Clarifying Singapore's Arbitration Law And Enforcing FIDIC Dispute Adjudication Board Decisions

A recent decision of the Singapore Court of Appeal confirms that interim awards made under Singapore's International Arbitration Act (IAA) are final and enforceable. The decision is also significant as it confirms that a dispute adjudication or avoidance board (DAB) decision made under the 1999 FIDIC Red Book Conditions of Contract for Construction (the "Red Book") must be complied with, and promptly, thereby reinforcing the "pay now, argue later" principle central to the DAB procedure.

Brief background

The subject matter of the Singapore Court of Appeal's decision in PT Perusahaan Gas Negara (Persero) v CRW Joint Operation (Indonesia) [2015] SGCA 30 ("Perusahaan") related to a dispute that had arisen between PT Perusahaan Gas Negara ("Persero") and CRW Joint Operation (Indonesia) ("CRW"). The dispute had arisen from variation claims made by CRW under a 1999 FIDIC Red Book contract ("Contract") for the design, procurement, installation, testing and pre-commissioning of a pipeline to convey natural gas from South Sumatra to West Java, Indonesia. CRW referred the matter to the DAB constituted under the Contract, which decided that PGN was to pay approximately USD 17.3 million to CRW ("DAB Decision").

Despite the fact that the Contract contained a provision requiring PGN to comply with the DAB Decision, it refused to do so. A plethora of arbitral and court appeal proceedings followed. Essentially, CRW pursued enforcement of the DAB Decision through arbitration, and thereafter attempted to enforce the subsequent arbitral awards in the Singapore Courts as PGN continually refused to comply with the DAB Decision.

In 2011, after the High Court and Court of Appeal had set aside a previous arbitral decision, which required PGN to comply with the DAB Decision, CRW returned to arbitration, seeking two awards:

first, an interim or partial award permitting it to enforce the DAB Decision against PGN; and secondly, a final award for the sums determined in the DAB Decision (i.e. dealing with the Primary Dispute). CRW successfully argued the first ground, and the tribunal issued an interim award compelling PGN to comply with the DAB Decision (the "Interim Award"). CRW obtained leave from the High Court to enforce the Interim Award against PGN, and in response, PGN applied to the High Court to set aside the award (PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (Indonesia) [2014] SGHC 146).

In the High Court, the positions of the parties were as...