particular, paragraph 6 of Clause 20.4 of the GCC provides in pertinent part, that: "[...]
neither party shall be entitled to commence arbitration of a dispute unless a notice of
dissatisfaction has been given in accordance with this Sub-Clause". The Tribunal is of the view
that the Respondent failed to comply with certain mandatory and exclusive provisions of the
Contract regarding its claim for delay damages. By failing to comply, and in the circumstances of
this matter, the Respondent is contractually barred from bringing its Counterclaim for delay
damages in this arbitration.

129. Consequently, the Tribunal considers the Respondent's Counterclaim for delay damages ...
not to be admissible in the present arbitration.

.........

153. For the sake of completeness, the Respondent argues that the Claimant is not entitled to an
Extension of Time for Completion or compensation, since its Claim was time-barred for failure to
comply with Sub-Clause 20.1 of the GCC. The Claimant argues that Sub-Clause 20.1 is ambiguous
and calls for interpretation. For the Claimant, the service of a notice to claim within 28 days from
the event which may potentially generate a claim, would be lacking any purpose in case the
Contractor does not subjectively consider that this event may ultimately cause him to incur
additional cost and delays to completion, applying therefore a subjective interpretation of the
Claimant's obligation under SubClause 20.1.

154. The Respondent submitted that Sub-Clause 20.1 is not ambiguous, and that the Claimant's
notice of claim for compensation resulting from an alleged late approval of the Process Design
was only made on 25 September 2006 (letter 471), that is to say 18 months from the
circumstances giving rise to such claim.

155. The Respondent also submitted that as far as the Claimant had any claim resulting from
issues concerning the total phosphorous load, the Claimant became aware of the event or
circumstances giving rise to any such claim as soon as 19 January 2005, but that the relevant
notice was also late, for having been given by letter of 3 January 2006 (letter 209).

156. The Respondent also drew the attention of the Tribunal to the Engineer's letter of 5 October
2007 (letter 587) whereby the Engineer indicated that:

I agree that letters 209 and 471 constitute valid notices under the first paragraph of Sub-Clause
20.1. However, I note that letter 209 is headed "Process Design - Total Phosphorous Load" and the
content refers exclusively to the total phosphorous problem. I also note that the statement "the
lack of agreement starts to cause delay to our programme of design works" constitutes a starting

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 point for any alleged delays.

[Claimant] also state[s] in letter 10171 that their letter 471 refers solely to the alleged delay to the
"Sand and Grease Removal".

I note that [Claimant] letter 5162 is headed "Default by the Engineer to Timeously Review Design
Documents" and states that "This event relates to the effects of the failure by the Engineer to
review the Contractor's process design", followed by "The event has resulted in delay for which
the Contractor is entitled to an extension of time pursuant to GCC 8.4(e) ..." This is a clear notice
for an extension of time which complies with SubClause 20.1.

Having considered these requirements I confirm that letters 209, 471 and 516 constitute valid
notices under Sub-Clause 20.1., subject to the limitations due to the dates and contents of the
letters. The Contractor must prove that any detailed claims are within the scope of the statements
made in the notices. [Footnotes and emphasis added]

157. [The Adjudicator] states in the DAB Decision 2 that: "[t]he drafting of SC 20.1 is not elegant
but reasonably construed it means that a Contractor must have reached the view that it is
entitled to time or payment before notice need be served. In other words, any delay caused to the
Contractor must have become critical delay which could not reasonably be mitigated by the
Contractor. The point in time of the event or circumstance (from which the 28-day period
commences) is the time when (actually or constructively) the Contractor reaches the view that it
has an entitlement. It is very subjective. On the evidence I do find, however, that it is was
reasonable that [Claimant] did not reach the view of there being an entitlement before December
2005 and thus the notice on January 2006 was in time. I would add that in construing the notice
provisions of the Contract, the benefit of any doubt must be given to the Claimant. It would be
contrary to justice for [Claimant] to be denied its right to claim under the contract or the law by
reason of a limitation clause that was arguably ambiguous. I thus find that [Claimant] was in time
with its claims."

158. In this regard, the Tribunal notes once again, that it has the obligation to review all evidence
presented to it during the arbitration. The evidence in the present arbitration is not limited to the
DAB Decisions, and while the Tribunal takes into consideration the DAB's Decisions, the Tribunal
is not bound by the conclusions of the DAB in its Decision 2, which was the subject of Notices of
Dissatisfaction on the part of both Parties. The Tribunal has carefully reviewed Referral 2 as well
as the Parties' Notices of Dissatisfaction, and has analysed both the DAB Decisions 1 and 2. In
particular, the Tribunal has taken note of the DAB's interpretation of Sub-Clause 20.1, as well as
the DAB's conclusion concerning the timing of the Claimant's claims.

159. However, the Tribunal notes that the DAB's conclusion does not distinguish among such
claims, despite the requirement of Sub-Clause 20.1 concerning the content of the notice under the
FIDIC Conditions, which require that such notice describes "the event or circumstance giving rise
to the claim". The DAB's interpretation of Sub-Clause 20.1 is not in and of itself a "trade usage"
and is only one interpretation of Sub-Clause 20.1 available in the file which the Tribunal has
considered. It is not the only one, and is not binding upon the Tribunal. Again, it is for the

1
Of 30 August 2007.
2
Of 26 October 2006.

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 Tribunal to rule upon how Sub-Clause 20.1 is to be read, interpreted and applied according to its
terms. In particular, since the Parties disagree in this arbitration as to whether (i) Sub-Clause 20.1
is ambiguous or not, and (ii) whether the letter 209 of 3 January 2006 constitutes a timely notice
for the Claimant's claim that alleged delays in the approval of the Process Design actually caused
delays to the Works, it is for the Tribunal to decide these issues, based on the Parties' submissions
and evidence submitted in this arbitration.

160. This being said, the majority of the Tribunal considers that whether Sub-Clause 20.1 is
ambiguous or not is a matter of pure legal nature which is subject to the view and decision of the
Tribunal. [The Adjudicator] may have found in his Decision 2, as the Claimant has claimed in this
arbitration, that the Claimant's letter of 3 January 2006 "was in time" and constituted proper
notice under SubClause 20.1 of the GCC. However, this decision is not binding on this Tribunal.

161. As recalled above in paragraph 145, in its Decision 1, the DAB specifically indicated that
since the Claimant had not been claiming for time or payment, it would not apply Sub-Clause 20.1
of the GCC to its determination under Referral 1. In other words, the DAB Decision 1 is irrelevant
for the purpose of determining whether the Claimant complied with Sub-Clause 20.1 of the GCC,
and again, Decision 2 is not binding on the Tribunal.

162. It is only in DAB Decision 2, which is admissible as evidence in this arbitration, but has not
become final, that the DAB addressed the issue of the Claimant's compliance with Sub-Clause 20.1
of the GCC. This decision was based on the assumptions that (i) Sub-Clause 20.1 of the GCC would
allow the Claimant to make a claim "when it reaches the view that it has an entitlement", and (ii)
notice under Sub-Clause 20.1 would have been given by the Claimant in its letter of 3 January
2006.

163. First, the majority of the Tribunal respectfully differs with [the Adjudicator]'s interpretation
of Sub-Clause 20.1 of the GCC and his conclusion thereof, and such majority does not consider
Sub-Clause 20.1 of the GCC to be ambiguous. In fact, Sub-Clause 20.1 is referred to in the FIDIC
Conditions of Contract for Plant and Design-Build - The Yellow Book, and is a standard clause
used in FIDIC contracts. Sub-Clause 20.1 also expressly states that notice under Sub-Clause 20.1
should (i) describe "the event or circumstance giving rise to the claim" and (ii) be given "not later
than 28 days after the Contractor became aware, or should have become aware, of the event or
circumstance giving rise to the claim." [Emphasis added].

164. The majority of the Tribunal is of the view that the language of Sub-Clause 20.1 of the GCC is
clear in respect of the Contractor's obligations, and does not call for interpretation. The
Claimant's interpretation of Sub-Clause 20.1 is based on the assumption that such clause would
be ambiguous, and the Claimant refers to [articles] of the [applicable] Civil Code regarding
ambiguous provisions. Since the majority of the Tribunal considers Sub-Clause 20.1 not
ambiguous it therefore sees no need to apply such provisions in the present circumstances.

165. Sub-Clause 20.1 of the GCC provides that:

If the Contractor considers himself to be entitled to any extension of the Time for Completion
and/or any additional payment, under any Clause of these Conditions or otherwise in connection
with the Contract, the Contractor shall give notice to the Engineer, describing the event or
circumstance giving rise to the claim. The notice shall be given as soon as practicable, and not
later than 28 days after the Contractor became aware, or should have become aware, of the event

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 or circumstance.

If the Contractor fails to give notice of a claim within such period of 28 days, the Time for
Completion shall not be extended, the Contractor shall not be entitled to additional payment, and
the Employer shall be discharged from all liability in connection with the claim. Otherwise, the
following provisions of this Sub-Clause shall apply. [Emphasis added]

166. Applying [a provision] of the [applicable] Civil Code, referred to by the Claimant, which
provides that: "legally concluded agreements have the power of law between contracting
parties", and applying [another provision], pursuant to which: "agreements shall be fulfilled in
good faith", the majority of the Tribunal considers that the Claimant' s claim for an Extension of
Time in the present arbitration (which is generally based on the allegation that Engineer's delay
in approval of the Process Design - the event or circumstance giving rise to the claim - caused
delay to the Works), is timebarred since notice of delay and claim for an extension of time on the
part of the Claimant was given later than 28 days from approval of the Process Design, that is to
say, 28 days from 13 April 2006 ...

167. In the majority of the Tribunal's view, Sub-Clause 20.1 was drafted specifically as stated
above to avoid any doubt as to the date on which the 28 days should start running, and to avoid
any subjective interpretation of that date, which is the approach that has been adopted by the
Claimant when reading SubClause 20.1. The majority of the Tribunal considers that the 28-day
time limit stipulated by Sub-Clause 20.1 does not run, as argued by the Claimant, from the day the
Contractor "considers itself entitled to an extension of time and additional payment", but rather
from the day the Claimant became or should have become aware of the event or circumstance
giving rise to its claim.

168. Second, compliance with Sub-Clause 20.1 of the GCC is not limited to the timing of the notice
but also the content of the notice. To identify whether a communication qualifies as a notice for
the purpose of Sub-Clause 20.1, the Tribunal must examine the contents of said communication.
It is clear to the majority of the Tribunal based on the evidence presented to it, including the DAB
Decisions, 3 the Tribunal Expert reports4 and testimony during the Hearing, 5 the Claimant's
submissions on compliance with Sub-Clause 20.1 conditions, 6 and Claimant's letter of 3 January

3
The DAB Decision 1 only refers to the Claimant's letter of 26 October 2006 as a letter by which the Claimant would have made a claim in
respect of the "Default by the Engineer to Timeously Review Design Documents".
4
The Tribunal Delay Expert states in his report … that the Claimant's 3 January 2006 letter "is not a formal notice of claim for delay as
required by Clause 20.1. GCC Clause 20.1 states that a Contractor should give notice that the Contractor is being delayed within twenty-eight
days of becoming aware or should have become aware of the event or circumstances. However, the [Engineer's] letter of 03 January 2006 can
be construed as a notice of delay. [Claimant] could potentially be compensated for delays starting 28 days prior to 03 January 2006 if it is
determined that the Engineer … is responsible for delay. [ ...] However on 25 September 2006 [7], [Claimant] submitted its formal claim for a
12-month time extension as a result of late approval of the Process Design." Also the Tribunal Design Expert states in his … report that: "as at
3rd January 2006, [Claimant] were advising of delay or prolongation to the design, but did not at that date state that the Works would not be
completed until after the Contract completion date. [...] Moreover in that letter, [Claimant] requested [the Engineer] to issue instructions or
variations for DATPL or to give a determination in accordance with GCC 3.5. On the basis of this letter and at that date, it is apparent that
[Claimant] were of the view that there had been no acts of prevention and no instructions had been issued to cease design work while DATPL
was ascertained."
5
During the Hearing, the Tribunal Delay Expert expressed the view that "[a]s a contractor I would have, you know, in March and February
be saying approve the process design and they kept going back and forth and we did not see any letters in the file by the contractor to the
engineer saying, 'Approve the process design. You are delaying the project'. The first letter showing that this was impacting the project
somewhat was in January 2006 when the contractor wrote a letter saying, 'Gee, all this back and forth on this process design is impacting
me'."

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 2006 itself - the contents of which the Tribunal has examined carefully - that said letter is not a
Sub-Clause 20.1 of the GCC notice of delay based on an alleged failure of the Engineer to approve
the Process Design. This view is also shared by the Engineer, as mentioned in paragraph 156
above. The DAB's Decision 2 does not address the content of that notice, despite the terms of Sub-
Clause 20.1, and is therefore of no relevance in that respect. Therefore, the majority of the
Tribunal is of the view that the Claimant's letter of 3 January 2006 does not qualify as a Sub-
Clause 20.1 notice for the purpose of Claimant's claim in this arbitration.

169. Furthermore and for the sake of clarity, the majority of the Tribunal notes that in essence,
the Claimant's 3 January 2006 letter, which according to the Claimant amounts to a notification of
delay due to late approval of the Process Design and to a claim under Sub-Clause 2001 of the GCC,
does not complain of the Engineer's delay in approving the Process Design itself, nor claims any
"extension of the Time for Completion and/or any additional payment", but rather addresses the
Parties' exchanges and alleged lack of agreement on the DATPL, as follows:

We are writing with reference to your latest comments on the Process Design, in particular to
your statements concerning the design basis for Total Phosphorous.

Discussions regarding the phosphate levels that the WWTP should be designed to treat, have
been the subject of much discussion since more than one year.

In the meantime the lack of agreement starts to cause delay to our programme of design works,
as further designs are based on.

[...]

The present situation is that we have been and continue to work to the agreed (as per the
Contract) value for total phosphorous. This value of 522kg/day was clearly stated in our Tender,
including the Contractor's Guarantee. As already stated in our comments to the Process Design,
increasing the design value of total phosphorous (to 726kg/ day) will not increase the sizing of the
WWTP, but it will have an impact on some mechanical equipment. However, it will affect the
operational cost of the plant. Therefore, we request that you clarify the situation by clearly
stating the value of the total phosphorous that you require us to design for and to issue any
instruction or variations as may be necessary or give a determination in accordance with Clause
3.5 of the Conditions of Contract, which may include but not necessarily be limited to, agreeing
an amendment to our Contractor's Guarantee. [Emphasis added]

170. It has been shown in the present arbitration that the above-mentioned DATPL issue, which
was the Claimant's responsibility, resulted from the Claimant's late check, and that this issue did
not critically affect the work progress or the design. 7 Moreover, nothing suggests in the above
letter that as of 3 January 2006 the Claimant considered generally or in particular that the
Engineer's comments on the Process Design was a cause for delay in the progress of the Works

6
The Claimant submits in … the "Claimant's Submissions On Compliance with SubClause 20.1 Conditions" … that "Contractor's notification of
delay was given via letter no. 209 dated 3 of January 2006 …" because, "[...] it was only on 3 January 2006 that the Contractor became aware
that circumstances surrounding the dispute over the late approval by the Engineer of the process Design would have indeed delayed further
civil works other than the Aeration Tanks, which were all reliant upon approved civil designs stemming from an approved process design".
[Emphasis added]
7
See the conclusions of the Tribunal Design Expert report …, according to which: "A change to the total Phosphorous load should not result
in any critical delay to the design." [Emphasis added]

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 which would justify granting the Claimant an Extension of Time. The majority of the Tribunal
simply notes that there is no such allegation or request in that letter.

171. Furthermore, the Claimant submitted its Preliminary Process Design to the Engineer on 19
October 2004, and the Process Design was eventually approved in April 2006. In view of the clear
wording of Sub-Clause 20.1 of the GCC, had the Claimant considered, or had reasons to consider
that the Engineer' s delay in the approval of the Process Design was a cause of delay to the Works,
notice under Sub-Clause 20.1 should have at least been given within 28 days from such approval.
Although the Claimant alleges that it did not receive a response by the Engineer within the 21
days stipulated by Sub-Clause 5.2 of the GCC, the Claimant waited until September 20068 to
actually submit a notice referring to Sub-Clause 20.1, clearly exceeding the 28 days stipulated in
Sub-Clause 20.1 of the GCC.

172. Based on the above, the majority of the Tribunal considers that the Claimant did not comply
with Sub-Clause 20.1 of the GCC since its notice was time-barred.

.........

On the basis of the foregoing, the Tribunal:

1. Decides that the Respondent's Counterclaim for delay damages ... is not admissible.

2. Decides by majority that the Claimant is not entitled to an Extension of the Time for
Completion.

3. Decides by majority that the Claimant is not entitled to losses, costs, damages and or expenses
that the Claimant may have incurred during the original Time for Completion and the extended
construction period.

4. Orders, by majority, the Claimant to pay [the amount paid to it pursuant to the DAB decision] to
the Respondent.

5. Orders, by majority, the Claimant to pay simple legal interest calculated per annum at the
applicable statutory rate on the amount [mentioned above] in accordance with [applicable law],
starting to run from the day following the date of receipt of the present Final Award by the
Claimant until full payment by the Claimant.

6. Decides, by majority, in accordance with Article 31 of the ICC Rules that each party shall bear
its own costs incurred in relation to this arbitration, including any expenses and attorney's fees,
as well as all administrative costs and arbitrator's fees and expenses fixed by the Court …

7. Dismisses all the Parties' other claims.'

8
By letter No. 471, of 25 September 2006 …, entitled "Engineer's design Review - Notice of a claim", stating in particular: "We hereby give you
notice in accordance with Clause 20.1 that we consider we are entitled to an extension of the Time for Completion with such additional costs
and profit that are applicable due to the inordinate length of time taken in design reviews."

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