The disputes between PT Perhusahaan and Negara have been running for a number of years. There have been proceedings before Dispute Boards, arbitration tribunals and in the Singapore courts. The case has all along been an interesting one, (and the first part of the summary below is based on an article from the very first IQ) as it has raised a number of interesting issues about the enforcement of Dispute Board decisions. In 2014, the case came before the Singapore courts for a second time.
The contract; dispute; and DAB decision
In February 2006, PGN, an Indonesian state-owned company, entered into a contract with CRW for the construction by CRW of a pipeline and optical fibre cable in Indonesia. The contract incorporated the General Conditions of the FIDIC Conditions of Contract for Construction (First Edition, 1999) ("the 1999 Red Book"), with some amendments (together "the Conditions of Contract"). The law governing the contract was that of Indonesia.
A dispute arose between the parties over certain variation order proposals and requests for payments submitted by CRW. Following a referral of that dispute to the DAB, the DAB issued several decisions, all of which were accepted by PGN except for one, dated 25 November 2008, ordering PGN to pay CRW a sum in excess of US$17 million ("the DAB Decision"). In accordance with Sub-Clause 20.4 of the Conditions of Contract, PGN submitted a Notice of Dissatisfaction ("NOD") in respect of that decision.
Arbitration proceedings - 2009
PGN subsequently refused to comply with the DAB decision. This led CRW to file a request for arbitration with the ICC International Court of Arbitration on 13 February 2009. Importantly, the dispute referred to arbitration was however not the underlying dispute which was the subject of the DAB decision, but was in fact a new dispute, namely, whether CRW was entitled to immediate payment by PGN of the sum awarded by the DAB in its decision of 25 November 2008 ("the dispute").
CRW's case was that, notwithstanding PGN's notice of dissatisfaction, PGN still remained bound by the DAB decision and was required to "promptly give effect" to that decision in accordance with Sub- Clause 20.4 of the Conditions of Contract. In its defence, PGN argued that the DAB decision was not "final and binding" as it had served a notice of dissatisfaction and that a binding but not final DAB decision could not be converted into a final arbitral award without first determining whether the DAB decision was correct (or ought to be revised) on the merits. PGN in particular sought to argue that the powers of the arbitral tribunal set out in sub-clause 20.6 did not include the power to direct a party to make immediate payment of the sum awarded by the DAB without a review confirming the correctness of the DAB decision.
The arbitral tribunal found in CRW's favour and held by majority in a final award ("the Final Award") that the DAB decision was binding and that PGN had...