Cases - Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation

Record details

Name

Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation

Date

[2010]

Citation

SGHC 202

Keywords

Dispute ajudication board - variation order proposals - when a decisions becomes final and binding

Summary

The Singapore High Court set aside an arbitrator’s award made following a decision of a dispute adjudication board in relation to a dispute arising out of a contract adopting the standard provisions of the Red book.

A dispute arose between the parties regarding variation order proposals which was referred to a dispute adjudication board in accordance with the contract. Perusahaan Gas Negara accepted all of the dispute adjudication board’s decision apart from one which required it to pay USD$17 million to CRW. Perusahaan Gas Negara submitted a notice of dissatisfaction in respect of this decision. CRW filed a request for arbitration maintaining that Perusahaan Gas Negara were obliged to make the payment of USD$17 million following the decision of the dispute adjudication board.

Two issues were considered by the arbitration tribunal:

• whether CRW was entitled to the immediate payment; and
• whether Perusahaan Gas Negara was entitled to request that the tribunal open and review the decision of the dispute adjudication board.

Clause 20.4 of the contract provided that a decision of the dispute adjudication board ‘shall be binding on both Parties, who shall give effect to it unless it shall be revised in an amicable settlement or an arbitral award.’ If no notice of dissatisfaction is submitted within 28 days of the decision of the dispute adjudication board, it becomes ‘final and binding.’

Clause 20.6 provided that any decision that has not become final and binding shall be settled by arbitration.

Clause 20.7 provided that where a party fails to comply with a dispute adjudication board decision that has become ‘final and binding’, the other party may refer this failure to arbitration.

The tribunal made an award in favour of CRW ordering Perusahaan Gas Negara to pay USD$17 million and that Perusahaan Gas Negara’s argument for opening up the dispute adjudication board decision failed as a defence to CRW’s claim for payment.

Perusahaan Gas Negara then issued court proceedings on the basis that the tribunal had exceeded its jurisdiction by making the award which the dispute adjudication board had made to CRW final while failing to determine whether the dispute adjudication board decision had been made in accordance with the contract before doing so. The Court found in favour of Perusahaan Gas Negara. The tribunal’s decision was set aside because, as Perusahaan Gas Negara had submitted its notice of dissatisfaction, the dispute adjudication board’s decision was not final and binding and therefore under 20.6 the dispute (as a second dispute) was to be referred to arbitration as opposed to the failure to comply with the dispute adjudication board’s decision (clause 20.7). The tribunal had exceeded its powers by failing to review the merits of the case. CRW’s appeal in July 2011 against this decision failed.

This decision gives useful guidance as to when a decision becomes final and binding under the terms of the FIDIC form and its permitted treatment before that time.