FIDIC Guidance On Enforcing DAB Decisions

Author:Mr Jeremy Glover
Profession:Fenwick Elliott LLP

FIDIC, as is well known, are currently finalising a new amended version of the Yellow Book. In a taste of what is to come, on 1 April 2013 the FIDIC Contracts Committee issued a Guidance Note dealing with the powers of, effect of and the enforcement of Dispute Adjudication Board ("DAB") decisions.

The purpose of the Guidance Note is to clarify clause 20 of the General Conditions of the Rainbow Suite or 1999 Conditions of Contract. The guidance is intended to address the question of how one enforces DAB decisions that are binding but not yet final. FIDIC say that their intention is to make it explicit and clear that the failure to comply with a DAB decision should be capable of being referred to arbitration under sub-clause 20.6 without the need first to obtain a further DAB decision under sub-clause 20.4 and to comply with the amicable settlement provisions of sub-clause 20.5.

Such an approach will be familiar to those who operate in jurisdictions where short-form adjudication has been introduced (for example the Housing Grants, Construction and Regeneration Act in the UK) and where decisions that are binding and not yet final can be immediately enforced. Indeed the Building and Construction Industry Security of Payment Act 2006 in Singapore goes as far as to state that an application for review of an adjudicator's decision can only be heard if that decision has actually been paid.

The idea behind clause 20.4 is that whether or not a party has given notice of its dissatisfaction, the DAB's decision should be immediately binding on the parties and they must comply with it promptly. If a party fails to comply with a DAB decision and that decision has become final, sub-clause 20.7 already provides for a party to refer the other party's failure to comply with such a decision direct to arbitration. However, if the DAB decision is binding but not final (i.e. the "losing" party has served a notice of dissatisfaction), there is now doubt about whether or not there is a straightforward route to enforcing that decision.

The reason why FIDIC has issued this guidance now owes much to the discussion and disagreement that followed the Singapore case of CRW Joint Operation v PT Perusahaan Gas Legara (Persero) TBK [2011] SGCA 33. Here, the Singapore Court of Appeal held that an Arbitral Tribunal had, by summarily enforcing a binding but non-final DAB decision by way of a final award without a hearing on the merits, acted in a way which was: "unprecedented...

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